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

(Mark One)

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

                   For the fiscal year ended December 31, 1998

                                       OR

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

              For the transition period from _________ to _________


                         Commission file number 0-20016

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

               Florida                                   59-3004139
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
   incorporation or organization)

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

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

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

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

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

              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 4,000,000 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 X, Ltd. (the  "Registrant" or the  "Partnership")  is a
limited  partnership  which was  organized  pursuant to the laws of the State of
Florida on April 16, 1990. 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  9, 1991,  the  Partnership
offered  for  sale up to  $40,000,000  of  limited  partnership  interests  (the
"Units") (4,000,000 Units at $10 per Unit) pursuant to a registration  statement
on Form S-11 under the Securities Act of 1933, as amended,  effective  March 20,
1991.  The  offering  terminated  on March 18,  1992,  at which date the maximum
offering  proceeds of  $40,000,000  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 and family-style  restaurant chains
(the "Restaurant Chains").  Net proceeds to the Partnership from its offering of
Units,  after  deduction  of  organizational  and  offering  expenses,  totalled
$35,200,000, and were used to acquire 47 Properties, including interests in nine
Properties  owned by joint  ventures in which the  Partnership is a co-venturer,
and to establish a working capital reserve for Partnership purposes.  During the
year ended  December  31,  1995,  the  Partnership  sold its Property in Denver,
Colorado, and reinvested the majority of the net sales proceeds in a Shoney's in
Fort Myers  Beach,  Florida.  During  the year  ended  December  31,  1996,  the
Partnership  reinvested  the remaining net sales  proceeds from the 1995 sale of
the  Property  in  Denver,  Colorado,  in a Golden  Corral  Property  located in
Clinton,   North  Carolina,   with   affiliates  of  the  General   Partners  as
tenants-in-common. During the year ended December 31, 1997, the Partnership sold
its  Property in Fremont,  California,  and  reinvested  the majority of the net
sales  proceeds in a Boston  Market in Homewood,  Alabama.  In addition,  during
1997,  the  Partnership  used  approximately  $130,400 that had been  previously
reserved for working capital purposes, to invest in a Chevy's Fresh Mex Property
located  in  Miami,   Florida,  with  affiliates  of  the  General  Partners  as
tenants-in-common. During the year ended December 31, 1998, the Partnership sold
its Properties in Sacramento, California and Billings, Montana. During 1998, the
Partnership  reinvested the proceeds from the  Sacramento,  California sale in a
Property  in San Marcos,  Texas.  As a result of the above  transactions,  as of
December  31,  1998,  the  Partnership  owned  48  Properties,   including  nine
Properties owned by joint ventures in which the Partnership is a co-venturer and
two Properties owned with affiliates as tenants-in-common.  During January 1999,
the Partnership  reinvested the net sales proceeds from the sale of its Property
in Billings, Montana in a joint venture, Ocean Shores Joint Venture, to purchase
and hold one Property.  The  Partnership  leases the  Properties on a triple-net
basis with the lessees  responsible  for all repairs and  maintenance,  property
taxes, insurance and utilities.

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership  would be merged with and into a subsidiary  of APF (the  "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term,  "triple-net" basis to operators of
national and regional  restaurant  chains. APF has agreed to issue shares of its
common stock, par value $0.01 per share (the "APF Shares"), as consideration for
the Merger.  At a special meeting of the partners that is expected to be held in
the third  quarter  of 1999,  Limited  Partners  holding in excess of 50% of the
Partnership's  outstanding limited partnership interests must approve the Merger
prior to consummation of the transaction. If the Limited Partners at the special
meeting approve the Merger,  APF will own the Properties and other assets of the
Partnership. See Item 8. Financial Statements and Supplementary Data -- Note 11.
Subsequent Events.

         In the event that the Limited  Partners  vote  against the Merger,  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


<PAGE>


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  or joint  venture
purchase options granted to certain lessees.

Leases

         Although there are variations in the specific terms of the leases,  the
following  is  a  summarized   description  of  the  general  structure  of  the
Partnership's  leases.  Generally,  the  leases of the  Properties  owned by the
Partnership  and the joint  ventures in which the  Partnership is a co-venturer,
provide for initial  terms  ranging  from 14 to 20 years (the  average  being 18
years) and expire between 2006 and 2016.  All leases are on a triple-net  basis,
with the lessee  responsible  for all repairs and  maintenance,  property taxes,
insurance and utilities.  The leases of the Properties  provide for minimum base
annual  rental  payments   (payable  in  monthly   installments)   ranging  from
approximately  $26,160 to  $198,500.  The  majority  of the leases  provide  for
percentage rent, based on sales in excess of a specified amount. In addition,  a
majority  of the leases  provide  that,  commencing  in  specified  lease  years
(ranging from the second to the sixth lease year), the annual base rent required
under the terms of the lease will increase.

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

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

         In December  1997,  the lease  relating to the Perkins  Property in Ft.
Pierce,  Florida,  was amended to provide for reduced base rents  effective  May
1997 through  December 31, 1998,  with rent deferrals  totalling  $144,633 being
payable by the tenant at the time that the Property is leased to another tenant,
the date the Property is sold or upon termination of the lease, whichever occurs
first.  Effective  January 1, 1999,  the rents  reverted back to the amounts due
under the original lease agreement.

         During 1998, two tenants, Brambury Associates and Boston Chicken, Inc.,
filed for  bankruptcy  and  rejected  the leases  relating to two of their three
leases and ceased  making  rental  payments to the  Partnership  on the rejected
leases.  The Partnership  will not recognize rental and earned income from these
Properties  until new  tenants  for these  Properties  are  located or until the
Properties  are  sold  and the  proceeds  from  such  sales  are  reinvested  in
additional  Properties.  The  Partnership  continued  receiving  rental payments
relating  to the lease that was not  rejected  until the  Partnership  sold this
Property in March 1999.  The lost  revenues  resulting  from the two leases that
were rejected,  as described above,  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 the two Properties with rejected leases.

         During 1994, the lease  relating to the Property in Fremont,  Ohio, was
amended to provide for the payment of reduced annual base rent with no scheduled
rent increases.  However,  the lease amendment  provided for a lower  percentage
rent breakpoint,  as compared to the original lease agreement, a change that was
designed  to  result  in  higher  percentage  rent  payments  at any  time  that
percentage rent became payable. In accordance with a provision in the amendment,
as a result of the tenant  assigning the leases to a new tenant during 1998, the
rents under the assigned  lease  reverted back to those that were required under
the original lease agreement.

         During 1998, three of the Partnership's  leases were amended to provide
for rent reductions from August 1998 through the end of the lease term.



<PAGE>


         In January 1999, the Partnership invested in Ocean Shores Joint Venture
with an affiliate of the General Partners to hold one restaurant  property.  The
lease terms for the Property  owned by the joint venture are  substantially  the
same as the  Partnership's  other leases as  described  above in the first three
paragraphs of this section.

Major Tenants

         During 1998, two lessees of the Partnership and its consolidated  joint
venture,  Golden Corral  Corporation and Foodmaker,  Inc., each contributed more
than ten percent of the  Partnership's  total rental  income  (including  rental
income from the Partnership's  consolidated  joint venture and the Partnership's
share of rental  income  from eight  Properties  owned by  unconsolidated  joint
ventures and two Properties owned with affiliates as  tenants-in-common).  As of
December  31,  1998,  Golden  Corral  Corporation  was the lessee  under  leases
relating to four  restaurants  and  Foodmaker,  Inc. was the lessee under leases
relating to six restaurants.  It is anticipated that based on the minimum rental
payments  required  by the  leases,  these two  lessees  each will  continue  to
contribute  more than ten percent of the  Partnership's  total rental  income in
1999. In addition,  five  Restaurant  Chains,  Golden  Corral Family  Steakhouse
Restaurants ("Golden Corral"),  Hardee's,  Burger King, Shoney's and Jack in the
Box, each accounted for more than ten percent of the Partnership's  total rental
income during 1998 (including rental income from the Partnership's  consolidated
joint venture and the Partnership's share of rental income from eight Properties
owned by unconsolidated  joint ventures and two Properties owned with affiliates
as  tenants-in-common).  In 1999, it is anticipated  that these five  Restaurant
Chains  each  will  continue  to  account  for  more  than  ten  percent  of the
Partnership's total rental income to which the Partnership is entitled under the
terms of the leases.  Any failure of these  lessees or  Restaurant  Chains could
materially  affect the  Partnership's  income if the  Partnership is not able to
re-lease  the  Properties  in a timely  manner.  No  single  tenant  or group of
affiliated tenants lease Properties with an aggregate carrying value,  excluding
acquisition fees and certain  acquisition  expenses,  in excess of 20 percent of
the total assets of the Partnership.

Joint Venture Arrangements

         The Partnership has entered into a joint venture  arrangement,  Allegan
Real Estate Joint Venture,  with an unaffiliated entity to purchase and hold one
Property.  In addition,  the  Partnership  has entered into three separate joint
venture arrangements,  CNL Restaurant Investments III, Ashland Joint Venture and
Williston Real Estate Joint Venture, with affiliates of the General Partners, to
purchase and hold eight Properties.

         The joint  venture  arrangements  provide for the  Partnership  and its
joint venture  partners to share in all costs and benefits  associated  with the
joint ventures in accordance with their respective  percentage  interests in the
joint ventures.  The Partnership and its joint venture partners are also jointly
and severally  liable for all debts,  obligations  and other  liabilities of the
joint ventures.

         CNL  Restaurant  Investments  III's joint  venture  agreement  does not
provide a fixed term, but continues in existence  until  terminated by either of
the joint  venturers.  Ashland Joint Venture has an initial term of 30 years and
Allegan Real Estate Joint Venture and  Williston  Real Estate Joint Venture each
have an initial term of 20 years and,  after the expiration of the initial term,
each of the three joint ventures 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  has  management  control of Allegan Real Estate Joint
Venture and shares  management  control  equally with  affiliates of the General
Partners for CNL Restaurant Investments III, Williston Real Estate Joint Venture
and Ashland Joint Venture. 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 CNL  Restaurant  Investments  III,
Allegan Real Estate Joint  Venture,  Ashland Joint  Venture and  Williston  Real
Estate  Joint  Venture is  distributed  50 percent,  88.26%,  10.51% and 40.95%,
respectively,  to the  Partnership and the balance is distributed to each of the
other joint venture  partners in  accordance  with their  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 January 1996, the
Partnership  entered  into an  agreement  to hold a Golden  Corral  Property  as
tenants-in-common  with  affiliates  of  the  General  Partners.  The  agreement
provides  for the  Partnership  and the  affiliates  to share in the profits and
losses of the Property in proportion to each co-venturer's  percentage interest.
The Partnership owns a 13 percent interest in this Property.

         In  addition,  in  December  1997,  the  Partnership  entered  into  an
agreement  to hold a  Chevy's  Fresh  Mex  Property  as  tenants-in-common  with
affiliates of the General Partners.  The agreement  provides for the Partnership
and the  affiliates  to share in the  profits  and  losses  of the  Property  in
proportion to each  co-venturer's  percentage  interest.  The Partnership owns a
6.69% interest in this Property.

         In  January  1999,  the  Partnership   entered  into  a  joint  venture
arrangement,  Ocean  Shore  Joint  Venture,  with an  affiliate  of the  General
Partners  to  purchase  and hold one  Property.  The joint  venture  arrangement
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.  The  Partnership  owns a
69.06% in the profits and losses of the joint venture.

Certain Management Services

         CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain  services  relating to management of the  Partnership and its Properties
pursuant to a management  agreement with the Partnership.  Under this agreement,
CNL  Fund  Advisors,   Inc.  is  responsible  for  collecting  rental  payments,
inspecting  the  Properties  and the tenants'  books and records,  assisting the
Partnership  in  responding  to  tenant  inquiries  and  notices  and  providing
information  to  the  Partnership  about  the  status  of  the  leases  and  the
Properties.  CNL Fund  Advisors,  Inc.  also  assists  the  General  Partners in
negotiating the leases.  For these  services,  the Partnership has agreed to pay
CNL Fund Advisors,  Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties  wholly owned by the Partnership plus the Partnership's
allocable  share of gross revenues of joint ventures in which the Partnership is
a co-venturer,  but not in excess of competitive  fees for comparable  services.
Under the management agreement, the management fee is subordinated to receipt by
the Limited  Partners of an aggregate,  ten percent,  cumulative,  noncompounded
annual  return on their  adjusted  capital  contributions  (the  "10%  Preferred
Return"),  calculated in accordance with the Partnership's  limited  partnership
agreement (the "Partnership Agreement").

         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 and family-style  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 which offer 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 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.



<PAGE>


Item 2.  Properties

         As of December 31, 1998,  the  Partnership  owned,  either  directly or
through  joint  venture  arrangements,  48  Properties,  located  in 17  states.
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.

Description of Properties

         Land. The Partnership's  Property sites range from approximately 15,700
to 200,900  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.

         Buildings.  Each of the Properties  owned by the Partnership  include a
building that is one of a Restaurant  Chain's  approved  designs.  The buildings
generally are  rectangular  and are  constructed  from various  combinations  of
stucco,  steel,  wood, brick and tile.  Building sizes range from  approximately
1,800 to 10,700 square feet.  All buildings on Properties 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.

         Generally,  a  lessee  is  required,  under  the  terms  of  its  lease
agreement,  to make such capital  expenditures as may be reasonably necessary to
refurbish restaurant  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.

         Leases  with  Major   Tenants.   The  terms  of  the  leases  with  the
Partnership's  major  tenants as of December  31,  1998 (see Item 1.  Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.

         Golden Corral  Corporation leases four Golden Corral  restaurants.  The
initial term of each lease is 15 years (expiring  between 2007 and 2011) and the
average minimum base rent is approximately  $156,700 (ranging from approximately
$88,000 to $198,500).

         Foodmaker,  Inc.  leases six Jack in the Box  restaurants.  The initial
term of each lease is between 18 and 20 years  (expiring  between 2009 and 2016)
and the  average  minimum  base  rent is  approximately  $91,700  (ranging  from
approximately $68,000 to $110,300).

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

Item 3.  Legal Proceedings

         Neither the  Partnership,  nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties,  is a party to, or
subject to, any material pending legal proceedings.


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

         Not applicable.





<PAGE>


                                     PART II


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

         As of March 11,  1999 there were 3,522  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.  Limited  Partners who wish to sell
their  Units  may  offer  the  Units  for  sale  pursuant  to the  Partnership's
distribution  reinvestment  plan (the "Plan"),  and Limited Partners who wish to
have their  distributions  used to acquire additional Units (to the extent Units
are  available  for  purchase)  may do so  pursuant  to such Plan.  The  General
Partners  have the right to prohibit  transfers of Units.  From  inception,  the
price for any Unit  transferred  pursuant  to the Plan was  $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 1998 and 1997 other than
pursuant to the Plan, net of commissions.

