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

                                   FORM 10-K/A
                                 Amendment No. 1


(Mark One)

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

                   For the fiscal year ended December 31, 1997

                                       OR

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

                        For the transition period from to



                         Commission file number 0-19144

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

                   Florida                            59-2922954
       (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>



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


PART I

Item 1.  Business

         CNL Income Fund VI, 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 June 8, 1989, the Partnership
offered  for  sale up to  $35,000,000  in  limited  partnership  interests  (the
"Units") (70,000 Units at $500 per Unit) pursuant to a registration statement on
Form S-11 under the Securities Act of 1933, as amended,  effective  December 16,
1988.  The offering  terminated  on January 22, 1990,  at which date the maximum
offering  proceeds of  $35,000,000  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  selected   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  $30,975,000,  and  were  used  to  acquire  42  Properties,
including  interests  in four  Properties  owned by joint  ventures in which the
Partnership  is a  co-venturer.  During the year ended  December 31,  1994,  the
Partnership  sold its Properties in Batesville and Heber Springs,  Arkansas,  to
the tenant and  reinvested  the net sales proceeds in a Jack in the Box Property
in Dallas,  Texas,  and a Jack in the Box  Property in Yuma,  Arizona,  which is
owned  as  tenants-in-common  with an  affiliate  of the  General  Partners.  In
addition,  during the year ended  December 31, 1995,  the  Partnership  sold its
Property in Little  Canada,  Minnesota,  and  reinvested the majority of the net
sales proceeds in a Denny's Property in Broken Arrow, Oklahoma.  During the year
ended  December 31, 1996,  the  Partnership  reinvested  the remaining net sales
proceeds  from  the sale of the  Property  in  Little  Canada,  Minnesota,  in a
Property  located in Clinton,  North  Carolina,  with  affiliates of the General
Partners as  tenants-in-common.  Also,  during the year ended December 31, 1996,
the  Partnership  sold its  Property  in  Dallas,  Texas.  During the year ended
December 31, 1997,  the  Partnership  reinvested the net sales proceeds from the
sale of the  Property in Dallas,  Texas,  in a  Bertucci's  Property  located in
Marietta, Georgia. In addition, during 1997, the Partnership sold its Properties
in Plattsmouth, Nebraska; Venice,

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<PAGE>




Florida;  Naples,  Florida, and Whitehall,  Michigan,  and the Property in Yuma,
Arizona,  which was held as  tenants-in-common  with an affiliate of the General
Partners,  and  reinvested  a portion  of these net sales  proceeds  in two IHOP
Properties,  one in each of Elgin,  Illinois,  and Manassas,  Virginia, and in a
Property in Vancouver,  Washington,  as tenants-in-common with affiliates of the
General Partners. In addition,  Show Low Joint Venture, a joint venture in which
the Partnership is a co-venturer with an affiliate of the General Partners, sold
its Property in Show Low,  Arizona.  The joint venture  reinvested the net sales
proceeds in a Property in Greensboro,  North Carolina.  As a result of the above
transactions,  as of December 31, 1997, the Partnership owned 41 Properties. The
41 Properties  include  interests in four Properties  owned by joint ventures in
which the Partnership is a co-venturer and two Properties  owned with affiliates
as  tenants-in-common.  During January 1998, the Partnership  reinvested the net
sales  proceeds  from the sales of the  Properties  in  Whitehall,  Michigan and
Plattsmouth,  Nebraska in one Property in Overland Park, Kansas and one Property
in Memphis,  Tennessee,  as  tenants-in-common,  with  affiliates of the General
Partners.  In addition,  in January 1998, the  Partnership  sold its Property in
Deland,  Florida.  In February  1998,  the  Partnership  sold its  Properties in
Liverpool, New York and Melbourne, Florida. 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 five to 20 years (the average  being 17 years),  and expire
between 2003 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 $38,100 to
$185,700. Generally, the leases provide for

                                        2

<PAGE>



percentage  rent based on sales in excess of a specified  amount.  In  addition,
some of the leases  provide that,  commencing in the fourth to sixth lease year,
the  percentage  rent will be an amount  equal to the greater of the  percentage
rent calculated under the lease formula or a specified  percentage (ranging from
one to five percent) of the purchase price or gross sales.

         Generally,  the leases of the Properties provide for two, three or 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 purchase price 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 of the Property in Melbourne,  Florida  vacated the Property
in October 1997. The Partnership sold this Property in February 1998.

         During the year ended December 31, 1997, the Partnership reinvested the
net sales proceeds from the sale of its Property in Dallas,  Texas in 1996, in a
Bertucci's Property located in Marietta,  Georgia. In addition, during 1997, the
Partnership  sold its  Properties in  Plattsmouth,  Nebraska;  Venice,  Florida;
Naples,  Florida,  and Whitehall,  Michigan,  and the Property in Yuma, Arizona,
which was held as  tenants-in-common  with an affiliate of the General Partners,
and reinvested a portion of these net sales proceeds in two IHOP Properties, one
in each of  Elgin,  Illinois,  and  Manassas,  Virginia,  and in a  Property  in
Vancouver,  Washington,  as  tenants-in-common  with  affiliates  of the General
Partners as described below in "Joint Venture  Arrangements." In addition,  Show
Low Joint  Venture,  a joint venture in which the  Partnership  is a co-venturer
with an  affiliate  of the  General  Partners,  sold its  Property  in Show Low,
Arizona.  The joint venture  reinvested  the net sales proceeds in a Property in
Greensboro,  North Carolina. The lease terms for all of these new Properties are
substantially the same as the  Partnership's  other leases as described above in
the first three paragraphs of this section.

         During January 1998, the Partnership  reinvested the net sales proceeds
from the  sales of the  Properties  in  Whitehall,  Michigan,  and  Plattsmouth,
Nebraska,  in one Property in Overland Park, Kansas and one Property in Memphis,
Tennessee,  as  tenants-in-common,  with  affiliates of the General  Partners 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.


