CNL Restaurant Properties Inc · 424B3 · On 4/24/98

Filed On 4/24/98   ·   SEC File 333-37657   ·   Accession Number 922981-98-19

Prospectus   ·   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Cnl American Properties Fund, Inc.                   120    654K 

Document Table of Contents

424B3
1st Page of 120
TOC
Top
Previous
Next
Bottom
Just 1st
 
Sponsored Ads...


CNL AMERICAN PROPERTIES FUND, INC.

Supplement No. 1, dated April 24, 1998
 to Prospectus, dated January 26, 1998

         This Supplement is part of, and should be read in conjunction with, the
Prospectus   dated  January  26,  1998.  This  Supplement   replaces  all  prior
Supplements to the  Prospectus.  Capitalized  terms used in this Supplement have
the same meaning as in the Prospectus unless otherwise stated herein.           

         Information  as to  proposed  properties  for  which  the  Company  has
received  initial  commitments  and as to the  number  and  types of  Properties
acquired by the Company is presented as of March 2, 1998,  and all references to
commitments or Property  acquisitions  should be read in that context.  Proposed
properties  for which  the  Company  receives  initial  commitments,  as well as
property  acquisitions  that occur  after  March 2, 1998,  will be reported in a
subsequent Supplement.                                                          

THE OFFERING

         Upon  completion  of its Initial  Offering  on  February  6, 1997,  the
Company had received subscription proceeds of $150,591,765  (15,059,177 shares),
including 59,177 shares  ($591,765)  issued pursuant to the  Reinvestment  Plan.
Following the completion of its Initial Offering, the Company commenced its 1997
Offering of up to  27,500,000  shares and upon  completion  of such  offering on
March 2, 1998,  had received  aggregate  subscription  proceeds of  $251,872,648
(25,187,265  shares),  including 187,265 shares  ($1,872,648) issued pursuant to
the  Reinvestment  Plan.  Net  offering  proceeds to the Company  from the Prior
Offerings,  after deduction of selling  commissions,  marketing  support and due
diligence   expense   reimbursement   fees  and  offering   expenses,   totalled
approximately  $361,100,000.  As of March 2, 1998,  the Company had  invested or
committed for investment approximately $282,900,000 of aggregate net proceeds in
250 Properties,  in providing  mortgage financing through Mortgage Loans, and in
paying acquisition fees and certain acquisition expenses,  leaving approximately
$78,200,000  in aggregate  net offering  proceeds  available  for  investment in
Properties and Mortgage Loans. It is anticipated that the Company will acquire a
total of 670 to 730  Properties if the maximum  number of Shares is sold in this
offering (including  approximately 320 to 360 Properties to be acquired with the
proceeds of this offering and an additional  approximately 100 to 120 Properties
to be acquired with the remaining proceeds of the 1997 Offering).               

 MANAGEMENT COMPENSATION

         For information  concerning  compensation  and fees paid to the Advisor
and its  Affiliates  since the date of inception  of the  Company,  see "Certain
Transactions."                                                                  

 CONFLICTS OF INTEREST

         As of March 2, 1998,  CNL American  Realty Fund,  Inc. and CNL Income &
Growth  Fund  VIII,   Ltd.  had   approximately   $12,475,000   and  $2,254,000,
respectively, available for investment.                                         

424B3
2nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 2nd


BUSINESS

GENERAL                                                                         

         The table set forth below provides  information with respect to certain
Restaurant Chains in which the Company and Affiliates of the Company (consisting
of 18 public  partnerships and 8 private  partnerships) and a listed public REIT
(which was managed by an Affiliate through December 31, 1997, at which time such
Affiliate merged with the REIT) had invested, as of December 31, 1997:          

                                                                · Download Table


                            Approximate        Aggregate                   
                         Dollars Invested    Percentage of      Number of  
Restaurant Chain           by Affiliates   Dollars Invested  Prior Programs
----------------           -------------   ----------------  --------------
                                                                           
Golden Corral               $158,221,000          16.4%            26      
Burger King                  105,659,000          11.0%            25      
Jack in the Box               97,713,000          10.1%            15      
Denny's                       91,365,000           9.5%            20      
Hardee's                      58,599,000           6.1%            13      
Boston Market                 53,732,000           5.6%            11      
IHOP                          37,970,000           3.9%             8      
Shoney's                      37,240,000           3.9%            13      
Long John Silver's            32,029,000           3.3%             6      
Wendy's                       31,499,000           3.3%            16      
TGI Friday's                  30,228,000           3.1%             9      
Darryl's                      22,296,000           2.3%             4      
Checkers                      21,263,000           2.2%             7      
Chevy's Fresh Mex             16,313,000           1.7%             6      
Perkins                       16,311,000           1.7%             9      
Ground Round                  15,751,000           1.6%             3      
Pizza Hut                     15,578,000           1.6%             8      
Black-eyed Pea                15,211,000           1.6%             4      
KFC                           14,436,000           1.5%            11      
Popeyes                       10,589,000           1.1%             9      
Arby's                        10,493,000           1.1%             6      
Taco Bell                      7,435,000           0.8%             8      
Tumbleweed Southwest                                                       
   Mesquite Grill & Bar        6,402,000           0.7%             1      
Houlihan's                     4,741,000           0.5%             1      

COMPLETED INVESTMENTS                                                           

         As of  March 2,  1998,  the  Company  had  invested  or  committed  for
investment  approximately  $282,900,000  of the  net  proceeds  from  the  Prior
Offerings in 250 Properties (185 Properties  which consist of land and building,
44  Properties  which  consist of land only and 21  Properties  which consist of
building  only),  in  providing  mortgage  financing  to the  tenants  of the 44
Properties consisting of land only to purchase the buildings on these Properties
and the buildings on two additional  properties  through  Mortgage Loans, and to
pay  related   acquisition   fees  and   acquisition   expenses.   See  "Certain
Transactions."  All of the Properties are owned directly by the Company,  except
for one Property which is owned through a joint venture arrangement.  All of the
Properties were acquired since the Company commenced  operations on June 1, 1995
and have leases  expiring  from 5 to 25 years after the date on which each lease
commenced.                                                                      

                                                                     -2-

424B3
3rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 3rd

         The following tables set forth  information for the Properties owned by
the  Company  as of March  2,  1998,  including  the  number  of  Properties  by
Restaurant Chain and the number of Properties by state.                         

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

Applebee's                                                2   
Arby's                                                   10   
Bennigan's                                                1   
Black-eyed Pea                                           18   
Boston Market                                            32   
Burger King                                               9   
Charley's Place                                           2   
Chevy's Fresh Mex                                         4   
Darryl's                                                 15   
Denny's                                                   4   
Einstein Bros. Bagels                                     2   
Golden Corral                                            30   
Ground Round                                             13   
Houlihan's                                                3   
IHOP                                                      8   
Jack in the Box                                          30   
KFC                                                       1   
Mr. Fable's                                               1   
On The Border                                             1   
Pizza Hut                                                44   
Popeyes                                                   1   
Ruby Tuesday's                                            1   
Ruth's Chris Steak House                                  1   
Ryan's Family Steak House                                 1   
Shoney's                                                  3   
TGI Friday's                                              1   
Tumbleweed Southwest Mesquite Grill & Bar                 7   
Wendy's                                                   5   
                                                    ----

  Total                                              250
                                                    ====

                                                                     -3-

424B3
4th Page of 120
TOC
1st
Previous
Next
Bottom
Just 4th

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

Alabama                                           5           
Arizona                                           8           
California                                       23           
Colorado                                          5           
Connecticut                                       1           
Delaware                                          1           
Florida                                          14           
Georgia                                           2           
Idaho                                             1           
Illinois                                          5           
Indiana                                           5           
Iowa                                              5           
Kansas                                            3           
Kentucky                                          4           
Maryland                                          7           
Michigan                                          8           
Minnesota                                         3           
Missouri                                          7           
Nebraska                                          1           
Nevada                                            2           
New Jersey                                        2           
New Mexico                                        3           
New York                                          1           
North Carolina                                    9           
Ohio                                             37           
Oklahoma                                          6           
Oregon                                            3           
Pennsylvania                                      6           
Tennessee                                        15           
Texas                                            35           
Utah                                              1           
Virginia                                          8           
Washington                                        2           
West Virginia                                    10           
Wisconsin                                         2           
                                    ----

Total                                      250      
                                    ====
PROPERTY ACQUISITIONS                                                           

         Between  January 1, 1998 and March 2, 1998,  the Company  acquired  six
Properties  consisting of land and  building.  These  Properties  are two Golden
Corral  Properties  (one in each of Dubuque,  Iowa; and Edmond,  Oklahoma),  two
Tumbleweed Southwest Mesquite Grill & Bar Properties (one in each of Clarksville
and Hermitage,  Tennessee),  one Arby's Property (in Jacksonville,  Florida) and
one Jack in the Box Property (in Los Angeles, California).                      

         In connection with the purchase of these six  Properties,  the Company,
as lessor,  entered into long-term lease agreements with  unaffiliated  lessees.
The  general  terms  of the  lease  agreements  are  described  in  "Business  -
Description of Property Leases." In addition, in connection with the purchase of
these Properties,                                                               

                                                                     -4-

424B3
5th Page of 120
TOC
1st
Previous
Next
Bottom
Just 5th

which are to be  constructed,  the  Company  has entered  into  development  and
indemnification  and put agreements with the lessee.  The general terms of these
agreements  are  described  in "Business - Site  Selection  and  Acquisition  of
Properties - Construction and Renovation."                                      

         The  following  table sets  forth the  location  of the six  Properties
consisting  of land and  building,  acquired by the Company from January 1, 1998
through March 2, 1998, a description  of the  competition,  and a summary of the
principal terms of the  acquisition and lease of each Property.  For information
regarding the  Properties  acquired by the Company prior to January 1, 1998, see
Exhibit B, Schedule III - Real Estate and Accumulated Depreciation attached.    

                                                                     -5-

424B3
6th Page of 120
TOC
1st
Previous
Next
Bottom
Just 6th

 PROPERTY ACQUISITIONS
From January 1, 1998 through March 2, 1998

                                                        · Enlarge/Download Table


                                                            Lease Expira-                                                        
Property Location and       Purchase           Date           tion and             Minimum                             Option    
Competition                 Price (1)        Acquired     Renewal Options      Annual Rent (2)  Percentage Rent      To Purchase 
-----------               ------------       --------     ----------------     ---------------  ---------------      ----------- 
                                                                                                                                 
Golden Corral (6)        $520,186          01/20/98       07/2013; four       10.75% of Total   for each lease      during the   
(the  "Dubuque #2        (excluding                       five-year renewal   Cost (4)          year, 5% of the     first through
Property ")              development                      options                               amount by           seventh      
Restaurant to be         costs) (3)                                                             which annual        lease years  
constructed                                                                                     gross sales         and the      
                                                                                                exceed              tenth        
The Dubuque #2                                                                                  $2,833,105 (5)      through      
Property is located on                                                                                              fifteenth    
the northeast corner of                                                                                             lease years  
the intersection of                                                                                                 only         
Northwest Arterial and                                                                                                           
Chavenelle Road, in                                                                                                              
Dubuque, Dubuque                                                                                                                 
County, Iowa, in an                                                                                                              
area of mixed retail,                                                                                                            
commercial, and                                                                                                                  
residential                                                                                                                      
development.                                                                                                                     

                                       -6-                                                                                       

424B3
7th Page of 120
TOC
1st
Previous
Next
Bottom
Just 7th

Golden Corral (6)        $546,484          01/20/98       07/2013; four       10.75% of Total   for each lease      during the   
(the  "Edmond            (excluding                       five-year renewal   Cost (4)          year, 5% of the     first through
Property ")              development                      options                               amount by           seventh      
Restaurant to be         costs) (3)                                                             which annual        lease years  
constructed                                                                                     gross sales         and the      
                                                                                                exceed              tenth        
The Edmond Property                                                                             $2,776,470 (5)      through      
is located on the                                                                                                   fifteenth    
northwest corner of                                                                                                 lease years  
Broadway Extension                                                                                                  only         
and Comfort Drive, in                                                                                                            
Edmond, Oklahoma                                                                                                                 
County, Oklahoma, in                                                                                                             
an area of mixed retail,                                                                                                         
commercial, and residential                                                                                                      
development. Other fast-                                                                                                         
food, family-style and                                                                                                           
casual dining restaurants                                                                                                        
located in proximity to                                                                                                          
the Edmond Property include                                                                                                      
an Applebee's, a Chili's,                                                                                                        
an Outback Steak House, a                                                                                                        
Perkins, a Chick-Fil-A, a                                                                                                        
Taco Bell, a McDonald's,                                                                                                         
a Burger King, a Hardee's,                                                                                                       
and several local restaurants.                                                                                                   

                                                                -7-                                                              

424B3
8th Page of 120
TOC
1st
Previous
Next
Bottom
Just 8th

                                                           Lease Expira-                                                         
Property Location and       Purchase          Date           tion and              Minimum                             Option    
Competition                 Price (1)       Acquired      Renewal Options      Annual Rent (2)  Percentage Rent      To Purchase 
-----------               ------------      --------      ---------------      ---------------  ----------------     ----------- 

Tumbleweed               $565,440          02/10/98     02/2018; two         11% of Total       for each lease      at any time  
Southwest Mesquite       (excluding                     five-year renewal    Cost (4);          year, (i) 5% of     after the    
   Grill & Bar (7)       development                    options              increases by 10%   annual gross        seventh      
(the  "Clarksville       costs) (3)                                          after the fifth    sales  minus (ii)   lease year   
Property ")                                                                  lease year and     the minimum                      
Restaurant to be                                                             after every five   annual rent for                  
constructed                                                                  years thereafter   such lease year                  
                                                                             during the lease                                    
The Clarksville                                                              term                                                
Property is located on                                                                                                           
the northwest  corner                                                                                                            
of  Wilma-Rudolph                                                                                                                
Boulevard and SR                                                                                                                 
374, in Clarksville,                                                                                                             
Montgomery County,                                                                                                               
Tennessee, in an area                                                                                                            
of mixed retail,                                                                                                                 
commercial, and                                                                                                                  
residential development.                                                                                                         

Tumbleweed               $511,103          02/10/98     02/2018; two         11% of Total       for each lease      at any time  
Southwest Mesquite       (excluding                     five-year renewal    Cost (4);          year, (i) 5% of     after the    
   Grill & Bar (7)       development                    options              increases by 10%   annual gross        seventh      
(the  "Hermitage         costs) (3)                                          after the fifth    sales minus (ii)    lease year   
Property ")                                                                  lease year and     the minimum                      
Restaurant to be                                                             after every five   annual rent for                  
constructed                                                                  years thereafter   such lease year                  
                                                                             during the lease                                    
The Hermitage                                                                term                                                
Property is located on                                                                                                           
the east side of Old                                                                                                             
Hickory Boulevard, in                                                                                                            
Hermitage, Davidson                                                                                                              
County, Tennessee, in                                                                                                            
an area of mixed retail,                                                                                                         
commercial, and                                                                                                                  
residential                                                                                                                      
development.  Other                                                                                                              
fast-food, family-style                                                                                                          
and casual dining                                                                                                                
restaurants located in                                                                                                           
proximity to the                                                                                                                 
Hermitage Property                                                                                                               
include an Applebee's                                                                                                            
and a Schlotzsky's                                                                                                               
Deli.                                                                                                                            

                                                                -8-                                                              

424B3
9th Page of 120
TOC
1st
Previous
Next
Bottom
Just 9th

                                                           Lease Expira-                                                         
Property Location and       Purchase          Date           tion and              Minimum                             Option    
Competition                 Price (1)       Acquired      Renewal Options      Annual Rent (2)  Percentage Rent      To Purchase 
-----------               ------------      --------      ---------------      ---------------  ---------------      ----------- 

Arby's                   $424,738          02/20/98     02/2018; two                 (8)              None          at any time  
(the "Jacksonville      (excluding                     five-year renewal                                           after the     
Property")              development                    options                                                     seventh       
Restaurant to be         costs) (3)                                                                                 lease year   
constructed                                                                                                                      

The Jacksonville Property                                                                                                        
is    located    on   the                                                                                                        
northwest    corner    of                                                                                                        
DeBarry  Avenue and Wells                                                                                                        
Road,  in   Jacksonville,                                                                                                        
Clay County,  Florida, in                                                                                                        
an area of mixed  retail,                                                                                                        
commercial,           and                                                                                                        
residential  development.                                                                                                        
Other          fast-food,                                                                                                        
family-style  and  casual                                                                                                        
dining        restaurants                                                                                                        
located in  proximity  to                                                                                                        
the Jacksonville Property                                                                                                        
include a Steak-n- Shake,                                                                                                        
a  Chili's,   an  Outback                                                                                                        
Steak  House,   a  Burger                                                                                                        
King, a Ruby  Tuesday,  a                                                                                                        
Tony Roma's,  and several                                                                                                        
local restaurants.                                                                                                               

     -9-                                                                                                                         

424B3
10th Page of 120
TOC
1st
Previous
Next
Bottom
Just 10th

Jack in the Box          $1,380,250        02/23/98     02/2016; four        $134,574 (9);            None          at any time  
(the  "Los Angeles #4    (3) (9)                        five-year renewal    increases by 8%                        after the    
Property ")                                             options              after the fifth                        seventh      
Restaurant to be                                                             lease year and                         lease year   
constructed                                                                  after every five                                    
                                                                             years thereafter                                    
The Los Angeles #4                                                           during the lease                                    
Property is located on                                                       term                                                
the southeast corner of                                                                                                          
Pico Boulevard and                                                                                                               
Hoover Street, in Los                                                                                                            
Angeles, Los Angeles                                                                                                             
County, California, in                                                                                                           
an area of mixed retail,                                                                                                         
commercial, and                                                                                                                  
residential                                                                                                                      
development.  Other                                                                                                              
fast-food, family-style                                                                                                          
and casual dining                                                                                                                
restaurants located in                                                                                                           
proximity to the Los                                                                                                             
Angeles #4 Property                                                                                                              
include a Wendy's, a                                                                                                             
Domino's Pizza and                                                                                                               
several local                                                                                                                    
restaurants.                                                                                                                     


                                                    -10-

424B3
11th Page of 120
TOC
1st
Previous
Next
Bottom
Just 11th

-----------------------                                                         
FOOTNOTES:                                                                      

(1)      The estimated federal income tax basis of the depreciable  portion (the
         building portion) of each of the construction Properties acquired, once
the buildings are constructed, is set forth below:            

Property                                Federal Tax Basis     
--------                                -----------------     

Dubuque #2 Property                            $1,074,000     
Edmond Property                                 1,012,000     
Clarksville Property                              926,000     
Hermitage Property                                926,000     
Jacksonville Property                             599,000     
Los Angeles #4 Property                           620,000     

(2)      For the Dubuque #2,  Edmond,  Clarksville,  Hermitage and  Jacksonville
         Properties,  minimum  annual  rent will  become due and  payable on the
         earlier of (i) 180 days after execution of the lease, (ii) the date the
         certificate  of occupancy for the  restaurant  is issued,  or (iii) the
         date the  restaurant  opens  for  business  to the  public  or (for the
         Clarksville,  Hermitage and Jacksonville Properties), (iv) the date the
         tenant receives from the landlord its final funding of the construction
         costs.  During the period  commencing  with the  effective  date of the
         lease to the date minimum  annual rent becomes  payable for the Dubuque
         #2 and Edmond Properties, as described above, interim rent equal to ten
         percent  per annum of the amount  funded by the  Company in  connection
         with the purchase and  construction of the Properties  shall accrue and
         be  payable  in a single  lump sum at the time of final  funding of the
         construction  costs.  During the period  commencing  with the effective
         date of the lease to the date minimum  annual rent becomes  payable for
         the  Clarksville  and Hermitage  Properties,  as described  above,  the
         tenant  shall pay  monthly  interim  rent equal to 11% per annum of the
         amount  funded by the  Company  in  connection  with the  purchase  and
         construction of the Properties.  During the period  commencing with the
         effective  date of the lease to the date  minimum  annual rent  becomes
         payable for the Jacksonville  Property,  as described above, the tenant
         shall pay interim  rent equal to the  product of 325 basis  points over
         the  "Applicable  Treasury Rate" (US Treasuries with a maturity date of
         20 years) multiplied by the amounts funded by the Company in connection
with the purchase and construction of the Property.           

(3)      The  development   agreements  for  the  Properties  which  are  to  be
         constructed, provides that construction must be completed no later than
         the dates set forth below. The maximum cost to the Company,  (including
         the  purchase  price of the land,  development  costs,  and closing and
         acquisition  costs) is not expected to, but may,  exceed the amount set
forth below:                                                  

                                                                · Download Table


Property                 Estimated Maximum Cost  Estimated Final Completion Date
--------                 ----------------------  -------------------------------
                                                                                 
Dubuque #2 Property            $1,647,329                   July 19, 1998       
Edmond Property                 1,616,169                   July 19, 1998       
Clarksville Property            1,488,802                   August 9, 1998      
Hermitage Property              1,432,291                   August 9, 1998      
Jacksonville Property           1,025,168                   August 19, 1998     
Los Angeles #4 Property         1,380,250                   August 22, 1998     

(4)      The "Total Cost" is equal to the sum of (i) the  purchase  price of the
         property,  (ii)  closing  costs,  and (iii)  actual  development  costs
incurred under the development agreement.                     

                                                    -11-

424B3
12th Page of 120
TOC
1st
Previous
Next
Bottom
Just 12th

(5)      Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).                                              

(6)      The  lessee  of  the  Dubuque  #2 and  Edmond  Properties  is the  same
unaffiliated lessee.                                          

(7)      The lessee of the  Clarksville  and  Hermitage  Properties  is the same
unaffiliated lessee.                                          

(8)      Initial  minimum annual rent shall equal the rate which is in effect 15
         business  days  prior  to the  commencement  of the  annual  rent  (2),
         multiplied by the amounts funded by the Company in connection  with the
         purchase and construction of the Property. Minimum annual rent shall be
         adjusted  upward at the end of each 36 month period after the Company's
         closing on the property by the lower of (i) 4.14% of the minimum annual
         rent or (ii) an amount equal to the product obtained by multiplying the
Consumer Price Index by three.                                

(9)      The  Company  paid for all  construction  costs in advance at  closing;
         therefore,  minimum annual rent was determined on the date acquired and
is not expected to change.                                    

                                                    -12-

424B3
13th Page of 120
TOC
1st
Previous
Next
Bottom
Just 13th

PENDING INVESTMENTS                                                             

         As of March 2, 1998, the Company had initial commitments to acquire ten
properties,  including eight properties  consisting of land and building and two
properties  consisting  of  building  only.  The  acquisition  of each of  these
properties is subject to the fulfillment of certain conditions,  including,  but
not limited to, a  satisfactory  environmental  survey and  property  appraisal.
There can be no assurance  that any or all of the  conditions  will be satisfied
or, if satisfied,  that one or more of these  properties will be acquired by the
Company. If acquired,  the leases of all ten of these properties are expected to
be  entered  into on  substantially  the same terms  described  in  "Business  -
Description of Property Leases."                                                

         In connection with the IHOP property in Saugus, Massachusetts,  and one
of the Shoney's properties in Phoenix,  Arizona,  the Company anticipates owning
only the building and not the underlying land. However, for the Saugus property,
the Company  anticipates  entering into a landlord  estoppel  agreement with the
landlord of the land and a  collateral  assignment  of the ground lease with the
lessee, and for the Phoenix property,  the Company  anticipates  entering into a
tri-party  agreement  with the lessee and the landlord of the land,  in order to
provide the Company  with  certain  rights with respect to the land on which the
buildings are located.                                                          

         Set forth below are  summarized  terms  expected to apply to the leases
for each of the properties.                                                     

                                  -13-

424B3
14th Page of 120
TOC
1st
Previous
Next
Bottom
Just 14th
                                                        · Enlarge/Download Table


                          Lease Term and                                                                 Option to          
Property                  Renewal Options         Minimum Annual Rent            Percentage Rent         Purchase           
--------                  ---------------         -------------------            ---------------         --------           
                                                                                                                            
Boston  Market        15 years;  five five-   10.38% of the Company's total    for each lease year      at any time after   
Colorado Springs, CO  year renewal options    cost to purchase the property;   after the fifth lease    the fifth lease year
Existing restaurant                           increases by 10% after the fifth year, (i) 4% of annual                       
                                              lease year and after every five  gross sales minus (ii)                       
                                              years thereafter during the      the minimum annual rent                      
                                              lease term                       for such lease year                          

Ground  Round          20 years; five five-   10.25% of the Company's                  (2)               at any time after  
Maple Shade, NJ        year renewal options   total cost to purchase the                                 the seventh lease  
Existing restaurant                           property                                                   year               

IHOP (3)                        (4)           11.78% of the Company's        for each lease year, (i) 3%   at any time after
Saugus, MA                                    total cost to purchase the     of annual gross sales minus   the fifth lease  
Existing restaurant                           building; increases by 5.81%   (ii) the minimum annual rent  year             
                                              after the fifth lease year,    for such lease year                            
                                              4.66% after the tenth lease                                                   
                                              year, and 2.83% after the                                                     
                                              fifteenth lease year                                                          

Jack in the Box        18 years; four five-   9.75% of Total Cost (1);                None               at any time after  
Pflugerville, TX       year renewal options   increases by 8% after the                                  the seventh lease  
Restaurant to be                              fifth lease year and after                                 year (5)           
constructed                                   every five years thereafter                                                   
                                              during the lease term                                                         

Jack in the Box        18 years; four five-   9.75% of Total Cost (1);                None               at any time after  
St. Louis, MO          year renewal options   increases by 8% after the                                  the seventh lease  
Restaurant to be                              fifth lease year and after                                 year (5)           
constructed                                   every five years thereafter                                                   
                                              during the lease term                                                         

Jack in the Box        18 years; four five-   9.75% of Total Cost (1);                None               at any time after  
Waxahachie, TX         year renewal options   increases by 8% after the                                  the seventh lease  
Restaurant to be                              fifth lease year and after                                 year (5)           
constructed                                   every five years thereafter                                                   
                                              during the lease term                                                         

Ruby Tuesday           20 years; two five-    11% of Total Cost (1); increases  for each lease year, (i)  at any time after 
Georgetown, KY         year renewal options   by 10% after the fifth lease      6% of annual gross sales  the seventh lease 
Restaurant to be                              year and after every five years   minus (ii) the minimum    year              
constructed                                   thereafter during the lease term  annual rent for such                        
                                                                                lease year                                  

Ruby Tuesday           20 years; two five-    11% of Total Cost (1); increases  for each lease year, (i)  at any time after 
Somerset, KY           year renewal options   by 10% after the fifth lease      6% of annual gross sales  the seventh lease 
Restaurant to be                              year and after every five years   minus (ii) the minimum    year              
constructed                                   thereafter during the lease term  annual rent for such                        
                                                                                lease year                                  

                                                              -14-                                                          

424B3
15th Page of 120
TOC
1st
Previous
Next
Bottom
Just 15th

                          Lease Term and                                                                 Option to          
Property                  Renewal Options         Minimum Annual Rent            Percentage Rent         Purchase           
--------                  ---------------         -------------------            ---------------         --------           

Shoney's                20 years; two five-   11% of Total Cost (1);       for each lease year, (i) 6%   at any time after  
Phoenix, AZ (#4)        year renewal options  increases by 10% after the   of annual gross sales minus   the seventh lease  
Restaurant to be                              fifth lease year and after   (ii) the minimum annual rent  year               
renovated                                     every five years thereafter  for such lease year                              
                                              during the lease term                                                         

Shoney's (6)                    (7)           11% of Total Cost (1);       for each lease year, (i) 2.5% at any time after  
Phoenix, AZ (#5)                              increases by 10% after the   of annual gross sales minus   the seventh lease  
Restaurant to be                              fifth lease year and after   (ii) the minimum annual rent  year               
constructed                                   every five years thereafter  for such lease year                              
                                              during the lease term                                                         


----------------------                                                          
FOOTNOTES:                                                                      

(1)      The "Total Cost" is equal to the sum of (i) the  purchase  price of the
         property,  (ii)  closing  costs,  and (iii)  actual  development  costs
incurred under the development agreement.                     

(2)      For each  lease  year,  percentage  rent shall be  calculated  upon the
         amount by which gross sales exceed a to be determined  breakpoint (base
         sales) as follows; 6% for an increase of 0% to 33.33% above base sales,
         5.5% for an increase of 33.34% to 66.7% above base sales, and 5% for an
         increase  of 66.8% to 100% above base  sales.  For  increases  in gross
         sales in excess of 100%,  percentage  rent  shall  decrease  by .5% for
every additional 33.33% increase above base sales.            

(3)      The Company anticipates owning the building only for this property. The
         Company  will  not own  the  underlying  land;  although,  the  Company
         anticipates  entering  into a  landlord  estoppel  agreement  with  the
         landlord of the land and a  collateral  assignment  of the ground lease
         with the lessee in order to provide the  Company  with  certain  rights
with respect to the land on which the building is located.    

(4)      The lease term shall  expire  upon the earlier of (i) the date 20 years
         from the date of closing,  (ii) the  expiration of the original term of
         the ground lease, or (iii) the earlier termination of the ground lease.

(5)      In the event the  Company  purchases  the  property  directly  from the
  lessee, the lessee will have no option to purchase the property.

