CNL HEALTH CARE PROPERTIES INC
424B3, 2000-09-05
REAL ESTATE INVESTMENT TRUSTS
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                         CNL RETIREMENT PROPERTIES, INC.
                   (Formerly CNL Health Care Properties, Inc.)

                    Supplement No. 2, dated September 5, 2000

                       to Prospectus, dated March 31, 2000

================================================================================


         This Supplement is part of, and should be read in conjunction with, the
Prospectus dated March 31, 2000. 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 the Property  acquired by the Company is presented as
of August 3, 2000, and all references to the Property acquisition should be read
in that context.  Proposed  properties  for which the Company  receives  initial
commitments,  as well as property  acquisitions that occur after August 3, 2000,
will be reported in a subsequent Supplement.



                               RECENT DEVELOPMENTS


         On April 20,  2000,  the  Company  acquired  a Brighton  Gardens(R)  by
Marriott(R)  assisted  living  Property  located in Orland Park,  Illinois.  The
assisted  living  community,   which  is  located   southwest  of  Chicago,   is
approximately six miles from two medical  facilities,  Palos Community  Hospital
and Oak  Forest  Community  Hospital,  and less than two miles  from the  Orland
Square  Shopping  Center.  According  to a report  published  by Project  Market
Decision and Claritas,  a research and data collection firm, the greater Chicago
area is the third largest  seniors  market in the country with more than 263,800
seniors age 75 and older. The number of seniors in the ten-mile area surrounding
the  Property  is  expected  to grow by 11%  between  1999 and  2004.  The newly
constructed  assisted living  Property,  which  commenced  operations in October
1999, has 106 units.  The Company' s interest in the Property is focused on real
estate only,  not  assisted  living  operations.  The Company has entered into a
long-term, "triple-net" lease with the tenant of this Property.


         As a  result  of  the  acquisition  of the  Property  in  Orland  Park,
Illinois,  and the  commencement  of rental income under the lease,  the Company
increased  its  monthly  distribution  rate,  effective  April 20,  2000,  to an
annualized  rate  of  7%.  See  "Distribution  Policy"  for  information  on how
distributions are declared.


         At a special  meeting of  stockholders  of CNL Health Care  Properties,
Inc. (the  "Company"),  held on August 22, 2000,  the  stockholders  approved an
amendment  to the  Company's  Amended and  Restated  Articles  of  Incorporation
proposed  by the Board of  Directors  to change the  Company's  name.  Effective
August 24, 2000, the Company changed its name to CNL Retirement Properties, Inc.
The Board of Directors  believes that this will provide better name  recognition
of the Company in the context of its business.


                                  THE OFFERINGS

         As of August 3, 2000, the Company had received subscription proceeds of
$9,013,762  (901,376 Shares).  As of August 3, 2000, net proceeds to the Company
from its offering of Shares and capital  contributions  from the Advisor,  after
deduction of Selling  Commissions,  marketing  support and due diligence expense
reimbursement  fees and  Organizational  and Offering  Expenses of three percent
totalled approximately $8,200,000. The Company had used approximately $5,800,000
of Net Offering  Proceeds  and  $8,100,000  in advances  relating to its line of
credit,   described  in  "Business  --  Borrowing,"   to  invest   approximately
$13,900,000 in one assisted  living Property . As of August 3, 2000, the Company
had repaid advances totalling  $1,785,000 relating to its line of credit and had
paid  approximately  $880,000  in  Acquisition  Fees and  Acquisition  Expenses,
leaving  approximately  $265,000 of Net Offering Proceeds available to invest in
Properties and Mortgage Loans.




<PAGE>



         As described in "The Offering" section of the Prospectus,  the Board of
Directors  may  determine  to engage in future  offerings  of Common  Stock.  In
connection  therewith,  the Board of Directors has approved a second offering by
the Company of up to 15,500,000  Shares, of which up to 500,000 Shares are being
offered to participants in our  Reinvestment  Plan in connection with the second
offering. The second offering will be at the same price and on substantially the
same terms as this offering.  The Company will not commence the second  offering
until after the completion of this offering.

         The  Company  currently  anticipates  that  any net  offering  proceeds
received  from the second  offering will be invested in health care and seniors'
housing  Properties or, to a lesser extent,  to make Mortgage Loans to operators
of Health Care Facilities.  The Company believes that the net proceeds  received
from the second offering and any additional offerings will enable the Company to
continue to grow and take  advantage  of  acquisition  opportunities  until such
time, if any, that the Company lists on a national exchange. Under the Company's
Articles of Incorporation, if the Company does not list by December 31, 2008, it
will commence an orderly  liquidation of its assets, and the distribution of the
proceeds therefrom to its stockholders.



                                  RISK FACTORS

FINANCING RISKS

         The following information updates and replaces the first full paragraph
on page 19 of the Prospectus.

         We have no  commitment  for  long-term  financing.  We intend to obtain
long-term  financing;  however,  we have not yet obtained a  commitment  for any
long-term  financing,  and we cannot be sure that we will be able to obtain  any
long-term  financing  on  satisfactory  terms.  If we do  not  obtain  long-term
financing,  we may not be able to  acquire  as many  properties  or make as many
loans and leases as we anticipated, which could limit the diversification of our
investments and our ability to achieve our investment objectives.


                             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
Relationships and Related Transactions."


                              CONFLICTS OF INTEREST


         The  following  information  updates  and  replaces  the  Conflicts  of
Interest table beginning on page 33 of the Prospectus.

         The Company will be subject to various  conflicts  of interest  arising
out of its relationship to the Advisor and its Affiliates, as described below.



