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, 2001

                                       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 value 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  $30,810,000.  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,  CNL Portsmouth  Joint  Venture,  with CNL Income Fund XI,
Ltd., 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.  In June  2000,  the  Partnership  reinvested  the net  sales
proceeds  from the sale of the Property in Atlanta,  Georgia in a joint  venture
arrangement,  TGIF Pittsburgh Joint Venture, with CNL Income Fund VII, Ltd., CNL
Income Fund XV, Ltd.,  and CNL Income Fund XVI,  Ltd.,  each an affiliate of the
General  Partners,  to purchase  one  Property in  Homestead,  Pennsylvania.  In
January 2001, the Partnership  sold a portion of its interest in TGIF Pittsburgh
Joint Venture to CNL Income Fund VII, Ltd., a Florida limited partnership and an
affiliate of the General Partners,  for approximately  $500,000. The Partnership
used the net sales proceeds to pay  liabilities of the  Partnership  and to meet
the Partnership's  working capital needs.  During 2001, the Partnership sold its
Properties  in  Timonium,  Maryland and  Henderson,  Nevada and  reinvested  the
majority  of these net sales  proceeds  in a Property  in Denver,  Colorado,  as
tenants-in-common,   with  CNL  Income  Fund  VIII,   Ltd.,  a  Florida  limited
partnership and an affiliate of the General Partners.  In addition,  in December
2001, the Partnership sold its Property in Santa Rosa,  California.  As a result
of the above  transactions,  as of December 31, 2001, the  Partnership  owned 19
Properties directly,  and had interests in four additional Properties indirectly
through  joint  venture or tenancy in common  arrangements.  In January 2002 the
Partnership  reinvested a portion of the net sales proceeds from the sale of the
Property in Santa Rose, California in a Property in Houston, Texas. In addition,
in  January  2002,  the  Partnership  reinvested  the  remaining  net sales in a
Property in Austin, Texas, as tenants-in-common, with CNL Income Fund X, Ltd., a
Florida  limited  partnership  and an  affiliate  of the General  Partners.  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.

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.  The
leases are generally on a triple-net basis, with the lessee  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  $58,400 to $259,900.  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.

         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 17 of
the  Partnership's  23 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 of 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 July 2001, the Partnership  reinvested the majority of the net sales
proceeds it received from the sale of the  Properties in Timonium,  Maryland and
Henderson,  Nevada,  in a Property  located in Denver,  Colorado with CNL Income
Fund VIII, Ltd., as tenants-in-common,  as described below in "Joint Venture and
Tenancy  in  Common  Arrangements."  The  lease  terms  for  this  Property  are
substantially the same as the Partnership's other leases, as described above.

         In January 2002, the Partnership  reinvested a portion of the net sales
proceeds it received from the sale of the Property in Santa Rosa, California, in
a  Property  located  in  Austin,  Texas,  with  CNL  Income  Fund X,  Ltd.,  as
tenants-in-common,  as described  below in "Joint  Venture and Tenancy in Common
Arrangements."  In addition,  in January 2002,  the  Partnership  reinvested the
remaining net sales proceeds in a Property located in Houston,  Texas. The lease
terms for these Properties are substantially the same as the Partnership's other
leases, as described above.

Major Tenants

         During  2001,   four  lessees  of  the   Partnership,   Golden   Corral
Corporation,  Jack in the Box Inc.,  IHOP  Properties,  Inc., and S&A Properties
Corporation  and  Steak and Ale of  Colorado,  Inc.  (under  common  control  of
Metromedia  Restaurant Group,  hereinafter referred to as Metromedia  Restaurant
Group), each contributed more than ten percent of the Partnership's total rental
and earned income (including the Partnership's  share of total rental and earned
income from joint  ventures and the Property held as  tenants-in-common  with an
affiliate).  As of December 31, 2001,  Golden Corral  Corporation was the lessee
under leases relating to four  restaurants,  Jack in the Box Inc. was the lessee
relating to three leases, Metromedia Restaurant Group was the lessee relating to
two leases and IHOP Properties, Inc. was the lessee relating to one lease. It is
anticipated  that based on the minimum rental  payments  required by the leases,
Golden Corral Corporation,  Jack in the Box Inc. and Metromedia Restaurant Group
will each  continue to  contribute  more than ten  percent of the  Partnership's
total  rental and earned  income  (including  the  Partnership's  share of total
rental  and  earned  income  from  joint  ventures  and  the  Property  held  as
tenants-in-common  with an  affiliate)  in 2002.  In addition,  four  Restaurant
Chains, Golden Corral Family Steakhouse  Restaurants ("Golden Corral"),  Jack in
the Box,  Bennigan's,  and IHOP, each accounted for more than ten percent of the
Partnership's  total rental and earned income (including the Partnership's share
of total rental and earned  income from joint  ventures and the Property held as
tenants-in-common  with an affiliate) for 2001. In 2002, it is anticipated  that
Golden Corral, Jack in the Box and Bennigan's will each contribute more than ten
percent  of  the   Partnership's   rental  and  earned  income   (including  the
Partnership's  share of total rental and earned  income from joint  ventures and
the  Property  held  as  tenants-in-common  with  an  affiliate)  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 not able to re-lease the  Properties  in a timely
manner.  As of December 31, 2001,  Golden Corral  Corporation  leased Properties
with an  aggregate  carrying  value in excess of 20% of the total  assets of the
Partnership.


Joint Venture and Tenancy in Common 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,  CNL Portsmouth  Joint  Venture,  with CNL Income Fund XI,
Ltd., an affiliate of the General  Partners,  to purchase and hold one Property.
The  affiliate is a limited  partnership  organized  pursuant to the laws of the
State of Florida.  The joint venture agreement  provides for the Partnership and
its joint venture partner to share in all costs and benefits associated with the
joint venture in proportion to each partner's  percentage  interest in the joint
venture. The Partnership owns a 57.2% interest in the joint venture.

         In addition, in June 2000, the Partnership entered into a joint venture
arrangement,  TGIF Pittsburgh Joint Venture, with CNL Income Fund VII, Ltd., CNL
Income Fund XV, Ltd. and CNL Income Fund XVI,  Ltd.,  affiliates  of the General
Partners, to purchase 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 agreement provides for the Partnership and its joint venture partners to
share in all costs and benefits  associated with the joint venture in proportion
to each partner's percentage interest in the joint venture. In January 2001, the
Partnership  sold a portion of its interest in TGIF Pittsburgh  Joint Venture to
CNL Income Fund VII, Ltd., a Florida limited partnership and an affiliate of the
General  Partners,  for  approximately  $500,000.  As of December 31, 2001,  the
Partnership  owned a 19.78% interest in the joint venture.  The Partnership used
the net sales  proceeds to pay  liabilities of the  Partnership  and to meet the
Partnership's working capital needs.

         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, CNL Portsmouth
Joint Venture and TGIF Pittsburgh  Joint Venture are distributed  39.93%,  57.2%
and 19.78%,  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.

         In addition to the above joint venture  agreements,  in July 2001,  the
Partnership  entered into an agreement to hold a Property as  tenants-in-common,
with CNL Income Fund VIII,  Ltd.,  an  affiliate  of the General  Partners.  The
agreement provides for the Partnership and the affiliate to share in the profits
and  losses  of the  Property  in  proportion  to  each  co-tenant's  percentage
interest.  The Partnership  owns an 80.7% interest in this Property.  CNL Income
Fund VIII, Ltd. is a limited  partnership  organized pursuant to the laws of the
State of Florida.  The tenancy in common  agreement  restricts each  co-tenant's
ability to sell,  transfer,  or assign its  interest  in the tenancy in common's
Property without first offering it for sale to the remaining co-tenant.

         In addition,  in January 2002, the Partnership  reinvested a portion of
the sales proceeds from the 2001 sale of the Property in Santa Rosa,  California
in a Property in Austin,  Texas, as  tenants-in-common,  with CNL Income Fund X,
Ltd., a Florida limited  partnership  and an affiliate of the General  Partners.
The Partnership entered into a separate  long-term,  triple-net lease with terms
substantially the same as its other leases for each property.

         The use of joint venture and tenancy in common  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  and  tenancy in common  arrangements  also  provides  the
Partnership  with  increased  diversification  of its portfolio  among a greater
number of properties.

Management Services

         CNL APF Partners,  LP, 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 APF Partners,  LP (the  "Advisor") 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.  The Advisor also assists the General  Partners in  negotiating  the
leases.  For these  services,  the  Partnership has agreed to pay the Advisor 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.

         Effective July 1, 2000, CNL Fund Advisors, Inc. assigned its rights in,
and its obligations under, the management  agreement with the Partnership to the
Advisor. All of the terms and conditions of the management agreement,  including
the payment of fees, as described above, remain unchanged.

         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.

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.

Employees

         The  Partnership   has  no  employees.   The  officers  of  CNL  Realty
Corporation  and the officers and  employees  of CNL American  Properties  Fund,
Inc.,  the parent  company of the  Advisor,  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.,  a  diversified  real estate  company,  and its  affiliates,  who may also
perform certain services for the Partnership.


Item 2.  Properties

         As of December 31, 2001, the Partnership owned 23 Properties. Of the 23
Properties,  19 are  owned by the  Partnership  in fee  simple,  three are owned
through joint venture  arrangements and one is owned through a tenancy in common
arrangement.  See  Item 1.  Business  - Joint  Venture  and  Tenancy  in  Common
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, 2001, the Partnership's  Property sites ranged
from  approximately  24,400 to 148,500  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, 2001 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, 2001.

               State                                 Number of Properties

               Arizona                                         1
               California                                      1
               Colorado                                        1
               Florida                                         2
               Illinois                                        1
               Kentucky                                        1
               Minnesota                                       1
               North Carolina                                  3
               New York                                        1
               Ohio                                            2
               Pennsylvania                                    1
               Tennessee                                       1
               Texas                                           6
               Virginia                                        1
                                                         --------------
               TOTAL PROPERTIES                               23
                                                         ==============

         Buildings.  Each  of the  Properties  owned  by the  Partnership  as of
December  31,  2001,  includes 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 2,100 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, 2001,  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, 2001, the aggregate cost of the Properties  owned by
the  Partnership  and  joint  ventures  for  federal  income  tax  purposes  was
$23,240,960 and $6,205,016, respectively.

         The following table lists the Properties owned by the Partnership as of
December 31, 2001 by Restaurant Chain.

                Restaurant Chain                        Number of Properties

                Arby's                                            2
                Bennigan's                                        2
                Boston Market                                     3
                Burger King                                       1
                Chevy's Fresh Mex                                 1
                Golden Corral                                     4
                Ground Round                                      1
                IHOP                                              1
                Jack in the Box                                   3
                NI's International Buffet                         1
                On the Border                                     1
                Taco Bell                                         1
                T.G.I. Friday's                                   1
                Wendy's                                           1
                                                            --------------
                TOTAL PROPERTIES                                 23
                                                            ==============

         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, 2001,  2000,  1999,  1998 and 1997 the Properties  were
83%, 80%, 96%, 96% and 100% occupied,  respectively. The following is a schedule
of the average rent per Property for each of the years ended December 31:
<TABLE>
<CAPTION>

                                     2001              2000              1999               1998               1997
                                 -------------     -------------    ---------------     --------------     -------------

 <c>
  Rental Revenues (1)(2)          $ 2,564,402       $ 2,888,408        $ 3,141,240        $ 2,953,285        $1,290,621
  Properties (2)                           19                20                 23                 24                22
  Average rent per
      property                      $ 134,969         $ 144,420          $ 136,576          $ 123,054           $58,665
</TABLE>

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

(2)      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, 2001 for the next ten years and thereafter.
<TABLE>
<CAPTION>

                                                                                     Percentage of
             Expiration Year          Number             Annual Rental               Gross Annual
                                     of Leases              Revenues                 Rental Income
             -----------------    ----------------    ---------------------    --------------------------

 <c>
              2001                             --                       --                      --
              2002                             --                       --                      --
              2003                             --                       --                      --
              2004                             --                       --                      --
              2005                             --                       --                      --
              2006                             --                       --                      --
              2007                             --                       --                      --
              2008                             --                       --                      --
              2009                             --                       --                      --
              2010                             --                       --                      --
              Thereafter                       19              $ 2,594,700                 100.00%
                                        ----------            -------------           -------------
              Total (1)                        19              $ 2,594,700                 100.00%
                                        ==========            =============           =============
</TABLE>

(1)      Excludes four Properties which were vacant at December 31, 2001.

