<PAGE>

                                  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, 1999

                                       OR

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

                        For the transition period from to


                         Commission file number 0-24095

                           CNL INCOME FUND XVIII, LTD.
             (Exact name of registrant as specified in its charter)

          Florida                                    59-3295394
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
 incorporation or organization)

                             450 South Orange Avenue
                           Orlando, Florida 32801-3336
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (407) 540-2000

           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:

              Units of limited partnership interest ($10 per Unit)
                                (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 voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market for such Units. Each Unit was originally sold at $10 per Unit.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None
<PAGE>

                                     PART I


Item 1. Business

     CNL Income Fund XVIII, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on February 10, 1995. The general partners of the Partnership are Robert
A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on September 20, 1996, the
Partnership offered for sale up to $35,000,000 of limited partnership interests
(the "Units") (3,500,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
August 11, 1995. The offering terminated on February 6, 1998, at which date the
maximum offering proceeds of $35,000,000 had been received from investors who
were admitted to the Partnership as limited partners (the "Limited Partners").

     The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food, family-style and casual dining
restaurant chains (the "Restaurant Chains"). As of December 31, 1998, net
proceeds to the Partnership from its offering of Units, after deduction of
organizational and offering expenses, totalled $30,800,000. During 1998, the
Partnership had invested approximately $29,859,000 of the proceeds to acquire 24
Properties (which included one Property owned by a joint venture in which the
Partnership is a co-venturer) and to pay acquisition fees and certain
acquisition expenses. In February 1999, the Partnership invested in a joint
venture arrangement, Portsmouth Joint Venture, with an affiliate of the General
Partners to hold and purchase one Property and used the remaining amounts to
establish a working capital reserve for Partnership purposes. In December 1999,
the Partnership sold one Property in Atlanta, Georgia. As a result of the above
transactions, as of December 31, 1999, the Partnership owned 24 Properties,
including 22 wholly owned Properties and interests in two Properties owned by
joint ventures in which the Partnership is a co-venturer. The Properties are
generally leased on a triple-net basis with the lessees responsible for all
repairs and maintenance, property taxes, insurance and utilities.

     The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. The Partnership has no obligation to sell all or any portion of a
Property at any particular time, except as may be required under property
purchase options granted to certain lessees.

     On March 11, 1999, the Partnership entered into an Agreement and Plan of
Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Termination
of Merger"). APF is a real estate investment trust whose primary business is the
ownership of restaurant properties leased on a long-term, "triple-net" basis to
operators of national and regional restaurant chains. Subsequent to entering
into the Merger agreement, the General Partners received a number of comments
from brokers who sold the Partnership's units concerning the loss of passive
income treatment in the event the Partnership merged with APF. On June 3, 1999,
the General Partners, on behalf of the Partnership, and APF agreed that it would
be in the best interest of the Partnership and APF that APF not attempt to
acquire the Partnership in the acquisition. Therefore in June 1999, APF entered
into a termination agreement with the General Partners of the Partnership.

Description of Leases

     The leases of the Properties provide for initial terms ranging from 15 to
20 years (the average being 18 years) and expire between 2012 and 2019. All
leases are generally on a triple-net basis, with the lessees responsible for all
repairs and maintenance, property taxes, insurance and utilities. The leases
provide for minimum base annual rental payments (payable in equal monthly
installments) ranging from approximately $63,200 to $243,600. The majority of
the leases provide for percentage rent based on sales in excess of a specified
amount. In addition, the majority of the leases provide that, commencing in
specified lease years (generally the sixth lease year), the annual base rent
required under the terms of the lease will increase.



                                       1
<PAGE>

     Generally, the leases provide for two to five five-year renewal options
subject to the same terms and conditions as the initial lease. Lessees of 21 of
the Partnership's 24 Properties also have been granted options to purchase the
Properties after a specified portion of the lease term has elapsed. The option
purchase price is equal to the Partnership's original cost of the Property
(including acquisition costs), plus a specified percentage or the Property's
fair market value at the time the purchase option is exercised, whichever is
greater. Fair market value will be determined through an appraisal by an
independent appraisal firm.

     The leases also generally provide that, in the event the Partnership wishes
to sell the Properties, the Partnership first must offer the lessees the right
to purchase the Properties on the same terms and conditions, and for the same
price, as any offer which the Partnership has received for the sale of the
Properties.

     In October 1998, the tenants of three Boston Market properties, Boston
Chicken, Inc., Finest Foodservice, L.L.C., and WMJ Texas, Inc., filed for
bankruptcy, rejected one of their three leases and ceased making rental payments
to the Partnership on the rejected lease. The Partnership will not recognize any
rental and earned income from this Property until a new tenant for the Property
is located, or until the Property is sold and the proceeds from such a sale are
reinvested in an additional Property. As of March 15, 2000, the Partnership was
continuing to receive rental payments relating to the two non-rejected leases.
While the tenants have not rejected or affirmed the remaining two leases, there
can be no assurance that some or all of the leases will not be rejected in the
future. The lost revenues resulting from the one lease that was rejected, as
described above, and the possible rejection of the remaining two leases could
have an adverse affect on the results of operations of the Partnership if the
Partnership is unable to re-lease these Properties in a timely manner. The
General Partners are currently seeking either new tenants or purchasers for the
rejected Property.

     In February 1999, the Partnership entered into a joint venture arrangement,
Portsmouth Joint Venture, with an affiliate of the General Partners, to purchase
and hold one restaurant Property. The lease terms for this Property are
substantially the same as the Partnership's other leases as described above, in
the first three paragraphs of this section.

Major Tenants

     During 1999, two lessees of the Partnership, Golden Corral Corporation and
Jack in the Box, Inc., each contributed more than ten percent of the
Partnership's total rental income. As of December 31, 1999, Golden Corral
Corporation and Jack in the Box, Inc. were each the lessee under leases relating
to four restaurants. It is anticipated that based on the minimum rental payments
required by the leases, that each of these lessees will continue to contribute
more than ten percent of the Partnership's total rental income in 2000. In
addition, three Restaurant Chains, Boston Market, Golden Corral Family
Steakhouse Restaurants ("Golden Corral"), and Jack in the Box, each accounted
for more than ten percent of the Partnership's total rental income for 1999.
During 1998, three tenants of The Boston Market properties filed for bankruptcy,
as described above. In 2000, it is anticipated that these three Restaurant
Chains each will contribute more than ten percent of the Partnership's rental
income to which the Partnership is entitled under the terms of the leases. Any
failure of such lessees or Restaurant Chains could materially adversely affect
the Partnership's income if the Partnership is unable to re-lease the Properties
in a timely manner, as described above. No single tenant or group of affiliated
tenants lease Properties with an aggregate carrying value in excess of 20
percent of the total assets of the Partnership.

Joint Venture Arrangements

     In August 1998, the Partnership entered into a joint venture arrangement,
Columbus Joint Venture, with CNL Income Fund XII, Ltd. and CNL Income Fund XVI,
Ltd., affiliates of the General Partners, to construct and hold one Property.
Each of the affiliates is a limited partnership organized pursuant to the laws
of the State of Florida. The joint venture arrangement provides for the
Partnership and its joint venture partners to share in all costs and benefits
associated in the joint venture in proportion to each partner's percentage
interest in the joint venture. The Partnership has a 39.93% interest in Columbus
Joint Venture. The Partnership and its joint venture partners are also jointly
and severally liable for all debts, obligations and other liabilities of the
joint venture.

     In addition, in February 1999, the Partnership entered into a joint venture
arrangement, Portsmouth Joint Venture, with CNL Income Fund XI, Ltd., an
affiliate of the General Partners, to purchase and hold one restaurant Property.
The joint venture agreement provides for the Partnership and its joint venture
partner to share in all costs



                                       2
<PAGE>

and benefits associated with the joint venture in proportion to each partner's
percentage interest in the joint venture. The Partnership owns 57.2% interest in
the profits and losses of the joint venture. The affiliate is a limited
partnership organized pursuant to the laws of the State of Florida.

     Each joint venture has an initial term of 20 years and, after the
expiration of the initial term, continues in existence from year to year unless
terminated at the option of any of the joint venturers or by an event of
dissolution. Events of dissolution include the bankruptcy, insolvency or
termination of any joint venturer, sale of the Property owned by the joint
venture and mutual agreement of the Partnership and its joint venture partners
to dissolve the joint venture.

     The Partnership shares management control equally with affiliates of the
General Partners for each of the joint ventures. The joint venture agreements
restrict each venturer's ability to sell, transfer or assign its joint venture
interest without first offering it for sale to its joint venture partners,
either upon such terms and conditions as to which the venturers may agree or, in
the event the venturers cannot agree, on the same terms and conditions as any
offer from a third party to purchase such joint venture interest.

     Net cash flow from operations of Columbus Joint Venture and Portsmouth
Joint Venture are distributed 39.93% and 57.2%, respectively, to the Partnership
and the balance is distributed to the respective joint venture partners in
accordance with its respective percentage interest in the joint venture. Any
liquidation proceeds, after paying joint venture debts and liabilities and
funding reserves for contingent liabilities, will be distributed first to the
joint venture partners with positive capital account balances in proportion to
such balances until such balances equal zero, and thereafter in proportion to
each joint venture partner's percentage interest in the joint venture.

     The use of joint venture arrangements allows the Partnership to fully
invest its available funds at times at which it would not have sufficient funds
to purchase an additional property, or at times when a suitable opportunity to
purchase an additional property is not available. The use of joint venture
arrangements also provides the Partnership with increased diversification of its
portfolio among a greater number of properties.

Management Services

     CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to the management of the Partnership and its
Properties pursuant to a management agreement with the Partnership. Under this
agreement, CNL Fund Advisors, Inc. is responsible for collecting rental
payments, inspecting the Properties and the tenants' books and records,
assisting the Partnership in responding to tenant inquiries and notices and
providing information to the Partnership about the status of the leases and the
Properties. CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership, plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.

     The management agreement continues until the Partnership no longer owns an
interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.

Employees

     The Partnership has no employees. The officers of CNL Realty Corporation
and the officers and employees of APF, the parent company of CNL Fund Advisors,
Inc., perform certain services for the Partnership. In addition, the General
Partners have available to them the resources and expertise of the officers and
employees of CNL Financial Group, Inc., (formerly CNL Group, Inc.), a
diversified real estate company, and its affiliates, who may also perform
certain services for the Partnership.



                                       3
<PAGE>

Item 2. Properties

     As of December 31, 1999, the Partnership owned 24 Properties. Of the 24
Properties, 22 are owned by the Partnership in fee simple and two are owned
through joint venture arrangements. See Item 1. Business - Joint Venture
Arrangements. The Partnership is not permitted to encumber its Properties under
the terms of its partnership agreement. Reference is made to the Schedule of
Real Estate and Accumulated Depreciation for a listing of the Properties and
their respective costs, including acquisition fees and certain acquisition
expenses.

Description of Properties

     Land. As of December 31, 1999, the Partnership's Property sites ranged from
approximately 24,400 to 120,400 square feet depending upon building size and
local demographic factors. Sites purchased by the Partnership are in locations
zoned for commercial use which have been reviewed for traffic patterns and
volume.

     The following table lists the Properties owned by the Partnership as of
December 31, 1999 by state. More detailed information regarding the location of
the Properties is contained in the Schedule of Real Estate and Accumulated
Depreciation for the year ended December 31, 1999.

<TABLE>
<CAPTION>

        State                                Number of Properties
        -----                                --------------------
<S>                                                    <C>
        Arizona                                        1
        California                                     2
        Florida                                        2
        Illinois                                       1
        Kentucky                                       1
        Maryland                                       1
        Minnesota                                      1
        North Carolina                                 3
        Nevada                                         1
        New York                                       1
        Ohio                                           2
        Tennessee                                      1
        Texas                                          6
        Virginia                                       1
                                             -------------------
        TOTAL PROPERTIES                               24
                                             ===================
</TABLE>


     Buildings. The Properties owned by the Partnership as of December 31, 1999,
include a building that is one of a Restaurant Chain's approved designs. The
buildings generally are rectangular and constructed from various combinations of
stucco, steel, wood, brick and tile. Building sizes range from approximately
2,000 to 9,700 square feet. All buildings on Properties acquired by the
Partnership are freestanding and surrounded by paved parking areas. Buildings
are suitable for conversion to various uses, although modifications may be
required prior to use for other than restaurant operations. As of December 31,
1999, the Partnership had no plans for renovation of the Properties.
Depreciation expense is computed for buildings and improvements using the
straight line method using a depreciable life of 40 years for federal income tax
purposes. As of December 31, 1999, the aggregate cost of the Properties owned by
the Partnership and joint ventures for federal income tax purposes was
$15,710,412 and $821,849, respectively.



                                       4
<PAGE>

     The following table lists the Properties owned by the Partnership as of
December 31, 1999 by Restaurant Chain.

<TABLE>
<CAPTION>

        Restaurant Chain                     Number of Properties
<S>                                                    <C>
        Arby's                                         2
        Bennigan's                                     1
        Boston Market                                  4
        Burger King                                    1
        Chevy's Fresh Mex                              1
        Golden Corral                                  5
        Ground Round                                   1
        IHOP                                           2
        Jack in the Box                                4
        On the Border                                  1
        Taco Bell                                      1
        Wendy's                                        1
                                             --------------------
        TOTAL PROPERTIES                               24
                                             ====================
</TABLE>


     The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.

     The General Partners believe that the Properties are adequately covered by
insurance. In addition, the General Partners have obtained contingent liability
and property coverage for the Partnership. This insurance is intended to reduce
the Partnership's exposure in the unlikely event a tenant's insurance policy
lapses or is insufficient to cover a claim relating to the Property.

     Leases. The Partnership leases the Properties to operators of selected
national and regional fast-food, family-style and casual dining restaurant
chains. The leases are generally on a long-term "triple net" basis, meaning that
the tenant is responsible for repairs, maintenance, property taxes, utilities
and insurance. Generally, a lessee is required, under the terms of its lease
agreement, to make such capital expenditures as may be reasonably necessary to
refurbish buildings, premises, signs and equipment so as to comply with the
lessee's obligations, if applicable, under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease. The terms of
the leases of the Properties owned by the Partnership are described in Item 1.
Business - Leases.

     At December 31, 1999 and 1998, 96% of the Properties were occupied. At
December 31, 1997 and 1996, all of the Properties were occupied. The following
is a schedule of the average rent per Property for each of the years ended
December 31:

<TABLE>
<CAPTION>

                                              1999                 1998                 1997                 1996 (2)
                                       ----------------     ---------------     -----------------      -----------------
<S>                                        <C>                 <C>                   <C>                      <C>
    Rental Revenues (1)                    $ 3,141,240         $ 2,953,285           $ 1,290,621              $   1,374
    Properties (3)                                  23                  24                    22                      2
    Average Rent per
        Property                           $   136,576         $   123,054           $    58,665              $     687
</TABLE>

(1)  Rental income includes the Partnership's share of rental income from the
     Properties owned through joint venture arrangements. Rental revenues have
     been adjusted, as applicable, for any amounts for which the Partnership has
     established an allowance for doubtful accounts.

(2)  Operations did not commence until October 12, 1996, the date following the
     date on which the Partnership received the minimum offering proceeds of
     $1,500,000, and such proceeds were released from escrow. The Partnership
     acquired two Properties in December 1996, of which only one was operational
     as of December 31, 1996.



                                       5
<PAGE>

(3)  Excludes Properties that were vacant at December 31, and did not generate
     rental revenues during the year ended December 31.

     The following is a schedule of lease expirations for leases in place as of
December 31, 1999 for the next ten years and thereafter.

<TABLE>
<CAPTION>
                                                                                          Percentage of
          Expiration                Number                 Annual Rental                   Gross Annual
             Year                 of Leases                  Revenues                     Rental Income
     -------------------     ------------------     -------------------------    ------------------------------
     <S>                                    <C>                  <C>                             <C>
     2000                                   --                   $        --                          --
     2001                                   --                            --                          --
     2002                                   --                            --                          --
     2003                                   --                            --                          --
     2004                                   --                            --                          --
     2005                                   --                            --                          --
     2006                                   --                            --                          --
     2007                                   --                            --                          --
     2008                                   --                            --                          --
     2009                                   --                            --                          --
     Thereafter                             23                     3,785,206                     100.00%
                                   ------------              ----------------            ----------------
     Total (1)                              23                   $ 3,785,206                     100.00%
                                   ============              ================            ================
</TABLE>

(1)  Excludes one Property which was vacant at December 31, 1999.

     Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants, as of December 31, 1999 (See Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Description of Leases.

     Golden Corral Corporation leases four Golden Corral restaurants. The
initial term of each lease is 15 years (expiring in 2012 to 2013) and the
average minimum base annual rent is approximately $164,400 (ranging from
approximately $156,700 to $178,200).

