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

                                   FORM 10-K/A
                                 Amendment No. 1


(Mark One)

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

                   For the fiscal year ended December 31, 1997

                                       OR

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

            For the transition period from ___________ to ___________


                         Commission file number 0-23968

                           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)

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

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

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

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

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

              Units of limited partnership interest ($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  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,  1997 is being  amended  to  provide  additional  disclosure  under  Item 1.
Business, Item 2. Properties and Item 7. Management's Discussion and Analysis of
Financial  Condition and Results of Operations - Capital  Resources,  Short-Term
Liquidity and Long-Term Liquidity.



                                     PART I

Item 1.  Business

         CNL Income Fund 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 nine 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, 1995, the tenant of the Property in Houston,
Texas, exercised its option in accordance with the lease agreement to substitute
another Property for the Houston,  Texas Property. In connection therewith,  the
Partnership  sold the  Houston,  Texas  Property  to the tenant and used the net
sales proceeds,  along with approximately $39,800 of cash reserves, to acquire a
Checkers Property in Lakeland,  Florida,  from the tenant. 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, 1997,  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.


         The  Partnership  will hold its Properties  until the General  Partners
determine that the sale or other  disposition of the Properties is  advantageous
in view of the Partnership's investment objectives.  In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation,  net cash flow and  federal  income  tax  considerations.  Certain
lessees also have been granted options to purchase Properties,  generally at the
Property's  then fair market  value after a specified  portion of the lease term
has elapsed.  In general,  the General Partners plan to seek the sale of some of
the  Properties  commencing  seven  to 12 years  after  their  acquisition.  The
Partnership  has no  obligation  to sell all or any portion of a Property at any
particular  time,  except as may be required  under  property  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 2016.  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 of the lease will increase.

         Generally,  the leases of the Properties  provide for two to five -year
renewal  options  subject to the same terms and conditions as the initial lease.
Certain  lessees also have been granted  options to purchase  Properties  at the
Property's  then fair market  value after a specified  portion of the lease term
has elapsed.  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.

         During 1997, the Partnership reinvested the net sales proceeds from the
sales of the  Properties  in  Richmond,  Virginia  and  Orlando,  Florida,  in a
Property located in Akron, Ohio and a Property in Miami, Florida,  respectively,
with  affiliates of the General  Partners,  as  tenants-in-common,  as described
below in "Joint Venture  Arrangements." The lease terms for these Properties are
substantially the same as the Partnership's  other leases, as described above in
the first three paragraphs of this section.

Major Tenants

         During  1997,  four  lessees  (or group of  affiliated  lessees) of the
Partnership,  (i) Flagstar  Enterprises,  Inc. and  Quincy's  Restaurants,  Inc.
(which are affiliated  entities  under common  control of Flagstar  Corporation)
(hereinafter  referred to as  Flagstar  Corporation),  (ii) Long John  Silver's,
Inc., (iii) Golden Corral Corporation and (iv) 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, 1997, Flagstar  Corporation was the lessee under leases relating to
12 restaurants, Long John Silver's, Inc. was the lessee under leases relating to
eight  restaurants,  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  required by the  leases,  these four  lessees or groups of  affiliated
lessees  each  will  continue  to  contribute  more  than  ten  percent  of  the
Partnership's  total rental income in 1998 and  subsequent  years.  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  1997  (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).  In  subsequent  years,  it is  anticipated  that these five
Restaurant Chains each will continue to account for more than ten percent of the
Partnership's total rental income to which the Partnership is entitled under the
terms of the leases.  Any failure of these  lessees or  Restaurant  Chains could
materially  affect  the  Partnership's  income.  No  single  tenant  or group of
affiliated  tenants lease Properties with an aggregate  carrying value in excess
of 20 percent of the total assets of the Partnership.

