10-Q 1 if16-jun02.txt CNL INCOME FUND XVI, LTD. FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT of 1934 For the quarterly period ended June 30, 2002 -------------------------------------------------------------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from ______________________ to ____________________ Commission file number 0-26218 --------------------------------------- CNL Income Fund XVI, Ltd. ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Florida 59-3198891 -------------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 450 South Orange Ave. Orlando, Florida 32801 - 3336 -------------------------------- ------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number (including area code) (407) 540-2000 ------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _________ CONTENTS Part I Page ---- Item 1. Financial Statements: Condensed Balance Sheets 1 Condensed Statements of Income 2 Condensed Statements of Partners' Capital 3 Condensed Statements of Cash Flows 4 Notes to Condensed Financial Statements 5-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 11 Part II Other Information 12 CNL INCOME FUND XVI, LTD. (A Florida Limited Partnership) CONDENSED BALANCE SHEETS

See accompanying notes to condensed financial statements. CNL INCOME FUND XVI, LTD. (A Florida Limited Partnership) CONDENSED STATEMENTS OF INCOME

See accompanying notes to condensed financial statements. CNL INCOME FUND XVI, LTD. (A Florida Limited Partnership) CONDENSED STATEMENTS OF PARTNERS' CAPITAL

See accompanying notes to condensed financial statements. CNL INCOME FUND XVI, LTD. (A Florida Limited Partnership) CONDENSED STATEMENTS OF CASH FLOWS

See accompanying notes to condensed financial statements. CNL INCOME FUND XVI, LTD. (A Florida Limited Partnership) NOTES TO CONDENSED FINANCIAL STATEMENTS Quarters and Six Months Ended June 30, 2002 and 2001 1. Basis of Presentation: The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. The financial statements reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Operating results for the quarter and six months ended June 30, 2002, may not be indicative of the results that may be expected for the year ending December 31, 2002. Amounts as of December 31, 2001, included in the financial statements, have been derived from audited financial statements as of that date. These unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in Form 10-K of CNL Income Fund XVI, Ltd. (the "Partnership") for the year ended December 31, 2001. Effective January 1, 2002, the Partnership adopted Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement requires that a long-lived asset be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The assessment is based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value. If an impairment is recognized, the adjusted carrying amount of a long-lived asset is its new cost basis. The statement also requires that the results of operations of a component of an entity that either has been disposed of or is classified as held for sale be reported as a discontinued operation if the disposal activity was initiated subsequent to the adoption of the Standard. 2. Reclassification: Certain items in the prior years' financial statements have been reclassified to conform to 2002 presentation. These reclassifications had no effect on total partners' capital or net income. 3. Land and Buildings on Operating Leases: In June 2002, the Partnership reinvested a portion of the net sales proceeds from the sale of the property in Mesquite, Texas and the majority of the net sales proceeds from the sale of the property in Rancho Cordova, California in a property in Austin, Texas at an approximate cost of $1,406,700. The Partnership acquired this property from CNL Funding 2001-A, LP, an affiliate of the general partners (see Note 5). 4. Investment in Joint Ventures: In June 2002, the Partnership reinvested a portion of the net sales proceeds from the sale of the property in Mesquite, Texas, in a joint venture arrangement, Arlington Joint Venture, with CNL Income Fund VII, Ltd., an affiliate of the general partners. The joint venture acquired a property in Arlington, Texas from CNL Funding 2001-A, LP, an affiliate of the general partners (see Note 5). The Partnership and CNL Income Fund VII, Ltd. entered into an agreement whereby each co-venturer will share in the profits and losses of the property in proportion to its applicable percentage interest. As of June 30, 2002, the Partnership had contributed approximately $210,800 for a 21% interest in this joint venture. CNL INCOME FUND XVI, LTD. (A Florida Limited Partnership) NOTES TO CONDENSED FINANCIAL STATEMENTS Quarters and Six Months Ended June 30, 2002 and 2001 4. Investment in Joint Ventures - Continued: As of June 30, 2002, Columbus Joint Venture, TGIF Pittsburgh Joint Venture, and Arlington Joint Venture, each owned and leased one property to operators of fast-food or family-style restaurants. In addition, the Partnership and affiliates, as three separate tenants-in-common, each owned and leased one property to operators of fast-food or family-style restaurants. The following presents the combined, condensed financial information for the joint ventures at:

The Partnership recognized income of $150,801 and $97,030 during the six months ended June 30, 2002 and 2001, respectively, of which $75,646 and $47,716 was earned during the quarters ended June 30, 2002 and 2001, respectively, from these joint ventures and tenants-in-common. 5. Related Party Transactions: In June 2002, the Partnership acquired a property, in Austin, Texas, from CNL Funding 2001-A, LP, for a purchase price of approximately $1,406,700 (see Note 3). In addition, in June 2002, the Partnership invested in Arlington Joint Venture with CNL Income Fund VII, Ltd. Arlington Joint Venture acquired a property in Arlington, Texas, from CNL Funding 2001-A, LP, for a purchase price of approximately $1,003,600 (see Note 4). CNL Funding 2001-A, LP is an affiliate of the general partners. CNL Funding 2001-A, LP had purchased and temporarily held title to the properties in order to facilitate the acquisition of the properties by the Partnership. The purchase price paid by the Partnership and the joint venture represented the costs incurred by CNL Funding 2001-A, LP to acquire the properties, including closing costs. CNL INCOME FUND XVI, LTD. (A Florida Limited Partnership) NOTES TO CONDENSED FINANCIAL STATEMENTS Quarters and Six Months Ended June 30, 2002 and 2001 6. Discontinued Operations: In March 2002, the Partnership sold its Denny's property in Mesquite, Texas, to an unrelated third party for $475,000 and received net sales proceeds of approximately $448,700. Due to the fact that the Partnership had recorded provisions for write-down of assets in previous years, no gain or loss on disposal of discontinued operations was recorded during the quarter and six months ended June 30, 2002 relating to this sale. In June 2002, the Partnership sold its Jack in the Box property in Rancho Cordova, California, to an unrelated third party for approximately $1,363,400 and received net sales proceeds of approximately $1,325,100, resulting in a gain on disposal of discontinued operations of approximately $402,600 during the quarter and six months ended June 30, 2002. In June 2002, the Partnership entered into an agreement with an unrelated third party to sell the Denny's property in Bucyrus, Ohio. As a result, the Partnership reclassified the asset from land and building on operating leases to real estate held for sale. The reclassified asset was recorded at the lower of its carrying amount or fair value, less cost to sell. In addition, the Partnership stopped recording depreciation once the property was placed up for sale. On August 5, 2002, the Partnership sold this property (see Note 8). In connection with the anticipated sale of the property, the Partnership recorded a loss on disposal of assets of $20,262 during the quarter and six months ended June 30, 2002. The financial results for these three properties are reflected as Discontinued Operations in the accompanying financial statements. The operating results of the discontinued operations for the above properties are as follows:

7. Commitment: During 2002, the Partnership entered into an agreement with an unrelated third party to sell the Denny's property in Bucyrus, Ohio (see Notes 6 and 8). 8. Subsequent Event: On August 5, 2002, the Partnership sold its property in Bucyrus, Ohio for $156,200 and received net sales proceeds of approximately $144,900, resulting in a loss on disposal of assets of $20,262, which the Partnership recorded at June 30, 2002. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CNL Income Fund XVI, Ltd. (the "Partnership") is a Florida limited partnership that was organized on September 2, 1993, to acquire for cash, either directly or through joint venture arrangements, both newly constructed and existing restaurant properties, as well as land upon which restaurants were to be constructed (the "Properties"), which are leased primarily to operators of national and regional fast-food and family-style restaurant chains. The leases are generally triple-net leases, with the lessee responsible for all repairs and maintenance, property taxes, insurance and utilities. As of June 30, 2001, the Partnership owned 38 Properties directly and five Properties indirectly through joint venture or tenancy in common arrangements. As of June 30, 2002, the Partnership owned 36 Properties, directly and six Properties indirectly through joint venture or tenancy in common arrangements. Capital Resources The Partnership's primary source of capital for the six months ended June 30, 2002 and 2001 was cash from operating activities (which includes cash received from tenants, distributions from joint ventures, and interest and other income received, less cash paid for expenses). Cash from operating activities was $2,126,023 and $1,476,601 for the six months ended June 30, 2002 and 2001, respectively. The increase in cash from operating activities during the six months ended June 30, 2002, as compared to the six months ended June 30, 2001, was primarily a result of changes in the Partnership's working capital and changes in income and expenses, as described in "Results of Operations." Other sources and uses