<TABLE>
<CAPTION>
<S> <C>

                                                   1998 (1)                                1997 (1)
                                      -----------------------------------      ----------------------------------
                                       High          Low        Average         High         Low        Average
                                      --------     --------    ----------      --------    --------    ----------
         First Quarter                 $10.00       $ 9.30        $ 9.65        $ 9.50      $ 7.75        $ 9.13
         Second Quarter                  9.50         8.50          9.30          8.70        7.75          8.38
         Third Quarter                   9.50         7.80          9.29          9.50        8.25          8.67
         Fourth Quarter                  9.70         8.25          8.85          9.20        8.65          8.62
</TABLE>


(1)      A total of 19,100 and 15,700 Units were transferred other than pursuant
         to  the  Plan  for  the  years  ended   December  31,  1998  and  1997,
         respectively.

         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 the  years  ended  December  31,  1998 and  1997,  the  Partnership
declared cash distributions of $3,680,004 and $3,600,003,  respectively,  to the
Limited  Partners.  During the quarter  ended March 31,  1998,  the  Partnership
declared  a special  distribution  to the  Limited  Partners  of  $80,000  which
represented  cumulative  excess operating  reserves.  No amounts  distributed to
partners for the years ended  December 31, 1998 and 1997,  are required to be or
have been  treated by the  Partnership  as a return of capital  for  purposes of
calculating   the   Limited   Partners'   return  on  their   adjusted   capital
contributions.  No distributions have been made to the General Partners to date.
As indicated in the chart below, these  distributions were declared at the close
of each of the Partnership's  calendar  quarters.  These amounts include monthly
distributions  made in arrears for the Limited Partners electing to receive such
distributions on this basis.

          Quarter Ended                           1998              1997
          --------------------                 ------------      ------------
          March 31                                $980,001          $900,000
          June 30                                  900,001           900,001
          September 30                             900,001           900,001
          December 31                              900,001           900,001

         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.




<PAGE>


Item 6.  Selected Financial Data

<TABLE>
<CAPTION>
<S> <C>
                                           1998           1997            1996           1995            1994
                                       -------------- --------------- -------------- --------------  --------------
Year ended December 31:
     Revenues (1)                        $ 3,169,493    $ 3,813,248     $ 3,871,869    $ 3,875,779     $ 4,020,289
     Net income (2)                        1,878,858      3,531,381       3,461,812      3,552,067       3,672,841
     Cash distributions
         declared (3)                      3,680,004      3,600,003       3,640,003      3,640,003       3,625,017
     Net income per Unit (2)                     .46            .87             .86            .88             .91
     Cash distributions declared
         per Unit (3)                            .92            .90             .91            .91             .91

At December 31:
     Total assets                       $ 34,480,865   $ 36,289,727    $ 36,437,560   $ 36,563,796    $ 36,722,696
     Partners' capital                    33,352,897     35,154,043      35,222,665     35,400,856      35,488,792

</TABLE>


(1)      Revenues include equity in earnings of  unconsolidated  joint ventures,
         minority  interest in income of the  consolidated  joint  venture,  and
         adjustments  to accrued  rental  income as a result of certain  tenants
         filing  for  bankruptcy  and  rejecting  the leases  relating  to these
         Properties.

(2)      Net income for the years  ended  December  31,  1998,  1997,  and 1995,
         include $218,960,  $132,238, and $67,214,  respectively,  from gains on
         sale of land and buildings.  Net income for the year ended December 31,
         1998, includes $1,001,846 from provision for loss on land, building and
         net investment in direct financing lease.

(3)      Distributions  for the years ended  December 31, 1998,  1996, and 1995,
         each include a special distribution to the Limited Partners of $80,000,
         $40,000, and $40,000, respectively, which represented cumulative excess
         operating reserves.

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


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

         The  Partnership  was organized on April 16, 1990, to acquire for cash,
either directly or through joint venture  arrangements,  both newly  constructed
and  existing  restaurant  Properties,  as well as land  upon  which  restaurant
Properties  were to be constructed,  which are leased  primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are generally  triple-net  leases,  with the lessees  responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 1998, the  Partnership  owned 48 Properties,  either  directly or indirectly
through joint venture arrangements.

Liquidity and Capital Resources

         The  Partnership's  primary  source  of  capital  for the  years  ended
December 31, 1998, 1997, and 1996, was cash from operations (which includes cash
received from tenants,  distributions from joint ventures and interest received,
less cash paid for expenses).  Cash from operations was $3,604,438,  $3,596,417,
and  $3,695,802  for  the  years  ended  December  31,  1998,  1997,  and  1996,
respectively.  The increase in cash from operations  during 1998, as compared to
1997, is primarily a result of changes in the Partnership's working capital. The
decrease in cash from operations  during 1997, as compared to 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.

         Other  sources and uses of capital  included the  following  during the
years ended December 31, 1998, 1997, and 1996.

         In January 1996,  the  Partnership  reinvested  the remaining net sales
proceeds  from  the 1995  sale of the  Property  in  Denver,  Colorado,  and the
proceeds  from  the  granting  of  an  easement  relating  to  the  Property  in
Hendersonville,  North Carolina, in a Golden Corral Property located in Clinton,
North Carolina, with affiliates of the General Partners as tenants-in-common. In
connection  therewith,  the  Partnership  and  its  affiliates  entered  into an
agreement  whereby each  co-venturer will share in the profits and losses of the
Property in proportion to its applicable percentage interest. As of December 31,
1998, the Partnership owned a 13 percent interest in this Property.

         In  September  1997,  the  Partnership  sold its  Property  in Fremont,
California,  to the  franchisor,  for $1,420,000 and received net sales proceeds
(net of $2,745 which  represents  amounts due to the former  tenant for prorated
rent) of  $1,363,805,  resulting in a gain of $132,238 for  financial  reporting
purposes. This Property was originally acquired by the Partnership in March 1992
and had a cost of  approximately  $1,116,900,  excluding  acquisition  fees  and
miscellaneous acquisition expenses; therefore, the Partnership sold the Property
for approximately  $249,700 in excess of its original purchase price. In October
1997,  the  Partnership  reinvested  approximately  $1,277,300  of the net sales
proceeds in a Boston  Market  Property in  Homewood,  Alabama.  The  Partnership
acquired the Boston Market  Property from an affiliate of the General  Partners.
The affiliate had purchased and temporarily  held title to the Property in order
to facilitate the acquisition of the Property by the  Partnership.  The purchase
price paid by the Partnership represented the costs incurred by the affiliate to
acquire the Property, including closing costs. The General Partners believe that
the transaction,  or a portion thereof,  relating to the sale of the Property in
Fremont,  California,  and the  reinvestment  of the proceeds in a Boston Market
Property in Homewood,  Alabama, will qualify as a like-kind exchange transaction
for federal  income tax  purposes.  However,  the  Partnership  will  distribute
amounts  sufficient  to enable the  Limited  Partners  to pay  federal and state
income taxes,  if any (at a level  reasonably  assumed by the General  Partners)
resulting from the sale. The  Partnership  intends to reinvest the remaining net
sales  proceeds  in an  additional  Property  or  use  such  amounts  for  other
Partnership purposes.

         In December 1997, the Partnership used approximately  $130,400 that had
been previously  reserved for working capital  purposes,  to invest in a Chevy's
Fresh Mex Property  located in Miami,  Florida,  with  affiliates of the General
Partners as tenants-in-common.  In connection therewith, the Partnership and its
affiliates  entered into an agreement whereby each co-venturer will share in the
profits and losses of the Property in  proportion to its  applicable  percentage
interest.  As of December 31, 1998,  the  Partnership  owned a 6.69% interest in
this Property.

         In January  1998,  the  Partnership  sold its  property in  Sacramento,
California,  to the tenant for  $1,250,000  and received  net sales  proceeds of
$1,230,672,  resulting in a gain of $163,350 for financial  reporting  purposes.
This property was  originally  acquired by the  Partnership in December 1991 and
had  a  cost  of  approximately   $969,400,   excluding   acquisition  fees  and
miscellaneous acquisition expenses; therefore, the Partnership sold the property
for approximately $261,300 in excess of its original purchase price. In November
1998,  the  Partnership  reinvested  the  majority of the net sales  proceeds it
received  from the sale of the Property in  Sacramento,  California in a Jack in
the Box Property  located in San Marcos,  Texas. The Partnership will distribute
amounts  sufficient  to enable the  limited  partners  to pay  federal and state
income taxes, if any (at a level  reasonably  assumed by the General  Partners),
resulting from the sale.

         In October 1995, the tenant of the  Partnership's  Property  located in
Austin,  Texas,  entered into a sublease  agreement  for a vacant parcel of land
under which the subtenant  has the option to purchase  such land.  The subtenant
exercised the purchase  option and in accordance  with the terms of the sublease
agreement, the tenant assigned the purchase contract, together with the purchase
contract  payment of $69,000 (less closing costs of $1,000 that were incurred in
anticipation of the sale) from the subtenant, to the Partnership. In March 1998,
the sale for the  vacant  parcel  of land was  consummated  and the  Partnership
recorded the net sales  proceeds of $68,434  ($68,000 of which had been received
as a deposit in 1995),  resulting  in a gain of $7,810 for  financial  reporting
purposes.

         In October 1998, the Partnership sold its Property in Billings, Montana
to the  tenant  for  $362,000  and  received  net sales  proceeds  of  $360,688,
resulting in a gain of $47,800 for financial reporting  purposes.  This property
was  originally  acquired  by the  Partnership  in April  1992 and had a cost of
approximately $302,000, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the Property for approximately $58,700
in excess of its original  purchase  price.  In January  1999,  the  Partnership
reinvested the majority of these proceeds plus remaining net proceeds from other
sales of  properties in a joint  venture,  Ocean Shores Joint  Venture,  with an
affiliate  of the  General  Partners,  to  hold  one  restaurant  property.  The
Partnership  owns a 69.06%  interest  in the  profits  and  losses  of the joint
venture.  The  Partnership  will  distribute  amounts  sufficient  to enable the
Limited  Partners  to pay  federal and state  income  taxes,  if any (at a level
reasonably assumed by the General Partners), resulting from the sale.

         In March 1999, the Partnership  sold its Property in Amherst,  New York
and received net sales proceeds in excess of the carrying value of the Property.
The Partnership intends to reinvest the net sales proceeds from the sale of this
Property in an additional Property.

         None of the Properties  owned by the  Partnership or the joint ventures
in which the  Partnership  owns an interest is or may be  encumbered.  Under its
Partnership  Agreement,  the  Partnership  is prohibited  from borrowing for any
purpose;  provided,  however,  that the General Partners or their affiliates are
entitled to reimbursement,  at cost, for actual expenses incurred by the General
Partners or their  affiliates  on behalf of the  Partnership.  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.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term highly liquid  investments  pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions to partners.  At December 31, 1998, the Partnership had $1,835,972
invested in such  short-term  investments  as compared to $1,583,883 at December
31,  1997.  The increase in cash is primarily  attributable  to the  Partnership
using only a portion of the net sales  proceeds from the sale of the Property in
Sacramento,  California  to  purchase  the  Property in San  Marcos,  Texas,  as
described  above. In January 1999, the Partnership  reinvested the remaining net
proceeds in Ocean Shores Joint Venture,  as described above. The funds remaining
at December 31, 1998, after payment of distributions  and other  liabilities and
excluding  amounts invested in January 1999 in Ocean Shores Joint Venture,  will
be used to meet the Partnership's working capital and other needs.

         During  1998,  1997,  and  1996,  affiliates  of the  General  Partners
incurred $125,405,  $86,327, and $112,363,  respectively,  for certain operating
expenses.  As of December 31, 1998 and 1997,  the  Partnership  owed $29,987 and
$4,946,  respectively,  to  affiliates  for  such  amounts  and  accounting  and
administrative  services.  As of March 11, 1999, the  Partnership had reimbursed
the  affiliates all such amounts.  Other  liabilities,  including  distributions
payable,  decreased  to  $1,033,236  at December 31, 1998,  from  $1,066,237  at
December 31, 1997,  primarily as a result of a decrease in rents paid in advance
at December 31, 1998.  The General  Partners  believe that the  Partnership  has
sufficient cash on hand to meet its current working capital needs.

         Based on cash from operations,  and during the years ended December 31,
1998 and 1996,  cumulative excess operating reserves,  the Partnership  declared
distributions to the Limited Partners of $3,680,004,  $3,600,003, and $3,640,003
for each of the years ended  December 31, 1998,  1997,  and 1996,  respectively.
This  represents  distributions  of $0.92,  $0.90,  $0.91 per Unit for the years
ended December 31, 1998, 1997, and 1996, respectively. No amounts distributed to
the Limited  Partners for the years ended December 31, 1998, 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.

         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.

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

         Due to low  operating  expenses  and  ongoing  cash flow,  the  General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition,  because all leases of the Partnership's  Properties are
on a  triple-net  basis,  it is not  anticipated  that a  permanent  reserve for
maintenance  and  repairs  will be  established  at this  time.  To the  extent,
however,  that the  Partnership  has  insufficient  funds for such purpose,  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,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

         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. As  consideration  for the Merger,  APF has agreed to
issue  4,243,243  APF Shares  which,  for the  purposes  of  valuing  the merger
consideration,  have been valued by APF at $10.00 per APF Share,  the price paid
by APF  investors in APF's most recent public  offering.  In order to assist the
General  Partners in evaluating the proposed merger  consideration,  the General
Partners  retained  Valuation  Associates,  a nationally  recognized real estate
appraisal firm, to appraise the  Partnership's  restaurant  property  portfolio.
Based on Valuation Associates'  appraisal,  the Partnership's property portfolio
and other assets were valued on a going concern basis  (meaning the  Partnership
continues  unchanged) at  $41,779,262  as of December 31, 1998.  Legg Mason Wood
Walker,  Incorporated  has  rendered  a  fairness  opinion  that  the APF  Share
consideration, payable by APF, is fair to the Partnership from a financial point
of view.  The APF Shares are  expected  to be listed for trading on the New York
Stock Exchange concurrently with the consummation of the Merger, and, therefore,
would be freely  tradable  at the option of the former  Limited  Partners.  At a
special meeting of the partners that is expected to be held in the third quarter
of  1999,  Limited  Partners  holding  in  excess  of 50%  of the  Partnership's
outstanding  limited  partnership  interests  must  approve the Merger  prior to
consummation of the  transaction.  The General Partners intend to recommend that
the Limited Partners of the Partnership  approve the Merger.  In connection with
their  recommendation,  the  General  Partners  will  solicit the consent of the
Limited Partners at the special meeting.

