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 0-28380

                       CNL AMERICAN PROPERTIES FUND, INC.
             (Exact name of registrant as specified in its charter)

                   Maryland                             59-3239115
        (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:

                     Common Stock, $0.01 par value per share
                                (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  has made three  offerings of shares of common stock
(the "Shares") on Form S-11 under the  Securities  Act of 1933, as amended.  The
number of Shares held by  non-affiliates  as of March 19,  1999 was  74,656,927.
Since no established market for such Shares exists, there is no market value for
such Shares. Each Share was originally sold at $10 per Share.

         The number of shares of common stock  outstanding  as of March 19, 1999
was 74,676,927.


<PAGE>


                      DOCUMENTS INCORPORATED BY REFERENCE:

         Registrant  incorporates  by  reference  portions  of the CNL  American
Properties Fund, Inc.  Definitive Proxy Statement for the 1999 Annual Meeting of
Stockholders  (Items  10,  11, 12 and 13 of Part III) to be filed no later  than
April 30, 1999.


<PAGE>


                                                        
                                     PART I


Item 1.  Business

         CNL American  Properties Fund, Inc. is a Maryland  corporation that was
organized on May 2, 1994.  CNL APF GP Corp.  and CNL APF LP Corp.,  organized in
Delaware in May 1998, are wholly owned  subsidiaries of CNL American  Properties
Fund, Inc. CNL APF Partners,  LP is a Delaware limited partnership formed in May
1998.  CNL APF GP  Corp.  and CNL APF LP  Corp.  are  the  general  and  limited
partners,  respectively,  of CNL APF Partners,  LP. The term "Company" includes,
unless the text otherwise requires,  CNL American Properties Fund, Inc., CNL APF
GP Corp.,  CNL APF LP Corp.,  CNL APF Partners,  LP and  CNL/Corral  South Joint
Venture.  In April 1995, the Company commenced a public offering for the sale of
up to  16,500,000  shares  ($165,000,000)  of common stock (the  "Shares")  (the
"Initial  Offering").  Following  the  completion  of its  Initial  Offering  in
February 1997, the Company commenced an offering of up to 27,500,000 Shares (the
"1997  Offering").  Following the completion of the 1997 Offering in March 1998,
the  Company  commenced  an  offering  of up to  34,500,000  Shares  ("the  1998
Offering"). The Company's 1998 Offering became fully subscribed in December 1998
and proceeds  from the last  subscriptions  were received in January 1999. As of
December 31, 1998, the Company had received aggregate subscription proceeds from
its  Initial   Offering,   1997  Offering  and  1998  Offering  of  $747,253,675
(74,725,368  Shares),  including  $5,572,261 (557,226 Shares) issued through the
reinvestment plan.

         The  Company  had  adopted  a  reinvestment   plan  pursuant  to  which
stockholders  could  elect to have the full  amount of their cash  distributions
from the Company reinvested in additional Shares of common stock of the Company.
In October  1998,  the Board of  Directors  elected to terminate  the  Company's
reinvestment  plan.  In October  1998,  the Board of  Directors  also elected to
implement the Company's  redemption plan. Under the redemption plan, the Company
elected to redeem Shares, subject to certain conditions and limitations.  During
the year ended December 31, 1998, 69,514 Shares were redeemed at $9.20 per Share
($639,528) and retired from Shares outstanding of common stock.

         On March 11,  1999,  the Company  entered into  several  agreements  to
acquire  certain  affiliates  of  CNL  Group,  Inc.  (the  "Acquisitions").  The
Acquisitions consist of:

         Acquisition of Advisor and the CNL Restaurant Financial Services Group.
Pursuant to an Agreement  and Plan of Merger with CNL Fund  Advisors,  Inc. (the
"Advisor"),  the Company  will become  internally  advised and acquire  complete
acquisition and development and in-house  management  functions by acquiring the
Advisor.  Because the  Company has had no  employees  since its  inception,  the
Advisor  has  provided  these  functions  on behalf of the  Company and has been
responsible  for the  day-to-day  operations of the Company,  including  raising
capital, investment analysis,  acquisitions, due diligence, asset management and
accounting services.

         Additionally,  pursuant  to an  Agreement  and Plan of Merger  with CNL
Financial Corp. and CNL Financial Services, Inc. (together,  the "CNL Restaurant
Financial  Services  Group" and together with the Advisor,  the "CNL  Restaurant
Businesses"),  the Company will increase its financing  capabilities  and expand
its mortgage loan portfolio.  The CNL Restaurant  Financial Services Group makes
and services  mortgage  loans to  operators of national and regional  restaurant
chains  and  securitizes  a portion of those  loans.  As  consideration  for the
acquisition  of the CNL Restaurant  Businesses,  the Company has agreed to issue
12.3 million Shares.

         Acquisition  of CNL Income Funds.  In order to increase the size of its
restaurant  property  portfolio,  the Company also entered into an Agreement and
Plan of Merger with each of the 18 CNL Income Funds,  which are Florida  limited
partnerships,  engaged in the  purchase  and  triple-net  leasing of  restaurant
properties (the "Funds"). As consideration for the acquisition of the Funds (and
assuming  all of the Funds are  acquired),  the  Company  has agreed to issue 61
million Shares. The general partners of each of the Funds plan to hold a special
meeting of the partners during the third quarter of 1999 for each Fund, at which
it will request approval of the acquisition of the Fund by the Company.  Limited
parters holding in excess of 50% of each Fund's outstanding  limited partnership
interests  must  approve the Fund's  acquisition  prior to  consummation  of the
transaction.



<PAGE>


         The Company was formed primarily to acquire restaurant  properties (the
"Properties")  located across the United States,  directly or indirectly through
joint  venture  or  co-tenancy  arrangements,   to  be  leased  on  a  long-term
(generally,  15 to 20 years,  plus renewal  options for an  additional  10 to 20
years),  "triple-net" basis, which means that the tenant will be responsible for
repairs,  maintenance,  property taxes, utilities and insurance. As of March 11,
1999, the Company owned a portfolio of 469 Properties  located across the United
States which are leased to operators of certain national and regional fast-food,
family-style and casual dining restaurant chains (the "Restaurant Chains").  The
Company  structures  the leases of its Properties to provide for payment of base
annual rent with (i)  automatic  increases  in base rent and/or (ii)  percentage
rent  based on gross  sales  above a certain  level.  The  Company  also  offers
financing  for the  purchase of  buildings,  generally by tenants that lease the
underlying  land from the Company (the  "Mortgage  Loans").  Mortgage  Loans are
expected to constitute  from 5% to 10% of the Company's total  investments.  The
Company will  re-evaluate this policy in connection with the consummation of the
Acquisitions,  as described above. Management believes that the economic effects
of the Mortgage  Loans for the purchase of buildings are similar to those of its
leases  (generally  with full  repayment in 15 to 20 years).  In  addition,  the
Company offers furniture,  fixtures and equipment (the "Equipment") financing to
operators of Restaurant Chains pursuant to which the Company  provides,  through
direct  financing leases and loans,  the Equipment  (collectively,  the "Secured
Equipment Leases"). The Company has represented that at the end of each quarter,
the value of the  Equipment  together  with any personal  property  owned by the
Company,  in the aggregate,  will represent less than 25% of the Company's total
assets.  In  1996,  the  Company  obtained  a  $15,000,000  line of  credit  and
subsequently  amended such line of credit to $35,000,000,  which the Company can
use to fund Secured  Equipment  Leases,  to purchase  Properties  and to provide
Mortgage Loans. The Company anticipates renegotiating and increasing its line of
credit in the first quarter of 1999.

         As of December 31,  1998,  net proceeds to the Company from its Initial
Offering,  1997  Offering,  1998  Offering  and capital  contributions  from the
Company's  Advisor,  after deduction of  organizational  and offering  expenses,
totalled $670,336,817. The Company acquired its first Property on June 30, 1995,
and as of December 31, 1998, approximately $549,917,000 of net offering proceeds
had been used to invest,  or committed  for  investment,  in (i) 409  Properties
(including  40  Properties  on  which a  restaurant  was  being  constructed  or
renovated),   (ii)  mortgage  financing  of  approximately  $19,489,000,   (iii)
investments in franchise loan certificates of approximately $16,100,000 and (iv)
acquisition fees to the Advisor  totalling  $33,595,134 and certain  acquisition
expenses.  In addition, as of December 31, 1998, the Company had entered into 39
Secured  Equipment  Leases  and  entered  into ten  promissory  notes  totalling
approximately  $19,113,000 with borrowers for equipment  financing.  As of March
11, 1999,  the Company had invested or committed for  investment the majority of
the net offering proceeds received from the Initial Offering,  1997 Offering and
1998  Offering.  As of March 11, 1999,  the Company had  acquired 60  additional
Properties (33 of which were under construction),  as described below in Item 2.
Properties.  As of March 11, 1999,  the Company had entered into ten  additional
Secured  Equipment  Leases,   entered  into  five  additional  promissory  notes
totalling  approximately  $721,000 with  borrowers  for equipment  financing and
entered into one additional  promissory note for  approximately  $783,000 with a
borrower for a Mortgage  Loan.  The Company  currently is negotiating to acquire
additional  Properties,  but as of March 11,  1999,  had not  acquired  any such
Properties.  The Company will use proceeds available from the line of credit and
the remaining net offering proceeds to acquire additional Properties.

         Currently,  the  Company's  primary  investment  objectives  are (i) to
preserve,  protect,  and enhance the  Company's  assets,  (ii) making  quarterly
distributions, (iii) obtaining fixed income through the receipt of base rent, as
well as increase the Company's income (and distributions) and provide protection
against  inflation  through  automatic  increases  in base rent and  receipt  of
percentage rent, and to obtain fixed income through the receipt of payments from
Mortgage Loans and Secured  Equipment  Leases,  (iv)  continuing to qualify as a
REIT for federal  income tax  purposes  and (v)  providing  stockholders  of the
Company with liquidity of their investment (although liquidity cannot be assured
thereby)  through  listing  the  Shares  of the  Company  on the New York  Stock
Exchange or other national exchange or over-the-counter market ("Listing").

         The  Company  intends,  to the  extent  consistent  with the  Company's
objective of  qualifying  as a REIT,  to reinvest in  additional  Properties  or
Mortgage  Loans any  proceeds of the sale of a Property or a Mortgage  Loan that
are not  required to be  distributed  to  stockholders  in order to preserve the
Company's  REIT status for federal  income tax purposes.  Similarly,  and to the
extent consistent with REIT qualification, the Company plans to use the proceeds
of the sale of a Secured  Equipment Lease to fund additional  Secured  Equipment
Leases,  or to reduce its outstanding  indebtedness  on the line of credit.  The
Company  intends to provide  stockholders of the Company with liquidity of their
investment,  either in whole or in part,  through  Listing  of the Shares of the
Company  (although  liquidity  cannot be assured  thereby)  no later than in the
fourth quarter of 1999. If Listing  occurs,  the Company  intends to reinvest in
additional Properties, Mortgage Loans and Secured Equipment Leases any net sales
proceeds not required to be distributed to stockholders in order to preserve the
Company's  status as a REIT. If Listing does not occur by December 31, 2005, the
Company will  undertake the orderly  liquidation  of the Company and the sale of
the Company's assets and will distribute any net sales proceeds to stockholders.
In  addition,  the  Company  will not sell any  assets if such sale would not be
consistent with the Company's objective of qualifying as a REIT.

         In  deciding  the  precise  timing  and terms of  Property  sales,  the
Advisor,  subject  to the  approval  of the Board of  Directors,  will  consider
factors  such  as  national  and  local  market  conditions,  potential  capital
appreciation,  cash flows, and federal income tax  considerations.  The terms of
certain  leases,  however,  may  require  the  Company to sell a Property  at an
earlier time if the tenant  exercises its option to purchase a Property  after a
specified  portion  of the lease  term has  elapsed.  The  Company  will have 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  tenants.  In  connection  with  sales of  Properties  by the
Company,  purchase money obligations may be taken by the Company as part payment
of the sales price.  The terms of payment will be affected by custom in the area
in which the  Property is located and  prevailing  economic  conditions.  When a
purchase  money  obligation  is  accepted  in lieu of cash  upon  the  sale of a
Property,  the Company will  continue to have a mortgage on the Property and the
proceeds  of the sale will be  realized  over a period of years  rather  than at
closing of the sale.

         The Company does not anticipate  selling the Secured  Equipment  Leases
prior to  expiration  of the lease  term,  except in the event that the  Company
undertakes orderly liquidation of its assets. In addition,  the Company does not
anticipate  selling any Mortgage Loans prior to the expiration of the loan term,
except in the event (i) the Company owns the Property (land only) underlying the
building  improvements  which  secure  the  Mortgage  Loan  and the  sale of the
Property occurs,  or (ii) the Company  undertakes an orderly sale of its assets.
The Company will  re-evaluate this policy in connection with the consummation of
the Acquisitions, as described above.

Leases

         As of December 31, 1998, the Company had acquired,  either  directly or
through a joint  venture  arrangement,  409  Properties,  which are  subject  to
long-term,  triple-net  leases.  Although  there are  variations in the specific
terms of the leases,  the following is a summarized  description  of the general
structure of the Company's  leases.  The leases of the  Properties  owned by the
Company and the joint ventures in which the Company is a co-venturer,  generally
provide for initial  terms  ranging from 15 to 20 years and expire  between 2006
and 2018. The leases are on a triple-net basis, with the lessee  responsible for
all repairs and maintenance, property taxes, insurance and utilities. The leases
of the Properties  provide for minimum base annual rental  payments  (payable in
monthly  installments)  ranging  from  approximately  $52,000  to  $468,000.  In
addition, certain leases provide for percentage rent based on sales in excess of
a specified  amount.  In  addition,  the  majority of the leases  provide  that,
commencing in specified lease years (generally the sixth lease year), the annual
base rent required under the terms of the lease will increase.

         Generally,  the  leases  of the  Properties  provide  for  two to  five
five-year or ten-year  renewal  options subject to the same terms and conditions
as the initial lease. Certain lessees also have been granted options to purchase
the Property at the Property's then fair market value after a specified  portion
of the lease term has elapsed. The option purchase price may equal the Company's
original cost to purchase the Property  (including  acquisition  costs),  plus a
specified percentage from the date of the lease or a specified percentage of the
Company's  purchase  price,  if that amount is greater than the Property's  fair
market value at the time the purchase option is exercised.

         The leases also generally provide that, in the event the Company wishes
to sell the  Property  subject to that lease,  the Company  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 Company has received for the sale of
the Property.

         In connection with the  acquisition of five Properties  acquired during
1998 that are building only,  the Company has entered into tri-party  agreements
with the tenants and the owners of the land.  The tri-party  agreements  provide
that the tenant is responsible  for all  obligations  under the ground lease and
provide  certain  rights to the  Company to help  protect  its  interest  in the
buildings  in the event of a default by the tenant under the terms of the ground
lease. In connection with the purchase of one of the Properties that is building
only,  the Company has entered into an  assignment  of an interest in the ground
lease with the landlord of the land.  The  assignment  provides  that the ground
lessee is responsible  for all  obligations  under the ground lease and provides
certain rights to the Company relating to the maintenance of its interest in the
building  in the event of a default by the lessee  under the terms of the ground
lease.

         During the period  January 1, 1999 through March 11, 1999,  the Company
acquired 60  additional  Properties  (33 of which are under  construction).  The
leases for these Properties are substantially the same as those described above.

Major Tenants

         During 1998,  one of the  Company's  lessees,  Foodmaker,  Inc.  (which
operates and franchises Jack in the Box restaurants),  contributed more than ten
percent  of the  Company's  total  rental,  earned  income and  interest  income
relating  to its  Properties,  Mortgage  Loans,  Secured  Equipment  Leases  and
Certificates.  Foodmaker,  Inc.  is  the  lessee  under  leases  relating  to 50
restaurants. In addition, two Restaurant Chains, Golden Corral Family Steakhouse
and Jack in the Box,  each  accounted for more than ten percent of the Company's
total rental, earned income and interest income relating to Properties, Mortgage
Loans,  Secured  Equipment  Leases and  Certificates  during  1998.  Because the
Company has not  completed  its  investment in  Properties,  Mortgage  Loans and
Secured  Equipment  Leases,  it is not  possible  to  determine  which  lessees,
borrowers  or  Restaurant  Chains will  contribute  more than ten percent of the
Company's  rental,  earned income and interest income during 1999 and subsequent
years.  In the event  that  certain  lessees,  borrowers  or  Restaurant  Chains
contribute  more than ten percent of the  Company's  rental,  earned  income and
interest  income in future  years,  any failure of such  lessees,  borrowers  or
Restaurant  Chains could materially  affect the Company's income. As of December
31,  1998,  no single  lessee or  borrower,  or group of  affiliated  lessees or
borrowers  leased  Properties or was the borrower  under  Mortgage Loans with an
aggregate  carrying value,  excluding  acquisition fees and certain  acquisition
expenses, in excess of 20 percent of total assets of the Company.

Mortgage Loans and Mortgage Loan Securitizations

         During 1998, the Company provided  mortgage  financing of approximately
$2,902,000 evidenced by four mortgage notes which are collateralized by building
improvements  on four  Properties.  The  Mortgage  Loans bear  interest at rates
ranging  from 9.5% to 11 percent  per annum and are being  collected  in monthly
installments with maturity dates ranging from 2000 to 2014.

         During 1998,  the Company  invested  approximately  $16,100,000  of the
offering  proceeds in franchise  loan  certificates  (the  "Certificates")  in a
mortgage loan securitization sponsored by an affiliate of the Company's Advisor.
A securitization  is a process of taking what historically has been a non-liquid
asset class and  transforming the asset into an underlying  liquid  security.  A
mortgage  loan  securitization  takes a non-liquid  financial  asset (a group of
mortgage  loans) and  aggregates  these loans together into a pool and creates a
security  backed by these loans,  which is issued to investors.  We believe this
investment  represents  an  opportunity  for the  Company to achieve  investment
returns  similar  to  those  generated  by  its  triple-net   leased  restaurant
Properties.  In  addition,  the Company  has  pre-existing,  triple-net  leasing
arrangements  with the majority of the borrowers  underlying  the pool of loans.
Prior to acquiring the Certificates, the Company engaged a nationally recognized
investment  banking firm to evaluate its investment in the  Certificates and the
firm provided a valuation  letter to the Company that the purchase price paid by
the Company was consistent with the estimated value of the cash flow expected to
be generated from the Certificates.  The Company invested in securities rated BB
and B as well as a non-rated class.

Secured Equipment Leases

         In 1997, the Company entered into two promissory  notes with a borrower
for equipment  financing,  totalling  $13,225,000,  which are  collateralized by
restaurant  equipment.  Payments of principal  and interest were received by the
Company  during 1998.  In December  1998,  additional  equipment  financing  was
provided to this borrower,  resulting in two new promissory notes  consolidating
the  new  amounts  with  the  previous  amounts  loaned  in  1997.  The  two new
(consolidated) promissory notes total the original $13,225,000, bear interest at
a rate of ten  percent  per  annum  and will be  collected  in 84 equal  monthly
installments  of principal and interest  beginning on February 1, 1999. In 1998,
the Company entered into several  promissory  notes with borrowers for equipment
financing in the  aggregate  sum of  $5,887,512,  collateralized  by  restaurant
equipment.  These  promissory notes bear interest ranging from ten percent to 11
percent per annum and are being collected in monthly  installments with maturity
dates ranging from 1999 to 2006.



<PAGE>


Joint Venture Arrangements

         In August 1995 and June 1998,  the Company  entered into joint  venture
arrangements,  CNL/Corral  South Joint Venture and CNL/Lee Vista Joint  Venture,
respectively,  with  unaffiliated  entities  for each to  purchase  and hold one
Property.  The joint venture  arrangements provide for the Company and its joint
venture  partners to share in all costs and benefits  associated  with the joint
ventures in accordance with their respective  percentage  interests in the joint
ventures.  The  Company  and its joint  venture  partners  are also  jointly and
severally liable for all debts,  obligations and other  liabilities of the joint
ventures.

         CNL/Corral  South Joint  Venture and CNL/Lee  Vista Joint  Venture have
initial terms of 15 years and 30 years,  respectively,  and after the expiration
of the initial terms,  continue in existence from year to year unless terminated
at the option of either of the joint  venturers  or by an event of  dissolution.
Events of dissolution  include the bankruptcy,  insolvency or termination of any
joint  venturer,  sale of the  property  owned  by a joint  venture  and  mutual
agreement  of the Company and its joint  venture  partners to dissolve the joint
venture.

         The Company has management  control of CNL/Corral  South Joint Venture.
The joint venture agreement  restricts 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.

         The Company shares  management  control with its joint venture  partner
for CNL/Lee Vista Joint  Venture.  The joint venture  agreement  restricts  each
venturer's  ability to sell,  encumber or possess any  venture  property,  or to
assign its  interest  or rights in venture  property  without the consent of its
joint venture  partner.  The joint venture  agreement also prohibits any partner
from confessing  judgment against the joint venture,  lending or borrowing money
or entering into any commitment on behalf of the joint venture, or participating
in any act which would make it impossible  to carry on the ordinary  business of
the joint venture.

         As of  December  31,  1998,  the  Company  owned an 85.47%  interest in
CNL/Corral  South Joint  Venture.  Net cash flows from  operations  of the joint
venture  are  distributed  to the  Company  and its  joint  venture  partner  in
accordance with each partners'  respective interest.  Any liquidation  proceeds,
after  paying  joint  venture  debts and  liabilities  and funding  reserves for
contingent  liabilities,  will be distributed  first to the Company until it has
received a return of its capital  contribution,  plus a 20 percent return on its
capital contributions,  then to the other joint venture partner to the extent of
its positive capital account balance plus 20 percent thereof; and thereafter, in
proportion  to each joint  venture  partners'  percentage  interest in the joint
venture.

         As of December 31, 1998, the Company owned a 55.38% interest in CNL/Lee
Vista Joint  Venture.  Net cash flows from  operations  of the joint venture are
distributed to the Company and its joint venture partner in accordance with each
partners'  respective  interest.  Any liquidation  proceeds,  after paying joint
venture  debts and  liabilities,  paying  partners for loans made by them to the
joint  venture  and  funding  reserves  for  contingent  liabilities,   will  be
distributed to each joint venture partner in proportion to their then respective
aggregate unreturned capital contributions.

Certain Management Services

         The Advisor provides management  services relating to the Company,  the
Properties,  the Mortgage Loans and the Secured Equipment Lease program pursuant
to an advisory agreement (the "Advisory  Agreement") between it and the Company.
Under this  agreement,  the Advisor is responsible  for assisting the Company in
negotiating  leases,  Mortgage Loans,  Secured  Equipment Leases and the line of
credit,  collecting rental,  Mortgage Loan and Secured Equipment Lease payments,
inspecting the Properties and the tenants' books and records,  and responding to
tenant  inquiries  and notices.  The Advisor also  provides  information  to the
Company about the status of the leases, the Properties,  the Mortgage Loans, the
Secured Equipment Leases and the line of credit. In exchange for these services,
the  Advisor  is  entitled  to  receive  certain  fees  from  the  Company.  For
supervision of the Properties and Mortgage Loans, the Advisor receives a monthly
asset and mortgage  management  fee of one-twelfth of .60% of the Company's real
estate asset value and the outstanding  principal  balance of the Mortgage Loans
as of the end of the proceeding month. The management fee, which will not exceed
fees which are competitive for similar services in the same geographic area, may
or may not be taken,  in whole or in part as to any year, in the sole discretion
of the Advisor. For


<PAGE>


negotiating  equipment financing and loans and supervising the Secured Equipment
Lease program,  the Advisor is entitled to receive a one-time Secured  Equipment
Lease  servicing fee of two percent of the purchase  price of the equipment that
is the subject of a lease or loan (the "Secured Equipment Lease Servicing Fee").

         The Advisory  Agreement  continues until April 19, 1999, and thereafter
may be extended  annually  upon  mutual  consent of the Advisor and the Board of
Directors of the Company unless terminated at an earlier date upon 60 days prior
notice by each party.

Borrowing

         The Company has a revolving $35,000,000 uncollateralized line of credit
(the "Line of Credit") with a bank that enables the Company to receive  advances
under the Line of Credit to provide equipment financing, to purchase and develop
Properties and to fund Mortgage  Loans.  The advances bear interest at a rate of
LIBOR plus 1.65% or the bank's prime rate,  whichever the Company selects at the
time of borrowing.  Interest  only is repayable  monthly until July 31, 1999, at
which time all remaining interest and principal shall be due. The Line of Credit
provides for two one-year renewal options. Advances used to purchase and develop
Properties and to fund Mortgage Loans will be repaid using  additional  offering
proceeds or  refinanced  on a long-term  basis.  The Company  will not  encumber
Properties  in  connection  with the Line of  Credit.  The  Company  anticipates
renegotiating and increasing its Line of Credit in the first quarter of 1999.

         During the year ended December 31, 1998, the Company obtained  advances
totalling  $7,692,040 under the Line of Credit,  the proceeds of which were used
to fund 12 Secured  Equipment  Leases  (including four partially  funded Secured
Equipment Leases as of December 31, 1998) and to provide equipment  financing in
the form of promissory  notes as described  above in Item 1. Business -- Leases.
The Company  expects to obtain  additional  advances under the Line of Credit to
fund any  Secured  Equipment  Leases  entered  into in the  future.  The Company
intends to limit the amount of Secured  Equipment  Leases it enters  into to ten
percent of gross proceeds of its offerings.

         The  Company  expects  to use  uninvested  net  offering  proceeds  and
proceeds  from  borrowing  against  its Line of  Credit to  purchase  additional
Properties,  to  fund  construction  costs  relating  to  the  Properties  under
construction, to make Mortgage Loans and to fund Secured Equipment Leases.

Competition

         The fast-food,  family-style and casual dining  restaurant  business is
characterized by intense  competition.  The operators of the restaurants located
on the  Company'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.

         Many successful  fast-food,  family-style and casual dining restaurants
are located in "eating islands",  which are areas to which people tend to return
frequently and within which they can diversify  their eating habits,  because in
many cases local  competition  may enhance the  restaurant's  success instead of
detracting  from it.  Fast-food,  family-style  and  casual  dining  restaurants
frequently  experience better operating results when there are other restaurants
in the same area.

         The Company will be in competition with other persons and entities both
to locate  suitable  Properties  to  acquire  and to locate  purchasers  for its
Properties.  The Company also will compete with other financing  sources such as
banks,  mortgage lenders and  sale/leaseback  companies for suitable tenants for
its  Properties,  borrowers for its Mortgage Loans and lessees and borrowers for
its Secured Equipment Leases.