<PAGE>


         The following chart indicates the relationship between the Company, the
Advisor and CNL  Holdings,  Inc.,  including  its  Affiliates  that will provide
services to the Company.

                             CNL Holdings, Inc. (1)
              Subsidiaries, Affiliates and Strategic Business Units

Capital Markets:                         Retail:
   CNL Capital Markets, Inc. (2)           Commercial Net Lease Realty, Inc.(8)
     CNL Investment Company
       CNL Securities Corp. (3)          Restaurant:
     CNL Asset Management, Inc.            CNL American Properties Fund, Inc.(9)
     CNL Institutional Advisors, Inc.
                                         Hospitality:
Administrative Services:                   CNL Hospitality Properties, Inc. (6)
   CNL Shared Services, Inc. (4)
                                         Health Care:
Real Estate Services:                      CNL Retirement Properties, Inc.
   CNL Real Estate Services, Inc. (5)
     CNL Hospitality Corp. (6)           Financial Services:
       CNL Hotel Development Company       CNL Finance, Inc.
     CNL Retirement Corp. (7)                 CNL Capital Corp.
       CNL Retirement Development Corp.
     CNL Realty & Development Corp.

-----------------------
(1)      CNL Holdings,  Inc. is the parent company of CNL Financial Group,  Inc.
         (formerly CNL Group,  Inc.) and its affiliates.  James M. Seneff,  Jr.,
         Chairman  of the Board  and Chief  Executive  Officer  of the  Company,
         shares ownership and voting control of CNL Holdings, Inc. with Dayle L.
         Seneff, his wife.

(2)      CNL Capital Markets, Inc. is a wholly owned subsidiary of CNL Financial
         Group, Inc. and is the parent company of CNL Investment Company.

(3)      CNL  Securities  Corp. is a wholly owned  subsidiary of CNL  Investment
         Company and has served as managing  dealer in the offerings for various
         CNL public and private real estate programs, including the Company.

(4)      CNL Shared Services, Inc. is a wholly owned subsidiary of CNL Holdings,
         Inc.,  and  together  with  other  Affiliates  provides  administrative
         services for various CNL entities, including the Company.

(5)      CNL Real  Estate  Services,  Inc.,  a wholly  owned  subsidiary  of CNL
         Financial Group,  Inc., is the parent company of CNL Hospitality Corp.,
         CNL Retirement Corp. and CNL Realty & Development Corp.

(6)      CNL Hospitality  Properties,  Inc. is a public, unlisted REIT. James M.
         Seneff, Jr. holds the positions of Chief Executive Officer and Chairman
         of the Board, and Robert A. Bourne holds the positions of President and
         Vice  Chairman of the Board of CNL  Hospitality  Properties,  Inc.  CNL
         Hospitality  Corp.,  a majority  owned  subsidiary  of CNL Real  Estate
         Services,  Inc.,  provides  management  and  advisory  services  to CNL
         Hospitality Properties, Inc. pursuant to an advisory agreement.

(7)      CNL  Retirement  Corp.,  a wholly owned  subsidiary  of CNL Real Estate
         Services,  Inc.,  provides  management  and  advisory  services  to the
         Company pursuant to the Advisory Agreement.

(8)      Commercial  Net Lease  Realty,  Inc.  is a REIT  listed on the New York
         Stock Exchange.  Effective  January 1, 1998, CNL Realty Advisors,  Inc.
         and Commercial Net Lease Realty,  Inc. merged, at which time Commercial
         Net Lease  Realty,  Inc.  became self  advised.  James M.  Seneff,  Jr.
         continues to hold the positions of Chief Executive Officer and Chairman
         of the Board,  and Robert A. Bourne  continues  to hold the position of
         Vice Chairman of the Board of Commercial Net Lease Realty, Inc.



<PAGE>


(9)      CNL  American  Properties  Fund,  Inc.  is  a  public,  unlisted  REIT.
         Effective  September 1, 1999,  CNL Fund  Advisors,  Inc., CNL Financial
         Services,  Inc., CNL Financial Corp. and CNL American  Properties Fund,
         Inc.  merged,  at which time CNL American  Properties Fund, Inc. became
         self advised.  James M. Seneff,  Jr.  continues to hold the position of
         Chairman  of the  Board  and  Robert A.  Bourne  continues  to hold the
         position of Vice Chairman of the Board of CNL American Properties Fund,
         Inc.


COMPETITION TO ACQUIRE PROPERTIES AND INVEST IN MORTGAGE LOANS

         The following  information updates and replaces the second paragraph on
page 35 of the Prospectus.

         The Company will supplement this Prospectus  during the offering period
to disclose the  acquisition of a Property at such time as the Advisor  believes
that a reasonable probability exists that the Company will acquire the Property,
including  an  acquisition  from the Advisor or its  Affiliates.  Based upon the
experience  of  management  of the  Company  and the  Advisor  and the  proposed
acquisition  methods,  a reasonable  probability that the Company will acquire a
Property  normally will occur as of the date on which (i) a commitment letter is
executed by a proposed lessee,  (ii) a satisfactory  credit underwriting for the
proposed  lessee has been  completed,  (iii) a satisfactory  site inspection has
been completed and (iv) a nonrefundable deposit has been paid on the Property.


CERTAIN CONFLICT RESOLUTION PROCEDURES

         The following information updates and replaces Item 3 on page 37 of the
Prospectus.