     Jack in the Box, Inc. leases four Jack in the Box restaurants. The initial
term of each lease is 18 years (expiring in 2015) and the average minimum base
annual rent is approximately $112,100 (ranging from approximately $77,900 to
$132,200).

Competition

     The fast-food family-style and casual dining restaurant business is
characterized by intense competition. The restaurants on the Partnership's
Properties compete with independently owned restaurants, restaurants which are
part of local or regional chains, and restaurants in other well-known national
chains, including those offering different types of food and service.


Item 3. Legal Proceedings

     On May 11, 1999, four limited partners in several CNL Income Funds served a
derivative and purported class action lawsuit filed April 22, 1999 against the
General Partners and APF in the Circuit Court of the Ninth Judicial Circuit of
Orange County, Florida, alleging that the General Partners breached their
fiduciary duties and violated provisions of certain of the CNL Income Fund
partnership agreements in connection with the proposed Merger. The plaintiffs
are seeking unspecified damages and equitable relief. On July 8, 1999, the
plaintiffs filed an amended complaint which, in addition to naming three
additional plaintiffs, includes allegations of aiding and abetting and
conspiring to breach fiduciary duties, negligence and breach of duty of good
faith against certain of the defendants and seeks additional equitable relief.
As amended, the caption of the case is Jon Hale, Mary J. Hewitt, Charles A.
                                       ------------------------------------
Hewitt, Gretchen M. Hewitt, Bernard J. Schulte, Edward M. and Margaret Berol
----------------------------------------------------------------------------
Trust, and Vicky Berol v. James M. Seneff, Jr., Robert A. Bourne, CNL Realty
----------------------------------------------------------------------------
Corporation, and CNL American Properties Fund, Inc., Case No. CIO-99-0003561.
----------------------------------------------------

                                       6
<PAGE>

     On June 22, 1999, a limited partner of several CNL Income Funds served a
purported class action lawsuit filed April 29, 1999 against the General Partners
and APF, Ira Gaines, individually and on behalf of a class of persons similarly
         -----------------------------------------------------------------------
situated, v. CNL American Properties Fund, Inc., James M. Seneff, Jr., Robert A.
--------------------------------------------------------------------------------
Bourne, CNL Realty Corporation, CNL Fund Advisors, Inc., CNL Financial
----------------------------------------------------------------------
Corporation a/k/a CNL Financial Corp., CNL Financial Services, Inc. and CNL
---------------------------------------------------------------------------
Group, Inc., Case NO. CIO-99-3796, in the Circuit Court of the Ninth Judicial
------------
Circuit of Orange County, Florida, alleging that the General Partners breached
their fiduciary duties and that APF aided and abetted their breach of fiduciary
duties in connection with the proposed Merger. The plaintiff is seeking
unspecified damages and equitable relief.

     On September 23, 1999, Judge Lawrence Kirkwood entered an order
consolidating the two cases under the caption In re: CNL Income Funds
                                              -----------------------
Litigation, Case No. 99-3561. Pursuant to this order, the plaintiffs in these
-----------------------------
cases filed a consolidated and amended complaint on November 8, 1999. On
December 22, 1999, the General Partners and CNL Group, inc. filed motions to
dismiss and motions to strike. On December 28, 1999, APF and CNL Fund Advisors,
Inc. filed motions to dismiss. On March 6, 2000, all of the defendants filed a
Joint Notice of Filing Form 8-K Reports and Suggestion of Mootness.


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

     Not applicable.



                                     PART II


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

(a) As of March 15, 2000, there were 1,559 holders of record of the Units. There
is no public trading market for the Units, and it is not anticipated that a
public market for the Units will develop. During 1999, Limited Partners who
wished to sell their Units may have offered the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the "Plan"), and Limited Partners
who wished to have their distributions used to acquire additional Units (to the
extent Units were available for purchase), may have done so pursuant to such
Plan. The General Partners had the right to prohibit transfers of Units. The
price paid for any Unit transferred pursuant to the Plan through December 31,
1999 range from $8.57 to $9.50 per Unit. The price paid for any Unit transferred
other than pursuant to the Plan was subject to negotiation by the purchaser and
the selling Limited Partner. The Partnership will not redeem or repurchase
Units.

     The following table reflects, for each calendar quarter, the high, low and
average sales prices for transfers of Units during 1999 and 1998 other than
pursuant to the Plan, net of commissions

<TABLE>
<CAPTION>

                                            1999(1)                                             1998 (1)
                         ---------------------------------------------     --------------------------------------------------
                              High           Low             Average             High              Low             Average
                         -----------    -----------     --------------     --------------     -----------     ---------------
<S>                          <C>            <C>                <C>                <C>             <C>                 <C>
     First Quarter               (2)            (2)                (2)                (2)             (2)                 (2)
     Second Quarter              (2)            (2)                (2)             $7.66           $7.66               $7.66
     Third Quarter           $10.00         $10.00             $10.00                 (2)             (2)                 (2)
     Fourth Quarter            9.01           9.01               9.01               9.50            8.25                8.87
</TABLE>

(1)  A total of 6,400 and 5,232 Units were transferred other than pursuant to
     the Plan for the years ended December 31, 1999 and 1998, respectively.

(2)  No transfer of Units took place during the quarter other than pursuant to
     the Plan.

     The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.



                                       7
<PAGE>

     For the years ended December 31, 1999 and 1998, the Partnership declared
cash distributions of $2,799,998 and $2,657,764, respectively, to the Limited
Partners. No amounts distributed to partners for the years ended December 31,
1999 and 1998, are required to be or have been treated by the Partnership as a
return of capital for purposes of calculating the Limited Partners' return on
their adjusted capital contributions. No distributions have been made to the
General Partners to date. As indicated in the chart below, these distributions
were declared following the close of each of the Partnership's calendar
quarters. These amounts include monthly distributions made in arrears for the
Limited Partners electing to receive such distributions on this basis.

<TABLE>
<CAPTION>

        Quarter Ended                            1999                               1998
    ----------------------             --------------------------         --------------------------
<S>                                               <C>                                <C>
    March 31                                      $      699,999                     $      601,514
    June 30                                              699,999                            656,250
    September 30                                         700,000                            700,000
    December 31                                          700,000                            700,000
</TABLE>

     The Partnership intends to continue to make distributions of cash available
for distribution to the Limited Partners on a quarterly basis, although some
Limited Partners, in accordance with their election, receive monthly
distributions for an annual fee.

(b)  Not applicable.


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.

<TABLE>
<CAPTION>

                                                                                                               February 10,
                                                                                                                1995 (date
                                                                                                               of inception)
                                    Year Ended          Year Ended         Year Ended         Year Ended          through
                                   December 31,        December 31,       December 31,       December 31,       December 31,
                                       1999                1998               1997               1996             1995 (1)
                                 ----------------  ------------------ ------------------ ------------------  ------------------
<S>                                  <C>                 <C>                <C>                 <C>                    <C>
    Revenues (2)                     $ 3,192,371         $ 3,097,757        $ 1,453,242         $   31,614             $    --
    Net income (4)(5)                  2,515,356           2,302,322          1,154,760             26,910                  --
    Cash distributions
          declared per Unit (2)              .80                 .76                .57                .11                  --
    Net income per Unit                      .72                 .66                .51                .05                  --
    Cash distributions
          declared per Unit (2)              .80                 .76                .57                .11                  --
    Weighted average number
          of Limited Partner
          Units outstanding (3)        3,500,000           3,495,278          2,279,801            503,436                  --

<CAPTION>
                                       1999                1998               1997               1996                1995
                                 ----------------  ------------------ ------------------ ------------------  ------------------
<S>                                  <C>                 <C>                <C>                 <C>                    <C>
    At December 31:
        Total assets                 $30,866,006         $31,112,617        $31,807,255        $ 7,240,324          $  256,890
        Total partners' capital       29,983,855          30,268,497         29,846,580          6,996,213               1,000
</TABLE>

(1)  Operations did not commence until October 12, 1996, the date following when
     the Partnership received the minimum offering proceeds of $1,500,000, and
     such proceeds were released from escrow.

(2)  Approximately 7%, 13%, and 12% of cash distributions ($0.05, $0.06, and
     $0.06 per Unit, respectively) for the years ended December 31, 1999, 1998,
     and 1997, respectively, represents a return of capital in accordance with
     generally accepted accounting principles ("GAAP"). Cash distributions
     treated as a return of capital on a GAAP basis represent the amount of cash
     distributions in excess of accumulated net income on a GAAP basis. The
     Partnership has not treated such amounts as a return of capital for
     purposes of calculating the Limited Partners' return on their invested
     capital contributions.



                                       8
<PAGE>

(3)  Represents the weighted average number of Units outstanding during the
     period the Partnership was operational.

(4)  Net income for the year ended December 31, 1998, includes $197,466 from
     provision for loss on land.

(5)  Net income for the year ended December 31, 1999, include $46,300 from gains
     on sale of land and building.


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

     The Partnership was organized on February 10, 1995, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurant Properties, as well as land upon which restaurants were
to be constructed, which are leased primarily to operators of selected national
and regional fast-food, family-style and casual dining Restaurant Chains. The
leases are generally triple-net leases, with the lessees generally responsible
for all repairs and maintenance, property taxes, insurance and utilities. As of
December 31, 1999, the Partnership owned 24 Properties, either directly or
through a joint venture arrangement.

Capital Resources

     On September 20, 1996, the Partnership commenced an offering to the public
of up to 3,500,000 Units of limited partnership interest pursuant to a
registration statement on Form S-11 under the Securities Act of 1933, as
amended, effective August 11, 1995. The Partnership's offering of Units
terminated on February 6, 1998, at which time the maximum proceeds of
$35,000,000 (3,500,000 Units) had been received from investors. The Partnership,
therefore, will derive no additional capital resources from the offering.

     As of December 31, 1998, net proceeds to the Partnership from its offering
of Units, after deduction of organizational and offering expenses, totalled
$30,800,000. During 1997, the Partnership acquired 20 additional Properties (one
of which was under construction as of December 31, 1997) and completed
construction of a Property under construction in 1996. During 1998, the
Partnership completed construction of the Property under construction as of
December 31, 1997, acquired one additional Property and entered into one joint
venture arrangement, Columbus Joint Venture. In addition, during 1999, the
Partnership used the remaining net proceeds to enter into one joint venture
arrangement, Portsmouth Joint Venture, and to establish a working capital
reserve for Partnership purposes. Also during 1999, the Partnership sold one
Property in Atlanta, Georgia, as described below. As a result of the above
transactions, as of December 31, 1999, the Partnership had invested the net
proceeds in 24 Properties, including two Properties owned by joint ventures in
which the Partnership is a co-venturer, and to pay acquisition fees and
miscellaneous acquisition expenses. As of December 31, 1999, the Partnership had
paid $1,575,000 in acquisition fees to an affiliate of the General Partners.

     In August 1998, the Partnership formed Columbus Joint Venture with CNL
Income Fund XII, Ltd. and CNL Income Fund XVI, Ltd., affiliates of the General
Partners. During the year ended December 31, 1999, the Partnership made
additional contributions of approximately $195,700 to Columbus Joint Venture to
pay property construction costs. As of December 31, 1999, the Partnership owned
a 39.93% interest in this joint venture.

     In February 1999, the Partnership entered into a joint venture arrangement,
CNL Portsmouth Joint Venture, with CNL Income Fund XI, Ltd., an affiliate of the
general partners, to own and lease one restaurant property. As of December 31,
1999, the Partnership had contributed approximately $330,500 to the joint
venture and owned a 57.2% interest in this joint venture.

     In December 1999, the Partnership sold its Property in Atlanta, Georgia,
and received net sales proceeds of $688,997, resulting in a gain of $46,300 for
financial reporting purposes. This Property was originally acquired by the
Partnership in 1997, and had a cost of approximately $617,600, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the Property for approximately $71,400 in excess of its
original purchase price. As of December 31, 1999, the net sales proceeds of
$688,997, plus accrued interest of $1,888, were being held in an
interest-bearing escrow account pending the release of funds by the escrow agent
to acquire an additional Property. The Partnership anticipates that it will
distribute amounts sufficient to enable the Limited Partners to pay federal and
state income taxes, if any (at a level reasonably assumed by the General
Partners), resulting from the sale.



                                       9
<PAGE>

     Currently, the Partnership's primary source of capital is cash from
operations (which includes cash received from tenants, interest received and
distributions from joint ventures, less cash paid for expenses). Cash from
operations was $2,797,040, $2,831,738 and $1,361,756, for the years ended
December 31, 1999, 1998, and 1997, respectively. The decrease in cash from
operations for 1999, as compared to 1998, was primarily a result of changes in
the Partnership's working capital, and the increase in cash from operations for
1998, as compared to 1997, was primarily a result of changes in income and
expenses as described in "Results of Operations" below and changes in the
Partnership's working capital.

     None of the Properties owned or to be acquired by the Partnership, or the
joint venture in which the Partnership owns an interest, is or may be
encumbered. Subject to certain restrictions on borrowing, however, the
Partnership may borrow funds but will not encumber any of the Properties in
connection with any such borrowing. The Partnership will not borrow for the
purpose of returning capital to the Limited Partners or under arrangements that
would make the Limited Partners liable to creditors of the Partnership. The
General Partners further have represented that they will use their reasonable
efforts to structure any borrowing so that it will not constitute "acquisition
indebtedness" for federal income tax purposes and also will limit the
Partnership's outstanding indebtedness to three percent of the aggregate
adjusted tax basis of its Properties. Affiliates of the General Partners from
time to time incur certain expenses on behalf of the Partnership for which the
Partnership reimburses the affiliates without interest.

     Currently, rental income from the Partnership's Properties is invested in
money market accounts or other short-term, highly liquid investments pending the
Partnership's use of such funds to pay Partnership expenses or to make
distributions to the partners. At December 31, 1999, the Partnership had
$1,282,113 invested in such short-term investments, as compared to $1,839,613 at
December 31, 1998. The decrease in the amount invested in short-term investments
was primarily a result of the payment during 1999, of costs relating to the
Property that was under construction at December 31, 1998, owned by Columbus
Joint Venture, which the Partnership is a co-venturer, and the fact that during
1999, the Partnership acquired an interest in joint venture, Portsmouth Joint
Venture. As of December 31, 1999, the average interest rate earned on the rental
income deposited in demand deposit accounts at commercial banks was
approximately 3.04 percent annually. The funds remaining at December 31, 1999
will be used to pay distributions and other liabilities and to meet the
Partnership's working capital and other needs.

Short-Term Liquidity

     The Partnership's short-term liquidity requirements consist primarily of
the operating expenses of the Partnership.

     The Partnership's investment strategy of acquiring Properties for cash and
leasing them generally under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The General Partners believe that the leases will generate cash flow in excess
of operating expenses.

     Due to low operating expenses and ongoing cash flow, the General Partners
believe that the Partnership has sufficient working capital reserves at this
time. In addition, because all of the leases for the Partnership's Properties
are generally on a triple-net basis, it is not anticipated that a permanent
reserve for maintenance and repairs is necessary at this time. To the extent,
however, that the Partnership has insufficient funds for such purposes, the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs. The General
Partners have the right to cause the Partnership to maintain reserves if, in
their discretion, they determine such reserves are required to meet the
Partnership's working capital needs.

     The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.

     The Partnership generally distributes cash from operations remaining after
the payment of the operating expenses of the Partnership, to the extent that the
General Partners determine that such funds are available for distribution. Based
on cash from operations, the Partnership declared distributions to the Limited
Partners of $2,799,998, $2,657,764 and $1,310,885, for the years ended December
31, 1999, 1998, and 1997, respectively. This represents distributions of $0.80,
$0.76 and $0.57 per Unit, for the years ended December 31, 1999, 1998 and 1997,
respectively, based on the weighted average number of Units outstanding during
the period the Partnership was operational. No amounts distributed or to be
distributed to the Limited Partners for the years ended December 31,



                                       10
<PAGE>

1999, 1998 or 1997, are required to be or have been treated by the Partnership
as a return of capital for purposes of calculating the Limited Partners' return
on their adjusted capital contributions. The Partnership intends to continue to
make distributions of cash available for distribution to the Limited Partners on
a quarterly basis, although some Limited Partners, in accordance with their
election, receive monthly distributions, for an annual fee.