Employees

         Reference is made to Item 10.  Directors and Executive  Officers of the
Registrant for a listing of the Company's Executive Officers. The Company has no
other employees.




<PAGE>


Item 2.  Properties

         As of December 31, 1998, the Company owned,  either directly or through
a joint venture arrangement, 409 Properties,  located in 38 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.

         During the period  January 1, 1999 through March 11, 1999,  the Company
acquired 60 additional  Properties  (33 of which were under  construction),  for
cash at a total cost of approximately $54,283,000,  excluding development costs,
acquisition  fees  and  certain  acquisition  expenses.   The  leases  of  these
Properties  are  substantially  the  same  as the  leases  described  in Item 1.
Business - Leases.

         The Company currently is negotiating to acquire additional  properties,
but as of March 11, 1999, had not acquired any such properties.

Description of Properties

         Land. The Company's Property lot sizes range from approximately  11,500
to 190,000  square  feet  depending  upon  building  size and local  demographic
factors.  Sites  purchased by the Company are in locations  zoned for commercial
use which have been reviewed for traffic patterns and volume.

         Buildings.  The buildings generally are rectangular and are constructed
from various combinations of stucco, steel, wood, brick and tile. Building sizes
range from approximately  1,300 to 12,700 square feet.  Generally,  buildings on
Properties  owned by the Company are  freestanding  and are  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.

         As of December 31, 1998,  the Company owned 26 Properties  that consist
of only building.  The Company does not own the  underlying  land. In connection
with the  acquisition  of each of these  Properties,  the Company  entered  into
either a  tri-party  agreement  with the  tenant and the owner of the land or an
assignment  of interest in the ground lease with the  landlord,  as described in
Item 1. Business - Leases.

         Leases with Major  Tenants.  The terms of the leases with the Company'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.

         Foodmaker, Inc. leases 50 Jack in the Box Properties.  The initial term
of each lease is 18 years  (expiring  between  2011 and 2016) and the  aggregate
minimum base annual rent is approximately $5,338,000.

         Management   considers  the  Properties  to  be   well-maintained   and
sufficient for the Company's operations.

Item 3.  Legal Proceedings

         Neither the Company,  nor its Advisor or any affiliates of the Advisor,
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

         None.


<PAGE>


                                     PART II


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

         As of March 11,  1999,  there  were  32,199  stockholders  of record of
common stock.  There is no public trading market for the Shares, and even though
the Company  intends to list the Shares on the New York Stock  Exchange or other
national  securities  exchange or  over-the-counter  market no later than in the
fourth  quarter of 1999,  there is no  assurance  that listing will occur and if
listing  occurs there is no assurance  that a public  market for the Shares will
develop.  In October  1998,  the Board of  Directors  elected to  implement  the
Company's  redemption  plan.  Under the redemption  plan, the Company elected to
redeem Shares,  subject to certain  conditions and limitations.  During the year
ended  December  31,  1998,  69,514  Shares  were  redeemed  at $9.20  per Share
($639,528) and retired from Shares outstanding of common stock.

         As of December 31, 1998, the offering price per Share was $10.

         The  Company  expects  to  distribute  at least 95% of its real  estate
investment trust taxable income to the  stockholders  pursuant to the provisions
of the  Articles of  Incorporation.  For the years ended  December  31, 1998 and
1997, the Company  declared cash  distributions  of $39,449,149 and $16,854,297,
respectively,  to  stockholders.  For federal  income tax  purposes,  84.87% and
93.33% of distributions paid in 1998 and 1997, respectively,  were considered to
be ordinary income and 15.13% and 6.67%,  respectively,  were considered to be a
return of capital.  No amounts  distributed to stockholders  for the years ended
December  31,  1998 and 1997,  are  required  to be or have been  treated by the
Company as a return of capital for  purposes of  calculating  the  stockholders'
return  on  their  invested   capital.   The  following   table  presents  total
distributions and distributions per Share:
<TABLE>
<CAPTION>

                                       First            Second             Third            Fourth             Year
                                   --------------    -------------     --------------    -------------     --------------
<S> <C>
1998 Quarter

Total distributions declared          $7,281,343       $8,711,463        $10,467,640      $12,988,703        $39,449,149
Distributions per Share                   0.1906           0.1906             0.1906           0.1906             0.7624


1997 Quarter

Total distributions declared          $2,693,357       $3,589,113         $4,597,499       $5,974,328        $16,854,297
Distributions per Share                   0.1792           0.1865             0.1885           0.1906             0.7448

</TABLE>

         In January, February and March 1999, the Company declared distributions
to stockholders totalling $4,744,904,  $4,746,243 and $4,746,243,  respectively,
($0.06354 per Share) payable in March 1999.

         The Company intends to continue to declare distributions of cash to the
stockholders.  The Company expects that future distributions will be declared on
a quarterly basis.




<PAGE>


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

                                            1998            1997            1996            1995          1994 (1)
                                       ---------------  -------------- --------------- --------------- ---------------
<S> <C>
Year ended December 31:
     Revenues                            $ 42,187,037    $19,457,933      $ 6,206,684      $  659,131        $
                                                                                                             --
     Net earnings                          32,152,408     15,564,456        4,745,962         368,779              --
     Cash distributions declared           39,449,149     16,854,297        5,436,072         638,618              --
     Funds from operations (2)             37,191,065     17,732,888        5,355,464         471,670              --
     Earnings per Share (4)                      0.60           0.66             0.59            0.19              --
     Cash distributions declared
         per Share                               0.76           0.74             0.71            0.31              --
     Weighted average number of
         Shares outstanding (3)            53,296,438     23,423,868        8,071,670       1,898,350              --

At December 31:
     Total assets                        $680,352,013   $339,077,762     $134,825,048    $ 33,603,084      $  929,585
     Total stockholders' equity (4)       660,810,286    321,638,101      122,867,427      31,980,648         200,000
</TABLE>

(1)      Selected  financial  data for 1994  represents  the  period May 2, 1994
         (date of inception) through December 31, 1994.

(2)      Funds from operations ("FFO"),  based on the revised definition adopted
         by the Board of Governors of the  National  Association  of Real Estate
         Investment  Trusts  ("NAREIT")  and as used herein,  means net earnings
         determined in accordance with generally accepted accounting  principles
         ("GAAP"),  excluding gains or losses from debt  restructuring and sales
         of property,  plus depreciation and amortization of real estate assets,
         plus  amortization of direct financing leases and after adjustments for
         unconsolidated   partnerships   and  joint   ventures.   (Net  earnings
         determined  in  accordance  with GAAP  include  the  noncash  effect of
         straight-lining  rent increases throughout the lease term and/or rental
         payments during the  construction of a property prior to the date it is
         placed in service.  This straight-lining is a GAAP convention requiring
         real estate  companies to report  rental  revenue  based on the average
         rent  per year  over the life of the  lease.  During  the  years  ended
         December  31,  1998,  1997,  1996,  and  1995,  net  earnings  included
         $2,734,767,  $1,941,054,  $517,067 and $39,142,  respectively, of these
         amounts.) FFO was restated by the Company for the years ended  December
         31,  1997,  1996  and  1995 to add  back  the  amortization  of  direct
         financing leases.  FFO was developed by NAREIT as a relative measure of
         performance  and liquidity of an equity REIT in order to recognize that
         income-producing  real estate  historically  has not depreciated on the
         basis determined under GAAP.  However,  FFO (i) does not represent cash
         generated from operating activities  determined in accordance with GAAP
         (which, unlike FFO, generally reflects all cash effects of transactions
         and other events that enter into the  determination  of net  earnings),
         (ii) is not necessarily  indicative of cash flow available to fund cash
         needs and (iii)  should  not be  considered  as an  alternative  to net
         earnings  determined  in  accordance  with GAAP as an indication of the
         Company's  operating  performance,  or  to  cash  flow  from  operating
         activities  determined in  accordance  with GAAP as a measure of either
         liquidity or the Company's ability to make distributions.  Accordingly,
         the Company believes that in order to facilitate a clear  understanding
         of the consolidated  historical  operating results of the Company,  FFO
         should be considered in conjunction with the Company's net earnings and
         cash  flows as  reported  in the  accompanying  consolidated  financial
         statements and notes thereto.

(3)      The weighted  average  number of Shares  outstanding  for 1995 is based
         upon the period the Company was operational.

(4)      For each of the periods presented,  the Company was in the offering and
         acquisition  stages;  therefore,  the  information  presented  does not
         present a full period  during  which net  offering  proceeds  have been
         fully invested.




<PAGE>


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

         CNL American  Properties Fund, Inc. is a Maryland  corporation that was
organized on May 2, 1994.  CNL APF GP Corp.  and CNL APF LP Corp.,  organized in
Delaware in May 1998, are wholly owned  subsidiaries of CNL American  Properties
Fund, Inc. CNL APF Partners,  LP is a Delaware limited partnership formed in May
1998.  CNL APF GP  Corp.  and CNL APF LP  Corp.  are  the  general  and  limited
partners,  respectively,  of CNL APF Partners,  LP. The term "Company" includes,
unless the text otherwise requires,  CNL American Properties Fund, Inc., CNL APF
GP Corp.,  CNL APF LP Corp.,  CNL APF Partners,  LP and  CNL/Corral  South Joint
Venture.  The  Company  was  formed  primarily  for  the  purpose  of  acquiring
properties,   directly  or  indirectly   through  joint  venture  or  co-tenancy
arrangements,  restaurant  properties  (the  "Properties")  to  be  leased  on a
long-term,  triple-net  basis to  operators  of selected  national  and regional
fast-food,  family-style and casual dining restaurant  chains.  The Company also
provides  financing  (the  "Mortgage  Loans")  for the  purchase  of  buildings,
generally  by  tenants  that  lease the  underlying  land from the  Company.  In
addition, the Company offers furniture, fixtures and equipment financing through
leases or loans (the  "Secured  Equipment  Leases") to operators  of  restaurant
chains.

         The following information, including, without limitation, the Year 2000
compliance disclosure and the interest rate risk management disclosure, that are
not historical  facts may be  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange  Act of 1934.  Although  the  Company  believes  that the  expectations
reflected  in  such   forward-looking   statements  are  based  upon  reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Certain factors that might cause such a
difference  include  the  following:  changes  in general  economic  conditions,
changes in real estate conditions, availability of capital from borrowings under
an increased  line of credit,  the ability of the Company to invest the proceeds
of its offerings of common stock,  the ability of the Company to locate suitable
tenants for its  properties and borrowers for its Mortgage Loans and the ability
of tenants and borrowers to make payments under their respective leases, Secured
Equipment Leases or Mortgage Loans.

         As of December 31, 1998, the Company had  investments in 409 Properties
in 38 states,  including two Properties  through two joint venture  arrangements
and 40 Properties which were under construction or renovation.

Liquidity and Capital Resources

         The Company was formed in May 1994, at which time the Company  received
initial capital contributions of $200,000 for 20,000 shares of common stock from
CNL Fund Advisors, Inc. (the "Advisor").  In April 1995, the Company commenced a
public  offering  for  the  sale  of  up to  16,500,000  shares  (the  "Shares")
($165,000,000)  of  common  stock  (the  "Initial   Offering").   Following  the
completion of its Initial  Offering in February 1997,  the Company  commenced an
offering  of up to  27,500,000  Shares of common  stock (the  "1997  Offering").
Following  the  completion  of the 1997  Offering  in March  1998,  the  Company
commenced  an offering of up to  34,500,000  Shares (the "1998  Offering").  The
Company's  1998 Offering  became fully  subscribed in December 1998 and proceeds
from the last  subscriptions  were  received in January 1999. As of December 31,
1998, the Company had received aggregate  subscription proceeds from its Initial
Offering,  1997 Offering and 1998 Offering of $747,253,675  (74,725,368 Shares),
including $5,572,261 (557,226 Shares) issued through the reinvestment plan.

         The  Company  had  adopted  a  reinvestment   plan  pursuant  to  which
stockholders  could  elect to have the full  amount of their cash  distributions
from the Company reinvested in additional Shares of common stock of the Company.
In October  1998,  the Board of  Directors  elected to terminate  the  Company's
reinvestment  plan.  In October  1998,  the Board of  Directors  also elected to
implement the Company's  redemption plan. Under the redemption plan, the Company
elected to redeem Shares, subject to certain conditions and limitations.  During
the year ended December 31, 1998, 69,514 Shares were redeemed at $9.20 per Share
($639,528) and retired from Shares outstanding of common stock.

         As of December 31,  1998,  net proceeds to the Company from its Initial
Offering,  1997  Offering,  1998  Offering  and capital  contributions  from the
Advisor,  after  deduction  of  stock  issuance  costs,  totalled  $670,336,817.
Approximately  $549,917,000 of such amount had been used to invest, or committed
for  investment,  in (i) 409  Properties  (including  40  Properties  on which a
restaurant  was being  constructed  or renovated) as of December 31, 1998,  (ii)
mortgage financing of approximately $19,489,000,  (iii) investments in franchise
loan certificates of approximately  $16,100,000 and (iv) acquisition fees to the
Advisor totalling $33,595,134 and certain acquisition


<PAGE>


expenses.  The Company  acquired 23 of the 409  Properties  from  affiliates for
purchase prices totalling approximately $23,455,000. Each Property acquired from
an affiliate  was  purchased at a cost no greater than the lesser of the cost of
the  Property to the  affiliate  (including  carrying  costs) or the  Property's
appraised value.

         In connection with the 40 Properties under construction at December 31,
1998, the Company has entered into various  development  agreements with tenants
which provide terms and  specifications  for the  construction  of buildings the
tenants  have agreed to lease or equipment  financing  the Company has agreed to
provide. The agreements provide a maximum amount of development costs (including
the purchase price of the land and closing costs) to be paid by the Company. The
aggregate  maximum   development  costs  the  Company  has  agreed  to  pay  are
approximately $61,307,000,  of which approximately $44,253,000 had been incurred
as of December 31, 1998. The buildings currently under construction are expected
to be  operational  by June  1999.  In  connection  with  the  purchase  of each
Property, the Company, as lessor, entered into a long-term lease agreement.

         As of March 11, 1999,  the Company had received the final  subscription
proceeds from the 1998 Offering,  bringing total subscription  proceeds received
to $747,464,410  (74,746,441 Shares), of which $639,528 (69,514 Shares) had been
retired pursuant to the Company's  redemption  plan, from its Initial  Offering,
1997 Offering and 1998 Offering,  including  $5,572,261  (557,226 Shares) issued
pursuant to the Company's reinvestment plan. Approximately  $613,401,000 of such
amount  had  been  used  to  invest,  or  committed  for  investment  in (i) 469
Properties  as of March 11,  1999,  (ii)  mortgage  financing  of  approximately
$20,272,000,  (iii)  investments in franchise loan certificates of approximately
$16,100,000 and (iv) acquisition fees to the Advisor  totalling  $33,604,618 and
certain acquisition expenses.

         The  Company  expects  to use  uninvested  net  offering  proceeds  and
proceeds  from  borrowing  against  its line of  credit to  purchase  additional
Properties,  to  fund  construction  costs  relating  to  the  Properties  under
construction and to make Mortgage Loans. The Company expects to fund the Secured
Equipment  Leases with proceeds from the line of credit.  The Company intends to
limit  equipment  financing  to ten  percent  of the  aggregate  gross  offering
proceeds  from  its  offerings.   The  Company  anticipates   renegotiating  and
increasing its line of credit in the first quarter of 1999. Remaining uninvested
net proceeds from the Company's 1998 Offering combined with a larger, unsecured,
revolving  line  of  credit  are  expected  to  provide   adequate  capital  for
investments in Properties,  Mortgage Loans and Secured  Equipment Leases through
1999.

         The Company currently is negotiating to acquire additional  Properties,
but as of March 11, 1999, had not acquired any such Properties.

         During 1998, the Company sold three Properties to tenants. During 1997,
the  Company  sold five of its  Properties  and the  equipment  relating  to two
Secured  Equipment  Leases to tenants.  The  Company  received  net  proceeds of
approximately  $2,386,000  and  $7,252,000  during 1998 and 1997,  respectively,
which approximated the carrying value of the Properties and the equipment at the
time of the sales.  As a result,  no gain or loss was  recognized  for financial
reporting purposes. The Company used the net sales proceeds relating to the sale
of the equipment to repay amounts previously  advanced under its line of credit.
The Company  reinvested  the proceeds  from the sale of Properties in additional
Properties.

         During 1998,  the Company  invested  approximately  $16,100,000  of the
offering  proceeds in franchise  loan  certificates  (the  "Certificates")  in a
mortgage loan securitization sponsored by an affiliate of the Company's Advisor.
A securitization  is a process of taking what historically has been a non-liquid
asset class and  transforming the asset into an underlying  liquid  security.  A
mortgage  loan  securitization  takes a non-liquid  financial  asset (a group of
mortgage  loans) and  aggregates  these loans together into a pool and creates a
security  backed by these loans,  which is issued to investors.  We believe this
investment  represents  an  opportunity  for the  Company to achieve  investment
returns  similar  to  those  generated  by  its  triple-net   leased  restaurant
Properties.  In  addition,  the Company  has  pre-existing,  triple-net  leasing
arrangements  with the majority of the borrowers  underlying  the pool of loans.
Prior to acquiring the Certificates, the Company engaged a nationally recognized
investment  banking firm to evaluate its investment in the  Certificates and the
firm provided a valuation  letter to the Company that the purchase price paid by
the Company was consistent with the estimated value of the cash flow expected to
be generated from the Certificates.  The Company invested in securities rated BB
and B as well as a non-rated class.



<PAGE>


         During 1998,  1997 and 1996, the Company entered into Mortgage Loans in
the principal  sum of  $2,901,742,  $4,200,000  and  $12,847,000,  respectively,
collateralized  by mortgages on the buildings on Properties.  The Mortgage Loans
bear  interest at rates ranging from 9.50% to 11 percent per annum and are being
collected in monthly installments with maturity dates ranging from 2000 to 2017.

         In 1997, the Company entered into two promissory  notes with a borrower
for equipment  financing,  totalling  $13,225,000,  which are  collateralized by
restaurant  equipment.  Payments of principal  and interest were received by the
Company  during 1998.  In December  1998,  additional  equipment  financing  was
provided to this borrower,  resulting in two new promissory notes  consolidating
the  new  amounts  with  the  previous  amounts  loaned  in  1997.  The  two new
(consolidated) promissory notes total the original $13,225,000, bear interest at
a rate of ten  percent  per  annum  and will be  collected  in 84 equal  monthly
installments  of principal and interest  beginning on February 1, 1999. In 1998,
the Company entered into several  promissory  notes with borrowers for equipment
financing in the  aggregate  sum of  $5,887,512,  collateralized  by  restaurant
equipment.  These  promissory notes bear interest ranging from ten percent to 11
percent per annum and are being collected in monthly  installments with maturity
dates ranging from 1999 to 2006.

         In March 1996,  the Company  entered into a line of credit and security
agreement  with a bank,  the proceeds of which were to be used by the Company to
fund Secured Equipment Leases. In August 1997, the Company's $15,000,000 line of
credit was amended and  restated to enable the Company to receive  advances on a
revolving $35,000,000  uncollateralized line of credit (the "Line of Credit") to
provide  equipment  financing,  to purchase and develop  Properties  and to fund
Mortgage Loans.  The advances bear interest at a rate of LIBOR plus 1.65% or the
bank's  prime  rate,  whichever  the Company  selects at the time of  borrowing.
Interest  only is  repayable  monthly  until  July 31,  1999,  at which time all
remaining  interest and principal  shall be due. The Line of Credit provides for
two one-year renewal options.  Advances used to purchase and develop  Properties
and to fund Mortgage Loans will be repaid using additional  offering proceeds or
refinanced  on a long-term  basis.  The Company will not encumber  Properties in
connection with the Line of Credit.

         During the years ended  December 31, 1998,  1997 and 1996,  the Company
obtained   advances   totalling   $7,692,040,    $19,721,804   and   $3,666,896,
respectively,  under the Line of Credit, the proceeds of which were used to fund
Secured Equipment Leases and to pay loan costs.  During the years ended December
31, 1998,  1997 and 1996, the Company repaid $8,039,  $20,784,577  and $145,080,
respectively,  of amounts  advanced  under the Line of Credit.  During  1998 and
1997, the Company used uninvested net offering proceeds and proceeds relating to
the 1997 sale of the equipment  described above, to repay amounts advanced under
the Line of Credit. The Company expects to obtain additional  advances under the
Line of Credit to fund future equipment  financing  requirements and to purchase
Properties and to invest in Mortgage Loans.

         Properties  are and will be leased on a  long-term,  triple-net  basis,
meaning that tenants are generally  required to pay all repairs and maintenance,
property  taxes,  insurance and utilities.  Rental payments under the leases are
expected to exceed the  Company's  operating  expenses.  For these  reasons,  no
short-term  or  long-term   liquidity  problems  currently  are  anticipated  by
management.

         Until Properties are acquired,  or Mortgage Loans are entered into, net
offering  proceeds  are held in  short-term,  highly  liquid  investments  which
management  believes to have  appropriate  safety of principal.  This investment
strategy  provides high  liquidity in order to  facilitate  the Company's use of
these  funds to  acquire  Properties  at such time as  Properties  suitable  for
acquisition  are located or to fund  Mortgage  Loans.  At December  31, 1998 and
1997, the Company had $125,207,377 and  $49,595,001,  respectively,  invested in
such short-term investments (including  certificates of deposit in the amount of
$2,007,540 and $2,008,224, respectively). The increase in the amount invested in
short-term  investments reflects  subscription proceeds derived from the sale of
Shares  during  the year  ended  December  31,  1998.  These  funds will be used
primarily to purchase and develop or renovate Properties (directly or indirectly
through joint venture arrangements), to make Mortgage Loans, to pay offering and
acquisition  costs,  to pay  distributions  to  stockholders,  to  meet  Company
expenses and, in management's discretion, to create cash reserves.

         During the years ended December 31, 1998, 1997 and 1996,  affiliates of
the  Company  incurred  on  behalf of the  Company  $4,228,480,  $2,351,244  and
$804,617,  respectively,  for certain  organizational and offering expenses.  In
addition, during the years ended December 31, 1998, 1997 and 1996, affiliates of
the Company incurred on behalf of the Company $1,113,580, $514,908 and $206,103,
respectively,  for certain  acquisition  expenses  and  $924,683,  $368,516  and
$243,402, respectively, for certain operating expenses. As of December 31, 1998,
the Company owed the Advisor and its  affiliates  $1,308,464  for such  amounts,
unpaid fees and accounting and administrative expenses.

         During the years ended  December 31, 1998,  1997 and 1996,  the Company
generated cash from  operations  (which  includes cash received from tenants and
interest and other income  received,  less cash paid for operating  expenses) of
$39,116,275,  $17,076,214  and  $5,482,540,  respectively.  Based  on cash  from
operations,   the  Company   declared   distributions  to  the  stockholders  of
$39,449,149,   $16,854,297   and   $5,436,072   during  1998,   1997  and  1996,
respectively.  In addition,  in January,  February  and March 1999,  the Company
declared distributions to its stockholders totalling $4,744,904,  $4,746,243 and
$4,746,243,  respectively,  payable in March 1999.  For the years ended December
31,  1998,  1997 and 1996,  84.87%,  93.33%  and  90.25%,  respectively,  of the
distributions received by stockholders were considered to be ordinary income and
15.13%, 6.67% and 9.75%,  respectively,  were considered a return of capital for
federal  income  tax  purposes.   However,  no  amounts  distributed  or  to  be
distributed to the stockholders as of March 11, 1999, are required to be or have
been treated by the Company as a return of capital for  purposes of  calculating
the stockholders' return on their invested capital.

         Management  believes  that the  Properties  are  adequately  covered by
insurance.  In  addition,  the Advisor has  obtained  contingent  liability  and
property  coverage for the Company.  This insurance policy is intended to reduce
the Company's  exposure in the unlikely event a tenant's insurance policy lapses
or is  insufficient  to cover a claim  relating to the  Property.  The Company's
investment  strategy of  acquiring  Properties  for cash and leasing  them under
triple-net  leases  to  operators  who meet  specified  financial  standards  is
expected to minimize the Company's operating expenses.

         Due  to the  fact  that  the  Properties  are  leased  on a  long-term,
triple-net basis,  management does not believe that working capital reserves are
necessary  at this  time.  Management  has the  right to cause  the  Company  to
maintain  reserves if, in their  discretion,  they  determine  such reserves are
required to meet the Company's working capital needs.

         Management  expects that the cash  generated  from  operations  will be
adequate to pay operating expenses.

         During  1998,  the Company  formed a special  committee  (the  "Special
Committee")   consisting  of  the  Independent  Directors  for  the  purpose  of
evaluating  strategic  alternatives  designed to maximize stockholder value. The
Special  Committee  retained  the  investment  banking  firms of Merrill  Lynch,
Pierce,  Fenner & Smith,  Incorporated and Solomon Smith Barney  Holdings,  Inc.
(the "Advising Firms") to advise the Special  Committee  regarding its strategic
alternatives.  In July 1998,  the Advising  Firms  presented  their findings and
supporting financial information to the Special Committee.  Based on the reports
of the Advising Firms and its own analyses,  the Special  Committee  unanimously
agreed to  present  the  recommendations  described  below to the full  Board of
Directors   and  the  full   Board  of   Directors   unanimously   adopted   the
recommendations of the Special Committee at a meeting held in July 1998.

         In summary,  the  Special  Committee  concluded  that the best means to
maximize  stockholder  value  would  be for  the  Company  to (i)  significantly
increase the size of the Company by acquiring  from  affiliates of the Company's
Advisor portfolios of Properties similar to those currently held by the Company,
(ii) become  internally  advised and acquire  internal  real estate  development
capability  by  acquiring  the  Advisor,   (iii)  expand  its  mortgage  lending
capabilities  by acquiring  two  affiliates  of the Advisor,  thus  allowing the
Company to offer a full range of financing  options to restaurant  operators and
(iv)  list its  common  stock on a  national  stock  exchange,  assuming  market
conditions are favorable.  The Special  Committee  further  recommended that the
Company evaluate  conducting a public offering of its common stock  concurrently
with the listing of its Shares.

         The  acquisitions  of portfolios of restaurant  Properties  and certain
related  restaurant  businesses  owned by  affiliates  are  subject  to  certain
conditions   including  certain  of  the  sellers  obtaining   approval  of  the
acquisitions by the limited partners. Accordingly, the acquisition of all of the
entities is not assured.

