UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-K

(Mark One)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998

                                       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 333-47411

                        CNL HEALTH CARE PROPERTIES, INC.
             (Exact name of registrant as specified in its charter)

               Maryland                              59-3491443
   (State or other jurisdiction of      (I.R.S. Employer Identification No.)
    incorporation or organization)

                              400 East South Street
                             Orlando, Florida 32801
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (407) 650-1000

           Securities registered pursuant to Section 12(b) of the Act:

     Title of each class:            Name of exchange on which registered:
             None                                 Not Applicable

           Securities registered pursuant to Section 12(g) of the Act:

                                      None
                                (Title of class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or 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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X ]

     Aggregate  market  value of the common stock held by  nonaffiliates  of the
registrant: The registrant registered an offering of shares of common stock (the
"Shares") on Form S-11 under the  Securities  Act of 1933, as amended.  Since no
established  market for such Shares  exists,  there is no market  value for such
Shares. Each Share was originally sold at $10 per Share.

     The number of shares of common stock  outstanding  as of March 5, 1999,
was 20,000.


<PAGE>



                                     PART I


Item 1.  Business

         CNL Health Care Properties, Inc. (the "Company") is a corporation which
was  organized  pursuant to the laws of the state of  Maryland  on December  22,
1997,  and which intends to make an election for federal  income tax purposes to
be taxed as a real estate  investment  trust (a "REIT").  Beginning in September
1998, the Company  offered for sale up to $155,000,000 of shares of common stock
(the "Shares")  (15,500,000  shares at $10 per share) pursuant to a registration
statement on Form S-11 under the Securities  Act of 1933, as amended,  effective
September  18,  1998.  As  of  December  31,  1998,  the  Company  had  received
subscription  proceeds  of  $25,500  (2,550  shares)  from the  offering.  Until
subscription  proceeds for the Company total $2,500,000  (250,000  shares),  the
proceeds  will be held in escrow and interest  earned on such will accrue to the
benefit of subscribers. The offering of the Shares of the Company will terminate
no later than  September 18, 1999,  unless the Company  elects to extend it to a
date no later than September 18, 2000, in states that permit such extension.  As
of December 31, 1998,  capital  contributions  from the sole  stockholder of the
Company,  CNL Health Care  Advisors,  Inc. (the  "Advisor"),  totalled  $200,000
(20,000 shares).

         The Company has been formed primarily to acquire real estate properties
(the  "Properties")  related to health care and seniors' housing facilities (the
"Health Care  Facilities")  located  across the United  States.  The Health Care
Facilities may include  congregate  living,  assisted living and skilled nursing
facilities,  continuing care retirement  communities and life care  communities,
and medical office buildings and walk-in clinics.  The Properties will be leased
on a long-term, "triple-net" basis to operators of Health Care Facilities. Under
the Company's  triple-net  leases,  the lessee will be responsible  for repairs,
maintenance,  property  taxes,  utilities,  and insurance.  The Company also may
offer  mortgage  financing  (the  "Mortgage  Loans") to operators of Health Care
Facilities  secured by real estate owned by the  borrower.  However,  because it
prefers  to focus on  investing  in  Properties,  which  have the  potential  to
appreciate,  the  Company  currently  expects to provide  Mortgage  Loans in the
aggregate  principal  amount of  approximately  5% to 10% of the Company's total
assets.  The Company  expects that the  interest  rate and terms of the Mortgage
Loans will be similar to those of its leases.  To a lesser  extent,  the Company
also may offer  furniture,  fixtures and  equipment  ("Equipment")  financing to
operators of Health Care  Facilities  through loans or direct  financing  leases
(collectively,  the  "Secured  Equipment  Leases").  The  aggregate  outstanding
principal  amount of Secured  Equipment  Leases is not expected to exceed 10% of
the  Company's  total assets.  The Company has not yet acquired any  Properties,
made any Mortgage Loans or entered into any Secured Equipment  Leases,  nor have
any Properties,  Mortgage Loans or Secured  Equipment Leases been identified for
investment.

         The Company's primary investment  objectives are to preserve,  protect,
and enhance the Company's  assets while (i) making  distributions  commencing in
the initial year of Company operations;  (ii) obtaining fixed income through the
receipt of base rent, and increasing  the Company's  income (and  distributions)
and providing  protection against inflation through automatic fixed increases in
base rent or increases  in the base rent based on  increases  in consumer  price
indices,  over the terms of the leases,  and obtaining  fixed income through the
receipt of payments  from Mortgage  Loans and Secured  Equipment  Leases;  (iii)
qualifying  and remaining  qualified as a REIT for federal  income tax purposes;
and  (iv)  providing  stockholders  of  the  Company  with  liquidity  of  their
investment within five to ten years after  commencement of the offering,  either
in whole or in part, through (a) listing of the shares on a national  securities
exchange or over-the-counter market (the "Listing"),  or (b) the commencement of
orderly sales of the Company's  assets and  distribution of the proceeds thereof
(outside the ordinary  course of business and consistent  with its objectives of
qualifying  as a  REIT).  There  can  be  no  assurance  that  these  investment
objectives  will be met. In  addition,  if the Shares are not listed by December
31, 2008, as to which there can be no  assurance,  the Company will commence the
orderly sale of its assets and the  distribution  of the proceeds.  Listing does
not assure liquidity.

         For the first five to ten years after the commencement of the offering,
the Company intends,  to the extent  consistent with the Company's  objective of
qualifying as a REIT, to reinvest in additional Properties or Mortgage Loans any
proceeds of the sale of a Property or Mortgage  Loan that are not required to be
distributed to  stockholders  in order to preserve the Company's REIT status for
federal income tax purposes.  Similarly,  and to the extent consistent with REIT
qualification,  the Company  plans to use the  proceeds of the sale of a Secured
Equipment Lease to fund additional  Secured  Equipment  Leases, or to reduce its
outstanding  indebtedness  on the  borrowings.  At or  prior  to the end of such
ten-year period, the Company intends to provide stockholders of the Company with
liquidity of their  investment,  either in whole or in part,  through Listing of
the Shares of the Company  (although  liquidity cannot be assured thereby) or by
commencing orderly sales of the Company's assets. If Listing occurs, the Company
intends  to  reinvest  in  additional  Properties,  Mortgage  Loans and  Secured
Equipment  Leases any net sales  proceeds  not  required  to be  distributed  to
stockholders in order to preserve the Company's  status as a REIT. The Company's
Articles of Incorporation  provide,  however,  that if Listing does not occur by
December 31, 2008, the Company thereafter will undertake the orderly liquidation
of the Company and the sale of the Company's  assets and will distribute any net
sales  proceeds to  stockholders.  In  addition,  the Company  will not sell any
assets if such sale would not be  consistent  with the  Company's  objective  of
qualifying as a REIT.

         In deciding the precise timing and terms of Property sales, the Advisor
will consider  factors such as national and local market  conditions,  potential
capital  appreciation,  cash flows, and federal income tax  considerations.  The
terms of certain leases,  however, may require the Company to sell a Property at
an earlier time if the tenant  exercises its option to purchase a Property after
a specified  portion of the lease term has  elapsed.  The  Company  will have no
obligation  to sell all or any  portion of a Property  at any  particular  time,
except as may be required  under  property  or joint  venture  purchase  options
granted to certain  tenants.  In  connection  with  sales of  Properties  by the
Company,  purchase money obligations may be taken by the Company as part payment
of the sales price.  The terms of payment will be affected by custom in the area
in which the  Property is located and  prevailing  economic  conditions.  When a
purchase  money  obligation  is  accepted  in lieu of cash  upon  the  sale of a
Property,  the Company will  continue to have a mortgage on the Property and the
proceeds  of the sale will be  realized  over a period of years  rather  than at
closing of the sale.

         The Company does not anticipate  selling the Secured  Equipment  Leases
prior to  expiration  of the lease  term,  except in the event that the  Company
undertakes orderly liquidation of its assets. In addition,  the Company does not
anticipate  selling any Mortgage Loans prior to the expiration of the loan term,
except in the event (i) the Company owns the Property (land only) underlying the
building  improvements  which  secure  the  Mortgage  Loan  and the  sale of the
Property occurs, or (ii) the Company undertakes an orderly sale of its assets.

Leases

         As of  December  31,  1998,  the  Company  had  not  entered  into  any
commitment for an acquisition of a Property. However, leases entered into in the
future are  expected  to be  triple-net  leases,  which  means that the  tenants
generally  will be required to pay all  repairs,  maintenance,  property  taxes,
utilities,  and insurance.  The tenants also will be required to pay for special
assessments,  sales and use  taxes,  and the cost of any  renovations  permitted
under the  leases.  The  Company  will own the  Properties  either  directly  or
indirectly through a joint venture, partnership, or a subsidiary.

         The initial terms of the leases are presently  anticipated  to be 10 to
20 years with up to four,  five-year renewal options. The minimum rental payment
under the renewal  option  generally is expected to be greater than that due for
the final lease year of the initial  term of the lease.  During the initial term
of each lease, the tenant will pay the Company,  as lessor,  minimum annual rent
equal to a specified percentage of the Company's cost of purchasing the Property
payable  in  monthly  installments.  Typically,  the  leases  will  provide  for
automatic  fixed  increases in the minimum  annual rent or increases in the base
rent based on increases in consumer  price  indices at  predetermined  intervals
during the terms of the leases.  If the Company is acquiring a Property  that is
to be constructed or renovated pursuant to a development agreement,  the cost of
purchasing the Property will include the purchase  price of the land,  including
all fees,  costs,  and  expenses  paid by the  Company  in  connection  with its
purchase of the land, and all fees, costs and expenses  disbursed by the Company
for construction of building improvements.



