<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549
                                  FORM 10-K/A
                                Amendment No. 1
(Mark One)

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

                 For the fiscal year ended    December 31, 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>

     The Form 10-K of CNL Income Fund X, Ltd. for the year ended December 31,
1998 is being amended to revise the disclosure under Item 1. Business, Item 2.
Properties, Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations and Item 8. Financial Statements and Supplementary
Data.


                                    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. The 48 Properties included 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 fourth 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.

     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

                                       2
<PAGE>

Partnership's investment objectives. In deciding whether to sell Properties, the
General Partners will consider factors such as potential capital appreciation,
net cash flow and federal income tax considerations. Certain lessees also have
been granted options to purchase Properties, generally at the Property's then
fair market value after a specified portion of the lease term has elapsed. The
Partnership has no obligation to sell all or any portion of a Property at any
particular time, except as may be required under property 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.  Fair market value will be determined through an appraisal by an
independent appraisal firm.  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.

                                       3
<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, in excess
of 20 percent of the total assets of the Partnership.

Joint Venture and Tenancy in Common 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 with CNL Income Fund IX,
Ltd., an affiliate of the General Partners, to purchase and hold six Properties;
Ashland Joint Venture with CNL Income Fund IX, Ltd. and CNL Income Fund XI,
Ltd., affiliates of the General Partners, to purchase and hold one Property; and
Williston Real Estate Joint Venture with CNL Income Fund XII, Ltd., an affiliate
of the General Partners, to purchase and hold one Property.  The affiliates are
limited partnerships organized pursuant to the laws of the State of Florida.

     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 has an 88.26% interest in Allegan Real Estate Joint
Venture, a 50 percent interest in CNL Restaurant Investments III, a 10.51%
interest in Ashland Joint Venture, and a 40.95% interest in Williston Real
Estate Joint Venture.  The Partnership and its joint venture partners are also
jointly and severally liable for all debts, obligations and other liabilities of
the joint 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.

                                       4
<PAGE>

     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 January 1999, the Partnership entered into a joint venture arrangement,
Ocean Shore Joint Venture, with CNL Income Fund XVII, Ltd., 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.

     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 CNL Income Fund IV, Ltd., CNL Income Fund VI, Ltd., and
CNL Income Fund XV, Ltd., 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-tenant'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 CNL Income Fund
III, Ltd., CNL Income Fund VII, Ltd., and CNL Income Fund XIII, Ltd., 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-tenant's percentage interest.  The Partnership owns a 6.69% interest in
this Property.

     Each of the affiliates is a limited partnership organized pursuant to the
laws of the State of Florida.  The tenancy in common agreement restricts each
co-tenant's ability to sell, transfer, or assign its interest in the tenancy in
common's Property without first offering it for sale to the remaining co-tenant.

     The use of joint venture and tenancy in common arrangements allows the
Partnership to fully invest its available funds at times at which it would not
have sufficient funds to purchase an additional property, or at times when a
suitable opportunity to purchase an additional property is not available.  The
use of joint venture and tenancy in common arrangements also provides the
Partnership with increased diversification of its portfolio among a greater
number of properties.   In addition, tenancy in common arrangements may allow
the Partnership to defer the gain for federal income tax purposes upon the sale
of the property if the proceeds are reinvested in an additional property.

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.

                                       5
<PAGE>

Employees

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


Item 2.  Properties

     As of December 31, 1998, the Partnership owned 48 Properties.  Of the 48
Properties, 37 are owned by the Partnership in fee simple, nine are owned
through joint venture arrangements and two are owned through tenancy in common
arrangements.  See Item 1. Business - Joint Venture and Tenancy in Common
Arrangements.  The Partnership is not permitted to encumber its Properties under
the terms of its partnership agreement.  Reference is made to the Schedule of
Real Estate and Accumulated Depreciation for a listing of the Properties and
their respective costs, including acquisition fees and certain acquisition
expenses.  This schedule was filed with the Partnership's Form 10-K for the year
ended December 31, 1998.

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.

     The following table lists the Properties owned by the Partnership as of
December 31, 1998 by state.  More detailed information regarding the location of
the Properties is contained in the Schedule of Real Estate and Accumulated
Depreciation filed with the Partnership's Form 10-K for the year ended December
31, 1998.

