UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-K/A
                                 Amendment No. 1


(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, 1997

                                       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 33-90998-01

                           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)

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

       Registrant's telephone number, including area code: (407) 422-1574

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

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

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

                                      None
                                (Title of class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or such shorter  period that the registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days: Yes X No


         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  byreference  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>



         The Form  10-K of CNL  Income  Fund  XVIII,  Ltd.  for the  year  ended
December 31, 1997 is being amended to provide  additional  disclosure under Item
1. Business, Item 2. Properties and Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations - Capital Resources, Short-Term
Liquidity and Long-Term Liquidity.


                                     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.  As of  December  31,  1997,  the  Partnership  had  accepted
subscriptions  for 3,500,000  Units and had received  subscription  proceeds for
3,414,576  Units,  representing  $34,145,759  of capital  contributed by limited
partners. The remaining proceeds of $854,241,  representing the remaining 85,424
Units, were received during the period January 1, 1998 through February 6, 1998.

         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,  1997,  net
proceeds to the  Partnership  from its  offering of Units,  after  deduction  of
organizational  and offering  expenses,  totalled  $30,022,641.  During the year
ended December 31, 1996, the Partnership acquired two Properties. As of December
31, 1997, the Partnership had invested approximately $27,645,000 of the proceeds
described  above in 22  Properties  (one of which was under  construction  as of
December  31,  1997),  and to  pay  acquisition  fees  and  certain  acquisition
expenses,  leaving  approximately  $2,377,700 of net offering proceeds available
for  investment  in  Properties.  The  Partnership  will use the  remaining  net
offering  proceeds,  together with proceeds from the sale of Units subsequent to
December 31, 1997, to acquire additional Properties, to pay acquisition fees and
acquisition  expenses  and to pay  expenses  relating to the sale of Units.  The
Properties are leased on a triple-net basis with the lessees responsible for all
repairs and maintenance, property taxes, insurance and utilities.

         The  Partnership's  primary  investment  objectives  are  to  preserve,
protect and enhance Partnership capital,  while providing (i) cash distributions
commencing in the initial year

                                                         1

<PAGE>



of Partnership operations in amounts which exceed current taxable income (due to
the fact that  depreciation  deductions  attributable  to the Properties  reduce
taxable  income even though  depreciation  is not a cash  expenditure);  (ii) an
anticipated  minimum level of income through the long-term  rental of Properties
to selected operators of certain national and regional  fast-food,  family-style
and casual dining  restaurant  chains;  (iii)  additional  income and protection
against inflation by participation in certain restaurant gross sales through the
receipt of percentage rent payments and,  typically,  automatic increases in the
minimum  annual  rent;  and (iv)  capital  appreciation  through  the  potential
increase in value of the Properties.

         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.  In  general,  the General  Partners  plan to seek the sale of the
Properties commencing seven to 12 years after their acquisition. 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.



                                                         2

<PAGE>



Description of Leases

         The leases of the  Properties  owned by the  Partnership as of December
31,  1997,  provide for initial  terms  ranging from 15 to 26 years (the average
being 17 years) and expire between 2012 and 2023. All leases are on a triple-net
basis,  with the lessees  responsible for all repairs and maintenance,  property
taxes,  insurance  and  utilities.  The  leases  for the  Properties  that  were
operational  as of December  31, 1997,  provide for minimum  base annual  rental
payments  (payable in equal  monthly  installments)  ranging from  approximately
$60,400 to $243,600.  The  majority of the leases  provide for  percentage  rent
based on sales in excess of a specified amount. In addition, the majority of the
leases provide that,  commencing in specified  lease years  (generally the sixth
lease  year),  the annual base rent  required  under the terms of the lease will
increase.


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


                                                         3

<PAGE>



         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.

