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

                                    FORM 10-K

(Mark One)

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

                   For the fiscal year ended December 31, 1998

                                       OR

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

              For the transition period from ________ to _________ 


                         Commission file number 0-19141

                             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) 650-1000

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

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

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

              Units of limited partnership interest ($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, 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.  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.  During the year ended December 31 1998, the Partnership also sold its
Properties in Port Orange,  Florida,  and Tyler,  Texas.  The Partnership used a
portion of the sales  proceeds to enter into a joint  venture  arrangement,  RTO
Joint Venture,  with an affiliate of the Partnership  which has the same General
Partners. As a result of the above transactions,  the Partnership currently owns
25 Properties, including 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. Generally, the Properties are leased on a triple-net basis
with the lessees  responsible for all repairs and  maintenance,  property taxes,
insurance and utilities.

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership  would be merged with and into a subsidiary  of APF (the  "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term,  "triple-net" basis to operators of
national and regional  restaurant  chains. APF has agreed to issue shares of its
common stock, par value $0.01 per share (the "APF Shares"), as consideration for
the Merger.  At a special meeting of the partners that is expected to be held in
the third  quarter  of 1999,  Limited  Partners  holding in excess of 50% of the
Partnership's  outstanding limited partnership interests must approve the Merger
prior to consummation of the transaction. If the Limited Partners at the special
meeting approve the Merger,  APF will own the Properties and other assets of the
Partnership. See Item 8. Financial Statements and Supplementary Data -- Note 12.
Subsequent Event.

         In the event that the Limited  Partners  vote  against the Merger,  the
Partnership will hold its Properties  until the General Partners  determine that
the sale or other  disposition of the Properties is  advantageous in view of the
Partnership's investment objectives. In deciding whether to sell Properties, the
General Partners will consider factors such as potential  capital  appreciation,
net cash flow and federal income tax  considerations.  Certain lessees also have
been granted  options to purchase  Properties,  generally at the Property's then
fair market value after a specified  portion of the lease term has elapsed.  The
Partnership  has no  obligation  to sell all or any portion of a Property at any
particular  time,  except as may be required  under  property  or joint  venture
purchase options granted to certain lessees.



<PAGE>


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 2018.  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 $38,500 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.

         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. In March 1998, the Partnership entered into a
new lease for the South Haven  Property with the former  operator as tenant,  to
operate the  Property.  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.  The Partnership is currently  seeking a replacement
tenant or a purchaser for the Property in Belding, Michigan.

         In May 1998,  the  Partnership  contributed  a portion of the net sales
proceeds  from the  sale of the  Property  in  Tyler,  Texas in a joint  venture
arrangement,  RTO Joint Venture,  with an affiliate of the Partnership which has
the same General  Partners as described  below in "Joint Venture  Arrangements."
The  lease  terms  for  this  Property  are   substantially   the  same  as  the
Partnership's  other leases as described above in the first three  paragraphs of
this section.

         In August 1998, the Partnership terminated the lease with the tenant of
the Property in Daleville,  Indiana, due to financial difficulties the tenant is
experiencing. The Partnership is currently seeking a new tenant or purchaser for
this Property.

         During 1994, the lease relating to the Property in New Castle,  Indiana
was  amended to provide  for the  payment  of reduced  annual  base rent with no
scheduled  rent  increases.  However,  the lease  amendment  provided  for lower
percentage  rent  breakpoints,  as compared to the original lease  agreement,  a
change that was  designed to result in higher  percentage  rent  payments at any
time that percentage rent became payable. This created rental payments under the
amended  lease that were equal to or greater than the original  lease during the
term of the lease. In accordance with a provision in the amendment,  as a result
of the former tenant  assigning the lease to a new tenant during 1998,  the rent
under the assigned  lease  reverted back to those that were  required  under the
original lease agreement.



<PAGE>


Major Tenants

         During  1998,  Golden  Corral  Corporation  contributed  more  than ten
percent  of  the  Partnership's   total  rental  and  mortgage  interest  income
(including rental income from the Partnership's  consolidated  joint venture and
the  Partnership's  share of the rental  income from three  Properties  owned by
unconsolidated  joint  ventures  and two  Properties  owned with  affiliates  as
tenants-in-common).  As of December 31, 1998, Golden Corral  Corporation was the
lessee under leases relating to two restaurants.  It is anticipated  that, based
on the minimum rental payments required by the leases, this lessee will continue
to  contribute  more than ten  percent  of the  Partnership's  total  rental and
mortgage  interest income in 1999. In addition,  two Restaurant  Chains,  Golden
Corral 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 1998  (including  rental  income from the  Partnership's  consolidated  joint
venture and the  Partnership's  share of the rental income from three Properties
owned by unconsolidated  joint ventures and two Properties owned with affiliates
as  tenants-in-common).  It is anticipated that these two 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  income if the Partnership is
not able to re-lease the  Properties  in a timely  manner.  No single  tenant or
group of affiliated  tenants lease Properties with an aggregate  carrying value,
excluding  acquisition fees and certain  acquisition  expenses,  in excess of 20
percent of the total assets of the Partnership.

Joint Venture Arrangements

         The   Partnership   has  entered  into  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.  In
May 1998, the Partnership  entered into a joint venture  arrangement,  RTO Joint
Venture,  with  affiliates  of the General  Partners,  to construct and hold one
Property.  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.

         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 42.09% and 27.78% interest in the Property in
Mesa, Arizona and the Property in Vancouver, Washington, respectively.

         Net cash flow from  operations of  CNL/Longacre  Joint  Venture,  Cocoa
Joint Venture,  Halls Joint Venture and RTO Joint Venture is distributed  66.5%,
43.0%,  48.9%, and 53.12%,  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.

Certain Management Services

         CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain  services  relating to management of the  Partnership and its Properties
pursuant to a management  agreement.  Under this  agreement,  CNL Fund Advisors,
Inc. is responsible for collecting  rental  payments,  inspecting the Properties
and the tenants' books and records,  assisting the  Partnership in responding to
tenant inquiries and notices and providing  information to the Partnership about
the  status of the leases  and the  Properties.  CNL Fund  Advisors,  Inc.  also
assists the General Partners in negotiating the leases. For these services,  the
Partnership  has  agreed to pay CNL Fund  Advisors,  Inc.  an annual  fee of one
percent of the sum of gross 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").

         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.

Employees

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

Item 2.  Properties

         As of December 31, 1998,  the  Partnership  owned,  either  directly or
through  joint  venture  arrangements,  25  Properties  located  in  13  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,  1998 (see Item 1.  Business -
Major  Tenants),  are  substantially  the  same as  those  described  in Item 1.
Business - Leases.

         Slaymaker Group,  Inc., leases one Tony Roma's  restaurant  pursuant to
one lease,  with an initial  term of 20 years  (expiring  in 2017).  The average
minimum base annual rent for the lease is $167,500.

         Golden  Corral  Corporation  leases  two  restaurants  pursuant  to two
leases,  each with an initial term of 12 to 15 years  (expiring  2002 and 2004),
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 11,  1999 there were 2,478  holders of record of the Units.
There is no public trading market for the Units,  and it is not anticipated that
a public  market for the Units will develop.  Limited  Partners who wish to sell
their  Units  may  offer  the  Units  for  sale  pursuant  to the  Partnership's
distribution  reinvestment  plan (the "Plan"),  and Limited Partners who wish to
have their  distributions  used to acquire additional Units (to the extent Units
are  available  for  purchase),  may do so  pursuant  to such Plan.  The General
Partners have the right to prohibit  transfers of Units.  From inception through
December 31, 1998, the price paid for any Unit transferred  pursuant to the Plan
was $475 per Unit. The price paid for any Unit  transferred  other than pursuant
to the Plan was subject to negotiation by the purchaser and the selling  Limited
Partner. The Partnership will not redeem or repurchase Units.



<PAGE>


         The following table reflects,  for each calendar quarter, the high, low
and average  sales prices for transfers of Units during 1998 and 1997 other than
pursuant to the Plan, net of commissions.

<TABLE>
<CAPTION>
<S> <C>
                                                 1998 (1)                                  1997 (1)
                                   --------------------------------------    --------------------------------------
                                     High           Low         Average        High          Low          Average
                                   ---------     ----------    ----------    ---------    ----------     ----------
         First Quarter                 $475           $475          $475         $500          $422           $468
         Second Quarter                 (2)            (2)           (2)          430           375            403
         Third Quarter                  500            390           447          462           385            433
         Fourth Quarter                 450            380           414          500           438            457
</TABLE>


(1)      A total of 168 and 324 Units were  transferred  other than  pursuant to
         the Plan for the years ended December 31, 1998 and 1997, respectively.

(2) No transfer of Units took place  during the quarter  other than  pursuant to
the Plan.

         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.

         For the  years  ended  December  31,  1998 and  1997,  the  Partnership
declared cash distributions of $3,838,327 and $2,300,000,  respectively,  to the
Limited Partners.  Distributions  during 1998 included a special distribution of
$1,838,327,  as a result of the distribution of net sales proceeds from the 1997
and 1998 sales of Properties in Tampa and Port Orange,  Florida. This amount was
applied  toward the Limited  Partners'  cumulative  10%  Preferred  Return.  The
reduced number of Properties for which the Partnership receives rental payments,
as well as ongoing operations, reduced the Partnership's revenues in 1998 and is
expected to reduce the Partnership's  revenues in subsequent years. The decrease
in Partnership  revenues,  combined with the fact that a significant  portion of
the Partnership's  expenses are fixed in nature,  resulted in a decrease in cash
distributions  to the Limited  Partners  during 1998. No amounts  distributed to
partners for the years ended  December 31, 1998 and 1997,  are required to be or
have been  treated by the  Partnership  as a return of capital  for  purposes of
calculating   the   Limited   Partners'   return  on  their   adjusted   capital
contributions.  No distributions have been made to the General Partners to date.
As indicated in the chart below, these  distributions were declared at the close
of each of the Partnership's  calendar  quarters.  These amounts include monthly
distributions  made in arrears for the Limited Partners electing to receive such
distributions on this basis.