         3. The Company will not make loans to the Sponsor,  Advisor,  Directors
or any Affiliates thereof, except (A) mortgage loans subject to the restrictions
governing  mortgage  loans  in the  Articles  of  Incorporation  (including  the
requirement to obtain an appraisal from an independent  expert) or (B) to wholly
owned  subsidiaries  of the Company.  Any loans to the Company by the Advisor or
its  Affiliates  must be approved by a majority of the  Directors  (including  a
majority  of  the  Independent  Directors)  not  otherwise  interested  in  such
transaction  as fair,  competitive,  and  commercially  reasonable,  and no less
favorable to the Company than comparable loans between unaffiliated  parties. It
is  anticipated  that  the  Advisor  or its  Affiliates  shall  be  entitled  to
reimbursement,  at cost,  for actual  expenses  incurred  by the  Advisor or its
Affiliates on behalf of the Company or Joint  Ventures in which the Company is a
co-venturer,  subject to the 2%/25% Guidelines (2% of Average Invested Assets or
25% of Net Income)  described  in the section of the  Prospectus  entitled  "The
Advisor and the Advisory Agreement -- The Advisory Agreement."



                                    BUSINESS

GENERAL


         The  following   information  updates  and  replaces  the  second  full
paragraph and the first table on page 43 and the first and second  paragraphs on
page 44 of the Prospectus.

         The Company  believes  that  demographic  trends are  significant  when
looking at the  potential  for future  growth in the health care  industry.  For
1999, the  Administration  on Aging found there were over 34.4 million Americans
over the age of 65,  representing  approximately  13% of the U.S  population  or
about one in eight Americans.  According to statistics cited from Age Power: How
the 21st Century Will Be Ruled by the New Old, by Ken Dychtwald,  Ph.D., today's
baby boomers  (those born  between 1946 and 1964) will begin  reaching age 65 as
early as 2011.  Baby boomers will grow in number to 60 million  "elder  boomers"
and will be a large  percentage of the  approximately  75 million seniors by the
year 2035.  According to data released from the U.S. Bureau of Census in January
2000,  the elderly  population is projected to more than double  between now and
the year 2050,  to 80  million.  As  illustrated  below,  most of this growth is
expected to occur  between 2010 and 2030 when the number of elderly is projected
to grow by an average of 2.8% annually.




<PAGE>


                          Elderly Population Estimates

      Date             Over 85 Population (000)        Over 65 Population (000)
-----------------     ---------------------------     --------------------------

  July 1, 1998                  4,054                           34,401

  July 1, 2000                  4,312                           34,835

  July 1, 2005                  4,968                           36,370

  July 1, 2010                  5,786                           39,715

  July 1, 2015                  6,396                           45,959

  July 1, 2020                  6,763                           53,733

  July 1, 2025                  7,441                           62,641

  July 1, 2030                  8,931                           70,319

  July 1, 2035                  11,486                          74,774

  July 1, 2040                  14,284                          77,177

  July 1, 2045                  17,220                          79,142

  July 1, 2050                  19,352                          81,999

         Source:  U.S. Bureau of Census


         Based on information from the Economic and Statistic  Administration of
the U.S.  Department of Commerce,  management  believes that all of these trends
suggest that as more people live to the oldest ages,  there may also be more who
face chronic,  limiting  illnesses or  conditions.  These  conditions  result in
people  becoming  dependent on others for help in performing  the  activities of
daily living. According to the Health Care Financing Administration,  nearly one
quarter of all seniors over age 65 have health  problems  severe enough to limit
their  ability to  perform  one or more  activities  of daily  living.  The U.S.
General  Accounting  Office  anticipates that the number of older people needing
assistance  with activities of daily living will increase to 14 million by 2020,
from 7 million in 1994.

         In addition  to an aging  population,  according  to 1997 data from the
U.S. Department of Commerce, a significant segment of the elderly population has
the financial resources to afford seniors' housing  facilities,  with people age
55 to 64 making a mean household  income of $58,000 per year. The mean household
income for those age 65 and over is more than  $33,000  per year.  In  addition,
according  to June 30,  1999 data from the U.S.  Bureau of Census,  the  average
household  wealth for those age 65 and over exceeds the national average for all
age groups by 54%, and 27% of those  households  have an annual income in excess
of $50,000.  According to statistics  cited from Age Power: How the 21st Century
Will Be Ruled by the New Old,  men and women now in their 50s and older  control
80% of all the money in U.S. savings-and-loan  institutions and represent $66 of
every $100 invested in the stock market.  Individuals  age 50 and over currently
earn  approximately $2 trillion in annual income,  control more than $7 trillion
in wealth and own 77% of the financial assets in America.

         America's  seniors  are also  preparing  for their  future  health care
needs.  They  currently  purchase  more than 90% of  long-term  care  insurance,
representing $800 million in premiums,  a figure growing 23% each year. American
families are also exploring  current and future health care needs.  An estimated
22 million households are involved in elder care, a number that has tripled over
the past decade and is expected to double in the next two decades.  According to
an April 2000  Newsweek  article,  more than 62% of  today's  baby  boomers  are
concerned about care for an aging parent or relative.

         More than 70% of working-age Americans believe a comfortable retirement
is a fundamental part of the American dream according to Age Power: How the 21st
Century  Will  Be  Ruled  by the New  Old.  To  adequately  prepare  for  future
retirement  needs,  it is estimated that the baby boom  generation  will need to
have saved at least $1 million  per  household  to  maintain  their  standard of
living.


         Management  believes  that other  changes and trends in the health care
industry will create  opportunities  for growth of seniors' housing  facilities,
including (i) the growth of operators serving specific health care niches,  (ii)
the  consolidation of providers and facilities  through mergers,  integration of
physician  practices,   and  elimination  of  duplicative  services,  (iii)  the
pressures  to  reduce  the cost of  providing  quality  health  care,  (iv) more
dual-income and


<PAGE>


single-parent households leaving fewer family members available for in-home care
of aging  parents and  necessitating  more senior  care  facilities,  and (v) an
anticipated  increase  in the number of  insurance  companies  and  health  care
networks offering privately funded long-term care insurance.