Major Tenants


         During  1997,   five  lessees  of  the   Partnership,   Golden   Corral
Corporation,  Foodmaker,  Inc.,  Tiffany,  L.L.C.,  IHOP  Properties,  Inc.  and
Platinum  Rotisserie,  L.L.C.,  each  contributed  more than ten  percent of the
Partnership's  total  rental  income.  As of December 31,  1997,  Golden  Corral
Corporation  and Foodmaker,  Inc. were each the lessees under leases relating to
four restaurants,  Tiffany,  L.L.C. was the lessee under a lease relating to one
restaurant,  IHOP  Properties,  Inc. was the lessee under leases relating to two
restaurants  and  Platinum  Rotisserie,  L.L.C.  was  the  lessee  under a lease
relating to one restaurant.  In addition,  four Restaurant Chains, Golden Corral
Family Steakhouse Restaurants ("Golden Corral"), Jack in the Box, Boston Market,
and IHOP each  accounted  for more than ten percent of the  Partnership's  total
rental  income  for 1997.  Because  the  Partnership's  first  Property  was not
purchased until December 1996, the foregoing  information  regarding the lessees
and   Restaurant   Chains  which   contributed  a  significant   amount  of  the
Partnership's  total rental income during 1997, may or may not be representative
of the  lessees  and  Restaurant  Chains  which will  account  for more than ten
percent of the  Partnership's  rental income during 1998 and  subsequent  years.
Because the  Partnership has not completed its acquisition of Properties as yet,
it is not  possible  to  determine  which  lessees  or  Restaurant  Chains  will
contribute more than ten percent of the Partnership's  rental income during 1998
and subsequent  years.  In the event that certain  lessees or Restaurant  Chains
contribute  more than ten  percent  of the  Partnership's  rental  income in the
future years, any failure of such lessees or Restaurant  Chains could materially
adversely affect the  Partnership's  income.  As of December 31, 1997, no single
tenant  or  group of  affiliated  tenants  lease  Properties  with an  aggregate
carrying  value in excess of 20 percent of the  anticipated  total assets of the
Partnership upon completion of the offering of Units.

Management Services

         CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain  services  relating  to  the  management  of  the  Partnership  and  its
Properties pursuant to a management  agreement with the Partnership.  Under this
agreement,  CNL  Fund  Advisors,  Inc.  is  responsible  for  collecting  rental
payments,  inspecting  the  Properties  and  the  tenants'  books  and  records,
assisting the  Partnership  in  responding  to tenant  inquiries and notices and
providing  information to the Partnership about the status of the leases and the
Properties.  CNL Fund  Advisors,  Inc.  also  assists  the  General  Partners in
negotiating the leases.  For these  services,  the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross

                                                         4

<PAGE>



rental  revenues  from  Properties  wholly  owned by the  Partnership,  plus the
Partnership's  allocable  share of gross revenues of joint ventures in which the
Partnership  is a  co-venturer,  but  not in  excess  of  competitive  fees  for
comparable services.

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

Employees

         The  Partnership   has  no  employees.   The  officers  of  CNL  Realty
Corporation  and the officers and employees of CNL Fund Advisors,  Inc.  perform
certain  services for the  Partnership.  In addition,  the General Partners have
available to them the  resources  and expertise of the officers and employees of
CNL 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, 1997, the  Partnership  owned 22 Properties . Of the
22 Properties,  20 Properties are owned by the Partnership in fee simple and for
the remaining two Properties,  the Partnership  owns the building  improvements.
Reference  is made to the Schedule of Real Estate and  Accumulated  Depreciation
filed  with this  report for a listing of the  Properties  and their  respective
costs, including acquisition fees and certain acquisition expenses.


         The Partnership is negotiating to acquire additional Properties, but as
of March 13, 1998, had not acquired any such Properties.

Description of Properties

         Land. As of December 31, 1997, the Partnership's  Property sites ranged
from  approximately  27,000 to 120,400  square feet depending upon building size
and  local  demographic  factors.  Sites  purchased  or to be  purchased  by the
Partnership are or will be 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, 1997 by state. More detailed information  regarding the location of
the  Properties  is  contained  in the  Schedule of Real Estate and  Accumulated
Depreciation filed with this report.