Joint Venture Arrangements and Tenancy in Common Arrangements

         The   Partnership   has  entered  into  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,  to purchase and hold
two Properties.  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 a 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,  as  tenants-in-common,  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-venturer's  percentage  interest.  The Partnership owns a
63.03% and 47.83% interest in the Burger King Property and the Chevy's Fresh Mex
Property, respectively.

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

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


                                                         1

<PAGE>



Certain Management Services

         CNL Income Fund Advisors,  Inc., an affiliate of the General  Partners,
provided  certain  services  relating to management of the  Partnership  and its
Properties  pursuant to a  management  agreement  with the  Partnership  through
September 30, 1995.  Under this  agreement,  CNL Income Fund Advisors,  Inc. was
responsible for collecting  rental  payments,  inspecting the Properties and the
tenants'  books and records,  assisting the  Partnership in responding to tenant
inquiries and notices and providing  information  to the  Partnership  about the
status of the leases and the  Properties.  CNL Income Fund  Advisors,  Inc. also
assisted the General Partners in negotiating the leases. For these services, the
Partnership  had agreed to pay CNL Income Fund  Advisors,  Inc. an annual fee of
one percent of the sum of gross rental revenues from Properties  wholly owned by
the  Partnership  plus the  Partnership's  allocable  share of gross revenues of
joint ventures in which the  Partnership is a co-venturer  and the Property held
as  tenants-in-common  with an affiliate,  but not in excess of competitive fees
for comparable services.

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

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

Employees

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


Item 2.  Properties


         As of December 31, 1997, the Partnership owned 47 Properties. Of the 47
Properties, 42 are owned by the Partnership in fee simple, two are owned through
joint  venture  arrangements  and  three  are owned  through  tenancy  in common
arrangements.  See Item 1.  Business  - Joint  Venture  and  Tenancy  in  Common
Arrangements.  The Partnership is not permitted to encumber its Properties under
the terms of its  partnership  agreement.  Reference  is made to the Schedule of
Real Estate and Accumulated Depreciation filed with this report for a listing of
the  Properties  and their  respective  costs,  including  acquisition  fees and
certain acquisition expenses.


Description of Properties

         Land. The Partnership's  Property sites range from approximately 19,900
to 145,400  square  feet  depending  upon  building  size and local  demographic
factors.  Sites  purchased  by  the  Partnership  are  in  locations  zoned  for
commercial use which have been reviewed for traffic patterns and volume.


                                                         2

<PAGE>




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

         State                                   Number of Properties
         -----                                   --------------------

         Alabama                                          3
         Arkansas                                         1
         Arizona                                          2
         California                                       1
         Colorado                                         1
         Florida                                         10
         Georgia                                          1
         Indiana                                          1
         Kansas                                           1
         Louisiana                                        1
         Maryland                                         1
         North Carolina                                   1
         Ohio                                             4
         Pennsylvania                                     3
         South Carolina                                   2
         Tennessee                                        5
         Texas                                            9
                                                    -------
         TOTAL PROPERTIES:                               47
                                                    =======

         Buildings.  Each of the Properties owned by the Partnership  includes a
building that is one of a Restaurant  Chain's  approved  designs.  However,  the
buildings located on the eight Checkers Properties are owned by the tenant while
the land  parcels are owned by the  Partnership.  The  buildings  generally  are
rectangular and are  constructed  from various  combinations  of stucco,  steel,
wood,  brick and tile. The sizes of the building owned by the Partnership  range
from approximately  1,900 to 11,500 square feet. All buildings on Properties are
freestanding  and surrounded by paved parking areas.  Buildings are suitable for
conversion to various uses, although  modifications may be required prior to use
for other than restaurant  operations.  As of December 31, 1997, the Partnership
had no plans for renovation of the Properties.  Depreciation expense is computed
for  buildings  and  improvements   using  the  straight  line  method  using  a
depreciable life of 40 years for federal income tax purposes. As of December 31,
1997, the aggregate cost basis of the Properties  owned by the  Partnership  and
joint  ventures   (including   Properties   owned  through   tenancy  in  common
arrangements)  for federal income tax purposes was  $32,712,921  and $4,762,863,
respectively.