                   Quarter Ended               1998               1997
               ----------------------      --------------     -------------

               March 31                       $2,338,327          $575,000
               June 30                           500,000           575,000
               September 30                      500,000           575,000
               December 31                       500,000           575,000


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




<PAGE>


Item 6.  Selected Financial Data

<TABLE>
<CAPTION>


                                           1998           1997           1996            1995            1994
                                       -------------  -------------- -------------- ---------------  --------------
<S> <C>

Year ended December 31:
     Revenues (1)                        $2,024,231     $2,147,770    $ 2,279,880       $2,314,818      $2,354,981
     Net income (2)                       1,544,895      1,731,915       1,428,159       1,679,820       1,743,029
     Cash distributions
         declared (3)                     3,838,327      2,300,000       2,300,000       2,300,000       2,300,000
     Net income per Unit (2)                  30.70          34.40           28.31           33.26           34.51
     Cash distributions declared
         Per Unit (3)                         76.77          46.00           46.00           46.00           46.00

At December 31:
     Total assets                       $17,135,485    $19,718,430    $ 20,133,002    $ 20,760,182     $21,299,865
     Partners' capital                   16,227,102     18,520,534      18,982,619      19,694,760      20,283,440

</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, 1998 includes  $469,613 from
         gains on the sales of land and  buildings,  $25,500 from a loss on sale
         of land and building and $403,157 for a provision  for loss on land and
         building.  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.

(3)      Distributions  for the year ended  December  31, 1998 include a special
         distribution  to the Limited  Partners of $1,838,327 as a result of the
         distribution of net sales proceeds from the sales of Properties  during
         1997 and 1998.

         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 generally  triple-net leases,  with the lessee generally  responsible
for all repairs and maintenance,  property taxes, insurance and utilities. As of
December 31, 1998,  the  Partnership  owned 25  Properties,  either  directly or
indirectly through joint venture arrangements.

Liquidity and Capital Resources

         During  the  years  ended  December  31,  1998,  1997,  and  1996,  the
Partnership  generated cash from  operations  (which includes cash received from
tenants, distributions from joint ventures and interest received, less cash paid
for expenses) of $1,649,735,  $1,813,231,  and $2,103,745.  The decrease in cash
from operations  during 1998 and 1997, 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, 1998, 1997, and 1996.

         During the years  ended  December  31, 1997 and 1996,  the  Partnership
received $106,000 and $159,700,  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 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 $2,157, $338, and $18,445 for financial reporting purposes for the years
ended December 31, 1998, 1997, and 1996,  respectively,  and had a deferred gain
in the amount of  $181,308  and  $183,465 at  December  31,  1998 and 1997.  The
mortgage note receivable  balance relating to this Property at December 31, 1998
and 1997, was $871,812 and $874,443,  including  accrued  interest of $9,350 and
$2,747,  and net of the  remaining  deferred  gain  of  $181,308  and  $183,465.
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 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 March  1998,  the  Partnership  entered  into a new lease for this
Property  with the former  operator  as tenant,  to operate  the  Property as an
Arby's. 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 pay liabilities of the Partnership,  including quarterly
distributions to the Limited Partners.

         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, 1998 and 1997 included $25,783
and $37,099, respectively, of such amounts, including accrued interest of $1,802
in 1997. 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 and paid these amounts during the year ended December 31, 1998.

         During 1997, the Partnership sold its Properties in Smyrna,  Tennessee;
Salem,  New  Hampshire;  and Port St. Lucie and Tampa,  Florida,  for a total of
$4,020,172 and received net sales proceeds totalling $3,925,876,  resulting in a
total gain of $549,516 for financial reporting  purposes.  These Properties were
originally  acquired  by the  Partnership  in  1989  and  had a  total  cost  of
approximately   $3,503,900,   excluding   acquisition  fees  and   miscellaneous
acquisition  expenses;  therefore,  the  Partnership  sold these  Properties for
approximately  $422,100  in  excess  of  their  original  purchase  prices.  The
Partnership  used  approximately  $132,500  of the  net  sales  proceeds  to pay
liabilities of the Partnership, including quarterly distributions to the Limited
Partners,  and used the  remaining  net sales  proceeds  to  acquire  additional
Properties and acquire  Properties with affiliates of the General Partners.  The
Partnership distributed 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.

         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  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  as  tenants-in-common  with
affiliates of the General Partners, as described below.

         During  1998,  the  Partnership  sold its  Properties  in Port  Orange,
Florida,  and Tyler, Texas to the tenants for a total of $2,180,000 and received
net sales proceeds totalling  $2,125,220,  resulting in a total gain of $466,322
for financial reporting  purposes.  These Properties were originally acquired by
the  Partnership  in  1988  and  1989  and  had  costs  totaling   approximately
$1,791,300,  excluding acquisition fees and miscellaneous  acquisition expenses;
therefore,  the Partnership  sold the Properties for  approximately  $333,900 in
excess of their original purchase prices. In addition,  the Partnership incurred
deferred,  subordinated, real estate disposition fees of $65,400 relating to the
sales of the  Properties  for which net sales  proceeds  were not  reinvested in
additional Properties.  The Partnership  distributed $1,838,327 of the net sales
proceeds from the 1997 and 1998 sales of the  properties in Tampa,  Florida,  as
described  above,  and Port Orange,  Florida,  as a special  distribution to the
limited  partners in April  1998.  In  addition,  in May 1998,  the  Partnership
contributed the net sales proceeds from the sale of the Property in Tyler, Texas
in a  joint  venture  arrangement  as  described  below.  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).

         As described  above, in May 1998, the Partnership  entered into a joint
venture,  RTO Joint  Venture,  a joint  venture with an affiliate of the general
partners,  to construct  and hold one  restaurant  Property.  As of December 31,
1998,  the  Partnership  had  contributed  $766,746 to purchase land and pay for
construction relating to the joint venture.  Construction was completed and rent
commenced  in December  1998.  The  Partnership  holds a 53.12%  interest in the
profits and losses of the joint venture.

         In January 1999, the Partnership received notice from the tenant of its
Properties  in Endicott  and Ithaca,  New York,  that it intends to exercise its
option to purchase  the  Properties  in  accordance  with the terms of its lease
agreements; however, as of March 11, 1999, the sales had not occurred.

         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,  1998,  the  Partnership  had
$352,648  invested in such  short-term  investments as compared to $1,361,290 at
December 31, 1997.  The decrease in cash and cash  equivalents  during 1998,  is
primarily attributable to the fact that the Partnership distributed amounts held
at December 31, 1997 relating to the net sales  proceeds  received from the 1997
sale of the Property in Tampa, Florida, as a special distribution to the Limited
Partners  during 1998, as described  below.  The funds remaining at December 31,
1998,  will be reinvested in additional  Properties,  distributed to the Limited
Partners or used for other Partnership purposes, as described above.

         During  1998,  1997,  and  1996,  affiliates  of the  General  Partners
incurred  on  behalf  of  the  Partnership   $79,438,   $77,353,  and  $113,560,
respectively,  for certain operating expenses. As of December 31, 1998 and 1997,
the Partnership owed $128,548 and $109,367, respectively, to affiliates for such
amounts and accounting and administrative services. In addition, during 1998 and
1997, the Partnership had incurred  $65,400 and $34,500,  respectively,  in real
estate  disposition  fees due to an  affiliate  as a result of its  services  in
connection with the sale of the Properties in St. Cloud, Port Orange, and Tampa,
Florida.  The payment of such fees is deferred  until the Limited  Partners have
received  the sum of their  10%  Preferred  Return  and their  adjusted  capital
contributions.  Other liabilities, including distributions payable, decreased to
$524,019 at December 31, 1998, from $831,100 at December 31, 1997, partially due
to a decrease in  construction  costs payable as a result of the payment  during
1998, of  construction  costs accrued at December 31, 1997 for renovation  costs
relating to the  Partnership's  Property  located in Connorsville,  Indiana,  as
described above. The decrease in liabilities is also partially attributable to a
decrease in  distributions  payable to the Limited Partners at December 31, 1998
and a decrease in accrued real estate tax expense  relating to the Properties in
Belding and South Haven, Michigan at December 31, 1998.  Liabilities at December
31, 1998, to the extent they exceed cash and cash  equivalents,  at December 31,
1998,  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 on current and anticipated  future cash from operations,  and for
the years  ended  December  31, 1998 and 1997,  a portion of the sales  proceeds
received from the sales of the Properties,  and for the years ended December 31,
1997 and 1996, additional capital  contributions from the General Partners,  the
Partnership  declared  distributions  to the  Limited  Partners  of  $3,838,327,
$2,300,000,  and  $2,300,000  for the years ended  December 31, 1998,  1997, and
1996, respectively.  This represents distributions of $77, $46, and $46 per Unit
for  the  years  ended  December  31,  1998,   1997,  and  1996,   respectively.
Distributions  for 1998 included  $1,838,327 as a result of the  distribution of
net sales  proceeds from the 1997 and 1998 sales of Properties in Tampa and Port
Orange, Florida. This special distribution was effectively a return of a portion
of  the  Limited  Partners'   investment,   although,  in  accordance  with  the
Partnership agreement, it was applied to the Limited Partners' unpaid cumulative
preferred return.  In deciding whether to sell Properties,  the General Partners
considered  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, reduced
the  Partnership's  revenues in 1998 and is expected to reduce the Partnership's
revenues in subsequent  years.  The decrease in Partnership  revenues,  combined
with the fact that a significant portion of the Partnership's expenses are fixed
in nature,  resulted 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  1998,  1997, and 1996, are required to be or have
been  treated  by the  Partnership  as a  return  of  capital  for  purposes  of
calculating   the   Limited   Partners'   return  on  their   adjusted   capital
contributions. The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis.

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

         The Partnership's  investment strategy of acquiring Properties for cash
and 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  the leases of the  Partnership's  Properties  are
generally 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.