<PAGE>


         It is  anticipated  that if the  Company  wishes  at any time to sell a
Property  pursuant to a bona fide offer from a third  party,  the tenant of that
Property will have the right to purchase the Property for the same price, and on
the same terms and conditions,  as contained in the offer. In certain cases, the
tenant also may have the right to purchase  the  Property  seven to twenty years
after  commencement of the lease at a purchase price equal to the greater of (i)
the appraised value of the Property, or (ii) a specified amount, generally equal
to  the  Company's  purchase  price  of  the  Property,  plus  a  pre-determined
percentage of the Company's purchase price.

Certain Management Services

         Pursuant to an advisory  agreement (the "Advisory  Agreement") with the
Company,  the Advisor will provide management  services relating to the Company,
the  Properties,  the Mortgage  Loans and the Secured  Equipment  Lease program.
Under this agreement,  the Advisor will be responsible for assisting the Company
in negotiating leases, Mortgage Loans, the line of credit (the "Line of Credit")
and Secured  Equipment  Leases,  collecting  rental,  Mortgage  Loan and Secured
Equipment Lease  payments,  inspecting the Properties and the tenants' books and
records,  and responding to tenants inquiries and notices. The Advisor also will
provide  information  to  the  Company  about  the  status  of the  leases,  the
Properties, the Mortgage Loans, the Secured Equipment Leases, the Line of Credit
and the permanent financing. In exchange for these services, the Advisor will be
entitled  to receive  certain  fees from the  Company.  For  supervision  of the
Properties and the Mortgage Loans,  the Advisor will receive an asset management
fee,  which is payable  monthly in an amount equal to one-twelfth of .60% of the
total  amount  invested in the  Properties,  exclusive of  acquisition  fees and
acquisition expenses (the "Real Estate Asset Value") plus one-twelfth of .60% of
the  outstanding  principal  amount of any Mortgage  Loans, as of the end of the
preceding  month. For negotiating  Secured  Equipment Leases and supervising the
Secured  Equipment Lease program,  the Advisor will receive,  upon entering into
each lease, a secured equipment lease servicing fee, payable out of the proceeds
of the borrowings, equal to 2% of the purchase price of the equipment subject to
each Secured Equipment Lease (the "Secured  Equipment Lease Servicing Fee"). For
identifying the Properties,  structuring the terms of the acquisition and leases
of the Properties and structuring  the terms of the Mortgage Loans,  the Advisor
will  receive  a fee equal to 4.5% of gross  proceeds  from the  offering,  loan
proceeds  from  permanent  financing  (the  "Permanent  Financing")  and amounts
outstanding on the Line of Credit, if any, at the time of Listing, but excluding
that  portion  of the  Permanent  Financing  used to finance  Secured  Equipment
Leases.

         The  Advisory  Agreement   continues  until  September  15,  1999,  and
thereafter my be extended  annually  upon mutual  consent of the Advisor and the
Board of Directors of the Company  unless  terminated at an earlier date upon 60
days prior written notice by each party.

Borrowing

         The Company plans to obtain a revolving Line of Credit  initially in an
amount up to $45,000,000,  and may, in addition, also obtain Permanent Financing
to acquire  assets and to pay certain fees.  The Line of Credit may be increased
at the  discretion of the Board of  Directors.  The Line of Credit may be repaid
with offering  proceeds,  working capital or Permanent  Financing.  The Board of
Directors  anticipates  that the Permanent  Financing will not exceed 30% of the
Company's total assets.  However,  in accordance with the Company's  Articles of
Incorporation,  the aggregate  maximum  amount the Company may borrow is 300% of
the Company's net assets (as defined in the Company's  prospectus).  The Company
has engaged in preliminary  discussions with a potential lender, but has not yet
received a  commitment  for the Line of Credit or any  Permanent  Financing  and
there is no  assurance  that the  Company  will obtain the Line of Credit or any
Permanent  Financing on satisfactory  terms. The Board of Directors may elect to
encumber assets in connection with any borrowing.

Competition

         The Company  anticipates  that it will compete  with other REITs,  real
estate partnerships,  health care providers and other investors,  including, but
not limited to banks and  insurance  companies,  many of which will have greater
financial resources than the Company, in the acquisition,  leasing and financing
of  Health  Care  Facilities.  Further,  non-profit  entities  are  particularly
attracted to investments in senior care  facilities  because of their ability to
finance  acquisitions  through  the  issuance  of  tax-exempt  bonds,  providing
non-profit  entities  with a  relatively  lower cost of capital as  compared  to
for-profit  purchasers.  In addition,  in certain states, health care facilities
owned  by  non-profit  entities  are  exempt  from  taxes on real  property.  As
profitability  increases  for investors in health care  properties,  competition
among investors likely will become increasingly intense.

Employees

         Reference is made to Item 10.  Directors and Executive  Officers of the
Registrant for a listing of the Company's Executive Officers. The Company has no
other employees.

Item 2.  Properties

         Although  the  Advisor  has  not  yet  selected  any   Properties   for
investment,  it is expected  that any  Properties  purchased by the Company will
conform  generally to the following  specifications  of size,  cost, and type of
land and buildings.  The Company  anticipates  acquiring  Properties  related to
Health  Care  Facilities  which may  include,  but will not be  limited  to, the
following types:

         Congregate   Living   Facilities.   Congregate  living  facilities  are
primarily apartment buildings which contain a significant amount of common space
to accommodate  dining,  recreation,  activities and other support  services for
senior  citizens.  These  properties range in size from 100 to 500 units with an
average size of approximately  225 units.  Units include studios and one and two
bedrooms ranging in size from 450 square feet to over 1,500 square feet.

         Assisted  Living  Facilities.  Assisted  living  facilities  provide  a
special combination of housing, supportive services, personalized assistance and
health  care to their  residents  in a manner  which is  designed  to respond to
individual  needs.  These facilities  offer a lower-cost  alternative to skilled
nursing  facilities for those who do not require intensive nursing care. Current
industry practice generally is to build freestanding  assisted living facilities
with an average of between 40 and 100 units, depending on such factors as market
forces,  site constraints and program  orientation.  Current economics place the
size of the private living space of a unit in the range of 300 gross square feet
for an efficiency unit to 750 square feet for a large one bedroom unit.

         Skilled   Nursing   Facilities.   In  addition   to   housing,   meals,
transportation   and   housekeeping,    skilled   nursing   facilities   provide
comprehensive  nursing and long term care to their  residents.  Skilled  nursing
facilities are also generally freestanding, but are typically more institutional
in nature,  allowing  for  efficient  cleaning and  sterilization.  The rooms in
skilled  nursing  facilities  are equipped with patient  monitoring  devices and
emergency call systems.  Oxygen systems may also be present. Both multiple floor
and single  floor  designs  are  common.  Individual  rooms in  skilled  nursing
facilities may be as small as 100 square feet, with common areas varying greatly
in size.

         Continuing Care Retirement  Communities.  Congregate  living facilities
sometimes have assisted  living and/or skilled  nursing  facilities  attached or
adjacent to their locations.  When this occurs,  the projects are often referred
to as continuing  care  retirement  communities  or life care  communities.  The
intent of continuing care retirement  communities or life care communities is to
provide a continuum of care to the residents.  In other words,  as residents age
and their  health  care  needs  increase,  they can  receive  the care they need
without  having to move away from the  "community"  which has become their home.
Continuing care retirement  communities  typically  operate on a fee-for-service
basis and the units are rented on a monthly basis to residents,  while life care
centers generally charge an entrance fee that is partially refundable and covers
the cost of all of the residents' health care- related services,  plus a monthly
maintenance fee.

         Medical Office Buildings.  Medical office buildings,  including walk-in
clinics, are conventional office buildings with additional plumbing,  mechanical
and  electrical  service  amenities,  which  facilitate  physicians  and medical
delivery  companies  in the  practice  of medicine  and  delivery of health care
services.  These  facilities  can range in size from 3,000 square feet  (walk-in
clinic) up to 100,000 square feet (medical office building).

         Either before or after construction or renovation, the Properties to be
acquired  by the  Company  will  be one of a  Health  Care  Facility  operator's
approved  designs.  Generally,  Properties  to be acquired  by the Company  will
consist of both land and building, although in a number of cases the Company may
acquire only the land  underlying  the building  with the building  owned by the
tenant or a third party,  and also may acquire the  building  only with the land
owned by a third party.  In general,  the Properties  will be  freestanding  and
surrounded by paved parking areas and  landscaping.  Although,  buildings may be
suitable for conversion to various uses through  modifications,  some Properties
may not be economically convertible to other uses.

         A tenant generally will be required by the lease agreement to make such
capital  expenditures  as may be  reasonably  necessary to refurbish  buildings,
premises,  signs,  and  equipment  and maintain  the  leasehold in a manner that
allows operation for its intended purpose.  These capital expenditures generally
will be paid by the tenant during the term of the lease.

Item 3.  Legal Proceedings

         Neither the Company,  nor its Advisor or any affiliates of the Advisor,
nor any of their  respective  properties,  is a party to,  or  subject  to,  any
material pending legal proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders

         None.


<PAGE>


                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

(a) As of February 5, 1999,  the sole  stockholder of record of common stock was
the Advisor.  There is no public trading market for the Shares,  and even though
the  Company  intends to list the Shares on a national  securities  exchange  or
over-the-counter  market  within ten years of  commencement  of the  offering of
Shares,  there is no assurance that one will develop and it is not known at this
time if a public market for the Shares will develop. Prior to such time, if any,
as Listing occurs,  any stockholder  (other than the Advisor) may present all or
any portion  equal to at least 25% of such  stockholder's  Shares to the Company
for redemption at any time, in accordance  with the  procedures  outlined in the
Company's prospectus.  At such time, the Company may, at its sole option, redeem
such Shares  presented for  redemption  for cash to the extent it has sufficient
funds  available.  In addition,  the Company may, at its  discretion,  use up to
$100,000  per  calendar  quarter of the  proceeds of any public  offering of its
common stock for redemptions.  Stockholders who wish to have their distributions
used to  acquire  additional  Shares (to the extent  Shares  are  available  for
purchase),  may do so pursuant to the Company's  Reinvestment  Plan. There is no
assurance  that there will be sufficient  funds  available for  redemption  and,
accordingly,  a  stockholder's  Shares may not be redeemed.  Any Shares acquired
pursuant to a redemption will be retired and no longer available for issuance by
the Company.  The Directors of the Company,  in their  discretion,  may amend or
suspend the  redemption  plan at any time they  determine that such amendment or
suspension is in the best interest of the Company.

