FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

                 For the quarterly period ended        March 31, 1999
                                                ---------------------------

                                       OR

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

For the transition period from _____________ to _______________


                             Commission file number
                                     0-21558
                         ------------------------------


                            CNL Income Fund XII, Ltd.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Florida                                         59-3078856
--------------------------------------------         ---------------------------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                         Identification No.)


400 East South Street
Orlando, Florida                                                32801
--------------------------------------------         ---------------------------
   (Address of principal executive offices)                   (Zip Code)


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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for 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 _________




<PAGE>


                                    CONTENTS



Part I                                                                Page
                                                                      ----
   Item 1.    Financial Statements:

                  Condensed Balance Sheets                              1

                  Condensed Statements of Income                        2

                  Condensed Statements of Partners' Capital             3

                  Condensed Statements of Cash Flows                    4

                  Notes to Condensed Financial Statements               5-6

   Item 2.    Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                   7-12

   Item 3.   Quantitative and Qualitative Disclosures About
                  Market Risk                                           12

Part II

   Other Information                                                    13-14



<PAGE>

                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C>

                                                                                  March 31,              December 31,
                                                                                    1999                    1998
                                                                              ----------------         --------------
                               ASSETS

   Land and buildings on operating leases,
       less  accumulated  depreciation  of
       $1,879,307 and $1,795,099 and allowance
       for loss on building of $206,535 in
       1999 and 1998                                                             $ 20,619,125            $ 20,703,333
   Net investment in direct financing leases                                       12,425,957              12,471,978
   Investment in joint ventures                                                     2,652,267               2,522,004
   Cash and cash equivalents                                                        2,000,725               2,362,980
   Receivables, less allowance for doubtful accounts
       of $3,990 and $214,633                                                          43,584                  16,862
   Prepaid expenses                                                                    17,024                   7,038
   Lease costs, less accumulated amortization
       of $3,754 and $3,256                                                            25,799                  26,297
   Accrued rental income, less allowance for doubtful
       accounts of $6,323 in 1999 and 1998                                          2,574,477               2,524,406
                                                                           -------------------     -------------------

                                                                                 $ 40,358,958            $ 40,634,898
                                                                           ===================     ===================

                  LIABILITIES AND PARTNERS' CAPITAL

   Accounts payable                                                                $   37,483              $   21,195
   Accrued and escrowed real estate taxes payable                                      17,146                  10,137
   Distributions payable                                                              956,252               1,091,252
   Due to related party                                                                11,351                  24,025
   Rents paid in advance and deposits                                                  39,624                  97,448
                                                                           -------------------     -------------------
       Total liabilities                                                            1,061,856               1,244,057

   Commitment (Note 3)

   Partners' capital                                                               39,297,102              39,390,841
                                                                           -------------------     -------------------

                                                                                 $ 40,358,958             $40,634,898
                                                                           ===================     ===================



           See accompanying notes to condensed financial statements.


<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME


                                                                                          Quarter Ended
                                                                                            March 31,
                                                                                     1999               1998
                                                                                 --------------    ---------------
Revenues:
    Rental income from operating leases                                              $ 604,884          $ 626,546
    Earned income from direct financing leases                                         376,334            407,674
    Contingent rental income                                                             2,371              7,422
    Interest and other income                                                           19,755             15,252
                                                                                 --------------    ---------------
                                                                                     1,003,344          1,056,894
                                                                                 --------------    ---------------

Expenses:
    General operating and administrative                                                47,284             34,465
    Professional services                                                               11,141             12,986
    Bad debt expense                                                                        --              8,968
    Management fees to related party                                                    10,530             10,580
    Real estate taxes                                                                    2,125                 --
    State and other taxes                                                               20,764             17,248
    Depreciation and amortization                                                       84,706             79,994
    Transaction costs                                                                   35,419                 --
                                                                                 --------------    ---------------
                                                                                       211,969            164,241
                                                                                 --------------    ---------------

Income Before Equity in Earnings of Joint Ventures                                     791,375            892,653

Equity in Earnings of Joint Ventures                                                    71,138             65,650
                                                                                 --------------    ---------------