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with APF,  pursuant to which the Partnership  would be merged with and
into a subsidiary  of APF. As  consideration  for the Merger,  APF has agreed to
issue  2,049,031  APF Shares  which,  for the  purposes  of  valuing  the merger
consideration,  have been valued by APF at $10.00 per APF Share,  the price paid
by APF  investors in APF's most recent public  offering.  In order to assist the
General  Partners in evaluating the proposed merger  consideration,  the General
Partners  retained  Valuation  Associates,  a nationally  recognized real estate
appraisal firm, to appraise the  Partnership's  restaurant  property  portfolio.
Based on Valuation Associates'  appraisal,  the Partnership's property portfolio
and other assets were valued on a going concern basis  (meaning the  Partnership
continues  unchanged) at  $20,212,956  as of December 31, 1998.  Legg Mason Wood
Walker,  Incorporated  has  rendered  a  fairness  opinion  that  the APF  Share
consideration, payable by APF, is fair to the Partnership from a financial point
of view.  The APF Shares are  expected  to be listed for trading on the New York
Stock Exchange concurrently with the consummation of the Merger, and, therefore,
would be freely  tradable  at the option of the former  Limited  Partners.  At a
special meeting of the partners that is expected to be held in the third quarter
of  1999,  Limited  Partners  holding  in  excess  of 50%  of the  Partnership's
outstanding  limited  partnership  interests  must  approve the Merger  prior to
consummation of the  transaction.  The General Partners intend to recommend that
the Limited Partners of the Partnership  approve the Merger.  In connection with
their  recommendation,  the  General  Partners  will  solicit the consent of the
Limited Partners at the special meeting.

Results of Operations

         During  1996,  the  Partnership  and its  consolidated  joint  venture,
CNL/Long  Acre  Joint  Venture,  owned and  leased 26  wholly  owned  Properties
(including one Property in St. Cloud, Florida,  which was sold in October 1996),
during 1997, the  Partnership  owned 27 wholly owned  Properties  (including six
Properties,  which were sold during the year ended December 31, 1997) and during
1998,  the  Partnership   owned  21  wholly  owned  Properties   (including  two
Properties,  which were sold during 1998). In addition,  during 1998,  1997, and
1996, the Partnership and its  consolidated  joint venture,  CNL/Long Acre Joint
Venture,  was a co-venturer in three separate joint ventures that each owned and
leased one Property.  During 1997, the  Partnership and its  consolidated  joint
venture,  CNL/Long Acre Joint  Venture,  owned and leased two  Properties,  with
affiliates of the General Partners,  as tenants-in-common.  In addition,  during
1998, the Partnership and its  consolidated  joint venture,  CNL/Long Acre Joint
Venture, was also a co-venturer in a joint venture that owns one Property. As of
December 31, 1998,  the  Partnership  owned,  either  directly or through  joint
venture arrangements, 22 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
$38,500 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,  1998,  1997,  and  1996,  the
Partnership  and its  consolidated  joint venture,  CNL/Longacre  Joint Venture,
earned $1,367,303,  $1,500,967, and $1,931,573,  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, 1998 and
1997,  each as compared to the previous  year, was partially  attributable  to a
decrease of approximately  $506,900 and $322,300,  respectively,  as a result of
the sale of several  Properties,  as described  above in "Liquidity  and Capital
Resources."  During 1998 and 1997,  the decrease in rental  income was partially
offset  by  increases  of   approximately   $299,900  and  $24,700  due  to  the
reinvestment of net sales proceeds in various  Properties  during 1998 and 1997,
as described above in "Liquidity and Capital Resources".

         Rental and earned  income also  decreased  during 1998,  as compared to
1997 and 1996, by  approximately  $39,100,  due to the fact that in August 1998,
the  Partnership  terminated  the  lease  with the  tenant  of the  Property  in
Daleville, Indiana due to financial difficulties the tenant is experiencing. The
Partnership  is currently  seeking a new tenant or purchaser for this  Property.
The  Partnership  will not recognize any rental income relating to this Property
until such time as the Partnership executes a new lease or until the Property is
sold and the proceeds from such sale is reinvested in an additional Property.

         The decrease in rental and earned  income  during 1998,  as compared to
1997,  was  partially  offset by, and the decrease in 1997, as compared to 1996,
was  partially  attributable  to the  Partnership  increasing  its allowance for
doubtful  accounts  during 1997, by  approximately  $57,700 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 and
the General Partners 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." No such allowance was established during 1998
due to the fact that the  Partnership  (i)  re-leased  the  Property  located in
Connorsville, Indiana, to a new tenant who began operating the Property after it
was  renovated  into an Arby's  Property and (ii) sold the  Property  located in
Richmond,  Indiana,  in November  1997,  as described  above in  "Liquidity  and
Capital Resources."

         In October 1995, the tenant ceased  operations of the Property in South
Haven, Michigan. In connection therewith, in June 1997, the Partnership incurred
renovation  costs to convert the Property into an Arby's  restaurant and entered
into an operating  agreement.  In March 1998, the Partnership entered into a new
lease  for  this  Property,   as  described  above  in  "Liquidity  and  Capital
Resources," and earned approximately  $40,200 and $5,100 in rental income during
1998 and 1997, respectively.

         Rental and earned income in 1998,  1997, and 1996,  continued to remain
at reduced  amounts due to the fact that the  Partnership  is not  receiving any
rental  income  from the  Properties  in  Belding,  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. The
General  Partners are currently  seeking  either new tenants or  purchasers  for
these  Properties.  Rental and earned  income for 1999 is  expected to remain at
reduced amounts until such time as the Partnership executes new leases for these
Properties or until the Properties are sold and the proceeds from such sales are
reinvested in additional Properties.

         For the years ended December 31, 1998,  1997, and 1996, the Partnership
earned $133,179,  $233,663,  and $130,167,  respectively,  in contingent  rental
income.  The decrease in  contingent  rental  income during 1998, as compared to
1997, is partially attributable to, and the increase in contingent rental income
during 1997, as compared to 1996, is primarily due to, amounts  collected  which
represented a percentage of the net operating income generated by the restaurant
under the operating  agreement with the new operator of the Property  located in
South Haven,  Michigan.  In March 1998, the Partnership entered into a new lease
for the  Property in South Haven,  Michigan,  with this  operator.  The decrease
during 1998, as compared to 1997,  is also  partially  attributable  to sales of
Properties, whose leases required the payment of contingent rents.

         During  the  years  ended  December  31,  1998,  1997,  and  1996,  the
Partnership earned $282,795, $302,503, and $147,804,  respectively,  in interest
and other  income.  The increase in interest  income during 1997, as compared to
1996,  was primarily  attributable  to the interest  earned on the mortgage note
receivable  accepted in  connection  with the sale of the Property in St. Cloud,
Florida in October 1996. In addition,  interest income increased during 1997 due
to interest earned on the net sales proceeds  received  relating to the sales of
several Properties.

         In addition, for the years ended December 31, 1998, 1997, and 1996, the
Partnership earned $173,941, $56,015, and $46,452, 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 1998, as
compared to 1997, is primarily  attributable  to the fact that during 1998,  the
Partnership  reinvested a portion of the net sales proceeds it received from the
1997 and 1998 sales of several  Properties in a Property with  affiliates of the
General  Partners,  as  tenants-in-common  and acquired an interest in RTO Joint
Venture  with an  affiliate  of the  General  Partners,  as  described  above in
"Liquidity  and Capital  Resources."  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 with
affiliates as  tenants-in-common,  as described  above in "Liquidity and Capital
Resources."

         During the year ended December 31, 1998, one lessee of the  Partnership
and its consolidated joint venture,  Golden Corral Corporation  contributed more
than ten percent of the Partnership's  total rental and mortgage interest income
(including rental income from the Partnership's  consolidated  joint venture and
the  Partnership's  share of the rental  income from three  Properties  owned by
unconsolidated  joint  ventures  and two  Properties  owned with  affiliates  as
tenants-in-common).  As of December 31, 1998 Golden Corral  Corporation  was the
lessee under leases relating to two restaurants.  It is anticipated  that, based
on the minimum rental payments required by the leases, this lessee will continue
to  contribute  more than ten  percent  of the  Partnership's  total  rental and
mortgage interest income during 1999. In addition, two Restaurant Chains, Golden
Corral 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 1998, (including rental income from the Partnership's  consolidated joint
venture and the  Partnership's  share of the rental income from three Properties
owned by unconsolidated  joint ventures and two Properties owned with affiliates
as  tenants-in-common).  It is anticipated that these two 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 if the Partnership is not able
to re-lease the Properties in a timely manner.

         Operating expenses,  including  depreciation and amortization  expense,
were  $520,292,  $574,472,  and $631,565 for the years ended  December 31, 1998,
1997, and 1996, respectively. The decrease in operating expenses during 1998 and
1997,  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 1998,
1997,  and 1996, as described  above in "Liquidity and Capital  Resources."  The
decrease in operating  expenses  during 1998,  as compared to 1997, is partially
offset by the fact that the Partnership  incurred  $14,644 in transaction  costs
related to the  General  Partner's  retaining  financial  and legal  advisors to
assist them in  evaluating  and  negotiating  the  proposed  Merger with APF, as
described  above in "Liquidity and Capital  Resources." If the Limited  Partners
reject the Merger,  the  Partnership  will bear the  portion of the  transaction
costs based upon the  percentage  of "For" votes and the General  Partners  will
bear  the  portion  of such  transaction  costs  based  upon the  percentage  of
"Against" votes and abstentions.

         Due to the  tenant  defaults  under the leases  for the  Properties  in
Belding,  Michigan;   Daleville,   Indiana,  and  Lebanon,  New  Hampshire,  the
Partnership  and its  consolidated  joint venture,  CNL/Longacre  Joint Venture,
expect to continue to incur operating expenses relating to such Properties until
the Properties are sold or re-leased to new tenants.

         In connection with the sale of its Properties in St. Cloud, Florida and
Myrtle Beach, South Carolina,  during 1997 and 1996, respectively,  as described
above in "Liquidity and Capital  Resources," the  Partnership  recognized a gain
for financial  reporting  purposes of $3,291,  $1,362, and $19,369 for the years
ended  December 31, 1998,  1997,  and 1996,  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 $319,866 at December 31, 1998,
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 several  Properties  as described  above in
"Liquidity and Capital  Resources," the Partnership  recognized  gains totalling
$440,822  and  $549,516  during  1998  and  1997,  respectively,  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."

         During 1998 and 1997, the Partnership  established  allowances for loss
on land and  buildings of $403,157 and  $250,694,  respectively,  for  financial
reporting purposes, relating to Properties which became vacant and for which the
Partnership  has  not  successfully  re-leased.  The  allowances  represent  the
difference  between the net carrying  value at December  31, 1998 and 1997,  and
their current estimated net realizable values.

         At December 31, 1996, the Partnership established an allowance for loss
on land and  building in the amount of $169,463  for its  Property in  Franklin,
Tennessee,  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)  $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."