                                                         3

<PAGE>



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

         Restaurant Chain                             Number of Properties
         ----------------                             --------------------

         Arby's                                                 1
         Burger King                                            5
         Checkers                                               8
         Chevy's Fresh Mex                                      1
         Denny's                                                3
         Golden Corral                                          3
         Hardee's                                              11
         Jack in the Box                                        5
         Long John Silver's                                     8
         Quincy's                                               1
         Wendy's                                                1
                                                           ------
         TOTAL PROPERTIES                                      47
                                                           ======

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

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

         Leases.  The Partnership leases the Properties to operators of selected
national and regional fast-food restaurant chains. The leases are generally on a
long-term  "triple  net"  basis,  meaning  that the  tenant is  responsible  for
repairs,  maintenance,  property taxes,  utilities and insurance.  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.  The terms of the leases of the
Properties owned by the Partnership are described in Item 1. Business - Leases.

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

                                                             For the Year Ended December 31:
                                   1997            1996              1995             1994             1993
                              --------------------------------------------------------------------------------

    Rental Revenues (1)        $3,822,053        $3,778,319       $3,923,423        $3,610,912        $960,781
    Properties                         47                46               47                46              35
    Average Rent per Unit         $81,320           $82,137          $83,477           $78,498         $27,451
</TABLE>


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



                                                         5

<PAGE>



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

                                                                                            Percentage of
                                            Number              Annual Rental                Gross Annual
        Expiration Year                 of Leases                 Revenues                  Rental Income
    -----------------------        ------------------       --------------------          ----------------
              1998                              -                          -                           -
              1999                              -                          -                           -
              2000                              1                     34,800                       0.96%
              2001                              -                          -                           -
              2002                              -                          -                           -
              2003                              1                     34,260                       0.94%
              2004                              -                          -                           -
              2005                              -                          -                           -
              2006                              -                          -                           -
              2007                              1                     37,763                       1.04%
              Thereafter                       44                  3,529,811                      97.06%
                                         --------             --------------              --------------
              Totals                           47                  3,636,634                     100.00%
</TABLE>


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

      Flagstar  Corporation  leases 11  Hardee's  restaurants  and one  Quincy's
restaurant.  The initial  term of each lease is 20 years  (expiring in 2013) and
the average  minimum base annual rent is  approximately  $62,100  (ranging  from
approximately $48,800 to $99,200).

      Long John Silver's, Inc. leases eight Long John Silver's restaurants.  The
initial  term for  seven of the  leases is 20 years  (expiring  in 2013) and the
initial  term  of the  eighth  lease,  which  the  Partnership  assumed  from an
unrelated,  third  party in  connection  with  the  acquisition  of the  related
Property,  is six years (expiring in 2000). The average minimum base annual rent
is approximately $80,900 (ranging from approximately $34,800 to $115,800).

      Golden  Corral  Corporation  leases three Golden Corral  restaurants.  The
initial term of each lease is 15 years (expiring  between 2008 and 2009) and the
average  minimum  base  annual  rent is  approximately  $177,900  (ranging  from
approximately $168,600 to $186,200).

                                                         6

<PAGE>




      Foodmaker, Inc. leases five Jack in the Box restaurants.  The initial term
of each  lease is 18 years  (expiring  between  2010 and 2011)  and the  average
minimum base annual rent is approximately  $81,000  (ranging from  approximately
$59,100 to $91,800).

Competition

      The fast-food and  family-style  restaurant  business is  characterized by
intense  competition.  The restaurants on the Partnership's  Properties  compete
with  independently  owned  restaurants,  restaurants which are part of local or
regional chains, and restaurants in other well-known national chains,  including
those offering different types of food and service.