         In  addition,  in order to effect the  acquisitions  of  portfolios  of
Properties  from affiliates of the Company's  Advisor,  the Company will need to
increase  its  authorized  common  stock,  which  requires  the  approval of the
Company's  stockholders.  It is  expected  that the  request  for a vote on such
increase will be presented to the  stockholders  during 1999. In connection with
such vote, complete information on the proposed transaction will be delivered to
the Company's stockholders. Prior to seeking that vote, the Company will furnish
to the stockholders an opinion of a third party that the consideration  proposed
to be paid by the Company  for the  acquisitions  is fair to the Company  from a
financial point of view.



<PAGE>


         On March 11, 1999, the Company  entered into  agreements to acquire (i)
the  Advisor,  (ii)  CNL  Financial  Corp.  and CNL  Financial  Services,  Inc.,
affiliates of the Advisor that provide mortgage loans and perform securitization
transactions and (iii) 18 CNL Income Funds, limited partnerships affiliated with
the Advisor whose  properties are  substantially  the same type as the Company's
(the "Income Funds"). In connection  therewith,  the Company has agreed to issue
7.6  million,  4.7  million  and  up to  61  million  shares  of  common  stock,
respectively.  The  acquisition  of each of the Income Funds is contingent  upon
certain conditions, including approval by the Company's stockholders to increase
the number of  authorized  shares of common  stock and approval by a majority of
the limited partners of each Income Fund, as described above.

Results of Operations

         As of December 31,  1998,  the Company had  purchased  and entered into
long-term,  triple-net leases for 409 Properties. The leases provide for minimum
annual base rental payments and certain leases provide for percentage rent based
on sales in excess of a  specified  amount.  The  majority  of the  leases  also
provide that, commencing in generally the sixth lease year, the annual base rent
required under the terms of the leases will increase.  In connection  therewith,
during the years ended  December 31, 1998,  1997 and 1996,  the Company earned a
total of $33,129,661, $15,490,615 and $4,357,298, respectively, in rental income
from  operating  leases,  earned  income  from the direct  financing  leases and
contingent rental income. The increase during 1998 and 1997, each as compared to
the previous  year,  was  attributable  to the Company  investing in  additional
Properties,  Mortgage Loans and Secured  Equipment  Leases during 1998 and 1997.
Because the Company has not yet invested  all of its net  offering  proceeds and
because it intends to make additional investments in Properties,  Mortgage Loans
and Secured  Equipment  Leases,  revenues for the years ended December 31, 1998,
1997 and 1996,  represent  only a portion  of  revenues  which  the  Company  is
expected  to earn  during  future  years  in which  the  Company  has  completed
additional  investments and the Company's  Properties are operational (and other
investments in place) for the full period.

         During the years ended  December 31, 1998,  1997 and 1996,  the Company
earned $3,085,518,  $2,010,500 and $1,069,349,  respectively, in interest income
from Mortgage Loans and equipment financing. The increase during the years ended
December  31,  1998  and  1997,  each  as  compared  to the  previous  year,  is
attributable to investing in additional loans  collateralized  by Properties and
equipment  during 1998 and 1997, as described  above in  "Liquidity  and Capital
Resources."

         During 1998, one of the Company's lessees, Foodmaker, Inc., contributed
more than ten percent of the Company's total rental,  earned income and interest
income relating to its Properties,  Mortgage Loans, Secured Equipment Leases and
Certificates.  Foodmaker,  Inc.  is  the  lessee  under  leases  relating  to 50
restaurants. In addition, two restaurant chains, Golden Corral Family Steakhouse
and Jack in the Box,  each  accounted for more than ten percent of the Company's
total rental, earned income and interest income relating to Properties, Mortgage
Loans,  Secured  Equipment  Leases and  Certificates  during  1998.  Because the
Company has not completed its investment in Properties, Secured Equipment Leases
and  Mortgage  Loans as yet, it is not  possible  to  determine  which  lessees,
borrowers  or  restaurant  chains will  contribute  more than ten percent of the
Company's  rental and interest  income during 1999 and subsequent  years. In the
event that certain lessees,  borrowers or restaurant chains contribute more than
ten percent of the Company's rental, earned income and interest income in future
years,  any  failure of such  lessees,  borrowers  or  restaurant  chains  could
materially affect the Company's income.

         In October 1998, Boston Chicken, Inc. and its affiliates, tenants of 27
Boston Market Properties,  filed a voluntary petition for bankruptcy  protection
under  Chapter 11 of the U.S.  Bankruptcy  Code;  two  additional  Boston Market
operators,  tenants in three  additional  Boston Market  Properties,  also filed
voluntary petitions for bankruptcy protection.  As a result of these filings for
bankruptcy,  these  tenants have the legal right to reject or affirm one or more
leases with the Company.  To date the restaurants on 13 of these Properties have
been closed. Of the 13 Properties with closed  restaurants,  12 leases have been
rejected,  accounting for  approximately  three percent of the Company's rental,
earned and  interest  income for the year ended  December  31,  1998.  While the
tenants have not rejected or affirmed the  remaining 18 leases,  there can be no
assurance  that some or all of these  leases will not be rejected in the future.
The lost  revenues  resulting  from the rejection of all 30 leases could have an
adverse  effect on the results and  operations  of the Company if the Company is
unable to re-lease the Properties in a timely manner.  Currently, the Company is
actively marketing the 13 closed Properties to existing and prospective  clients
and local and regional restaurant operators.



<PAGE>


         During the years ended  December 31, 1998,  1997 and 1996,  the Company
earned  $5,899,028,  $1,931,331  and $773,404,  respectively,  in investment and
interest income from investments in the  Certificates,  money market accounts or
other  short-term,  highly liquid  investments.  The increase in investment  and
interest  income  is  primarily  attributable  to the  receipt  of  subscription
proceeds  from the 1998 Offering  that are being  temporarily  invested in money
market accounts or short-term,  highly liquid investments  pending investment in
Properties  and  Mortgage  Loans.  The  increase  was also  attributable  to the
investment in the Certificates during 1998, as described above in "Liquidity and
Capital Resources." As net offering proceeds are invested in Properties and used
to make  Mortgage  Loans,  interest  income  from  investments  in money  market
accounts or other short-term, highly liquid investments is expected to decrease.

         Operating expenses,  including  depreciation and amortization  expense,
were  $9,408,957,  $3,862,024  and  $1,430,795  for the years ended December 31,
1998, 1997 and 1996,  respectively.  Total operating  expenses  increased during
each of the years  ended  December  31,  1998 and 1997,  each as compared to the
prior year,  primarily as a result of the Company having  invested in additional
Properties,  Mortgage  Loans and  Secured  Equipment  Leases  during  each year.
Operating expenses for the year ended December 31, 1998, include a provision for
uncollectible mortgage notes of $636,614 relating to two promissory notes with a
borrower due to financial difficulties the borrower is experiencing. General and
administrative  expenses  as a  percentage  of total  revenues  is  expected  to
decrease as the Company acquires  additional  Properties,  invests in additional
Mortgage  Loans  and  Secured   Equipment   Leases  and  the  Properties   under
construction become operational. However, asset and mortgage management fees and
depreciation  and  amortization  expense are expected to increase as the Company
invests in additional Properties and Mortgage Loans.

         During  the  year  ended  December  31,  1998,  the  Company   recorded
provisions  for  losses on land and  buildings  in the  amount of  $611,534  for
financial  reporting purposes relating to two Shoney's Properties and two Boston
Market  Properties.  The  tenants  of  these  Properties  experienced  financial
difficulties  and  ceased  payment  of rents  under  the  terms  of their  lease
agreements.  The allowances  represent the difference between the carrying value
of the  Properties at December 31, 1998 and the estimated net  realizable  value
for these Properties.

         The Company has made an election  under Section  856(c) of the Internal
Revenue Code of 1986, as amended (the  "Code"),  to be taxed as a REIT under the
Code  beginning  with its taxable year ended  December 31, 1995. As a REIT,  for
federal  income  tax  purposes,  the  Company  generally  will not be subject to
federal  income tax on income that it distributes  to its  stockholders.  If the
Company  fails to qualify as a REIT in any taxable  year,  it will be subject to
federal income tax on its taxable income at regular corporate rates and will not
be eligible to make a new election  until the fifth  taxable year  following the
year for which the revocation or  termination is effective.  Such an event could
materially affect the Company's net income.  However,  the Company believes that
it is organized  and operates in such a manner as to qualify for  treatment as a
REIT for the years ended  December 31,  1998,  1997 and 1996.  In addition,  the
Company intends to continue to operate the Company so as to remain  qualified as
a REIT for federal income tax purposes.

         Generally, the Company's leases as of December 31, 1998, are triple-net
leases and contain provisions that management believes will mitigate the adverse
effect of inflation.  Such provisions  include clauses  requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic  increases  in base rent at  specified  times  during  the term of the
lease.  Management  expects that  increases in  restaurant  sales volumes due to
inflation  and real sales growth  should  result in an increase in rental income
over  time.  Continued  inflation  also may cause  capital  appreciation  of the
Company'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.

         Effective  January 1, 1998, the Company adopted  Statement of Financial
Accounting Standards No. 130, "Reporting  Comprehensive  Income." This Statement
requires the  reporting of net earnings and all other  changes to equity  during
the period,  except those resulting from investments by owners and distributions
to owners, in a separate statement that begins with net earnings. Currently, the
Company's only component of comprehensive income is net earnings.

         In June  1998,  the  FASB  issued  Statement  of  Financial  Accounting
Standards  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities"  ("FAS 133").  FAS 133 is effective  for all fiscal  quarters of all
fiscal years  beginning  after June 15, 1999  (January 1, 2000 for the Company).
FAS 133  requires  that all  derivative  instruments  be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are recorded
each period in current  earnings or other  comprehensive  income,  depending  on
whether a derivative is


<PAGE>


designated  as part of a hedge  transaction  and,  if it is,  the  type of hedge
transaction.  Management of the Company anticipates that, due to its limited use
of interest  rate  swaps,  the  adoption of FAS 133 will not have a  significant
effect on the Company's results of operations or its financial position.

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

         The  information  technology  infrastructure  of the  Advisor  and  its
affiliates  consists of a network of personal  computers  and servers  that were
obtained from major  suppliers.  The Advisor and its affiliates  utilize various
administrative  and financial  software  applications on that  infrastructure to
perform the business functions of the Company.  The inability of the Advisor and
its 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  Company's  business  activities  or  operations.
Accordingly,  the Advisor and its  affiliates  have requested and are evaluating
documentation  from the  suppliers  of the software  and  infrastructure  of the
Advisor and its affiliates  regarding the Year 2000 compliance of their products
that are used in the business  activities  or  operations  of the  Company.  The
Advisor and its 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 Advisor and its affiliates to become Year 2000 compliant will be incurred
by the Advisor and its affiliates; therefore, these costs will have no impact on
the Company's financial position or results of operations.

         The Company has material  third party  relationships  with its tenants,
financial  institutions  and transfer agent.  The Company 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 Company because
of the Year 2000 deficiencies,  such a failure may have a material impact on the
Company.  Accordingly,  the Advisor and its  affiliates  have  requested and are
evaluating documentation from the Company's tenants,  financial institutions and
transfer agent relating to their Year 2000 compliance plans. The Advisor and its
affiliates 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 Advisor  and its  affiliates  do not, at this time,  know of the
potential  costs to the Company of any adverse impact or effect of any Year 2000
deficiencies by these third parties.

         The  Advisor  and its  affiliates  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 Company
will be completed prior to June 30, 1999.  Based on the progress the Advisor and
its affiliates  have made in identifying  and addressing the Company's Year 2000
issues and the plan and timeline to complete the compliance program, the Advisor
and  its  affiliates  do not  foresee  significant  risks  associated  with  the
Company's  Year 2000  compliance  at this  time.  Because  the  Advisor  and its
affiliates are still evaluating the status of the information technology systems
used in business activities and operations of the Company and the systems of the
third parties with which the Company conducts its business,  the Advisor and its
affiliates  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 Advisor and its affiliates  identify  significant  risks related to
the Company's  Year 2000  compliance or if the  Company's  Year 2000  compliance
program's  progress deviates  substantially from the anticipated  timeline,  the
Advisor and its affiliates will develop appropriate contingency plans.


<PAGE>


Interest Rate Risk

         The  Company  has  provided  fixed rate  Mortgage  Loans and  equipment
financing to borrowers. The Company has also invested in Certificates with fixed
and adjustable rates.  Management  believes that the estimated fair value of the
Mortgage  Loans,  equipment  financing  and  Certificates  at December  31, 1998
approximated the outstanding principal amounts. The Company 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.
<TABLE>
<CAPTION>

                           Mortgage and equipment notes                    Certificates
                                   Fixed Rates                   Fixed Rates        Floating Rates
                        -----------------------------------    ---------------- -- ------------------
<S> <C>
      1999                           $ 3,923,380                       $     0              $     0
      2000                             5,913,062                             0                    0
      2001                             2,226,757                             0                    0
      2002                             2,463,159                             0                    0
      2003                             2,798,068                             0                    0
      Thereafter                      20,411,249                     9,514,215            6,568,839
                                  ===============                ==============       ==============
                                     $37,735,675                    $9,514,215           $6,568,839
                                  ===============                ==============       ==============
</TABLE>

         As of December 31, 1998, the Company had $10,143,044  outstanding under
its Line of Credit.  In connection  with entering into this Line of Credit,  the
Company  entered into interest rate swap  agreements  with a commercial  bank to
reduce the impact of changes in interest  rates on its floating  rate  long-term
debt. These agreements  effectively  change the Company's interest rate exposure
on  notional  amounts  totalling  approximately  $2,110,000  of the  outstanding
floating rate notes to fixed rates ranging from 8.75% to nine percent per annum.
The notional  amounts of the interest  rate swap  agreements  amortize  over the
period of the agreements which  approximate the term of the related notes. As of
December  31, 1998,  the  notional  balance was  approximately  $1,339,900.  The
Company is exposed to credit  loss in the event of  nonperformance  by the other
party to the  interest  rate swap  agreements;  however,  the  Company  does not
anticipate  nonperformance by the counterparty.  Management does not believe the
impact of any  payments  of a  termination  penalty,  in the  event the  Company
determines to terminate the swap agreements prior to the end of their respective
terms,  would be  material  to the  Company's  financial  position or results of
operations.


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.


<PAGE>







                        Report of Independent Accountants



To the Board of Directors
CNL American Properties Fund, Inc.


In our  opinion,  the  consolidated  financial  statements  listed  in the index
appearing under item 14(a)(1)  present  fairly,  in all material  respects,  the
financial   position  of  CNL  American   Properties   Fund,  Inc.  (a  Maryland
corporation) and its subsidiaries at December 31, 1998 and 1997, and the results
of their  operations  and their  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 consolidated  financial statements.  These financial statements
and  financial  statement  schedules  are the  responsibility  of the  Company'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 29, 1999, except for Note 17 for which the date is March 11, 1999


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED 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                                        $393,339,334             $205,338,186
Net investment in direct financing leases                                   91,675,650               47,613,595
Investment in joint venture                                                    988,078                       --
Mortgage notes receivable                                                   19,631,693               17,622,010
Equipment notes receivable                                                  19,377,380               13,548,044
Other investments                                                           16,201,014                       --
Cash and cash equivalents                                                  123,199,837               47,586,777
Certificates of deposit                                                      2,007,540                2,008,224
Receivables, less allowance for doubtful accounts
    of $1,069,024 and $99,964, respectively                                    526,650                  635,796
Accrued rental income                                                        3,959,913                1,772,261
Intangibles and other assets                                                 9,444,924                2,952,869
                                                                       ----------------        -----------------

                                                                          $680,352,013             $339,077,762
                                                                       ================        =================

LIABILITIES AND STOCKHOLDERS' EQUITY

Line of credit                                                             $10,143,044              $ 2,459,043
Accrued construction costs payable                                           4,170,410               10,978,211
Accounts payable and accrued expenses                                        1,035,436                1,060,497
Due to related parties                                                       1,308,464                1,524,294
Rents paid in advance                                                          954,271                  517,428
Deferred rental income                                                       1,189,883                  557,576
Other payables                                                                 458,402                   56,878
                                                                       ----------------        -----------------
       Total liabilities                                                    19,259,910               17,153,927
                                                                       ----------------        -----------------

Minority interest                                                              281,817                  285,734
                                                                       ----------------        -----------------

Commitments (Note 16)

Stockholders' equity:
    Preferred stock, without par value.  Authorized
       and unissued 3,000,000 shares                                                 --                        --
    Excess shares, $0.01 par value per share.
       Authorized and unissued 78,000,000 shares                                     --                        --
    Common stock, $0.01 par value per share.  Authorized
       125,000,000 and 75,000,000 shares, respectively, issued
       74,745,368 and 36,192,971, respectively, outstanding
       74,675,854 and 36,192,971, respectively                                 746,759                  361,930
    Capital in excess of par value                                         669,610,058              323,525,961
    Accumulated distributions in excess of net earnings                     (9,546,531 )             (2,249,790 )
                                                                       ----------------        -----------------
       Total stockholders' equity                                          660,810,286              321,638,101
                                                                       ----------------        -----------------

                                                                          $680,352,013             $339,077,762
                                                                       ================        =================

</TABLE>

          See accompanying notes to consolidated financial statements.


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>


                                                                                Year Ended December 31,
                                                                     1998                 1997                 1996
                                                                 --------------       --------------       -------------
<S> <C>
Revenues:
    Rental income from operating leases                           $26,688,864          $12,457,200          $3,731,806
    Earned income from direct financing leases                      6,440,797            3,033,415             625,492
    Interest income from mortgage and equipment
       notes receivable                                             3,085,518            2,010,500           1,069,349
    Investment and interest income                                  5,899,028            1,931,331             773,404
    Other income                                                       72,830               25,487               6,633
                                                               ---------------      ---------------      --------------
                                                                   42,187,037           19,457,933           6,206,684
                                                               ---------------      ---------------      --------------
Expenses:
    General operating and administrative                            2,955,535            1,010,725             601,540
    Asset management fees to related party                          1,851,004              804,879             251,200
    State and other taxes                                             548,320              251,358              56,184
    Depreciation and amortization                                   4,054,098            1,795,062             521,871
                                                               ---------------      ---------------      --------------
                                                                    9,408,957            3,862,024           1,430,795
                                                               ---------------      ---------------      --------------

Earnings Before Minority Interest in Income of
    Consolidated Joint Venture, Equity in Earnings
    of Unconsolidated Joint Venture and Provision
    for Loss on Land and Buildings                                 32,778,080           15,595,909           4,775,889

Minority Interest in Income of
    Consolidated Joint Venture                                        (30,156 )            (31,453 )           (29,927 )

Equity in Earnings of Unconsolidated
    Joint Venture                                                      16,018                   --                  --

Provision for Loss on Land and Buildings                             (611,534 )                 --                  --
                                                               ---------------      ---------------      --------------

Net Earnings                                                      $32,152,408          $15,564,456          $4,745,962
                                                               ===============      ===============      ==============

Earnings Per Share of Common
    Stock (Basic and Diluted)                                        $   0.60             $   0.66            $   0.59
                                                               ===============      ===============      ==============

Weighted Average Number of Shares
    of Common Stock Outstanding                                    53,296,438           23,423,868           8,071,670
                                                               ===============      ===============      ==============


</TABLE>


          See accompanying notes to consolidated financial statements.


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>

                                                                                            Accumulated
                                               Common Stock              Capital in        distributions
                                         --------------------------
                                            Number          Par          excess of          in excess of
                                          of shares        value         par value          net earnings         Total
                                         -------------    ---------     -------------      ---------------    -------------
<S> <C>
Balance at December 31, 1995                 3,865,416     $ 38,654       $32,211,833        $ (269,839 )       $31,980,648

Subscriptions received for common
    stock through public offering and
    distribution reinvestment plan          10,079,299      100,793       100,692,198                --         100,792,991

Stock issuance costs                                --           --        (9,216,102 )              --          (9,216,102 )

Net earnings                                        --           --                --         4,745,962           4,745,962

Distributions declared and
    paid ($0.71 per share)                          --           --                --        (5,436,072 )        (5,436,072 )
                                          -------------   ----------   ---------------     -------------     ---------------

Balance at December 31, 1996                13,944,715      139,447       123,687,929          (959,949 )       122,867,427

Subscriptions received for common
    stock through public offerings and
    distribution reinvestment plan          22,248,256      222,483       222,260,077                --         222,482,560

Stock issuance costs                                --           --       (22,422,045 )              --         (22,422,045 )

Net earnings                                        --           --                --        15,564,456          15,564,456

Distributions declared and
    paid ($0.74 per share)                          --           --                --       (16,854,297 )       (16,854,297 )
                                          -------------   ----------   ---------------     -------------     ---------------

Balance at December 31, 1997                36,192,971      361,930       323,525,961        (2,249,790 )       321,638,101

Subscriptions received for common
    stock through public offerings and
    distribution reinvestment plan          38,552,397      385,524       385,138,442                --         385,523,966

Retirement of common stock                     (69,514 )       (695 )        (638,833 )              --            (639,528 )

Stock issuance costs                                --           --       (38,415,512 )              --         (38,415,512 )

Net earnings                                        --           --                --        32,152,408          32,152,408

Distributions declared and
    paid ($0.76 per share)                          --           --                --       (39,449,149 )       (39,449,149 )
                                          -------------   ----------   ---------------     -------------     ---------------

Balance at December 31, 1998                74,675,854     $746,759      $669,610,058      $ (9,546,531 )      $660,810,286
                                          =============   ==========   ===============     =============     ===============


</TABLE>

          See accompanying notes to consolidated financial statements.


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                         1998                  1997                  1996
                                                                    ---------------       ---------------       ---------------
<S> <C>
Increase (Decrease) in Cash and Cash Equivalents:

   Cash Flows from Operating Activities:
      Cash received from tenants                                     $ 34,275,767          $ 15,440,803           $ 4,543,506
      Distributions from unconsolidated joint venture                         578                    --                    --
      Cash paid for expenses                                           (4,326,169 )          (1,903,876 )            (928,001 )
      Interest received                                                 9,166,099             3,539,287             1,867,035
                                                                   ---------------      ----------------      ----------------
             Net cash provided by operating activities                 39,116,275            17,076,214             5,482,540
                                                                   ---------------      ----------------      ----------------

   Cash Flows from Investing Activities:
      Additions to land and buildings on operating leases            (200,101,667 )        (143,542,667 )         (36,104,148 )
      Investment in direct financing leases                           (47,115,435 )         (39,155,974 )         (13,372,621 )
      Proceeds from sale of buildings and
         equipment under direct financing leases                        2,385,941             7,251,510                    --
      Investment in joint venture                                        (974,696 )                  --                    --
      Purchase of other investments                                   (16,083,055 )                  --                    --
      Investment in certificates of deposit                                    --            (2,000,000 )                  --
      Investment in mortgage notes receivable                          (2,886,648 )          (4,401,982 )         (13,547,264 )
      Collection on mortgage notes receivable                             291,990               250,732               133,850
      Investment in equipment notes receivable                         (7,837,750 )         (12,521,401 )                  --
      Collection on equipment notes receivable                          1,263,633                    --                    --
      Increase in intangibles and other assets                         (6,281,069 )                  --            (1,103,896 )
                                                                   ---------------      ----------------      ----------------
             Net cash used in investing activities                   (277,338,756 )        (194,119,782 )         (63,994,079 )
                                                                   ---------------      ----------------      ----------------

   Cash Flows from Financing Activities:
      Reimbursement of acquisition and stock
         issuance costs paid by related parties on
         behalf of the Company                                         (4,574,925 )          (2,857,352 )            (939,798 )
      Proceeds from borrowing on line of credit                         7,692,040            19,721,804             3,666,896
      Payment on line of credit                                            (8,039 )         (20,784,577 )            (145,080 )
      Contribution from minority interest of
         consolidated joint venture                                            --                    --                97,419
      Subscriptions received from stockholders                        385,523,966           222,482,560           100,792,991
      Retirement of shares of common stock                               (639,528 )                  --                    --
      Distributions to minority interest                                  (34,073 )             (34,020 )             (39,121 )
      Distributions to stockholders                                   (39,449,149 )         (16,854,297 )          (5,439,404 )
      Payment of stock issuance costs                                 (34,579,650 )         (19,542,862 )          (8,486,188 )
      Other                                                               (95,101 )              49,001               (54,533 )
                                                                   ---------------      ----------------      ----------------
             Net cash provided by financing activities                313,835,541           182,180,257            89,453,182
                                                                   ---------------      ----------------      ----------------

Net Increase in Cash and Cash Equivalents                              75,613,060             5,136,689            30,941,643

Cash and Cash Equivalents at Beginning of Year                         47,586,777            42,450,088            11,508,445
                                                                   ---------------      ----------------      ----------------

Cash and Cash Equivalents at End of Year                            $ 123,199,837           $47,586,777           $42,450,088
                                                                   ===============      ================      ================
</TABLE>

          See accompanying notes to consolidated financial statements.


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>


                                                                                        Year Ended December 31,
                                                                            1998                  1997                1996
                                                                        --------------        -------------       --------------
<S> <C>
Reconciliation of Net Earnings to Net Cash
   Provided by Operating Activities:

      Net earnings                                                       $32,152,408          $15,564,456          $ 4,745,962
                                                                      ===============       ==============       ==============
      Adjustments to reconcile  net  earnings
         to net cash  provided by operating
         activities:
             Provision for uncollectible mortgage notes                      636,614                   --                   --
             Depreciation                                                  4,042,290            1,784,268              511,078
             Amortization                                                     11,808               10,794               69,886
             Provision for loss on land and buildings                        611,534                   --                   --
             Equity in earnings of joint venture,
                net of distributions                                         (15,440 )                 --                   --
             Decrease (increase) in receivables                              262,958             (905,339 )           (160,984 )
             Decrease  in net  investment  in  direct  financing
               leases                                                      1,971,634            1,130,095              259,740
             Increase in accrued rental income                            (2,187,652 )         (1,350,185 )           (382,934 )
             Increase in intangibles and other assets                        (29,477 )             (6,869 )             (4,293 )
             Increase (decrease) in accounts payable and
                accrued expenses                                             404,161              153,223               (2,896 )
             Increase (decrease) in due to related parties,
                excluding reimbursement of acquisition,
                deferred offering and stock issuance costs
                paid on behalf of the Company                                 31,255               15,466              (30,929 )
             Increase in rents paid in advance                               436,843              398,528               93,549
             Increase in deferred rental income                              693,372              221,727              335,849
             Increase in other payables                                       63,811               28,597               18,585
             Increase in minority interest                                    30,156               31,453               29,927
                                                                      ---------------       --------------       --------------
                   Total adjustments                                       6,963,867            1,511,758              736,578
                                                                      ---------------       --------------       --------------

Net Cash Provided by Operating Activities                                $39,116,275          $17,076,214          $ 5,482,540
                                                                      ===============       ==============       ==============

Supplemental Schedule of Non-Cash Investing
   and Financing Activities:

      Related  parties  paid certain  acquisition,
         deferred  offering and stock
         issuance costs on behalf of the
         Company as follows:
             Acquisition costs                                           $ 1,113,580           $  514,908           $  206,103
             Deferred offering costs                                              --                   --              466,405
             Stock issuance costs                                          4,228,480            2,351,244              338,212
                                                                      ---------------       --------------       --------------

                                                                         $ 5,342,060          $ 2,866,152          $ 1,010,720
                                                                      ===============       ==============       ==============

</TABLE>

          See accompanying notes to consolidated financial statements.