         The  Partnership's  leases as of December  31,  1998,  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.

Year 2000

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

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

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

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

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

Interest Rate Risk

         The  Partnership  has provided  fixed rate mortgage notes to borrowers.
The General Partners believe that the estimated fair value of the mortgage notes
at  December  31, 1998  approximated  the  outstanding  principal  amounts.  The
Partnership is exposed to equity loss in the event of changes in interest rates.
The  following  table  presents  the expected  cash flows of principal  that are
sensitive to these changes.

                                               Mortgage notes
                                                 Fixed Rates
                                              ------------------

                    1999                              $  26,987
                    2000                              1,042,574
                    2001                                 50,615
                    2002                                 56,332
                    2003                                 62,696
                    Thereafter                          810,777
                                              ------------------

                                                    $ 2,049,981
                                              ==================



Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

         This information is described above in Item 7. Management's  Discussion
and Analysis of Financial  Condition  and Results of Operations -- Interest Rate
Risk.


Item 8.   Financial Statements and Supplementary Data


<PAGE>


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

                                    CONTENTS







                                                                       Page
                                                                       ----

Report of Independent Accountants                                       17

Financial Statements:

  Balance Sheets                                                        18

  Statements of Income                                                  19

  Statements of Partners' Capital                                       20

  Statements of Cash Flows                                              21

  Notes to Financial Statements                                         23


<PAGE>






                        Report of Independent Accountants



To the Partners
CNL Income Fund V, Ltd.


In our opinion,  the financial  statements  listed in the index  appearing under
item 14(a)(1) present fairly, in all material  respects,  the financial position
of CNL Income Fund V, Ltd. (a Florida limited  partnership) at December 31, 1998
and 1997,  and the results of its  operations and its cash flows for each of the
three years in the period ended  December 31, 1998 in conformity  with generally
accepted  accounting  principles.  In addition,  in our opinion,  the  financial
statement  schedules  listed in the index appearing under item 14(a)(2)  present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial  statements.  These financial  statements
and financial  statement  schedules are the  responsibility of the Partnership's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedules based on our audits. We conducted
our audits of these  statements in accordance with generally  accepted  auditing
standards which require that we plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.






Orlando, Florida
January 18, 1999, except for Note 12 for which the date is March 11, 1999.


<PAGE>


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

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

<TABLE>
<CAPTION>

                                                                                            December 31,
                                                                                   1998                      1997
                                                                             ------------------         ----------------
<S> <C>
                         ASSETS

Land and buildings on operating leases, less
    accumulated depreciation and allowance
    for loss on land and buildings                                                 $10,660,128                $12,421,143
Net investment in direct financing leases                                            1,708,966                  2,277,481
Investment in joint ventures                                                         2,282,012                  1,558,709
Mortgage notes receivable, less deferred gain                                        1,748,060                  1,758,167
Cash and cash equivalents                                                              352,648                  1,361,290
Receivables, less allowance for doubtful
    accounts of $141,505 and $137,892                                                   87,490                    108,261
Prepaid expenses                                                                         1,872                      9,307
Accrued rental income                                                                  239,963                    169,726
Other assets                                                                            54,346                     54,346
                                                                             ------------------         -----------------

                                                                                   $17,135,485                $19,718,430
                                                                             ==================         =================


                     LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                                                     $   7,546                 $   24,229
Accrued construction costs payable                                                          --                    125,000
Accrued and escrowed real estate
    taxes payable                                                                       10,361                     93,392
Distributions payable                                                                  500,000                    575,000
Due to related parties                                                                 228,448                    143,867
Rents paid in advance and deposits                                                       6,112                     13,479
                                                                             ------------------         -----------------
       Total liabilities                                                               752,467                    974,967

Minority interest                                                                      155,916                    222,929

Partners' capital                                                                   16,227,102                 18,520,534
                                                                             ------------------         -----------------

                                                                                   $17,135,485                $19,718,430
                                                                             ==================         =================



                 See accompanying notes to financial statements.


<PAGE>


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

                                                STATEMENTS OF INCOME

                                                                                   Year Ended December 31,
                                                                       1998                 1997                 1996
                                                                   --------------      ---------------      ---------------
Revenues:
    Rental income from operating leases                             $  1,168,301         $  1,343,833         $  1,746,021
    Earned income from direct financing leases                           199,002              157,134              185,552
    Contingent rental income                                             133,179              233,663              130,167
    Interest and other income                                            282,795              302,503              147,804
                                                                   --------------      ---------------      ---------------
                                                                       1,783,277            2,037,133            2,209,544
                                                                   --------------      ---------------      ---------------

Expenses:
    General operating and administrative                                 166,878              166,346              178,991
    Professional services                                                 20,542               23,172               22,605
    Bad debt expense                                                       5,882                9,007                   --
    Real estate taxes                                                     35,434               39,619               40,711
    State and other taxes                                                  9,658               11,897               12,492
    Depreciation and amortization                                        267,254              324,431              376,766
    Transaction costs                                                     14,644                   --                   --
                                                                   --------------      ---------------      ---------------
                                                                         520,292              574,472              631,565
                                                                   --------------      ---------------      ---------------

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                           1,262,985            1,462,661            1,577,979

Minority interest in Loss of Consolidated Joint Venture                   67,013               54,622               23,884

Equity in Earnings of Unconsolidated Joint Ventures                      173,941               56,015               46,452

Gain on Sale of Land and Buildings                                       444,113              409,311               19,369

Provision for Loss on Land and  Buildings                               (403,157 )          (250,694)            (239,525)
                                                                   --------------      ---------------      ---------------

Net Income                                                          $  1,544,895         $  1,731,915         $  1,428,159
                                                                   ==============      ===============      ===============

Allocation of Net Income:
    General partners                                                  $    9,748          $    11,809          $    12,513
    Limited partners                                                   1,535,147            1,720,106            1,415,646
                                                                   --------------      ---------------      ---------------

                                                                    $  1,544,895         $  1,731,915         $  1,428,159
                                                                   ==============      ===============      ===============

Net Income Per Limited Partner Unit                                   $    30.70           $    34.40           $    28.31
                                                                   ==============      ===============      ===============

Weighted Average Number of Limited Partner
    Units Outstanding                                                     50,000               50,000               50,000
                                                                   ==============      ===============      ===============




                 See accompanying notes to financial statements.


<PAGE>


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

                         STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 1998, 1997 and 1996


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

Balance, December 31, 1995              $ 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

    Distributions to limited partners
       ($77 per limited partner unit)         --             --              --   (3,838,327)          --            --  (3,838,327)
    Net income                                --          9,748              --           --    1,535,147            --   1,544,895
                                       ---------   ------------   ------------- ------------  -----------   ------------ -----------

Balance, December 31, 1998             $ 343,200    $   160,530    $ 25,000,000 $(23,606,567) $17,194,939    $(2,865,000)$16,227,102
                                       =========   ============   ============= ============  ===========   ============ ===========




                                See accompanying notes to financial statements.


<PAGE>


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

                                             STATEMENTS OF CASH FLOWS


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

Increase (Decrease) in Cash and Cash Equivalents:

      Cash Flows from Operating Activities:
         Cash received from tenants                             $  1,490,412         $  1,771,467         $  2,083,722
         Distributions from unconsolidated joint
             ventures                                                215,839               53,176               53,782
         Cash paid for expenses                                     (331,363 )           (305,341  )          (161,730 )
         Interest received                                           274,847              293,929              127,971
                                                             ----------------      ----------------     ---------------
             Net cash provided by operating activities             1,649,735            1,813,231            2,103,745
                                                             ----------------      ----------------     ---------------

      Cash Flows from Investing Activities:
         Proceeds from sale of land and buildings                  2,125,220            5,271,796              100,000
         Additions to land and buildings on operating
             leases                                                 (125,000 )         (1,900,790  )                --
         Investment in direct financing leases                            --             (911,072  )                --
         Investment in joint ventures                               (765,201 )         (1,090,062  )                --
         Collections on mortgage notes receivable                     19,931                9,265                6,712
         Other                                                            --                   --              (26,287 )
                                                             ----------------      ----------------     ---------------
             Net cash provided by investing activities             1,254,950            1,379,137               80,425
                                                             ----------------      ----------------     ---------------

      Cash Flows from Financing Activities:
         Contributions from general partner                               --              106,000              159,700
         Distributions to limited partners                        (3,913,327 )         (2,300,000  )        (2,300,000 )
                                                             ----------------      ----------------     ---------------
             Net cash used in financing activities                (3,913,327 )         (2,194,000  )        (2,140,300 )
                                                             ----------------      ----------------     ---------------

Net Increase (Decrease) in Cash and Cash
   Equivalents                                                    (1,008,642 )            998,368               43,870

Cash and Cash Equivalents at Beginning of Year                     1,361,290              362,922              319,052
                                                             ----------------      ----------------     ---------------

Cash and Cash Equivalents at End of Year                         $   352,648         $  1,361,290          $   362,922
                                                             ================      ================     ===============







                 See accompanying notes to financial statements.


<PAGE>


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

                                        STATEMENTS OF CASH FLOWS - CONTINUED


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

      Net income                                                   $1,544,895         $1,731,915        $1,428,159
                                                                 -------------      -------------    --------------
      Adjustments to  reconcile  net income to
        net cash  provided  by  operating
         activities:
             Bad debt expense                                           5,882              9,007                --
             Depreciation                                             267,254            324,431           376,766
             Minority interest in loss of consolidated
                joint venture                                         (67,013 )          (54,622 )         (23,884 )
             Equity in earnings of unconsolidated
                joint ventures, net of distributions                   41,898             (2,839 )           7,330
             Gain on sale of land and buildings                      (444,113 )         (409,311 )         (19,369 )
             Provisions for loss on land and buildings                403,157            250,694           239,525
             Decrease in net investment in direct
                financing leases                                       38,017             42,682            46,387
             Decrease (increase) in accrued interest
                on mortgage note receivable                            (6,533 )            6,788            (9,414 )
             Decrease (increase) in receivables                        17,333            (43,006 )          10,270
             Decrease in prepaid expenses                               7,435              1,109             1,505
             Increase in accrued rental income                        (70,237 )          (19,527 )         (27,875 )
             Increase (decrease) in accounts
                payable and accrued expenses                         (100,554 )          (12,509 )          32,032
             Increase   (decrease)  in  due  to  related               19,181            (13,322 )          59,945
                parties
             Increase   (decrease)   in  rents  paid  in
                advance                                                (6,867 )            1,741           (17,632 )
                and deposits
                                                                 -------------      -------------    --------------
                   Total adjustments                                  104,840             81,316           675,586
                                                                 -------------      -------------    --------------

Net Cash Provided by Operating Activities                          $1,649,735         $1,813,231       $ 2,103,745
                                                                 =============      =============    ==============

Supplemental Schedule of Non-Cash Investing and
   Financing Activities:

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

      Deferred real estate disposition fees incurred and
         unpaid at end of year                                      $  65,400            $    --         $  34,500
                                                                 =============      =============    ==============

      Distributions declared and unpaid at December 31              $ 500,000          $ 575,000        $  575,000
                                                                 =============      =============    ==============

</TABLE>



                 See accompanying notes to financial statements.