         Leases  with Major  Tenants.  The terms of each of the leases  with the
Partnership's  major  tenants,  as of December 31, 2001 (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  three  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  $113,000 (ranging from  approximately
$77,900 to $132,200).

         Metromedia  Restaurant  Group leases two  Bennigan's  restaurants.  The
initial term of one lease is 11 years (expiring in 2019) and the initial term of
the other lease is ten years  (expiring  in 2018) and the average  minimum  base
annual rent is approximately  $218,400 (ranging from  approximately  $200,200 to
$236,600).

         IHOP Properties,  Inc. leases one IHOP restaurant.  The initial term of
the lease is 18 years  (expiring  in 2017) and the  minimum  base annual rent is
approximately $144,100.

Item 3.  Legal Proceedings

         On August 10, 1998,  DJD Partners VII, LLC served a lawsuit filed on or
about July 28, 1998 against Finest  Foodservice,  LLC and CNL Income Fund XVIII,
Ltd.,  DJD  Partners  VII,  LLC v. Finest  Foodservice,  LLC, et al, Case No. CT
98-014942,  in the District  Court of the Fourth  Judicial  District of Hennepin
County,  Minnesota,  alleging  a breach  of a  contract  entered  into by Finest
Foodservice,  LLC and assigned to CNL Income Fund XVIII, Ltd. in connection with
the  construction  of a Boston  Market  property in  Minnetonka,  Minnesota.  In
October  1998 Finest  Foodservice,  LLC filed for  bankruptcy  and  rejected its
lease,  causing the obligations of the contract to become the  responsibility of
CNL Income  Fund  XVIII,  Ltd.  On May 4, 2001,  the  District  Court  awarded a
judgment of approximately $85,400 to the plaintiff.  CNL Income Fund XVIII, Ltd.
is appealing the judgment.

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,  2002,  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  2001,
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 have the right to prohibit
transfers of Units. The price paid for any Unit transferred pursuant to the Plan
through December 31, 2001 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 2001 and 2000 other than
pursuant to the Plan, net of commissions.
<TABLE>
<CAPTION>

                                           2001 (1)                                      2000(1)
                             --------------------------------------     ------------------------------------------
                               High         Low          Average           High           Low          Average
                             ---------    ---------    ------------     -----------     ---------    -------------

 <c>
     First Quarter              $6.86       $ 6.80         $  6.83           $9.30        $ 7.45          $  8.73
     Second Quarter              6.57         6.57            6.57            6.65          6.65             6.65
     Third Quarter               6.30         6.30            6.30            7.27          7.27             7.27
     Fourth Quarter              8.00         8.00            8.00            6.47          6.47             6.47
</TABLE>

(1)      A total of 22,500 and 10,290 Units were transferred other than pursuant
         to  the  Plan  for  the  years  ended   December  31,  2001  and  2000,
         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.

         For each of the years ended December 31, 2001 and 2000, the Partnership
declared cash distributions of $2,800,000 to the Limited Partners. Distributions
of $700,000  were  declared at the close of each of the  Partnership's  calendar
quarters  during 2001 and 2000, to the Limited  Partners.  These amounts include
monthly  distributions  made in arrears  for the  Limited  Partners  electing to
receive such distributions on this basis. No amounts distributed to partners for
the years  ended  December  31, 2001 and 2000,  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.

         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>



                                    Year Ended        Year Ended      Year Ended      Year Ended       Year Ended
                                   December 31,      December 31,    December 31,    December 31,     December 31,
                                       2001              2000            1999            1998             1997
                                  ----------------  --------------- --------------- ---------------- ---------------

 <c>
    Revenues (1)                     $  2,681,283     $  3,021,125     $ 3,192,371      $ 3,097,757     $ 1,453,242
    Net income (3)(4)(5)                1,168,765        1,117,197       2,515,356        2,302,322       1,154,760
    Cash distributions
        declared                        2,800,000        2,800,000       2,799,998        2,657,764       1,310,885
    Net income per Unit                      0.33             0.32            0.72             0.66            0.51
    Cash distributions
        declared per Unit                    0.80             0.80            0.80             0.76            0.57
    Weighted average number
        of Limited Partner
        Unitsoutstanding (2)            3,500,000        3,500,000       3,500,000        3,495,278       2,279,801

                                       2001              2000            1999            1998             1997
                                  ----------------  --------------- --------------- ---------------- ----------------
    At December 31:
        Total assets                $  27,511,695    $  29,112,352     $30,866,006      $31,112,617     $31,807,255
        Total partners'                26,669,817       28,301,052      29,983,855       30,268,497      29,846,580
        capital
</TABLE>

(1)      Revenues include equity in earnings of joint ventures.

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

(3)      Net income for the years  ended  December  31,  2001,  2000,  and 1998,
         includes $708,377, $993,178 and $197,466, respectively, from provisions
         for write-down of assets.

(4)      Net income for the years  ended  December  31,  2001 and 1999,  include
         $429,072 and $46,300 from gains on sale of assets.

(5)      Net income for the year ended December 31, 2000, includes $100,000 from
         lease termination income.


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, 2001, the  Partnership  owned 23 Properties,
either directly or through joint venture or tenancy in common arrangements.

Capital Resources

         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  $1,684,911,  $2,310,051,  and  $2,797,040,  for the years ended
December  31,  2001,  2000,  and 1999,  respectively.  The decrease in cash from
operations  during 2001 and 2000,  each as compared to the  previous  year,  was
primarily a result of changes in income and expenses as described in "Results of
Operations" below.

         Other  sources and uses of capital  included the  following  during the
years ended December 31, 2001, 2000, and 1999.

         In  February  1999,  the  Partnership  entered  into  a  joint  venture
arrangement,  CNL  Portsmouth  Joint  Venture,  with CNL Income Fund XI, Ltd., a
Florida limited partnership and an affiliate of the General Partners, to own and
lease one  restaurant  Property.  As of December 31, 2001, 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.  In June 2000, the  Partnership  reinvested the net sales proceeds from
this sale into a joint venture arrangement,  TGIF Pittsburgh Joint Venture, with
CNL Income Fund VII,  Ltd.,  CNL Income Fund XV, Ltd.,  and CNL Income Fund XVI,
Ltd.,  each of which is a Florida  limited  partnership  and an affiliate of the
General Partners,  to own and lease one restaurant Property.  As of December 31,
2000, the  Partnership  had  contributed  approximately  $1,001,600 to the joint
venture. In January 2001, the Partnership sold a portion of its interest in TGIF
Pittsburgh  Joint  Venture  to CNL  Income  Fund VII,  Ltd.,  for  approximately
$500,000.  Because the  Partnership  sold 50% of its interest in TGIF Pittsburgh
Joint Venture at its current carrying value, no gain or loss was recognized.  As
of  December  31,  2001,  the   Partnership   had  a  remaining   investment  of
approximately  $501,500 in the joint venture  representing a 19.78%  interest in
this  joint  venture.  The  Partnership  used  the  net  sales  proceeds  to pay
liabilities of the  Partnership  and to meet the  Partnership's  working capital
needs.

         In June 2001, the Partnership  sold its Property in Timonium,  Maryland
to an unrelated  third party for  $875,000  and  received net sales  proceeds of
approximately  $848,600,  resulting  in a loss of  $18,855.  In July  2001,  the
Partnership  reinvested  the  majority of these sales  proceeds in a Property in
Denver,  Colorado,  as  tenants-in-common,  with CNL Income Fund VIII,  Ltd., as
described below.

         In July 2001, the Partnership sold its Property in Henderson, Nevada to
an unrelated  third party for  approximately  $1,314,700  and received net sales
proceeds  of  approximately  $1,278,000  resulting  in a gain  of  approximately
$177,900.  In July 2001, the Partnership  reinvested the majority of these sales
proceeds  in a Property  in Denver,  Colorado,  as  tenants-in-common,  with CNL
Income Fund VIII,  Ltd., a Florida  limited  partnership and an affiliate of the
General  Partners.  As of December 31, 2001,  the  Partnership  had  contributed
approximately  $1,766,400 for an 80.7% interest in the profits and losses of the
Property.

         In addition,  in December  2001, the  Partnership  sold its Property in
Santa Rosa, California to an unrelated third party for approximately  $1,718,800
and received net sales proceeds of approximately  $1,664,800 resulting in a gain
of approximately $270,100. In January 2002, the Partnership reinvested a portion
of these net sales  proceeds in a Property in Houston,  Texas and reinvested the
remaining   net  sales   proceeds   in  a   Property   in  Austin,   Texas,   as
tenants-in-common  with CNL Income Fund X, Ltd., a Florida  limited  partnership
and an affiliate of the General Partners.

         In  2001,  the  Partnership  entered  in a  promissory  note  with  the
corporate General Partner for a loan in the amount of $75,000 in connection with
the operations of the partnership.  The loan was uncollateralized,  non-interest
bearing and due on demand.  As of December 31, 2001, the  Partnership had repaid
the loan in full to the corporate General Partner.

         None of the Properties owned or to be acquired by the  Partnership,  or
the joint  ventures  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.

         In November  2001,  the  Partnership  entered into an agreement with an
unrelated third party to sell the On the Border property in San Antonio,  Texas.
As of March 15, 2002 the sale had not occurred.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments such as
demand  deposit  accounts  at  commercial  banks,   money  market  accounts  and
certificates  of deposit  with less than a 90 day  maturity  date,  pending  the
Partnership's  use  of  such  funds  to  pay  Partnership  expenses  or to  make
distributions  to the  partners.  At December  31,  2001,  the  Partnership  had
$226,136  invested in such  short-term  investments,  as compared to $479,603 at
December 31, 2000. As of December 31, 2001, the average  interest rate earned on
the rental income  deposited in demand deposit  accounts at commercial banks was
approximately  3.1% annually.  The funds  remaining at December 31, 2001 will be
used to pay distributions and other liabilities of the Partnership.

         In January 2002, the  Partnership  entered into a promissory  note with
the corporate General Partner for a loan in the amount of $125,000 in connection
with  the  operations  of  the  partnership.   The  loan  was  uncollateralized,
non-interest  bearing and due on demand.  As of March 15, 2002, the  Partnership
had repaid the loan in full to the corporate General Partner.

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 do not believe that  working  capital  reserves  are  necessary 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 current and anticipated future cash from operations, and
for the year ended December 31, 2001 loans from the corporate  General  Partner,
as  described   above  in  "Capital   Resources,"   the   Partnership   declared
distributions to the Limited Partners of $2,800,000, $2,800,000, and $2,799,998,
for the years ended  December  31,  2001,  2000,  and 1999,  respectively.  This
represents distributions of $0.80 per Unit, for each of the years ended December
31, 2001, 2000 and 1999. No distributions  were made to the General Partners for
the years ended December 31, 2001,  2000, or 1999. No amounts  distributed or to
be  distributed  to the Limited  Partners for the years ended December 31, 2001,
2000 or 1999,  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 2000, the General  Partners waived their right to receive future
distributions  from the Partnership,  including both  distributions of operating
cash flow and  distributions  of  liquidation  proceeds,  to the extent that the
cumulative amount of such distributions  would exceed the balance in the General
Partners'  capital  accounts as of December 31, 1999.  Accordingly,  the General
Partners were not allocated any net income and did not receive any distributions
during the years ended December 31, 2001 and 2000.

         As of December  31, 2001 and 2000,  the  Partnership  owed  $20,273 and
$53,181,  respectively, to related parties for operating expenses and accounting
and  administrative  services.  As  of  March  15,  2002,  the  Partnership  had
reimbursed  the  affiliates  all  such  amounts.  Other  liabilities,  including
distributions  payable,  increased to $821,605 at December 31, 2001, as compared
to $758,119 at December 31,  2000.  Liabilities  at December  31,  2001,  to the
extent they exceed cash and cash  equivalents at December 31, 2001, will be paid
from anticipated  future cash from operations,  loans from the General Partners,
or from future General Partners contributions.