of capital included the following during the six months ended June 30, 2002. In March 2002, the Partnership sold its Property in Mesquite, Texas, to an unrelated third party for $475,000 and received net sales proceeds of approximately $448,700. Due to the fact that the Partnership had recorded provisions for write-down of assets in previous years, no gain or loss was recorded during the quarter ended March 31, 2002 relating to this sale. In June 2002, the Partnership sold the Jack in the Box Property in Rancho Cordova, California, to an unrelated third party for approximately $1,363,400 and received net sales proceeds of approximately $1,325,100, resulting in a gain on disposal of discontinued operations of approximately $402,600 during the quarter and six months ended June 30, 2002. In June 2002, the Partnership reinvested a portion of the net sales proceeds from the sale of the property in Mesquite, Texas and the majority of the net sales proceeds from the sale of the property in Rancho Cordova, California in a Property in Austin, Texas at an approximate cost of $1,510,200. In June 2002, the Partnership reinvested approximately $210,800 of the remaining proceeds from the sale of the Property in Mesquite, Texas, in a joint venture arrangement, Arlington Joint Venture, with CNL Income Fund VII, Ltd., a Florida limited partnership and an affiliate of the general partners. The joint venture acquired a Property in Arlington, Texas at an approximate cost of $1,003,600. The Partnership and the joint venture acquired the Properties from CNL Funding 2001-A, LP, a Delaware limited partnership and an affiliate of the general partners. CNL Funding 2001-A, LP had purchased and temporarily held title to the Properties in order to facilitate the acquisition of the Properties by the Partnership. The purchase prices paid by the Partnership and the joint venture represented the costs incurred by CNL Funding 2001-A, LP to acquire the Properties, including closing costs. The general partners believe that this transaction, or a portion thereof, relating to the sale of the Property in Rancho Cordova, California and the reinvestment of the net sales proceeds, described above, will qualify as a like-kind transaction for federal income tax purposes. The Partnership anticipates its distributions will be sufficient to enable the limited partners to pay federal and state income taxes, if any (at a level reasonably assumed by the general partners), resulting from these transactions. Currently, rental income from the Partnership's Properties and any net sales proceeds from the sale of Properties are invested in money market accounts or other short-term, highly liquid investments, such as demand deposit accounts at commercial banks, money market accounts and certificates of deposit with less than a 90-day maturity date, pending the Partnership's use of such funds to pay Partnership expenses or to make distributions to the partners. At June 30, 2002, the Partnership had $1,246,276 invested in such short-term investments, as compared to $774,673 at December 31, 2001. Cash and cash equivalents increased during the six months ended June 30, 2002, primarily as a result of receipts of accounts receivable from December 31, 2001. The funds remaining at June 30, 2002, will be used to pay distributions and other liabilities. During the six months ended June 30, 2002, the Partnership entered into an agreement with an unrelated third party to sell the Denny's Property in Bucyrus, Ohio. The Partnership reclassified the assets relating to this Property to real estate held for sale. On August 5, 2002, the Partnership sold its Property in Bucyrus, Ohio for $156,200 and received net sales proceeds of approximately $144,900, resulting in a loss on disposal of assets of $20,262, which the Partnership recorded at June 30, 2002. The Partnership intends to reinvest these proceeds in an additional Property. Short-Term Liquidity The Partnership's short-term liquidity requirements consist primarily of the operating expenses of the Partnership. The Partnership's investment strategy of acquiring Properties for cash and leasing them under triple-net leases to operators who generally meet specified financial standards minimizes the Partnership's operating expenses. The general partners believe that the leases will continue to generate cash flow in excess of operating expenses. The general partners have the right, but not the obligation, to make additional capital contributions if they deem it appropriate in connection with the operations of the Partnership. The Partnership generally distributes cash from operations remaining after the payment of operating expenses of the Partnership. Based on current and, for the six months ended June 30, 2001, a loan from the corporate general partner, the Partnership declared distributions to limited partners of $1,800,000 for each of the six months ended June 30, 2002 and 2001 ($900,000 for each of the quarters ended June 30, 2002 and 2001). This represents distributions of $0.40 per unit for each of the six months ended June 30, 2002 and 2001, ($0.20 for each applicable quarter). No distributions were made to the general partners