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

                                    FORM 10-K

(Mark One)

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

                   For the fiscal year ended December 31, 1997

                                       OR

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

                        For the transition period from to


                         Commission file number 0-19141

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

                      Florida                             59-2922869
          (State or other jurisdiction of   (I.R.S. Employer Identification No.)
          incorporation or organization)

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

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

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

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

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

              Units of limited partnership interest ($500 per Unit)
                                (Title of class)

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

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [x]

         Aggregate market value of the voting stock held by nonaffiliates of the
registrant:   The  registrant   registered  an  offering  of  units  of  limited
partnership  interest  (the  "Units") on Form S-11 under the  Securities  Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $500 per Unit.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None


<PAGE>



                                     PART I


Item 1.  Business

         CNL Income Fund V, Ltd. (the  "Registrant" or the  "Partnership")  is a
limited  partnership  which was  organized  pursuant to the laws of the State of
Florida on August 17, 1988. 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 December  16,  1988,  the
Partnership offered for sale up to $25,000,000 in limited partnership  interests
(the  "Units")  (50,000  Units  at $500 per  Unit)  pursuant  to a  registration
statement  on Form S-11  under  the  Securities  Act of 1933,  as  amended.  The
offering  terminated  on June 7,  1989,  as of which date the  maximum  offering
proceeds of  $25,000,000  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
$22,125,000,  and were used to acquire 30  Properties,  including  interests  in
three  Properties  owned  by  joint  ventures  in  which  the  Partnership  is a
co-venturer.  During the year ended December 31, 1995, the Partnership  sold its
Property in Myrtle  Beach,  South  Carolina,  to the tenant of the  Property and
accepted a promissory note for the full sales price of the Property.  During the
year ended  December 31, 1996, the  Partnership  sold its Property in St. Cloud,
Florida,  to the tenant of the  Property  and  accepted  $100,000  in cash and a
promissory  note for the  remaining  sales price of the  Property.  In addition,
during the year ended December 31, 1997, the Partnership  sold its Properties in
Franklin and Smyrna, Tennessee;  Salem, New Hampshire; Port St. Lucie and Tampa,
Florida, and Richmond,  Indiana.  The Partnership  reinvested a portion of these
net sales  proceeds  in a Property  in  Houston,  Texas and a Property in Sandy,
Utah.  In  addition,  the  Partnership  reinvested  a  portion  of the net sales
proceeds in a Property in Mesa, Arizona and a Property in Vancouver, Washington,
as  tenants-in-common,  with affiliates of the General Partners.  As a result of
the above transactions, the Partnership currently owns 26 Properties,  including
interests in three  Properties  owned by joint ventures in which the Partnership
is a  co-venturer.  In January  and  February  1998,  the  Partnership  sold its
Properties  in  Port  Orange,  Florida  and  Tyler,  Texas,  respectively.   The
Partnership  intends to  reinvest  some or all of the net sales  proceeds  in an
additional Property and use the remaining net sales proceeds,  if any, for other
Partnership purposes. Generally, the Properties are leased on a triple-net basis
with the lessees  responsible for all repairs and  maintenance,  property taxes,
insurance and utilities.

         The  Partnership  will hold its Properties  until the General  Partners
determine that the sale or other  disposition of the Properties is  advantageous
in view of the Partnership's investment objectives.  In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation,  net cash flow and  federal  income  tax  considerations.  Certain
lessees also have been granted options to purchase Properties,  generally at the
Property's  then fair market  value after a specified  portion of the lease term
has elapsed.  In general,  the General Partners plan to seek the sale of some of
the  Properties  commencing  seven  to 12 years  after  their  acquisition.  The
Partnership  has no  obligation  to sell all or any portion of a Property at any
particular  time,  except as may be required  under  property  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. 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 seven to 20 years (the  average  being 18 years) and expire
between 2001 and 2017.  All leases are on a triple-net  basis,  with the lessees
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 $37,800 to
$222,800.  Generally,  the leases provide for percentage rent, based on sales in
excess of a specified  amount, to be paid annually.  In addition,  a majority of
the leases provide that, commencing in the sixth lease year,

                                        1

<PAGE>



the percentage rent will be an amount equal to the greater of (i) the percentage
rent calculated under the lease formula or (ii) a specified  percentage (ranging
from  one-fourth to five percent) of the purchase price paid by the  Partnership
for the Property.

         Generally,  the  leases  of the  Properties  provide  for  two to  four
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,  or pursuant to a formula
based on the original  cost of the  Property,  after a specified  portion of the
lease term has elapsed.

         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.

         The tenant relating to the Property in Lebanon, New Hampshire, in which
the  Partnership  has a  66.5%  interest,  defaulted  under  the  terms  of  its
agreement,  and in February  1995,  ceased  operations of the  restaurant on the
Property.  The  Partnership  is  currently  seeking  a  replacement  tenant or a
purchaser for this Property.

         In February  1994,  the tenant of the  Properties  in Belding and South
Haven,  Michigan,  defaulted  under the terms of its leases  and a new  operator
began  occupying the  Properties on a  month-to-month  basis for reduced  rental
amounts.  The new  operator  ceased  operations  of the  Belding and South Haven
Properties in October 1994 and October  1995,  respectively.  In June 1997,  the
Partnership  entered  into an  operating  agreement  with a new operator for the
Property  in  South  Haven,  Michigan.   Under  the  operating  agreement,   the
Partnership will collect amounts contingent on net operating income generated by
the restaurant.  The Partnership is currently seeking a replacement  tenant or a
purchaser for the Property in Belding, Michigan.

         In June 1997, the  Partnership  terminated the lease with the tenant of
the Property in  Connorsville,  Indiana.  In July 1997, the Partnership  entered
into a new lease for this  Property with a new tenant to operate the Property as
an Arby's  restaurant.  The lease terms of this Property are  substantially  the
same as the  Partnership's  other leases as  described  above in the first three
paragraphs of this section.

         In November and December 1997, the Partnership  reinvested a portion of
the net sales  proceeds  from the  sales of the  Properties  in Port St.  Lucie,
Florida; Franklin,  Tennessee and Salem, New Hampshire, in Properties located in
Houston,  Texas and Sandy,  Utah,  respectively.  In  addition,  in October  and
December  1997, the  Partnership  reinvested a portion of the net sales proceeds
from the  sales  of the  Properties  in  Smyrna  and  Franklin,  Tennessee,  and
Richmond,  Indiana,  in a Property  located in Mesa,  Arizona  and a Property in
Vancouver, Washington,  respectively, with affiliates of the General Partners as
tenants-in-common, as described below in "Joint Venture Arrangements." The lease
terms for these Properties are substantially the same as the Partnership's other
leases, as described above in the first three paragraphs of this section.

Major Tenants

         During 1997, two lessees of the Partnership and its consolidated  joint
venture, Shoney's, Inc. and Golden Corral Corporation, 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 the
rental income from two Properties owned by unconsolidated joint ventures and two
Properties owned with affiliates as tenants-in-common). As of December 31, 1997,
Shoney's,  Inc.  was the lessee under leases  relating to four  restaurants  and
Golden  Corral   Corporation  was  the  lessee  under  leases  relating  to  two
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 1997 and subsequent
years. In addition,  three Restaurant Chains,  Perkins,  Denny's and Wendy's Old
Fashioned Hamburger Restaurants, each accounted for more than ten percent of the
Partnership's  total  rental and  mortgage  interest  income in 1997  (including
rental  income  from  the  Partnership's  consolidated  joint  venture  and  the
Partnership's   share  of  the  rental  income  from  two  Properties  owned  by
unconsolidated  joint  ventures  and two  Properties  owned with  affiliates  as
tenants-in-common).  In subsequent  years,  it is  anticipated  that these three
Restaurant Chains each will continue to account for more than ten percent of the
total rental and mortgage  interest  income to which the Partnership is entitled
under the terms of the leases and mortgage note. Any failure of these lessees or
these Restaurant Chains could materially affect the Partnership's

                                        2

<PAGE>



income. No single tenant or group of affiliated tenants lease Properties with an
aggregate  carrying value,  excluding  acquisition fees and certain  acquisition
expenses, in excess of 20 percent of the total assets of the Partnership.

Joint Venture Arrangements

         The   Partnership   has  entered  into  three  separate  joint  venture
arrangements,  CNL/Longacre  Joint Venture,  Cocoa Joint Venture and Halls Joint
Venture, to purchase and hold three Properties through such joint ventures. Each
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 and its joint venture  partners are jointly and severally liable for
all debts, obligations, and other liabilities of the joint ventures.

         Each joint venture has an initial term of 20 to 30 years and, after the
expiration of the initial term,  continues in existence from year to year unless
terminated  at the option of either joint  venturer or unless  terminated  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 partner to
dissolve the joint venture.

         The  Partnership  has  management  control  of the  CNL/Longacre  Joint
Venture and shares  management  control  equally with  affiliates of the General
Partners  for Cocoa Joint  Venture and Halls 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
partner,  either upon such terms and  conditions  as to which the  venturers may
agree or,  in the  event  the  venturers  cannot  agree,  on the same  terms and
conditions  as any offer  from a third  party to  purchase  such  joint  venture
interest.

         Net cash flow from  operations of  CNL/Longacre  Joint  Venture,  Cocoa
Joint Venture and Halls Joint  Venture is  distributed  66.5%,  43.0% and 49.0%,
respectively,  to the  Partnership and the balance is distributed to each of the
other joint  venture  partners.  Any  liquidation  proceeds,  after paying joint
venture debts and liabilities and funding  reserves for contingent  liabilities,
will be distributed  first to the joint venture  partners with positive  capital
account  balances in proportion to such balances until such balances equal zero,
and thereafter in proportion to each joint venture partner's percentage interest
in the joint venture.

         In  addition  to the above  joint  venture  agreements,  in October and
December  1997,  the  Partnership  entered into  separate  agreements  to hold a
Property in Mesa, Arizona and a Property in Vancouver, Washington, respectively,
as  tenants-in-common  with affiliates of the General  Partners.  The agreements
provide  for the  Partnership  and the  affiliates  to share in the  profits and
losses  of  the  Properties  in  proportion  to  each  co-venturer's  percentage
interest.  The  Partnership  owns a 42.23  and  27.78  percent  interest  in the
Property  in  Mesa,   Arizona  and  the  Property  in   Vancouver,   Washington,
respectively.

Certain Management Services

         CNL Income Fund Advisors,  Inc., an affiliate of the General  Partners,
provided  certain  services  relating to management of the  Partnership  and its
Properties  pursuant to a  management  agreement  with the  Partnership  through
September 30, 1995.  Under this  agreement,  CNL Income Fund Advisors,  Inc. was
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 Income Fund  Advisors,  Inc. also
assisted the General Partners in negotiating the leases. For these services, the
Partnership  had agreed to pay CNL Income Fund  Advisors,  Inc. an annual fee of
one percent of the sum of gross operating  revenues from Properties wholly owned
by the Partnership plus the  Partnership's  allocable share of gross revenues of
joint ventures in which the  Partnership is a co-venturer,  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").


                                        3

<PAGE>



         Effective October 1, 1995, CNL Income Fund Advisors,  Inc. assigned its
rights  in,  and its  obligations  under,  the  management  agreement  with  the
Partnership  to CNL Fund  Advisors,  Inc. All of the terms and conditions of the
management agreement,  including the payment of fees, as described above, remain
unchanged.

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

Competition

         The fast-food 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.

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

Employees

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


Item 2.  Properties

         As of December 31, 1997,  the  Partnership  owned,  either  directly or
through  joint  venture  arrangements,  26  Properties  located  in  14  states.
Reference  is made to the Schedule of Real Estate and  Accumulated  Depreciation
filed  with this  report for a listing of the  Properties  and their  respective
costs, including acquisition fees and certain acquisition expenses.

Description of Properties

         Land. The Partnership's  Property sites range from approximately 12,300
to 135,000  square  feet  depending  upon  building  size and local  demographic
factors.  Sites  purchased  by  the  Partnership  are  in  locations  zoned  for
commercial use which have been reviewed for traffic patterns and volume.

         Buildings.  Generally,  each of the Properties owned by the Partnership
includes 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  1,700 to 10,100 square feet. All buildings on Properties acquired
by the  Partnership  are  freestanding  and  surrounded by paved parking  areas.
Buildings are suitable for  conversion to various uses,  although  modifications
may be required prior to use for other than restaurant operations.

         Generally,  a  lessee  is  required,  under  the  terms  of  its  lease
agreement,  to make such capital  expenditures as may be reasonably necessary to
refurbish  buildings,  premises,  signs and  equipment  so as to comply with the
lessee's  obligations,  if applicable,  under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.

         Leases  with Major  Tenants.  The terms of each of the leases  with the
Partnership's  major  tenants as of December  31,  1997 (see Item 1.  Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.


                                        4

<PAGE>



         Shoney's,  Inc.  leases one  Shoney's  restaurant  and two  Captain D's
restaurants  pursuant  to three  leases,  each with an initial  term of 20 years
(expiring  in 2008).  The  average  minimum  base  annual rent for the leases is
approximately $63,600 (ranging from approximately $49,000 to $84,700).

         Golden  Corral  Corporation  leases  two  restaurants  pursuant  to two
leases,  each with an initial term of 12 to 15 years  (expiring  2002 and 2004),
respectively,  and average  minimum  base annual rent of  approximately  $97,800
($63,400 and 132,200, respectively).

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


Item 3.  Legal Proceedings

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


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

         Not applicable.


                                     PART II


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

         As of March 13, 1998,  there were 2,491 holders of record of the Units.
There is no public trading market for the Units,  and it is not anticipated that
a public  market for the Units will develop.  Limited  Partners who wish to sell
their  Units  may  offer  the  Units  for  sale  pursuant  to the  Partnership's
distribution  reinvestment  plan (the "Plan"),  and Limited Partners who wish to
have their  distributions  used to acquire additional Units (to the extent Units
are  available  for  purchase),  may do so  pursuant  to such Plan.  The General
Partners have the right to prohibit  transfers of Units.  The price paid for any
Unit  transferred  pursuant to the Plan has been $475 per Unit.  The price to be
paid for any Unit  transferred  other  than  pursuant  to the Plan is subject to
negotiation by the purchaser and the selling  Limited  Partner.  The Partnership
will not redeem or repurchase Units.

         The following table reflects,  for each calendar quarter, the high, low
and average  sales prices for transfers of Units during 1997 and 1996 other than
pursuant to the Plan, net of commissions.
<TABLE>
<CAPTION>

                                                      1997 (1)                          1996 (1)
                                       ----------------------------------       ----------------------
<S> <C>
                                            High       Low      Average        High       Low      Average
         First Quarter                       $500      $422        $468         $475      $402        $459
         Second Quarter                       430       375         403          475       333         415
         Third Quarter                        462       385         433          475       350         432
         Fourth Quarter                       500       438         457          451       396         414
</TABLE>

(1)      A total of 324 and 592 Units were  transferred  other than  pursuant to
         the Plan for the years ended December 31, 1997 and 1996, respectively.

         The capital  contribution  per Unit was $500.  All cash  available  for
distribution  will be distributed to the partners  pursuant to the provisions of
the Partnership Agreement.



                                        5

<PAGE>



         For each of the years ended December 31, 1997 and 1996, the Partnership
declared cash distributions of $2,300,000 to the Limited Partners. Distributions
of $575,000  were  declared at the close of each of the  Partnership's  calendar
quarters  during 1997 and 1996 to the Limited  Partners.  These amounts  include
monthly  distributions  made in arrears  for the  Limited  Partners  electing to
receive  distributions  on this basis. The General Partners expect to distribute
some or all of the net sales  proceeds from the sales of the Properties in Tampa
and Port Orange,  Florida, to the Limited Partners.  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.  The reduced
number of Properties for which the Partnership receives rental payments, as well
as ongoing  operations,  is expected to reduce the Partnership's  revenues.  The
decrease in  Partnership  revenues,  combined  with the fact that a  significant
portion of the Partnership's expenses are fixed in nature, is expected to result
in a decrease in cash  distributions  to the Limited  Partners  during 1998.  No
amounts  distributed to partners for the years ended December 31, 1997 and 1996,
are  required  to be or have  been  treated  by the  Partnership  as a return of
capital  for  purposes of  calculating  the  Limited  Partners'  return on their
adjusted capital  contributions.  No distributions have been made to the General
Partners to date.