(6)      The Company anticipates owning the building only for this property. The
         Company  will  not own  the  underlying  land;  although,  the  Company
         anticipates entering into a tri-party agreement with the lessee and the
         landlord  of the land in order to  provide  the  Company  with  certain
   rights with respect to the land on which the building is located.

(7)      The lease term shall expire upon the earlier of (i) the  expiration  of
         the original term of the ground lease, or (ii) the earlier  termination
of the ground lease.                                          

                                                    -15-

424B3
16th Page of 120
TOC
1st
Previous
Next
Bottom
Just 16th

INVESTMENT OF OFFERING PROCEEDS                                                 

         Additional Secured Equipment Leases will be funded with the proceeds of
the Line of Credit.  No portion of Gross  Proceeds of this offering will be used
to fund Secured Equipment Leases. Although management cannot estimate the number
of additional  Secured  Equipment Leases that may be entered into, the aggregate
outstanding  principal amount of Secured Equipment Leases will not exceed 10% of
the gross  proceeds of this  offering,  the Prior  Offerings and any  subsequent
offerings,  including the approximately  $23,388,700 of Secured Equipment Leases
funded as of March 2,  1998.  The Board of  Directors  may  determine  to obtain
additional financing to be used by the Company to fund Secured Equipment Leases,
provided  that the  amount of such  additional  financing  may not exceed 10% of
gross  proceeds  of this  offering,  the  Prior  Offerings  and  any  subsequent
offering. Management has undertaken, consistent with its objective of qualifying
as a REIT for federal income tax purposes, to ensure that the total value of all
Secured Equipment Leases will not exceed 25% of the Company's total assets,  and
that Secured  Equipment  Leases to a single lessee,  in the aggregate,  will not
exceed 5% of total assets.                                                      

DESCRIPTION OF PROPERTY LEASES                                                  

         Term of Leases.  The following  table sets forth the number of Property
leases expiring in each year for the Properties owned by the Company as of March
2, 1998.  Since  lease  renewal  options  are  exercisable  at the option of the
tenant,  the table below only  presents the year in which the initial lease term
expires.                                                                        

Year of Initial Lease                         
             Term Expiration                  Number of Properties
             ---------------                  --------------------

            2002                                   1
            2006                                   1
            2008                                   2
            2009                                   1
            2010                                  10
            2011                                  22
            2012                                  39
            2013                                   8
            2014                                   4
            2015                                  31
            2016                                  54
            2017                                  72
            2018                                   4
            2022                                   1
                                                ----

            Total                                250
                                                ====
BORROWING                                                                       

         As of March 2, 1998,  the  Company  had funded  $23,388,700  in Secured
Equipment  Leases and had used  $19,000,000 of uninvested net offering  proceeds
from the 1997 Offering to temporarily  reduce the balance  outstanding under the
Line of Credit pending the investment of such offering proceeds in Properties or
Mortgage Loans in order to reduce interest expense incurred by the Company.     

                                  -16-

424B3
17th Page of 120
TOC
1st
Previous
Next
Bottom
Just 17th

 SELECTED FINANCIAL DATA

         The following  table sets forth certain  financial  information for the
Company,  and should be read in conjunction  with  "Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations"  and the Financial
Statements included in Exhibit B to this Prospectus.                            

                                                        · Enlarge/Download Table


                                                                                                 May 2,    
                                                                                               1994 (Date  
                                                                                              of Inception)
                                                                                                through    
                                                             Year Ended December 31,          December 31, 
                                              1997           1996               1995             1994      
                                       ---------------  ---------------    --------------  ----------------
                                                                                                           
Revenues                                 $  19,457,933    $   6,206,684      $    659,131  $          -    
Net earnings                                15,564,456        4,745,962           368,779             -    
Cash distributions declared (1)             16,854,297        5,436,072           638,618             -    
Funds from operations (2)                   17,348,723        5,257,040           469,097             -    
Earnings per Share                                0.66             0.59              0.19             -    
Cash distributions declared per Share             0.74             0.71              0.31             -    
Gross Proceeds received from Prior                                                                         
   Offerings                               222,482,560      100,792,991        38,454,158             -    
Weighted average number of Shares                                                                          
   outstanding (3)                          23,423,868        8,071,670         1,898,350             -    

                                          December 31,     December 31,      December 31,     December 31, 
                                             1997             1996              1995             1994      
                                          ------------     ------------      ------------     ------------ 

Total assets                              $339,077,762     $134,825,048      $ 33,603,084     $  929,585   
Total stockholders' equity                 321,638,101      122,867,427        31,980,648        200,000   


(1)      Approximately  eight  percent,  13  percent  and  42  percent  of  cash
         distributions  ($0.06,  $0.09 and $0.13 per Share) for the years  ended
         December 31, 1997, 1996 and 1995,  respectively,  represent a return of
         capital in accordance  with generally  accepted  accounting  principles
         ("GAAP").  Cash distributions  treated as a return of capital on a GAAP
         basis  represent  the  amount  of  cash   distributions  in  excess  of
         accumulated  net earnings on a GAAP basis.  The Company has not treated
         such amount as a return of capital for purposes of calculating Invested
Capital and the Stockholders' 8% Return.                      

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

                                  -17-

424B3
18th Page of 120
TOC
1st
Previous
Next
Bottom
Just 18th

         ability to make distributions.  Accordingly,  the Company believes that
         in  order  to  facilitate  a clear  understanding  of the  consolidated
         historical  operating results of the Company,  FFO should be considered
         in  conjunction  with the  Company's  net  earnings  and cash  flows as
         reported in the  accompanying  consolidated  financial  statements  and
notes thereto. See Exhibit B - Financial Information.         

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

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OF THE COMPANY

INTRODUCTION                                                                    

         The  Company is a Maryland  corporation  that was  organized  on May 2,
1994, to acquire  Properties,  directly or  indirectly  through Joint Venture or
co-tenancy  arrangements,  to be leased on a  long-term,  "triple-net"  basis to
operators of certain  Restaurant  Chains.  In addition,  the Company may provide
Mortgage Loans for the purchase of buildings,  generally by borrowers that lease
the underlying land from the Company.  To a lesser extent, the Company may offer
Secured Equipment Leases to operators of Restaurant Chains.                     

LIQUIDITY AND CAPITAL RESOURCES                                                 

         The Company was formed in May 1994, at which time the Company  received
initial capital contributions of $200,000 for 20,000 shares of Common Stock from
the Advisor. In April 1995, the Company commenced a public offering for the sale
of up to 16,500,000  Shares  ($165,000,000) of Common Stock, the net proceeds of
which were used to invest in Properties  and Mortgage  Loans.  Of the 16,500,000
Shares  offered,   1,500,000  Shares   ($15,000,000)   were  available  only  to
stockholders who elected to participate in the Company's Reinvestment Plan. Upon
completion of its Initial Offering on February 6, 1997, the Company had received
subscription  proceeds of $150,591,765  (15,059,177  Shares),  including  59,177
Shares ($591,765) issued pursuant to the Company's Reinvestment Plan.           

         Following the completion of its Initial Offering, the Company commenced
the 1997 Offering of up to 27,500,000  Shares of Common Stock. Of the 27,500,000
Shares  offered,  2,500,000 were available only to  stockholders  who elected to
participate  in the Company's  Reinvestment  Plan. As of December 31, 1997,  the
Company had received subscription  proceeds of $361,729,707  (36,172,971 Shares)
from  the  Initial  Offering  and  1997  Offering,   including   246,441  Shares
($2,464,413) issued pursuant to the Reinvestment Plan.                          

         As of December 31,  1997,  net proceeds to the Company from its Initial
Offering,  1997  Offering  and capital  contributions  from the  Advisor,  after
deduction of selling  commissions,  marketing  support and due diligence expense
reimbursement   fees,  and  organizational   and  offering  expenses,   totalled
$323,867,890.  As of  December  31,  1997,  approximately  $272,140,000  of  net
offering proceeds had been used to invest,  or committed for investment,  in 244
Properties (including ten Properties on which restaurants were being constructed
as of December 31, 1997), to provide mortgage  financing of $17,047,000,  to pay
acquisition  fees  to the  Advisor  totalling  $16,277,837  and  to pay  certain
acquisition  expenses.  The  Company  acquired  18 of the  244  Properties  from
Affiliates  for  purchase  prices  totalling  approximately   $14,681,000.   The
Affiliates had purchased and temporarily held title to these Properties in order
to facilitate the  acquisition  of the Properties by the Company.  Each Property
acquired from an Affiliate was purchased at a cost no greater than the lesser of
the cost of the  Property to the  Affiliate  (including  carrying  costs) or the
Property's appraised value.                                                     

         In connection  with the ten Properties  under  construction at December
31,  1997,  the Company has entered  into various  development  agreements  with
tenants which provide terms and specifications for the construction of buildings
the tenants have agreed to lease.  The  agreements  provide a maximum  amount of
development  costs  (including the purchase price of the land and closing costs)
to be paid by the Company.  The aggregate maximum  development costs the Company
has agreed to pay are approximately $14,495,000, of which approximately         

                                  -18-

424B3
19th Page of 120
TOC
1st
Previous
Next
Bottom
Just 19th

$10,202,000  had been  incurred as of December 31,  1997.  The  buildings  under
construction  as of December 31, 1997,  are expected to be  operational  by June
1998. In connection with the purchase of each Property,  the Company, as lessor,
entered into a long-term lease agreement.                                       

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

         In connection  with the $17,047,000 of mortgage  financing  provided by
the Company as of December 31,  1997,  the Company  entered  into four  Mortgage
Loans  collateralized  by  mortgages on the  buildings  relating to 44 Pizza Hut
Properties  and two  additional  Pizza Hut  buildings.  The Mortgage  Loans bear
interest at rates ranging from 10.5% to 10.75% per annum and are being collected
in 240 equal  installments  totalling  $172,369.  Mortgage  notes  receivable at
December 31, 1997 and 1996 of $17,622,010 and $13,389,607, respectively, include
accrued interest of $118,887 and $35,285, respectively.                         

         In March 1996,  the Company  entered into a line of credit and security
agreement  with a bank,  the proceeds of which were to be used by the Company to
fund Secured  Equipment  Leases.  The line of credit  provided  that the Company
would be able to receive  advances  of up to  $15,000,000  until  March 4, 1998.
Generally,  all advances  under the line of credit bore interest at either (i) a
rate per annum equal to 215 basis points above the Reserve  Adjusted  LIBOR Rate
(as  defined in the line of credit) or (ii) a rate per annum equal to the bank's
prime rate,  whichever the Company selected at the time advances were made. As a
condition of obtaining  the line of credit,  the Company  agreed to grant to the
bank a first security interest in the Secured Equipment Leases.                 

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

         In addition,  during 1996, the Company  entered into interest rate swap
agreements  with a  commercial  bank to reduce the impact of changes in interest
rates on its floating rate long-term debt. These agreements  effectively  change
the Company's interest rate exposure on notional amounts totalling approximately
$2,110,000  of the  outstanding  floating rate notes to fixed rates ranging from
8.75% to nine percent per annum.  The notional amounts of the interest rate swap
agreements amortize over the period of the agreements which approximate the term
of the related  notes.  As of December 31,  1997,  the  notional  balances  were
approximately $1,750,000.  The Company is exposed to credit loss in the event of
nonperformance by the other party to the interest rate swap agreements; however,
the Company does not anticipate nonperformance by the counterparty.             

         The Company will not encumber Properties in connection with the Line of
Credit.  Management  believes that during the offering period the Line of Credit
will allow the Company to make investments in Properties and Mortgage Loans that
the  Company  otherwise  would be forced to delay  until it raised a  sufficient
amount of  proceeds  from the sale of Shares  to allow the  Company  to make the
investments.  By eliminating this delay the Company will also eliminate the risk
that  these  investments  will no  longer  be  available,  or the  terms  of the
investments  will be less  favorable,  when the  Company  has raised  sufficient
offering  proceeds.  Alternatively,  Affiliates  of the Advisor  could make such
investments,  pending receipt by the Company of sufficient offering proceeds, in
order  to  preserve  the  investment  opportunities  for the  Company.  However,
Properties  acquired by the  Company in this manner  would be subject to closing
costs both on the  original  purchase  by the  Affiliate  and on the  subsequent
purchase by the Company,  which would increase the amount of expenses associated
with the  acquisition of Properties  and reduce the amount of offering  proceeds
available for investment in  income-producing  assets.  Management believes that
the use of the Line of Credit by the  Company  will enable the Company to reduce
or  eliminate  the  instances  in which  the  Company  will be  required  to pay
duplicate closing costs.                                                        

                                  -19-

424B3
20th Page of 120
TOC
1st
Previous
Next
Bottom
Just 20th

         During the years ended December 31, 1997 and 1996, the Company obtained
advances totalling $19,721,804 and $3,666,896,  respectively, under the lines of
credit,  the proceeds of which were used to fund Secured Equipment Leases and to
pay loan costs.  During the year ended  December  31,  1997,  the  Company  used
proceeds  relating to the sale of Equipment,  as described above, and uninvested
net offering  proceeds,  to repay $20,784,577 of amounts advanced under the Line
of Credit.  During the year ended  December 31,  1996,  the Company used amounts
collected under the terms of the Secured  Equipment  Leases to repay $145,080 of
amounts  advanced  under  the line of  credit.  The  Company  expects  to obtain
additional advances under the Line of Credit to fund future Equipment financings
and to purchase Properties and to invest in Mortgage Loans.                     

         Advances  used to fund  Secured  Equipment  Leases will be repaid using
payments received from Secured Equipment Leases and will be refinanced in regard
to any Secured  Equipment  Lease not fully  repaid at the end of the term of the
Line of Credit. The Company,  from time to time, may use uninvested net offering
proceeds to repay a portion of or all of the balance  outstanding under the Line
of Credit  pending the  investment  of such  offering  proceeds in Properties or
Mortgage  Loans in order to reduce  the  Company's  interest  cost  during  such
period.  Advances used to purchase and develop  Properties  and to fund Mortgage
Loans will be repaid  using  additional  offering  proceeds or  refinanced  on a
long-term basis.                                                                

         During the period  January 1, 1998 through  March 2, 1998,  the Company
acquired  six  additional   Properties  (all  on  which  restaurants  are  being
constructed)  for cash at a total cost of  approximately  $3,948,200,  excluding
development and closing costs. The development  costs (including the purchase of
the  land and  closing  costs)  to be paid by the  Company  relating  to the six
Properties under construction are estimated to be approximately  $8,590,000.  In
connection  with the purchase of each of the six  Properties,  the  Company,  as
lessor,   entered  into  a  long-term  lease  agreement.   The  buildings  under
construction  are  expected  to be  operational  by  August  1998.  The  Company
currently is negotiating to acquire  additional  Properties,  but as of March 2,
1998, had not acquired any such Properties.                                     

         The Company completed its 1997 Offering on March 2, 1998, at which time
the Company had  received  subscription  proceeds  of  $402,464,413  (40,246,441
Shares) from its Initial  Offering and 1997 Offering,  including  246,441 Shares
($2,464,413) issued pursuant to the Company's  Reinvestment Plan. As of March 2,
1998,  the  Company  had  invested,  or  committed  for  investment,  a total of
approximately  $282,900,000  of such  proceeds in 250  Properties,  in providing
mortgage  financing  totalling  $17,047,000  for Mortgage  Loans  relating to 44
Properties  consisting  of  land  only  and  the  buildings  on  two  additional
properties,  and to pay acquisition  fees totalling  $18,110,899 to the Advisor,
leaving  approximately  $78,200,000 in aggregate net offering  proceeds from the
Prior Offerings available for investment in Properties and Mortgage Loans.      

         Following the  completion of its 1997 Offering,  the Company  commenced
the sale of up to 34,500,000  Shares.  Of the  34,500,000  Shares being offered,
2,000,000  Shares are available only to stockholders  purchasing  Shares through
the Reinvestment  Plan.  Management  believes that the increase in the amount of
assets of the Company  that will result from this  offering  will  increase  the
diversification  of the  Company's  assets and the  likelihood  of  Listing  the
Company's Shares on a national securities  exchange or over-the-counter  market,
although  there is no assurance  that Listing will occur.  If the Shares are not
listed on a national securities exchange or over-the-counter  market by December
31,  2005,  as to which there can be no  assurance,  the Company  will  commence
orderly sale of its assets and the  distribution  of the proceeds.  Listing does
not assure liquidity.                                                           

         The Company  expects to use uninvested  net offering  proceeds from the
Prior Offerings,  plus any Net Offering Proceeds from the sale of Shares in this
offering, to purchase additional Properties, to fund construction costs relating
to the Properties  under  construction  and to make Mortgage Loans.  The Company
does not intend to use net offering  proceeds to fund Secured  Equipment Leases;
however,  from time to time the Company may use uninvested net offering proceeds
to repay all or a portion of the  balance  outstanding  under the Line of Credit
pending the investment of such offering proceeds in Properties or Mortgage Loans
in order to reduce the Company's  interest cost during such period.  The Company
expects to fund the  Secured  Equipment  Leases with  proceeds  from the Line of
Credit. The number of Properties to be acquired and Mortgage Loans to be entered
into will  depend  upon the amount of net  offering  proceeds  available  to the
Company, although the Company is expected to have a total                       

                                  -20-

424B3
21st Page of 120
TOC
1st
Previous
Next
Bottom
Just 21st

portfolio of approximately 670 to 730 Properties if the maximum number of Shares
is sold in this offering.  The Company intends to limit  equipment  financing to
ten percent of the aggregate gross offering proceeds from its offerings.        

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

         Until Properties are acquired,  or Mortgage Loans are entered into, net
offering  proceeds  are held in  short-term,  highly  liquid  investments  which
management  believes to have  appropriate  safety of principal.  This investment
strategy  provides high  liquidity in order to  facilitate  the Company's use of
these  funds to  acquire  Properties  at such time as  Properties  suitable  for
acquisition  are located or to fund Mortgage  Loans.  At December 31, 1997,  the
Company had  $49,595,001  invested in such short-term  investments  (including a
certificate  of deposit in the amount of  $2,000,000) as compared to $42,450,088
at  December  31,  1996.  The  increase  in the amount  invested  in  short-term
investments  reflects  subscription  proceeds  derived  from the sale of  Shares
during  the year  ended  December  31,  1997,  net of the  repayment  of amounts
advanced under the Line of Credit, as described above.  These funds will be used
primarily to purchase and develop or renovate Properties (directly or indirectly
through joint venture arrangements), to make Mortgage Loans, to pay offering and
acquisition  costs, to pay Distributions to stockholders,  to temporarily reduce
amounts outstanding under the Company's Line of Credit pending the investment of
net offering proceeds, to meet Company expenses and, in management's discretion,
to create cash reserves.                                                        

         During the years ended December 31, 1997, 1996 and 1995,  Affiliates of
the  Company  incurred  on  behalf  of  the  Company  $2,351,244,  $804,617  and
$2,084,145,  respectively,  for certain  organizational  and offering  expenses,
$514,908, $206,103 and $131,629,  respectively, for certain acquisition expenses
and  $368,516,  $243,402  and  $54,234,   respectively,  for  certain  operating
expenses.  As of  December  31,  1997,  the  Company  owed the  Advisor  and its
Affiliates  $1,524,294  for  such  amounts,   unpaid  fees  and  accounting  and
administrative  expenses.  As of March 2, 1998,  the Company had  reimbursed all
such  amounts.  The  Advisor has agreed to pay or  reimburse  to the Company all
organizational  and  offering  expenses  in  excess  of three  percent  of gross
offering  proceeds  from each of the Initial  Offering,  1997  Offering and this
offering.                                                                       

         During the years ended  December 31, 1997,  1996 and 1995,  the Company
generated cash from  operations  (which  includes cash received from tenants and
interest and other income  received,  less cash paid for operating  expenses) of
$17,076,214,  $5,482,540  and  $498,459,  respectively.  Based  on  current  and
anticipated future cash from operations,  the Company declared  Distributions to
the  stockholders of $16,854,297,  $5,436,072 and $638,618 during 1997, 1996 and
1995,  respectively.  In  addition,  in January,  February  and March 1998,  the
Company  declared   Distributions  to  its  stockholders  totalling  $2,298,433,
$2,421,992 and  $2,556,539,  respectively,  payable in March 1998. For the years
ended December 31, 1997, 1996 and 1995, 93.33%, 90.25% and 59.82%, respectively,
of the  Distributions  received by  stockholders  were considered to be ordinary
income and 6.67%,  9.75% and 40.18%,  respectively,  were considered a return of
capital for federal income tax purposes.  However,  no amounts distributed or to
be  distributed to the  stockholders  as of March 2, 1998, are required to be or
have  been  treated  by the  Company  as a return of  capital  for  purposes  of
calculating the Stockholders' 8% Return on their Invested Capital.              

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

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

                                  -21-

424B3
22nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 22nd

         Management  expects that the cash  generated  from  operations  will be
adequate to pay Operating Expenses.                                             

RESULTS OF OPERATIONS                                                           

         No  significant  operations  commenced  until the Company  received the
minimum offering proceeds of $1,500,000 on June 1, 1995.                        

         As of  December  31,  1997,  the  Company  and its  consolidated  joint
venture,  CNL/Corral  South  Joint  Venture,  had  purchased  and  entered  into
long-term, triple-net leases for 244 Properties. The leases provide for minimum,
annual,  base rental  payments  (payable in monthly  installments)  ranging from
approximately  $61,900 to $467,500.  In  addition,  certain  leases  provide for
percentage rent based on sales in excess of a specified amount.  The majority of
the leases also provide that,  commencing in generally the sixth lease year, the
annual  base rent  required  under the terms of the  leases  will  increase.  In
connection therewith,  during the years ended December 31, 1997, 1996, and 1995,
the  Company   earned  a  total  of   $15,490,615,   $4,357,298   and  $539,776,
respectively,  in rental income from  operating  leases,  earned income from the
direct financing leases and contingent  rental income from 244 Properties and 27
Secured  Equipment Leases in 1997, from 85 Properties and six Secured  Equipment
Leases in 1996 and from 16 Properties in 1995, respectively. Because the Company
did not commence  significant  operations until it received the minimum offering
proceeds  on  June 1,  1995,  and  intends  to make  additional  investments  in
Properties,  Mortgage Loans and Secured Equipment Leases, revenues for the years
ended  December 31, 1997,  1996 and 1995,  represent  only a portion of revenues
which the Company is expected to earn during  future  years in which the Company
has  completed   additional   investments  and  the  Company's   Properties  are
operational (and other investments in place) for the full period.               

         During the years ended  December 31, 1997 and 1996,  the Company earned
$1,687,456 and $1,069,349, respectively, in mortgage interest income relating to
the Mortgage Loans collateralized by Pizza Hut Properties, as described above in
"Liquidity and Capital  Resources."  The increase during the year ended December
31, 1997, is  attributable  to investing in an  additional  Mortgage Loan during
1997.                                                                           

         During  1997,  three  of  the  Company's  lessees  and  borrowers,   or
affiliated  groups of lessees and  borrowers,  Castle Hill  Holdings V,  L.L.C.,
Castle  Hill  Holdings  VI,  L.L.C.   and  Castle  Hill  Holdings  VII,   L.L.C.
(collectively,  "Castle Hill"), Foodmaker, Inc. and Houlihan's Restaurants Inc.,
each contributed more than ten percent of the Company's total rental, earned and
interest income relating to its Properties, Mortgage Loans and Secured Equipment
Leases.  Castle Hill is the lessee under leases  relating to the land portion of
44  restaurants  and is the borrower on Mortgage Loans relating to the buildings
on such Properties, as well as two additional properties. Foodmaker, Inc. is the
lessee under leases relating to 29 restaurants and Houlihan's Restaurants,  Inc.
is the lessee  under  leases  relating  to 20  restaurants.  In  addition,  four
Restaurant Chains,  Pizza Hut, Golden Corral Family Steakhouse,  Jack in the Box
and Boston  Market,  each  accounted  for more than ten percent of the Company's
total rental,  earned and interest income  relating to its Properties,  Mortgage
Loans and Secured  Equipment  Leases  during  1997.  Because the Company has not
completed its  investment in Properties,  Mortgage  Loans and Secured  Equipment
Leases as yet, it is not  possible to  determine  which  lessees,  borrowers  or
Restaurant Chains will contribute more than ten percent of the Company's rental,
earned and interest  income during 1998 and subsequent  years. In the event that
certain lessees, borrowers or Restaurant Chains contribute more than ten percent
of the Company's rental,  earned income and interest income in future years, any
failure of such lessees,  borrowers or Restaurant Chains could materially affect
the Company's income.                                                           

         During the years ended  December 31, 1997,  1996 and 1995,  the Company
also earned $2,254,375, $773,404 and $118,859,  respectively, in interest income
from Secured  Equipment  Leases,  as described  above in "Liquidity  and Capital
Resources," and from  investments in money market accounts or other  short-term,
highly  liquid  investments  and other  income.  Interest  income is expected to
increase as the Company  invests  subscription  proceeds  received in the future
relating to this offering in highly  liquid  investments  pending  investment in
Properties and Mortgage Loans. However, as net offering proceeds are invested in
Properties and used to make Mortgage Loans,  interest income from investments in
money market accounts or other short-term, highly liquid investments is expected
to decrease.                                                                    

                                  -22-

424B3
23rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 23rd

         Operating expenses,  including  depreciation and amortization  expense,
were $3,862,024,  $1,430,795 and $290,276 for the years ended December 31, 1997,
1996 and 1995,  respectively.  Total operating expenses increased during each of
the years  ended  December  31,  1997 and 1996,  as  compared to the prior year,
primarily as a result of the Company  having  invested in additional  Properties
and Mortgage Loans during each year.  General and  administrative  expenses as a
percentage  of total  revenues is  expected to decrease as the Company  acquires
additional  Properties,  invests in additional Mortgage Loans and the Properties
under  construction  become  operational.  However,  asset  management  fees and
depreciation  and  amortization  expense are expected to increase as the Company
invests in additional Properties and Mortgage Loans.                            

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

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting  Standards No. 128, "Earnings Per Share." The
statement,  which is effective for fiscal years ending after  December 15, 1997,
provides for a revised  computation of earnings per share.  The Company  adopted
this standard during the year ended December 31, 1997. Adoption of this standard
had no  material  effect on the  Company's  financial  position  or  results  of
operations.                                                                     

         In June 1997, the Financial Accounting Standards Board issued Statement
No. 130 "Reporting Comprehensive Income." The statement,  which is effective for
fiscal years  beginning  after December 15, 1997,  requires the reporting of net
earnings  and all other  changes  to equity  during  the  period,  except  those
resulting from investments by owners and  distributions to owners, in a separate
statement that begins with net earnings. Currently, the Company's only component
of  comprehensive  income is net  earnings.  The Company  does not believe  that
adoption of this standard will have a material effect on the Company's financial
position or results of operations.                                              

         The  Advisor  of  the  Company  is in  the  process  of  assessing  and
addressing  the impact of the year 2000 on its computer  package  software.  The
hardware and built-in  software used by the Advisor are believed to be year 2000
compliant.  Accordingly,  the Company does not expect this matter to  materially
impact  how it  conducts  business  nor its  future  results  of  operations  or
financial position.                                                             

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

         This information contains forward-looking statements within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
Exchange  Act of 1934.  Although  the  Company  believes  that the  expectations
reflected  in  such   forward-looking   statements  are  based  upon  reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Certain factors that might cause such a
difference  include  the  following:  changes  in general  economic  conditions,
changes in real estate conditions,  continued availability of proceeds from this
offering, the ability of the Company to invest the remaining                    

                                  -23-

424B3
24th Page of 120
TOC
1st
Previous
Next
Bottom
Just 24th

proceeds of the 1997 Offering and the proceeds of this offering,  the ability of
the Company to locate suitable  tenants for its Properties and borrowers for its
Mortgage  Loans,  and the ability of such tenants and borrowers to make payments
under their respective leases, Secured Equipment Leases or Mortgage Loans.      