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  Years Ended December 31, 1998, 1997 and 1996


1.       Significant Accounting Policies:

         Organization  and Nature of Business - CNL  American  Properties  Fund,
         Inc. was organized in Maryland on May 2, 1994. CNL APF GP Corp. and CNL
         APF LP Corp.,  organized  in  Delaware  in May 1998,  are wholly  owned
         subsidiaries of CNL American Properties Fund, Inc. CNL APF Partners, LP
         is a Delaware limited  partnership formed in May 1998. CNL APF GP Corp.
         and  CNL  APF  LP  Corp.   are  the  general   and  limited   partners,
         respectively,  of CNL APF Partners,  LP. The term  "Company"  includes,
         unless the text otherwise requires, CNL American Properties Fund, Inc.,
         CNL APF GP  Corp.,  CNL APF LP  Corp.  and CNL APF  Partners,  LP.  The
         Company was formed primarily for the purpose of acquiring,  directly or
         indirectly through joint venture or co-tenancy arrangements, restaurant
         properties (the  "Properties") to be leased on a long-term,  triple-net
         basis  to  operators  of  selected  national  and  regional  fast-food,
         family-style  and casual  dining  restaurant  chains.  The Company also
         provides   financing  (the  "Mortgage   Loans")  for  the  purchase  of
         buildings, generally by tenants that lease the underlying land from the
         Company.  In  addition,  the Company  offers  furniture,  fixtures  and
         equipment  financing  through  leases or loans (the "Secured  Equipment
         Leases") to operators of restaurant chains.

         Principles  of  Consolidation  - The  Company  accounts  for its 85.47%
         interest in  CNL/Corral  South Joint  Venture  using the  consolidation
         method.   Minority  interest  represents  the  minority  joint  venture
         partner's   proportionate   share  of  the  equity  in  the   Company's
         consolidated  joint  venture.  The  Company  accounts  for  its  55.38%
         interest in CNL/Lee Vista Joint Venture using the equity method because
         it shares control with the other joint venture partner. All significant
         intercompany balances and transactions have been eliminated.

         Real Estate and Lease  Accounting - The Company records the acquisition
         of land,  buildings and equipment at cost,  including  acquisition  and
         closing costs. In addition, interest costs incurred during construction
         are  capitalized.  Land and buildings are generally 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.  In
         addition,  the Company  offers  equipment  financing  through leases or
         loans.  The Property  leases are  accounted for using either the direct
         financing or the operating  method.  The Secured  Equipment  Leases are
         accounted  for using the direct  financing  method.  Such  methods  are
         described below:



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


1.       Significant Accounting Policies - Continued:

                  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 5).  Unearned  income is deferred and
                  amortized  to income  over the lease  terms so as to produce a
                  constant   periodic  rate  of  return  on  the  Company'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  (including rental payments,  if
                  any,  required  during the  construction  of a Property)  vary
                  during the lease term, income is recognized on a straight-line
                  basis so as to produce a constant periodic rent over the lease
                  term commencing on the date the Property is placed in service.

                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled  rental  payments  to date.  In  contrast,  deferred
                  rental income  represents  the  aggregate  amount of scheduled
                  rental payments to date (including  rental payments due during
                  construction  and  prior  to  the  Property  being  placed  in
                  service)  in excess of income  recognized  on a  straight-line
                  basis over the lease term  commencing on the date the Property
                  is placed in service.

         When the  Properties  or  equipment  are  sold,  the  related  cost and
         accumulated  depreciation  for operating  leases and the net investment
         for direct financing leases, plus any accrued rental income or deferred
         rental  income,  will be  removed  from the  accounts  and any gains or
         losses from sales will be reflected in income.  Management  reviews its
         Properties for impairment  whenever events or changes in  circumstances
         indicate that the carrying  amount of the assets may not be recoverable
         through  operations.  Management  determines  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.




<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


1.       Significant Accounting Policies - Continued:

         Mortgage  Loans - The Company  accounts for loan  origination  fees and
         costs  incurred in connection  with Mortgage  Loans in accordance  with
         Statement of Financial  Accounting  Standards No. 91,  "Accounting  for
         Nonrefundable  Fees and Costs  Associated with Originating or Acquiring
         Loans and Initial Direct Costs of Leases." This statement  requires the
         deferral of loan origination fees and the capitalization of direct loan
         costs. The costs capitalized,  net of the fees deferred,  are amortized
         to  interest  income  as an  adjustment  of yield  over the life of the
         loans. The unpaid principal and accrued interest on the Mortgage Loans,
         plus the  unamortized  balance of such fees and costs are  included  in
         mortgage notes  receivable (see Note 7).  Provisions for  uncollectible
         mortgage  notes  are  established   whenever  it  appears  that  future
         collection of principal on specific  mortgage  notes appears  doubtful.
         The  provision  for   uncollectible   mortgage  notes   represents  the
         difference  between  the  carrying  value  at  December  31 and the net
         realizable value management expects to receive relating to the mortgage
         note.

         Other   Investments   -  The   Company   determines   the   appropriate
         classification  of  other  investments  at the  time  of  purchase  and
         reevaluates   such  designation  at  each  balance  sheet  date.  Other
         investments  have been classified as available for sale and are carried
         at fair  value,  with  unrealized  holding  gains and  losses,  if any,
         reported as a separate  component  of  stockholders'  equity and in the
         statement of comprehensive earnings, as applicable.

         Cash and Cash  Equivalents  - The Company  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,  money  market funds (some of which are
         backed by  government  securities)  and  certificates  of deposit (with
         maturities of three months or less when  purchased).  Cash  equivalents
         are stated at cost plus accrued  interest,  which  approximates  market
         value.

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

         Organization  Costs - Organization  costs are amortized over five years
         using the  straight-line  method and are  included in  intangibles  and
         other   assets.   As  of  December  31,  1998  and  1997,   accumulated
         amortization totalled $14,318 and $10,318, respectively.



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


1.       Significant Accounting Policies - Continued:

         Loan Costs - Loan  costs  incurred  in  connection  with the  Company's
         $35,000,000  line  of  credit  have  been  capitalized  and  are  being
         amortized  over the term of the loan  commitment  using  the  effective
         interest method.  Income or expense  associated with interest rate swap
         agreements  related to the line of credit is  recognized on the accrual
         basis as earned or incurred through an adjustment to interest  expense.
         Loan costs are included in intangibles and other assets. As of December
         31,  1998 and 1997,  the  Company  had  aggregate  gross  loan costs of
         $100,634.  As of December 31, 1998 and 1997,  accumulated  amortization
         totalled $88,000 and $61,783, respectively.

         Income  Taxes - The  Company has made an election to be taxed as a real
         estate  investment trust ("REIT") under Sections 856 through 860 of the
         Internal Revenue Code of 1986, as amended, and related regulations. The
         Company generally will not be subject to federal corporate income taxes
         on amounts  distributed  to  stockholders,  providing it distributes at
         least 95 percent of its REIT  taxable  income and meets  certain  other
         requirements  for qualifying as a REIT.  Accordingly,  no provision for
         federal  income  taxes has been made in the  accompanying  consolidated
         financial statements.  Notwithstanding the Company's  qualification for
         taxation as a REIT,  the  Company is subject to certain  state taxes on
         its income and property.

         Earnings Per Share - Basic earnings per share are calculated based upon
         net earnings (income available to common  stockholders)  divided by the
         weighted  average number of shares of common stock  outstanding  during
         the reporting period.  The Company does not have any dilutive potential
         common shares.

         Use of  Estimates  -  Management  of the  Company  has 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.  Actual results could differ from those
         estimates.

         Reclassification   -  Certain  items  in  the  prior  years'  financial
         statements   have  been   reclassified   to   conform   with  the  1998
         presentation.  These  reclassifications  had no effect on stockholders'
         equity or net earnings.

         New  Accounting  Standards  -  Effective  January 1, 1998,  the Company
         adopted Statement of Financial Accounting Standards No. 130, "Reporting
         Comprehensive  Income."  This  Statement  requires the reporting of net
         earnings  and all other  changes to equity  during the  period,  except
         those resulting from investments by owners and distributions to owners,
         in a separate statement that begins with net earnings.  Currently,  the
         Company's only component of comprehensive income is net earnings.


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


1.       Significant Accounting Policies - Continued:

         In June  1998,  the  FASB  issued  Statement  of  Financial  Accounting
         Standards No. 133,  "Accounting for Derivative  Instruments and Hedging
         Activities"  ("FAS 133").  FAS 133 is effective for all fiscal quarters
         of all fiscal years  beginning after June 15, 1999 (January 1, 2000 for
         the  Company).  FAS 133 requires  that all  derivative  instruments  be
         recorded on the balance sheet at their fair value.  Changes in the fair
         value of  derivatives  are recorded each period in current  earnings or
         other  comprehensive  income,  depending  on  whether a  derivative  is
         designated  as part of a hedge  transaction  and, if it is, the type of
         hedge transaction.  Management of the Company  anticipates that, due to
         its limited use of interest  rate swaps,  the  adoption of FAS 133 will
         not have a significant effect on the Company's results of operations or
         its financial position.

2.       Public Offerings:

         The Company's public offering of 34,500,000  shares  ($345,000,000)  of
         common stock (the "1998 Offering")  became fully subscribed in December
         1998 and the last  subscription  was received in January 1999. Prior to
         the 1998  Offering,  the  Company  received  proceeds  from its initial
         offering (the "Initial Offering"), of $150,591,765 (15,059,177 shares),
         including  $591,765  (59,177  shares) issued  pursuant to the Company's
         reinvestment  plan,  and  received  proceeds  from its first  follow-on
         offering (the "1997  Offering") of  $251,872,648  (25,187,265  shares),
         including  $1,872,648 (187,265 shares) issued pursuant to the Company's
         reinvestment plan.

3.       Leases:

         The Company  leases its land,  buildings  and equipment to operators of
         national  and  regional  fast-food,   family-style  and  casual  dining
         restaurants.  The  leases are  accounted  for under the  provisions  of
         Statement of Financial  Accounting  Standards No. 13,  "Accounting  for
         Leases." For Property leases classified as direct financing leases, the
         building  portions of the majority of the leases are  accounted  for as
         direct  financing  leases  while the land  portions of these leases are
         generally  accounted  for  as  operating  leases.  Substantially,   all
         Property leases have initial terms of 15 to 20 years (expiring  between
         2006 and 2018) and  provide  for  minimum  rentals.  In  addition,  the
         majority of the Property  leases provide for contingent  rentals and/or
         scheduled rent increases over the terms of the leases. Each tenant also
         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 for the Property  leases  generally  allow tenants to renew the
         leases for two to four successive five-year periods subject to the same
         terms and conditions



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


3.       Leases - Continued:

         as the initial lease. Most leases also allow the tenant to purchase the
         Property  at  the  greater  of  the  Company's  purchase  price  plus a
         specified  percentage of such purchase price or fair market value after
         a specified portion of the lease has elapsed.

         The Secured  Equipment Leases recorded as direct financing leases as of
         December  31,  1998  provide for minimum  rentals  payable  monthly and
         generally  have  lease  terms  ranging  from four to seven  years.  The
         Secured  Equipment Leases generally include an option for the lessee to
         acquire the equipment at the end of the lease term for a nominal fee.

4.       Land and Buildings on Operating Leases:

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

<TABLE>
<CAPTION>

                                                                         1998                     1997
                                                                   ------------------       -----------------
<S> <C>
                  Land                                                  $210,451,742            $106,616,360
                  Buildings                                              169,708,652              95,518,149
                                                                   ------------------       -----------------
                                                                         380,160,394             202,134,509
                  Less accumulated depreciation                           (6,242,782 )            (2,395,665 )
                                                                   ------------------       -----------------
                                                                         373,917,612             199,738,844
                  Construction in progress                                20,033,256               5,599,342
                                                                   ------------------       -----------------
                                                                         393,950,868             205,338,186
                  Less allowance for loss on
                      land and buildings                                    (611,534 )                    --
                                                                   ------------------       -----------------

                                                                        $393,339,334            $205,338,186
                                                                   ==================       =================
</TABLE>

         Some leases provide for scheduled  rent increases  throughout the lease
         term and/or rental payments during the construction of a Property prior
         to the date it is placed in service.  Such amounts are  recognized on a
         straight-line basis over the terms of the leases commencing on the date
         the  Property is placed in service.  For the years ended  December  31,
         1998, 1997 and 1996, the Company recognized $2,734,767 (net of $351,177
         in reserves  and  $666,596 in  write-offs),  $1,941,054  and  $517,067,
         respectively, of such rental income.


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


4.       Land and Buildings on Operating Leases - Continued:

         During 1998, the Company sold three Properties to tenants. During 1997,
         the Company sold five of its Properties  and the equipment  relating to
         two Secured  Equipment  Leases to tenants.  The  Company  received  net
         proceeds of  approximately  $2,386,000 and  $7,252,000  during 1998 and
         1997,  respectively,  which  approximated  the  carrying  value  of the
         Properties  and the net investment in the direct  financing  leases for
         the  equipment at the time of the sales.  As a result,  no gain or loss
         was recognized for financial reporting  purposes.  The Company used the
         net  sales  proceeds  relating  to the sale of the  equipment  to repay
         amounts previously advanced under its line of credit (see Note 10). The
         Company  reinvested  the  proceeds  from  the  sale  of  Properties  in
         additional Properties.

         During  1998,  a tenant  exercised  its option under the terms of three
         lease  agreements  to  exchange  three  existing  Properties  for three
         replacement   Properties  which  were  approved  by  the  Company.   In
         connection therewith, the Company exchanged three Properties with three
         replacement   Properties.   Under  the  exchange  agreements  for  each
         Property,  each  replacement  Property will continue under the terms of
         the leases of the original  Properties.  All closing costs were paid by
         the tenant. The Company accounted for these transactions as nonmonetary
         exchanges of similar productive assets and recorded the acquisitions of
         the  replacement  Properties  at the net  book  value  of the  original
         Properties.  No gain or loss was recognized  due to these  transactions
         being accounted for as nonmonetary exchanges of similar assets.

         At December 31, 1998,  the Company  recorded  provisions  for losses on
         land and buildings  totalling $611,534 for financial reporting purposes
         relating to two Shoney's  Properties and two Boston Market  Properties.
         The tenants of these Properties  experienced financial difficulties and
         ceased payment of rents under the terms of their lease agreements.  The
         allowances  represent the difference  between the carrying value of the
         Properties at December 31, 1998 and the estimated net realizable  value
         for these Properties.

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

                           1999                  $31,434,445
                           2000                   31,470,924
                           2001                   31,671,570
                           2002                   32,416,670
                           2003                   33,586,967
                           Thereafter            461,430,511
                                           ------------------

                                                $622,011,087
                                           ==================



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


4.       Land and Buildings on Operating Leases - Continued:

         Since  lease  renewal  periods  are  exercisable  at the  option of the
         tenant, the above table only presents future minimum lease payments due
         during  the  initial  lease  terms.  In  addition,  this table does not
         include any amounts for future contingent rentals which may be received
         on the leases based on a percentage of the tenant's gross sales.  These
         amounts also do not include minimum lease payments that will become due
         when Properties under development are completed (see Note 16).

5.       Net Investment in Direct Financing Leases:

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

                                                                        1998                    1997
                                                                  ------------------      ------------------
<S> <C>
                   Minimum lease payments
                       receivable                                      $186,515,403             $98,121,853
                   Estimated residual values                             17,680,858               6,889,570
                   Interest receivable from
                       Secured Equipment Leases                              81,690                  67,614
                   Less unearned income                                (112,602,301 )           (57,465,442 )
                                                                  ------------------      ------------------

                   Net investment in direct
                       financing leases                                 $91,675,650             $47,613,595
                                                                  ==================      ==================
</TABLE>

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

                           1999                      $11,883,992
                           2000                       12,078,426
                           2001                       11,850,358
                           2002                       11,753,228
                           2003                       11,536,216
                           Thereafter                127,413,183
                                               ------------------

                                                    $186,515,403
                                               ==================

         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).



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


6.       Investment in Joint Venture:

         In June 1998,  the Company  entered into a joint  venture  arrangement,
         CNL/Lee Vista Joint  Venture,  with a third party to construct and hold
         one  restaurant  property.  As of December  31,  1998,  the Company had
         contributed  $868,953 to pay for construction  relating to the Property
         owned by the joint  venture.  The  Company  has  agreed  to  contribute
         approximately  $646,000 to complete  its funding to the joint  venture.
         When funding is completed,  the Company  expects to have an approximate
         68 percent interest in the profits and losses of the joint venture. The
         Company  accounts for its  investment  in this joint  venture under the
         equity  method  because it shares  control with the other joint venture
         partner.  As of December 31, 1998, the Company had a 55.38% interest in
         this joint venture.

         The following  presents the  condensed  financial  information  for the
         joint venture at:
<TABLE>
<CAPTION>

                                                                               December 31,
                                                                        1998                    1997
                                                                ---------------------    -------------------
<S> <C>
                    Land and building on operating
                        lease, less accumulated
                        depreciation                                      $2,207,874               $  --
                    Other assets                                              31,757                  --
                    Liabilities                                              647,066                  --
                    Partners' capital                                      1,592,565                  --
                    Revenues                                                  36,767                  --
                    Net income                                                28,682                  --
</TABLE>

         At December 31, 1998,  the  difference  between the Company's  carrying
         amount of its investment in joint venture and the underlying  equity in
         the net assets of the joint  venture  was  $104,698,  less  accumulated
         amortization   of  $1,013.   This  amount  is  being   amortized  on  a
         straight-line  basis  over 30  years,  the  term of the  joint  venture
         agreement.

7.       Mortgage Notes Receivable:

         During  1997,  in  connection  with  the  acquisition  of land for nine
         Properties,  the Company  entered into a Mortgage Loan in the principal
         sum of $4,200,000, collateralized by a mortgage on the buildings on the
         nine Properties and two additional  buildings.  The Mortgage Loan bears
         interest  at a rate of 10.5% per annum  and is being  collected  in 240
         equal monthly installments.



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


7.       Mortgage Notes Receivable - Continued:

         During 1998, the Company  accepted four Mortgage Loans in the aggregate
         principal  sum  of  $2,901,742,  collateralized  by  mortgages  on  the
         buildings of four  Properties.  These  Mortgage  Loans bear interest at
         rates ranging from 9.5% to 11 percent per annum and are being collected
         in monthly installments with maturity dates ranging from 2000 to 2014.

         Mortgage notes receivable consisted of the following at December 31:
<TABLE>
<CAPTION>

                                                                           1998                   1997
                                                                      ---------------        ----------------
<S> <C>
                  Outstanding principal                                  $19,272,171             $16,662,418
                  Accrued interest income                                     79,034                 118,887
                  Deferred financing income                                  (95,575 )               (85,448 )
                  Unamortized loan costs                                   1,012,677                 926,153
                  Provision for uncollectible
                      mortgage notes                                        (636,614 )                    --
                                                                      ---------------        ----------------

                                                                         $19,631,693             $17,622,010
                                                                      ===============        ================
</TABLE>

         Management  believes  that the estimated  fair value of mortgage  notes
         receivable at December 31, 1998 and 1997  approximated  the outstanding
         principal  amount,  net of the  provision  for  uncollectible  mortgage
         notes, based on estimated current rates at which similar loans would be
         made to borrowers with similar credit and for similar maturities.

8.       Equipment Notes Receivable:

         In October 1997, the Company  entered into two promissory  notes with a
         borrower  for  equipment  financing  totalling  $13,225,000,  which are
         collateralized  by  restaurant  equipment.  Payments of  principal  and
         interest  were  collected  during 1998.  In December  1998,  additional
         equipment financing was provided to this borrower, resulting in two new
         promissory  notes  consolidating  the new  amounts  with  the  previous
         amounts loaned in 1997.  The two new  (consolidated)  promissory  notes
         total the original $13,225,000,  bear interest at a rate of ten percent
         per annum and will be collected  in 84 equal  monthly  installments  of
         principal and interest beginning on February 1, 1999.

         In 1998,  the Company also entered into several  promissory  notes with
         several  borrowers for equipment  financing for a total of  $5,887,512,
         which are collateralized by restaurant equipment.  The promissory notes
         bear interest at rates ranging from ten percent to 11 percent per annum
         and are being  collected in monthly  installments  with maturity  dates
         ranging from 1999 to 2006.




<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


8.       Equipment Notes Receivable - Continued:

         Equipment notes receivable consisted of the following at December 31:
<TABLE>
<CAPTION>

                                                                           1998                   1997
                                                                      ---------------        ----------------
<S> <C>
                  Outstanding principal                                  $19,100,118             $13,225,000
                  Accrued interest income                                    119,113                 323,044
                  Deferred financing income                                   (4,344 )                    --
                  Unamortized loan costs                                     162,493                      --
                                                                      ---------------        ----------------

                                                                         $19,377,380             $13,548,044
                                                                      ===============        ================
</TABLE>

         Management  believes that the estimated  fair value of equipment  notes
         receivable at December 31, 1998 and 1997  approximated  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.

9.       Other Investments:

         In August  1998,  the Company  acquired an  investment  in the Class F,
         Class  G  and  Class  H  Franchise  Loan  Certificates,  Series  1998-1
         (collectively,  the  "Certificates")  from  CNL  Funding  98-1,  LP,  a
         mortgage loan  securitization  entity  sponsored by CNL Financial Corp.
         ("CFC"),  an affiliate of CNL Fund  Advisors,  Inc., the advisor to the
         Company (the "Advisor").  CFC originated and serviced mortgage loans on
         restaurant  properties  comparable to the triple-net  leased properties
         currently owned by the Company.  After  originating the mortgage loans,
         CFC contributed  the loans to CNL Funding 98-1, LP, the  securitization
         entity  which   subsequently   issued  the  Certificates   representing
         beneficial ownership interests in the pool of mortgage loans.

         The  Company  paid  an  aggregate   purchase  price  of   approximately
         $16,100,000   for  the   Certificates.   The  Company   classified  the
         investments in these  Certificates as available for sale for accounting
         purposes.  At  December  31,  1998,  the  estimated  fair  value of the
         Certificates  approximated their carrying value; therefore, the Company
         did  not  record  any  unrealized  gains  or  losses  relating  to  its
         investment in Certificates.  The investment in Certificates  balance at
         December 31, 1998 includes $117,959 of accrued interest.

         The Company  acquired Class F-1,  Class G-1 and Class H-1  Certificates
         with fixed pass through rates of 8.4% per annum and an effective  yield
         of 11.6%  per annum  for the year  ended  December  31,  1998.  Monthly
         payments of interest on these Certificates  commenced in September 1998
         and monthly payments of principal and interest are scheduled to be made
         during the period September 2012 through June 2017.



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


9.       Other Investments - Continued:

         The  Company  also  acquired   Class  F-2,  Class  G-2  and  Class  H-2
         Certificates  with  adjustable  pass through rates of LIBOR (defined as
         the per annum London Interbank Offered Rate for 30 day dollar deposits)
         plus 2.25% per annum  (7.33% at  December  31,  1998) and an  effective
         yield of 11.3% per annum for the year ended December 31, 1998.  Monthly
         payments of interest on these Certificates  commenced in September 1998
         and monthly payments of principal and interest are scheduled to be made
         during the period April 2012 through March 2017.

10.      Line of Credit:

         In March 1996,  the Company  entered into a $15,000,000  line of credit
         and security  agreement  with a bank,  the proceeds of which were to be
         used by the Company to offer Secured  Equipment Leases. In August 1997,
         the  Company's  $15,000,000  line of credit was amended and restated to
         enable the  Company  to receive  advances  on a  revolving  $35,000,000
         uncollateralized  line of credit  (the  "Line of  Credit")  to  provide
         equipment  financing,  to purchase and develop  Properties  and to fund
         Mortgage  Loans.  The  advances  bear  interest at a rate of LIBOR plus
         1.65% or the bank's prime rate,  whichever  the Company  selects at the
         time of borrowing.  Interest  only is repayable  monthly until July 31,
         1999, at which time all remaining  interest and principal shall be due.
         The Line of Credit provides for two one-year renewal options.

         As  of  December  31,  1998  and  1997,   $10,143,044  and  $2,459,043,
         respectively,  of  principal  was  outstanding  relating to the Line of
         Credit. As of December 31, 1998 and 1997, the interest rates on amounts
         outstanding  under the Line of Credit were  7.2743% and 7.6187%  (LIBOR
         plus 1.65%),  respectively.  The weighted average interest rates on the
         Line of Credit were  7.2256%  and 7.7290% for the years ended  December
         31, 1998 and 1997, respectively. The Company believes, based on current
         terms,  that the  carrying  value of its Line of Credit at December 31,
         1998 and 1997  approximated fair value. The terms of the Line of Credit
         include  financial  covenants  which  provide  for the  maintenance  of
         certain  financial  ratios.  The  Company was in  compliance  with such
         covenants as of December 31, 1998.

         During 1996,  the Company  entered into interest  rate swap  agreements
         with a  commercial  bank to reduce the  impact of  changes in  interest
         rates on its floating rate debt. The agreements  effectively change the
         Company's   interest  rate  exposure  on  notional  amounts   totalling
         approximately  $2,110,000  of the  outstanding  floating  rate notes to
         fixed rates ranging from 8.75% to nine percent per annum.  The notional
         amounts of the interest rate swap  agreements  amortize over the period
         of the agreements which approximate the term of


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


10.      Line of Credit - Continued:

         the related notes.  As of December 31, 1998,  the notional  balance was
         approximately $1,339,900 and the fair values of the interest rate swaps
         were a liability of  approximately  $43,600.  The Company is exposed to
         credit  loss in the event of  nonperformance  by the other party to the
         interest rate swap agreements; however, the Company does not anticipate
         nonperformance by the counterparty.