         State                                    Number of Properties

         Arizona                                               1
         California                                            2
         Florida                                               1
         Georgia                                               1
         Illinois                                              1
         Kentucky                                              1
         Maryland                                              1
         Minnesota                                             1
         North Carolina                                        3
         Nevada                                                1
         New York                                              1
         Ohio                                                  1
         Tennessee                                             1
         Texas                                                 6
                                                          ------
         TOTAL PROPERTIES:                                    22
                                                          ======

         Buildings.  The Properties  owned by the Partnership as of December 31,
1997,  currently  include or will include a building that is one of a Restaurant
Chain's approved designs. The buildings to be acquired or constructed  generally
will be rectangular and constructed from various combinations of stucco,  steel,
wood,  brick and tile.  Building sizes range from  approximately  2,200 to 9,700
square  feet.  All  buildings  on  Properties  acquired or to be acquired by the
Partnership  will  be  freestanding  and  surrounded  by  paved  parking  areas.
Buildings   will  be  suitable  for   conversion  to  various   uses,   although
modifications may be required prior to use for other than restaurant operations.
As of December 31, 1997,  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, 1997,  the aggregate  cost basis of the
Properties  owned  by the  Partnership  for  federal  income  tax  purposes  was
$26,322,788.

         The following table lists the Properties owned by the Partnership as of
December 31, 1997 by Restaurant Chain.

         Restaurant Chain                       Number of Properties

         Arby's                                             1
         Black-eyed Pea                                     1
         Boston Market                                      4
         Burger King                                        1
         Chevy's Fresh Mex                                  1
         Golden Corral                                      5
         Ground Round                                       1
         IHOP                                               2
         Jack in the Box                                    4
         On the Border                                      1
         Wendy's                                            1
                                                      -------
         TOTAL PROPERTIES                                  22
                                                      =======

         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 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 or is expected to be  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.

         As of December 31, 1997 and 1996, all of the Properties  were occupied.
The  following  is a schedule of the  average  annual rent for each of the years
ended December 31:

<TABLE>
<CAPTION>

                                                                                           For the Period
                                                                                         February 10, 1995
                                                     Year Ended         Year Ended       (Date of Inception)
                                                     December 31,       December 31,      through December 31,
                                                       1997               1996                 1995
                                                 ----------------   ----------------    -----------------------
<S> <C>

      Rental Revenues                                 $1,290,621            $1,373            $     -
      Properties                                              22                 2                  -
      Average Rent Per Unit                              $58,665              $687                  -

</TABLE>


                                                         7

<PAGE>




         The following is a schedule of lease expirations for leases in place as
of  December  31,  1997  for  each of the ten  years  beginning  with  1998  and
thereafter.

<TABLE>
<CAPTION>

                                                                                            Percentage of
                                            Number              Annual Rental                Gross Annual
        Expiration Year                 of Leases                  Revenues                Rental Income
<S> <C>

             1998                                -                          -                          -
             1999                                -                          -                          -
             2000                                -                          -                          -
             2001                                -                          -                          -
             2002                                -                          -                          -
             2003                                -                          -                          -
             2004                                -                          -                          -
             2005                                -                          -                          -
             2006                                -                          -                          -
             2007                                -                          -                          -
             Thereafter                         22                  1,756,439                    100.00%
                                          --------            ---------------             --------------
             Totals                             22                  1,756,439                    100.00%
                                          ========            ===============             ==============
</TABLE>


         Leases  with Major  Tenants.  The terms of each of the leases  with the
Partnership's  major  tenants,  as of December 31, 1997 (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)  and the  average
minimum base annual rent is approximately  $160,300 (ranging from  approximately
$148,400 to $170,400).

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

         Tiffany,  L.L.C. leases one Golden Corral restaurant.  The initial term
of the lease is 20 years  (expiring in 2017) and the minimum base annual rent is
approximately $189,700.

         IHOP Properties, Inc. leases two IHOP Restaurants.  The initial term of
each lease is 20 years  (expiring  in 2017) and the average  minimum base annual
rent  is  approximately   $137,200  (ranging  from  approximately   $130,200  to
$144,100).

         Platinum  Rotisserie,  L.L.C. leases one Boston Market restaurant.  The
initial  term of the lease is 15 years  (expiring  in 2012) and the minimum base
annual rent is approximately $122,600.