for the quarters and six months ended June 30, 2002 and 2001. No amounts distributed to the limited partners for the six months ended June 30, 2002 and 2001 are required to be or have been treated by the Partnership as a return of capital for purposes of calculating the limited partners' return on their adjusted capital contributions. The Partnership intends to continue to make distributions of cash available for distribution to the limited partners on a quarterly basis. Total liabilities of the Partnership, including distributions payable, were $979,919 at June 30, 2002, as compared to $1,012,790 at December 31, 2001. The decrease in total liabilities was primarily due to a decrease in rents paid in advance and security deposits at June 30, 2002, as compared to December 31, 2001. The general partners believe that the Partnership has sufficient cash on hand to meet its current working capital needs. Long-Term Liquidity The Partnership has no long-term debt or other long-term liquidity requirements. Results of Operations Total rental revenues were $2,166,322 for the six months ended June 30, 2002, as compared to $1,443,899 for the same period of 2001, of which $1,347,092 and $707,190 were earned during the second quarter of 2002 and 2001, respectively. Rental revenues were lower during the quarter and six months ended June 30, 2001 as compared to the same periods of 2002, due to the fact that in March 2001, the Partnership stopped recording rental revenues relating to four Denny's Properties because the tenant, Phoenix Restaurant Group, Inc. ("PRG") was experiencing financial difficulties and ceased rental payments. In October 2001, PRG filed for bankruptcy and rejected two of the four leases it had with the Partnership. In March 2002, the Partnership sold one of the vacant Properties, as described above in "Capital Resources." The Partnership will not recognize any rental revenues from the remaining vacant Property until the Property is re-leased or the Property is sold and the proceeds are reinvested in an additional Property. The lost revenues resulting from the remaining vacant Property will have an adverse effect on the results of operation of the Partnership if the Partnership is not able to re-lease or sell the Property in a timely manner. The general partners are currently seeking a replacement tenant for the vacant Property. Rental revenues were higher during the quarter and six months ended June 30, 2002 as compared to the same periods of 2001, due to the fact that during the quarter and six months ended June 30, 2002, the Partnership received payment of past due rents relating to the two Properties not rejected by PRG. The Partnership assigned the leases relating to these Properties to a new tenant. In addition, the increase in rental revenues during the quarter and six months ended June 30, 2002, as compared to the same periods of 2001, was partially due to the acquisition of two Properties, one in December 2001 and one in June 2002. The tenant of the Las Vegas, Nevada Property vacated the Property and ceased restaurant operations during the first quarter of 2001. Rental revenues are expected to remain at reduced amounts while equity in earnings of joint ventures is expected to increase due to the fact that in June 2001 and June 2002 the Partnership reinvested the net sales proceeds from the 2001 sale of the Property in Marana, Arizona and a portion of the net sales proceeds from the 2002 sale of the Property in Mesquite, Texas in a Property with an affiliate of the general partners, as tenants in common and in a joint venture arrangement, Arlington Joint Venture, as described above in "Capital Resources". During the six months ended June 30, 2002 and 2001, the Partnership earned net income from joint ventures of $150,801 and $97,030, respectively, $75,646 and $47,716 of which was earned during the quarters ended June 30, 2002 and 2001, respectively. The increase in net income earned by joint ventures during the quarter and six months ended June 30, 2002, as compared to the same periods of 2001, was primarily due to the fact that in June 2001, the Partnership reinvested the net sales proceeds it received from the 2001 sale of the Property in Marana, Arizona in a Property in Walker, Louisiana, with an affiliate of the general partners, as tenants-in-common. In addition, in June 2002, the Partnership reinvested a portion of the net sales proceeds from the sale of the Property in Marana, Arizona in a joint venture arrangement, Arlington Joint Venture, as described above in "Capital Resources". Operating expenses, including depreciation and amortization expense and provision for write-down of assets were $452,800 and $1,033,981, for the six months ended June 30, 2002 and 2001, respectively, of which $214,981 and $461,650 were incurred during the quarters ended June 30, 2002 and 2001, respectively. Operating expenses were higher during the quarter and six months ended June 30, 2001, as compared to the same periods of 2002, due to the fact that during the quarter and six months ended June 30, 2001, the Partnership recorded provisions for write-down of assets of $58,285 and $262,361, respectively, relating