Net Income                                                                           $ 862,513          $ 958,303
                                                                                 ==============    ===============

Allocation of Net Income:
    General partners                                                                 $   8,625          $   9,583
    Limited partners                                                                   853,888            948,720
                                                                                 --------------    ---------------

                                                                                     $ 862,513          $ 958,303
                                                                                 ==============    ===============

Net Income Per Limited Partner Unit                                                   $   0.19           $   0.21
                                                                                 ==============    ===============

Weighted Average Number of Limited
    Partner Units Outstanding                                                        4,500,000          4,500,000
                                                                                 ==============    ===============


           See accompanying notes to condensed financial statements.


<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL


                                                                             Quarter Ended           Year Ended
                                                                               March 31,            December 31,
                                                                                  1999                  1998
                                                                           -------------------    ------------------

General partners:
    Beginning balance                                                             $   223,305            $  192,411
    Net income                                                                          8,625                30,894
                                                                           -------------------    ------------------
                                                                                      231,930               223,305
                                                                           -------------------    ------------------

Limited partners:
    Beginning balance                                                              39,167,536            40,224,901
    Net income                                                                        853,888             2,902,643
    Distributions ($0.21 and $0.88 per
       limited partner unit, respectively)                                           (956,252 )          (3,960,008 )
                                                                           -------------------    ------------------
                                                                                   39,065,172            39,167,536
                                                                           -------------------    ------------------

Total partners' capital                                                          $ 39,297,102          $ 39,390,841
                                                                           ===================    ==================


           See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS


                                                                                     Quarter Ended
                                                                                       March 31,
                                                                               1999                 1998
                                                                          ----------------     ---------------

Increase (Decrease) in Cash and Cash Equivalents

    Net Cash Provided by Operating Activities                                   $ 853,445          $1,129,927
                                                                          ----------------     ---------------

    Cash Flows from Investing Activities:
       Investment in joint venture                                               (124,448 )                --
       Payment of lease costs                                                          --              (3,500 )
                                                                          ----------------     ---------------
              Net cash used in investing activities                              (124,448 )            (3,500 )
                                                                          ----------------     ---------------

    Cash Flows from Financing Activities:
       Distributions to limited partners                                       (1,091,252 )          (956,252 )
                                                                          ----------------     ---------------
              Net cash used in financing activities                            (1,091,252 )          (956,252 )
                                                                          ----------------     ---------------

Net Increase (Decrease) in Cash and Cash
    Equivalents                                                                  (362,255 )           170,175

Cash and Cash Equivalents at Beginning of Quarter                               2,362,980           1,706,415
                                                                          ----------------     ---------------

Cash and Cash Equivalents at End of Quarter                                    $2,000,725          $1,876,590
                                                                          ================     ===============

Supplemental Schedule of Non-Cash Financing
    Activities:

       Distributions declared and unpaid at end of
          quarter                                                               $ 956,252           $ 956,252
                                                                          ================     ===============




           See accompanying notes to condensed financial statements.

</TABLE>

<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     Quarters Ended March 31, 1999 and 1998


1.       Basis of Presentation:

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of management,  necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the quarter ended March 31, 1999,  may not be indicative of the results
         that may be expected for the year ending December 31, 1999.  Amounts as
         of December 31, 1998, included in the financial  statements,  have been
         derived from audited financial statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund XII, Ltd. (the  "Partnership")  for the year ended December
         31, 1998.