     During the year ended December 31, 1997, affiliates of the General Partners
incurred on behalf of the Partnership $211,216 for certain organizational and
offering expenses. In addition, during 1998 and 1997, affiliates incurred
$35,842 and $134,138, respectively, for certain acquisition expenses. In
addition, $88,400, $89,969 and $44,166 were incurred by affiliates on behalf of
the Partnership for certain operating expenses during 1999, 1998 and 1997,
respectively. As of December 31, 1999 and 1998, the Partnership owed $36,737 and
$32,775, respectively, to related parties for such amounts, fees and other
reimbursements. As of March 15, 2000, the Partnership had reimbursed the
affiliates all such amounts. Other liabilities, including distributions payable,
increased to $845,414 at December 31, 1999, as compared to $811,345 at December
31, 1998. The increase during 1999, as compared to 1998, is primarily a result
of the Partnership accruing transaction costs relating to the proposed merger
with APF, as described in "Termination of Merger." The increase was partially
offset by a decrease due to a decrease in deferred rental income during 1999, as
compared to 1998.

Long-Term Liquidity

     The Partnership has no long-term debt or other long-term liquidity
requirements.

Results of Operations

     The Partnership owned and leased 22 wholly owned Properties in 1997. During
1998, the Partnership acquired one additional wholly owned Property and entered
into a joint venture arrangement to construct and hold one restaurant Property,
in which the Partnership is a co-venturer. During 1999, the Partnership entered
into an additional joint venture arrangement to hold one restaurant Property, in
which the Partnership is a co-venturer. As of December 31, 1999, the Partnership
owned, either directly or through a joint venture arrangement, 25 Properties
(including one Property in Atlanta, Georgia, which was sold in December 1999),
which are generally subject to long-term triple-net leases. The leases of the
Properties provide for minimum base annual rental payments (payable in monthly
installments) ranging from approximately $63,200 to $243,600. The majority of
the leases provide for percentage rent based on sales in excess of a specified
amount. In addition, the majority of the leases provide that, commencing in
specified lease years (generally the sixth lease year), the annual base rent
required under the terms of the lease will increase. For a further description
of the Partnership's leases and Properties, see Item 1. Business - Leases and
Item 2. Properties.

     During the years ended December 31, 1999, 1998, and 1997, the Partnership
earned $3,071,229, $2,953,285 and $1,290,621, respectively, in rental income
from operating leases and earned income from direct financing leases. The
increase in rental and earned income during 1999, as compared to 1998, and the
increase during 1998, as compared to 1997, was partially attributable to the
fact that the Partnership acquired Properties throughout 1997 and 1998. The
increase during 1999 was partially offset by a decrease in rental income due to
the sale of the Property in Atlanta, Georgia, in December 1999. The increase in
rental and earned income during 1999, as compared to 1998, was also partially
attributable to the fact that during 1999, the Partnership collected and
recognized as income approximately $47,400 for a portion of past due rental
amounts for which the Partnership had previously established an allowance for
doubtful accounts relating to the Property in Stow, Ohio.

     The increase in rental and earned income during 1999, as compared to 1998,
was partially offset by the fact that the tenants of three Boston Market
Properties, Boston Chicken, Inc., Finest Foodservice, L.L.C. and WMJ Texas,
Inc., filed for bankruptcy in 1998. One of these tenants rejected the lease
relating to one of the Partnership's Properties and ceased making rental
payments to the Partnership for this lease. The Partnership will not recognize
any rental and earned income from this Property until a new tenant for the
Property is located, or until the Property is sold and the proceeds from such
sale are reinvested in an additional Property. The General Partners are
currently seeking either a new tenant or purchaser for the rejected Property. As
of March 15, 2000, the Partnership was continuing to receive rental payments on
the non-rejected leases. While the tenants have not rejected or affirmed the
remaining two leases, there can be no assurance that either or both of the
leases will not be rejected in the future. The lost revenues resulting from the
one lease that was rejected, as described above, and the possible rejection of
the remaining two leases, could have an adverse effect on the results of
operations of the Partnership if the Partnership is unable to re-lease these
Properties in a timely manner.



                                       11
<PAGE>

     For the year ended December 31, 1999, the Partnership also earned $61,656
attributable to net income earned by joint ventures in which the Partnership is
a co-venturer. The increase in net income earned by joint ventures during 1999,
as compared to 1998, was primarily attributable to the Partnership entering into
a joint venture arrangement, Columbus Joint Venture, during 1998, which was
placed in service in December 1999, and entering into a joint venture
arrangement, Portsmouth Joint Venture in February 1999, each as described above
in "Capital Resources."

     During the year ended December 31, 1999, two lessees of the Partnership,
Golden Corral Corporation and Jack in the Box, Inc., each contributed more than
ten percent of the Partnership's total rental income. As of December 31, 1999,
Golden Corral Corporation and Jack in the Box, Inc. were each the lessee under
leases relating to four restaurants. It is anticipated that, based on the
minimum rental payments required by the leases, these lessees each will continue
to contribute more than ten percent of the Partnership's total rental income in
2000. In addition, during the year ended December 31, 1999, three Restaurant
Chains, Golden Corral, Jack in the Box, and Boston Market, each accounted for
more than ten percent of the Partnership's total rental income. During 1998,
three tenants of Boston Market Properties filed for bankruptcy, as described
below. In 2000, it is anticipated that these three Restaurant Chains each will
continue to account for more than ten percent of the total rental income to
which the Partnership is entitled under the terms of the leases. Any failure of
such lessees or Restaurant Chains could materially adversely affect the
Partnership's income if the Properties are not re-leased in a timely manner.

     During the years ended December 31, 1999, 1998 and 1997, the Partnership
earned $59,486, $144,472 and $162,621, respectively, in interest and other
income. The decrease in interest and other income during 1999, as compared to
1998, was primarily attributable to the decrease in the amount of funds invested
in short-term liquid investments due to the payment during 1999, of construction
costs relating to the Property that was under construction at December 31, 1998
owned by Columbus Joint Venture, which the Partnership is a co-venturer and the
fact that during 1999, the Partnership acquired an interest in a joint venture,
Portsmouth Joint Venture. The decrease during 1998, as compared to 1997, was
primarily attributable to a decrease in the amount of funds invested in
short-term liquid investments due to the payment during 1998, of construction
costs relating to a Property that was under construction at December 31, 1997,
the acquisition of an additional Property in 1998 and investing in a joint
venture arrangement during 1998.

     Operating expenses, including depreciation and amortization expense, were
$723,315, $597,969 and $298,482 for the years ended December 31, 1999, 1998 and
1997. The increase in operating expenses during 1999, as compared to 1998, was
partially attributable to an increase in depreciation expense as the result of
the fact that the Properties acquired during 1998, were fully operational for
the entire year during 1999, as compared to a partial year during 1998.

     The increase in operating expenses during 1999 and 1998, each as compared
to the previous year, was partially a result of the Partnership incurring
$74,734 and $15,522 in transaction costs during 1999 and 1998, respectively,
relating to the General Partners retaining financial and legal advisors to
assist them in evaluating and negotiating the proposed Merger with APF.

     The increase in operating expenses during 1999 was also partially due to
the fact that the Partnership incurred approximately $44,000 in legal fees,
maintenance and real estate taxes as a result of a tenant filing for bankruptcy
and rejecting the lease relating to its Property, as described above. The
Partnership will continue to incur such expenses relating to this Property whose
lease was rejected until a replacement tenant or purchaser is located.

     The increase in operating expenses during 1998, as compared to 1997, was
primarily attributable to an increase in depreciation expense as the result of
the acquisition of additional Properties during 1998 and 1997, and the fact that
Properties acquired during the year ended December 31, 1997 were operational for
the full year in 1998.

     As a result of the sale of the Property in Atlanta, Georgia, as described
above in "Capital Resources," the Partnership recognized a gain of $46,300 for
financial reporting purposes for the year ended December 31, 1999. No Properties
were sold during 1998 or 1997.

     During the year ended December 31, 1998, the Partnership established an
allowance for loss on land of $197,466 for financial reporting purposes relating
to the Property in Minnetonka, Minnesota. The tenant of this



                                       12
<PAGE>

Boston Market Property declared bankruptcy and rejected the lease relating to
this Property. The loss represents the difference between the Property's
carrying value at December 31, 1998 and the estimated of net realizable value.
No such allowance was established during the years ended December 31, 1999 and
1997.

     The Partnership's leases are on a triple-net basis and contain provisions
that management believes will mitigate the adverse effect of inflation. Such
provisions include clauses requiring the payment of percentage rent based on
certain restaurant sales above a specified level and/or automatic increases in
base rent at specified times during the term of the lease. Management expects
that increases in restaurant sales volumes due to inflation and real sales
growth should result in an increase in rental income over time. Continued
inflation also may cause capital appreciation of the Partnership's Properties.
Inflation and changing prices, however, also may have an adverse impact on the
sales of the restaurants and on potential capital appreciation of the
Properties.

Termination of Merger

     On March 11, 1999, the Partnership entered into an Agreement and Plan of
Merger with APF, pursuant to which the Partnership would be merged with and into
a subsidiary of APF. Subsequent to entering into the Merger agreement, the
General Partners received a number of comments from brokers who sold the
Partnership's units concerning the loss of passive income treatment in the event
the Partnership merged with APF. On June 3, 1999, the General Partners, on
behalf of the Partnership, and APF agreed that it would be in the best interests
of the Partnership and APF that APF not attempt to acquire the Partnership in
the acquisition. Therefore in June 1999, APF entered into a termination
agreement with the General Partners of the Partnership.

Overview of Year 2000 Problem

     The year 2000 problem concerns the inability of information and
non-information technology systems to properly recognize and process
date-sensitive information beyond January 1, 2000. The failure to accurately
recognize the year 2000 could result in a variety of problems from data
miscalculations to the failure of entire systems.

Status

     The Partnership generally does not directly own information technology
systems. The General Partners and their affiliates generally provide all
services requiring the use of information and some non-information technology
systems. In early 1998, affiliates of the General Partners formed a year 2000
committee ("the Y2K Team") that assessed the readiness of any systems that are
date sensitive and completed upgrades for the hardware equipment and software
that was not year 2000 compliant, as necessary. The cost for these upgrades and
other remedial measures is the responsibility of the General Partners and their
affiliates. The General Partners and their affiliates do not expect that the
Partnership will incur any costs in connection with the year 2000 remedial
measures. In addition, the Y2K Team requested and received certifications of
compliance from other companies with which the General Partners, their
affiliates, and the Partnership have material third party relationships.

     In assessing the risks presented by the year 2000 problem, the Y2K Team
identified potential worst case scenarios involving the future of the
information and non-information technology systems used by the Partnership's
transfer agent, financial institutions and tenants. As of January 14, 2000, the
General Partners and their affiliates have tested the information and
non-information technology systems used by the Partnership and have not
experienced material disruption or other significant problems. In addition, as
of the same date, the General Partners are not aware of any material year 2000
problems relating to information and non-information technology systems of third
parties with which the Partnership maintains material relationships, including
those of the Partnership's transfer agent, financial institutions and tenants.
In addition, in the Partnership's interactions with its transfer agent,
financial institutions and tenants, the systems of these third parties have
functioned normally. Until the Partnership's first distribution in 2000 and the
delivery of the information by the transfer agent to stockholders in early 2000,
the General Partners will continue to monitor the year 2000 compliance of the
transfer agent. In addition, the General Partners will continue to monitor the
systems used by the Partnership and to maintain contact with third parties with
which the Partnership has material relationships with respect to year 2000
compliance and any year 2000 issues that may arise at a later date. The General
Partners will develop contingency plans relating to ongoing year 2000 issues at
the time that such issues are identified and such plans are deemed necessary.



                                       13
<PAGE>

     Based on the information provided to the Y2K Team, the upgrades and
remedial measures by the General Partners and their affiliates, and the normal
functioning to date of information and non-information technology systems used
by the Partnership and those third parties, the General Partners do not foresee
significant risks associated with its year 2000 compliance at this time. In
addition, the General Partners and their affiliates do not expect to incur any
additional costs in connection with the year 2000 remedial efforts. However,
there can be no assurance that the General Partners and their affiliates or any
third parties will not have ongoing year 2000 issues that may have adverse
effects on the Partnership.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     Not applicable.


Item 8. Financial Statements and Supplementary Data





                                       14
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                                    CONTENTS
                                    --------




<TABLE>
<CAPTION>

                                                                          Page
                                                                          ----

<S>                                                                       <C>
Report of Independent Certified Public Accountants                        15

Financial Statements:

      Balance Sheets                                                      16

      Statements of Income                                                17

      Statements of Partners' Capital                                     18

      Statements of Cash Flows                                            19

      Notes to Financial Statements                                       21
</TABLE>




                                       15
<PAGE>

               Report of Independent Certified Public Accountants
               --------------------------------------------------




To the Partners
CNL Income Fund XVIII, Ltd.


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 Income Fund XVIII, Ltd. (a Florida limited partnership) at December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States. In addition, in
our opinion, the financial statement schedules listed in the index appearing
under item 14(a)(2) present fairly, in all material respects, the information
set forth therein when read in conjunction with the related financial
statements. These financial statements and financial statement schedules are the
responsibility of the Partnership's management; our responsibility is to express
an opinion on these financial statements and financial statement schedules based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States 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
February 4, 2000



                                       16
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                                 BALANCE SHEETS
                                 --------------

<TABLE>
<CAPTION>

                                                              December 31,
                                                          1999           1998
                                                      -----------    -----------
<S>                                                   <C>            <C>
                    ASSETS
                    ------
  Land and buildings on operating leases, less
     accumulated depreciation and allowance
     for loss on land                                 $22,514,872    $22,876,012
  Net investment in direct financing leases             5,209,759      5,937,312
  Investment in joint ventures                            688,113        160,395
  Cash and cash equivalents                             1,282,113      1,839,613
  Restricted cash                                         690,885             --
  Receivables, less allowance for doubtful
  accounts of $11,172 and $62,189 respectively             28,037             --
  Prepaid expenses                                          9,341          3,653
  Organization costs, less accumulated
     amortization of $10,000 and $4,411                        --          5,589
  Accrued rental income                                   383,725        230,999
  Other assets                                             59,161         59,044
                                                      -----------    -----------
                                                      $30,866,006    $31,112,617
                                                      ===========    ===========

          LIABILITIES AND PARTNERS' CAPITAL
          ---------------------------------
  Accounts payable                                    $    86,294    $     2,558
  Distributions payable                                   700,000        700,000
  Due to related parties                                   36,737         32,775
  Rents paid in advance                                    13,969          7,351
  Deferred rental income                                   45,151        101,436
                                                      -----------    -----------
             Total liabilities                            882,151        844,120

  Partners' capital                                    29,983,855     30,268,497
                                                      -----------    -----------
                                                      $30,866,006    $31,112,617
                                                      ===========    ===========
</TABLE>


                 See accompanying notes to financial statements.



                                       17
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                              STATEMENTS OF INCOME
                              --------------------


<TABLE>
<CAPTION>

                                                                                            Year Ended December 31,
                                                                                  1999                 1998                 1997
                                                                              -----------          -----------          -----------
<S>                                                                           <C>                  <C>                  <C>
Revenues:
     Rental income from operating leases                                      $ 2,444,692          $ 2,396,215          $   950,316
     Earned income from direct financing leases                                   626,537              557,070              340,305
     Interest and other income                                                     59,486              144,472              162,621
                                                                              -----------          -----------          -----------
                                                                                3,130,715            3,097,757            1,453,242
                                                                              -----------          -----------          -----------
Expenses:
     General operating and administrative                                         142,554              145,661              123,708
     Professional services                                                         61,288               25,670               20,429
     Management fees to related party                                              30,235               28,038               11,842
     State and other taxes                                                         21,983                8,605                  424
     Depreciation and amortization                                                392,521              374,473              142,079
     Transaction costs                                                             74,734               15,522                   --
                                                                              -----------          -----------          -----------
                                                                                  723,315              597,969              298,482
                                                                              -----------          -----------          -----------
Income Before Equity in Earnings of Joint Ventures,
     Gain on Sale of Land and Building and Provision
     for Loss on Land                                                           2,407,400            2,499,788            1,154,760

Equity in Earnings of Joint Ventures                                               61,656                   --                   --

Gain on Sale of Land and Building                                                  46,300                   --                   --

Provision for Loss on Land                                                             --             (197,466)                  --
                                                                              -----------          -----------          -----------

Net Income                                                                    $ 2,515,356          $ 2,302,322          $ 1,154,760
                                                                              ===========          ===========          ===========
Allocation of Net Income:
     General partners                                                         $    (3,309)         $    (1,582)         $    (1,421)
     Limited partners                                                           2,518,665            2,303,904            1,156,181
                                                                              -----------          -----------          -----------

                                                                              $ 2,515,356          $ 2,302,322          $ 1,154,760
                                                                              ===========          ===========          ===========

Net Income Per Limited Partner Unit                                           $      0.72          $      0.66          $      0.51
                                                                              ===========          ===========          ===========
Weighted Average Number of
     Limited Partner Units Outstanding                                          3,500,000            3,495,278            2,279,801
                                                                              ===========          ===========          ===========
</TABLE>


                 See accompanying notes to financial statements.