INVESTMENT OF OFFERINGS PROCEEDS

         The following  information updates and replaces the last full paragraph
on page 47 of the Prospectus.

         The Company has  undertaken to supplement  this  Prospectus  during the
offering  period to disclose the  acquisition  of Properties at such time as the
Company  believes  that a reasonable  probability  exists that any such Property
will be acquired  by the  Company.  Based upon the  experience  and  acquisition
methods of the  Affiliates  of the Company and the Advisor,  this  normally will
occur,  with regard to acquisition of Properties,  as of the date on which (i) a
commitment letter is executed by a proposed lessee,  (ii) a satisfactory  credit
underwriting  for the proposed lessee has been  completed,  (iii) a satisfactory
site  inspection  has been completed and (iv) a  nonrefundable  deposit has been
paid  on  the  Property.   However,  the  initial  disclosure  of  any  proposed
acquisition  cannot be relied upon as an assurance  that the Company  ultimately
will  consummate  such proposed  acquisition  or that the  information  provided
concerning  the proposed  acquisition  will not change  between the date of such
supplement and the actual  purchase or extension of financing.  The terms of any
borrowing by the Company will also be disclosed by supplement  following receipt
by the Company of an acceptable commitment letter from a potential lender.

PROPERTY ACQUISITIONS

         The following "Property  Acquisitions" section updates and replaces the
"Pending Investments" section beginning on page 48 of the Prospectus.


         Brighton Gardens(R) by Marriott(R) located in Orland Park, Illinois. On
April 20, 2000, the Company acquired a Brighton Gardens assisted living Property
located in Orland Park,  Illinois (the "Orland Park  Property") for  $13,848,900
from Marriott Senior Living Services,  Inc. The Company,  as lessor, has entered
into a long-term lease agreement relating to this Property. The general terms of
the lease agreement are described in " -- Description of Property Leases" of the
Prospectus. The principal features of the lease are as follows:

o        The initial term of the lease expires  on April 24, 2015.


o        At the end of the  initial  lease  term,  the  tenant  will  have  four
         consecutive renewal options of five years each.

o        The lease requires minimum rent payments of $1,350,268 per year for the
         first  and  second  lease  years and  $1,384,890  for each  lease  year
         thereafter.

o        In addition to minimum rent, the lease requires  percentage  rent equal
         to seven  percent of gross  revenues in excess of the  "Baseline  Gross
         Revenues." The Baseline  Gross  Revenues will be  established  when the
         facility  achieves  average  occupancy  of  93%  for  four  consecutive
         quarters.

o        A security  deposit  equal to $553,956 has been retained by the Company
         as security for the tenant's obligations under the lease.

o        The tenant has  established  a reserve  fund which will be used for the
         replacement and renewal of furniture,  fixtures and equipment  relating
         to the assisted living Property (the "FF&E  Reserve").  Deposits to the
         FF&E Reserve are made every four weeks as follows: 1% of gross receipts
         for the first through  fourth lease year; 2% of gross  receipts for the
         fifth through  eighth lease year;  and 3% of gross receipts every lease
         year thereafter.

 o       Marriott International, Inc. has, with certain limitations,  guaranteed
         the  tenant's  obligation  to pay  minimum  rent under the  lease.  The
         guarantee  terminates on the earlier of the end of the fifth lease year
         or at such time as the net operating  income from the Property  exceeds
         minimum  rent due  under  the  lease by 25% for any  trailing  12-month
         period. The maximum amount of the guarantee is $2,769,780.

         The estimated  federal income tax basis of the  depreciable  portion of
the Orland Park Property is approximately $12.5 million.

         The Orland Park  Property,  which  opened in October  1999,  is a newly
constructed Brighton Gardens by Marriott located in Orland Park,  Illinois.  The
Orland Park Property includes 82 assisted living units and 24 special care units
for  residents  with  Alzheimer's  and related  memory  disorders.  The facility
provides  assistance with daily living activities such as bathing,  dressing and
medication  reminders.  Special  amenities  include a common activities room and
common  dining room, a private  dining  area,  library and garden.  The assisted
living community,  which is located  southwest of Chicago,  is approximately six
miles from two  medical  facilities,  Palos  Community  Hospital  and Oak Forest
Community  Hospital,  and less than two miles  from the Orland  Square  Shopping
Center. According to a report published by Project Market Decision and Claritas,
a research  and data  collection  firm,  the greater  Chicago  area is the third
largest  seniors market in the country with more than 263,800 seniors age 75 and
older.  The number of seniors in the ten-mile area  surrounding  the Property is
expected to grow by 11% between 1999 and 2004.  Other senior  living  facilities
located in  proximity to the Orland Park  Property  include  Victorian  Village,
Sunrise of Palos Park,  Peace Memorial  Village and Arden Courts of Manor Drive.
The average occupancy rate and the revenue per available unit for the period the
assisted living facility has been operational are as follows:

                          Orland Park Property
                  ----------------------------------------------
                                   Average             Revenue
                                  Occupancy        per Available
                  Year              Rate                Unit
                  ----              ----                ----

                 *1999             23.30%             $118.11
                **2000             41.40%             $109.89

* Data for the Orland  Park  Property  represents  the period  October  11, 1999
through  December 31, 1999.
** Data for 2000 represents the period January 1, 2000 through June 16, 2000.

         The Company believes that the results achieved by the Property for 1999
and year-to-date 2000, are not indicative of its long-term operating  potential,
as the Property had been open for less than twelve  months  during the reporting
period.