Long-Term Liquidity

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

Critical Accounting Policies

         The  Partnership's  leases are  accounted  for under the  provisions of
Statement of Accounting Standard No. 13, "Accounting for Leases" ("FAS 13"), and
have been  accounted  for as operating  leases.  FAS 13 requires  management  to
estimate the economic  life of the leased  property,  the residual  value of the
leased  property and the present value of minimum lease  payments to be received
from the  tenant.  In  addition,  management  assumes  that all  payments  to be
received under its leases are collectible.  Changes in management's estimates or
assumption  regarding  collectibility of lease payments could result in a change
in accounting for the lease at the inception of the lease.

         The Partnership  accounts for its  unconsolidated  joint ventures using
the equity method of accounting. Under generally accepted principles, the equity
method of accounting is appropriate for entities that are partially owned by the
Partnership,  but for which  operations  of the  investee  are shared with other
partners. The Partnership's joint ventures agreement requires the consent of all
partners  on all  key  decisions  affecting  the  operations  of the  underlying
Property.

         Management  reviews its  Properties and  investments in  unconsolidated
entities  periodically  (no less than once per  year)  for  impairment  whenever
events or changes in  circumstances  indicate  that the  carrying  amount of the
assets may not be recoverable through operations.  Management determines whether
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 their fair value.

Results of Operations

         During  1999,  the  Partnership   owned  and  leased  25  wholly  owned
Properties  (including  one  Property  which was sold in 1999).  During 2000 and
2001, the  Partnership  owned and leased 22 wholly owned  Properties  (including
three  Properties  which  were sold in 2001).  In  addition,  during  1999,  the
Partnership was a co-venturer in two joint ventures,  that each owned and leased
one Property.  During 2000 and 2001,  the  Partnership  was a co-venturer in one
additional  joint venture that owned and leased one  Property,  and during 2001,
the   Partnership   owned  and  lease  one  Property  with  an   affiliate,   as
tenants-in-common.  As of December  31,  2001,  the  Partnership  owned,  either
directly  or  through  joint  venture  or  tenancy  in common  arrangements,  23
Properties,  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  $58,400  to
$259,900.  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,  2001,  2000,  and  1999,  the
Partnership  earned $2,465,515,  $2,772,490,  and $3,071,229,  respectively,  in
rental  income from  operating  leases and earned  income from direct  financing
leases.  The decrease in rental and earned income during 2001 and 2000,  each as
compared to the previous year, was partially due to 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.  During 1998, one of these
tenants in bankruptcy  rejected its lease and ceased  making rental  payments to
the  Partnership  for this lease.  The Partnership  continued  receiving  rental
payments relating to the leases that were not rejected until June 2000, at which
time the other  two  tenants  rejected  the  leases  relating  to two  remaining
Properties and ceased making rental payments. In June 2001, the Partnership sold
the Property in Timonium,  Maryland,  as described in "Capital  Resources."  The
Partnership  will not  recognize any rental and earned income from the remaining
vacant  Properties in  Minnetonka,  Minnesota  and San Antonio,  Texas until new
tenants for the Properties are located, or until the Properties are sold and the
proceeds  from such sales are  reinvested  in  additional  Properties.  The lost
revenues resulting from the remaining vacant  Properties,  could have an adverse
affect on the results of operations of the Partnership if the Partnership is not
able to re-lease these  Properties in a timely manner.  The General Partners are
currently seeking either new tenants or purchasers for these vacant Properties.

         Rental and earned income also decreased  during 2001 and 2000,  each as
compared  to the  previous  year,  due to the fact  that in  October  2000,  the
Partnership  terminated the lease with the tenant of the Boston Market  Property
in  Raleigh,  North  Carolina,  due to  financial  difficulties  the  tenant was
experiencing.  In connection  therewith,  the Partnership  received  $100,000 in
lease  termination  income in  consideration  for the Partnership  releasing the
tenant from its obligations  under the lease. 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 sale are
reinvested in an additional Property. The Partnership is currently seeking a new
tenant or purchaser for this Property.

         Rental and earned income also decreased  during 2001 and 2000,  each as
compared to the previous  year, due to the fact that in June 2000, the tenant of
the On the Border  Property in San Antonio,  Texas  defaulted under the terms of
its lease,  vacated the Property and discontinued  making rental payments.  As a
result,  in 2000, the Partnership  reclassified the asset from net investment in
direct financing leases to land and buildings on operating leases. In accordance
with  Statement  of  Financial  Accounting  Standards  No. 13,  "Accounting  for
Leases,"  the  Partnership  recorded  the  reclassified  assets  at the lower of
original  cost,  present  fair  value,  or present  carrying  value.  No loss on
termination of direct  financing  leases was recorded.  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
sale are  reinvested in an additional  Property.  The  Partnership  is currently
seeking a new tenant or purchaser for this Property.

         The decrease in rental income during 2001 and 2000,  was also partially
due to the 2001 sale of the Property in Henderson,  Nevada, and the 1999 sale of
the Property in Atlanta,  Georgia, as described in "Capital  Resources." In June
2000,  the  Partnership  reinvested the net sales proceeds from the 1999 sale of
the  Property  in  Atlanta,  Georgia,  in  a  joint  venture  arrangement,  TGIF
Pittsburgh Joint Venture,  and in July 2001, the Partnership  reinvested the net
sales  proceeds  from the 2001 sale of the Property in Henderson,  Nevada,  in a
Property in Denver,  Colorado,  with an  affiliate  of the  General  Partners as
tenants-in-common.  Rental and earned  income are  expected to remain at reduced
amounts  while equity in earnings of joint  ventures is expected to increase due
to the fact that the Partnership  reinvested these net sales proceeds in a joint
venture  and  a  Property  with  an  affiliate  of  the  General  Partners,   as
tenants-in-common.

         During  the  years  ended  December  31,  2001,   2000  and  1999,  the
Partnership   also  earned   $197,012,   $112,863  and  $61,656,   respectively,
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 2001,
as compared to 2000, was primarily due to the  Partnership  reinvesting  the net
sales proceeds from the sale of the Property in Henderson, Nevada, in a Property
in Denver, Colorado,  during 2001, with an affiliate of the General Partners, as
tenants-in-common,  as  described  in "Capital  Resources".  The increase in net
income earned by joint ventures  during 2000, as compared to 1999, was primarily
attributable  to the  Partnership  entering into TGIF  Pittsburgh  Joint Venture
during 2000 and CNL  Portsmouth  Joint  Venture in February  1999,  as described
above in "Capital Resources."

         During  2001,   four  lessees  of  the   Partnership,   Golden   Corral
Corporation,  Jack  in the  Box  Inc.,  IHOP  Properties,  Inc.  and  Metromedia
Restaurant  Group,  each contributed more than ten percent of the  Partnership's
total  rental and earned  income  (including  the  Partnership's  share of total
rental  and  earned  income  from  joint  ventures  and  the  Property  held  as
tenants-in-common  with an  affiliate).  As of December 31, 2001,  Golden Corral
Corporation  was the lessee under leases relating to four  restaurants,  Jack in
the Box Inc.  was the lessee  relating to three  leases,  Metromedia  Restaurant
Group was the lessee  relating to two leases and IHOP  Properties,  Inc. was the
lessee relating to one lease. It is anticipated that based on the minimum rental
payments required by the leases, Golden Corral Corporation, Jack in the Box Inc.
and Metromedia  Restaurant  Group will each continue to contribute more than ten
percent of the  Partnership's  total  rental and earned  income  (including  the
Partnership's  share of total rental and earned  income from joint  ventures and
the Property held as tenants-in-common  with an affiliate) in 2002. In addition,
four Restaurant  Chains,  Golden Corral Family Steakhouse  Restaurants  ("Golden
Corral"),  Jack in the Box,  Bennigan's,  and IHOP, each accounted for more than
ten percent of the  Partnership's  total rental and earned income (including the
Partnership's  share of total rental and earned  income from joint  ventures and
the Property held as tenants-in-common  with an affiliate) for 2001. In 2002, it
is  anticipated  that Golden Corral,  Jack in the Box and  Bennigan's  will each
contribute more than ten percent of the  Partnership's  rental and earned income
(including the Partnership's  share of total rental and earned income from joint
ventures and the Property held as tenants-in-common  with an affiliate) 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 not able to re-lease the  Properties  in a timely
manner.

         During  the  years  ended  December  31,  2001,   2000  and  1999,  the
Partnership earned $18,756, $35,772, and $59,486,  respectively, in interest and
other  income.  The decrease in interest and other income  during 2001 and 2000,
each as  compared  to the  previous  year,  was  primarily  attributable  to the
decrease in the amount of funds invested in cash and cash equivalents due to the
acquisition  of an  additional  Property  in 1999  and the  investment  in joint
venture arrangements during 2000 and 1999.

         Operating expenses, including depreciation and amortization expense and
provisions for write-down on assets, were $1,941,590,  $1,819,055, and $723,315,
during the years ended  December  31,  2001,  2000 and 1999,  respectively.  The
increase in  operating  expenses  during 2001 and 2000,  each as compared to the
previous  year,  was partially due to the fact that the  Partnership  recorded a
provision  for  write-down  of assets of $387,138 and $553,317  during the years
ended  December 31, 2001 and 2000,  respectively,  relating to the Boston Market
Properties in Timonium,  Maryland;  Raleigh,  North  Carolina;  and San Antonio,
Texas.  The  tenant  of  the  Timonium  and  San  Antonio,  Properties  declared
bankruptcy and rejected the leases relating to these  Properties.  The tenant of
the  Raleigh  Property  terminated  its lease  with the  Partnership  and ceased
restaurant operations. The provisions represented the difference between each of
the  Properties'  carrying  values  and  the  General  Partners'  estimated  net
realizable  value of each of the  Properties.  No such provision was established
during the year ended December 31, 1999. In June 2001, the Partnership  sold the
Timonium,  Maryland Property,  as described in "Capital Resources." In addition,
during the year ended  December 31, 2000, the  Partnership  recorded a provision
for write-down of assets in the amount of $299,849 relating to the On the Border
Property in San Antonio,  Texas. The tenant of this Property defaulted under the
terms of its lease,  vacated the Property and ceased  operation during 2000. The
provision  represented the difference between the carrying value of the asset at
December 31, 2000, and the General Partners'  estimated net realizable value for
this Property.  During 2001, the Partnership  recognized an additional provision
for  write-down  of assets  relating  to this  Property of  $321,239.  The total
provision  represented the difference between the carrying value of the Property
at December 31, 2001 and the estimated net sales  proceeds from the  anticipated
sale of the Property  based on a purchase and sales  contract  with an unrelated
third party. As of March 15, 2002, the sale had not occurred.  No such provision
was  established  during the year ended  December  31,  1999.  The  increase  in
operating expenses during 2001, as compared to 2000, was partially  attributable
to the fact that during 2001, the  Partnership  incurred  approximately  $85,400
pursuant to a judgment  entered against the Partnership in a lawsuit relating to
the Property in Minnetonka,  Minnesota.  The General  Partners are appealing the
judgment. In addition,  the increase in operating expenses during 2001 and 2000,
each as compared to the previous  year,  was  partially due to the fact that the
Partnership incurred expenses such as insurance, repairs and maintenance,  legal
fees and real estate taxes relating to the vacant  Properties  described  above.
The Partnership  will continue to incur such costs until the  Partnership  finds
replacement tenants or purchasers for the remaining vacant Properties.

         The increase in operating  expenses  during 2001,  as compared to 2000,
was also partially  attributable to the fact that during 2000, the tenant of the
On the Border Property in San Antonio, Texas, in which the Partnership only owns
the building portion, subject to a ground lease, vacated the Property and ceased
restaurant  operations.  In accordance with an agreement executed in conjunction
with the execution of the initial lease,  the ground lessor,  the tenant and the
Partnership agreed that the Partnership would be provided certain rights to help
protect  its  interest  in the  building in the event of a default by the tenant
under the terms of the initial  lease.  As a result of the default by the tenant
and in order to preserve  its  interest in the  building,  during the year ended
December 31, 2001 and 2000, the Partnership incurred  approximately $135,900 and
$31,400,  respectively,  in rent  expense  relating  to the ground  lease of the
Property.  No such expense was recorded during the year ended December 31, 1999.
The Partnership will continue to incur such expense until the Partnership  finds
a replacement tenant for this Property.

