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 0-23968

                           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) 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>


                                     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,
including 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 third  quarter  of 1999,  Limited  Partners  holding in excess of 50% of the
Partnership's  outstanding limited partnership interests must approve the Merger
prior to consummation of the transaction. If the Limited Partners at the special
meeting approve the Merger,  APF will own the Properties and other assets of the
Partnership. See Item 8.
Financial Statements and Supplementary Data -- Note 11. Subsequent Event.

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

         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  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,  excluding  acquisition fees and certain  acquisition
expenses, in excess of 20 percent of the total assets of the Partnership.

Joint Venture Arrangements

         The   Partnership   has  entered  into  two  separate   joint   venture
arrangements,  Attalla Joint Venture and Salem Joint Venture, with affiliates of
the General  Partners to purchase  and hold two  Properties.  The joint  venture
arrangements provide for the Partnership 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 Partnership and
its joint venture  partners 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
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-venturer's  percentage  interest.  The Partnership owns a
66.13% interest in this Property.

         In addition, in January and December 1997, the Partnership entered into
agreements  to hold a Burger King  Property  and a Chevy's  Fresh Mex  Property,
respectively,  as tenants-in-common with affiliates of the General Partners. The
agreements  provide  for the  Partnership  and the  affiliates  to  share in the
profits  and  losses  of the  Properties  in  proportion  to each  co-venturer's
percentage  interest.  The Partnership  owns a 63.09% and 47.83% interest in the
Burger King Property and the Chevy's Fresh Mex Property, respectively.

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.

Competition

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

Employees

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


Item 2.  Properties

         As of December 31, 1998,  the  Partnership  owned,  either  directly or
through  joint  venture  arrangements,  47  Properties,  located  in 17  states.
Reference  is made to the Schedule of Real Estate and  Accumulated  Depreciation
filed  with this  report for a listing of the  Properties  and their  respective
costs, including acquisition fees and certain acquisition expenses.

Description of Properties

         Land. The Partnership's  Property sites range from approximately 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.

         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 nine 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.

         Generally,  a  lessee  is  required,  under  the  terms  of  its  lease
agreement,  to make such capital  expenditures as may be reasonably necessary to
refurbish  buildings,  premises,  signs and  equipment  so as to comply with the
lessee's  obligations,  if applicable,  under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.

         Leases  with  Major   Tenants.   The  terms  of  the  leases  with  the
Partnership's  major  tenants as of December  31,  1998 (see Item 1.  Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.



<PAGE>


         Flagstar Enterprises,  Inc. leases 11 Hardee's restaurants. The initial
term of each lease is 20 years  (expiring in 2013) and the average  minimum base
annual rent is  approximately  $58,700  (ranging from  approximately  $48,800 to
$65,700).

         Long John Silver's,  Inc.  leases five Long John Silver's  restaurants.
The initial  term for four of the leases is 20 years  (expiring in 2013) and the
initial  term  of the  fifth  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 $75,500 (ranging from approximately $34,800 to $103,300).

         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).

         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  $85,400  (ranging from  approximately
$59,900 to $95,600).

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


Item 3.  Legal Proceedings

         Neither the  Partnership,  nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties,  is a party to, or
subject to, any material pending legal proceedings.


Item 4.  Submission of Matters to a Vote of Security Holders

         Not applicable.



                                     PART II


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

         As of March 11,  1999 there were 3,049  holders of record of the Units.
There is no public trading market for the Units,  and it is not anticipated that
a public  market for the Units will develop.  Limited  Partners who wish to sell
their  Units  may  offer  the  Units  for  sale  pursuant  to the  Partnership's
distribution  reinvestment  plan (the "Plan"),  and Limited Partners who wish to
have their  distributions  used to acquire additional Units (to the extent Units
are  available  for  purchase),  may do so  pursuant  to such Plan.  The General
Partners have the right to prohibit  transfers of Units.  From inception through
December 31, 1998, the price paid for any Unit transferred  pursuant to the Plan
was $9.50 per Unit. The price paid for any Unit transferred  other than pursuant
to the Plan was subject to negotiation by the purchaser and the selling  Limited
Partner. The Partnership will not redeem or repurchase Units.

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

<TABLE>
<CAPTION>
<S> <C>
                                                 1998 (1)                                1997 (1)
                                     ----------------------------------      ----------------------------------
                                      High        Low         Average         High         Low        Average
                                     -------     -------     ----------      --------    --------    ----------
       First Quarter                  $8.67       $8.40          $8.53         $9.50       $8.00         $9.11
       Second Quarter                  9.50        7.90           8.54          8.41        7.30          7.97
       Third Quarter                   8.95        8.81           8.85          9.50        8.05          8.50
       Fourth Quarter                  9.50        8.97           9.16          9.50        8.80          9.01
</TABLE>


(1)      A total of 30,350 and 23,177 Units were transferred other than pursuant
         to  the  Plan  for  the  years  ended   December  31,  1998  and  1997,
         respectively.

         The  capital  contribution  per Unit was $10.  All cash  available  for
distribution  will be distributed to the partners  pursuant to the provisions of
the Partnership Agreement.

         For each of the years ended December 31, 1998 and 1997, the Partnership
declared  cash   distributions   of   $3,400,008,   to  the  Limited   Partners.
Distributions   of  $850,002   were  declared  at  the  close  of  each  of  the
Partnership's  calendar  quarters during 1998 and 1997 to the Limited  Partners.
These  amounts  include  monthly  distributions  made in arrears for the Limited
Partners  electing  to receive  such  distributions  on this  basis.  No amounts
distributed  to  partners  for the years  ended  December  31, 1998 and 1997 are
required to be or have been  treated by the  Partnership  as a return of capital
for  purposes of  calculating  the Limited  Partners'  return on their  adjusted
capital  contributions.  No distributions have been made to the General Partners
to date.

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

<TABLE>
<CAPTION>


Item 6.  Selected Financial Data
<S> <C>
                                           1998           1997           1996            1995            1994
                                       -------------  -------------- -------------- ---------------  --------------
Year ended December 31:
     Revenues (1)                        $3,482,210    $ 3,832,470     $ 3,795,754     $ 3,956,874     $ 3,679,212
     Net income (2)                       2,495,855      3,035,627       3,231,815       3,319,174       3,117,632
     Cash distributions declared          3,400,008      3,400,008       3,400,008       3,375,011       3,025,009
     Net income per Unit (2)                   0.62           0.75            0.80            0.82            0.77
     Cash distributions declared
         per Unit                              0.85           0.85            0.85            0.84            0.76

At December 31:
     Total assets                       $34,687,493    $35,523,590     $35,945,070     $36,054,757     $36,145,882
     Partners' capital                   33,749,403     34,653,556      35,017,937      35,186,130      35,241,967

</TABLE>


(1)      Revenues  include equity in earnings of joint ventures and  adjustments
         to accrued rental income due to the tenant of certain Properties filing
         for bankruptcy.

(2)      Net income for the year ended  December  31, 1998  includes a provision
         for loss on  building  of  $297,885.  Net  income  for the  year  ended
         December 31, 1997, includes a loss on sale of land and direct financing
         lease of  $48,538.  Net income for the year ended  December  31,  1996,
         includes a gain on sale of land of $82,855.

         The above selected  financial  data should be read in conjunction  with
the financial statements and related notes contained in Item 8 hereof.


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

         The  Partnership  was  organized on 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 generally  triple-net leases,  with the lessee
generally responsible for all repairs and maintenance, property taxes, insurance
and  utilities.  As of December 31, 1998, the  Partnership  owned 47 Properties,
either directly or through joint venture arrangements.

Liquidity and 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
$3,277,301,  $3,273,557  and  $3,367,581  for the years ended December 31, 1998,
1997, and 1996, respectively.  The increase in cash from operations during 1998,
as compared to 1997,  and the  decrease in cash from  operations  during 1997 as
compared to 1996,  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, 1998, 1997, and 1996.

         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.  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, 1998, the Partnership
owned a 63.09% 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,
1998, 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 in
order to facilitate  the sale of the Property.  Upon the sale of the Property in
October 1997, 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
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, rental income from the Partnership Properties is invested in
money market accounts or other short-term highly liquid investments  pending the
Partnership's  use  of  such  funds  to  pay  Partnership  expenses  or to  make
distributions  to partners.  At December 31, 1998, the  Partnership had $766,859
invested in such short-term  investments as compared to $907,980 at December 31,
1997. The decrease in cash and cash  equivalents  during the year ended December
31, 1998,  is  primarily  the result of an increase in rents due at December 31,
1998. The funds remaining at December 31, 1998, will be used towards the payment
of distributions and other liabilities.

         During  1998,  1997,  and  1996,  affiliates  of the  General  Partners
incurred  on  behalf  of  the  Partnership   $101,134,   $87,870,  and  $97,819,
respectively,  for certain operating expenses. As of December 31, 1998 and 1997,
the Partnership  owed $22,529 and $6,791,  respectively,  to related parties for
such amounts,  accounting and administrative services and management fees. As of
March 11, 1999, the  Partnership had reimbursed the affiliates all such amounts.
Other liabilities,  including  distributions  payable,  increased to $915,561 at
December 31, 1998,  from $863,243 at December 31, 1997,  primarily as the result
of an increase in rents paid in advance and deposits at December 31, 1998. Total
liabilities for the year ended December 31, 1998, to the extent they exceed cash
and cash equivalents, will be paid from future cash from operations. The General
Partners  believe that the  Partnership  has sufficient cash on hand to meet its
current working capital needs.

         Based 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, 1998,  1997,  and 1996.  This  represents
distributions  of $0.85 per Unit for each of the years ended  December 31, 1998,
1997 and 1996.  No amounts  distributed  to the Limited  Partners  for the years
ended December 31, 1998, 1997, and 1996, are required to be or have been treated
by the  Partnership  as a return of capital  for  purposes  of  calculating  the
Limited   Partners'  return  on  their  adjusted  capital   contributions.   The
Partnership  intends to continue to make  distributions  of cash  available  for
distribution to the Limited Partners on a quarterly basis.

         In November  1998,  the  Partnership  entered  into a new lease for the
Property located in Tampa, Florida, with a new tenant to operate the Property as
a Steak-N-Shake  restaurant. In connection therewith, the Partnership has agreed
to fund up to $600,000 in conversion  costs  associated  with this Property.  No
amounts were funded as of the year ended December 31, 1998.

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

         The Partnership's  investment strategy of acquiring Properties for cash
and  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.