Competition


         The fast-food and family-style  restaurant business is characterized by
intense  competition.  The restaurants on the Partnership's  Properties  compete
with independently owned


                                                         8

<PAGE>



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.

         At the time the Partnership elects to dispose of its Properties,  other
than as a result of the exercise of tenant options to purchase  Properties,  the
Partnership  will be in  competition  with other  persons and entities to locate
purchasers for its Properties.



                                                         9

<PAGE>



                                     PART II


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 triple-net leases,  with the lessees generally
responsible  for all repairs and  maintenance,  property  taxes,  insurance  and
utilities.  The  Partnership's  primary  investment  objectives are to preserve,
protect and enhance Partnership capital,  while providing (i) cash distributions
commencing in the initial year of Partnership operations in amounts which exceed
current   taxable  income  (due  to  the  fact  that   depreciation   deductions
attributable to the Properties reduce taxable income even though depreciation is
not a cash expenditure); (ii) an anticipated minimum level of income through the
long-term  rental of  Properties to selected  operators of certain  national and
regional  fast-food,  family-style and casual dining  Restaurant  Chains;  (iii)
additional  income and protection  against inflation by participation in certain
restaurant  gross sales  through the receipt of  percentage  rent  payments and,
typically,  automatic  increases in the minimum  annual  rent;  and (iv) capital
appreciation through the potential increase in value of the Properties.

         As of December 31, 1997, the  Partnership  owned 22 Properties,  one of
which was under construction.


 Capital Resources


         On September  20, 1996,  the  Partnership  commenced an offering to the
public of up to 3,500,000 Units of limited  partnership  interest  pursuant to a
registration  statement  on Form  S-11  under  the  Securities  Act of 1933,  as
amended, effective August 11, 1995. As of December 31, 1997, the Partnership had
accepted  subscriptions  for  3,500,000  Units  and  had  received  subscription
proceeds for 3,414,576 Units, representing $34,145,759 of capital contributed by
Limited Partners. The remaining proceeds of $854,241, representing the remaining
85,424 Units were received during the period January 1, 1998 through February 6,
1998.


                                                        10

<PAGE>



         As of December  31,  1997,  net  proceeds to the  Partnership  from its
offering of Units,  after  deduction of  organizational  and offering  expenses,
totalled  $30,022,641.  During 1996, the  Partnership  invested or committed for
investment  approximately  $2,960,800 of such proceeds in two  Properties and to
pay  acquisition  fees  and  certain  acquisition  expenses.  During  1997,  the
Partnership  completed  construction of the Property under  construction in 1996
and acquired 20 additional Properties (one of which was under construction as of
December 31, 1997).  As a result of the above  transactions,  as of December 31,
1997, the Partnership had invested approximately $27,645,000 of the net proceeds
in 22 Properties,  and to pay  acquisition  fees and  miscellaneous  acquisition
expenses,  leaving  approximately  $2,377,700 of net offering proceeds available
for investment in Properties.  As of December 31, 1997, the Partnership had paid
$1,536,559 in acquisition fees to an affiliate of the General Partners.

         The  building  under   construction   at  December  31,  1997,   became
operational in February 1998. In connection  with the purchase of this Property,
the Partnership, as lessor entered into a long-term lease agreement.

         As of March 13,  1998,  the  Partnership  had sold a total of 3,500,000
Units,  for an  aggregate  of  $35,000,000  in gross  offering  proceeds and had
invested or committed for investment approximately  $28,056,645 of such proceeds
in 22 Properties and to pay acquisition fees and certain  acquisition  expenses,
leaving  approximately   $2,746,400  in  net  offering  proceeds  available  for
investment in  Properties.  As of March 13, 1998, the  Partnership  had incurred
$1,575,000 in acquisition fees to an affiliate of the General Partners.

         The  Partnership   presently  is  negotiating  to  acquire   additional
Properties,  but as of March 13, 1998, had not acquired any such Properties. The
Partnership will use the remaining net offering proceeds,  to acquire additional
Properties,  to pay  acquisition  expenses and in the  discretion of the General
Partners, to create operating reserves.