         Marriott  Brands.  Brighton  Gardens  by  Marriott  is  a  quality-tier
assisted living concept which  generally has 90 assisted  living suites,  and in
certain  locations,  30 to 45 nursing beds in a community.  In some communities,
separate  on-site  centers  also provide  specialized  care for  residents  with
Alzheimer's   or  other   memory-related   disorders.   According   to  Marriott
International,  Inc.'s 1999 Form 10-K,  Marriott Senior Living  Services,  Inc.,
which is a wholly owned subsidiary of Marriott International,  Inc., operates 99
assisted senior living communities principally under the names "Brighton Gardens
by Marriott,"  "Village  Oaks," and "Marriott  MapleRidge,"  and 45  independent
living communities.  Marriott Senior Living Services, Inc. is one of the largest
participants  in the seniors'  housing  industry  with $559 million in sales for
1999.  The  communities  are designed in a  comfortable,  home-like  setting and
provide  residents  with a sense of community  through a variety of  activities,
restaurant-style  dining,  on-site security,  weekly  housekeeping and scheduled
transportation.  The communities  are  distinguished  by an innovative  wellness
program that enables  residents to remain as independent as possible for as long
as possible, while providing a personally tailored program of services and care.
Marriott  Senior  Living  Services,  Inc.  has provided  seniors with  excellent
service and quality  care since 1984.  In 1999,  the  American  Seniors  Housing
Association, a seniors housing trade association, ranked Marriott Seniors Living
Services, Inc. as the nation's second largest manager of senior housing.

SITE SELECTION AND ACQUISITION OF PROPERTIES

         The  following   information  updates  and  replaces  the  second  full
paragraph on page 51 of the Prospectus.

         The purchase of each  Property will be supported by an appraisal of the
real estate prepared by an independent  appraiser.  The Advisor,  however,  will
rely on its own  independent  analysis and not on such appraisals in determining
whether or not to recommend that the Company acquire a particular property.  The
purchase  price of each such  Property,  plus any  Acquisition  Fees paid by the
Company  in  connection  with such  purchase,  will not  exceed  the  Property's
appraised  value.  (In  connection  with the  acquisition of a Property that has
recently  been or is to be  constructed  or  renovated,  the  comparison  of the
purchase price and the appraised value of such Property ordinarily will be based
on the "stabilized  value" of such Property.) The stabilized  value is the value
at the point which the  Property  has reached  its level of  competitiveness  at
which it is expected to operate over the long term. It


<PAGE>


should be noted that  appraisals are estimates of value and should not be relied
upon as measures  of true worth or  realizable  value.  Each  appraisal  will be
maintained  in the  Company's  records  for at  least  five  years  and  will be
available for inspection and duplication by any stockholder.

BORROWING

         The following  information updates and replaces the last full paragraph
on page 61 of the Prospectus.


         On April 20, 2000, the Company  entered into an initial  revolving line
of  credit  and  security  agreement  with a bank to be used by the  Company  to
acquire  health care  Properties.  The line of credit  provides that the Company
will be able to receive advances of up to $25,000,000 until April 19, 2005, with
an annual  review to be performed by the bank to indicate that there has been no
substantial  deterioration,  in the bank's reasonable discretion,  of the credit
quality.  Interest  expense on each advance shall be payable  monthly,  with all
unpaid  interest and principal due no later than five years from the date of the
advance.  Generally,  advances  under the line of credit  will bear  interest at
either (i) a rate per annum equal to LIBOR plus the difference between LIBOR and
the bank's  base rate at the time of the  advance or (ii) a rate per annum equal
to the bank's base rate,  whichever the Company selects at the time advances are
made. The interest rate will be adjusted daily in accordance  with  fluctuations
with the bank's  rate or the LIBOR  rate,  as  applicable.  Notwithstanding  the
above,  the interest  rate on the first  $9,700,000  drawn will be 8.75% through
April 1, 2002, and thereafter  will hear interest at either (i) or (ii) above as
of April 1, 2002. Each loan made under the line of credit will be secured by the
assignment of rents and leases.  In addition,  the line of credit  provides that
the Company  will not be able to further  encumber  the  applicable  health care
Property  during the term of the loan  without the bank's  consent.  The Company
will be required,  at each closing,  to pay all costs, fees and expenses arising
in  connection  with the line of credit.  The  Company  must also pay the bank's
attorneys fees,  subject to a maximum cap,  incurred in connection with the line
of credit and each advance.  On April 20, 2000, the Company obtained one advance
totalling $8,100,000 relating to the line of credit. In connection with the line
of credit, the Company incurred an origination fee, legal fees and closing costs
of $55,917. The proceeds were used in connection with the purchase of one health
care Property described in "-- Property Acquisitions."



                             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 Appendix B.

<TABLE>
<CAPTION>
<S> <C>

                                                Six Months Ended
                                           June 30,        June 30, 1999
                                            2000               (1)                   Year Ended December 31,
                                         (Unaudited)       (Unaudited)       1999 (1)     1998 (1)     1997 (1)(2)
                                        --------------   -----------------   ----------   ----------    -----------
    Revenues                             $  368,584                  --     $ 86,231        $  --          $  --
    Organizational costs                         --                  --       35,000           --             --
    Other operating expenses                211,299                  --       79,621           --             --
    Net earnings (loss)                     157,285                  --      (28,390)          --             --
    Cash distributions declared (3)         152,525                  --       50,404           --             --
    Cash from operations                    657,668                  --       12,851           --             --
    Funds from operations (4)               214,136                  --      (28,390)          --             --
    Earnings (loss) per Share                   .24                  --         (.07)          --             --
    Cash distributions declared
      per Share                                 .23                  --          .13           --             --
     Weighted average number of Shares
          outstanding (5)                   665,899                  --      412,713           --             --


                                        June 30, 2000    June 30, 1999 (1)              December 31,
                                         (Unaudited)       (Unaudited)         1999         1998           1997
                                        --------------   -----------------   ----------   ----------    -----------
     Total assets                        $15,366,232          $1,592,442    $5,088,560     $976,579       $280,330
     Total  stockholders' equity           6,149,193             200,000     3,292,137      200,000        200,000

</TABLE>

(1)      No operations  commenced until the Company  received  minimum  offering
         proceeds of $2,500,000  and funds were released from escrow on July 14,
         1999.  The Company did not acquire its first  Property  until April 20,
         2000;  therefore,  revenues  for  the  year  ended  December  31,  1999
         consisted  only of interest  income on funds held in  interest  bearing
         accounts pending investment in a Property.