         Interest costs (including  amortization of loan costs) incurred for the
         years ended December 31, 1998,  1997 and 1996 were  $402,292,  $544,788
         and $127,012,  respectively,  all of which were  capitalized as part of
         the cost of buildings under construction.  For the years ended December
         31,  1998,  1997 and 1996,  the  Company  paid  interest  of  $338,569,
         $502,680 and $91,757, respectively.

11.      Redemption of Shares:

         In  October  1998,  the Board of  Directors  elected to  implement  the
         Company's  redemption  plan.  Under the  redemption  plan,  the Company
         elected  to  redeem   shares,   subject  to  certain   conditions   and
         limitations.  During the year ended  December 31, 1998,  69,514  shares
         were  redeemed at $9.20 per share  ($639,528)  and retired  from shares
         outstanding of common stock.

12.      Stock Issuance Costs:

         The Company has incurred certain expenses in connection with the public
         offerings  of  its  shares  of  common  stock,  including  commissions,
         marketing support and due diligence expense  reimbursement fees, filing
         fees,  legal,  accounting,  printing and escrow  fees,  which have been
         deducted from the gross proceeds of the offerings.

         During the years ended  December 31, 1998,  1997 and 1996,  the Company
         incurred  $38,415,512,  $22,422,045  and $9,216,102,  respectively,  in
         stock  issuance   costs,   including   $31,142,123,   $17,798,605   and
         $8,063,439,  respectively,  in commissions,  marketing  support and due
         diligence  expense  reimbursement  fees and soliciting dealer servicing
         fees (see Note 14).



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


13.      Distributions:

         For the years ended December 31, 1998,  1997 and 1996,  84.87%,  93.33%
         and 90.25%, respectively, of the distributions received by stockholders
         were  considered  to be ordinary  income and  15.13%,  6.67% and 9.75%,
         respectively,  were  considered a return of capital for federal  income
         tax purposes.  No amounts  distributed  to  stockholders  for the years
         ended December 31, 1998,  1997 and 1996 are required to be or have been
         treated  by  the  Company  as a  return  of  capital  for  purposes  of
         calculating the stockholders' return on their invested capital.

14.      Related Party Transactions:

         Certain  directors  and officers of the Company hold similar  positions
         with the Advisor and the managing dealer of the Company's  common stock
         offerings, CNL Securities Corp.

         CNL  Securities  Corp.  is  entitled  to  receive  selling  commissions
         amounting  to 7.5% of the total  amount  raised from the sale of shares
         for services in connection  with the Company's  offerings of shares,  a
         substantial portion of which has been or will be paid as commissions to
         other  broker-dealers.  During the years ended December 31, 1998,  1997
         and 1996, the Company incurred $28,914,297, $16,686,192 and $7,559,474,
         respectively,   of  such  fees,  of  which  approximately  $26,033,000,
         $15,563,500  and $7,059,000,  respectively,  was paid by CNL Securities
         Corp. as commissions to other broker-dealers.

         In addition,  CNL  Securities  Corp. is entitled to receive a marketing
         support and due diligence  expense  reimbursement  fee equal to 0.5% of
         the total amount raised from the sale of shares, a portion of which may
         be reallowed to other  broker-dealers.  During the years ended December
         31, 1998, 1997 and 1996, the Company  incurred  $1,927,620,  $1,112,413
         and  $503,965,  respectively,  of such fees,  the majority of which was
         reallowed  to other  broker-dealers  and from  which  all bona fide due
         diligence expenses were paid.

         CNL Securities  Corp. is also entitled to receive,  in connection  with
         each common stock offering,  a soliciting  dealer servicing fee payable
         annually by the Company  beginning on December 31 of the year following
         the year in which the offering terminates in the amount of 0.20% of the
         stockholders'  investment in the Company.  CNL Securities Corp. in turn
         may  reallow  all or a  portion  of such  fee to  broker-dealers  whose
         clients purchased shares in such offering and held shares on such date.
         As of December 31, 1998, the Company had incurred $300,206 of such fees
         relating to the Initial  Offering which terminated in February 1997. No
         such fees were  incurred  during the years ended  December 31, 1997 and
         1996.



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


14.      Related Party Transactions - Continued:

         The  Advisor is entitled to receive  acquisition  fees for  services in
         identifying the Properties and structuring the terms of the acquisition
         and leases of the Properties and  structuring the terms of the Mortgage
         Loans equal to 4.5% of the total amount raised from the sale of shares.
         During the years ended  December 31, 1998,  1997 and 1996,  the Company
         incurred $17,317,297, $10,011,715 and $4,535,685, respectively, of such
         fees. Such fees are included in land and buildings on operating leases,
         net investment in direct financing  leases,  mortgage notes receivable,
         investment in joint venture and other assets.

         In 1998,  the Board of Directors  approved an amendment to the advisory
         agreement between the Company and the Advisor providing for the payment
         of acquisition fees to the Advisor for acquisitions made by the Company
         after the  completion of the 1998 Offering and the investment of all of
         the  proceeds  received  by the  Company  from the 1998  Offering  (the
         "Offering  Completion Date").  After the Offering  Completion Date, the
         Company  intends  to  continue  to expand  its  Property  portfolio  by
         acquiring additional Properties using funds from its Line of Credit. To
         the  extent the  Company  uses funds from its Line of Credit to acquire
         Properties after the Offering Completion Date, the Company will pay the
         Advisor an acquisition  fee equal to 4.5% of the purchase price paid by
         the Company.  As of December  31, 1998,  the Company had not used funds
         from  its Line of  Credit  to  acquire  Properties  because  it had net
         offering proceeds available for investment.

         In connection with the acquisition of Properties that are being or have
         been constructed or renovated by affiliates, subject to approval by the
         Company's  Board of  Directors,  the Company may incur  development  or
         construction  management  fees,  payable to  affiliates of the Company.
         Such fees are included in the purchase  price of the Properties and are
         therefore  included in the basis on which the Company  charges  rent on
         the  Properties.  During the years ended  December 31,  1998,  1997 and
         1996,   the  Company   incurred   $229,153,   $387,728  and   $166,695,
         respectively, of such amounts relating to six, six and four Properties,
         respectively.

         In connection with the acquisition of Properties that are being or have
         been  renovated,   subject  to  approval  by  the  Company's  Board  of
         Directors, the Company may incur advisory fees payable to affiliates of
         the  Company.  Such  fees are  included  in the  purchase  price of the
         Properties and are therefore included in the basis on which the Company
         charges  rent on the  Properties.  During the year ended  December  31,
         1998,  the  Company  incurred  $67,389 of such fees  relating  to three
         Properties. No such fees were incurred for the years ended December 31,
         1997 and 1996.



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


14.      Related Party Transactions - Continued:

         For negotiating  Secured  Equipment  Leases and supervising the Secured
         Equipment Lease program,  the Advisor is entitled to receive a one-time
         Secured  Equipment  Lease  servicing fee of two percent of the purchase
         price of the  equipment  that is the  subject  of a  Secured  Equipment
         Lease.  During the years ended  December 31, 1998,  1997 and 1996,  the
         Company incurred $54,998, $87,665 and $70,070, respectively, in Secured
         Equipment Lease servicing fees.

         The Company and the Advisor  have  entered  into an advisory  agreement
         pursuant to which the Advisor will receive a monthly  asset  management
         fee of  one-twelfth  of 0.60% of the Company's  real estate asset value
         and the outstanding  principal  balance of the Mortgage Loans as of the
         end of the preceding  month.  The management fee, which will not exceed
         fees which are competitive for similar  services in the same geographic
         area,  may or may not be taken,  in whole or in part as to any year, in
         the  sole  discretion  of  the  Advisor.  All  or  any  portion  of the
         management  fee not  taken as to any  fiscal  year  shall  be  deferred
         without  interest  and may be taken in such  other  fiscal  year as the
         Advisor shall determine. During the years ended December 31, 1998, 1997
         and 1996,  the  Company  incurred  $1,911,128,  $881,668  and  $278,902
         respectively, of such fees, $60,124, $76,789 and $27,702, respectively,
         of which  has been  capitalized  as part of the cost of  buildings  for
         Properties that have been or are being constructed.

         Prior to such time, if any, as shares of the Company's common stock are
         listed on a national securities  exchange or  over-the-counter  market,
         the Advisor is 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 Advisor  provides a substantial
         amount of services in connection with the sale.  However,  if the 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  real  estate
         disposition  fee  is  payable  only  after  the  stockholders   receive
         distributions  equal to the sum of an  annual,  aggregate,  cumulative,
         noncompounded   eight  percent   return  on  their   invested   capital
         ("Stockholders' 8% Return") plus their aggregate  invested capital.  As
         of December 31, 1998, no deferred, subordinated real estate disposition
         fees had been incurred.

         A subordinated  share of net sales proceeds will be paid to the Advisor
         upon the sale of Company  assets in an amount  equal to ten  percent of
         net sales  proceeds.  However,  if net sales proceeds are reinvested in
         replacement Properties or replacement Secured Equipment Leases, no such
         share of net sales  proceeds  will be paid to the  Advisor  until  such
         replacement  Property or Secured  Equipment  Lease is sold. This amount
         will be payable only after the stockholders receive distributions equal
         to the sum of the  stockholders'  aggregate  invested  capital  and the
         Stockholders' 8% Return.  As of December 31, 1998, no such payments had
         been made to the Advisor.


<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


14.      Related Party Transactions - Continued:

         The Advisor and its affiliates  provide  accounting and  administrative
         services  to the Company on a  day-to-day  basis as well as services in
         connection  with the offering of shares.  For the years ended  December
         31, 1998,  1997 and 1996,  expenses  incurred for these  services  were
         classified as follows:
<TABLE>
<CAPTION>

                                                               1998                1997                1996
                                                          ----------------    ----------------    ----------------
<S> <C>
                  Stock issuance costs                        $ 3,103,046         $ 1,676,226           $ 769,225
                  General operating
                       and administrative
                       expenses                                 1,189,471             556,240             334,603
                                                          ----------------    ----------------    ----------------

                                                              $ 4,292,517         $ 2,232,466         $ 1,103,828
                                                          ================    ================    ================
</TABLE>

         During the years ended  December 31, 1998,  1997 and 1996,  the Company
         acquired   five,   five  and   four   Properties,   respectively,   for
         approximately $8,770,000, $5,450,000 and $2,610,000, respectively, from
         affiliates of the Company. The affiliates had purchased and temporarily
         held title to these  Properties in order to facilitate the  acquisition
         of the Properties by the Company.  Each Property was acquired at a cost
         no  greater  than  the  lesser  of  the  cost  of the  Property  to the
         affiliate, including carrying costs, or the Property's appraised value.



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


14.      Related Party Transactions - Continued:

         The due to related parties consisted of the following at December 31:
<TABLE>
<CAPTION>

                                                                             1998                    1997
                                                                        ---------------         ---------------
<S> <C>
                    Due to the Advisor:
                         Expenditures incurred
                            on behalf of the Company
                            and accounting and
                            administrative services                         $1,238,148               $ 126,205
                         Acquisition fees                                       39,788                 386,972
                                                                        ---------------         ---------------
                                                                             1,277,936                 513,177
                                                                        ---------------         ---------------

                    Due to CNL Securities Corp:
                         Commissions                                            30,528                 940,520
                         Marketing support and due
                            diligence expense reim-
                            bursement fees                                           --                  63,097
                                                                        ---------------         ---------------
                                                                                30,528               1,003,617
                                                                        ---------------         ---------------

                    Due to other affiliates                                          --                   7,500
                                                                        ---------------         ---------------

                                                                            $1,308,464              $1,524,294
                                                                        ===============         ===============
</TABLE>

15.      Concentration of Credit Risk:

         The following schedule presents rental, earned and interest income from
         individual  lessees or borrowers,  or  affiliated  groups of lessees or
         borrowers,  each  representing  more than ten percent of the  Company's
         total rental,  earned income and interest  income from its  Properties,
         Mortgage Loans,  Secured  Equipment Leases and Certificates for each of
         the years ended December 31:
<TABLE>
<CAPTION>

                                                                       1998              1997              1996
                                                                  ---------------    --------------    --------------
<S> <C>
                 Foodmaker, Inc.                                      $4,101,214        $1,980,338            $  N/A
                 Houlihan's Restaurants, Inc.                                N/A         1,847,574               N/A
                 Golden Corral Corporation                                   N/A               N/A           577,003
                 Castle Hill Holdings V, L.L.C.,
                     Castle Hill Holdings VI, L.L.C.
                     and Castle Hill Holdings VII,
                     L.L.C.                                                  N/A         2,636,004         1,699,986


</TABLE>

<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


15.      Concentration of Credit Risk - Continued:

         In addition,  the following  schedule  presents  total  rental,  earned
         income and interest  income from  individual  restaurant  chains,  each
         representing  more than ten  percent  of the  Company's  total  rental,
         earned income and interest income from its Properties,  Mortgage Loans,
         Secured  Equipment  Leases and Certificates for each of the years ended
         December 31:
<TABLE>
<CAPTION>

                                                                       1998              1997              1996
                                                                  ---------------    --------------    --------------
<S> <C>
                 Golden Corral Family Steakhouse
                     Restaurants                                      $4,373,687        $2,531,941        $1,459,349
                 Jack in the Box                                       4,101,214         1,980,338               N/A
                 Pizza Hut                                                   N/A         2,636,004         1,699,986
                 Boston Market                                               N/A         2,338,949           547,590
</TABLE>

         The  information   denoted  by  N/A  indicates  that  for  each  period
         presented, the tenant or group of affiliated tenants and the chains did
         not  represent  more than ten percent of the  Company's  total  rental,
         earned income and interest income.

         Although the Company's Properties are geographically diverse throughout
         the United  States and the Company's  lessees and  borrowers  operate a
         variety of restaurant concepts,  failure of any one of these restaurant
         chains or any one of these lessees or borrowers that  contributes  more
         than ten percent of the Company's  rental,  earned and interest  income
         could significantly  impact the results of operations of the Company if
         the Company is not able to re-lease the Properties in a timely manner.

16.      Commitments:

         The  Company has  entered  into  various  development  agreements  with
         tenants which provide terms and  specifications for the construction of
         buildings  the tenants have agreed to lease or equipment  financing the
         Company has agreed to provide.  The agreements provide a maximum amount
         of  development  costs  (including  the purchase  price of the land and
         closing  costs)  to be  paid  by the  Company.  The  aggregate  maximum
         development  costs the  Company  has  agreed  to pay are  approximately
         $61,307,000, of which approximately $44,253,000 in land and other costs
         had been  incurred as of December 31,  1998.  The  buildings  currently
         under  construction  are expected to be  operational  by June 1999.  In
         connection with the purchase of each Property,  the Company, as lessor,
         entered  into a long-term  lease  agreement.  The general  terms of the
         lease agreements are  substantially the same as those described in Note
         3.



<PAGE>


                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997 and 1996


17.      Subsequent Events:

         During the period  January 1, 1999 through March 11, 1999,  the Company
         received the last subscription proceeds for 21,073 shares ($210,735) of
         common stock relating to the 1998 Offering.

         On  January  1,  February 1 and March 1,  1999,  the  Company  declared
         distributions of $4,744,904,  $4,746,243 and $4,746,243,  respectively,
         or  $0.06354  per share of common  stock,  payable  in March  1999,  to
         stockholders  of record on  January  1,  February1  and March 1,  1999,
         respectively.

         During the period  January 1, 1999 through March 11, 1999,  the Company
         acquired 60 Properties (33 on which  restaurants are being  constructed
         or renovated)  for cash at a total cost of  approximately  $54,283,000.
         The buildings  under  construction  are expected to be  operational  by
         September 1999. In connection  with the purchase of each Property,  the
         Company as lessor,  has  entered  into a  long-term,  triple-net  lease
         agreement.

         On March 11, 1999, the Company  entered into  agreements to acquire (i)
         the Advisor, (ii) CNL Financial Corp. and CNL Financial Services, Inc.,
         affiliates  of the  Advisor  that  provide  mortgage  loans and perform
         securitization  transactions  and (iii) 18 CNL  Income  Funds,  limited
         partnerships   affiliated   with  the  Advisor  whose   properties  are
         substantially  the same type as the Company's (the "Income Funds").  In
         connection therewith,  the Company has agreed to issue 7.6 million, 4.7
         million and up to 61 million shares of common stock, respectively.  The
         acquisition  of each of the Income  Funds is  contingent  upon  certain
         conditions,   including  approval  by  the  Company's  stockholders  to
         increase the number of  authorized  shares of common stock and approval
         by a majority of the limited partners of each Income Fund.


<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  information  required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on May 13, 1999.

Item 11.  Executive Compensation

         The  information  required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on May 13, 1999.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         The  information  required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on May 13, 1999.

Item 13.  Certain Relationships and Related Transactions

         The  information  required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on May 13, 1999.


                                     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.  Consolidated Financial Statements

                  Report of Independent Accountants

                  Consolidated Balance Sheets at December 31, 1998 and 1997

                  Consolidated  Statements  of  Earnings  for  the  years  ended
                  December 31, 1998, 1997 and 1996.

                  Consolidated  Statements of Stockholders' Equity for the years
                  ended December 31, 1998, 1997 and 1996.

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

                  Notes to Consolidated Financial Statements



<PAGE>


         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      CNL  American   Properties  Fund,  Inc.  Amended  and
                           Restated  Articles  of   Incorporation,   as  amended
                           (Included   as  Exhibit   3.1  to  the   Registrant's
                           Quarterly  Report on Form 10-Q for the quarter  ended
                           June 30, 1998 and incorporated herein by reference.)

                  3.2      CNL  American   Properties  Fund,  Inc.  Amended  and
                           Restated   Bylaws   (Included   as  Exhibit   3.2  to
                           Registration Statement No. 333-37657 on Form S-11 and
                           incorporated herein by reference.)

                  4.1      Form of Stock Certificate (Included as Exhibit 4.5 to
                           Registration  Statement No. 33-78790 on Form S-11 and
                           incorporated herein by reference.)

                  10.1     Advisory  Agreement,  dated  as of  April  24,  1998,
                           between CNL American  Properties  Fund,  Inc. and CNL
                           Fund  Advisors,  Inc.  (Included as Exhibit  10.10 to
                           Registration Statement No. 333-37657 on Form S-11 and
                           incorporated herein by reference.)

                  10.2     Form of  Indemnification  Agreement dated as of April
                           18, 1995, between CNL American  Properties Fund, Inc.
                           and each of James M. Seneff,  Jr.,  Robert A. Bourne,
                           G. Richard  Hostetter,  J. Joseph  Kruse,  Richard C.
                           Huseman, John T. Walker, Jeanne A. Wall, Lynn E. Rose
                           and Edgar J.  McDougall,  and dated as of January 27,
                           1997 between CNL American  Properties  Fund, Inc. and
                           Steven D.  Shackelford,  and dated as of February 18,
                           1998, between CNL American  Properties Fund, Inc. and
                           Curtis B.  McWilliams  (Included  as Exhibit  10.9 to
                           Registration Statement No. 333-15411 and incorporated
                           herein by reference.)

                  10.3     Agreement of Limited Partnership of CNL APF Partners,
                           LP  (Included  as  Exhibit  10.4 to the  Registrant's
                           Quarterly  Report on Form 10-Q for the quarter  ended
                           June 30, 1998 and incorporated herein by reference.)

                  21       Subsidiaries of the Registrant (Filed herewith.)

                  27       Financial Data Schedule (Filed herewith.)

(b)      The  Registrant  filed no reports on Form 8-K during the period 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 29th day of
March, 1999.

                                         CNL AMERICAN PROPERTIES FUND, INC.

                                         By:      CURTIS B. McWILLIAMS
                                                  President

                                                  /s/ Curtis B. McWilliams
                                                  --------------------------
                                                  CURTIS B. McWILLIAMS


<PAGE>


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

              Signature                                    Title                                   Date
<S> <C>
/s/ James M. Seneff, Jr.                   Chairman   of  the  Board  and  Chief              March 29, 1999
--------------------------------------
James M. Seneff, Jr.                       Executive     Officer      (Principal
                                           Executive Officer)



/s/ Robert A. Bourne                       Vice   Chairman   of  the  Board  and              March 29, 1999
--------------------------------------
Robert A. Bourne                           Treasurer



/s/ Steven D. Shackelford                  Chief  Financial  Officer  (Principal              March 29, 1999
Steven D. Shackelford                      Financial and Accounting Officer)



/s/ G. Richard Hostetter                   Independent Director                               March 29, 1999
--------------------------------------
G. Richard Hostetter



/s/ J. Joseph Kruse                        Independent Director                               March 29, 1999
---------------------------------------
J. Joseph Kruse



/s/ Richard C. Huseman                     Independent Director                               March 29, 1999
------------------------------------
Richard C. Huseman

</TABLE>

<PAGE>






                       CNL AMERICAN PROPERTIES FUND, INC.
                                AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>


                                                          Additions                      Deductions
                                                 ------------------------------    ------------------------

                                  Balance at      Charged        Charged to         Deemed                       Balance
                                   Beginning         to             Other          Uncollec-      Collec-         at End
    Year         Description        of Year       Costs and       Accounts           tible          ted          of Year
                                                  Expenses
   --------    ----------------   ------------   ------------   ---------------    -----------    ---------    ------------
<S> <C>
    1996       Allowance for
                   doubtful
                   accounts             $  --         $  --           $ 2,857  (b)     $  --  (c)     $ --         $  2,857
               (a)
                                  ============   ============   ===============    ===========    =========    ============

    1997       Allowance for
                   doubtful
                   accounts          $  2,857         $  --          $ 97,745  (b)     $  --  (c)    $ 638        $  99,964
               (a)
                                  ============   ============   ===============    ===========    =========    ============

    1998       Allowance for
                   doubtful
                   accounts          $ 99,964     $ 636,614       $ 1,324,980  (b)     $  --  (c)  $ 4,743      $ 2,056,815
               (a)
                                  ============   ============   ===============    ===========    =========    ============

</TABLE>

         (a)  Deducted from receivables on the balance sheet.

         (b) Reduction of rental and other income.


<PAGE>

<TABLE>
<CAPTION>


                                                       CNL AMERICAN PROPERTIES FUND, INC.

                                            SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                               December 31, 1998
<S> <C>

                                                                                      Costs Capitalized   
                                                                                        Subsequent To     
                                                               Initial Cost              Acquisition      
                                                  ----------------------------      --------------------- 
                                       Encum-                    Buildings and      Improve-   Carrying   
                                       brances        Land       Improvements         ments      Costs    
                                      ---------   -------------  ------------       ---------  ---------  
Properties the Company
  has invested in Under
  Operating Leases:

    Applebee's Restaurants:
      Antioch, Tennessee                  -            609,696       770,331             -         -      
      Clarksville, Tennessee              -            556,070       983,010             -         -      
      Columbia, Tennessee                 -            625,868       936,068             -         -      
      Cookeville, Tennessee               -            489,867     1,003,630             -         -      
      Hendersonville, Tennessee           -            549,651       966,628             -         -      
      Hermitage, Tennessee                -            735,272       827,474             -         -      
      Hopkinsville, Kentucky              -            390,058       943,019             -         -      
      Lebanon, Tennessee                  -            568,168       925,046             -         -      
      Madison, Tennessee                  -            740,165       835,996             -         -      
      Montclair, California               -            874,094             -       880,494         -      
      Salinas, California                 -            786,475             -             -         -      

    Arby's Restaurants:
      Arab, Alabama                       -            230,720       455,946             -         -      
      Atlanta, Georgia                    -            648,459             -       683,390         -      
      Avon, Indiana                       -            338,486       497,282             -         -      
      Canton, Georgia                     -            586,477             -       604,508         -      
      Columbus, Ohio                      -            441,770             -       621,014         -      
      Columbus, Ohio                      -            483,660             -       459,387         -      
      Grand Rapids, Michigan (k)          -            289,183             -             -         -      
      Greensboro, North Carolina          -            363,478       404,650             -         -      
      Greenville, North Carolina          -            277,986       490,143             -         -      
      Jacksonville, Florida               -            463,047             -       621,088         -      
      Jonesville, North Carolina          -            228,364       539,764             -         -      
      Kendallville, Indiana               -            276,567       505,359             -         -      
      Kernersville, North Carolina        -            273,325       413,077             -         -      
      Kinston, North Carolina             -            268,545       485,160             -         -      
      Lexington, North Carolina           -            320,924       463,347             -         -      
      Redford, Michigan                   -            402,516             -       390,699         -      
      Vancouver, Washington               -            702,830             -        13,611         -      
      Whitehall, Ohio                     -            512,258             -       267,103         -      

    Barb Wires Steakhouse and
     Saloon Restaurants:
      Lawrence, Kansas                    -            493,489             -             -         -      

    Bennigan's Restaurants:
      Arvada, Colorado                    -            714,194     1,302,733             -         -      
      Bedford, Texas                      -            768,333             -             -         -      
      Clearwater, Florida                 -            900,038             -             -         -      
      Colorado Springs, Colorado          -            794,255             -             -         -      
      Englewood, Colorado                 -            665,141             -             -         -      
      Englewood, New Jersey               -          1,460,179       901,042             -         -      
      Florham Park, New Jersey            -          1,077,645             -             -         -      
      Houston, Texas                      -            908,502             -             -         -      
      Jacksonville, Florida               -            779,387             -             -         -      
      Jacksonville, Florida               -            832,557             -             -         -      
      Mount Laurel, New Jersey            -          1,305,939     1,030,685             -         -      
      North Richland Hills, Texas         -            886,048             -             -         -      
      Ocala, Florida                      -            687,614             -     1,064,050         -      
      Oklahoma City, Oklahoma             -            756,750             -             -         -      
      Orlando, Florida                    -          1,585,461       874,143             -         -      
      Pensacola, Florida                  -            692,093             -             -         -      
      Saint Louis Park, Minnesota         -            885,111             -             -         -      
      Tampa, Florida                      -            734,245             -             -         -      
      Woodridge, Illinois                 -            789,680             -             -         -      

    Big Boy Restaurants:
      Benton Harbor, Michigan             -            168,548             -       715,504         -      
      Mansfield, Ohio                     -            366,727             -       618,096         -      
      Saint Clairsville, Ohio             -            437,235             -       609,391         -      