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS                                                

       The Directors and executive officers of the Company are listed below:

Name               Age       Position with the Company        
----               ---       -------------------------        

James M. Seneff, Jr.        51        Director, Chairman of the Board, and      
                   Chief Executive Officer
Robert A. Bourne            51        Director and President                    
G. Richard Hostetter        58        Independent Director                      
J. Joseph Kruse             65        Independent Director                      
Richard C. Huseman          59        Independent Director                      
Curtis B. McWilliams        42        Executive Vice President                  
John T. Walker              39        Chief Operating Officer and Executive     
          Vice President
Jeanne A. Wall              39        Executive Vice President                  
Steven D. Shackelford       34        Chief Financial Officer                   
Lynn E. Rose                49        Secretary and Treasurer                   

         James M.  Seneff,  Jr.  Director,  Chairman  of the  Board,  and  Chief
Executive  Officer.  Mr. Seneff  currently holds the position of Chairman of the
Board,  Chief  Executive  Officer and director of CNL Fund  Advisors,  Inc., the
Advisor to the  Company.  Mr.  Seneff  also has served as Chairman of the Board,
Chief  Executive  Officer and a director of CNL American Realty Fund, Inc. since
1996 and of CNL Real Estate  Advisors,  Inc. since January 1997. Mr. Seneff is a
principal stockholder of CNL Group, Inc., a diversified real estate company, and
has  served as its  Chairman  of the  Board of  Directors,  director,  and Chief
Executive  Officer  since its formation in 1980.  CNL Group,  Inc. is the parent
company of CNL Securities Corp.,  which is acting as the Managing Dealer in this
offering,  CNL Investment Company,  CNL Fund Advisors,  Inc. and CNL Real Estate
Advisors,  Inc.  Mr.  Seneff has been  Chairman  of the Board,  Chief  Executive
Officer and a director of CNL Securities  Corp. since its formation in 1979. Mr.
Seneff also has held the  position of  Chairman  of the Board,  Chief  Executive
Officer,  President  and a 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,  and
Chief  Executive  Officer  and  Chairman  of the Board of  Commercial  Net Lease
Realty,  Inc. since 1992,  served as Chief Executive Officer and Chairman of the
Board of CNL Realty  Advisors,  Inc. from its inception in 1991 through 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 1990. 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 recommends to 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 than $60 billion of
retirement  funds.  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                                                                            

                                  -24-

424B3
25th Page of 120
TOC
1st
Previous
Next
Bottom
Just 25th

estate.  Included in these real estate ventures are  approximately  65 privately
offered real estate limited  partnerships with investment  objectives similar to
one or more  of the  Company's  investment  objectives,  in  which  Mr.  Seneff,
directly  or through  an  affiliated  entity,  serves or has served as a general
partner. Mr. Seneff received his degree in Business  Administration from Florida
State University in 1968.                                                       

         Robert A. Bourne.  Director and President.  Mr. Bourne  currently holds
the position of Vice Chairman of the Board of Directors,  director and Treasurer
of CNL Fund  Advisors,  Inc.,  the Advisor to the Company.  Mr. Bourne served as
President of CNL Fund  Advisors,  Inc.  from the date of its  inception  through
October  1997.  Mr.  Bourne also has served as  President  and a director of CNL
American  Realty Fund,  Inc.  since 1996 and of CNL Real Estate  Advisors,  Inc.
since  January 1997.  Mr. Bourne is President and Treasurer of CNL Group,  Inc.,
President,  Treasurer,  a director, and a registered principal of CNL Securities
Corp. (the Managing Dealer of this offering),  President,  Treasurer, a director
and a  registered  principal 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  Advisors,  Inc. from the date of its  inception  through June 30,
1997.  Mr.  Bourne served as President and a director from July 1992 to February
1996,  served as Secretary  and Treasurer  from  February 1996 through  December
1997,  and has served as Vice Chairman of the Board of Directors  since February
1996, of Commercial  Net Lease  Realty,  Inc. In addition,  Mr. Bourne served as
President of CNL Realty Advisors, Inc. from 1991 to February 1996, and served as
a director of CNL Realty Advisors,  Inc. from 1991 through December 1997, and as
Treasurer and Vice Chairman from February 1996 through  December  1997, at which
time such company merged with Commercial Net Lease Realty,  Inc. Upon graduation
from Florida State  University in 1970,  where he received a B.A. in Accounting,
with honors,  Mr.  Bourne  worked as a certified  public  accountant  and,  from
September  1971  through  December  1978 was  employed  by  Coopers  &  Lybrand,
Certified  Public  Accountants,  where  he  held  the  position  of tax  manager
beginning in 1975.  From January 1979 until June 1982,  Mr. Bourne was a partner
in the accounting firm of Cross & Bourne and from July 1982 through January 1987
he was a partner in the accounting firm of Bourne & Rose, P.A., Certified Public
Accountants.   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 with investment  objectives similar to
one or more  of the  Company's  investment  objectives,  in  which  Mr.  Bourne,
directly  or through  an  affiliated  entity,  serves or has served as a general
partner.  Mr. Bourne oversaw the acquisition and oversees the management of over
1,500  properties  located  across 47 states  with a total value in excess of $2
billion.                                                                        

         G. Richard Hostetter,  Esq.  Independent  Director.  Mr. Hostetter also
serves as a director  of CNL  American  Realty  Fund,  Inc.  Mr.  Hostetter  was
associated  with the law firm of Miller and Martin from 1966 through  1989,  the
last ten years of such association as a senior partner.  As a lawyer,  he served
for more than 20 years as counsel for  various  corporate  real  estate  groups,
fast-food  companies  and  public  companies,  including  The  Krystal  Company,
resulting in his extensive  participation  in  transactions  involving the sale,
lease, and  sale/leaseback  of approximately 250 restaurant units. Mr. Hostetter
graduated  from the  University  of Georgia and received his J.D. from Emory Law
School in 1966.  He is licensed to practice law in Tennessee  and Georgia.  From
1989 to date,  Mr.  Hostetter  has served as  President  and General  Counsel of
Mills, Ragland & Hostetter,  Inc., the corporate general partner of MRH, L.P., a
holding  company  involved  in  corporate  acquisitions,  in  which he also is a
general and limited partner.                                                    

         J.  Joseph  Kruse.  Independent  Director.  Mr.  Kruse also serves as a
director of CNL American Realty Fund,  Inc. From 1993 to the present,  Mr. Kruse
has been President and Chief Executive  Officer of Kruse & Co., Inc., a merchant
banking  company engaged in real estate.  Formerly,  Mr. Kruse was a Senior Vice
President  with Textron,  Inc. for twenty years,  and then served as Senior Vice
President at G. William  Miller & Co., a firm founded by the former  Chairman of
the Federal Reserve Board and the Treasury Secretary.  Mr. Kruse was responsible
for  evaluations of commercial real estate and retail shopping mall projects and
continues  to serve of counsel to the firm.  Mr.  Kruse  received a Bachelors of
Science in Education degree from the                                            

                                  -25-

424B3
26th Page of 120
TOC
1st
Previous
Next
Bottom
Just 26th

University of Florida in 1957 and a Masters of Science in Administration in 1958
from Florida State  University.  He also graduated from the Advanced  Management
Program of the Harvard Graduate School of Business.                             

         Richard C. Huseman.  Independent Director. Mr. Huseman also serves as a
director of CNL American  Realty Fund, Inc. Mr. Huseman is presently a professor
in the College of Business Administration, and from 1990 through 1995, served as
the Dean of the College of Business  Administration of the University of Central
Florida. He has served as a consultant in the area of managerial strategies to a
number of Fortune 500  corporations,  including IBM, AT&T, and 3M, as well as to
several branches of the U.S. government, including the U.S. Department of Health
and Human Services,  the U.S.  Department of Justice,  and the Internal  Revenue
Service. Mr. Huseman received a B.A. from Greenville College in 1961 and an M.A.
and a Ph.D. from the University of Illinois in 1963 and 1965, respectively.     

         Curtis B. McWilliams.  Executive Vice President.  Mr. McWilliams joined
CNL  Group,  Inc.  in April  1997 and  currently  serves  as an  Executive  Vice
President. In addition, Mr. McWilliams serves as President of CNL Fund Advisors,
Inc. (the Advisor to the  Company),  CNL  Financial  Services,  Inc. and certain
other  subsidiaries  of CNL Group,  Inc. From September 1983 through March 1997,
Mr.  McWilliams was employed by Merrill Lynch. From January 1991 to August 1996,
Mr. McWilliams was a managing director in the corporate banking group of Merrill
Lynch's  investment  banking  division.  During  this  time,  he  was  a  senior
relationship manager with Merrill Lynch and as such was responsible for a number
of the firm's larger corporate relationships. In addition, from February 1990 to
February  1993,  he served as co-head of one of the  Industrial  Banking  Groups
within  Merrill  Lynch's  investment  banking  division  and had  administrative
responsibility  for a group of bankers and client  relationships,  including the
firm's transportation group. In addition, from September 1996 to March 1997, Mr.
McWilliams served as Chairman of Merrill Lynch's Private Advisory Services.  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.  Chief Operating  Officer and Executive Vice President.
Mr.  Walker  joined CNL Fund  Advisors,  Inc. in September  1994, as Senior Vice
President,  responsible for Research and Development. He currently serves as the
Chief Operating Officer and Executive Vice President of CNL Fund Advisors, Inc.,
the Advisor to the Company.  Mr. Walker is also  Executive Vice President of CNL
American Realty Fund, Inc. and CNL Real Estate  Advisors,  Inc. From May 1992 to
May 1994, he was Executive  Vice  President for Finance and  Administration  and
Chief Financial Officer of Z Music,  Inc., a cable television  network which was
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.                                               

         Jeanne A. Wall. Executive Vice President.  Ms. Wall serves as Executive
Vice President of CNL Fund Advisors,  Inc., the Advisor to the Company. Ms. Wall
is also Executive Vice President of CNL American  Realty Fund, Inc. and CNL Real
Estate  Advisors,  Inc.  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.
In 1984,  Ms. Wall joined CNL  Securities  Corp.  In 1985,  Ms. Wall became Vice
President of CNL  Securities  Corp.,  in 1987 she became a 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                                             

                                  -26-

424B3
27th Page of 120
TOC
1st
Previous
Next
Bottom
Just 27th

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 through 1997, and as Vice  President of Commercial  Net Lease Realty,  Inc.
since 1992 through 1997. 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.                                                          

         Steven D. Shackelford.  Chief Financial Officer. Mr. Shackelford joined
CNL Fund Advisors,  Inc.,  the Advisor to the Company,  in September 1996 as the
Chief Financial  Officer.  From March 1995 to July 1996, he 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  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 and is a certified public accountant.                          

         Lynn E. Rose.  Secretary and Treasurer.  Ms. Rose is also Secretary and
Treasurer of CNL American  Realty Fund,  Inc. Ms. Rose serves as Secretary and a
director of CNL Fund Advisors,  Inc., the Advisor to the Company,  and serves as
Secretary,  Treasurer and a director of CNL Real Estate Advisors,  Inc. Ms. Rose
served as Treasurer of CNL Fund  Advisors,  Inc.  from the date of its inception
through June 30, 1997. Ms. Rose, a certified  public  accountant,  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  Secretary  and a  director  of CNL  Realty  Advisors,  Inc.  from its
inception in 1991 through 1997, and as a Treasurer of CNL Realty Advisors,  Inc.
from 1991 to February  1996.  In  addition,  Ms. Rose  served as  Secretary  and
Treasurer of Commercial  Net Lease Realty,  Inc. from 1992 to February 1996. Ms.
Rose  also  currently  serves  as  Secretary  for  approximately  50  additional
corporations.   Ms.  Rose   oversees  the   management   information   services,
administration,  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 and is a registered  financial
and operations principal of CNL Securities Corp. She was licensed as a certified
public accountant in 1979.                                                      

THE ADVISOR AND THE ADVISORY AGREEMENT

THE ADVISORY AGREEMENT                                                          

         The Advisory Agreement,  which was entered into by the Company with the
unanimous  approval  of  the  Board  of  Directors,  including  the  Independent
Directors,  expires one year after the date of execution,  subject to successive
one-year  renewals  upon mutual  consent of the  parties.  The current  Advisory
Agreement  expires  on April  19,  1999.  In the  event  that a new  Advisor  is
retained, the previous Advisor will cooperate with the Company and the Directors
in  effecting an orderly  transition  of the  advisory  functions.  The Board of
Directors  (including a majority of the Independent  Directors)  shall approve a
successor  Advisor  only  upon  a  determination   that  the  Advisor  possesses
sufficient  qualifications to perform the advisory functions for the Company and
that the  compensation  to be received  by the new  Advisor  pursuant to the new
Advisory Agreement is justified.                                                

                                  -27-

424B3
28th Page of 120
TOC
1st
Previous
Next
Bottom
Just 28th


CERTAIN TRANSACTIONS

         The  Managing  Dealer  is  entitled  to  receive  Selling   Commissions
amounting to 7.5% of the total  amount  raised from the sale of Shares of Common
Stock for  services in  connection  with the offering of Shares,  a  substantial
portion   of  which  has  been  or  will  be  paid  as   commissions   to  other
broker-dealers.  For the period  January 1, 1998 through March 2, 1998,  and the
years ended December 31, 1997, 1996 and 1995, the Company  incurred  $3,055,103,
$16,686,192, $7,559,474 and $2,884,062, respectively, of such fees in connection
with the  Prior  Offerings,  of  which  approximately  $2,900,400,  $15,563,500,
$7,059,000  and  $2,682,000,  respectively,  was paid by the Managing  Dealer as
commissions to other broker-dealers.                                            

         In  addition,  the  Managing  Dealer is entitled to receive a marketing
support and due diligence  expense  reimbursement fee equal to 0.5% of the total
amount  raised from the sale of Shares,  a portion of which may be  reallowed to
other broker-dealers.  For the period January 1, 1998 through March 2, 1998, and
the years ended December 31, 1997, 1996 and 1995, the Company incurred $203,673,
$1,112,413, $503,965 and $192,271, respectively, of such fees in connection with
the  Prior  Offerings,  substantially  all of  which  were  reallowed  to  other
broker-dealers and from which all bona fide due diligence expenses were paid.   

         The  Advisor is entitled to receive  Acquisition  Fees for  services in
identifying  the Properties and  structuring  the terms of the  acquisition  and
leases of the Properties and  structuring  the terms of the Mortgage Loans equal
to 4.5% of the total  amount  raised  from the sale of  Shares.  For the  period
January 1, 1998 through  March 2, 1998,  and the years ended  December 31, 1997,
1996 and 1995,  the Company  incurred  $1,833,062,  $10,011,715,  $4,535,685 and
$1,730,437, respectively, of such fees in connection with the Prior Offerings.  

         For negotiating  Secured  Equipment  Leases and supervising the Secured
Equipment  Lease program,  the Advisor is entitled to receive from the Company a
one-time  Secured  Equipment  Lease Servicing Fee of two percent of the purchase
price of the Equipment that is the subject of a Secured Equipment Lease. For the
years ended  December  31,  1997 and 1996,  the Company  incurred  $366,865  and
$70,070,  respectively,  in such fees.  No such  amounts  were  incurred for the
period  January 1, 1998 through March 2, 1998 or for the year ended December 31,
1995.                                                                           

         The Company and the Advisor  have  entered  into an Advisory  Agreement
pursuant to which the Advisor will  receive a monthly  asset  management  fee of
one-twelfth of 0.60% of the Company's Real Estate Asset Value,  plus one-twelfth
of 0.60% of the total  principal  amount of the Company's  Mortgage Loans, as of
the end of the preceding  month.  The management fee, which will not exceed fees
which are competitive for similar  services in the same geographic  area, may or
may not be taken,  in whole or in part as to any year, in the sole discretion of
the Advisor. All or any portion of the management fee not taken as to any fiscal
year shall be deferred  without  interest  and may be taken in such other fiscal
year as the Advisor shall determine.  For January and February 1998, the Company
incurred $120,115 and $121,152,  respectively,  of such fees, $3,309 and $6,465,
respectively, of which has been capitalized as part of the cost of the buildings
for  Properties  that have been or are being  constructed.  For the years  ended
December 31, 1997, 1996 and 1995, the Company  incurred  $881,668,  $278,902 and
$27,950,  respectively, of such fees, $76,789, $27,702 and $4,872, respectively,
of  which  has  been  capitalized  as part  of the  cost  of the  buildings  for
Properties that have been or are being constructed.                             

         The Advisor and its Affiliates  provide  accounting and  administrative
services to the Company  (including  accounting and  administrative  services in
connection  with the  offering of Shares) on a day-to-day  basis.  For the years
ended  December  31,  1997,  1996 and  1995,  the  Company  incurred  a total of
$2,232,466,   $1,103,828  and  $782,690,   respectively,   for  these  services,
$1,676,226,  $769,225 and  $714,674,  respectively,  of such costs  representing
stock  issuance  costs  and  $556,240,   $334,603  and  $68,016,   respectively,
representing  general  operating and  administrative  expenses,  including costs
related to preparing and  distributing  reports  required by the  Securities and
Exchange Commission.                                                            

                                  -28-

424B3
29th Page of 120
TOC
1st
Previous
Next
Bottom
Just 29th

         During the years ended  December 31, 1997,  1996 and 1995,  the Company
acquired  five,  four  and  nine  Properties,  respectively,  for  approximately
$5,450,000,  $2,610,000 and  $6,621,000,  respectively,  from  Affiliates of the
Company.  The  Affiliates  had  purchased  and  temporarily  held title to these
Properties  in order to  facilitate  the  acquisition  of the  Properties by the
Company.  Each Property was acquired at a cost no greater than the lesser of the
cost  of the  Property  to  the  Affiliate  (including  carrying  costs)  or the
Property's appraised value.                                                     

         In connection  with the acquisition of six Properties in 1997 and three
Properties in 1996 that were constructed or renovated by Affiliates, the Company
incurred   development/construction   management  fees  totalling  $369,570  and
$159,350,  respectively.  Such  fees  were  included  in the  purchase  price of
Properties and therefore included in the basis on which the Company charges rent
on the Properties.  No such amounts were incurred for the period January 1, 1998
through March 2, 1998 or for the year ended December 31, 1995.                  

         The Advisor and the Managing  Dealer are wholly owned  subsidiaries  of
CNL Group, Inc., of which James M. Seneff,  Jr., Chairman of the Board and Chief
Executive Officer of the Company, and his spouse are the sole stockholders.     

         All of these fees were paid in  accordance  with the  provisions of the
Company's Articles of Incorporation.                                            

 PRIOR PERFORMANCE INFORMATION

         The  information  presented in this section  represents  the historical
experience  of certain real estate  programs  organized by certain  officers and
directors of the Advisor.  INVESTORS IN THE COMPANY  SHOULD NOT ASSUME THAT THEY
WILL EXPERIENCE RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN
SUCH PRIOR REAL ESTATE  PROGRAMS.  INVESTORS WHO PURCHASE  SHARES IN THE COMPANY
WILL NOT THEREBY ACQUIRE ANY OWNERSHIP INTEREST IN ANY PARTNERSHIPS TO WHICH THE
FOLLOWING INFORMATION RELATES.                                                  

         Two  Directors  of the  Company,  Robert A. Bourne and James M. Seneff,
Jr.,  individually  or with others have served as general  partners of 88 and 89
real  estate  limited  partnerships,  respectively,  including  the 18  publicly
offered CNL Income Fund  partnerships,  which  purchased  properties  similar to
those to be acquired by the Company,  listed in the table  below.  None of these
limited  partnerships  has been  audited  by the  IRS.  Of  course,  there is no
guarantee  that the  Company  will not be  audited.  Based on an analysis of the
operating  results of the prior  partnerships,  the  general  partners  of these
partnerships  believe that each of such  partnerships  has met or is meeting its
principal investment objectives in a timely manner.                             

         CNL Realty Corporation, which was organized as a Florida corporation in
November  1985 and whose  sole  stockholders  are  Messrs.  Bourne  and  Seneff,
currently serves as the corporate general partner with Messrs. Bourne and Seneff
as individual general partners of 18 CNL Income Fund limited  partnerships,  all
of which were organized to invest in fast-food, family-style and, in the case of
two of the partnerships, casual dining restaurant properties and have investment
objectives  similar to those of the Company.  As of December  31,  1997,  the 18
partnerships  had  raised  a  total  of  $614,145,759  from a  total  of  48,907
investors,  and had invested in 708  fast-food,  family-style  or casual  dining
restaurant properties.  Certain additional information relating to the offerings
and investment history of the 18 public partnerships is set forth below.        

                                                        · Enlarge/Download Table


                                                                          Date 90% of Net
                                                         Number of        Proceeds Fully 
                 Maximum                                 Limited          Invested or    
Name of          Offering                                Partnership      Committed to   
Partnership      Amount (1)          Date Closed         Units Sold       Investment (2) 
-----------      ----------          -----------         ----------       -------------- 
                                                                                         
CNL Income       $15,000,000         December 31, 1986        30,000  December 1986      
Fund, Ltd.       (30,000 units)                                                          

                           -29-                                                          

424B3
30th Page of 120
TOC
1st
Previous
Next
Bottom
Just 30th

CNL Income       $25,000,000         August 21, 1987          50,000  November 1987      
Fund II, Ltd.    (50,000 units)                                                          

CNL Income       $25,000,000         April 29, 1988           50,000  June 1988          
Fund III, Ltd.   (50,000 units)                                                          

CNL Income       $30,000,000         December 6, 1988         60,000  February 1989      
Fund IV, Ltd.    (60,000 units)                                                          

CNL Income       $25,000,000         June 7, 1989             50,000  December 1989      
Fund V, Ltd.     (50,000 units)                                                          

CNL Income       $35,000,000         January 19, 1990         70,000  May 1990           
Fund VI, Ltd.    (70,000 units)                                                          

CNL Income       $30,000,000         August 1, 1990       30,000,000  January 1991       
Fund VII, Ltd.   (30,000,000 units)                                                      

CNL Income       $35,000,000         March 7, 1991        35,000,000  September 1991     
Fund VIII, Ltd.  (35,000,000 units)                                                      

CNL Income       $35,000,000         September 6, 1991     3,500,000  November 1991      
Fund IX, Ltd.    (3,500,000 units)                                                       

CNL Income       $40,000,000         March 18, 1992        4,000,000  June 1992          
Fund X, Ltd.     (4,000,000 units)                                                       

CNL Income       $40,000,000         September 28, 1992    4,000,000  September 1992     
Fund XI, Ltd.    (4,000,000 units)                                                       

CNL Income       $45,000,000         March 15, 1993        4,500,000  July 1993          
Fund XII, Ltd.   (4,500,000 units)                                                       

CNL Income       $40,000,000         August 26, 1993       4,000,000  August 1993        
Fund XIII, Ltd.  (4,000,000 units)                                                       

CNL Income       $45,000,000         February 22, 1994     4,500,000  May 1994           
Fund XIV, Ltd.   (4,500,000 units)                                                       

CNL Income       $40,000,000         September 1, 1994     4,000,000  December 1994      
Fund XV, Ltd.    (4,000,000 units)                                                       

CNL Income       $45,000,000         June 12, 1995         4,500,000  August 1995        
Fund XVI, Ltd.   (4,500,000 units)                                                       

CNL Income       $30,000,000         September 19, 1996    3,000,000  December 1996      
Fund XVII, Ltd.  (3,000,000 units)                                                       

                           -30-                                                          

424B3
31st Page of 120
TOC
1st
Previous
Next
Bottom
Just 31st

CNL Income       $35,000,000                (3)                 (3)              (3)     
Fund XVIII, Ltd. (3,500,000 units)                                                       

----------------                                                                

(1)  The amount  stated  includes the  exercise by the general  partners of each
     partnership  of their option to increase by $5,000,000  the maximum size of
     the offering of CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income
     Fund III,  Ltd.,  CNL Income Fund IV, Ltd.,  CNL Income Fund VI, Ltd.,  CNL
     Income Fund VIII, Ltd., CNL Income Fund X, Ltd., CNL Income Fund XII, Ltd.,
     CNL Income Fund XIV,  Ltd.,  CNL Income Fund XVI,  Ltd, and CNL Income Fund
XVIII, Ltd.                                                           

(2)  For  a  description   of  the  property   acquisitions   by  these  limited
partnerships, see the table set forth on the following page.          

(3)  As of December 31, 1997, CNL Income Fund XVIII,  Ltd.,  which is offering a
     maximum of 3,500,000 limited partnership units ($35,000,000),  had accepted
     subscriptions  for  $35,000,000  and had received  subscriptions  totalling
     $34,145,759 (3,414,576 units). As of such date, CNL Income Fund XVIII, Ltd.
     had purchased 22  properties.  On February 6, 1998,  CNL Income Fund XVIII,
     Ltd.'s  offering  terminated  upon  receipt of the  remaining  proceeds  of
$854.241, representing the remaining 85,424 units.                    

         As of December 31, 1997, Mr. Seneff and Mr. Bourne, directly or through
affiliated  entities,  also had served as joint general partners of 69 nonpublic
real estate  limited  partnerships.  The  offerings  of 68 of these 69 nonpublic
limited   partnerships  had  terminated  as  of  December  31,  1997.  These  68
partnerships  raised a total of $170,327,353 from approximately 4,241 investors,
and purchased,  directly or through  participation in a joint venture or limited
partnership, interests in a total of 206 projects as of December 31, 1997. These
206  projects  consist of 19  apartment  projects  (comprising  10% of the total
amount raised by all 68 partnerships), 13 office buildings (comprising 5% of the
total amount raised by all 68  partnerships),  159  fast-food,  family-style  or
casual dining restaurant  property and business  investments  (comprising 68% of
the total amount raised by all 68  partnerships),  one  condominium  development
(comprising  .5% of the  total  amount  raised  by  all 68  partnerships),  four
hotels/motels (comprising 5% of the total amount raised by all 68 partnerships),
eight commercial/retail properties (comprising 11% of the total amount raised by
all 68 partnerships),  and two tracts of undeveloped land (comprising .5% of the
total amount raised by all 68  partnerships).  The offering of the one remaining
nonpublic  limited  partnership  (offering  totalling  $15,000,000)  had  raised
$9,962,500  from 152  investors  (approximately  66.42%  of the  total  offering
amount) as of December 31, 1997.                                                

         Mr. Bourne also has served, without Mr. Seneff, as a general partner of
one additional  nonpublic real estate limited partnership program which raised a
total of $600,000 from 13 investors and purchased,  through  participation  in a
limited  partnership,  one apartment building located in Georgia with a purchase
price of $1,712,000.                                                            

         Mr. Seneff also has served, without Mr. Bourne, as a general partner of
two additional  nonpublic real estate limited  partnerships which raised a total
of  $240,000  from 12  investors  and  purchased  two office  buildings  with an
aggregate  purchase price of $928,390.  Both of the office buildings are located
in Florida.                                                                     

         Of the 88 real estate limited  partnerships  whose offerings had closed
as of December 31, 1997 (including 17 CNL Income Fund limited  partnerships)  in
which Mr. Seneff  and/or Mr. Bourne serve or have served as general  partners in
the past, 37 invested in restaurant  properties leased on a "triple-net"  basis,
including  seven  which  also  invested  in  franchised   restaurant  businesses
(accounting  for  approximately  93% of the total  amount  raised by all 88 real
estate limited partnerships).                                                   

         The following table sets forth summary information,  as of December 31,
1997,  regarding  property  acquisitions  by the 18 limited  partnerships  that,
either  individually  or  through a joint  venture or  partnership  arrangement,
acquired  restaurant  properties and that have investment  objectives similar to
those of the Company.                                                           

                                                                · Download Table


Name of          Type of                                 Method of  Type of
Partnership      Property             Location           Financing  Program
-----------      --------             --------           ---------  -------
                                                                           
CNL Income       22 fast-food or    AL, AZ, CA, FL,      All cash   Public 
Fund, Ltd.       family-style       GA, LA, MD, OK,                        
                 restaurants        PA, TX, VA, WA                         

CNL Income       47 fast-food or    AL, AZ, CO, FL,      All cash   Public 
Fund II, Ltd.    family-style       GA, IL, IN, LA, MI,                    
                 restaurants        MN, MO, NC, NM,                        
                                    OH, TX, WA, WY                         

CNL Income       35 fast-food or    AZ, CA, CO, FL,      All cash   Public 
Fund III, Ltd.   family-style       GA, IA, IL, IN, KS,                    
                 restaurants        KY, MD, MI, MN,                        
                                    MO, NC, NE, OK,                        
                                    TX                                     

CNL Income       45 fast-food or    AL, DC, FL, GA,      All cash   Public 
Fund IV, Ltd.    family-style       IL, IN, KS, MA,                        
                 restaurants        MD, MI, MS, NC,                        
                                    OH, PA, TN, TX,                        
                                    VA                                     

CNL Income       34 fast-food or    AZ, FL, GA, IL, IN,  All cash   Public 
Fund V, Ltd.     family-style       MI, NH, NY, OH,                        
                 restaurants        SC, TN, TX, UT,                        
                                    WA                                     

CNL Income       51 fast-food or    AR, AZ, FL, GA,      All cash   Public 
Fund VI, Ltd.    family-style       IL, IN, MA, MI,                        
                 restaurants        MN, NC, NE, NM,                        
                                    NY, OH, OK, PA,                        
                                    TN, TX, VA, WA,                        
                                    WY                                     

CNL Income       49 fast-food or    AZ, CO, FL, GA,      All cash   Public 
Fund VII, Ltd.   family-style       IN, LA, MI, MN,                        
                 restaurants        NC, OH, SC, TN,                        
                                    TX, UT, WA                             

CNL Income       42 fast-food or    AZ, FL, IN, LA,      All cash   Public 
Fund VIII, Ltd.  family-style       MI, MN, NC, NY,                        
                 restaurants        OH, TN, TX, VA                         

CNL Income       43 fast-food or    AL, CO, FL, GA,      All cash   Public 
Fund IX, Ltd.    family-style       IL, IN, LA, MI,                        
                 restaurants        MN, MS, NC, NH,                        
                                    NY, OH, SC, TN,                        
                                    TX                                     

CNL Income       51 fast-food or    AL, CA, CO, FL,      All cash   Public 
Fund X, Ltd.     family-style       ID, IL, LA, MI,                        
                 restaurants        MO, MT, NC, NH,                        
                                    NM, NY, OH, PA,                        
                                    SC, TN, TX                             

                              -31-                                         

424B3
32nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 32nd

CNL Income       40 fast-food or    AL, AZ, CA, CO,      All cash   Public 
Fund XI, Ltd.    family-style       CT, FL, KS, LA,                        
                 restaurants        MA, MI, MS, NC,                        
                                    NH, NM, OH, OK,                        
                                    PA, SC, TX, VA,                        
                                    WA                                     