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




                                                         7

<PAGE>



                                     PART II


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


      The  Partnership was organized on September 25, 1992, to acquire for cash,
either directly or through joint venture  arrangements,  both newly  constructed
and  existing  restaurant  Properties,  as well as land  upon  which  restaurant
Properties  were to be constructed,  which are leased  primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are triple-net  leases,  with the lessee  generally  responsible  for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 1997, the Partnership owned 47 Properties,  either directly or through joint
venture or tenancy in common arrangements.

Capital Resources

      The Partnership's primary source of capital is cash from operations (which
includes  cash  received from  tenants,  distributions  from joint  ventures and
interest  received,  less cash paid for  expenses).  Cash  from  operations  was
$3,204,420,  $3,367,581  and  $3,379,378  for the years ended December 31, 1997,
1996 and 1995,  respectively.  The decrease in cash from operations  during 1997
and 1996,  each as  compared  to the  previous  year,  is  primarily a result of
changes in income and expenses as described in "Results of Operations" below and
changes in the  Partnership's  working  capital  during  each of the  respective
years.

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



                                                         8

<PAGE>


      In January 1995, the  Partnership  received  notice from the tenant of its
Property in Houston,  Texas,  of its intent to exercise its option in accordance
with its lease agreement,  to substitute another Property for the Houston, Texas
Property. In April 1995, the Partnership sold its Property in Houston, Texas, to
the tenant for its  original  purchase  price,  excluding  acquisition  fees and
miscellaneous  acquisition  expenses.  As a  result  of  this  transaction,  the
Partnership  recognized a loss for financial reporting purposes of approximately
$29,560 primarily due to acquisition fees and miscellaneous acquisition expenses
the  Partnership  had allocated to the Houston,  Texas,  Property and due to the
accrued  rental income  relating to future  scheduled  rent  increases  that the
Partnership had recorded and reversed at the time of sale. The Partnership  used
the net sales proceeds,  along with approximately  $39,800 of cash reserves,  to
acquire a Checkers Property in Lakeland, Florida, from the tenant.

      In November 1996, the Partnership sold its Property in Richmond, Virginia,
to the tenant and received  sales  proceeds of $550,000,  resulting in a gain of
$82,855 for financial reporting purposes.  This Property was originally acquired
by the  Partnership  in March 1994,  and had a cost of  approximately  $415,400,
excluding acquisition fees and miscellaneous  acquisition  expenses;  therefore,
the Partnership  sold the Property for  approximately  $134,600 in excess of its
original  purchase  price.  As of  December  31,  1996,  the sales  proceeds  of
$550,000,  plus accrued interest of $770, were being held in an interest-bearing
escrow  account  pending the release of funds by the escrow  agent to acquire an
additional Property.  In January 1997, the Partnership  reinvested the net sales
proceeds in a Property located in Akron,  Ohio, with an affiliate of the General
Partners as tenants-in-common.  In connection therewith, the Partnership and the
affiliate  entered into an agreement  whereby each co-venturer will share in the
profits and losses of the Property in  proportion to its  applicable  percentage
interest.  As of December 31, 1997, the  Partnership  owned a 63.03% interest in
this  Property.  The  sale  of the  Property  in  Richmond,  Virginia,  and  the
reinvestment  of the net sales  proceeds  in a  Property  in Akron,  Ohio,  were
structured to qualify as a like-kind  exchange  transaction  in accordance  with
Section 1031 of the Internal  Revenue Code. As a result,  no gain was recognized
for federal income tax purposes.  Therefore, the Partnership was not required to
distribute  any of the net  sales  proceeds  from the sale of this  Property  to
Limited Partners for the purpose of paying federal and state income taxes.