<TABLE>
<CAPTION>
          State                            Number of Properties
          -----                            --------------------
          <S>                              <C>
          Alabama                                   2
          Florida                                   6
          Idaho                                     1
          Illinois                                  1
          Louisiana                                 2
          Michigan                                  2
          Missouri                                  1
          Montana                                   5
          North Carolina                            4
          New Hampshire                             3
          New Mexico                                3
          New York                                  3
          Ohio                                      3
          Pennsylvania                              1
          South Carolina                            1
          Tennessee                                 3
          Texas                                     7
                                                  -----
          TOTAL PROPERTIES:                         48
                                                  =====
</TABLE>

     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. As of December 31, 1998,  the  Partnership  had  no
plans  for renovation of the Properties.  Depreciation expense is computed for
buildings

                                       6
<PAGE>

and improvements using the straight line method using a depreciable life of 40
years for federal income tax purposes. As of December 31, 1998, the aggregate
cost of the Properties owned by the Partnership (including its consolidated
joint venture) and the unconsolidated joint ventures (including Properties owned
through tenancy in common arrangements), for federal income tax purposes was
$29,957,164 and $11,270,400, respectively.

     The following table lists the Properties owned by the Partnership as of
December 31, 1998 by Restaurant Chain.

<TABLE>
<CAPTION>
          Restaurant Chain                    Number of Properties
          ----------------                    --------------------
          <S>                                 <C>
          Boston Market                               1
          Burger King                                12
          Chevy's Fresh Mex                           1
          Denny's                                     3
          Golden Corral                               4
          Hardee's                                    7
          Jack in the Box                             6
          Long John Silver's                          2
          Perkins                                     3
          Pizza Hut                                   5
          Shoney's                                    4
                                                    -----
          TOTAL PROPERTIES:                          48
                                                    =====
</TABLE>

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

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

     Leases.  The Partnership leases the Properties to operators of selected
national and regional fast-food restaurant chains.  The leases are generally on
a long-term "triple net" basis, meaning that the tenant is responsible for
repairs, maintenance, property taxes, utilities and insurance.  Generally, a
lessee is required, under the terms of its lease agreement, to make such capital
expenditures as may be reasonably necessary to refurbish 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. The terms of the leases of the
Properties owned by the Partnership are described in Item 1. Business - Leases.

                                       7
<PAGE>

     At December 31, 1998, 1997, 1996, 1995, and 1994, the Properties were 96%,
100%, 100%, 100%, and 100% occupied, respectively.  The following is a schedule
of the average annual rent for each of the five years ended December 31:

<TABLE>
<CAPTION>
                                                              For the Year Ended December 31:
                                   1998                1997                1996                1995                1994
                             ---------------     ---------------     ---------------     ---------------     ---------------

<S>                          <C>                 <C>                 <C>                 <C>                 <C>
Rental Revenues (1)               $3,163,838          $3,823,808          $3,894,384          $3,882,392          $4,050,876
Properties (2)                            47                  49                  48                  47                  47
Average Rent per Unit             $   67,316          $   78,037          $   81,133          $   82,604          $   86,189
</TABLE>


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

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

     The following is a schedule of lease expirations for leases in place as of
December 31, 1998 for each of the ten years beginning with 1999 and thereafter.

<TABLE>
<CAPTION>
                                                                                           Percentage of
                                               Number             Annual Rental             Gross Annual
        Expiration Year                      of Leases               Revenues              Rental Income
    ----------------------              ------------------     ------------------       ------------------
    <S>                                 <C>                    <C>                      <C>
          1999                                      --                        --                       --
          2000                                      --                        --                       --
          2001                                      --                        --                       --
          2002                                      --                        --                       --
          2003                                      --                        --                       --
          2004                                      --                        --                       --
          2005                                      --                        --                       --
          2006                                      10                   650,756                    18.81%
          2007                                       3                   538,740                    15.57%
          2008                                      --                        --                       --
          Thereafter                                33                 2,270,517                    65.62%
                                            ----------         -----------------        -----------------
          Totals (1)                                46                 3,460,013                   100.00%
                                            ==========         =================        =================
</TABLE>

(1)  Excludes two Properties which were vacant at December 31, 1998.

     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).

                                       8
<PAGE>

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 offering different types of food and service.


                                    PART II

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 or tenancy in common arrangements.

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

                                       9
<PAGE>

sale. The Partnership intends to reinvest the remaining net sales proceeds in an
additional Property or use such amounts to pay Partnership liabilities.

     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 or
tenancy in common arrangements 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 and net sales
proceeds from the sale of Properties, pending reinvestment in additional
Properties or payment of Partnership liabilities, are invested in money market
accounts or other short-term highly liquid investments such as demand deposit
accounts at commercial banks, CDs and money market accounts with less than a
30-day maturity date, 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

                                       10
<PAGE>

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. As of December 31,
1998, the average interest rate earned on the rental income deposited in demand
deposit accounts at commercial banks was approximately two percent annually. 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.