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<PAGE>



Major Tenants


         During 1997,  three  lessees of the  Partnership  and its  consolidated
joint venture,  Golden Corral Corporation,  Restaurant Management Services, Inc.
and  Mid-America  Corporation,  each  contributed  more than ten  percent of the
Partnership's   total  rental   income   (including   rental   income  from  the
Partnership's   consolidated  joint  venture  in  which  the  Partnership  is  a
co-venturer  and the  Partnership's  share of the rental  income  from the three
Properties owned by unconsolidated  joint ventures and two Properties owned with
affiliates  as  tenants-in-common).  As of  December  31,  1997,  Golden  Corral
Corporation was the lessee under leases relating to five restaurants, Restaurant
Management  Services,  Inc.  was the  lessee  under  leases  relating  to  seven
restaurants and Mid-America  Corporation was the lessee under leases relating to
four  restaurants.  It is anticipated that, based on the minimum rental payments
required by the leases,  these three  lessees each will  continue to  contribute
more than ten  percent  of the  Partnership's  total  rental  income in 1998 and
subsequent  years.  In addition,  four Restaurant  Chains,  Golden Corral Family
Steakhouse  Restaurants  ("Golden Corral"),  Hardee's,  Burger King and Denny's,
each  accounted  for more than ten  percent of the  Partnership's  total  rental
income in 1997 (including the Partnership's  consolidated  joint venture and the
Partnership's  share of the rental  income  from the three  Properties  owned by
unconsolidated  joint ventures in which the Partnership is a co-venturer and two
Properties owned with affiliates as tenants-in-common).  In subsequent years, it
is anticipated  that these four Restaurant  Chains each will continue to account
for more than ten percent of the Partnership's  total rental income to which the
Partnership  is  entitled  under the terms of the  leases.  Any failure of these
lessees or Restaurant Chains could materially  affect the Partnership's  income.
No  single  tenant  or group of  affiliated  tenants  lease  Properties  with an
aggregate  carrying  value in excess of 20  percent  of the total  assets of the
Partnership.


Joint Venture Arrangements and Tenancy in Common Arrangements


         The  Partnership  has entered into a joint  venture  arrangement,  Caro
Joint Venture, with an unaffiliated entity to purchase and hold one Property. In
addition,  the  Partnership  has  entered  into  three  separate  joint  venture
arrangements:  Auburn Joint  Venture with CNL Income Fund IV, Ltd., an affiliate
of the General  Partners,  to  purchase  and hold one  Property;  Show Low Joint
Venture with CNL Income Fund II, Ltd., an affiliate of the General Partners,  to
purchase and hold one Property; and Asheville Joint Venture with CNL Income Fund
VIII,  Ltd.,an  affiliate  of the General  Partners,  to  purchase  and hold one
Property.  Each of the affiliates is a limited partnership organized pursuant to
the laws of the State of Florida. The joint venture arrangements provide for the
Partnership  and its joint  venture  partners to share in all costs and benefits
associated with the joint venture in accordance with their respective percentage
interests in the joint venture.  The  Partnership  has a 66 percent  interest in
Caro Joint  Venture,  a 3.9%  interest  in Auburn  Joint  Venture,  a 36 percent
interest in


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<PAGE>



Show Low Joint Venture,  and a 14 percent  interest in Asheville  Joint Venture.
The Partnership and its joint venture  partners are jointly and severally liable
for all debts, obligations and other liabilities of the joint venture.

         Each  joint  venture  has an initial  term of 20 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 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 Caro Joint Venture and shares
management  control equally with  affiliates of the General  Partners for Auburn
Joint Venture,  Show Low Joint Venture and Asheville  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 Auburn Joint Venture,  Show Low Joint
Venture,  Caro Joint Venture and Asheville  Joint Venture is  distributed  3.9%,
36.0%,  66.0% and 14.0%,  respectively,  to the  Partnership  and the balance is
distributed to each of the other joint venture  partners in accordance  with its
respective  percentage interest in the joint venture. Any liquidation  proceeds,
after  paying  joint  venture  debts and  liabilities  and funding  reserves for
contingent liabilities,  will be distributed first to the joint venture partners
with positive capital account balances in proportion to such balances until such
balances  equal  zero,  and  thereafter  in  proportion  to each  joint  venture
partner's percentage interest in the joint venture.


         In addition  to the above joint  venture  agreements,  the  Partnership
entered   into  an   agreement   to  hold  a  Jack  in  the  Box   Property   as
tenants-in-common  with CNL Income Fund VII,  Ltd.,  an affiliate of the General
Partners.  The agreement provided for the Partnership and the affiliate to share
in the profits and losses of the  Property in  proportion  to each co-  tenant's
percentage  interest.  As of December 31, 1996, the  Partnership  owned a 51.67%
interest in this Property. In October 1997, the Partnership and the affiliate as
tenants-in-common,  sold  the Jack in the Box  Property  in  Yuma,  Arizona.  In
December 1997, the  Partnership  entered into an agreement to hold a Property in
Vancouver,  Washington,  as  tenants-in-common  with CNL Income Fund,  Ltd., CNL
Income Fund II,  Ltd.,  and CNL Income Fund V, Ltd.,  affiliates  of the General
Partners and in conjunction  therewith,  reinvested its portion of the net sales
proceeds received from the sale of the Property in Yuma, Arizona.  The agreement
provides  for the  Partnership  and the  affiliate  to share in the  profits and
losses of the Property in proportion to each co-venturer's  percentage interest.
The Partnership owns a 23.04%


                                        5

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interest in the Property in Vancouver, Washington.


         In addition, in January 1996, the Partnership entered into an agreement
to hold a Golden Corral Property as  tenants-in-common  with CNL Income Fund IV,
Ltd., CNL Income Fund X, Ltd., and CNL Income Fund XV, Ltd., each of which is an
affiliate of the General  Partners.  The agreement  provides for the Partnership
and the  affiliates  to share in the  profits  and  losses  of the  Property  in
proportion to each  co-venturer's  percentage  interest.  The Partnership owns a
17.93% interest in this Property.

         During January 1998, the Partnership  entered into separate  agreements
to hold an IHOP Property in Overland Park, Kansas , as  tenants-in-common,  with
CNL Income Fund II,  Ltd.,  and CNL Income  Fund III,  Ltd.,  affiliates  of the
General   Partners,   and  to  hold  a  Property  in  Memphis,   Tennessee,   as
tenants-in-common,  with CNL Income Fund II, Ltd. and CNL Income Fund XVI, Ltd.,
affiliates of the General Partners.  The agreements  provide for the Partnership
and the  affiliates  to share in the profits and losses of the  Property and net
cash flow from the  Properties,  in proportion  to each co- tenant's  percentage
interest.  The Partnership owns a 34.74% and 46.2% interest in the Properties in
Overland Park, Kansas,and Memphis, Tennessee, respectively.