      In October 1997, the Partnership sold its Property in Orlando, Florida, to
a third  party,  for  $953,371  and  received  net sales  proceeds of  $932,849,
resulting in a loss of $48,538 for  financial  reporting  purposes.  In December
1997, the Partnership reinvested the net sales proceeds in a Property located in
Miami, Florida, with affiliates of the General Partners as tenants-in-common. In
connection  therewith,  the  Partnership  and  its  affiliates  entered  into an
agreement  whereby each  co-venturer will share in the profits and losses of the
Property in proportion to its applicable percentage interest. As of December 31,
1997, the Partnership owned a 47.83% interest in this Property.

      During the year ended December 31, 1997, the  Partnership  loaned $196,980
to  the  former  tenant  of  the  Denny's  Property  in  Orlando,  Florida.  The
Partnership collected $127,843 of the amounts advanced and wrote off the balance
of $69,137.

      None of the Properties owned by the Partnership,  or the joint ventures or
tenancy in common arrangements in which the Partnership owns an interest,  is or
may be encumbered.  Subject to certain  restrictions on borrowing,  however, the
Partnership  may borrow  funds but will not encumber  any of the  Properties  in
connection  with any such  borrowing.  The  Partnership  will not borrow for the
purpose of returning capital to the Limited  Partners.  The Partnership will not
borrow  under  arrangements  that  would  make the  Limited  Partners  liable to
creditors of the Partnership. The General Partners further have represented that
they will use their  reasonable  efforts to structure  any  borrowing so that it
will not constitute  "acquisition  indebtedness" for federal income tax purposes
and also will limit the Partnership's  outstanding indebtedness to three percent
of the aggregate adjusted tax basis of its Properties. Affiliates of the General
Partners  from time to time incur  certain  operating  expenses on behalf of the
Partnership  for  which  the  Partnership   reimburses  the  affiliates  without
interest.

         Currently,  cash  reserves  and  rental  income  from  the  Partnership
Properties  and  net  sales  proceeds  from  the  sale  of  Properties,  pending
reinvestment in additional Properties,  are invested in money market accounts or
other  short-term  highly liquid  investments such as demand deposit accounts at
commercial banks, CDs and money market accounts with less than a 30-day maturity
date, pending the Partnership's use of such funds to pay Partnership expenses or
to make  distributions  to partners.  At December 31, 1997, the  Partnership had
$907,980  invested in such  short-term  investments as compared to $1,103,568 at
December 31, 1996.  The  decrease in cash and cash  equivalents  during the year
ended  December 31, 1997, is partially the result of the  Partnership  advancing
and not  recovering  $69,137 from the former  tenant of the Denny's  Property in
Orlando,  Florida,  as  described  above.  In  addition,  the  decrease was also
partially  attributable  to a decrease in rents paid in advance at December  31,
1997.  As of December 31, 1997,  the average  interest rate earned on the rental
income   deposited  in  demand   deposit   accounts  at  commercial   banks  was
approximately three percent annually.  The funds remaining at December 31, 1997,
after payment of distributions and other  liabilities,  will be used to meet the
Partnership's working capital and other needs.

 Short-Term Liquidity

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

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

      Due to low operating  expenses and ongoing cash flow, the General Partners
believe that the  Partnership has sufficient  working  capital  reserves at this
time. In addition,  because all leases of the Partnership's  Properties are on a
triple-net basis, it is not anticipated that a permanent reserve for maintenance
and repairs will be established at this time. To the extent,  however,  that the
Partnership has insufficient funds for such purposes,  the General Partners will
contribute to the  Partnership  an aggregate  amount of up to one percent of the
offering  proceeds for  maintenance and repairs.  The General  Partners have the
right to cause the  Partnership  to maintain  additional  reserves  if, in their
discretion,  they determine such reserves are required to meet the Partnership's
working capital needs.