    Black-eyed Pea Restaurants:
      Glendale, Arizona                   -            746,437             -       501,072         -      
      Grapevine, Texas                    -            883,196             -       108,843         -      
      Herndon, Virginia                   -            362,141       989,635             -         -      
      Hillsboro, Texas                    -            404,155             -             -         -      
      Killeen, Texas                      -            447,582             -        17,358         -      
      McKinney, Texas                     -            758,796             -        13,869         -      
      Mesa, Arizona                       -            784,939             -             -         -      
      Mesa, Arizona                       -            788,311             -        10,933         -      
      Norman, Oklahoma                    -            527,388             -       166,992         -      

    Boston Market Restaurants:
      Atlanta, Georgia                    -            774,448             -       507,587         -      
      Baltimore, Maryland                 -            585,818             -       866,641         -      
      Cedar Park, Texas                   -            569,782             -       294,878         -      
      Chanhassen, Minnesota               -            376,929       639,875             -         -      
      Collinsville, Illinois              -            507,544             -       328,353         -      
      Columbus, Ohio                      -            353,608       606,470             -         -      
      Corvallis, Oregon                   -            365,784             -       605,763         -      
      Edgewater, Colorado (o)             -            320,463       627,371             -         -   
      Ellisville, Missouri                -            396,377             -       681,847         -      
      Florissant, Missouri                -            705,522             -       626,845         -      
      Gambrills, Maryland                 -            667,992             -       661,776         -      
      Glendale, Arizona                   -            566,562       403,730             -         -      
      Golden Valley, Minnesota            -            665,422             -       481,311         -      
      Hoover, Alabama                     -            493,536       619,786             -         -      
      Indianapolis, Indiana               -            885,567             -       648,755         -      
      Jessup, Maryland (n)                -            631,336             -       675,111         -   
      Lansing, Michigan                   -            515,827             -       572,706         -      
      LaQuinta, California                -            688,147             -       351,810         -      
      Liberty, Missouri                   -            469,041             -       336,295         -      
      Newport News, Virginia              -            473,596       586,377             -         -      
      Riverdale, Maryland                 -            526,092             -       504,483         -      
      Rockwall, Texas                     -            528,118             -       340,297         -      
      Saint Joseph, Missouri              -            378,786             -       388,489         -      
      San Antonio, Texas                  -            482,361             -       316,135         -      
      Stafford, Texas                     -            448,185       681,598             -         -      
      Taylorsville, Utah                  -            889,562             -       487,475         -      
      Upland, California                  -            788,248       209,449             -         -      
      Vacaville, California               -            751,576             -       757,026         -      
      Waldorf, Maryland                   -            651,867             -       775,634         -      
      Warwick, Rhode Island               -            234,685       589,367             -         -      

    Burger King Restaurants:
      Atlanta, Georgia                    -            394,422             -             -         -      
      Burbank, Illinois                   -            543,095             -       620,617         -      
      Chattanooga, Tennessee              -            680,192             -       575,426         -      
      Chattanooga, Tennessee              -            769,842             -       411,012         -      
      Chicago, Illinois                   -            917,717             -       784,590         -      
      Highland, Indiana                   -            672,815             -       621,133         -      
      Kent, Ohio                          -            233,468       689,696             -         -      
      Oak Lawn, Illinois                  -          1,211,346             -       829,339         -      
      Ooltewah, Tennessee                 -            546,261             -       714,114         -      

    Charley's Restaurants:
      King of Prussia, Pennsylvania       -            965,223       549,565             -         -      
      McLean, Virginia                    -            944,585       689,363             -         -      

    Chevy's Fresh Mex Restaurants:
      Arapahoe, Colorado                  -            986,426     1,680,312             -         -      
      Beaverton, Oregon                   -            938,162     1,681,670             -         -      
      Greenbelt, Maryland                 -            945,234     1,475,339             -         -      
      Lake Oswego, Oregon                 -            963,047     1,505,671             -         -      
      Las Vegas, Nevada                   -          1,156,847     1,188,272             -         -      
      Naperville, Illinois                -            960,779     1,365,563             -         -      

    Darryl's Restaurants:
      Evansville, Indiana                 -            563,479             -             -         -      
      Hampton, Virginia                   -            698,367       570,468             -         -      
      Huntsville, Alabama                 -            777,842       663,941             -         -      
      Knoxville, Tennessee                -            589,574             -             -         -      
      Louisville, Kentucky                -            647,375             -             -         -      
      Mobile, Alabama                     -            495,195             -             -         -      
      Montgomery, Alabama                 -            346,380             -             -         -      
      Nashville, Tennessee                -            513,218             -             -         -      
      Orlando, Florida                    -          1,485,631       772,853             -         -      
      Pensacola, Florida                  -            389,394             -             -         -      
      Raleigh, North Carolina             -            840,525       505,176             -         -      
      Raleigh, North Carolina             -          1,131,164       719,865             -         -      
      Richmond, Virginia                  -            618,125             -             -         -      
      Richmond, Virginia                  -            311,196             -             -         -      
      Winston-Salem, North Carolina       -            436,867             -             -         -      

    Denny's Restaurants:
      McKinney, Texas                     -            439,961             -             -         -      
      Pasadena, Texas                     -            466,555       506,094             -         -      
      Shawnee, Oklahoma                   -            528,090       625,653             -         -      
      Tampa, Florida                      -            397,302             -             -         -      

    Einstein Brothers' Bagels
     Restaurants:
      Dearborn, Michigan                  -            464,957             -       178,078         -      
      Springfield, Virginia               -            628,804             -        36,311         -      

    Fazoli's Restaurant:
      Southaven, Mississippi              -            485,648             -       172,318         -      

    Golden Corral Family
     Steakhouse Restaurants:
      Brunswick, Georgia                  -            456,629             -     1,170,630         -      
      Carlsbad, New Mexico                -            384,221             -       643,854         -      
      Cleburne, Texas                     -            359,455             -       653,853         -      
      Clovis, New Mexico                  -            426,349       805,517             -         -      
      Columbia, Missouri                  -            848,187             -       664,399         -      
      Columbia, Tennessee                 -            442,218             -       930,207         -      
      Columbus, Ohio                      -          1,031,098             -     1,092,939         -      
      Corpus Christi, Texas               -            576,548             -       934,918         -      
      Corsicana, Texas                    -            349,227       699,756             -         -      
      Council Bluffs, Iowa                -            546,078             -       993,149         -      
      Dover, Delaware                     -          1,043,108             -       977,508         -      
      Dublin, Georgia                     -            324,046             -       833,316         -      
      Dubuque, Iowa                       -            564,242             -     1,056,315         -      
      Duncan, Oklahoma                    -            161,390             -     1,028,945         -      
      Edmond, Oklahoma                    -            569,664             -     1,017,781         -      
      Enid, Oklahoma                      -            364,536             -       865,147         -      
      Fort Dodge, Iowa                    -            320,852             -       763,705         -      
      Fort Walton Beach, Florida          -            590,538             -     1,176,436         -      
      Fort Worth, Texas                   -            640,320       898,171             -         -      
      Hopkinsville, Kentucky              -            456,646             -       861,803         -      
      Jacksonville, Florida               -            615,554             -     1,184,073         -      
      Jacksonville, Florida               -            541,264             -     1,173,738         -      
      Liberty, Missouri                   -            409,153             -       943,712         -      
      Lufkin, Texas                       -            479,197             -       954,051         -      
      Moberly , Missouri                  -            374,230             -       838,342         -      
      Mobile, Alabama                     -            428,841             -     1,031,457         -      
      Muskogee, Oklahoma                  -            395,839             -       887,540         -      
      Olathe, Kansas                      -            548,821             -     1,099,448         -      
      Omaha, Nebraska                     -            570,111             -       845,896         -      
      Palatka, Florida                    -            322,433             -       987,385         -      
      Pensacola, Florida                  -            634,108             -        21,570         -      
      Port Richey, Florida                -            626,999             -     1,130,692         -      
      Tampa, Florida                      -            825,650             -     1,161,192         -      
      Universal City, Texas               -            357,429             -       650,249         -      
      Winchester, Kentucky                -            303,633             -       970,489         -      

    Ground Round Restaurants:
      Allentown, Pennsylvania             -            405,631       884,954             -         -      
      Cincinnati, Ohio                    -            282,099       534,632             -         -      
      Crystal, Minnesota                  -            370,667       431,642             -         -      
      Dubuque, Iowa                       -            693,733       810,458             -         -      
      Ewing , New Jersey                  -            371,254       685,847             -         -      
      Gloucester, New Jersey              -            422,489       528,849             -         -      
      Janesville, Wisconsin               -            451,235       548,178             -         -      
      Kalamazoo, Michigan                 -            287,331       712,081             -         -      
      Nanuet, New York                    -            375,116       605,067             -         -      
      Parma, Ohio                         -            388,699       793,475             -         -      
      Reading, Pennsylvania               -            728,574       793,410             -         -      
      Waterloo, Iowa                      -            436,471       659,089             -         -      
      Wauwatosa, Wisconsin                -            627,680       804,399             -         -      

    Houlihan's Restaurants:
      Bethel Park, Pennsylvania           -            846,183       595,601             -         -      
      Langhorne, Pennsylvania             -            817,039       648,765             -         -      
      Plymouth Meeting, Pennsylvania      -          1,181,460       908,880             -         -      

    International House of Pancakes
     Restaurants:
       Castle Rock, Colorado              -            541,312             -        92,804         -      
       Clarksville, Tennessee             -            375,987       964,430             -         -      
       Elk Grove, California              -            584,766             -             -         -      
       Fairfax, Virginia                  -          1,096,763       705,345             -         -      
       Fort Worth, Texas                  -            575,285       802,974             -         -      
       Greeley, Colorado                  -            416,115             -       756,717         -      
       Greenville, South Carolina         -            476,847       961,606             -         -      
       Hollywood, California              -          1,407,002             -             -         -      
       Homewood, Alabama                  -            545,112     1,029,900             -         -      
       Houston, Texas                     -            645,365       856,532             -         -      
       Kansas City, Missouri              -            512,481       831,202             -         -      
       Killeen, Texas                     -            380,687       775,713             -         -      
       Lake Jackson, Texas                -            460,167       802,640             -         -      
       Leesburg, Virginia                 -            665,015       580,798             -         -      
       Leon Valley, Texas                 -            593,624       918,024             -         -      
       Loveland, Colorado                 -            488,259             -             -         -      
       Murfreesboro, Tennessee            -            647,414       871,268             -         -      
       Port Arthur, Texas                 -            382,950       957,912             -         -      
       Poughkeepsie, New York             -            504,533       806,624             -         -      
       Pueblo, Colorado                   -            387,562       891,943             -         -      
       Roseville, Michigan                -            282,868       843,648             -         -      
       Southaven, Mississippi             -           579,175     1,176,434             -         -       
       Stockbridge, Georgia               -            765,743       707,406             -         -      
       Victoria, Texas                    -            319,237             -             -         -      

     Jack In the Box Restaurants:
       Allen, Texas                       -            710,749             -       721,843         -      
       Avondale, Arizona                  -            605,063             -       649,514         -      
       Bacliff, Texas                     -            419,488             -       697,861         -      
       Chandler, Arizona                  -            481,456             -       636,588         -      
       Chandler, Arizona                  -            603,735             -       595,803         -      
       Channelview, Texas                 -            361,238             -       711,595         -      
       Corinth, Texas                     -            396,864             -       620,042         -      
       Dallas, Texas                      -            369,886             -       513,533         -      
       Enumclaw, Washington               -            124,468             -       773,506         -      
       Florissant, Missouri               -            389,265             -       779,211         -      
       Folsum, California                 -            635,343       703,067             -         -      
       Fresno, California                 -            286,850             -       606,547         -      
       Fresno, California                 -            462,813             -       573,816         -      
       Garland, Texas                     -            382,042             -       613,690         -      
       Gun Barrel City, Texas             -            284,046             -       577,029         -      
       Hollister, California              -            537,223             -       592,536         -      
       Houston, Texas                     -            370,342             -       548,107         -      
       Houston, Texas                     -            420,521             -       543,338         -      
       Houston, Texas                     -            545,485             -       527,020         -      
       Houston, Texas                     -            403,002       610,815             -         -      
       Houston, Texas                     -            375,776             -       643,445         -      
       Humble, Texas                      -            437,667             -       591,877         -      
       Humble, Texas                      -            390,509             -       596,872         -      
       Hutchins, Texas                    -            272,937             -       688,400         -      
       Kent, Washington                   -            737,038             -       604,806         -      
       Kingsburg, California              -            415,880             -       649,681         -      
       Las Vegas, Nevada                  -            730,674             -       600,180         -      
       Los Angeles, California            -            603,354       602,630             -         -      
       Los Angeles, California            -            911,754             -       581,552         -      
       Los Angeles, California            -            740,616       678,189             -         -      
       Los Angeles, California            -            853,821             -       635,185         -      
       Los Angeles, California            -          1,075,983             -       589,694         -      
       Lufkin, Texas                      -            418,351             -       651,064         -      
       Lufkin, Texas                      -            363,616             -       773,187         -      
       Moscow, Idaho                      -            217,851             -       751,664         -      
       Murietta, California               -            387,455             -       625,933         -      
       Nacogdoches, Texas                 -            383,591             -       675,860         -      
       Ontario, California                -            769,900             -       785,757         -      
       Oxnard, California                 -            681,663             -       642,924         -      
       Palmdale, California               -            631,275             -       567,912         -      
       Pflugerville, Texas                -            717,246             -       688,066         -      
       Saint Louis, Missouri              -            474,296             -       759,049         -      
       San Antonio, Texas                 -            274,012             -       777,712         -      
       San Antonio, Texas                 -            310,793             -       690,785         -      
       Tacoma, Washington                 -            494,273             -       741,964         -      
       Tigard, Oregon                     -            383,921             -       874,164         -      
       Waxahachie, Texas                  -            477,580             -       566,856         -      
       Weatherford, Texas                 -            464,245             -       779,235         -      
       West Sacramento, California        -            523,089             -       617,131         -      
       Woodland, California               -            358,130             -       668,383         -      

     Kentucky Fried Chicken
      Restaurant:
        Putnam, Connecticut               -            301,723             -             -         -      

     Little Lake Bryan Land:
       Orlando, Florida                   -          4,846,660             -             -         -      

     Mister Fables Restaurant:
       Grand Rapids, Michigan             -            320,594       559,433             -         -      

     Pizza Hut Restaurants:
       Adrian, Michigan                   -            242,239             -             -         -      
       Beaver, West Virginia              -            212,053             -             -         -      
       Beckley, West Virginia             -            209,432             -             -         -      
       Bedford, Ohio                      -            174,721             -             -         -      
       Belle, West Virginia               -             46,737             -             -         -      
       Bluefield, West Virginia           -            120,449             -             -         -      
       Bolivar, Ohio                      -            190,009             -             -         -      
       Bowling Green, Ohio                -            200,442             -             -         -      
       Bowling Green, Ohio                -            135,831             -             -         -      
       Carrolton, Ohio                    -            187,082             -             -         -      
       Cleveland, Ohio                    -            126,494             -             -         -      
       Cleveland, Ohio                    -            116,849             -             -         -      
       Cleveland, Ohio                    -            226,163             -             -         -      
       Cross Lanes, West Virginia         -            215,881             -             -         -      
       Defiance, Ohio                     -            242,239             -             -         -      
       Dover, Ohio                        -            245,145             -             -         -      
       East Cleveland, Ohio               -            194,012             -             -         -      
       Euclid, Ohio                       -            202,050             -             -         -      
       Fairview Park, Ohio                -            142,570             -             -         -      
       Huntington, West Virginia          -            212,093             -             -         -      
       Hurricane, West Virginia           -            180,803             -             -         -      
       Lambertville, Michigan             -             99,166             -             -         -      
       Marietta, Ohio                     -            169,454             -             -         -      
       Mayfield Heights, Ohio             -            202,552             -             -         -      
       Middleburg Heights, Ohio           -            216,518             -             -         -      
       Millersburg, Ohio                  -            213,090             -             -         -      
       Milton, West Virginia              -             99,815             -             -         -      
       Monroe, Michigan                   -            152,215             -             -         -      
       New Philadelphia, Ohio             -            149,206             -             -         -      
       New Philadelphia, Ohio             -            223,981             -             -         -      
       North Olmstead, Ohio               -            259,922             -             -         -      
       Norwalk, Ohio                      -            261,529             -             -         -      
       Ronceverte, West Virginia          -             99,733             -             -         -      
       Sandusky, Ohio                     -            259,922             -             -         -      
       Seven Hills, Ohio                  -            239,023             -             -         -      
       Steubenville, Ohio                 -            228,199             -             -         -      
       Strongsville, Ohio                 -            186,476             -             -         -      
       Toledo, Ohio                       -            128,604             -             -         -      
       Toledo, Ohio                       -            194,097             -             -         -      
       Toledo, Ohio                       -            208,480             -             -         -      
       Toledo, Ohio                       -            176,170             -             -         -      
       Toledo, Ohio                       -            197,227             -             -         -      
       Uhrichsville, Ohio                 -            279,779             -             -         -      
       Wellsburg, West Virginia           -            167,170             -             -         -      

     Pollo Tropical Restaurants:
       Coral Springs, Florida             -            852,746     1,108,491             -         -      
       Davie, Florida                     -            712,865       873,395             -         -      
       Fort Lauderdale, Florida           -            397,878       923,975             -         -      
       Lake Worth, Florida                -            435,465       915,232             -         -      
       Miami, Florida                     -            918,258       764,150             -         -      
       Miami, Florida                     -            654,766     1,195,901             -         -      
       Miami, Florida                     -            683,560       614,256             -         -      
       Miami, Florida                     -            789,680       604,283             -         -      
       Miami, Florida                     -            911,013     1,011,766             -         -      
       Miami, Florida                     -          1,244,893       918,257             -         -      
       Sunrise, Florida                   -            569,436       968,749             -         -      

     Ponderosa Restaurants:
       Blue Springs, Missouri             -            691,797     1,136,902             -         -      
       Johnstown, Pennsylvania            -            599,391             -     1,159,989         -      

     Popeye's Chicken Restaurant:
       Thomasville, Georgia               -            113,780       407,429             -         -      
       Valdosta, Georgia                  -            158,880       378,057             -         -      

     Roadhouse Grill Restaurants:
       Brandon, Florida                   -            913,244             -       170,962         -      
       Clearwater, Florida                -          1,336,881             -        10,055         -      
       Jacksonville, Florida              -            369,914             -     1,554,300         -      
       Pensacola, Florida                 -            895,539             -       300,903         -      

     Ruby Tuesday's Restaurants:
       Coral Springs, Florida             -            698,778             -        14,657         -      
       Lakeland, Florida                  -            574,441       742,781             -         -      
       London, Kentucky                   -            354,415             -             -         -      
       Orange City, Florida               -            695,999             -        11,089         -      
       Somerset, Kentucky                 -            545,612             -       868,606         -      

     Ruth's Chris Steak House
      Restaurant:
       Tampa, Florida                     -          1,076,442     1,062,751             -         -      

     Ryan's Family Steak House
      Restaurant:
       Spring Hill, Florida               -            591,371             -     1,175,273         -      

     Shoney's Restaurants:
       Indian Harbor Beach, Florida (m)   -            309,101             -       420,246         -      
       Las Vegas, Nevada                  -            656,263             -             -         -      
       Guadalupe, Arizona                 -            623,709             -             -         -      
       Phoenix, Arizona (p)               -            469,721             -        85,872         -      

     Sonny's Real Pit Bar-B-Q
      Restaurants:
       Athens, Georgia                    -            628,688       962,524             -         -      
       Conyers, Georgia                   -            371,021       593,171             -         -      
       Doraville, Georgia                 -            585,461       812,822             -         -      
       Jonesboro, Georgia                 -            478,006       679,114             -         -      
       Marietta, Georgia                  -            527,572       870,710             -         -      
       Norcross, Georgia                  -            734,105       961,287             -         -      
       Smyrna, Georgia                    -            634,379       643,323             -         -      

     Steak and Ale Restaurants:
       Altamonte Springs, Florida         -          1,006,396       690,731             -         -      
       Austin, Texas                      -            705,557             -             -         -      
       Birmingham, Alabama                -            715,432             -             -         -      
       College Park, Georgia              -            802,361             -             -         -      
       Conroe, Texas                      -            590,733             -             -         -      
       Greenville, South Carolina         -            670,594             -             -         -       
       Houston, Texas                     -            776,694             -             -         -      
       Houston, Texas                     -            964,354             -             -         -      
       Huntsville, Alabama                -            641,125             -             -         -      
       Jacksonville, Florida              -            670,491             -             -         -      
       Maitland, Florida                  -            684,164             -             -         -      
       Memphis, Tennessee                 -            810,316       798,412             -         -      
       Mesquite, Texas                    -            592,342             -             -         -      
       Miami, Florida                     -            594,142             -             -         -      
       Middletown, New Jersey             -            933,759       763,368             -         -      
       Norcorss, Georgia                  -            740,132             -             -         -      
       Orlando, Florida                   -            922,679       725,256             -         -      
       Palm Harbor, Florida               -            487,021             -             -         -      
       Pensacola, Florida                 -            354,419             -             -         -      
       Tulsa, Oklahoma                    -            433,713             -             -         -      

     Taco Bell Restaurants:
       Livingston, Tennessee              -            212,438             -             -         -      
       Saint Louis, Missouri              -            308,915       351,160             -         -      
       Saint Louis, Missouri              -            349,637             -             -         -      

     TGI Friday's Restaurants:
       El Paso, Texas                     -            599,160             -             -         -      
       Independence, Missouri             -            857,404             -       896,945         -      
       Mesa, Arizona                      -            914,342             -             -         -      
       San Diego, California              -          2,386,592             -     1,432,281         -      

     TropiGrill Restaurants:
       Altamonte Springs, Florida         -            548,886       700,856             -         -      
       Orlando, Florida                   -            618,372       631,370             -         -      

     Tumbleweed Southwest Mesquite
      Bar & Grill Restaurants:
       Clarksville, Tennessee             -            608,642             -             -         -      
       Cookeville, Tennessee              -            511,084             -             -         -      
       Hermitage, Tennessee               -            519,259             -       939,819         -      
       Murfreesboro, Tennessee            -            514,900             -             -         -      
       Nashville, Tennessee               -            420,176             -             -         -      

     Wendy's Old Fashioned
      Hamburgers Restaurants:
       Camarillo, California              -            640,066             -       688,918         -      
       Knoxville, Tennessee               -            358,027             -       444,622         -      
       Knoxville, Tennessee               -            555,886             -       435,037         -      
       Westlake Village, California       -            842,158             -       622,125         -      
                                                 ------------- -------------  ------------  ---------  
                                                  $210,451,742   $93,495,475   $96,246,433         -   
                                                 =============  ============  ============ =========   

Properties of Joint Venture in Which
  the Company has a 55.38% Interest and
  has Invested in Under an Operating Lease   

    Bennigan's Restaurant
      Orlando, FLorida                            $    706,411             -   $ 1,508,767         - 
                                                 =============  =============  =========== ==========              

Properties the Company
  has Invested in Under
  Direct Financing Leases:

    Applebee's Restaurants:
      Salinas, California                 -                  -             -       794,058         -      
      Tullahoma, Tennessee                -            324,362     1,009,364             -         -      

    Arby's Restaurants:
      Grand Rapids, Michigan (k)          -                 -             -       957,945         -       

    Barb Wires Steakhouse and
     Saloon Restaurants:
      Lawrence, Kansas                    -                  -     1,022,607             -         -      

    Bennigan's Restaurants:
      Bedford, Texas                      -                  -       954,774             -         -      
      Clearwater, Florida                 -                  -     1,043,049             -         -      
      Colorado Springs, Colorado          -                  -       902,872             -         -      
      Englewood, Colorado                 -                  -     1,131,082             -         -      
      Florham Park, New Jersey            -                  -     1,092,401             -         -      
      Houston, Texas                      -                  -       985,394             -         -      
      Jacksonville, Florida               -                  -       819,356             -         -      
      Jacksonville, Florida               -                  -     1,061,339             -         -      
      North Richland Hills, Texas         -                  -       983,252             -         -      
      Oklahoma City, Oklahoma             -                  -     1,015,084             -         -      
      Pensacola, Florida                  -                  -       980,438             -         -      
      Saint Louis Park, Minnesota         -                  -     1,280,033             -         -      
      Tampa, Florida                      -                  -     1,312,146             -         -      
      Winston-Salem, North Carolina       -            247,828       992,551             -         -      
      Woodridge, Illinois                 -                  -       991,688             -         -      

    Black-eyed Pea Restaurant:
      Albuquerque, New Mexico             -                  -       705,746             -         -      
      Albuquerque, New Mexico             -                  -       704,757             -         -      
      Bedford, Texas                      -                  -       655,028             -         -      
      Dallas, Texas                       -                  -       655,011             -         -      
      Dallas, Texas                       -                  -       698,827             -         -      
      Forestville, Maryland               -                  -       681,034             -         -      
      Fort Worth, Texas                   -                  -       655,014             -         -      
      Hillsboro, Texas                    -                  -             -       811,120         -      
      Houston, Texas                      -                  -       685,977             -         -      
      Mesa, Arizona                       -                  -       906,740             -         -      
      Oklahoma City, Oklahoma             -                  -       651,523             -         -      
      Phoenix, Arizona                    -                  -       677,681             -         -      
      Phoenix, Arizona                    -                  -       677,805             -         -      
      Phoenix, Arizona                    -                  -       682,141             -         -      
      Scottsdale, Arizona                 -                  -             -       823,188         -      
      Tucson, Arizona                     -                  -       678,333             -         -      
      Waco, Texas                         -                  -       699,815             -         -      
      Wichita, Kansas                     -                  -       698,827             -         -      

    Burger King Restaurant:
      Atlanta, Georgia                    -                  -       609,693             -         -      

    Darryl's Restaurants:
      Evansville, Indiana                 -                  -       974,401             -         -      
      Knoxville, Tennessee                -                  -       709,047             -         -      
      Louisville, Kentucky                -                  -       915,201             -         -      
      Mobile, Alabama                     -                  -     1,009,042             -         -      
      Montgomery, Alabama                 -                  -       952,382             -         -      
      Nashville, Tennessee                -                  -       736,400             -         -      
      Pensacola, Florida                  -                  -       725,709             -         -      
      Richmond, Virginia                  -                  -       775,617             -         -      
      Richmond, Virginia                  -                  -       650,175             -         -      
      Winston-Salem, North Carolina       -                  -       812,752             -         -      