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with APF,  pursuant to which the Partnership  would be merged with and
into a subsidiary  of APF. As  consideration  for the Merger,  APF has agreed to
issue  3,886,185  APF Shares  which,  for the  purposes  of  valuing  the merger
consideration,  have been valued by APF at $10.00 per APF Share,  the price paid
by APF  investors in APF's most recent public  offering.  In order to assist the
General  Partners in evaluating the proposed merger  consideration,  the General
Partners  retained  Valuation  Associates,  a nationally  recognized real estate
appraisal firm, to appraise the  Partnership's  restaurant  property  portfolio.
Based on Valuation Associates'  appraisal,  the Partnership's property portfolio
and other assets were valued on a going concern basis  (meaning the  Partnership
continues  unchanged) at  $38,283,180  as of December 31, 1998.  Legg Mason Wood
Walker,  Incorporated  has  rendered  a  fairness  opinion  that  the APF  Share
consideration, payable by APF, is fair to the Partnership from a financial point
of view.  The APF Shares are  expected  to be listed for trading on the New York
Stock Exchange concurrently with the consummation of the Merger, and, therefore,
would be freely  tradable  at the option of the former  Limited  Partners.  At a
special meeting of the partners that is expected to be held in the third quarter
of  1999,  Limited  Partners  holding  in  excess  of 50%  of the  Partnership's
outstanding  limited  partnership  interests  must  approve the Merger  prior to
consummation of the  transaction.  The General Partners intend to recommend that
the Limited Partners of the Partnership  approve the Merger.  In connection with
their  recommendation,  the  General  Partners  will  solicit the consent of the
Limited Partners at the special meeting.

Results of Operations

         During  1996,  the  Partnership   owned  and  leased  44  wholly  owned
Properties  (including  one  Property in Richmond,  Virginia,  which was sold in
November 1996),  during 1997, the  Partnership  owned and leased 43 wholly owned
Properties  (including  one  Property  in  Orlando,  Florida,  which was sold in
October 1997), and during 1998, the Partnership owned and leased 42 wholly owned
Properties.  During 1998,  1997, and 1996, the  Partnership was a co-venturer in
two  separate  joint  ventures  that each  owned and  leased  one  Property.  In
addition, during 1996, the Partnership owned and leased one Property, and during
1997 and 1998, owned and leased three Properties, with affiliates of the General
Partners as  tenants-in-common.  As of December 31, 1998, 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,  1998,  1997,  and  1996,  the
Partnership  earned $2,862,491,  $3,347,609,  and $3,376,286,  respectively,  in
rental  income from  operating  leases  (net of  adjustments  to accrued  rental
income) and earned income from direct  financing  leases from Properties  wholly
owned by the  Partnership.  Rental and earned income  decreased by approximately
$211,400  during 1998,  as compared to 1997,  primarily  due to the fact that in
June 1998,  Long John  Silver's,  Inc.,  filed for  bankruptcy  and rejected the
leases  relating to three of the eight  Properties  it leased and ceased  making
rental  payments  on  the  three  rejected  leases.  The  Partnership  continued
receiving rental payments  relating to the leases not rejected by the tenant. In
conjunction with the three rejected  leases,  during the year ended December 31,
1998, the Partnership wrote off approximately  $307,400 of accrued rental income
(non-cash  accounting  adjustment  relating  to the  straight-lining  of  future
scheduled  rent  increases  over the lease  term in  accordance  with  generally
accepted accounting  principles).  During 1998, the Partnership re-leased two of
these Properties to new tenants.  Rental payments commenced in December 1998 for
one lease and the other lease has a scheduled  rent  commencement  date of March
1999.  The  General  Partners  are  currently  seeking  either a new tenant or a
purchaser for the remaining property.  The Partnership will not recognize rental
and earned income from the remaining  Property  until a new tenant is located or
until the Property is sold and the proceeds  from such sale is  reinvested in an
additional Property. 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
remaining  vacant  Property 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.

         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  former  tenant of the  Denny's
Property in Orlando,  Florida,  ceased making rental payments 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 the fact that the  Partnership  established  an
allowance for doubtful accounts of approximately $15,300 and $85,400 during 1997
and 1996,  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
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). No such allowance was recorded during 1997. 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  "Liquidity  and  Capital
Resources."

         In addition,  the decrease in rental and earned  income during 1997, as
compared to 1996,  is  partially  attributable  to a decrease  of  approximately
$46,200,  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 "Liquidity and Capital Resources."

         For the years ended December 31, 1998,  1997, and 1996, the Partnership
also earned $326,906, $287,751, and $299,495, respectively, in contingent rental
income.  The increase in  contingent  rental  income during 1998, as compared to
1997, is primarily the result of the gross sales of four  restaurant  Properties
meeting the  threshold  during 1998,  under the terms of their leases  requiring
payment of 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.

         In addition, for the years ended December 31, 1998, 1997, and 1996, the
Partnership earned $243,492, $150,417, and $60,654,  respectively,  attributable
to  net  income  earned  by  joint  ventures  in  which  the  Partnership  is  a
co-venturer.  The increase in net income earned by these joint  ventures  during
1998,  as  compared  to 1997,  is  primarily  attributable  to the fact  that in
December  1997,  the  Partnership  reinvested the net sales proceeds it received
from the sale,  in October  1997,  of the  Property  in Orlando,  Florida,  in a
Property located in Miami,  Florida,  with affiliates of the general partners as
tenants-in-common,  as described above in "Liquidity and Capital Resources." The
increase 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
"Liquidity and Capital Resources."

         During the year ended  December  31,  1998,  four of the  Partnership's
lessees,  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  affiliates  as  tenants-in-common).  As of  December  31,  1998,  Flagstar
Corporation 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. During
1998, Long John Silver's Inc. filed for bankruptcy. It is anticipated that based
on the minimum rental  payments  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 during
1999.  In addition,  during the year ended  December 31, 1998,  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).  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 total  rental  income  under the terms of its  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.

         Operating expenses,  including  depreciation and amortization  expense,
were  $688,470,  $748,305,  and $646,794 for the years ended  December 31, 1998,
1997, and 1996, respectively. The decrease in operating expenses during 1998, as
compared to 1997,  is partially  attributable  to, and the increase in operating
expenses  during 1997, as compared to 1996, is primarily the result of, the fact
that during 1997,  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 fact that the former tenant ceased making
rental payments. The Partnership ceased collection efforts on rental amounts not
collected  from the tenant at the sale of the  Property  in  October,  1997,  as
described above in "Liquidity and Capital  Resources." In addition,  during 1997
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
"Liquidity and Capital Resources."

         The decrease in operating expenses during 1998, as compared to 1997, is
partially  offset by an increase in insurance  and real estate tax expenses as a
result of Long John  Silver's,  Inc.  filing for  bankruptcy  and  rejecting the
leases relating to three  Properties in June 1998.  During 1998, the Partnership
entered  into two  leases,  each with a new tenant  for two of the three  vacant
Properties,  to  operate  the  Properties  as a Lions  Choice  restaurant  and a
Steak-N-Shake  restaurant,  as described  above.  In  accordance  with the lease
agreement,  the new tenant of the Lions Choice  Property is responsible for real
estate taxes,  insurance and maintenance  relating to this Property;  therefore,
the General Partners do not anticipate the Partnership will incur these expenses
for this Property in the future.  The  Partnership  will continue to incur these
expenses  relating  to the  Property  that is expected  to be  converted  into a
Steak-N-Shake  Property  until the  conversion is completed,  at which point the
tenant will be responsible  for these expenses under the terms of the lease.  In
addition, the Partnership will continue to incur these expenses, relating to the
one remaining  vacant  Property until a new tenant or purchaser is located.  The
Partnership  is currently  seeking  either a new tenant or a purchaser  for this
Property.  In  addition,  the  decrease in operating  expenses  during 1998,  is
partially  offset by an  increase in  depreciation  expense due to the fact that
during 1998, the Partnership  reclassified the three vacant  Properties from net
investment in direct financing leases to land and building on operating  leases.
The decrease in operating  expenses during 1998 is also partially  offset by the
fact that the Partnership has incurred  $23,291 in transaction  costs related to
the General  Partners  retaining  financial and legal advisors to assist them in
evaluating and  negotiating  the proposed Merger with APF, as described above in
"Liquidity and Capital  Resources." If the Limited  Partners  reject the Merger,
the Partnership  will bear the portion of the  transaction  costs based upon the
percentage of "For" votes and the General Partners will bear the portion of such
transaction costs based upon the percentage of "Against" votes and abstentions.


         During the year ended  December 31, 1998,  the  Partnership  recorded a
provision for loss on building in the amount of $297,885 for financial  purposes
relating to one of the Properties for which Long John  Silver's,  Inc.  rejected
the lease.  The  allowance  represents  the  difference  between the  Property's
carrying  value at December 31, 1998 and the current  estimate of net realizable
value at December 31, 1998 for the Property.  No such allowance was  established
during the years ended December 31, 1997 and 1996.

         As a  result  of the  sale of the  Property  in  Orlando,  Florida,  as
described above in "Liquidity and 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  "Liquidity  and  Capital  Resources,"  the
Partnership  recognized a gain of $82,855 for financial  reporting  purposes for
the year ended December 31, 1996. No Properties were sold during 1998.

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

Year 2000

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

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

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

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

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


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

         Not applicable.


Item 8.  Financial Statements and Supplementary Data


<PAGE>


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

                                    CONTENTS








                                                                     Page
                                                                     ----

Report of Independent Accountants                                     14

Financial Statements:

  Balance Sheets                                                      15

  Statements of Income                                                16

  Statements of Partners' Capital                                     17

  Statements of Cash Flows                                            18

  Notes to Financial Statements                                       20


<PAGE>






                        Report of Independent Accountants



To the Partners
CNL Income Fund XIII, Ltd.