         The increase in operating  expenses  during 2001,  as compared to 2000,
was also  partially  attributable  to an  increase  in the  costs  incurred  for
administrative  expenses for servicing the Partnership  and its  Properties,  as
permitted by the Partnership  agreement.  In addition, the increase in operating
expenses  during 2001,  as compared to 2000,  was partially due to the fact that
the Partnership  incurred  additional state taxes due to changes in the tax laws
of a state in which the Partnership conducts business.

         The increase in operating  expenses  during 2000,  as compared to 1999,
was partially  attributable to an increase in depreciation expense as the result
of the fact that the Properties  acquired  during 1999, and the fact that during
2000,  the  Partnership  reclassified  the lease relating to the Property in San
Antonio,  Texas from direct  financing lease to operating lease. The increase in
operating  expenses during 2001 and 2000, was partially  offset by a decrease in
the amount of transaction costs the Partnership incurred relating to the General
Partners retaining financial and legal advisors to assist them in evaluating and
negotiating  the proposed and terminated  Merger with APF, as described below in
"Termination of Merger."

         As a result of the sales of three  Properties,  as  described  above in
"Capital Resources," the Partnership  recognized total gains of $429,072 for the
year  ended  December  31,  2001.  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 the year ended December 31, 1999. No Properties
were sold during 2000.

         The lease termination  refund to tenant of $84,873 during 2000, was due
to lease  termination  negotiations  related to the 1999 sale of the Property in
Atlanta,  Georgia,  as  described in "Capital  Resources."  No such amounts were
incurred during 2001 or 1999. The Partnership does not anticipate  incurring any
additional costs related to the sale of this Property.

         The  restaurant  industry,  as a  whole,  has  been  one  of  the  many
industries  affected  by  the  general  slowdown  in  the  economy.   While  the
Partnership has experienced  some losses due to the financial  difficulties of a
limited number of restaurant operators, the General Partners remain confident in
the overall  performance  of the  fast-food  and family style  restaurants,  the
concepts that  comprise the  Partnership's  portfolio.  Industry data shows that
these  restaurant  concepts  continue to outperform  and remain more stable than
higher-end  restaurants,  those that have been more  adversely  affected  by the
slowing economy.

         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.
Inflation, overall, has had a minimal effect on the results of operations of the
Partnership.   Continued  inflation  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.

         In December 1999, the Securities and Exchange  Commission  released SAB
101, which provides the staff's view in applying generally  accepted  accounting
principles  to  selected  revenue  recognition  issues.  SAB  101  requires  the
Partnership  to defer  recognition  of certain  percentage  rental  income until
certain defined  thresholds are met. The  Partnership  adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material impact on the
Partnership's results of operations.

         In July 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141 "Business  Combinations" (FAS 141) and
Statement  of  Financial  Accounting  Standards  No.  142  "Goodwill  and  Other
Intangible  Assets" (FAS 142). The  Partnership has reviewed both statements and
has determined  that both FAS 141 and FAS 142 do not apply to the Partnership as
of December 31, 2001.

         In October  2001,  the  Financial  Accounting  Standards  Board  issued
Statement  of  Financial  Accounting  Standards  No.  144  "Accounting  for  the
Impairment or Disposal of Long-Lived  Assets" (FAS 144). This statement requires
that a long-lived asset be tested for recoverability  whenever events or changes
in circumstances  indicate that its carrying amount may not be recoverable.  The
carrying  amount of a long-lived  asset is not recoverable if it exceeds the sum
of the  undiscounted  cash flows  expected to result  from the use and  eventual
disposition of the asset.  The assessment is based on the carrying amount of the
asset  at the  date it is  tested  for  recoverability.  An  impairment  loss is
recognized  when the  carrying  amount of a  long-lived  asset  exceeds its fair
value.  If an  impairment  is  recognized,  the  adjusted  carrying  amount of a
long-lived asset is its new cost basis. The adoption of FAS 144 did not have any
effect on the  partnership's  recording of impairment  losses as this  Statement
retained  the  fundamental  provisions  of  FAS  No.  121  "Accounting  for  the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of".

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.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         Not applicable.


Item 8.  Financial Statements and Supplementary Data
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                                    CONTENTS









                                                                         Page

Report of Independent Certified Public Accountants                        18

Financial Statements:

     Balance Sheets                                                       19

     Statements of Income                                                 20

     Statements of Partners' Capital                                      21

     Statements of Cash Flows                                          22-23

     Notes to Financial Statements                                     24-42




               Report of Independent Certified Public Accountants





To the Partners
CNL Income Fund XVIII, Ltd.


In our opinion,  the accompanying  balance sheets and the related  statements of
income,  of partners'  capital and of cash flows present fairly, in all material
respects,  the  financial  position of CNL Income  Fund  XVIII,  Ltd. (a Florida
limited  partnership)  at  December  31,  2001 and 2000,  and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United  States of  America.  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 of America, 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 our opinion.




/s/ PricewaterhouseCoopers LLP

Orlando, Florida
February 8, 2002
<page>

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

                                 BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                                         December 31,
                                                                                 2001                    2000
                                                                          -------------------      ------------------

 <c>
                            ASSETS

  Land and buildings on operating leases, net                                   $ 18,917,589             $22,421,426
  Net investment in direct financing leases                                        3,145,098               3,984,296
  Investment in joint ventures                                                     3,011,159               1,762,821
  Cash and cash equivalents                                                          226,136                 479,603
  Restricted cash                                                                  1,662,201                      --
  Receivables, less allowance for doubtful accounts of
     $75,201 and $123,993,respectively                                                19,767                     346
  Accrued rental income                                                              513,016                 440,148
  Other assets                                                                        16,729                  23,712
                                                                          -------------------      ------------------

                                                                                $ 27,511,695             $29,112,352
                                                                          ===================      ==================

               LIABILITIES AND PARTNERS' CAPITAL

  Accounts payable                                                                $   92,368              $   33,559
  Escrowed real estate taxes payable                                                  12,817                  11,788
  Distributions payable                                                              700,000                 700,000
  Due to related parties                                                              20,273                  53,181
  Rents paid in advance                                                               11,441                   7,474
  Deferred rental income                                                               4,979                   5,298
                                                                          -------------------      ------------------
           Total liabilities                                                         841,878                 811,300

  Commitment (Note 13)

  Partners' capital                                                               26,669,817              28,301,052
                                                                          -------------------      ------------------

                                                                                $ 27,511,695             $29,112,352
                                                                          ===================      ==================

                See accompanying notes to financial statements.
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                              STATEMENTS OF INCOME

                                                                                Year Ended December 31,
                                                                      2001                2000               1999
                                                                ------------------   ---------------    ---------------
Revenues:
     Rental income from operating leases                             $  2,067,066       $ 2,327,142        $ 2,444,692
     Earned income from direct financing leases                           398,449           445,348            626,537
     Lease termination income                                                  --           100,000                 --
     Interest and other income                                             18,756            35,772             59,486
                                                                ------------------   ---------------    ---------------
                                                                        2,484,271         2,908,262          3,130,715
                                                                ------------------   ---------------    ---------------
Expenses:
     General operating and administrative                                 521,346           229,811            142,554
     Provision for doubtful accounts                                           --             2,973                 --
     Professional services                                                163,585            35,304             61,288
     Management fees to related party                                      24,943            27,875             30,235
     Real estate taxes                                                    121,188            87,603                 --
     State and other taxes                                                 22,252            17,604             21,983
     Depreciation and amortization                                        379,899           397,175            392,521
     Provisions for write-down of assets                                  708,377           993,178                 --
     Transaction costs                                                         --            27,532             74,734
                                                                ------------------   ---------------    ---------------
                                                                        1,941,590         1,819,055            723,315
                                                                ------------------   ---------------    ---------------

Income Before Gain on Sale of Assets, Termination
     Refund to Tenant, and Equity in Earnings of Joint
     Ventures                                                             542,681         1,089,207          2,407,400

Gain on Sale of Assets                                                    429,072                --             46,300

Termination Refund to Tenant                                                   --           (84,873  )              --

Equity in Earnings of Joint Ventures                                      197,012           112,863             61,656
                                                                ------------------   ---------------    ---------------

Net Income                                                           $  1,168,765       $ 1,117,197        $ 2,515,356
                                                                ==================   ===============    ===============

Allocation of Net Income:
     General partners                                                    $     --           $    --         $   (3,309  )
     Limited partners                                                   1,168,765         1,117,197          2,518,665
                                                                ------------------   ---------------    ---------------

                                                                     $  1,168,765       $ 1,117,197        $ 2,515,356
                                                                ==================   ===============    ===============

Net Income Per Limited Partner Unit                                    $     0.33         $    0.32          $    0.72
                                                                ==================   ===============    ===============

Weighted Average Number of
     Limited Partner Units Outstanding                                  3,500,000         3,500,000          3,500,000
                                                                ==================   ===============    ===============


                 See accompanying notes to financial statements.

<page>

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

                         STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 2001, 2000 and 1999


                                           General Partners                                         Limited Partners
                                        -----------------------------------    -----------------------------------------------------
                                                           Accumulated                                                Accumulated
                                        ntributions          Earnings         Contributions      Distributions         Earnings
                                        --------------   -----------------   -----------------   ---------------    ----------------

Balance, December 31, 1998                $     1,000         $    (3,010 )     $  35,000,000      $ (4,026,495 )      $  3,487,002

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

Balance, December 31, 1999                      1,000              (6,319 )        35,000,000        (6,826,493 )         6,005,667

    Contributions from limited partners
    Distributions to limited partners
       ($0.80 per limited partner unit)            --                  --                  --        (2,800,000 )                --
    Net income                                     --                  --                  --                --           1,117,197
                                        --------------   -----------------   -----------------   ---------------    ----------------

Balance, December 31, 2000                      1,000              (6,319 )        35,000,000        (9,626,493 )         7,122,864

    Contributions from limited partners
    Distributions to limited partners
       ($0.80 per limited partner unit)            --                  --                  --        (2,800,000 )                --
    Net income                                     --                  --                  --                --           1,168,765
                                        --------------   -----------------   -----------------   ---------------    ----------------

Balance, December 31, 2001                $     1,000         $    (6,319 )     $  35,000,000     $ (12,426,493 )      $  8,291,629
                                        ==============   =================   =================   ===============    ================

                See accompanying notes to financial statements.
<page>

------------------
    Syndication
       Costs            Total
   ---------------   -------------

     $ (4,190,000 )   $30,268,497


               --      (2,799,998 )
               --       2,515,356
   ---------------   -------------

       (4,190,000 )    29,983,855



               --      (2,800,000 )
               --       1,117,197
   ---------------   -------------

       (4,190,000 )    28,301,052



               --      (2,800,000 )
               --       1,168,765
   ---------------   -------------

     $ (4,190,000 )   $26,669,817
   ===============   =============


                See accompanying notes to financial statements.
<page>

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

                            STATEMENTS OF CASH FLOWS


                                                                              Year Ended December 31,
                                                                     2001              2000               1999
                                                                ---------------    --------------    ---------------

Increase (Decrease) in Cash and Cash Equivalents:

      Cash Flows from Operating Activities:
         Cash received from tenants                                $ 2,281,026       $ 2,738,192        $ 2,930,415
         Distributions from joint ventures                             203,437            97,264             60,076
         Interest received                                              17,822            41,937             53,448
         Cash paid for expenses                                       (817,374 )        (482,469 )         (246,899 )
         Lease termination refund                                           --           (84,873 )               --
                                                                ---------------    --------------    ---------------

             Net cash provided by operating activities               1,684,911         2,310,051          2,797,040
                                                                ---------------    --------------    ---------------

      Cash Flows from Investing Activities:
         Proceeds from sale of assets                                4,291,443                --            688,997
         Additions to land and buildings on operating
             leases                                                         --                --            (25,792 )
         Investment in joint ventures                               (1,766,420 )      (1,001,558 )         (526,138 )
         Decrease (increase) in restricted cash                     (1,663,401 )         688,997           (688,997 )
         Other                                                              --                --               (117 )
                                                                ---------------    --------------    ---------------

             Net cash provided by (used in) investing
                activities                                             861,622          (312,561 )         (552,047 )
                                                                ---------------    --------------    ---------------

      Cash Flows from Financing Activities:
         Reimbursement of acquisition and syndication
             costs paid by related parties on behalf of
             the Partnership                                                --                --             (2,495 )
         Proceeds from loan from corporate general
             partner                                                    75,000                --                 --
         Repayment of loan from corporate general
             partner                                                   (75,000 )              --                 --
         Distributions to limited partners                          (2,800,000 )      (2,800,000 )       (2,799,998 )
                                                                ---------------    --------------    ---------------