         The  Partnership  intends to  continue  to make  distributions  of cash
available  for  distribution  to the  Limited  Partners  on a  quarterly  basis,
although some Limited  Partners,  in  accordance  with their  election,  receive
monthly distributions, for an annual fee.


Item 6.  Selected Financial Data
<TABLE>
<CAPTION>

                                   1997              1996             1995              1994              1993
                               ------------      ------------     ------------      ------------      --------
<S> <C>
Year Ended December 31:
   Revenues (1)                 $ 2,147,770       $ 2,279,880      $ 2,314,818       $ 2,354,981       $ 2,421,786
   Net income (2)                 1,731,915         1,428,159        1,679,820         1,743,029         1,794,894
   Cash distributions declared    2,300,000         2,300,000        2,300,000         2,300,000         2,300,000
   Net income per Unit (2)            34.40             28.31            33.26             34.51             35.54
   Cash distributions declared
      per Unit                        46.00             46.00            46.00             46.00             46.00

At December 31:
   Total assets                 $19,718,430       $20,133,002      $20,760,182       $21,299,865       $21,850,488
   Partners' capital             18,520,534        18,982,619       19,694,760        20,283,440        20,840,411
</TABLE>

(1)      Revenues  include equity in earnings of  unconsolidated  joint ventures
         and  minority  interest  in  income or loss of the  consolidated  joint
         venture.

(2)      Net income for the year ended December 31, 1997, includes $550,878 from
         gains on the sales of land and  buildings,  $141,567 from a loss on the
         sale of land and building and $250,694 for a provision for loss on land
         and building. Net income for the year ended December 31, 1996, includes
         $19,369 from the gains on sale of land and buildings and $239,525 for a
         provision for loss on land and buildings. Net income for the year ended
         December  31,  1995,  includes  $5,924  from a gain on sale of land and
         building.

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


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

         The  Partnership was organized on August 17, 1988, 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 triple-net leases, with the lessee generally responsible

                                        6

<PAGE>



for all repairs and maintenance,  property taxes, insurance and utilities. As of
December 31, 1997,  the  Partnership  owned 26  Properties,  either  directly or
indirectly through joint venture arrangements.

Liquidity and Capital Resources

         The  Partnership's  primary  source  of  capital  for the  years  ended
December 31, 1997, 1996 and 1995, 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  $1,813,231,  $2,103,745
and  $2,142,918  for  the  years  ended  December  31,  1997,   1996  and  1995,
respectively. The decrease in cash from operations during 1997 and 1996, each as
compared to the  previous  year,  is primarily a result of changes in income and
expenses  as  discussed  in  "Results  of  Operations"  below and changes in the
Partnership's working capital during each of the respective years.

         Other  sources and uses of capital  included the  following  during the
years ended December 31, 1997, 1996 and 1995.

          During  the  years  ended  December  31,  1997,  1996  and  1995,  the
Partnership received $106,000,  $159,700 and $31,500,  respectively,  in capital
contributions  from  the  corporate  General  Partner  in  connection  with  the
operations of the Partnership.  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.

         In August 1995,  the  Partnership  sold its  Property in Myrtle  Beach,
South Carolina, to the tenant of the Property for $1,040,000,  and in connection
therewith,  accepted  a  promissory  note in the  principal  sum of  $1,040,000,
collateralized by a mortgage on the Property.  The note bears interest at a rate
of 10.25% per annum and is being  collected in 59 equal monthly  installments of
$9,319,  with a balloon  payment of  $1,006,004  due in July  2000.  Collections
commenced  August 1, 1995. In accordance with Statement of Financial  Accounting
Standards  No.  66,  "Accounting  for  Sales of Real  Estate,"  the  Partnership
recorded the sale of the Property using the installment sales method. Therefore,
the gain on the sale of the Property was  deferred  and is being  recognized  as
income  proportionately  as payments of principal  under the  mortgage  note are
collected.  The  Partnership  recognized  a gain of $1,024,  $924 and $1,571 for
financial  reporting  purposes for the years ended  December 31, 1997,  1996 and
1995,  respectively.  The  mortgage  note  receivable  balance  relating to this
Property at December 31, 1997 and 1996, was $883,417 and $889,891, respectively,
including  accrued interest of $8,665 and $8,729,  respectively,  and net of the
remaining  deferred  gain of $139,693 and  $140,717,  respectively.  The General
Partners  anticipate  that  payments  collected  under the mortgage note will be
reinvested in additional Properties or used for other Partnership purposes.

         In addition,  in October 1996, the Partnership sold its Property in St.
Cloud,  Florida,  to the tenant for  $1,150,000.  In connection  therewith,  the
Partnership  received $100,000 in cash and accepted the remaining sales proceeds
in  the  form  of  a  promissory  note  in  the  principal  sum  of  $1,057,299,
representing  the balance of the sales price of $1,050,000  plus tenant  closing
costs in the amount of $7,299 the Partnership  financed on behalf of the tenant.
The  promissory  note  bears  interest  at  a  rate  of  10.75%  per  annum,  is
collateralized  by a mortgage  on the  Property,  and is being  collected  in 12
monthly  installments  of  interest  only and  thereafter  in 168 equal  monthly
installments  of principal and interest.  This sale is also being  accounted for
under the installment sales method for financial reporting purposes;  therefore,
the gain on the sale of the Property was  deferred  and is being  recognized  as
income  proportionately  as payments of principal  under the  mortgage  note are
collected.  The Partnership  recognized a gain of $338 and $18,445 for financial
reporting purposes for the years ended December 31, 1997 and 1996, respectively,
and had a deferred  gain in the amount of $183,465  and $183,802 at December 31,
1997 and 1996. The mortgage note receivable balance relating to this Property at
December  31,  1997 and 1996,  was  $874,443  and  $882,967,  including  accrued
interest  of  $2,747  and  $9,471,  and net of the  remaining  deferred  gain of
$183,465 and $183,802.  Payments  collected  under the mortgage  note  totalling
$100,000 were used to pay liabilities of the  Partnership,  including  quarterly
distributions  to the Limited  Partners.  The General  Partners  anticipate that
payments  collected  under the mortgage note in the future will be reinvested in
additional Properties or used for other Partnership purposes.

         In  January  1997,  the  Partnership  sold its  Property  in  Franklin,
Tennessee,  to the tenant,  for  $980,000  and  received  net sales  proceeds of
$960,741. Since the Partnership had previously established an allowance for loss
on land and  building  of $169,463  as of  December  31,  1996  relating to this
Property, no loss was recognized during 1997

                                        7

<PAGE>



as a result  of this  sale.  The  Partnership  used  $360,000  of the net  sales
proceeds  to  pay   liabilities   of  the   Partnership,   including   quarterly
distributions  to  the  Limited  Partners.   In  addition,  in  June  1997,  the
Partnership  entered into an  operating  agreement  for the Property  located in
South  Haven,  Michigan,  with an operator to operate the  Property as an Arby's
restaurant. In connection therewith, the Partnership used approximately $120,400
of the net sales proceeds from the sale of the Property in Franklin,  Tennessee,
to fund conversion costs associated with the Arby's Property.  In December 1997,
the Partnership reinvested approximately $244,800 of the net sales proceeds in a
Property  located  in Sandy,  Utah,  and  approximately  $150,000  in a Property
located in Vancouver,  Washington,  as tenants-in-common  with affiliates of the
General  Partners,  as  described  below.  The  Partnership  intends  to use the
remaining  net  sales  proceeds  from  the  sale of the  Property  in  Franklin,
Tennessee to fund additional  renovation costs relating to the Property in South
Haven,  Michigan,  described  above,  and to pay liabilities of the Partnership,
including quarterly distributions to the Limited Partners.

         In May 1997, the Partnership sold its Property in Smyrna, Tennessee, to
a third  party for  $655,000  and  received  net  sales  proceeds  of  $634,310,
resulting in a gain of $101,995 for financial reporting purposes.  This Property
was  originally  acquired  by the  Partnership  in March  1989 and had a cost of
approximately $569,500, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the Property for approximately $64,800
in excess of its original  purchase price.  The Partnership  used  approximately
$82,500  of the  net  sales  proceeds  to pay  liabilities  of the  Partnership,
including  quarterly  distributions  to the Limited  Partners.  In addition,  in
October 1997, the Partnership reinvested approximately $460,900 of the net sales
proceeds in a Property in Mesa, Arizona, as tenants-in-common  with an affiliate
of the General Partners. In December 1997, the Partnership  reinvested remaining
net  sales  proceeds  in  a  Property  located  in  Vancouver,   Washington,  as
tenants-in-common  with affiliates of the General Partners,  as described below.
The Partnership anticipates that it will distribute amounts sufficient to enable
the  Limited  Partners  to pay  federal  and  state  taxes,  if any  (at a level
reasonably assumed by the General Partners), resulting from the sale.

         In June 1997, the Partnership  terminated the leases with the tenant of
the Properties in Connorsville and Richmond,  Indiana. In connection  therewith,
the  Partnership  accepted a promissory  note from the former tenant for $35,297
for amounts  relating  to past due real  estate  taxes as a result of the former
tenant's financial difficulties. The promissory note, which is uncollateralized,
bears  interest at a rate of ten percent per annum and is being  collected in 36
monthly installments.  Receivables at December 31, 1997 included $37,099 of such
amounts,  including  accrued  interest of $1,802.  In July 1997, the Partnership
entered into a new lease for the Property in Connorsville,  Indiana,  with a new
tenant to operate the Property as an Arby's restaurant. In connection therewith,
the Partnership incurred $125,000 in renovation costs.

         In September  1997,  the  Partnership  sold its Property in Salem,  New
Hampshire,  to the tenant for $1,295,172 and received net sales proceeds (net of
$1,773 which  represents  prorated rent  returned to the tenant) of  $1,270,365,
resulting in a gain of approximately  $141,508 for financial reporting purposes.
This Property was originally  acquired by the  Partnership in May 1989 and had a
cost of approximately  $1,085,100,  excluding acquisition fees and miscellaneous
acquisition  expenses;   therefore,   the  Partnership  sold  the  Property  for
approximately  $187,000 in excess of its original  purchase  price.  In December
1997, the Partnership reinvested the net sales proceeds in a Property located in
Sandy,  Utah,  as  described  below.  The  General  Partners  believe  that  the
transaction,  or a portion  thereof,  relating  to the sale of the  Property  in
Salem,  New Hampshire,  and the  reinvestment  of the proceeds will qualify as a
like-kind  exchange  transaction for federal income tax purposes.  However,  the
Partnership will distribute amounts sufficient to enable the Limited Partners to
pay federal and state income taxes, if any (at a level reasonably assumed by the
General Partners), resulting from the sale.

         In addition,  in September 1997, the  Partnership  sold its Property in
Port St. Lucie,  Florida,  to the tenant for  $1,220,000  and received net sales
proceeds  of  $1,216,750,  resulting  in a gain of  approximately  $125,309  for
financial  reporting  purposes.  This  Property was  originally  acquired by the
Partnership  in  November  1989  and  had a cost  of  approximately  $1,176,100,
excluding acquisition fees and miscellaneous  acquisition  expenses;  therefore,
the  Partnership  sold the Property for  approximately  $40,700 in excess of its
original  purchase  price.  In November  1997,  the  Partnership  reinvested the
majority  of the net sales  proceeds  in an IHOP  Property  located in  Houston,
Texas. The General Partners believe that the transaction,  or a portion thereof,
relating  to the  sale of the  Property  in Port  St.  Lucie,  Florida,  and the
reinvestment  of the proceeds will qualify as a like-kind  exchange  transaction
for federal  income tax  purposes.  However,  the  Partnership  will  distribute
amounts sufficient to enable the Limited

                                        8

<PAGE>



Partners to pay federal and state income  taxes,  if any (at a level  reasonably
assumed by the General Partners), resulting from the sale.

         During the year ended December 31, 1996, the Partnership established an
allowance for the Property in Richmond,  Indiana, in the amount of $70,062 which
represented the difference between the Property's carrying value at December 31,
1996,  and the  property  manager's  estimate  of net  realizable  value  of the
Property based on an anticipated sales price of this Property. In November 1997,
the  Partnership  sold this  Property to a third party for $400,000 and received
net sales proceeds of $385,179. As a result of this transaction, the Partnership
recognized  a loss of $141,567 for  financial  reporting  purposes.  In December
1997, the Partnership reinvested the net sales proceeds in a Property located in
Vancouver,  Washington,  as  tenants-in-common  with  affiliates  of the General
Partners, as described below.

         In addition,  in December  1997, the  Partnership  sold its Property in
Tampa,  Florida,  to a third party for $850,000 and received net sales  proceeds
(net of $724 which represents  prorated rent returned to the tenant) of $804,451
resulting in a gain of $180,704 for financial reporting purposes.  This Property
was  originally  acquired by the  Partnership in February 1989 and had a cost of
approximately $673,200, excluding acquisition fees and miscellaneous acquisition
expenses;  therefore,  the  Partnership  sold  the  Property  for  approximately
$132,000 in excess of its original  purchase price.  The Partnership  intends to
use $50,000 of the net sales  proceeds to pay  liabilities  of the  Partnership,
including  quarterly  distributions  to the Limited  Partners.  The  Partnership
intends to distribute  some or all of the  remaining  net sales  proceeds to the
Limited Partners.  The Partnership will distribute  amounts sufficient to enable
the Limited  Partners to pay federal and state income taxes,  if any (at a level
reasonably  assumed  by the  General  Partners),  resulting  from the sale.  The
remaining  net  sales  proceeds,  if any,  will be used  for  other  Partnership
purposes.

         As described above, in December 1997, the Partnership used the majority
of the net sales proceeds from the sale of the Properties in Franklin, Tennessee
and Salem, New Hampshire,  in a Property located in Sandy, Utah. In addition, in
December 1997, the Partnership  used the majority of the net sales proceeds from
the sale of the  Properties  in Franklin  and Smyrna,  Tennessee  and  Richmond,
Indiana, in a Property located in Vancouver,  Washington,  as  tenants-in-common
with affiliates of the General Partners.

         In January  1998,  the  Partnership  sold its  Property in Port Orange,
Florida,  to the tenant,  for $1,330,000 and received net sales proceeds (net of
$2,909 which  represents  prorated rent  returned to the tenant) of  $1,283,096,
resulting in a gain of approximately  $350,300 for financial reporting purposes.
The  Partnership  intends to distribute some or all of the net sales proceeds to
the Limited Partners. The remaining net sales proceeds, if any, will be used for
other Partnership  purposes. In addition, in February 1998, the Partnership sold
its Property in Tyler, Texas, to the tenant, for $850,000 and received net sales
proceeds  of  $844,229,  resulting  in a  gain  of  approximately  $155,900  for
financial  reporting  purposes.  The  Partnership  intends to reinvest the sales
proceeds in an additional  Property  during 1998, or use the net sales  proceeds
for other Partnership purposes.