2.       Merger Transaction:

         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 4,768,496  shares of its common stock,  par value $0.01 per share
         (the "APF  Shares")  which,  for the  purposes  of  valuing  the merger
         consideration,  have been  valued by APF at $10.00 per APF  Share,  the
         price paid by APF investors in three  previous  public  offerings,  the
         most recent of which was completed in December 1998. In order to assist
         the general  partners in evaluating the proposed merger  consideration,
         the  general  partners  retained  Valuation  Associates,  a  nationally
         recognized real estate  appraisal  firm, to appraise the  Partnership's
         restaurant   property   portfolio.   Based  on  Valuation   Associates'
         appraisal,  the Partnership's  property portfolio and other assets were
         valued on a going  concern  basis  (meaning the  Partnership  continues
         unchanged)  at  $46,951,127  as of December 31,  1998.  Legg Mason Wood
         Walker, Incorporated has rendered a fairness opinion that the APF Share
         consideration,  payable  by  APF,  is fair  to the  Partnership  from a
         financial  point of view.  The APF Shares are expected to be listed for
         trading  on  the  New  York  Stock  Exchange   concurrently   with  the
         consummation of the Merger, and, therefore, would be freely tradable at
         the option of the former limited partners.  At a special meeting of the
         partners  that is  expected  to be held in the third  quarter  of 1999,
         limited  partners  holding  in  excess  of  50%  of  the  Partnership's
         outstanding limited partnership interests must approve the Merger prior
         to consummation


<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     Quarters Ended March 31, 1999 and 1998


2.       Merger Transaction - Continued:

         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.  If the limited partners
         reject  the  Merger,  the  Partnership  will  bear the  portion  of the
         transactions  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.

         On May 5,  1999,  four  limited  partners  in several of the CNL Income
         Funds  filed  a  lawsuit  against  the  general  partners  and  APF  in
         connection  with  the  proposed  Merger  (see  Part II - Item 1.  Legal
         Proceedings).  The general partners and APF believe that the lawsuit is
         without  merit and  intend to defend  vigorously  against  the  claims.
         Because the lawsuit was so recently  filed,  it is premature to further
         comment on the lawsuit at this time.

3.       Commitment:

         In March  1999,  the  Partnership  entered  into an  agreement  with an
         unrelated  third  party to sell  the Long  John  Silver's  property  in
         Morganton,  North  Carolina.  The  general  partners  believe  that the
         anticipated sales price will exceed the Partnership's cost attributable
         to the  property;  however,  as of May  13,  1999,  the  sale  had  not
         occurred.




<PAGE>


ITEM 2.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                 RESULTS OF OPERATIONS

         CNL Income Fund XII,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was organized on August 20, 1991, to acquire for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing  restaurants,  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 leases
are generally  triple-net leases,  with the lessees  responsible for all repairs
and maintenance,  property taxes, insurance and utilities. As of March 31, 1999,
the Partnership owned 48 Properties, which included interests in five Properties
owned by joint ventures in which the Partnership is a co-venturer.

Liquidity and Capital Resources
-------------------------------

         The  Partnership's  primary  source of capital for the  quarters  ended
March 31, 1999 and 1998, was cash from operations  (which includes cash received
from tenants,  distributions from joint ventures,  and interest and other income
received,  less cash paid for expenses).  Cash from  operations was $853,445 and
$1,129,927,  for the quarters ended March 31, 1999 and 1998,  respectively.  The
decrease in cash from  operations  for the  quarter  ended  March 31,  1999,  as
compared to the quarter  ended March 31, 1998,  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
quarter ended March 31, 1999.

         In  August  1998,  the   Partnership   entered  into  a  joint  venture
arrangement, Columbus Joint Venture, with affiliates of the general partners, to
construct  and  hold  one  restaurant  Property.  As  of  March  31,  1999,  the
Partnership  had  contributed  approximately  $239,700,  of which  approximately
$124,400 was  contributed  during the quarter ended March 31, 1999, to the joint
venture to purchase land and pay for  construction  costs  relating to the joint
venture.  As of March 31, 1999, the Partnership  owned an approximate 28 percent
interest in the profits and losses of the joint venture.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions to the partners. At March 31, 1999, the Partnership had $2,000,725
invested in such short-term  investments,  as compared to $2,362,980 at December
31, 1998. The decrease in cash and cash  equivalents for the quarter ended March
31, 1999, is partially  attributable to the payment of a special distribution to
the limited partners of $135,000 in January 1999 of cumulative  excess operating
reserves. In addition,  the decrease is partially due to the Partnership funding
additional  amounts to Columbus Joint Venture to pay construction costs relating
to the joint venture.  The funds  remaining at March 31, 1999,  after payment of
distributions  and other  liabilities,  will be used to  acquire  an  additional
Property and to meet the Partnership's working capital and other needs.