         As of December 31, 1998, the offering price per Share was $10.

(b) The information  required by this item is set forth in Item 7.  Management's
Discussion and Analysis of Financial  Condition and Results of Operations and is
hereby incorporated herein by reference.

Item 6.  Selected Financial Data

         The following  selected  financial  data should be read in  conjunction
with the financial statements and related notes in Item 8 hereof.

                                                  1998 (1)    1997 (1) (2) 
                                                 ---------   --------------

Year Ended December 31:
    Revenues                               $          -      $          -
    Net earnings                                      -                 -
    Cash distributions declared                       -                 -

At December 31:
    Total assets                                  $976,579         $280,330
    Total stockholder's equity                     200,000          200,000


(1)      No significant  operations had commenced because the Company was in its
         development  stage.  No operations will commence until such time as the
         Company has sold at least 250,000 shares ($2,500,000).

(2)      Selected  financial data for 1997  represents  the period  December 22,
         1997 (date of inception) through December 31, 1997.





Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

         The Company is a Maryland  corporation  that was  organized on December
22, 1997,  to acquire  Properties  related to health care and  seniors'  housing
facilities  located  across the United  States.  The Health Care  Facilities may
include  congregate  living,  assisted  living and skilled  nursing  facilities,
continuing care retirement  communities and life care  communities,  and medical
office  buildings  and  walk-in  clinics.  The  Properties  will be  leased on a
long-term,  "triple-net"  basis.  The Company may also provide Mortgage Loans to
operators  of  Health  Care  Facilities  in the  aggregate  principle  amount of
approximately  5% to 10% of the  Company's  total  assets.  The Company also may
offer  Secured  Equipment  Leases to  operators of Health Care  Facilities.  The
aggregate principal amount of Secured Equipment Leases is not expected to exceed
10% of the Company's total assets.

         The Company's primary investment  objectives are to preserve,  protect,
and enhance the Company's  assets while (i) making  distributions  commencing in
the initial year of Company operations;  (ii) obtaining fixed income through the
receipt of base rent, and increasing  the Company's  income (and  distributions)
and providing  protection against inflation through automatic fixed increases in
base rent or increases  in the base rent based on  increases  in consumer  price
indices,  over the terms of the leases,  and obtaining  fixed income through the
receipt of payments  from Mortgage  Loans and Secured  Equipment  Leases;  (iii)
qualifying  and remaining  qualified as a REIT for federal  income tax purposes;
and  (iv)  providing  stockholders  of  the  Company  with  liquidity  of  their
investment within five to ten years after  commencement of the offering,  either
in whole or in part,  through (a) Listing of the Shares, or (b) the commencement
of the orderly sale of the Company's  assets,  and  distribution of the proceeds
thereof  (outside  the  ordinary  course of  business  and  consistent  with its
objective of qualifying as a REIT).

         Pursuant to a registration  statement on Form S-11 under the Securities
Act of 1933  effective  September 18, 1998,  the Company  registered for sale an
aggregate of  $155,000,000 of shares of common stock  (15,500,000  shares at $10
per Share), with 500,000 of such shares available only to stockholders who elect
to participate in the Company's reinvestment plan. The offering of Shares of the
Company  commenced on September 18, 1998.  The offering of Shares of the Company
will  terminate no later than  September 18, 1999,  unless the Company elects to
extend it to a date no later than September 18, 2000, in states that permit such
extension.

         The  managing  dealer of the  offering  of shares of the Company is CNL
Securities Corp., an affiliate of the Company.

         This information contains forward-looking statements within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
Exchange  Act of 1934.  Although  the  Company  believes  that the  expectations
reflected  in  such   forward-looking   statements  are  based  upon  reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Certain factors that might cause such a
difference  include  the  following:  changes  in general  economic  conditions,
changes in local real  estate  conditions,  availability  of  proceeds  from the
Company's  offering,  the  ability of the  Company to obtain a line of credit or
permanent  financing on satisfactory terms, the ability of the Company to locate
suitable  tenants for its  Properties  and borrowers for its Mortgage  Loans and
Secured  Equipment  Leases,  and the  ability of tenants and  borrowers  to make
payments under their  respective  leases,  Mortgage  Loans or Secured  Equipment
Leases.

Liquidity and Capital Resources

         A capital  contribution  of $200,000  from the Advisor is the Company's
sole  source of capital  until the Company  sells the minimum  number of 250,000
Shares  ($2,500,000).  As of  February  5, 1999,  subscription  funds  totalling
$35,500 had been  deposited  with the escrow  agent for the  offering of shares.
Until subscription  proceeds for the Company total at least $2,500,000  (250,000
Shares), the proceeds will be held in escrow.

         The  Company  expects  to use net  offering  proceeds  from the sale of
Shares to purchase Properties and to invest in Mortgage Loans. In addition,  the
Company  intends to borrow  money to acquire  Properties,  to invest in Mortgage
Loans and Secured Equipment Leases, and to pay certain related fees. The Company
intends to encumber assets in connection with such borrowing.  The Company plans
to initially  obtain a revolving Line of Credit in an amount up to  $45,000,000.
The Company  also plans to obtain  Permanent  Financing.  Although  the Board of
Directors anticipates that the Line of Credit initially will be in the amount of
$45,000,000 and the aggregate amount of any Permanent  Financing will not exceed
30% of the Company's total assets,  the maximum amount the Company may borrow is
300% of the  Company's  net  assets.  The  Company  has  engaged in  preliminary
discussions with potential lenders but has not yet received a commitment for the
Line of Credit or any  Permanent  Financing  and there is no assurance  that the
Company  will  obtain  the  Line  of  Credit  or  any  Permanent   Financing  on
satisfactory terms.

         At December 31, 1998 and 1997, the Company's total assets were $976,579
and  $280,330,  respectively.  The  increase in total assets  reflects  deferred
offering expenses incurred during the year ended December 31, 1998.

         During the year ended  December  31, 1998 and the period  December  22,
1997 (date of inception)  through  December 31, 1997,  affiliates of the Company
incurred  $562,739 and $43,397,  respectively,  for certain  organizational  and
offering  expenses.  As of  December  31, 1998 and 1997,  the  Company  owed the
affiliates $685,372 and $58,600, respectively, for such amounts, unpaid fees and
administrative  expenses.  In the event the minimum  offering  proceeds  are not
received by the  Company,  the  Company  will have no  obligation  to repay such
amounts.   Further,   the   Advisor  of  the  Company  has  agreed  to  pay  all
organizational  and  offering  expenses  (excluding  commissions  and  marketing
support and due diligence expense reimbursement fees) in excess of three percent
of the gross offering proceeds.

         Due to anticipated low operating expenses, rental income expected to be
obtained  from  Properties  after they are  acquired,  the fact that the Line of
Credit and Permanent  Financing  have not been obtained and that the Company has
not entered into Mortgage Loans or Secured Equipment Leases, management does not
believe that working capital reserves will be necessary at this time. Management
has the right to cause the Company to maintain reserves if, in their discretion,
they determine such reserves are required to meet the Company's  working capital
needs.

         As of  December  31,  1998,  the  Company  had  not  entered  into  any
arrangements creating a reasonable probability that a Property would be acquired
by the Company or that a particular  Mortgage  Loan or Secured  Equipment  Lease
would be funded.  The number of Properties to be acquired and Mortgage  Loans to
be invested in will depend  upon the amount of net  offering  proceeds  and loan
proceeds  available to the  Company.  The amount  invested in Secured  Equipment
Leases is not expected to exceed 10% of the Company's total assets.

         Management  expects that the cash to be generated from  operations will
be adequate to pay operating expenses and to make distributions to stockholders.

Results of Operations

         As of December  31,  1998,  no  significant  operations  had  commenced
because the Company was in its  development  stage.  No operations will commence
until such time as the Company has sold at least  250,000  Shares  ($2,500,000).
Management  is not  aware of any  known  trends  or  uncertainties,  other  than
national  economic  conditions,  which  may  reasonably  be  expected  to have a
material  impact,  favorable  or  unfavorable,  on  revenues  or income from the
acquisition and operation of the Properties.

Year 2000

         The Year 2000 problem is the result of information  technology  systems
and embedded  systems  (products which are made with  microprocessor  (computer)
chips such as HVAC systems,  physical  security  systems and elevators)  using a
two-digit  format,  as  opposed  to four  digits,  to  indicate  the year.  Such
information  technology and embedded systems may be unable to properly recognize
and process date-sensitive information beginning January 1, 2000.


         The  Company  does  not  have  any  information   technology   systems.
Affiliates of the Advisor provide all services  requiring the use of information
technology  systems  pursuant to a management  agreement  with the Company.  The
maintenance of embedded systems, if any, at the Company's Properties will be the
responsibility  of the tenants of the Properties in accordance with the terms of
the Company's  leases.  The Advisor and its affiliates  have  established a team
dedicated to reviewing the internal  information  technology systems used in the
operation of the Company,  and the information  technology and embedded  systems
and the Year 2000  compliance  plans of the Company's  tenants at such time that
the Company acquires Properties,  significant suppliers,  financial institutions
and transfer agent.