Short-Term Liquidity

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

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

     The Partnership generally distributes cash from operations remaining after
the payment of the operating expenses of the Partnership, to the extent that the
General Partners determine that such funds are available for distribution.
Based on cash from operations, 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.

     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.

Long-Term Liquidity

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

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

                                       11
<PAGE>

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 "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

                                       12
<PAGE>

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 "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 below.  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.

                                       13
<PAGE>

  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 "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 "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.

Proposed Merger

     On March 11, 1999, the Partnership entered into an Agreement and Plan of
Merger with APF, pursuant to which the Partnership would be merged with and into
a subsidiary of APF.  As consideration for the Merger, APF has agreed to issue
4,243,243 APF Shares.  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 fair value of the Partnership's property portfolio and other
assets was $41,779,262 as of December 31, 1998.  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 Limited
Partners that is expected to be held in the fourth 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.  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.

Year 2000 Readiness Disclosure

Overview of Year 2000 Problem

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

                                       14
<PAGE>

Information and Non-Information Technology Systems

     The Partnership does not have any information or non-information technology
systems.  The General Partners and their affiliates provide all services
requiring the use of information and non-information technology systems pursuant
to a management agreement with the Partnership.  The information technology
system of the General Partners' affiliates consists of a network of personal
computers and servers built using hardware and software from mainstream
suppliers.  The non-information technology systems of the affiliates are
primarily facility related and include building security systems, elevators,
fire suppressions, HVAC, electrical systems and other utilities.  The affiliates
have no internally generated programmed software coding to correct, because
substantially all of the software utilized by the affiliates is purchased or
licensed from external providers.  The maintenance of non-information technology
systems at the Partnership's restaurant properties is the responsibility of the
tenants of such properties in accordance with the terms of the Partnership's
leases.

The Y2K Team

     In early 1998, the General Partners and their affiliates formed a Year 2000
committee (the "Y2K Team") for the purpose of identifying, understanding and
addressing the various issues associated with the year 2000 problem.  The Y2K
Team consists of the General Partners and members from their affiliates,
including representatives from senior management, information systems,
telecommunications, legal, office management, accounting and property
management.

Assessing Year 2000 Readiness

     The Y2K Team's initial step in assessing year 2000 readiness consists of
identifying any systems that are date-sensitive and, accordingly, could have
potential year 2000 problems.  The Y2K Team has conducted inspections,
interviews and tests to identify which of the systems used by the Partnership
could have a potential year 2000 problem.

     The information system of the General Partners' affiliates is comprised of
hardware and software applications from mainstream suppliers.  Accordingly, the
Y2K Team has contacted and is evaluating documentation from the respective
vendors and manufacturers to verify the year 2000 compliance of their products.
The Y2K Team has also requested and is evaluating documentation from the
non-information technology systems providers of the affiliates.

     In addition, the Y2K Team has requested and is evaluating documentation
from other companies with which the Partnership has material third party
relationships.  Such third parties, in addition to the providers of information
and non-information technology systems, consist of the Partnership's transfer
agent and financial institutions.  The Partnership depends on its transfer agent
to maintain and track investor information and its financial institutions for
availability of cash.

     As of September 15, 1999, the Y2K Team had received responses from
approximately 60% of the third parties.  All of the responses were in writing.
Of the third parties responding, all indicated that they are currently year 2000
compliant or will be year 2000 compliant prior to the year 2000.  Although the
Y2K Team continues to receive positive responses from the companies with which
the Partnership has third party relationships regarding their year 2000
compliance, the General Partners cannot be assured that the third parties have
adequately considered the impact of the year 2000.

     In addition, the Y2K Team has requested documentation from the
Partnership's tenants.  The Y2K Team is in the process of evaluating the
responses and expects to complete this process by October 31, 1999.  The
Partnership has also instituted a policy of requiring any new tenants to
indicate that their systems are year 2000 compliant or are expected to be year
2000 compliant prior to the year 2000.

                                       15
<PAGE>

Achieving Year 2000 Compliance

     The Y2K Team has identified and completed upgrades of the hardware
equipment that was not year 2000 compliant.  In addition, the Y2K Team has
identified and completed upgrades of the software applications that were not
year 2000 compliant, although the General Partners cannot be assured that the
upgrade solutions provided by the vendors have addressed all possible year 2000
issues.