<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies:

         Organization  and Nature of  Business - CNL  Income  Fund 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.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled rental payments to date.  Whenever a tenant defaults
                  under  the  terms  of its  lease,  or  events  or  changes  in
                  circumstance  indicate  that the  tenant  will not  lease  the
                  property  through the end of the lease term,  the  Partnership
                  either  reserves or writes-off the  cumulative  accrued rental
                  income balance.

         When  the  properties  are  sold,  the  related  cost  and  accumulated
         depreciation  for operating  leases and the net  investment  for direct
         financing leases,  plus any accrued rental income, are removed from the
         accounts and gains or losses from sales are  reflected  in income.  The
         general  partners of the Partnership  review  properties for impairment
         whenever events or changes in circumstances  indicate that the carrying
         amount of the assets may not be  recoverable  through  operations.  The
         general partners  determine whether an impairment in value has occurred
         by comparing the estimated future  undiscounted  cash flows,  including
         the  residual  value of the  property,  with the  carrying  cost of the
         individual  property.  If an impairment  is  indicated,  the assets are
         adjusted to their fair value.  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.

         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.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

         The Partnership accounts for its interest in Cocoa Joint Venture, Halls
         Joint  Venture,  RTO  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.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

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

2.       Leases:

         The Partnership leases its land and buildings 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 five  successive  five-year  periods
         subject to the same terms and  conditions  as the initial  lease.  Most
         leases  also allow the tenant to purchase  the  property at fair market
         value after a specified portion of the lease has elapsed.

3.       Land and Buildings on Operating Leases:

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

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

          Land                             $ 5,352,136           $ 6,069,665
          Buildings                          7,857,598             8,546,530
                                         --------------     -----------------
                                            13,209,734            14,616,195

          Less accumulated depreciation     (1,895,755 )          (1,944,358 )
                                         --------------     -----------------
                                            11,313,979            12,671,837
          Less allowance for loss on
              land and buildings              (653,851 )            (250,694 )
                                         --------------     -----------------

                                           $10,660,128           $12,421,143
                                         ==============     =================



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


3.       Land and Buildings on Operating Leases - Continued:

         In  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  established an allowance for
         loss  on land  and  building  as of  December  31,  1996,  no loss  was
         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.  The Partnership  reinvested
         the  majority  of  the  remaining  net  sales  proceeds  in  additional
         properties.

         During  1997,  the  Partnership  sold  its  properties  in  Salem,  New
         Hampshire;  Port St. Lucie,  Florida; and Tampa, Florida for a total of
         $3,365,172  and  received  net  sales  proceeds  totalling   $3,291,566
         resulting in a total gain of $447,521 for financial reporting purposes.
         These  properties were  originally  acquired by the Partnership in 1989
         and had total costs of approximately $2,934,400,  excluding acquisition
         fees and miscellaneous acquisition expenses; therefore, the Partnership
         sold the  properties  for  approximately  $357,300  in  excess of their
         original  purchase prices.  The Partnership  reinvested the majority of
         net sales proceeds in additional properties.

         In November  1997,  the  Partnership  sold its  property  in  Richmond,
         Indiana,  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).




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


3.       Land and Buildings on Operating Leases - Continued:

         During the year ended  December  31,  1998,  the  Partnership  sold its
         properties in Port Orange, Florida, and Tyler, Texas to the tenants for
         a total  of  $2,180,000  and  received  net  sales  proceeds  totalling
         $2,125,220,  resulting  in a  total  gain  of  $440,822  for  financial
         reporting  purposes.  These properties were originally  acquired by the
         Partnership  in 1988  and  1989 and had  costs  totaling  approximately
         $1,791,300,  excluding  acquisition fees and miscellaneous  acquisition
         expenses;  therefore, the Partnership sold these properties for a total
         of approximately  $333,900 in excess of their original purchase prices.
         In connection with the sale of the properties, the Partnership incurred
         deferred,  subordinated,  real estate  disposition fees of $65,400 (see
         Note 10).

         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,  during  1998,  the
         Partnership paid $125,000 in renovation costs.

         In 1997, the Partnership  established an allowance for loss on land and
         buildings of $250,694,  for financial reporting  purposes,  relating to
         the properties in Belding,  Michigan and Lebanon, New Hampshire. Due to
         the  fact  that  the  Partnership  has not  been  able to  successfully
         re-lease these properties,  the Partnership  increased the allowance by
         $155,612  for the property in Belding,  Michigan,  and $122,875 for the
         property  in  Lebanon,  New  Hampshire,   owned  by  the  Partnership's
         consolidated joint venture,  CNL/Longacre Joint Venture at December 31,
         1998. In addition, at December 31, 1998, the Partnership established an
         allowance  for loss on land and  building of  $124,670  relating to the
         property located in Daleville, Indiana, due to the fact that the tenant
         terminated the lease with the Partnership. The allowances represent the
         difference  between  the  net  carrying  values  of the  properties  at
         December 31, 1998 and current  estimates of net  realizable  values for
         these properties.

         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, 1998,  1997,  and 1996,  the  Partnership
         recognized $70,237, $19,527, and $27,875,  respectively, of such rental
         income.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


3.       Land and Buildings on Operating Leases - Continued:


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

                1999                                              $1,087,538
                2000                                               1,101,658
                2001                                               1,075,591
                2002                                                 987,031
                2003                                                 999,957
                Thereafter                                         8,250,965
                                                           ------------------

                                                                 $13,502,740
                                                           ==================

         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:


                                           1998               1997
                                        --------------    ---------------
           Minimum lease payments
               receivable                  $3,260,110         $4,213,033
           Estimated residual values          566,502            806,792
           Less unearned income            (2,117,646 )       (2,742,344 )
                                        --------------    ---------------

           Net investment in direct
            financing leases               $1,708,966         $2,277,481
                                        ==============    ===============



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996

4.       Net Investment in Direct Financing Leases - Continued:

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

                1999                                        $ 220,518
                2000                                          220,518
                2001                                          220,518
                2002                                          220,518
                2003                                          220,518
                Thereafter                                  2,157,520
                                                      ----------------

                                                           $3,260,110
                                                      ================

         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).

         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,  the Partnership
         reinvested the remaining net sales proceeds in additional properties as
         tenants-in-common with affiliates of the general partners.

         In June 1998, the  Partnership  terminated its lease with the tenant of
         the  property  in  Daleville,  Indiana.  As a result,  the  Partnership
         reclassified these assets from net investment in direct financing lease
         to land and building on operating  lease.  In accordance with Statement
         of Financial  Accounting  Standards #13,  "Accounting  for Leases," the
         Partnership  recorded the reclassified  assets at the lower of original
         cost,  present  fair  value,  or  present  carrying  value.  No loss on
         termination  of direct  financing  lease  was  recorded  for  financial
         reporting purposes.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


5.       Investment in Joint Ventures:

         As of December 31, 1998, the  Partnership  had a 43 percent and a 48.9%
         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,  Tennessee 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, 1998, the
         Partnership owned a 42.09% 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;  Richmond,  Indiana,  and  Smyrna,  Tennessee  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, 1998, the
         Partnership owned a 27.78% interest in this property.

         In May, 1998, the Partnership entered into a joint venture arrangement,
         RTO Joint  Venture,  with an  affiliate  of the  general  partners,  to
         construct and hold one restaurant property.  Construction was completed
         and rent  commenced in December  1998.  As of December  31,  1998,  the
         Partnership  had  contributed   $766,746  to  the  joint  venture.  The
         Partnership  holds a 53.12%  interest  in the profits and losses of the
         joint  venture.  The  Partnership  accounts for its  investment in this
         joint  venture  under the equity  method since the  Partnership  shares
         control with an affiliate.

         Cocoa Joint  Venture,  Halls Joint  Venture,  RTO 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.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


5.       Investment in Joint Ventures - Continued:

         The following presents the combined condensed financial information for
         all of the Partnership's investments in joint ventures at December 31:

<TABLE>
<CAPTION>
<S> <C>
                                                                               1998                 1997
                                                                          ---------------      ---------------
                Land and buildings on operating
                    leases, less accumulated
                    depreciation                                              $4,812,568           $4,277,972
                Net investment in direct financing
                    lease                                                        817,525                   --
                Cash                                                              17,992               24,994
                Receivables                                                        5,168                4,417
                Prepaid expenses                                                     458                  270
                Accrued rental income                                            112,279               68,819
                Liabilities                                                       46,398                1,250
                Partners' capital                                              5,719,592            4,375,222
                Revenues                                                         555,103              151,242
                Net income                                                       454,922              121,605

</TABLE>

         The Partnership  recognized  income  totaling  $173,941,  $56,015,  and
         $46,452 for  the  years  ended  December  31,  1998,  1997,  and  1996,
         respectively, from these joint ventures.

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 $991,332  due in July 2000.  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 $1,134, $1,024, and $924
         for the years ended December 31, 1998, 1997, and 1996, respectively.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


6.       Mortgage Notes Receivable - Continued:

         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 was being  collected  in 12
         monthly  installments  of interest  only,  and  thereafter in 168 equal
         monthly  installments  of principal and  interest.  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 $2,157,  $338,  and  $18,445 for the
         years ended December 31, 1998, 1997, and 1996, respectively.