Results of Operations

         During  1996,  the  Partnership  and its  consolidated  joint  venture,
Allegan Real Estate Joint Venture,  owned and leased 39 wholly owned Properties,
and during 1997,  the  Partnership  owned and leased 40 wholly owned  Properties
(including  one  Property in Fremont,  California,  which was sold in  September
1997).  During 1998, the Partnership owned and leased 40 wholly owned Properties
(including two Properties  sold in 1998).  In addition,  during 1998,  1997, and
1996, the Partnership was a co-venturer in two separate joint ventures that each
owned and leased one Property and one joint  venture  which owned and leased six
Properties. During 1996, the Partnership also owned and leased one Property with
affiliates as tenants-in-common  and during 1997 and 1998, the Partnership owned
and leased two Properties with affiliates as  tenants-in-common.  As of December
31, 1998,  the  Partnership  owned,  either  directly or through  joint  venture
arrangements 48 Properties  which are subject to long-term,  triple-net  leases.
The leases of the  Properties  provide for minimum  base annual  rental  amounts
(payable  in  monthly   installments)  ranging  from  approximately  $26,160  to
$198,500.  The majority of the leases provide for percentage rent based on sales
in excess of a specified amount.  In addition,  a majority of the leases provide
that,  commencing in specified lease years (ranging from the second to the sixth
lease  year),  the annual base rent  required  under the terms of the lease will
increase.  For further  description of the Partnership's  leases and Properties,
see Item 1. Business - Leases and Item 2. Properties, respectively.

         During  the  years  ended  December  31,  1998,  1997,  and  1996,  the
Partnership  and its  consolidated  joint  venture,  Allegan  Real Estate  Joint
Venture, earned $2,710,790, $3,402,320, and $3,481,139,  respectively, in rental
income from operating leases and earned income from direct financing leases. The
decrease  during the year ended December 31, 1998, as compared to the year ended
December 31, 1997,  was  partially due to a decrease in rental and earned income
of  approximately  $33,300 due to the fact that the tenant of the  Properties in
Lancaster and Amherst,  New York,  filed for  bankruptcy  and rejected the lease
relating  to one of the two  Properties  leased  by  Brambury  Associates.  As a
result, the tenant ceased making rental payments, on the one rejected lease. The
Partnership wrote off approximately  $292,600 of accrued rental income (non-cash
accounting  adjustment  relating to the straight-lining of future scheduled rent
increases over the lease term in accordance with generally  accepted  accounting
principles)  relating to both  Properties.  The  Partnership  also increased the
allowance for doubtful accounts for past due rental amounts for these Properties
in the amount of approximately  $82,700 for the year ended December 31, 1998, as
compared to the increase in allowance  for  doubtful  accounts of  approximately
$64,600 for the year ended December 31, 1997 due to the fact that  collection of
such  amounts  is  questionable.  The  Partnership  continued  receiving  rental
payments  relating to the lease that was not rejected until the Partnership sold
this Property in March 1999. The lost revenues resulting from the lease that was
rejected,  as described  above,  could have an adverse  effect on the results of
operations of the  Partnership  if the  Partnership  is unable to re-lease these
Properties in a timely manner. The General Partners are currently seeking either
a new tenant or purchaser for the Property with the rejected lease. The decrease
in rental and earned  income  during  1997,  as compared to 1996,  is  partially
attributable to the Partnership  increasing its allowance for doubtful  accounts
by  approximately  $64,600  during 1997,  for rental  amounts  relating to these
Properties located in Lancaster and Amherst,  New York. Rental and earned income
also decreased by approximately $36,600 during 1997, as compared to 1996, due to
the fact that the  Partnership  sold its  Property  in  Fremont,  California  in
September 1997, as described above in "Liquidity and Capital Resources."

         Additionally,  the decrease in rental and earned income during the year
ended  December 31, 1998,  as compared to the year ended  December 31, 1997,  is
partially due to a decrease of approximately $68,800 in rental and earned income
due to the fact that the lease  relating to the Perkins  Property in Ft. Pierce,
Florida,  was  amended  to provide  for rent  reductions  from May 1997  through
December 31, 1998. Due to the lease amendment and questionable collectibility of
future scheduled rent increases from this tenant, the Partnership  increased its
reserve for accrued rental income (non-cash  accounting  adjustment  relating to
the  straight-lining  of future  scheduled rent increases over the lease term in
accordance  with generally  accepted  accounting  principles)  by  approximately
$151,800  during 1998,  as compared to  approximately  $28,800  during 1997.  In
addition,  rental and earned income decreased by  approximately  $210,100 during
the year ended  December 31, 1998, as a result of the sale of the  Properties in
Fremont and  Sacramento,  California in September  1997 and January 1998 and the
sale of the  Property in  Billings,  Montana in October  1998.  The  decrease in
rental and  earned  income  for 1998 was  partially  offset by the fact that the
Partnership  recognized  rental  income of  approximately  $143,800  and $28,100
during 1998 and 1997, respectively,  due to the reinvestment of a portion of the
net sales proceeds from the 1997 sale of the Property in Fremont, California, in
a Property in Homewood, Alabama in October 1997.

         In addition, rental and earned income decreased by approximately $3,800
due to the fact that in October 1998,  Boston  Chicken,  Inc., the tenant of the
Boston Market Property in Homewood,  Alabama,  filed for bankruptcy and rejected
the  lease  relating  to  this  Property  and  ceased  making  payments  to  the
Partnership.  In conjunction with the rejected lease, the Partnership  wrote off
approximately $13,200 of accrued rental income (non-cash accounting  adjustments
relating to the  straight-lining  of future  scheduled  rent  increases over the
lease term in accordance with generally  accepted  accounting  principles).  The
Partnership will not recognize rental and earned income from this Property until
a new tenant for this  Property is located or until the Property is sold and the
proceeds from such a sale are  reinvested in an  additional  Property.  The lost
revenues resulting from the rejection of this lease could have an adverse effect
on the results of operations of the  Partnership if the  Partnership is not able
to re-lease this Property in a timely manner. The general partners are currently
seeking either a new tenant or purchaser for this Property.

         The  decrease in rental and earned  income for the year ended  December
31, 1998, as compared to the year ended December 31, 1997, is also partially due
to a decrease of approximately $39,900 for 1998, due to the fact that the leases
relating to the Burger King Properties in Irondequoit,  New York, Ashland,  Ohio
and Henderson,  North Carolina were amended to provide for rent  reductions from
August 1998 through the end of the lease term.

         During  the  years  ended  December  31,  1998,  1997,  and  1996,  the
Partnership  also  earned  $67,511,  $51,678,  and  $45,126,   respectively,  in
contingent rental income.  The increase in contingent rental income during 1998,
as compared to 1997, is partially attributable to an (i) increase in gross sales
relating to certain restaurant  properties during 1998 and due to (ii) adjusting
estimated  contingent  rental  amounts  accrued at December 31, 1997,  to actual
amounts  during the year ended  December  31, 1998.  The increase in  contingent
rental income during 1997, as compared to 1996, is primarily  attributable  to a
change in the percentage  rent formula in accordance with the terms of the lease
agreement for one of the Partnership's leases during 1997.

         For the years ended December 31, 1998,  1997, and 1996, the Partnership
also earned $292,013, $278,919, and $278,371, respectively,  attributable to net
income earned by  unconsolidated  joint  ventures in which the  Partnership is a
co-venturer.  The increase in net income earned by unconsolidated joint ventures
during 1998, as compared to 1997, is primarily  attributable  to the Partnership
investing in a Property in Miami,  Florida, in December 1997, with affiliates of
the General Partners as tenants-in-common,  as described above in "Liquidity and
Capital Resources."

         During the year ended December 31, 1998, two lessees of the Partnership
and its  consolidated  joint venture,  Golden Corral  Corporation and Foodmaker,
Inc., each contributed more than ten percent of the  Partnership's  total rental
income  (including  rental  income  from the  Partnership's  consolidated  joint
venture and the Partnership's share of rental income from eight Properties owned
by  unconsolidated  joint ventures and two Properties  owned with  affiliates as
tenants-in-common).  As of December 31, 1998, Golden Corral  Corporation was the
lessee under leases  relating to four  restaurants  and Foodmaker,  Inc. was the
lessee under leases relating to six restaurants. It is anticipated that based on
the minimum  rental  payments  required by the  leases,  these two lessees  will
continue to contribute more than ten percent of the  Partnership's  total rental
income during 1999. In addition,  during the year ended December 31, 1998,  five
Restaurant Chains,  Golden Corral,  Hardee's,  Burger King, Shoney's and Jack in
the Box,  each  accounted for more than ten percent of the  Partnership's  total
rental income (including rental income from the Partnership's consolidated joint
venture and the Partnership's share of rental income from eight Properties owned
by  unconsolidated  joint ventures and two Properties  owned with  affiliates as
tenants-in-common). In 1999, it is anticipated that these five Restaurant Chains
will  continue to account for more than ten percent of the  Partnership's  total
rental  income  to which  the  Partnership  is  entitled  under the terms of the
leases.  Any failure of these  lessees or  Restaurant  Chains  could  materially
affect the  Partnership's  income if the Partnership is not able to re-lease the
Properties in a timely manner.

         Operating expenses,  including  depreciation and amortization  expense,
were  $507,749,  $414,105,  and $410,057 for the years ended  December 31, 1998,
1997, and 1996, respectively. The increase in operating expenses during the year
ended  December 31, 1998,  as compared to the year ended  December 31, 1997,  is
partially the result of an increase in depreciation  expense due to the purchase
of the Property in Homewood,  Alabama,  in October 1997 and the fact that during
1998,  the  Partnership  reclassified  the leases  relating to the Properties in
Irondequoit,  New York, Ashland, Ohio, and Henderson, North Carolina from direct
financing leases to operating leases due to lease amendments.  In addition,  the
increase in operating expenses is partially due to the fact that the Partnership
recorded legal expenses relating to the Properties in Lancaster and Amherst, New
York due to the fact that the tenant of these  Properties  filed for bankruptcy,
as described above.

         In addition,  the increase in operating expenses for 1998 is due to the
fact that the Partnership  incurred $23,779 in transaction  costs related to the
General  Partners  retaining  financial  and legal  advisors  to assist  them in
evaluating and  negotiating  the proposed Merger with APF, as described above in
"Liquidity and Capital  Resources." If the Limited  Partners  reject the Merger,
the Partnership  will bear the portion of the  transaction  costs based upon the
percentage of "For" votes and the General Partners will bear the portion of such
transaction costs based upon the percentage of "Against" votes and abstentions.

         During 1998, two tenants of the  Partnership,  Brambury  Associates and
Boston  Chicken,  Inc. filed for bankruptcy and rejected the leases  relating to
two of their three leases. The Partnership will incur certain expenses,  such as
real estate taxes,  insurance and maintenance  relating to these Properties with
rejected  leases  until  replacement  tenants or  purchasers  are  located.  The
Partnership is currently  seeking either  replacement  tenants or purchasers for
these Properties with rejected leases.

         As a result of the sale of the Properties in Sacramento, California and
Billings,  Montana,  and the sale of the  parcel of land in  Austin,  Texas,  as
described above in "Liquidity and Capital Resources," the Partnership recognized
a gain of  $218,960  for  financial  reporting  purposes  during  the year ended
December  31,  1998.  As a  result  of the  sale  of the  Property  in  Fremont,
California,  as  discussed  above in  "Liquidity  and  Capital  Resources,"  the
Partnership  recognized a gain of $132,238 for financial  reporting purposes for
the year ended December 31, 1997. No Properties  were sold during the year ended
December 31, 1996.

         During the year ended  December 31, 1998,  the  Partnership  recorded a
provision for loss on land,  building,  and  impairment in carrying value of net
investment in direct financing lease for financial  reporting  purposes relating
to the  Properties  in Lancaster,  New York,  Amherst,  New York,  and Homewood,
Alabama.  The tenants of these Properties filed for bankruptcy  during 1998, and
rejected  two of the three leases  related to these  Properties.  The  allowance
represents  the  difference  between the  carrying  value of the  Properties  at
December 31, 1998, and the estimated net realizable value for these Properties.

         The Partnership's leases as of December 31, 1998, are triple-net leases
and contain  provisions that the General  Partners  believe 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.

Year 2000

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

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

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

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

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


Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

           Not applicable.


Item 8.    Financial Statements and Supplementary Data


<PAGE>


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

                                    CONTENTS








                                                                     Page
                                                                     ----

Report of Independent Accountants                                     16

Financial Statements:

  Balance Sheets                                                      17

  Statements of Income                                                18

  Statements of Partners' Capital                                     19

  Statements of Cash Flows                                            20

  Notes to Financial Statements                                       22


<PAGE>






                        Report of Independent Accountants



To the Partners
CNL Income Fund X, Ltd.


In our opinion,  the financial  statements  listed in the index  appearing under
item 14(a)(1) present fairly, in all material  respects,  the financial position
of CNL Income Fund X, Ltd. (a Florida limited  partnership) at December 31, 1998
and 1997,  and the results of its  operations and its cash flows for each of the
three years in the period ended  December 31, 1998 in conformity  with generally
accepted  accounting  principles.  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 generally  accepted  auditing
standards which require that we plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.






Orlando, Florida
January 30, 1999,  except for the second paragraph of Note 11 for which the date
is March 11, 1999.


<PAGE>

<TABLE>
<CAPTION>

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

                                                   BALANCE SHEETS
                                                   --------------
<S> <C>

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

                         ASSETS

Land and buildings on operating leases, less
    accumulated depreciation and allowance
    for loss on land and building                                                 $16,685,182              $15,709,899
Net investment in direct financing leases, less
    allowance for impairment in carrying value                                     10,713,000               13,460,125
Investment in joint ventures                                                        3,421,329                3,505,326
Cash and cash equivalents                                                           1,835,972                1,583,883
Restricted cash                                                                       361,403                   92,236
Receivables, less allowance for doubtful
    accounts of $236,810 and $137,856                                                  81,100                  123,903
Prepaid expenses                                                                        5,229                    5,877
Accrued rental income, less allowance for
    doubtful accounts of $269,421 and                                               1,342,166                1,775,374
    $117,593
Other assets                                                                           35,484                   33,104
                                                                             -----------------         ----------------

                                                                                  $34,480,865              $36,289,727
                                                                             =================         ================

                     LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                                                    $   2,403                $   6,033
Accrued and escrowed real estate taxes
    payable                                                                            27,418                   27,784
Distributions payable                                                                 900,001                  900,001
Due to related parties                                                                 29,987                    4,946
Rents paid in advance and deposits                                                    103,414                  132,419
                                                                             -----------------         ----------------
       Total liabilities                                                            1,063,223                1,071,183

Minority interest                                                                      64,745                   64,501

Partners' capital                                                                  33,352,897               35,154,043
                                                                             -----------------         ----------------

                                                                                  $34,480,865              $36,289,727
                                                                             =================         ================

                 See accompanying notes to financial statements.