(2)      Selected  financial data for 1997  represents  the period  December 22,
         1997 (date of inception) through December 31, 1997.

(3)      Cash distributions are declared by the Board of Directors and generally
         are based on various factors, including cash available from operations.
         For the six months ended June 30, 2000 and the year ended  December 31,
         1999,  0% and 100%,  respectively,  of cash  distributions  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
         net earnings on a GAAP basis,  including  organization  costs that were
         expensed for GAAP  purposes for the year ended  December 31, 1999.  The
         Company has not treated such amount as a return of capital for purposes
         of calculating Invested Capital and the Stockholders' 8% Return.

(4)      Funds from operations ("FFO"),  based on the revised definition adopted
         by the Board of Governors of the  National  Association  of Real Estate
         Investment  Trusts  ("NAREIT")  and as used herein,  means net earnings
         determined in accordance with 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.  FFO was  developed  by NAREIT as a
         relative  measure of  performance  and  liquidity  of an equity REIT in
         order to recognize that  income-producing  real estate historically has
         not depreciated on the basis  determined under GAAP.  However,  FFO (i)
         does not represent cash generated from operating activities  determined
         in accordance with GAAP (which, unlike FFO, generally reflects all cash
         effects  of   transactions   and  other  events  that  enter  into  the
         determination of net earnings),  (ii) is not necessarily  indicative of
         cash  flow  available  to fund  cash  needs  and  (iii)  should  not be
         considered as an alternative  to net earnings  determined in accordance
         with GAAP as an indication of the Company's operating  performance,  or
         to cash flow from operating  activities  determined in accordance  with
         GAAP as a measure of either liquidity or the Company's  ability to make
         distributions.  Accordingly,  the  Company  believes  that in  order to
         facilitate  a  clear  understanding  of  the  consolidated   historical
         operating  results  of  the  Company,   FFO  should  be  considered  in
         conjunction  with the Company's net earnings and cash flows as reported
         in  the  accompanying  financial  statements  and  notes  thereto.  See
         Appendix B-- Financial Information.

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



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The following  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. These statements generally are characterized by
the use of terms such as  "believe,"  "expect"  and "may."  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  local  and  national  real  estate
conditions, the availability of capital from borrowings under the Company's Line
of Credit,  availability of proceeds from the Company's offering, the ability of
the Company to obtain Permanent  Financing on satisfactory terms, the ability of
the Company to continue to  identify  suitable  investments,  the ability of the
Company to continue to locate suitable  tenants for its Properties and borrowers
for its Mortgage Loans and Secured Equipment Leases,  and the ability of tenants
and borrowers to make payments under their respective leases,  Mortgage Loans or
Secured Equipment Leases. Given these  uncertainties,  readers are cautioned not
to place undue reliance on such statements.


 THE COMPANY

         CNL Retirement  Properties,  Inc. (formerly CNL Health Care Properties,
Inc.) is a Maryland  corporation  that was  organized on December 22, 1997.  CNL
Retirement GP Corp. and CNL Retirement LP Corp. are wholly owned subsidiaries of
CNL  Retirement  Properties,  Inc.,  organized in Delaware in December 1999. CNL
Retirement  Partners,  LP is a Delaware limited  partnership  formed in December
1999.  CNL  Retirement GP Corp.  and CNL Retirement LP Corp. are the general and
limited partner,  respectively,  of CNL Retirement Partners, LP. Assets acquired
are expected to be held by CNL Retirement  Partners,  LP and, as a result, owned
by CNL Retirement Properties,  Inc. through the Partnership.  The term "Company"
includes , unless the context  otherwise  requires,  CNL Retirement  Properties,
Inc., CNL Retirement Partners, LP, CNL Retirement GP Corp. and CNL Retirement LP
Corp.

         The  Company  was formed to acquire  Properties  related to Health Care
Facilities  located  across the United  States.  The Health Care  Facilities may
include  congregate  living,  assisted  living and skilled  nursing  facilities,
continuing care retirement  communities and life care  communities,  and medical
office  buildings and walk-in  clinics.  The Properties will be leased on a long
term,  "triple-net"  basis.  The  Company  may also  provide  Mortgage  Loans to
operators  of  Health  Care  Facilities  in the  aggregate  principal  amount of
approximately  5% to 10% of the  Company's  total  assets.  The Company may also
offer  Secured  Equipment  Leases to  operators of Health Care  Facilities.  The
aggregate principal amount of Secured Equipment Leases is not expected to exceed
10% of Gross Proceeds.