         Currently,  the  Partnership's  primary  source of capital is cash from
operations  (which  includes cash  received from tenants and interest  received,
less cash paid for  expenses).  Cash from  operations was $1,361,610 and $27,146
for the years  ended  December  31,  1997 and 1996.  The  increase  in cash from
operations  for the year ended  December 31, 1997, as compared to the year ended
December  31,  1996,  is primarily a result of changes in income and expenses as
described  in "Results  of  Operations"  below and changes in the  Partnership's
working capital.

         None of the Properties owned or to be acquired by the Partnership 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

                                                        11

<PAGE>



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.


         Until  Properties  are  acquired by the  Partnership,  all  Partnership
proceeds  are held in  short-term,  highly  liquid  investments  such as  demand
deposit  accounts at commercial  banks,  CDs and money market accounts with less
than a  30-day  maturity  date,  which  the  General  Partners  believe  to have
appropriate  safety  of  principal.   This  investment  strategy  provides  high
liquidity in order to facilitate the Partnership's use of these funds to acquire
Properties at such time as Properties  suitable for acquisition are located.  At
December 31, 1997, the  Partnership  had $4,143,327  invested in such short-term
investments, as compared to $5,371,325 at December 31, 1996. The decrease in the
amount  invested in short-term  investments is primarily a result of the payment
during 1997, of costs  relating to the Property that was under  construction  at
December 31, 1996 and the acquisition of additional  Properties  during 1997. As
of December  31, 1997,  the average  interest  rate earned on the rental  income
deposited in demand deposit accounts at commercial banks was approximately  five
percent  annually.  The funds remaining at December 31, 1997 will be used to pay
construction  costs relating to several Properties that were incurred but unpaid
at December 31,  1997,  to purchase and develop  additional  Properties,  to pay
acquisition  costs,  to pay  distributions,  to meet the  Partnership's  working
capital and other needs and, in the General Partners' discretion, to create cash
reserves.

Short-Term Liquidity

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


         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them under  triple-net  leases to  operators  who  generally  meet
specified financial  standards  minimizes the Partnership's  operating expenses.
The General  Partners  believe that the leases will generate cash flow in excess
of operating  expenses.  Partnership net income is expected to increase in 1998,
as rental income  increases  due to the  acquisition  of  additional  Properties
during 1998 and the fact that  Properties  acquired during 1997 will earn rental
income  for a full  year in  1998,  as  compared  to a  partial  year  in  1997.
Accordingly,  the General Partners believe that the anticipated  decrease in the
Partnership's  liquidity in 1998,  due to its  investment  of the  remaining net
offering proceeds in additional

                                                        12

<PAGE>



Properties and the payment of construction  costs relating to several Properties
incurred but unpaid at December 31, 1997, will not have an adverse effect on the
Partnership's operations during 1998.

         Due to low  operating  expenses,  ongoing cash flow from rental  income
obtained  from  Properties  after  they  are  acquired  and the  fact  that  the
Partnership  will not enter into a  commitment  to  purchase  a  Property  until
sufficient  cash is available  for such  purchase,  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 on a triple-net
basis,  it is not  anticipated  that a  permanent  reserve for  maintenance  and
repairs is necessary at this time. To the extent,  however, that the Partnership
has insufficient  funds for such purposes,  the General Partners will contribute
to the  Partnership  an  aggregate  amount of up to one percent of the  offering
proceeds for  maintenance  and repairs.  The General  Partners have the right to
cause  the  Partnership  to  maintain  reserves  if, in their  discretion,  they
determine such reserves are required to meet the  Partnership's  working capital
needs.