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

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

Certain Management Services

         CNL 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.

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an annual fee of one percent of the sum of gross rental revenues from Properties
wholly owned by the Partnership plus the Partnership's  allocable share of gross
revenues of joint  ventures in which the  Partnership  is a co-venturer  and the
Property  held as  tenants-in-common  with an  affiliate,  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").

         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.


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, 41 Properties.  Of the
41 Properties,  35 are owned by the  Partnership  in fee simple,  four are owned
through joint venture arrangements and two are owned through a tenancy in common
arrangement.  See  Item 1.  Business  - Joint  Venture  and  Tenancy  in  Common
Arrangements.  The Partnership is not permitted to encumber its Properties under
the terms of its  partnership  agreement.  Reference  is made to the Schedule of
Real Estate and Accumulated Depreciation filed with this report for a listing of
the  Properties  and their  respective  costs,  including  acquisition  fees and
certain acquisition  expenses.  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.



                                        7

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Description of Properties

         Land. The Partnership's  Property sites range from approximately 11,500
to 88,200  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.



                                        8

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         The following table lists the Properties owned by the Partnership as of
December 31, 1997 by state. More detailed information  regarding the location of
the  Properties  is  contained  in the  Schedule of Real Estate and  Accumulated
Depreciation filed with this report.

         State                                Number of Properties

         Florida                                      11
         Georgia                                       1
         Illinois                                      1
         Indiana                                       1
         Massachusetts                                 1
         Michigan                                      2
         North Carolina                                3
         Nebraska                                      1
         New Mexico                                    1
         New York                                      1
         Ohio                                          1
         Oklahoma                                      2
         Pennsylvania                                  1
         Tennessee                                     7
         Texas                                         3
         Virginia                                      2
         Washington                                    1
         Wyoming                                       1
                                                   ------
         TOTAL PROPERTIES:                            41
                                                   ======

         Buildings.  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
1,200 to 10,700 square feet.  All buildings on Properties are  freestanding  and
surrounded by paved  parking  areas.  Buildings  are suitable for  conversion to
various uses, although modifications may be required prior to use for other than
restaurant operations. As of December 31, 1997, the Partnership had no plans for
renovation of the Properties. Depreciation expense is computed for buildings and
improvements  using the straight line method using depreciable lives of 31.5 and
39 years for federal income tax purposes. As of December 31, 1997, the aggregate
cost basis of the Properties owned by the Partnership and its consolidated joint
venture,  and the  unconsolidated  joint  ventures  (including  Properties  held
through  tenancy in common  arrangements)  for federal  income tax  purposes was
$28,598,561 and $3,023,805, respectively.

         Generally, a lessee is required, under the terms of its

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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.



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

         Restaurant Chain               Number of Properties

         Arby's                                   1
         Bertucci's                               1
         Burger King                              5
         Captain D's                              1
         Chevy's Fresh Mex                        1
         Church's                                 2
         Darryl's                                 1
         Denny's                                  3
         Golden Corral                            5
         Hardee's                                 3
         IHOP                                     2
         Jack in the Box                          1
         KFC                                      3
         Perkins                                  1
         Popeyes                                  4
         Shoney's                                 1
         Taco Bell                                1
         Waffle House                             3
         Wendy's                                  1
         Other                                    1
                                             ------
         TOTAL PROPERTIES                        41
                                             ======

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

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

         Leases.  The Partnership leases the Properties to operators of selected
national and regional fast-food restaurant chains. The leases are generally on a
long-term  "triple  net"  basis,  meaning  that the  tenant is  responsible  for
repairs, maintenance, property taxes, utilities and insurance.

         The terms of the leases of the Properties owned by the
Partnership are described in Item 1. Business -Leases.

         At December 31, 1997,  1996,  1995, 1994, and 1993, the Properties were
95%, 98%,100%,100%, and 100% occupied, respectively. The following is a schedule
of the average annual rent for each of the five years ended December 31:
<TABLE>
<CAPTION>

                                                        For the Year Ended December 31:
                                   1997            1996              1995              1994            1993
                            -------------       -----------      ------------      -----------     -----------
<S> <C>

    Rental Revenues (1)        $3,139,283        $3,568,754       $3,431,074        $3,465,440      $3,641,644
    Properties (2)                     39                42               42                42              42
    Average Rent per Unit         $80,494           $84,970          $81,692           $82,510         $86,706
</TABLE>

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

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

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

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

             1998                              1                     54,000                        1.83%
             1999                              -                          -                            -
             2000                              -                          -                            -
             2001                              -                          -                            -
             2002                              -                          -                            -
             2003                              -                          -                            -
             2004                              4                    624,648                       21.17%
             2005                              5                    533,411                       18.08%
             2006                              1                    111,414                        3.78%
             2007                              -                          -                            -
             Thereafter                       28                  1,627,599                       55.14%
                                         -------              -------------                -------------
             Totals                           39                  2,951,072                      100.00%
                                         =======              =============                =============
</TABLE>

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

         Restaurant  Management  Services leases five Popeyes  restaurants,  one
Church's Fried Chicken restaurant and one other restaurant (formerly operated as
a Captain  D's).  The initial term of each lease is 20 years  (expiring  between
2009 and 2010) and the average minimum base annual rent is approximately $53,000
(ranging from approximately $46,000 to $61,900).


                                                        12

<PAGE>



         Golden Corral  Corporation leases five Golden Corral  restaurants.  The
initial term of each lease is 15 years (expiring  between 2004 and 2011) and the
average  minimum  base  annual  rent is  approximately  $152,900  (ranging  from
approximately $88,000 to $185,700).

         Mid-America Corporation leases four Burger King restaurants.
 The initial term of each lease is between 14 and 16 years
(expiring  between  2004 and 2006) and the average  minimum  base annual rent is
approximately $105,000 (ranging from approximately $102,700 to $105,800).