CNL Income       49 fast-food or    AL, AZ, CA, FL,      All cash   Public 
Fund XII, Ltd.   family-style       GA, LA, MO, MS,                        
                 restaurants        NC, NM, OH, SC,                        
                                    TN, TX, WA                             

CNL Income       50 fast-food or    AL, AR, AZ, CA,      All cash   Public 
Fund XIII, Ltd.  family-style       CO, FL, GA, IN,                        
                 restaurants        KS, LA, MD, NC,                        
                                    OH, PA, SC, TN,                        
                                    TX, VA                                 

CNL Income       63 fast-food or    AL, AZ, CO, FL,      All cash   Public 
Fund XIV, Ltd.   family-style       GA, KS, LA, MN,                        
                 restaurants        MO, MS, NC, NJ,                        
                                    NV, OH, SC, TN,                        
                                    TX, VA                                 

CNL Income       54 fast-food or    AL, CA, FL, GA,      All cash   Public 
Fund XV, Ltd.    family-style       KS, KY, MN, MO,                        
                 restaurants        MS, NC, NJ, NM,                        
                                    OH, OK, PA, SC,                        
                                    TN, TX, VA                             

CNL Income       44 fast-food or    AZ, CA, CO, DC,      All cash   Public 
Fund XVI, Ltd.   family-style       FL, GA, ID, IN, KS,                    
                 restaurants        MN, MO, NC, NM,                        
                                    NV, OH, TN, TX,                        
                                    UT, WI                                 

CNL Income       28 fast-food,      CA, FL, GA, IL, IN,  All cash   Public 
Fund XVII, Ltd.  family-style or    MI, NC, NV, OH,                        
                 casual dining      SC, TN, TX                             
                 restaurants                                               

CNL Income       22 fast-food,      AZ, CA, FL, GA,      All cash   Public 
Fund XVIII, Ltd. family-style or    IL, KY, MD, MN,                        
                 casual dining      NC, NV, NY, OH,                        
                 restaurants        TN, TX                                 


                                  --------------------------------------------

         A more detailed  description of the acquisitions by real estate limited
partnerships  sponsored  by  Messrs.  Bourne  and  Seneff  is set forth in prior
performance  Table VI, included in Part II of the  registration  statement filed
with the Securities and Exchange  Commission for this offering.  A copy of Table
VI is available to stockholders  from the Company upon request,  free of charge.
In  addition,  upon request to the Company,  the Company will  provide,  without
charge,  a copy of the most  recent  Annual  Report on Form 10-K  filed with the
Securities and Exchange  Commission  for CNL Income Fund,  Ltd., CNL Income Fund
II, Ltd., CNL Income Fund III, Ltd., CNL                                        

                                  -32-

424B3
33rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 33rd

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 XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL
Income Fund XVI,  Ltd.,  CNL Income Fund XVII,  Ltd., and CNL Income Fund XVIII,
Ltd., as well as a copy,  for a reasonable  fee, of the exhibits filed with such
reports.                                                                        

         In order to provide potential  purchasers of Shares in the Company with
information  to enable  them to  evaluate  the prior  experience  of the Messrs.
Seneff and Bourne as  general  partners  of real  estate  limited  partnerships,
including those set forth in the foregoing  table,  certain  financial and other
information  concerning those limited  partnerships  with investment  objectives
similar to one or more of the Company's  investment  objectives in which Messrs.
Seneff and Bourne are general  partners  is  provided  in the Prior  Performance
Tables   included  as  Exhibit  C.   Information   about  the  previous   public
partnerships,  the offerings of which became fully  subscribed  between  January
1993  and  December  1997,  is  included  therein.  Potential  stockholders  are
encouraged  to examine the Prior  Performance  Tables  attached as Exhibit C (in
Table III), which include information as to the operating results of these prior
partnerships, for more detailed information concerning the experience of Messrs.
Seneff and Bourne.                                                              

 DISTRIBUTION POLICY

DISTRIBUTIONS                                                                   

         The following table reflects the total  Distributions and Distributions
per Share  declared by the  Company  for each month since the Company  commenced
operations.                                                                     

                                                        · Enlarge/Download Table


                       1995                       1996                        1997          
                       ----                       ----                        ----          
Month         Total         Per Share     Total        Per Share     Total         Per Share
-----      -----------      ---------  ----------      ---------  -----------      ---------
                                                                                            
January    $        -      $       -      $225,354     $0.058300    $  827,978     $0.059375
February            -              -       255,649      0.058300       884,806      0.059375
March               -              -       287,805      0.058300       980,573      0.060416
April               -              -       323,721      0.058300     1,091,142      0.061458
May                 -              -       368,155      0.058300     1,202,718      0.062500
June             15,148      0.030000      407,803      0.058300     1,295,253      0.062500
July             30,682      0.030000      458,586      0.059375     1,403,187      0.062500
August           57,739      0.035000      517,960      0.059375     1,516,980      0.062500
September        84,467      0.050000      558,394      0.059375     1,677,332      0.063540
October         104,733      0.050000      615,914      0.059375     1,844,923      0.063540
November        155,665      0.058300      683,907      0.059375     1,991,289      0.063540
December        190,184      0.058300      732,824      0.059375     2,138,116      0.063540

         The Company intends to make regular Distributions to stockholders.  The
payment of Distributions  commenced in July 1995.  Distributions will be made to
those  stockholders  who are  stockholders as of the record date selected by the
Directors.  Distributions will be declared monthly and paid on a quarterly basis
during the  offering  period and  declared and paid  quarterly  thereafter.  The
Company is  required  to  distribute  annually  at least 95% of its real  estate
investment  trust  taxable  income to maintain its  objective of qualifying as a
REIT.  Generally,  income  distributed  will not be taxable to the Company under
federal income tax laws if the Company complies with the provisions  relating to
qualification as a REIT. If the cash available to the Company is insufficient to
pay such Distributions, the Company may obtain the necessary funds by borrowing,
issuing new  securities,  or selling  assets.  These methods of obtaining  funds
could affect future  Distributions by increasing  operating costs. To the extent
that  Distributions  to stockholders  exceed earnings and profits,  such amounts
constitute  a return  capital for federal  income tax  purposes,  although  such
Distributions will not reduce stockholders'  aggregate Invested Capital. For the
years ended  December 31,  1997,  1996 and 1995,  the Company  declared and made
Distributions totalling $16,854,297,                                            

                                  -33-

424B3
34th Page of 120
TOC
1st
Previous
Next
Bottom
Just 34th

$5,436,072  and  $638,618,  respectively,  of which  93.33%,  90.25% and 59.82%,
respectively,  of such amounts were  characterized as ordinary income and 6.67%,
9.75% and  40.18%,  respectively,  were  characterized  as return of capital for
federal income tax purposes. In addition,  in January,  February and March 1998,
the Company declared  distributions to its  stockholders  totalling  $2,298,433,
$2,421,992 and  $2,556,539,  respectively,  payable in March 1998.  However,  no
amounts  distributed to  stockholders as of March 2, 1998, are required to be or
have  been  treated  by the  Company  as a return of  capital  for  purposes  of
calculating the stockholders'  return on their Invested Capital. Due to the fact
that the Company had not  acquired  all of its  Properties  and was still in its
offering period as of December 31, 1997, the  characterization  of Distributions
for federal income tax purposes is not  necessarily  considered by management to
be  representative  of the  characterization  of  Distributions in future years.
Distributions  in kind  shall not be  permitted,  except  for  distributions  of
readily  marketable  securities;  distributions  of  beneficial  interests  in a
liquidating  trust  established  for  the  dissolution  of the  Company  and the
liquidation  of its  assets  in  accordance  with the terms of the  Articles  of
Incorporation; or distributions of in-kind property as long as the Directors (i)
advise each  stockholder of the risks  associated  with direct  ownership of the
property; (ii) offer each stockholder the election of receiving in-kind property
distributions;  and (iii) distribute in-kind property only to those stockholders
who accept the Directors' offer.                                                

SUMMARY OF THE
ARTICLES OF INCORPORATION AND BYLAWS

DESCRIPTION OF CAPITAL STOCK                                                    

         The Company has  authorized  a total of  156,000,000  shares of capital
stock,  consisting  of  75,000,000  shares of Common  Stock,  $.01 par value per
share,  3,000,000 shares of Preferred Stock ("Preferred  Stock"), and 78,000,000
additional shares of excess stock ("Excess  Shares"),  $.01 par value per share.
Of the 78,000,000 Excess Shares,  75,000,000 are issuable in exchange for Common
Stock and 3,000,000  are issuable in exchange for  Preferred  Stock as described
below at "--  Restriction  of  Ownership."  As of March 2, 1998, the Company had
40,266,441  shares of Common Stock  outstanding  (including 20,000 issued to the
Advisor prior to the  commencement  of the Initial  Offering and 246,441  issued
pursuant  to the  Reinvestment  Plan) and no  Preferred  Stock or Excess  Shares
outstanding.                                                                    

         The Company's annual meeting of stockholders is scheduled to be held on
May 4, 1998, at which time the stockholders  will vote regarding an amendment to
the Company's  Amended and Restated  Articles of  Incorporation  to increase the
number of authorized shares of capital stock to 206,000,000  shares  (consisting
of 125,000,000  shares of Common Stock,  3,000,000 shares of Preferred Stock and
78,000,000  Excess  Shares).  The Board of Directors  may determine to engage in
future  offerings  of Common  Stock of up to the number of  unissued  authorized
shares of Common Stock available.                                               

 EXPERTS

         The audited consolidated  financial statements (including the financial
statement  schedules) of the Company,  as of December 31, 1997 and 1996, and for
the years ended December 31, 1997, 1996 and 1995,  included in this  Prospectus,
have been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent  accountants,  given on the  authority  of that firm as  experts  in
accounting and auditing.                                                        

 DEFINITIONS

         "1997  Offering" means the public offering of the Company of 27,500,000
shares of Common Stock,  including  2,500,000 shares  available  pursuant to the
Reinvestment  Plan,  which commenced in February 1997 and terminated on March 2,
1998.                                                                           

-34-

424B3
35th Page of 120
TOC
1st
Previous
Next
Bottom
Just 35th

 EXHIBIT B

 FINANCIAL INFORMATION

THE FINANCIAL STATEMENTS INCLUDED IN
 THIS EXHIBIT B UPDATE AND REPLACE
EXHIBIT B TO THE ATTACHED PROSPECTUS, 
 DATED JANUARY 26, 1998.

424B3
36th Page of 120
TOC
1st
Previous
Next
Bottom
Just 36th

                                  CNL AMERICAN PROPERTIES FUND, INC.
                                  AND SUBSIDIARY

                                   INDEX TO UPDATED FINANCIAL STATEMENTS

                                                        · Enlarge/Download Table


                                                                                             Page
                                                                                             ----
                                                                                                 
Pro Forma Consolidated Financial Information (unaudited):                                        

   Pro Forma Consolidated Balance Sheet as of December 31, 1997                              B-2 

   Pro Forma Consolidated Statement of Earnings for the year ended December 31, 1997         B-3 

   Notes to Pro Forma Consolidated Financial Statements for the year ended December              
      31, 1997                                                                               B-4 

Audited Consolidated Financial Statements:                                                       

   Report of Independent Accountants                                                         B-7 

   Consolidated Balance Sheets as of December 31, 1997 and 1996                              B-8 

   Consolidated Statements of Earnings for the years ended December 31, 1997,                    
      1996 and 1995                                                                          B-9 

   Consolidated Statements of Stockholders' Equity for the years ended                           
      December 31, 1997, 1996 and 1995                                                       B-10

   Consolidated Statements of Cash Flows for the years ended December                            
      31, 1997, 1996 and 1995                                                                B-11

   Notes to Consolidated Financial Statements for the years ended December                       
      31, 1997, 1996 and 1995                                                                B-13

Financial Statement Schedules:                                                                   

   Schedule III - Real Estate and Accumulated Depreciation as of December 31, 1997           B-32

   Notes to Schedule III - Real Estate and Accumulated Depreciation as of December 31, 1997  B-48

   Schedule IV - Mortgage Loans on Real Estate as of December 31, 1997                       B-50

   Notes to Schedule IV - Mortgage Loans on Real Estate as of December 31, 1997              B-51


424B3
37th Page of 120
TOC
1st
Previous
Next
Bottom
Just 37th

PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

         The following Pro Forma Consolidated Balance Sheet of the Company gives
effect to (i) property acquisition  transactions from inception through December
31, 1997,  including the receipt of $361,729,709 in gross offering proceeds from
the sale of  36,172,971  shares of  common  stock  and the  application  of such
proceeds to purchase 244 properties  (including 178 properties  which consist of
land and  building,  one  property  through a joint  venture  arrangement  which
consists of land and building,  21 properties which consist of building only and
44 properties which consist of land only), ten of which were under  construction
at December 31,  1997,  to provide  mortgage  financing to the lessees of the 44
properties  consisting  of land only,  and to pay  organizational  and  offering
expenses,  acquisition fees and  miscellaneous  acquisition  expenses,  (ii) the
receipt of  $40,734,704  in gross  offering  proceeds from the sale of 4,073,470
additional  shares of common  stock  during the period  January 1, 1998  through
March 2, 1998,  (iii) the  application  of such funds to purchase six additional
properties acquired during the period January 1, 1998 through March 2, 1998 (all
six of which  are  under  construction),  to pay  additional  costs  for the ten
properties  under  construction at December 31, 1997, to pay offering  expenses,
acquisition  fees  and  miscellaneous   acquisition   expenses,   and  (iv)  the
application of such funds to purchase ten properties, including eight properties
consisting of land and building and two properties  consisting of building only,
for which the Company  has made  initial  commitments  to acquire as of March 2,
1998,  all as  reflected in the pro forma  adjustments  described in the related
notes.  The Pro  Forma  Consolidated  Balance  Sheet as of  December  31,  1997,
includes  the   transactions   described  in  (i)  above  from  the   historical
consolidated balance sheet, adjusted to give effect to the transactions in (ii),
(iii) and (iv) above, as if they had occurred on December 31, 1997.             

         The Pro Forma  Consolidated  Statement  of Earnings  for the year ended
December 31, 1997,  includes the historical  operating results of the properties
described  in (i) above  from the  dates of their  acquisitions  plus  operating
results for three of the properties that were acquired by the Company during the
period January 1, 1997 through March 2, 1998, and had a previous  rental history
prior to the Company's acquisition of such properties, from (A) the later of (1)
the date the property  became  operational as a rental  property by the previous
owner or (2) January 1, 1997,  to (B) the  earlier of (1) the date the  property
was acquired by the Company or (2) the end of the pro forma period presented. No
pro forma adjustments have been made to the Pro Forma Consolidated  Statement of
Earnings for the remaining  properties acquired by the Company during the period
January 1, 1997 through March 2, 1998, or the  properties  for which the Company
has made  initial  commitments  to acquire as of March 2, 1998,  due to the fact
that these properties did not have a previous rental history.                   

         This pro forma  consolidated  financial  information  is presented  for
informational  purposes  only and  does  not  purport  to be  indicative  of the
Company's  financial results or condition if the various events and transactions
reflected  therein  had  occurred  on the  dates,  or been in effect  during the
periods, indicated. This pro forma consolidated financial information should not
be viewed as predictive of the Company's  financial results or conditions in the
future.                                                                         

 B-1

424B3
38th Page of 120
TOC
1st
Previous
Next
Bottom
Just 38th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
 DECEMBER 31, 1997

                                                        · Enlarge/Download Table


                                                        Pro Forma                    
            ASSETS                     Historical      Adjustments       Pro Forma   
                                       ----------      -----------       ---------   
                                                                                     
Land and buildings on operating                                                      
  leases, less accumulated                                                           
  depreciation                        $205,338,186    $ 12,897,271 (a)               
                                                         8,697,232 (b)  $226,932,689 
Net investment in direct                                                             
  financing leases (c)                  47,613,595       2,054,464 (b)    49,668,059 
Cash and cash equivalents               47,586,777      11,239,389 (a)               
                                                       (10,205,000)(b)    48,621,166 
Certificates of deposit                  2,008,224                         2,008,224 
Receivables, less allowance for                                                      
  doubtful accounts                        635,796                           635,796 
Notes receivable                        13,548,044                        13,548,044 
Mortgage notes receivable               17,622,010                        17,622,010 
Accrued rental income                    1,772,261                         1,772,261 
Intangibles and other assets             2,952,869       1,177,268 (a)               
                                                          (546,696)(b)     3,583,441 
                                      ------------    ------------      ------------ 

                                      $339,077,762    $ 25,313,928      $364,391,690 
                                      ============    ============      ============ 

LIABILITIES AND STOCKHOLDERS' EQUITY                                                 

Liabilities:                                                                         
  Line of credit                       $ 2,459,043                      $  2,459,043 
  Accrued construction costs                                                         
    payable                             10,978,211    $(10,978,211)(a)              -
  Accounts payable and other                                                         
    accrued expenses                     1,060,497                         1,060,497 
  Due to related parties                 1,524,294                         1,524,294 
  Rents paid in advance                    517,428                           517,428 
  Deferred rental income                   557,576          38,252 (a)       595,828 
  Other payables                            56,878                            56,878 
      Total liabilities                 17,153,927        (10,939,959)     6,213,968 

Minority interest                          285,734                           285,734 

Stockholders' equity:                                                                
  Preferred stock, without par                                                       
    value.  Authorized and unissued                                                  
    3,000,000 shares                            -                                 -  
  Excess shares, $0.01 par value per                                                 
    share.  Authorized and unissued                                                  
    78,000,000 shares                           -                                 -  
  Common stock, $0.01 par value per                                                  
    share.  Authorized 75,000,000                                                    
    shares; issued and outstanding                                                   
    36,192,971 shares; issued and                                                    
    outstanding, as adjusted,                                                        
    40,266,441 shares                      361,930          40,734 (a)       402,664 
  Capital in excess of par value       323,525,961      36,213,153 (a)   359,739,114 
  Accumulated distributions in                                                       
    excess of net earnings              (2,249,790)                       (2,249,790)
                                      ------------   ------------       ------------ 

                                       321,638,101     36,253,887        357,891,988 
                                      ------------   ------------       ------------ 

                                      $339,077,762   $ 25,313,928       $364,391,690 
                                      ============   ============       ============ 


See accompanying notes to unaudited pro forma consolidated
financial statements. 

 B-2

424B3
39th Page of 120
TOC
1st
Previous
Next
Bottom
Just 39th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1997

                                                                · Download Table


                                                Pro Forma                  
                                  Historical   Adjustments      Pro Forma  
                                  ----------   -----------      ---------  
                                                                           
Revenues:                                                                  
  Rental income from                                                       
    operating leases             $12,457,200    $  20,249 (1)  $12,477,449 
  Earned income from                                                       
    direct financing leases (6)    3,033,415                     3,033,415 
  Interest income from                                                     
    mortgage notes receivable      1,687,456                     1,687,456 
  Other interest income            2,254,375       (9,189)(2)    2,245,186 
  Other income                        25,487                        25,487 
                                  ----------    ---------       ---------- 
                                  19,457,933       11,060       19,468,993 
                                  ----------    ---------       ---------- 

Expenses:                                                                  
  General operating and                                                    
    administrative                   944,763                       944,763 
  Professional services               65,962                        65,962 
  Asset and mortgage management                                            
    fees to related party            804,879        1,506 (3)      806,385 
  State taxes                        251,358                       251,358 
  Depreciation and amortization    1,795,062        4,321 (4)    1,799,383 
                                   ---------    ---------        --------- 
                                   3,862,024        5,827        3,867,851 
                                   ---------    ---------        --------- 

Earnings Before Minority                                                   
  Interest in Income of                                                    
  Consolidated Joint Venture      15,595,909       5,233        15,601,142 

Minority Interest in Income of                                             
  Consolidated Joint Venture         (31,453)                      (31,453)
                                 -----------   ---------       ----------- 

Net Earnings                     $15,564,456   $   5,233       $15,569,689 
                                 ===========   =========       =========== 

Earnings Per Share of                                                      
  Common Stock (Basic                                                      
  and Diluted) (5)               $      0.66                   $      0.66 
                                 ===========                   =========== 

Weighted Average Number of                                                 
  Shares of Common Stock                                                   
  Outstanding (5)                 23,423,868                    23,423,868 
                                  ==========                    ========== 


See accompanying notes to unaudited pro forma consolidated
financial statements. 

 B-3

424B3
40th Page of 120
TOC
1st
Previous
Next
Bottom
Just 40th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997

Pro Forma Consolidated Balance Sheet:                                           
-------------------------------------                                           

(a)      Represents gross proceeds of $40,734,704 from the issuance of 4,073,471
         shares of common stock during the period  January 1, 1998 through March
         2, 1998 and the receipt of $38,252 of rental income during construction
         (capitalized  as  deferred  rental  income)  used  (i) to  acquire  six
         properties  (all of which consist of land and building) for $8,166,301,
         (ii) to fund estimated  construction costs of $15,053,387  ($10,978,211
         of which was accrued as  construction  costs  payable at  December  31,
         1997) relating to ten wholly owned  properties  under  construction  at
         December  31,  1997,  (iii)  to  pay  acquisition  fees  of  $1,833,062
         ($655,794 of which was allocated to properties  acquired  through March
         2, 1998 and $1,177,268 of which was classified as other assets and will
         be allocated to future properties) and (iv) to pay selling  commissions
         and offering expenses (stock issuance costs) of $4,480,817,  which have
         been netted against capital in excess of par value, leaving $11,239,389
in cash and cash equivalents for future investment.           

         The pro forma adjustment to land and buildings on operating leases as a
result of the above transactions were as follows:             

                                                        · Enlarge/Download Table


                                                          Estimated purchase                               
                                                           price (including                                
                                                           construction and                                
                                                            closing costs)    Acquisition fees             
                                                            and additional      allocated to               
                                                          construction costs      property         Total   
                                                          ------------------      --------         -----   
                                                                                                           
     Golden Corral in Edmond, OK                            $ 1,495,908         $    80,138     $ 1,576,046
     Golden Corral in Dubuque, IA                             1,527,271              81,818       1,609,089
     Tumbleweed Southwest Mesquite                                                                         
       Grill & Bar in Hermitage, TN                           1,362,770              73,006       1,435,776
     Tumbleweed Southwest Mesquite                                                                         
       Grill & Bar in Clarksville, TN                         1,416,585              75,888       1,492,473
     Arby's in Jacksonville, FL                                 984,017              52,715       1,036,732
     Jack in the Box in Los Angeles, CA                       1,379,750              73,915       1,453,665
     Ten wholly owned properties under                                                                     
       construction at December 31, 1997                      4,075,176             218,314       4,293,490
                                                            -----------         -----------     -----------

                                                            $12,241,477         $   655,794     $12,897,271
                                                            ===========         ===========     ===========

(b)  Represents  the use of the Company's  net offering  proceeds to acquire                               
     ten  properties  (including  eight  properties  consisting  of land and                               
     building and two properties  consisting of building only) for which the                               
     Company had made initial  commitments  to purchase as of March 2, 1998,                               
     for an estimated cost of $10,205,000, and the allocation of $546,696 of                               
     acquisition  fees  to  these  ten  properties.  See  "Business  Pending                               
     Investments" for a detailed description of these initial commitments.                                 

     The pro forma  adjustment to land and  buildings and net  investment in                               
     direct  financing  leases as a result of the above  commitments were as                               
     follows:                                                                                              
                                                          Estimated purchase                               
                                                           price (including                                
                                                           construction and                                
                                                            closing costs)    Acquisition fees             
                                                            and additional      allocated to               
                                                          construction costs      property         Total   
                                                          ------------------  ----------------  -----------
     Initial commitments to acquire ten                                                                    
       properties as of March 2, 1998                       $10,205,000         $   546,696     $10,751,696
                                                            ===========         ===========     ===========

     Adjustment classified as follows:                                                                     
         Land and buildings on operating leases                                                 $ 8,697,232
         Net investment in direct financing leases                                                2,054,464
                                                                                                -----------
                                                                                                $10,751,696
                                                                                                ===========

(c)      In accordance with generally accepted accounting principles,  leases in
         which the present  value of future  minimum  lease  payments  equals or
         exceeds 90 percent of the value of the related  properties  are treated
         as direct  financing  leases  rather  than as land and  buildings.  The
         categorization of the leases has no effect on rental payments received.

 B-4

424B3
41st Page of 120
TOC
1st
Previous
Next
Bottom
Just 41st

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1997

Pro Forma Consolidated Statement of Earnings:                                   
---------------------------------------------                                   

(1)      Represents  rental income from operating  leases and earned income from
         direct financing leases for three of the properties acquired during the
         period  January 1, 1997  through  March 2,  1998,  which had a previous
         rental history prior to the  acquisition of the property by the Company
         (the "Pro Forma  Properties"),  for the period commencing (A) the later
         of (i) the date the Pro Forma Property  became  operational as a rental
         property  by the  previous  owner or (ii)  January 1, 1997,  to (B) the
         earlier  of (i) the date the Pro Forma  Property  was  acquired  by the
         Company or (ii) the end of the pro forma period presented.  Each of the
         three Pro Forma  Properties  was  acquired  from an  affiliate  who had
         purchased   and   temporarily   held   title  to  the   property.   The
         noncancellable  leases for the Pro Forma Properties in place during the
         period the affiliate  owned the properties were assigned to the Company
         at the time the Company acquired the properties. The following presents
         the actual  date the Pro Forma  Properties  were  acquired or placed in
         service by the Company as compared to the date the Pro Forma Properties
         were treated as becoming  operational as a rental property for purposes
of the Pro Forma Consolidated Statement of Earnings.          

                                                              Date Pro Forma
                                            Date Placed        Property Became
                                           in Service         Operational as
                                          By the Company       Rental Property
                                          --------------       ---------------

             Burger King in Kent, OH      February 1997        December 1996
Golden Corral in                                  
               Hopkinsville, KY           February 1997        February 1997
Jack in the Box in                                
               Folsom, CA                 October 1997        September 1997

         In accordance  with generally  accepted  accounting  principles,  lease
         revenue  from  leases  accounted  for  under  the  operating  method is
         recognized over the terms of the leases. For operating leases providing
         escalating   guaranteed   minimum  rents,   income  is  reported  on  a
         straight-line  basis over the terms of the leases. For leases accounted
         for as direct  financing  leases,  future  minimum  lease  payments are
         recorded as a receivable. The difference between the receivable and the
         estimated  residual  values less the cost of the properties is recorded
         as unearned  income.  The unearned  income is amortized  over the lease
         terms to provide a  constant  rate of  return.  Accordingly,  pro forma
         rental  income  from  operating  leases and earned  income  from direct
         financing  leases does not necessarily  represent  rental payments that
         would have been received if the properties had been operational for the
full pro forma period.                                        

         Generally,  the leases  provide for the payment of  percentage  rent in
         addition  to base  rental  income.  However,  due to the  fact  that no
         percentage  rent was due under the leases for the Pro Forma  Properties
         during  the  portion  of  1997  that  the  previous   owners  held  the
         properties,  no pro forma  adjustment  was made for  percentage  rental
income for the year ended December 31, 1997.                  

(2)      Represents  adjustment  to interest  income due to the  decrease in the
         amount of cash  available for investment in interest  bearing  accounts
         during the periods commencing (A) on the later of (i) the dates the Pro
         Forma  Properties  became  operational  as  rental  properties  by  the
         previous owners or (ii) January 1, 1997, through (B) the earlier of (i)
         the actual dates of  acquisition  by the Company or (ii) the end of the
         pro  forma  period  presented,  as  described  in Note (1)  above.  The
         estimated  pro forma  adjustment  is based upon the fact that  interest
         income  on  interest   bearing   accounts  was  earned  at  a  rate  of
         approximately  four  percent per annum by the  Company  during the year
ended December 31, 1997.                                      

 B-5

424B3
42nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 42nd

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1997

Pro Forma Consolidated Statement of Earnings - Continued:                       

(3)      Represents  incremental  increase in asset  management fees relating to
         the Pro Forma Properties for the period  commencing (A) on the later of
         (i) the date the Pro  Forma  Properties  became  operational  as rental
         properties  by the previous  owners or (ii) January 1, 1997 through (B)
         the earlier of (i) the date the Pro Forma  Properties  were acquired by
         the  Company  or (ii) the end of the pro  forma  period  presented,  as
         described in Note (1) above.  Asset  management fees are equal to 0.60%
         of the Company's Real Estate Asset Value (estimated to be approximately
         $3,392,000 for the Pro Forma Properties for the year ended December 31,
1997), as defined in the Company's prospectus.                

(4)      Represents incremental increase in depreciation expense of the building
         portions of the Pro Forma Properties  accounted for as operating leases
         using the  straight-line  method  over an  estimated  useful life of 30
years.                                                        

(5)      Historical  earnings per share were calculated  based upon the weighted
         average  number of shares of common stock  outstanding  during the year
ended December 31, 1997.                                      

(6)      See Note  (c)  under  "Pro  Forma  Consolidated  Balance  Sheet"  for a
description of direct financing leases.                       

 B-6

424B3
43rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 43rd

 Report of Independent Accountants

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

We have audited the  accompanying  consolidated  balance  sheets of CNL American
Properties Fund, Inc. (a Maryland corporation) and its subsidiary as of December
31,  1997  and  1996,  and the  related  consolidated  statements  of  earnings,
stockholders'  equity,  and cash flows for each of the three years in the period
ended December 31, 1997 and the related  financial  statement  schedules.  These
financial statements and financial statement schedules are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.     