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





Orlando, Florida
February 1, 1999, except for Note 11 for which the date is March 11, 1999


<PAGE>


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

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

<TABLE>
<CAPTION>


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

Land and buildings on operating leases, less
    accumulated depreciation and allowance
    for loss on building                                                          $22,945,358              $22,788,618
Net investment in direct financing leases                                           6,951,890                7,910,470
Investment in joint ventures                                                        2,451,336                2,457,810
Cash and cash equivalents                                                             766,859                  907,980
Receivables, less allowance for doubtful
    accounts of $532 in 1998                                                          121,119                   23,946
Prepaid expenses                                                                        8,453                   10,368
Lease costs                                                                            17,875                       --
Organization costs, less accumulated
    amortization of $10,000 and $9,422                                                     --                      578
Accrued rental income                                                               1,424,603                1,423,820
                                                                             -----------------         ----------------

                                                                                  $34,687,493              $35,523,590
                                                                             =================         ================


                     LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                                                    $   4,068                $   7,671
Accrued and escrowed real estate taxes
    payable                                                                             6,923                       --
Distributions payable                                                                 850,002                  850,002
Due to related parties                                                                 22,529                    6,791
Rents paid in advance and deposits                                                     54,568                    5,570
                                                                             -----------------         ----------------
       Total liabilities                                                              938,090                  870,034

Commitment (Note 10)

Partners' capital                                                                  33,749,403               34,653,556
                                                                             -----------------         ----------------

                                                                                  $34,687,493              $35,523,590
                                                                             =================         ================


                 See accompanying notes to financial statements.


<PAGE>


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

                                                STATEMENTS OF INCOME

                                                                            Year Ended December 31,
                                                                1998                 1997                 1996
                                                            --------------       --------------       --------------
Revenues:
    Rental income from
       operating leases                                       $ 2,404,934          $ 2,371,062          $ 2,477,156
    Adjustments to accrued rental
       income                                                    (307,405 )                 --                   --
    Earned income from direct
       financing leases                                           764,962              976,547              899,130
    Contingent rental income                                      326,906              287,751              299,495
    Interest and other income                                      49,321               46,693               59,319
                                                            --------------       --------------       --------------
                                                                3,238,718            3,682,053            3,735,100
                                                            --------------       --------------       --------------
Expenses:
    General operating and
       administrative                                             150,239              152,918              156,466
    Bad debt expense                                                   --              123,071                   --
    Professional services                                          26,869               25,595               33,746
    Management fees to related party                               35,257               34,321               35,675
    Real estate taxes                                              13,989                   --               10,680
    State and other taxes                                          16,172               18,301               16,793
    Depreciation and amortization                                 422,653              394,099              393,434
    Transaction costs                                              23,291                   --                   --
                                                            --------------       --------------       --------------

                                                                  688,470              748,305              646,794
                                                            --------------       --------------       --------------
Income Before Equity in Earnings of
    Joint Ventures, Gain (Loss) on
    Sale of Land,  Buildings  and  Investment
in  Direct Financing Lease, and Provision                       2,550,248            2,933,748            3,088,306
    for Loss on Building

Equity in Earnings of Joint Ventures                              243,492              150,417               60,654

Gain (Loss) on Sale of Land, Buildings and
    Investment in Direct Financing Lease                               --              (48,538 )             82,855

Provision for Loss on Building                                   (297,885 )                 --                   --
                                                            --------------       --------------       --------------

Net Income                                                    $ 2,495,855          $ 3,035,627          $ 3,231,815
                                                            ==============       ==============       ==============

Allocation of Net Income:
    General partners                                           $   26,667           $   30,690           $   31,490
    Limited partners                                            2,469,188            3,004,937            3,200,325
                                                            --------------       --------------       --------------
                                                              $ 2,495,855          $ 3,035,627          $ 3,231,815
                                                            ==============       ==============       ==============

Net Income Per Limited Partner Unit                             $    0.62            $    0.75            $    0.80
                                                            ==============       ==============       ==============

Weighted Average Number of
    Limited Partner Units Outstanding                           4,000,000            4,000,000            4,000,000
                                                            ==============       ==============       ==============


                 See accompanying notes to financial statements.


<PAGE>


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

                                                                         STATEMENTS OF PARTNERS' CAPITAL

                                                                  Years Ended December 31, 1998, 1997, and 1996


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

Balance, December 31, 1995     $  1,000     $  74,027    $ 40,000,000   $ (7,528,384)  $7,304,656    $(4,665,169)     $35,186,130

    Distribution to limited
       partners ($0.85 per
       limited partner unit)         --            --              --     (3,400,008)          --             --       (3,400,008 )
    Net income                       --        31,490              --             --    3,200,325             --        3,231,815
                              ---------   -----------  --------------   -------------  ----------   ------------    -------------

Balance, December 31, 1996        1,000       105,517      40,000,000    (10,928,392)  10,504,981     (4,665,169)     35,017,937

    Distribution to limited
       partners ($0.85 per
       limited partner unit)         --            --              --     (3,400,008)          --             --       (3,400,008 )
    Net income                       --        30,690              --             --    3,004,937             --        3,035,627
                              ---------   -----------  --------------   -------------  ----------   ------------      -----------

Balance, December 31, 1997        1,000       136,207      40,000,000    (14,328,400)  13,509,918     (4,665,169)     34,653,556
    Distribution to limited
       partners ($0.85 per
       limited partner unit)         --            --              --     (3,400,008)          --             --       (3,400,008 )
    Net income                       --        26,667              --             --    2,469,188             --        2,495,855
                              ---------   -----------  --------------   ------------   ----------   ------------      -----------

Balance, December 31, 1998     $  1,000     $ 162,874    $ 40,000,000   $(17,728,408) $15,979,106    $(4,665,169)     $33,749,403
                              =========   ===========  ==============   ============= ===========   ============     =============



                 See accompanying notes to financial statements.


<PAGE>


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

                                              STATEMENTS OF CASH FLOWS


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


Increase (Decrease) in Cash and Cash
   Equivalents:

      Cash Flows from Operating Activities:
         Cash received from tenants                                   $3,235,985            $3,329,633            $3,476,985
         Distributions from joint ventures                               250,270               151,322                93,700
         Cash paid for expenses                                         (245,273 )            (236,793  )           (251,454 )
         Interest received                                                36,319                29,395                48,350
                                                                 ----------------       ----------------     ----------------
             Net cash provided by operating
                activities                                             3,277,301             3,273,557             3,367,581
                                                                 ----------------       ----------------     ----------------

      Cash Flows from Investing Activities:
         Proceeds from sale of land and building                              --               932,849               550,000
         Advances to tenant                                                   --              (196,980  )                 --
         Repayment of advances                                                --               127,843                    --
         Investment in joint ventures                                       (539 )          (1,482,849  )                 --
         Payment of lease costs                                          (17,875 )                  --                    --
         Decrease (increase) in restricted cash                               --               550,000              (550,000 )
                                                                 ----------------       ----------------     ----------------
             Net cash used in investing activities                       (18,414 )             (69,137  )                 --
                                                                 ----------------       ----------------     ----------------

      Cash Flows from Financing Activities:
         Distributions to limited partners                            (3,400,008 )          (3,400,008  )         (3,400,008 )
                                                                 ----------------       ----------------     ----------------
                Net cash used in financing activities                 (3,400,008 )          (3,400,008  )         (3,400,008 )
                                                                 ----------------       ----------------     ----------------

Net Decrease in Cash and Cash Equivalents                               (141,121 )            (195,588  )            (32,427 )

Cash and Cash Equivalents at Beginning of Year                           907,980             1,103,568             1,135,995
                                                                 ----------------       ----------------     ----------------

Cash and Cash Equivalents at End of Year                               $ 766,859             $ 907,980            $1,103,568
                                                                 ================       ================     ================








                 See accompanying notes to financial statements.


<PAGE>


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

                                        STATEMENTS OF CASH FLOWS - CONTINUED


                                                                             Year Ended December 31,

                                                                   1998               1997               1996
                                                              ---------------    ---------------    ----------------
Reconciliation of Net Income to Net Cash
   Provided by Operating Activities:

      Net income                                                $  2,495,855       $  3,035,627        $  3,231,815
                                                              ---------------    ---------------    ----------------
      Adjustments to reconcile netincome to
         net cash  provided  by  operating
         activities:
             Bad debt expense                                             --            123,071                  --
             Depreciation                                            421,840            391,434             391,434
             Amortization                                                637              2,665               2,000
             Equity in earnings of joint ventures,
                net of distributions                                   6,954                905              33,046
             Loss (gain) on sale of land and
                building                                                  --             48,538             (82,855 )
             Provision for loss on building                          297,885                 --                  --
             Decrease (increase) in receivables                      (97,173 )           23,845             (28,034 )
             Decrease in net investment in direct
                financing leases                                      82,115             84,646              80,214
             Increase (decrease) in prepaid
                expenses                                               1,915             (1,225 )            (5,005 )
             Increase in accrued rental income                          (783 )         (378,850 )          (313,540 )
             Increase (decrease) in accounts
                payable and accrued expenses                           3,320            (12,761 )            12,137
             Increase (decrease) in due to related
                parties                                               15,738              4,197              (4,773 )
             Increase (decrease) in rents paid in
                advance and deposits                                  48,998            (48,535 )            51,142
                                                              ---------------    ---------------    ----------------
                   Total adjustments                                 781,446            237,930             135,766
                                                              ---------------    ---------------    ----------------

Net Cash Provided by Operating Activities                       $  3,277,301       $  3,273,557        $  3,367,581
                                                              ===============    ===============    ================

Supplemental Schedule of Non-Cash Investing and
   Financing Activities:

Distributions declared and unpaid at
   December 31                                                   $   850,002        $   850,002         $   850,002
                                                              ===============    ===============    ================

</TABLE>



                 See accompanying notes to financial statements.


<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies:

         Organization  and Nature of Business - CNL Income Fund XIII,  Ltd. (the
         "Partnership") is a Florida limited  partnership that was organized for
         the purpose of acquiring both newly constructed and existing restaurant
         properties,  as well as properties  upon which  restaurants  were to be
         constructed,  which are leased  primarily  to operators of national and
         regional fast-food and family-style restaurant chains.

         The general partners of the Partnership are CNL Realty Corporation (the
         "Corporate  General  Partner"),  James M.  Seneff,  Jr.  and  Robert A.
         Bourne.  Mr. Seneff and Mr. Bourne are also 50 percent  shareholders of
         the Corporate General Partner. The general partners have responsibility
         for managing the day-to-day operations of the Partnership.

         Real  Estate  and  Lease  Accounting  -  The  Partnership  records  the
         acquisition of land and buildings at cost,  including  acquisition  and
         closing costs. Land and buildings are leased to unrelated third parties
         on a triple-net basis, whereby the tenant is generally  responsible for
         all operating  expenses  relating to the property,  including  property
         taxes, insurance, maintenance and repairs. The leases are accounted for
         using  either the  direct  financing  or the  operating  methods.  Such
         methods are described below:

                  Direct  financing  method - The leases accounted for using the
                  direct  financing  method are recorded at their net investment
                  (which at the inception of the lease generally  represents the
                  cost of the asset) (Note 4).  Unearned  income is deferred and
                  amortized  to income  over the lease  terms so as to produce a
                  constant  periodic  rate of  return on the  Partnership's  net
                  investment in the leases.