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

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

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

           Principal balance                                                         $2,049,981          $2,069,912
           Accrued interest receivable                                                   17,945              11,412
           Less deferred gains on sale of land and buildings                           (319,866)           (323,157 )
                                                                              -----------------    -----------------

                                                                                     $1,748,060          $1,758,167
                                                                              =================    =================
</TABLE>


         The general partners believe that the estimated fair values of mortgage
         notes  receivable  at  December  31,  1998 and  1997,  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.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996

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  accrued  as a  result  of  the  former  tenant's
         financial difficul-ties. 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, 1998 and 1997,
         included $25,783 and $37,099,  respectively of such amounts,  including
         accrued interest of $1,802 in 1997.

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  not in
         liquidation  of the  Partnership,  to the extent  distributed,  will be
         distributed  first to the limited  partners in an amount  sufficient to
         provide them with their 10% Preferred Return,  plus the return of their
         adjusted capital contributions. The general partners will then receive,
         to  the  extent  previously  subordinated  and  unpaid,  a one  percent
         interest  in all prior  distributions  of net cash flow and a return of
         their  capital  contributions.  Any  remaining  sales  proceeds will be
         distributed 95 percent to the limited  partners and five percent to the
         general partners.

         Any  gain  from  the  sale  of a  property  not in  liquidation  of the
         Partnership  is, in general,  allocated in the same manner as net sales
         proceeds are distributable. Any loss from the sale of a property is, in
         general,  allocated  first,  on a pro  rata  basis,  to  partners  with
         positive balances in their capital accounts; and thereafter, 95 percent
         to the limited partners and five percent to the general partners.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


8.       Allocations and Distributions - Continued:

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

         During the year ended  December  31,  1998,  the  Partnership  declared
         distributions to the limited partners of $3,838,327, and during each of
         the years ended December 31, 1997 and 1996, the Partnership distributed
         $2,300,000.  Distributions for 1998 included  $1,838,327 as a result of
         the  distribution of net sales proceeds from the 1997 and 1998 sales of
         the  properties  in Tampa and Port  Orange,  Florida.  This  amount was
         applied  toward  the  limited   partners'  10%  Preferred   Return.  No
         distributions have been made to the general partners to date.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


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>


                                                                    1998              1997             1996
                                                                --------------     ------------     ------------
<S> <C>
               Net income for financial
                   reporting purposes                              $1,544,895       $1,731,915       $1,428,159

               Depreciation for tax reporting purposes
                   less than (in excess of) depreciation for
                   financial reporting purposes                        18,802          (23,618 )        (28,058 )

               Gain on disposition of land and buildings
                   for financial reporting purposes in
                   excess of gain for tax reporting purposes          (16,347 )       (354,648 )         (1,606 )

               Allowance for loss on land and  buildings              403,157          250,694          239,525

               Direct financing leases recorded as operating
                   leases for tax reporting purposes                   38,017           42,682           46,387

               Equity in earnings of unconsolidated
                   joint ventures for tax reporting purposes
                   in  excess  of  (less  than)   equity  in
               earnings
                   of unconsolidated joint ventures  for               10,795           (1,914 )         (1,900 )
                   financial reporting purposes

               Capitalization of transaction costs for tax
                   reporting purposes                                  14,644               --               --

               Allowance for doubtful accounts                          3,613          100,149           33,254

               Accrued rental income                                  (70,237 )        (19,527 )        (27,875 )

               Capitalization  of  administrative   expenses
               for tax                                                 22,990               --               --
                   reporting purposes

               Rents paid in advance                                   (6,867 )          1,241          (17,632 )

               Minority interest in temporary differences
                   of consolidated joint venture                      (84,622 )        (41,515 )           (343 )

               Other                                                    1,705           36,721               --
                                                                --------------     ------------     ------------

               Net income for federal income tax purposes          $1,880,545       $1,722,180       $1,669,911
                                                                ==============     ============     ============


</TABLE>


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


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

         During the years ended December 31, 1998, 1997, and 1996, the Affiliate
         acted  as  manager  of  the  Partnership's  properties  pursuant  to  a
         management agreement with the Partnership. In connection therewith, the
         Partnership  agreed  to pay the  Affiliate  an  annual,  noncumulative,
         subordinated management fee of one percent of the sum of gross revenues
         from properties  wholly owned by the Partnership and the  Partnership's
         allocable  share of gross  revenues  from  joint  ventures,  but not in
         excess  of  competitive  fees  for  comparable  services  in  the  same
         geographic  area.  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 1998, 1997, and 1996.

         The  Affiliate  of the  Partnership  is  also  entitled  to  receive  a
         deferred,  subordinated  real estate  disposition fee, payable upon the
         sale of one or more  properties  based on the lesser of  one-half  of a
         competitive real estate  commission or three percent of the sales price
         if  the  Affiliate   provides  a  substantial  amount  of  services  in
         connection  with the  sale.  However,  if the net  sales  proceeds  are
         reinvested in a replacement  property,  no such real estate disposition
         fees will be incurred until such  replacement  property is sold and the
         net sales  proceeds  are  distributed.  The  payment of the real estate
         disposition fee is  subordinated to receipt by the limited  partners of
         their  aggregate  10% Preferred  Return,  plus their  adjusted  capital
         contributions.  During the years ended  December 31, 1998 and 1996, the
         Partnership  incurred a deferred,  subordinated real estate disposition
         fee of $65,400 and $34,500,  respectively, as the result of the sale of
         the  properties  during  1998  and  1996,  respectively.  No  deferred,
         subordinated  real estate  disposition  fee was  incurred  for the year
         ended December 31, 1997 due to the  reinvestment  of net sales proceeds
         in additional properties.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


10.      Related Party Transactions - Continued:

         During the years ended December 31, 1998, 1997, and 1996, the Affiliate
         provided accounting and administrative services to the Partnership on a
         day-to-day  basis.  The  Partnership  incurred  $94,611,  $80,145,  and
         $83,563  for the  years  ended  December  31,  1998,  1997,  and  1996,
         respectively, for such services.

         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.

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

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

             Due to Affiliates:
                 Expenditures incurred on
                    behalf of the Partnership       $ 77,907        $ 67,106
                 Accounting and administrative
                    services                          50,641          42,261
                 Deferred, subordinated real
                    estate disposition fee            99,900          34,500
                                                -------------   -------------

                                                    $228,448        $143,867
                                                =============   =============



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996

11.      Concentration of Credit Risk:

         The  following   schedule  presents  total  rental  and  earned  income
         (including  mortgage  interest  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 each of the years ended December 31:

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

              Golden Corral Corporation      $195,511     $195,511     $  N/A
              Shoney's, Inc.                      N/A      229,795    241,119

         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 each of the years ended December 31:

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

             Wendy's Old Fashioned
                 Hamburger Restaurant       $220,347     $302,253      $293,817
             Golden Corral Family
                 Steakhouse                  195,511          N/A           N/A
             Denny's                             N/A      312,510       310,021
             Perkins                             N/A      228,492       268,939

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

         Although  the  Partnership's   properties  are  geographically  diverse
         throughout the United States and the  Partnership's  lessees  operate a
         variety of restaurant concepts,  default by any one of these lessees or
         restaurant chains, could significantly impact the results of operations
         of the  Partnership  if the  Partnership  is not able to  re-lease  the
         properties in a timely manner.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


12.      Subsequent Event:

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
         of Merger with CNL American Properties Fund, Inc. ("APF"),  pursuant to
         which the Partnership would be merged with and into a subsidiary of APF
         (the  "Merger").  As  consideration  for the Merger,  APF has agreed to
         issue 2,049,031  shares of its common stock, par value $0.01 per shares
         (the "APF  Shares")  which,  for the  purposes  of  valuing  the merger
         consideration,  have been  valued by APF at $10.00 per APF  Share,  the
         price paid by APF  investors in APF's most recent public  offering.  In
         order to assist the general  partners in evaluating the proposed merger
         consideration,  the general partners retained Valuation  Associates,  a
         nationally  recognized  real estate  appraisal  firm,  to appraise  the
         Partnership's   restaurant  property  portfolio.   Based  on  Valuation
         Associates'  appraisal,  the Partnership's property portfolio and other
         assets were valued on a going  concern basis  (meaning the  Partnership
         continues unchanged) at $20,212,956 as of December 31, 1998. Legg Mason
         Wood Walker,  Incorporated has rendered a fairness opinion that the APF
         Share consideration,  payable by APF, is fair to the Partnership from a
         financial  point of view.  The APF Shares are expected to be listed for
         trading  on  the  New  York  Stock  Exchange   concurrently   with  the
         consummation of the Merger, and, therefore, would be freely tradable at
         the option of the former limited partners.  At a special meeting of the
         partners  that is  expected  to be held in the third  quarter  of 1999,
         limited  partners  holding  in  excess  of  50%  of  the  Partnership's
         outstanding limited partnership interests must approve the Merger prior
         to  consummation  of the  transaction.  The general  partners intend to
         recommend  that the  limited  partners of the  Partnership  approve the
         Merger. In connection with their  recommendation,  the general partners
         will  solicit  the  consent  of the  limited  partners  at the  special
         meeting.  If the limited  partners  reject the Merger,  the Partnership
         will  bear  the  portion  of  the  transaction  costs  based  upon  the
         percentage  of "For"  votes  and the  general  partners  will  bear the
         portion  of  such  transaction  costs  based  upon  the  percentage  of
         "Against" votes and abstentions.



<PAGE>


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

         None.