<PAGE>


Liquidity and Capital Resources - Continued
-------------------------------------------

         Total  liabilities of the Partnership  decreased to $1,061,856 at March
31, 1999,  from  $1,244,057  at December 31, 1998,  primarily as a result of the
Partnership  accruing a special  distribution payable to the limited partners of
$135,000 at December 31, 1998,  as  described  above,  which was paid in January
1999. The decrease is also partially attributable to a decrease in rents paid in
advance at March 31, 1999. The general partners believe that the Partnership has
sufficient cash on hand to meet its current working capital needs.

         In March  1999,  the  Partnership  entered  into an  agreement  with an
unrelated  third party to sell the Long John  Silver's  Property  in  Morganton,
North Carolina.  The general partners  believe that the anticipated  sales price
will exceed the Partnership's cost attributable to the Property;  however, as of
May 13, 1999, the sale had not occurred.

         Based on current cash from operations,  and for the quarter ended March
31, 1999, future cash from operations, the Partnership declared distributions to
the limited  partners of $956,252 for each of the quarters  ended March 31, 1999
and 1998. This represents distributions for each applicable quarter of $0.21 per
unit. No distributions  were made to the general partners for the quarters ended
March 31, 1999 and 1998. No amounts  distributed to the limited partners for the
quarters  ended March 31, 1999 and 1998, are required to be or have been treated
by the  Partnership  as a return of capital  for  purposes  of  calculating  the
limited   partners'  return  on  their  adjusted  capital   contributions.   The
Partnership  intends to continue to make  distributions  of cash  available  for
distribution to the limited partners on a quarterly basis.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them  under  triple-net  leases to  operators  who 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.

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

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with 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. APF has agreed to issue 4,768,496 APF Shares which, for the purposes
of valuing the merger  consideration,  have been valued by APF at $10.00 per APF
Share, the price paid by APF investors in three previous public  offerings,  the
most  recent of which was  completed  in December  1998.  In order to assist the
general  partners in evaluating the proposed merger  consideration,  the general
partners  retained  Valuation  Associates,  a nationally  recognized real estate
appraisal firm, to appraise the  Partnership's  restaurant  property  portfolio.
Based on Valuation Associates'  appraisal,  the Partnership's property portfolio
and other assets were valued on a going concern basis  (meaning the  Partnership
continues unchanged) at $46,951,127 as of

<PAGE>


Liquidity and Capital Resources - Continued
-------------------------------------------

December 31, 1998. Legg Mason Wood Walker,  Incorporated has rendered a fairness
opinion  that  the APF  Share  consideration,  payable  by  APF,  is fair to the
Partnership  from a financial  point of view.  The APF Shares are expected to be
listed  for  trading  on the New  York  Stock  Exchange  concurrently  with  the
consummation  of the  Merger,  and  therefore,  would be freely  tradable at the
option of the former limited partners. At a special meeting of the partners that
is expected to be held in the third quarter of 1999, limited partners holding in
excess of 50% of the Partnership's  outstanding  limited  partnership  interests
must approve the Merger prior to consummation of the transaction. 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.  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.

         On May 5,  1999,  four  limited  partners  in several of the CNL Income
Funds filed a lawsuit  against the general  partners and APF in connection  with
the  proposed  Merger  (see Part II - Item 1. Legal  Proceedings).  The  general
partners and APF believe that the lawsuit is without  merit and intend to defend
vigorously against the claims.  Because the lawsuit was so recently filed, it is
premature to further comment on the lawsuit at this time.