                  Operating  method - Land and  building  leases  accounted  for
                  using the  operating  method are recorded at cost,  revenue is
                  recognized as rentals are earned and  depreciation  is charged
                  to operations as incurred.  Buildings are  depreciated  on the
                  straight-line  method over their estimated  useful lives of 30
                  years.  When  scheduled  rentals  vary  during the lease term,
                  income is recognized on a straight-line basis so as to produce
                  a constant periodic rent over the lease term commencing on the
                  date the property is placed in service.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

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

         When  the  properties  are  sold,  the  related  cost  and  accumulated
         depreciation  for operating  leases and the net  investment  for direct
         financing leases,  plus any accrued rental income, are removed from the
         accounts and gains or losses from sales are  reflected  in income.  The
         general  partners of the Partnership  review  properties for impairment
         whenever events or changes in circumstances  indicate that the carrying
         amount of the assets may not be  recoverable  through  operations.  The
         general partners  determine whether an impairment in value has occurred
         by comparing the estimated future  undiscounted  cash flows,  including
         the  residual  value of the  property,  with the  carrying  cost of the
         individual  property.  If an impairment  is  indicated,  the assets are
         adjusted to their fair value.  Although the general  partners have made
         their best estimate of these factors based on current conditions, it is
         reasonably  possible  that  changes  could occur in the near term which
         could adversely affect the general partners' estimate of net cash flows
         expected to be  generated  from its  properties  and the need for asset
         impairment write-downs.

         When the  collection  of amounts  recorded as rental or other income is
         considered  to be  doubtful,  an  adjustment  is made to  increase  the
         allowance for doubtful  accounts,  which is netted against  receivables
         and accrued rental income,  and to decrease  rental or other income for
         the  current  period,  although  the  Partnership  continues  to pursue
         collection of such amounts.  If amounts are subsequently  determined to
         be  uncollectible,  the  corresponding  receivable  and  allowance  for
         doubtful accounts are decreased accordingly.

         Investment  in  Joint  Ventures  - The  Partnership  accounts  for  its
         interest  in Attalla  Joint  Venture  and Salem  Joint  Venture,  and a
         property in Arvada, Colorado, a property in Akron, Ohio, and a property
         in Miami, Florida, for which each property is held as tenants-in-common
         with affiliates,  using the equity method since the Partnership  shares
         control with affiliates which have the same general partners.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

         Cash and Cash Equivalents - The Partnership considers all highly liquid
         investments  with a maturity of three months or less when  purchased to
         be cash  equivalents.  Cash  and cash  equivalents  consist  of  demand
         deposits at commercial  banks and money market funds (some of which are
         backed by government  securities).  Cash equivalents are stated at cost
         plus accrued interest, which approximates market value.

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

         Organization  Costs - Organization costs were amortized over five years
         using the straight-line method.

         Lease  Costs - Lease  incentive  costs and  brokerage  and  legal  fees
         associated  with  negotiating new leases are amortized over the term of
         the new lease using the straight-line method.

         Income Taxes - Under  Section 701 of the  Internal  Revenue  Code,  all
         income,  expenses and tax credit items flow through to the partners for
         tax  purposes.  Therefore,  no  provision  for federal  income taxes is
         provided in the accompanying  financial statements.  The Partnership is
         subject to certain state taxes on its income and property.

         Additionally,  for tax  purposes,  syndication  costs are  included  in
         Partnership equity and in the basis of each partner's  investment.  For
         financial  reporting  purposes,  syndication  costs are netted  against
         partners' capital and represent a reduction of Partnership equity and a
         reduction in the basis of each partner's investment.

         Use of Estimates - The general  partners of the Partnership have made a
         number of estimates and assumptions relating to the reporting of assets
         and liabilities and the disclosure of contingent assets and liabilities
         to prepare these  financial  statements in  conformity  with  generally
         accepted  accounting  principles.  The more significant areas requiring
         the use of  management  estimates  relate to the allowance for doubtful
         accounts  and future  cash flows  associated  with  long-lived  assets.
         Actual results could differ from those estimates.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


1.       Significant Accounting Policies - Continued:

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

2.       Leases:

         The  Partnership  leases its land or land and buildings to operators of
         national and  regional  fast-food  and  family-style  restaurants.  The
         leases are accounted for under the provisions of Statement of Financial
         Accounting  Standards  No. 13,  "Accounting  for  Leases."  Some of the
         leases are  classified as operating  leases and some of the leases have
         been classified as direct financing  leases.  For the leases classified
         as direct  financing  leases,  the  building  portions of the  property
         leases are  accounted  for as direct  financing  leases  while the land
         portions  of  the  majority  of  these  leases  are  operating  leases.
         Substantially all leases are for 15 to 20 years and provide for minimum
         and contingent rentals. In addition, the tenant pays all property taxes
         and  assessments,  fully  maintains  the  interior  and exterior of the
         building and carries insurance coverage for public liability,  property
         damage,  fire and extended coverage.  The lease options generally allow
         tenants  to  renew  the  leases  for two to five  successive  five-year
         periods  subject to the same terms and conditions as the initial lease.
         Most  leases  also allow the tenant to  purchase  the  property at fair
         market value after a specified portion of the lease has elapsed.

3.       Land and Buildings on Operating Leases:

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

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

            Land                                 $12,742,897     $ 12,742,897
            Buildings                             12,607,970       11,743,041
                                                -------------   --------------
                                                  25,350,867       24,485,938
            Less accumulated depreciation         (2,107,624 )     (1,697,320 )
                                                -------------   --------------
                                                  23,243,243       22,788,618
            Less allowance for loss on building     (297,885 )             --
                                                -------------   --------------

                                                 $22,945,358     $ 22,788,618
                                                =============   ==============



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996

3.       Land and Buildings on Operating Leases - Continued:

         In 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, as tenants-in-common,
         with affiliates of the general partners (see Note 5).

         At December 31, 1998, the Partnership established an allowance for loss
         on building of  $297,885,  relating  to one  property in  Philadelphia,
         Pennsylvania.  The tenant of this  property  filed for  bankruptcy  and
         ceased  payment of rents  under the terms of its lease  agreement.  The
         allowance  represents the difference  between the carrying value of the
         property  at  December  31,  1998,  and  the  current  estimate  of net
         realizable value for this property.

         Generally,  the leases provide for escalating  guaranteed minimum rents
         throughout the lease term.  Income from these  scheduled rent increases
         is  recognized on a  straight-line  basis over the terms of the leases.
         For the years ended December 31, 1998,  1997, and 1996, the Partnership
         recognized  $783  (net  of  $307,405  in  write-offs),   $378,850,  and
         $313,540, respectively, of such rental income.

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

                1999                                            $ 2,188,225
                2000                                              2,179,331
                2001                                              2,190,526
                2002                                              2,220,532
                2003                                              2,257,154
                Thereafter                                       20,981,325
                                                           -----------------

                                                                $32,017,093
                                                           =================

         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.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


4.       Net Investment in Direct Financing Leases:

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

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

              Minimum lease payments
                  receivable                       $13,789,643      $15,747,868
              Estimated residual values              2,344,575        2,582,058
              Less unearned income                  (9,182,328 )    (10,419,456)
                                                ---------------   --------------

              Net investment in direct financing
                  leases                            $6,951,890       $7,910,470
                                                ===============   ==============

         In October 1997, the Partnership sold its property in Orlando, Florida,
         for  which  the  building  portion  had  been  classified  as a  direct
         financing lease. In connection therewith, the gross investment (minimum
         lease payment  receivable  and estimated  residual  value) and unearned
         income relating to this property were removed from the accounts and the
         loss from the sale relating to the land portion of the property and the
         net investment in direct  financing lease was reflected in income (Note
         3).

         In  June  1998,  three  of the  Partnership's  leases  with  Long  John
         Silver's,  Inc., were rejected in connection with the tenant filing for
         bankruptcy. As a result, the Partnership reclassified these assets from
         net  investment  in direct  financing  leases to land and  buildings on
         operating leases. In accordance with Statement of Financial  Accounting
         Standards #13,  "Accounting for Leases," the  Partnership  recorded the
         reclassified  assets at the lower of original cost, present fair value,
         or present  carrying value. No loss on termination of direct  financing
         leases was recorded for financial reporting purposes.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


4.       Net Investment in Direct Financing Leases - Continued:

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

                1999                                           $ 857,997
                2000                                             857,997
                2001                                             870,737
                2002                                             888,571
                2003                                             889,113
                Thereafter                                     9,425,228
                                                        -----------------

                                                             $13,789,643
                                                        =================

         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).

5.       Investment in Joint Ventures:

         The  Partnership  has a 50 percent and a 27.8%  interest in the profits
         and  losses  of  Attalla  Joint   Venture  and  Salem  Joint   Venture,
         respectively.  The remaining interests in these joint ventures are held
         by affiliates of the Partnership which have the same general partners.

         The  Partnership  also  owns  a  property  in  Arvada,   Colorado,   as
         tenants-in-common  with  an  affiliate  of the  general  partners.  The
         Partnership  accounts for its  investment  in this  property  using the
         equity method since the  Partnership  shares control with an affiliate.
         As of December 31, 1998,  the  Partnership  owned a 66.13%  interest in
         this property.

         In January 1997, the  Partnership  used the net sales proceeds from the
         1996 sale of the property in Richmond,  Virginia, to acquire a property
         in Akron, Ohio, as  tenants-in-common  with an affiliate of the general
         partners.  The Partnership accounts for its investment in this property
         using the equity  method  since the  Partnership  shares  control  with
         affiliates,  and amounts  relating to its  investment  are  included in
         investment in joint ventures.  As of December 31, 1998, the Partnership
         owned a 63.09% interest in this property.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


5.       Investment in Joint Ventures - Continued:

         In addition,  in December 1997, the Partnership  acquired a property in
         Miami,  Florida,  as  tenants-in-common  with affiliates of the general
         partners.  The Partnership accounts for its investment in this property
         using the equity  method  since the  Partnership  shares  control  with
         affiliates,  and amounts  relating to its  investment  are  included in
         investment in joint ventures.  As of December 31, 1998, the Partnership
         owned a 47.83% interest in this property.