    Denny's Restaurants:
      McKinney, Texas                     -                  -             -       655,052         -      
      Tampa, Florida                      -                  -             -       715,957         -      

    Golden Corral Family
     Steakhouse Restaurants:
      Brooklyn, Ohio                      -                  -     1,044,311             -         -      
      Eastlake, Ohio                      -            256,332     1,473,307             -         -      

    International House of
     Pancakes Restaurants:
      Anderson, South Carolina            -                  -       957,414             -         -      
      Crestwood, Illinois                 -                  -       935,262             -         -      
      Elk Grove, California               -                  -     1,039,584             -         -      
      Hollywood, California               -                  -       994,845             -         -      
      Loveland, Colorado                  -                  -       963,597             -         -      
      Maryville, Tennessee                -            243,825       963,231             -         -      
      Victoria, Texas                     -                  -       814,015             -         -      

    Kentucky Fried Chicken
     Restaurant:
      Putnam, Connecticut                 -                  -       530,846             -         -      

    On the Border Restaurant:
      San Antonio, Texas                  -                  -             -     1,305,217         -      

    Popeye's Chicken Restaurant:
      Starke, Florida                     -            208,910             -       427,067         -      

    Ruby Tuesday's Restaurant:
      London, Kentucky                    -                  -             -       845,249         -      

    Shoney's Restaurants:
      Guadalupe, Arizona                  -                  -             -       949,343         -      
      Las Vegas, Nevada                   -                  -             -     1,184,901         -      

    Steak and Ale Restaurants:
      Austin, Texas                       -                  -       745,609             -         -      
      Birmingham, Alabama                 -                  -       681,623             -         -      
      College Park, Georgia               -                  -       909,525             -         -      
      Conroe, Texas                       -                  -     1,032,606             -         -      
      Greenville, South Carolina          -                 -     1,180,342             -         -       
      Houston, Texas                      -                  -     1,092,606             -         -      
      Houston, Texas                      -                  -       978,733             -         -      
      Huntsville, Alabama                 -                  -       810,041             -         -      
      Jacksonville, Florida               -                  -       879,060             -         -      
      Maitland, Florida                   -                  -       791,599             -         -      
      Mesquite, Texas                     -                  -       908,017             -         -      
      Miami, Florida                      -                  -     1,176,774             -         -      
      Norcorss, Georgia                   -                  -       966,814             -         -      
      Palm Harbor, Florida                -                  -       816,569             -         -      
      Pensacola, Florida                  -                  -       826,191             -         -      
      Tulsa, Oklahoma                     -                  -     1,067,543             -         -      

    Taco Bell Restaurants:
      Livingston, Tennessee               -                  -             -       436,198         -      
      Saint Louis, Missouri               -                  -       471,686             -         -      

    TGI Friday's Restaurants:
      El Paso, Texas                      -                  -     1,089,566             -         -      
      Mesa, Arizona                       -                  -             -     1,440,217         -      

    Tumbleweed Southwest Mesquite
     Bar & Grill Restaurants:
      Clarksville, Tennessee              -                  -             -       937,562         -      
      Cookeville, Tennessee               -                  -     1,029,717             -         -      
      Hendersonville, Tennessee           -            782,282             -             -         -
      Murfreesboro, Tennessee             -            976,699             -             -         -
      Nashville, Tennessee                -                  -       949,367             -         -      

    Wendy's Old Fashioned
     Hamburgers Restaurants:
      Carmel Mountain, California         -            594,856             -             -         -
      Knoxville, Tennessee                -                  -             -       453,380         -      
      San Diego, California               -                  -             -       590,058         -      
      Sevierville, Tennessee              -                  -             -       531,726         -      
      Seymour, Tennessee                  -                  -             -       460,693         -      
                                                  =============  ============  ============ =========
                                                    $1,281,257   $68,036,345   $14,318,931         -
                                                  =============  ============  ============ =========




                                                                                             
                Gross Amount at Which                                       Life on Which    
        Carried at Close of Period (b)(m)(n)(o)(p)                         Depreciation in   
 -----------------------------------------------------   Date              Latest Income    
             Buildings and                Accumulated   of Con-     Date    Statement is    
    Land     Improvements      Total      Depreciation struction  Acquired    Computed      
 ----------- -------------  ------------  ------------ ---------  --------  -------------   
                                                                                             
                                                                                             
                                                                                             
                                                                                             
                                                                                             
   609,696        770,331     1,380,027         9,093   1991        08/98       (e)               
   556,070        983,010     1,539,080        11,603   1995        08/98       (e)               
   625,868        936,068     1,561,936        11,049   1996        08/98       (e)               
   489,867      1,003,630     1,493,497        11,847   1993        08/98       (e)               
   549,651        966,628     1,516,279        11,410   1994        08/98       (e)               
   735,272        827,474     1,562,746         9,767   1992        08/98       (e)               
   390,058        943,019     1,333,077        11,131   1997        08/98       (e)               
   568,168        925,046     1,493,214        10,919   1998        08/98       (e)               
   740,165        835,996     1,576,161         9,868   1995        08/98       (e)               
   874,094        880,494     1,754,588        30,362   1997        08/96       (e)               
   786,475             (g)      786,475            (h)  1997        09/96       (h)               
                                                                                             
                                                                                             
   230,720        455,946       686,666         8,973   1988        05/98       (e)               
   648,459        683,390     1,331,849         9,315   1998        04/98       (e)               
   338,486        497,282       835,768        37,921   1996        09/96       (e)               
   586,477        604,508     1,190,985           939   1998        08/98       (e)               
   441,770        621,014     1,062,784         9,542   1998        04/98       (e)               
   483,660        459,387       943,047            (c)  (d)         09/98       (c)               
   289,183             (g)      289,183            (h)  1995        08/95       (h)               
   363,478        404,650       768,128        19,004   1990        08/97       (e)               
   277,986        490,143       768,129        23,019   1995        08/97       (e)               
   463,047        621,088     1,084,135        12,327   1998        02/98       (e)               
   228,364        539,764       768,128        25,349   1995        08/97       (e)               
   276,567        505,359       781,926        41,767   1995        07/96       (e)               
   273,325        413,077       686,402        19,400   1994        08/97       (e)               
   268,545        485,160       753,705        22,785   1995        08/97       (e)               
   320,924        463,347       784,271        22,607   1992        07/97       (e)               
   402,516        390,699       793,215            (c)  (d)         09/98       (c)               
   702,830         13,611       716,441            (c)  (d)         12/98       (c)               
   512,258        267,103       779,361           756   1998        09/98       (e)               
                                                                                             
                                                                                             
                                                                                             
   493,489             (g)      493,489            (h)  1994        08/97       (h)               
                                                                                             
                                                                                             
   714,194      1,302,733     2,016,927        75,963   1997        04/97       (e)               
   768,333             (g)      768,333            (h)  1986        06/98       (h)               
   900,038             (g)      900,038            (h)  1979        06/98       (h)               
   794,255             (g)      794,255            (h)  1979        06/98       (h)               
   665,141             (g)      665,141            (h)  1984        06/98       (h)               
 1,460,179        901,042     2,361,221        16,313   1982        06/98       (e)               
 1,077,645             (g)    1,077,645            (h)  1983        06/98       (h)               
   908,502             (g)      908,502            (h)  1979        06/98       (h)               
   779,387             (g)      779,387            (h)  1983        06/98       (h)               
   832,557             (g)      832,557            (h)  1981        06/98       (h)               
 1,305,939      1,030,685     2,336,624        18,661   1982        06/98       (e)               
   886,048             (g)      886,048            (h)  1979        06/98       (h)               
   687,614      1,064,050     1,751,664            (c)  (d)         09/98       (c)               
   756,750             (g)      756,750            (h)  1986        06/98       (h)               
 1,585,461        874,143     2,459,604        15,826   1978        06/98       (e)               
   692,093             (g)      692,093            (h)  1983        06/98       (h)               
   885,111             (g)      885,111            (h)  1976        06/98       (h)               
   734,245             (g)      734,245            (h)  1980        06/98       (h)               
   789,680             (g)      789,680            (h)  1987        12/98       (h)               
                                                                                             
                                                                                             
   168,548        715,504       884,052            (c)  (d)         12/98       (c)               
   366,727        618,096       984,823            (c)  (d)         12/98       (c)               
   437,235        609,391     1,046,626            (c)  (d)         12/98       (c)               
                                                                                             
                                                                                             
   746,437        501,072     1,247,509            (c)  (d)         08/98       (c)               
   883,196        108,843       992,039            (c)  (d)         12/98       (c)               
   362,141        989,635     1,351,776        15,387   1996        07/98       (e)               
   404,155             (g)      404,155            (h)  1996        06/96       (h)               
   447,582         17,358       464,940            (c)  (d)         12/98       (c)               
   758,796         13,869       772,665            (c)  (d)         12/98       (c)               
   784,939             (g)      784,939            (h)  1994        09/97       (h)               
   788,311         10,933       799,244            (c)  (d)         11/98       (c)               
   527,388        166,992       694,380            (c)  (d)         11/98       (c)               
                                                                                             
                                                                                             
   774,448        507,587     1,282,035        28,902   1997        12/96       (e)               
   585,818        866,641     1,452,459        39,513   1997        05/97       (e)               
   569,782        294,878       864,660        14,067   1997        04/97       (e)               
   376,929        639,875     1,016,804        67,201   1995        11/95       (e)               
   507,544        328,353       835,897        16,080   1997        04/97       (e)               
   353,608        606,470       960,078        14,295   1997        05/98       (e)               
   365,784        605,763       971,547        45,197   1996        07/96       (e)               
   320,463        627,371       947,834        28,604   1997        08/97       (e)               
   396,377        681,847     1,078,224        52,924   1996        06/96       (e)               
   705,522        626,845     1,332,367        41,961   1996        09/96       (e)               
   667,992        661,776     1,329,768        29,750   1997        05/97       (e)               
   566,562        403,730       970,292        10,508   1997        04/98       (e)               
   665,422        481,311     1,146,733        36,175   1996        06/96       (e)               
   493,536        619,786     1,113,322        27,296   1997        09/97       (e)               
   885,567        648,755     1,534,322        28,750   1997        04/97       (e)               
   631,336        675,111     1,306,447        33,062   1997        05/97       (e)               
   515,827        572,706     1,088,533        23,850   1997        05/97       (e)               
   688,147        351,810     1,039,957        24,106   1996        09/96       (e)               
   469,041        336,295       805,336        15,345   1997        04/97       (e)               
   473,596        586,377     1,059,973        28,556   1997        07/97       (e)               
   526,092        504,483     1,030,575        20,778   1997        05/97       (e)               
   528,118        340,297       868,415        24,738   1996        07/96       (e)               
   378,786        388,489       767,275        26,431   1996        12/96       (e)               
   482,361        316,135       798,496        13,345   1997        04/97       (e)               
   448,185        681,598     1,129,783        34,064   1997        07/97       (e)               
   889,562        487,475     1,377,037        25,386   1997        04/97       (e)               
   788,248        209,449       997,697        16,619   1996        07/96       (e)               
   751,576        757,026     1,508,602        37,074   1997        05/97       (e)               
   651,867        775,634     1,427,501        37,985   1997        05/97       (e)               
   234,685        589,367       824,052        15,291   1994        04/98       (e)               
                                                                                             
                                                                                             
   394,422             (g)      394,422            (h)  1998        06/98       (h)               
   543,095        620,617     1,163,712        49,649   1996        03/96       (e)               
   680,192        575,426     1,255,618        31,584   1997        12/96       (e)               
   769,842        411,012     1,180,854        21,812   1997        02/97       (e)               
   917,717        784,590     1,702,307        48,061   1996        10/96       (e)               
   672,815        621,133     1,293,948        49,180   1996        04/96       (e)               
   233,468        689,696       923,164        43,822   1970        02/97       (e)               
 1,211,346        829,339     2,040,685        63,242   1996        03/96       (e)               
   546,261        714,114     1,260,375        33,908   1997        04/97       (e)               
                                                                                             
                                                                                             
   965,223        549,565     1,514,788        28,482   1977        06/97       (e)               
   944,585        689,363     1,633,948        35,727   1971        06/97       (e)               
                                                                                             
                                                                                             
   986,426      1,680,312     2,666,738        56,164   1994        12/97       (e)               
   938,162      1,681,670     2,619,832        56,209   1995        12/97       (e)               
   945,234      1,475,339     2,420,573        49,313   1994        12/97       (e)               
   963,047      1,505,671     2,468,718        50,327   1995        12/97       (e)               
 1,156,847      1,188,272     2,345,119           326   1997        12/98       (e)               
   960,779      1,365,563     2,326,342        28,621   1990        05/98       (e)               
                                                                                             
                                                                                             
   563,479             (g)      563,479            (h)  1983        06/97       (h)               
   698,367        570,468     1,268,835        29,565   1983        06/97       (e)               
   777,842        663,941     1,441,783        34,410   1981        06/97       (e)               
   589,574             (g)      589,574            (h)  1983        06/97       (h)               
   647,375             (g)      647,375            (h)  1983        06/97       (h)               
   495,195             (g)      495,195            (h)  1983        06/97       (h)               
   346,380             (g)      346,380            (h)  1984        06/97       (h)               
   513,218             (g)      513,218            (h)  1981        06/97       (h)               
 1,485,631        772,853     2,258,484        40,054   1983        06/97       (e)               
   389,394             (g)      389,394            (h)  1983        06/97       (h)               
   840,525        505,176     1,345,701        26,182   1980        06/97       (e)               
 1,131,164        719,865     1,851,029        37,308   1972        06/97       (e)               
   618,125             (g)      618,125            (h)  1982        06/97       (h)               
   311,196             (g)      311,196            (h)  1982        06/97       (h)               
   436,867             (g)      436,867            (h)  1978        06/97       (h)               
                                                                                             
                                                                                             
   439,961             (g)      439,961            (h)  1996        06/96       (h)               
   466,555        506,094       972,649        56,000   1981        09/95       (e)               
   528,090        625,653     1,153,743        69,225   1987        09/95       (e)               
   397,302             (g)      397,302            (h)  1997        02/97       (h)               
                                                                                             
                                                                                             
                                                                                             
   464,957        178,078       643,035         8,737   1997        04/97       (e)               
   628,804         36,311       665,115         1,798   1997        05/97       (e)               
                                                                                             
                                                                                             
   485,648        172,318       657,966            (c)  (d)         11/98       (c)               
                                                                                             
                                                                                             
                                                                                             
   456,629      1,170,630     1,627,259        10,717   1998        06/98       (e)               
   384,221        643,854     1,028,075        71,877   1995        08/95       (e)               
   359,455        653,853     1,013,308        70,190   1995        08/95       (e)               
   426,349        805,517     1,231,866        12,451   1997        07/98       (e)               
   848,187        664,399     1,512,586            (c)  (d)         11/98       (c)               
   442,218        930,207     1,372,425        32,076   1996        12/96       (e)               
 1,031,098      1,092,939     2,124,037       112,853   1995        11/95       (e)               
   576,548        934,918     1,511,466        39,555   1997        05/97       (e)               
   349,227        699,756     1,048,983        79,209   1995        08/95       (e)               
   546,078        993,149     1,539,227        11,723   1998        12/97       (e)               
 1,043,108        977,508     2,020,616       106,622   1995        08/95       (e)               
   324,046        833,316     1,157,362            (c)  (d)         08/98       (c)               
   564,242      1,056,315     1,620,557        14,398   1998        01/98       (e)               
   161,390      1,028,945     1,190,335        37,201   1997        08/97       (e)               
   569,664      1,017,781     1,587,445        15,267   1998        01/98       (e)               
   364,536        865,147     1,229,683        31,830   1997        06/97       (e)               
   320,852        763,705     1,084,557            (c)  (d)         11/98       (c)               
   590,538      1,176,436     1,766,974        38,324   1997        08/97       (e)               
   640,320        898,171     1,538,491       100,911   1995        08/95       (e)               
   456,646        861,803     1,318,449        29,717   1996        02/97       (e)               
   615,554      1,184,073     1,799,627        50,082   1997        05/97       (e)               
   541,264      1,173,738     1,715,002        51,904   1997        06/97       (e)               
   409,153        943,712     1,352,865        37,488   1997        06/97       (e)               
   479,197        954,051     1,433,248        64,044   1997        11/96       (e)               
   374,230        838,342     1,212,572        46,055   1997        12/96       (e)               
   428,841      1,031,457     1,460,298        34,568   1997        09/97       (e)               
   395,839        887,540     1,283,379        20,061   1997        12/97       (e)               
   548,821      1,099,448     1,648,269        25,553   1997        10/97       (e)               
   570,111        845,896     1,416,007            (c)  (d)         10/98       (c)               
   322,433        987,385     1,309,818        33,357   1997        09/97       (e)               
   634,108         21,570       655,678            (c)  (d)         12/98       (c)               
   626,999      1,130,692     1,757,691        86,015   1996        05/96       (e)               
   825,650      1,161,192     1,986,842       112,169   1995        08/95       (e)               
   357,429        650,249     1,007,678        71,928   1995        08/95       (e)               
   303,633        970,489     1,274,122        50,830   1997        02/97       (e)               
                                                                                             
                                                                                             
   405,631        884,954     1,290,585        35,398   1983        10/97       (e)               
   282,099        534,632       816,731        21,385   1981        10/97       (e)               
   370,667        431,642       802,309        17,266   1981        10/97       (e)               
   693,733        810,458     1,504,191        32,418   1982        10/97       (e)               
   371,254        685,847     1,057,101        25,617   1979        11/97       (e)               
   422,489        528,849       951,338        21,154   1981        10/97       (e)               
   451,235        548,178       999,413        21,927   1982        10/97       (e)               
   287,331        712,081       999,412        28,483   1980        10/97       (e)               
   375,116        605,067       980,183        21,827   1982        12/97       (e)               
   388,699        793,475     1,182,174        31,739   1977        10/97       (e)               
   728,574        793,410     1,521,984        31,736   1982        10/97       (e)               
   436,471        659,089     1,095,560        26,364   1982        10/97       (e)               
   627,680        804,399     1,432,079        32,176   1977        10/97       (e)               
                                                                                             
                                                                                             
   846,183        595,601     1,441,784        30,868   1972        06/97       (e)               
   817,039        648,765     1,465,804        33,623   1976        06/97       (e)               
 1,181,460        908,880     2,090,340        47,104   1974        06/97       (e)               
                                                                                             
                                                                                             
                                                                                             
   541,312         92,804       634,116            (c)  (d)         11/98       (c)               
   375,987        964,430     1,340,417         1,233   1997        12/98       (e)               
   584,766             (g)      584,766            (h)  1997        08/97       (h)               
 1,096,763        705,345     1,802,108        36,105   1995        06/97       (e)               
   575,285        802,974     1,378,259         7,205   1997        09/98       (e)               
   416,115        756,717     1,172,832            (c)  (d)         08/98       (c)               
   476,847        961,606     1,438,453           263   1998        12/98       (e)               
 1,407,002             (g)    1,407,002            (h)  1996        06/98       (h)               
   545,112      1,029,900     1,575,012         1,317   1996        12/98       (e)               
   645,365        856,532     1,501,897        42,807   1996        07/97       (e)               
   512,481        831,202     1,343,683         7,458   1998        09/98       (e)               
   380,687        775,713     1,156,400         6,960   1997        09/98       (e)               
   460,167        802,640     1,262,807        36,522   1997        08/97       (e)               
   665,015        580,798     1,245,813        31,215   1994        05/97       (e)               
   593,624        918,024     1,511,648           335   1997        12/98       (e)               
   488,259             (g)      488,259            (h)  1997        08/97       (h)               
   647,414        871,268     1,518,682           716   1998        12/98       (e)               
   382,950        957,912     1,340,862           262   1997        12/98       (e)               
   504,533        806,624     1,311,157        12,099   1996        07/98       (e)               
   387,562        891,943     1,279,505         1,222   1997        12/98       (e)               
   282,868        843,648     1,126,516           693   1997        12/98       (e)               
   579,175      1,176,434     1,755,609           322   1997        12/98       (e)                
   765,743        707,406     1,473,149        35,354   1997        07/97       (e)               
   319,237             (g)      319,237            (h)  1997        08/97       (h)               
                                                                                             
                                                                                             
   710,749        721,843     1,432,592            (c)  (d)         12/98       (c)               
   605,063        649,514     1,254,577         8,497   1998        04/98       (e)               
   419,488        697,861     1,117,349        32,838   1997        04/97       (e)               
   481,456        636,588     1,118,044         5,537   1998        07/98       (e)               
   603,735        595,803     1,199,538            (c)  (d)         12/98       (c)               
   361,238        711,595     1,072,833        30,300   1997        07/97       (e)               
   396,864        620,042     1,016,906        26,684   1997        06/97       (e)               
   369,886        513,533       883,419        31,644   1997        12/96       (e)               
   124,468        773,506       897,974        36,609   1997        04/97       (e)               
   389,265        779,211     1,168,476        22,256   1997        10/97       (e)               
   635,343        703,067     1,338,410        28,315   1997        10/97       (e)               
   286,850        606,547       893,397        26,990   1997        05/97       (e)               
   462,813        573,816     1,036,629         7,140   1998        05/98       (e)               
   382,042        613,690       995,732        25,795   1997        07/97       (e)               
   284,046        577,029       861,075        11,725   1998        04/98       (e)               
   537,223        592,536     1,129,759        34,172   1997        01/97       (e)               
   370,342        548,107       918,449        31,810   1997        02/97       (e)               
   420,521        543,338       963,859        28,060   1997        03/97       (e)               
   545,485        527,020     1,072,505        49,766   1996        11/95       (e)               
   403,002        610,815     1,013,817        46,290   1996        07/96       (e)               
   375,776        643,445     1,019,221        48,655   1996        07/96       (e)               
   437,667        591,877     1,029,544        45,458   1996        06/96       (e)               
   390,509        596,872       987,381        37,921   1997        02/97       (e)               
   272,937        688,400       961,337        15,748   1998        03/98       (e)               
   737,038        604,806     1,341,844        34,549   1997        01/97       (e)               
   415,880        649,681     1,065,561        37,349   1997        01/97       (e)               
   730,674        600,180     1,330,854        36,291   1997        01/97       (e)               
   603,354        602,630     1,205,984        70,360   1986        06/95       (e)               
   911,754        581,552     1,493,306        32,105   1997        01/97       (e)               
   740,616        678,189     1,418,805        22,730   1997        12/97       (e)               
   853,821        635,185     1,489,006        12,755   1998        02/98       (e)               
 1,075,983        589,694     1,665,677            (c)  (d)         12/98       (c)               
   418,351        651,064     1,069,415         5,663   1998        07/98       (e)               
   363,616        773,187     1,136,803            (c)  (d)         12/98       (c)               
   217,851        751,664       969,515        43,212   1992        01/97       (e)               
   387,455        625,933     1,013,388        35,813   1997        01/97       (e)               
   383,591        675,860     1,059,451        14,289   1998        04/98       (e)               
   769,900        785,757     1,555,657            (c)  (d)         12/98       (c)               
   681,663        642,924     1,324,587        32,073   1997        04/97       (e)               
   631,275        567,912     1,199,187        30,626   1997        02/97       (e)               
   717,246        688,066     1,405,312        11,531   1998        03/98       (e)               
   474,296        759,049     1,233,345         7,504   1998        04/98       (e)               
   274,012        777,712     1,051,724            (c)  (d)         12/98       (c)               
   310,793        690,785     1,001,578            (c)  (d)         12/98       (c)               
   494,273        741,964     1,236,237            (c)  (d)         12/98       (c)               
   383,921        874,164     1,258,085            (c)  (d)         12/98       (c)               
   477,580        566,856     1,044,436        13,071   1998        03/98       (e)               
   464,245        779,235     1,243,480            (c)  (d)         12/98       (c)               
   523,089        617,131     1,140,220        25,883   1997        07/97       (e)               
   358,130        668,383     1,026,513        27,407   1997        07/97       (e)               
                                                                                             
                                                                                             
                                                                                             
   301,723             (g)      301,723            (h)  1997        07/97       (h)               
                                                                                             
                                                                                             
 4,846,660              -     4,846,660             -    (q)        09/98       (q)               
                                                                                             
                                                                                             
   320,594        559,433       880,027        52,009   1967        03/96       (e)               
                                                                                             
                                                                                             
   242,239              -       242,239            (f)  1989        01/96       (f)               
   212,053              -       212,053            (f)  1986        05/96       (f)               
   209,432              -       209,432            (f)  1978        05/96       (f)               
   174,721              -       174,721            (f)  1975        01/96       (f)               
    46,737              -        46,737            (f)  1980        05/96       (f)               
   120,449              -       120,449            (f)  1986        05/96       (f)               
   190,009              -       190,009            (f)  1996        03/97       (f)               
   200,442              -       200,442            (f)  1985        01/96       (f)               
   135,831              -       135,831            (f)  1992        12/96       (f)               
   187,082              -       187,082            (f)  1990        03/97       (f)               
   126,494              -       126,494            (f)  1986        01/96       (f)               
   116,849              -       116,849            (f)  1978        01/96       (f)               
   226,163              -       226,163            (f)  1987        01/96       (f)               
   215,881              -       215,881            (f)  1990        05/96       (f)               
   242,239              -       242,239            (f)  1977        01/96       (f)               
   245,145              -       245,145            (f)  1975        05/97       (f)               
   194,012              -       194,012            (f)  1986        01/96       (f)               
   202,050              -       202,050            (f)  1983        01/96       (f)               
   142,570              -       142,570            (f)  1996        01/96       (f)               
   212,093              -       212,093            (f)  1978        05/96       (f)               
   180,803              -       180,803            (f)  1978        05/96       (f)               
    99,166              -        99,166            (f)  1994        01/96       (f)               
   169,454              -       169,454            (f)  1986        05/96       (f)               
   202,552              -       202,552            (f)  1980        04/96       (f)               
   216,518              -       216,518            (f)  1975        01/96       (f)               
   213,090              -       213,090            (f)  1989        03/97       (f)               
    99,815              -        99,815            (f)  1986        05/96       (f)               
   152,215              -       152,215            (f)  1994        01/96       (f)               
   149,206              -       149,206            (f)  1975        03/97       (f)               
   223,981              -       223,981            (f)  1983        03/97       (f)               
   259,922              -       259,922            (f)  1976        01/96       (f)               
   261,529              -       261,529            (f)  1993        01/96       (f)               
    99,733              -        99,733            (f)  1991        05/96       (f)               
   259,922              -       259,922            (f)  1978        01/96       (f)               
   239,023              -       239,023            (f)  1983        01/96       (f)               
   228,199              -       228,199            (f)  1983        03/97       (f)               
   186,476              -       186,476            (f)  1976        04/96       (f)               
   128,604              -       128,604            (f)  1988        04/96       (f)               
   194,097              -       194,097            (f)  1993        12/96       (f)               
   208,480              -       208,480            (f)  1975        01/96       (f)               
   176,170              -       176,170            (f)  1985        01/96       (f)               
   197,227              -       197,227            (f)  1978        01/96       (f)               
   279,779              -       279,779            (f)  1983        03/97       (f)               
   167,170              -       167,170            (f)  1980        03/97       (f)               
                                                                                             