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

      The Partnership generally distributes cash from operations remaining after
the payment of the operating expenses of the Partnership, to the extent that the
General Partners determine that such funds are available for distribution. Based
primarily  on  current  and  future   anticipated  cash  from  operations,   the
Partnership  declared  distributions  to the Limited  Partners of $3,400,008 for
each of the years ended  December 31, 1997 and 1996 and  $3,375,011 for the year
ended December 31, 1995.  This  represents  distributions  of $0.85 per Unit for
each of the years  ended  December  31, 1997 and 1996 and $0.84 per Unit for the
year ended December 31, 1995. No amounts distributed or to be distributed to the
Limited  Partners  for the years ended  December 31,  1997,  1996 and 1995,  are
required to be or have been  treated by the  Partnership  as a return of capital
for  purposes of  calculating  the Limited  Partners'  return on their  adjusted
capital contributions. The Partnership intends to continue to make distributions
of cash available for distribution to the Limited Partners on a quarterly basis.

      During 1997, 1996 and 1995, affiliates of the General Partners incurred on
behalf of the  Partnership  $87,870,  $97,819  and  $94,875,  respectively,  for
certain  operating  expenses.  As of December 31, 1997 and 1996, the Partnership
owed  $6,791 and $2,594,  respectively,  to related  parties  for such  amounts,
accounting and  administrative  services and management fees. As of February 28,
1998, the  Partnership  had  reimbursed  the affiliates all such amounts.  Other
liabilities,  including distributions payable, decreased to $863,243 at December
31,  1997,  from  $924,539 at December  31,  1996,  partially as the result of a
decrease in rents paid in advance and a decrease  in accrued and  escrowed  real
estate taxes payable at December 31, 1997. The General Partners believe that the
Partnership  has  sufficient  cash on hand to meet its current  working  capital
needs.

                                                         9

<PAGE>

Long-Term Liquidity

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

Results of Operations

      During 1995, the Partnership  owned and leased 45 wholly owned  Properties
(including one Property in Houston, Texas, which was sold in April 1995), during
1996, the Partnership owned and leased 44 wholly owned Properties (including one
Property in  Richmond,  Virginia,  which was sold in  November  1996) and during
1997, the Partnership owned and leased 43 wholly owned Properties (including one
Property in Orlando, Florida, which was sold in October 1997). During 1997, 1996
and 1995, the  Partnership was a co-venturer in two separate joint ventures that
each owned and leased one  Property.  In  addition,  during  1995 and 1996,  the
Partnership  owned and leased one  Property,  and during 1997,  owned and leased
three Properties,  with affiliates of the General Partners as tenants-in-common.
As  of  December  31,  1997,  the  Partnership   owned,   either  directly,   as
tenants-in-common  with  affiliates or through joint  venture  arrangements,  47
Properties which are subject to long-term,  triple-net leases. The leases of the
Properties  provide for minimum base annual rental  amounts  (payable in monthly
installments)  ranging from approximately $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 of the
lease will increase.  For further  description of the  Partnership's  leases and
Properties, see Item 1. Business - Leases and Item 2. Properties, respectively.

      During the years ended December 31, 1997,  1996 and 1995, the  Partnership
earned  $3,347,609,  $3,376,286 and $3,509,773,  respectively,  in rental income
from  operating  leases and earned  income  from  direct  financing  leases from
Properties  wholly owned by the  Partnership.  The decrease in rental and earned
income  during  1997,  as  compared to 1996,  was  partially  attributable  to a
decrease  of  approximately  $116,200  as a result of the fact that in  February
1997,  the  Partnership  discontinued  charging rent to the former tenant of the
Denny's Property in Orlando,  Florida, as a result of the former tenant vacating
the Property.  The decrease in rental and earned income during 1997, as compared
to 1996, was partially  offset by, and the decrease  during 1996, as compared to
1995, was partially attributable to the fact that the Partnership established an
allowance for doubtful  accounts of approximately  $15,300,  $85,400 and $38,000
during 1997, 1996 and 1995,  respectively,  for past due rental amounts relating
to the Denny's Property in Orlando,  Florida, due to financial  difficulties the
tenant was experiencing. The decrease during 1997, as compared to 1996, was also
offset  by,  and the  decrease  during  1996,  as  compared  to  1995,  was also
attributable  to the fact that  during  1996,  the  Partnership  established  an
allowance  for doubtful  accounts of  approximately  $72,700 for accrued  rental
income amounts  previously  recorded (due to the fact that future scheduled rent
increases are recognized on a straight-line  basis over the term of the lease in
accordance with generally accepted accounting principles).  The Partnership sold
this  Property  in October  1997,  and  reinvested  the net sales  proceeds in a
Property in Miami, Florida, as tenants-in-common, with affiliates of the General
Partners, as described above in "Capital Resources."