         Attalla Joint Venture and Salem Joint Venture and the  Partnership  and
         affiliates,  as tenants-in-common  in three separate  tenancy-in-common
         arrangements,  each  own and  lease  one  property  to an  operator  of
         national fast-food or family-style restaurants.  The following presents
         the combined,  condensed  financial  information for the joint ventures
         and  the  properties  held  as  tenants-in-common  with  affiliates  at
         December 31:

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

                Land and buildings on operating
                    leases, less accumulated
                    depreciation                       $4,174,420   $4,256,861
                Net investment in direct financing
                    leases                                360,790      364,479
                Cash                                       19,083       18,729
                Receivables                                   546           --
                Prepaid expenses                              454          380
                Accrued rental income                     182,217      106,653
                Liabilities                                16,028       15,653
                Partners' capital                       4,721,482    4,731,449
                Revenues                                  569,719      347,971
                Net income                                476,700      285,922

         The Partnership  recognized income totalling  $243,492,  $150,417,  and
         $60,654  for the  years  ended  December  31,  1998,  1997,  and  1996,
         respectively,  from these joint  ventures  and the  properties  held as
         tenants-in-common with affiliates.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


6.       Allocations and Distributions:

         Generally, all net income and net losses of the Partnership,  excluding
         gains and losses from the sale of properties,  are allocated 99 percent
         to the  limited  partners  and one  percent  to the  general  partners.
         Distributions  of net  cash  flow are made 99  percent  to the  limited
         partners and one percent to the general  partners;  provided,  however,
         that the one percent of net cash flow to be  distributed to the general
         partners  is  subordinated  to receipt by the  limited  partners  of an
         aggregate,  ten percent,  cumulative,  noncompounded  annual  return on
         their  invested  capital  contributions  (the  "Limited  Partners'  10%
         Return").

         Generally,  net  sales  proceeds  from the sale of  properties,  not in
         liquidation  of the  Partnership,  to the extent  distributed,  will be
         distributed  first to the limited  partners in an amount  sufficient to
         provide them with their Limited  Partners' 10% Return,  plus the return
         of their adjusted capital contributions. The general partners will then
         receive,  to the  extent  previously  subordinated  and  unpaid,  a one
         percent  interest  in all  prior  distributions  of net cash flow and a
         return of their capital  contributions.  Any remaining  sales  proceeds
         will be distributed 95 percent to the limited partners and five percent
         to the general partners.  Any gain from the sale of a property,  not in
         liquidation of the  Partnership,  is in general,  allocated in the same
         manner as net sales proceeds will be  distributable.  Any loss from the
         sale of a  property  is, in  general,  allocated  first,  on a pro rata
         basis,  to partners with positive  balances in their capital  accounts;
         and thereafter,  95 percent to the limited partners and five percent to
         the general partners.

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

         During each of the years ended  December 31, 1998,  1997, and 1996, the
         Partnership   declared   distributions   to  the  limited  partners  of
         $3,400,008.  No distributions have been made to the general partners to
         date.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


7.       Income Taxes:

         The following is a reconciliation of net income for financial reporting
         purposes to net income for federal  income tax  purposes  for the years
         ended December 31:

<TABLE>
<CAPTION>


                                                                    1998              1997             1996
                                                                --------------     ------------     ------------
<S> <C>
               Net income for financial reporting purposes         $2,495,855       $3,035,627       $3,231,815

               Depreciation for tax reporting purposes in
                   excess of depreciation for financial
                   reporting purposes                                 (59,127 )       (100,696 )       (103,634 )

               Direct financing leases recorded as
                   operating leases for tax reporting
                   purposes                                            82,115           84,646           80,214

               Capitalization of transaction costs for tax             23,291               --               --
                   reporting purposes

               Equity in earnings of joint ventures for tax
                   reporting purposes in excess of (less than)
                   equity in earnings of joint ventures
                   for financial reporting purposes                   (27,118 )        (19,727 )          6,819
                   
               Gain on sale of property for financial
                   reporting purposes, deferred for tax                    --               --          (82,855 )
                   reporting purposes

               Loss on sale of property for financial
                   reporting purposes in excess of loss for
                   tax reporting purposes                                  --           38,823               --

               Allowance for loss on building                         297,885               --               --

               Allowance for doubtful accounts                            532         (150,734 )        102,198

               Accrued rental income                                     (783 )       (378,850 )       (313,540 )

               Rents paid in advance                                   38,165          (48,535 )         51,142
                                                                --------------     ------------     ------------
               Net income for federal income tax
                   purposes                                        $2,850,815       $2,460,554       $2,972,159
                                                                ==============     ============     ============

</TABLE>


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


8.       Related Party Transactions:

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

         During the years ended December 31, 1998, 1997, and 1996, the Affiliate
         acted  as  manager  of  the  Partnership's  properties  pursuant  to  a
         management agreement with the Partnership. In connection therewith, the
         Partnership agreed to pay the Affiliate a management fee of one percent
         of the sum of  gross  revenues  from  properties  wholly  owned  by the
         Partnership  and the  Partnership's  allocable  share of gross revenues
         from joint ventures and the property held as tenants-in-common  with an
         affiliate.  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  Affiliate.  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  Affiliates  shall
         determine.   The  Partnership  incurred  management  fees  of  $35,257,
         $34,321,  and $35,675 for the years ended December 31, 1998,  1997, and
         1996, respectively.

         The Affiliate is also entitled to receive a deferred, subordinated real
         estate disposition fee, payable upon the sale of one or more properties
         based on the lesser of one-half of a competitive real estate commission
         or three  percent  of the  sales  price  if the  Affiliate  provides  a
         substantial amount of services in connection with the sale. However, if
         the net sales  proceeds are  reinvested in a replacement  property,  no
         such  real  estate   disposition  fees  will  be  incurred  until  such
         replacement   property  is  sold  and  the  net  sales   proceeds   are
         distributed.  The  payment  of  the  real  estate  disposition  fee  is
         subordinated to receipt by the limited  partners of their aggregate 10%
         Preferred  Return,  plus  their  adjusted  capital  contributions.   No
         deferred,  subordinated real estate disposition fees have been incurred
         since inception.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


8.       Related Party Transactions - Continued:

         During the years ended December 31, 1998, 1997, and 1996, the Affiliate
         provided accounting and administrative services to the Partnership on a
         day-to-day  basis.  For the years ended  December 31, 1998,  1997,  and
         1996, the expenses  incurred for these services were $98,719,  $87,322,
         and $91,272, respectively.

         During 1997, the Partnership  and an affiliate of the general  partners
         acquired a property in Akron, Ohio, as tenants-in-common for a purchase
         price of $872,625  (of which the  Partnership  contributed  $550,000 or
         63.03%) from CNL BB Corp.,  also an affiliate of the general  partners.
         CNL BB Corp. had purchased and temporarily  held title to this property
         in  order  to  facilitate  the  acquisition  of  the  property  by  the
         Partnership and the affiliate, as tenants-in-common. The purchase price
         paid  by the  Partnership  and  the  affiliate  represented  the  costs
         incurred by CNL BB Corp. to acquire and carry the  property,  including
         closing costs.

         The due to related  parties at  December  31,  1998 and 1997,  totalled
         $22,529, and $6,791, respectively.

9.       Concentration of Credit Risk:

         The  following  schedule  presents  total rental and earned income from
         individual  lessees,  each  representing  more than ten  percent of the
         Partnership's   total   rental  and  earned   income   (including   the
         Partnership's  share of total  rental  and  earned  income  from  joint
         ventures and the properties held as tenants- in-common with affiliates)
         for each of the years ended December 31:

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

             Flagstar Enterprises, Inc.   $649,525    $744,199        $765,109
             Long John Silver's, Inc.      571,066     759,064         764,565
             Golden Corral Corporation     542,900     536,886         539,568
             Foodmaker, Inc.               458,690     450,816         450,393
             Checkers Drive-In
                 Restaurants, Inc.             N/A         N/A         412,422



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


9.       Concentration of Credit Risk - Continued:

         In addition,  the following  schedule  presents total rental and earned
         income from individual  restaurant chains,  each representing more than
         ten  percent  of the  Partnership's  total  rental  and  earned  income
         (including  the  Partnership's  share of total rental and earned income
         from joint ventures and the properties held as  tenants-in-common  with
         affiliates) for each of the years ended December 31:

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

            Hardee's                      $ 649,525    $ 649,762    $ 670,249
            Long John Silver's              571,066      759,064      764,565
            Golden Corral Family
                Steakhouse Restaurants      542,900      536,886      539,568
            Burger King                     497,670      484,111      431,280
            Jack in the Box                 458,690      450,816      450,393
            Checkers Drive-In Restaurants       N/A          N/A      412,422

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

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

         In June  1998,  Long  John  Silver's,  Inc.  filed for  bankruptcy  and
         rejected the leases relating to three of the eight Properties it leased
         and ceased making rental payments to the Partnership.  During 1998, the
         Partnership  entered  into a new lease for two of the three  properties
         with new tenants.  The general partners are currently  seeking either a
         new tenant or a purchaser for the remaining  property.  The Partnership
         will not recognize  rental and earned income from this property until a
         new tenant is located or until the  property  is sold and the  proceeds
         from such sale is reinvested in an additional property. 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, 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.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1998, 1997, and 1996


10.      Commitment:

         In November  1998,  the  Partnership  entered  into a new lease for the
         property in Tampa,  Florida,  with a new tenant to operate the property
         as a Steak-N-Shake restaurant. In connection therewith, the Partnership
         agreed to pay up to $600,000 in  renovation  costs,  none of which were
         incurred as of the year ended December 31, 1998.