LIQUIDITY AND CAPITAL RESOURCES

Common Stock Offerings

         During  the  period  December  22,  1997  (date of  inception)  through
December 31, 1998, a capital  contribution  of $200,000 from the Advisor was the
Company's sole source of capital.  On September 18, 1998, the Company  commenced
this offering of Shares of Common Stock.  As of August 3, 2000,  the Company had
received subscription proceeds of $9,013,762 (901,376 Shares), including $50,463
(5,046 Shares) through its Reinvestment Plan. As of August 3, 2000, net proceeds
to the Company from this offering of Shares and capital  contributions  from the
Advisor,  after  deduction  of Selling  Commissions,  marketing  support and due
diligence expense reimbursement fees and Organizational and Offering Expenses of
three percent totalled approximately $8,200,000. In April 2000, the Company used
approximately  $5,800,000  of Net Offering  Proceeds and  $8,100,000 in advances
relating to its line of credit,  described in "Business -- Borrowing," to invest
approximately  $13,900,000  in one  assisted  living  Property . As of August 3,
2000,  the Company had repaid  advances  of  $1,785,000  relating to its line of
credit and had paid  approximately  $880,000 in Acquisition Fees and Acquisition
Expenses,  leaving approximately  $265,000 of Net Offering Proceeds available to
invest in Properties and Mortgage Loans. See "Business -- Property Acquisitions"
for a  description  of the Property  owned as of August 3, 2000. As of August 3,
2000, the Company had not entered into any Mortgage Loans.

         On May 19, 2000,  the Company  filed a  registration  statement on Form
S-11 with the Securities and Exchange Commission in connection with the proposed
sale by the Company of up to an  additional  15,500,000  Shares of Common  Stock
($155,000,000)  (the  "2000  Offering")  in an  offering  expected  to  commence
immediately  following the completion of this offering. Of the 15,500,000 Shares
of Common Stock to be offered,  up to 500,000 will be available to  stockholders
purchasing  Shares  through the  Reinvestment  Plan. The price per Share and the
other terms of the 2000  Offering,  including the  percentage of gross  proceeds
payable (i) to the  Managing  Dealer for  Selling  Commissions  and  expenses in
connection with the offering and (ii) to the Advisor for  Acquisition  Fees, are
substantially the same as those for this offering.

         The Company  expects to use any additional  Net Offering  Proceeds from
the sale of Shares in this  offering,  plus any net offering  proceeds  from the
2000 Offering,  to purchase additional  Properties and, to a lesser extent, make
Mortgage Loans. See "Investment  Objectives and Policies" in the Prospectus.  In
addition,  the  Company  intends to borrow  money to  acquire  Assets and to pay
certain  related fees. The Company intends to encumber Assets in connection with
such  borrowings.  The Company  currently  has a $25,000,000  revolving  line of
credit available, as described below. The line of credit may be increased at the
discretion of the Board of Directors  and may be repaid with offering  proceeds,
proceeds from the sale of Assets,  working capital or Permanent  Financing.  The
Company may also obtain Permanent Financing; although, it has not yet received a
commitment  for any  Permanent  Financing,  and there is no  assurance  that the
Company will obtain any Permanent Financing on satisfactory terms. The aggregate
amount of any Permanent  Financing  shall not exceed 30% of the Company's  total
Assets and the maximum  amount the  Company may borrow is 300% of the  Company's
Net Assets.  The number of  Properties  to be acquired and Mortgage  Loans to be
invested in will depend upon the amount of net offering  proceeds  received from
this offering and future  offerings and loan proceeds  available to the Company.
The amount invested in Secured Equipment Leases is not expected to exceed 10% of
Gross Proceeds.


<PAGE>


         Indebtedness

         On April 20, 2000,  the Company  entered into a  $25,000,000  revolving
line of credit and security  agreement  with a bank to be used by the Company to
acquire health care Properties. The line of credit provides that the Company may
receive  advances  of up to  $25,000,000  until April 19,  2005,  with an annual
review  to be  performed  by the  bank  to  indicate  that  there  has  been  no
substantial deterioration, in the bank's reasonable discretion, of the Company's
credit quality.  Interest expense on each advance shall be payable monthly, with
all unpaid  interest and principal due no later than five years from the date of
the advance. Generally,  advances under the line of credit will bear interest at
either (i) a rate per annum equal to London Interbank  Offered Rate (LIBOR) plus
the difference between LIBOR and the bank's base rate at the time of the advance
or (ii) a rate equal to the bank's base rate,  whichever the Company  selects at
the time  advances  are  made.  The  interest  rate  will be  adjusted  daily in
accordance  with  fluctuations  with  the  bank's  rate or the  LIBOR  rate,  as
applicable. Notwithstanding the above, the interest rate on the first $9,700,000
drawn will be 8.75% through April 1, 2002, and thereafter  will bear interest at
either  (i) or (ii) above as of April 1, 2002.  In  addition,  a fee of 0.5% per
advance will be due and payable to the bank on funds as  advanced.  Each advance
made under the line of credit will be  collateralized by the assignment of rents
and leases.  In addition,  the line of credit provides that the Company will not
be able to  further  encumber  the  applicable  Property  during the term of the
advance  without the bank's  consent.  The  Company  will be  required,  at each
closing, to pay all costs, fees and expenses arising in connection with the line
of credit.  The Company must also pay the bank's  attorneys  fees,  subject to a
maximum cap,  incurred in  connection  with the line of credit and each advance.
During the six months ended June 30, 2000,  the Company  obtained an advance for
$8,100,000 and repaid  $1,300,000  relating to the line of credit. In connection
with the line of credit, the Company incurred an origination fee, legal fees and
closing costs of $55,917. The proceeds were used in connection with the purchase
of a Property.


         The  Company  may  be  subject  to  interest   rate  risk  through  any
outstanding  balances  on its  variable  rate line of credit.  The  Company  may
mitigate this risk by paying down any outstanding balances on the line of credit
from offering proceeds should interest rates rise substantially.