         None of the Properties  owned by the  Partnership or the joint ventures
in which the  Partnership  owns an interest is or may be  encumbered.  Under its
Partnership  Agreement,  the  Partnership  is prohibited  from borrowing for any
purpose;  provided,  however,  that the General Partners or their affiliates are
entitled to reimbursement,  at cost, for actual expenses incurred by the General
Partners or their  affiliates  on behalf of the  Partnership.  Affiliates of the
General Partners from time to time incur certain operating expenses on behalf of
the  Partnership  for which the  Partnership  reimburses the affiliates  without
interest.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions  to the  partners.  At December  31,  1997,  the  Partnership  had
$1,361,290  invested in such  short-term  investments as compared to $362,922 at
December 31, 1996.  The increase in cash and cash  equivalents  during 1997,  is
primarily  attributable  to the  receipt of net sales  proceeds  relating to the
sales of several Properties, as described above. The funds remaining at December
31, 1997,  will be  reinvested  in  additional  Properties,  distributed  to the
Limited Partners or used for other Partnership purposes, as described above, and
will be used for the payment of distributions and other liabilities.


                                        9

<PAGE>



         During 1997, 1996 and 1995, affiliates of the General Partners incurred
on behalf of the Partnership $77,353, $113,560 and $114,204,  respectively,  for
certain  operating  expenses.  As of December 31, 1997 and 1996, the Partnership
owed $109,367 and  $121,464,  respectively,  to affiliates  for such amounts and
accounting and administrative  services.  In addition,  as of December 31, 1997,
the Partnership had incurred $34,500 in a real estate  disposition fee due to an
affiliate as a result of its services in  connection  with the sale during 1996,
of the  Property  in St.  Cloud,  Florida.  Amounts  payable  to other  parties,
including  distributions  payable,  increased  to $817,621 at December 31, 1997,
from $705,130 at December 31, 1996,  primarily as a result of incurring $125,000
in  renovation  costs  relating  to  the   Partnership's   Property  located  in
Connorsville,  Indiana,  which were unpaid at December 31, 1997.  Liabilities at
December  31,  1997,  to the  extent  they  exceed  cash  and  cash  equivalents
(excluding  the net sales  proceeds  held at December  31, 1997 from the sale of
Properties,  as described above), at December 31, 1997, will be paid from future
cash from operations,  from amounts collected under the mortgage notes described
above or, in the event the General  Partners  elect to make  additional  capital
contributions, from future General Partner contributions.

         Based primarily on current and anticipated future cash from operations,
a portion of the sales  proceeds  received from the sales of the  Properties and
additional  capital  contributions  from the General  Partners,  the Partnership
declared  distributions  to the Limited  Partners of $2,300,000  for each of the
years ended December 31, 1997, 1996 and 1995. This represents  distributions  of
$46 per Unit for each of the years ended  December 31, 1997,  1996 and 1995. The
General Partners expect to distribute some or all of the net sales proceeds from
the sales of the  Properties in Tampa and Port Orange,  Florida,  to the Limited
Partners.  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.  The reduced number of Properties for which
the Partnership  receives rental  payments,  as well as ongoing  operations,  is
expected to reduce the  Partnership's  revenues.  The  decrease  in  Partnership
revenues, combined with the fact that a significant portion of the Partnership's
expenses  are fixed in  nature,  is  expected  to result in a  decrease  in cash
distributions to the Limited Partners during 1998. No amounts  distributed or to
be distributed to the Limited  Partners for the years ended December 1997,  1996
and 1995, are required to be or have been treated by the Partnership as a return
of capital for purposes of  calculating  the Limited  Partners'  return on their
adjusted  capital  contributions.  The  Partnership  intends to continue to make
distributions  of cash available for  distribution to the Limited  Partners on a
quarterly basis.

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

         The Partnership's  investment strategy of acquiring Properties for cash
and generally  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 do not believe that  working  capital  reserves  are  necessary 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 purposes,  the General Partners will
contribute to the  Partnership  an aggregate  amount of up to one percent of the
offering proceeds for maintenance and repairs.

Results of Operations

         During  1995,  the  Partnership   owned  and  leased  27  wholly  owned
Properties  (including one Property in Myrtle Beach,  South Carolina,  which was
sold in August 1995),  during 1996, the  Partnership  owned and leased 26 wholly
owned Properties (including one Property in St. Cloud,  Florida,  which was sold
in  October  1996) and  during  1997,  the  Partnership  owned 27  wholly  owned
Properties  (including  six  Properties,  one in each of  Franklin  and  Smyrna,
Tennessee; Salem, New Hampshire; Port St. Lucie and Tampa, Florida and Richmond,
Indiana,  which were sold during the year ended December 31, 1997). In addition,
during 1997,  1996 and 1995, the Partnership was a co-venturer in three separate
joint  ventures  that each owned and leased one Property  and during  1997,  the
Partnership

                                       10

<PAGE>



owned and leased two  Properties,  with affiliates of the General  Partners,  as
tenants-in-common.  As of December  31,  1997,  the  Partnership  owned,  either
directly or through joint  venture  arrangements,  26  Properties  which are, in
general,  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  $37,800 to $222,800.  Generally,  the leases provide
for  percentage  rent based on sales in excess of a specified  amount to be paid
annually.  In addition, a majority of the leases provide that, commencing in the
sixth lease year, the percentage  rent will be an amount equal to the greater of
(i) the percentage rent  calculated  under the lease formula or (ii) a specified
percentage  (ranging from one-fourth to five percent) of the purchase price paid
by  the   Partnership  for  the  Property.   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,  1997,   1996  and  1995,  the
Partnership  and its  consolidated  joint venture,  CNL/Longacre  Joint Venture,
earned  $1,500,967,  $1,931,573 and $2,068,342,  respectively,  in rental income
from  operating  leases and earned  income from  direct  financing  leases.  The
decrease in rental and earned income during the year ended December 31, 1997, as
compared to 1996,  was  partially  attributable  to a decrease of  approximately
$322,300 as a result of the sale of its  Properties  in St.  Cloud,  Florida (in
October 1996), Franklin,  Tennessee (in January 1997), Smyrna, Tennessee (in May
1997),  Salem,  New Hampshire (in September 1997),  Port St. Lucie,  Florida (in
September  1997) and Tampa,  Florida (in December  1997),  as described above in
"Liquidity  and Capital  Resources."  During 1997, the decrease in rental income
was  partially  offset  by an  increase  of  approximately  $24,700  due  to the
reinvestment  of a portion of these net sales proceeds in a Property in Houston,
Texas and Sandy,  Utah, in November  1997 and December  1997,  respectively,  as
described  above in  "Liquidity  and Capital  Resources".  The General  Partners
believe  that the  decrease  in rental  and earned  income  will be offset by an
increase during 1998 as the  Partnership  continues to reinvest a portion of the
remaining net sales  proceeds from the sale of Properties as described  above in
"Liquidity and Capital Resources," during 1998.

         Rental and  earned  income  also  decreased  in 1997 and 1996,  each as
compared to the previous  year, as a result of the  Partnership  increasing  its
allowance  for  doubtful   accounts  by   approximately   $57,700  and  $29,500,
respectively,  for rental and other amounts relating to the Hardee's  Properties
located in  Connorsville  and Richmond,  Indiana,  which were leased by the same
tenant,  due to financial  difficulties the tenant was experiencing.  Rental and
earned income  decreased by  approximately  $79,200  during 1997 due to the fact
that the  Partnership  terminated  the  lease  with the  former  tenant of these
Properties  in  June  1997,  as  described   above  in  "Liquidity  and  Capital
Resources."  The General  Partners  have agreed that they will cease  collection
efforts on past due rental  amounts once the former  tenant of these  Properties
pays all amounts due under the  promissory  note for past due real estate  taxes
described above in "Liquidity and Capital Resources." The decrease in rental and
earned income was slightly offset by an increase of $8,500 in rental income from
the new tenant of the Property in Connorsville, Indiana, who began operating the
Property after it was renovated into an Arby's  Property.  In November 1997, the
Partnership  sold its  Property in  Richmond,  Indiana,  as  described  above in
"Liquidity and Capital Resources."

         The decrease in rental and earned  income  during 1996,  as compared to
1995, was partially  attributable  to a decrease of  approximately  $95,000 as a
result of the sale of its  Properties  in Myrtle Beach,  South  Carolina and St.
Cloud,  Florida,  in August 1995 and October  1996,  respectively,  as described
above in "Liquidity and Capital Resources." As a result of accepting  promissory
notes in conjunction with each of these sales of Properties,  as described above
in "Liquidity and Capital Resources,"  interest income increased during 1997 and
1996 as described below.

         Rental and earned income also decreased by approximately  $8,100 during
1996,  as compared  to 1995,  due to the fact that in October  1995,  the tenant
ceased  operations of the Property in South Haven,  Michigan.  In June 1997, the
Partnership  incurred  renovation  costs to convert the Property  into an Arby's
restaurant  and entered into an operating  agreement  for this  Property with an
operator , as described  above in "Liquidity and Capital  Resources," and earned
approximately  $5,100 in rental  income  during  1997 from the  operator  of the
Property.

         Rental and earned income in 1997, 1996 and 1995, continued to remain at
reduced amounts due to the fact that the Partnership is not receiving any rental
income from the Properties in Belding and South Haven, Michigan and Lebanon, New
Hampshire, as a result of the tenants defaulting under the terms of their leases
and ceasing  operations of the restaurants on the Properties during 1995. During
1997,  the  Partnership  located a new tenant for the  Property in South  Haven,
Michigan,  as  described  above.  The General  Partners  are  currently  seeking
replacement  tenants or purchasers for the  Properties in Belding,  Michigan and
Lebanon, New Hampshire. Rental and earned

                                       11

<PAGE>



income for 1998 is expected to remain at reduced  amounts until such time as the
Partnership  executes new leases for its  Properties in Belding,  Michigan,  and
Lebanon, New Hampshire.

         For the years ended December 31, 1997,  1996 and 1995, the  Partnership
earned  $233,633,  $130,167 and $104,455,  respectively,  in  contingent  rental
income.  The increase in  contingent  rental  income during 1997, as compared to
1996,  is  primarily  attributable  to  amounts  collected  under the  operating
agreement  with  the new  operator  of the  Property  located  in  South  Haven,
Michigan.  The operating  agreement  provides for payment to the  Partnership of
reduced base rents and a percentage of the net operating income generated by the
restaurant.  The Partnership expects to continue to receive such amounts until a
lease is entered into with the current operator, at which time contingent rental
income is  expected  to  decrease,  but at which time base rent is  expected  to
increase.  The increase in contingent  rental income during 1996, as compared to
1995, is partially  attributable to increased gross sales of certain  restaurant
Properties requiring the payment of contingent rent.

         During  the  years  ended  December  31,  1997,   1996  and  1995,  the
Partnership  earned $288,637,  $137,385 and $55,785,  respectively,  in interest
income.  The increase in interest  income during 1997 and 1996, each as compared
to the previous year, was primarily  attributable  to the interest earned on the
mortgage notes receivable accepted in connection with the sale of the Properties
in St.  Cloud,  Florida and Myrtle  Beach,  South  Carolina in October  1996 and
August 1995,  respectively.  In addition,  interest income increased during 1997
due to interest earned on the net sales proceeds  received relating to the sales
of the Properties in Smyrna,  Tennessee;  Salem, New Hampshire;  Port St. Lucie,
Florida;  Richmond,  Indiana and Tampa, Florida.  Interest income is expected to
decrease  during 1998 as net sales  proceeds  held at  December  31,  1997,  are
reinvested in additional Properties, distributed to the Limited Partners or used
for other Partnership purposes.

         In addition,  for the years ended December 31, 1997, 1996 and 1995, the
Partnership earned $56,015, $46,452 and $47,018,  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 joint ventures during 1997, as
compared to 1996,  is primarily  attributable  to the fact that in October 1997,
the  Partnership  acquired  an interest  in a Property  in Mesa,  Arizona,  with
affiliates as  tenants-in-common,  as described  above in "Liquidity and Capital
Resources."  Net income earned by joint  venture is expected to increase  during
1998 as a result of the  Partnership  acquiring  an  interest  in a Property  in
Vancouver,  Washington,  in  December  1997,  with  affiliates  of  the  General
Partners, as described above in "Liquidity and Capital Resources."

         During the years ended December 31, 1997, 1996 and 1995, two lessees of
the Partnership and its consolidated  joint venture,  Shoney's,  Inc. and Golden
Corral Corporation,  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 the  rental  income  from  two
Properties owned by unconsolidated  joint ventures and two Properties owned with
affiliates as  tenants-in-common).  As of December 31, 1997, Shoney's,  Inc. was
the  lessee  under  leases  relating  to  four  restaurants  and  Golden  Corral
Corporation  was the lessee  under  leases  relating to two  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 1998 and subsequent years. In addition,
three Restaurant Chains,  Perkins,  Denny's and Wendy's Old Fashioned  Hamburger
Restaurants, each accounted for more than ten percent of the Partnership's total
rental and mortgage interest income during 1997, 1996 and 1995 (including rental
income from the Partnership's  consolidated  joint venture and the Partnership's
share of the rental income from two  Properties  owned by  unconsolidated  joint
ventures and two  Properties  owned with  affiliates as  tenants-in-common).  In
subsequent years, it is anticipated that these three Restaurant Chains each will
continue to account for more than ten percent of the total  rental and  mortgage
interest  income to which the  Partnership  is  entitled  under the terms of the
leases and mortgage  note.  Any failure of these  lessees or  Restaurant  Chains
could materially affect the Partnership's income.

         Operating expenses,  including  depreciation and amortization  expense,
were $574,472, $631,565 and $640,922 for the years ended December 31, 1997, 1996
and 1995, respectively. The decrease in operating expenses during 1997 and 1996,
each as compared to the previous year, was partially  attributable to a decrease
in depreciation expense as a result of the sales of Properties in 1997, 1996 and
1995, as described above in "Liquidity and Capital Resources."


                                       12

<PAGE>



         Operating expenses also decreased during 1996, as compared to 1995, due
to  the  fact  that  the  Partnership  and  its   consolidated   joint  venture,
CNL/Longacre Joint Venture,  recorded approximately $35,100, $40,700 and $47,200
during the years ended December 31, 1997, 1996 and 1995, respectively,  for real
estate taxes  relating to the  Properties in Lebanon,  New Hampshire and Belding
and South Haven,  Michigan,  as a result of lease terminations.  The Partnership
entered into an operating  agreement  with an operator for the Property in South
Haven, Michigan, as described above in "Liquidity and Capital Resources," and is
currently seeking either a replacement  tenant or a purchaser for the Properties
in  Lebanon,  New  Hampshire  and  Belding,  Michigan,  as  described  above  in
"Liquidity and Capital  Resources." The Partnership expects to continue to incur
real estate  taxes,  insurance  and  maintenance  expense for its  Properties in
Lebanon, New Hampshire and Belding,  Michigan, until such time as a new lease is
executed for each Property or until each Property is sold.

         The decrease in operating expenses during 1996, as compared to 1995, is
partially  offset by an  increase  in  accounting  and  administrative  expenses
associated  with operating the Partnership and its Properties and an increase in
insurance  expense as a result of the  General  Partners'  obtaining  contingent
liability and property coverage for the Partnership beginning in May 1995.

         In connection with the sale of its Properties in St. Cloud, Florida and
Myrtle Beach, South Carolina,  during 1996 and 1995, respectively,  as described
above in "Liquidity and Capital  Resources," the  Partnership  recognized a gain
for  financial  reporting  purposes of $1,362,  $19,369 and $1,571 for the years
ended  December  31,  1997,  1996 and 1995,  respectively.  In  accordance  with
Statement of Financial  Accounting  Standards No. 66,  "Accounting  for Sales of
Real Estate," the  Partnership  recorded the sales using the  installment  sales
method.  As such, the gain on the sales was deferred and is being  recognized as
income  proportionately  as payments  under the  mortgage  notes are  collected.
Therefore,  the balance of the  deferred  gain of $323,157 at December 31, 1997,
will be recognized as income in future  periods as payments are  collected.  For
federal income tax purposes,  gains of approximately  $194,100 and $136,900 from
the sale of the  Properties  in St.  Cloud,  Florida,  and Myrtle  Beach,  South
Carolina,  respectively, were also deferred and are being recognized as payments
under the mortgage notes are collected.