11.      Subsequent Event:

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
         of Merger with CNL American Properties Fund, Inc. ("APF"),  pursuant to
         which the Partnership would be merged with and into a subsidiary of APF
         (the  "Merger").  As  consideration  for the Merger,  APF has agreed to
         issue 3,886,185  shares of its common stock, par value $0.01 per shares
         (the "APF  Shares")  which,  for the  purposes  of  valuing  the merger
         consideration,  have been  valued by APF at $10.00 per APF  Share,  the
         price paid by APF  investors in APF's most recent public  offering.  In
         order to assist the general  partners in evaluating the proposed merger
         consideration,  the general partners retained Valuation  Associates,  a
         nationally  recognized  real estate  appraisal  firm,  to appraise  the
         Partnership's   restaurant  property  portfolio.   Based  on  Valuation
         Associates'  appraisal,  the Partnership's property portfolio and other
         assets were valued on a going  concern basis  (meaning the  Partnership
         continues unchanged) at $38,283,180 as of December 31, 1998. Legg Mason
         Wood Walker,  Incorporated has rendered a fairness opinion that the APF
         Share consideration,  payable by APF, is fair to the Partnership from a
         financial  point of view.  The APF Shares are expected to be listed for
         trading  on  the  New  York  Stock  Exchange   concurrently   with  the
         consummation of the Merger, and, therefore, would be freely tradable at
         the option of the former limited partners.  At a special meeting of the
         partners  that is  expected  to be held in the third  quarter  of 1999,
         limited  partners  holding  in  excess  of  50%  of  the  Partnership's
         outstanding limited partnership interests must approve the Merger prior
         to  consummation  of the  transaction.  The general  partners intend to
         recommend  that the  limited  partners of the  Partnership  approve the
         Merger. In connection with their  recommendation,  the general partners
         will  solicit  the  consent  of the  limited  partners  at the  special
         meeting.  If the limited  partners  reject the Merger,  the Partnership
         will  bear  the  portion  of  the  transaction  costs  based  upon  the
         percentage  of "For"  votes  and the  general  partners  will  bear the
         portion  of  such  transaction  costs  based  upon  the  percentage  of
         "Against" votes and abstentions.



<PAGE>


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

         None.


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

         The General Partners of the Registrant are James M. Seneff, Jr., Robert
A.  Bourne  and CNL  Realty  Corporation,  a Florida  corporation.  The  General
Partners  manage  and  control  the  Partnership's   affairs  and  have  general
responsibility   and  the  ultimate  authority  in  all  matters  affecting  the
Partnership's  business.  The  Partnership  has  available  to it the  services,
personnel and experience of CNL Fund Advisors,  Inc., CNL Group,  Inc. and their
affiliates, all of which are affiliates of the General Partners.

         James M. Seneff, Jr., age 52, is a principal  stockholder of CNL Group,
Inc., a diversified  real estate company,  and has served as its Chairman of the
Board of Directors,  a director and Chief Executive  Officer since its formation
in 1980. Mr. Seneff has been Chairman of the Board of Directors,  director,  and
Chief Executive Officer of CNL Securities Corp. since its formation in 1979. Mr.
Seneff also has held the position of Chairman of the Board of  Directors,  Chief
Executive  Officer,   President  and  director  of  CNL  Management  Company,  a
registered investment advisor,  since its formation in 1976, has served as Chief
Executive  Officer,  Chairman  of the Board  and a  director  of CNL  Investment
Company,  has served as Chief Executive  Officer, a director and Chairman of the
Board of Directors of Commercial Net Lease Realty, Inc., a publicly-traded REIT,
listed on the NYSE, since 1992,  served as Chief Executive  Officer,  a director
and  Chairman of the Board of Directors of CNL Realty  Advisors,  Inc.  from its
inception in May 1992 through  December  1997, at which time such company merged
with  Commercial  Net Lease  Realty,  Inc.,  and has held the  position of Chief
Executive  Officer,  Chairman of the Board and a director  of CNL  Institutional
Advisors, Inc., a registered investment advisor, since its inception in December
1990.  Mr.  Seneff  has  served as  Chairman  of the Board of  Directors  of CNL
American  Properties  Fund, Inc. since December 1994 and as a director and Chief
Executive  Officer  since May 1994.  Mr.  Seneff has served as  Chairman  of the
Board,  Chief Executive Officer and a director of CNL Fund Advisors,  Inc. since
March 1994.  Mr.  Seneff has served as Chairman  of the Board,  Chief  Executive
Officer and a director of CNL Hospitality  Properties,  Inc. since June 1996 and
of CNL Hospitality Advisors, Inc. since January 1997. Mr. Seneff has also served
as Chairman of the Board,  Chief Executive  Officer and a director of CNL Health
Care  Properties,  Inc. since  December 1997 and CNL Health Care Advisors,  Inc.
since July 1997. Mr. Seneff previously served on the Florida State Commission on
Ethics  and is a  former  member  and past  Chairman  of the  State  of  Florida
Investment  Advisory Council,  which advises the Florida Board of Administration
investments for various Florida employee  retirement funds. The Florida Board of
Administration,  Florida's  principal  investment  advisory and money management
agency,  oversees the  investment of more then $60 billion of retirement  funds.
Mr.  Seneff  has  served as a member of the board of  directors  of First  Union
National  Bank of  Florida  since  May 1998 and has  served  as a member  of the
Orlando Advisory Board of First Union National Bank of Florida since March 1994.
Since 1971,  Mr.  Seneff has been active in the  acquisition,  development,  and
management  of real  estate  projects  and,  directly  or through an  affiliated
entity,  has  served as a general  partner  or joint  venturer  in over 100 real
estate ventures involved in the financing, acquisition, construction, and rental
of restaurants,  office buildings,  apartment complexes,  hotels, and other real
estate.  Included in these real estate ventures are  approximately  65 privately
offered  real  estate  limited  partnerships  in which Mr.  Seneff,  directly or
through an affiliated  entity,  serves or has served as a general partner.  Also
included are CNL Income Fund,  Ltd.,  CNL Income Fund II, Ltd.,  CNL Income Fund
III,  Ltd.,  CNL Income Fund IV, Ltd.,  CNL Income Fund V, Ltd., CNL Income Fund
VI, Ltd., CNL Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund
IX, Ltd.,  CNL Income Fund X, Ltd.,  CNL Income Fund XI,  Ltd.,  CNL Income Fund
XII,  Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL Income Fund
XVI, Ltd., CNL Income Fund XVII, Ltd. and CNL Income Fund XVIII,  Ltd. (the "CNL
Income  Fund  Partnerships"),  public  real  estate  limited  partnerships  with
investment  objectives similar to those of the Partnership,  in which Mr. Seneff
serves as a  general  partner.  Mr.  Seneff  received  his  degree  in  Business
Administration from Florida State University in 1968.

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

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

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

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

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

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

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

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

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

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


Item 11.  Executive Compensation

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


Item 12.  Security Ownership of Certain Beneficial Owners and Management

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

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


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

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

                                                                      100%
                                                                      ====

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



<PAGE>


Item 13.  Certain Relationships and Related Transactions

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


<TABLE>
<CAPTION>
                                                                                                 Amount Incurred
       Type of Compensation                                                                       For the Year
            and Recipient                            Method of Computation                   Ended December 31, 1998
      -----------------------                        ---------------------                   -----------------------
<S> <C>
Reimbursement     to    affiliates    for     Operating  expenses  are  reimbursed     Operating   expenses   incurred   on
operating expenses                            at the  lower of cost or 90  percent     behalf    of    the     Partnership:
                                              of  the  prevailing  rate  at  which     $101,134
                                              comparable  services could have been
                                              obtained  in  the  same   geographic     Accounting      and      administra-
                                              area.   Affiliates  of  the  General     tive services:  $98,719
                                              Partners  from  time to  time  incur
                                              certain   operating    expenses   on
                                              behalf of the  Partnership for which
                                              the   Partnership   reimburses   the
                                              affiliates without interest.

Annual management fee to affiliates           One  percent  of the  sum  of  gross        $35,257
                                              operating  revenues from  Properties
                                              wholly  owned  by  the   Partnership
                                              plus  the  Partnership's   allocable
                                              share  of  gross  revenues  of joint
                                              ventures  in which  the  Partnership
                                              is a  co-venturer  and the  Property
                                              owned   with   an    affiliate    as
                                              tenants-in-common.   The  management
                                              fee,    which    will   not   exceed
                                              competitive   fees  for   comparable
                                              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  affiliates
                                              of  the  General  Partners.  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  affiliates   shall
                                              determine.



<PAGE>



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

Deferred,    subordinated   real   estate     A   deferred,    subordinated   real        $ - 0 -
disposition fee payable to affiliates         estate   disposition   fee,  payable
                                              upon   sale   of   one   or   more
                                              Properties,  in an amount equal to
                                              the  lesser of (i)  one-half  of a
                                              competitive       real      estate
                                              commission,  or (ii) three percent
                                              of  the   sales   price   of  such
                                              Property or Properties. Payment of
                                              such  fee  shall  be made  only if
                                              affiliates of the General Partners
                                              provide  a  substantial  amount of
                                              services  in  connection  with the
                                              sale of a Property  or  Properties
                                              and  shall  be   subordinated   to
                                              certain  minimum  returns  to  the
                                              Limited Partners.  However, if the
                                              net sales  proceeds are reinvested
                                              in a replacement Property, no such
                                              real estate  disposition  fee will
                                              be incurred until such replacement
                                              Property is sold and the net sales
                                              proceeds are distributed.

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

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



<PAGE>



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

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


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



<PAGE>


                                     PART IV


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

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

         1.  Financial Statements

                  Report of Independent Accountants

                  Balance Sheets at December 31, 1998 and 1997

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

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

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

                  Notes to Financial Statements

         2.  Financial Statement Schedules

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

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

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

                  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      Affidavit and  Certificate of Limited  Partnership of
                           CNL Income Fund XIII,  Ltd.  (Included as Exhibit 3.1
                           to  Registration  Statement No. 33-53672 on Form S-11
                           and incorporated herein by reference.)

                  4.1      Affidavit and  Certificate of Limited  Partnership of
                           CNL Income Fund XIII,  Ltd.  (Included as Exhibit 3.1
                           to  Registration  Statement No. 33-53672 on Form S-11
                           and incorporated herein by reference.)

                  4.2      Amended and Restated Agreement of Limited Partnership
                           of CNL Income Fund XIII,  Ltd.  (Included  as Exhibit
                           4.2 to  Form  10-K  filed  with  the  Securities  and
                           Exchange   Commission   on  March   31,   1994,   and
                           incorporated herein by reference.)

                  10.1     Management  Agreement  between  CNL Income Fund XIII,
                           Ltd. and CNL Investment  Company (Included as Exhibit
                           10.1 to Form  10-K  filed  with  the  Securities  and
                           Exchange   Commission   on  March   31,   1994,   and
                           incorporated herein by reference.)

                  10.2     Assignment   of   Management   Agreement   from   CNL
                           Investment Company to CNL Income Fund Advisors,  Inc.
                           (Included as Exhibit 10.2 to Form 10-K filed with the
                           Securities and Exchange Commission on March 30, 1995,
                           and incorporated herein by reference.)