                                       18
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                         STATEMENTS OF PARTNERS' CAPITAL
                         -------------------------------

                  Years Ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>

                                         General Partners                                Limited Partners
                                   -------------------------- ----------------------------------------------------------------------
                                                  Accumulated                                Accumulated Syndication
                                   Contributions   Earnings   Contributions  Distributions    Earnings      Costs          Total
                                   ------------- ------------ -------------  -------------  ------------ -----------    ------------
<S>                                 <C>          <C>           <C>           <C>            <C>          <C>            <C>
Balance, December 31, 1996          $  1,000     $      (7)    $  8,421,815  $   (57,846)   $   26,917   $(1,395,666)   $ 6,996,213

 Contributions from limited partners      --            --       25,723,944           --            --            --     25,723,944
 Distributions to limited partners
    ($0.57 per limited partner unit)      --            --               --   (1,310,885)           --            --     (1,310,885)
 Syndication costs                        --            --               --           --            --    (2,717,452)    (2,717,452)
 Net income                               --        (1,421)              --           --     1,156,181            --      1,154,760
                                    --------     ---------     ------------  -----------    ----------   -----------    -----------

Balance, December 31, 1997             1,000        (1,428)      34,145,759   (1,368,731)    1,183,098    (4,113,118)    29,846,580

 Contributions from limited partners      --            --          854,241           --            --            --        854,241
 Distributions to limited partners
    ($0.76 per limited partner unit)      --            --               --   (2,657,764)           --            --     (2,657,764)
 Syndication costs                        --            --               --           --            --       (76,882)       (76,882)
 Net income                               --        (1,582)              --           --     2,303,904            --      2,302,322
                                    --------     ---------     ------------  -----------    ----------   -----------    -----------

Balance, December 31, 1998             1,000        (3,010)      35,000,000   (4,026,495)    3,487,002    (4,190,000)    30,268,497

 Distributions to limited partners
   ($0.80 per limited partner unit)       --            --               --   (2,799,998)           --            --     (2,799,998)
 Net income                               --        (3,309)              --           --     2,518,665            --      2,515,356
                                    --------     ---------     ------------  -----------    ----------   -----------    -----------

Balance, December 31, 1999          $  1,000     $  (6,319)    $ 35,000,000  $(6,826,493)   $6,005,667   $(4,190,000)   $29,983,855
                                    ========     =========     ============  ===========    ==========   ===========    ===========
</TABLE>



                 See accompanying notes to financial statements.



                                       19
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                            ------------------------

<TABLE>
<CAPTION>

                                                                                           Year Ended December 31,
                                                                                 1999                 1998                 1997
                                                                             ------------         ------------         ------------
<S>                                                                          <C>                  <C>                  <C>
Increase (Decrease) in Cash and Cash Equivalents:
       Cash Flows from Operating Activities:
           Cash received from tenants                                        $  2,930,415         $  2,884,620         $  1,353,968
           Distributions from joint ventures                                       60,076                5,630                   --
           Interest received                                                       53,448              141,408              161,826
           Cash paid for expenses                                                (246,899)            (199,920)            (154,038)
                                                                             ------------         ------------         ------------
               Net cash provided by operating activities                        2,797,040            2,831,738            1,361,756
                                                                             ------------         ------------         ------------

       Cash Flows from Investing Activities:
           Proceeds from sale of land and building                                688,997                   --                   --
           Additions to land and buildings on operating
             leases                                                               (25,792)          (3,134,046)         (18,581,999)
           Investment in direct financing leases                                       --              (12,945)          (5,962,087)
           Investment in joint ventures                                          (526,138)            (166,025)                  --
           Other                                                                     (117)                  --                  107
           Increase in restricted cash                                           (688,997)                  --                   --
                                                                             ------------         ------------         ------------
               Net cash used in investing activities                             (552,047)          (3,313,016)         (24,543,979)
                                                                             ------------         ------------         ------------

       Cash Flows from Financing Activities:
           Reimbursement of acquisition and syndication
             costs paid by related parties on behalf
             of the Partnership                                                    (2,495)             (37,135)            (396,548)
           Contributions from limited partners                                         --              854,241           25,723,944
           Distributions to limited partners                                   (2,799,998)          (2,468,400)            (855,957)
           Payment of syndication costs                                                --             (161,142)          (2,450,214)
           Other                                                                       --              (10,000)             (67,000)
                                                                             ------------         ------------         ------------
               Net cash provided by (used in) financing
                  activities                                                   (2,802,493)          (1,822,436)          21,954,225
                                                                             ------------         ------------         ------------

Net Decrease in Cash and Cash Equivalents                                        (557,500)          (2,303,714)          (1,227,998)

Cash and Cash Equivalents at Beginning of Year                                  1,839,613            4,143,327            5,371,325
                                                                             ------------         ------------         ------------
Cash and Cash Equivalents at End of Year                                     $  1,282,113         $  1,839,613         $  4,143,327
                                                                             ============         ============         ============
</TABLE>



                 See accompanying notes to financial statements.



                                       20
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                      STATEMENTS OF CASH FLOWS - CONTINUED
                      ------------------------------------


<TABLE>
<CAPTION>

                                                                                                  Year Ended December 31,
                                                                                           1999            1998            1997
                                                                                        -----------     -----------     -----------
<S>                                                                                     <C>             <C>             <C>
Reconciliation of Net Income to Net Cash
   Provided by Operating Activities
       Net income                                                                       $ 2,515,356     $ 2,302,322     $ 1,154,760
                                                                                        -----------     -----------     -----------
       Adjustments to reconcile net income to net cash provided by operating
           activities:
               Depreciation                                                                 386,932         372,473         140,079
               Amortization                                                                   5,589           2,000           2,000
               Equity in earnings of joint ventures net
                  of distributions                                                           (1,580)          5,630              --
               Provision for loss on land                                                        --         197,466              --
               Decrease in net investment in direct
                  financing leases                                                           38,556          81,211          28,084
               Decrease (Increase) in receivables                                           (29,925)         68,000         (66,771)
               Increase in prepaid expenses                                                  (5,688)         (3,653)             --
               Increase in accrued rental income                                           (152,726)       (119,132)       (128,079)
               Increase in accounts payable                                                  83,736           2,102             398
               Increase in due to related parties, excluding
                 acquisition and syndication costs paid on
                 behalf of the Partnership                                                    6,457          27,257           2,202
               Increase (decrease) in rents paid in
                 advance                                                                      6,618         (20,926)         28,277
               Increase (decrease) in deferred rental income                                (56,285)        (83,012)        200,806
                                                                                        -----------     -----------     -----------
                      Total adjustments                                                     281,684         529,416         206,996
                                                                                        -----------     -----------     -----------

Net Cash Provided by Operating Activities                                               $ 2,797,040     $ 2,831,738     $ 1,361,756
                                                                                        ===========     ===========     ===========

Supplemental Schedule of Non-Cash Investing and
   Financing Activities:

       Related parties paid certain acquisition and
           syndication costs on behalf of the Partnership as follows:
               Acquisition costs                                                        $        --     $    35,842     $   134,138
               Syndication costs                                                                 --              --         211,216
                                                                                        -----------     -----------     -----------
                                                                                        $        --     $    35,842     $   345,354
                                                                                        ===========     ===========     ===========

       Distributions declared and unpaid at December 31                                 $   700,000     $   700,000     $   510,636
                                                                                        ===========     ===========     ===========
</TABLE>


                 See accompanying notes to financial statements.



                                       21
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 1999, 1998, and 1997


1.   Significant Accounting Policies:
     -------------------------------

     Organization and Nature of Business - CNL Income Fund XVIII, Ltd. (the
     -----------------------------------
     "Partnership") is a Florida limited partnership that was organized for the
     purpose of acquiring both newly constructed and existing restaurant
     properties, as well as properties upon which restaurants were to be
     constructed, which are leased primarily to operators of national and
     regional fast-food, family-style and casual dining restaurant chains. Under
     the terms of a registration statement filed with the Securities and
     Exchange Commission, the Partnership was authorized to sell a maximum of
     3,500,000 units ($35,000,000) of limited partnership interest. A total of
     3,500,000 units ($35,000,000) of limited partnership interest had been sold
     as of December 31, 1998.

     The general partners of the Partnership are CNL Realty Corporation (the
     "Corporate General Partner"), James M. Seneff, Jr. and Robert A. Bourne.
     Mr. Seneff and Mr. Bourne are also 50 percent shareholders of the Corporate
     General Partner. The general partners have responsibility for managing the
     day-to-day operations of the Partnership.

     Real Estate and Lease Accounting - The Partnership records the acquisition
     --------------------------------
     of land and buildings at cost, including acquisition and closing costs.
     Land and buildings are leased to unrelated third parties generally on a
     triple-net basis, whereby the tenant is generally responsible for all
     operating expenses relating to the property, including property taxes,
     insurance, maintenance and repairs. The leases are accounted for using the
     direct financing or operating methods. Such methods are described below:

          Direct financing method - The leases accounted for using the direct
          financing method are recorded at their net investment (which at the
          inception of the lease generally represents the cost of the asset)
          (see Note 4). Unearned income is deferred and amortized to income over
          the lease terms so as to produce a constant periodic rate of return on
          the Partnership's net investment in the leases.

          Operating method - Land and building leases accounted for using the
          operating method are recorded at cost, revenue is recognized as
          rentals are earned and depreciation is charged to operations as
          incurred. Buildings are depreciated on the straight-line method over
          their estimated useful lives of 30 years. When scheduled rentals
          (including rental payments, if any, required during the construction
          of a property) vary during the lease term, income is recognized on a
          straight-line basis so as to produce a constant periodic rent over the
          lease term commencing on the date the property is placed in service.



                                       22
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                        (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


1.   Significant Accounting Policies - Continued:
     -------------------------------
          Accrued rental income represents the aggregate amount of income
          recognized on a straight-line basis in excess of scheduled rental
          payments to date. In contrast, deferred rental income represents the
          aggregate amount of scheduled rental payments to date (including
          rental payments due during construction and prior to the property
          being placed in service) in excess of income recognized on a
          straight-line basis over the lease term commencing on the date the
          property is placed in service. Whenever a tenant defaults under the
          terms of its lease, or events or changes in circumstance indicate that
          the tenant will not lease the property through the end of the lease
          term, the Partnership either reserves or reverses the cumulative
          accrued rental income balance.

     When the properties are sold, the related cost and accumulated depreciation
     for operating leases and the net investment for direct financing leases,
     plus any accrued rental income, are removed from the accounts and gains or
     losses from sales will be reflected in income. The general partners of the
     Partnership review properties for impairment whenever events or changes in
     circumstances indicate that the carrying amount of the assets may not be
     recoverable through operations. The general partners determine whether an
     impairment in value has occurred by comparing the estimated future
     undiscounted cash flows, including the residual value of the property, with
     the carrying cost of the individual property. If an impairment is
     indicated, the assets are adjusted to the fair value. Although the general
     partners have made their best estimate of these factors based on current
     conditions, it is reasonably possible that changes could occur in the near
     term which could adversely affect the general partners' estimate of net
     cash flows expected to be generated from its properties and the need for
     asset impairment write-downs.

     When the collection of amounts recorded as rental or other income is
     considered to be doubtful, an adjustment is made to increase the allowance
     for doubtful accounts, which is netted against receivables, and to decrease
     rental or other income or increase bad debt expense for the current period,
     although the Partnership continues to pursue collection of such amounts. If
     amounts are subsequently determined to be uncollectible, the corresponding
     receivable and allowance for doubtful accounts are decreased accordingly.

     Investment in Joint Ventures - The Partnership's investments in Columbus
     ----------------------------
     Joint Venture and CNL Portsmouth Joint Venture are accounted for using the
     equity method since the Partnership shares control with affiliates which
     have the same general partners.



                                       23
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


1.   Significant Accounting Policies - Continued:
     -------------------------------

     Cash and Cash Equivalents - The Partnership considers all highly liquid
     -------------------------
     investments with a maturity of three months or less when purchased to be
     cash equivalents. Cash and cash equivalents consist of demand deposits at
     commercial banks and money market funds (some of which are backed by
     government securities). Cash equivalents are stated at cost plus accrued
     interest, which approximates market value.

     Cash accounts maintained on behalf of the Partnership in demand deposits at
     commercial banks and money market funds may exceed federally insured
     levels; however, the Partnership has not experienced any losses in such
     accounts. The Partnership limits investment of temporary cash investments
     to financial institutions with high credit standing; therefore, the
     Partnership believes it is not exposed to any significant credit risk on
     cash and cash equivalents.

     Organization Costs - Prior to January 1, 1999, organization costs were
     ------------------
     being amortized over five years using the straight-line method. Effective
     January 1, 1999, the Partnership adopted Statement of Position 98-5
     "Reporting on the Costs of Start-Up Activities". The statement requires
     that an entity expense the costs of start-up activities and organization
     costs as they are incurred. Adaption of this statement did not have a
     material effect of the Partnership's financial position or results of
     operations.

     Income Taxes - Under Section 701 of the Internal Revenue Code, all income,
     ------------
     expenses and tax credit items flow through to the partners for tax
     purposes. Therefore, no provision for federal income taxes is provided in
     the accompanying financial statements. The Partnership is subject to
     certain state taxes on its income and property.

     Additionally, for tax purposes, syndication costs are included in
     Partnership equity and in the basis of each partner's investment. For
     financial reporting purposes, syndication costs are netted against
     partners' capital and represent a reduction of Partnership equity and a
     reduction in the basis of each partner's investment (Note 7).

     Rents Paid in Advance - Rents paid in advance by lessees for future periods
     ---------------------
     are deferred upon receipt and are recognized as revenues during the period
     in which the rental income is earned. Rents paid in advance include
     "interim rent" payments required to be paid under the terms of certain
     leases for construction properties equal to a pre-determined rate times the
     amount funded by the Partnership during the period commencing with the
     effective date of the lease to the date minimum annual rent becomes
     payable. Once minimum annual rent becomes payable, the "interim rent"
     payments are amortized and recorded as income either (i) over the lease
     term so as to produce a constant periodic rate



                                       24
<PAGE>

                          CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


1.   Significant Accounting Policies - Continued:
     -------------------------------

     of return for leases accounted for using the direct financing method, or
     (ii) over the lease term using the straight-line method for leases
     accounted for using the operating method, whichever is applicable.

     Weighted Average Number of Limited Partner Units Outstanding - Net income
     ------------------------------------------------------------
     and distributions per limited partner unit are calculated based upon the
     weighted average number of units of limited partnership interest
     outstanding during the period the Partnership was operational.

     Use of Estimates - The general partners of the Partnership have made a
     ----------------
     number of estimates and assumptions relating to the reporting of assets and
     liabilities and the disclosure of contingent assets and liabilities to
     prepare these financial statements in conformity with generally accepted
     accounting principles. Actual results could differ from those estimates.

2.   Leases:
     ------

     The Partnership leases its land and buildings to operators of national and
     regional fast-food and family-style restaurants. The leases are accounted
     for under the provisions of Statement of Financial Accounting Standards No.
     13, "Accounting for Leases." Some of the Partnership's leases are
     classified as operating leases and some of the leases have been classified
     as direct financing leases. For the leases classified as direct financing
     leases, the building portions of the property leases are accounted for as
     direct financing leases while the land portions of the majority of the
     leases are operating leases. The leases have initial terms of 15 to 20
     years and the majority of the leases provide for minimum and contingent
     rentals. In addition, the tenant generally pays all property taxes and
     assessments, fully maintains the interior and exterior of the building and
     carries insurance coverage for public liability, property damage, fire and
     extended coverage. The lease options generally allow the tenants to renew
     the leases for two to five successive five-year periods subject to the same
     terms and conditions as the initial lease. Most leases also allow the
     tenant to purchase the property at fair market value after a specified
     portion of the lease has elapsed.



                                       25
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997

3.   Land and Buildings on Operating Leases:
     --------------------------------------

     Land and buildings on operating leases consisted of the following at
December 31:

<TABLE>
<CAPTION>

                                                   1999                       1998
                                               ------------               ------------
<S>                                            <C>                        <C>
     Land                                      $ 12,008,124               $ 11,982,332
     Buildings                                   11,603,999                 11,603,999
                                               ------------               ------------
                                                 23,612,123                 23,586,331
     Less accumulated depreciation                 (899,785)                  (512,853)
                                               ------------               ------------
                                                 22,712,338                 23,073,478
     Less allowance for loss on
         land                                      (197,466)                  (197,466)
                                               ------------               ------------

                                               $ 22,514,872               $ 22,876,012
                                               ============               ============
</TABLE>

     During the year ended December 31, 1998, the Partnership established an
     allowance for loss on land of $197,466, relating to the property located in
     Minnetonka, Minnesota. The tenant of this property declared bankruptcy in
     October 1998 and rejected the lease relating to the property. The allowance
     represents the difference between the carrying value of the property at
     December 31, 1998, and the estimated net realizable value for this
     property.

