<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C. 20549
                                  FORM 10-K/A
                                Amendment No. 2

(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  0-23968

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

               Florida                                 59-3143094
    (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)

                                 450 South Orange Avenue
                            Orlando, Florida  32801
                   (Address of principal executive offices,
                              including zip code)

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

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

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

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

             Units of limited partnership interest ($10 per Unit)
                               (Title of class)

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

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

     Aggregate market value of the voting stock held by nonaffiliates of the
registrant:  The registrant registered an offering of 4,000,000 units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended.  Since no established market for such Units exists, there is
no market value for such Units.  Each Unit was originally sold at $10 per Unit.

                     DOCUMENTS INCORPORATED BY REFERENCE:
                                     None
<PAGE>

     The Form 10-K of CNL Income Fund XIII, Ltd. for the year ended December 31,
1998 is being amended to revise the disclosure under Item 1. Business.

                                    PART I

Item 1.  Business

     CNL Income Fund XIII, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on September 25, 1992.  The general partners of the Partnership are
Robert A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners").  Beginning on March 31, 1993, the
Partnership offered for sale up to $40,000,000 of limited partnership interests
(the "Units") (4,000,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
March 17, 1993.  The offering terminated on August 26, 1993, at which date the
maximum offering proceeds of $40,000,000 had been received from investors who
were admitted to the Partnership as limited partners (the "Limited Partners").

     The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totalled
$35,324,831, and were used to acquire 47 Properties, including ten Properties
consisting of only land, two Properties owned by joint ventures in which the
Partnership is a co-venturer, and one Property acquired as tenants-in-common
with affiliates of the General Partners, to pay acquisition fees to an affiliate
of the General Partners totalling $2,200,000, to pay miscellaneous acquisition
expenses and to establish a working capital reserve for Partnership purposes.
During the year ended December 31, 1996, the Partnership sold its Property in
Richmond, Virginia, consisting of land only. During the year ended December 31,
1997, the Partnership reinvested the net sales proceeds from the sale of the
Property in Richmond, Virginia, in a Burger King Property located in Akron,
Ohio, with an affiliate of the General Partners as tenants-in-common. In
addition, during the year ended December 31, 1997, the Partnership sold its
Property in Orlando, Florida, to a third party and reinvested the net sales
proceeds in a Chevy's Fresh Mex Property located in Miami, Florida, with an
affiliate of the General Partners as tenants-in-common. As a result of the above
transactions, as of December 31, 1998, the Partnership owned 47 Properties. The
47 Properties include eight Properties consisting of land only, interests in two
Properties owned by joint ventures in which the Partnership is a co-venturer and
three Properties owned with affiliates as tenants-in-common. The lessee of the
eight Properties consisting of land only, owns the buildings currently on the
land and has the right, if not in default under the lease, to remove the
buildings from the land at the end of the lease terms. The Partnership leases
the Properties on a triple-net basis with the lessees responsible for all
repairs and maintenance, property taxes, insurance and utilities.

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

     In the event that the Limited Partners vote against the Merger, the
Partnership will hold its Properties until the General Partners determine that
the sale or other disposition of the Properties is advantageous in view of the
Partnership's investment objectives.  In deciding whether to sell Properties,
the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations.  Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion
<PAGE>

of the lease term has elapsed. The Partnership has no obligation to sell all or
any portion of a Property at any particular time, except as may be required
under property purchase options granted to certain lessees.

Leases

     Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases.  The leases of the Properties owned by the Partnership and
joint ventures in which the Partnership is a co-venturer provide for initial
terms ranging from 6 to 20 years (the average being 19 years), and expire
between 2000 and 2018. All leases are on a triple-net basis, with the lessees
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The leases of the Properties provide for minimum base annual rental
payments (payable in monthly installments) ranging from approximately $27,400 to
$191,900. A majority of the 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, the annual base rent required under
the terms if the lease will increase.

     Generally, the leases of the Properties provide for two to five five-year
renewal options subject to the same terms and conditions as the initial lease.
Lessees of 30 of the Partnership's 47 Properties also have been granted options
to purchase Properties at the Property's then fair market value after a
specified portion of the lease term has elapsed.  Fair market value will be
determined through an appraisal by an independent appraisal firm.  Under the
terms of certain leases, the option purchase price may equal the Partnership'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
Partnership'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 Partnership wishes
to sell the Property subject to that lease, the Partnership first must offer the
lessee the right to purchase the Property on the same terms and conditions, and
for the same price, as any offer which the Partnership has received for the sale
of the Property.