to the Properties leased by PRG and the vacant Property in Las Vegas, Nevada. The provisions represented the difference between each Property's carrying value and its fair value. As of June 30, 2002, the Partnership had two remaining vacant Properties. In June 2002, the Partnership entered into an agreement with an unrelated third party to sell the Property in Bucyrus, Ohio, as described below, and is seeking a replacement tenant for the other Property. In addition, the decrease in operating expenses during the quarter and six months ended June 30, 2002, was partially due to the fact that during 2002 and 2001, the Partnership incurred Property related expenses, such as legal fees, repairs and maintenance, insurance and real estate taxes relating to vacant Properties. Between November 2001 and June 2002, the Partnership sold three of its vacant Properties. The Partnership did not incur any additional expenses relating to these Properties after the sale of the Properties had occurred. In addition, the decrease in operating expenses during the quarter and six months ended June 30, 2002, was partially due to a decrease in the costs incurred for administrative expenses for servicing the Partnership and its Properties and a decrease in the amount of state tax expense relating to several states in which the Partnership conducts business. Effective January 1, 2002, the Partnership adopted Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement requires that a long-lived asset be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The assessment is based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value. If an impairment is recognized, the adjusted carrying amount of a long-lived asset is its new cost basis. The statement also requires that the results of operations of a component of an entity that either has been disposed of or is classified as held for sale be reported as a discontinued operation if the disposal activity was initiated subsequent to the adoption of the Standard. As a result of the 2001 sale of the Property in Marana, Arizona, the Partnership recognized a gain of $281,058, during the six months ended June 30, 2001. In January 2002, the Partnership entered into an agreement with an unrelated third party to sell the Jack in the Box Property in Rancho Cordova, California. In June 2002, the Partnership sold this Property and recognized a gain on disposal of discontinued operations of approximately $402,600 during the quarter and six months ended June 30, 2002. In addition, during the six months ended June 30, 2002, the Partnership sold one of its vacant PRG Properties, as described above, and used a portion of the proceeds from the sale to reinvest in an income producing Property. Due to the fact that the Partnership had recorded provisions for write-down of assets in previous years, no gain or loss on disposal of discontinued operations was recorded during the six months ended June 30, 2002 relating to this sale. During 2002, the Partnership entered into an agreement with an unrelated third party to sell the Denny's property in Bucyrus, Ohio. On August 5, 2002, the Partnership sold this Property, as described above in "Capital Resources." The Partnership expects to use the proceeds from the sale to reinvest in an income producing Property. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Partnership reclassified the asset from land and building on operating leases to real estate held for sale. The Partnership recorded the reclassified asset at the lower of its carrying amount or fair value, less cost to sell, which resulted in a loss on disposal of assets of $20,262 during the quarter and six months ended June 30, 2002. During the quarter and six months ended June 30, 2001, the Partnership recorded a loss on disposal of assets of $382,366 relating to this Property. The loss represented the difference between the Property's carrying value and its fair value. In addition, during the six months ended June 30, 2002, the Partnership stopped recording depreciation upon placing the Property up for sale. The Partnership recognized net rental income (rental revenues less Property related expenses), of $22,678 and $3,038 during the six months ended June 30, 2002 and 2001, respectively, of which, income of $3,940 and a loss of $39,822 were recorded during the quarters ended June 30, 2002 and 2001, respectively, relating to these Properties. In June 2002, the Partnership reinvested the majority of the net sales proceeds from the two sales in a Property in Austin, Texas and used the remaining proceeds to invest in Arlington Joint Venture, as described above in "Capital Resources". ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. PART II. OTHER INFORMATION Item 1. Legal Proceedings. Inapplicable. ------------------ Item 2. Changes in Securities. Inapplicable. -------------------------- Item 3. Default upon Senior Securities. Inapplicable. ------------------------------- Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable. ---------------------------------------------------- Item 5. Other Information. Inapplicable. ------------------ Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits 3.