     In December 1999, the Partnership sold its property in Atlanta, Georgia, to
     a third party and received net sales proceeds of $688,997, resulting in a
     gain of $46,300 for financial reporting purposes. This property was
     originally acquired by the Partnership in 1997 at a cost of approximately
     $617,600, excluding acquisition fees and miscellaneous acquisition
     expenses; therefore, the Partnership sold this property for a total of
     approximately $71,400 in excess of its original purchase price.

     Generally, the leases provide for escalating guaranteed minimum rents
     throughout the lease term. Income from these scheduled rent increases is
     recognized on a straight-line basis over the terms of the leases. For the
     years ended December 31, 1999, 1998, and 1997, the Partnership recognized
     $196,020, $209,725, and $128,079, respectively, of such rental income.



                                       26
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997

3.         Land and Buildings on Operating Leases:
           --------------------------------------

     The following is a schedule of the future minimum lease payments to be
received on the noncancellable operating leases at December 31, 1999:

<TABLE>
<CAPTION>

     <S>                                                      <C>
     2000                                                     $ 2,228,238
     2001                                                       2,229,765
     2002                                                       2,307,926
     2003                                                       2,370,623
     2004                                                       2,382,226
     Thereafter                                                24,331,118
                                                              -----------
                                                              $35,849,896
                                                              ===========
</TABLE>

     Since lease renewal periods are exercisable at the option of the tenant,
     the above table only presents future minimum lease payments due during the
     initial lease term. In addition, this table does not include any amounts
     for future contingent rentals which may be received on the leases based on
     a percentage of tenant's gross sales.


4.   Net Investment in Direct Financing Leases:
     -----------------------------------------

     The following lists the components of the net investment in direct
     financing leases at December 31:

<TABLE>
<CAPTION>

                                                        1999                     1998
                                                    -----------              -----------
<S>                                                 <C>                      <C>
          Minimum lease payments
             receivable                             $10,184,633              $12,564,207
          Estimated residual values                   1,420,667                1,420,667
          Less unearned income                       (6,395,541)              (8,047,562)
                                                    -----------              -----------

          Net investment in direct
               financing leases                     $ 5,209,759              $ 5,937,312
                                                    ===========              ===========
</TABLE>



                                       27
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997

4.   Net Investment in Direct Financing Leases - Continued:
     -----------------------------------------

     The following is a schedule of future minimum lease payments to be received
on direct financing leases at December 31, 1999:

<TABLE>
<CAPTION>

            <S>                                                <C>
            2000                                               $   607,820
            2001                                                   607,820
            2002                                                   613,824
            2003                                                   622,228
            2004                                                   622,228
            Thereafter                                           7,110,713
                                                               -----------
                                                               $10,184,633
                                                               ===========
</TABLE>

     The above table does not include future minimum lease payments for renewal
     periods or for contingent rental payments that may become due in future
     periods (See Note 3).

5.   Investment in Joint Ventures:
     ----------------------------

     In February 1999, the Partnership entered into a joint venture arrangement,
     CNL Portsmouth Joint Venture, with CNL Income Fund XI, Ltd., an affiliate
     of the general partners, to own and lease one restaurant property. As of
     December 31, 1999, the Partnership had contributed approximately $330,500
     to the joint venture and owned a 57.2% interest in this joint venture.



                                       28
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


5.   Investment in Joint Venture - Continued:
     ---------------------------

     In August 1998, the Partnership entered into a joint venture arrangement,
     Columbus Joint Venture, with affiliates of the general partners, to
     construct and hold one restaurant property. During 1999 and 1998, the
     Partnership contributed $195,700 and $166,025, respectively, to purchase
     land and pay construction costs relating to the Property owned by the joint
     venture. As of December 31, 1999, the Partnership had a 39.93% interest in
     the profits and losses of the joint venture.

     The following presents the combined, condensed financial information for
     the joint ventures at December 31:

<TABLE>
<CAPTION>

                                                      1999             1998
                                                   ----------       ---------
<S>                                                <C>              <C>
           Land and buildings under an
               operating leases and
               construction in progress, less
           accumulated depreciation                $1,142,511       $ 875,700
           Net investment in direct financing
              lease                                   320,961              --
           Accrued rental income                       19,219              --
           Cash                                         7,969           3,935
           Receivables                                    851              --
           Prepaid expenses                               483              --
           Liabilities                                 21,233         477,945
           Partners' capital                        1,470,761         401,690
           Revenue                                    151,716              --
           Net income                                 131,214              --
</TABLE>


     During the year ended December 31, 1999, the Partnership recognized income
     totaling $61,656 from these joint ventures. As of December 31, 1998, the
     property owned by Columbus Joint Venture was not operational.

6.   Restricted Cash:
     ---------------

     As of December 31, 1999, the net sales proceeds of $688,997 from the sale
     of the property in Atlanta, Georgia, plus accrued interest of $1,888, were
     being held in an interest-bearing escrow account pending the release of
     funds by the escrow agent to acquire an additional property on behalf of
     the Partnership.



                                       29
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


7.   Syndication Costs:
     -----------------

     Syndication costs consisting of legal fees, commissions, the due diligence
     expense reimbursement fee, printing and other expenses incurred in
     connection with the offering totalled $76,882 and $2,717,452 for the years
     ended December 31, 1998 and 1997, respectively. These offering expenses
     were charged to the limited partners' capital accounts to reflect the net
     capital proceeds of the offering. No such charges were incurred during the
     year ended December 31, 1999.

8.   Allocations and Distributions:
     -----------------------------

     Generally, distributions of net cash flow, as defined in the limited
     partnership agreement of the Partnership, are made 95 percent to the
     limited partners and five percent to the general partners; provided,
     however, that for any particular year, the five percent of net cash flow to
     be distributed to the general partners will be subordinated to receipt by
     the limited partners in that year of an eight percent noncumulative,
     noncompounded return on their aggregate invested capital contributions (the
     "Limited Partners' 8% Return").

     Generally, net income (determined without regard to any depreciation and
     amortization deductions and gains and losses from the sale of properties)
     is allocated between the limited partners and the general partners first,
     in an amount not to exceed the net cash flow distributed to the partners
     attributable to such year in the same proportions as such net cash flow is
     distributed; and thereafter, 99 percent to the limited partners and one
     percent to the general partners. All deductions for depreciation and
     amortization are allocated 99 percent to the limited partners and one
     percent to the general partners.

     Net sales proceeds from the sale of a property not in liquidation of the
     Partnership generally will be distributed first to the limited partners in
     an amount sufficient to provide them with the return of their invested
     capital contributions, plus their cumulative Limited Partners' 8% Return.
     The general partners will then receive a return of their capital
     contributions and, to the extent previously subordinated and unpaid, a five
     percent interest in all net cash flow distributions. Any remaining net
     sales proceeds will be distributed 95 percent to the limited partners and
     five percent to the general partners.

     Any gain from the sale of a property not in liquidation of the Partnership
     will be, in general, allocated in the same manner as net sales proceeds are
     distributable. Any loss will be allocated first, on a pro rata basis to the
     partners with positive balances in their capital accounts; and thereafter,
     95 percent to the limited partners and five percent to the general
     partners.



                                       30
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


8.   Allocations and Distributions - Continued:
     -----------------------------
     Generally, net sales proceeds from a liquidating sale of properties, will
     be used in the following order (i) first to pay and discharge all of the
     Partnership's liabilities to creditors, (ii) second, to establish reserves
     that may be deemed necessary for any anticipated or unforeseen liabilities
     or obligations of the Partnership, (iii) third, to pay all of the
     Partnership's liabilities, if any, to the general and limited partners,
     (iv) fourth, after allocations of net income, gains and/or losses, to the
     partners with positive capital account balances, in proportion to such
     balances, up to amounts sufficient to reduce such positive balances to
     zero, and (v) thereafter, any funds remaining shall then be distributed 95
     percent to the limited partners and five percent to the general partners.

     During the years ended December 31, 1999, 1998, and 1997, the Partnership
     declared distributions to the limited partners of $2,799,998, $2,657,764
     and $1,310,885, respectively. No distributions have been made to the
     general partners to date.



                                       31
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


9.   Income Taxes:
     ------------

     The following is a reconciliation of net income for financial reporting
     purposes to net income for federal income tax purposes for the years ended
     December 31:

<TABLE>
<CAPTION>

                                                                                  1999                 1998                 1997
                                                                              -----------          -----------          -----------
<S>                                                                           <C>                  <C>                  <C>
Net income for financial reporting purposes                                   $ 2,515,356          $ 2,302,322          $ 1,154,760

Depreciation for tax reporting purposes in excess of
   depreciation for financial reporting purposes                                  (21,493)             (33,436)             (45,009)

Allowance for loss on land                                                             --              197,466                   --

Direct financing leases recorded as operating
   leases for tax reporting purposes                                               84,855               81,211               28,084

Capitalization of transaction costs for tax reporting
   purposes                                                                        74,734               15,522                   --

Equity in earnings of joint venture for tax
   reporting purposes in exxcess (less than) equity
   in earnings of joint venture for financial reporting
   purposes                                                                        (8,745)               7,168                   --

Accrued rental income                                                            (196,020)            (209,725)            (128,079)

Deferred rental income                                                            (12,990)             (73,028)             281,415

Rents paid in advance                                                               6,618              (20,926)              27,277

Allowance for doubtful accounts                                                   (51,017)              62,155                   34

Gain on sale of land and buildings for financial
   reporting purposes less than gain on sale
   for tax reporting purposes                                                      33,870                   --                   --

Amortization for financial reporting purposes
   less than amortization for tax reporting
   purposes                                                                        (3,108)              (3,984)                (732)

Other                                                                                (540)                  --                   --
                                                                              -----------          -----------          -----------
Net income for federal income tax purposes                                    $ 2,421,520          $ 2,324,745          $ 1,317,750
                                                                              ===========          ===========          ===========
</TABLE>



                                       32
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


10.  Related Party Transactions:
     --------------------------

     One of the individual general partners, James M. Seneff, Jr., is one of the
     principal shareholders of CNL Holdings, Inc. The other individual general
     partner, Robert A. Bourne, serves as President and Treasurer of CNL
     Financial Group, Inc., a wholly owned subsidiary of CNL Holdings, Inc. CNL
     Fund Advisors, Inc. (the "Advisor") was a majority owned subsidiary of CNL
     Financial Group, Inc. until it merged with CNL American Properties Fund,
     Inc., ("APF") effective September 1, 1999. The individual general partners
     are stockholders and directors of APF.

     CNL Securities Corp. was entitled to receive selling commissions amounting
     to 8.5% of the total amount raised from the sale of units of limited
     partnership interest for services in connection with the formation of the
     Partnership and the offering of units, a substantial portion of which was
     paid as commissions to other broker-dealers. For the years ended December
     31, 1998 and 1997, the Partnership incurred $72,611 and $2,186,535,
     respectively, of which $67,539 and $2,050,986, respectively, was reallowed
     to other broker-dealers. No such fees were incurred during 1999.

     In addition, CNL Securities Corp. was entitled to receive a due diligence
     expense reimbursement fee equal to 0.5% of the total amount raised from the
     sale of units of limited partnership interest, a portion of which was
     reallowed to other broker-dealers and from which all due diligence expenses
     were paid. For the years ended December 31, 1998 and 1997, the Partnership
     incurred $4,271 and $128,620, respectively, of such fees. The majority of
     these fees were reallowed to other broker-dealers for payment of bona fide
     due diligence expenses.

     CNL Fund Advisors, Inc. was entitled to receive acquisition fees for
     services in finding, negotiating and acquiring properties on behalf of the
     Partnership equal to 4.5% of the total amount raised from the sale of units
     of limited partnership interest. For the years ended December 31, 1998 and
     1997, the Partnership incurred $38,441 and $1,157,577, respectively, of
     such fees. Such fees are included in land and buildings, net investment in
     direct financing leases, investment in joint ventures and other assets.



                                       33
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


10.  Related Party Transactions - Continued:
     --------------------------

     The Advisor provides certain services relating to management of the
     Partnership and its properties pursuant to a management agreement with the
     Partnership. In connection therewith , the Partnership agreed to pay the
     Advisor an annual management fee of one percent of the sum of gross
     revenues from properties wholly owned by the Partnership and the
     Partnership's allocable share of gross revenues from joint ventures. The
     management fee, which will not exceed fees which are competitive for
     similar services in the same geographic area, may or may not be taken, in
     whole or in part as to any year, in the sole discretion of the Advisor. All
     or any portion of the management fee not taken as to any fiscal year shall
     be deferred without interest and may be taken in such other fiscal year as
     the Advisor shall determine. For the years ended December 31, 1999, 1998,
     and 1997, the Partnership incurred $30,235, $28,038, and $11,842,
     respectively, for such management fees.

     The Advisor is also entitle to receive a deferred, subordinated real estate
     disposition fee, payable upon the sale of properties, based on the lesser
     of one-half of a competitive real estate commission or three percent of the
     sales price if the Advisor provides a substantial amount of services in
     connection with the sale. However, if the net sales proceeds are reinvested
     in a replacement property, no such real estate disposition fees will be
     incurred until such replacement property is sold and the net sales proceeds
     are distributed. The payment of the real estate disposition fee is
     subordinated to receipt by the limited partners of their aggregate Limited
     Partners' 8% Return, plus their invested capital contributions. No
     deferred, subordinated real estate disposition fees have been incurred
     since inception.

     During the years ended December 31, 1999, 1998, and 1997, the Advisor and
     its affiliates provided various administrative services to the Partnership,
     including services related to accounting; financial, tax and regulatory
     compliance and reporting; lease and loan compliance; limited partners
     distributions and reporting; due diligence and marketing; and investor
     relations (including administrative services in connection with selling
     units of limited partnership interest), on a day-to-day basis including
     services relating to the proposed and terminated merger as described in
     Note 12. The expenses incurred for these services were classified as
     follows for the years ended December 31:

<TABLE>
<CAPTION>

                                              1999          1998          1997
                                            --------      --------      --------
<S>                                         <C>           <C>           <C>
        General operating and
             administrative expenses        $ 82,382      $104,709      $ 98,207
        Syndication costs                         --            --       212,279
                                            --------      --------      --------
                                            $ 82,382      $104,709      $310,486
                                            ========      ========      ========
</TABLE>



                                       34
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


10.  Related Party Transactions - Continued:
     --------------------------------------

     The due to related parties consisted of the following at December 31:

<TABLE>
<CAPTION>

                                                        1999            1998
                                                      -------         -------
<S>                                                   <C>             <C>
Due to the Advisor and its
   affiliates:
     Expenditures incurred on
        behalf of the Partnership                     $ 8,814         $13,698
     Accounting and
        administrative services                        14,512           9,608
     Management fees                                    4,515           2,379
     Other                                              8,896           7,090
                                                      -------         -------
                                                      $36,737         $32,775
                                                      =======         =======
</TABLE>

11.  Concentration of Credit Risk:
     ----------------------------

     The following schedule presents total rental and earned income from
     individual lessees, each representing more than ten percent of the
     Partnership's total rental and earned income for each of the years ended
     December 31:

<TABLE>
<CAPTION>

                                             1999           1998           1997
                                          ---------      ---------      --------
<S>                                       <C>            <C>            <C>
         Golden Corral Corp.              $ 657,612      $ 626,564      $241,395
         Jack in the Box, Inc.
            (formerly Foodmaker, Inc.)      509,456        509,456       240,261
         IHOP Properties, Inc.                  N/A            N/A       152,343
         Tiffany, L.L.C                         N/A            N/A       154,153
         Platinum Rotisserie, L.L.C             N/A            N/A       133,591
</TABLE>



                                       35
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


11.  Concentration of Credit Risk - Continued:
     ----------------------------

     In addition, the following schedule presents total rental and earned income
     from individual restaurant chains, each representing more than ten percent
     of the Partnership's total rental and earned income for each of the years
     ended December 31:

<TABLE>
<CAPTION>

                                              1999          1998          1997
                                            --------      --------      --------
<S>                                         <C>           <C>           <C>
        Golden Corral                       $908,481      $784,292      $395,548
        Jack in the Box                      509,456       509,456       240,261
        Boston Market                        350,901       455,118       231,489
        IHOP                                     N/A           N/A       152,343
        Platinum Rotisserie, L.L.C               N/A           N/A           N/A
        Tiffany, L.L.C                           N/A           N/A           N/A
</TABLE>

     The information denoted by N/A indicates that for each period presented,
     the tenant or group of affiliated tenants and the chains did not represent
     more than ten percent of the Partnership's total rental, earned income and
     interest income.