         The  information  technology  infrastructure  of the  affiliates of the
Advisor  consists  of a network of  personal  computers  and  servers  that were
obtained from major suppliers. The affiliates utilize various administrative and
financial software  applications on that  infrastructure to perform the business
functions of the Company.  The  inability of the Advisor and its  affiliates  to
identify and timely  correct  material  Year 2000  deficiencies  in the software
and/or infrastructure could result in an interruption in, or failure of, certain
of the Company's business activities or operations. Accordingly, the Advisor and
its  affiliates  have  requested  and  are  evaluating  documentation  from  the
suppliers of the software and  infrastructure  of the  affiliates  regarding the
Year 2000 compliance of their products that are used in the business  activities
or  operations  of the  Company.  The  Advisor has not yet  received  sufficient
certifications  to be  assured  that the  suppliers  have fully  considered  and
mitigated any potential material impact of the Year 2000 deficiencies. The costs
expected to be incurred  by the Advisor and its  affiliates  to become Year 2000
compliant will be incurred by the Advisor and its affiliates;  therefore,  these
costs  will have no impact on the  Company's  financial  position  or results of
operations.

         The  Company  will have  material  third party  relationships  with its
tenants,  financial  institutions and transfer agent. The Company will depend on
its  tenants  for  rents  and  cash  flows,   its  financial   institutions  for
availability  of cash and its  transfer  agent to  maintain  and track  investor
information.  If any of these third parties are unable to meet their obligations
to the Company because of the Year 2000 deficiencies,  such a failure may have a
material  impact on the Company.  Accordingly,  the Advisor has requested and is
evaluating  documentation from the Company's financial institutions and transfer
agent  relating  to their Year 2000  compliance  plans.  The Advisor has not yet
received sufficient certifications to be assured that the financial institutions
and transfer agent have fully  considered  and mitigated any potential  material
impact of the Year 2000 deficiencies.  Therefore,  the Advisor does not, at this
time, know of the potential costs to the Company of any adverse impact or effect
of any Year 2000 deficiencies by these third parties.

         The Advisor currently expects that all year 2000 compliance testing and
any necessary  remedial measures on the information  technology  systems used in
the business activities and operations of the Company will be completed prior to
June 30, 1999. Based on the progress the Advisor and its affiliates have made in
identifying  and  addressing  the  Company's  Year 2000  issues and the plan and
timeline to  complete  the  compliance  program,  the  Advisor  does not foresee
significant  risks  associated  with the Company's Year 2000  compliance at this
time.  Because the Advisor and its affiliates are still evaluating the status of
the systems used in business  activities  and  operations of the Company and the
systems of the third parties with which the Company  conducts its business,  the
Advisor has not yet developed a comprehensive  contingency plan and is unable to
identify "the most  reasonably  likely worst case scenario" at this time. As the
Advisor  identifies  significant  risks  related  to  the  Company's  Year  2000
compliance or if the Company's Year 2000 compliance  program's progress deviates
substantially   from  the  anticipated   timeline,   the  Advisor  will  develop
appropriate contingency plans.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         Not applicable.

Item 8.   Financial Statements and Supplementary Data


<PAGE>




                        CNL HEALTH CARE PROPERTIES, INC.



                                    CONTENTS
                                    --------





                                                             Page
                                                             ----

Report of Independent Accountants                             11

Financial Statements:

  Balance Sheets                                              12

  Statements of Stockholders' Equity                          13

  Notes to Financial Statements                               14-17


<PAGE>







                        Report of Independent Accountants
                        --------------------------------- 



To the Board of Directors
CNL Health Care Properties, Inc.


In our opinion,  the financial  statements  listed in the index  appearing under
Item 14(a)(1) present fairly, in all material  respects,  the financial position
of CNL Health Care Properties,  Inc. (a development stage Maryland  corporation)
at December 31, 1998 and 1997 in conformity with generally  accepted  accounting
principles.  These financial  statements are the responsibility of the Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion  expressed
above.





/s/ PRICEWATERHOUSECOOPERS LLP

Orlando, Florida
January 15, 1999


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                   (A Development Stage Maryland Corporation)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>


<S> <C>
                                                                   December 31,       December 31,
                                                                      1998                1997
                                                                   ----------         -----------

                        ASSETS

Cash                                                               $      92             $200,000
Deferred offering costs                                              975,339               80,330
Other assets                                                           1,148                   --
                                                                 -----------          -----------

                                                                    $976,579             $280,330
                                                                 ===========          ===========

                LIABILITIES AND STOCKHOLDER'S EQUITY





Liabilities:
    Due to related parties                                          $685,372              $58,600
    Accounts payable and accrued expenses                             91,207               21,730
                                                                 -----------          -----------
          Total liabilities                                          776,579               80,330
                                                                 -----------          -----------

Stockholder's equity:
    Preferred stock, without par value per share
       Authorized and unissued 3,000,000 shares                          --                    --
    Excess shares, $.01 par value per share
       Authorized and unissued 103,000,000 shares                        --                    --
    Common stock, $.01 par value per share
       Authorized 100,000,000 and 100,000
       shares, respectively; 20,000 shares
       issued and outstanding                                           200                   200
    Capital in excess of par value                                  199,800               199,800
                                                                -----------           -----------
          Total stockholder's equity                                200,000               200,000
                                                                -----------           -----------

                                                                   $976,579              $280,330
                                                                ===========           ===========
</TABLE>












                 See accompanying notes to financial statements.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                   (A Development Stage Maryland Corporation)

                       STATEMENTS OF STOCKHOLDER'S EQUITY

                   Year Ended December 31, 1998 and the Period
                  December 22, 1997 (Date of Inception) through
                                December 31, 1997

<TABLE>
<CAPTION>


                                             Common stock           
                                        -----------------------      Capital in
                                         Number         Par          excess of
                                        of Shares      value         par value          Total
                                        ----------    ---------     ------------     ------------
<S> <C>

Balance, December 22, 1997
    (Date of Inception)                   $    --      $   --         $       --      $       --

Cash received from sale
    of common stock to
    CNL Health Care
    Advisors, Inc.                         20,000          200           199,800         200,000
                                        ----------    ---------      ------------    ------------

Balance at December 31, 1997               20,000          200           199,800         200,000

Subscriptions received for common
    stock through public offering           2,550           26            25,474          25,500

Subscriptions held in escrow at
    December 31, 1998                      (2,550 )        (26 )         (25,474 )       (25,500 )
                                        ----------    ---------      ------------    ------------

Balance at December 31, 1998             $ 20,000      $   200        $  199,800      $  200,000
                                        ==========    =========      ============    ============

</TABLE>




















                 See accompanying notes to financial statements.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                   (A Development Stage Maryland Corporation)

                          NOTES TO FINANCIAL STATEMENTS

                   Year Ended December 31, 1998 and the Period
                  December 22, 1997 (Date of Inception) through
                                December 31, 1997


1.       Significant Accounting Policies:

         Organization and Nature of Business - CNL Health Care Properties,  Inc.
         (the  "Company")  was  organized  pursuant  to the laws of the state of
         Maryland on December 22, 1997. The Company  intends to use the proceeds
         from its public offering (the "Offering") (see Note 2), after deducting
         offering  expenses,  primarily to acquire real estate  properties  (the
         "Properties")  related to health care and seniors'  housing  facilities
         (the "Health Care  Facilities")  located across the United States.  The
         Health Care Facilities may include congregate  living,  assisted living
         and skilled nursing facilities,  continuing care retirement communities
         and life care  communities,  and medical  office  buildings and walk-in
         clinics.  The Company may provide  mortgage  financing  (the  "Mortgage
         Loans")  to  operators  of  Health  Care  Facilities  in the  aggregate
         principal  amount of  approximately  5% to 10% of the  Company's  total
         assets.  The Company also may offer  furniture,  fixture and  equipment
         financing  ("Secured  Equipment  Leases") to  operators  of Health Care
         Facilities.  Secured  Equipment Leases will be funded from the proceeds
         of a loan in an amount up to ten percent of the Company's total assets.

         As of December 31, 1998, the Company was in the  development  stage and
         had not begun operations.

         Income Taxes - The Company intends to make an election to be taxed as a
         real estate investment trust ("REIT") under Sections 856 through 860 of
         the  Internal  Revenue  Code  commencing  with its taxable  year ending
         December 31, 1999. If the Company qualifies for taxation as a REIT, the
         Company  generally will not be subject to federal  corporate income tax
         to  the  extent  it   distributes   its  REIT  taxable  income  to  its
         stockholders, so long as it distributes at least 95 percent of its REIT
         taxable income.  REITs are subject to a number of other  organizational
         and  operational  requirements.  Even  if  the  Company  qualifies  for
         taxation as a REIT,  it may be subject to certain state and local taxes
         on its income and property,  and federal income and excise taxes on its
         undistributed income.

         Use of  Estimates  -  Management  of the  Company  has made a number of
         estimates  and  assumptions  relating  to the  reporting  of assets and
         liabilities to prepare these  financial  statements in conformity  with
         generally accepted accounting  principles.  Actual results could differ
         from those estimates.

         New  Accounting  Standard - In April 1998,  the  American  Institute of
         Certified Public Accountants issued Statement of Position ("SOP") 98-5,
         "Reporting  on  the  Costs  of  Start-Up  Activities,"  which  will  be
         effective  for the  Company as of January  1, 1999.  This SOP  requires
         start-up  and  organization  costs to be expensed as incurred  and also
         requires  previously  deferred  start-up  costs to be  recognized  as a
         cumulative effect  adjustment in the statement of earnings.  Management
         of the Company does not believe  that  adoption of this SOP will have a
         material  effect on the  Company's  financial  position  or  results of
         operations.