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

         The General Partners of the Registrant are James M. Seneff, Jr., Robert
A.  Bourne  and CNL  Realty  Corporation,  a Florida  corporation.  The  General
Partners  manage  and  control  the  Partnership's   affairs  and  have  general
responsibility   and  the  ultimate  authority  in  all  matters  affecting  the
Partnership's  business.  The  Partnership  has  available  to it the  services,
personnel and experience of CNL Fund Advisors,  Inc., CNL Group,  Inc. and their
affiliates,  all of which are affiliates of the General  Partners.  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 52, is a principal  stockholder of CNL Group,
Inc., a diversified  real estate company,  and has served as its Chairman of the
Board of Directors,  a director and Chief Executive  Officer since its formation
in 1980. Mr. Seneff has been Chairman of the Board of Directors,  director,  and
Chief Executive Officer of CNL Securities Corp. since its formation in 1979. Mr.
Seneff also has held the position of Chairman of the Board of  Directors,  Chief
Executive  Officer,   President  and  director  of  CNL  Management  Company,  a
registered investment advisor,  since its formation in 1976, has served as Chief
Executive  Officer,  Chairman  of the Board  and a  director  of CNL  Investment
Company,  has served as Chief Executive  Officer, a director and Chairman of the
Board of Directors of Commercial Net Lease Realty, Inc., a publicly-traded REIT,
listed on the NYSE, since 1992,  served as Chief Executive  Officer,  a director
and  Chairman of the Board of Directors of CNL Realty  Advisors,  Inc.  from its
inception in May 1992 through  December  1997, at which time such company merged
with  Commercial  Net Lease  Realty,  Inc.,  and has held the  position of Chief
Executive  Officer,  Chairman of the Board and a director  of CNL  Institutional
Advisors, Inc., a registered investment advisor, since its inception in December
1990.  Mr.  Seneff  has  served as  Chairman  of the Board of  Directors  of CNL
American  Properties  Fund, Inc. since December 1994 and as a director and Chief
Executive  Officer  since May 1994.  Mr.  Seneff has served as  Chairman  of the
Board,  Chief Executive Officer and a director of CNL Fund Advisors,  Inc. since
March 1994.  Mr.  Seneff has served as Chairman  of the Board,  Chief  Executive
Officer and a director of CNL Hospitality  Properties,  Inc. since June 1996 and
of CNL Hospitality Advisors, Inc. since January 1997. Mr. Seneff has also served
as Chairman of the Board,  Chief Executive  Officer and a director of CNL Health
Care  Properties,  Inc. since  December 1997 and CNL Health Care Advisors,  Inc.
since July 1997. Mr. Seneff previously served on the Florida State Commission on
Ethics  and is a  former  member  and past  Chairman  of the  State  of  Florida
Investment  Advisory Council,  which advises the Florida Board of Administration
investments for various Florida employee  retirement funds. The Florida Board of
Administration,  Florida's  principal  investment  advisory and money management
agency,  oversees the  investment of more then $60 billion of retirement  funds.
Mr.  Seneff  has  served as a member of the board of  directors  of First  Union
National  Bank of  Florida  since  May 1998 and has  served  as a member  of the
Orlando Advisory Board of First Union National Bank of Florida since March 1994.
Since 1971,  Mr.  Seneff has been active in the  acquisition,  development,  and
management  of real  estate  projects  and,  directly  or through an  affiliated
entity,  has  served as a general  partner  or joint  venturer  in over 100 real
estate ventures involved in the financing, acquisition, construction, and rental
of restaurants,  office buildings,  apartment complexes,  hotels, and other real
estate.  Included in these real estate ventures are  approximately  65 privately
offered  real  estate  limited  partnerships  in which Mr.  Seneff,  directly or
through an affiliated  entity,  serves or has served as a general partner.  Also
included are CNL Income Fund,  Ltd.,  CNL Income Fund II, Ltd.,  CNL Income Fund
III,  Ltd.,  CNL Income Fund IV, Ltd., CNL Income Fund 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.



<PAGE>


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

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

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

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

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

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

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

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

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

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


Item 11.  Executive Compensation

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


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of March 11,  1999,  no person was known to the  Registrant  to be a
beneficial owner of more than five percent of the Units.

         The following  table sets forth,  as of March 11, 1999,  the beneficial
ownership interests of the General Partners in the Registrant.


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

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

                                                                    100%
                                                                    ====

         Neither the General  Partners,  nor any of their  affiliates,  owns any
interest  in the  Registrant,  except as noted  above.  On March 11,  1999,  the
Registrant  entered  into an  Agreement  and Plan of  Merger  with CNL  American
Properties  Fund, Inc.  ("APF") pursuant to which the Registrant would be merged
with and into a subsidiary of APF (the "Merger").  For further  discussion,  see
Item 8. Financial Statements and Supplementary Data -- Note 12.
Subsequent Event.




<PAGE>


Item 13.  Certain Relationships and Related Transactions

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

<TABLE>
<CAPTION>

                                                                                                 Amount Incurred
       Type of Compensation                                                                       For the Year
            and Recipient                            Method of Computation                   Ended December 31, 1998
     ------------------------                        ---------------------                   -----------------------
<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:  $79,438
                                              of  the  prevailing  rate  at  which
                                              comparable  services could have been     Accounting    and     administrative
                                              obtained  in  the  same   geographic     services: $94,611
                                              area.   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.

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


<PAGE>



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

Deferred,    subordinated   real   estate     A   deferred,    subordinated   real     $ 65,400
disposition fee payable to affiliates         estate   disposition   fee,  payable
                                              upon   sale   of   one   or   more
                                              Properties,  in an amount equal to
                                              the  lesser of (i)  one-half  of a
                                              competitive       real      estate
                                              commission,  or (ii) three percent
                                              of  the   sales   price   of  such
                                              Property or Properties. Payment of
                                              such  fee  shall  be made  only if
                                              affiliates of the General Partners
                                              provide  a  substantial  amount of
                                              services  in  connection  with the
                                              sale of a Property  or  Properties
                                              and  shall  be   subordinated   to
                                              certain  minimum  returns  to  the
                                              Limited Partners.  However, if the
                                              net sales  proceeds are reinvested
                                              in a replacement Property, no such
                                              real estate  disposition  fee will
                                              be incurred until such replacement
                                              Property is sold and the net sales
                                              proceeds are distributed.

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

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



<PAGE>



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

General  Partners'  share of  Partnership     Distributions  of net sales proceeds     $ - 0 -
net sales  proceeds  from a sale or sales     from   a   sale    or    sales    of
in liquidation of the Partnership             substantially     all     of     the
                                              Partnership's   assets   will   be
                                              distributed in the following order
                                              or priority: (i) first, to pay all
                                              debts  and   liabilities   of  the
                                              Partnership   and   to   establish
                                              reserves; (ii) second, to Partners
                                              with  positive   capital   account
                                              balances,   determined  after  the
                                              allocation  of  net  income,   net
                                              loss, gain and loss, in proportion
                                              to such  balances,  up to  amounts
                                              sufficient to reduce such balances
                                              to zero; and (iii) thereafter, 95%
                                              to the Limited  Partners and 5% to
                                              the General Partners.

</TABLE>


         As discussed  above in Item 8. Financial  Statements and  Supplementary
Data -- Note 12.  Subsequent Event, the Registrant has entered into an Agreement
and Plan of  Merger,  dated  March  11,  1999,  with APF  pursuant  to which the
Registrant would be merged with and into a subsidiary of APF in exchange for the
issuance of APF Shares.  The APF Shares are expected to be listed for trading on
the New York Stock Exchange concurrently with the consummation of the Merger. If
the Merger is approved by Limited Partners holding units greater than 50% of the
outstanding  units of the  Registrant,  the General  Partners of the  Registrant
would receive certain  benefits.  For instance,  following the Merger,  James M.
Seneff, Jr. and Robert A. Bourne, the individual General Partners, will continue
to serve as directors of APF, with Mr. Seneff serving as Chairman and Mr. Bourne
serving as Vice Chairman. As APF directors, they may also be entitled to receive
stock options under any stock option plan adopted by APF.



<PAGE>


                                     PART IV

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

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

         1.   Financial Statements

                  Report of Independent Accountants

                  Balance Sheets at December 31, 1998 and 1997

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

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

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

                  Notes to Financial Statements

         2.   Financial Statement Schedules

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

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

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

                  Schedule IV - Mortgage Loans on Real Estate at December 31,
                  1998

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

         3.   Exhibits

                  3.1      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.)

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


<PAGE>






                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 30th day of
March, 1999.


                                           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>
<S> <C>

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

/s/ Robert A.Bourne                     President, Treasurer and Director           March 30, 1999
--------------------------------        (Principal Financial and Accounting
Robert A. Bourne                        Officer)


/s/ James M. Seneff, Jr.                Chief Executive  Officer and Director       March 30, 1999
--------------------------------        (Principal Executive  Officer)
James M. Seneff, Jr.


<PAGE>

</TABLE>





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

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 1998, 1997, and 1996


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

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

   1996        Allowance for
                   doubtful
                   accounts (a)        $   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
                                   ==============   ==============   ===============    ============     ============  ===========

   1998        Allowance for
                   doubtful
                   accounts (a)       $  137,892         $    --         $  17,303  (b)   $  3,094  (c)    $  10,596      $141,505
                                   ==============   ==============   ===============    ============     ============  ===========

</TABLE>



         (a)  Deducted from receivables on the balance sheet.

         (b) Reduction of rental and other income.

         (c) Amounts written off as uncollectible.


<PAGE>



<TABLE>
<CAPTION>


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

                                              SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                                 December 31, 1998
<S> <C>

                                                                                         Costs Capitalized   
                                                                                           Subsequent To     
                                                                   Initial Cost             Acquisition      n
                                                           --------------------------- --------------------- 
                                             Encum-                      Buildings and  Improve-    Carrying 
                                            brances           Land       Improvements    ments       Costs   
                                          -----------     ------------   ------------  ----------   -------- 
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:
      Daleville, Indiana (l) (n)              -               125,562       404,935           -         -    
      New Castle, Indiana                     -               117,394       471,340           -         -    

    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           -         -    

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

    Tony Romas:
      Sandy, Utah                             -               595,330             -           -         -    

    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) (o)          -               448,726             -     696,741         -    
                                                         ------------  ------------  ----------  ---------

                                                           $5,352,136    $5,382,594   $2,475,004        -    
                                                         ============  ============   ==========  ========


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 48.90% 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 42.09% Interest as
  Tenants-in-Common and has
  Invested in Under an
  Operating Lease:
    Boston Market Restaurant:
      Mesa, Arizona (k)                       -              $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           -         -    
                                                         ============  ============  ==========  ======== 

Property of Joint Venture in Which
  the Partnership has a 53.12% Interest
  and has Invested in Under an Operating
  Lease:
    Ruby Tuesday's Restaurant:
      Orlando, Florida                        -              $623,496             -           -         -    
                                                         ============  ============  ==========  ======== 


 Properties the Partnership
   has Invested in Under
   Direct Financing Leases:

     Captain D's Restaurant
       Zanesville, Ohio                       -               $99,651      $390,518           -         -    

     Denny's Restaurant:
       Huron, Ohio                            -                27,418       456,139           -         -    