         As a result of the sales of the Properties in Smyrna, Tennessee; Salem,
New  Hampshire;  and Port St. Lucie and Tampa,  Florida,  as described  above in
"Liquidity and Capital  Resources," the Partnership  recognized  gains totalling
$549,516 during 1997, for financial reporting purposes. The gains for 1997, were
partially  offset  by a loss  of  $141,567  for  financial  reporting  purposes,
resulting from the November 1997 sale of the Property in Richmond,  Indiana,  as
described  above in "Liquidity  and Capital  Resources."  In October  1995,  the
Partnership  also  sold a  portion  of the  land  relating  to its  Property  in
Dalesville,  Indiana,  as the result of a right of way taking and  recognized  a
gain for financial  reporting  purposes of $4,353 during the year ended December
31, 1995.

         During 1997, the Partnership  established an allowance for loss on land
and  building of  $151,671  for  financial  reporting  purposes  relating to the
Property in Belding,  Michigan.  The allowance represents the difference between
the  Property's  carrying  value at  December  31,  1997 and the  estimated  net
realizable  value for this Property.  In addition,  an allowance was established
for loss on land and  building  of  $99,023  for  financial  reporting  purposes
relating to the Property in Lebanon,  New Hampshire,  owned by the Partnership's
consolidated joint venture.  The allowance represents the difference between the
Property's  carrying value at December 31, 1997 and the estimated new realizable
value, based on an anticipated sales price for the Property.

         At December 31, 1996, the Partnership established an allowance for loss
on land and building in the amount of $169,463 for financial reporting purposes.
The allowance  represented  the difference  between (i) the Property's  carrying
value at December 31, 1996,  plus the additional  rental income  (accrued rental
income)  that the  Partnership  had  recognized  since  inception  of the  lease
relating to the  straight-lining  of future  scheduled rent increases minus (ii)
the  net  realizable  value  of  $960,741  received  as net  sales  proceeds  in
conjunction with the sale of the Property in January 1997, as described above in
"Liquidity and Capital Resources."

         In addition,  during 1996, the Partnership established an allowance for
loss on land and building for its Property in Richmond,  Indiana.  The allowance
of $70,062  represented the difference between the Property's  carrying value at
December  31, 1996,  and the  estimated  fair value of the Property  based on an
anticipated  sales price of this  Property.  This  Property was sold in November
1997, as described above in "Liquidity and Capital Resources."


                                       13

<PAGE>



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

         The  Partnership's  leases as of December  31,  1997,  are, in general,
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  (for  certain  Properties)  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.


Item 8.   Financial Statements and Supplementary Data

                                       14

<PAGE>



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

                                    CONTENTS







                                                                   Page

Report of Independent Accountants                                   15

Financial Statements:

  Balance Sheets                                                    16

  Statements of Income                                              17

  Statements of Partners' Capital                                   18

  Statements of Cash Flows                                          19

  Notes to Financial Statements                                     21

                                       15

<PAGE>







                        Report of Independent Accountants



To the Partners
CNL Income Fund V, Ltd.


We have audited the financial  statements and the financial  statement schedules
of CNL Income Fund V, Ltd. (a Florida limited  partnership) listed in Item 14(a)
of this Form 10-K. 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  in  accordance  with  generally   accepted  auditing
standards.  Those standards 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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of CNL Income Fund V, Ltd. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended  December 31, 1997 in conformity
with generally accepted accounting principles.  In addition, in our opinion, the
financial  statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.



/s/ Coopers & Lybrand, L.L.P.
-------------------------------


Orlando, Florida
January 29, 1998

                                       16

<PAGE>



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

                                 BALANCE SHEETS


                                                       December 31,
              ASSETS                             1997             1996
              ------                          -----------      -------

Land and buildings on operating
  leases, less accumulated
  depreciation and allowance for
  loss on land and buildings                  $12,421,143      $15,190,278
Net investment in direct financing
  leases                                        2,277,481        1,941,406
Investment in joint ventures                    1,558,709          465,808
Mortgage notes receivable, less
  deferred gain                                 1,758,167        1,772,858
Cash and cash equivalents                       1,361,290          362,922
Receivables, less allowance for
  doubtful accounts of $137,892 and
  $37,743                                         108,261           57,934
Prepaid expenses                                    9,307           10,416
Accrued rental income                             169,726          277,034
Other                                              54,346           54,346
                                              -----------      -----------

                                              $19,718,430      $20,133,002
                                              ===========      ===========


    LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                              $    24,229      $    25,366
Accrued construction costs payable                125,000               -
Accrued real estate taxes
  payable                                          93,392          104,764
Distributions payable                             575,000          575,000
Due to related parties                            143,867          155,964
Rents paid in advance                              13,479           11,738
                                              -----------      -----------
    Total liabilities                             974,967          872,832

Minority interest                                 222,929          277,551

Partners' capital                              18,520,534       18,982,619
                                              -----------      -----------

                                              $19,718,430      $20,133,002
                                              ===========      ===========










                 See accompanying notes to financial statements.

                                       17

<PAGE>



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

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                                  Year Ended December 31,
                                                                       1997             1996              1995
                                                                    ----------       ----------        -------
<S> <C>
Revenues:
  Rental income from operating leases                               $1,343,833       $1,746,021        $1,878,584
  Earned income from direct financing
    leases                                                             157,134          185,552           189,758
  Contingent rental income                                             233,663          130,167           104,455
  Interest income                                                      288,637          137,385            55,785
  Other income                                                          13,866           10,419            27,395
                                                                    ----------       ----------        ----------
                                                                     2,037,133        2,209,544         2,255,977
                                                                    ----------       ----------        ----------

Expenses:
  General operating and administra-
    tive                                                               166,346          178,991           157,741
  Professional services                                                 23,172           22,605            20,741
  Bad debt expense                                                       9,007               -              1,541
  Real estate taxes                                                     39,619           40,711            47,182
  State and other taxes                                                 11,897           12,492            15,982
  Depreciation and amortization                                        324,431          376,766           397,735
                                                                    ----------       ----------        ----------
                                                                       574,472          631,565           640,922
                                                                    ----------       ----------        ----------

Income Before Minority Interest
  in Loss of Consolidated Joint
  Venture, Equity in Earnings of
  Unconsolidated Joint Ventures,
  Gain on Sale of Land and
  Buildings and Provision for Loss
  on Land and Buildings                                              1,462,661        1,577,979         1,615,055

Minority Interest in Loss of
  Consolidated Joint Venture                                            54,622           23,884            11,823

Equity in Earnings of Unconsoli-
  dated Joint Ventures                                                  56,015           46,452            47,018

Gain on Sale of Land and Buildings                                     409,311           19,369             5,924

Provision for Loss on Land and
  Buildings                                                           (250,694)        (239,525)               -
                                                                    ----------       ----------        ---------

Net Income                                                          $1,731,915       $1,428,159        $1,679,820
                                                                    ==========       ==========        ==========

Allocation of Net Income:
  General partners                                                  $   11,809       $   12,513        $   16,754
  Limited partners                                                   1,720,106        1,415,646         1,663,066
                                                                    ----------       ----------        ----------

                                                                    $1,731,915       $1,428,159        $1,679,820
                                                                    ==========       ==========        ==========


Net Income Per Limited Partner Unit                                 $    34.40       $    28.31        $    33.26
                                                                    ==========       ==========        ==========

Weighted Average Number of Limited
  Partner Units Outstanding                                             50,000           50,000            50,000
                                                                    ==========       ==========        ==========
</TABLE>



                 See accompanying notes to financial statements.

                                       18

<PAGE>



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

                         STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>


                                        General Partners                  Limited Partners
                                              Accumu-                                      Accumu-
                                  Contri-     lated        Contri-         Distri-         lated       Syndication
                                  butions    Earnings      butions         butions        Earnings        Costs         Total
                                  -------    --------    -----------    ------------    -----------    -----------   --------
<S> <C>

Balance, December 31, 1994       $ 46,000    $109,706    $25,000,000    $(12,868,240)   $10,860,974    $(2,865,000)  $20,283,440

  Contributions from general
    partner                        31,500          -              -               -              -              -         31,500
  Distributions to limited
    partners ($46 per
    limited partner unit)              -           -              -       (2,300,000)            -              -     (2,300,000)
  Net income                           -       16,754             -               -       1,663,066             -      1,679,820
                                 --------    --------    -----------    ------------    -----------    -----------   -----------

Balance, December 31, 1995         77,500     126,460     25,000,000     (15,168,240)    12,524,040     (2,865,000)   19,694,760

  Contributions from general
    partner                       159,700          -              -               -              -              -        159,700
  Distributions to limited
    partners ($46 per
    limited partner unit)              -           -              -       (2,300,000)            -              -     (2,300,000)
  Net income                           -       12,513             -               -       1,415,646             -      1,428,159
                                 --------    --------    -----------    ------------    -----------    -----------   -----------

Balance, December 31, 1996        237,200     138,973     25,000,000     (17,468,240)    13,939,686     (2,865,000)   18,982,619

  Contributions from general
    partner                       106,000          -              -               -              -              -        106,000
  Distributions to limited
    partners ($46 per
    limited partner unit)              -           -              -       (2,300,000)            -              -     (2,300,000)
  Net income                           -       11,809             -               -       1,720,106             -      1,731,915
                                 --------    --------    -----------    ------------    -----------    -----------   -----------

Balance, December 31, 1997       $343,200    $150,782    $25,000,000    $(19,768,240)   $15,659,792    $(2,865,000)  $18,520,534
                                 ========    ========    ===========    ============    ===========    ===========   ===========
</TABLE>





                 See accompanying notes to financial statements.

                                       19

<PAGE>



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

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                            Year Ended December 31,
                                                                  1997                1996               1995
                                                               -----------         -----------        -------
<S> <C>
Increase (Decrease) in Cash and
  Cash Equivalents:

    Cash Flows from Operating
      Activities:
        Cash received from tenants                             $ 1,771,467         $ 2,083,722        $ 2,216,111
        Distributions from uncon-
          solidated joint ventures                                  53,176              53,782             53,405
        Cash paid for expenses                                    (305,341)           (161,730)          (173,597)
        Interest received                                          293,929             127,971             46,999
                                                               -----------         -----------        -----------
            Net cash provided by
              operating activities                               1,813,231           2,103,745          2,142,918
                                                               -----------         -----------        -----------

    Cash Flows from Investing
      Activities:
        Proceeds from sale of land
          and buildings                                          5,271,796             100,000                 -
        Proceeds from sale of
          portion of land for
          right of way purposes                                         -                   -               7,625
        Collections on mortgage
          note receivable                                            9,265               6,712             11,409
        Additions to land and
          buildings on operating
          leases                                                (1,900,790)                 -                  -
        Investment in direct
          financing lease                                         (911,072)                 -                  -
        Investment in joint
          venture                                               (1,090,062)                 -                  -
        Other                                                           -              (26,287)                -
                                                               -----------         -----------        ----------
            Net cash provided by
              investing activities                               1,379,137              80,425             19,034
                                                               -----------         -----------        -----------

    Cash Flows from Financing
      Activities:
        Contributions from general
          partner                                                  106,000             159,700             31,500
        Distributions to limited
          partners                                              (2,300,000)         (2,300,000)        (2,300,000)
                                                               -----------         -----------        -----------
            Net cash used in
              financing activities                              (2,194,000)         (2,140,300)        (2,268,500)
                                                               -----------         -----------        -----------

Net Increase (Decrease) in Cash
  and Cash Equivalents                                             998,368              43,870           (106,548)

Cash and Cash Equivalents at
  Beginning of Year                                                362,922             319,052            425,600
                                                               -----------         -----------        -----------

Cash and Cash Equivalents at End
  of Year                                                      $ 1,361,290         $   362,922        $   319,052
                                                               ===========         ===========        ===========

</TABLE>





                 See accompanying notes to financial statements.

                                       20

<PAGE>



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

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                           Year Ended December 31,
                                                                  1997                1996               1995
                                                               -----------         -----------        -------
<S> <C>
Reconciliation of Net Income to
  Net Cash Provided by Operating
  Activities:

    Net income                                                 $ 1,731,915         $ 1,428,159        $ 1,679,820
                                                               -----------         -----------        -----------
    Adjustments to reconcile net
      income to net cash provided
      by operating activities:
        Depreciation                                               324,431             376,766            397,735
        Minority interest in loss
          of consolidated joint
          venture                                                  (54,622)            (23,884)           (11,823)
        Equity in earnings of
          unconsolidated joint
          ventures, net of
          distributions                                             (2,839)              7,330              6,387
        Gain on sale of land
          and buildings                                           (409,311)            (19,369)            (5,924)
        Provisions for loss on
          land and buildings                                       250,694             239,525                 -
        Decrease (increase) in
          accrued interest on
          mortgage note receivable                                   6,788              (9,414)            (8,786)
        Decrease (increase) in
          receivables                                              (33,999)             10,270             13,527
        Decrease (increase) in
          prepaid expenses                                           1,109               1,505               (534)
        Decrease in net investment
          in direct financing
          leases                                                    42,682              46,387             42,180
        Increase in accrued rental
          income                                                   (19,527)            (27,875)           (30,484)
        Increase (decrease) in
          accounts payable and
          accrued expenses                                         (12,509)             32,032              9,730
        Increase (decrease) in due
          to related parties                                       (13,322)             59,945             41,585
        Increase (decrease) in
          rents paid in advance                                      1,741             (17,632)             9,505
                                                               -----------         -----------        -----------
            Total adjustments                                       81,316             675,586            463,098
                                                               -----------         -----------        -----------

Net Cash Provided by Operating
  Activities                                                   $ 1,813,231         $ 2,103,745        $ 2,142,918
                                                               ===========         ===========        ===========

Supplemental Schedule of Non-Cash
  Investing and Financing
  Activities:

    Mortgage note accepted
      in connection with sale
      of land and buildings                                    $        -          $ 1,057,299        $ 1,040,000
                                                               ===========         ===========        ===========

    Distributions declared and
      unpaid at December 31                                    $   575,000         $   575,000        $   575,000
                                                               ===========         ===========        ===========
</TABLE>



                 See accompanying notes to financial statements.

                                       21

<PAGE>



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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies:

         Organization  and Nature of  Business - CNL  Income  Fund V, 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.

                                       22

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies - Continued:


                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled rental payments to date.

         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 are
         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  continues  to pursue
         collection of such amounts.  If amounts are subsequently  determined to
         be  uncollectible,  the  corresponding  receivable  and  allowance  for
         doubtful accounts are decreased accordingly.

         Investment in Joint Ventures - The  Partnership  accounts for its 66.5%
         interest in CNL/Longacre Joint Venture, a Florida general  partnership,
         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.

                                       23

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

1.       Significant Accounting Policies - Continued:

         The Partnership accounts for its interest in Cocoa Joint Venture, Halls
         Joint  Venture and a property in each of Mesa,  Arizona and  Vancouver,
         Washington, held as tenants-in-common with affiliates, using the equity
         method since the Partnership  shares control with affiliates which have
         the same general partners.

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

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

         Income Taxes - Under  Section 701 of the  Internal  Revenue  Code,  all
         income,  expenses and tax credit items flow through to the partners for
         tax  purposes.  Therefore,  no  provision  for federal  income taxes is
         provided in the accompanying  financial statements.  The Partnership is
         subject to certain state taxes on its income and properties.

         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 estimates relate to the allowance for doubtful  accounts and
         future cash flows  associated  with long-lived  assets.  Actual results
         could differ from those estimates.