     The cost for these upgrades and other remedial measures is the
responsibility of the General Partners and their affiliates.  The General
Partners do not expect that the Partnership will incur any costs in connection
with year 2000 remedial measures.

Assessing the Risks to the Partnership of Non-Compliance and Developing
Contingency Plans

Risk of Failure of Information and Non-Information Technology Systems Used by
the Partnership

     The General Partners believe that the reasonably likely worst case scenario
with regard to the information and non-information technology systems used by
the Partnership is the failure of one or more of these systems as a result of
year 2000 problems.  Because the Partnership's major source of income is rental
payments under long-term triple-net leases, any failure of information or
non-information technology systems used by the Partnership is not expected to
have a material impact on the results of operations of the Partnership. Even if
such systems failed, the payment of rent under the Partnership's leases would
not be affected. In addition, the Y2K Team is expected to correct any Y2K
problems within the control of the General Partners and their affiliates before
the year 2000.

     The Y2K Team has determined that a contingency plan to address this risk is
not necessary at this time.  However, if the Y2K Team identifies additional
risks associated with the year 2000 compliance of the information or
non-information technology systems used by the Partnership, the Y2K Team will
develop a contingency plan if deemed necessary at that time.

Risk of Inability of Transfer Agent to Accurately Maintain Partnership Records

     The General Partners believe that the reasonably likely worst case scenario
with regard to the Partnership's transfer agent is that the transfer agent will
fail to achieve year 2000 compliance of its systems and will not be able to
accurately maintain the records of the Partnership.  This could result in the
inability of the Partnership to accurately identify its Limited Partners for
purposes of distributions, delivery of disclosure materials and transfer of
units.  The Y2K Team has received certification from the Partnership's transfer
agent of its year 2000 compliance.  Despite the positive response from the
transfer agent, the General Partners cannot be assured that the transfer agent
has addressed all possible year 2000 issues.

     The Y2K Team has developed a contingency plan pursuant to which the General
Partners and their affiliates would maintain the records of the Partnership
manually, in the event that the systems of the transfer agent are not year 2000
compliant.  The General Partners and their affiliates would have to allocate
resources to internally perform the functions of the transfer agent.  The
General Partners do not anticipate that the additional cost of these resources
would have a material impact on the results of operations of the Partnership.

Risk of Loss of Short-Term Liquidity from Failure of Financial Institutions to
Achieve Year 2000 Compliance

     The General Partners believe that the reasonably likely worst case scenario
with regard to the Partnership's financial institutions is that some or all of
its funds on deposit with such financial institutions may be temporarily
unavailable.  The Y2K Team has received responses from 93% of the Partnership's
financial institutions indicating that their systems are currently year 2000
compliant or are expected to be year 2000 compliant prior to the year 2000.
Despite the positive responses from the financial institutions, the General
Partners cannot be assured that the financial institutions have addressed all
possible year 2000 issues.  The loss of short-term liquidity could affect the
Partnership's ability to pay its expenses on a current basis.  The General
Partners do not anticipate that a loss of short-term liquidity would have a
material impact on the results of operations of the Partnership.

     Based upon the responses received from the Partnership's financial
institutions and the inability of the Y2K

                                       16
<PAGE>

Team to identify a suitable alternative for the deposit of funds that is not
subject to potential year 2000 problems, the Y2K Team has determined not to
develop a contingency plan to address this risk.

Risks of Late Payment or Non-Payment of Rent by Tenants

     The General Partners believe that the reasonably likely worst case scenario
with regard to the Partnership's tenants is that some of the tenants may make
rental payments late as the result of the failure of the tenants to achieve year
2000 compliance of their systems used in the payment of rent, the failure of the
tenant's financial institutions to achieve year 2000 compliance, or the
temporary disruption of the tenants' businesses.  The Y2K Team is in the process
of requesting responses from the Partnership's tenants indicating the extent to
which their systems are currently year 2000 compliant or are expected to be year
2000 compliant prior to the year 2000.  The General Partners cannot be assured
that the tenants have addressed all possible year 2000 issues.  The late payment
of rent by one or more tenants would affect the results of operations of the
Partnership in the short-term.

     The General Partners are also aware of predictions that the year 2000
problem, if uncorrected, may result in a global economic crisis.  The General
Partners are not able to determine if such predictions are true.  A widespread
disruption of the economy could affect the ability of the Partnership's tenants
to pay rent and, accordingly, could have a material impact on the results of
operations of the Partnership.