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund XVI, Ltd. (Included as Exhibit 3.2 to Registration Statement No. 33-69968-01 on Form S-11 and incorporated herein by reference.) 4.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund XVI, Ltd. (Included as Exhibit 3.2 to Registration Statement No. 33-69968-01 on Form S-11 and incorporated herein by reference.) 4.2 Amended and Restated Agreement of Limited Partnership of CNL Income Fund XVI, Ltd. (Included as Exhibit 4.2 to Form 10-K filed with the Securities and Exchange Commission on March 30, 1995, and incorporated herein by reference.) 10.1 Management Agreement between CNL Income Fund XVI, Ltd. and CNL Investment Company (Included as Exhibit 10.1 to Form 10-K filed with the Securities and Exchange Commission on March 30, 1995, and incorporated herein by reference.) 10.2 Assignment of Management Agreement from CNL Investment Company to CNL Income Fund Advisors, Inc. (Included as Exhibit 10.2 to Form 10-K filed with the Securities and Exchange Commission on March 30, 1995, and incorporated herein by reference.) 10.3 Assignment of Management Agreement from CNL Income Fund Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit 10.3 to Form 10-K filed with the Securities and Exchange Commission on April 1, 1996, and incorporated herein by reference.) 10.4 Assignment of Management Agreement from CNL Fund Advisors, Inc. to CNL APF Partners, LP. (Included as Exhibit 10.4 to Form 10-Q filed with the Securities and Exchange Commission on August 13, 2001, and incorporated herein by reference). 10.5 Assignment of Management Agreement from CNL APF Partners, LP to CNL Restaurants XVIII, Inc. (Filed herewith) (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATED this 6th day of August, 2002. CNL INCOME FUND XVI, LTD. By:CNL REALTY CORPORATION General Partner By:/s/ James M. Seneff, Jr. ------------------------------- JAMES M. SENEFF, JR. Chief Executive Officer (Principal Executive Officer) By:/s/ Robert A. Bourne ------------------------------- ROBERT A. BOURNE President and Treasurer (Principal Financial and Accounting Officer) CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF CORPORATE GENERAL PARTNER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, James M. Seneff, Jr., the Chief Executive Officer of CNL Realty Corporation, the corporate general partner of CNL Income Fund XVI, Ltd. (the "Partnership"), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Partnership's Quarterly Report on Form 10-Q for the period ending June 30, 2002 (the "Report"). The undersigned hereby certifies that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. Date: August 6, 2002 /s/ James M. Seneff, Jr. --------------- -------------------------- Name: James M. Seneff, Jr. Title: Chief Executive Officer CERTIFICATION OF CHIEF FINANCIAL OFFICER OF CORPORATE GENERAL PARTNER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, Robert A. Bourne, the President and Treasurer of CNL Realty Corporation, the corporate general partner of CNL Income Fund XVI, Ltd. (the "Partnership"), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Partnership's Quarterly Report on Form 10-Q for the period ending June 30, 2002 (the "Report"). The undersigned hereby certifies that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. Date: August 6, 2002 /s/ Robert A. Bourne ----------------- ------------------------ Name: Robert A. Bourne Title: President and Treasurer EXHIBIT INDEX Exhibit Number 3.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund XVI, Ltd. (Included as Exhibit 3.2 to Registration Statement No. 33-69968-01 on Form S-11 and incorporated herein by reference.) 4.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund XVI, Ltd. (Included as Exhibit 3.2 to Registration Statement No. 33-69968-01 on Form S-11 and incorporated herein by reference.) 4.2 Amended and Restated Agreement of Limited Partnership of CNL Income Fund XVI, Ltd. (Included as Exhibit 4.2 to Form 10-K filed with the Securities and Exchange Commission on March 30, 1995, and incorporated herein by reference.) 10.1 Management Agreement between CNL Income Fund XVI, Ltd. and CNL Investment Company (Included as Exhibit 10.1 to Form 10-K filed with the Securities and Exchange Commission on March 30, 1995, and incorporated herein by reference.) 10.2 Assignment of Management Agreement from CNL Investment Company to CNL Income Fund Advisors, Inc. (Included as Exhibit 10.2 to Form 10-K filed with the Securities and Exchange Commission on March 30, 1995, and incorporated herein by reference.) 10.3 Assignment of Management Agreement from CNL Income Fund Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit 10.3 to Form 10-K filed with the Securities and Exchange Commission on April 1, 1996, and incorporated herein by reference.) 10.4 Assignment of Management Agreement from CNL Fund Advisors, Inc. to CNL APF Partners, LP. (Included as Exhibit 10.4 to Form 10-Q filed with the Securities and Exchange Commission on August 13, 2001, and incorporated herein by reference). 10.5 Assignment of Management Agreement from CNL APF Partners, LP to CNL Restaurants XVIII, Inc. (Filed herewith)

CNL INCOME FUND XVI LTD 10-Q