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards 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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  consolidated  financial  position of CNL American
Properties  Fund,  Inc. and its subsidiary as of December 31, 1997 and 1996, and
the  consolidated  results of their  operations and their cash flows for each of
the three years in the period  ended  December  31,  1997,  in  conformity  with
generally  accepted  accounting  principles.  In addition,  in our opinion,  the
financial  statement schedules referred to above, when considered in relation to
the basic financial  statements taken as a whole present fairly, in all material
respects, the information required to be included therein.                      

/s/ Coopers & Lybrand L.L.P.                                                    

Orlando, Florida                                                                
January 22, 1998                                                                

 B-7

424B3
44th Page of 120
TOC
1st
Previous
Next
Bottom
Just 44th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

 CONSOLIDATED BALANCE SHEETS
 ---------------------------

                                              December 31,
         ASSETS                               1997              1996
                                              ------------      ------------

Land and buildings on operating leases,                                         
less accumulated depreciation                 $205,338,186      $ 60,243,146
Net investment in direct financing leases         47,613,595        15,204,972  
Cash and cash equivalents                         47,586,777        42,450,088  
Certificates of deposit                            2,008,224                -   
Receivables, less allowance for doubtful                                        
accounts of $99,964 and $2,857                     635,796           142,389
Notes receivable                                  13,548,044                -   
Mortgage notes receivable                         17,622,010        13,389,607  
Accrued rental income                              1,772,261           422,076  
Intangibles and other assets                       2,952,869         2,972,770  
                                              ------------      ------------

                                              $339,077,762      $134,825,048
                                              ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY                                        

Line of credit                                  $  2,459,043      $  3,521,816  
Accrued construction costs payable                10,978,211         6,587,573  
Accounts payable and other accrued expenses        1,060,497            79,817  
Due to related parties                             1,524,294           997,084  
Rents paid in advance                                517,428           118,900  
Deferred rental income                               557,576           335,849  
Other payables                                        56,878            28,281  
                                              ------------      ------------
    Total liabilities                           17,153,927        11,669,320
                                              ------------      ------------

Minority interest                                    285,734           288,301  
                                              ------------      ------------

Commitments (Note 13)                                                           

Stockholders' equity:                                                           
Preferred stock, without par value.                                         
Authorized and unissued 3,000,000                                       
 shares                                                -                 -
Excess shares, $0.01 par value per share.                                   
Authorized and unissued 78,000,000                                      
 and 23,000,000 shares, respectively                   -                 -
Common stock, $0.01 par value per share.                                    
Authorized 75,000,000 and 20,000,000                                    
shares, respectively, issued and                                        
outstanding 36,192,971 and 13,944,715,                                  
  respectively                                     361,930           139,447
Capital in excess of par value                 323,525,961       123,687,929
Accumulated distributions in excess of                                      
   net earnings                                  (2,249,790)         (959,949)
                                              ------------      ------------
    Total stockholders' equity                 321,638,101       122,867,427
                                              ------------      ------------

                                              $339,077,762      $134,825,048
                                              ============      ============

            See accompanying notes to consolidated financial statements.

 B-8

424B3
45th Page of 120
TOC
1st
Previous
Next
Bottom
Just 45th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

 CONSOLIDATED STATEMENTS OF EARNINGS
 -----------------------------------

                                                                · Download Table


                                              Year Ended December 31,              
                                   1997               1996                 1995    
                                -----------        -----------         ----------- 
                                                                                   
Revenues:                                                                          
  Rental income from operating                                                     
    leases                      $12,457,200        $ 3,731,806         $   510,841 
  Earned income from direct                                                        
    financing leases              3,033,415            625,492              28,935 
  Interest income from                                                             
    mortgage notes receivable     1,687,456          1,069,349                  -  
  Other interest income           2,254,375            773,404             118,859 
  Other income                       25,487              6,633                 496 
                                -----------        -----------         ----------- 
                                 19,457,933          6,206,684             659,131 
                                -----------        -----------         ----------- 

Expenses:                                                                          
  General operating and                                                            
    administrative                  944,763            542,564             134,759 
  Professional services              65,962             58,976               8,119 
  Asset and mortgage manage-                                                       
    ment fees to related party      804,879            251,200              23,078 
  State taxes                       251,358             56,184              20,189 
  Depreciation and amorti-                                                         
    zation                        1,795,062            521,871             104,131 
                                -----------        -----------         ----------- 
                                  3,862,024          1,430,795             290,276 
                                -----------        -----------         ----------- 

Earnings Before Minority                                                           
  Interest in Income of                                                            
  Consolidated Joint Venture     15,595,909          4,775,889             368,855 

Minority Interest in Income of                                                     
  Consolidated Joint Venture        (31,453)           (29,927)                (76)
                                -----------        -----------         ----------- 

Net Earnings                    $15,564,456        $ 4,745,962         $   368,779 
                                ===========        ===========         =========== 

Earnings Per Share of Common                                                       
  Stock (Basic and Diluted)     $      0.66        $      0.59         $      0.19 
                                ===========        ===========         =========== 

Weighted Average Number of                                                         
  Shares of Common Stock                                                           
  Outstanding                    23,423,868          8,071,670           1,898,350 
                                ===========        ===========         =========== 


See accompanying notes to consolidated financial statements.

 B-9

424B3
46th Page of 120
TOC
1st
Previous
Next
Bottom
Just 46th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 -----------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

                                                        · Enlarge/Download Table


                                                                     Accumulated                 
                                Common stock         Capital in      distributions               
                             Number          Par      excess of      in excess of                
                           of shares        value     par value      net earnings      Total     
                           ---------        -----     ---------      ------------      -----     
                                                                                                 
Balance at December 31,                                                                          
  1994                         20,000      $    200  $    199,800   $        -      $    200,000 

Subscriptions received                                                                           
  for common stock                                                                               
  through public offering                                                                        
  and distribution                                                                               
  reinvestment plan         3,845,416        38,454    38,415,704            -        38,454,158 

Stock issuance costs               -             -     (6,403,671)           -        (6,403,671)

Net earnings                       -             -             -        368,779          368,779 

Distributions declared                                                                           
  ($0.31 per share)                -             -             -       (638,618)        (638,618)
                           ----------      --------  ------------   -----------     ------------ 

Balance at December 31,                                                                          
  1995                      3,865,416        38,654    32,211,833      (269,839)      31,980,648 

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

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

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

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

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

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

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

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

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

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

See accompanying notes to consolidated financial statements.

B-10

424B3
47th Page of 120
TOC
1st
Previous
Next
Bottom
Just 47th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

 CONSOLIDATED STATEMENTS OF CASH FLOWS
 -------------------------------------

                                                        · Enlarge/Download Table


                                                             Year Ended December 31,               
                                                  1997               1996                 1995     
                                              ------------       ------------         --------     
                                                                                                   
Increase (Decrease) in Cash and Cash                                                               
  Equivalents:                                                                                     

    Cash Flows From Operating Activities:                                                          
      Cash received from tenants              $ 15,440,803       $  4,543,506         $    492,488 
      Cash paid for expenses                    (1,903,876)          (928,001)            (113,384)
      Interest received                          3,539,287          1,867,035              119,355 
                                              ------------       ------------         ------------ 
          Net cash provided by operating                                                           
            activities                          17,076,214          5,482,540              498,459 
                                              ------------       ------------         ------------ 

    Cash Flows From Investing Activities:                                                          
      Additions to land and buildings on                                                           
        operating leases                      (143,542,667)       (36,104,148)         (18,835,969)
      Increase in net investment in direct                                                         
        financing leases                       (39,155,974)       (13,372,621)          (1,364,960)
      Proceeds from sale of buildings and                                                          
        equipment under direct financing                                                           
        leases                                   7,251,510                 -                    -  
      Investment in certificates of deposit     (2,000,000)                -                    -  
      Investment in notes receivable           (12,521,401)                -                    -  
      Investment in mortgage notes                                                                 
        receivable                              (4,401,982)       (13,547,264)                  -  
      Collections on mortgage notes                                                                
        receivable                                 250,732            133,850                   -  
      Increase in intangibles and other                                                            
        assets                                          -          (1,103,896)            (628,142)
                                              ------------       ------------         ------------ 
          Net cash used in investing                                                               
            activities                        (194,119,782)       (63,994,079)         (20,829,071)
                                              ------------       ------------         ------------ 

    Cash Flows From Financing Activities:                                                          
      Reimbursement of acquisition,                                                                
        organization, deferred offering and                                                        
        stock issuance costs paid by related                                                       
        parties on behalf of the Company        (2,857,352)          (939,798)          (2,500,056)
      Proceeds from borrowing on line of                                                           
        credit                                  19,721,804          3,666,896                   -  
      Payment on line of credit                (20,784,577)          (145,080)                  -  
      Contribution from minority interest                                                          
        of consolidated joint venture                     -            97,419              200,000 
      Subscriptions received from                                                                  
        stockholders                           222,482,560        100,792,991           38,454,158 
      Distributions to minority interest           (34,020)           (39,121)                  -  
      Distributions to stockholders            (16,854,297)        (5,439,404)            (635,286)
      Payment of stock issuance costs          (19,542,862)        (8,486,188)          (3,680,704)
      Other                                         49,001            (54,533)                  -  
                                              ------------       ------------         -----------  
          Net cash provided by financing                                                           
            activities                         182,180,257         89,453,182           31,838,112 
                                              ------------       ------------         ------------ 

Net Increase in Cash and Cash Equivalents        5,136,689         30,941,643           11,507,500 

Cash and Cash Equivalents at Beginning of                                                          
  Year                                          42,450,088         11,508,445                  945 
                                              ------------       ------------         ------------ 

Cash and Cash Equivalents at End of Year      $ 47,586,777       $ 42,450,088         $ 11,508,445 
                                              ============       ============         ============ 


See accompanying notes to consolidated financial statements.

B-11

424B3
48th Page of 120
TOC
1st
Previous
Next
Bottom
Just 48th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

 CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
 -------------------------------------------------

                                                        · Enlarge/Download Table


                                                               Year Ended December 31,               
                                                    1997                1996                1995     
                                                ------------        ------------        ------------ 
                                                                                                     
Reconciliation of Net Earnings to Net Cash                                                           
  Provided by Operating Activities:                                                                  

    Net earnings                                $ 15,564,456        $  4,745,962        $    368,779 
                                                ------------        ------------        ------------ 
    Adjustments to reconcile net earnings                                                            
      to net cash provided by operating                                                              
      activities:                                                                                    
        Depreciation                               1,784,268             511,078             100,318 
        Amortization                                  10,794              69,886               3,813 
        Increase in receivables                     (905,339)           (160,984)            (44,749)
        Decrease in net investment in direct                                                         
          financing leases                         1,130,095             259,740               1,078 
        Increase in accrued rental income         (1,350,185)           (382,934)            (39,142)
        Increase in intangibles and other                                                            
          assets                                      (6,869)             (4,293)             (8,090)
        Increase (decrease) in accounts                                                              
          payable and other accrued expenses         153,223              (2,896)             38,461 
        Increase (decrease) in due to related                                                        
          parties, excluding reimbursement of                                                        
          acquisition, organization, deferred                                                        
          offering and stock issuance costs                                                          
          paid on behalf of the Company               15,466             (30,929)             42,868 
        Increase in rents paid in advance            398,528              93,549              25,351 
        Increase in deferred rental income           221,727             335,849                  -  
        Increase in other payables                    28,597              18,585               9,696 
        Increase in minority interest                 31,453              29,927                  76 
                                                ------------        ------------        ------------ 
            Total adjustments                      1,511,758             736,578             129,680 
                                                ------------        ------------        ------------ 

Net Cash Provided by Operating Activities       $ 17,076,214        $  5,482,540        $    498,459 
                                                ============        ============        ============ 

Supplemental Schedule of Non-Cash Investing                                                          
  and Financing Activities:                                                                          

    Related parties paid certain  acquisition,                                                       
      organization,  deferred offering                                                               
      and stock issuance costs on behalf                                                             
      of the Company as follows:                                                                     
        Acquisition costs                       $    514,908        $    206,103        $    131,629 
        Organization costs                                -                   -               20,000 
        Deferred offering costs                           -              466,405                  -  
        Stock issuance costs                       2,351,244             338,212           2,084,145 
                                                ------------        ------------        ------------ 

                                                $  2,866,152        $  1,010,720        $  2,235,774 
                                                ============        ============        ============ 


See accompanying notes to consolidated financial statements.

B-12

424B3
49th Page of 120
TOC
1st
Previous
Next
Bottom
Just 49th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

1.       Significant Accounting Policies:                                       

         Organization  and Nature of Business - CNL  American  Properties  Fund,
         Inc.  (the  "Company")  was  organized  in  Maryland  on May  2,  1994,
         primarily for the purpose of acquiring,  directly or indirectly through
         joint venture or co-tenancy  arrangements,  restaurant  properties (the
         "Properties")  to  be  leased  on  a  long-term,  triple-net  basis  to
         operators of certain national and regional fast-food,  family-style and
         casual dining restaurant  chains.  The Company also provides  financing
         (the  "Mortgage  Loans") for the  purchase of  buildings,  generally by
         tenants that lease the underlying  land from the Company.  In addition,
         the Company offers furniture,  fixtures and equipment financing through
         leases or loans ("Secured Equipment Leases") to operators of restaurant
chains.                                                       

         The Company was a development stage enterprise from May 2, 1994 through
         June 1, 1995. Since operations had not begun,  activities  through June
1, 1995, were devoted to organization of the Company.         

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

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

B-13

424B3
50th Page of 120
TOC
1st
Previous
Next
Bottom
Just 50th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

1.       Significant Accounting Policies - Continued:                           

                  Direct  financing  method - The leases accounted for using the
                  direct  financing  method are recorded at their net investment
                  (which at the inception of the lease generally  represents the
                  cost of the asset) (Note 5).  Unearned  income is deferred and
                  amortized  to income  over the lease  terms so as to produce a
                  constant   periodic  rate  of  return  on  the  Company's  net
investment in the leases.                   

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

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

         When the  Properties  or  equipment  are  sold,  the  related  cost and
         accumulated  depreciation  for operating  leases and the net investment
         for direct financing leases, plus any accrued rental income or deferred
         rental  income,  will be  removed  from the  accounts  and any gains or
         losses from sales will be reflected in income.  Management  reviews its
Properties for                                                

B-14

424B3
51st Page of 120
TOC
1st
Previous
Next
Bottom
Just 51st

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

1.       Significant Accounting Policies - Continued:                           

         impairment  whenever events or changes in  circumstances  indicate that
         the  carrying  amount  of the  assets  may not be  recoverable  through
         operations.  Management  determines  whether an impairment in value has
         occurred by comparing the  estimated  future  undiscounted  cash flows,
         including the residual value of the Property, with the carrying cost of
         the individual Property. If an impairment is indicated,  the assets are
adjusted to their fair value.                                 

         Mortgage  Loans - The Company  accounts for loan  origination  fees and
         costs  incurred in connection  with Mortgage  Loans in accordance  with
         Statement of Financial  Accounting  Standards No. 91,  "Accounting  for
         Nonrefundable  Fees and Costs  Associated with Originating or Acquiring
         Loans and Initial Direct Costs of Leases".  This statement requires the
         deferral of loan origination fees and the capitalization of direct loan
         costs. The costs capitalized,  net of the fees deferred,  are amortized
         to  interest  income  as an  adjustment  of yield  over the life of the
         loans. The unpaid principal and accrued interest on the Mortgage Loans,
         plus the  unamortized  balance of such fees and costs are  included  in
mortgage notes receivable (see Note 7).                       

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

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

B-15

424B3
52nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 52nd

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

1.       Significant Accounting Policies - Continued:                           

         Organization  Costs - Organization  costs are amortized over five years
         using the  straight-line  method and are  included in  intangibles  and
         other  assets.  For  the  years  ended  December  31,  1997  and  1996,
         accumulated  amortization  of $10,318  and  $6,318,  respectively,  was
recorded.                                                     

         Loan Costs - Loan  costs  incurred  in  connection  with the  Company's
         $35,000,000  line  of  credit  have  been  capitalized  and  are  being
         amortized  over the term of the loan  commitment  using  the  effective
         interest method.  Income or expense  associated with interest rate swap
         agreements  related to the line of credit is  recognized on the accrual
         basis as earned or incurred through an adjustment to interest  expense.
         Loan costs are included in intangibles and other assets. As of December
         31,  1997 and 1996,  the  Company  had  aggregate  gross  loan costs of
         $100,634 and $54,533,  respectively.  For the years ended  December 31,
         1997  and  1996,  accumulated  amortization  of  $61,783  and  $22,034,
respectively, was recorded.                                   

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

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

         Use of  Estimates  -  Management  of the  Company  has made a number of
         estimates  and  assumptions  relating  to the  reporting  of assets and
         liabilities and the disclosure of contingent  assets and liabilities to
         prepare  these  financial   statements  in  conformity  with  generally
         accepted accounting principles.  Actual results could differ from those
estimates.                                                    

B-16

424B3
53rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 53rd

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

1.       Significant Accounting Policies - Continued:                           

         Reclassification   -  Certain  items  in  the  prior  years'  financial
         statements   have  been   reclassified   to   conform   with  the  1997
         presentation.  These  reclassifications  had no effect on stockholders'
equity or net earnings.                                       

         New Accounting  Standards - In February 1997, the Financial  Accounting
         Standards Board issued Statement of Financial  Accounting Standards No.
         128, "Earnings Per Share". The statement, which is effective for fiscal
         years  ending  after   December  15,  1997,   provides  for  a  revised
         computation of earnings per share (see Earnings Per Share). Adoption of
         this  standard  had  no  material  effect  on the  Company's  financial
position or results of operations.                            

         In February  1997,  the  Financial  Accounting  Standards  Board issued
         Statement of Financial  Accounting  Standards No. 129,  "Disclosure  of
         Information about Capital Structure". The statement, which is effective
         for  fiscal  years  ending  after  December  15,  1997,   provides  for
         disclosure  of the  Company's  capital  structure.  At this  time,  the
         Company's  Board of Directors has not determined  the relative  rights,
         preferences,  and privileges of each class or series of preferred stock
         authorized.  Since the Company  has not issued  preferred  shares,  the
disclosures to this standard are not applicable.              

         In June 1997, the Financial Accounting Standards Board issued Statement
         of Financial  Accounting  Standards  No. 130  "Reporting  Comprehensive
         Income".  The statement,  which is effective for fiscal years beginning
         after December 15, 1997, requires the reporting of net earnings and all
         other changes to equity during the period,  except those resulting from
         investments  by owners  and  distributions  to  owners,  in a  separate
         statement that begins with net earnings.  Currently, the Company's only
         component of comprehensive income is its net earnings. The Company does
         not believe that adoption of this standard will have a material  effect
on the Company's financial position or results of operations. 

2.       Public Offering:                                                       

         The Company has a currently  effective  registration  statement on Form
         S-11  with  the  Securities  and  Exchange  Commission  for the sale of
         27,500,000 shares ($275,000,000) of common stock (the "1997 Offering").
Of the 27,500,000 shares of common                            

B-17

424B3
54th Page of 120
TOC
1st
Previous
Next
Bottom
Just 54th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

2.       Public Offering - Continued:                                           

         stock, the Company has registered,  2,500,000 shares  ($25,000,000) are
         available  only  to  stockholders  who  elect  to  participate  in  the
         Company's  reinvestment  plan.  The Company has adopted a  reinvestment
         plan pursuant to which  stockholders  may elect to have the full amount
         of their cash  distributions  from the Company reinvested in additional
         shares of common stock of the Company.  Prior to the 1997 Offering, the
         Company  received  proceeds  from its initial  offering  (the  "Initial
         Offering"),  of $150,591,765  (15,059,177  shares),  including $591,765
         (59,177 shares) issued pursuant to the Company's  reinvestment plan. As
         of December 31, 1997, the Company had received  aggregate  subscription
         proceeds from its Initial  Offering and 1997  Offering of  $361,729,709
         (36,172,971  shares),  including  $2,464,413  (246,441  shares)  issued
through the reinvestment plan.                                

         On October 10, 1997,  the Company filed a  registration  statement with
         the Securities and Exchange  Commission in connection with the proposed
         sale by the  Company of up to  34,500,000  shares of common  stock (the
         "1998  Offering")  in an  offering  expected  to  commence  immediately
         following  the  completion  of  the  Company's  1997  Offering.  Of the
         34,500,000  shares of common  stock to be  offered,  2,000,000  will be
         available   only  to   stockholders   purchasing   shares  through  the
         reinvestment  plan. The price per share and the other terms of the 1998
         Offering,  including the  percentage of gross  proceeds  payable to the
         managing dealer for selling commissions and expenses in connection with
         the  offering,   payable  to  the  advisor  for  acquisition  fees  and
         acquisition  expenses  and  reimbursable  to the advisor  for  offering
         expenses,  will be the same as those for the Company's  1997  Offering.
         Net  proceeds  from the 1998  Offering  will be invested in  additional
Properties and Mortgage Loans.                                

3.       Leases:                                                                

         The Company  leases its land,  buildings  and equipment to operators of
         national  and  regional  fast-food,   family-style  and  casual  dining
         restaurants.  The  leases are  accounted  for under the  provisions  of
         Statement of Financial  Accounting  Standards No. 13,  "Accounting  for
         Leases". For Property leases classified as direct financing leases, the
         building  portions of the majority of the leases are  accounted  for as
     direct financing leases while the land portions of these leases are

B-18

424B3
55th Page of 120
TOC
1st
Previous
Next
Bottom
Just 55th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

3.       Leases - Continued:                                                    

         accounted for as operating  leases.  Substantially  all Property leases
         have initial terms of 15 to 20 years  (expiring  between 2006 and 2017)
         and provide for  minimum  rentals.  In  addition,  the  majority of the
         Property  leases provide for contingent  rentals and/or  scheduled rent
         increases  over the  terms of the  leases.  Each  tenant  also pays all
         property  taxes and  assessments,  fully  maintains  the  interior  and
         exterior of the  building  and carries  insurance  coverage  for public
         liability,  property  damage,  fire and  extended  coverage.  The lease
         options for the Property  leases  generally  allow tenants to renew the
         leases for two to four successive five-year periods subject to the same
         terms and conditions as the initial  lease.  Most leases also allow the
         tenant  to  purchase  the  Property  at the  greater  of the  Company's
         purchase  price plus a specified  percentage of such purchase  price or
       fair market value after a specified portion of the lease has elapsed.

         The Secured  Equipment Leases recorded as direct financing leases as of
         December 31, 1997 provide for minimum  rentals payable monthly and have
         lease terms  ranging  from four to seven years.  The Secured  Equipment
         Leases  generally  include  an option  for the  lessee to  acquire  the
equipment at the end of the lease term for a nominal fee.     

4.       Land and Buildings on Operating Leases:                                

         Land and  buildings on operating  leases  consisted of the following at
December 31:                                                  
                                       1997                   1996
                                       ------------           ------------

            Land                       $106,616,360           $ 33,850,436
            Buildings                    95,518,149             24,152,610
                                       ------------           ------------
                                        202,134,509             58,003,046
Less accumulated                                  
               depreciation               (2,395,665)              (611,396)
                                       ------------           ------------
                                        199,738,844             57,391,650
Construction in                                   
              progress                    5,599,342              2,851,496
                                       ------------           ------------

                                       $205,338,186           $ 60,243,146
                                       ============           ============

B-19

424B3
56th Page of 120
TOC
1st
Previous
Next
Bottom
Just 56th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

4.       Land and Buildings on Operating Leases - Continued:                    

         Some leases provide for scheduled  rent increases  throughout the lease
         term and/or rental payments during the construction of a Property prior
         to the date it is placed in service.  Such amounts are  recognized on a
         straight-line basis over the terms of the leases commencing on the date
         the  Property is placed in service.  For the years ended  December  31,
         1997, 1996 and 1995, the Company  recognized  $1,941,054,  $517,067 and
$39,142, respectively, of such rental income.                 

         During 1997,  the Company sold five of its Properties and the equipment
         relating  to two  Secured  Equipment  Leases to  tenants.  The  Company
         received net proceeds of approximately $7,252,000,  which were equal to
         the carrying  value of the  Properties  and the net  investment  in the
         direct  financing leases for the equipment at the time of the sales. As
         a  result,  no gain or loss  was  recognized  for  financial  reporting
         purposes.  The Company used the net sales proceeds relating to the sale
         of the equipment to repay amounts previously advanced under its line of
         credit (see Note 8). The Company  reinvested the proceeds from the sale
of Properties in additional Properties.                       

         The  following  is a schedule of future  minimum  lease  payments to be
       received on the noncancellable operating leases at December 31, 1997:

              1998                                          $ 18,891,310
              1999                                            18,931,518
              2000                                            18,960,643
              2001                                            19,187,537
              2002                                            19,982,822
              Thereafter                                     265,518,312
                                                            ------------

                                                            $361,472,142
                                                            ============

         Since  lease  renewal  periods  are  exercisable  at the  option of the
         tenant, the above table only presents future minimum lease payments due
         during  the  initial  lease  terms.  In  addition,  this table does not
         include any amounts for future contingent rentals which may be received
         on the leases based on a percentage of the tenant's gross sales.  These
         amounts also do not include minimum lease payments that will become due
when Properties under development are completed (see Note 13).

B-20

424B3
57th Page of 120
TOC
1st
Previous
Next
Bottom
Just 57th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

5.       Net Investment in Direct Financing Leases:                             

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

                                            1997              1996
                                            ------------      ------------

Minimum lease payments                              
             receivable                     $ 98,121,853      $ 30,162,465
           Estimated residual values           6,889,570         1,346,332
Secured equipment lease                             
             interest receivable                  67,614            18,286
            Less unearned income              (57,465,442)      (16,322,111)
                                            ------------      ------------

Net investment in direct                            
             financing leases               $ 47,613,595      $ 15,204,972
                                            ============      ============

         The  following  is a schedule of future  minimum  lease  payments to be
received on direct financing leases at December 31, 1997:     

         1998                                        6,820,081
         1999                                        6,820,081
         2000                                        6,872,134
         2001                                        6,644,067
         2002                                        6,546,936
         Thereafter                                 64,418,554
                                                   -----------
                                                   $98,121,853
                                                   ===========

         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 4).                               

6.       Notes Receivable:                                                      

         In October 1997, the Company  entered into two promissory  notes with a
         borrower  for  equipment  financing,  totalling  $13,225,000  which are
         collateralized  by  restaurant  equipment.  The  promissory  notes bear
         interest at a rate of ten percent per annum and will be collected in 84
         equal monthly  installments  totalling  $219,550  beginning  January 1,
         1998. At December 31, 1997, the Company had advanced $12,521,400 to the
         borrower and had a remaining  balance to fund of $703,600  (included in
         accounts  payable and other  accrued  expenses at December  31,  1997).
         Notes  receivable  at December 31, 1997,  include  accrued  interest of
$323,044.                                                     

B-21

424B3
58th Page of 120
TOC
1st
Previous
Next
Bottom
Just 58th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

6.       Notes Receivable - Continued:                                          

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

7.       Mortgage Notes Receivable:                                             

         During 1996, in connection  with the  acquisition  of land for 35 Pizza
         Hut  restaurants,  the Company  accepted three  promissory notes in the
         aggregate principal sum of $12,847,000,  collateralized by mortgages on
         the buildings on the 35 Pizza Hut Properties. The promissory notes bear
         interest at a rate of 10.75% per annum and are being  collected  in 240
equal monthly installments totalling $130,426.                

         During 1997, in connection  with the acquisition of land for nine Pizza
         Hut  restaurants,  the  Company  accepted  a  promissory  note  in  the
         principal  sum  of  $4,200,000,  collateralized  by a  mortgage  on the
         buildings on the nine Pizza Hut Properties and two additional Pizza Hut
         buildings.  The  promissory  note bears interest at a rate of 10.5% per
         annum and is being  collected  in 240  equal  monthly  installments  of
$41,943.                                                      

      Mortgage notes receivable consisted of the following at December 31:

                                              1997                1996
                                              -----------        -----------

            Outstanding principal             $16,662,418        $12,713,151
            Accrued interest income               118,887             35,285
             Deferred financing income             (85,448)           (46,268)
            Unamortized loan costs                926,153            687,439
                                              -----------        -----------

                                              $17,622,010        $13,389,607
                                              ===========        ===========

         Management  believes  that the estimated  fair value of mortgage  notes
         receivable at December 31, 1997 and 1996  approximated  the outstanding
         principal  amount based on  estimated  current  rates at which  similar
         loans would be made to borrowers  with  similar  credit and for similar
maturities.                                                   

B-22

424B3
59th Page of 120
TOC
1st
Previous
Next
Bottom
Just 59th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

8.       Line of Credit:                                                        

         In March 1996,  the Company  entered into a line of credit and security
         agreement  with a bank,  the  proceeds  of which were to be used by the
         Company to offer Secured Equipment Leases.  The line of credit provided
         that the Company would be able to receive advances of up to $15,000,000
         until March 4, 1998.  Generally,  all advances under the line of credit
         bore  interest at either (i) a rate per annum equal to 215 basis points
         above  the  Reserve  Adjusted  LIBOR  Rate (as  defined  in the line of
         credit)  or (ii) a rate per  annum  equal  to the  bank's  prime  rate,
         whichever  the Company  selected at the time  advances  were made. As a
         condition of obtaining the line of credit,  the Company agreed to grant
        to the bank a first security interest in the Secured Equipment Leases.