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


         The Partnership  generally  distributes cash from operations  remaining
after the payment of the operating  expenses of the  Partnership,  to the extent
that  the  General  Partners   determine  that  such  funds  are  available  for
distribution.   Based  on  cash  from  operations,   the  Partnership   declared
distributions to the Limited  Partners of $1,310,885 and $57,846,  respectively,
for the years ended December 31, 1997 and 1996  (representing  distributions  of
$0.57 and $0.11 per Unit, respectively,  based on the weighted average number of
Units outstanding during the period the Partnership was operational). No amounts
distributed  or to be  distributed  to the Limited  Partners for the years ended
December  31,  1997 and 1996,  are  required  to be or have been  treated by the
Partnership  as a return of capital  for  purposes  of  calculating  the Limited
Partners'  return  on their  adjusted  capital  contributions.  The  Partnership
intends to continue to make  distributions of cash available for distribution to
the Limited Partners on a quarterly basis,  although some Limited  Partners,  in
accordance with their election,  receive  monthly  distributions,  for an annual
fee.


         During the years ended  December 31, 1997 and 1996, and the period
February 10, 1995 (date of inception)  through December 31, 1995,  affiliates of
the General Partners  incurred on behalf of the Partnership  $211,216,  $285,858
and $196,174, respectively, for certain organizational and offering expenses. In
addition,  during  1997 and 1996,  affiliates  incurred  $134,138  and  $18,036,
respectively,   for  certain   acquisition   expenses   and  $44,166  and  $893,
respectively,  for certain operating expenses. As of December 31, 1997 and 1996,
the Partnership owed $118,231 and $83,889,  respectively, to related parties for
such  amounts,  fees  and  other  reimbursements.  As of  March  13,  1998,  the
Partnership had reimbursed the affiliates all such amounts. Amounts payable

                                                        13

<PAGE>



to other parties,  including  distributions payable,  increased to $1,629,719 at
December 31, 1997, as compared to $160,222 at December 31, 1996,  primarily as a
result of an  increase  in  distributions  payable  to Limited  Partners  and an
increase  in  construction  costs  payable at  December  31,  1997.  The General
Partners  believe that the  Partnership  has sufficient cash on hand to meet its
current working capital needs.


Long-Term Liquidity

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


Results of Operations

         No significant  operations commenced until the Partnership received and
released from escrow the minimum offering  proceeds of $1,500,000 on October 11,
1996.

         The  Partnership  owned  and  leased  two  Properties  in  1996  and 22
Properties  in 1997  (including  one Property  which was under  construction  at
December 31, 1997), which are 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  $60,400 to  $243,600.  The
majority of the leases provide for percentage rent based on sales in excess of a
specified  amount.  In  addition,  the  majority  of the  leases  provide  that,
commencing in specified lease years (generally the sixth lease year), the annual
base rent  required  under the terms of the lease will  increase.  For a further
description of the  Partnership's  leases and  Properties,  see Item 1. Business
Leases and Item 2. Properties.

         During the years  ended  December  31, 1997 and 1996,  the  Partnership
earned  $1,290,621  and $1,373,  respectively,  in rental income from  operating
leases and earned income from direct  financing  leases.  The increase in rental
and earned income during 1997, as compared to 1996, is primarily attributable to
the  acquisition  of  additional  Properties  subsequent  to December  31, 1996.
Because  the  Partnership  did not  commence  significant  operations  until  it
received  the minimum  offering  proceeds on October 11,  1996,  and has not yet
acquired all of its Properties, Partnership revenues for the year ended December
31, 1997, represent only a portion of revenues which the Partnership is expected
to earn  during  the  full  year  in  which  the  Partnership's  Properties  are
operational.

         During at least one of the years ended  December 31, 1997 and 1996, six
lessees,  or group of  affiliated  lessees,  of the  Partnership,  Golden Corral
Corporation,  Foodmaker, Inc., Tiffany, L.L.C., IHOP Properties,  Inc., Platinum
Rotisserie,  L.L.C.  and  Carrols  Corporation  each  contributed  more than ten
percent of the  Partnership's  total  rental  income.  As of December  31, 1997,
Golden Corral Corporation and Foodmaker,  Inc. were each the lessee under leases
relating  to four  restaurants,  Tiffany,  L.L.C.  was the lessee  under a lease
relating to one restaurant,  IHOP  Properties,  Inc. was the lessee under leases
relating to two