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


 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.


                                                      PART II


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 lessees  generally  responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 1997, the  Partnership  owned 41 Properties,  either  directly or indirectly
through joint venture or tenancy in common arrangements.


 Capital Resources


         The  Partnership's  primary  source  of  capital  for the  years  ended
December 31, 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

                                                        13

<PAGE>



expenses).  Cash from operations was  $3,156,041,  $3,310,762 and $3,222,430 for
the years ended December 31, 1997, 1996 and 1995, respectively.  The decrease in
cash from  operations  during 1997, as compared to 1996, and the increase during
1996,  as  compared  to 1995,  are  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.

         In June 1995,  the  Partnership  sold its  Property  in Little  Canada,
Minnesota,  for $904,000 and received net sales proceeds of $899,503,  resulting
in a gain of $103,283  for  financial  reporting  purposes.  This  Property  was
originally  acquired  by the  Partnership  in  October  1989  and  had a cost of
approximately $823,900, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the Property for approximately $75,600
in excess of its  original  purchase  price.  In August  1995,  the  Partnership
reinvested  $724,612 in a Property in Broken Arrow,  Oklahoma.  In addition,  in
August 1995, the Partnership  sold a small parcel of vacant land adjacent to its
Property in Orlando,  Florida,  for  $7,500,  resulting  in a loss of $7,370 for
financial reporting purposes. In connection therewith,  the Partnership accepted
a  promissory  note for $6,000.  The  promissory  note was  collateralized  by a
mortgage on the Property,  bore interest at a rate of nine percent per annum and
was  scheduled  to be  collected  in six monthly  installments  of $1,026,  with
collections  commencing September 1995. Receivables include $3,056 from the note
at December 31, 1995. The receivable was collected in full during 1996.


         In January 1996,  the  Partnership  reinvested  the remaining net sales
proceeds from the 1995 sale of the Property in Little  Canada,  Minnesota,  in a
Golden Corral Property  located in Clinton,  North Carolina,  with affiliates of
the  General  Partners  as  tenants-in-common.   In  connection  therewith,  the
Partnership and its affiliates  entered into an agreement whereby each co-tenant
will  share in the  profits  and losses of the  Property  in  proportion  to its
applicable percentage interest. As of December 31, 1997, the Partnership owned a
17.93% interest in this Property.


         In March 1996,  the  Partnership  entered  into an  agreement  with the
tenant of the Properties in Chester,  Pennsylvania,  and Orlando,  Florida,  for
payment of certain rental payment  deferrals the  Partnership had granted to the
tenant through March 31, 1996.  Under the agreement,  the Partnership  agreed to
abate approximately $42,700

                                                        14

<PAGE>



of  the  rental  payment   deferral   amounts.   The  tenant  made  payments  of
approximately  $18,600 in each of April 1996 and March 1997 in  accordance  with
the terms of the agreement,  and has agreed to pay the Partnership the remaining
balance  due of  approximately  $90,900  in six  remaining  annual  installments
through 2002.

         In December 1996, the Partnership  sold its Property in Dallas,  Texas,
to an unrelated  third party for  $1,016,000  and received net sales proceeds of
$982,980.  This Property was originally acquired by the Partnership in June 1994
and  had a cost  of  approximately  $980,900,  excluding  acquisition  fees  and
miscellaneous acquisition expenses; therefore, the Partnership sold the Property
for  approximately  $2,100 in excess of its original  purchase price. Due to the
fact  that the  Partnership  had  recognized  accrued  rental  income  since the
inception of the lease relating to the  straight-lining of future scheduled rent
increases in accordance  with  generally  accepted  accounting  principles,  the
Partnership  wrote off the  cumulative  balance of such accrued rental income at
the time of the sale of this Property,  resulting in a loss on land and building
of  $1,706  for  financial  reporting  purposes.   Due  to  the  fact  that  the
straight-lining  of  future  rent  increases  over  the  term of the  lease is a
non-cash  accounting  adjustment,  the  write-off of these amounts is a loss for
financial  statement  purposes  only.  As of December  31,  1996,  the net sales
proceeds of  $977,017,  plus  accrued  interest  of $739,  were being held in an
interest bearing escrow account pending the release of funds by the escrow agent
to acquire an additional Property. In February 1997, the Partnership  reinvested
the net sales proceeds,  along with additional  funds, in a Bertucci's  Property
located in Marietta,  Georgia, for a total cost of approximately $1,112,600. The
General Partners believe that the transaction, or a portion thereof, relating to
the sale of the Property in Dallas,  Texas and the reinvestment of the net sales
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 January 1997, Show Low Joint Venture,  in which the Partnership owns
a 36 percent interest,  sold the Property to the tenant for $970,000,  resulting
in a gain to the joint venture of approximately $360,000 for financial reporting
purposes.  The Property was originally  contributed to Show Low Joint Venture in
July 1990 and had a total cost of approximately $663,500,  excluding acquisition
fees and miscellaneous  acquisition expenses;  therefore, the joint venture sold
the  Property  for  approximately  $306,500 in excess of its  original  purchase
price. In June 1997, Show Low Joint Venture reinvested $782,413 of the net sales
proceeds in a Property in Greensboro,  North Carolina.  As of December 31, 1997,
the  Partnership  had received  approximately  $70,000  representing a return of
capital for its pro-rata share of the uninvested net sales proceeds.

         In July 1997, the Partnership sold the Property in Whitehall, Michigan,
to an unrelated third party, for $665,000

                                                        15

<PAGE>



and received net sales proceeds (net of $2,981 which  represents  amounts due to
the former tenant for prorated rent) of $626,907, resulting in a loss of $79,777
for financial reporting purposes, as described below in "Results of Operations."
The net sales proceeds were  reinvested in a Property in Overland Park,  Kansas,
with affiliates of the General Partners as tenants-in-common, in January 1998.