<PAGE>


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

                                                STATEMENTS OF INCOME

                                                                              Year Ended December 31,
                                                                    1998                 1997                 1996
                                                               --------------       --------------       -------------

Revenues:
    Rental income from operating leases                          $ 1,886,761          $ 1,896,607         $ 1,921,562
    Adjustments to accrued rental income                            (457,567 )            (28,812 )           (88,781 )
    Earned income from direct financing leases                     1,281,596            1,534,525           1,648,358
    Contingent rental income                                          67,511               51,678              45,126
    Interest and other income                                        108,481               88,853              75,896
                                                               --------------       --------------       -------------
                                                                   2,886,782            3,542,851           3,602,161
                                                               --------------       --------------       -------------
Expenses:
    General operating and administrative                             163,189              153,672             166,049
    Bad debt expense                                                   5,887                   --                  --
    Professional services                                             44,309               26,890              33,692
    Real estate taxes                                                    199                9,703                  --
    State and other taxes                                             10,520                9,372               2,357
    Depreciation and amortization                                    259,866              214,468             207,959
    Transaction costs                                                 23,779                   --                  --
                                                               --------------       --------------       -------------

                                                                     507,749              414,105             410,057
                                                               --------------       --------------       -------------
Income Before Minority Interest in Income of
    Consolidated Joint Venture,  Equity in 
    Earnings of Unconsolidated Joint Ventures,
    Gain on Sale of Land and Building  and
    Provision for Loss on Land, Building, and
    Impairment in Carrying Value of Net
    Investment in Direct Financing Lease                           2,379,033            3,128,746           3,192,104

Minority Interest in Income of Consolidated Joint Venture             (9,302 )             (8,522 )            (8,663 )

Equity in Earnings of Unconsolidated Joint Ventures                  292,013              278,919             278,371

Gain on Sale of Land and Building                                    218,960              132,238                  --

Provision for Loss on Land, Building, and Impairment in
    Carrying Value of Net Investment in Direct Financing
    Lease                                                         (1,001,846 )                 --                  --
                                                               --------------       --------------       -------------

Net Income                                                       $ 1,878,858          $ 3,531,381         $ 3,461,812
                                                               ==============       ==============       =============

Allocation of Net Income:
    General partners                                              $   21,016           $   33,991           $  34,618
    Limited partners                                               1,857,842            3,497,390           3,427,194
                                                               --------------       --------------       -------------
                                                                 $ 1,878,858          $ 3,531,381         $ 3,461,812
                                                               ==============       ==============       =============

Net Income Per Limited Partner Unit                                $    0.46            $    0.87           $    0.86
                                                               ==============       ==============       =============

Weighted Average Number of Limited Partner Units
    Outstanding                                                    4,000,000            4,000,000           4,000,000
                                                               ==============       ==============       =============


                 See accompanying notes to financial statements.


<PAGE>


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

                         STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 1998, 1997, and 1996


                                   General Partners                                         Limited Partners
                              --------------------------  -------------------------------------------------------------------------
                                             Accumulated                                Accumulated    Syndication
                               Contributions   Earnings   Contributions  Distributions    Earnings        Costs           Total
                              -------------- -----------  -------------  -------------  ------------   -----------    --------------

Balance, December 31, 1995     $  1,000      $  139,100    $ 40,000,000  $(13,723,133)   $13,773,889  $ (4,790,000 )   $35,400,856

    Distributions to limited
       partners ($0.91 per
       limited partner unit)         --              --              --    (3,640,003)            --            --      (3,640,003 )
    Net income                       --          34,618              --            --      3,427,194            --       3,461,812
                              ---------   -------------  --------------   -----------   ------------   -----------     -------------

Balance, December 31, 1996       1,000          173,718      40,000,000   (17,363,136)    17,201,083    (4,790,000 )    35,222,665

    Distributions to limited
       partners ($0.90 per
       limited partner unit)        --               --              --    (3,600,003)            --            --      (3,600,003 )
    Net income                      --           33,991              --            --      3,497,390            --       3,531,381
                              --------   --------------  --------------   -----------   ------------   -----------     -------------

Balance, December 31, 1997       1,000          207,709      40,000,000   (20,963,139)    20,698,473    (4,790,000 )    35,154,043

    Distributions to limited
       partners ($0.92 per
       limited partner unit)        --               --              --    (3,680,004)            --            --      (3,680,004 )
    Net income                      --           21,016              --            --      1,857,842            --       1,878,858
                              --------   --------------  --------------   ------------  ------------   -----------     -------------

Balance, December 31, 1998    $  1,000      $   228,725    $ 40,000,000   $(24,643,143) $ 22,556,315   $(4,790,000 )   $33,352,897
                              ========   ==============  ==============   ============  ============   ===========     =============



                 See accompanying notes to financial statements.


<PAGE>


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

                                              STATEMENTS OF CASH FLOWS


                                                                                   Year Ended December 31,
                                                                      1998                 1997                   1996
                                                                 ----------------      ---------------       ---------------

Increase (Decrease) in Cash and Cash
   Equivalents:

      Cash Flows from Operating Activities:
         Cash received from tenants                                   $3,382,562          $3,380,391             $ 3,491,064
         Distributions from unconsolidated joint
             ventures                                                    373,004             353,207                 354,648
         Cash paid for expenses                                         (221,284 )          (190,902  )             (211,345)
         Interest received                                                70,156              53,721                  61,435
                                                                 ----------------      ---------------       ---------------
             Net cash provided by operating
                activities                                             3,604,438           3,596,417               3,695,802
                                                                 ----------------      ---------------       ---------------

      Cash Flows from Investing Activities:
         Proceeds from sale of land and building                       1,591,794           1,363,805                      --
         Additions to land and buildings on
             operating leases                                         (1,020,329 )        (1,277,308  )                 (978)
         Investment in direct financing leases                                --                  --                  (1,542)
         Investment in joint venture                                          --            (130,404  )             (108,952)
         Increase in restricted cash                                    (237,758 )           (89,702  )                   --
         Other                                                             3,006                  --                      --
                                                                 ----------------      ---------------       ---------------
             Net cash provided by (used in)
                investing activities                                     336,713            (133,609  )             (111,472)
                                                                 ----------------      ---------------       ---------------

      Cash Flows from Financing Activities:
         Distributions to limited partners                            (3,680,004 )        (3,640,002  )           (3,640,003)
         Distributions to holder of minority interest                     (9,058 )            (8,406  )               (7,697)
                                                                 ----------------      ---------------       ---------------
                Net cash used in financing activities                 (3,689,062 )        (3,648,408  )           (3,647,700)
                                                                 ----------------      ---------------       ---------------

Net Increase (Decrease) in Cash and Cash
   Equivalents                                                           252,089            (185,600  )              (63,370)

Cash and Cash Equivalents at Beginning of Year                         1,583,883           1,769,483               1,832,853
                                                                 ----------------      ---------------       ---------------

Cash and Cash Equivalents at End of Year                              $1,835,972          $1,583,883             $ 1,769,483
                                                                 ================      ===============       ===============









                 See accompanying notes to financial statements.


<PAGE>


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

                                        STATEMENTS OF CASH FLOWS - CONTINUED


                                                                               Year Ended December 31,
                                                                    1998                 1997               1996
                                                               ---------------      ---------------    ----------------
Reconciliation of Net Income to Net Cash Provided by
   Operating Activities:

      Net income                                                  $ 1,878,858           $3,531,381          $3,461,812
                                                               ---------------      ---------------    ----------------
      Adjustments to  reconcile  net income to net cash  provided  by  operating
         activities:
             Bad debt expense                                           5,887                   --                  --
             Depreciation                                             259,866              214,468             206,497
             Amortization                                                  --                   --               1,462
             Minority interest in income of consolidated
                joint venture                                           9,302                8,522               8,663
             Equity in earnings of unconsolidated joint
                ventures, net of distributions                         80,991               74,288              75,898
             Gain on sale of land and building                       (218,960 )           (132,238 )                --
             Provision for loss on land, building, and
                impairment in carrying value of net
                investment in direct financing lease                1,001,846                   --                  --
             Decrease (increase) in receivables                         8,312              (71,222 )            46,834
             Decrease (increase) in prepaid expenses                      648                 (374 )            (3,852 )
             Decrease in net investment in direct financing
                leases                                                219,237              211,942             160,007
             Decrease (increase) in accrued rental income             300,791             (201,022 )          (315,029 )
             Increase in other assets                                  (2,380 )                 --                  --
             Increase (decrease) in accounts payable and
                accrued expenses                                       (3,996 )            (14,156 )            14,318
             Increase (decrease) in due to related parties             25,041                3,337              (5,395 )
             Increase (decrease) in rents paid in advance
                and deposits                                           38,995              (28,509 )            44,587
                                                               ---------------      ---------------    ----------------
                   Total adjustments                                1,725,580               65,036             233,990
                                                               ---------------      ---------------    ----------------

Net Cash Provided by Operating Activities                         $ 3,604,438           $3,596,417          $3,695,802
                                                               ===============      ===============    ================

Supplemental Schedule of Non-Cash Financing Activities:

      Distributions declared and unpaid at December 31              $ 900,001            $ 900,001           $ 940,000
                                                               ===============      ===============    ================


</TABLE>








                See accompanying notes to financial statements.


<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies:

         Organization  and Nature of  Business - CNL  Income  Fund X, 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 and family-style restaurant chains.

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

         Real  Estate  and  Lease  Accounting  -  The  Partnership  records  the
         acquisition of land and buildings at cost,  including  acquisition  and
         closing costs. Land and buildings are leased to unrelated third parties
         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  either the  direct  financing  or the  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) (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  vary  during the lease term,
                  income is recognized on a straight-line basis so as to produce
                  a constant periodic rent over the lease term commencing on the
                  date the property is placed in service.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled rental payments to date.  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 writes-off 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. 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.  If an impairment is indicated,  the assets are
         adjusted to their fair value.

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

         Investment in Joint Ventures - The Partnership  accounts for its 88.26%
         interest in Allegan Real Estate Joint Venture  using the  consolidation
         method.   Minority  interest  represents  the  minority  joint  venture
         partner's  proportionate  share  of the  equity  in  the  Partnership's
         consolidated joint venture. All significant  intercompany  accounts and
         transactions have been eliminated.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

         The  Partnership's  investments  in  CNL  Restaurant  Investments  III,
         Williston Real Estate Joint Venture and Ashland Joint Venture,  and the
         property  in  Clinton,  North  Carolina,  and the  property  in  Miami,
         Florida,  for which each  property  is held as  tenants-in-common  with
         affiliates,  are  accounted  for  using  the  equity  method  since the
         Partnership  shares control with affiliates which have the same general
         partners.

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

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

         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.

         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.  The more significant areas requiring
         the use of  management  estimates  relate to the allowance for doubtful
         accounts  and future  cash flows  associated  with  long-lived  assets.
         Actual results could differ from those estimates.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

         Reclassification   -  Certain  items  in  the  prior  years'  financial
         statements  have been  reclassified  to conform  to 1998  presentation.
         These  reclassifications  had no effect  on  partners'  capital  or net
         income.

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 leases have been
         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 these leases are operating  leases.  Substantially  all
         leases are for 15 to 20 years and provide  for  minimum and  contingent
         rentals.   In  addition,   the  tenant  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 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 X, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


3.       Land and Buildings on Operating Leases:

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

                                              1998              1997
                                          ---------------   ---------------

            Land                             $ 9,741,686       $ 9,947,295
            Buildings                          8,588,903         6,875,851
            Construction in process              592,943                --
                                          ---------------   ---------------
                                              18,923,532        16,823,146

            Less accumulated depreciation     (1,329,832 )      (1,113,247 )
                                          ---------------   ---------------
                                              17,593,700        15,709,899
            Less allowance for loss on
                land and building               (908,518 )              --
                                          ---------------   ---------------

                                             $16,685,182       $15,709,899
                                          ===============   ===============

         During 1997, the Partnership sold its property in Fremont,  California,
         to the  franchisor,  for  $1,420,000 and received net sales proceeds of
         $1,363,805,  resulting  in a gain of $132,238 for  financial  reporting
         purposes.  This property was originally  acquired by the Partnership in
         March  1992  and  had a cost  of  approximately  $1,116,900,  excluding
         acquisition fees and miscellaneous acquisition expenses; therefore, the
         Partnership sold the property for  approximately  $249,700 in excess of
         its  original   purchase   price.  In  October  1997,  the  Partnership
         reinvested approximately $1,277,300 in a Boston Market property located
         in Homewood, Alabama.

         In March 1998,  a vacant  parcel of land  relating  to the  property in
         Austin,  Texas, was sold to a third party who had previously  subleased
         the land from the Partnership's  lessee. In connection  therewith,  the
         Partnership  received net sales  proceeds of $68,434  ($68,000 of which
         had been  received and  recorded as a deposit in 1995),  resulting in a
         gain of $7,810 for financial reporting purposes.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


3.       Land and Buildings on Operating Leases - Continued:

         During  1998,  the  Partnership  sold  two  properties  for a total  of
         $1,612,000  and  received  net  sales  proceeds  totalling  $1,591,360,
         resulting in a total gain of $211,150 for financial reporting purposes.
         These  properties were  originally  acquired by the Partnership in 1991
         and 1992 and had total  costs of  approximately  $1,271,400,  excluding
         acquisition fees and miscellaneous acquisition expenses; therefore, the
         Partnership sold the properties for approximately $320,000 in excess of
         their original  purchase  prices.  In November  1998,  the  Partnership
         reinvested  the majority of the net sales proceeds from the sale of its
         property in Sacramento, California in a Jack in the Box property in San
         Marcos, Texas.

         During the year ended  December 31, 1998,  the  Partnership  recorded a
         provision  for  loss  on  land  and  building  totalling  $908,518  for
         financial  reporting  purposes relating to the Properties in Lancaster,
         New York, Amherst, New York and Homewood,  Alabama,  respectively.  The
         tenants of these  Properties  filed for  bankruptcy  during  1998,  and
         rejected the leases related to two of these  Properties.  The allowance
         represents the difference  between the carrying value of the Properties
         at December 31, 1998 and the estimated net  realizable  value for these
         Properties.