      In addition,  the decrease in rental and earned income for the years ended
1997 and 1996, each as compared to the previous year, is partially  attributable
to a decrease of approximately $46,200 and $5,600, respectively, due to the fact
that the Partnership sold its Property in Richmond,  Virginia, in November 1996.
The  Partnership  reinvested  the net sales  proceeds  in a Property  located in
Akron, Ohio, as tenants-in-common, with an affiliate of the General Partners, as
described above in "Capital Resources."

      For the years ended December 31, 1997, 1996 and 1995, the Partnership also
earned  $287,751,  $299,495 and $293,749,  respectively,  in  contingent  rental
income.  The decrease in  contingent  rental  income during 1997, as compared to
1996, is primarily the result of the Partnership  adjusting estimated contingent
rental  amounts  accrued at December 31, 1996, to actual amounts during the year
ended December 31, 1997. The increase in contingent rental income during 1996 as
compared to 1995, is primarily  the result of increases in gross sales  relating
to certain restaurant Properties during 1996.


      In addition,  for the years ended  December 31, 1997,  1996 and 1995,  the
Partnership earned $150,417, $60,654 and $98,520, respectively,  attributable to
net income earned by joint  ventures in which the  Partnership is a co-venturer.
The increase in net income earned by joint ventures  during 1997, as compared to
1996 is primarily attributable to the fact that in January 1997, the Partnership
reinvested  the net sales  proceeds  from the sale of the  Property in Richmond,
Virginia,  in a  Property  in Akron,  Ohio,  with an  affiliate  of the  General
Partners,  as  tenants-in-common  as described above in "Capital Resources." The
increase  was  also  attributable  to  the  fact  that  in  December  1997,  the
Partnership  reinvested  the net sales proceeds from the sale of the Property in
Orlando,  Florida,  in a Property  in Miami,  Florida,  with  affiliates  of the
General  Partners,   as   tenants-in-common   as  described  above  in  "Capital
Resources."  The decrease in net income earned by joint ventures during 1996, as
compared to 1995,  is primarily a result of the former tenant  defaulting  under
the terms of the lease  agreement of the Kenny Rogers'  Roasters  Property owned
with an affiliate as tenants-in-common during 1996. The Partnership entered into
a new lease for this  Property  with a new tenant to operate the  Property as an
Arby's  restaurant.  Rent  commenced in December  1996,  upon  completion of the
renovations.

      During at least one of the years ended  December 31, 1997,  1996 and 1995,
five of the  Partnership's  lessees (or group of affiliated  lessees),  Flagstar
Corporation,  Long John Silver's,  Inc., Golden Corral  Corporation,  Foodmaker,
Inc. and Checkers  Drive-In  Restaurants,  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 affiliates as tenants-in-common). As of December 31, 1997,
Flagstar  Corporation  was the lessee under leases  relating to 12  restaurants,
Long  John  Silver's,  Inc.  was the  lessee  under  leases  relating  to  eight
restaurants,  Golden Corral  Corporation was the lessee under leases relating to
three restaurants,  Foodmaker, Inc. was the lessee under leases relating to five
restaurants  and  Checkers  was  the  lessee  under  leases  relating  to  eight
restaurants.  It is  anticipated  that  based  on the  minimum  rental  payments
required by the leases, Flagstar Corporation,  Long John Silver's,  Inc., Golden
Corral  Corporation  and Foodmaker,  Inc. each will continue to contribute  more
than ten  percent of the  Partnership's  total  rental  income  during  1998 and
subsequent  years. In addition,  during at least one of the years ended December
31, 1997, 1996 and 1995, five Restaurant Chains,  Long John Silver's,  Hardee's,
Golden Corral, Jack in the Box and Burger King, each accounted for 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 affiliates as tenants-in-common).  In subsequent years, it
is anticipated that these five Restaurant Chains,  each will continue to account
for more than ten percent of the total rental income to which the Partnership is
entitled  under  the  terms of its  leases.  Any  failure  of these  lessees  or
Restaurant Chains could materially affect the Partnership's income.