         In addition, in July 1997, the Partnership sold its Property in Naples,
Florida,  to an unrelated  third party,  for  $1,530,000  and received net sales
proceeds  (net of $9,945 which  represents  amounts due to the former tenant for
prorated  rent) of  $1,477,780,  resulting in a gain of $186,550  for  financial
reporting purposes.  This Property was originally acquired by the Partnership in
December 1989 and had a cost of approximately $1,083,900,  excluding acquisition
fees and miscellaneous acquisition expenses; therefore, the Partnership sold the
Property for approximately $403,800 in excess of its original purchase price. In
December  1997,  the  Partnership  reinvested  the net sales proceeds in an IHOP
Property in Elgin, Illinois, for a total cost of approximately  $1,484,100.  The
General Partners believe that the transaction, or a portion thereof, relating to
the sale of the Property in Naples,  Florida,  and the  reinvestment  of the net
sales  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 July  1997,  the  Partnership  sold its  Property  in
Plattsmouth,  Nebraska,  to the tenant,  for  $700,000  and  received  net sales
proceeds  (net of escrow  fees of $1,750) of  $697,650,  resulting  in a gain of
$156,401 for financial reporting purposes. This Property was originally acquired
by the  Partnership  in January 1990 and had a cost of  approximately  $561,000,
excluding acquisition fees and miscellaneous  acquisition  expenses;  therefore,
the Partnership  sold the Property for  approximately  $138,400 in excess of its
original  purchase price.  In January 1998, the  Partnership  reinvested the net
sales proceeds in an IHOP Property in Memphis, Tennessee, with affiliates of the
General  Partners as  tenants-in-common.  The General  Partners believe that the
transaction,  or a portion  thereof,  relating  to the sale of the  Property  in
Plattsmouth,  Nebraska,  and the  reinvestment  of the net sales  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 June 1997, the  Partnership  terminated the lease with the tenant of
the Property in Greensburg,  Indiana. In connection  therewith,  the Partnership
accepted a  promissory  note from this  former  tenant for  $13,077  for amounts
relating to past due real estate taxes the  Partnership had incurred as a result
of the former tenant's financial difficulties. The promissory note,

                                                        16

<PAGE>



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 $13,631 of such amounts,  including accrued interest of $554. In
July  1997,  the  Partnership  entered  into a new  lease  for the  Property  in
Greensburg,  Indiana,  with a new tenant to operate  the  Property  as an Arby's
restaurant.  In connection therewith, the Partnership agreed to fund $125,000 in
renovation  costs. The renovations were completed in October 1997, at which time
rent commenced.

         In  September  1997,  the  Partnership  sold its  Property  in  Venice,
Florida,  to an unrelated  third party,  for  $1,245,000  and received net sales
proceeds  (net of $5,048 which  represents  amounts due to the former tenant for
prorated  rent) of  $1,201,648,  resulting in a gain of $283,853  for  financial
reporting purposes.  This Property was originally acquired by the Partnership in
August 1989 and had a cost of approximately  $1,032,400,  excluding  acquisition
fees and miscellaneous acquisition expenses; therefore, the Partnership sold the
Property for approximately $174,300 in excess of its original purchase price. In
December  1997,  the  Partnership  reinvested  the net sales proceeds in an IHOP
Property in Manassas,  Virginia,  for a total cost of approximately  $1,126,800.
The  General  Partners  believe  that the  transaction,  or a  portion  thereof,
relating to the sale of the Property in Venice, Florida, and the reinvestment of
the net sales  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   October   1997,   the   Partnership    and   an   affiliate,    as
tenants-in-common,  sold the Property in Yuma, Arizona, in which the Partnership
owned a 51.67% interest,  for a total sales price of $1,010,000 and received net
sales proceeds of $982,025,  resulting in a gain, to the  tenancy-in-common,  of
approximately  $128,400  for  financial  reporting  purposes.  The  Property was
originally acquired in July 1994 and had a total cost of approximately $861,700,
excluding acquisition fees and miscellaneous  acquisition  expenses;  therefore,
the  Property  was sold for  approximately  $120,300  in excess of its  original
purchase price. The Partnership received approximately $455,000,  representing a
return of capital for its pro-rata share of the net sales proceeds.  In December
1997, the  Partnership  reinvested  the amounts  received as a return of capital
from the  sale of the  Yuma,  Arizona  Property,  in a  Property  in  Vancouver,
Washington,  as tenants-in-common  with affiliates of the General Partners.  The
General Partners believe that the transaction, or a portion thereof, relating to
the sale of the Property in Yuma,  Arizona and the reinvestment of the net sales
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.

                                                        17

<PAGE>




         In January 1998, the Partnership sold its Property in Deland,  Florida,
to the tenant,  for  $1,250,000  and received net sales  proceeds of $1,234,617,
resulting in a gain of approximately  $345,100 for financial reporting purposes.
The Partnership intends to reinvest the sales proceeds in an additional Property
during 1998. The General  Partners  believe that the  transaction,  or a portion
thereof,  relating  to the sale of the  Property  in  Deland,  Florida,  and the
reinvestment  of the  proceeds  will be  structured  to qualify  as a  like-kind
exchange transaction for federal income tax purposes.

         In February  1998,  the  Partnership  sold its  Property in  Melbourne,
Florida, for $590,000 and received net sales proceeds of $542,477,  resulting in
a loss of $158,239  for  financial  reporting  purposes,  which the  Partnership
recorded at December 31, 1997, as described below in "Results of Operations." In
addition, in February 1998, the Partnership sold its Property in Liverpool,  New
York,  for $157,500 and received net sales proceeds of  approximately  $150,700,
resulting  in a loss of $181,970 for  financial  reporting  purposes,  which the
Partnership  recorded at December  31, 1997,  as described  below in "Results of
Operations." The Partnership intends to reinvest the net sales proceeds from the
sale of both Properties in additional Properties.

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


         Currently,  rental  income from the  Partnership's  Properties  and net
sales proceeds from the sale of Properties  pending  reinvestment  in additional
Properties,  are invested in money market accounts or other  short-term,  highly
liquid  investments such as demand deposit accounts at commercial banks, CDs and
money  market  accounts  with  less than a 30-day  maturity  date,  pending  the
Partnership's  use  of  such  funds  to  pay  Partnership  expenses  or to  make
distributions  to the  partners.  At December  31,  1997,  the  Partnership  had
$1,614,759 invested in such short-term  investments as compared to $1,127,930 at
December 31, 1996.  The increase in cash and cash  equivalents  during 1997,  is
primarily due to the receipt of $626,907 in net sales  proceeds form the sale of
the Property in  Whitehall,  Michigan in July 1997.  This  increase is partially
offset  by a  decrease  in cash  and  cash  equivalents  due to the  Partnership
investing  approximately  $134,900 in a Bertucci's Property, as described above.
As of December 31, 1997,  the average  interest rate earned on the rental income
deposited in demand deposit accounts at commercial banks was approximately three
percent annually. The funds remaining at December 31, 1997, after payment of


                                                        18

<PAGE>



distributions  and other  liabilities,  will be used to invest in an  additional
Property as described  above and to meet the  Partnership's  working capital and
other needs.