         Some 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 year ended December 31, 1998, the Partnership  recognized a loss of
         $300,791 (net of $151,828 in reserves and $305,739 in  write-offs)  and
         for the  years  ended  December  31,  1997 and  1996,  the  Partnership
         recognized  income of  $201,022  and  $315,029,  respectively,  (net of
         reserves of $28,812 and $88,781, respectively).

         The following is a schedule of the future  minimum lease payments to be
         received on noncancellable operating leases at December 31, 1998:

                1999                                               $1,725,916
                2000                                                1,737,475
                2001                                                1,781,312
                2002                                                1,896,469
                2003                                                1,908,568
                Thereafter                                         13,254,521
                                                             -----------------

                                                                  $22,304,261
                                                             =================



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


3.       Land and Buildings on Operating Leases - Continued:

         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  terms.  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 the tenant's gross sales.  These
         amounts do not include minimum lease payments that will become due when
         the property under development is completed.

4.       Net Investment in Direct Financing Leases:

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

                                                     1998            1997
                                                --------------  --------------

            Minimum lease payments
                receivable                       $ 18,740,085    $ 25,273,063
            Estimated residual values               3,553,036       4,225,008
            Less unearned income                  (11,486,793 )   (16,037,946 )
                                                --------------  --------------
                                                   10,806,328      13,460,125
            Less allowance for impairment in
                carrying value                        (93,328 )            --
                                                --------------  --------------
            Net investment in direct financing
                leases                           $ 10,713,000    $ 13,460,125
                                                ==============  ==============

         During 1997, the Partnership sold its property in Fremont,  California,
         for  which  the  building  portion  had  been  classified  as a  direct
         financing lease. In connection therewith, the gross investment (minimum
         lease payment  receivable  and estimated  residual  value) and unearned
         income relating to this property were removed from the accounts and the
         gain from the sale  relating to the land  portion of the  property  was
         reflected in income (Note 3).

         During 1998, the  Partnership  sold a property,  for which the building
         portion had been classified as a direct  financing lease. In connection
         therewith,  the gross investment (minimum lease payments receivable and
         the  estimated  residual  value) and  unearned  income  relating to the
         building  were  removed from the accounts and the gain from the sale of
         the property was reflected in income (see Note 3).



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


4.       Net Investment in Direct Financing Leases - Continued:

         During 1998, three of the Partnership's  leases were amended and one of
         the  Partnership's  leases that was  classified  as a direct  financing
         lease was rejected in connection with the tenant filing for bankruptcy.
         As a result, the Partnership  reclassified the two of the three amended
         leases and the rejected lease from direct financing leases to operating
         leases.  In  accordance  with the  Statement  of  Financial  Accounting
         Standards #13,  "Accounting for Leases," the  Partnership  recorded the
         reclassified leases at the lower of original costs, present fair value,
         or present  carrying  amount.  No losses on the  termination  of direct
         financing leases were recorded for financial reporting purposes.

         The  following  is a schedule of future  minimum  lease  payments to be
         received on the direct financing leases at December 31, 1998:

                1999                                        $1,389,897
                2000                                         1,391,381
                2001                                         1,398,824
                2002                                         1,429,020
                2003                                         1,440,530
                Thereafter                                  11,690,433
                                                      -----------------

                                                           $18,740,085
                                                      =================

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

5.       Investment in Joint Ventures:

         The  Partnership  has a 50  percent,  a  10.51%,  a  40.95%,  and a 13%
         interest in the profits and losses of CNL Restaurant  Investments  III,
         Ashland  Joint  Venture,  Williston  Real  Estate  Joint  Venture and a
         property in Clinton,  North Carolina,  held as  tenants-in-common  with
         affiliates of the general  partners.  The remaining  interests in these
         joint ventures are held by affiliates of the Partnership which have the
         same general partners.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


5.       Investment in Joint Ventures - Continued:

         In December  1997,  the  Partnership  acquired and leased a property in
         Miami,  Florida,  as  tenants-in-common  with affiliates of the general
         partners.  The Partnership accounts for its investment in this property
         using the equity  method  since the  Partnership  shares  control  with
         affiliates,  and amounts  relating to its  investment  are  included in
         investment in joint ventures.  As of December 31, 1998, the Partnership
         owned a 6.69% interest in this property.

         CNL  Restaurant  Investments  III owns and leases six  properties to an
         operator of national  fast-food  restaurants.  Ashland  Joint  Venture,
         Williston Real Estate Joint Venture and the  Partnership and affiliates
         as  tenants-in-common in two separate  tenancy-in-common  arrangements,
         each own and lease one property to an operator of national fast-food or
         family-style  restaurants.  The following  presents the joint ventures'
         combined, condensed financial information at December 31:

                                                    1998          1997
                                               --------------- -------------
           Land and buildings on operating
               leases, less accumulated
               depreciation                       $ 9,340,944   $ 9,573,341
           Net investment in direct financing
               lease                                  657,426       661,991
           Cash                                         2,935         8,197
           Receivables                                  7,597        26,766
           Prepaid expenses                            24,337        22,852
           Accrued rental income                       19,880            --
           Liabilities                                  3,119         7,415
           Partners' capital                       10,050,000    10,285,732
           Revenues                                 1,115,856       930,470
           Net income                                 843,914       695,878

         The Partnership  recognized income totalling  $292,013,  $278,919,  and
         $278,371  for the  years  ended  December  31,  1998,  1997,  and 1996,
         respectively, from these joint ventures.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


6.       Restricted Cash:

         As of December 31, 1997, net sales proceeds of $89,702 from the sale of
         the property in Fremont,  California,  plus accrued interest of $2,534,
         were being  held in an  interest-bearing  escrow  account  pending  the
         release of funds by the escrow agent to acquire an additional property.
         The funds were  released  by the escrow  agent in 1998 and were used to
         acquire an additional property. (See Note 3).

         As of December 31, 1998,  the net sales  proceeds of $359,990  from the
         sale of a property,  plus accrued interest of $1,413 were being held in
         an interest-bearing  escrow account pending the release of funds by the
         escrow agent to acquire an additional property.

7.       Allocations and Distributions:

         Generally, all net income and net losses of the Partnership,  excluding
         gains and losses from the sale of properties,  are allocated 99 percent
         to the  limited  partners  and one  percent  to the  general  partners.
         Distributions  of net  cash  flow are made 99  percent  to the  limited
         partners and one percent to the general  partners;  provided,  however,
         that the one percent of net cash flow to be  distributed to the general
         partners  is  subordinated  to receipt by the  limited  partners  of an
         aggregate,  ten percent,  cumulative,  noncompounded  annual  return on
         their adjusted capital contributions (the "10% Preferred Return").

         Generally,  net  sales  proceeds  from  the sale of  properties  not in
         liquidation  of the  Partnership,  to the extent  distributed,  will be
         distributed  first to the limited  partners in an amount  sufficient to
         provide them with their 10% Preferred Return,  plus the return of their
         adjusted capital contributions. The general partners will then receive,
         to  the  extent  previously  subordinated  and  unpaid,  a one  percent
         interest  in all prior  distributions  of net cash flow and a return of
         their  capital  contributions.  Any  remaining  sales  proceeds will be
         distributed 95 percent to the limited  partners and five percent to the
         general  partners.  Any  gain  from  the  sale  of a  property  not  in
         liquidation of the  Partnership  is, in general,  allocated in the same
         manner as net sales proceeds are distributable.  Any loss from the sale
         of a property is, in general,  allocated first, on a pro rata basis, to
         partners  with  positive  balances  in  their  capital  accounts;   and
         thereafter,  95 percent to the limited partners and five percent to the
         general partners.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


7.       Allocations and Distributions - Continued:

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

         During  the  years  ended  December  31,  1998,  1997,  and  1996,  the
         Partnership   declared   distributions   to  the  limited  partners  of
         $3,680,004, $3,600,003, and $3,640,003,  respectively. No distributions
         have been made to the general partners to date.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996

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>
<S> <C>

                                                                   1998              1997             1996
                                                                ------------      -----------      ------------

              Net income for financial reporting purposes        $1,878,858       $3,531,381        $3,461,812

              Depreciation for tax reporting purposes in
                  excess of depreciation for financial
                  reporting purposes                               (228,986 )       (289,098 )        (298,518 )

              Direct    financing   leases   recorded   as
              operating                                             219,237          211,942           160,007
                  leases for tax reporting purposes

              Equity in  earnings  of  unconsolidated 
                  joint ventures for tax reporting purposes
                  in  excess  of  equity  in  earnings  of
                  unconsolidated joint ventures for
                  financial reporting purposes                       12,612           15,294            10,839

              Gain on sale of land and building for
                  financial  reporting  purposes less than
                  (in excess of) gain for tax reporting purposes     65,474          (42,996 )              --

              Allowance for loss on land and building             1,001,846               --                --

              Allowance for doubtful accounts                        98,954          133,428                --

              Accrued rental income                                 300,791         (201,022 )        (315,029 )

              Rents paid in advance                                  38,995          (22,593 )          45,447

              Minority interest in timing differences of
                  consolidated joint venture                            413            1,461             2,184

              Capitalization of transaction costs for
                  tax reporting purposes                             23,779               --                --

              Other                                                      --               --            (7,738 )
                                                                ------------      -----------      ------------

              Net income for federal income tax purposes         $3,411,973       $3,337,797        $3,059,004
                                                                ============      ===========      ============
</TABLE>


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


9.       Related Party Transactions:

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal shareholders of CNL Group, Inc., the majority stockholder
         of CNL Fund Advisors, Inc. The other individual general partner, Robert
         A. Bourne, serves as treasurer, director and vice chairman of the board
         of CNL Fund Advisors.  During the years ended December 31, 1998,  1997,
         and 1996,  CNL Fund  Advisors,  Inc.  (hereinafter  referred  to as the
         "Affiliate")  performed  certain  services  for  the  Partnership,   as
         described below.

         During the years ended December 31, 1998, 1997, and 1996, the Affiliate
         acted  as  manager  of  the  Partnership's  properties  pursuant  to  a
         management agreement with the Partnership. In connection therewith, the
         Partnership  agreed  to pay the  Affiliate  an  annual,  noncumulative,
         subordinated 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,  but not in
         excess of competitive fees for comparable services.  These fees will be
         incurred  and will be payable only after the limited  partners  receive
         their  10%  Preferred  Return.  Due to the  fact  that  these  fees are
         noncumulative,  if the  limited  partners  do  not  receive  their  10%
         Preferred Return in any particular year, no management fees will be due
         or payable for such year. As a result of such threshold,  no management
         fees were incurred during the years ended December 31, 1998,  1997, and
         1996.

         The Affiliate is also entitled to receive a deferred, subordinated real
         estate disposition fee, payable upon the sale of one or more properties
         based on the lesser of one-half of a competitive real estate commission
         or three  percent  of the  sales  price  if the  Affiliate  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.   In  addition,   the  real  estate   disposition  fee  is
         subordinated to receipt by the limited  partners of their aggregate 10%
         Preferred  Return,  plus  their  adjusted  capital  contributions.   No
         deferred,  subordinated real estate disposition fees have been incurred
         since inception.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


9.       Related Party Transactions - Continued:

         During the years ended December 31, 1998, 1997, and 1996, the Affiliate
         provided accounting and administrative services to the Partnership on a
         day-to-day  basis.  The Partnership  incurred  $105,445,  $87,967,  and
         $94,496  for the  years  ended  December  31,  1998,  1997,  and  1996,
         respectively, for such services.

         During 1997, the  Partnership  acquired a property for a purchase price
         of $1,277,300 from CNL BB Corp., an affiliate of the general  partners.
         CNL BB Corp. had purchased and temporarily  held title to this property
         in  order  to  facilitate  the  acquisition  of  the  property  by  the
         Partnership. The purchase price paid by the Partnership represented the
         costs  incurred  by CNL BB Corp.  to  acquire  and carry the  property,
         including closing costs.

         The due to related  parties at  December  31,  1998 and 1997,  totalled
$29,987 and $4,946, respectively.

10.      Concentration of Credit Risk:

         The  following  schedule  presents  total rental and earned income from
         individual lessees, or affiliated groups of lessees,  each representing
         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  unconsolidated  joint ventures and the properties  held as
         tenants-in-common  with  affiliates),  for  each  of  the  years  ended
         December 31:

                                              1998        1997         1996
                                         ------------  ----------- -----------

            Golden Corral Corporation       $578,430     $548,399    $568,164
            Foodmaker, Inc.                  436,577      646,477     684,277
            Flagstar Enterprises, Inc.
                (and Denny's Inc. during
                the years ended
                December 31, 1997 and
                1996)                            N/A      602,913     668,919



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


10.      Concentration of Credit Risk - Continued:

         In addition,  the following  schedule  presents total rental and earned
         income from individual  restaurant chains,  each representing more than
         ten  percent  of the  Partnership's  total  rental  and  earned  income
         (including  the  Partnership's  share of total rental and earned income
         from   unconsolidated   joint  ventures  and  the  properties  held  as
         tenants-in-common with affiliates) for each of the years ended December
         31:

                                            1998        1997          1996
                                          ----------- ------------  -----------

              Burger King                   $758,178     $777,378     $714,792
              Golden Corral Family
                  Steakhouse Restaurants     578,430      548,399      568,164
              Shoney's                       440,333      441,052      439,330
              Jack in the Box                436,577      646,477      684,277
              Hardees                        400,716      403,882      468,037
              Perkins                            N/A          N/A      393,046

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

11.      Subsequent Events:

         In January 1999, the  Partnership  used the net proceeds from the sales
         of  properties  during  1998  and 1997 to  enter  into a joint  venture
         arrangement,  Ocean  Shores  Joint  Venture,  with an  affiliate of the
         general  partners,  to hold one restaurant  property.  The  Partnership
         contributed  approximately $802,400 to acquire the restaurant property.
         The Partnership owns a 69.06% interest in the profits and losses of the
         joint venture.  The Partnership will account for its investment in this
         joint venture under the equity method since the Partnership  will share
         control with an affiliate.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


11.      Subsequent Events - Continued:

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
         of Merger with CNL American Properties Fund, Inc. ("APF"),  pursuant to
         which the Partnership would be merged with and into a subsidiary of APF
         (the  "Merger").  As  consideration  for the Merger,  APF has agreed to
         issue 4,243,243  shares of its common stock, par value $0.01 per shares
         (the "APF  Shares")  which,  for the  purposes  of  valuing  the merger
         consideration,  have been  valued by APF at $10.00 per APF  Share,  the
         price paid by APF  investors in APF's most recent public  offering.  In
         order to assist the general  partners in evaluating the proposed merger
         consideration,  the general partners retained Valuation  Associates,  a
         nationally  recognized  real estate  appraisal  firm,  to appraise  the
         Partnership's   restaurant  property  portfolio.   Based  on  Valuation
         Associates'  appraisal,  the Partnership's property portfolio and other
         assets were valued on a going  concern basis  (meaning the  Partnership
         continues unchanged) at $41,779,262 as of December 31, 1998. Legg Mason
         Wood Walker,  Incorporated has rendered a fairness opinion that the APF
         Share consideration,  payable by APF, is fair to the Partnership from a
         financial  point of view.  The APF Shares are expected to be listed for
         trading  on  the  New  York  Stock  Exchange   concurrently   with  the
         consummation of the Merger, and, therefore, would be freely tradable at
         the option of the former limited partners.  At a special meeting of the
         partners  that is  expected  to be held in the third  quarter  of 1999,
         limited  partners  holding  in  excess  of  50%  of  the  Partnership's
         outstanding limited partnership interests must approve the Merger prior
         to  consummation  of the  transaction.  The general  partners intend to
         recommend  that the  limited  partners of the  Partnership  approve the
         Merger. In connection with their  recommendation,  the general partners
         will  solicit  the  consent  of the  limited  partners  at the  special
         meeting.  If the limited  partners  reject the Merger,  the Partnership
         will  bear  the  portion  of  the  transaction  costs  based  upon  the
         percentage  of "For"  votes  and the  general  partners  will  bear the
         portion  of  such  transaction  costs  based  upon  the  percentage  of
         "Against" votes and abstentions.