             Net cash used in financing activities                  (2,800,000 )      (2,800,000 )       (2,802,493 )
                                                                ---------------    --------------    ---------------

Net Decrease in Cash and Cash Equivalents                             (253,467 )        (802,510 )         (557,500 )

Cash and Cash Equivalents at Beginning of Year                         479,603         1,282,113          1,839,613
                                                                ---------------    --------------    ---------------

Cash and Cash Equivalents at End of Year                            $  226,136        $  479,603        $ 1,282,113
                                                                ===============    ==============    ===============

                See accompanying notes to financial statements.
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                      STATEMENTS OF CASH FLOWS - CONTINUED


                                                                              Year Ended December 31,
                                                                    2001                2000                1999
                                                               ---------------     ----------------    ---------------

Reconciliation of Net Income to Net Cash
   Provided by Operating Activities:

      Net income                                                 $  1,168,765         $  1,117,197       $  2,515,356
                                                               ---------------     ----------------    ---------------
      Adjustments to reconcile net income to
         net cash provided by operating
         activities:
             Depreciation                                             376,679              395,565            386,932
             Amortization                                               3,220                1,610              5,589
             Provision for doubtful accounts                               --               (2,973 )               --
             Equity in earnings of joint ventures net
                of distributions                                        6,425              (15,599 )           (1,580 )
             Provision for write-down of assets                       708,377              993,178                 --
             Gain on sale of assets                                  (429,072 )                 --                 --
             Decrease in net investment in direct
                financing leases                                       41,450               70,178             38,556
             Decrease (increase) in receivables                       (11,003 )             32,552            (29,925 )
             Increase in accrued rental income                       (218,691 )           (196,435 )         (152,726 )
             Decrease (increase) in other assets                        6,983              (14,371 )           (5,688 )
             Increase  (decrease)  in  accounts  payable
and                                                                    61,038              (40,947 )           83,736
                escrowed real estate taxes payable
             Increase   (decrease)  in  due  to  related              (32,908 )             16,444              6,457
parties               acquisition costs paid on b
             Increase (decrease) in rents paid in
                advance                                                 3,967               (6,495 )            6,618
             Decrease   (increase)  in  deferred  rental                 (319 )            (39,853 )          (56,285 )
income
                                                               ---------------     ----------------    ---------------
                   Total adjustments                                  516,146            1,192,854            281,684
                                                               ---------------     ----------------    ---------------

Net Cash Provided by Operating Activities                        $  1,684,911         $  2,310,051       $  2,797,040
                                                               ===============     ================    ===============

Supplemental Schedule of Non-Cash Financing Activities:

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

                See accompanying notes to financial statements.
<page>

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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 2001, 2000, and 1999


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%  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
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


1.       Significant Accounting Policies - Continued:

                  so as to produce a constant  periodic rent over the lease term
                  commencing on the date the property is placed in service.

                  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 are  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,
         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.
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


1.       Significant Accounting Policies - Continued:

         Investment  in  Joint  Ventures  -  The  Partnership's  investments  in
         Columbus  Joint  Venture,   CNL  Portsmouth   Joint  Venture  and  TGIF
         Pittsburgh Joint Venture and the property in Denver Colorado,  which is
         held as  tenants-in-common,  are  accounted for using the equity method
         since the joint venture agreement  requires the consent of all partners
         on all  key  decisions  affecting  the  operations  of  the  underlying
         property.

         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.

         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. See "Income Taxes"
         footnote for a  reconciliation  of net income for  financial  reporting
         purposes to net income for federal income tax purposes.

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


1.       Significant Accounting Policies - Continued:

         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 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.

         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.

         Reclassification   -  Certain  items  in  the  prior  years'  financial
         statements  have been  reclassified  to conform  to 2001  presentation.
         These reclassifications had no effect on total partners' capital or net
         income.

         Staff  Accounting  Bulletin No. 101 ("SAB 101") - In December 1999, the
         Securities and Exchange Commission released SAB 101, which provides the
         staff's view in applying  generally accepted  accounting  principles to
         selected revenue  recognition  issues. SAB 101 requires the Partnership
         to defer recognition of certain  percentage rental income until certain
         defined  thresholds are met. The Partnership  adopted SAB 101 beginning
         January  1,  2000.  Implementation  of SAB 101 did not have a  material
         impact on the Partnership's results of operations.

         Statement of  Financial  Accounting  Standards  No. 141 ("FAS 141") and
         Statement of Financial  Accounting Standards No. 142 ("FAS 142") - - In
         July 2001, the Financial Accounting Standards Board issued Statement of
         Financial  Accounting  Standards No. 141 "Business  Combinations"  (FAS
         141) and Statement of Financial  Accounting Standards No. 142 "Goodwill
         and Other  Intangible  Assets" (FAS 142). The  Partnership has reviewed
         both statements and has determined that both FAS 141 and FAS 142 do not
         apply to the Partnership as of December 31, 2001.
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


1.       Significant Accounting Policies - Continued:

         Statement of Financial  Accounting  Standards  No. 144 ("FAS 144") - In
         October 2001, the Financial Accounting Standards Board issued Statement
         of  Financial   Accounting   Standards  No.  144  "Accounting  for  the
         Impairment or Disposal of Long-Lived  Assets".  This statement requires
         that a long-lived asset be tested for recoverability whenever events or
         changes in  circumstances  indicate that its carrying amount may not be
         recoverable.   The  carrying  amount  of  a  long-lived  asset  is  not
         recoverable  if it  exceeds  the  sum of the  undiscounted  cash  flows
         expected to result from the use and eventual  disposition of the asset.
         The assessment is based on the carrying amount of the asset at the date
         it is tested for recoverability.  An impairment loss is recognized when
         the carrying amount of a long-lived asset exceeds its fair value. If an
         impairment is recognized,  the adjusted carrying amount of a long-lived
         asset is its new cost basis.  The  adoption of FAS 144 did not have any
         effect on the  partnership's  recording  of  impairment  losses as this
         Statement   retained  the   fundamental   provisions  of  FAS  No.  121
         "Accounting for the Impairment of Long-Lived  Assets and for Long-Lived
         Assets to be Disposed of".

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


3.       Land and Buildings on Operating Leases:

         Land and  buildings on operating  leases  consisted of the following at
         December 31:
<TABLE>
<CAPTION>

                                                                    2001                   2000
                                                             --------------------   --------------------

 <c>
                 Land                                               $  9,707,338           $ 11,670,473
                 Buildings                                            10,749,500             12,046,303
                                                             --------------------   --------------------
                                                                      20,456,838             23,716,776
                 Less accumulated depreciation                        (1,539,249 )           (1,295,350 )
                                                             --------------------   --------------------

                                                                    $ 18,917,589           $ 22,421,426
                                                             ====================   ====================
</TABLE>

         During the year ended  December 31, 2000,  the  Partnership  recorded a
         provision  for  write-down  of  assets  of  $656,409  relating  to  the
         properties located in Raleigh,  North Carolina and Timonium,  Maryland.
         The tenant of the property in Raleigh,  North  Carolina  terminated its
         lease.  The tenant of the  property  in  Timonium,  Maryland  filed for
         bankruptcy  in October  1998 and  rejected  the lease  relating to this
         property  in June  2000.  The  provisions  represented  the  difference
         between  the  net  carrying  value  of the  properties,  including  the
         accumulated  accrued rental income  balance,  at December 31, 2000, and
         the  general   partners'   estimated  net  realizable   value  for  the
         properties.  In June 2001,  the  Partnership  sold this  property to an
         unrelated  third party for $875,000 and received net sales  proceeds of
         approximately $848,600,  resulting in an additional loss of $18,855. In
         July 2001,  the  Partnership  reinvested  the  majority  of these sales
         proceeds   in  a   Bennigan's   property   in  Denver,   Colorado,   as
         tenants-in-common,  with CNL Income Fund VIII,  Ltd., a Florida limited
         partnership and an affiliate of the general partners (see Note 5).

         In July 2001, the Partnership sold its property in Henderson, Nevada to
         an unrelated third party for approximately  $1,314,700 and received net
         sales  proceeds  of  approximately  $1,278,000  resulting  in a gain of
         approximately  $177,900.  In July 2001, the Partnership  reinvested the
         majority of these sales  proceeds in a  Bennigan's  property in Denver,
         Colorado,  as  tenants-in-common,  with CNL Income Fund VIII,  Ltd.,  a
         Florida limited  partnership  and an affiliate of the general  partners
         (see Note 5).

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


3.       Land and Buildings on Operating Leases - Continued:

         In December  2001,  the  Partnership  sold its  property in Santa Rosa,
         California for which the building was classified as a direct  financing
         lease  (see  Note 4) to an  unrelated  third  party  for  approximately
         $1,718,800 and received net sales proceeds of approximately  $1,664,800
         resulting in a gain of  approximately  $270,100.  In January 2002,  the
         Partnership  reinvested  a portion  of these net  sales  proceeds  in a
         property in Houston, Texas (see Note 14). In addition, in January 2002,
         the  Partnership  reinvested a portion of these net sales proceeds in a
         property in Austin, Texas, as tenants-in-common with CNL Income Fund X,
         Ltd. (see Note 14).

         During the years  ended  December  31, 2001 and 2000,  the  Partnership
         recorded a provision for  write-down of assets of $387,138 and $36,920,
         respectively,  relating to the Boston  Market  property in San Antonio,
         Texas.  The tenant of this  property  filed for  bankruptcy  in October
         1998, and during 2000, rejected the lease relating to the property. The
         provision  represented the difference between the carrying value of the
         property,  including the accumulated accrued rental income balance, and
         the general partners'  estimated net realizable value of each property.
         In addition,  the  Partnership  recorded a provision for  write-down of
         assets  of  $321,239  relating  to the On the  Border  property  in San
         Antonio,  Texas. The tenant of this property  defaulted under the terms
         of its lease,  vacated the property and ceased  restaurant  operations.
         The provision  represented the difference between the carrying value of
         the property at December 31, 2001 and the estimated net sales  proceeds
         from the anticipated sale of the property based on a purchase and sales
         contract with an unrelated third party (see Note 13).

         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, 2001,  2000 and 1999, the  Partnership
         recognized  $169,007,  $95,700,  and  $196,020,  respectively,  of such
         rental income.

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


3.       Land and Buildings on Operating Leases - Continued:

         The following is a schedule of the future  minimum lease payments to be
         received on the noncancellable operating leases at December 31, 2001:

                   2002                                   $1,791,340
                   2003                                    1,838,961
                   2004                                    1,850,564
                   2005                                    1,850,564
                   2006                                    1,851,747
                   Thereafter                             15,692,440
                                                     ----------------

                                                         $24,875,616
                                                     ================

         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>
                                                                  2001                  2000
                                                            -----------------     -----------------

 <c>
                   Minimum lease payments
                        receivable                               $ 5,823,294           $ 7,689,932
                   Estimated residual values                       1,205,840             1,420,667
                   Less unearned income                           (3,884,036 )          (5,126,303 )
                                                            -----------------     -----------------

                   Net investment in direct
                        financing leases                         $ 3,145,098           $ 3,984,296
                                                            =================     =================
</TABLE>
<page>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


4.       Net Investment in Direct Financing Leases - Continued:

         During 2000,  the  Partnership  recorded a provision for  write-down on
         assets of $299,849  relating to the On the Border  property  located in
         San Antonio, Texas. In June 2000, the tenant of this property defaulted
         under  the  terms  of  its  lease,  vacated  the  property  and  ceased
         operation. As a result, the Partnership reclassified the related assets
         from net investment in direct  financing leases to land and building on
         operating leases. In accordance with Statement of Financial  Accounting
         Standards No. 13, "Accounting for Leases," the Partnership recorded the
         reclassified  asset at the lower of original cost,  present fair value,
         or present  carrying value. No loss on termination of direct  financing
         leases was recorded during 2001 and 2000.

         In December  2001,  the  Partnership  sold its  property in Santa Rosa,
         California  for  which  building  portion  was  classified  as a direct
         financing  lease.  In connection  with the sale,  the gross  investment
         (minimum lease payments  receivable and the estimated  residual  value)
         and  unearned  income  relating  to the assets  classified  as a direct
         financing lease, were removed from the accounts (see Note 3).