     Although the Partnership's properties are geographically diverse throughout
     the United States and the Partnership's lessees operate a variety of
     restaurant concepts, default by any one of these lessees or restaurant
     chains could significantly impact the results of operations of the
     Partnership if the Partnership is not able to re-lease the properties in a
     timely manner.

     In 1998, Boston Chicken, Inc., Finest Foodservice, L.L.C., and WMJ Texas,
     Inc., the tenants of three of the Boston Market properties filed for
     bankruptcy and rejected the lease relating to one property. The Partnership
     will not recognize any rental income relating to this property until a new
     tenant for the property is located, or until the property is sold and the
     proceeds from such a sale are reinvested in an additional property. While
     the tenants have not rejected or affirmed the remaining two leases, there
     can be no assurance that some or all of the leases will not be rejected in
     the future. The lost revenues resulting from the one lease that was
     rejected, and the possible rejection of the remaining two leases could have
     an adverse effect on the results of operations of the Partnership if the
     Partnership is unable to re-lease these Properties in a timely manner. The
     general partners are currently seeking either a new tenant or purchaser for
     the one rejected Property.



                                       36
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998, and 1997


12.  Termination of Merger:
     ---------------------

     On March 11, 1999, the Partnership entered into an Agreement and Plan of
     Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which
     the Partnership would be merged with and into a subsidiary of APF (the
     "Merger"). Subsequent to entering into the Merger agreement, the general
     partners received a number of comments from brokers who sold the
     Partnership's units concerning the loss of passive income treatment in the
     event the Partnership merged with APF. On June 3, 1999, the general
     partners, on behalf of the Partnership, and APF agreed that it would be in
     the best interests of the Partnership and APF that APF not attempt to
     acquire the Partnership in the acquisition. Therefore in June 1999, APF
     entered into a termination agreement with the general partners of the
     Partnership.



                                       37
<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 General Partners of the Registrant are James M. Seneff, Jr., Robert A.
Bourne and CNL Realty Corporation, a Florida corporation. The General Partners
manage and control the Partnership's affairs and have general responsibility and
the ultimate authority in all matters affecting the Partnership's business. The
Partnership has available to it the services, personnel and experience of CNL
Fund Advisors, Inc., CNL Financial Group, Inc. and their affiliates, all of
which are affiliates of the General Partners.

     James M. Seneff, Jr., age 53, 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 co-venturer
in over 100 real estate ventures. These ventures have involved the financing,
acquisition, construction, and leasing of restaurants, office buildings,
apartment complexes, hotels, and other real estate. Mr. Seneff is a principal
stockholder of CNL Holdings, Inc., the parent company of CNL Financial Group,
Inc. (formerly CNL Group, Inc.), a diversified real estate company, and has
served as a director, Chairman of the Board and Chief Executive Officer of CNL
Financial Group, Inc. since its formation in 1980. Mr. Seneff has served as a
director and Chairman of the Board since inception in 1994, and served as Chief
Executive Officer from 1994 through August 1999, of CNL American Properties
Fund, Inc., a public, unlisted real estate investment trust. He also served as a
director, Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors, Inc., the advisor to CNL American Properties Fund, Inc. until it
merged with the company in September 1999. In addition, he serves as a director,
Chairman of the Board and Chief Executive Officer of CNL Health Care Properties,
Inc., as well as CNL Health Care Corp., the advisor to the company. He also
serves as director, Chairman of the Board and Chief Executive Officer of CNL
Hospitality Properties, Inc., a public, unlisted real estate investment trust,
as well as CNL Hospitality Corp., its advisor. Since 1992, Mr. Seneff has served
as Chairman of the Board and Chief Executive Officer of Commercial Net Lease
Realty, Inc., a public real estate investment trust that is listed on the New
York Stock Exchange. Mr. Seneff has also served as a director, Chairman of the
Board and Chief Executive Officer of the following affiliated companies since
formation: CNL Securities Corp., since 1979; CNL Investment Company, since 1990;
and CNL Institutional Advisors, a registered investment advisor for pension
plans, since 1990. Mr. Seneff formerly served as a director of First Union
National Bank of Florida, N.A., and currently serves as the Chairman of the
Board of CNLBank. Mr. Seneff 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 is Florida's principal investment advisory and money management
agency and oversees the investment of more than $60 billion of retirement funds.
Mr. Seneff received his degree in Business Administration from Florida State
University in 1968.

     Robert A. Bourne, age 52, Since joining CNL Securities Corp. in 1979, Mr.
Bourne has participated as a general partner or co-venturer in over 100 real
estate ventures involved in the financing, acquisition, construction, and
leasing of restaurants, office buildings, apartment complexes, hotels, and other
real estate. Mr. Bourne is the President and Treasurer of CNL Financial Group,
Inc. (formerly CNL Group, Inc.). Mr. Bourne has served as a director since
inception in 1994, President from 1994 through February 1999, Treasurer from
February 1999 through August 1999, and Vice Chairman of the Board since February
1999 of CNL American Properties Fund, Inc., a public, unlisted real estate
investment trust. He also served in the following positions for CNL Fund
Advisors, Inc., the advisor to CNL American Properties Fund, Inc. prior to its
merger with CNL American Properties Fund, Inc.: director from 1994 through
August 1999, Treasurer from July 1998 through August 1999, President from 1994
through September 1997, and Vice Chairman of the Board from September 1997
through August 1999. Mr. Bourne is a director and President of CNL Health Care
Properties, Inc., as well as a director and President of CNL Health Care Corp.,
the advisor to the company. He is also a director, Vice Chairman of the Board
and President of CNL



                                       38
<PAGE>

Hospitality Properties, Inc., a public, unlisted real estate investment trust,
as well as CNL Hospitality Corp., its advisor. Mr. Bourne also serves as a
director of CNLBank. He has served as a director since 1992, Vice Chairman of
the Board since February 1996, Secretary and Treasurer from February 1996
through 1997, and President from July 1992 through February 1996, of Commercial
Net Lease Realty Inc., a public real estate investment trust listed on the New
York Stock Exchange. Mr. Bourne holds the following positions for these
affiliates of CNL Financial Group, Inc.: director, President and Treasurer of
CNL Investment Company; director, President, Treasurer, and Registered Principal
of CNL Securities Corp., a subsidiary of CNL Investment Company and director,
President, Treasurer, and Chief Investment Officer of CNL Institutional
Advisors, Inc., a registered investment advisor for pension plans. Mr. Bourne
began his career as a certified public accountant employed by Coopers & Lybrand,
Certified Public Accountants, from 1971 through 1978, where he attained the
position of tax manager in 1975. Mr. Bourne graduated from Florida State
University in 1970 where he received a B.A. in Accounting, with honors.

     CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida. Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners. CNL
Realty Corporation was organized to serve as the corporate general partner of
real estate limited partnerships, such as the Partnership, organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships.

     CNL Fund Advisors, Inc. provides certain management services in connection
with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation organized in 1994 under the laws of the State of Florida, and its
principal office is located at 450 South Orange Avenue, Orlando, Florida 32801.
CNL Fund Advisors, Inc. was a majority owned subsidiary of CNL Financial Group,
Inc., until its merger effective September 1, 1999. On September 1, 1999, CNL
American Properties Fund, Inc. acquired CNL Fund Advisors, Inc. and was
organized to perform property acquisition, property management and other
services.

     CNL Financial Group, Inc., which was the parent company of CNL Fund
Advisors, Inc. through August 1999, was organized in 1980 under the laws of the
State of Florida. CNL Financial Group, Inc. is a diversified real estate company
which provides a wide range of real estate, development and financial services
to companies in the United States through the activities of its subsidiaries.
These activities are primarily focused on the franchised restaurant and
hospitality industries. James M. Seneff, Jr., an individual General Partner of
the Partnership, is the Chairman of the Board, Chief Executive Officer, and a
director of CNL Financial Group, Inc. Mr. Seneff and his wife own all of the
outstanding shares of CNL Holdings, Inc., the Parent company of CNL Financial
Group, Inc.

     The following persons serve as operating officers of CNL Financial Group,
Inc. or its affiliates or subsidiaries in the discretion of the Boards of
Directors of those companies, but, except as specifically indicated, do not
serve as members of the Boards of Directors of those entities. The Boards of
Directors have the responsibility for creating and implementing the policies of
CNL Financial Group, Inc. and its affiliated companies.

     Curtis B. McWilliams, age 44, joined CNL Financial Group, Inc. in April
1997 and served as an Executive Vice President through August 1999. He serves as
Chief Executive Officer of CNL American Properties Fund, Inc. and CNL Fund
Advisors, Inc. In addition, Mr. McWilliams served as President of CNL Fund
Advisors, Inc. and as President of the Restaurant and Financial Services Groups
within CNL Financial Group, Inc. through August 1999. Mr. McWilliams served as
President of CNL American Properties Fund, Inc. from February 1999 through
August 1999 and previously served as Executive Vice President from February 1998
through February 1999. From September 1983 through March 1997, Mr. McWilliams
was employed by Merrill Lynch & Co., most recently as Chairman of Merrill
Lynch's Private Advisory Services until March 1997. 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.

     John T. Walker, age 41, serves as President and Chief Operating Officer of
CNL American Properties Fund, Inc. and CNL Fund Advisors, Inc. He served as
Executive Vice President of CNL American Properties Fund, Inc. from January 1996
through August 1999, as Chief Operating Officer since March 1995 through August
1999, and previously served as Senior Vice President from December 1994 through
August 1999. In addition, Mr. Walker has served as Executive Vice President of
CNL Fund Advisors, Inc. since January 1996 through August 1999, Chief Operating
Officer from April 1995 through August 1999, and previously served as Senior
Vice President from November 1994 through January 1996. In addition, Mr. Walker
previously served as Executive Vice President of CNL Hospitality Properties,
Inc. and CNL Hospitality Advisors, Inc. As of September 1, 1999, Mr. Walker
serves as President for CNL American Properties Fund, Inc. From May 1992 to May
1994, Mr. Walker, a certified public



                                       39
<PAGE>

accountant, was Executive Vice President for Finance and Administration and
Chief Financial Officer of Z Music, Inc., a cable television network
(subsequently acquired by Gaylord Entertainment), where he was responsible for
overall financial and administrative management and planning. From January 1990
through April 1992, Mr. Walker was Chief Financial Officer of the First Baptist
Church in Orlando, Florida. From April 1984 through December 1989, he was a
partner in the accounting firm of Chastang, Ferrell & Walker, P.A., where he was
the partner in charge of audit and consulting services, and from 1981 to 1984,
Mr. Walker was a Senior Consultant/Audit Senior at Price Waterhouse. Mr. Walker
is a Cum Laude graduate of Wake Forest University with a B.S. in Accountancy and
is a certified public accountant.

     Lynn E. Rose, age 51, Ms. Rose served as Secretary of CNL American
Properties Fund, Inc., a public, unlisted real estate investment trust, from
1994 through August 1999, and served as Treasurer from 1994 through February
1999. She also served as Treasurer of CNL Fund Advisors, Inc., from 1994 through
July 1998, and served as Secretary and a director from 1994 through August 1999,
at which point it merged with CNL American Properties Fund, Inc. In addition,
she is Secretary and Treasurer of CNL Health Care Properties, Inc., and serves
as Secretary of its subsidiaries. In addition, she serves as Secretary,
Treasurer and a director of CNL Health Care Corp., the advisor. to the company.
Ms. Rose also serves as Secretary and Treasurer of CNL Hospitality Properties,
Inc., a public, unlisted real estate investment trust, as Secretary, Treasurer
and a director of CNL Hospitality Corp., its Advisor, and as Secretary of the
subsidiaries of the company. Ms. Rose served as Secretary and Treasurer of
Commercial Net Lease Realty, Inc., a public real estate investment trust listed
on the New York Stock Exchange, from 1992 to February 1996, and as Secretary and
a director of CNL Realty Advisors, Inc., its advisor, from its inception in 1991
through 1997. She also served as Treasurer of CNL Realty Advisors, Inc. from
1991 through February 1996. Ms. Rose, a certified public accountant, has served
as Secretary of CNL Financial Group, Inc. (formerly CNL Group, Inc.) since 1987,
served as Controller from 1987 to 1993 and has served as Chief Financial Officer
since 1993. She also serves as Secretary of the subsidiaries of CNL Financial
Group, Inc. and holds various other offices in the subsidiaries. In addition,
she serves as Secretary for approximately 50 additional corporations affiliated
with CNL Financial Group, Inc. and its subsidiaries. Ms. Rose oversees the tax
and legal compliance for over 375 corporations, partnerships and joint ventures,
and the accounting and financial reporting for over 200 entities. 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. She was licensed as a
certified public accountant in 1979.

     Jeanne A. Wall, age 41, Ms. Wall served as Executive Vice President of CNL
American Properties Fund, Inc., a public, unlisted real estate investment trust,
from 1994 through August 1999, and as Executive Vice President of CNL Fund
Advisors, Inc., its advisor, from 1994 through August 1999, at which point it
merged with CNL American Properties Fund, Inc. Ms. Wall also serves as Executive
Vice President of CNL Health Care Properties, Inc. and CNL Health Care Corp.,
the Advisor to the Company. Ms. Wall also serves as Executive Vice President of
CNL Hospitality Properties, Inc., a public, unlisted real estate investment
trust, and serves as Executive Vice President and a director of CNL Hospitality
Corp., its advisor. She also serves as a director for CNLBank. Ms. Wall serves
as Executive Vice President of CNL Financial Group, Inc. (formerly CNL Group,
Inc.). Ms. Wall has served as Chief Operating Officer of CNL Investment Company
and of CNL Securities Corp. since 1994 and has served as Executive Vice
President of CNL Investment Company since January 1991. In 1984, Ms. Wall joined
CNL Securities Corp. and in 1985, became Vice President. In 1987, she became a
Senior Vice President and in July 1997, 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, communications and
investor services for programs offered through participating brokers. Ms. Wall
also served as Senior Vice President of CNL Institutional Advisors Inc., a
registered investment advisor, from 1990 to 1993. Ms. Wall served as Vice
President of Commercial Net Lease Realty, Inc., a public real estate investment
trust listed on the New York Stock Exchange, from 1992 through 1997, and served
as Vice President of CNL Realty Advisors, Inc. from its inception in 1991
through 1997. Ms. Wall currently serves as a trustee on the Board of the
Investment Program Association, is a member of the Corporate Advisory Council
for the International Association for Financial Planning and is a member of IWF,
International Women's Forum. In addition, she previously served on the Direct
Participation Program committee for the National Association of Securities
Dealers, Inc. Ms. Wall holds a B.A. in Business Administration from Linfield
College and is a registered principal of CNL Securities Corp.

     Steven D. Shackelford, age 36, a certified public accountant, serves as
Senior Vice President, Chief Financial Officer, and Secretary of CNL American
Properties Fund, Inc. and CNL Fund Advisors, Inc. He served as Chief Financial
Officer of CNL American Properties Fund, Inc. from January 1997 and as Chief
Financial Officer



                                       40
<PAGE>

of CNL Fund Advisors, Inc. since September 1996 through August 1999. From March
1995 to July 1996, Mr. Shackelford was a senior manager in the national office
of Price Waterhouse where he was responsible for advising foreign clients
seeking to raise capital and a public listing in the United States. From August
1992 to March 1995, he served as a manager in the Price Waterhouse, Paris,
France office serving several multinational clients. Mr. Shackelford was an
audit staff and audit senior from 1986 to 1992 in the Orlando, Florida office of
Price Waterhouse. Mr. Shackelford received a B.A. in Accounting, with honors,
and a Masters of Business Administration from Florida State University.


Item 11. Executive Compensation

     Other than as described in Item 13, the Partnership has not paid and does
not intend to pay any executive compensation to the General Partners or any of
their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.


Item 12. Security Ownership of Certain Beneficial Owners and Management

     As of March 15, 2000, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.

     The following table sets forth, as of March 15, 2000, the beneficial
ownership interests of the General Partners in the Registrant.

<TABLE>
<CAPTION>

                                                                  Amount and Nature of
     Title of Class                  Name of Partner              Beneficial Ownership     Percent of Class
--------------------------         -------------------            --------------------     -----------------
<S>                                <C>                                <C>                          <C>
General Partnership Interests      James M. Seneff, Jr.                                              45%
                                   Robert A. Bourne                                                  45%
                                   CNL Realty Corporation                                            10%
                                                                                           --------------
                                                                                                    100%
                                                                                           ==============

Limited Partnership Interest       James M. Seneff, Jr.               2,500 Units                  0.07%
                                   Robert A. Bourne                   2,500 Units                  0.07%
                                                                                           --------------
                                                                                                   0.14%
                                                                                           ==============
</TABLE>


     Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.