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

         During the years ended December 31, 1997 and 1996, the Company obtained
         advances totalling $19,721,804 and $3,666,896,  respectively, under the
         Line of Credit and made principal  payments  totalling  $20,784,577 and
         $145,080,  respectively.  As of December 31, 1997 and 1996,  $2,459,043
         and $3,521,816,  respectively, of principal was outstanding relating to
         the Line of Credit, plus $14,430 and $13,164,  respectively, of accrued
         interest.  As of  December  31,  1997,  the  interest  rate on  amounts
         outstanding  under the Line of Credit was 7.373% (LIBOR plus 1.65%). As
         of December 31, 1996,  the interest rate on amounts  outstanding  under
         the Line of Credit  ranged from 7.71% to 7.82% (215 basis  points above
         the  Reserve  Adjusted  LIBOR  Rate).  The Company  believes,  based on
         current terms,  that the carrying value of its note payable at December
         31, 1997 and 1996  approximated  fair  value.  The terms of the Line of
         Credit include financial covenants which provide for the maintenance of
         certain  financial  ratios.  The  Company was in  compliance  with such
covenants as of December 31, 1997.                            

B-23

424B3
60th Page of 120
TOC
1st
Previous
Next
Bottom
Just 60th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

8.       Line of Credit - Continued:                                            

         During 1996,  the Company  entered into interest  rate swap  agreements
         with a  commercial  bank to reduce the  impact of  changes in  interest
         rates on its floating rate long-term  debt. The agreements  effectively
         change  the  Company's  interest  rate  exposure  on  notional  amounts
         totalling  approximately  $2,110,000 of the  outstanding  floating rate
         notes to fixed rates ranging from 8.75% to nine percent per annum.  The
         notional amounts of the interest rate swap agreements amortize over the
         period of the  agreements  which  approximate  the term of the  related
         notes. As of December 31, 1997, the notional balance was  approximately
         $1,750,000.  The  Company  is  exposed  to credit  loss in the event of
         nonperformance by the other party to the interest rate swap agreements;
         however,  the  Company  does  not  anticipate   nonperformance  by  the
         counterparty. Management does not believe the impact of any payments of
         a termination penalty, in the event the Company determines to terminate
         the swap agreements prior to the end of their respective  terms,  would
         be  material  to  the  Company's   financial  position  or  results  of
operations.                                                   

         Interest costs (including  amortization of loan costs) incurred for the
         years ended  December 31, 1997 and 1996,  were  $544,788 and  $127,012,
         respectively,  all of  which  were  capitalized  as part of the cost of
         buildings  under  construction.  For the years ended December 31, 1997,
         and  1996,   the  Company  paid   interest  of  $502,680  and  $91,757,
         respectively.  No interest was paid during the year ended  December 31,
1995.                                                         

9.       Stock Issuance Costs:                                                  

         The Company has incurred certain expenses in connection with the public
         offerings of its shares,  including commissions,  marketing support and
         due  diligence   expense   reimbursement   fees,  filing  fees,  legal,
         accounting, printing and escrow fees, which have been deducted from the
         gross  proceeds  of  the  offerings.   CNL  Fund  Advisors,  Inc.  (the
         "Advisor") has agreed to pay all  organizational  and offering expenses
         (excluding  commissions and marketing support and due diligence expense
         reimbursement  fees) which exceed three  percent of the gross  offering
proceeds received from the sale of shares of the Company.     

         During the years ended  December 31, 1997,  1996 and 1995,  the Company
         incurred  $22,422,045,  $9,216,102  and  $6,423,671,  respectively,  in
organizational and offering costs, including                  

B-24

424B3
61st Page of 120
TOC
1st
Previous
Next
Bottom
Just 61st

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

9.       Stock Issuance Costs - Continued:                                      

         $17,798,605,  $8,063,439 and $3,076,333,  respectively,  in commissions
         and marketing support and due diligence expense reimbursement fees (see
         Note 11). Of these  amounts,  as of December 31,  1997,  1996 and 1995,
         $38,041,818,   $15,619,773  and  $6,403,671,  respectively,  have  been
         treated  as stock  issuance  costs  and  $20,000  has been  treated  as
         organization  costs.  The stock  issuance  costs  have been  charged to
        stockholders' equity subject to the three percent cap described above.

10.      Distributions:                                                         

         For the years ended December 31, 1997,  1996 and 1995,  93.33%,  90.25%
         and 59.82%, respectively, of the distributions received by stockholders
         were  considered  to be  ordinary  income and 6.67%,  9.75% and 40.18%,
         respectively,  were  considered a return of capital for federal  income
         tax purposes.  No amounts  distributed  to  stockholders  for the years
         ended December 31, 1997,  1996 and 1995 are required to be or have been
         treated  by  the  Company  as a  return  of  capital  for  purposes  of
 calculating the stockholders' return on their invested capital.

11.      Related Party Transactions:                                            

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

         CNL  Securities  Corp.  is  entitled  to  receive  selling  commissions
         amounting  to 7.5% of the total  amount  raised from the sale of shares
         for services in connection  with the offering of shares,  a substantial
         portion  of  which  has  been or will be paid as  commissions  to other
         broker  dealers.  During the years ended  December 31,  1997,  1996 and
         1995, the Company  incurred  $16,686,192,  $7,559,474  and  $2,884,062,
         respectively,   of  such  fees,  of  which  approximately  $15,563,500,
         $7,059,000 and  $2,682,000,  respectively,  were or will be paid by CNL
Securities Corp. as commissions to other broker-dealers.      

         In addition,  CNL  Securities  Corp. is entitled to receive a marketing
         support and due diligence  expense  reimbursement  fee equal to 0.5% of
         the total amount raised from the sale of shares, a portion of which may
         be reallowed to other  broker-dealers.  During the years ended December
         31, 1997, 1996 and 1995, the Company incurred $1,112,413,  $503,965 and
         $192,271,  respectively,  of such  fees,  the  majority  of which  were
         reallowed  to other  broker-dealers  and from  which  all bona fide due
diligence expenses were paid.                                 

B-25

424B3
62nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 62nd

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

11.      Related Party Transactions - Continued:                                

         CNL Securities Corp. will also receive,  in connection with each common
         stock offering,  a soliciting  dealer servicing fee payable annually by
         the Company  beginning on December 31 of the year following the year in
         which  the  offering   terminates   in  the  amount  of  0.20%  of  the
         stockholders'  investment in the Company.  CNL Securities Corp. in turn
         may reallow all or a portion of such fee to  soliciting  dealers  whose
         clients  purchased shares in such offering held shares on such date. As
of December 31, 1997, no such fees had been incurred.         

         The  Advisor is entitled to receive  acquisition  fees for  services in
         identifying the Properties and structuring the terms of the acquisition
         and leases of the Properties and  structuring the terms of the Mortgage
         Loans equal to 4.5% of the total amount raised from the sale of shares.
         During the years ended  December 31, 1997,  1996 and 1995,  the Company
         incurred $10,011,715, $4,535,685 and $1,730,437,  respectively, of such
         fees. Such fees are included in land and buildings on operating leases,
         net investment in direct  financing  leases,  mortgage notes receivable
and other assets.                                             

         In connection with the acquisition of Properties that are being or have
         been constructed or renovated by affiliates, subject to approval by the
         Company's    Board   of    Directors,    the    Company    may    incur
         development/construction  management fees, payable to affiliates of the
         Company. Such fees are included in the purchase price of the Properties
         and are  therefore  included in the basis on which the Company  charges
         rent on the  Properties.  During the years ended  December 31, 1997 and
         1996, the Company incurred $369,570 and $159,350, respectively, of such
         amounts  relating to six and three  Properties,  respectively.  No such
amounts were incurred for the year ended December 31, 1995.   

         For negotiating  Secured  Equipment  Leases and supervising the Secured
         Equipment Lease program,  the Advisor is entitled to receive a one-time
         secured  equipment  lease  servicing fee of two percent of the purchase
         price of the  equipment  that is the  subject  of a  Secured  Equipment
         Lease.  During the years ended  December 31, 1997 and 1996, the Company
         incurred $366,865 and $70,070, respectively, in Secured Equipment Lease
         servicing  fees.  No such  amounts  were  incurred  for the year  ended
December 31, 1995.                                            

B-26

424B3
63rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 63rd

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

11.      Related Party Transactions - Continued:                                

         The Company and the Advisor  have  entered  into an advisory  agreement
         pursuant to which the Advisor will receive a monthly asset and mortgage
         management  fee of  one-twelfth  of 0.60% of the Company's  real estate
         asset value and the outstanding principal balance of the Mortgage Loans
         as of the end of the proceeding  month.  The management fee, which will
         not exceed fees which are competitive for similar  services in the same
         geographic area, may or may not be taken, in whole or in part as to any
         year, in the sole discretion of the Advisor.  All or any portion of the
         management  fee not  taken as to any  fiscal  year  shall  be  deferred
         without  interest  and may be taken in such  other  fiscal  year as the
         Advisor shall determine. During the years ended December 31, 1997, 1996
         and  1995,  the  Company  incurred   $881,668,   $278,902  and  $27,950
         respectively,  of such fees, $76,789, $27,702 and $4,872, respectively,
         of which  has been  capitalized  as part of the cost of  buildings  for
Properties that have been or are being constructed.           

         Prior to such time, if any, as shares of the Company's common stock are
         listed on a national securities  exchange or  over-the-counter  market,
         the Advisor is entitled to receive a deferred, subordinated real estate
         disposition  fee, payable upon the sale of one or more Properties based
         on the lesser of one-half of a  competitive  real estate  commission or
         three percent of the sales price if the Advisor  provides a substantial
         amount of services in connection with the sale.  However,  if the sales
         proceeds are reinvested in a replacement  property, no such real estate
         disposition  fees will be incurred until such  replacement  property is
         sold and the net  sales  proceeds  are  distributed.  The  real  estate
         disposition  fee  is  payable  only  after  the  stockholders   receive
         distributions  equal to the sum of an  annual,  aggregate,  cumulative,
         noncompounded   eight  percent   return  on  their   invested   capital
         ("Stockholders' 8% Return") plus their aggregate  invested capital.  No
         deferred,  subordinated real estate disposition fees have been incurred
to date.                                                      

         A subordinated  share of net sales proceeds will be paid to the Advisor
         upon the sale of Company  assets in an amount  equal to ten  percent of
         net sales  proceeds.  However,  if net sales proceeds are reinvested in
         replacement properties or replacement Secured Equipment Leases, no such
         share of net sales  proceeds  will be paid to the  Advisor  until  such
         replacement  property or Secured  Equipment  Lease is sold. This amount
         will be paid only after the stockholders receive distributions equal to
the sum of the stockholders' aggregate                        

B-27

424B3
64th Page of 120
TOC
1st
Previous
Next
Bottom
Just 64th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

11.      Related Party Transactions - Continued:                                

         invested capital and the  Stockholders'  8% Return.  As of December 31,
1997, no such payments have been made to the Advisor.         

         The Advisor and its affiliates  provide  accounting and  administrative
         services  to the Company on a  day-to-day  basis as well as services in
         connection  with the offering of shares.  For the years ended  December
         31, 1997,  1996 and 1995,  expenses  incurred for these  services  were
classified as follows:                                        

                                        1997          1996          1995
                                        ----------    ----------    ----------

          Stock issuance costs          $1,676,226    $  769,225    $  714,674
General operating and                                     
            administrative expenses        556,240       334,603        68,016
                                        ----------    ----------    ----------

                                        $2,232,466    $1,103,828    $  782,690
                                        ==========    ==========    ==========

         During the years ended  December 31, 1997,  1996 and 1995,  the Company
         acquired   five,   four  and   nine   Properties,   respectively,   for
         approximately $5,450,000, $2,610,000 and $6,621,000, respectively, from
         affiliates of the Company. The affiliates had purchased and temporarily
         held title to these  Properties in order to facilitate the  acquisition
         of the Properties by the Company.  Each Property was acquired at a cost
         no  greater  than  the  lesser  of  the  cost  of the  Property  to the
         affiliate, including carrying costs, or the Property's appraised value.

B-28

424B3
65th Page of 120
TOC
1st
Previous
Next
Bottom
Just 65th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

11.      Related Party Transactions - Continued:                                

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

                                                 1997             1996
                                                 ----------       ----------

Due to the Advisor:                               
Expenditures incurred on                      
behalf of the Company                     
and accounting and                        
                 administrative services         $  126,205       $  199,068
               Acquisition fees                     386,972          383,210
                                                 ----------       ----------
                                                    513,177          582,278
                                                 ----------       ----------

Due to CNL Securities Corp.:                      
               Commissions                          940,520          372,227
Marketing support and                         
due diligence expense                     
                 reimbursement fees                  63,097           42,579
                                                 ----------       ----------
                                                  1,003,617          414,806
                                                 ----------       ----------

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

                                                 $1,524,294       $  997,084
                                                 ==========       ==========

12.      Concentration of Credit Risk:                                          

         The following schedule presents rental, earned and interest income from
         individual  lessees or borrowers,  or  affiliated  groups of lessees or
         borrowers,  each  representing  more than ten percent of the  Company's
         total rental,  earned income and interest  income from its  Properties,
         Mortgage  Loans and  Secured  Equipment  Leases for at least one of the
years ended December 31:                                      
                                       1997         1996          1995
                                       ----------   ----------    ----------

Castle Hill  Holdings  V,                                 
L.L.C.,  Castle Hill                                  
Holdings  VI, L.L.C.                                  
and Castle Hill Holdings                              
          VII, L.L.C.                 $2,636,004   $1,699,986    $       -
         Foodmaker, Inc.                1,980,338      346,179        66,813
Houlihan's Restaurants,                                   
          Inc.                         1,847,574           -             -
         DenAmerica Corp.               1,120,534      420,810        66,595
         Golden Corral Corporation      1,064,801      577,003       212,406
Northstar Restaurants,                                    
           Inc.                           328,914      329,117        73,219
         Roasters Corp.                    47,264      187,609        82,136

                                  B-29

424B3
66th Page of 120
TOC
1st
Previous
Next
Bottom
Just 66th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

12.      Concentration of Credit Risk - Continued:                              

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

                                          1997          1996          1995
                                         ----------    ----------    ---------

           Pizza Hut                    $2,636,004    $1,699,986    $      -
Golden Corral Family                                  
              Steakhouse Restaurants      2,531,941     1,459,349      212,406
            Boston Market                 2,338,949       547,590       73,219
            Jack in the Box               1,980,338       346,179       66,813
            Denny's                         931,752       420,810       66,595
            Kenny Rogers' Roasters           47,264       187,609       82,136

         Although the Company's Properties are geographically diverse throughout
         the United  States and the Company's  lessees and  borrowers  operate a
         variety of restaurant concepts,  failure of any one of these restaurant
         chains or any one of these lessees or borrowers that  contributes  more
         than ten percent of the  Company's  rental,  earned income and interest
         income  could  significantly  impact the results of  operations  of the
         Company.  However,  management believes that the risk of such a default
         is reduced due to the essential or important nature of these Properties
for the on-going operations of the lessees and borrowers.     

13.      Commitments:                                                           

         The  Company has  entered  into  various  development  agreements  with
         tenants which provide terms and  specifications for the construction of
         buildings the tenants have agreed to lease.  The  agreements  provide a
         maximum  amount of development  costs  (including the purchase price of
         the land and closing  costs) to be paid by the Company.  The  aggregate
         maximum   development   costs  the   Company  has  agreed  to  pay  are
         approximately  $14,495,000,  of which approximately $10,202,000 in land
         and  other  costs  had been  incurred  as of  December  31,  1997.  The
         buildings  currently under  construction are expected to be operational
         by June 1998. In  connection  with the purchase of each  Property,  the
         Company,  as lessor,  entered  into a long-term  lease  agreement.  The
         general terms of the lease  agreements  are  substantially  the same as
those described in Note 3.                                    

B-30

424B3
67th Page of 120
TOC
1st
Previous
Next
Bottom
Just 67th

CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------

Years Ended December 31, 1997, 1996 and 1995

14.      Subsequent Events:                                                     

         During the period January 1, 1998 through January 22, 1998, the Company
         received  subscription  proceeds  for an  additional  1,231,779  shares
($12,317,791) of common stock.                                

         On January 1, 1998, the Company declared distributions of $2,299,701 or
         $.06354  per share of common  stock,  payable  on March  23,  1998,  to
stockholders of record on January 1, 1998.                    

         During the period January 1, 1998 through January 22, 1998, the Company
         acquired  two  Properties   (both  on  which   restaurants   are  being
         constructed) for cash at a total cost of approximately $1,067,000.  The
         buildings  under  construction  are expected to be  operational by July
         1998. In connection with the purchase of each Property,  the Company as
   lessor, has entered into a long-term, triple-net lease agreement.

B-31

424B3
68th Page of 120
TOC
1st
Previous
Next
Bottom
Just 68th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

 SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 -------------------------------------------------------

 December 31, 1997

                                                        · Enlarge/Download Table


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

    Applebee's Restaurants:                                                                            
      Montclair, California                -   $   874,094        $        -   $        -      $     - 
      Salinas, California                  -       786,475                 -            -            - 

    Arby's Restaurants:                                                                                
      Avon, Indiana                        -       338,486            497,282           -            - 
      Greensboro, North Carolina           -       363,478            404,650           -            - 
      Greenville, North Carolina           -       277,986            490,143           -            - 
      Jonesville, North Carolina           -       228,364            539,764           -            - 
      Kendallville, Indiana                -       276,567            505,359           -            - 
      Kernersville, North Carolina         -       273,325            413,077           -            - 
      Kinston, North Carolina              -       268,545            485,160           -            - 
      Lexington, North Carolina            -       320,924            463,347           -            - 

    Barb Wires Steakhouse and Saloon                                                                   
      Restaurants:                                                                                     
        Cookeville, Tennessee              -       511,084                 -            -            - 
        Lawrence, Kansas                   -       493,489                 -            -            - 
        Murfreesboro, Tennessee            -       514,900                 -            -            - 
        Nashville, Tennessee               -       420,176                 -            -            - 

    Bennigan's Restaurant:                                                                             
      Arvada, Colorado                     -       714,194          1,302,733           -            - 

    Black-eyed Pea Restaurants:                                                                        
      Hillsboro, Texas                     -       403,885                 -            -            - 
      Mesa, Arizona                        -       784,939                 -            -            - 

    Boston Market Restaurants:                                                                         
      Arvada, Colorado                     -       569,452                 -       641,644           - 
      Atlanta, Georgia                     -       775,523                 -       456,458           - 
      Baltimore, Maryland                  -       585,818                 -       866,641           - 
      Cedar Park, Texas                    -       569,769                 -       296,976           - 
      Chanhassen, Minnesota                -       376,929            639,875           -            - 
      Collinsville, Illinois               -       507,544                 -       328,353           - 
      Corvallis, Oregon                    -       365,784                 -       605,763           - 
      Dubuque, Iowa                        -       353,608            663,969           -            - 
      Edgewater, Colorado                  -       320,463            627,371           -            - 
      Ellisville, Missouri                 -       397,036                 -       639,422           - 
      Florissant, Missouri                 -       705,522                 -       626,845           - 
      Franklin, Tennessee (k)              -       566,562            442,992           -            - 
      Gambrills, Maryland                  -       667,992                 -       661,776           - 
      Golden Valley, Minnesota             -       665,422                 -       481,311           - 
      Grand Island, Nebraska               -       234,685            644,615           -            - 
      Hoover, Alabama                      -       493,536            619,786           -            - 
      Indianapolis, Indiana                -       885,234                 -       867,523           - 
      Jessup, Maryland                     -       630,950                 -       720,642           - 
      Lansing, Michigan                    -       515,827                 -       572,706           - 


B-32

424B3
69th Page of 120
TOC
1st
Previous
Next
Bottom
Just 69th
                                                        · Enlarge/Download Table


             Gross Amount at Which Carried                                                  Life     
                 at Close of Period (b)                                                   on Which   
---------------------------------------------------                                     Depreciation 
                                                                                          in Latest  
                     Buildings                                       Date                   Income   
                        and                          Accumulated    of Con-     Date     Statement is
   Land             Improvements           Total     Depreciation  struction  Acquired     Computed  
-----------         ------------        -----------  ------------  ---------  --------   ------------

                                                                                                      

$   874,094                   (g)       $   874,094        (h)        1997      08/96         (h)    
    786,475                   (g)           786,475        (h)        1997      09/96         (h)    

    338,486              497,282            835,768  $ 21,345         1996      09/96         (e)    
    363,478              404,650            768,128     5,515         1990      08/97         (e)    
    277,986              490,143            768,129     6,681         1995      08/97         (e)    
    228,364              539,764            768,128     7,357         1995      08/97         (e)    
    276,567              505,359            781,926    24,922         1995      07/96         (e)    
    273,325              413,077            686,402     5,630         1994      08/97         (e)    
    268,545              485,160            753,705     6,613         1995      08/97         (e)    
    320,924              463,347            784,271     7,162         1992      07/97         (e)    

    511,084                   (g)           511,084        (h)        1994      08/97         (h)    
    493,489                   (g)           493,489        (h)        1994      08/97         (h)    
    514,900                   (g)           514,900        (h)        1995      08/97         (h)    
    420,176                   (g)           420,176        (h)        1978      08/97         (h)    

    714,194            1,302,733          2,016,927    32,539         1997      04/97         (e)    

    403,885                   (g)           403,885        (h)        1996      06/96         (h)    
    784,939                   (g)           784,939        (h)        1994      09/97         (h)    

    569,452              641,644          1,211,096    10,566         1997      04/97         (e)    
    775,523              456,458          1,231,981    11,776         1997      12/96         (e)    
    585,818              866,641          1,452,459    11,625         1997      05/97         (e)    
    569,769              296,976            866,745     4,238         1997      04/97         (e)    
    376,929              639,875          1,016,804    45,872         1995      11/95         (e)    
    507,544              328,353            835,897     5,135         1997      04/97         (e)    
    365,784              605,763            971,547    26,005         1996      07/96         (e)    
    353,608              663,969          1,017,577    49,661         1995      10/95         (e)    
    320,463              627,371            947,834     7,692         1997      08/97         (e)    
    397,036              639,422          1,036,458    29,321         1996      06/96         (e)    
    705,522              626,845          1,332,367    22,067         1996      09/96         (e)    
    566,562              442,992          1,009,554    35,004         1995      08/95         (e)    
    667,992              661,776          1,329,768     7,691         1997      05/97         (e)    
    665,422              481,311          1,146,733    21,132         1996      06/96         (e)    
    234,685              644,615            879,300    49,053         1995      09/95         (e)    
    493,536              619,786          1,113,322     6,637         1997      09/97         (e)    
    885,234              867,523          1,752,757     9,527         1997      04/97         (e)    
    630,950              720,642          1,351,592    12,270         1997      05/97         (e)    
    515,827              572,706          1,088,533     4,759         1997      05/97         (e)    


B-33

424B3
70th Page of 120
TOC
1st
Previous
Next
Bottom
Just 70th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

                                                        · Enlarge/Download Table


                                                                           Costs Capitalized  
                                                                              Subsequent      
                                                  Initial Cost              To Acquisition    
                                           ---------------------------  ----------------------
                                                           Buildings                          
                                  Encum-                      and       Improve-      Carrying
                                 brances     Land         Improvements   ments          Costs 
                                 -------   --------       ------------  --------      --------
                                                                                               
  La Quinta, California               -     688,147                 -     351,810           - 
  Liberty, Missouri                   -     469,049                 -     334,826           - 
  Merced, California                  -     573,163                 -     402,636           - 
  Newport News, Virginia              -     473,596            586,377         -            - 
  Riverdale, Maryland                 -     525,389                 -     574,019           - 
  Rockwall, Texas                     -     528,118                 -     340,297           - 
  San Antonio, Texas                  -     481,952                 -     315,486           - 
  Saint Joseph, Missouri              -     378,786                 -     388,489           - 
  Stafford, Texas                     -     448,185            681,598         -            - 
  Taylorsville, Utah                  -     901,777                 -     475,260           - 
  Upland, California                  -     788,248                 -     209,449           - 
  Vacaville, California               -     751,576                 -     757,026           - 
  Waldorf, Maryland                   -     651,867                 -     775,634           - 

Burger King Restaurants:                                                                      
  Burbank, Illinois                   -     543,095                 -     620,617           - 
  Chattanooga, Tennessee              -     680,192                 -     575,426           - 
  Chattanooga, Tennessee              -     769,842                 -     411,012           - 
  Chicago, Illinois                   -     917,717                 -     784,590           - 
  Highland, Indiana                   -     672,815                 -     621,133           - 
  Indian Head Park, Illinois          -     618,715                 -     134,394           - 
  Kent, Ohio                          -     233,468            689,696         -            - 
  Oak Lawn, Illinois                  -   1,211,346                 -     829,339           - 
  Ooltewah, Tennessee                 -     546,261                 -     714,114           - 

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

Chevy's Fresh Mex Restaurants:                                                                
  Arapahoe, Colorado                  -     986,426          1,680,312         -            - 
  Beaverton, Oregon                   -     938,162          1,681,670         -            - 
  Greenbelt, Maryland                 -     945,234          1,475,339         -            - 
  Lake Oswego, Oregon                 -     963,047          1,505,671         -            - 

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


B-34

424B3
71st Page of 120
TOC
1st
Previous
Next
Bottom
Just 71st
                                                        · Enlarge/Download Table


                                                                                            Life     
              Gross Amount at Which Carried                                               on Which   
                  at Close of Period (b)                                                Depreciation 
---------------------------------------------------                                       in Latest  
                     Buildings                                       Date                   Income   
                        and                          Accumulated    of Con-     Date     Statement is
   Land             Improvements           Total     Depreciation  struction  Acquired     Computed  
-----------         ------------        -----------  ------------  ---------  --------   ----------  
                                                                                                      
    688,147              351,810          1,039,957    12,379         1996      09/96         (e)    
    469,049              334,826            803,875     4,136         1997      04/97         (e)    
    573,163              402,636            975,799    16,620         1996      09/96         (e)    
    473,596              586,377          1,059,973     9,010         1997      07/97         (e)    
    525,389              574,019          1,099,408     4,508         1997      05/97         (e)    
    528,118              340,297            868,415    13,394         1996      07/96         (e)    
    481,952              315,486            797,438     2,802         1997      04/97         (e)    
    378,786              388,489            767,275    13,482         1996      12/96         (e)    
    448,185              681,598          1,129,783    11,344         1997      07/97         (e)    
    901,777              475,260          1,377,037     8,908         1997      04/97         (e)    
    788,248              209,449            997,697     9,637         1996      07/96         (e)    
    751,576              757,026          1,508,602    11,839         1997      05/97         (e)    
    651,867              775,634          1,427,501    12,130         1997      05/97         (e)    

    543,095              620,617          1,163,712    28,962         1996      03/96         (e)    
    680,192              575,426          1,255,618    13,403         1997      12/96         (e)    
    769,842              411,012          1,180,854     8,111         1997      02/97         (e)    
    917,717              784,590          1,702,307    21,908         1996      10/96         (e)    
    672,815              621,133          1,293,948    29,476         1996      04/96         (e)    
    618,715              134,394            753,109        (c)          (d)     04/96         (c)    
    233,468              689,696            923,164    20,833         1970      02/97         (e)    
  1,211,346              829,339          2,040,685    35,597         1996      03/96         (e)    
    546,261              714,114          1,260,375    11,104         1997      04/97         (e)    

    965,223              549,565          1,514,788    10,163         1977      06/97         (e)    
    944,585              689,363          1,633,948    12,748         1971      06/97         (e)    

    986,426            1,680,312          2,666,738       153         1994      12/97         (e)    
    938,162            1,681,670          2,619,832       154         1995      12/97         (e)    
    945,234            1,475,339          2,420,573       135         1994      12/97         (e)    
    963,047            1,505,671          2,468,718       138         1995      12/97         (e)    

    563,479                   (g)           563,479        (h)        1983      06/97         (h)    
    698,367              570,468          1,268,835    10,550         1983      06/97         (e)    
    777,842              663,941          1,441,783    12,278         1981      06/97         (e)    
    589,574                   (g)           589,574        (h)        1983      06/97         (h)    
    647,375                   (g)           647,375        (h)        1983      06/97         (h)    
    495,195                   (g)           495,195        (h)        1983      06/97         (h)    
    346,380                   (g)           346,380        (h)        1984      06/97         (h)    
    513,218                   (g)           513,218        (h)        1981      06/97         (h)    
  1,485,631              772,853          2,258,484    14,292         1983      06/97         (e)    
    389,394                   (g)           389,394        (h)        1983      06/97         (h)    
    840,525              505,176          1,345,701     9,342         1980      06/97         (e)    
  1,131,164              719,865          1,851,029    13,313         1972      06/97         (e)    
    618,125                   (g)           618,125        (h)        1982      06/97         (h)    
    311,196                   (g)           311,196        (h)        1982      06/97         (h)    
    436,867                   (g)           436,867        (h)        1978      06/97         (h)    


B-35

424B3
72nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 72nd

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

                                                        · Enlarge/Download Table


                                                                         Costs Capitalized   
                                                                             Subsequent      
                                                 Initial Cost              To Acquisition    
                                          ---------------------------  ----------------------
                                                          Buildings                          
                                 Encum-                      and       Improve-      Carrying
                                brances   Land           Improvements   ments         Costs  
                                -------   ----           ------------  --------      --------
                                                                                              