<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 Group,  Inc. and their
affiliates, all of which are affiliates of the General Partners.

         James M. Seneff, Jr., age 52, is a principal  stockholder of CNL Group,
Inc., a diversified  real estate company,  and has served as its Chairman of the
Board of Directors,  a director and Chief Executive  Officer since its formation
in 1980. Mr. Seneff has been Chairman of the Board of Directors,  director,  and
Chief Executive Officer of CNL Securities Corp. since its formation in 1979. Mr.
Seneff also has held the position of Chairman of the Board of  Directors,  Chief
Executive  Officer,   President  and  director  of  CNL  Management  Company,  a
registered investment advisor,  since its formation in 1976, has served as Chief
Executive  Officer,  Chairman  of the Board  and a  director  of CNL  Investment
Company,  has served as Chief Executive  Officer, a director and Chairman of the
Board of Directors of Commercial Net Lease Realty, Inc., a publicly-traded REIT,
listed on the NYSE, since 1992,  served as Chief Executive  Officer,  a director
and  Chairman of the Board of Directors of CNL Realty  Advisors,  Inc.  from its
inception in May 1992 through  December  1997, at which time such company merged
with  Commercial  Net Lease  Realty,  Inc.,  and has held the  position of Chief
Executive  Officer,  Chairman of the Board and a director  of CNL  Institutional
Advisors, Inc., a registered investment advisor, since its inception in December
1990.  Mr.  Seneff  has  served as  Chairman  of the Board of  Directors  of CNL
American  Properties  Fund, Inc. since December 1994 and as a director and Chief
Executive  Officer  since May 1994.  Mr.  Seneff has served as  Chairman  of the
Board,  Chief Executive Officer and a director of CNL Fund Advisors,  Inc. since
March 1994.  Mr.  Seneff has served as Chairman  of the Board,  Chief  Executive
Officer and a director of CNL Hospitality  Properties,  Inc. since June 1996 and
of CNL Hospitality Advisors, Inc. since January 1997. Mr. Seneff has also served
as Chairman of the Board,  Chief Executive  Officer and a director of CNL Health
Care  Properties,  Inc. since  December 1997 and CNL Health Care Advisors,  Inc.
since July 1997. 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 advises 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 then $60 billion of retirement  funds.
Mr.  Seneff  has  served as a member of the board of  directors  of First  Union
National  Bank of  Florida  since  May 1998 and has  served  as a member  of the
Orlando Advisory Board of First Union National Bank of Florida since March 1994.
Since 1971,  Mr.  Seneff has been active in the  acquisition,  development,  and
management  of real  estate  projects  and,  directly  or through an  affiliated
entity,  has  served as a general  partner  or joint  venturer  in over 100 real
estate ventures involved in the financing, acquisition, construction, and rental
of restaurants,  office buildings,  apartment complexes,  hotels, and other real
estate.  Included in these real estate ventures are  approximately  65 privately
offered  real  estate  limited  partnerships  in which Mr.  Seneff,  directly or
through an affiliated  entity,  serves or has served as a general partner.  Also
included are CNL Income Fund,  Ltd.,  CNL Income Fund II, Ltd.,  CNL Income Fund
III,  Ltd.,  CNL Income Fund IV, Ltd.,  CNL Income Fund V, Ltd., CNL Income Fund
VI, Ltd., CNL Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund
IX, Ltd.,  CNL Income Fund XI, Ltd.,  CNL Income Fund XII, Ltd., CNL Income Fund
XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL Income Fund
XVI, Ltd., CNL Income Fund XVII, Ltd. and CNL Income Fund XVIII,  Ltd. (the "CNL
Income  Fund  Partnerships"),  public  real  estate  limited  partnerships  with
investment  objectives similar to those of the Partnership,  in which Mr. Seneff
serves as a  general  partner.  Mr.  Seneff  received  his  degree  in  Business
Administration from Florida State University in 1968.

         Robert A.  Bourne,  age 51, is  President  and  Treasurer of CNL Group,
Inc.,  President,  Treasurer,  a director,  and a  registered  principal  of CNL
Securities  Corp.,  President,  Treasurer,  and a  director  of  CNL  Investment
Company,  and  Chief  Investment  Officer,  a  director  and  Treasurer  of  CNL
Institutional Advisors, Inc., a registered investment advisor. Mr. Bourne served
as President of CNL Institutional  Advisor,  Inc. from the date of its inception
through  July 1997.  Mr.  Bourne  served as President  of  Commercial  Net Lease
Realty,  Inc.  from July 1992 through  February  1996,  served as Secretary  and
Treasurer from February 1996 through December 1997, and has served as a director
since July 1992 and as Vice  Chairman of the Board of Directors  since  February
1996. In addition,  Mr. Bourne served as President of CNL Realty Advisors,  Inc.
from May 1992 through  February  1996,  served as Treasurer  from  February 1996
through  December 1997,  served as a director from May 1992 through December 31,
1997 and served as Vice Chairman from  February 1996 through  December  1997, at
which time such company merged with Commercial Net Lease Realty, Inc. Mr. Bourne
has served as a Vice  Chairman of the Board of  Directors  and  Treasurer of CNL
American  Properties  Fund,  Inc.  since February 1999, has served as a director
since May 1994 and previously served as President from May 1994 through February
1999. Mr. Bourne has served as a director of CNL Fund Advisors, Inc. since March
1994, has served as Treasurer and Vice Chairman of the Board of Directors  since
September  1997,  and  previously  served as  President  from March 1994 through
September  1997.  Mr.  Bourne has  served as  President  and a  director  of CNL
Hospitality  Properties,  Inc. since June 1996 and of CNL Hospitality  Advisors,
Inc.  since January 1997. Mr. Bourne has served as President and director of CNL
Health Care  Properties,  Inc. since December 1997 and CNL Health Care Advisors,
Inc. since July 1997. Mr. Bourne,  who joined CNL Securities  Corp. in 1979, has
participated  as a general  partner or joint  venturer  in over 100 real  estate
ventures  involved in the financing,  acquisition,  construction,  and rental of
restaurants,  office  buildings,  apartment  complexes,  hotels,  and other real
estate.  Included in these real estate ventures are  approximately  64 privately
offered  real  estate  limited  partnerships  in which Mr.  Bourne,  directly or
through an affiliated  entity,  serves or has served as a general partner.  Also
included  are the CNL Income  Fund  Partnerships,  public  real  estate  limited
partnerships with investment objectives similar to those of the Partnership,  in
which  Mr.  Bourne  serves as a  general  partner.  Mr.  Bourne  formerly  was a
certified public  accountant with Coopers & Lybrand and a partner in the firm of
Bourne & Rose, P.A. Mr. Bourne received a B.A. in Accounting,  with honors, from
Florida State University in 1970.

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

         CNL  Fund  Advisors,  Inc.  provides  certain  management  services  in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation  organized  in 1994 under the laws of the State of Florida,  and its
principal  office is located at 400 East South Street,  Orlando,  Florida 32801.
CNL Fund  Advisors,  Inc. is a majority owned  subsidiary of CNL Group,  Inc., a
diversified  real  estate  company,   and  was  organized  to  perform  property
acquisition, property management and other services.

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

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

         Curtis B. McWilliams,  age 43, joined CNL Group, Inc. in April 1997 and
currently serves as an Executive Vice President. In addition, Mr. McWilliams has
served  as  President  of  CNL  Fund  Advisors,  Inc.  and as  President  of the
Restaurant  and Financial  Services  Groups within CNL Group,  Inc.  since April
1997. Mr.  McWilliams has served as President of CNL American  Properties  Fund,
Inc. since February 1999 and previously  served as Executive Vice President from
February 1998 through February 1999. From September 1983 through March 1997, Mr.
McWilliams  was employed by Merrill  Lynch & Co.,  most  recently as Chairman of
Merrill  Lynch's  Private  Advisory  Services until March 1997.  Mr.  McWilliams
received a B.S.E. in Chemical  Engineering from Princeton University in 1977 and
a Masters of Business  Administration  with a concentration  in finance from the
University of Chicago in 1983.

         John T. Walker,  age 40, has served as Executive  Vice President of CNL
American  Properties  Fund, Inc. since January 1996, as Chief Operating  Officer
since March 1995, and previously  served as Senior Vice President since December
1994. In addition, Mr. Walker has served as Executive Vice President of CNL Fund
Advisors, Inc. since January 1996, Chief Operating Officer since April 1995, and
previously  served as Senior Vice President  from November 1994 through  January
1996. In addition,  Mr. Walker  previously served as Executive Vice President of
CNL Hospitality  Properties,  Inc. and CNL Hospitality  Advisors,  Inc. From May
1992 to May 1994, Mr. Walker, a certified public accountant,  was Executive Vice
President for Finance and Administration and Chief Financial Officer of Z Music,
Inc.,   a  cable   television   network   (subsequently   acquired   by  Gaylord
Entertainment),   where  he  was   responsible   for   overall   financial   and
administrative  management  and planning.  From January 1990 through April 1992,
Mr. Walker was Chief  Financial  Officer of the First Baptist Church in Orlando,
Florida.  From  April  1984  through  December  1989,  he was a  partner  in the
accounting firm of Chastang, Ferrell & Walker, P.A., where he was the partner in
charge of audit and consulting services, and from 1981 to 1984, Mr. Walker was a
Senior  Consultant/Audit  Senior at Price Waterhouse.  Mr. Walker is a Cum Laude
graduate of Wake Forest University with a B.S. in Accountancy and is a certified
public accountant.

         Lynn E. Rose,  age 50, a  certified  public  accountant,  has served as
Secretary of CNL American  Properties  Fund, Inc. since December 1994 and served
as Treasurer from December 1994 through  February 1999. Ms. Rose has served as a
director  and  Secretary of CNL Fund  Advisors,  Inc.  since March 1994,  and as
Treasurer  from the date of its  inception  through June 30, 1997.  Ms. Rose has
served as Secretary of CNL Group, Inc. since 1987, as Chief Financial Officer of
CNL Group, Inc. since December 1993, and served as Controller of CNL Group, Inc.
from 1987  until  December  1993.  In  addition,  Ms.  Rose has  served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She has
served as Chief Operating Officer, Vice President and Secretary of CNL Corporate
Services,  Inc. since November 1994. Ms. Rose also has served as Chief Financial
Officer and Secretary of CNL Institutional Advisors, Inc. since its inception in
1990, as Treasurer of CNL Realty Advisors,  Inc. from 1991 to February 1996, and
as Secretary and a director of CNL Realty Advisors,  Inc. since its inception in
1991 until  December 31, 1997, at which time CNL Realty  Advisors,  Inc.  merged
with Commercial Net Lease Realty, Inc. In addition, Ms. Rose served as Secretary
and Treasurer of Commercial  Net Lease Realty,  Inc. from 1992 to February 1996.
Ms. Rose also serves as Secretary and Treasurer of CNL  Hospitality  Properties,
Inc. and CNL Health Care  Properties,  Inc. and as  Secretary,  Treasurer  and a
director of CNL Hospitality  Advisors,  Inc. and CNL Health Care Advisors,  Inc.
Ms. Rose also  currently  serves as Secretary  for  approximately  50 additional
corporations.  Ms.  Rose  oversees  the  legal  compliance,  accounting,  tenant
compliance,  and reporting  for over 250  corporations,  partnerships  and joint
ventures.  Prior to joining CNL, Ms. Rose was a partner with Robert A. Bourne in
the accounting firm of Bourne & Rose, P.A.,  Certified Public  Accountants.  Ms.
Rose holds a B.A. in Sociology from the University of Central Florida.

         Jeanne A. Wall,  age 40, has served as Executive  Vice President of CNL
American  Properties  Fund,  Inc.  since  December  1994. Ms. Wall has served as
Executive  Vice  President of CNL Fund  Advisors,  Inc. since November 1994, and
previously  served as Vice President from March 1994 through  November 1994. Ms.
Wall has served as Chief Operating Officer of CNL Investment  Company and of CNL
Securities  Corp. since November 1994 and has served as Executive Vice President
of CNL  Investment  Company since January 1991.  Ms. Wall joined CNL  Securities
Corp. in 1984. In 1985, Ms. Wall became Vice  President of CNL Securities  Corp.
In 1987, she became Senior Vice President and in July 1997 she became  Executive
Vice  President of CNL  Securities  Corp. In this  capacity,  Ms. Wall serves as
national  marketing and sales director and oversees the national  marketing plan
for  the CNL  investment  programs.  In  addition,  Ms.  Wall  oversees  product
development,  partnership  administration  and  investor  services  for programs
offered  through  participating  brokers and  corporate  communications  for CNL
Group,  Inc.  and its  affiliates.  Ms.  Wall also has  served  as  Senior  Vice
President of CNL Institutional Advisors,  Inc., a registered investment advisor,
from 1990 to 1993,  as Vice  President of CNL Realty  Advisors,  Inc.  since its
inception in 1991 until  December 31, 1997,  at which time CNL Realty  Advisors,
Inc. merged with Commercial Net Lease Realty, Inc., and served as Vice President
of  Commercial  Net Lease Realty,  Inc. from 1992 through  December 31, 1997. In
addition,  Ms.  Wall  serves as  Executive  Vice  President  of CNL  Hospitality
Properties,  Inc., CNL Hospitality  Advisors,  Inc., CNL Health Care Properties,
Inc.  and CNL Health  Care  Advisors,  Inc.  Ms.  Wall holds a B.A.  in Business
Administration  from  Linfield  College  and is a  registered  principal  of CNL
Securities  Corp.  Ms.  Wall  currently  serves as a trustee on the board of the
Investment Program Association and on the Direct Participation Program committee
for the National Association of Securities Dealers (NASD).