         The  following  is a schedule of future  minimum  lease  payments to be
         received on direct financing leases at December 31, 2001:

                      2002                                       $ 354,046
                      2003                                         362,451
                      2004                                         362,451
                      2005                                         362,451
                      2006                                         362,451
                      Thereafter                                 4,019,444
                                                           ----------------

                                                                $5,823,294
                                                           ================

         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).

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


5.       Investment in Joint Ventures:

         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.,  each  of  which  is a  Florida  limited
         partnership and an affiliate 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, 2001, the Partnership had a 39.93% interest
         in the profits and losses of the joint venture.

         In  February  1999,  the  Partnership  entered  into  a  joint  venture
         arrangement,  CNL Portsmouth  Joint  Venture,  with CNL Income Fund XI,
         Ltd.,  a Florida  limited  partnership  and an affiliate of the general
         partners,  to own and lease one restaurant property. As of December 31,
         2001, the  Partnership had  contributed  approximately  $330,500 to the
         joint venture and owned a 57.2% interest in this joint venture.

         In June 2000, the Partnership used the net sales proceeds from the 1999
         sale of the property in Atlanta,  Georgia, along with additional funds,
         to  invest  in a  joint  venture  arrangement,  TGIF  Pittsburgh  Joint
         Venture,  with CNL Income Fund VII, Ltd., CNL Income Fund XV, Ltd., and
         CNL Income  Fund XVI,  Ltd.,  each a Florida  limited  partnership  and
         affiliate  of the  general  partners,  to own and lease one  restaurant
         property.  As of December 31, 2000,  the  Partnership  had  contributed
         approximately  $1,001,600  to the  joint  venture  and  owned  a  39.5%
         interest in this joint venture. In January 2001, the Partnership sold a
         portion of its interest in TGIF Pittsburgh  Joint Venture to CNL Income
         Fund VII, Ltd., for  approximately  $500,000.  Because the  Partnership
         sold  50% of its  interest  in TGIF  Pittsburgh  Joint  Venture  at its
         current carrying value, no gain or loss was recognized.  As of December
         31, 2001, the Partnership had a remaining  investment of  approximately
         $501,500 in the joint venture  representing  a 19.78%  interest in this
         joint venture.

         In July 2001, the Partnership reinvested the sales proceeds it received
         from  the sale of  property  in  Henderson,  Nevada,  in an  additional
         property in Denver,  Colorado,  as  tenants-in-common,  with CNL Income
         Fund VIII,  Ltd., a Florida  limited  partnership  and affiliate of the
         general  partners.  As  of  December  31,  2001,  the  Partnership  had
         contributed  approximately  $1,766,400  for an  80.7%  interest  in the
         profits and losses of the property.
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


5.       Investment in Joint Ventures - Continued:

         As of December 31, 2001,  Columbus Joint Venture,  CNL Portsmouth Joint
         Venture,  TGIF  Pittsburgh  Joint Venture,  and the  Partnership and an
         affiliate, as tenants-in-common, each owned and leased one property, to
         operators of  fast-food  or  family-style  restaurants.  The  following
         presents the combined,  condensed  financial  information for the joint
         ventures at December 31:
<TABLE>
<CAPTION>

                                                                               2001                 2000
                                                                          ---------------      ---------------

 <c>
                  Land and buildings on operating
                      leases, net                                             $5,731,159           $3,632,190
                  Net investment in direct financing
                      lease                                                      313,339              317,357
                  Accrued rental income                                          125,874               56,163
                  Cash                                                            22,034               48,518
                  Receivables                                                      8,368                   --
                  Other assets                                                     1,116                  377
                  Liabilities                                                     12,335               13,055
                  Partners' capital                                            6,189,555            4,041,550
                  Revenue                                                        580,528              306,267
                  Net income                                                     485,218              256,965
</TABLE>

         The  Partnership  recognized  income  totaling  $197,012,  $112,863 and
         $61,656  during  the years  ended  December  31,  2001,  2000 and 1999,
         respectively, from these joint ventures.

6.       Restricted Cash:

         As of December 31, 2001, the net sales proceeds of $1,664,829  from the
         sale of the  property in Santa  Rosa,  California,  less  miscellaneous
         escrow  fees of $2,628  were being held in an  interest-bearing  escrow
         account  pending the release of funds by the escrow agent to acquire an
         additional  property.  These funds were released by the escrow agent in
         2002 and were  used to  acquire a  property  in  Houston,  Texas and an
         interest in a property in Austin,  Texas, with CNL Income Fund X, Ltd.,
         a Florida limited partnership and an affiliate of the general partners'
         (see Note 14).
<page>
                          CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


7.       Allocations and Distributions:

         From inception through December 31, 1999,  generally,  distributions of
         net cash flow, as defined in the limited  partnership  agreement of the
         Partnership,  were made 95% 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").

         From the inception  through  December 31, 1999,  generally,  net income
         (determined   without  regard  to  any  depreciation  and  amortization
         deductions  and  gains  and  losses  from the sale of  properties)  was
         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% to the limited partners
         and  one  percent  to  the  general   partners.   All   deductions  for
         depreciation  and  amortization  were  allocated  99%  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  were  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  then  received 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 were  distributed  95% 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 was, in general,  allocated in the same manner as net sales
         proceeds are distributable. Any loss was allocated first, on a pro rata
         basis to the partners with positive balances in their capital accounts;
         and  thereafter,  95% to the limited  partners  and five percent to the
         general partners.

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


7.       Allocations and Distributions - Continued:

         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% to the
         limited partners and five percent to the general partners.

         Effective  January 1, 2000, the general  partners waived their right to
         receive  future  distributions  from the  Partnership,  including  both
         distributions  of operating cash flow and  distributions of liquidation
         proceeds,   to  the  extent   that  the   cumulative   amount  of  such
         distributions would exceed the balance in the general partners' capital
         account as of December  31,  1999.  Accordingly,  for years  commencing
         January  1,  2000 and  after,  the  Partnership's  net  income  will be
         allocated entirely among the limited partners.  However,  if losses are
         allocated to the general  partners in a year, an amount of income equal
         to the sum of such losses may be  allocated  to the general  partner in
         succeeding years. Accordingly,  the general partners were not allocated
         any net income and did not receive any  distributions  during the years
         ended December 31, 2000 and 2001.

         During  the  years  ended  December  31,  2001,   2000  and  1999,  the
         Partnership   declared   distributions   to  the  limited  partners  of
         $2,800,000, $2,800,000, and $2,799,998,  respectively. No distributions
         have been made to the general partners to date.
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


8.       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>


                                                                   2001             2000              1999
                                                               --------------   --------------   ---------------

 <c>
             Net income for financial reporting purposes        $  1,168,765     $  1,117,197      $  2,515,356

             Depreciation for tax reporting purposes less
                 than (inexcess of) depreciation for financial
                 reporting purposes                                   (2,398 )          2,804           (21,493 )

             Amortization for  tax reporting purposes
                  in excess of amortization for financial
                  reporting purposes                                  (5,249 )         (7,088 )          (3,108 )

             Equity in earnings of joint venture for tax
                  reporting purposes less than equity
                  in earnings of joint venture for financial
                  reporting purposes                                 (20,397 )        (16,905 )          (8,745 )

             Provision for write-down of assets                      708,377          993,178                --

               Direct financing leases recorded as operating
                  leases for tax reporting purposes                   41,450           70,178            84,855

             Capitalization (Deduction) of transaction costs
             for tax                                                      --          (89,716 )          74,734
                  reporting purposes

             Provision for doubtful accounts                         (48,792 )        112,821           (51,017 )

             Gain on sale of assets for financial reporting
                purposes (in excess of) less than gain
                on sale for tax reporting purposes                  (742,359 )             --            33,870

             Accrued rental income                                  (169,007 )       (196,435 )        (196,020 )

             Accrued settlement charge on appeal                      85,410               --                --

             Deferred rental income                                  (50,166 )        (39,853 )         (12,990 )

             Rents paid in advance                                     3,967           (6,495 )           6,618

             Other                                                       165               --              (540 )
                                                               --------------   --------------   ---------------

             Net income for federal income tax purposes          $   969,766     $  1,939,686      $  2,421,520
                                                               ==============   ==============   ===============

</TABLE>
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


9.       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 APF Partners, LP. (the "Advisor") is a wholly owned subsidiary
         of CNL American  Properties  Fund,  Inc.,  ("APF").  CNL Fund Advisors,
         Inc., a majority owned subsidiary of CNL Financial Group, Inc. until it
         merged with and into APF  effective  September  1, 1999,  served as the
         Partnership's  advisor until it assigned its rights in and  obligations
         under a  management  agreement  with  the  Partnership  to the  Advisor
         effective   July  1,  2000.  The   individual   general   partners  are
         stockholders and directors of APF.

         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,  2001,  2000 and 1999,  the  Partnership  incurred
         $24,943, $27,875, and $30,235, 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.
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


9.       Related Party Transactions - Continued:

         During the years ended  December 31, 2001,  2000, and 1999, 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 during 2000 and 1999 relating to
         the proposed and  terminated  merger.  For the years ended December 31,
         2001, 2000, and 1999, the Partnership  incurred $207,702,  $92,444, and
         $82,382, respectively, for such expenses.

         The  amounts  due to related  parties at  December  31,  2001 and 2000,
         totaled $20,273 and $53,181, respectively.

10.      Concentration of Credit Risk:

         The  following   schedule  presents  total  rental  and  earned  income
         (including  the  Partnership's  share of total rental and earned income
         from  joint  ventures  and  the  property  held  with an  affiliate  as
         tenants-in common) 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>

                                                             2001                2000                1999
                                                        ----------------    ----------------    ---------------
<S> <c>
               Golden Corral Corporation                      $ 657,612           $ 657,612          $ 657,612
               Jack in the Box Inc.
                    (formerly Foodmaker,
                    Inc. in 1999)                               492,127             509,456            509,456
               Metromedia Restaurant
                    Group  (S&A Properties
                    Corporation and Steak
                    and Ale of Colorado,
                    Inc.)                                       332,616                 N/A                N/A
               IHOP Properties, Inc.                            280,171                 N/A                N/A
</TABLE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


10.      Concentration of Credit Risk - Continued:

         In addition,  the following  schedule  presents total rental and earned
         income  (including the  Partnership's  share of total rental and earned
         income from joint  ventures and the property  held with an affiliate as
         tenants-in-common) 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>

                                                            2001                2000                 1999
                                                       ----------------    ----------------     ---------------

 <c>
              Golden Corral                                  $ 657,612           $ 657,612           $ 908,481
              Jack in the Box                                  492,127             509,456             509,456
              Bennigan's                                       332,616                 N/A                 N/A
              IHOP                                             280,171                 N/A                 N/A
              Boston Market                                        N/A                 N/A             350,901
</TABLE>

         The  information   denoted  by  N/A  indicates  that  for  each  period
         presented,  the tenant or chain 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.  In
         2000, the tenants rejected the two remaining  leases. In June 2001, one
         of the properties with a rejected lease was sold. The Partnership  will
         not  recognize  any rental  income  relating  to the  remaining  vacant
         properties  until new tenants for the properties are located,  or until
         the  properties  are  sold  and  the  proceeds  from  such a  sale  are
         reinvested in additional  properties.  The lost revenues resulting from
         the remaining  vacant  properties,  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  new  tenants or  purchasers  for these
         Properties.

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


11.      Litigation Settlement:

         In July 1998,  DJD  Partners  VII, LLC filed a lawsuit  against  Finest
         Foodservice,  LLC and the  Partnership,  alleging a breach of  contract
         that was originally entered into by Finest  Foodservice,  LLC and later
         assigned to the  Partnership,  in connection with the construction of a
         Boston  Market  property in  Minnetonka,  Minnesota.  In October  1998,
         Finest  Foodservice,  LLC, the former tenant of the site in Minnetonka,
         Minnesota,  filed for  bankruptcy  and rejected its lease,  causing the
         obligations  of  the  contract  to  become  the  responsibility  of the
         Partnership.  In May 2001,  the  District  Court  awarded a judgment of
         approximately $85,400 to DJD Partners VII, LLC against the Partnership,
         as a result of the breach of contract by Finest  Foodservice,  LLC. The
         Partnership accrued this amount as a general and administrative expense
         as of December 31, 2001. A motion for  reconsideration  and a new trial
         was filed and denied. The Partnership is appealing the District Court's
         judgment.