     In June 1998, Long John Silver's, Inc., filed for bankruptcy and rejected
the leases relating to three of the eight Properties that it leased and ceased
making rental payments to the Partnership under such leases. In October 1998,
the Partnership entered into a new lease with a new tenant to operate one of the
rejected Properties as a Lion's Choice restaurant. The lease terms for this
Property are substantially the same as the Partnership's other leases as
described above.  In November 1998, the Partnership also entered into a new
lease with a new tenant for one of the rejected Properties.  The Partnership has
agreed to fund up to $600,000 to convert the Long John Silver's Property into a
Steak-N-Shake.  The Partnership anticipates entering into an agreement with an
affiliate of the General Partners to fund a portion of these conversion costs.
Rent is scheduled to commence during the second quarter of 1999.  The lease
terms for this Property are substantially the same as the Partnership's other
leases as described above.  The General Partners are currently seeking either a
new tenant or purchaser for the remaining Property.  The Partnership will not
recognize rental and earned income from the remaining vacant Property until a
new tenant for this Property is located or until the Property is sold and the
proceeds from such sale is reinvested in an additional Property.  As of March
11, 1999, the Partnership has been receiving rental payments on the five leases
that have not been rejected.  While Long John Silver's, Inc. has not rejected or
affirmed the remaining five leases, there can be no assurance that some or all
of the leases will not be rejected in the future.  The lost revenues resulting
from the vacant Property, as described above, and the possible rejection of the
remaining five leases could have an adverse effect on the results of operations
of the Partnership if the Partnership is unable to re-lease these Properties in
a timely manner.

Major Tenants

     During 1998, four lessees of the Partnership, Flagstar Enterprises, Inc.,
Long John Silver's, Inc., Golden Corral Corporation and Foodmaker, Inc., each
contributed more than ten percent of the Partnership's total rental income
(including the Partnership's share of rental income from two Properties owned by
joint ventures and three Properties owned with an affiliate as tenants-in-
common).  As of December 31, 1998, Flagstar Enterprises, Inc. was the lessee
under leases relating to 11 restaurants, Long John Silver's, Inc. was the lessee
under leases relating to five restaurants, (excluding three restaurants for
which Long John Silver's, Inc. rejected the leases as a result of filing for
bankruptcy, as described above), Golden Corral Corporation was the lessee under
leases relating to three restaurants and Foodmaker, Inc. was the lessee under
leases relating to five restaurants. It is anticipated that based on the minimum
rental payments
<PAGE>

required by the leases, Flagstar Enterprises, Inc., Golden Corral Corporation
and Foodmaker, Inc. each will continue to contribute more than ten percent of
the Partnership's total rental income in 1999. In addition, five Restaurant
Chains, Long John Silver's, Hardee's, Golden Corral Family Steakhouse
Restaurants ("Golden Corral"), Jack in the Box and Burger King, each accounted
for more than ten percent of the Partnership's total rental income during 1998
(including the Partnership's share of rental income from two Properties owned by
joint ventures and three Properties owned with affiliates as tenants-in-common).
It is anticipated that Hardee's, Golden Corral, Jack in the Box and Burger King
each will continue to account for more than ten percent of the Partnership's
total rental income under the terms of the leases. Any failure of these lessees
or Restaurant Chains could materially affect the Partnership's income if the
Partnership is not able to re-lease the Properties in a timely manner. No single
tenant or group of affiliated tenants lease Properties with an aggregate
carrying value in excess of 20 percent of the total assets of the Partnership.

Joint Venture and Tenancy in Common Arrangements

     The Partnership has entered into two separate joint venture arrangements:
Attalla Joint Venture and Salem Joint Venture, with CNL Income Fund XIV, Ltd., a
limited partnership organized pursuant to the laws of the State of Florida and
an affiliate of the General Partners, for each joint venture to purchase and
hold one Property.  The joint venture arrangements provide for the Partnership
and its joint venture partner to share in all costs and benefits associated with
the joint ventures in accordance with their respective percentage interests in
the joint ventures.  The Partnership has a 50 percent interest in Attalla Joint
Venture and a 27.8% interest in Salem Joint Venture.  The Partnership and its
joint venture partner are also jointly and severally liable for all debts,
obligations and other liabilities of the joint ventures.