                                       24

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies - Continued:

         Reclassification   -  Certain  items  in  the  prior  years'  financial
         statements  have been  reclassified  to conform  to 1997  presentation.
         These  reclassifications  had no effect  on  partners'  capital  or net
         income.

2.       Leases:

         The Partnership leases its land and buildings primarily 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."  The leases
         generally are classified as operating leases; however, some leases have
         been classified as direct financing  leases.  Substantially  all leases
         are for 15 to 20 years and provide for minimum and contingent  rentals.
         In  addition,   the  tenant  generally  pays  all  property  taxes  and
         assessments,  fully maintains the interior and exterior of the building
         and carries insurance  coverage for public liability,  property damage,
         fire and extended  coverage.  The lease options generally allow tenants
         to  renew  the  leases  for two to four  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:

                                           1997                 1996
                                        -----------          -------

                  Land                  $ 6,069,665          $ 7,284,070
                  Buildings               8,546,530           10,431,908
                                        -----------          -----------
                                         14,616,195           17,715,978
                  Less accumulated
                    depreciation         (1,944,358)          (2,346,374)
                                        -----------          -----------
                                         12,671,837           15,369,604
          Less allowance for loss
            on land and buildings          (250,694)            (179,326)
                                        -----------          -----------

                                        $12,421,143          $15,190,278
                                        ===========          ===========


                                       25

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


3.       Land and Buildings on Operating Leases - Continued:

         In August 1995,  the  Partnership  sold its  property in Myrtle  Beach,
         South  Carolina,  to the tenant for  $1,040,000  and accepted the sales
         proceeds in the form of a promissory  note (Note 6). The total carrying
         value of the  property was  $896,788,  including  acquisition  fees and
         miscellaneous acquisition expenses and net of accumulated depreciation.
         As a result  of this sale  being  accounted  for using the  installment
         sales method for financial  reporting purposes as required by Statement
         of Financial Accounting Standards No. 66, "Accounting for Sales of Real
         Estate," the  Partnership  recognized a gain of $1,024 and $924 for the
         years  ended  December  31,  1997  and  1996,  respectively,  and had a
         deferred  gain in the amount of $139,693  and  $140,717 at December 31,
         1997 and 1996, respectively (Note 6).

         In October  1996,  the  Partnership  sold its  property  in St.  Cloud,
         Florida,  to the tenant for $1,150,000.  In connection  therewith,  the
         Partnership  received $100,000 in cash and accepted the remaining sales
         proceeds in the form of a promissory  note (Note 6). The total carrying
         value of the  property was  $894,265,  including  acquisition  fees and
         miscellaneous acquisition expenses and net of accumulated depreciation.
         As a result  of this sale  being  accounted  for under the  installment
         sales method for financial reporting purposes,  as described above, the
         Partnership  recognized  a gain of $338 and $18,445 for the years ended
         December 31, 1997 and 1996,  respectively,  and had a deferred  gain in
         the amount of $183,464  and  $183,802  at  December  31, 1997 and 1996,
         respectively (Note 6).

         In 1996, the Partnership  established an allowance for loss on land and
         building in the amount of $109,264 and wrote off accrued  rental income
         of  $60,199  for  financial  reporting  purposes  for the  property  in
         Franklin,  Tennessee.  The allowance represented the difference between
         (i) the  property's  carrying  value at  December  31,  1996,  plus the
         accrued rental income that the  Partnership  had  recognized  since the
         inception  of the  lease  relating  to the  straight-  lining of future
         scheduled rent increases  minus (ii) the net realizable  value based on
         sales proceeds received in January 1997 from the sale of this Property.
         The  Partnership  sold the property in January  1997, to the tenant for
         $980,000  and  received  net  sales  proceeds  of  $960,741.  Since the
         Partnership  had  previously  established an allowance for loss on land
         and building as of December 31, 1996, no loss was

                                       26

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

3.       Land and Buildings on Operating Leases - Continued:

         recognized  during 1997 as a result of the sale. The  Partnership  used
         $360,000  of  the  net  sales  proceeds  to  pay   liabilities  of  the
         Partnership, including quarterly distributions to the limited partners.
         In June 1997, the Partnership  entered into an operating  agreement for
         the  property  located in South  Haven,  Michigan,  with an operator to
         operate the property as an Arby's restaurant.  In connection therewith,
         the Partnership used  approximately  $120,400 of the net sales proceeds
         from the sale of the property in Franklin,  Tennessee,  for  conversion
         costs associated with the Arby's property.

         In December 1997, the Partnership reinvested  approximately $244,800 of
         the net  sales  proceeds  from the sale of the  Property  in  Franklin,
         Tennessee,  in a property  located in Sandy,  Utah, as described below,
         and  approximately  $150,000  of the net sales  proceeds  in a property
         located in Vancouver,  Washington, as tenants-in-common with affiliates
         of the general partners (see Note 5).

         In September  1997,  the  Partnership  sold its property in Salem,  New
         Hampshire, to the tenant for $1,295,172 and received net sales proceeds
         (net of $1,773 which  represents  prorated rent returned to the tenant)
         of $1,270,365,  resulting in a gain of $141,508 for financial reporting
         purposes.  This property was originally  acquired by the Partnership in
         May  1989  and  had  a  cost  of  approximately  $1,085,100,  excluding
         acquisition fees and miscellaneous acquisition expenses; therefore, the
         Partnership sold the property for  approximately  $187,000 in excess of
         its  original   purchase  price.  In  December  1997,  the  Partnership
         reinvested the net sales proceeds in a property located in Sandy, Utah,
         as described below.

         In addition,  in September 1997, the  Partnership  sold its property in
         Port St. Lucie,  Florida, to the tenant for $1,220,000 and received net
         sales  proceeds of  $1,216,750,  resulting  in a gain of  $125,309  for
         financial reporting purposes.  This property was originally acquired by
         the  Partnership  in  November  1989  and had a cost  of  approximately
         $1,176,100,  excluding  acquisition fees and miscellaneous  acquisition
         expenses;   therefore,   the   Partnership   sold  the   property   for
         approximately  $40,700 in excess of its  original  purchase  price.  In
         November 1997, the Partnership reinvested the majority of the net sales
         proceeds in a property located in Houston, Texas.

                                       27

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


3.       Land and Buildings on Operating Leases - Continued:

         In 1996, the Partnership  established an allowance for loss on land for
         the  property in  Richmond,  Indiana,  in the amount of $70,062,  which
         represented  the difference  between the  property's  carrying value at
         December  31,  1996,  and the  property  manager's  estimate of the net
         realizable  value of the property based on an anticipated  sales price.
         In November 1997, the  Partnership  sold this property to a third party
         for $400,000 and received net sales  proceeds of $385,179.  As a result
         of this transaction,  the Partnership recognized a loss of $141,567 for
         financial  reporting  purposes.   In  December  1997,  the  Partnership
         reinvested the net sales  proceeds in a property  located in Vancouver,
         Washington,   as  tenants-in-common  with  affiliates  of  the  general
         partners (see Note 5).

         Also, in December  1997,  the  Partnership  sold its property in Tampa,
         Florida,  to a third party for $850,000 and received net sales proceeds
         (net of $724 which represents  prorated rent returned to the tenant) of
         $804,451  resulting  in a gain  of  $180,704  for  financial  reporting
         purposes.  This property was originally  acquired by the Partnership in
         February  1989  and had a cost  of  approximately  $673,200,  excluding
         acquisition fees and miscellaneous acquisition expenses;  therefore the
         Partnership sold the property for  approximately  $132,000 in excess of
         its original purchase price.

         At December 31, 1997, the Partnership established an allowance for loss
         on land and building of $151,671,  for  financial  reporting  purposes,
         relating to the property in Belding, Michigan. The allowance represents
         the difference  between the  property's  carrying value at December 31,
         1997 and the  estimated  net  realizable  value for this  property.  In
         addition,  at December 31, 1997, an allowance was  established for loss
         on land and  building of $99,023,  for  financial  reporting  purposes,
         relating  to the  property  in  Lebanon,  New  Hampshire,  owned by the
         Partnership's  consolidated joint venture,  CNL/Longacre Joint Venture.
         The allowance represents the difference between the property's carrying
         value at December 31, 1997 and the estimated new realizable value based
         on an anticipated sales price for this property.

         As described above, in December 1997, the Partnership used the majority
         of the net sales  proceeds from the sale of the Properties in Franklin,
         Tennessee and Salem, New Hampshire, in
         a Property located in Sandy, Utah.

                                       28

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


3.       Land and Buildings on Operating Leases - Continued:

         Some leases provide for escalating  guaranteed minimum rents throughout
         the  lease  terms.  Income  from  these  scheduled  rent  increases  is
         recognized on a straight-line  basis over the terms of the leases.  For
         the years ended  December  31,  1997,  1996 and 1995,  the  Partnership
         recognized $19,526, $27,875 and $30,484,  respectively,  of such rental
         income.

         The following is a schedule of the future  minimum lease payments to be
         received on noncancellable operating leases at December 31, 1997:

                  1998                      $ 1,049,074
                  1999                        1,052,663
                  2000                        1,063,699
                  2001                        1,028,379
                  2002                          939,819
                  Thereafter                  8,440,061
                                            -----------

                                            $13,573,695

         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 gross sales.

4.       Net Investment in Direct Financing Leases:

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

                                                    1997             1996
                                                -----------      --------

                  Minimum lease payments
                    receivable                  $ 4,213,033      $ 2,811,323
                  Estimated residual
                    values                          806,792          828,783
                  Less unearned income           (2,742,344)      (1,698,700)
                                                -----------      -----------

                  Net investment in direct
                    financing leases            $ 2,277,481      $ 1,941,406
                                                ===========      ===========


                                       29

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

4.       Net Investment in Direct Financing Leases:

         The  following  is a schedule of future  minimum  lease  payments to be
         received on direct financing leases at December 31, 1997:

                  1998                                $  286,518
                  1999                                286,518
                  2000                                286,518
                  2001                                286,518
                  2002                                286,518
                  Thereafter                           2,780,443
                                                      ----------

                                                      $4,213,033

         In May 1997, the Partnership sold its property in Smyrna, Tennessee, to
         a third party for $655,000 and received net sales proceeds of $634,310,
         resulting in a gain of $101,995 for financial reporting purposes.  This
         property was originally  acquired by the  Partnership in March 1989 and
         had a cost of approximately  $569,500,  excluding  acquisition fees and
         miscellaneous acquisition expenses; therefore, the Partnership sold the
         property for  approximately  $64,800 in excess of its original purchase
         price.  The  Partnership  used  approximately  $82,500 of the net sales
         proceeds to pay  liabilities of the  Partnership,  including  quarterly
         distributions to the limited  partners.  In addition,  in October 1997,
         the  Partnership  reinvested  approximately  $460,900  of the net sales
         proceeds in a property in Mesa, Arizona, as  tenants-in-common  with an
         affiliate of the general  partners.  In December 1997, the  Partnership
         reinvested  the remaining net sales  proceeds in a property  located in
         Vancouver,  Washington,  as  tenants-in-common  with  affiliates of the
         general partners (Note 5).

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

5.       Investment in Joint Ventures:

         The  Partnership  has a 43  percent  and a 49 percent  interest  in the
         profits  and losses of Cocoa Joint  Venture  and Halls  Joint  Venture,
         respectively.  The remaining interests in these joint ventures are held
         by affiliates of the Partnership which have the same general partners.

         In  October  1997,  the  Partnership  used a  portion  of the net sales
         proceeds from the sale of the Property in Smyrna,

                                       30

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

5.       Investment in Joint Ventures - Continued:

         Tennessee  (see Note 4) to  acquire a  property  in Mesa,  Arizona,  as
         tenants-in-common  with  an  affiliate  of the  general  partners.  The
         Partnership  accounts for its  investment  in this  property  using the
         equity method since the  Partnership  shares control with an affiliate,
         and amounts  relating to its  investment  are included in investment in
         joint ventures. As of December 31, 1997, the Partnership owned a 42.23%
         interest in this property.

         In addition,  in December 1997, the Partnership used some or all of the
         net  sales  proceeds  from the  sales of the  Properties  in  Franklin,
         Tennessee;  and Richmond,  Indiana (see Note 3), and Smyrna,  Tennessee
         (see  Note 4) to  acquire  a  property  in  Vancouver,  Washington,  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 an affiliate,
         and amounts  relating to its  investment  are included in investment in
         joint ventures. As of December 31, 1997, the Partnership owned a 27.78%
         interest in this property.

         Cocoa Joint  Venture,  Halls 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 combined condensed financial information for
         the  joint  ventures  and  the  two  properties  held  as two  separate
         tenants-in-common with affiliates at December 31:

                                                     1997           1996
                                                  ----------     -------
                  Land and buildings on
                    operating leases, less
                    accumulated depreciation      $4,277,972     $  946,406
                  Cash                                24,994            561
                  Receivables                          4,417             -
                  Prepaid expenses                       270            251
                  Accrued rental income               68,819         63,806
                  Liabilities                          1,250            880
                  Partners' capital                4,375,222      1,010,144
                  Revenues                           151,242        123,689
                  Net income                         121,605         98,949

         The  Partnership  recognized  income  totalling  $56,015,  $46,452  and
         $47,018  for  the  years  ended  December  31,  1997,  1996  and  1995,
         respectively, from these joint ventures.

                                       31

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

6.       Mortgage Notes Receivable:

         In  connection  with the sale in 1995 of its property in Myrtle  Beach,
         South  Carolina,  the  Partnership  accepted a  promissory  note in the
         principal  sum  of  $1,040,000,  collateralized  by a  mortgage  on the
         property. The promissory note bears interest at 10.25% per annum and is
         being collected in 59 equal monthly  installments of $9,319,  including
         interest, with a balloon payment of $1,006,004 due in July 2000.

         In addition, in connection with the sale in 1996 of its property in St.
         Cloud,  Florida,  the  Partnership  accepted a  promissory  note in the
         principal  sum of  $1,057,299,  representing  the  balance of the sales
         price of $1,050,000  plus tenant  closing costs in the amount of $7,299
         that the  Partnership  financed  on behalf of the  tenant.  The note is
         collateralized by a mortgage on the property. The promissory note bears
         interest  at a rate of 10.75%  per annum and is being  collected  in 12
         monthly  installments  of interest  only,  and  thereafter in 168 equal
         monthly installments of principal and interest.

         The mortgage  notes  receivable  consisted of the following at December
         31:
                                              1997                    1996
                                           ----------              -------

                  Principal balance        $2,069,912              $2,079,177
                  Accrued interest
                    receivable                 11,412                  18,200
                  Less deferred gains
                    on sale of land
                    and buildings            (323,157)               (324,519)
                                           ----------              ----------

                                           $1,758,167              $1,772,858
                                           ==========              ==========

         The general partners believe that the estimated fair values of mortgage
         notes  receivable  at  December  31,  1997 and  1996,  approximate  the
         outstanding  principal amount based on estimated current rates at which
         similar  loans would be made to borrowers  with similar  credit and for
         similar maturities.

7.       Receivables:

         In June 1997, the Partnership  terminated the leases with the tenant of
         the properties in  Connorsville  and Richmond,  Indiana.  In connection
         therewith,  the Partnership  accepted a promissory note from the former
         tenant for $35,297 for amounts  relating to past due real estate  taxes
         the Partnership had

                                       32

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


7.       Receivables - Continued:

         accrued as a result of the former tenant's financial difficulties.  The
         promissory  note is  uncollateralized,  bears interest at a rate of ten
         percent per annum,  and is being collected in 36 monthly  installments.
         Receivables  at December 31, 1997,  included  $37,099 of such  amounts,
         including accrued interest of $1,802.

8.       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,  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  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.