12.      Selecting Data:

         The following table presents  selected  unaudited  quarterly  financial
         data for each full quarter during the years ended December 31, 2001 and
         2000.
<TABLE>
<CAPTION>

               2001 Quarter              First            Second             Third            Fourth              Year
          ------------------------   ---------------   --------------    --------------   ---------------    ---------------

 <c>
          Revenue (1)(2)                  $ 654,648        $ 657,078         $ 706,261         $ 663,296        $ 2,681,283
          Net income (loss)                 203,872         (221,224 )         477,621           708,496          1,168,765
          Net income (loss)
              per limited
              partner unit                     0.06            (0.06 )            0.14              0.19               0.33

               2000 Quarter              First            Second             Third            Fourth              Year
          ------------------------   ---------------   --------------    --------------   ---------------    ---------------

          Revenue (1)(2)                  $ 776,928        $ 747,892         $ 686,946         $ 809,359        $ 3,021,125
          Net income (loss)                 602,591          397,789           224,681          (107,864 ))       1,117,197
          Net income (loss)
              per limited
              partner unit                     0.17             0.11              0.06             (0.02 ))            0.32
</TABLE>

(1)      Revenues include equity in earnings of  unconsolidated  joint ventures,
         lease  termination  income and interest and other income.

(2)      Revenues  have been  adjusted to  reclassify  any  reversals of accrued
         rental  income  to   provisions   for   write-down   of  assets.   This
         reclassification had no effect on total net income.
<page>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


13.      Commitment:

         In November  2001,  the  Partnership  entered into an agreement with an
         unrelated  third  party  to  sell  the On the  Border  property  in San
         Antonio,  Texas.  At December 31, 2001, the  Partnership  established a
         provision for write-down on assets related to the  anticipated  sale of
         this  property  (see  Note 3).  As of March  15,  2002 the sale had not
         occurred.

14.      Subsequent Events:

         In January  2002,  the  Partnership  reinvested  a portion of the sales
         proceeds  from the 2001 sale of the property in Santa Rosa,  California
         in a property in Houston,  Texas.  In addition,  in January  2002,  the
         Partnership  reinvested  the remaining net sales proceeds in a property
         in Austin, Texas, as tenants-in-common, with CNL Income Fund X, Ltd., a
         Florida limited  partnership and an affiliate of the general  partners.
         The Partnership  entered into a separate  long-term,  triple-net  lease
         with  terms  substantially  the  same  as its  other  leases  for  each
         property.

         In January 2002, the  Partnership  entered into a promissory  note with
         the corporate  general  partner for a loan in the amount of $125,000 in
         connection  with  the  operations  of  the  Partnership.  The  loan  is
         uncollateralized,  non-interest  bearing  and  due  on  demand.  As  of
         February  7, 2002,  the  Partnership  had repaid the entire loan to the
         corporate general partner.


<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 55. 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 has
served as Director and Chairman of the Board of CNL  American  Properties  Fund,
Inc. ("APF"),  a public,  unlisted real estate investment trust, since 1994. Mr.
Seneff served as Chief  Executive  Officer of APF from 1994 through August 1999,
and has served as Co-Chief  Executive  Officer of APF since  December  2000. Mr.
Seneff served as Chairman of the Board and Chief  Executive  Officer of CNL Fund
Advisors,  Inc.,  formerly  the  Partnership's  advisor,  until it merged with a
wholly-owned  subsidiary  of APF  in  September  1999,  and in  June  2000,  was
re-elected  to those  positions  of CNL Fund  Advisors,  Inc.  Mr.  Seneff  is a
principal stockholder of CNL Holdings, Inc., the parent company of CNL Financial
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. CNL Financial  Group,  Inc. is the parent  company,
either directly or indirectly through subsidiaries, of CNL Real Estate Services,
Inc., CNL Capital Markets, Inc., CNL Investment Company and CNL Securities Corp.
Mr. Seneff also serves as a 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.  In addition,
he serves as a Director,  Chairman of the Board and Chief  Executive  Officer of
CNL Retirement Properties, Inc., a public, unlisted real estate investment trust
and its advisor,  CNL Retirement Corp. Since 1992, Mr. Seneff has also served as
a Director,  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 CNL Securities  Corp.  since 1979; CNL
Investment  Company  since  1990;  and  CNL  Institutional  Advisors,   Inc.,  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 CNL Bank. Mr. Seneff previously
served on the Florida State Commission on Ethics and is a former member and past
Chairman of the State of Florida Investment  Advisory Council,  which recommends
to the Florida Board of Administration  investments for various Florida employee
retirement  funds.  The Florida  Board of  Administration,  Florida's  principal
investment advisory and money management agency, oversees the investment of more
than $60 billion of retirement funds. Mr. Seneff received his degree in Business
Administration from Florida State University in 1968.

         Robert A.  Bourne,  age 54. 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
Director of the Board of Directors of APF. Mr. Bourne served as President of APF
from 1994 through  February 1999. He also served as Treasurer from February 1999
through  August 1999 and from May 1994 through  December 1994. He also served in
various  executive  positions with CNL Fund  Advisors,  Inc. prior to its merger
with a  wholly-owned  subsidiary of APF  including,  President from 1994 through
September 1997, and Director from 1994 through August 1999. Mr. Bourne serves as
President and Treasurer of CNL Financial Group, Inc.; Director, Vice Chairman of
the Board,  President  and  Treasurer  of CNL  Hospitality  Properties,  Inc., a
public,  unlisted  real estate  investment  trust;  as well as,  Director,  Vice
Chairman of the Board,  President and Treasurer of CNL  Hospitality  Corp.,  its
advisor. In addition, Mr. Bourne serves as Director, Vice Chairman of the Board,
President and Treasurer of CNL Retirement Properties,  Inc., a public,  unlisted
real  estate  investment  trust;  as well as, a Director,  Vice  Chairman of the
Board,  President and Treasurer of its advisor,  CNL Retirement Corp. Mr. Bourne
also serves as a Director of CNL Bank.  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  also  serves as  Director,
President  and Treasurer for various  affiliates  of CNL Financial  Group,  Inc.
including,  CNL Investment  Company,  CNL Securities Corp. and 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.

         Curtis B.  McWilliams,  age 46. Mr.  McWilliams  has served as Co-Chief
Executive  Officer of APF since  December  2000 and  previously  served as Chief
Executive  Officer from  September  1999  through  December  2000.  Prior to the
acquisition of CNL Fund Advisors,  Inc., Mr.  McWilliams  served as President of
APF from  February  1999 until  September  1999.  From February 1998 to February
1999, he served as Executive  Vice President of APF. Mr.  McWilliams  joined CNL
Financial  Group,  Inc. in April 1997 and served as an Executive  Vice President
from October 1997 until September 1999. In addition,  Mr.  McWilliams  served as
President of CNL Fund Advisors, Inc. and CNL Financial Services, Inc. from April
1997 until the acquisition of such entities by wholly-owned  subsidiaries of APF
in September  1999.  From September 1983 through March 1997, Mr.  McWilliams was
employed by Merrill  Lynch & Co. The  majority of his career at Merrill  Lynch &
Co.  was in the  Investment  Banking  division  where he  served  as a  Managing
Director.  Mr.  McWilliams  received  a  B.S.E.  in  Chemical  Engineering  from
Princeton University in 1977 and a Master of Business Administration degree with
a concentration in finance from the University of Chicago in 1983.

         Steven  D.  Shackelford,  age  38.  Mr.  Shackelford  was  promoted  to
Executive Vice President of APF in June 2000. He served as Senior Vice President
from September 1999 until his promotion in June 2000. Mr. Shackelford has served
as Chief  Financial  Officer  since January 1997 and has served as Secretary and
Treasurer of APF since September 1999. He also served as Chief Financial Officer
of CNL Fund Advisors,  Inc. from September  1996 to September  1999.  From March
1995 to July 1996, Mr.  Shackelford  was a senior manager in the national office
of Price  Waterhouse LLP 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 was a  manager  in the  Paris,  France  office of Price
Waterhouse, serving several multi-national clients. Mr. Shackelford was an audit
staff and  senior  from  1986 to 1992 in the  Orlando,  Florida  office of Price
Waterhouse.  Mr.  Shackelford  received a Bachelor of Arts degree in Accounting,
with honors, and a Master of Business  Administration  degree from Florida State
University and is a certified public accountant.


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,  2002,  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, 2002,  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
---------------------------------            -------------------------    --------------------------     -----------------

 <c>
           General Partnership Interests          James M. Seneff, Jr.                                            45%
                                                  Robert A. Bourne                                                45%
                                                  CNL Realty Corporation                                          10%
                                                                                                            ---------------
                                                                                                                 100%
                                                                                                            ===============

           Limited Partnership Interest           Robert A. Bourne              2,500 Units                     0.07%
                                                                                                            ---------------
                                                                                                                0.07%
                                                                                                            ===============
</TABLE>


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



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, 2001,  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, 2001
---------------------------------      --------------------------------------      ------------------------------

 <c>
Reimbursement  to affiliates for       Operating  expenses are reimbursed at       Accounting                and
operating expenses                     the  lower  of  cost  or  90%  of the       administra-tive     services:
                                       prevailing  rate at which  comparable       $207,702
                                       services  could have been obtained in
                                       the     same     geographic     area.
                                       Affiliates  of the  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       One  percent  of  the  sum  of  gross       $24,943
affiliates                             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.



                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
         and Recipient                         Method of Computation                  Ended December 31, 2001
---------------------------------      --------------------------------------      ------------------------------

Deferred,    subordinated   real       A deferred,  subordinated real estate       $-0-
estate  disposition  fee payable       disposition  fee,  payable  upon sale
to the affiliates                      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       to  five   percent   of   Partnership
Partnership net 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       to  five   percent   of   Partnership
Partnership  net sales  proceeds       distributions   of  such  net   sales
from  a  sale  or  sales  not in       proceeds,   subordinated  to  certain
liquidation of the Partnership         minimum   returns   to  the   Limited
                                       Partners.

General   Partners'   share   of       Distributions  of net sales  proceeds       $-0-
Partnership  net sales  proceeds       from   a    sale    or    sales    of
from  a   sale   or   sales   in       substantially      all     of     the
liquidation of the Partnership         Partnership's    assets    will    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>


                                     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, 2001 and 2000

                  Statements of Income for the years ended December 31, 2001,
                  2000, and 1999

                  Statements of Partners' Capital for the years ended December
                  31, 2001, 2000, and 1999

                  Statements of Cash Flows for the years ended December 31,
                  2001, 2000, and 1999

                  Notes to Financial Statements

         2.  Financial Statement Schedules

                  Schedule II - Valuation and Qualifying Accounts for the years
                  ended December 31, 2001, 2000, and 1999

                  Schedule III - Real Estate and Accumulated Depreciation at
                  December 31, 2001

                  Notes to Schedule III - Real Estate and Accumulated
                  Depreciation at December 31, 2001

                  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.)

               **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      Assignment  of  Management  Agreement  from  CNL Fund
                           Advisors,  Inc. to CNL APF  Partners,  LP.  (Filed as
                           Exhibit  10.2 to Form 10-Q filed with the  Securities
                           and  Exchange  Commission  on  August  9,  2001,  and
                           incorporated herein by reference.)

               **10.3      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.)

               **10.4      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.)

               **10.5      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.)

               **10.6      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.)

               **10.7      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.)

               **10.8      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.)

               **10.9      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.)

               **10.10     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.)

               **10.11     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.)

               **10.12     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.)

               **10.13     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.)

               **10.14     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.)

(b)      The  Registrant  filed no reports on Form 8-K during the period October
         1, 2001 through December 31, 2001.

(c)      Not Applicable.


(d)      Other Financial Information

         The  Partnership is required to file audited  financial  information of
         one of its  tenants  (Golden  Corral  Corporation)  as a result of this
         tenant leasing more than 20% of the Partnership's  total assets for the
         year  ended  December  31,  2001.   Golden  Corral   Corporation  is  a
         privately-held  company and its financial  information is not available
         to the Partnership to include in this filing. The Partnership will file
         this financial  information  under cover of a Form 10-K/A as soon as it
         is available.


**previously filed



                                   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 27th day of
March, 2002.