     Attalla Joint Venture and Salem Joint Venture have initial terms of 30
years and, after the expiration of the initial term, each joint venture
continues 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 the joint venture and mutual agreement
of the Partnership and its joint venture partners to dissolve the joint venture.

     The Partnership shares management control equally with an affiliate of the
General Partners for Attalla Joint Venture and Salem Joint Venture.  The joint
venture agreements restrict each venturer's ability to sell, transfer or assign
its joint venture interest without first offering it for sale to its joint
venture partner, either upon such terms and conditions as to which the venturers
may agree or, in the event the venturers cannot agree, on the same terms and
conditions as any offer from a third party to purchase such joint venture
interest.

     Net cash flow from operations of Attalla Joint Venture and Salem Joint
Venture is distributed 50 percent and 27.8%, respectively, to the Partnership
and the balance is distributed to each other joint venture partner in accordance
with its percentage interest in the joint venture.  Any liquidation proceeds,
after paying joint venture debts and liabilities and funding reserves for
contingent liabilities, will be distributed first to the joint venture partners
with positive capital account balances in proportion to such balances until such
balances equal zero, and thereafter in proportion to each joint venture
partner's percentage interest in the joint venture.

     In addition to the above joint venture agreements, the Partnership entered
into an agreement to hold an Arby's Property as tenants-in-common, with CNL
Income Fund II, Ltd., an affiliate of the General Partners.  The agreement
provides for the Partnership and the affiliate to share in the profits and
losses of the Property in proportion to each co-tenant's percentage interest.
The Partnership owns a 66.13% interest in this Property.

     In addition, in 1997, the Partnership entered into an agreement to hold a
Burger King Property, as tenants-in-common, with CNL Income Fund XVII, Ltd., an
affiliate of the General Partners, and entered into another agreement to hold a
Chevy's Fresh Mex Property with CNL Income Fund III, Ltd., CNL Income Fund VII,
Ltd. and CNL Income Fund X, Ltd., which are affiliates of the General Partners.
The agreements provide for the Partnership and the affiliates to share in the
profits and losses of the Properties in proportion to each co-tenant's
percentage interest.  The Partnership owns a 63.09% and 47.83% interest in the
Burger King Property and the Chevy's Fresh Mex Property, respectively.

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

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

Certain Management Services

     CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership. Under this agreement,
CNL Fund Advisors, Inc. is responsible for collecting rental payments,
inspecting the Properties and the tenants' books and records, assisting the
Partnership in responding to tenant inquiries and notices and providing
information to the Partnership about the status of the leases and the
Properties. CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer and the Properties held as tenants-in-common with an affiliate,
but not in excess of competitive fees for comparable services.

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

Employees

     The Partnership has no employees. The officers of CNL Realty Corporation
and the officers and employees of CNL Fund Advisors, Inc. perform certain
services for the Partnership. In addition, the General Partners have available
to them the resources and expertise of the officers and employees of CNL Group,
Inc., a diversified real estate company, and its affiliates, who may also
perform certain services for the Partnership.
<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 17th day of
December, 1999.

                                    CNL INCOME FUND XIII, LTD.

                                    By:  CNL REALTY CORPORATION
                                         General Partner

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


                                    By:  ROBERT A. BOURNE
                                         General Partner

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


                                    By:  JAMES M. SENEFF, JR.
                                         General Partner

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

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

<TABLE>
<CAPTION>
           Signature                                  Title                                    Date
           ---------                                  -----                                    ----
<S>                                           <C>                                       <C>
/s/ Robert A. Bourne                            President, Treasurer and Director       December 17, 1999
-----------------------------------------      (Principal Financial and Accounting
Robert A. Bourne                                            Officer)

/s/ James M. Seneff, Jr.                      Chief Executive Officer and Director      December 17, 1999
-----------------------------------------         (Principal Executive Officer)
James M. Seneff, Jr.
</TABLE>