         During each of the years ended  December 31, 1997,  1996 and 1995,  the
         Partnership   declared   distributions   to  the  limited  partners  of
         $2,300,000.  No distributions have been made to the general partners to
         date.

                                       33

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

9.       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>

                                                                1997             1996              1995
                                                             ----------       ----------        -------
<S> <C>
                  Net income for financial
                    reporting purposes                       $1,731,915       $1,428,159        $1,679,820

                  Depreciation for tax
                    reporting purposes in
                    excess of depreciation
                    for financial reporting
                    purposes                                    (23,618)         (28,058)          (26,980)

                  Gain on disposition of
                    land and buildings for
                    financial reporting
                    purposes in excess of
                    gain for tax reporting
                    purposes                                   (354,648)          (1,606)                 (69)

                  Allowance for loss on
                    land and buildings                          250,694          239,525                -

                  Direct financing leases
                    recorded as operating
                    leases for tax reporting
                    purposes                                     42,682           46,387            42,180

                  Equity in earnings of
                    unconsolidated joint
                    ventures for tax
                    reporting purposes less
                    than equity in earnings of
                    unconsolidated joint
                    ventures for financial
                    reporting purposes                           (1,914)          (1,900)           (2,926)

                  Allowance for doubtful
                    accounts                                    100,149           33,254          (150,480)

                  Accrued rental income                         (19,527)         (27,875)                 (30,484)

                  Rents paid in advance                           1,241          (17,632)            9,505

                  Minority interest in
                    timing differences of
                    consolidated joint
                    venture                                     (41,515)            (343)             (370)

                  Disallowed real estate
                    tax deduction                                36,721               -                 -
                                                             ----------       ----------        ---------

                  Net income for federal
                    income tax purposes                      $1,722,180       $1,669,911        $1,520,196
                                                             ==========       ==========        ==========
</TABLE>

                                       34

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


10.      Related Party Transactions:

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal  shareholders  of CNL Group,  Inc., the parent company of
         CNL Fund Advisors, Inc. The other individual general partner, Robert A.
         Bourne, served as president of CNL Fund Advisors,  Inc. through October
         1997. CNL Income Fund Advisors,  Inc. was a wholly owned  subsidiary of
         CNL Group,  Inc. until its merger,  effective January 1, 1996, with CNL
         Fund Advisors,  Inc. During the years ended December 31, 1997, 1996 and
         1995,  CNL Income  Fund  Advisors,  Inc.  and CNL Fund  Advisors,  Inc.
         (hereinafter   referred  to  collectively  as  the  "Affiliates")  each
         performed certain services for the Partnership, as described below.

         During  the years  ended  December  31,  1997,  1996 and 1995,  certain
         Affiliates 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 Affiliates 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 1997, 1996 and 1995.

         Certain   Affiliates   are  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
         Affiliates  provide a substantial amount of services in connection with
         the  sale.  However,  if the net sales  proceeds  are  reinvested  in a
         replacement  property,  no such real  estate  disposition  fees will be
         incurred  until  such  replacement  property  is sold and the net sales
         proceeds are  distributed.  The payment of the real estate  disposition
         fee is subordinated to receipt by the limited partners of their

                                       35

<PAGE>



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

                                     NOTES TO FINANCIAL STATEMENTS - CONTINUED

                                   Years Ended December 31, 1997, 1996 and 1995


10.      Related Party Transactions - Continued:

         aggregate   10%  Preferred   Return,   plus  their   adjusted   capital
         contributions. During the year ended December 31, 1996, the Partnership
         incurred  a  deferred,  subordinated  real  estate  disposition  fee of
         $34,500  as the  result  of the  sale  of the  Property  in St.  Cloud,
         Florida.  No deferred,  subordinated real estate  disposition fees were
         incurred  for the years  ended  December  31,  1997 and 1995 due to the
         reinvestment of net sales proceeds in additional Properties.

         During the years ended December 31, 1997, 1996 and 1995, the Affiliates
         provided accounting and administrative services to the Partnership on a
         day-to-day basis. The Partnership incurred $80,145, $83,563 and $83,882
         for the years ended December 31, 1997, 1996 and 1995, respectively, for
         such services.

         The due to related parties consisted of the following at December 31:

                                                        1997        1996
                                                      --------    ------

                  Due to Affiliates:
                    Expenditures incurred on
                      behalf of the Partnership       $ 67,106    $ 78,407
                    Accounting and administrative
                      services                          42,261      43,057
                    Deferred, subordinated real
                      estate disposition fee            34,500      34,500
                                                      --------    --------

                                                      $143,867    $155,964
                                                      ========    ========

         During 1997, the Partnership  and an affiliate of the general  partners
         acquired  a  property  in Mesa,  Arizona,  as  tenants-in-common  for a
         purchase  price of  $1,084,111  (of which the  Partnership  contributed
         $460,911 or 42.23%) from CNL BB Corp., also 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
         Partnership's percent of interest in the costs incurred by CNL BB Corp.
         to acquire and carry the property, including closing costs.



                                       36

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

11.      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  share of total  rental and earned
         income from  unconsolidated  joint ventures and the properties  held as
         tenants-in-common with affiliates), for at least one of the years ended
         December 31:

                                       1997          1996          1995
                                    ----------    ----------    -------

                  Shoney's, Inc.     $229,795      $241,119      $247,353
                  Golden Corral
                    Corporation       195,511       195,511       195,511

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

                                             1997         1996         1995
                                           --------     --------     ------

                  Denny's                  $312,510     $310,021     $314,057
                  Wendy's Old Fashioned
                    Hamburger Restaurant    302,253      293,817      278,127
                  Perkins                   228,492      268,939      226,898

         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. However, the general partners believe that the risk
         of such a default is reduced due to the  essential or important  nature
         of these properties for the on-going operations of the lessees.

12.      Subsequent Event:

         In January  1998,  the  Partnership  sold its  property in Port Orange,
         Florida to the tenant,  for  $1,330,000 and received net sales proceeds
         (net of $2,909 which  represents  prorated rent returned to the tenant)
         of  $1,283,096,  resulting  in a gain  of  approximately  $350,300  for
         financial reporting purposes.

                                       37

<PAGE>



Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         None.


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

         The General Partners of the Registrant are James M. Seneff, Jr., Robert
A.  Bourne  and CNL  Realty  Corporation,  a Florida  corporation.  The  General
Partners  manage  and  control  the  Partnership's   affairs  and  have  general
responsibility   and  the  ultimate  authority  in  all  matters  affecting  the
Partnership's  business.  The  Partnership  has  available  to it the  services,
personnel and experience of CNL Fund Advisors,  Inc., CNL Group,  Inc. and their
affiliates,  all of which are affiliates of the General  Partners.  In addition,
during 1995,  the  Partnership  had available to it the services,  personnel and
experience of CNL Income Fund Advisors,  Inc., prior to its merger with CNL Fund
Advisors, Inc., effective January 1, 1996.

         James M. Seneff, Jr., age 51, is a principal  stockholder of CNL Group,
Inc., a diversified  real estate company,  and has served as its Chairman of the
Board of Directors,  director and Chief Executive Officer since its formation in
1980.  CNL Group,  Inc.  is the  parent  company of CNL  Securities  Corp.,  CNL
Investment Company, CNL Fund Advisors,  Inc., CNL Real Estate Advisors, Inc. and
prior to its merger with CNL Fund Advisors, Inc., effective January 1, 1996, CNL
Income Fund Advisors, Inc. Mr. Seneff is Chief Executive Officer, and has been a
director and registered  principal of CNL Securities Corp.,  which served as the
managing dealer in the Partnership's  offering of Units,  since its formation in
1979.  Mr.  Seneff also has held the position of President and a director of CNL
Management  Company,  a registered  investment  advisor,  since its formation in
1976,  has served as Chief  Executive  Officer and  Chairman of the Board of CNL
Investment  Company,  and Chief  Executive  Officer and Chairman of the Board of
Commercial Net Lease Realty,  Inc. since 1992, has served as the Chairman of the
Board and the Chief  Executive  Officer of CNL Realty  Advisors,  Inc. since its
inception in 1991 through  December 31, 1997, at which time CNL Realty Advisors,
Inc.  merged with Commercial Net Lease Realty,  Inc.,  served as Chairman of the
Board and Chief  Executive  Officer of CNL Income Fund Advisors,  Inc. since its
inception in 1994 through December 31, 1995, has served as a director,  Chairman
of the Board and Chief  Executive  Officer of CNL Fund Advisors,  Inc. since its
inception in 1994,  and has held the position of Chief  Executive  Officer and a
director of CNL Institutional  Advisors,  Inc., a registered investment advisor,
since its inception in 1990.  In addition,  Mr. Seneff has served as a director,
Chairman of the Board and Chief  Executive  Officer of CNL  American  Properties
Fund,  Inc. since 1994, and has served as a director,  Chairman of the Board and
Chief Executive  Officer of CNL American Realty Fund, Inc. since 1996 and of CNL
Real Estate Advisors,  Inc. since January 1997. Mr. Seneff  previously served on
the Florida State  Commission on Ethics and is a former member and past Chairman
of the State of Florida  Investment  Advisory  Council,  which recommends to the
Florida  Board  of  Administration  investments  for  various  Florida  employee
retirement  funds.  The Florida  Board of  Administration,  Florida's  principal
investment advisory and money management agency, oversees the investment of more
than $60 billion of retirement funds.  Since 1971, Mr. Seneff has been active in
the  acquisition,  development  and  management  of real  estate  projects  and,
directly or through an  affiliated  entity,  has served as a general  partner or
joint  venturer in over 100 real  estate  ventures  involved  in the  financing,
acquisition,  construction and rental of office buildings,  apartment complexes,
restaurants,  hotels  and other  real  estate.  Included  in these  real  estate
ventures are approximately 65 privately offered real estate limited partnerships
in which Mr.  Seneff,  directly or through an affiliated  entity,  serves or has
served as a general partner. Also included are CNL Income Fund, Ltd., CNL Income
Fund II, Ltd.,  CNL Income Fund III,  Ltd., CNL Income Fund IV, Ltd., CNL Income
Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income
Fund IX, Ltd.,  CNL Income Fund X, Ltd.,  CNL Income Fund XI,  Ltd.,  CNL Income
Fund XII,  Ltd.,  CNL Income Fund XIII,  Ltd.,  CNL Income Fund XIV,  Ltd.,  CNL
Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII,  Ltd. and
CNL Income Fund XVIII,  Ltd. (the "CNL Income Fund  Partnerships"),  public real
estate limited  partnerships with investment  objectives similar to those of the
Partnership,  in which  Mr.  Seneff  serves  as a general  partner.  Mr.  Seneff
received his degree in Business  Administration from Florida State University in
1968.

                                       38

<PAGE>



         Robert A.  Bourne,  age 50, is  President  and  Treasurer of CNL Group,
Inc., President,  a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, and prior to its merger with
CNL Fund Advisors,  Inc.,  effective  January 1, 1996, CNL Income Fund Advisors,
Inc., and Chief Investment Officer,  Vice Chairman of the Board of Directors,  a
director  and  Treasurer  of CNL  Institutional  Advisors,  Inc.,  a  registered
investment  advisor.  Mr.  Bourne  served  as  President  of  CNL  Institutional
Advisors,  Inc. from the date of its inception  through June 30, 1997 and served
as President of CNL Fund Advisors,  Inc. from the date of its inception  through
October  1997.  Mr.  Bourne  currently  serves as Vice  Chairman of the Board of
Directors and as Treasurer of CNL Fund Advisors, Inc. Mr. Bourne also has served
as a director  since 1992,  as  President  from July 1992 to February  1996,  as
Secretary and Treasurer  from February  1996 through  December  1997,  and since
February  1996,  served as Vice Chairman of the Board of Directors of Commercial
Net Lease Realty,  Inc. In addition,  Mr. Bourne has served as a director  since
its  inception in 1991,  as President  from 1991 to February  1996, as Secretary
from February 1996 to July 1996, and since  February  1996,  served as Treasurer
and Vice Chairman of CNL Realty  Advisors,  Inc.  through  December 31, 1997, at
which time CNL Realty  Advisors,  Inc.  merged with Commercial Net Lease Realty,
Inc.  In  addition,  Mr.  Bourne has served as  President  and a director of CNL
American  Properties  Fund,  Inc.  since 1994, and has served as President and a
director of CNL  American  Realty Fund,  Inc.  since 1996 and of CNL Real Estate
Advisors, Inc. since January 1997. Upon graduation from Florida State University
in 1970, where he received a B.A. in Accounting,  with honors, Mr. Bourne worked
as a certified public accountant and, from September 1971 through December 1978,
was employed by Coopers & Lybrand,  Certified Public Accountants,  where he held
the  position of tax manager  beginning  in 1975.  From  January 1979 until June
1982, Mr. Bourne was a partner in the accounting firm of Cross & Bourne and from
July 1982  through  January  1987,  he was a partner in the  accounting  firm of
Bourne & Rose, P.A.,  Certified Public  Accountants.  Mr. Bourne, who joined CNL
Securities  Corp.  in 1979,  has  participated  as a  general  partner  or joint
venturer  in  over  100  real  estate   ventures   involved  in  the  financing,
acquisition,  construction and rental of office buildings,  apartment complexes,
restaurants,  hotels  and other  real  estate.  Included  in these  real  estate
ventures are approximately 64 privately offered real estate limited partnerships
in which Mr.  Bourne,  directly or through an affiliated  entity,  serves or has
served as a general partner. Also included are the CNL Income Fund Partnerships,
public real estate limited  partnerships with investment  objectives  similar to
those of the Partnership, in which Mr. Bourne serves as a general partner.

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

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

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

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



                                       39

<PAGE>



         Curtis B. McWilliams,  age 42, joined CNL Fund Advisors,  Inc. in April
1997 and  currently  serves  as  President  of CNL Fund  Advisors,  Inc.  and as
Executive Vice President of CNL American Properties Fund, Inc. In addition,  Mr.
McWilliams  serves  as  Executive  Vice  President  of CNL  Group,  Inc.  and as
President of CNL Financial Services,  Inc. and certain other subsidiaries of CNL
Group,  Inc. From September 1983 through March 1997, Mr. McWilliams was employed
by Merrill  Lynch.  From  January  1991 to August  1996,  Mr.  McWilliams  was a
managing director in the corporate  banking group of Merrill Lynch's  investment
banking division.  During this time, he was a senior  relationship  manager with
Merrill  Lynch and as such was  responsible  for a number of the  firm's  larger
clients.  From February 1990 to February  1993, he also served as co-head of one
of the  Industrial  Banking  Groups within Merrill  Lynch's  investment  banking
division and had administrative responsibility for a group of bankers and client
relationships, including the firm's transportation group. From September 1996 to
March  1997,  Mr.  McWilliams  served as  Chairman  of Merrill  Lynch's  Private
Advisory Services. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton  University  in 1977 and a Masters of Business  Administration  with a
concentration in finance from the University of Chicago in 1983.

         John T. Walker,  age 39, is the Chief  Operating  Officer and Executive
Vice President of CNL Fund Advisors, Inc. and CNL American Properties Fund, Inc.
and serves as Executive Vice President of CNL American Realty Fund, Inc. and CNL
Real  Estate  Advisors,  Inc.  Mr.  Walker  joined CNL Fund  Advisors,  Inc.  in
September  1994,  as  Senior  Vice  President,   responsible  for  Research  and
Development.  From May 1992 to May 1994,  he was  Executive  Vice  President for
Finance and Administration and Chief Financial Officer of Z Music, Inc., a cable
television  network which was  subsequently  acquired by Gaylord  Entertainment,
where he was responsible for overall financial and administrative management and
planning.  From January 1990 through April 1992, Mr. Walker was Chief  Financial
Officer of the First Baptist Church in Orlando, Florida. From April 1984 through
December  1989, he was a partner in the accounting  firm of Chastang,  Ferrell &
Walker,  P.A.,  where he was the  partner  in  charge  of audit  and  consulting
services, and from 1981 to 1984, Mr. Walker was a Senior Consultant/Audit Senior
at  Price  Waterhouse.  Mr.  Walker  is a Cum  Laude  graduate  of  Wake  Forest
University with a B.S. in Accountancy and is a certified public accountant.