<PAGE>


                  10.3     Assignment  of Management  Agreement  from CNL Income
                           Fund  Advisors,  Inc.  to  CNL  Fund  Advisors,  Inc.
                           (Included as Exhibit 10.5 to Form 10-K filed with the
                           Securities and Exchange  Commission on April 1, 1996,
                           and incorporated herein by reference.)

                  27       Financial Data Schedule (Filed herewith.)

         (b)      The Registrant  filed no reports on Form 8-K during the period
                  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 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>
/s/ Robert A. Bourne                President,   Treasurer  and  Director              March 29, 1999
---------------------------
Robert A. Bourne                    (Principal  Financial and  Accounting
                                    Officer)

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


<PAGE>


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

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 1998, 1997, and 1996



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

    1996       Allowance for
                   doubtful
                   accounts (a)       $  49,747         $    --        $  173,721  (b)       $   -- (c)       $    --       $223,468
                                  ==============   ==============   ===============    =============     =============   ===========

   1997        Allowance for
                   doubtful
                   accounts (a)       $ 223,468         $    --           $    --  (b)    $ 223,468 (c)       $    --          $  --
                                  ==============   ==============   ===============    =============     =============   ===========

   1998        Allowance for
                   doubtful
                   accounts (a)          $   --         $    --          $    532  (b)       $   -- (c)       $    --        $   532
                                  ==============   ==============   ===============    =============     =============   ===========


         (a) Deducted from  receivables and accrued rental income on the balance
             sheet.

         (b) Reduction of rental, earned and other income.

         (c) Amounts written off as uncollectible.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


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

                                                 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 Partnership
  has Invested in Under
  Operating Leases:

    Burger King Restaurants:
      Cincinnati, Ohio                     -              $256,901      $669,537            -         -    
      Dayton, Ohio                         -               211,835       771,616            -         -    
      Lafayette, Indiana                   -               247,183       723,304            -         -    
      Pineville, Louisiana                 -               174,843       618,815            -         -    

    Checkers Drive-In Restaurants:
      Houston, Texas                       -               445,389             -            -         -    
      Port Richey, Florida                 -               380,055             -            -         -    
      Pensacola, Florida                   -               280,409             -            -         -    
      Orlando, Florida                     -               424,323             -            -         -    
      Boca Raton, Florida                  -               501,416             -            -         -    
      Venice, Florida                      -               374,675             -            -         -    
      Woodstock, Georgia                   -               386,638             -            -         -    
      Lakeland, Florida                    -               326,175             -            -         -    

    Denny's Restaurants:
      Peoria, Arizona                      -               460,107             -            -         -    
      Mesa, Arizona                        -               530,494             -      540,983         -    

    Golden Corral Family
     Steakhouse Restaurants:
      Dallas, Texas                        -               611,589     1,071,838            -         -    
      San Antonio, Texas                   -               625,527       964,122            -         -    
      Panama City, Florida                 -               617,016             -    1,103,437         -    

    Hardee's  Restaurants:
      Ashland, Alabama                     -               197,336       417,418            -         -    
      Bloomingdale, Tennessee              -               160,149       424,977            -         -    
      Blytheville, Arkansas                -               164,004             -            -         -    
      Chapin, South Carolina               -               218,639       460,364            -         -    
      Kingsport, Tennessee                 -               204,516             -            -         -    
      Opelika, Alabama                     -               240,363       412,621            -         -    
      Spartanburg, South Carolina          -               226,815       431,574            -         -    

    Jack in the Box Restaurants:
      Sacramento, California               -               323,929       601,054            -         -    
      Houston, Texas                       -               315,842       590,708            -         -    
      Houston, Texas                       -               368,409       567,115            -         -    
      Arlington, Texas                     -               404,752       592,173            -         -    

    Lions Choice Restaurant:
      Overland Park, Kansas                -               452,691             -            -         -    

    Long John Silver's Restaurants:
      Penn Hills, Pennsylvania             -               292,370             -            -         -    
      Philadelphia, Pennsylvania (j)       -               274,580             -      504,838         -    
      Arlington, Texas                     -               362,939             -            -         -    
      Johnstown, Pennsylvania              -               254,412             -            -         -    
      Orlando, Florida                     -               299,696       139,676            -         -    
      Austin, Texas                        -               463,937             -            -         -    

    Steak & Shake Restaurant:
      Tampa, Florida                       -               372,748             -      360,090         -    

    Wendy's Old Fashioned Hamburger
     Restaurant:
      Salisbury, Maryland                  -               290,195       641,710            -         -    
                                                      ------------  ------------  -----------  -------- 

                                                       $12,742,897   $10,098,622   $2,509,348         - 
                                                      ============  ============  ===========  ======== 

Property of Joint Venture in
  Which the Partnership has
  a 50% Interest and has
  Invested in Under an
  Operating Lease:

    Hardee's Restaurant:
      Attalla, Alabama                     -              $196,274      $434,428            -         -    
                                                      ============  ============  ===========  ======== 

Property in Which the Partnership
  has a 66.13% Interest as Tenants-
  In-Common and has Invested in Under
  an Operating Lease:

    Arby's Restaurant:
      Arvada, Colorado                     -              $260,439      $545,126            -         -    
                                                      ============  ============  ===========  ======== 

Property of Joint Venture in Which the
  Partnership has a 27.8% Interest and has
  Invested in Under an Operating Lease:

    Denny's Restaurant:
      Salem, Ohio                          -              $131,762             -            -         -    
                                                      ============  ============  ===========  ======== 

Property in Which the Partnership has
  a 63.09% Interest as Tenants-In-Common
  and has Invested in Under an Operating
  Lease:

    Burger King Restaurant:
      Akron, Ohio (h)                      -              $355,595      $517,030            -         -    
                                                      ============  ============  ===========  ======== 

Property in Which the Partnership has a
  47.83% Interest as Tenants-in-Common
  and has Invested in Under an Operating
  Lease:

    Chevy's Fresh Mex Restaurant:
      Smithfield, North Carolina           -              $976,357      $974,016            -         -    
                                                      ============  ============  ===========  ======== 

Properties the Partnership has
  Invested in Under Direct
  Financing Leases:

    Denny's Restaurant
      Peoria, Arizona                      -                     -             -     $613,090         -    
 
    Hardee's Restaurants
      Blytheville, Arkansas                -                     -       450,014            -         -    
      Huntingdon, Tennessee                -               100,836       427,932            -         -    
      Kingsport, Tennessee                 -                     -       484,785            -         -    
      Parsons, Tennessee                   -               101,332       409,671            -         -    
      Trenton, Tennessee                   -               147,232       442,640            -         -    

    Jack in the Box Restaurant:
      Cleburne, Texas                      -               145,890       496,797            -         -    

    Lion's Choice Restaurant:
      Overland Park, Kansas                -                     -       611,694            -         -    

    Long John Silver's Restaurants:
      Penn Hills, Pennsylvania             -                     -             -      387,086         -    
      Arlington, Texas                     -                     -       449,369            -         -    
      Johnstown, Pennsylvania              -                     -             -      427,552         -    
      Austin, Texas                        -                     -       517,109            -         -    


    Quincy's Restaurant:
      Mount Airy, North Carolina           -               212,852       827,991            -         -    
                                                      ------------  ------------  -----------  --------
          
                                                          $708,142    $5,118,002   $1,427,728         -
                                                      ============  ============  ===========  ========

Property of Joint Venture in
  Which the Partnership has a
  27.8% Interest and has Invested
  in Under Direct Financing Lease:

    Denny's Restaurant:
      Salem, Ohio                          -                     -      $371,836            -         -    
                                                      ============  ============  ===========  ========




                                                                                                    
          Gross Amount at Which                                               Life on Which         
         Carried at Close of Period (c)                                      Depreciation in        
 -----------------------------------------               Date                 Latest Income         
               Buildings and              Accumulated   of Con-    Date       Statement is          
     Land       Improvements    Total    Depreciation struction  Acquired       Computed            
 ------------  ------------   ---------- ------------ ---------  --------     -------------         
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
  $256,901      $669,537       $926,438     $121,067    1988       07/93           (b)                 
   211,835       771,616        983,451      139,525    1988       07/93           (b)                 
   247,183       723,304        970,487      130,789    1989       07/93           (b)                 
   174,843       618,815        793,658      111,895    1990       07/93           (b)                 
                                                                                                    
                                                                                                    
   445,389             -        445,389           (g)    -         03/94           (g)                 
   380,055             -        380,055           (g)    -         03/94           (g)                 
   280,409             -        280,409           (g)    -         03/94           (g)                 
   424,323             -        424,323           (g)    -         03/94           (g)                 
   501,416             -        501,416           (g)    -         03/94           (g)                 
   374,675             -        374,675           (g)    -         03/94           (g)                 
   386,638             -        386,638           (g)    -         10/94           (g)                 
   326,175             -        326,175           (g)    -         04/95           (g)                 
                                                                                                    
                                                                                                    
   460,107            (f)       460,107            -    1994       10/93           (d)                 
   530,494       540,983      1,071,477       83,667    1994       12/93           (b)                 
                                                                                                    
                                                                                                    
                                                                                                    
   611,589     1,071,838      1,683,427      200,957    1991       05/93           (b)                 
   625,527       964,122      1,589,649      179,529    1993       06/93           (b)                 
   617,016     1,103,437      1,720,453      176,424    1994       11/93           (b)                 
                                                                                                    
                                                                                                    
   197,336       417,418        614,754       75,478    1992       07/93           (b)                 
   160,149       424,977        585,126       76,845    1992       07/93           (b)                 
   164,004            (f)       164,004            -    1991       07/93           (d)                 
   218,639       460,364        679,003       83,244    1993       07/93           (b)                 
   204,516            (f)       204,516            -    1992       07/93           (d)                 
   240,363       412,621        652,984       74,611    1992       07/93           (b)                 
   226,815       431,574        658,389       78,038    1993       07/93           (b)                 
                                                                                                    
                                                                                                    
   323,929       601,054        924,983      110,330    1992       06/93           (b)                 
   315,842       590,708        906,550      106,867    1993       07/93           (b)                 
   368,409       567,115        935,524      102,702    1992       07/93           (b)                 
   404,752       592,173        996,925      107,078    1993       08/93           (b)                 
                                                                                                    
                                                                                                    
   452,691            (f)       452,691            -    1993       12/93           (d)                 
                                                                                                    