Short-Term Liquidity

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

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



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

         Due to low  operating  expenses  and  ongoing  cash flow,  the  General
Partners do not believe that  working  capital  reserves  are  necessary at this
time. In addition,  because the 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.

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


         The Partnership  generally  distributes cash from operations  remaining
after the payment of the operating  expenses of the  Partnership,  to the extent
that  the  General  Partners   determine  that  such  funds  are  available  for
distribution.  Based on cash from  operations,  and cumulative  excess operating
reserves  for the  year  ended  December  31,  1996,  the  Partnership  declared
distributions to the Limited  Partners of $3,150,000,  $3,220,000 and $3,150,000
for the  years  ended  December  31,  1997,  1996 and 1995,  respectively.  This
represents  distributions  of $45,  $46 and $45 per  Unit  for the  years  ended
December 31, 1997, 1996 and 1995,  respectively.  No amounts  distributed to the
Limited  Partners  for the years ended  December 31,  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.


         During 1997,  1996 and 1995,  affiliates of the General  Partners,
incurred  on  behalf  of  the   Partnership   $82,503,   $96,112  and   $95,898,
respectively,  for certain operating expenses. As of December 31, 1997 and 1996,
the Partnership  owed $32,019 and $2,633,  respectively,  to affiliates for such
amounts and accounting and administrative services. As of February 28, 1998, the
Partnership had reimbursed the affiliates all such amounts. Other liabilities of
the Partnership,  including  distributions  payable,  increased to $1,022,326 at
December 31,  1997,  from  $917,704 at December 31, 1996.  The increase in other
liabilities is partially  attributable  to the Partnership  accruing  renovation
costs for the Property in Greensburg,  Indiana, in connection with the new lease
entered into in July 1997,  as  described  above.  In addition,  the increase in
other  liabilities  for 1997 was due to an increase in accrued and escrowed real
estate taxes payable due to the Partnership  accruing  current real estate taxes
relating to its Property in Melbourne,  Florida, due to the fact that the tenant
vacated the Property in October 1997. Other liabilities also increased due to an
increase  in  rents  paid in  advance.  The  increase  in other  liabilities  is
partially  offset by a  decrease  in  distributions  payable  as a result of the
Partnership  accruing a special  distribution payable to the Limited Partners of
$70,000  at  December  31,  1996,  which was paid in  January  1997 from  excess
operating  reserves.  The General  Partners  believe  that the  Partnership  has
sufficient cash on hand to meet its current working capital needs.


Long-Term Liquidity

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


Results of Operations

         During  1995,  the  Partnership   owned  and  leased  38  wholly  owned
Properties (including one Property in Little Canada,  Minnesota,  which was sold
in June 1995),  during 1996,  the  Partnership  owned and leased 37 wholly owned
Properties  (including one Property in Dallas, Texas, which was sold in December
1996),  and  during  1997,  the  Partnership  owned and  leased 39 wholly  owned
Properties  (including  three  Properties,  one  in  each  of  Naples,  Florida;
Plattsmouth,  Nebraska and Whitehall, Michigan, which were sold in July 1997 and
one Property in Venice, Florida, which was sold in September 1997). In addition,
during 1995 and 1996, the  Partnership  was a co-venturer in four separate joint
ventures  that each  owned  and  leased  one  Property,  and  during  1997,  the
Partnership  was a co-venturer  in four separate  joint  ventures that owned and
leased a total of five Properties  (including one Property in Show Low, Arizona,
which was sold in January,  1997). During 1995, the Partnership owned and leased
one  Property  with  an  affiliate  as   tenants-in-common,   during  1996,  the
Partnership owned and leased two properties with affiliates as tenants-in-common
and  during  1997,  the  Partnership  owned  and  leased  four  Properties  with
affiliates as tenants-in-

                                                        20

<PAGE>



common  (including  one  Property in Yuma,  Arizona,  which was sold in October,
1997).  As of December 31, 1997, the  Partnership  owned,  either  directly,  as
tenants-in-common  with affiliates,  or through joint venture  arrangements,  41
Properties which are subject to long-term,  triple-net leases. The leases of the
Properties  provide for minimum base annual rental  amounts  (payable in monthly
installments)  ranging from approximately  $38,100 to $185,700.  Generally,  the
leases  provide  for  percentage  rent  based on sales in excess of a  specified
amount. In addition,  some of the leases provide that,  commencing in the fourth
to sixth lease year, the percentage  rent will be an amount equal to the greater
of the  percentage  rent  calculated  under the  lease  formula  or a  specified
percentage  (ranging  from one to five  percent) of the purchase  price or gross
sales. 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,  Caro Joint  Venture,  earned
$2,897,402,  $3,333,665  and  $3,207,860,  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 $159,400 during
1997,  as a result of the sales  during  1997 of the  Properties  in  Whitehall,
Michigan;  Naples,  Florida;  Plattsmouth,  Nebraska  and Venice,  Florida.  The
decrease in rental and earned  income  during  1997,  as  compared to 1996,  was
partially  attributable  to, and the increase in rental and earned income during
1996, as compared to 1995,  was partially  offset by, a decrease of $103,100 and
$6,800, respectively,  of rental and earned income from the sale of the Property
in Dallas, Texas in December 1996. The decrease in rental income during 1997 was
partially  offset  by  an  increase  of   approximately   $109,400  due  to  the
reinvestment  of the net sales  proceeds  from the 1996 sale of the  Property in
Dallas,  Texas,  in a Property  in  Marietta,  Georgia,  in February  1997.  The
decrease  in rental and earned  income  during 1997 was  partially  offset by an
increase  of  approximately  $1,600 in rental and earned  income due to the fact
that the  Partnership  reinvested  the net sales  proceeds from the sales of the
Properties  in Naples  and  Venice,  Florida  in two IHOP  Properties  in Elgin,
Illinois and Manassas, Virginia in December 1997.