<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                   (A Development Stage Maryland Corporation)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                   Year Ended December 31, 1998 and the Period
                  December 22, 1997 (Date of Inception) through
                                December 31, 1997


2.       Public Offering:

         The Company has filed a currently effective  registration  statement on
         Form S-11 with the  Securities  and Exchange  Commission.  A maximum of
         15,500,000 shares  ($155,000,000) may be sold, including 500,000 shares
         ($5,000,000)  which are  available  only to  stockholders  who elect to
         participate in the Company's reinvestment plan. The Company has adopted
         a reinvestment  plan pursuant to which  stockholders  may elect to have
         the full amount of their cash distributions from the Company reinvested
         in additional shares of common stock of the Company.  In addition,  the
         Company has  registered  600,000  shares  issuable upon the exercise of
         warrants granted to the managing dealer of the Offering. As of December
         31,  1998,  the Company had received  subscription  proceeds of $25,500
         (2,550  shares).  Until  subscription  proceeds  for the Company  total
         $2,500,000 (250,000 shares), the proceeds will be held in escrow.

3.       Deferred Offering Costs:

         The Company has and will  continue to incur certain costs in connection
         with the Offering, including filing fees, legal, accounting,  marketing
         and  printing  costs and escrow fees,  which will be deducted  from the
         gross  proceeds of the Offering.  Certain  preliminary  costs  incurred
         prior to raising capital have been and will be advanced by an affiliate
         of the Company.  CNL Health Care  Advisors,  Inc. (the  "Advisor")  has
         agreed  to pay all  organizational  and  offering  expenses  (excluding
         commissions   and   marketing   support  and  due   diligence   expense
         reimbursement  fees) which exceed three  percent of the gross  offering
         proceeds received from the sale of shares of the Company.

         As  of  December  31,  1998,  the  Company  had  incurred  $975,339  in
         organizational  and  offering  costs which has been treated as deferred
         offering  costs.  Once the  Company  receives  the  minimum  amount  of
         subscriptions,  the  offering  costs will be  charged to  stockholders'
         capital subject to the three percent cap described above.

4.       Capitalization:

         In September 1998, the Company amended the Articles of Incorporation to
         increase the number of authorized  shares of capital stock from 100,000
         shares to 206,000,000  shares (consisting of 100,000,000 common shares,
         3,000,000 preferred shares and 103,000,000 excess shares).

5.       Related Party Arrangements:

         On December  22, 1997 (date of  inception),  CNL Health Care  Advisors,
         Inc.  contributed  $200,000  in cash to the Company and became its sole
         stockholder.

         The Advisor and certain affiliates of the Company will receive fees and
         compensation  in  connection  with the Offering,  and the  acquisition,
         management, and sale of the assets of the Company.





<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                   (A Development Stage Maryland Corporation)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                   Year Ended December 31, 1998 and the Period
                  December 22, 1997 (Date of Inception) through
                                December 31, 1997


5.       Related Party Arrangements - Continued:

         CNL Securities  Corp. is entitled to receive  commissions  amounting to
         7.5% of the total amount raised from the sale of shares for services in
         connection  with the offering of the shares,  a substantial  portion of
         which will be paid as commissions to other  broker-dealers.  During the
         year ended December 31, 1998, the Company  incurred $1,912 of such fees
         of which $1,785 will be paid by CNL Securities  Corp. as commissions to
         other  broker-dealers.  These fees will not be paid until subscriptions
         for at least 250,000  shares  ($2,500,000)  have been obtained from the
         Offering.

         In addition,  CNL  Securities  Corp. is entitled to receive a marketing
         support and due diligence  expense  reimbursement  fee equal to 0.5% of
         the total amount raised from the sale of shares, a portion of which may
         be reallowed to other  broker-dealers.  During the year ended  December
         31, 1998, the Company  incurred $128 of such fee, the majority of which
         will be reallowed to other  broker-dealers and from which all bona fide
         due diligence  expenses will be paid. These fees will not be paid until
         subscriptions  for at  least  250,000  shares  ($2,500,000)  have  been
         obtained from the Offering.

         The  Advisor is entitled to receive  acquisition  fees for  services in
         finding,  negotiating the leases of and acquiring  properties on behalf
         of the Company  equal to 4.5% of gross  proceeds,  loan  proceeds  from
         permanent  financing and amounts  outstanding on the line of credit, if
         any,  at the  time  of  Listing,  but  excluding  that  portion  of the
         permanent  financing used to finance Secured Equipment  Leases.  During
         the year ended December 31, 1998, the Company  incurred  $1,148 of such
         fees.  Such fees are  included in other  assets at December  31,  1998.
         These fees will not be paid until  subscriptions  for at least  250,000
         shares ($2,500,000) have been obtained from the Offering.

         In addition, the Company has agreed to issue and sell soliciting dealer
         warrants  ("Soliciting  Dealer  Warrants") to CNL Securities  Corp. The
         price for each  warrant  will be $0.0008 and one warrant will be issued
         for every 25 shares sold by the  managing  dealer.  All or a portion of
         the Soliciting  Dealer Warrants may be reallowed to soliciting  dealers
         with prior written  approval  from,  and in the sole  discretion of the
         managing  dealer,  except where  prohibited by either  federal or state
         securities  laws.  The holder of a  Soliciting  Dealer  Warrant will be
         entitled  to purchase  one share of common  stock from the Company at a
         price of $12.00  during the five year period  commencing  with the date
         the offering begins.  No Soliciting  Dealer Warrant,  however,  will be
         exercisable until one year from the date of issuance.

         The Advisor and its affiliates provide various administrative  services
         to the Company,  including  services related to accounting;  financial,
         tax and regulatory compliance reporting;  stockholder distributions and
         reporting;   due  diligence  and  marketing;   and  investor  relations
         (including administrative services in connection with the Offering), on
         a day-to-day basis. For the year ended December 31, 1998 and the period
         December  22,  1997 (date of  inception)  through  December  31,  1997,
         $196,184  and  $15,202,  respectively,   were  classified  as  deferred
         offering costs for these services.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                   (A Development Stage Maryland Corporation)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                   Year Ended December 31, 1998 and the Period
                  December 22, 1997 (Date of Inception) through
                                December 31, 1997


5.       Related Party Arrangements - Continued:

         Amounts due to related parties consisted of the following at:

<TABLE>
<CAPTION>


                                                      December 31,         December 31,
                                                          1998                 1997
                                                      --------------       --------------

<S> <C> 

  Due to the Advisor:
       Expenditures incurred for organizational
          and offering expenses on behalf
          of the Company                                  $470,798            $43,398
       Accounting and administrative
          services                                         211,386             15,202
       Acquisition fees                                      1,148                 --
                                                      -------------        -----------
                                                           683,332             58,600
                                                      -------------        -----------

  Due to CNL Securities Corp.:
       Commissions                                           1,912                 --
       Marketing support and due diligence
          expense reimbursement fee                            128                 --
                                                      -------------        -----------
                                                             2,040                 --
                                                      -------------        -----------

                                                          $685,372            $58,600
                                                      =============        ===========
</TABLE>


6.       Subsequent Event:

         During the period January 1, 1999 through January 15, 1999, the Company
         received  subscription  proceeds of 1,000  shares  ($10,000)  of common
         stock.



<PAGE>







                                                         

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         None.

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

         The Directors and executive officers of the Company are listed below:

      Name               Age       Position with the Company
  -----------         --------     -------------------------

James M. Seneff, Jr.     52        Director, Chairman of the Board, and
                                   Chief Executive Officer
Robert A. Bourne         51        Director and President
David W. Dunbar          46        Independent Director
Timothy S. Smick         46        Independent Director
Edward A. Moses          56        Independent Director
Phillip M. Anderson, Jr. 39        Chief Operating Officer and
                                   Executive Vice President
Daniel L. Simmons        45        Executive Vice President
Curtis B. McWilliams     43        Executive Vice President
Jeanne A. Wall           40        Executive Vice President
Lynn E. Rose             50        Secretary and Treasurer

     James M. Seneff,  Jr. Director,  Chairman of the Board, and Chief Executive
Officer. Mr. Seneff currently holds the position of Chairman of the Board, Chief
Executive Officer and director of CNL Health Care Advisors, Inc., the Advisor to
the Company.  Mr. Seneff also serves as Chairman of the Board,  Chief  Executive
Officer and a director of CNL American Properties Fund, Inc. and CNL Hospitality
Properties,  Inc.,  each of which is an unlisted REIT, and their  advisors,  CNL
Fund Advisors, Inc. and CNL Hospitality Advisors, Inc., respectively. Mr. Seneff
is a  principal  stockholder  of CNL Group,  Inc.,  a  diversified  real  estate
company, and has served as its Chairman of the Board of Directors, director, and
Chief  Executive  Officer  since its formation in 1980.  CNL Group,  Inc. is the
parent company of CNL Securities  Corp.,  which is acting as the managing dealer
in the Company's  Offering,  CNL Investment  Company,  CNL Health Care Advisors,
Inc., CNL Fund Advisors,  Inc. and CNL Hospitality Advisors, Inc. Mr. Seneff has
been  Chairman  of the Board,  Chief  Executive  Officer  and a director  of CNL
Securities  Corp.  since its  formation  in 1979.  Mr.  Seneff also has held the
position of Chairman of the Board,  Chief  Executive  Officer,  President  and a
director of CNL Management Company, a registered  investment advisor,  since its
formation in 1976, has served as Chief Executive Officer,  Chairman of the Board
and a director  of CNL  Investment  Company,  and Chief  Executive  Officer  and
Chairman of the Board of Commercial Net Lease Realty, Inc., a REIT listed on the
New York Stock  Exchange,  since  1992,  served as Chief  Executive  Officer and
Chairman of the Board of CNL Realty  Advisors,  Inc.  from its inception in 1991
through 1997 at which time such company merged with Commercial Net Lease Realty,
Inc.,  and has held the  position of Chief  Executive  Officer,  Chairman of the
Board  and  a  director  of  CNL  Institutional  Advisors,  Inc.,  a  registered
investment  advisor,  since its  inception in 1990.  Mr. Seneff also serves as a
director of First Union  National Bank of Florida,  N.A. Mr.  Seneff  previously
served on the Florida State Commission on Ethics and is a former member and past
Chairman of the State of Florida Investment  Advisory Council,  which recommends
to the Florida Board of Administration  investments for various Florida employee
retirement  funds.  The Florida  Board of  Administration,  Florida's  principal
investment advisory and money management agency, oversees the investment of more
than $60 billion of retirement funds.  Since 1971, Mr. Seneff has been active in
the  acquisition,  development,  and  management  of real estate  projects  and,
directly or through an  affiliated  entity,  has served as a general  partner or
joint  venturer in over 100 real  estate  ventures  involved  in the  financing,
acquisition,   construction,  and  rental  of  restaurants,   office  buildings,
apartment  complexes,  hotels,  and other real  estate.  Included  in these real
estate  ventures  are  approximately  65 privately  offered real estate  limited
partnerships with investment  objectives similar to one or more of the Company's
investment  objectives,  in which Mr. Seneff,  directly or through an affiliated
entity,  serves or has served as a general  partner.  Mr.  Seneff  received  his
degree in Business Administration from Florida State University in 1968.