     Because payment of rent is under the control of the Partnership's tenants,
the Y2K Team is not able to develop a contingency plan to address these risks.
In the event of late payment or non-payment of rent, the General Partners will
assess the remedies available to the Partnership under its lease agreements.

Item 8.   Financial Statements and Supplementary Data

                                       17
<PAGE>

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

                                   CONTENTS



<TABLE>
<CAPTION>


                                                         Page
                                                         ----
<S>                                                      <C>

Report of Independent Accountants                         19

Financial Statements:

  Balance Sheets                                          20

  Statements of Income                                    21

  Statements of Partners' Capital                         22

  Statements of Cash Flows                                23

  Notes to Financial Statements                           25

</TABLE>

                                       18
<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.



/s/ PricewaterhouseCoopers LLP

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

                                       19
<PAGE>

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

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


<TABLE>
<CAPTION>
                                                                         December 31,
                                                                 1998                    1997
                                                          -----------------       -----------------
<S>                                                       <C>                     <C>
                      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
 $117,593                                                         1,342,166               1,775,374
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
                                                          =================       =================
</TABLE>



                See accompanying notes to financial statements.

                                       20
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                                        Year Ended December 31,
                                                                        1998                     1997                     1996
                                                               --------------------     --------------------     ------------------
<S>                                                            <C>                      <C>                      <C>
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
                                                               ====================     ====================     ==================
</TABLE>

                See accompanying notes to financial statements.

                                       21
<PAGE>

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

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

                 Years Ended December 31, 1998, 1997, and 1996


<TABLE>
<CAPTION>
                                    General Partners                                   Limited Partners
                              ---------------------------   ---------------------------------------------------------
                                              Accumulated                                   Accumulated   Syndication
                              Contributions     Earnings    Contributions   Distributions     Earnings       Costs         Total
                              -------------   -----------   -------------   -------------   -----------   -----------   -----------
 <S>                          <C>             <C>           <C>             <C>             <C>           <C>           <C>
Balance, December 31, 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
                              =============   ===========   =============   =============   ===========   ===========   ===========
</TABLE>

                See accompanying notes to financial statements.

                                       22
<PAGE>

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

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


<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                       1998                   1997                  1996
                                                  --------------       ----------------      ----------------
<S>                                               <C>                  <C>                   <C>
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
                                                  ==============       ================      ================
</TABLE>

                See accompanying notes to financial statements.

                                       23
<PAGE>

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

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


<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                      1998                   1997                  1996
                                                               ----------------       ----------------      ----------------
<S>                                                            <C>                    <C>                   <C>
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             $3,696,417            $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.

                                       24
<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.

     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.

                                       25
<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:
     -------------------------------------------

     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.

     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.

                                       26
<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:
     -------------------------------------------

     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.

     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

                                       27
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED
                   -----------------------------------------

                 Years Ended December 31, 1998, 1997, and 1996


2.   Leases - Continued:
     ------------------

     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.

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                    --
                                           -----------           -----------
                                             8,923,532            16,823,146

        Less accumulated depreciation        1,329,832)           (1,113,247)
                                           -----------           -----------
                                             7,593,700            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.

                                       28
<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:
     --------------------------------------------------

     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.

     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).

                                       29
<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:
     --------------------------------------------------

     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
                                              ===========

     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:

<TABLE>
<CAPTION>
                                                       1998                   1997
                                                   ------------           ------------
          <S>                                      <C>                    <C>
          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
                                                   ============           ============
</TABLE>

                                       30
<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 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).

     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).

                                       31
<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:
     ----------------------------

     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.

     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                       0,050,000              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.

                                       32
<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.

                                       33
<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.

                                       34
<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>
                                                              1998                   1997                  1996
                                                            ---------              ---------             ---------

<S>                                                        <C>                    <C>                   <C>
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>

                                       35
<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.

     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.

                                       36
<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 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

                                       37
<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
            Hardee's                    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.

                                       38
<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"). 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 fair value of the Partnership's property
     portfolio and other assets was $41,779,262 as of December 31, 1998. 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, 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.

                                       39
<PAGE>

                                 SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 28th day of
October, 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.


     Signature                       Title                           Date
     ---------                       -----                           ----

/s/ Robert A. Bourne       President, Treasurer and             October 28, 1999
------------------------   Director (Principal Financial
Robert A. Bourne           and Accounting Officer)

/s/ James M. Seneff, Jr.   Chief Executive Officer and          October 28, 1999
------------------------   Director (Principal Executive
James M. Seneff, Jr.       Officer)