         Lynn E. Rose,  age 49, a  certified  public  accountant,  has served as
Chief  Financial  Officer of CNL Group,  Inc. since December 1993, has served as
Secretary of CNL Group,  Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until  December  1993. In addition,  Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She has
served as Chief Operating Officer, Vice President and Secretary of CNL Corporate
Services,  Inc. since November 1994. Ms. Rose also has served as Chief Financial
Officer and Secretary of CNL Institutional Advisors, Inc. since its inception in
1990, served as a director and Secretary of CNL Realty Advisors,  Inc. since its
inception in 1991 through  December 31, 1997, at which time CNL Realty Advisors,
Inc.  merged with  Commercial  Net Lease Realty,  Inc.,  Treasurer of CNL Realty
Advisors, Inc. from 1991 to February 1996, Secretary and Treasurer of Commercial
Net Lease Realty, Inc. from 1992 to February 1996,  Secretary of CNL Income Fund
Advisors,  Inc.  since its inception in 1994 to December  1995,  and a director,
Secretary and Treasurer of CNL Fund Advisors,  Inc. since 1994 and has served as
a director,  Secretary and  Treasurer of CNL Real Estate  Advisors,  Inc.  since
January  1997.  Ms.  Rose also has  served as  Secretary  and  Treasurer  of CNL
American  Properties  Fund,  Inc.  since 1994,  and has served as Secretary  and
Treasurer of CNL American  Realty Fund, Inc. since 1996. Ms. Rose also currently
serves as Secretary  for  approximately  50  additional  corporations.  Ms. Rose
oversees the management information services, administration,  legal compliance,
accounting,   tenant  compliance,  and  reporting  for  over  300  corporations,
partnerships,  and joint ventures.  Prior to joining CNL, Ms. Rose was a partner
with Robert A. Bourne in the accounting firm of Bourne & Rose,  P.A.,  Certified
Public  Accountants.  Ms. Rose holds a B.A. in Sociology  from the University of
Central Florida. She was licensed as a certified public accountant in 1979.



                                       40

<PAGE>



         Jeanne A. Wall,  age 39, has served as Chief  Operating  Officer of CNL
Investment  Company and of CNL  Securities  Corp.  since  November  1994 and has
served as Executive Vice President of CNL Investment Company since January 1991.
In 1984,  Ms. Wall joined CNL  Securities  Corp.  In 1985,  Ms. Wall became Vice
President of CNL Securities Corp., in 1987, she became Senior Vice President and
in July 1997, she became  Executive  Vice  President of CNL Securities  Corp. In
this  capacity,  Ms. Wall serves as national  marketing  and sales  director and
oversees  the  national  marketing  plan  for the CNL  investment  programs.  In
addition, Ms. Wall oversees product development,  partnership administration and
investor  services for  programs  offered  through  participating  brokers,  and
corporate  communications for CNL Group, Inc. and Affiliates.  Ms. Wall also has
served  as  Senior  Vice  President  of  CNL  Institutional  Advisors,  Inc.,  a
registered  investment  advisor,  from 1990 to 1993,  as Vice  President  of CNL
Realty  Advisors,  Inc.  since  its  inception  in 1991  through  1997,  as Vice
President of  Commercial  Net Lease  Realty,  Inc.  from 1992 through  1997,  as
Executive Vice President of CNL Fund Advisors, Inc. since 1994, and as Executive
Vice President of CNL American  Properties  Fund,  Inc. since 1994. In addition,
Ms. Wall has served as Executive  Vice  President  of CNL Real Estate  Advisors,
Inc. since January 1997 and as Executive  Vice President of CNL American  Realty
Fund,  Inc.  since 1996. Ms. Wall holds a B.A. in Business  Administration  from
Linfield College and is a registered  principal of CNL Securities Corp. Ms. Wall
currently serves as a trustee on the board of the Investment Program Association
and on the Direct  Participation  Program committee for the National Association
of Securities Dealers (NASD).

         Steven D. Shackelford, age 34, has served as Chief Financial Officer of
CNL Fund Advisors,  Inc. since September 1996 and as Chief Financial  Officer of
CNL American  Properties Fund, Inc. since January 1997. Mr.  Shackelford  joined
CNL Fund Advisors,  Inc. in September 1996. From March 1995 to July 1996, he was
a  senior  manager  in the  national  office  of Price  Waterhouse  where he was
responsible  for advising  foreign clients seeking to raise capital and a public
listing in the United  States.  From August  1992 to March 1995,  he served as a
manager  in  the  Price  Waterhouse,   Paris,   France  office  serving  several
multinational  clients. Mr. Shackelford was an audit staff and audit senior from
1986 to 1992 in the Orlando, Florida office of Price Waterhouse. Mr. Shackelford
received  a  B.A.  in  Accounting,  with  honors,  and  a  Masters  of  Business
Administration   from  Florida  State  University  and  is  a  certified  public
accountant.


Item 11.  Executive Compensation

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


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of March 13,  1998,  no person was known to the  Registrant  to be a
beneficial owner of more than five percent of the Units.

         The following  table sets forth,  as of March 13, 1998,  the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>

                 Title of Class                    Name of Partner                   Percent of Class
<S> <C>
         General Partnership Interests             James M. Seneff, Jr.                     45%
                                                   Robert A. Bourne                         45%
                                                   CNL Realty Corporation                   10%
                                                                                           ----
                                                                                           100%

</TABLE>

         Neither the General  Partners,  nor any of their  affiliates,  owns any
interest in the  Registrant  except as noted  above.  There are no  arrangements
which at a subsequent date may result in a change in control of the Registrant.

                                       41

<PAGE>



Item 13.  Certain Relationships and Related Transactions

         The  table  below   summarizes  the  types,   recipients,   methods  of
computation and amounts of compensation,  fees and distributions paid or payable
by the  Partnership  to the General  Partners and their  affiliates for the year
ended  December 31, 1997,  exclusive of any  distributions  to which the General
Partners or their  affiliates  may be entitled by reason of their  purchase  and
ownership of Units.

<TABLE>
<CAPTION>

==========================================================================================================================
                                                                                              Amount Incurred
         Type of Compensation                                                                  For the Year
              and Recipient                       Method of Computation                   Ended December 31, 1997
       ------------------------                   ---------------------                   -----------------------
<S> <C>
Reimbursement  to affiliates  for        Operating  expenses are  reimbursed      Operating expenses incurred on
operating expenses                       at the lower of cost or 90  percent      behalf of the Partnership:
                                         of the prevailing rate at which          $77,353
                                         comparable services could have
                                         been obtained in the same                Accounting and administrative
                                         geographic area.  Affiliates of the      services: $80,145
                                         General Partners from time to
                                         time incur certain operating
                                         expenses on behalf of the
                                         Partnership for which the
                                         Partnership reimburses the
                                         affiliates without interest.

Annual, subordinated manage-             One percent of the sum of gross             $ - 0 -
ment fee to affiliates                   operating revenues from
                                         Properties    wholly   owned   by   the
                                         Partnership   plus  the   Partnership's
                                         allocable  share of gross  revenues  of
                                         joint ventures in which the Partnership
                                         is  a  co-venturer,   subordinated   to
                                         certain  minimum returns to the Limited
                                         Partners.  The  management fee will not
                                         exceed  competitive fees for comparable
                                         services.  Due to the fact  that  these
                                         fees are 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.
==========================================================================================================================

</TABLE>



                                       42

<PAGE>


<TABLE>
<CAPTION>


==========================================================================================================================
                                                                                              Amount Incurred
         Type of Compensation                                                                  For the Year
             and Recipient                        Method of Computation                   Ended December 31, 1997
       ------------------------                   ---------------------                   -----------------------
<S> <C>
Deferred, subordinated real estate       A deferred, subordinated real            $ - 0 -
disposition fee payable to               estate disposition fee, payable
affiliates                               upon sale of one or more
                                         Properties,  in an amount  equal to the
                                         lesser of (i) one-half of a competitive
                                         real estate  commission,  or (ii) three
                                         percent  of the  sales  price  of  such
                                         Property or Properties. Payment of such
                                         fee shall be made only if affiliates of
                                         the   General    Partners   provide   a
                                         substantial   amount  of   services  in
                                         connection  with the sale of a Property
                                         or Properties and shall be subordinated
                                         to  certain   minimum  returns  to  the
                                         Limited Partners.  However,  if the net
                                         sales  proceeds  are  reinvested  in  a
                                         replacement   Property,  no  such  real
                                         estate disposition fee will be incurred
                                         until such replacement Property is sold
                                         and  the   net   sales   proceeds   are
                                         distributed.

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

General Partners' deferred, sub-         A deferred, subordinated share              $ - 0 -
ordinated share of Partnership net       equal to five percent of
sales proceeds from a sale or            Partnership distributions of such
sales                                    net sales proceeds, subordinated to
                                         certain minimum returns to the
                                         Limited Partners.
==========================================================================================================================
</TABLE>




                                       43

<PAGE>



                                     PART IV

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

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

         1.   Financial Statements

                  Report of Independent Accountants

                  Balance Sheets at December 31, 1997 and 1996

                  Statements  of Income for the years ended  December  31, 1997,
                  1996 and 1995

                  Statements of Partners'  Capital for the years ended  December
                  31, 1997, 1996 and 1995

                  Statements  of Cash  Flows for the years  ended  December  31,
                  1997, 1996 and 1995

                  Notes to Financial Statements

         2.   Financial Statement Schedules

                  Schedule II - Valuation and Qualifying  Accounts for the years
                  ended December 31, 1997, 1996 and 1995

                  Schedule  III - Real Estate and  Accumulated  Depreciation  at
                  December 31, 1997

                  Notes  to  Schedule   III  -  Real   Estate  and   Accumulated
                  Depreciation at December 31, 1997

                  Schedule IV - Mortgage  Loans on Real  Estate at December  31,
                  1997

                  All other Schedules are omitted as the required information is
                  inapplicable  or is presented in the  financial  statements or
                  notes thereto.

         3.   Exhibits

         3.1      Amended and  Restated  Affidavit  and  Certificate  of Limited
                  Partnership  of CNL Income Fund V, Ltd.  (Included  as Exhibit
                  3.1 to Form  10-K  filed  with  the  Securities  and  Exchange
                  Commission  on March  31,  1994,  and  incorporated  herein by
                  reference.)

         4.1      Amended and  Restated  Affidavit  and  Certificate  of Limited
                  Partnership  of CNL Income Fund V, Ltd.  (Included  as Exhibit
                  3.1 to Form  10-K  filed  with  the  Securities  and  Exchange
                  Commission  on March  31,  1994,  and  incorporated  herein by
                  reference.)

         4.2      Amended and  Restated  Certificate  and  Agreement  of Limited
                  Partnership  of CNL Income Fund V, Ltd.  (Included  as Exhibit
                  4.2 to Form  10-K  filed  with  the  Securities  and  Exchange
                  Commission  on March  31,  1994,  and  incorporated  herein by
                  reference.)

         10.1     Management  Agreement  (Included  as Exhibit 10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on March 31,
                  1994, and incorporated herein by reference.)

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


                                       44

<PAGE>



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

         27       Financial Data Schedule (Filed herewith.)

(b)      The  Registrant  filed no reports  on Form 8-K  during the period  from
         October 1, 1997 through December 31, 1997.

                                       45

<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 27th day of
March, 1998.


                                 CNL INCOME FUND V, LTD.

                                 By:      CNL REALTY CORPORATION
                                          General Partner

                                          /s/ Robert A. Bourne
                                          ----------------------------
                                          ROBERT A. BOURNE, President


                                 By:      ROBERT A. BOURNE
                                          General Partner

                                          /s/ Robert A. Bourne
                                          ---------------------------
                                          ROBERT A. BOURNE


                                 By:      JAMES M. SENEFF, JR.
                                          General Partner

                                          /s/ James M. Seneff, Jr.
                                          ---------------------------
                                          JAMES M. SENEFF, JR.


<PAGE>



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

==========================================================================================================================
               Signature                                  Title                                    Date
<S> <C>
/s/ Robert A. Bourne                     President, Treasurer and  Director                   March 27, 1998
-----------------------------------      (Principal  Financial  and
Robert A. Bourne                         Accounting  Officer)


/s/ James M. Seneff, Jr.                 Chief Executive Officer and                          March 27, 1998
-----------------------------------      Director (Principal Executive
James M. Seneff, Jr.                     Officer)

==========================================================================================================================
</TABLE>





<PAGE>



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

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>


                                              Additions                            Deductions
                                                                                                Collected
                                           Charged                                              or Deter-
                           Balance at      to Costs         Charged              Deemed          mined to       Balance
                            Beginning        and            to Other            Uncollec-        be Col-        at End
Year Description             of Year       Expenses         Accounts              tible         lectible        of Year
---- -----------           ----------      --------        -----------         -----------      ---------      --------
<S> <C>

1995 Allowance for
          doubtful
          accounts (a)     $430,464         $    -          $ 19,561(b)         $445,535(c)      $    -         $  4,490
                           ========         =======         ========            ========         =======        ========


1996 Allowance for
          doubtful
          accounts (a)     $  4,490         $    -          $ 46,493(b)         $  5,846(c)      $ 7,394        $ 37,743
                           ========         =======         ========            ========         =======        ========


1997 Allowance for
          doubtful
          accounts (a)     $ 37,743         $ 9,007         $ 92,395(b)         $     - (c)      $ 1,253        $137,892
                           ========         =======         ========            ========         =======        ========

</TABLE>


         (a)  Deducted from receivables on the balance sheet.

         (b) Reduction of rental and other income.

         (c) Amounts written off as uncollectible.