                                                        14

<PAGE>



restaurants,  Platinum Rotisserie,  L.L.C. was the lessee under a lease relating
to one restaurant and Carrols  Corporation was the lessee under a lease relating
to one restaurant.  In addition, during at least one of the years ended December
31, 1997 and 1996,  five  Restaurant  Chains,  Golden  Corral,  Jack in the Box,
Boston Market,  IHOP and Burger King each accounted for more than ten percent of
the Partnership's total rental income.  Because the Partnership's first Property
was not purchased until December 1996, the foregoing  information  regarding the
lessees and  Restaurant  Chains which  contributed a  significant  amount of the
Partnership's  total rental income during the years ended  December 31, 1997 and
1996,  may or may not be  representative  of the lessees and  Restaurant  Chains
which will account for more than ten percent of the Partnership's  rental income
during 1998 and subsequent years.  Because the Partnership has not completed its
acquisition of Properties as yet, it is not possible to determine  which lessees
or Restaurant  Chains will contribute more than ten percent of the Partnership's
total rental income during 1998 and subsequent  years. In the event that certain
lessees  or  Restaurant   Chains   contribute  more  than  ten  percent  of  the
Partnership's  rental  income in future  years,  any failure of such  lessees or
Restaurant Chains could materially adversely affect the Partnership's income.

         During the years  ended  December  31, 1997 and 1996,  the  Partnership
earned $162,621 and $30,241 in interest income from  investments in money market
accounts  or other  short-term,  highly  liquid  investments.  The  increase  in
interest  income during 1997, as compared to 1996, is primarily  attributable to
the increase in the amount of funds invested in short-term liquid investments as
a result of additional Limited Partner capital  contributions during 1997. As of
December 31, 1997,  the majority of these funds had been invested in Properties;
therefore, the Partnership expects interest income to decrease in 1998.

         Operating expenses,  including  depreciation and amortization  expense,
were  $298,482 and $4,704 for the years ended  December  31, 1997 and 1996.  The
increase in  operating  expenses  during 1997 is  primarily  attributable  to an
increase in depreciation expenses as the result of the acquisition of additional
Properties  during 1997.  Operating  expenses  also  increased  during 1997,  as
compared  to  1996,  as a  result  of an  increase  in  administrative  expenses
associated  with operating the Partnership and its Properties and an increase in
management  fees as a result of the  increase  in rental  revenues.  The  dollar
amount of operating expenses is expected to increase,  and the amount of general
operating  and  administrative  expenses as a  percentage  of total  revenues is
expected to decrease,  in 1998 as the Partnership acquires additional Properties
and the Property under construction becomes operational.

         The General Partners of the Partnership are in the process of assessing
and addressing the impact of the year 2000 on their computer  package  software.
The  hardware and  built-in  software  are  believed to be year 2000  compliant.
Accordingly, the General Partners do not expect this matter to materially impact
how the  Partnership  conducts  business  nor its  current or future  results of
operations or financial position.


         The  Partnership's  leases as of December 31, 1997,  and the leases the
Partnership  expects to enter into,  are or are  expected to be on a  triple-net
basis and contain provisions that management  believes will mitigate the adverse
effect of inflation.  Such provisions  include clauses  requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic  increases  in base rent at  specified  times  during  the term of the
lease.  Management  expects that  increases in  restaurant  sales volumes due to
inflation  and real sales growth  should  result in an increase in rental income
over  time.  Continued  inflation  also may cause  capital  appreciation  of the
Partnership's Properties.  Inflation and changing prices, however, also may have
an  adverse  impact on the sales of the  restaurants  and on  potential  capital
appreciation of the Properties.


                                                        16

<PAGE>



                                   SIGNATURES



         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 29th day of
July, 1999.

                                        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.


<PAGE>


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


Signature                               Title                                   Date
<S> <C>
/s/ Robert A. Bourne                President, Treasurer and Director        July 29, 1999
--------------------------          (Principal Financial and Accounting
Robert A. Bourne                    Officer)


/s/ James M. Seneff, Jr.            Chief Executive Oficer and Director      July 29, 1999
--------------------------          (Principal Executive Officer)
James M. Seneff, Jr.


</TABLE>