                                       41
<PAGE>

Item 13. Certain Relationships and Related Transactions

     The table below summarizes the types, recipients, methods of computation
and amounts of compensation, fees and distributions paid or payable by the
Partnership to the General Partners and their affiliates for the year ended
December 31, 1999, exclusive of any distributions to which the General Partners
or their affiliates may be entitled in the event they purchase Units.

<TABLE>
<CAPTION>

                                                                                                     Amount Incurred
         Type of Compensation                                                                          For the Year
            and Recipient                             Method of Computation                      Ended December 31, 1999
---------------------------------------    ---------------------------------------------   -------------------------------------
<S>                                        <C>                                             <C>
Reimbursement    to   affiliates   for     Operating  expenses  are  reimbursed  at the    Operating   expenses   incurred   on
operating expenses                         lower   of  cost  or  90   percent   of  the    behalf of the Partnership:  $88,400
                                           prevailing   rate   at   which    comparable
                                           services could have been obtained
                                           in the Accounting and
                                           administra-tive same geographic
                                           area. Affiliates of the services:
                                           $82,382 General Partners from time
                                           to time incur certain operating
                                           expenses on behalf of the
                                           Partnership for which the
                                           Partnership reimburses the
                                           affiliates without interest.

Annual management fee to affiliates        One percent of the sum of gross                 $30,235
                                           revenues (excluding noncash lease
                                           accounting adjustments) from
                                           Properties wholly owned by the
                                           Partnership plus the Partnership's
                                           allocable share of gross revenues of
                                           joint ventures in which the
                                           Partnership is a co-venturer. The
                                           management fee, which will not exceed
                                           competitive fees for comparable
                                           services in the same geographic area,
                                           may or may not be taken, in whole or
                                           in part as to any year, in the sole
                                           discretion of the affiliates. All or
                                           any portion of the management fee not
                                           taken as to any fiscal year shall be
                                           deferred without interest and may be
                                           taken in such other fiscal year as
                                           the affiliates shall determine.
</TABLE>



                                       42
<PAGE>

<TABLE>
<CAPTION>

                                                                                                     Amount Incurred
         Type of Compensation                                                                          For the Year
            and Recipient                             Method of Computation                      Ended December 31, 1999
---------------------------------------    ---------------------------------------------   -------------------------------------
<S>                                        <C>                                             <C>
Deferred,   subordinated  real  estate     A deferred, subordinated real estate            $-0-
disposition fee payable to the affiliates  disposition fee, payable upon sale of
                                           one or more Properties, in an amount
                                           equal to the lesser of (i) one-half
                                           of a competitive real estate
                                           commission, or (ii) three percent of
                                           the sales price of such Property or
                                           Properties. Payment of such fee shall
                                           be made only if the Affiliates
                                           provides a substantial amount of
                                           services in connection with the sale
                                           of a Property or Properties and shall
                                           be subordinated to certain minimum
                                           returns to the limited partners.

General      Partners'       deferred,     A deferred, subordinated share equal            $-0-
subordinated  share of Partnership net     to five percent of Partnership
cash flow                                  distributions of net cash flow,
                                           subordinated to certain minimum
                                           returns to the Limited Partners.



General      Partners'       deferred,     A deferred, subordinated share equal            $-0-
subordinated  share of Partnership net     to five percent of Partnership
sales  proceeds  from a sale or  sales     distributions of such net sales
not in liquidation of the Partnership      proceeds, subordinated to certain
                                           minimum returns to the Limited
                                           Partners.

General     Partners'     share     of     Distributions of net sales proceeds             $-0-
Partnership  net sales proceeds from a     from a sale or sales of substantially
sale or  sales in  liquidation  of the     all of the Partnership's assets will
Partnership                                be distributed in the following order
                                           or priority: (i) first, to pay all
                                           debts and liabilities of the
                                           Partnership and to establish
                                           reserves; (ii) second, to Partners
                                           with positive capital account
                                           balances, determined after the
                                           allocation of net income, net loss,
                                           gain and loss, in proportion to such
                                           balances, up to amounts sufficient to
                                           reduce such balances to zero; and
                                           (iii) thereafter, 95% to the Limited
                                           Partners and 5% to the General
                                           Partners.
</TABLE>



                                       43
<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 Certified Public Accountants

               Balance Sheets at December 31, 1999 and 1998

               Statements of Income for the years ended December 31, 1999, 1998,
               and 1997

               Statements of Partners' Capital for the years ended December 31,
               1999, 1998, and 1997

               Statements of Cash Flows for the years ended December 31, 1999,
               1998, and 1997

               Notes to Financial Statements

     2.   Financial Statement Schedule

               Schedule II - Valuation and Qualifying Accounts for the years
               ended December 31, 1999, 1998, and 1997

               Schedule III - Real Estate and Accumulated Depreciation at
               December 31, 1999

               Notes to Schedule III - Real Estate and Accumulated Depreciation
               at December 31, 1999

               All other Schedules are omitted as the required information is
               inapplicable or is presented in the financial statements or notes
               thereto.

     3.   Exhibits

          **3.1         Affidavit and Certificate of Limited Partnership of CNL
                        Income Fund XVIII, Ltd. (Filed as Exhibit 3.2 to the
                        Registrant's Registration Statement on Form S-11, No.
                        33-90998-01, incorporated herein by reference.)

          **3.2         Amended and Restated Agreement of Limited Partnership of
                        CNL Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to
                        Form 10-K filed with the Securities and Exchange
                        Commission on March 21, 1996, and incorporated herein by
                        reference.)

          **4.1         Affidavit and Certificate of Limited Partnership of CNL
                        Income Fund XVIII, Ltd. (Filed as Exhibit 3.2 to
                        Registrant's Registration Statement on Form S-11, No.
                        33-90998-01 and incorporated herein by reference.)

          **4.2         Amended and Restated Agreement of Limited Partnership of
                        CNL Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to
                        Form 10-K filed with the Securities and Exchange
                        Commission on March 21, 1996, and incorporated herein by
                        reference.)

          **4.3         Form of Agreement between CNL Income Fund XVII, Ltd. and
                        MMS Escrow and Transfer Agency, Inc. and between CNL
                        Income Fund XVIII, Ltd. and MMS Escrow and Transfer
                        Agency, Inc. relating to the Distribution Reinvestment
                        Plans (Filed as Exhibit 4.4 to the Registrant's
                        Registration Statement on Form S-11, No. 33-90998,
                        incorporated herein by reference.)



                                       44
<PAGE>

          **5.1         Opinion of Baker & Hostetler as to the legality of the
                        securities being registered by CNL Income Fund XVIII,
                        Ltd. (Filed as Exhibit 5.2 to Amendment No. Three to the
                        Registrant's Registration Statements on Form S-11, No.
                        33-90998, incorporated herein by reference.)

          **8.1         Opinion of Baker & Hostetler regarding certain material
                        tax issues relating to CNL Income Fund XVIII, Ltd.
                        (Filed as Exhibit 8.1 to Amendment No. Three to the
                        Registrant's Registration Statement on Form S-11, No.
                        33-90998, incorporated herein by reference.)

          **8.2         Opinion of Baker & Hostetler regarding certain material
                        issues relating to the Distribution Reinvestment Plan of
                        CNL Income Fund XVIII, Ltd. (Filed as Exhibit 8.4 to
                        Amendment No. Three to the Registrant's Registration
                        Statement on Form S-11, No. 33-90998, incorporated
                        herein by reference.)

          **8.3         Amended Opinion of Baker & Hostetler regarding certain
                        material issues relating to CNL Income Fund XVIII, Ltd.
                        (Filed as Exhibit 8.5 to Post-Effective Amendment No.
                        Four to the Registrant's Registration Statement on Form
                        S-11, No. 33-90998, incorporated herein by reference.)

          **10.1        Management Agreement between CNL Income Fund XVIII, Ltd.
                        and CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to
                        Form 10-K filed with the Securities and Exchange
                        Commission on March 20, 1997, and incorporated herein by
                        reference.)

          **10.2        Form of Joint Venture Agreement for Joint Ventures with
                        Unaffiliated Entities (Filed as Exhibit 10.2 to the
                        Registrant's Registration Statement on Form S-11, No.
                        33-90998, incorporated herein by reference.)

          **10.3        Form of Joint Venture Agreement for Joint Ventures with
                        Affiliated Programs (Filed as Exhibit 10.3 to the
                        Registrant's Registration Statement on Form S-11, No.
                        33-90998, incorporated herein by reference.)

          **10.4        Form of Development Agreement (Filed as Exhibit 10.5 to
                        the Registrant's Registration Statement on Form S-11,
                        No. 33-90998, incorporated herein by reference.)

          **10.5        Form of Indemnification and Put Agreement (Filed as
                        Exhibit 10.6 to the Registrant's Registration Statement
                        on Form S-11, No. 33-90998, incorporated herein by
                        reference.)

          **10.6        Form of Unconditional Guarantee of Payment and
                        Performance (Filed as Exhibit 10.7 to the Registrant's
                        Registration Statement on Form S-11, No. 33-90998,
                        incorporated herein by reference.)

          **10.7        Form of Lease Agreement for Existing Restaurant (Filed
                        as Exhibit 10.8 to the Registrant's Registration
                        Statement on Form S-11, No. 33-90998, incorporated
                        herein by reference.)

          **10.8        Form of Lease Agreement for Restaurant to be Constructed
                        (Filed as Exhibit 10.9 to the Registrant's Registration
                        Statement on Form S-11, No. 33-90998, incorporated
                        herein by reference.)

          **10.9        Form of Premises Lease for Golden Corral Restaurant
                        (Filed as Exhibit 10.10 to the Registrant's Registration
                        Statement on Form S-11, No. 33-90998, incorporated
                        herein by reference.)

          **10.10       Form of Agreement between CNL Income Fund XVII, Ltd. and
                        MMS Escrow and Transfer Agency, Inc. and between CNL
                        Income Fund XVIII, Ltd. and MMS Escrow and Transfer
                        Agency, Inc. relating to the Distribution Reinvestment
                        Plans (Filed as Exhibit



                                       45
<PAGE>

                        4.4 to the Registrant's Registration Statement on Form
                        S-11, No. 33-90998, incorporated herein by reference.)

          **10.11       Form of Cotenancy Agreement with Unaffiliated Entity
                        (Filed as Exhibit 10.12 to Amendment No. One to the
                        Registrant's Registration Statement on Form S-11, No.
                        33-90998, incorporated herein by reference.)


          **10.12       Form of Cotenancy Agreement with Affiliated Entity
                        (Filed as Exhibit 10.13 to Amendment No. One to the
                        Registrant's Registration Statement on Form S-11, No.
                        33-90998, incorporated herein by reference.)

          **10.13       Form of Registered Investor Advisor Agreement (Filed as
                        Exhibit 10.14 to Amendment No. One to the Registrant's
                        Registration Statement on Form S-11, No. 33-90998,
                        incorporated herein by reference.)

             27         Financial Data Schedule (Filed herewith.)

           (b)          The Registrant filed no reports on Form 8-K during the
                        period October 1, 1999 through December 31, 1999.


**   previously filed



                                       46
<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 28th day of
March, 2000.

                                        CNL INCOME FUND XVIII, LTD.

                                        By:       CNL REALTY CORPORATION
                                                  General Partner

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


                                        By:       ROBERT A. BOURNE
                                                  General Partner

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


                                        By:       JAMES M. SENEFF, JR.
                                                  General Partner

                                                  /s/ James M. Seneff, Jr.
                                                  ------------------------
                                                  JAMES M. SENEFF, JR.



                                       47
<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>

     Signature                                      Title                                    Date
     ---------                                      -----                                    ----
<S>                                 <C>                                                 <C>
/s/ Robert A. Bourne                President,  Treasurer and Director (Principal       March 28, 2000
-----------------------
Robert A. Bourne                    Financial and Accounting Officer)

/s/ James M. Seneff, Jr.            Chief   Executive    Officer   and   Director       March 28, 2000
------------------------
James M. Seneff, Jr.                (Principal Executive Officer)
</TABLE>



                                       48
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 1999, 1998, and 1997


<TABLE>
<CAPTION>

                                                                Additions                            Deductions
                                                  --------------------------------------      -----------------------
                                                                                               Collected
                                                                                                or Deter-
                                      Balance at   Charged to  Charged to      Deemed            mined to    Balance
                                      Beginning    Costs and     Other         Uncollec-         be Col-      at End
Year            Description           of Year       Expenses   Accounts          tible          lectible     of Year
----          ----------------       -----------  ----------   ----------      ---------       ---------    ---------
<S>           <C>                    <C>          <C>          <C>             <C>             <C>          <C>
1997          Allowance for
                 doubtful
                 accounts (a)        $       --   $       --   $       35(b)   $       --(c)   $    --      $    35
                                     ==========   ==========   ==========      ==========      =======      =======

1998          Allowance for
                 doubtful
                 accounts (a)        $       35   $       --   $   70,921(b)   $       --(c)   $ 8,767      $62,189
                                     ==========   ==========   ==========      ==========      =======      =======

1999          Allowance for
                 doubtful
                 accounts (a)        $   62,189   $       --   $    6,392(b)   $    9,987(c)   $47,422      $11,172
                                     ==========   ==========   ==========      ==========      =======      =======
</TABLE>


(a)  Deducted from receivables on the balance sheet.

(b)  Reduction of rental and other income.

(c)  Amounts written off as uncollectible.



                                      F-1
<PAGE>

                          CNL INCOME FUND XVIII, LTD.
                        (A Florida Limited Partnership)

            SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1999


<TABLE>
<CAPTION>
                                                                                                            Costs Capitalized
                                                                                                              Subsequent To
                                                                                   Initial Cost                Acquisition
                                                                          -----------------------------  ------------------------
                                                            Encum-                        Buildings and   Improve-      Carrying
                                                           brances            Land         Improvements     ments         Costs
                                                        ------------      -------------   -------------  ------------   ---------
<S>                                                            <C>      <C>                 <C>              <C>                 <C>
Properties the Partnership
  has Invested in Under
  Operating Leases:

     Arby's Restaurant:
       Lexington, North Carolina                               --       $   210,977                --                --           --

     Bennigan's Restaurant:
       Sunrise, Florida                                        --         1,147,705           925,087                --           --

     Boston Market Restaurants:
       Raleigh, North Carolina                                 --           702,215           599,388                --           --
       Timonium, Maryland                                      --           769,653                --           429,774           --
       San Antonio, Texas                                      --           677,584                --           223,333           --
       Minnetonka, Minnesota (i)                               --           574,766                --            25,792 (h)       --

     Burger King Restaurant:
       Kinston, North Carolina                                 --           262,498           663,421                --           --

     Chevy's Fresh Mex Restaurant:
       Mesa, Arizona                                           --         1,029,236         1,598,376                --           --

     Golden Corral Family
       Steakhouse Restaurants:
           Houston, Texas                                      --           889,003                --           844,282           --
           Stow, Ohio                                          --           489,799                --                --           --
           Galveston, Texas                                    --           687,946                --           836,386           --
           Elizabethtown, Kentucky                             --           488,945                --         1,045,207           --
           Destin, Florida                                     --           565,354                --         1,022,196           --

     Ground Round Restaurant:
       Rochester, New York                                     --           525,891           582,882                --           --

     IHOP Restaurant:
       Santa Rosa, California                                  --           501,216                --                --           --

     Jack in the Box Restaurants:
       Centerville, Texas                                      --           261,913                --           543,079           --
       Echo Park, California                                   --           674,647                --           659,358           --
       Henderson, Nevada                                       --           522,741                --           608,548           --
       Houston, Texas                                          --           778,706                --           589,840           --

     Wendy's Restaurant:
       Sparta, Tennessee                                       --           221,537                --           432,842           --
                                                                        -----------       -----------       -----------       ------

                                                                        $11,982,332       $ 4,369,154       $ 7,260,637       $   --
                                                                        ===========       ===========       ===========       ======
</TABLE>

                          CNL INCOME FUND XVIII, LTD.
                        (A Florida Limited Partnership)

      SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                               December 31, 1999


<TABLE>
<CAPTION>
                                           Gross Amount at Which                                                 Life on Which
                                       Carried at Close of Period (c)                                           Depreciation in
                               ----------------------------------------------                 Date               Latest Income
                                                Buildings and                  Accumulated   of Con-     Date      Statement
                                   Land         Improvements       Total       Depreciation  struction Acquired   is Computed
                               -------------    -------------  --------------  ------------  --------  ---------  ----------
<S>                                 <C>              <C>           <C>              <C>       <C>       <C>       <C>
Properties the Partnership
  has Invested in Under
  Operating Leases:

     Arby's Restaurant:
       Lexington, North Carolina   $210,977               (f)       $210,977             -    1997      07/97        (d)
     Bennigan's Restaurant:
       Sunrise, Florida           1,147,705          925,087       2,072,792        47,522    1982      06/98        (b)

     Boston Market Restaurants:
       Raleigh, North Carolina      702,215          599,388       1,301,603        58,677    1994      01/97        (b)
       Timonium, Maryland           769,653          429,774       1,199,427        35,310    1997      05/97        (b)
       San Antonio, Texas           677,584          223,333         900,917        17,612    1997      04/97        (b)
       Minnetonka, Minnesota (i)    600,558 (h)           (f)        600,558             -    1997      04/97        (d)

     Burger King Restaurant:
       Kinston, North Carolina      262,498          663,421         925,919        66,542    1994      12/96        (b)

     Chevy's Fresh Mex Restaurant:
       Mesa, Arizona              1,029,236        1,598,376       2,627,612       106,666    1994      12/97        (b)

     Golden Corral Family
       Steakhouse Restaurants:
           Houston, Texas           889,003          844,282       1,733,285        77,374    1997      12/96        (b)
           Stow, Ohio               489,799               (f)        489,799             -    1997      04/97        (d)
           Galveston, Texas         687,946          836,386       1,524,332        72,994    1997      01/97        (b)
           Elizabethtown, Kentucky  488,945        1,045,207       1,534,152        76,493    1997      05/97        (b)
           Destin, Florida          565,354        1,022,196       1,587,550        64,704    1998      09/97        (b)

     Ground Round Restaurant:
       Rochester, New York          525,891          582,882       1,108,773        42,702    1981      10/97        (b)

     IHOP Restaurant:
       Santa Rosa, California       501,216               (f)        501,216             -    1997      05/97        (d)

     Jack in the Box Restaurants:
       Centerville, Texas           261,913          543,079         804,992        48,849    1997      01/97        (b)
       Echo Park, California        674,647          659,358       1,334,005        55,174    1997      01/97        (b)
       Henderson, Nevada            522,741          608,548       1,131,289        50,701    1997      01/97        (b)
       Houston, Texas               778,706          589,840       1,368,546        44,664    1997      05/97        (b)

     Wendy's Restaurant:
       Sparta, Tennessee            221,537          432,842         654,379        33,801    1997      04/97        (b)
                               -------------    -------------  --------------  ------------

                                $12,008,124      $11,603,999     $23,612,123      $899,785
                               =============    =============  ==============  ============
</TABLE>



                                       F-2
<PAGE>

                          CNL INCOME FUND XVIII, LTD.
                        (A Florida Limited Partnership)

      SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                               December 31, 1999


<TABLE>
<CAPTION>

                                                                                  Costs Capitalized
                                                                                     Subsequent To
                                                               Initial Cost           Acquisition
                                                 -----------------------------  ------------------------
                                 Encum-                          Buildings and   Improve-      Carrying
                                 brances             Land         Improvements     ments        Costs
                               ------------      -------------   -------------  ------------   ---------
<S>                                 <C>              <C>           <C>           <C>                <C>
Properties the Partnership
    Invested in Under
    Direct Financing Leases:

     Arby's Restaurant:
         Lexington, North Carolina  -                       -        $459,004             -           -

     Golden Corral Family
         Steakhouse Restaurant:
             Stow, Ohio             -                       -       1,280,986             -           -

     IHOP Restaurants:
         Bridgeview, Illinois       -                 354,227       1,151,199             -           -
         Santa Rosa, California     -                       -         859,306             -           -

     On the Border Restaurant:
         San Antonio, Texas         -                       -               -     1,288,148           -
                                                 -------------   -------------  ------------   ---------
                                    -                $354,227      $3,750,495    $1,288,148           -
                                                 =============   =============  ============   =========

Property of Joint Venture
    in Which the Partnership
    has a 39.93% Interest
    in Under an Operating Lease:

     Arby's Restaurant:
       Columbus, Ohio               -                $407,096               -      $498,684           -
                                                 =============   =============  ============   =========

Property of Joint Venture
    in Which the Partnership
    has a 57.20% Interest
    in Under an Operating Lease:

     Taco Bell Restaurant
       Portsmouth, Virginia         -                $254,046               -             -           -
                                                 =============   =============  ============   =========

Property of Joint Venture
    in Which the Partnership
    has a 57.20% Interest
    in Under a Direct Financing Lease:

     Taco Bell Restaurant
       Portsmouth, Virginia         -                       -        $323,725             -           -
                                                 =============   =============  ============   =========
</TABLE>



                          CNL INCOME FUND XVIII, LTD.
                        (A Florida Limited Partnership)

      SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                               December 31, 1999



<TABLE>
<CAPTION>

                                              Gross Amount at Which                                                 Life on Which
                                           Carried at Close of Period (c)                                          Depreciation in
                               ----------------------------------------------                 Date                  Latest Income
                                                Buildings and                  Accumulated   of Con-     Date         Statement
                                   Land         Improvements       Total       Depreciation  struction Acquired      Is Computed
                               -------------    -------------  --------------  ------------  --------  ---------  -----------------
<S>                                <C>              <C>             <C>            <C>        <C>       <C>
Properties the Partnership
    Invested in Under
    Direct Financing Leases:

     Arby's Restaurant:
         Lexington, North Carolina        -               (f)             (f)           (d)   1997      07/97         (d)

     Golden Corral Family
         Steakhouse Restaurant:
             Stow, Ohio                   -               (f)             (f)           (d)   1997      04/97         (d)

     IHOP Restaurants:
         Bridgeview, Illinois            (f)              (f)             (f)           (d)   1972      07/97         (e)
         Santa Rosa, California           -               (f)             (f)           (d)   1994      05/97         (d)

     On the Border Restaurant:
         San Antonio, Texas               -               (f)             (f)           (d)   1997      04/97         (d)



Property of Joint Venture
    in Which the Partnership
    has a 39.93% Interest
    in Under an Operating Lease:

     Arby's Restaurant:
       Columbus, Ohio              $407,096         $498,684        $905,780       $17,315    1998      08/98         (b)
                               =============    =============  ==============  ============

Property of Joint Venture
    in Which the Partnership
    has a 57.20% Interest
    in Under an Operating Lease:

     Taco Bell Restaurant
       Portsmouth, Virginia        $254,046               (g)       $254,046            (d)   1997      02/99         (d)
                               =============                   ==============

Property of Joint Venture
    in Which the Partnership
    has a 57.20% Interest
    in Under a Direct Financing Lease:

     Taco Bell Restaurant
       Portsmouth, Virginia              (g)              (g)             (g)           (d)   1997      02/99         (d)
</TABLE>




                                       F-3
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1999


(a)  Transactions in real estate and accumulated depreciation during 1999, 1998,
     and 1997 are summarized as follows:

<TABLE>
<CAPTION>

                                                                                                                        Accumulated
                                                                                                     Cost               Depreciation
                                                                                                 -----------             -----------
<S>                                                                                              <C>                     <C>
Properties the Partnership has Invested in Under
   Operating Leases:

     Balance, December 31, 1996                                                                  $ 1,531,069             $       301
     Acquisitions                                                                                 19,920,373                      --
     Depreciation expense                                                                                 --                 140,079
                                                                                                 -----------             -----------

     Balance, December 31, 1997                                                                   21,451,442                 140,380
     Acquisitions                                                                                  2,134,889                      --
     Depreciation expense (i)                                                                             --                 372,473
                                                                                                 -----------             -----------

     Balance, December 31, 1998                                                                   23,586,331                 512,853
     Acquisitions                                                                                     25,792                      --
     Depreciation expense (i)                                                                             --                 386,932
                                                                                                 -----------             -----------

     Balance, December 31, 1999                                                                  $23,612,123             $   899,785
                                                                                                 ===========             ===========

Property of Joint Venture in Which the Partnership has
   a 39.93% Interest and has Invested in Under an
   Operating Lease:

     Balance, December 31, 1997                                                                  $        --             $        --
     Acquisitions                                                                                    875,700                      --
     Depreciation expense                                                                                 --                      --
                                                                                                 -----------             -----------

     Balance, December 31, 1998                                                                      875,700                      --
     Acquisitions                                                                                     30,080                      --
     Depreciation expense                                                                                 --                  17,315
                                                                                                 -----------             -----------

     Balance, December 31, 1999                                                                  $   905,780             $    17,315
                                                                                                 ===========             ===========

Property of Joint Venture in Which the Partnership has
   a 57.20% Interest and has Invested in Under an
   Operating Lease:

     Balance, December 31, 1998                                                                  $        --             $        --
     Acquisitions                                                                                    254,046                      --
     Depreciation expense (d)                                                                             --                      --
                                                                                                 -----------             -----------

     Balance, December 31, 1999                                                                  $   254,046             $        --
                                                                                                 ===========             ===========
</TABLE>

(b)  Depreciation expense is computed for buildings and improvements based upon
     estimated lives of 30 years.



                                       F-4
<PAGE>

                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

  NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 1999



(c)  As of December 31, 1999, the aggregate cost of the Properties owned by the
     Partnership and the joint ventures for federal income tax purposes was
     $26,932,200 and $1,481,551, respectively. All of the leases are treated as
     operating leases for federal income tax purposes.

(d)  For financial reporting purposes, the portion of the lease relating to the
     building has been recorded as a direct financing leases. The cost of the
     building has been included in net investment in direct financing leases;
     therefore, depreciation is not applicable.

(e)  For financial reporting purposes, the lease for the land and building has
     been recorded as a direct financing lease. The cost of the land and
     building has been included in net investment in direct financing leases;
     therefore, depreciation is not applicable.

(f)  For financial reporting purposes, certain components of the lease relating
     to land and building have been recorded as a direct financing lease.
     Accordingly, costs relating to these components of this lease are not
     shown.

(g)  For financial reporting purposes, the portion of the lease relating to the
     building has been recorded as a direct financing lease. Accordingly costs
     relating to this component of this lease are not shown.

(h)  Amount represents site improvements and is included in total land value for
     this Property.

(i)  For financial reporting purposes, the undepreciated cost of the Property in
     Minnetonka, Minnesota, was written down to net realizable value due to an
     anticipated impairment in value. The Partnership recognized the impairment
     by recording an allowance for loss on land in the amount of $197,466 at
     December 31, 1998. The tenant of this Property declared bankruptcy and
     rejected the lease relating to this Property. The impairment at December
     31, 1998, represents the difference between the Property's carrying value
     at December 31, 1998, and the estimated net realizable value of the
     Property. The cost of the Property presented on this schedule is the gross
     amount at which the Property was carried at December 31, 1998, excluding
     the allowance for loss on land. No additional impairment was recorded for
     the year ended December 31, 1999.





                                       F-5
<PAGE>

                                  EXHIBIT INDEX


Exhibit Number

       **3.1         Affidavit and Certificate of Limited Partnership of CNL
                     Income Fund XVIII, Ltd. (Filed as Exhibit 3.2 to
                     Registrant's Registration Statement on Form S-11, No.
                     33-90998-01, incorporated herein by reference.)

       **3.2         Amended and Restated Agreement of Limited Partnership of
                     CNL Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to
                     Form 10-K filed with the Securities and Exchange Commission
                     on March 21, 1996, and incorporated herein by reference.)

       **4.1         Affidavit and Certificate of Limited Partnership of CNL
                     Income Fund XVIII, Ltd. (Filed as Exhibit 3.2 to
                     Registrant's Registration Statement on Form S-11 No.
                     33-90998-01, incorporated herein by reference.)

       **4.2         Amended and Restated Agreement of Limited Partnership of
                     CNL Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to
                     Form 10-K filed with the Securities and Exchange Commission
                     on March 21, 1996, and incorporated herein by reference.)

       **4.3         Form of Agreement between CNL Income Fund XVII, Ltd. and
                     MMS Escrow and Transfer Agency, Inc. and between CNL Income
                     Fund XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc.
                     relating to the Distribution Reinvestment Plans (Filed as
                     Exhibit 4.4 to the Registrant's Registration Statement on
                     Form S-11, No. 33-90998, incorporated herein by reference.)

       **5.1         Opinion of Baker & Hostetler as to the legality of the
                     securities being registered by CNL Income Fund XVIII, Ltd.
                     (Filed as Exhibit 5.2 to Amendment No. Three to the
                     Registrant's Registration Statements on Form S-11, No.
                     33-90998, incorporated herein by reference.)

       **8.1         Opinion of Baker & Hostetler regarding certain material tax
                     issues relating to CNL Income Fund XVIII, Ltd. (Filed as
                     Exhibit 8.2 to Amendment No. Three to the Registrant's
                     Registration Statement on Form S-11, No. 33-90998,
                     incorporated herein by reference.)

       **8.2         Opinion of Baker & Hostetler regarding certain material
                     issues relating to the Distribution Reinvestment Plan of
                     CNL Income Fund XVIII, Ltd. (Filed as Exhibit 8.4 to
                     Amendment No. Three to the Registrant's Registration
                     Statement on Form S-11, No. 33-90998, incorporated herein
                     by reference.)

       **8.3         Amended Opinion of Baker & Hostetler regarding certain
                     material issues relating to CNL Income Fund XVIII, Ltd.
                     (Filed as Exhibit 8.5 to Post-Effective Amendment No. Four
                     to the Registrant's Registration Statement on Form S-11,
                     No.33-90998, incorporated herein by reference.)

       **10.1        Management Agreement between CNL Income Fund XVIII, Ltd.
                     and CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to
                     Form 10-K filed with the Securities and Exchange Commission
                     on March 20, 1997, and incorporated herein by reference.)

       **10.2        Form of Joint Venture Agreement for Joint Ventures with
                     Unaffiliated Entities (Filed as Exhibit 10.2 to the
                     Registrant's Registration Statement on Form S-11, No.
                     33-90998, incorporated herein by reference.)

       **10.3        Form of Joint Venture Agreement for Joint Ventures with
                     Affiliated Programs (Filed as Exhibit 10.3 to the
                     Registrant's Registration Statement on Form S-11, No.
                     33-90998, incorporated herein by reference.)

       **10.4        Form of Development Agreement (Filed as Exhibit 10.5 to the
                     Registrant's Registration Statement on Form S-11, No.
                     33-90998, incorporated herein by reference.)
<PAGE>

       **10.5        Form of Indemnification and Put Agreement (Filed as Exhibit
                     10.6 to the Registrant's Registration Statement on Form
                     S-11, No. 33-90998, incorporated herein by reference.)

       **10.6        Form of Unconditional Guarantee of Payment and Performance
                     (Filed as Exhibit 10.7 to the Registrant's Registration
                     Statement on Form S-11, No. 33-90998, incorporated herein
                     by reference.)

       **10.7        Form of Lease Agreement for Existing Restaurant (Filed as
                     Exhibit 10.8 to the Registrant's Registration Statement on
                     Form S-11, No. 33-90998, incorporated herein by reference.)

       **10.8        Form of Lease Agreement for Restaurant to be Constructed
                     (Filed as Exhibit 10.9 to the Registrant's Registration
                     Statement on Form S-11, No. 33-90998, incorporated herein
                     by reference.)

       **10.9        Form of Premises Lease for Golden Corral Restaurant (Filed
                     as Exhibit 10.10 to the Registrant's Registration Statement
                     on Form S-11, No. 33-90998, incorporated herein by
                     reference.)

       **10.10       Form of Agreement between CNL Income Fund XVII, Ltd. and
                     MMS Escrow and Transfer Agency, Inc. and between CNL Income
                     Fund XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc.
                     relating to the Distribution Reinvestment Plans (Filed as
                     Exhibit 4.4 to the Registrant's Registration Statement on
                     Form S-11, No. 33-90998, incorporated herein by reference.)

       **10.11       Form of Cotenancy Agreement with Unaffiliated Entity (Filed
                     as Exhibit 10.12 to Amendment No. One to the Registrant's
                     Registration Statement on Form S-11, No. 33-90998,
                     incorporated herein by reference.)

       **10.12       Form of Cotenancy Agreement with Affiliated Entity (Filed
                     as Exhibit 10.13 to Amendment No. One to the Registrant's
                     Registration Statement on Form S-11, No. 33-90998,
                     incorporated herein by reference.)

       **10.13       Form of Registered Investor Advisor Agreement (Filed as
                     Exhibit 10.14 to Amendment No. One to the Registrant's
                     Registration Statement on Form S-11, No. 33-90998,
                     incorporated herein by reference.)

           27        Financial Data Schedule (Filed herewith.)


**   previously filed