                                       F-1

<PAGE>



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

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997


<TABLE>
<CAPTION>

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

    Burger King Restaurant:
      Lawrenceville, Georgia              -         $  482,070         $       -        $  368,416     $     -

    Captain D's Restaurant:
      Belleville, Illinois                -            186,050            383,781               -            -

    Denny's Restaurant:
      New Castle, Indiana                 -            117,394            471,340               -            -
      Port Orange, Florida                -            530,689            506,630           53,247           -

    Golden Corral Family
      Steakhouse Restaurants:
        Livingston, Texas                 -            156,382            429,107               -            -
        Victoria, Texas                   -            504,787            742,216               -            -

    Hardee's Restaurants:
      Belding, Michigan (j)               -            113,884            564,805               -            -
      Connorsville, Indiana               -            279,665                 -           591,137           -
      South Haven, Michigan               -            120,847            599,339          120,363           -

    IHOP:
      Houston, Texas                      -            513,384            671,713               -            -

    Pizza Hut Restaurant:
      Mexia, Texas                        -            237,944            200,501               -            -

    Shoney's Restaurant:
      Tyler, Texas                        -            312,404            533,990               -            -

    Taco Bell Restaurants:
      Bountiful, Utah                     -            330,164                 -           319,511           -
      Centralia, Washington               -            215,302                 -           378,836           -

    Tony Romas:
      Sandy, Utah                         -            595,330                 -                -            -
</TABLE>


<PAGE>










<TABLE>
<CAPTION>

                                                                                                                         Life
                                                                                                                       on Which
                    Gross Amount at Which Carried                                                                  Depreciation
                     at Close of Period (c) (j)                                                                      in Latest
                           Buildings                                  Date                                              Income
                               and                                Accumulated         of Con-          Date          Statement is
           Land            Improvements           Total           Depreciation       struction       Acquired          Computed
        ----------         ------------        -----------        ------------       ---------       --------        ----------

<S> <C>




        $  482,070          $   368,416        $   850,486          $  104,385          1989           04/89            (b)


           186,050              383,781            569,831             112,469          1988           03/89            (b)


           117,394              471,340            588,734              75,139          1989           02/89            (h)
           530,689              559,877          1,090,566             156,593          1989           07/89            (b)



           156,382              429,107            585,489             119,194          1986           09/89            (b)
           504,787              742,216          1,247,003             198,776          1989           12/89            (b)


           113,884              564,805            678,689              88,134          1989           03/89            (i)
           279,665              591,137            870,802             131,643          1989           03/89            (b)
           120,847              719,702            840,549              95,844          1989           03/89            (i)


           513,384              671,713          1,185,097               2,177          1997           11/97            (b)


           237,944              200,501            438,445              58,479          1985           03/89            (b)


           312,404              533,990            846,394             155,747          1988           03/89            (b)


           330,164              319,511            649,675              89,197          1989           05/89            (b)
           215,302              378,836            594,138             102,075          1989           08/89            (b)


           595,330                (f)              595,330                  -           1997           12/97            (d)
</TABLE>

                                       F-2

<PAGE>



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

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 1997

<TABLE>
<CAPTION>


                                                                                                Costs Capitalized
                                                                                                    Subsequent
                                                                 Initial Cost                      To Acquisition
                                                                             Buildings
                                            Encum-                             and             Improve-      Carrying
                                           brances           Land          Improvements         ments         Costs
<S> <C>
    Wendy's Old Fashioned
      Hamburger Restaurants:
        Tampa, Florida                          -            336,218            462,400               -            -
        Endicott, New York                      -            277,965            243,839               -            -
        Ithaca, New York                        -            310,462            208,618               -            -

    Other:
      Lebanon, New Hampshire (g) (j)            -            448,724                 -           696,741           -
                                                          ----------         ----------       ----------     -------

                                                          $6,069,665         $6,018,279       $2,528,251     $     -
                                                          ==========         ==========       ==========     =======

Property of Joint Venture
  in Which the Partnership
  has a 43% Interest and has
  Invested in Under an
  Operating Lease:
    Waffle House Restaurant:
      Cocoa, Florida                            -         $  183,229         $  192,857       $       -      $     -
                                                          ==========         ==========       ==========     =======

Property of Joint  Venture in Which the
  Partnership  has a 49% Interest and has
  Invested in Under an Operating Lease:
    Burger King Restaurant:
      Knoxville, Tennessee                      -         $  283,961         $  430,406       $       -      $     -
                                                          ==========         ==========       ==========     =======

Property in Which the Partnership
  has a 42.23% Interest as
  Tenants-in-Common and has
  Invested in under an Operating
  Lease:
    Boston Market Restaurant:
      Mesa, Arizona                             -         $  440,842         $  650,622       $       -      $     -
                                                          ==========         ==========       ==========     =======

Property in Which the Partnership
  has a 27.78% Interest as
  Tenants-in-Common and has
  Invested in Under an Operating
  Lease:
    Chevy's Fresh Mex Restaurant:
      Vancouver, Washington                     -         $  875,659         $1,389,366       $       -      $     -
                                                          ==========         ==========       ==========     =======
</TABLE>




<PAGE>







<TABLE>
<CAPTION>




                                                                                                                         Life
                                                                                                                       on Which
                   Gross Amount at Which Carried                                                                    Depreciation
                    at Close of Period (c) (j)                                                                        in Latest
                            Buildings                                                  Date                             Income
                               and                                Accumulated         of Con-          Date          Statement is
           Land            Improvements           Total           Depreciation       struction       Acquired          Computed
        ----------         ------------        -----------        ------------       ---------       --------        ----------
<S> <C>


           336,218              462,400            798,618             136,151          1987           02/89            (b)
           277,965              243,839            521,804              65,700          1976           12/89            (b)
           310,462              208,618            519,080              56,211          1977           12/89            (b)


           448,724              696,741          1,145,465             196,444          1989           03/89            (b)
        ----------          -----------        -----------          ----------

        $6,069,665          $ 8,546,530        $14,616,195          $1,944,358
        ==========          ===========        ===========          ==========







        $  183,229          $   192,857        $   376,086          $   51,481          1986           12/89            (b)
        ==========          ===========        ===========          ==========







        $  283,961          $   430,406        $   714,367          $  113,341          1985           01/90            (b)
        ==========          ===========        ===========          ==========





        $  440,842          $   650,622        $ 1,091,464          $    4,021          1997           10/97            (b)
        ==========          ===========        ===========          ==========





        $  875,659          $ 1,389,366        $ 2,265,025          $      127          1994           12/97            (b)
        ==========          ===========        ===========          ==========
</TABLE>



                                       F-3

<PAGE>



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

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 1997


<TABLE>
<CAPTION>

                                                                                         Costs Capitalized
                                                                                               Subsequent
                                                         Initial Cost                       To Acquisition
                                                                        Buildings
                                        Encum-                             and             Improve-      Carrying
                                       brances           Land          Improvements         ments         Costs
<S> <C>
Properties the Partnership
  has Invested in Under
  Direct Financing Leases:
    Captain D's Restaurant:
      Zanesville, Ohio                      -         $   99,651         $  390,518       $       -      $     -

    Denny's Restaurants:
      Dalesville, Indiana                   -            125,562            458,914               -            -
      Huron, Ohio                           -             27,418            456,139               -            -

    Tony Romas:
      Sandy, Utah                           -                 -             911,072               -            -
                                                      ----------         ----------       ----------     -------

                                                      $  252,631         $2,216,643       $       -      $     -
                                                      ==========         ==========       ==========     =======
</TABLE>


<PAGE>









<TABLE>
<CAPTION>


                                                                                                                         Life
                                                                                                                       on Which
                Gross Amount at Which Carried                                                                      Depreciation
                      at Close of Period (c)                                                                          in Latest
                            Buildings                                                  Date                             Income
                               and                                Accumulated         of Con-          Date          Statement is
           Land            Improvements           Total           Depreciation       struction       Acquired          Computed
        ----------         ------------        -----------        ------------       ---------       --------        ----------
<S> <C>





           (f)                    (f)                (f)                 (e)             1988           03/89            (e)


           (f)                    (f)                (f)                 (e)             1974           02/89            (e)
           (f)                    (f)                (f)                 (e)             1971           05/89            (e)


             -                    (f)                (f)                 (d)             1997           12/97            (d)
</TABLE>

                                       F-4

<PAGE>



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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997



(a)      Transactions in real estate and accumulated  depreciation  during 1997,
         1996 and 1995, are summarized as follows:
<TABLE>
<CAPTION>

                                                                                              Accumulated
                                                                              Cost (i)       Depreciation
<S> <C>
                  Properties the Partnership has
                    Invested in Under Operating
                    Leases:

                      Balance, December 31, 1994                          $19,808,218           $1,873,060
                      Dispositions                                         (1,039,130)            (142,342)
                      Depreciation expense                                         -               397,735
                                                                          -----------           ----------

                      Balance, December 31, 1995                           18,769,088            2,128,453
                      Disposition                                          (1,053,110)            (158,845)
                      Depreciation expense                                         -               376,766
                                                                          -----------           ----------

                      Balance, December 31, 1996                           17,715,978            2,346,374
                      Disposition                                          (3,099,783)            (726,447)
                      Depreciation expense (j)                                     -               324,431
                                                                          -----------           ----------

                      Balance, December 31, 1997                          $14,616,195           $1,944,358
                                                                          ===========           ==========


                  Property of Joint Venture in Which the
                    Partnership  has a 43% Interest and
                    has Invested in Under an Operating Lease:

                      Balance, December 31, 1994                          $   376,086           $   32,195
                      Depreciation expense                                         -                 6,429
                                                                          -----------           ----------

                      Balance, December 31, 1995                              376,086               38,624
                      Depreciation expense                                         -                 6,429
                                                                          -----------           ----------

                      Balance, December 31, 1996                              376,086               45,053
                      Depreciation expense                                         -                 6,428
                                                                          -----------           ----------

                      Balance, December 31, 1997                          $   376,086           $   51,481
                                                                          ===========           ==========


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

                      Balance, December 31, 1994                          $   714,367           $   70,300
                      Depreciation expense                                         -                14,347
                                                                          -----------           ----------

                      Balance, December 31, 1995                              714,367               84,647
                      Depreciation expense                                         -                14,347
                                                                          -----------           ----------

                      Balance, December 31, 1996                              714,367               98,994
                      Depreciation expense                                         -                14,347
                                                                          -----------           ----------

                      Balance, December 31, 1997                          $   714,367           $  113,341
                                                                          ===========           ==========
</TABLE>


                                       F-5

<PAGE>



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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997
<TABLE>
<CAPTION>


                                                                                              Accumulated
                                                                              Cost (i)     Depreciation
<S> <C>
                  Property in Which the  Partnership
                    has a 42.23%  Interest  as
                    Tenants-in-Common  and has
                    Invested  in Under an  Operating
                    Lease:

                      Balance, December 31, 1996                          $        -            $       -
                      Acquisitions                                          1,091,464                   -
                      Depreciation expense                                         -                 4,021
                                                                          -----------           ----------

                      Balance, December 31, 1997                          $ 1,091,464           $    4,021
                                                                          ===========           ==========


                  Property in Which the  Partnership
                    has a 27.78%  Interest  as
                    Tenants-in-Common  and has
                    Invested  in Under an  Operating
                    Lease:

                      Balance, December 31, 1996                          $        -            $       -
                      Acquisitions                                          2,265,025                   -
                      Depreciation expense                                         -                   127
                                                                          -----------           ----------

                      Balance, December 31, 1997                          $ 2,265,025           $      127
                                                                          ===========           ==========
</TABLE>

                                       F-6

<PAGE>



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

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

                                December 31, 1997


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

(c)      As of December 31, 1997, the aggregate cost of the Properties  owned by
         the  Partnership   and  its   consolidated   joint  venture,   and  the
         unconsolidated  joint  ventures  for federal  income tax  purposes  was
         $15,626,886 and $5,493,388, respectively. All of the leases are treated
         as operating leases for federal income tax purposes.

(d)      For financial reporting purposes,  the portion of the lease relating to
         the building has been recorded as a direct financing lease. The cost of
         the  building  has  been  included  in the  net  investment  in  direct
         financing leases; therefore, depreciation is not applicable.

(e)      For financial reporting  purposes,  the lease for land and building has
         been  recorded as a direct  financing  lease.  The cost of the land and
         building  has been  included  in net  investment  in  direct  financing
         leases; therefore, depreciation is not applicable.

(f)      For  financial  reporting  purposes,  certain  components  of the lease
         relating  to the land  and  building  have  been  recorded  as a direct
         financing lease. Accordingly, costs related to these components of this
         lease are not shown.

(g)      The restaurant on the Property in Lebanon, New Hampshire, was converted
         from  a  Ponderosa  Steakhouse  restaurant  to  a  local,   independent
         restaurant in 1992.

(h)      Effective  January 1, 1994,  the lease for this  Property  was amended,
         resulting in the  reclassification of the building portion of the lease
         as an operating  lease.  The building was recorded at net book value as
         of January 1, 1994, and depreciated  over its remaining  estimated life
         of approximately 25 years.

(i)      Effective February 1, 1994, the lease for this Property was terminated,
         resulting in the lease's reclassification as an operating lease.

(j)      For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Properties in Belding, Michigan, and Lebanon, New Hampshire was written
         down to net realizable value due to an anticipated impairment in value.
         The Partnership recognized the impairment by recording an allowance for
         loss on land and building in the amount of $151,671 and $99,023 for the
         Properties   in  Belding,   Michigan   and  Lebanon,   New   Hampshire,
         respectively,  at December 31, 1997.  The  impairments  at December 31,
         1997 are based on anticipated sales prices.  The cost of the Properties
         presented on this schedule is the gross amount at which the  Properties
         were carried at December 31, 1997,  excluding the allowance for loss on
         land and buildings.

(k)      During  the year  ended  December  31,  1997,  the  Partnership  and an
         affiliate,  as tenants-in-common,  purchased land and building from CNL
         BB Corp, an affiliate of the General Partners, for an aggregate cost of
         $1,091,464.

                                       F-7

<PAGE>



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

                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

                                December 31, 1997

<TABLE>
<CAPTION>

                                                                                                                        Principal
                                                                                                                         Amount
                                                                                                                        of Loan
                                                                                                         Carrying      Subject to
                                                      Final       Periodic                Face          Amount of      Delinquent
                                      Interest      Maturity      Payment     Prior     Amount of        Mortgage       Principal
Description                             Rate          Date         Terms      Liens     Mortgage           (1)         or Interest
--------------------------            --------    ------------    --------    -----    ----------      -------------   -----------
<S> <C>
Perkins - Myrtle Beach, FL
First Mortgage                         10.25%      July 2000         (2)    $  -        $1,040,000      $  883,417     $        -

Ponderosa - St. Cloud, FL
First Mortgage                         10.75%     October 2011       (3)       -         1,057,299         874,750              -
                                                                            -----       ----------      ----------     ----------

    Total                                                                   $  -        $2,097,299      $1,758,167(4)  $        -
                                                                            =====       ==========      ==========     ==========

</TABLE>


(1)      The tax carrying  value of the notes are  $1,796,264,  which are net of
         deferred gains of $310,442.

(2)      Monthly payments of principal and interest at an annual rate of 10.25%,
         with a balloon payment at maturity of $1,006,004.

(3)      Twelve monthly payments of interest only and 168 equal monthly payments
         of principal and interest at an annual rate of 10.75%.

(4) The changes in the carrying amounts are summarized as follows:
<TABLE>
<CAPTION>


                                                                1997                 1996                 1995
                                                             ----------           ----------           -------
<S> <C>
      Balance at beginning of
         period                                              $1,772,858           $  895,736           $       -

      New mortgage loan                                              -             1,057,299            1,040,000

      Interest earned                                           211,263              126,533               43,974

      Collections of principal
        and interest                                           (227,316)            (123,832)             (46,597)

      Deferred gain on sale
        of land and building                                         -              (183,802)            (141,641)

      Recognition of deferred
        gain on sale of land
        and building                                              1,362                  924                   -
                                                             ----------           ----------           ---------

      Balance at end of period                               $1,758,167           $1,772,858           $  895,736
                                                             ==========           ==========           ==========

</TABLE>

                                       F-8

<PAGE>



                                    EXHIBITS


<PAGE>


                                  EXHIBIT INDEX


Exhibit Number                                                          Page

      3.1         Amended and  Restated  Affidavit  and  Certificate  of Limited
                  Partnership  of CNL Income Fund V, Ltd.  (Included  as Exhibit
                  3.1 to Form  10-K  filed  with  the  Securities  and  Exchange
                  Commission  on March  31,  1994,  and  incorporated  herein by
                  reference.)

      4.1         Amended and  Restated  Affidavit  and  Certificate  of Limited
                  Partnership  of CNL Income Fund V, Ltd.  (Included  as Exhibit
                  3.1 to Form  10-K  filed  with  the  Securities  and  Exchange
                  Commission  on March  31,  1994,  and  incorporated  herein by
                  reference.)

      4.2         Amended and  Restated  Certificate  and  Agreement  of Limited
                  Partnership  of CNL Income Fund V, Ltd.  (Included  as Exhibit
                  4.2 to Form  10-K  filed  with  the  Securities  and  Exchange
                  Commission  on March  31,  1994,  and  incorporated  herein by
                  reference.)

     10.1         Management  Agreement  (Included  as Exhibit 10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on March 31,
                  1994, and incorporated herein by reference.)

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

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

       27         Financial Data Schedule (Filed herewith.)

                                        i