                                                                                                    
   292,370            (f)       292,370            -    1993       07/93           (d)                 
   274,580       504,838        779,418       11,064    1993       07/93           (i)                 
   362,939            (f)       362,939            -    1993       08/93           (d)                 
   254,412            (f)       254,412            -    1993       08/93           (d)                 
   299,696       139,676        439,372       23,943    1983       11/93           (b)                 
   463,937            (f)       463,937            -    1993       12/93           (d)                 
                                                                                                    
                                                                                                    
   372,748       360,090        732,838        7,805    1994       12/93           (d)                 
                                                                                                    
                                                                                                    
                                                                                                    
   290,195       641,710        931,905      105,766    1993       01/94           (b)                 
----------  ------------  -------------  -----------                                                
                                                                                                    
$12,742,897  $12,607,970    $25,350,867   $2,107,624                                                
=========== ============  =============  ===========                                                
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
  $196,274      $434,428       $630,702      $73,118    1993       11/93           (b)                 
==========  ============  =============  ===========                                                
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
  $260,439      $545,126       $805,565      $77,712    1994       09/94           (b)                 
==========  ============  =============  ===========                                                
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
  $131,762            (f)      $131,762            -    1991       03/95           (d)                 
==========  ============  =============  ===========                                                
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
  $355,595      $517,030       $872,625      $33,221    1970       01/97           (b)                 
==========  ============  =============  ===========                                                
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
  $976,357      $974,016     $1,950,373      $32,556    1995       12/97           (b)                 
==========  ============  =============  ===========                                                
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
         -            (f)            (f)          (d)   1994       10/93           (d)                 
                                                                                                    
                                                                                                    
         -            (f)            (f)          (d)   1991       07/93           (d)                 
        (f)           (f)            (f)          (e)   1992       07/93           (e)                 
         -            (f)            (f)          (d)   1992       07/93           (d)                 
        (f)           (f)            (f)          (e)   1992       07/93           (e)                 
        (f)           (f)            (f)          (e)   1992       07/93           (e)                 
                                                                                                    
                                                                                                    
        (f)           (f)            (f)          (e)   1988       11/93           (e)                 
                                                                                                    
                                                                                                    
         -            (f)            (f)          (d)   1993       12/93           (d)                 
                                                                                                    
                                                                                                    
         -            (f)            (f)          (d)   1993       07/93           (d)                 
         -            (f)            (f)          (d)   1993       08/93           (d)                 
         -            (f)            (f)          (d)   1993       08/93           (d)                 
         -            (f)            (f)          (d)   1993       12/93           (d)                 
                                                                                                    
                                                                                                    
                                                                                                    
        (f)           (f)            (f)          (e)   1992       07/93           (e)                 
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
         -            (f)            (f)          (d)   1991       03/95           (d)                 
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
</TABLE>




<PAGE>


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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1998


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

<TABLE>
<CAPTION>

                                                                                          Accumulated
                                                                        Cost              Depreciation
                                                                  -----------------     -----------------
<S> <C>
              Properties the Partnership has Invested
                  in Under Operating Leases:

                      Balance, December 31, 1995                     $  25,363,129           $   914,452
                    Disposition                                           (444,604 )                  --
                      Depreciation expense                                       --               391,434
                                                                  -----------------     -----------------

                      Balance, December 31, 1996                        24,918,525             1,305,886
                      Dispositions                                        (432,587 )                  --
                      Depreciation expense                                      --               391,434
                                                                  -----------------     -----------------

                      Balance, December 31, 1997                        24,485,938             1,697,320
                      Reclassified from net investment in
                       direct financing lease                              864,929               (11,536 )
                      Depreciation expense                                      --               421,840
                                                                  -----------------     -----------------

                      Balance, December 31, 1998 (j)                 $  25,350,867          $  2,107,624
                                                                  =================     =================

              Properties of Joint Venture in Which the
                  Partnership has a 50% Interest and has
                  Invested in Under Operating Leases:

                      Balance, December 31, 1995                       $   630,702           $    29,675
                      Depreciation expense                                                        14,481
                                                                                 --
                                                                  -----------------     -----------------

                      Balance, December 31, 1996                           630,702                44,156
                      Depreciation expense                                                        14,482
                                                                                 --
                                                                  -----------------     -----------------

                      Balance, December 31, 1997                           630,702                58,638
                      Depreciation expense                                                        14,480
                                                                                 --
                                                                  -----------------     -----------------

                      Balance, December 31, 1998                       $   630,702           $    73,118
                                                                  =================  ====================




<PAGE>


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

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

                                December 31, 1998


                                                                                       Accumulated
                                                                        Cost           Depreciation
                                                                  ----------------    ---------------
             Properties in Which the Partnership has
                 a 66.13% Interest as Tenants-in-Common
                 and has Invested in Under Operating Leases:

                     Balance, December 31, 1995                         $  805,565          $  23,199
                     Depreciation expense                                       --             18,171
                                                                   ---------------     --------------

                     Balance, December 31, 1996                            805,565             41,370
                     Depreciation expense                                       --             18,171
                                                                   ---------------     --------------

                     Balance, December 31, 1997                            805,565             59,541
                     Depreciation expense                                       --             18,171
                                                                   ---------------     --------------

                     Balance, December 31, 1998                         $  805,565          $  77,712
                                                                   ===============     ==============


             Property of Joint Venture in Which the
                 Partnership has  a 27.8% Interest and has
                 Invested in Under Direct Financing
                 Leases:

                     Balance, December 31, 1995                         $  131,762            $    --
                     Depreciation expense (d)                                   --                 --
                                                                   ---------------     --------------

                     Balance, December 31, 1996                            131,762                  --
                     Depreciation expense (d)                                   --                  --
                                                                   ---------------     --------------

                     Balance, December 31, 1997                            131,762                  --
                     Depreciation expense (d)                                   --                  --
                                                                   ---------------     --------------

                     Balance, December 31, 1998                         $  131,762            $    --
                                                                   ===============     ==============

<PAGE>


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

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

                                December 31, 1998


                                                                                       Accumulated
                                                                        Cost           Depreciation
                                                                  ----------------    ---------------
             Properties in Which the Partnership has
               a 63.09% Interest as Tenants-in-Common and
               has Invested in Under an Operating Lease:

                     Balance, December 31, 1996                          $      --            $    --
                     Acquisition                                           872,625                 --
                     Depreciation expense                                       --             15,898
                                                                   ---------------     --------------

                     Balance, December 31, 1997                            872,625             15,898
                     Depreciation expense                                       --            17,323
                                                                   ---------------     --------------

                     Balance, December 31, 1998                         $  872,625         $   33,221
                                                                   ===============     ==============

             Properties in Which the Partnership has
               a 47.83% Interest as Tenants-in-Common
               has Invested in Under an Operating Lease:

                     Balance, December 31, 1996                            $    --            $    --
                     Acquisition                                         1,950,373                 --
                     Depreciation expense                                       --                 89
                                                                   ---------------     --------------

                     Balance, December 31, 1997                          1,950,373                 89
                     Depreciation expense                                       --             32,467
                                                                   ---------------     --------------

                     Balance, December 31, 1998                        $ 1,950,373         $   32,556
                                                                   ===============     ==============

</TABLE>


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

         (c)       As of December 31, 1998, the aggregate cost of the Properties
                   owned by the  Partnership  and joint ventures  (including the
                   Property owned as  tenants-in-common)  for federal income tax
                   purposes was $32,712,921 and $4,767,863, respectively. All of
                   the leases are treated as operating leases for federal income
                   tax purposes.

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



<PAGE>


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

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

                                December 31, 1998


         (e)      For financial reporting  purposes,  the lease for the land and
                  building has been recorded as a direct  financing  lease.  The
                  cost of the land and  building  has been  included  in the net
                  investment in direct financing leases; therefore, depreciation
                  is not applicable.

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

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

         (h)      During the year ended December 31, 1997, the  Partnership  and
                  an affiliate as tenants-in-common, purchased land and building
                  from CNL BB Corp., an affiliate of the General  Partners,  for
                  an aggregate cost of $872,625.

         (i)      Effective   June  1998,   the  lease  for  this  property  was
                  terminated,  resulting in the reclassification of the building
                  portion of the lease as an operating  lease.  The building was
                  recorded  at net book  value  as of June 11,  1998 and will be
                  depreciated over its remaining estimated life of approximately
                  26 years.

         (j)      For financial  reporting  purposes,  the undepreciated cost of
                  the Property in Philadelphia,  Pennsylvania,  was written down
                  to net  realizable  value due to an impairment  in value.  The
                  Partnership   recognized   the   impairment  by  recording  an
                  allowance  for loss on  building  in the amount of $297,885 at
                  December  31,  1998.  The  impairment  at  December  31,  1998
                  represents  the  difference  between the  Property's  carrying
                  value and the General Partners' estimate of the net realizable
                  value of the Property based on an  anticipated  sales price of
                  this Property to an interested and unrelated 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>



                                    EXHIBITS

<PAGE>




                                  EXHIBIT INDEX


    Exhibit Number

         3.1      Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund  XIII,  Ltd.  (Included  as Exhibit  3.1 to  Registration
                  Statement No. 33-53672 on Form S-11 and incorporated herein by
                  reference.)

         4.1      Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund  XIII,  Ltd.  (Included  as Exhibit  3.1 to  Registration
                  Statement No. 33-53672 on Form S-11 and incorporated herein by
                  reference.)

         4.2      Amended and Restated  Agreement of Limited  Partnership of CNL
                  Income Fund XIII,  Ltd.  (Included as Exhibit 4.2 to Form 10-K
                  filed with the Securities and Exchange Commission on March 31,
                  1994, and incorporated herein by reference.)

         10.1     Management  Agreement  between CNL Income Fund XIII,  Ltd. and
                  CNL Investment  Company (Included as Exhibit 10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on March 31,
                  1994, and incorporated herein by reference.)

         10.2     Assignment of Management Agreement from CNL Investment Company
                  to CNL Income Fund Advisors, Inc. (Included as Exhibit 10.2 to
                  Form 10-K filed with the Securities and Exchange Commission on
                  March 30, 1995, and incorporated herein by reference.)

         10.3     Assignment  of  Management  Agreement  from  CNL  Income  Fund
                  Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit
                  10.5 to Form  10-K  filed  with the  Securities  and  Exchange
                  Commission  on April  1,  1996,  and  incorporated  herein  by
                  reference.)

         27       Financial Data Schedule (Filed herewith.)