         The decrease in rental income during 1997, as compared to 1996, is also
attributable to the fact that during 1997 the Partnership's  consolidated  joint
venture established an allowance for doubtful accounts for rental amounts unpaid
by the tenant of the Property in Caro, Michigan totalling  approximately $84,500
due to financial difficulties the tenant is experiencing.  No such allowance was
established  during 1996.  The  Partnership's  consolidated  joint  venture will
continue  to pursue  collection  of past due  rental  amounts  relating  to this
Property and will recognize such amounts as income if collected.

         In addition,  the decrease in rental and earned  income during 1997, as
compared to 1996, is partially attributable to the

                                                        21

<PAGE>




Partnership  increasing  its  allowance  for  doubtful  accounts  during 1997 by
approximately  $40,500  for rental  amounts  relating to the  Hardee's  Property
located in Greensburg,  Indiana,  due to financial  difficulties  the tenant was
experiencing.  Rental and earned income also decreased by approximately  $43,700
during 1997 due to the fact that the  Partnership  terminated the lease with the
former tenant of the Property in Greensburg, Indiana, in June 1997, as described
above in "Capital  Resources."  The General  Partners have agreed that they will
cease  collection  efforts on past due rental  amounts once the former tenant of
this Property pays all amounts due under the  promissory  note for past due real
estate taxes described above in "Capital  Resources." The decrease in rental and
earned  income was  slightly  offset by an increase of $14,200 in rental  income
from the new tenant of this Property who began  operating the Property  after it
was renovated into an Arby's Property.

         In addition,  rental and earned  income  decreased  during  1997,  as a
result of the Partnership establishing an allowance for doubtful accounts during
1997  totalling  approximately  $107,100  for  rental  amounts  relating  to the
Property located in Melbourne,  Florida, due to the fact that the tenant vacated
the Property in October 1997. The Partnership will continue to pursue collection
of past due rental  amounts  relating to this Property and will  recognize  such
amounts as income if collected.  The Partnership  sold this Property in February
1998, as described above in " Capital Resources."

         In  addition,  rental  and earned  income  decreased  by  approximately
$35,300  during 1997, as a result of the fact that in December  1996, the tenant
ceased  operations  and  vacated  the  Property  in  Liverpool,  New  York.  The
Partnership  sold this Property in February 1998, as described above in "Capital
Resources."

         The decrease in rental and earned  income  during 1997,  as compared to
1996,  was offset by, and the increase in rental and earned income for 1996, was
partially  attributable to, the fact that the Partnership collected and recorded
as income  approximately  $18,600 and $5,300,  respectively,  in rental  payment
deferrals  for  the  two  Properties  leased  by the  same  tenant  in  Chester,
Pennsylvania,  and Orlando, Florida. Previously, the Partnership had established
an  allowance  for  doubtful  accounts  for these  amounts.  These  amounts were
collected in accordance with the agreement  entered into in March 1996, with the
tenant to collect the remaining  balance of the rental payment  deferral amounts
as  discussed  above in "Capital  Resources."  The increase in rental and earned
income during 1996, as compared to 1995, was partially  attributable to the fact
that during the year ended  December 31, 1995,  the  Partnership  established an
allowance for doubtful  accounts of  approximately  $52,900,  for rental payment
deferral  amounts  relating to these Properties  deemed  uncollectible.  No such
allowance was established during the year ended December 31, 1996 or 1997.


          Rental and earned income increased during 1996, as compared
to 1995, by approximately $43,700 due to the acquisition of a

                                                        22

<PAGE>



Property  located in Broken Arrow,  Oklahoma,  in August 1995 with the net sales
proceeds  from the sale of the  Property in Little  Canada,  Minnesota,  in June
1995.  The  increase  in rental  income was  partially  offset by a decrease  of
approximately $6,800 during the year ended December 31, 1996, due to the sale of
the Property in Little Canada, Minnesota, in June 1995.

         In addition,  the increase in rental income during 1996, as compared to
1995, was partially  attributable to an increase of approximately $35,300 during
1996,  due to the fact that in April 1995,  the  Partnership  entered into a new
lease for the Property in Hermitage, Tennessee, for which rent commenced in June
1995.

         For the years ended December 31, 1997,  1996 and 1995, the  Partnership
also earned $147,434, $110,073 and $115,946,  respectively, in contingent rental
income.  The  increase in  contingent  rental  income  during 1997 is  primarily
attributable  to increases in gross sales  relating to certain  Properties.  The
decrease in contingent rental income for 1996, as compared to 1995, is primarily
attributable to the decreases in gross sales relating to certain Properties.


         In addition,  for the years ended December 31, 1997, 1996 and 1995, the
Partnership earned $280,331, $97,381 and $83,483, respectively,  attributable to
net income earned by joint  ventures in which the  Partnership is a co-venturer.
The  increase in net income  earned by joint  ventures  in 1997,  as compared to
1996, is primarily attributable to the fact that in January 1997, Show Low Joint
Venture, in which the Partnership owns a 36 percent interest,  recognized a gain
of approximately  $360,000 for financial reporting purposes,  as a result of the
sale of its Property in January 1997, as described above in "Capital Resources."
Show Low Joint Venture  reinvested  the majority of the net sales  proceeds in a
replacement Property in June 1997. In addition, in October 1997, the Partnership
and an affiliate, as tenants-in-common,  sold the Property in Yuma, Arizona, and
recognized a gain of approximately $128,400 for financial reporting purposes, as
described above in "Capital  Resources." The Partnership owned a 51.67% interest
in the Property in Yuma, Arizona,  held as tenants-in-common  with an affiliate.
The  Partnership  reinvested its portion of the net sales proceeds in a Property
in  Vancouver,  Washington,  in December  1997,  as described  above in "Capital
Resources."  The increase in net income  earned by these joint  ventures  during
1996, as compared to 1995, is primarily attributable to the fact that in January
1996,  the  Partnership  acquired  an interest  in a Golden  Corral  Property in
Clinton,  North  Carolina,  with affiliates as  tenants-in-common,  as described
above in "Capital Resources."