         Steven D.  Shackelford,  age 35, a  certified  public  accountant,  has
served as Chief Financial  Officer of CNL American  Properties  Fund, Inc. since
January 1997 and as Chief  Financial  Officer of CNL Fund  Advisors,  Inc. since
September  1996.  From  March 1995 to July 1996,  Mr.  Shackelford  was a senior
manager in the national office of Price  Waterhouse where he was responsible for
advising  foreign  clients  seeking to raise capital and a public listing in the
United  States.  From August  1992 to March 1995,  he served as a manager in the
Price Waterhouse,  Paris, France office serving several  multinational  clients.
Mr.  Shackelford  was an audit  staff and audit  senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse.  Mr. Shackelford received a B.A. in
Accounting,  with honors, and a Masters of Business  Administration from Florida
State University.


Item 11.  Executive Compensation

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


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of March 11,  1999,  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 11, 1999,  the beneficial
ownership interests of the General Partners in the Registrant.


           Title of Class         Name of Partner            Percent of Class
           --------------         ---------------            ----------------

  General Partnership Interests   James M. Seneff, Jr.              45%
                                  Robert A. Bourne                  45%
                                  CNL Realty Corporation            10%
                                                                   100%

         Neither the General  Partners,  nor any of their  affiliates,  owns any
interest  in the  Registrant,  except as noted  above.  On March 11,  1999,  the
Registrant  entered  into an  Agreement  and Plan of  Merger  with CNL  American
Properties  Fund, Inc.  ("APF") pursuant to which the Registrant would be merged
with and into a subsidiary of APF (the "Merger").  For further  discussion,  see
Item 8. Financial Statements and Supplementary Data -- Note 11.
Subsequent Events.




<PAGE>


Item 13.  Certain Relationships and Related Transactions

         The  table  below   summarizes  the  types,   recipients,   methods  of
computation and amounts of compensation,  fees and distributions paid or payable
by the  Partnership  to the General  Partners and their  affiliates for the year
ended  December 31, 1998,  exclusive of any  distributions  to which the General
Partners or their  affiliates  may be entitled by reason of their  purchase  and
ownership of Units.

<TABLE>
<CAPTION>
<S> <C>

                                                                                                 Amount Incurred
       Type of Compensation                                                                       For the Year
            and Recipient                            Method of Computation                   Ended December 31, 1998
            -------------                            ---------------------                   -----------------------

Reimbursement     to    affiliates    for     Operating  expenses  are  reimbursed        Operating                expenses
operating expenses                            at the  lower of cost or 90  percent     incurred    on    behalf    of   the
                                              of  the  prevailing  rate  at  which     Partnership:        $125,405
                                              comparable  services could have been
                                              obtained  in  the  same   geographic        Accounting   and   administrative
                                              area.   Affiliates  of  the  General     services:  $105,445
                                              Partners  from  time to  time  incur
                                              certain   operating    expenses   on
                                              behalf of the  Partnership for which
                                              the   Partnership   reimburses   the
                                              affiliates without interest.

Annual,  subordinated  management fee to     One  percent  of the  sum  of  gross        $ - 0 -
affiliates                                    operating  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,  subordinated to
                                              certain  minimum  returns  to  the
                                              Limited  Partners.  The management
                                              fee  will not  exceed  competitive
                                              fees for comparable services.  Due
                                              to the fact  that  these  fees are
                                              non-cumulative,   if  the  Limited
                                              Partners  have not received  their
                                              10%   Preferred   Return   in  any
                                              particular   year,  no  management
                                              fees  will be due or  payable  for
                                              such year.



<PAGE>



                                                                                                 Amount Incurred
       Type of Compensation                                                                       For the Year
            and Recipient                            Method of Computation                   Ended December 31, 1998

Deferred,    subordinated   real   estate     A   deferred,    subordinated   real        $ - 0 -
disposition fee payable to affiliates         estate   disposition   fee,  payable
                                              upon   sale   of   one   or   more
                                              Properties,  in an amount equal to
                                              the  lesser of (i)  one-half  of a
                                              competitive       real      estate
                                              commission,  or (ii) three percent
                                              of  the   sales   price   of  such
                                              Property or Properties. Payment of
                                              such  fee  shall  be made  only if
                                              affiliates of the General Partners
                                              provide  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.  However, if the
                                              net sales  proceeds are reinvested
                                              in a replacement Property, no such
                                              real estate  disposition  fee will
                                              be incurred until such replacement
                                              Property is sold and the net sales
                                              proceeds are distributed.

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

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



<PAGE>



                                                                                                 Amount Incurred
       Type of Compensation                                                                       For the Year
            and Recipient                            Method of Computation                   Ended December 31, 1998

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


         As discussed  above in Item 8. Financial  Statements and  Supplementary
Data - Note 11. Subsequent  Events, the Registrant has entered into an Agreement
and Plan of  Merger,  dated  March  11,  1999,  with APF  pursuant  to which the
Registrant would be merged with and into a subsidiary of APF in exchange for the
issuance of APF Shares.  The APF Shares are expected to be listed for trading on
the New York Stock Exchange concurrently with the consummation of the Merger. If
the Merger is approved by Limited Partners holding units greater than 50% of the
outstanding  units of the  Registrant,  the General  Partners of the  Registrant
would receive certain benefits, including:

         o        With respect to their ownership in the Registrant, the General
                  Partners  will be issued  approximately  38,555  shares of APF
                  common stock, par value $0.01 per share.

         o        Following  the  Merger,  James M.  Seneff,  Jr.  and Robert A.
                  Bourne,  the  individual  General  Partners,  will continue to
                  serve as directors of APF, with Mr. Seneff serving as Chairman
                  and Mr. Bourne  serving as Vice  Chairman.  As APF  directors,
                  they may also be entitled to receive  stock  options under any
                  stock option plan adopted by APF.



<PAGE>


                                     PART IV


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

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

         1.  Financial Statements

                  Report of Independent Accountants

                  Balance Sheets at December 31, 1998 and 1997

                  Statements of Income for the years ended December 31, 1998,
                  1997, and 1996

                  Statements of Partners' Capital for the years ended December
                  31, 1998, 1997, and 1996

                  Statements of Cash Flows for the years ended December 31,
                  1998, 1997, and 1996

                  Notes to Financial Statements

         2.  Financial Statement Schedule

                  Schedule II - Valuation and Qualifying  Accounts for the years
                  ended December 31, 1998, 1997, and 1996

                  Schedule III - Real Estate and Accumulated Depreciation at 
                  December 31, 1998

                  Notes to Schedule III - Real Estate and Accumulated
                  Depreciation at December 31, 1998

                  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 X, Ltd.  (Included  as Exhibit 3.2 to
                           Registration  Statement No. 33-35049 on Form S-11 and
                           incorporated herein by reference.)

                  4.1      Affidavit and  Certificate of Limited  Partnership of
                           CNL Income Fund X, Ltd.  (Included  as Exhibit 3.2 to
                           Registration  Statement No. 33-35049 on Form S-11 and
                           incorporated herein by reference.)

                  4.2      Amended and Restated Agreement of Limited Partnership
                           of CNL Income Fund X, Ltd.  (Included  as Exhibit 3.3
                           to  Post-Effective  Amendment  No. 4 to  Registration
                           Statement No. 33-35049 on Form S-11 and  incorporated
                           herein by reference.)

                  10.1     Management  Agreement between CNL Income Fund X, Ltd.
                           and CNL Investment  Company (Included as Exhibit 10.1
                           to Form 10-K filed with the  Securities  and Exchange
                           Commission on March 17, 1998, and incorporated herein
                           by reference.)

                  10.2     Assignment   of   Management   Agreement   from   CNL
                           Investment Company to CNL Income Fund Advisors,  Inc.
                           (Included as Exhibit 10.2 to Form 10-K filed with the
                           Securities and Exchange Commission on March 30, 1995,
                           and incorporated herein by reference.)

                  10.3     Assignment  of Management  Agreement  from CNL Income
                           Fund  Advisors,  Inc.  to  CNL  Fund  Advisors,  Inc.
                           (Included as Exhibit 10.3 to Form 10-K filed with the
                           Securities and Exchange  Commission on April 1, 1996,
                           and incorporated herein by reference)

                  27       Financial Data Schedule (Filed herewith.)

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


<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 27th day of
March, 1999.

                                            CNL INCOME FUND X, 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              March  27, 1999
Robert A. Bourne             (Principal        Financial       and
                             Accounting  Officer)

/s/ James M. Seneff, Jr.     Chief Executive  Officer and Director              March  27, 1999
James M. Seneff, Jr.         (Principal Executive Officer)


<PAGE>


</TABLE>





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

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>
<S> <C>

                                                               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
   --------    -----------------   --------------   --------------   ---------------    -------------     ------------   -----------

    1996       Allowance for
                   doubtful                          
                   accounts (a)        $  12,167         $    --         $  91,857  (b)   $  10,368  (c)      $   447       $ 93,209
                                   ==============   ==============   ===============    =============     ============   ===========

   1997        Allowance for
                   doubtful
                   accounts (a)        $  93,209         $    --        $  192,212  (b)    $  5,083  (c)     $ 24,889       $255,449
                                   ==============   ==============   ===============    =============     ============   ===========

   1998        Allowance for
                   doubtful
                   accounts (a)       $  255,449         $    --        $  290,844  (b)   $  38,726  (c)     $  1,335       $506,232
                                   ==============   ==============   ===============    =============     ============   ===========


         (a)  Deducted from  receivables and accrued rental income on the balance
              sheet.

         (b)  Reduction of rental, earned and other income.

         (c)  Amounts written off as uncollectible.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


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

                                                  SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                                     December 31, 1998

<S> <C>
                                                                                            Costs Capitalized
                                                                                              Subsequent to  
                                                                  Initial Cost                 Acquisition   
                                                          --------------------------      -------------------
                                           Encum-                      Buildings and      Improve-   Carrying
                                          brances              Land    Improvements         ments     Costs  
                                        -----------         ---------- -------------      ---------  ------- 
Properties the Partnership
  has Invested in:

    Burger King Restaurant:
      San Antonio, Texas                     -               $373,095     $384,458             -        -    

    Checkers Drive-In Restaurants:
      Fayetteville, Georgia                  -                338,735            -             -        -    
      Atlanta, Georgia                       -                317,128            -             -        -    

    Denny's Restaurants:
      Casper, Wyoming                        -                184,285      415,181             -        -    
      Rock Springs, Wyoming                  -                217,448      488,991             -        -    

    Golden Corral Family
     Steakhouse Restaurants:
      Tomball, Texas                         -                311,019      529,759        22,330        -    
      Pineville, Louisiana (e)               -                187,961      503,435             -        -    
      Hueytown, Alabama                      -                258,084      513,853             -        -    
      Nederland, Texas                       -                327,473      520,701             -        -    
      Columbia, Missouri                     -                384,911      163,164             -        -    

    Jack in the Box Restaurant:
      Lubbock, Texas                         -                229,198      408,702             -        -    

    KFC Restaurants:
      Jacksonville, Florida                  -                198,735      266,200             -        -    
      Eagan, Minnesota                       -                202,084      370,247        31,976        -    
      Bay City, Texas                        -                162,783            -       305,154        -    

    Lonestar Steakhouse &
     Saloon Restaurant:
      Sterling Heights, Michigan (f)         -                430,281            -       648,736        -    

    Pizza Hut Restaurants:
      Clayton, New Mexico                    -                 54,093      200,141             -        -    
      Santa Rosa, New Mexico                 -                 75,963      168,204             -        -    
      Childress, Texas                       -                 71,512      145,191             -        -    
      Coleman, Texas                         -                 70,208      141,004             -        -    

    Ponderosa Steakhouse Restaurant:
      Scottsburg, Indiana                    -                208,781            -       518,884        -    

    Popeyes Famous Fried
     Chicken Restaurants:
      Altamonte Springs, Florida             -                197,959      255,965             -        -    
      Ocala, Florida                         -                184,512      274,991             -        -    
      Sanford, Florida                       -                237,243      359,865             -        -    
      Apopka, Florida                        -                155,041            -       417,209        -    

    Wendy's Old Fashioned
     Hamburger Restaurants:
      Gainesville, Texas                     -                166,302      449,914             -        -    
      Vail, Colorado                         -                782,609            -       550,346        -    

    Other:
      Oxford, Alabama (g)                    -                152,567      355,990             -        -    
      Littleton, Colorado (h)                -                 42,873      310,832             -        -    
      Lombard, Illinois (i)                  -                 85,517       96,207        40,633        -    
                                                         ------------  -----------  ------------  ------- 

                                                           $6,608,400   $7,322,995    $2,535,268        -    
                                                         ============  ===========  ============  ======= 

Property of Joint Venture in Which
  the Partnership has a 50% Interest and
  has Invested in Under an Operating Lease:

    Pizza Hut Restaurant:
      Orlando, Florida                       -               $330,568     $220,588             -        -    
                                                         ============  ===========  ============  ======= 

Property of Joint Venture in Which the
  Partnership  has a 49% Interest and has
  Invested in Under an Operating Lease:

    Denny's Restaurant:
      Holland, Michigan                      -               $295,987            -      $780,451        -    
                                                         ============  ===========  ============  ======= 

Property of Joint Venture in Which the
  Partnership  has a 64% Interest and has
  Invested in Under an Operating Lease:

    Darryl's Restaurant:
      Greensboro, North Carolina             -               $261,013            -             -        -    
                                                         ============  ===========  ============  ======= 

Property in Which the Partnership
  has a 33.87% Interest as Tenants-
  In-Common and has Invested
  in Under an Operating Lease

    Arby's Restaurant:
      Arvada, Colorado (m)                   -               $260,439     $545,126             -        -    
                                                         ============  ===========  ============  ======= 

Property in Which the Partnership has
  a 57.9129% Interest as Tenants-in-Common
  and has Invested in Under an Operating Lease:

    Boston Market Restaurant:
      Mesa, Arizona (l)                      -               $440,843     $650,622             -        -    
                                                         ============  ===========  ============  ======= 

Property in Which the Partnership has a 47%
  Interest as Tenants- In Common and
  has Invested in Under an Operating Lease:

    Golden Corral Restaurant:
      Smithfield, North Carolina             -               $264,272   $1,155,018             -        -    
                                                         ============  ===========  ============  ======= 

Property in Which the Partnership has a
  37.01%  Interest as Tenants-in-Common
  and has Invested in Under an Operating Lease:

    Chevy's Fresh Mex Restaurant:
      Vancouver, Washington                  -               $875,659   $1,389,366             -        -    
                                                         ============  ===========  ============  ======= 

Property of in Which the Partnership has
  a 13.38% Interest as Tenants- In-Common
  and has Invested in Under an Operating Lease:

    IHOP Restaurant
      Memphis, Tennessee                     -               $678,890     $825,076             -        -    
                                                         ============  ===========  ============  ======= 

Property of Joint Venture in
  Which the Parnership has a
  64% Interest has Invested in
  Under a Direct Financing Lease:

    Darryl's Restaurant:
      Greensboro, North Carolina             -                     -      $521,400            -         -    
                                                         ============  ===========  ============  ======= 

Property in Which the Partnership has a
  39.39% Interest as Tenants- In-Common and
  has Invested in Under a Direct Financing Lease:

    IHOP Restaurant
      Overland Park, Kansas                  -               $335,374   $1,273,134             -        -    
                                                         ============  ===========  ============  ======= 





                                                                                            
          Gross Amount at Which                                              Life on Which  
         Carried at Close of Period (c)                                     Depreciation in 
  -------------------------------------                 Date                 Latest Income  
               Buildings and             Accumulated   of Con-     Date       Statement is  
    Land       Improvements     Total    Depreciation struction  Acquired      Computed     
  ---------  ------------   -----------  -----------  ---------  --------     ------------  
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $373,095      $384,458      $757,553     $147,376    1987        07/87           (b)          
                                                                                            
                                                                                            
   338,735             -       338,735           (d)    -          12/94           (d)          
   317,128             -       317,128           (d)    -          12/94           (d)          
                                                                                            
                                                                                            
   184,285       415,181       599,466      156,846    1983        09/87           (b)          
   217,448       488,991       706,439      184,730    1983        09/87           (b)          
                                                                                            
                                                                                            
                                                                                            
   311,019       552,089       863,108      213,488    1987        05/87           (b)          
   187,961       503,435       691,396      194,382    1987        06/87           (b)          
   258,084       513,853       771,937      198,405    1987        06/87           (b)          
   327,473       520,701       848,174      198,156    1987        08/87           (b)          
   384,911       163,164       548,075       60,734    1987        11/87           (b)          
                                                                                            
                                                                                            
   229,198       408,702       637,900       74,014    1993        07/93           (b)          
                                                                                            
                                                                                            
   198,735       266,200       464,935      100,564    1983        09/87           (b)          
   202,084       402,223       604,307      150,834    1987        10/87           (b)          
   162,783       305,154       467,937      112,737    1987        12/87           (b)          
                                                                                            
                                                                                            
                                                                                            
   430,281       648,736     1,079,017      234,266    1988        08/87           (b)          
                                                                                            
                                                                                            
    54,093       200,141       254,234       76,165    1986        08/87           (b)          
    75,963       168,204       244,167       64,011    1986        08/87           (b)          
    71,512       145,191       216,703       55,253    1974        08/87           (b)          
    70,208       141,004       211,212       52,093    1977        12/87           (b)          
                                                                                            
                                                                                            
   208,781       518,884       727,665      187,375    1988        10/87           (b)          
                                                                                            
                                                                                            
                                                                                            
   197,959       255,965       453,924      101,675    1987        02/87           (b)          
   184,512       274,991       459,503      109,233    1987        02/87           (b)          
   237,243       359,865       597,108      138,948    1987        06/87           (b)          
   155,041       417,209       572,250      152,398    1988        09/87           (b)          
                                                                                            
                                                                                            
                                                                                            
   166,302       449,914       616,216      172,467    1986        07/87           (b)          
   782,609       550,346     1,332,955      209,437    1987        08/87           (b)          
                                                                                            
                                                                                            
   152,567       355,990       508,557      129,040    1987        02/88           (b)          
    42,873       310,832       353,705      116,562    1973        10/87           (b)          
    85,517       136,840       222,357       40,170    1973        10/87           (b)          
----------  ------------  ------------  -----------                                         
                                                                                            
$6,608,400    $9,858,263   $16,466,663   $3,631,359                                         
==========  ============  ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $330,568      $220,588      $551,156      $82,415    1987        10/87           (b)          
==========  ============  ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $295,987      $780,451    $1,076,438     $264,486    1988        10/87           (b)          
==========  ============  ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $261,013            (k)     $261,013            -    1987        07/87           (j)          
==========                ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $260,439      $545,126      $805,565      $77,712    1994        09/94           (b)          
==========  ============  ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $440,843      $650,622    $1,091,465      $25,836    1997        10/97           (b)          
==========  ============  ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $264,272    $1,155,018    $1,419,290      $39,450    1996        12/97           (b)          
==========  ============  ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $875,659    $1,389,366    $2,265,025      $46,437    1994        12/97           (b)          
==========  ============  ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
  $678,890      $825,076    $1,503,966      $26,642    1997        01/98           (b)          
==========  ============  ============  ===========                                         
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
        (k)           (k)          (j)   1974    06/97              (j)                        
==========                                                                                  
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
         -            (k)           (k)          (j)   1997        01/98           (j)          
==========                                                                                  
                                                                                            
                                                                                            
                                                                                            
                                                                                            
</TABLE>






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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1998


(a)      Transactions in real estate and accumulated  depreciation  during 1998,
         1997 and 1996, are summarized as follows:

<TABLE>
<CAPTION>
<S> <C>

                                                                                       Accumulated
                                                                        Cost          Depreciation
                                                                  -----------------   ---------------
              Properties the Partnership has Invested
                  in Under Operating Leases:

                      Balance, December 31, 1995                     $  15,555,248      $   692,282
                      Reclassified to operating lease                      567,923               --
                      Depreciation expense                                      --          206,497
                                                                  -----------------   ---------------

                      Balance, December 31, 1996                        16,123,171          898,779
                      Acquisitions                                       1,277,307               --
                      Dispositions                                        (577,332 )             --
                      Depreciation expense                                      --          214,468
                                                                  -----------------   ---------------

                      Balance, December 31, 1997                        16,823,146        1,113,247
                      Acquisitions                                       1,020,329               --
                      Dispositions                                        (833,323 )        (43,281  )
                      Reclass to operating lease                         1,913,380               --
                      Depreciation expense (m)(n)(o)                            --          259,866
                                                                  -----------------   ---------------

                      Balance, December 31, 1998                     $  18,923,532     $  1,329,832
                                                                  =================   ===============

              Properties of Joint  Venture  in Which
                  the Partnership has a 50% Interest
                  and has Invested in Under Operating
                  Leases:

                      Balance, December 31, 1995                      $  6,565,262      $   541,467
                      Depreciation expense                                      --          144,050
                                                                  -----------------   ---------------

                      Balance, December 31, 1996                         6,565,262          685,517
                      Depreciation expense                                      --          144,047
                                                                  -----------------   ---------------

                      Balance, December 31, 1997                         6,565,262          829,564
                      Depreciation expense                                      --          144,050
                                                                  -----------------   ---------------

                      Balance, December 31, 1998                      $  6,565,262      $   973,614
                                                                  =================   ===============



<PAGE>


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

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

                                December 31, 1998


                                                                                         Accumulated
                                                                       Cost             Depreciation
                                                                  ---------------       --------------
              Property of Joint Venture in Which  the
                 Partnership has a 10.51% Interest and
                 has Invested in Under Operating
                 Leases:

                      Balance, December 31, 1995                     $ 1,290,582           $  108,088
                      Depreciation expense                                    --               33,237
                                                                  ---------------       --------------

                      Balance, December 31, 1996                       1,290,582              141,325
                      Depreciation expense                                    --               33,147
                                                                  ---------------       --------------

                      Balance, December 31, 1997                       1,290,582              174,472
                      Depreciation expense                                    --               33,327
                                                                  ---------------       --------------

                      Balance, December 31, 1998                     $ 1,290,582           $  207,799
                                                                  ===============       ==============

              Property  in  Which  the  Partnership has
                 a 13% Interest as Tenants-in-Common
                 and has Invested in Under an Operating
                 Lease:

                      Balance, December 31, 1995                         $    --              $    --
                      Acquisition                                        814,970                   --
                      Depreciation expense                                    --               21,168
                                                                  ---------------       --------------

                      Balance, December 31, 1996                         814,970               21,168
                      Depreciation expense                                    --               22,553
                                                                  ---------------       --------------

                      Balance, December 31, 1997                         814,970               43,721
                      Depreciation expense                                    --               22,553
                                                                  ---------------       --------------

                      Balance, December 31, 1998                      $  814,970            $  66,274
                                                                  ===============       ==============



<PAGE>


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

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

                                December 31, 1998


                                                                                         Accumulated
                                                                       Cost             Depreciation
                                                                  ---------------       --------------
              Property in Which the Partnership has a
                 6.69% Interest as Tenants-in-Common
                 and has Invested in Under an Operating
                 Lease:

                      Balance, December 31, 1996                          $    --             $    --
                      Acquisition                                       1,950,373                  --
                      Depreciation expense                                     --                  89
                                                                  ---------------       --------------

                      Balance, December 31, 1997                        1,950,373                  89
                      Depreciation expense                                     --              32,467
                                                                  ---------------       --------------

                      Balance, December 31, 1998                      $ 1,950,373           $  32,556
                                                                  ===============       ==============

</TABLE>


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

  (c)      As of December 31, 1998, the aggregate  cost of the Properties  owned
           by the  Partnership  and  its  consolidated  joint  venture,  and the
           unconsolidated  joint  ventures  for federal  income tax purposes was
           $29,957,164  and  $11,270,400,  respectively.  All of the  leases are
           treated as operating leases for federal income tax purposes.

   (d)     For financial reporting  purposes,  the portion of the lease relating
           to the building has been recorded as a direct  financing  lease.  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)      Effective  January 1, 1994,  the lease for this Property was amended,
           resulting  in the  reclassification  of the  building  portion of the
           lease to an  operating  lease.  The building was recorded at net book
           value as of January  1,  1994,  and  depreciated  over its  remaining
           estimated life of approximately 28 years.

  (h)      Effective  March 1, 1996,  the lease for this  Property  was amended,
           resulting  in the  reclassification  of the  building  portion of the
           lease to an  operating  lease.  The building was recorded at net book
           value  as of March  1,  1996,  and  depreciated  over  its  remaining
           estimated life of approximately 26 years.


<PAGE>


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

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

                                December 31, 1998


   (i)   Effective  October 1, 1998,  the lease for this property was terminated
         resulting in the  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 useful life of approximately 23 years.

   (j)   Effective  August  1, 1998 the lease  for this  property  was  amended,
         resulting in the  reclassification of the building portion of the lease
         as an operating  lease.  The building was recorded at net book value as
         of August 1, 1998, and depreciated over its remaining estimated life of
         approximately 23 years.

   (k)   Scheduled for completion in 1999.

   (l)   Property was not place in service as of December 31, 1998; therefore no
         depreciation was taken.

   (m)   For financial reporting purposes the undepreciated cost of the Property
         in Lancaster,  New York, was written down to net realizable value to an
         impairment in value.  The tenant of this Property  filed for bankruptcy
         and  rejected  the lease  relating to this  Property.  The  Partnership
         recognized  the  impairment  by  recording  an  allowance  for  loss on
         building in the amount of $387,202 at December 31, 1998. The impairment
         at December 31, 1998  represents the difference  between the Property's
         carrying value and the net realizable  value of the Property.  The cost
         of the Property presented on this schedule is the gross amount at which
         the Property was carried at December 31, 1998,  excluding the allowance
         for loss on building.

   (n)   For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Property in Homewood, Alabama, was written down to net realizable value
         due to an  impairment in value.  The tenant of this Property  filed for
         bankruptcy  and  rejected  the lease  relating  to this  Property.  The
         Partnership  recognized  the  impairment  by recording an allowance for
         loss on land and  building in the amount of  $521,316  at December  31,
         1998.  The  impairment at December 31, 1998,  represents the difference
         between the Property's  carrying value and the estimated net realizable
         value of the  Property.  The  cost of the  Property  presented  on this
         schedule  is the gross  amount at which the  Property  was  carried  at
         December  31,  1998,  excluding  the  allowance  for  loss on land  and
         building.

   (o)   For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Property in Amherst, New York, was written down to net realizable value
         due to an  impairment in value.  The tenant of this Property  filed for
         bankruptcy  in 1998.  The  Partnership  recognized  the  impairment  by
         recording  an  allowance  for loss on the  building  in the  amount  of
         $93,328 at December  31,  1998.  The  impairment  at December 31, 1998,
         represents the difference between the Property's carrying value and the
         estimated  net  realizable  value  of the  Property.  The  cost  of the
         Property  presented  on this  schedule is the gross amount at which the
         Property was carried at December 31, 1998,  excluding the allowance for
         loss on the building.




<PAGE>


                                    EXHIBITS


<PAGE>







                                  EXHIBIT INDEX


Exhibit Number

         3.1      Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund  X,  Ltd.   (Included  as  Exhibit  3.2  to  Registration
                  Statement No. 33-35049 on Form S-11 and incorporated herein by
                  reference.)

         4.1      Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund  X,  Ltd.   (Included  as  Exhibit  3.2  to  Registration
                  Statement No. 33-35049 on Form S-11 and incorporated herein by
                  reference.)

         4.2      Amended and Restated  Agreement of Limited  Partnership of CNL
                  Income Fund X, Ltd. (Included as Exhibit 3.3 to Post-Effective
                  Amendment No. 4 to Registration Statement No. 33-35049 on Form
                  S-11 and incorporated herein by reference.)

         10.1     Management  Agreement  between CNL Income Fund X, Ltd. and CNL
                  Investment  Company  (Included  as  Exhibit  10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on March 17,
                  1998, and incorporated herein by reference.)

         10.2     Assignment of Management Agreement from CNL Investment Company
                  to CNL Income Fund Advisors, Inc. (Included as Exhibit 10.2 to
                  Form 10-K filed with the Securities and Exchange Commission on
                  March 30, 1995, and incorporated herein by reference.)

         10.3     Assignment  of  Management  Agreement  from  CNL  Income  Fund
                  Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit
                  10.3 to Form  10-K  filed  with the  Securities  and  Exchange
                  Commission  on April  1,  1996,  and  incorporated  herein  by
                  reference)

         27       Financial Data Schedule (Filed herewith.)