<PAGE>


     Robert A. Bourne.  Director and President.  Mr. Bourne  currently holds the
position  of  President  and  director of CNL Health Care  Advisors,  Inc.,  the
Advisor to the Company.  Mr. Bourne also serves as Vice Chairman of the Board of
Directors,  director and Treasurer of CNL American  Properties Fund, Inc. and as
President and a director of CNL Hospitality  Properties,  Inc., each of which is
an unlisted  REIT.  Mr.  Bourne  currently  holds the position of President  and
director of CNL  Hospitality  Advisors,  Inc.,  the  advisor of CNL  Hospitality
Properties,  Inc.  and Vice  Chairman of the Board of  Directors,  director  and
Treasurer of CNL Fund  Advisors,  Inc.,  the advisor to CNL American  Properties
Fund,  Inc. Mr. Bourne served as President of CNL Fund  Advisors,  Inc. from the
date of its  inception  in 1994  through  October  1997 and as  President of CNL
American  Properties  Fund,  Inc.  from  the  date of its  inception  in 1994 to
February  1999.  Mr.  Bourne is  President  and  Treasurer  of CNL Group,  Inc.,
President,  Treasurer,  a director, and a registered principal of CNL Securities
Corp. (the managing dealer of the Company's Offering),  President,  Treasurer, a
director  and a  registered  principal  of CNL  Investment  Company,  and  Chief
Investment  Officer,  a director and  Treasurer of CNL  Institutional  Advisors,
Inc., a registered  investment  advisor.  Mr.  Bourne served as President of CNL
Institutional  Advisors,  Inc. from the date of its  inception  through June 30,
1997.  Mr.  Bourne served as President and a director from July 1992 to February
1996,  served as Secretary  and Treasurer  from  February 1996 through  December
1997,  and has served as Vice Chairman of the Board of Directors  since February
1996, of Commercial Net Lease Realty,  Inc., a REIT listed on the New York Stock
Exchange.  In addition,  Mr. Bourne served as President of CNL Realty  Advisors,
Inc.  from 1991 to  February  1996,  and  served  as a  director  of CNL  Realty
Advisors,  Inc.  from 1991 through  December  1997,  and as  Treasurer  and Vice
Chairman from February 1996 through 1997, at which time such Company merged with
Commercial Net Lease Realty,  Inc. Upon graduation from Florida State University
in 1970, where he received a B.A. in Accounting,  with honors, Mr. Bourne worked
as a certified public  accountant and, from September 1971 through December 1978
was employed by Coopers & Lybrand,  Certified Public Accountants,  where he held
the  position of tax manager  beginning  in 1975.  From  January 1979 until June
1982, Mr. Bourne was a partner in the accounting firm of Cross & Bourne and from
July 1982 through January 1987 he was a partner in the accounting firm of Bourne
&  Rose,  P.A.,  Certified  Public  Accountants.  Mr.  Bourne,  who  joined  CNL
Securities  Corp.  in 1979,  has  participated  as a  general  partner  or joint
venturer  in  over  100  real  estate   ventures   involved  in  the  financing,
acquisition,   construction,  and  rental  of  restaurants,   office  buildings,
apartment  complexes,  hotels,  and other real  estate.  Included  in these real
estate  ventures  are  approximately  64 privately  offered real estate  limited
partnerships with investment  objectives similar to one or more of the Company's
investment  objectives,  in which Mr. Bourne,  directly or through an affiliated
entity, serves or has served as a general partner.

     David W. Dunbar.  Independent  Director.  Mr. Dunbar serves as chairman and
chief executive officer of Peoples Bank, which he organized and founded in 1996.
Mr.  Dunbar is also a member of the boards of  directors  of Morton  Plant Mease
Health  Care,  Inc.,  an 841-bed,  not-for-profit  hospital,  Morton Plant Mease
Hospital Foundation and North Bay Hospital, a 122-bed facility. In addition, Mr.
Dunbar  serves  as a  member  of the  Florida  Elections  Commission,  the  body
responsible for investigating and holding hearings  regarding alleged violations
of Florida's  campaign  finance  laws.  During 1994 and 1995,  Mr.  Dunbar was a
member of the board of directors and an executive officer of Peoples State Bank.
Mr.  Dunbar was the chief  executive  officer of Republic Bank from 1991 through
1993. From 1988 through 1991, Mr. Dunbar developed commercial and medical office
buildings  and,  through a financial  consulting  company he  founded,  provided
specialized  lending services for real estate development  clients,  specialized
construction  litigation support for national insurance  companies and strategic
planning services for institutional  clients.  In 1990, Mr. Dunbar was the chief
executive  officer,  developer and owner of a 60,000 square foot medical  office
building  located on the  campus of  Memorial  Hospital  in Tampa,  Florida.  In
addition, in 1990, Mr. Dunbar served as the Governor's appointee to the State of
Florida  Taxation  and  Budget  Reform  Commission,  a 25  member,  blue  ribbon
commission established to review, study and make appropriate recommendations for
changes to state tax laws. Mr. Dunbar  received a degree in finance from Florida
State  University.  He is also a graduate of the  American  Bankers  Association
National  Commercial Lending School at the University of Oklahoma and the School
of Banking of the South at Louisiana State University.

     Timothy S. Smick.  Independent  Director.  From 1996 through February 1998,
Mr. Smick served as chief  operating  officer,  executive  vice  president and a
member of the board of directors of Sunrise  Assisted  Living,  Inc., one of the
nation's  leading  providers  of  assisted  living  care  for  seniors  with  68
communities located in 13 states. In addition,  Mr. Smick served as president of
Sunrise  Management  Inc., a wholly owned subsidiary of Sunrise Assisted Living,
Inc.  During 1995,  Mr. Smick served as a senior  housing  consultant to LaSalle
Advisory,  Ltd., a pension fund advisory  company.  From 1985 through 1994,  Mr.
Smick was chairman and chief executive  officer of PersonaCare,  Inc., a company
he co-founded that provided sub-acute,  skilled nursing and assisted living care
with 12 facilities in six states.  Mr. Smick's  health care industry  experience
also includes serving as the regional  operations director for Manor Healthcare,
Inc.,  a division of  ManorCare,  Inc.,  and as  operations  director for Allied
Health and Management,  Inc. Prior to co-founding  PersonaCare,  Inc., Mr. Smick
was a partner in Duncan & Smick, a commercial real estate  development firm. Mr.
Smick  received a B.A. in English  from  Wheaton  College  and pursued  graduate
studies at Loyola College.

     Edward A. Moses.  Independent Director. Dr. Moses has served as dean of the
Roy E. Crummer Graduate School of Business at Rollins College since 1994, and as
a professor and NationsBank  professor of finance since 1989. As dean, Dr. Moses
is presently  establishing a  comprehensive  program of executive  education for
health care management at the Roy E. Crummer  Graduate School of Business.  From
1985 to 1989 he served as dean and  professor  of finance at the  University  of
North Florida.  He has also served in academic and  administrative  positions at
the University of Tulsa,  Georgia State University and the University of Central
Florida.  Dr. Moses has written six textbooks in the fields of  investments  and
corporate finance as well as numerous articles in leading business journals.  He
has held offices in a number of professional organizations,  including president
of the Southern Finance and Eastern Finance Associations, served on the Board of
the Southern Business Administration Association, and served as a consultant for
major banks as well as a number of Fortune 500 companies. He currently serves as
a  faculty  member  in  the  Graduate  School  of  Banking  at  Louisiana  State
University,  and is a member of the board of  directors  of HTE,  Inc. Dr. Moses
received a B.S. in  Accounting  from the  Wharton  School at the  University  of
Pennsylvania in 1965 and a Masters of Business  Administration  (1967) and Ph.D.
in finance from the University of Georgia in 1971.