     Tony Romas:
       Sandy, Utah                            -                     -       911,072           -         -    
                                                         ------------  ------------  ----------  --------
     
                                                             $127,069    $1,757,729           -         -
                                                         ============  ============  ==========  ========




                                                                                        
         Gross Amount at Which                                             Life on Which
         Carried at Close of Period (c)                                   Depreciation i
  ---------------------------------------             Date                 Latest Income
              Buildings and            Accumulated   of Con-     Date      Statement is 
    Land      Improvements    Total    Depreciation struction  Acquired      Computed   
  ---------   -----------  ----------- -----------  ---------  ---------   -------------
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
  $482,070     $368,416      $850,486     $116,665    1989       04/89          (b)        
                                                                                        
                                                                                        
   186,050      383,781       569,831      125,262    1988       03/89          (b)        
                                                                                        
                                                                                        
   125,562      404,935       530,497       13,827    1974       02/89          (l)        
   117,394      471,340       588,734       93,923    1989       02/89          (h)        
                                                                                        
                                                                                        
                                                                                        
   156,382      429,107       585,489      133,498    1986       09/89          (b)        
   504,787      742,216     1,247,003      223,516    1989       12/89          (b)        
                                                                                        
                                                                                        
   113,884      564,805       678,689      101,906    1989       03/89          (i)        
   279,665      591,137       870,802      152,936    1989       03/89          (b)        
   120,847      719,702       840,549      125,294    1989       03/89          (i)        
                                                                                        
                                                                                        
   513,384      671,713     1,185,097       24,567    1997       11/97          (b)        
                                                                                        
                                                                                        
   237,944      200,501       438,445       65,163    1985       03/89          (b)        
                                                                                        
                                                                                        
   330,164      319,511       649,675       99,847    1989       05/89          (b)        
   215,302      378,836       594,138      114,703    1989       08/89          (b)        
                                                                                        
                                                                                        
   595,330           (f)      595,330           (d)   1997       12/97          (d)        
                                                                                        
                                                                                        
                                                                                        
   336,218      462,400       798,618      151,564    1987       02/89          (b)        
   277,965      243,839       521,804       73,828    1976       12/89          (b)        
   310,462      208,618       519,080       63,164    1977       12/89          (b)        
                                                                                        
                                                                                        
   448,726      696,741     1,145,467      216,092    1989       03/89          (b)        
-----------  ----------     ---------  -----------                                      
                                                                                        
$5,352,136   $7,857,598   $13,209,734   $1,895,755                                      
===========  ===========  ============  ===========                                     
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
  $183,229     $192,857      $376,086      $57,909    1986       12/89          (b)        
==========  ===========  ============  ===========                                      
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
  $283,961     $430,406      $714,367     $127,688    1985       01/90          (b)        
==========  ===========  ============  ===========                                      
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
  $440,842     $650,622    $1,091,464      $25,837    1997       10/97          (b)        
==========  ===========  ============  ===========                                      
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
  $875,659   $1,389,366    $2,265,025      $46,436    1994       12/97          (b)        
==========  ===========  ============  ===========                                      
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
  $623,496           (f)     $623,496           (d)   1998       05/98          (d)        
==========               ============  ===========                                      
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
        (f)          (f)           (f)          (e)   1988       03/89          (e)        
                                                                                        
                                                                                        
        (f)          (f)           (f)          (e)   1971       05/89          (e)        
                                                                                        
                                                                                        
         -           (f)           (f)          (d)   1997       12/97          (d)        
                                                                                        
                                                                                        
                                                                                        
</TABLE>







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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1998


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

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

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

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

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

                                  Balance, December 31, 1997                          14,616,195            1,944,358
                                  Reclassification  from direct financing lease          530,497                   --
                                  Dispositions                                        (1,936,958 )           (315,857 )
                                  Depreciation expense (j)(n)(o)                              --              267,254
                                                                                 ----------------     ----------------

                                  Balance, December 31, 1998                      $   13,209,734         $  1,895,755
                                                                                 ================     ================

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

                                  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
                                  Depreciation expense                                        --                6,428
                                                                                 ----------------     ----------------

                                  Balance, December 31, 1998                        $    376,086          $    57,909
                                                                                 ================     ================


<PAGE>


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

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

                                              December 31, 1998


                                                                                                          Accumulated
                                                                                        Cost              Depreciation
                                                                                  -----------------      ---------------
                         Property of Joint Venture in Which the 
                             Partnership has a 48.90% Interest and
                             has Invested in Under an
                             Operating Lease:

                                 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
                                 Depreciation expense                                          --                14,347
                                                                                  ----------------       --------------

                                 Balance, December 31, 1998                          $    714,367           $   127,688
                                                                                  ================       ==============

                         Property in Which the Partnership has a 42.09%
                             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
                                 Depreciation expense                                          --                21,816
                                                                                  ----------------       --------------

                                 Balance, December 31, 1998                         $   1,091,464            $   25,837
                                                                                  ================       ==============

                         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
                                 Depreciation expense                                          --                46,309
                                                                                  ----------------       --------------

                                 Balance, December 31, 1998                         $   2,265,025            $   46,436
                                                                                  ================       ==============



<PAGE>


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

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

                                              December 31, 1998


                                                                                                         Accumulated
                                                                                        Cost             Depreciation
                                                                                -----------------      ---------------
                         Property of Joint Venture in Which the
                             Partnership has a 53.12% Interest
                             and has Invested in Under an
                             Operating Lease:

                                 Balance, December 31, 1997                                 $   --              $  --
                                 Acquisition                                               623,496                 --
                                 Depreciation expense (d)                                       --                 --
                                                                                  ----------------       --------------


                                 Balance, December 31, 1998                              $ 623,496              $  --
                                                                                  ================       ==============
</TABLE>



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

             (c)  As of December 31, 1998,  the aggregate cost of the Properties
                  owned by the Partnership and its  consolidated  joint venture,
                  and the  unconsolidated  joint ventures for federal income tax
                  purposes was $14,858,382 and $5,889,641,  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  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.



<PAGE>


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

       NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                    CONTINUED

                                December 31, 1998


             (i)  Effective  February  1994,  the  lease for this  Property  was
                  terminated,  resulting in the lease's  reclassification  as an
                  operating  lease.  The building was recorded at net book value
                  as of February 1994 and will be depreciated over its remaining
                  estimated life of approximately 25 years.

             (j)  For financial  reporting  purposes,  the undepreciated cost of
                  the  Property in Belding,  Michigan,  was written  down to net
                  realizable   value  due  to  an  impairment   in  value.   The
                  Partnership   recognized   the   impairment  by  recording  an
                  allowance  for  loss on land and  building  in the  amount  of
                  $307,283 at December 31, 1998.  The impairment at December 31,
                  1998 represents the difference between the Property's carrying
                  value and estimated net realizable value of the Property.  The
                  cost of the Property  presented on this  schedule is the gross
                  amount at which the Property was carried at December 31, 1998,
                  excluding the allowance for loss on land and building.

             (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.

             (l)  Effective   March  1998,  the  lease  for  this  property  was
                  terminated,  resulting in the lease being  reclassified  as an
                  operating  lease.  The building was recorded at net book value
                  as of March 1998, and will be  depreciated  over its remaining
                  estimated life of approximately 20 years.

             (m)  For financial  reporting  purposes,  the undepreciated cost of
                  the Property in Lebanon,  New  Hampshire,  was written down to
                  net  realizable  value  due to an  impairment  in  value.  The
                  Partnership   recognized   the   impairment  by  recording  an
                  allowance  for  loss on land and  building  in the  amount  of
                  $221,898 at December 31, 1998.  The impairment at December 31,
                  1998,   represents  the  difference   between  the  Property's
                  carrying value and the current  estimated net realizable value
                  of the  Property.  The cost of the Property  presented on this
                  schedule is the gross amount at which the Property was carried
                  at December 31, 1998, excluding the allowance for loss on land
                  and building.

             (n)  For financial  reporting  purposes,  the undepreciated cost of
                  the Property in  Daleville,  Indiana,  was written down to net
                  realizable   value  due  to  an  impairment   in  value.   The
                  Partnership   recognized   the   impairment  by  recording  an
                  allowance  for loss on the  building in the amount of $124,670
                  for the year  ended  December  31,  1998.  The  impairment  at
                  December  31,  1998,  represents  the  difference  between the
                  Property's  carrying  value  and  the  current  estimated  net
                  realizable  value of the  Property.  The cost of the  Property
                  presented  on this  schedule is the gross  amount at which the
                  Property  was  carried at December  31,  1998,  excluding  the
                  allowance for loss on the building.


<PAGE>


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

                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

                                December 31, 1998

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

                                                                                                                  Principal
                                                                                                                  Amount of
                                   Final       Periodic                                       Carrying           Loan Subject
                   Interest      Maturity      Payment        Prior       Face Amount         Amount of         to Delinquent
 Description         Rate          Date         Terms         Liens       of Mortgage         Mortgage(1)   Principal or Interest
 -----------         ----          ----         -----         -----       -----------         --------      ---------------------

Perkins -
Myrtle Beach, FL
First Mortgage      10.25%       July 2000       (2)           $--         $  1,040,000         $ 876,248            $--

Ponderosa -
St. Cloud, FL                     October                    
First Mortgage      10.75%         2011          (3)             --        $  1,057,299         $ 871,812            $--
                                                            ---------   ----------------    -------------   ----------------------

         Total                                                 $--          $ 2,097,299        $1,748,060(4)         $--
                                                            =========   ================    =============   ======================

      (1)    Carrying  amount  consists of  outstanding  principal  plus accrued
             interest less deferred  gains.  The tax carrying value of the notes
             are $1,767,587, which are net of deferred gains of $308,178.

      (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:


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

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

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

        Interest earned                                                223,031           211,263             126,533

        Collections of principal and interest                         (236,429 )        (227,316  )         (123,832 )

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

        Recognition  of  deferred  gain  on  sale  of  land  and         3,291             1,362                 924
        building
                                                                 --------------     --------------      -------------

        Balance at end of period                                   $ 1,748,060       $ 1,758,167          $1,772,858
                                                                 ==============     ==============      =============


<PAGE>

</TABLE>




                                    EXHIBITS


<PAGE>



















                                  EXHIBIT INDEX


Exhibit Number

      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.)