         During the years ended December 31, 1997,  1996 and 1995,  three of the
Partnership's   lessees,   Golden  Corral  Corporation,   Restaurant  Management
Services,  Inc. and  Mid-America  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 the three Properties owned by  unconsolidated  joint ventures
in which the Partnership is a co-venturer and two

                                                        23

<PAGE>



Properties owned with affiliates as tenants-in-common). As of December 31, 1997,
Golden  Corral  Corporation  was  the  lessee  under  leases  relating  to  five
restaurants,  Restaurant  Management Services,  Inc. was the lessee under leases
relating to seven  restaurants and Mid-America  Corporation was the lessee under
leases  relating  to four  restaurants.  It is  anticipated  that,  based on the
minimum annual rental payments required by the leases,  these three lessees each
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,  Golden  Corral,  Hardee's and Burger King,  and in 1997,  an additional
Restaurant  Chain,  Denny's,  each  accounted  for more than ten  percent of the
Partnership's  total  rental  income  in  1997,  1996 and  1995  (including  the
Partnership's  consolidated  joint  venture and the  Partnership's  share of the
rental income from the three Properties owned by  unconsolidated  joint ventures
in  which  the  Partnership  is a  co-venturer  and two  Properties  owned  with
affiliates as  tenants-in-common).  In subsequent  years, it is anticipated that
these four  Restaurant  Chains  each will  continue to account for more than ten
percent of the  Partnership's  total rental income to which the  Partnership  is
entitled  under  the  terms of the  leases.  Any  failure  of these  lessees  or
Restaurant Chains could materially affect the Partnership's income.

         For the years ended 1997,  1996 and 1995, the  Partnership  also earned
$119,961, $49,056 and $51,130,  respectively,  in interest and other income. The
increase in interest and other income  during the year ended  December 31, 1997,
was primarily attributable to interest earned on the net sales proceeds received
and held in escrow  relating to the sales of the  Properties  in Dallas,  Texas;
Naples, Florida; Plattsmouth, Nebraska and Venice, Florida.


         Operating expenses,  including  depreciation and amortization  expense,
were $840,365, $683,163 and $672,818 for the years ended December 31, 1997, 1996
and 1995,  respectively.  The increase in  operating  expenses  during 1997,  as
compared to 1996,  is partially  due to the fact that the  Partnership  recorded
approximately  $122,400 in bad debt  expense and  approximately  $19,400 in real
estate tax expense for the Property  located in Melbourne,  Florida,  due to the
fact that the tenant vacated the Property in October 1997. The Partnership  sold
this Property in February  1998, as described  above in "Capital  Resources." In
addition,  the  Partnership's  consolidated  joint venture,  Caro Joint Venture,
recorded bad debt expense and real estate tax expense of  approximately  $26,200
relating to the Property located in Caro, Michigan, representing past due rental
and other amounts.  The joint venture  partners intend to continue to pursue the
collection  of such  amounts  relating to the  Property in Caro,  Michigan.  The
increase in operating expenses during 1996, as compared to 1995, was partially a
result of 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.

                                                        24

<PAGE>




         The increase in operating  expenses during 1997 was partially offset by
the  decrease  in  depreciation  expense  which  resulted  from  the sale of the
Property  in  Dallas,  Texas  in  December  1996,  the sale of the  Property  in
Whitehall,  Michigan,  in July  1997,  and the sale of the  Property  in Venice,
Florida,  in September 1997. The decrease in depreciation  expense was partially
offset by an increase in  depreciation  expense  attributable to the purchase of
the Property in Marietta, Georgia, in February 1997.



         As a  result  of  the  sales  of the  Properties  in  Naples,  Florida;
Plattsmouth,  Nebraska  and  Venice,  Florida,  as  described  above in "Capital
Resources,"  the  Partnership  recognized  a gain of  $626,804  during  1997 for
financial reporting  purposes.  The gain for 1997 was partially offset by a loss
of $79,777 for financial reporting  purposes,  resulting from the July 1997 sale
of the  Property  in  Whitehall,  Michigan,  as  described  above  in "  Capital
Resources."

         As a result of the sale of the Property in Dallas,  Texas,  in December
1996,  the  Partnership  recognized a loss for financial  reporting  purposes of
$1,706 for the year ended  December  31, 1996,  as  discussed  above in "Capital
Resources."  In  addition,  as a result  of the sale of the  Property  in Little
Canada,  Minnesota,  during 1995 the Partnership  recognized a gain of $103,283,
and as a result of the sale during 1995 of a portion of the land of the Property
in Orlando,  Florida,  the Partnership  recognized a loss of $7,370 for the year
ended December 31, 1995, as described above in "Capital Resources."


         During the years  ended  December  31, 1996 and 1997,  the  Partnership
recorded  provisions  for losses on land and  building in the amounts of $77,023
and $104,947, respectively, for financial reporting purposes for the Property in
Liverpool,  New York.  The  allowance  at December  31,  1996,  represented  the
difference  between the  Property's  carrying value at December 31, 1996 and the
estimated net realizable  value for this Property based on an anticipated  sales
price to an  interested  third  party.  The  allowance  at  December  31,  1997,
represents the difference between the Property's  carrying value at December 31,
1997  and the net  realizable  value  of the  Property  based  on the net  sales
proceeds received in February 1998 from the sale of the Property.



         During the year ended December 31, 1997, the Partnership established an
allowance for loss on land and on allowance for  impairment in carrying value of
net investment in direct financing lease for its Property in Melbourne, Florida,
in the amount of $158,239.  The allowance  represents the difference between the
Property's  carrying  value at  December  31,  1997 and the net  sales  proceeds
received in February 1998 from the sale of the Property,  as described  above in
"Capital Resources."


         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

                                                        25

<PAGE>



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



                                                        26

<PAGE>



                                   SIGNATURES



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


                                         CNL INCOME FUND VI, LTD.

                                         By:      CNL REALTY CORPORATION
                                                  General Partner

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


                                         By:      ROBERT A. BOURNE
                                                  General Partner

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


                                         By:      JAMES M. SENEFF, JR.
                                                  General Partner

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


<PAGE>


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


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


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



</TABLE>