     Phillip M.  Anderson,  Jr.  Chief  Operating  Officer  and  Executive  Vice
President.  Mr. Anderson  joined CNL Health Care Advisors,  Inc. in January 1999
and is  responsible  for the planning and  implementation  of CNL's  interest in
health care industry investments,  including acquisitions,  development, project
analysis and due diligence.  He currently serves as the Chief Operating  Officer
of both CNL Health Care Advisors, Inc., the Company's Advisor, and of CNL Health
Care  Development,  Inc.  From 1987 through 1998,  Mr.  Anderson was employed by
Classic Residence by Hyatt. Classic Residence by Hyatt ("Classic") is affiliated
with Hyatt Hotels and Chicago's  Pritzker family.  Classic  acquires,  develops,
owns and  operates  seniors'  housing,  assisted  living,  skilled  nursing  and
Alzheimer's   facilities   throughout   the  United   States.   Mr.   Anderson's
responsibilities grew from overseeing construction of Classic's first properties
to acquiring and developing new properties.  After assuming  responsibility  for
acquisitions,  Mr. Anderson doubled the number of senior living  apartments/beds
("units")  in the  portfolio  by adding  over  1,200  units.  In  addition,  the
development of an additional 1,000 units of seniors' housing commenced under Mr.
Anderson's direction.  Mr. Anderson also served on Classic's Executive Committee
charged with the responsibility of monitoring performance of existing properties
and development projects.  Mr. Anderson has been a member of the American Senior
Housing  Association  since 1994 and currently serves on the executive board. He
graduated from the Georgia  Institute of Technology in 1982, where he received a
B.S. in Civil Engineering, with honors.

     Daniel  L.  Simmons.  Executive  Vice  President.  Mr.  Simmons  serves  as
Executive Vice  President of CNL Health Care Advisors,  Inc., the Advisor to the
Company.  From November 1997 to June 1998, Mr. Simmons served as a consultant to
CNL,  providing advice on issues regarding health care property  development and
management.  Since  1993,  Mr.  Simmons  has  served  as  a  consultant  to  The
Celebration Company, a subsidiary of The Walt Disney Company, regarding seniors'
housing  issues.  From 1984 to 1993, Mr. Simmons was a co-founder and partner in
the Johnson Simmons  Company,  where he was  responsible  for site  acquisition,
design, development,  financing and regulatory matters for three continuing care
communities. Mr. Simmons was also responsible for the development, financing and
operations associated with the restaurant and commercial properties divisions of
the  Johnson  Simmons  Company.  During  his  tenure,  Johnson  Simmons  Company
developed and managed over 1,100 units of seniors' housing and a 240-bed skilled
nursing  facility,  held in excess of $100 million in assets,  and employed more
than  1,200  people.  From  1983 to 1984,  Mr.  Simmons  served as  director  of
development for Cadem Corporation, a subsidiary of National Medical Enterprises.
At Cadem, he was responsible for site, design, development and regulatory issues
for proposed seniors' housing projects. From 1982 to 1983, Mr. Simmons served as
vice  president  of  Southern  Management  Services  Corporation,  where  he was
responsible  for the development  and operations of seniors'  housing,  assisted
living,  and  skilled  nursing  facilities.  He was  also  responsible  for  all
regulatory  issues with the State of Florida,  Department of Insurance,  and the
current  Agency for Health  Care  Administration  regarding  the  licensing  and
regulation of continuing care retirement communities, nursing homes and assisted
living  facilities.  Mr.  Simmons  attended  Florida  State  University  and the
University  of  South  Florida  and  was  a  founding  member  of  the  National
Association of Senior Living Industries.

     Curtis B. McWilliams.  Executive Vice President.  Mr.  McWilliams serves as
Executive Vice  President of CNL Health Care Advisors,  Inc., the Advisor to the
Company.  Mr.  McWilliams  joined CNL Group,  Inc.  in April 1997 and  currently
serves as an Executive Vice President.  In addition,  Mr.  McWilliams  serves as
President of CNL American  Properties  Fund,  Inc., an unlisted  REIT,  CNL Fund
Advisors,  Inc., CNL Financial Services,  Inc. and certain other subsidiaries of
CNL Group,  Inc.  From  March 1997 to  February  1999 Mr.  McWilliams  served as
Executive Vice President of CNL American  Properties  Fund,  Inc. From September
1983 through March 1997,  Mr.  McWilliams  was employed by Merrill  Lynch.  From
January  1991 to August  1996,  Mr.  McWilliams  was a managing  director in the
corporate banking group of Merrill Lynch's investment  banking division.  During
this time, he was a senior  relationship  manager with Merrill Lynch and as such
was responsible for a number of the firm's larger corporate relationships.  From
February  1990  to  February  1993,  he also  served  as  co-head  of one of the
Industrial Banking Groups within Merrill Lynch's investment banking division and
had   administrative   responsibility   for  a  group  of  bankers   and  client
relationships, including the firm's transportation group. From September 1996 to
March  1997,  Mr.  McWilliams  served as  Chairman  of Merrill  Lynch's  Private
Advisory Services. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton  University  in 1977 and a Masters of Business  Administration  with a
concentration in finance from the University of Chicago in 1983.

     Jeanne A. Wall. Executive Vice President. Ms. Wall serves as Executive Vice
President of CNL Health Care  Advisors,  Inc.,  the Advisor to the Company.  Ms.
Wall is also Executive Vice President of CNL American  Properties Fund, Inc. and
CNL Hospitality  Properties,  Inc., each of which is an unlisted REIT, and their
advisors,  CNL  Fund  Advisors,   Inc.  and  CNL  Hospitality  Advisors,   Inc.,
respectively.  Ms. Wall has served as Chief Operating  Officer of CNL Investment
Company and CNL Securities Corp. since November 1994 and has served as Executive
Vice President of CNL  Investment  Company since January 1991. In 1984, Ms. Wall
joined CNL  Securities  Corp.  In 1985,  Ms. Wall became Vice  President  of CNL
Securities  Corp.,  in 1987 she became a Senior Vice President and in July 1997,
she became  Executive Vice  President of CNL Securities  Corp. In this capacity,
Ms.  Wall serves as national  marketing  and sales  director  and  oversees  the
national marketing plan for the CNL investment programs.  In addition,  Ms. Wall
oversees product development,  partnership  administration and investor services
for programs offered through participating brokers, and investor communications.
Ms. Wall also has served as Senior Vice President of CNL Institutional Advisors,
Inc., a registered  investment advisor,  from 1990 to 1993, as Vice President of
CNL Realty  Advisors,  Inc. from its inception in 1991 through 1997, and as Vice
President of Commercial  Net Lease  Realty,  Inc., a REIT listed on the New York
Stock  Exchange,  from 1992  through  1997.  Ms.  Wall holds a B.A.  in Business
Administration  from  Linfield  College  and is a  registered  principal  of CNL
Securities  Corp.  Ms.  Wall  currently  serves as a trustee on the Board of the
Investment Program Association and on the Direct Participation Program committee
for the National Association of Securities Dealers.

     Lynn E. Rose.  Secretary  and  Treasurer.  Ms.  Rose  serves as  Secretary,
Treasurer and a director of CNL Health Care  Advisors,  Inc., the Advisor to the
Company.  Ms. Rose is also Secretary of CNL American  Properties  Fund, Inc. and
Secretary and Treasurer of CNL Hospitality Properties, Inc., each of which is an
unlisted  REIT,  and is Secretary,  Treasurer and a director of CNL  Hospitality
Advisors, Inc., the advisor of CNL Hospitality Properties, Inc. In addition, Ms.
Rose serves as Secretary and a director of CNL Fund Advisors,  Inc., the advisor
of CNL American  Properties  Fund, Inc. Ms. Rose served as Treasurer of CNL Fund
Advisors,  Inc.  from the date of its  inception  through  June 30,  1997 and as
Treasurer of CNL American  Properties  Fund, Inc. from the date of its inception
to February  1999.  Ms.  Rose,  a  certified  public  accountant,  has served as
Secretary  of CNL Group,  Inc.  since 1987,  as Chief  Financial  Officer of CNL
Group,  Inc.,  since December 1993, and served as Controller of CNL Group,  Inc.
from 1987  until  December  1993.  In  addition,  Ms.  Rose has  served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She has
served as Chief Operating Officer, Vice President and Secretary of CNL Corporate
Services,  Inc. since November 1994. Ms. Rose also has served as Chief Financial
Officer and Secretary of CNL Institutional Advisors, Inc. since its inception in
1990,  as  Secretary  and a  director  of CNL  Realty  Advisors,  Inc.  from its
inception in 1991 through 1997,  and as Treasurer of CNL Realty  Advisors,  Inc.
from 1991 to February  1996.  In  addition,  Ms. Rose  served as  Secretary  and
Treasurer of Commercial  Net Lease  Realty,  Inc., a REIT listed on the New York
Stock  Exchange,  from 1992 to February 1996. Ms. Rose also currently  serves as
Secretary for approximately 50 additional corporations.  Ms. Rose oversees legal
compliance,   accounting,   tenant  compliance,   and  reporting  for  over  250
corporations,  partnerships  and joint ventures.  Prior to joining CNL, Ms. Rose
was a partner  with  Robert A. Bourne in the  accounting  firm of Bourne & Rose,
P.A., Certified Public Accountants.  Ms. Rose holds a B.A. in Sociology from the
University  of Central  Florida and is a  registered  financial  and  operations
principal  of CNL  Securities  Corp.  She was  licensed  as a  certified  public
accountant in 1979.

Item 11.  Executive Compensation

         No annual or  long-term  compensation  was paid by the  Company  to the
Chief Executive  Officer for services  rendered in all capacities to the Company
during the period  December 22, 1997 (date of  inception)  through  December 31,
1997 or during the year ended  December  31,  1998.  In  addition,  no executive
officer of the  Company  received  an annual  salary or bonus  from the  Company
during the fiscal year ended December 31, 1998. The Company's executive officers
also are employees and  executive  officers of Advisor and receive  compensation
from CNL Group, Inc. in part for services in such capacities.  See Item 13 for a
description of the fees payable and expenses reimbursed to the Advisor.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The  following  table sets forth,  as of  February 5, 1999,  the number and
percentage of outstanding shares  beneficially owned by all persons known by the
Company  to own  beneficially  more than five  percent of the  Company's  Common
Stock,  by each  director  and nominee,  and by all officers and  directors as a
group,  based upon  information  furnished to the Company by such  stockholders,
officers and directors.