Results of Operations
---------------------

         During the quarter  ended March 31,  1998,  the  Partnership  owned and
leased 44 wholly owned Properties (which included one Property in Monroe,  North
Carolina  which was sold in December  1998),  and during the quarter ended March
31,  1999,  the  Partnership  owned and  leased 43 wholly  owned  Properties  to
operators  of  fast-food  and  family-style  restaurant  chains.  In  connection
therewith,  during the quarters ended March 31, 1999 and 1998,  the  Partnership
earned  $981,218 and $1,034,220,  respectively,  in rental income from operating
leases and earned  income from direct  financing  leases from these  Properties.
Rental and earned income  decreased due to the fact that in June 1998, Long John
Silver's, Inc. filed for bankruptcy and rejected the leases relating to three of
the eight  Properties  that it leased.  As a result,  the tenant  ceased  making
rental  payments on the three rejected  leases.  The  Partnership  has continued
receiving  rental  payments  relating  to the five  leases not  rejected  by the
tenant.  In December 1998, the Partnership sold one of the vacant Properties and
intends to reinvest the net sales  proceeds from the sale of this Property in an
additional  Property.  The Partnership  will not recognize any rental and earned
income  from the two  remaining  vacant  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 general  partners are
currently  seeking  either new  tenants or buyers for the two  remaining  vacant
Properties.  While Long John  Silver's,  Inc.  has not  rejected or affirmed the
remaining five leases,  there can be no assurance that some or all of the leases
will not be rejected in the future.  The lost  revenues  resulting  from the two
remaining vacant  Properties,  and the possible  rejection of the remaining five
leases  could  have an  adverse  effect  on the  results  of  operations  of the
Partnership,  if the  Partnership is not able to re-lease these  Properties in a
timely manner.


<PAGE>


Results of Operations - Continued
---------------------------------

         In addition,  during the quarter ended March 31, 1998, the  Partnership
owned and leased four Properties  indirectly through joint venture  arrangements
and during the quarter ended March 31, 1999,  the  Partnership  owned and leased
five Properties  indirectly  through joint venture  arrangements.  In connection
therewith,  during the quarters ended March 31, 1999 and 1998,  the  Partnership
earned $71,138 and $65,650,  respectively,  attributable to net income earned by
joint  ventures.  The increase in net income earned by joint ventures during the
quarter  ended March 31, 1999, is primarily due to the fact that in August 1998,
the  Partnership  invested in Columbus  Joint  Venture,  as  described  above in
"Liquidity and Capital Resources."

         Operating expenses,  including  depreciation and amortization  expense,
were  $211,969  and  $164,241  for the  quarters  ended March 31, 1999 and 1998,
respectively.  The increase in operating expenses during the quarter ended March
31,  1999,  as compared to the quarter  ended March 31,  1998,  was  partially a
result of the Partnership incurring $35,419 in transaction costs relating to the
general  partners  retaining  financial  and legal  advisors  to assist  them in
evaluating and  negotiating  the proposed Merger with APF, as described above in
"Liquidity and Capital  Resources." If the limited  partners  reject the Merger,
the Partnership  will bear the portion of the  transaction  costs based upon the
percentage of "For" votes and the general partners will bear the portion of such
transaction costs based upon the percentage of "Against" votes and abstentions.

         In  addition,  the increase in  operating  expenses  during the quarter
ended March 31, 1999, is partially attributable to the fact that the Partnership
accrued insurance and real estate tax expenses on the two remaining rejected and
vacant Properties as a result of Long John Silver's, Inc. filing for bankruptcy,
as described above. In addition,  the increase in operating  expenses during the
quarter  ended  March 31,  1999,  is  partially  attributable  to an increase in
depreciation  expense  due  to  the  fact  that  during  1998,  the  Partnership
reclassified these assets from net investment in direct financing leases to land
and  buildings on  operating  leases.  The  Partnership  will  continue to incur
certain expenses, such as real estate taxes, insurance, and maintenance relating
to the two remaining, vacant Properties until new tenants or buyers are located.
The Partnership is currently  seeking either new tenants or purchasers for these
two Properties. In addition, the Partnership will incur certain expenses such as
real estate taxes,  insurance,  and  maintenance  relating to one or more of the
five Properties  still leased by Long John Silver's,  Inc. if one or more of the
leases are rejected.

Year 2000 Readiness Disclosure
------------------------------

         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 Partnership does not have any
information or  non-information  technology  systems.  The general  partners and
affiliates  of the general  partners  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
affiliates of the general partners  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 of the general partners are
primarily  facility related and include building  security  systems,  elevators,
fire suppressions,  HVAC, electrical systems and other utilities. The affiliates
of the general partners have no internally  generated programmed software coding
to correct, because substantially all of


<PAGE>


Year 2000 Readiness Disclosure - Continued
------------------------------------------

the software  utilized by the general  partners and  affiliates  is purchased or
licensed from external providers. The maintenance of non-information  technology
systems at the Partnership's  Properties is the responsibility of the tenants of
the Properties in accordance with the terms of the Partnership's leases.