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

Einstein Brothers' Bagels                                                                    
  Restaurants:                                                                               
    Dearborn, Michigan               -     464,102                 -     236,674           - 
    Springfield, Virginia            -     628,804                 -      36,311           - 

Golden Corral Family                                                                         
  Steakhouse Restaurants:                                                                    
    Carlsbad, New Mexico             -     384,221                 -     643,854           - 
    Cleburne, Texas                  -     359,455                 -     653,853           - 
    Columbia, Tennessee              -     442,218                 -          -            - 
    Columbus, Ohio                   -   1,031,098                 -   1,092,939           - 
    Corpus Christi, Texas            -     576,319                 -     967,482           - 
    Corsicana, Texas                 -     349,227            699,756         -            - 
    Council Bluffs, Iowa             -     482,178                 -      11,844           - 
    Dover, Delaware                  -   1,043,108                 -     977,508           - 
    Duncan, Oklahoma                 -     161,573                 -     955,184           - 
    Enid, Oklahoma                   -     364,860                 -     790,942           - 
    Fort Walton Beach, Florida       -     591,440                 -   1,034,541           - 
    Fort Worth, Texas                -     640,320            898,171         -            - 
    Hopkinsville, Kentucky           -     455,534                 -          -            - 
    Jacksonville, Florida            -     616,450                 -   1,010,728           - 
    Jacksonville, Florida            -     541,510                 -   1,132,450           - 
    Liberty, Missouri                -     409,209                 -     930,147           - 
    Lufkin, Texas                    -     463,303                 -     994,467           - 
    Moberly, Missouri                -     581,989                 -     664,344           - 
    Mobile, Alabama                  -     429,268                 -   1,032,335           - 
    Muskogee, Oklahoma               -     393,435                 -      15,109           - 
    Olathe, Kansas                   -     547,126                 -     916,145           - 
    Palatka, Florida                 -     322,919                 -     950,722           - 
    Port Richey, Florida             -     626,999                 -   1,130,692           - 
    Tampa, Florida                   -     825,065                 -   1,222,843           - 
    Universal City, Texas            -     357,429                 -     650,249           - 
    Winchester, Kentucky             -     303,823                 -     923,607           - 

Ground Round Restaurants:                                                                    
  Allentown, Pennsylvania            -     405,631            884,954         -            - 
  Cincinnati, Ohio                   -     282,099            534,632         -            - 
  Crystal, Minnesota                 -     370,667            431,642         -            - 
  Dubuque, Iowa                      -     693,733            810,458         -            - 
  Ewing, New Jersey                  -     371,254            685,847         -            - 
  Gloucester, New Jersey             -     422,489            528,849         -            - 
  Janesville, Wisconsin              -     451,235            548,178         -            - 
  Kalamazoo, Michigan                -     287,331            712,081         -            - 


B-36

424B3
73rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 73rd
                                                        · Enlarge/Download Table


                                                                                            Life     
           Gross Amount at Which Carried                                                  on Which   
              at Close of Period (b)                                                    Depreciation 
---------------------------------------------------                                       in Latest  
                     Buildings                                       Date                   Income   
                        and                          Accumulated    of Con-     Date     Statement is
   Land             Improvements           Total     Depreciation  struction  Acquired     Computed  
-----------         ------------        -----------  ------------  ---------  --------   ----------  

                                                                                                      

    439,961                   (g)           439,961        (h)        1996      06/96       (h)      
    466,555              506,094            972,649    39,131         1981      09/95       (e)      
    528,090              625,653          1,153,743    48,370         1987      09/95       (e)      
    397,302                   (g)           397,302        (h)        1997      02/97       (h)      

    464,102              236,674            700,776     3,723         1997      04/97       (e)      
    628,804               36,311            665,115       588         1997      05/97       (e)      

    384,221              643,854          1,028,075    50,415         1995      08/95       (e)      
    359,455              653,853          1,013,308    48,395         1995      08/95       (e)      
    442,218                   (g)           442,218        (h)        1996      12/96       (h)      
  1,031,098            1,092,939          2,124,037    77,421         1995      11/95       (e)      
    576,319              967,482          1,543,801     8,681         1997      05/97       (e)      
    349,227              699,756          1,048,983    55,883         1995      08/95       (e)      
    482,178               11,844            494,022        (c)          (d)     12/97       (c)      
  1,043,108              977,508          2,020,616    75,038         1995      08/95       (e)      
    161,573              955,184          1,116,757     2,704         1997      08/97       (e)      
    364,860              790,942          1,155,802     2,745         1997      06/97       (e)      
    591,440            1,034,541          1,625,981        (c)          (d)     08/97       (c)      
    640,320              898,171          1,538,491    70,972         1995      08/95       (e)      
    455,534                   (g)           455,534        (h)        1996      02/97       (h)      
    616,450            1,010,728          1,627,178     9,069         1997      05/97       (e)      
    541,510            1,132,450          1,673,960    12,333         1997      06/97       (e)      
    409,209              930,147          1,339,356     5,946         1997      06/97       (e)      
    463,303              994,467          1,457,770    34,603         1997      11/96       (e)      
    581,989              664,344          1,246,333    14,349         1997      12/96       (e)      
    429,268            1,032,335          1,461,603       189         1997      09/97       (e)      
    393,435               15,109            408,544        (c)          (d)     12/97       (c)      
    547,126              916,145          1,463,271        (c)          (d)     10/97       (c)      
    322,919              950,722          1,273,641       434         1997      09/97       (e)      
    626,999            1,130,692          1,757,691    48,325         1996      05/96       (e)      
    825,065            1,222,843          2,047,908    77,496         1995      08/95       (e)      
    357,429              650,249          1,007,678    51,253         1995      08/95       (e)      
    303,823              923,607          1,227,430    17,586         1997      02/97       (e)      

    405,631              884,954          1,290,585     5,900         1983      10/97       (e)      
    282,099              534,632            816,731     3,564         1981      10/97       (e)      
    370,667              431,642            802,309     2,878         1981      10/97       (e)      
    693,733              810,458          1,504,191     5,403         1982      10/97       (e)      
    371,254              685,847          1,057,101     2,756         1979      11/97       (e)      
    422,489              528,849            951,338     3,526         1981      10/97       (e)      
    451,235              548,178            999,413     3,655         1982      10/97       (e)      
    287,331              712,081            999,412     4,747         1980      10/97       (e)      


B-37

424B3
74th Page of 120
TOC
1st
Previous
Next
Bottom
Just 74th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

                                                        · Enlarge/Download Table


                                                                            Costs Capitalized  
                                                                               Subsequent      
                                                     Initial Cost            To Acquisition    
                                            ---------------------------  ----------------------
                                                            Buildings                          
                                   Encum-                      and       Improve-      Carrying
                                  brances     Land         Improvements   ments         Costs  
                                  -------   --------       ------------  --------      --------
                                                                                                
  Nanuet, New Jersey                   -     375,116            605,067         -            - 
  Parma, Ohio                          -     388,699            793,475         -            - 
  Reading, Pennsylvania                -     728,574            793,410         -            - 
  Waterloo, Iowa                       -     436,471            659,089         -            - 
  Wauwatosa, Wisconsin                 -     627,680            804,399         -            - 

Houlihan's Restaurants:                                                                        
  Bethel Park, Pennsylvania            -     846,183            595,600         -            - 
  Langhorne, Pennsylvania              -     817,039            648,765         -            - 
  Plymouth Meeting, Pennsylvania       -   1,181,460            908,880         -            - 

International House of Pancakes                                                                
  Restaurants:                                                                                 
    Elk Grove, California              -     584,766                 -          -            - 
    Fairfax, Virginia                  -   1,096,763            705,345         -            - 
    Houston, Texas                     -     645,365            856,532         -            - 
    Lake Jackson, Texas                -     460,167            802,640         -            - 
    Leesburg, Virginia                 -     665,015            580,798         -            - 
    Loveland, Colorado                 -     488,259                 -          -            - 
    Stockbridge, Georgia               -     765,743            707,406         -            - 
    Victoria, Texas                    -     319,237                 -          -            - 

Jack in the Box Restaurants:                                                                   
  Bacliff, Texas                       -     419,488                 -     697,861           - 
  Channelview, Texas                   -     361,238                 -     711,595           - 
  Corinth, Texas                       -     396,864                 -     620,042           - 
  Dallas, Texas                        -     369,886                 -     513,533           - 
  Enumclaw, Washington                 -     124,468                 -     773,506           - 
  Florissant, Missouri                 -     388,820                 -     773,834           - 
  Folsom, California                   -     635,343            703,067         -            - 
  Fresno, California                   -     286,850                 -     606,547           - 
  Garland, Texas                       -     382,042                 -     613,690           - 
  Hollister, California                -     537,223                 -     592,536           - 
  Houston, Texas                       -     545,485                 -     527,020           - 
  Houston, Texas                       -     403,002                 -     610,815           - 
  Houston, Texas                       -     375,776                 -     643,445           - 
  Houston, Texas                       -     370,342                 -     548,107           - 
  Houston, Texas                       -     420,521                 -     543,338           - 
  Humble, Texas                        -     437,667                 -     591,877           - 
  Humble, Texas                        -     390,509                 -     596,872           - 
  Kent, Washington                     -     737,038                 -     604,806           - 
  Kingsburg, California                -     415,880                 -     649,681           - 
  Las Vegas, Nevada                    -     730,674                 -     600,180           - 
  Los Angeles, California              -     603,354            602,630         -            - 
  Los Angeles, California              -     911,754                 -     581,552           - 
  Los Angeles, California              -     740,616            678,189         -            - 
  Moscow, Idaho                        -     217,851                 -     751,664           - 
  Murrieta, California                 -     387,455                 -     625,933           - 
  Oxnard, California                   -     681,663                 -     642,924           - 
  Palmdale, California                 -     631,275                 -     567,912           - 
  West Sacramento, California          -     523,089                 -     617,131           - 
  Woodland, California                 -     358,130                 -     668,383           - 


B-38

424B3
75th Page of 120
TOC
1st
Previous
Next
Bottom
Just 75th
                                                        · Enlarge/Download Table


                                                                                              Life      
               Gross Amount at Which Carried                                                on Which    
                  at Close of Period (b)                                                  Depreciation  
---------------------------------------------------                                         in Latest   
                     Buildings                                        Date                    Income    
                        and                          Accumulated     of Con-      Date     Statement is 
   Land             Improvements           Total     Depreciation   struction   Acquired     Computed   
-----------         ------------        -----------  ------------   ---------   --------   ------------ 
                                                                                                         
    375,116              605,067            980,183         1,658        1982      12/97             (e)
    388,699              793,475          1,182,174         5,290        1977      10/97             (e)
    728,574              793,410          1,521,984         5,289        1982      10/97             (e)
    436,471              659,089          1,095,560         4,394        1982      10/97             (e)
    627,680              804,399          1,432,079         5,363        1977      10/97             (e)

    846,183              595,600          1,441,783        11,015        1972      06/97             (e)
    817,039              648,765          1,465,804        11,998        1976      06/97             (e)
  1,181,460              908,880          2,090,340        16,808        1974      06/97             (e)

    584,766                   (g)           584,766            (h)       1997      08/97             (h)
  1,096,763              705,345          1,802,108        12,593        1995      06/97             (e)
    645,365              856,532          1,501,897        14,256        1996      07/97             (e)
    460,167              802,640          1,262,807         9,767        1997      08/97             (e)
    665,015              580,798          1,245,813        11,855        1994      05/97             (e)
    488,259                   (g)           488,259            (h)       1997      08/97             (h)
    765,743              707,406          1,473,149        11,774        1997      07/97             (e)
    319,237                   (g)           319,237            (h)       1997      08/97             (h)

    419,488              697,861          1,117,349         9,576        1997      04/97             (e)
    361,238              711,595          1,072,833         6,580        1997      07/97             (e)
    396,864              620,042          1,016,906         6,016        1997      06/97             (e)
    369,886              513,533            883,419        15,527        1997      12/96             (e)
    124,468              773,506            897,974        10,826        1997      04/97             (e)
    388,820              773,834          1,162,654            (c)         (d)     10/97             (c)
    635,343              703,067          1,338,410         4,880        1997      10/97             (e)
    286,850              606,547            893,397         6,772        1997      05/97             (e)
    382,042              613,690            995,732         5,338        1997      07/97             (e)
    537,223              592,536          1,129,759        14,421        1997      01/97             (e)
    545,485              527,020          1,072,505        32,199        1996      11/95             (e)
    403,002              610,815          1,013,817        26,930        1996      07/96             (e)
    375,776              643,445          1,019,221        27,207        1996      07/96             (e)
    370,342              548,107            918,449        13,540        1997      02/97             (e)
    420,521              543,338            963,859         9,949        1997      03/97             (e)
    437,667              591,877          1,029,544        26,729        1996      06/96             (e)
    390,509              596,872            987,381        18,025        1997      02/97             (e)
    737,038              604,806          1,341,844        14,388        1997      01/97             (e)
    415,880              649,681          1,065,561        15,693        1997      01/97             (e)
    730,674              600,180          1,330,854        16,285        1997      01/97             (e)
    603,354              602,630          1,205,984        50,272        1986      06/95             (e)
    911,754              581,552          1,493,306        12,720        1997      01/97             (e)
    740,616              678,189          1,418,805           124        1997      12/97             (e)
    217,851              751,664            969,515        19,157        1992      01/97             (e)
    387,455              625,933          1,013,388        14,948        1997      01/97             (e)
    681,663              642,924          1,324,587        10,642        1997      04/97             (e)
    631,275              567,912          1,199,187        11,695        1997      02/97             (e)
    523,089              617,131          1,140,220         5,312        1997      07/97             (e)
    358,130              668,383          1,026,513         5,127        1997      07/97             (e)


B-39

424B3
76th Page of 120
TOC
1st
Previous
Next
Bottom
Just 76th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

                                                        · Enlarge/Download Table


                                                                       Costs Capitalized  
                                                                           Subsequent     
                                               Initial Cost             To Acquisition    
                                       ---------------------------  ----------------------
                                                       Buildings                          
                               Encum-                     and       Improve-      Carrying
                              brances  Land           Improvements   ments         Costs  
                              -------  ----           ------------  --------      --------
                                                                                           
Kenny Rogers' Roasters                                                                    
  Restaurant:                                                                             
    Grand Rapids, Michigan         -    282,806            599,309         -            - 

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

Mr. Fables's Restaurant:                                                                  
  Grand Rapids, Michigan           -    320,594            559,433         -            - 

On The Border Restaurant:                                                                 
  San Antonio, TX                  -         -                  -   1,305,075           - 

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

B-40

424B3
77th Page of 120
TOC
1st
Previous
Next
Bottom
Just 77th
                                                        · Enlarge/Download Table


                                                                                            Life     
             Gross Amount at Which Carried                                                on Which   
                at Close of Period (b)                                                  Depreciation 
---------------------------------------------------                                       in Latest  
                     Buildings                                       Date                   Income   
                        and                          Accumulated    of Con-     Date     Statement is
   Land             Improvements           Total     Depreciation  struction  Acquired     Computed  
-----------         ------------        -----------  ------------  ---------  --------   ------------

                                                                                                      

    282,806              599,309            882,115    48,123         1995      08/95       (e)      

    301,723                   (g)           301,723        (h)        1997      07/97       (h)      

    320,594              559,433            880,027    33,362         1967      03/96       (e)      

         -             1,305,075          1,305,075        (c)          (d)     10/97       (c)      

    242,239                   -             242,239        (f)        1989      01/96       (f)      
    212,053                   -             212,053        (f)        1986      05/96       (f)      
    209,432                   -             209,432        (f)        1978      05/96       (f)      
    174,721                   -             174,721        (f)        1975      01/96       (f)      
     46,737                   -              46,737        (f)        1980      05/96       (f)      
    120,449                   -             120,449        (f)        1986      05/96       (f)      
    190,009                   -             190,009        (f)        1996      03/97       (f)      
    200,442                   -             200,442        (f)        1985      01/96       (f)      
    135,831                   -             135,831        (f)        1992      12/96       (f)      
    187,082                   -             187,082        (f)        1990      03/97       (f)      
    116,849                   -             116,849        (f)        1978      01/96       (f)      
    126,494                   -             126,494        (f)        1986      01/96       (f)      
    226,163                   -             226,163        (f)        1987      01/96       (f)      
    215,881                   -             215,881        (f)        1990      05/96       (f)      
    242,239                   -             242,239        (f)        1977      01/96       (f)      
    245,145                   -             245,145        (f)        1975      05/97       (f)      
    194,012                   -             194,012        (f)        1986      01/96       (f)      
    202,050                   -             202,050        (f)        1983      01/96       (f)      
    142,570                   -             142,570        (f)        1996      01/96       (f)      
    212,093                   -             212,093        (f)        1978      05/96       (f)      
    180,803                   -             180,803        (f)        1978      05/96       (f)      
     99,166                   -              99,166        (f)        1994      01/96       (f)      
    169,454                   -             169,454        (f)        1986      05/96       (f)      
    202,552                   -             202,552        (f)        1980      04/96       (f)      
    216,518                   -             216,518        (f)        1975      01/96       (f)      
    213,090                   -             213,090        (f)        1989      03/97       (f)      
     99,815                   -              99,815        (f)        1986      05/96       (f)      
    152,215                   -             152,215        (f)        1994      01/96       (f)      
    149,206                   -             149,206        (f)        1975      03/97       (f)      
    223,981                   -             223,981        (f)        1983      03/97       (f)      
    259,922                   -             259,922        (f)        1976      01/96       (f)      
    261,529                   -             261,529        (f)        1993      01/96       (f)      
     99,733                   -              99,733        (f)        1991      05/96       (f)      
    259,922                   -             259,922        (f)        1978      01/96       (f)      
    239,023                   -             239,023        (f)        1983      01/96       (f)      
    228,199                   -             228,199        (f)        1983      03/97       (f)      
    186,476                   -             186,476        (f)        1976      04/96       (f)      


B-41

424B3
78th Page of 120
TOC
1st
Previous
Next
Bottom
Just 78th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

                                                        · Enlarge/Download Table


                                                                                 Costs Capitalized  
                                                                                    Subsequent      
                                                      Initial Cost                To Acquisition    
                                               ---------------------------    ----------------------
                                                               Buildings                            
                                   Encum-                         and         Improve-      Carrying
                                  brances        Land         Improvements     ments         Costs  
                                  -------      --------       ------------    --------      --------
                                                                                                     
  Toledo, Ohio                         -        128,604                 -            -            - 
  Toledo, Ohio                         -        194,097                 -            -            - 
  Toledo, Ohio                         -        208,480                 -            -            - 
  Toledo, Ohio                         -        176,170                 -            -            - 
  Toledo, Ohio                         -        197,227                 -            -            - 
  Uhrichsville, Ohio                   -        279,779                 -            -            - 
  Wellsburg, West Virginia             -        167,170                 -            -            - 

Ruby Tuesday's Restaurant:                                                                          
  London, Kentucky                     -        354,415                 -            -            - 

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

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

Shoney's Restaurants:                                                                               
  Indian Harbor Beach, Florida         -        309,101                 -       420,249           - 
  Las Vegas, Nevada                    -        656,316                 -       970,452           - 
  Guadalupe, Arizona                   -        623,725                 -            -            - 

TGI Friday's Restaurant:                                                                            
  Mesa, Arizona                        -        903,876                 -       284,913           - 

Wendy's Old Fashioned                                                                               
  Hamburgers Restaurants:                                                                           
    Camarillo, California              -        640,061                 -       687,385           - 
    Knoxville, Tennessee               -        358,027                 -       444,622           - 
    Westlake Village, California       -        763,232                 -       153,034           - 
                                           ------------        -----------  -----------     ------- 

                                           $106,616,360        $43,045,117  $58,072,374     $     - 
                                           ============        ===========  ===========     ======= 


B-42

424B3
79th Page of 120
TOC
1st
Previous
Next
Bottom
Just 79th
                                                        · Enlarge/Download Table


                                                                                               Life      
               Gross Amount at Which Carried                                                 on Which    
                   at Close of Period (b)                                                  Depreciation  
 ---------------------------------------------------                                         in Latest   
                      Buildings                                        Date                    Income    
                         and                          Accumulated     of Con-      Date     Statement is 
    Land             Improvements           Total     Depreciation   struction   Acquired     Computed   
 -----------         ------------        -----------  ------------   ---------   --------   ------------ 
                                                                                                          
     128,604                   -             128,604            (f)       1988      04/96             (f)
     194,097                   -             194,097            (f)       1993      12/96             (f)
     208,480                   -             208,480            (f)       1975      01/96             (f)
     176,170                   -             176,170            (f)       1985      01/96             (f)
     197,227                   -             197,227            (f)       1978      01/96             (f)
     279,779                   -             279,779            (f)       1983      03/97             (f)
     167,170                   -             167,170            (f)       1980      03/97             (f)

     354,415                   (g)           354,415            (h)       1997      08/97             (h)

   1,076,442            1,062,751          2,139,193        20,236        1996      06/97             (e)

     591,371            1,175,273          1,766,644        38,505        1996      09/96             (e)

     309,101              420,249            729,350        11,312        1997      01/97             (e)
     656,316              970,452          1,626,768            (c)         (d)     08/97             (c)
     623,725                   (g)           623,725            (h)       1997      04/97             (h)

     903,876              284,913          1,188,789            (c)         (d)     09/97             (c)

     640,061              687,385          1,327,446        33,167        1996      06/96             (e)
     358,027              444,622            802,649        19,300        1996      05/96             (e)
     763,232              153,034            916,266            (c)         (d)     11/97             (c)
------------         ------------       ------------    ----------                                       

$106,616,360         $101,117,491       $207,733,851    $2,395,665                                       
============         ============       ============    ==========                                       


B-43

424B3
80th Page of 120
TOC
1st
Previous
Next
Bottom
Just 80th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

                                                        · Enlarge/Download Table


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

    Applebee's Restaurants:                                                                           
      Montclair, California               -   $        -         $        -   $   890,100     $     - 
      Salinas, California                 -            -                  -       794,058           - 

    Barb Wires Steakhouse and                                                                         
      Saloon Restaurants:                                                                             
        Cookeville, Tennessee             -            -           1,029,717           -            - 
        Hendersonville, Tennessee         -            -             782,282           -            - 
        Lawrence, Kansas                  -            -           1,022,607           -            - 
        Murfreesboro, Tennessee           -            -             976,699           -            - 
        Nashville, Tennessee              -            -             949,367           -            - 

    Black-Eyed Pea Restaurants:                                                                       
      Albuquerque, New Mexico             -            -             705,746           -            - 
      Albuquerque, New Mexico             -            -             704,757           -            - 
      Bedford, Texas                      -            -             655,028           -            - 
      Dallas, Texas                       -            -             655,011           -            - 
      Dallas, Texas                       -            -             698,827           -            - 
      Forestville, Maryland               -            -             681,034           -            - 
      Fort Worth, Texas                   -            -             655,014           -            - 
      Hillsboro, Texas                    -            -                  -       849,816           - 
      Houston, Texas                      -            -             685,977           -            - 
      Mesa, Arizona                       -            -             906,740           -            - 
      Oklahoma City, Oklahoma             -            -             651,523           -            - 
      Phoenix, Arizona                    -            -             677,681           -            - 
      Phoenix, Arizona                    -            -             677,805           -            - 
      Phoenix, Arizona                    -            -             682,141           -            - 
      Scottsdale, Arizona                 -            -                  -       823,188           - 
      Tucson, Arizona                     -            -             678,333           -            - 
      Waco, Texas                         -            -             699,815           -            - 
      Wichita, Kansas                     -            -             698,827           -            - 

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

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


B-44

424B3
81st Page of 120
TOC
1st
Previous
Next
Bottom
Just 81st
                                                        · Enlarge/Download Table


                                                                                               Life     
             Gross Amount at Which Carried                                                   on Which   
                 at Close of Period (b)                                                    Depreciation 
--------------------------------------------------                                           in Latest  
                     Buildings                                          Date                   Income   
                        and                             Accumulated    of Con-     Date     Statement is
   Land             Improvements           Total        Depreciation  struction  Acquired     Computed  
-----------         ------------        -----------     ------------  ---------  --------   ----------  
                                                                                                         

           (g)                  (g)                (g)          (h)      1997      08/96         (h)    
           (g)                  (g)                (g)          (h)      1997      09/96         (h)    

           (g)                  (g)                (g)          (h)      1994      08/97         (h)    
           (j)                  (g)                (g)          (h)      1974      08/97         (h)    
           (g)                  (g)                (g)          (h)      1994      08/97         (h)    
           (g)                  (g)                (g)          (h)      1995      08/97         (h)    
           (g)                  (g)                (g)          (h)      1978      08/97         (h)    

           (j)                  (g)                (g)          (h)      1993      10/97         (h)    
           (j)                  (g)                (g)          (h)      1993      10/97         (h)    
           (j)                  (g)                (g)          (h)      1993      03/97         (h)    
           (j)                  (g)                (g)          (h)      1996      03/97         (h)    
           (j)                  (g)                (g)          (h)      1991      10/97         (h)    
           (j)                  (g)                (g)          (h)      1989      10/97         (h)    
           (j)                  (g)                (g)          (h)      1991      03/97         (h)    
           (g)                  (g)                (g)          (h)      1996      06/96         (h)    
           (j)                  (g)                (g)          (h)      1990      10/97         (h)    
           (g)                  (g)                (g)          (h)      1994      09/97         (h)    
           (j)                  (g)                (g)          (h)      1992      03/97         (h)    
           (j)                  (g)                (g)          (h)      1991      09/97         (h)    
           (j)                  (g)                (g)          (h)      1993      09/97         (h)    
           (j)                  (g)                (g)          (h)      1994      09/97         (h)    
           (j)                  (g)                (g)          (h)      1997      04/97         (h)    
           (j)                  (g)                (g)          (h)      1995      09/97         (h)    
           (j)                  (g)                (g)          (h)      1991      10/97         (h)    
           (j)                  (g)                (g)          (h)      1992      10/97         (h)    

           (g)                  (g)                (g)          (h)      1983      06/97         (h)    
           (g)                  (g)                (g)          (h)      1983      06/97         (h)    
           (g)                  (g)                (g)          (h)      1983      06/97         (h)    
           (g)                  (g)                (g)          (h)      1983      06/97         (h)    
           (g)                  (g)                (g)          (h)      1984      06/97         (h)    
           (g)                  (g)                (g)          (h)      1981      06/97         (h)    
           (g)                  (g)                (g)          (h)      1983      06/97         (h)    
           (g)                  (g)                (g)          (h)      1982      06/97         (h)    
           (g)                  (g)                (g)          (h)      1982      06/97         (h)    
           (g)                  (g)                (g)          (h)      1978      06/97         (h)    

           (g)                  (g)                (g)          (h)      1996      06/96         (h)    
           (g)                  (g)                (g)          (h)      1997      02/97         (h)    


B-45

424B3
82nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 82nd

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

                                                        · Enlarge/Download Table


                                                                            Costs Capitalized  
                                                                                Subsequent     
                                                   Initial Cost               To Acquisition   
                                          ---------------------------    ----------------------
                                                          Buildings                            
                               Encum-                        and         Improve-      Carrying
                              brances     Land           Improvements     ments         Costs  
                              -------     ----           ------------    --------      --------
                                                                                                
Golden Corral Family                                                                           
  Steakhouse Restaurants:                                                                      
    Brooklyn, Ohio                 -            -           1,044,311           -            - 
    Columbia, Tennessee            -            -                  -       939,712           - 
    Eastlake, Ohio                 -       256,332          1,473,307           -            - 
    Hopkinsville, Kentucky         -            -                  -       869,221           - 

International House of                                                                         
  Pancakes Restaurants:                                                                        
    Elk Grove, California          -            -           1,039,584           -            - 
    Loveland, Colorado             -            -             963,597           -            - 
    Victoria, Texas                -            -             814,015           -            - 

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

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

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

Shoney's Restaurant:                                                                           
  Guadalupe, Arizona               -            -                  -       919,322           - 

Wendy's Old Fashioned                                                                          
  Hamburgers Restaurants:                                                                      
    San Diego, California          -            -                  -       590,058           - 
    Sevierville, Tennessee         -            -                  -       531,726           - 
                                       -----------        -----------  -----------     ------- 

                                       $   465,242       $ 30,001,317  $ 9,850,526     $     - 
                                       ===========       ============  ===========     ======= 

B-46

424B3
83rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 83rd
                                                        · Enlarge/Download Table


                                                                                            Life     
              Gross Amount at Which Carried                                               on Which   
                  at Close of Period (b)                                                Depreciation 
---------------------------------------------------                                       in Latest  
                     Buildings                                       Date                   Income   
                        and                          Accumulated    of Con-     Date     Statement is
   Land             Improvements           Total     Depreciation  struction  Acquired     Computed  
-----------         ------------        -----------  ------------  ---------  --------   ------------
                                                                                                      

    (j)                  (g)                (g)          (h)         1995      08/96          (h)    
    (g)                  (g)                (g)          (h)         1996      12/96          (h)    
    (g)                  (g)                (g)          (i)         1996      12/96          (i)    
    (g)                  (g)                (g)          (h)         1996      02/97          (h)    

    (g)                  (g)                (g)          (h)         1997      08/97          (h)    
    (g)                  (g)                (g)          (h)         1997      08/97          (h)    
    (g)                  (g)                (g)          (h)         1997      08/97          (h)    

    (g)                  (g)                (g)       (h)            1997      07/97          (h)    

    (g)                  (g)                (g)       (i)            1997      05/97          (i)    

    (g)                  (g)                (g)       (h)            1997      08/97          (h)    

    (g)                  (g)                (g)       (h)            1997      04/97          (h)    

    (j)                  (g)                (g)       (h)            1996      10/96          (h)    
    (j)                  (g)                (g)       (h)            1996      06/96          (h)    


B-47

424B3
84th Page of 120
TOC
1st
Previous
Next
Bottom
Just 84th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

(a)      Transactions in real estate and accumulated  depreciation  during 1997,
1996 and 1995 are summarized as follows:                      

                                                                 Accumulated
                                                  Cost (b)      Depreciation
                                               ------------     ------------

Properties the Company                                  
has Invested in Under                               
Operating Leases:                                   

              Balance, December 31, 1994       $         -       $         -
              Acquisitions (l)                   19,824,044                -
               Depreciation expense (e)                   -            100,318
                                                ------------      ------------

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

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

               Balance, December 31, 1997       $207,733,851      $  2,395,665
                                                ============      ============

(b)        As of December 31, 1997,  1996 and 1995,  the  aggregate  cost of the
           Properties owned by the Company and its subsidiary for federal income
           tax  purposes  was   $248,050,936,   $73,144,286   and   $21,199,004,
           respectively.  All of the leases are treated as operating  leases for
federal income tax purposes.                              