      Operating expenses,  including depreciation and amortization expense, were
$748,305,  $646,794 and $608,140 for the years ended December 31, 1997, 1996 and
1995, respectively.  The increase in operating expenses during 1997, as compared
to 1996, is primarily the result of the fact that the  Partnership  recorded bad
debt  expense of  approximately  $54,000 for rental  amounts due from the former
tenant  of  the  Denny's  Property  in  Orlando,  Florida,  as a  result  of the
Partnership  ceasing collection efforts on rental amounts not collected from the
tenant as of the time of the sale of the Property in October, 1997, as described
above in "Capital  Resources."  Operating expenses also increased as a result of
the fact that the Partnership recorded bad debt expense of approximately $69,100
relating to the advances  made to the former  tenant of the Denny's  Property in
Orlando,  Florida,  that were not recovered from the former tenant, as described
above in "Capital  Resources." The increase in operating expenses during 1997 is
partially offset by, and the increase during 1996 is partially  attributable to,
the fact that during  1996,  the  Partnership  recorded  real estate tax expense
relating to this  Property  of  approximately  $10,700.  No such real estate tax
expense was  recorded by the  Partnership  during 1995 or 1997,  due to the fact
that real estate taxes  amounts were paid by the tenant and the purchaser of the
Property, respectively, for each of these years.

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

         As a  result  of the  sale of the  Property  in  Orlando,  Florida,  as
described above in "Capital  Resources,"  the Partnership  recognized a loss for
financial reporting purposes of $48,538 for the year ended December 31, 1997. In
addition,  as a result of the sale of the  Property in  Richmond,  Virginia,  as
described above in "Capital  Resources,"  the  Partnership  recognized a gain of
$82,855 for financial  reporting  purposes for the year ended December 31, 1996.
In  addition,  as a result of the sale of the  Property  in Houston,  Texas,  as
described above in "Capital  Resources,"  the Partnership  recognized a loss for
financial  reporting  purposes of $29,560 for the year ended  December 31, 1995.
The loss was primarily due to  acquisition  fees and  miscellaneous  acquisition
expenses  the  Partnership  had  allocated  to this  Property and due to accrued
rental income  relating to future  scheduled rent increases that the Partnership
had recorded and reversed at the time of sale.

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

      The  Partnership's  leases as of December 31, 1997, are triple-net  leases
and contain  provisions that the General  Partners  believe mitigate the adverse
effect of inflation.  Such provisions  include clauses  requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic  increases  in based rent at  specified  times  during the term of the
lease.  Management  expects that  increases in  restaurant  sales volumes due to
inflation  and real sales growth  should  result in an increase in rental income
over  time.  Continued  inflation  also may cause  capital  appreciation  of the
Partnership's Properties.  Inflation and changing prices, however, also may have
an  adverse  impact on the sales of the  restaurants  and on  potential  capital
appreciation of the Properties.




                                                        10

<PAGE>



                                   SIGNATURES


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

                                          CNL INCOME FUND 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.

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

/s/ Robert A. Bourne          President, Treasurer and           July 29, 1999
--------------------          Director (Principal Financial
Robert A. Bourne              and Accounting Officer)




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