                                      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.



         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


 <c>

/s/ Robert A. Bourne                     President,   Treasurer   and   Director            March 27, 2002
Robert A. Bourne                         (Principal   Financial  and  Accounting
                                         Officer)

/s/ James M. Seneff, Jr.                 Chief  Executive  Officer and  Director            March 27, 2002
James M. Seneff, Jr.                     (Principal Executive Officer)

</TABLE>


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

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 2001, 2000, and 1999

<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
----------    -----------------   --------------  ---------------  ----------------    -------------     ------------  ------------

 <c>

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

  2000        Allowance for
                  doubtful
                  accounts (a)        $  11,172          $    --        $  131,350 (b)    $  18,529 (c)       $   --     $ 123,993
                                  ==============  ===============  ================    =============     ============  ============

  2001        Allowance for
                  doubtful
                  accounts (a)        $ 123,993          $    --         $     696 (b)    $  49,488 (c)       $   --      $ 75,201
                                  ==============  ===============  ================    =============     ============  ============
</TABLE>


(a)    Deducted from receivables on the balance sheet.

(b)    Reduction of rental and other income.

(c)    Amounts written off as uncollectible.


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

                   SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                      December 31, 2001

<TABLE>
<CAPTION>

                                                                Costs Capitalized
                                                                  Subsequent To
                                              Initial Cost         Acquisition
                                      ---------------------- ------------------
                         Encum-                   Buildings&  Improve-   Carrying
                        brances         Land      Improvements ments     Costs
                        ---------     ----------  ---------------------  ------

 <c>
Properties the Partnership
  has Invested in Under
  Operating Leases:

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

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

    Boston Market Restaurants:
      Raleigh, North Caroli-a (k)       702,215     599,388          -       -
      San Antonio, Texas (l-            677,584           -    223,333       -
      Minnetonka, Minnesota-(i)         574,766           -     25,792 (h)   -

    Burger King Restaurant:
      Kinston, North Caroli-a           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       -
          Galveston, Texas -            687,946           -    836,386       -
          Elizabethtown, Ke-tucky       488,945           -  1,045,207       -
          Destin, Florida  -            565,354           -  1,022,196       -

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

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

    NI's Interational Buffet
      Restaurant:
          Stow, Ohio       -            489,799           -          -       -

    On The Border Restaurant:
      San Antonio, Texas (j-                  -           -    855,435       -

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

                                      $10,188,722 $4,369,154 $7,077,750      -
                                      ==========  ========== ==========  ======



                                                              Costs Capitalized
                                                                Subsequent To
                                          Initial Cost           Acquisition
                                      ---------------------- ------------------
                         Encum-                   Buildings aImprove-    Carrying
                        brances         Land       Improvementsments     Costs
                        ---------     ----------  ---------------------  ------
Properties the Partnership
    Invested in Under
    Direct Financing Leases:

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

    IHOP Restaurants:
        Bridgeview, Illinoi-            354,227   1,151,199          -       -

    NI's Interational Buffet
      Restaurant:
            Stow, Ohio     -                  -   1,280,986          -       -
                                                             ----------  ------
                                      ----------  ----------

                                       $354,227   $2,891,189        $0       -
                                      ==========  ========== ==========  ======

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 19.78% Interest
    in Under an Operating Lease:

    T.G.I.Friday's Restaurant:
      Homestead, Pennsylvan-a         $1,036,296  $1,499,296         -       -
                                      ==========  ========== ==========  ======

Property of Joint Venture
    in Which the Partnership
    has a 80.70% Interest
    in Under an Operating Lease:

    Bennigan's
      Denver, Colorado     -           $790,621   $1,398,252         -       -
                                      ==========  ========== ==========  ======

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          -       -
                                      ==========  ========== ==========  ======




   Net Amount at Which                                            Life on Which
 Carried at Close of Period (c)                                  Depreciation in
------------------------------------              Date            Latest Income
              Buildings and           Accumulatedof Con- Date      Statement is
   Land       Improvements  Total     DepreciatiostructioAcquired   Computed
------------  ----------------------  ---------------------------------------





   $210,977          (f)   $210,977         (d)  1997    07/97        (d)


  1,147,705     925,087   2,072,792    109,194   1982    06/98        (b)


    702,215     326,443   1,028,658     88,171   1994    01/97        (b)
    367,874     145,905     513,779     31,210   1997    04/97        (b)
    403,092 (h)       -     403,092          -   1997    04/97


    262,498     663,421     925,919    110,770   1994    12/96        (b)


  1,029,236   1,598,376   2,627,612    213,224   1994    12/97        (b)



    889,003     844,282   1,733,285    133,660   1997    12/96        (b)
    687,946     836,386   1,524,332    128,754   1997    01/97        (b)
    488,945   1,045,207   1,534,152    146,174   1997    05/97        (b)
    565,354   1,022,196   1,587,550    132,850   1997    09/97        (b)


    525,891     582,882   1,108,773     81,561   1981    10/97        (b)


    261,913     543,079     804,992     85,054   1997    01/97        (b)
    674,647     659,358   1,334,005     99,131   1997    01/97        (b)
    778,706     589,840   1,368,546     83,987   1997    05/97        (b)



    489,799          (f)    489,799          -   1997    04/97        (d)


          -     534,196     534,196     32,853   1997    04/97        (j)


    221,537     432,842     654,379     62,657   1997    04/97        (b)
------------  ----------  ----------  -----------

 $9,707,338   $10,749,500 $20,456,839 $1,539,249
============  ==========  ==========  =========











 Net Cost Basis at Which                                         Life on Which
 Carried at Close of Period (c)                                  Depreciation in
------------------------------------              Date            Latest Income
              Buildings and           Accumulatedof Con- Date      Statement is
   Land       Improvements  Total     DepreciatiostructioAcquired   Computed
------------  ----------------------  ---------------------------------------





          -          (f)         (f)        (d)  1997    07/97        (d)


         (f)         (f)         (f)        (d)  1972    07/97        (e)



          -          (f)         (f)        (d)  1997    04/97        (d)









   $407,096    $498,684    $905,780    $50,561   1998    08/98        (b)
============  ==========  ==========  =========







   $254,046          (g)   $254,046         (d)  1997    02/99        (d)
============              ==========







 $1,036,296   $1,499,296  $2,535,592   $79,267   2000    06/00        (b)
============  ==========  ==========  =========







   $790,621   $1,398,252  $2,188,873   $23,304   2001    07/01        (b)
============  ==========  ==========  =========







          -          (f)         (f)        (d)  1997    02/99        (d)
============  ==========  ==========  =========

</TABLE>

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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 2001


(a)      Transactions in real estate and accumulated  depreciation  during 2001,
         2000, 1999, and 1998 are summarized as follows:

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

                 Balance, December 31, 1998                                 $ 23,388,865         $   512,853
                 Acquisitions                                                     25,792                  --
                 Depreciation expense                                                 --             386,932
                                                                         ----------------   -----------------

                 Balance, December 31, 1999                                   23,414,657             899,785
                 Reclassified from net investment in direct
                   financing lease (j)                                           855,436                  --
                 Provision for loss (k)                                         (553,317 )                --
                 Depreciation expense                                                 --             395,565
                                                                         ----------------   -----------------

                 Balance, December 31, 2000 (i)(j)(k)                         23,716,776           1,295,350
                 Provision for loss (j)(l)                                      (708,377 )                --
                 Disposition                                                  (2,551,561 )          (132,780 )
                 Depreciation expense                                                 --             376,679
                                                                         ----------------   -----------------

                 Balance, December 31, 2001 (j)                             $ 20,456,838        $  1,539,249
                                                                         ================   =================

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

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

                 Balance, December 31, 1999                                      905,780              17,315
                 Acquisitions                                                         --                  --
                 Depreciation expense                                                 --              16,623
                                                                         ----------------   -----------------

                 Balance, December 31, 2000                                      905,780              33,938
                 Depreciation expense                                                 --              16,623
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                  $   905,780         $    50,561
                                                                         ================   =================

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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 2001


                                                                                              Accumulated
                                                                              Cost            Depreciation
                                                                         ----------------   -------------------

            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                                  $   254,046            $     --
                 Depreciation expense (d)                                             --                  --
                                                                         ----------------   -----------------

                 Balance, December 31, 1999                                      254,046                  --
                 Depreciation expense (j)                                             --                  --
                                                                         ----------------   -----------------

                 Balance, December 31, 2000                                      254,046                  --
                 Depreciation expense (j)                                             --                  --
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                  $   254,046            $     --
                                                                         ================   =================

            Property of Joint Venture in Which the Partnership has
              a 19.78% Interest and has Invest in Under an
              Operating Lease:

                 Balance, December 31, 1999                                     $     --            $     --
                 Acquisition                                                   2,535,592                  --
                 Depreciation expense                                                 --              29,290
                                                                         ----------------   -----------------

                 Balance, December 31, 2000                                    2,535,592              29,290
                 Depreciation expense                                                 --              49,977
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                 $  2,535,592         $    79,267
                                                                         ================   =================

            Property of Joint Venture in Which the Partnership has
              an 80.70% Interest and has Invested Under an
              Operating Lease:

                 Balance, December 31, 2000                                     $     --            $     --
                 Acquisitions                                                  2,188,873                  --
                 Depreciation expense                                                 --              23,304
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                 $  2,188,873         $    23,304
                                                                         ================   =================
</TABLE>

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

(c)      As of December 31, 2001, the aggregate cost of the Properties  owned by
         the  Partnership and the joint ventures for federal income tax purposes
         was  $23,240,960 and  $6,205,016,  respectively.  All of the leases are
         treated as operating leases for federal income tax purposes.

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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 2001


(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 a provision for  write-down of
         assets 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  represented the difference  between the
         Property's  carrying  value  at  December  31,  1998,  and the  General
         Partners'  estimated net realizable value of the Property.  The cost of
         the Property  presented on this schedule is the net amount at which the
         Property was carried, including the provision for write-down of assets.
         No additional  impairment was recorded for the years ended December 31,
         2001 and 2000.

(j)      For financial reporting  purposes,  during 2000, the undepreciated cost
         of  the  Property  in San  Antonio,  Texas,  was  written  down  to its
         estimated  net  realizable  value due to an  impairment  in value.  The
         Partnership  recognized  the  impairment  by recording a provision  for
         write-down  of assets in the amount of $299,849 at December  31,  2000.
         The tenant of this Property vacated the Property and ceased  restaurant
         operations,  resulting in a reclassification of the building portion of
         the lease to an operating  lease. The building was recorded at net book
         value  and   depreciated   over  its   remaining   estimated   life  of
         approximately  27.1 years.  During 2001, the Partnership  recognized an
         additional  provision for  write-down of assets of $321,239.  The total
         impairment  represented the difference between the Property's  carrying
         value and the estimated net sales proceeds from the anticipated sale of
         the Property  based on a purchase and sales  contract with an unrelated
         third party. The cost of the Property presented on this schedule is the
         net amount at which the  Property  was  carried at December  31,  2001,
         including the provision for write-down of assets.

(k)      For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Property in Raleigh, North Carolina, was written down to net realizable
         value due to an impairment in value.  The  Partnership  recognized  the
         impairment  by recording a provision  for  write-down  of assets in the
         amount of $272,945 at December 31, 2000. The impairment represented the
         difference  between  the  Property's  carrying  value  and the  General
         Partners'  estimated net  realizable  value of the Property at December
         31, 2000.  The cost of the Property  presented on this  schedule is the
         net amount at which the  Property  was  carried at December  31,  2001,
         including the provision for write-down of assets.
<PAGE>
                           CNL INCOME FUND XVIII, LTD.
                         (A Florida Limited Partnership)

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 2001


(l)      For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Property in San  Antonio,  Texas,  was written  down to net  realizable
         value due to an impairment in value.  The  Partnership  recognized  the
         impairment  by recording a provision  for  write-down  of assets in the
         amount of $387,138 at December  31, 2001.  The tenant of this  Property
         declared  bankruptcy  and rejected the lease relating to this Property.
         The  impairment  represented  the  difference  between  the  Property's
         carrying value and the General Partners' estimated net realizable value
         of the  Property  at  December  31,  2001.  The  cost  of the  Property
         presented on this  schedule is the net amount at which the Property was
         carried at December 31, 2001, including the provision for write-down of
         assets.