(c)        Property  was  not  placed  in  service  as  of  December  31,  1997;
therefore, no depreciation was taken.                     

(d)        Scheduled for completion in 1998.                                    

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

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

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

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

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

B-48

424B3
85th Page of 120
TOC
1st
Previous
Next
Bottom
Just 85th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

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

 December 31, 1997

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

(k)      The  restaurant on the property in Franklin,  Tennessee,  was converted
         from a Kenny Rogers' Roasters  restaurant to a Boston Market restaurant
in 1996.                                                      

(l)      During the years ended  December 31, 1997,  1996 and 1995,  the Company
         (i) incurred  acquisition  fees totalling  $10,011,715,  $4,535,685 and
         $1,730,437,  respectively, paid to the Advisor, (ii) purchased land and
         buildings  from  affiliates  of the  Company for an  aggregate  cost of
         approximately $5,450,000, $2,610,000 and $6,621,000,  respectively, and
       (iii) paid  development/construction management fees to affiliates of
         the Company  totalling  $369,570  and  $159,350  during the years ended
         December 31, 1997 and 1996, respectively.  No  development/construction
         management fees were paid to affiliates  during the year ended December
         31, 1995.  Such amounts are included in land and buildings on operating
         leases,  net investment in direct  financing leases and other assets at
December 31, 1997, 1996 and 1995.                             

B-49

424B3
86th Page of 120
TOC
1st
Previous
Next
Bottom
Just 86th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

 SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
 -------------------------------------------

 December 31, 1997

                                                        · Enlarge/Download Table


                                                                                                                     Principal   
                                                                                                                      Amount     
                                                                                                                     of Loans    
                                                                                                                    Subject to   
                                                        Final     Periodic              Face        Carrying        Delinquent   
                                         Interest     Maturity    Payment    Prior    Amount of     Amount of        Principal   
         Description                       Rate         Date       Terms     Liens    Mortgages     Mortgages       or Interest  
------------------------------           --------  -------------  --------   -----   -----------   -----------      -----------  
                                                                                                                                 
Castle Hill Holdings V, L.L.C.                                                                                                   
First Mortgages                           10.75%   January, 2016     (1)     $  -    $ 8,475,000   $ 8,700,023      $        -   
  Pizza Hut Restaurants:                                                                                                         
    Adrian, MI                                                                                                                   
    Bedford, OH                                                                                                                  
    Bowling Green, OH                                                                                                            
    Cleveland, OH                                                                                                                
    Cleveland, OH                                                                                                                
    Cleveland, OH                                                                                                                
    Defiance, OH                                                                                                                 
    East Cleveland, OH                                                                                                           
    Euclid, OH                                                                                                                   
    Fairview Park, OH                                                                                                            
    Lambertville, MI                                                                                                             
    Mayfield Heights, OH                                                                                                         
    Middleburg Heights, OH                                                                                                       
    Monroe, MI                                                                                                                   
    North Olmstead, OH                                                                                                           
    Norwalk, OH                                                                                                                  
    Sandusky, OH                                                                                                                 
    Seven Hills, OH                                                                                                              
    Strongsville, OH                                                                                                             
    Toledo, OH                                                                                                                   
    Toledo, OH                                                                                                                   
    Toledo, OH                                                                                                                   
    Toledo, OH                                                                                                                   

Castle Hill Holdings VI, L.L.C.                                                                                                  
First Mortgages                           10.75%      June, 2016        (1)       -             3,888,000     4,030,612        - 
  Pizza Hut Restaurants:                                                                                                         
    Beaver, WV                                                                                                                   
    Beckley, WV                                                                                                                  
    Belle, WV                                                                                                                    
    Bluefield, WV                                                                                                                
    Cross Lanes, WV                                                                                                              
    Huntington, WV                                                                                                               
    Hurricane, WV                                                                                                                
    Marietta, OH                                                                                                                 
    Milton, WV                                                                                                                   
    Ronceverte, WV                                                                                                               

Castle Hill Holdings VII, L.L.C.                                                                                                 
First Mortgages                           10.75%   January, 2017        (1)       -             484,000       503,900          - 
  Pizza Hut Restaurants:                                                                                                         
    Bowling Green, OH                                                                                                            
    Toledo, OH                                                                                                                   

Castle Hill Holdings VII (Phase II), L.L.C.                                                                                      
First Mortgages                           10.50%     April, 2017        (2)       -             4,200,000     4,387,475        - 
  Pizza Hut Restaurants:                                                                                                         
    Bolivar, OH                                                                                                                  
    Carrollton, OH                                                                                                               
    Dover, OH                                                                                                                    
    Millersburg, OH                                                                                                              
    New Philadelphia, OH                                                                                                         
    New Philadelphia, OH                                                                                                         
    Steubenville, OH                                                                                                             
    Uhrichsville, OH                                                                                                             
    Weirton, WV                                                                                                                  
    Wellsburg, WV                                                                                                                
    Wintersville, OH                                                                                                             

    Total                                                            $  -    $17,047,000     $17,622,010          (4)      $     
                                                                     =====   ===========     ===========                    =====


B-50

424B3
87th Page of 120
TOC
1st
Previous
Next
Bottom
Just 87th

 CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY

SCHEDULE IV - NOTES TO MORTGAGE LOANS ON REAL ESTATE
----------------------------------------------------

 December 31, 1997

(1)      Equal  monthly  payments of principal and interest at an annual rate of
10.75%.                                                       

(2)      Equal  monthly  payments of principal and interest at an annual rate of
10.50%.                                                       

(3)      The tax carrying value of the notes is $17,622,010.                    

(4)      The changes in the carrying amounts are summarized as follows:         

                                        1997          1996          1995
                                        -----------   -----------   ----------

        Balance at beginning of period  $13,389,607   $        -    $        -

        New mortgage loans                4,200,000    12,847,000            -

        Accrued interest                     83,601        35,286            -

        Collection of principal            (250,732)     (133,850)           -

        Deferred financing income           (39,180)      (46,268)           -

        Unamortized loan costs              238,714       687,439            -
                                        -----------   -----------   ----------

        Balance at end of period        $17,622,010   $13,389,607   $        -
                                        ===========   ===========   ==========

B-51

 ADDENDUM TO
 EXHIBIT C

PRIOR PERFORMANCE TABLES

THE FOLLOWING INFORMATION UPDATES 
AND REPLACES THE CORRESPONDING
INFORMATION IN EXHIBIT C TO THE 
ATTACHED PROSPECTUS, DATED
JANUARY 26, 1998. 

424B3
88th Page of 120
TOC
1st
Previous
Next
Bottom
Just 88th

EXHIBIT C 

PRIOR PERFORMANCE TABLES

         The  information in this Exhibit C contains  certain  relevant  summary
information  concerning  certain prior public  programs  sponsored by two of the
Company's  principals (who also serve as the Chairman of the Board and President
of the Company) and their  Affiliates (the "Prior Public  Programs")  which like
the  Company,  were  formed  to  invest  in  restaurant  properties  leased on a
triple-net   basis  to  operators  of  national  and  regional   fast-food   and
family-style  restaurant  chains,  or in the case of CNL  American  Realty Fund,
Inc., to invest in restaurant properties and hotel properties.                  

         A more detailed  description  of the  acquisitions  by the Prior Public
Programs is set forth in Part II of the  registration  statement  filed with the
Securities  and Exchange  Commission for this Offering and is available from the
Company upon request,  without charge. In addition, upon request to the Company,
the Company  will  provide,  without  charge,  a copy of the most recent  Annual
Report on Form 10-K filed with the  Securities  and Exchange  Commission for 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 XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL
Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd., CNL Income Fund XVIII,  Ltd.,
and CNL American Realty Fund,  Inc., as well as a copy, for a reasonable fee, of
the exhibits filed with such reports.                                           

         The investment  objectives of the Prior Public  Programs (like those of
the Company)  generally  include  preservation  and  protection of capital,  the
potential for increased income and protection against  inflation,  and potential
for capital appreciation, all through investment in restaurant properties, or in
the case of CNL American  Realty Fund,  Inc.,  through  investment in restaurant
properties and hotel properties.  In addition,  the investment objectives of the
Prior Public Programs included making partially tax-sheltered distributions.    

         STOCKHOLDERS  SHOULD NOT CONSTRUE  INCLUSION OF THE FOLLOWING TABLES AS
IMPLYING  THAT THE COMPANY WILL HAVE RESULTS  COMPARABLE  TO THOSE  REFLECTED IN
SUCH TABLES.  DISTRIBUTABLE CASH FLOW,  FEDERAL INCOME TAX DEDUCTIONS,  OR OTHER
FACTORS  COULD BE  SUBSTANTIALLY  DIFFERENT.  STOCKHOLDERS  SHOULD NOTE THAT, BY
ACQUIRING SHARES IN THE COMPANY,  THEY WILL NOT BE ACQUIRING ANY INTEREST IN ANY
PRIOR PUBLIC PROGRAMS.                                                          

Description of Tables                                                           

The following Tables are included herein:                     

       Table I - Experience in Raising and Investing Funds

Table II - Compensation to Sponsor          

   Table III - Operating Results of Prior Programs

Table V - Sales or Disposal of Properties   

         Unless otherwise indicated in the Tables, all information  contained in
the Tables is as of December 31, 1997.  The following is a brief  description of
the Tables:                                                                     

Table I - Experience in Raising and Investing Funds           

         Table  I  presents  information  on  a  percentage  basis  showing  the
experience  of two of the  principals  of the  Company and their  Affiliates  in
raising and  investing  funds for the Prior Public  Programs,  the  offerings of
which became fully subscribed between January 1993 and December 1997.           

C-1 

424B3
89th Page of 120
TOC
1st
Previous
Next
Bottom
Just 89th

         The Table sets forth  information on the offering expenses incurred and
amounts  available  for  investment  expressed as a percentage  of total dollars
raised.  The Table  also  shows the  percentage  of  property  acquisition  cost
leveraged, the date the offering commenced, and the time required to raise funds
for investment.                                                                 

Table II - Compensation to Sponsor                            

         Table II  provides  information,  on a total  dollar  basis,  regarding
amounts  and types of  compensation  paid to the  general  partners of the Prior
Public Programs.                                                                

         The Table indicates the total offering proceeds and the portion of such
offering proceeds paid or to be paid to two of the principals of the Company and
their Affiliates in connection with the Prior Public Programs,  the offerings of
which became fully subscribed  between January 1993 and December 1997. The Table
also shows the amounts  paid to two of the  principals  of the Company and their
Affiliates  from cash  generated  from  operations  and from cash generated from
sales or refinancing by each of the Prior Public Programs on a cumulative  basis
commencing with inception and ending December 31, 1997.                         

Table III - Operating Results of Prior Programs               

         Table III presents a summary of  operating  results for the period from
inception through December 31, 1997, of the Prior Public Programs, the offerings
of which became fully subscribed between January 1993 and December 1997.        

         The  Table  includes  a summary  of income or loss of the Prior  Public
Programs,  which are  presented  on the basis of generally  accepted  accounting
principles ("GAAP"). The Table also shows cash generated from operations,  which
represents  the cash  generated  from  operations of the properties of the Prior
Public  Programs,  as  distinguished  from cash  generated  from  other  sources
(special  items).  The section of the Table entitled  "Special  Items"  provides
information  relating  to cash  generated  from or used by items  which  are not
directly  related  to the  operations  of the  properties  of the  Prior  Public
Programs,  but rather are related to items of a partnership nature.  These items
include   proceeds   from  capital   contributions   of  limited   partners  and
disbursements  made  from  these  sources  of  funds,  such as  syndication  and
organizational  costs,  acquisition  of the properties and other costs which are
related more to the  organization  of the  partnership  and the  acquisition  of
properties than to the actual operations of the partnerships.                   

         The Table also presents  information  pertaining to investment  income,
returns of capital on a GAAP basis, cash  distributions  from operations,  sales
and  refinancing   proceeds  expressed  in  total  dollar  amounts  as  well  as
distributions and tax results on a per $1,000 investment basis.                 

Table IV - Results of Completed Programs                      

         Table IV is omitted from this  Exhibit C because none of the  directors
of the Company or their Affiliates has been involved in completed programs which
made investments similar to those of the Company.                               

Table V - Sales or Disposal of Properties                     

         Table  V  provides  information  regarding  the  sale  or  disposal  of
properties  owned by the Prior Public Programs between January 1993 and December
1997.                                                                           

         The Table  includes the selling price of the property,  the cost of the
property, the date acquired and the date of sale.                               

C-2 

424B3
90th Page of 120
TOC
1st
Previous
Next
Bottom
Just 90th

                                   TABLE I
                                   EXPERIENCE IN RAISING AND INVESTING FUNDS

                                                        · Enlarge/Download Table


                            CNL Income    CNL Income    CNL Income   CNL Income   CNL Income   CNL Income  CNL Income  CNL American
                            Fund XII,     Fund XIII,     Fund XIV,    Fund XV,     Fund XVI,   Fund XVII,  Fund XVIII, Realty Fund,
                               Ltd.          Ltd.          Ltd.         Ltd.         Ltd.         Ltd.         Ltd.        Inc.    
                                                                                                            (Note 1)     (Note 2)  

Dollar amount offered      $45,000,000   $40,000,000   $45,000,000  $40,000,000  $45,000,000  $30,000,000                          
                           ===========   ===========   ===========  ===========  ===========  ===========                          

Dollar amount raised             100.0%        100.0%        100.0%       100.0%       100.0%       100.0%                         
                           -----------   -----------   -----------  -----------  -----------  -----------                          

Less offering expenses:                                                                                                            

  Selling commissions                                                                                                              
    and discounts                 (8.5)         (8.5)         (8.5)        (8.5)        (8.5)        (8.5)                         
  Organizational expenses         (3.0)         (3.0)         (3.0)        (3.0)        (3.0)        (3.0)                         
  Marketing support and                                                                                                            
    due diligence expense                                                                                                          
    reimbursement fees                                                                                                             
    (includes amounts                                                                                                              
    reallowed to                                                                                                                   
    unaffiliated                                                                                                                   
    entities)                     (0.5)         (0.5)         (0.5)        (0.5)        (0.5)        (0.5)                         
                           -----------   -----------   -----------  -----------  -----------  -----------                          
                                 (12.0)        (12.0)        (12.0)       (12.0)       (12.0)       (12.0)                         
                           -----------   -----------   -----------  -----------  -----------  -----------                          
Reserve for operations             --            --            --           --           --           --                           
                           -----------   -----------   -----------  -----------  -----------  ----------                           

Percent available for                                                                                                              
  investment                      88.0%         88.0%         88.0%        88.0%        88.0%        88.0%                         
                           ===========   ===========   ===========  ===========  ===========  ===========                          

Acquisition costs:                                                                                                                 

  Cash down payment               83.0%         82.5%         82.5%        82.5%        82.5%        83.5%                         
  Acquisition fees paid                                                                                                            
    to affiliates                  5.0           5.5           5.5          5.5          5.5          4.5                          
  Loan costs                       --            --            --           --           --           --                           
                           -----------   -----------   -----------  -----------  -----------  ----------                           

Total acquisition costs           88.0%         88.0%         88.0%        88.0%        88.0%        88.0%                         
                           ===========   ===========   ===========  ===========  ===========  ===========                          

Percent leveraged                                                                                                                  
  (mortgage financing                                                                                                              
  divided by total                                                                                                                 
  acquisition costs)               --            --            --           --           --           --                           

Date offering began            9/29/92       3/31/93       8/27/93      2/23/94      9/02/94      9/02/95                          

Length of offering (in                                                                                                             
  months)                            6             5             6            6            9           12                          

Months to invest 90% of                                                                                                            
  amount available for                                                                                                             
  investment measured                                                                                                              
  from date of offering             11            10            11           10           11           15                          

Note 1:  Pursuant to a Registration Statement on Form S-11 under the Securities 
     Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
       XVII, Ltd. ("CNL XVII") and CNL Income Fund XVIII, Ltd. ("CNL XVIII")
      each registered for sale $30,000,000 of units of limited partnership
      interest (the "Units").  The offering of Units of CNL XVII commenced
 September 2, 1995.  Pursuant to the Registration Statement, the
         offering of Units of CNL XVIII could not commence until the offering of
        Units of CNL XVII had terminated.  CNL XVII terminated its offering of
 Units on September 19, 1996, at which time subscriptions for an
         aggregate 3,000,000 Units ($30,000,000)  had  been  received.  Upon the
       termination of the offering of Units of CNL XVII, CNL XVIII commenced
     its offering to the public of 3,500,000 Units ($35,000,000).  As of
       December 31, 1997, CNL XVIII had accepted subscriptions for 3,500,000
   Units and had received subscription proceeds for 3,414,576 Units,
      representing $34,145,759 of capital contributed by limited partners.
       The remaining proceeds of $854,241, representing the remaining 85,424
        Units were received during the period January 1, 1998 through February
6, 1998, at which time CNL XVIII terminated its offering.     

                                   C-3

424B3
91st Page of 120
TOC
1st
Previous
Next
Bottom
Just 91st

Note     2:  Pursuant  to a  Registration  Statement  on  Form  S-11  under  the
         Securities  Act of  1933,  as  amended,  effective  July 9,  1997,  CNL
         American Realty Fund, Inc.  registered for sale  $165,000,000 of shares
         of common  stock.  The offering of shares of CNL American  Realty Fund,
Inc. commenced July 9, 1997.                                  

                                   C-4

424B3
92nd Page of 120
TOC
1st
Previous
Next
Bottom
Just 92nd

                                  TABLE II
                                   COMPENSATION TO SPONSOR

                                                        · Enlarge/Download Table


                                 CNL Income  CNL Income  CNL Income   CNL Income   CNL Income  CNL Income  CNL Income  CNL American
                                  Fund XII,  Fund XIII,   Fund XIV,    Fund XV,     Fund XVI,  Fund XVII,  Fund XVIII, Realty Fund,
                                    Ltd.        Ltd.        Ltd.         Ltd.         Ltd.         Ltd.        Ltd.        Inc.    
                                                                                                             (Note 1)    (Note 2)  
                                                                                                                                   
Date offering commenced             9/29/92     3/31/93     8/27/93      2/23/94      9/02/94     9/02/95                          
Dollar amount raised            $45,000,000 $40,000,000 $45,000,000  $40,000,000  $45,000,000 $30,000,000                          
                                =========== =========== ===========  ===========  =========== ===========                          
Amount paid to sponsor from                                                                                                        
  proceeds of offering:                                                                                                            
    Selling commissions and                                                                                                        
      discounts                   3,825,000   3,400,000   3,825,000    3,400,000    3,825,000   2,550,000                          
    Real estate commissions               -           -           -            -            -           -                          
    Acquisition fees              2,250,000   2,200,000   2,475,000    2,200,000    2,475,000   1,350,000                          
    Marketing support and                                                                                                          
      due diligence expense                                                                                                        
      reimbursement fees                                                                                                           
      (includes amounts                                                                                                            
      reallowed to                                                                                                                 
      unaffiliated entities)        225,000     200,000     225,000      200,000      225,000     150,000                          
                                ----------- ----------- -----------  -----------   ----------  ----------                          
Total amount paid to sponsor      6,300,000   5,800,000   6,525,000    5,800,000    6,525,000   4,050,000                          
                                =========== =========== ===========  ===========   ==========  ==========                          
Dollar amount of cash generated                                                                                                    
  from operations before                                                                                                           
  deducting payments to                                                                                                            
  sponsor:                                                                                                                         
    1997                          3,940,072   3,395,200   3,734,726    3,419,967    3,909,781   2,611,191                          
    1996                          4,089,655   3,494,528   3,841,163    3,557,073    3,911,609   1,340,159                          
    1995                          3,928,473   3,482,461   3,823,939    3,361,477    2,619,840      11,671                          
    1994                          3,933,486   3,232,046   2,897,432    1,154,454      212,171           -                          
    1993                          3,320,549   1,148,550     329,957            -            -           -                          
    1992                             63,401           -           -            -            -           -                          
    1991                                  -           -           -            -            -           -                          
    1990                                  -           -           -            -            -           -                          
    1989                                  -           -           -            -            -           -                          
    1988                                  -           -           -            -            -           -                          
    1987                                  -           -           -            -            -           -                          
    1986                                  -           -           -            -            -           -                          
    1985                                  -           -           -            -            -           -                          
    1984                                  -           -           -            -            -           -                          
    1983                                  -           -           -            -            -           -                          
    1982                                  -           -           -            -            -           -                          
    1981                                  -           -           -            -            -           -                          
Amount  paid  to  sponsor  from                                                                                                    
operations (administrative,                                                                                                        
accounting  and                                                                                                                    
management fees):                                                                                                                  
    1997                            133,084     121,643     128,536      113,372      129,357     116,077                          
    1996                            137,966     126,947     134,867      122,391      157,883     107,211                          
    1995                            109,111     103,083     114,095      122,107      138,445       2,659                          
    1994                             84,524      83,046      84,801       37,620        7,023           -                          
    1993                             73,789      27,003       8,220            -            -           -                          
    1992                              2,031           -           -            -            -           -                          
    1991                                  -           -           -            -            -           -                          
    1990                                  -           -           -            -            -           -                          
    1989                                  -           -           -            -            -           -                          
    1988                                  -           -           -            -            -           -                          
    1987                                  -           -           -            -            -           -                          
    1986                                  -           -           -            -            -           -                          
    1985                                  -           -           -            -            -           -                          
    1984                                  -           -           -            -            -           -                          
    1983                                  -           -           -            -            -           -                          
    1982                                  -           -           -            -            -           -                          
    1981                                  -           -           -            -            -           -                          
Dollar amount of property sales                                                                                                    
and  refinancing  before                                                                                                           
deducting  payments to sponsor:                                                                                                    
    Cash                          1,640,000   1,769,260   3,196,603    3,312,297    1,385,384           -                          
    Notes                                 -           -           -            -           -            -                          
Amount paid to sponsors                                                                                                            
  from property sales and                                                                                                          
  refinancing:                                                                                                                     
    Real estate commissions               -           -           -            -            -           -                          
    Incentive fees                        -           -           -            -            -           -                          
    Other                                 -           -           -            -            -           -                          

Note 1:  Pursuant to a Registration Statement on Form S-11 under the Securities 
       Act of 1933, as amended, effective August 11, 1995, CNL  Income  Fund
     XVII,  Ltd.  ("CNL XVII") and  CNL  Income  Fund  XVIII, Ltd. ("CNL
  XVIII") each registered for sale $30,000,000 of units of limited
        partnership interest (the "Units").  The offering of Units of CNL XVII
       commenced September 2, 1995.  Pursuant to the Registration Statement,
 the offering of Units of CNL XVIII could not commence until the
        offering of Units of CNL XVII had terminated.  CNL XVII terminated its
      offering of Units on September 19, 1996, at which time subscriptions
         for an aggregate 3,000,000 Units ($30,000,000) had been received.  Upon
 the termination of the offering of Units of CNL XVII, CNL XVIII
        commenced its offering to the public of 3,500,000 Units ($35,000,000).
   As of December 31, 1997, CNL XVIII had accepted subscriptions for
      3,500,000 Units and had received subscription proceeds for 3,414,576
   Units, representing $34,145,759 of capital contributed by limited
      partners, and 22 properties had been acquired.  From commencement of
       the offering through December 31, 1997, total selling commissions and
     discounts were $2,902,389, due diligence expense reimbursement fees
         were $170,729, and acquisition fees were $1,536,559, for a total amount
  paid to sponsor of $4,609,677. CNL XVIII had cash generated from
 operations for the period October 11, 1996 (the date funds were
originally released from escrow) through December 31, 1997, of
      $1,388,756.  CNL XVIII made payments of $113,041 to the sponsor from
     operations for this period.  As of December 31, 1997, CNL XVIII had
accepted subscriptions for 3,500,000 Units and had received   
        subscription proceeds for 3,414,576 Units, representing $34,145,759 of
     capital contributed by limited partners.  The remaining proceeds of
        $854,241, representing the remaining 85,424 Units were received during
        the period January 1, 1998 through February 6, 1998, at which time CNL
XVIII terminated its offering.                                

                                   C-5

424B3
93rd Page of 120
TOC
1st
Previous
Next
Bottom
Just 93rd

Note 2:  Pursuant to a Registration Statement on Form S-11 under the Securities 
      Act of 1933, as amended, effective July 9, 1997, CNL American Realty
        Fund, Inc. registered for sale $165,000,000 of shares of common stock.
    The offering of shares of CNL American Realty Fund, Inc. commenced
         September 11, 1997.  As of December 31, 1997, CNL American Realty Fund,
       Inc. had sold 1,132,540 shares, representing subscription proceeds of
       $11,325,402 from the offering, including 106 shares, ($1,056) through
       the reinvestment plan.  From the commencement of the offering through
 December 31, 1997, total selling commissions and discounts were
     $849,405, marketing support and due diligence expense reimbursement
    fees were $56,627, and acquisition fees were $509,643, for a total
       amount paid to sponsor of $1,415,675.  CNL American Realty Fund, Inc.
         had cash generated from operations for the period October 15, 1997 (the
       date funds were originally released from escrow) through December 31,
    1997, of $22,469.  CNL American Realty Fund, Inc. made payments of
$6,889 to the sponsor from operations for this period.        

 C-6

424B3
94th Page of 120
TOC
1st
Previous
Next
Bottom
Just 94th

 TABLE III
 Operating Results of Prior Programs CNL
 INCOME FUND XII, LTD.

                                                        · Enlarge/Download Table


                                               1991                                                
                                             (Note 1)       1992           1993           1994     
                                           ------------  ------------   ------------   --------    
                                                                                                   

Gross revenue                           $          0    $     25,133   $  3,374,640   $  4,397,881 
Equity in earnings of joint ventures               0              46         49,604         85,252 
Profit (loss) from sale of properties                                                              
  (Note 7)                                         0               0              0              0 
Interest income                                    0          45,228        190,082         65,447 
Less: Operating expenses                           0          (7,211)      (193,804)      (192,951)
      Interest expense                             0               0              0              0 
      Depreciation and amortization                0          (3,997)      (286,293)      (327,795)
                                        ------------    ------------   ------------   ------------ 
Net income - GAAP basis                            0          59,199      3,134,229      4,027,834 
                                        ============    ============   ============   ============ 
Taxable income                                                                                     
  - from operations                                0          58,543      2,749,072      3,301,005 
                                        ============    ============   ============   ============ 
  - from gain (loss) on sale                       0               0              0              0 
                                        ============    ============   ============   ============ 
Cash generated from operations                                                                     
  (Notes 2 and 5)                                  0          61,370      3,246,760      3,848,962 
Cash generated from sales (Note 7)                 0               0              0              0 
Cash generated from refinancing                    0               0              0              0 
                                        ------------    ------------   ------------   ------------ 
Cash generated from operations, sales                                                              
  and refinancing                                  0          61,370      3,246,760      3,848,962 
Less: Cash distributions to investors                                                              
  (Note 6)                                                                                         
    - from operating cash flow                     0         (61,370)    (1,972,769)    (3,768,754)
    - from sale of properties                      0               0              0              0 
    - from return of capital (Note 4)              0         (60,867)             0              0 
    - from cash flow from prior period             0               0              0              0 
                                        ------------    ------------   ------------   ------------ 
Cash generated (deficiency) after cash                                                             
  distributions                                    0         (60,867)     1,273,991         80,208 
Special items (not including sales and                                                             
  refinancing):                                                                                    
    Limited partners' capital                                                                      
      contributions                                0      21,543,270     23,456,730              0 
    General partners' capital                                                                      
      contributions                            1,000               0              0              0 
    Organization costs                             0         (10,000)             0              0 
    Syndication costs                              0      (2,066,937)    (2,277,637)             0 
    Acquisition of land and buildings              0      (7,536,009)   (15,472,737)          (230)
    Investment in direct financing                                                                 
      leases                                       0      (2,503,050)   (11,875,100)          (591)
    Loan to tenant of joint venture,