                                                                                             
   852,746      1,108,491     1,961,237         9,339   1994        09/98       (e)               
   712,865        873,395     1,586,260         7,358   1993        09/98       (e)               
   397,878        923,975     1,321,853         7,784   1996        09/98       (e)               
   435,465        915,232     1,350,697         7,711   1994        09/98       (e)               
   918,258        764,150     1,682,408         6,996   1995        09/98       (e)               
   654,766      1,195,901     1,850,667        10,949   1994        09/98       (e)               
   683,560        614,256     1,297,816         5,624   1995        09/98       (e)               
   789,680        604,283     1,393,963         5,532   1995        09/98       (e)               
   911,013      1,011,766     1,922,779         9,263   1993        09/98       (e)               
 1,244,893        918,257     2,163,150           755   1994        12/98       (e)               
   569,436        968,749     1,538,185         8,161   1994        09/98       (e)               
                                                                                             
                                                                                             
   691,797      1,136,902     1,828,699        17,677   1997        07/98       (e)               
   599,391      1,159,989     1,759,380         4,131   1998        06/98       (e)               
                                                                                             
                                                                                             
   113,780        407,429       521,209         3,432   1998        09/98       (e)               
   158,880        378,057       536,937         3,703   1998        09/98       (e)               
                                                                                             
                                                                                             
   913,244        170,962     1,084,206            (c)  (d)         11/98       (c)               
 1,336,881         10,055     1,346,936            (c)  (d)         12/98       (c)               
   369,914      1,554,300     1,924,214         3,265   1998        09/98       (e)               
   895,539        300,903     1,196,442            (c)  (d)         07/98       (c)               
                                                                                             
                                                                                             
   698,778         14,657       713,435            (c)  (d)         11/98       (c)               
   574,441        742,781     1,317,222         2,985   1998        11/98       (e)               
   354,415             (g)      354,415            (h)  1997        08/97       (h)               
   695,999         11,089       707,088            (c)  (d)         12/98       (c)               
   545,612        868,606     1,414,218        14,060   1998        03/98       (e)               
                                                                                             
                                                                                             
                                                                                             
 1,076,442      1,062,751     2,139,193        55,661   1996        06/97       (e)               
                                                                                             
                                                                                             
                                                                                             
   591,371      1,175,273     1,766,644        77,681   1996        09/96       (e)               
                                                                                             
                                                                                             
   309,101        420,246       729,347        25,320   1997        01/97       (e)               
   656,263             (g)      656,263            (h)  1997        08/97       (h)               
   623,709             (g)      623,709            (h)  1997        04/97       (h)               
   469,721         85,872       555,593            (c)  (d)         03/98       (c)               
                                                                                             
                                                                                             
                                                                                             
   628,688        962,524     1,591,212        18,591   1981        06/98       (e)               
   371,021        593,171       964,192        11,457   1994        06/98       (e)               
   585,461        812,822     1,398,283        15,700   1990        06/98       (e)               
   478,006        679,114     1,157,120        13,117   1988        06/98       (e)               
   527,572        870,710     1,398,282        16,818   1988        06/98       (e)               
   734,105        961,287     1,695,392        18,567   1986        06/98       (e)               
   634,379        643,323     1,277,702        12,426   1981        06/98       (e)               
                                                                                             
                                                                                             
 1,006,396        690,731     1,697,127        12,506   1979        06/98       (e)               
   705,557             (g)      705,557            (h)  1969        06/98       (h)               
   715,432             (g)      715,432            (h)  1993        06/98       (h)               
   802,361             (g)      802,361            (h)  1973        06/98       (h)               
   590,733             (g)      590,733            (h)  1993        06/98       (h)               
  670,594              (g)      670,594            (h)  1976        06/98       (h)                
   776,694             (g)      776,694            (h)  1972        06/98       (h)               
   964,354             (g)      964,354            (h)  1973        06/98       (h)               
   641,125             (g)      641,125            (h)  1974        06/98       (h)               
   670,491             (g)      670,491            (h)  1977        06/98       (h)               
   684,164             (g)      684,164            (h)  1969        06/98       (h)               
   810,316        798,412     1,608,728         1,021   1979        12/98       (e)               
   592,342             (g)      592,342            (h)  1988        06/98       (h)               
   594,142             (g)      594,142            (h)  1974        06/98       (h)               
   933,759        763,368     1,697,127        13,821   1985        06/98       (e)               
   740,132             (g)      740,132            (h)  1984        12/98       (h)               
   922,679        725,256     1,647,935        13,131   1978        06/98       (e)               
   487,021             (g)      487,021            (h)  1983        06/98       (h)               
   354,419             (g)      354,419            (h)  1978        06/98       (h)               
   433,713             (g)      433,713            (h)  1969        06/98       (h)               
                                                                                             
                                                                                             
   212,438             (g)      212,438            (h)  1998        07/98       (h)               
   308,915        351,160       660,075         2,341   1991        10/98       (e)               
   349,637             (g)      349,637            (h)  1991        10/98       (h)               
                                                                                             
                                                                                             
   599,160             (g)      599,160            (h)  1992        08/98       (h)               
   857,404        896,945     1,754,349            (c)  (d)         11/98       (c)               
   914,342             (g)      914,342            (h)  1997        09/97       (h)               
 2,386,592      1,432,281     3,818,873            (c)  (d)         11/98       (c)               
                                                                                             
                                                                                             
   548,886        700,856     1,249,742         5,904   1994        09/98       (e)               
   618,372        631,370     1,249,742         5,319   1994        09/98       (e)               
                                                                                             
                                                                                             
                                                                                             
   608,642             (g)      608,642            (h)  1998        02/98       (h)               
   511,084             (g)      511,084            (h)  1994        08/97       (h)               
   519,259        939,819     1,459,078            (c)  (d)         02/98       (c)               
   514,900             (g)      514,900            (h)  1995        08/97       (h)               
   420,176             (g)      420,176            (h)  1978        08/97       (h)               
                                                                                             
                                                                                             
                                                                                             
   640,066        688,918     1,328,984        55,507   1996        06/96       (e)               
   358,027        444,622       802,649        33,123   1996        05/96       (e)               
   555,886        435,037       990,923         5,135   1998        06/98       (e)               
   842,158        622,125     1,464,283        12,869   1998        11/97       (e)               
------------ ------------- -------------  ------------                                        
$210,451,742 $189,741,908  $400,193,650    $6,242,783                                        
============ ============= =============  ============                                        
                                                                                             
                                                                                             
                                                                                             
                                                                                             
                                                                                             
                                                                                             
$    706,411 $  1,508,767  $  2,215,178    $    7,304   1998        06/98       (e)
============ ============= =============  ============                                                         
                                                                                             
        (g)            (g)           (g)           (h)  1997        09/96       (h)               
        (g)            (g)           (g)           (i)  1995        08/98       (i)               
                                                                                             
                                                                                              
        (g)            (g)           (g)           (h)  1995        08/95       (h)                
                                                                                             
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1994        08/97       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1986        06/98       (h)               
        (g)            (g)           (g)           (h)  1979        06/98       (h)               
        (g)            (g)           (g)           (h)  1979        06/98       (h)               
        (g)            (g)           (g)           (h)  1984        06/98       (h)               
        (g)            (g)           (g)           (h)  1983        06/98       (h)               
        (g)            (g)           (g)           (h)  1979        06/98       (h)               
        (g)            (g)           (g)           (h)  1983        06/98       (h)               
        (g)            (g)           (g)           (h)  1981        06/98       (h)               
        (g)            (g)           (g)           (h)  1979        06/98       (h)               
        (g)            (g)           (g)           (h)  1986        06/98       (h)               
        (g)            (g)           (g)           (h)  1983        06/98       (h)               
        (g)            (g)           (g)           (h)  1976        06/98       (h)               
        (g)            (g)           (g)           (h)  1980        06/98       (h)               
        (g)            (g)           (g)           (i)  1982        06/98       (i)               
        (g)            (g)           (g)           (h)  1987        12/98       (h)               
                                                                                             
                                                                                             
        (j)            (g)           (g)           (h)  1993        10/97       (h)               
        (j)            (g)           (g)           (h)  1993        10/97       (h)               
        (j)            (g)           (g)           (h)  1993        03/97       (h)               
        (j)            (g)           (g)           (h)  1996        03/97       (h)               
        (j)            (g)           (g)           (h)  1991        10/97       (h)               
        (j)            (g)           (g)           (h)  1989        10/97       (h)               
        (j)            (g)           (g)           (h)  1991        03/97       (h)               
        (g)            (g)           (g)           (h)  1996        06/96       (h)               
        (j)            (g)           (g)           (h)  1990        10/97       (h)               
        (g)            (g)           (g)           (h)  1994        09/97       (h)               
        (j)            (g)           (g)           (h)  1992        03/97       (h)               
        (j)            (g)           (g)           (h)  1991        09/97       (h)               
        (j)            (g)           (g)           (h)  1993        09/97       (h)               
        (j)            (g)           (g)           (h)  1994        09/97       (h)               
        (j)            (g)           (g)           (h)  1997        04/97       (h)               
        (j)            (g)           (g)           (h)  1995        09/97       (h)               
        (j)            (g)           (g)           (h)  1991        10/97       (h)               
        (j)            (g)           (g)           (h)  1992        10/97       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1998        06/98       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1983        06/97       (h)               
        (g)            (g)           (g)           (h)  1983        06/97       (h)               
        (g)            (g)           (g)           (h)  1983        06/97       (h)               
        (g)            (g)           (g)           (h)  1983        06/97       (h)               
        (g)            (g)           (g)           (h)  1984        06/97       (h)               
        (g)            (g)           (g)           (h)  1981        06/97       (h)               
        (g)            (g)           (g)           (h)  1983        06/97       (h)               
        (g)            (g)           (g)           (h)  1982        06/97       (h)               
        (g)            (g)           (g)           (h)  1982        06/97       (h)               
        (g)            (g)           (g)           (h)  1978        06/97       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1996        06/96       (h)               
        (g)            (g)           (g)           (h)  1997        02/97       (h)               
                                                                                             
                                                                                             
                                                                                             
        (j)            (g)           (g)           (h)  1995        08/96       (h)               
        (g)            (g)           (g)           (i)  1996        12/96       (i)               
                                                                                             
                                                                                             
                                                                                             
        (j)            (g)           (g)           (h)  1997        10/98       (h)               
        (j)            (g)           (g)           (h)  1996        11/98       (h)               
        (g)            (g)           (g)           (h)  1997        08/97       (h)               
        (g)            (g)           (g)           (h)  1996        06/98       (h)               
        (g)            (g)           (g)           (h)  1997        08/97       (h)               
        (g)            (g)           (g)           (i)  1997        12/98       (i)               
        (g)            (g)           (g)           (h)  1997        08/97       (h)               
                                                                                             
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1997        07/97       (h)               
                                                                                             
                                                                                             
        (j)            (g)           (g)           (h)  1997        10/97       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (i)  1997        05/97       (i)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1997        08/97       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1997        04/97       (h)               
        (g)            (g)           (g)           (h)  1997        08/97       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1969        06/98       (h)               
        (g)            (g)           (g)           (h)  1993        06/98       (h)               
        (g)            (g)           (g)           (h)  1973        06/98       (h)               
        (g)            (g)           (g)           (h)  1993        06/98       (h)               
        (g)            (g)           (g)           (h)  1976        06/98       (h)                
        (g)            (g)           (g)           (h)  1972        06/98       (h)               
        (g)            (g)           (g)           (h)  1973        06/98       (h)               
        (g)            (g)           (g)           (h)  1974        06/98       (h)               
        (g)            (g)           (g)           (h)  1977        06/98       (h)               
        (g)            (g)           (g)           (h)  1969        06/98       (h)               
        (g)            (g)           (g)           (h)  1988        06/98       (h)               
        (g)            (g)           (g)           (h)  1974        06/98       (h)               
        (g)            (g)           (g)           (h)  1984        12/98       (h)               
        (g)            (g)           (g)           (h)  1983        06/98       (h)               
        (g)            (g)           (g)           (h)  1978        06/98       (h)               
        (g)            (g)           (g)           (h)  1969        06/98       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1998        07/98       (h)               
        (g)            (g)           (g)           (h)  1991        10/98       (h)               
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1992        08/98       (h)               
        (g)            (g)           (g)           (h)  1997        09/97       (h)               
                                                                                             
                                                                                             
                                                                                             
        (g)            (g)           (g)           (h)  1998        02/98       (h)               
        (g)            (g)           (g)           (h)  1994        08/97       (h)               
        (j)            (g)           (g)           (h)  1974        08/97       (h)                             
        (g)            (g)           (g)           (h)  1995        08/97       (h)                             
        (g)            (g)           (g)           (h)  1978        08/97       (h)               
                                                                                             
                                                                                             
                                                                                             
        (j)            (g)           (g)           (h)  1997        10/98       (h)                             
        (j)            (g)           (g)           (h)  1998        07/98       (h)               
        (j)            (g)           (g)           (h)  1996        10/96       (h)               
        (j)            (g)           (g)           (h)  1996        06/96       (h)               
        (j)            (g)           (g)           (h)  1998        08/98       (h)               



</TABLE>

<PAGE>


               CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARIES

        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>

                                                                      Cost           Accumulated
                                                                (b)(m)(n)(o)(p)      Depreciation
                                                                -----------------   ----------------
<S> <C>
              Properties the Company has Invested
                  in Under Operating Leases:

                      Balance, December 31, 1995                   $  19,824,044       $   100,318
                   Acquisitions (l)                                   41,030,498                --
                      Depreciation expense (e)                                 --           511,078
                                                                -----------------   ----------------

                      Balance, December 31, 1996                      60,854,542           611,396
                      Acquisitions (l)                               146,879,309                 --
                      Depreciation expense (e)                                 --         1,784,269
                                                                -----------------   ----------------

                      Balance, December 31, 1997                     207,733,851         2,395,665
                      Acquisitions (l)                               192,459,799                 --
                      Depreciation expense (e)                                 --         3,847,117
                                                                -----------------   ----------------

                      Balance, December 31, 1998                   $ 400,193,650      $  6,242,782
                                                                =================   ================


              Property  of Joint  Venture  in  Which
                the  Company  has a 55.38%
                Interest and has Invested
                in Under an Operating Lease:

                   Balance, December 31, 1997                           $     --          $     --
                   Acquisition                                         2,215,177                --
                   Depreciation expense                                       --             7,303
                                                                -----------------   ----------------

                   Balance, December 31, 1998                       $  2,215,177        $    7,303
                                                                =================   ================
</TABLE>


(b)      As of December  31,  1998,  1997 and 1996,  the  aggregate  cost of the
         Properties owned by the Company and its subsidiaries for federal income
         tax   purposes  was   $418,427,587,   $248,050,936   and   $73,144,286,
         respectively.  All of the leases are  treated as  operating  leases for
         federal income tax purposes.

(c)      Property was not placed in service as of December 31, 1998;  therefore,
         no depreciation was taken.

(d)      Scheduled for completion in 1999.

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


<PAGE>


               CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARIES

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

                                December 31, 1998


(f)      The  building  portion  of  this  Property  is  owned  by  the  tenant;
         therefore, depreciation is not applicable.

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

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

(i)      For financial reporting  purposes,  the lease for the land and building
         has been recorded as 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.

(j)      The Company  owns the building  only  relating to this  Property.  This
         Property  is  subject  to a ground  lease  between  the  tenant  and an
         unaffiliated third party. In connection therewith,  the Company entered
         into either a tri-party  agreement with the tenant and the owner of the
         land or an assignment of interest in the ground lease with the landlord
         of the land.  The  tri-party  agreement or  assignment of interest each
         provide that the tenant is responsible  for all  obligations  under the
         ground lease and provide  certain rights to the Company to help protect
         its  interest  in the  building in the event of a default by the tenant
         under the terms of the ground lease.

(k)      The restaurant on the property in Grand Rapids, Michigan, was converted
         from a Kenny Rogers'  Roasters  restaurant  to an Arby's  restaurant in
         1998.

(l)      During the years ended  December 31, 1998,  1997 and 1996,  the Company
         (i) incurred  acquisition fees totalling  $17,317,297,  $10,011,715 and
         $4,535,685,  respectively, paid to the Advisor, (ii) purchased land and
         buildings  from  affiliates  of the  Company for an  aggregate  cost of
         approximately $8,770,000, $5,450,000 and $2,610,000,  respectively, and
         (iii) paid development or construction management fees to affiliates of
         the Company totalling $229,153,  $387,728 and $166,695 during the years
         ended December 31, 1998, 1997 and 1996, respectively.  Such amounts are
         included in land and buildings on operating  leases,  net investment in
         direct financing leases and other assets at December 31, 1998, 1997 and
         1996.

(m)      For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Property in Indian Harbor Beach,  Florida,  was written down to its net
         realizable value due to an anticipated impairment in value. The Company
         recognized  the  impairment  by  recording  an  allowance  for  loss on
         building in the amount of $52,327 at December 31, 1998.  The impairment
         at December 31, 1998  represents the difference  between the Property's
         carrying  value  and  the  property   manager's  estimate  of  the  net
         realizable value of the Property based on an anticipated sales price to
         an interested third party.  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 building.



<PAGE>


               CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARIES

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

                                December 31, 1998


(n)      For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Property in Jessup,  Maryland,  was written down to its net  realizable
         value due to an anticipated impairment in value. The Company recognized
         the  impairment  by recording an allowance  for loss on building in the
         amount of $342,385 at December 31, 1998. The impairment at December 31,
         1998  represents the difference  between the Property's  carrying value
         and the property  manager's estimate of the net realizable value of the
         Property  based on an  anticipated  sales price to an interested  third
         party. 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 building.

(o)      For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Property in Edgewater, Colorado, was written down to its net realizable
         value due to an anticipated impairment in value. The Company recognized
         the  impairment  by recording an allowance  for loss on building in the
         amount of $86,229 at December 31, 1998.  The impairment at December 31,
         1998  represents the difference  between the Property's  carrying value
         and the property  manager's estimate of the net realizable value of the
         Property  based on an  anticipated  sales price to an interested  third
         party. 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 building.

(p)      For  financial  reporting  purposes,  the  undepreciated  cost  of  the
         Property in Phoenix,  Arizona,  was written down to its net  realizable
         value due to an anticipated impairment in value. The Company recognized
         the  impairment  by  recording  an  allowance  for  loss  on  land  and
         construction work in progress in the amount of $130,593 at December 31,
         1998.  The  impairment at December 31, 1998  represents  the difference
         between  the  Property's  carrying  value  and the  property  manager's
         estimate  of the net  realizable  value  of the  Property  based  on an
         anticipated  sales price to an interested  third party. 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 construction work in progress.

(q)      The  Company  owns a  parcel  of  land  on  which  restaurants  will be
         constructed during 1999.


<PAGE>

               CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARIES

                   SCEDULE IV - MORTGAGE LOANS ON REAL ESTATE

                                December 31,1998
<TABLE>
<CAPTION>



                                                                                                           Principal
                                                                                                            Amount
                                                                                                            of Loans
                                                                                                           Subject to
                                                   Final     Periodic             Face        Carrying     Delinquent
                                    Interest      Maturity    Payment   Prior    Amount of     Amount of     Principal
         Description                  Rate          Date       Terms    Liens    Mortgages     Mortgages    or Interest
         -----------                --------      --------   --------   ------  ------------  -----------  -------------
<S> <C>
Castle Hill Holdings V, L.L.C.
First Mortgages                      10.75%    January, 2016    (1)      $ -      $8,475,000   $8,520,313       $ -
        Pizza Hut Restaurants:
               Adrian, MI
               Bedford, OH
               Bowling Green, OH
               Cleveland, OH
               Cleveland, OH
               Cleveland, OH
               Defiance, OH
               East Cleveland, OH
               Euclid,  OH
               Fairview Park, OH
               Lambertville, MI
               Mayfield Heights, OH
               Middleburg Heights, OH
               Monroe, MI
               North Olmstead, OH
               Norwalk, OH
               Sandusky, OH
               Seven Hills, OH
               Strongsville, OH
               Toledo, OH
               Toledo, OH
               Toledo, OH
               Toledo, OH

Castle Hill Holdings VI, L.L.C.
First Mortgages                      10.75%     June, 2016       (1)         -     3,888,000    3,950,844        -
        Pizza Hut Restaurants:
               Beaver, WV
               Beckley, WV
               Belle, WV
               Bluefield, WV
               Cross Lanes, WV
               Huntington, WV
               Hurricane, WV
               Marietta, OH
               Milton, WV
               Ronceverte, WV

Castle Hill Holdings VII, L.L.C.
First Mortgages                      10.75%    January, 2017      (1)        -       484,000      267,175 (5)    -
        Pizza Hut Restaurants:
               Bowling Green, OH
               Toledo, OH

Castle Hill Holdings VII
  (Phase II), L.L.C.
First Mortgages                      10.50%      April, 2017      (2)        -     4,200,000    3,879,129 (6)    -
        Pizza Hut Restaurants:
               Bolivar,  OH
               Carrollton,  OH
               Dover,  OH
               Millersburg, OH
               New Philadelphia, OH
               New Philadelphia, OH
               Steubenville, OH
               Uhrichsville, OH
               Weirton, WV
               Wellsburg, WV
               Wintersville, OH

GenXMex Foods, Inc.
First Mortgage
        Taco Bell Restaurant:
               Saint Peters, MO       9.50%    September, 2005   (3)         -       545,000      551,667        -

GenXMex Foods, Inc.
First Mortgage
        Taco Bell Restaurant:
               Saint Louis, MO        9.50%    September, 2005   (3)         -       545,000      551,667        -

S & H Tyson's Property, L.L.C.
First Mortgage
        Sam & Harry's Restaurant:
               Tyson's Corner, VA    11.00%     November, 2000   (4)         -     1,575,000    1,662,037        -

Completely Casual, Inc.
First Mortgage
        Ruby Tuesday's Restaurant:
               Lexington, KY         11.00%        June, 2014    (4)         -       236,742      248,861        -

                                                                        ======== ===========  ============  ========
               Total                                                      $  -   $19,948,742  $19,631,693      $ -
                                                                        ======== ===========  ============  ========



         (1)   Equal monthly payments of principal and interest at an annual rate of 10.75%.
         (2)   Equal monthly payments of principal and interest at an annual rate of 10.50%.
         (3)   Equal monthly payments of principal and interest at an annual rate of 9.50%.
         (4)   Equal monthly payments of interest only at an annual rate of 11.00%.
         (5)   Includes provision for uncollectible mortgage notes of $226,088.
         (6)   Includes provision for uncollectible mortgage notes of $410,526.
         (7)   The tax carrying value of the notes is $19,631,693.
         (8)   The changes in the carrying amounts are summarized as follows:

                                                              1998         1997         1996
                                                          -----------  -----------   -----------
               Balance at beginning of period             $17,622,010  $13,389,607   $        -
               New mortgage loans                           2,901,742    4,200,000    12,847,000
               Accrued interest                               (39,853)      83,601        35,286
               Collection of principal                       (291,990)    (250,732)     (133,850)
               Deferred financing income                      (10,126)     (39,180)      (46,268)
               Unamortized loan costs                          86,524      238,714       687,439
               Provision for uncollectible mortgag           (636,614)          -             -
                                                          ============ ===========   ============
               Balance at end of period                   $19,631,693   17,622,010    13,389,607
                                                          ============ ===========   ============



</TABLE>




<PAGE>



                                    EXHIBITS


<PAGE>







                                  EXHIBIT INDEX


   Exhibit Number

         3.1      CNL  American  Properties  Fund,  Inc.  Amended  and  Restated
                  Articles of Incorporation, as amended (Included as Exhibit 3.1
                  to the  Registrant's  Quarterly  Report  on Form  10-Q for the
                  quarter  ended  June  30,  1998  and  incorporated  herein  by
                  reference.)

         3.2      CNL American Properties Fund, Inc. Amended and Restated Bylaws
                  (Included  as  Exhibit  3.2  to  Registration   Statement  No.
                  333-37657 on Form S-11 and incorporated herein by reference.)

         4.1      Form  of  Stock  Certificate   (Included  as  Exhibit  4.5  to
                  Registration   Statement   No.   33-78790  on  Form  S-11  and
                  incorporated herein by reference.)

         10.1     Advisory  Agreement,  dated as of April 24, 1998,  between CNL
                  American  Properties  Fund,  Inc. and CNL Fund Advisors,  Inc.
                  (Included  as  Exhibit  10.10 to  Registration  Statement  No.
                  333-37657 on Form S-11 and incorporated herein by reference.)

         10.2     Form of Indemnification  Agreement dated as of April 18, 1995,
                  between CNL American  Properties  Fund, Inc. and each of James
                  M. Seneff,  Jr., Robert A. Bourne,  G. Richard  Hostetter,  J.
                  Joseph Kruse,  Richard C. Huseman,  John T. Walker,  Jeanne A.
                  Wall,  Lynn E.  Rose and Edgar J.  McDougall,  and dated as of
                  January 27, 1997 between CNL American  Properties  Fund,  Inc.
                  and Steven D. Shackelford,  and dated as of February 18, 1998,
                  between  CNL  American  Properties  Fund,  Inc.  and Curtis B.
                  McWilliams (Included as Exhibit 10.9 to Registration Statement
                  No. 333-15411 and incorporated herein by reference.)

         10.3     Agreement  of  Limited  Partnership  of CNL APF  Partners,  LP
                  (Included as Exhibit 10.4 to the Registrant's Quarterly Report
                  on  Form  10-Q  for  the  quarter  ended  June  30,  1998  and
                  incorporated herein by reference.)

         21       Subsidiaries of the Registrant (Filed herewith.)

         27       Financial Data Schedule (Filed herewith.)