     Name and Address                   Number of Shares      Percent
     of Beneficial Owner               Beneficially Owned    of Shares

     Robert A. Bourne                          0                 --

     David W. Dunbar                           0                 --

     Edward A. Moses                           0                 --

     James M. Seneff, Jr.                  20,000 (1)           (2)

     Timothy S. Smick                          0                 --

     All directors and executive           20,000 (1)           (2)
     officers as a group (10 persons)


(1)  Represents  shares held by CNL Group,  Inc.,  of which Mr.  Seneff is Chief
     Executive  Officer,  Chairman  of the Board of  Directors,  director  and a
     principal stockholder

(2)  100 percent.

Item 13.  Certain Relationships and Related Transactions

     All of the executive  officers of the Company are executive officers of the
Advisor, a wholly owned subsidiary of CNL Group,  Inc., of which Messrs.  Seneff
and Bourne are affiliates.  In addition,  Messrs. Seneff and Bourne and Ms. Rose
and Ms. Wall are executive officers of CNL Securities Corp., the managing dealer
of the  Company's  offering  of  shares  of  common  stock,  and a wholly  owned
subsidiary  of CNL Group,  Inc.  Messrs.  Seneff and Bourne are directors of the
Company, the Advisor and CNL Securities Corp., and Ms. Rose is a director of the
Advisor.  Administration of the day-to-day operations of the Company is provided
by the  Advisor,  pursuant to the terms of the Advisory  Agreement.  The Advisor
also serves as the Company's  consultant in connection with policy  decisions to
be made by the Company's  Board of Directors,  manages the Company's  properties
and renders such other services as the Board of Directors deems appropriate. The
Advisor also bears the expense of providing the  executive  personnel and office
space to the Company.  The Advisor is at all times subject to the supervision of
the Board of Directors of the Company and has only such  functions and authority
as the Company may delegate to it as the Company's agent.

     CNL Securities Corp. is entitled to receive selling  commissions  amounting
to 7.5% of the total  amount  raised from the sale of Shares of common stock for
services in connection  with the offering of Shares,  a  substantial  portion of
which will be paid as  commissions to other  broker-dealers.  For the year ended
December 31, 1998, the Company had incurred $1,912 of such fees, the majority of
which  will  be  paid  by  CNL   Securities   Corp.  as   commissions  to  other
broker-dealers.  These  fees will not be paid until  subscriptions  for at least
250,000 Shares ($2,500,000) have been obtained from the Offering.

     In  addition,  CNL  Securities  Corp.  is  entitled  to receive a marketing
support and due diligence  expense  reimbursement fee equal to 0.5% of the total
amount  raised from the sale of Shares,  a portion of which may be  reallowed to
other  broker-dealers.  For the year ended  December 31,  1998,  the Company had
incurred  $128 of such fees,  the  majority of which will be  reallowed to other
broker-dealers and from which all bona fide due diligence expenses will be paid.
These  fees will not be paid until  subscriptions  for at least  250,000  Shares
($2,500,000) have been obtained from the Offering.

     The  Advisor  is  entitled  to receive  acquisition  fees for  services  in
identifying  the properties and  structuring  the terms of the  acquisition  and
leases of the Properties and  structuring  the terms of the Mortgage Loans equal
to 4.5% of gross  proceeds,  loan proceeds from Permanent  Financing and amounts
outstanding on the Line of Credit, if any, at the time of Listing, but excluding
that  portion  of the  Permanent  Financing  used to finance  Secured  Equipment
Leases. For the year ended December 31, 1998, the Company had incurred $1,148 of
such fees. These fees will not be paid until  subscriptions for at least 250,000
Shares ($2,500,000) have been obtained from the Offering.

     The  Advisor  and its  affiliates  provide  accounting  and  administrative
services to the Company  (including  accounting and  administrative  services in
connection  with the  offering of Shares) on a  day-to-day  basis.  For the year
ended  December  31,  1998,  the Company  incurred a total of $196,184 for these
services, including costs related to preparing and distributing reports required
by the Securities and Exchange  Commission.  Such amounts will not be paid until
subscriptions  for at least 250,000 Shares  ($2,500,000) have been obtained from
the Offering.

     The Company has and will continue to incur certain costs in connection with
the Offering,  including filing fees, legal, accounting,  marketing and printing
costs and escrow  fees,  which will be deducted  from the gross  proceeds of the
Offering.  Certain preliminary costs incurred prior to raising capital have been
and will be advanced by an affiliate  of the Company.  The Advisor has agreed to
pay  all  organizational  and  offering  expenses  (excluding   commissions  and
marketing  support and due diligence  expense  reimbursement  fees) which exceed
three percent of the gross offering proceeds received from the sale of shares of
the Company.  For the year ended  December  31,  1998,  the Company had incurred
$562,739 for such costs. Of this amount,  $79,170 represents consulting fees and
expenses  paid to Daniel L.  Simmons,  who,  prior to becoming an officer of the
Company,  served as a consultant to the Company from November 1997 to June 1998.
Mr. Simmons currently serves as an Executive Vice President of the Company.

     All amounts  incurred by the Company to affiliates  of CNL Group,  Inc. are
believed by the Company to be fair and  comparable to amounts that would be paid
for similar services provided by unaffiliated third parties.


<PAGE>


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)      The following documents are filed as part of this report.

         1.  Financial Statements

                  Report of Independent Accountants

                  Balance Sheets at December 31, 1998 and 1997

                  Statements of Stockholder's Equity for the year ended December
                  31, 1998, and the period December 22, 1997 (date of inception)
                  through December 31, 1997

                  Notes to Financial Statements

         3.  Exhibits

                  3.1      CNL Health Care Properties,  Inc. Amended and
                           Restated Articles of Incorporation  (Filed herewith.)

                  3.2      CNL Health Care Properties, Inc. Bylaws
                           (Filed herewith.)

                  4.1      Reinvestment   Plan   (Included  as  Exhibit  4.4  to
                           Registration Statement No. 333-47411 on Form S-11 and
                           incorporated herein by reference.)

                  10.1     Advisory  Agreement,  dated as of September 15, 1998,
                           between  CNL Health  Care  Properties,  Inc.  and CNL
                           Health Care Advisors, Inc. (Filed herewith.)

                  10.2     Indemnification  Agreement  between  CNL Health  Care
                           Properties,  Inc. and Phillip M. Anderson,  Jr. dated
                           February 19,  1999.  Each of the  following  director
                           and/or  officer  has signed a  substantially  similar
                           agreement as follows: James M. Seneff, Jr., Robert A.
                           Bourne, David W. Dunbar,  Timothy S. Smick, Edward A.
                           Moses,  Daniel  L.  Simmons,  Curtis  B.  McWilliams,
                           Jeanne A. Wall and Lynn E. Rose dated  September  15,
                           1998 (Filed herewith.)

                  27       Financial Data Schedule (Filed herewith.)

(b)      No  reports on Form 8-K were  filed  during the period  October 1, 1998
         through December 31, 1998.

         Supplemental information to be furnished with reports filed pursuant to
Section 15(d) of the Act by  Registrants  which have not  registered  securities
pursuant to Section 12 of the Act.

         The Company has not sent an annual  report for 1998 or proxy  materials
for its 1999  annual  meeting of  shareholders  to  security  holders and has no
present intention to do so.



<PAGE>








                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 19th day of
February, 1999.

                              CNL HEALTH CARE PROPERTIES, INC.

                              By:      ROBERT A. BOURNE
                                       President (Principal Financial
                                       and Accounting Officer)

                                       /s/ Robert A. Bourne                
                                       ------------------------
                                       ROBERT A. BOURNE


<PAGE>


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>


<S> <C>

              Signature                                    Title                                   Date


/s/ James M. Seneff, Jr.                                
---------------------------                Chairman   of  the  Board  and  Chief            February 19, 1999
James M. Seneff, Jr.                       Executive     Officer      (Principal
                                           Executive Officer)



/s/ Robert A. Bourne                       
---------------------------                Director  and  President   (Principal            February 19, 1999
Robert A. Bourne                           Financial and Accounting  Officer)



/s/ David W. Dunbar                        Independent Director                              February 19, 1999
---------------------------
David W. Dunbar



/s/ Timothy S. Smick                       Independent Director                              February 19, 1999
---------------------------
Timothy S. Smick



/s/ Edward A. Moses                        Independent Director                              February 19, 1999
---------------------------
Edward A. Moses

</TABLE>


<PAGE>














                                    EXHIBITS


<PAGE>



















                                  EXHIBIT INDEX


                  Exhibit Number

        3.1       CNL  Health  Care   Properties,   Inc.   Amended  and
                  Restated   Articles  of Incorporation (Filed herewith.)

        3.2       CNL Health Care Properties, Inc. Bylaws (Filed herewith.)

        4.1       Reinvestment  Plan  (Included  as Exhibit  4.4 to
                  Registration  Statement  No. 333-47411 on Form S-11 and
                  incorporated herein by reference.)

        10.1      Advisory  Agreement,  dated as of September  15, 1998,
                  between CNL Health Care Properties, Inc. and CNL Health Care
                  Advisors, Inc. (Filed herewith.)

        10.2      Indemnification Agreement between CNL Health Care Properties,
                  Inc. and Phillip M.  Anderson,  Jr.  dated  February 19,
                  1999.  Each of the  following  director and/or officer has
                  signed a substantially  similar agreement as follows:  James
                  M. Seneff, Jr., Robert A. Bourne, David W. Dunbar,  Timothy
                  S. Smick, Edward A. Moses,  Daniel L.  Simmons,  Curtis B.
                  McWilliams,  Jeanne A. Wall and Lynn E. Rose dated September
                  15, 1998 (Filed herewith.)

        27        Financial Data Schedule (Filed herewith.)