         In early 1998, the general  partners and 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 the  affiliates  of the
general partners, including representatives from senior management,  information
systems,  telecommunications,  legal, office management, accounting and property
management. The Y2K Team's initial step in assessing the Partnership's Year 2000
readiness  consists of  identifying  any systems  that are  date-sensitive  and,
accordingly,  could have potential  Year 2000  problems.  The Y2K Team is in the
process of conducting inspections, interviews and tests to identify which of the
Partnership's systems could have a potential Year 2000 problem.

         The  information  system of the  affiliates of the general  partners is
comprised of hardware  and  software  applications  from  mainstream  suppliers.
Accordingly, the Y2K Team is in the process of contacting the respective vendors
and  manufacturers  to verify the Year 2000  compliance  of their  products.  In
addition,  the Y2K Team has also requested and is evaluating  documentation from
other   companies  with  which  the  Partnership  has  a  material  third  party
relationship,   including  the   Partnership's   tenants,   vendors,   financial
institutions and the  Partnership's  transfer agent. The Partnership  depends on
its  tenants  for  rents  and  cash  flows,   its  financial   institutions  for
availability  of cash and its  transfer  agent to  maintain  and track  investor
information.  The Y2K Team has also  requested and is  evaluating  documentation
from the  non-information  technology systems providers of the affiliates of the
general  partners.  Although the general  partners  continue 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  tenants,  financial  institutions,  transfer  agent,  other
vendors and system  providers have adequately  considered the impact of the Year
2000. The general  partners are not able to measure the effect on the operations
of the Partnership of any third party's failure to adequately address the impact
of the Year 2000.

         The general  partners and their  affiliates  have  identified  and have
implemented  upgrades for certain hardware equipment.  In addition,  the general
partners and their  affiliates have  identified  certain  software  applications
which will require upgrades to become Year 2000 compliant.  The general partners
expect all of these upgrades,  as well as any other necessary  remedial measures
on the  information  technology  systems  used in the  business  activities  and
operations of the Partnership,  to be completed by September 30, 1999, although,
the general  partners cannot be assured that the upgrade  solutions  provided by
the vendors have addressed all possible Year 2000 issues.  The general  partners
do not  expect  the  aggregate  cost of the Year 2000  remedial  measures  to be
material to the results of operations of the Partnership.



<PAGE>


Year 2000 Readiness Disclosure - Continued
------------------------------------------

         The general  partners and affiliates have received  certification  from
the  Partnership's  transfer  agent  of its  Year  2000  compliance.  Due to the
material  relationship of the Partnership  with its transfer agent, the Y2K Team
is evaluating the Year 2000  compliance of the systems of the transfer agent and
expects to have the  evaluation  completed  by September  30, 1999.  Despite the
positive  response  from the transfer  agent and the  evaluation of the transfer
agent's system by the Y2K Team, the general  partners cannot be assured that the
transfer  agent has addressed  all possible Year 2000 issues.  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 Partnership.

         Based upon the progress the general  partners and affiliates  have made
in  addressing  the Year 2000 issues and their plan and timeline to complete the
compliance  program,  the  general  partners do not  foresee  significant  risks
associated  with Year 2000  compliance  at this time.  The general  partners and
their affiliates plan to address their significant Year 2000 issues prior to the
Partnership  being  affected  by them;  therefore,  they  have not  developed  a
comprehensive  contingency  plan.  However,  if the general  partners  and their
affiliates identify significant risks related to their Year 2000 compliance,  or
if their progress deviates from the anticipated  timeline,  the general partners
and their affiliates will develop  contingency plans as deemed necessary at that
time.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Not applicable.



<PAGE>


                           PART II. OTHER INFORMATION


Item 1.     Legal Proceedings.

            On May 5, 1999,  four  limited  partners in several of the CNL
            Income  Funds  filed a  lawsuit,  Jon  Hale,  Mary J.  Hewitt,
            Charles A. Hewitt,  and Gretchen M. Hewitt v. James M. Seneff,
            Jr.,  Robert  A.  Bourne,  CNL  Realty  Corporation,  and  CNL
            American  Properties Fund, Inc., Case No.  CIO-99-0003561,  in
            the  Circuit  Court of the Ninth  Judicial  Circuit  of Orange
            County,  Florida,  alleging that the Messrs. Seneff and Bourne
            and CNL Realty  Corporation,  as general  partners  of the CNL
            Income Funds, breached their fiduciary duties and violated the
            provisions  of  certain  of the CNL  Income  Fund  partnership
            agreements in connection with the proposed  acquisition of the
            CNL  Income   Funds  by  APF.  The   plaintiffs   are  seeking
            unspecified damages and equitable relief. The general partners
            and APF believe  that the lawsuit is without  merit and intend
            to defend vigorously against such claims.  Because the lawsuit
            was so recently  filed,  it is premature to further comment on
            the lawsuit at this time.

Item 2.     Changes in Securities.       Inapplicable.

Item 3.     Default upon Senior Securities.   Inapplicable.

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

Item 5.     Other Information.        Inapplicable.

Item 6.     Exhibits and Reports on Form 8-K.

            (a)    Exhibits

                   2.1   Agreement  and  Plan  of  Merger  by  and  between  the
                         Registrant  and  CNL  American  Properties  Fund,  Inc.
                         ("APF")  dated  March 11,  1999 (filed as Appendix B to
                         the   Prospectus   Supplement   for   the   Registrant,
                         constituting  a part of the  Registration  Statement of
                         APF on Form S-4, File No. 74329.)

                   3.1   Affidavit and Certificate of Limited Partnership of CNL
                         Income  Fund XII,  Ltd.  (Included  as  Exhibit  3.2 to
                         Registration Statement No. 33-43278-01 on Form S-11 and
                         incorporated herein by reference.)

                   4.1   Affidavit and Certificate of Limited Partnership of CNL
                         Income  Fund XII,  Ltd.  (Included  as  Exhibit  3.2 to
                         Registration  Statement No. 33-43278-01 on Form S-1 and
                         incorporated herein by reference.)


<PAGE>



                   4.2   Amended and Restated  Agreement of Limited  Partnership
                         of CNL Income Fund XII,  Ltd.  (Included as Exhibit 4.2
                         to Form 10-K filed  with the  Securities  and  Exchange
                         Commission on April 15, 1993, and  incorporated  herein
                         by reference.)

                   10.1  Management  Agreement between CNL Income Fund XII, Ltd.
                         and CNL Investment Company (Included as Exhibit 10.1 to
                         Form  10-K  filed  with  the  Securities  and  Exchange
                         Commission on April 15, 1993, and  incorporated  herein
                         by reference.)

                   10.2  Assignment of Management  Agreement from CNL Investment
                         Company to CNL Income Fund Advisors,  Inc. (Included as
                         Exhibit 10.2 to Form 10-K filed with the Securities and
                         Exchange Commission on March 31, 1995, and incorporated
                         herein by reference.)

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

                   27    Financial Data Schedule (Filed herewith.)

            (b)    Reports on Form 8-K

                   Current  Report on Form 8-K dated  March 11, 1999  and  filed
                   March  12,  1999,  describing  the  proposed  Merger  of  the
                   Partnership  with and  into  a  subsidiary  of  CNL  American
                   Properties Fund, Inc.




<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 14th day of May, 1999.


                                 By:       CNL INCOME FUND XII, LTD.
                                           General Partner


                                          By:    /s/ James M. Seneff, Jr.
                                                 -------------------------------
                                                 JAMES M. SENEFF, JR.
                                                 Chief Executive Officer
                                                 (Principal Executive Officer)


                                          By:    /s/ Robert A. Bourne
                                                 -------------------------------
                                                 ROBERT A. BOURNE
                                                 President and Treasurer
                                                 (Principal Financial and
                                                 Accounting Officer)