         Property Acquisition and Investments

         On  April  20,  2000,  the  Company  acquired  its  first  Property,  a
private-pay  assisted living community in Orland Park,  Illinois.  In connection
with the  purchase of the  Property,  the  Company,  as lessor,  entered  into a
long-term, triple-net lease agreement.

         As  of  August  3  ,  2000,  the  Company  had  not  entered  into  any
arrangements creating a reasonable probability that an additional Property would
be acquired or a particular  Mortgage Loan or Secured  Equipment  Lease would be
funded. The Company is presently  negotiating to acquire additional  Properties,
but as of August 3, 2000,  the Company had not acquired any such  Properties  or
entered into any Mortgage Loans.

         Cash and Cash Equivalents

         Until Properties are acquired,  or Mortgage Loans are entered into, Net
Offering  Proceeds are held in short-term  (defined as  investments  maturing in
less than 30 days), highly liquid  investments,  such as demand deposit accounts
at commercial  banks,  certificates of deposit and money market accounts,  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 June 30, 2000, the Company
had $659,311  invested in such short-term  investments as compared to $4,744,222
at  December  31,  1999.  The  decrease  in the amount  invested  in  short-term
investments  was  primarily  attributable  to the  purchase of one  Property and
repayments  on the line of credit,  partially  offset by  subscription  proceeds
received from the sale of Shares from this offering  during the six months ended
June 30, 2000. The funds remaining at June 30, 2000, along with additional funds
expected  to be  received  from the sale of Shares,  will be used  primarily  to
purchase  Properties,  to make  Mortgage  Loans,  to pay  offering  expenses and
acquisition  expenses,  to pay  Distributions  to stockholders and other Company
expenses and, in management's discretion, to create cash reserves.


<PAGE>

         Liquidity Requirements

         The  Company  expects to meet its  short-term  liquidity  requirements,
other than for offering expenses,  the acquisition and development of Properties
and the investment in Mortgage Loans and Secured Equipment Leases,  through cash
flow  provided by  operating  activities.  The Company  believes  that cash flow
provided by operating  activities  will be sufficient  to fund normal  recurring
operating  expenses,  regular debt service  requirements  and  Distributions  to
stockholders.  To the extent that the Company's  cash flow provided by operating
activities is not sufficient to meet such short-term liquidity requirements as a
result, for example,  of unforeseen  expenses due to the tenant defaulting under
the terms of its lease agreement, the Company will use borrowings under its Line
of Credit.

         Due to the fact that the Company  leases its  Property,  and expects to
lease  Properties  acquired in the future , on a  long-term,  triple-net  basis,
meaning that tenants are generally  required to pay all repairs and maintenance,
property  taxes,  insurance  and  utilities,  management  does not believe  that
working capital  reserves are necessary at this time.  Management  believes that
the Property is 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  expects to meet its other  short-term
liquidity requirements,  including payment of offering expenses, the acquisition
and  development  of Properties and the investment in Mortgage Loans and Secured
Equipment Leases, with additional advances under its line of credit and proceeds
from  its  offerings.  The  Company  expects  to meet  its  long-term  liquidity
requirements through short- or long-term, unsecured or secured debt financing or
equity  financing.  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  associated  with  operating  the  Properties  are currently
anticipated by management.

          Distributions

         During the six months  ended June 30, 2000 and the year ended  December
31, 1999,  the Company  generated  cash from  operations  (which  includes  cash
received  from  tenant  and  interest  received,  less cash  paid for  operating
expenses)  of  $657,668  and  $10,409,   respectively.   Based  on  current  and
anticipated future cash from operations,  the Company declared  Distributions to
its  stockholders  of $152,525 and $50,404  during the six months ended June 30,
2000 and the  period  July  14,1999  (the  date  operations  commenced)  through
December 31, 1999, respectively.  No Distributions were paid or declared for the
period  December  22, 1997 (date of  inception)  through  July 13, 1999  because
operations  had not  commenced.  On July 1, August 1 and September 1, 2000,  the
Company declared  Distributions of $0.058 per Share to stockholders of record on
July 1, August 1 and September 1, 2000, respectively, payable in September 2000.
For the six months  ended June 30, 2000 and the year ended  December  31,  1999,
100%  of the  Distributions  received  by  stockholders  were  considered  to be
ordinary income for federal income tax purposes. No amounts distributed or to be
distributed  to the  stockholders  as of August 3, 2000,  were required to be or
have  been  treated  by the  Company  as a return of  capital  for  purposes  of
calculating the Stockholders' 8% Return on Invested Capital. The Company intends
to continue to make  Distributions  of cash  available  for such  purpose to the
stockholders on a monthly basis, payable quarterly.

         Due to Related Parties

         During the six months ended June 30, 2000, the years ended December 31,
1999 and 1998,  and the period  December  22, 1997 (date of  inception)  through
December  31,  1997,  Affiliates  incurred  on behalf of the  Company  $178,708,
$421,878,  $562,739 and $43,398,  respectively,  for certain  organizational and
offering  expenses.  In addition,  during the six months ended June 30, 2000 and
the year ended December 31, 1999, Affiliates of the Company incurred $56,129 and
$98,206, respectively, for certain Acquisition Expenses and $93,920 and $41,307,
respectively,  for certain  operating  expenses on behalf of the Company.  As of
June 30, 2000 and December 31, 1999, the Company owed the Affiliates  $1,795,033
and   $1,775,256,   respectively,   for  such   amounts   and  unpaid  fees  and
administrative  expenses.  The Advisor has agreed to pay all  organizational and
offering expenses  (excluding selling  commissions and marketing support and due
diligence  expense  reimbursement  fees) in  excess  of three  percent  of Gross
Proceeds of the offering. In addition,  pursuant to the Advisory Agreement,  the
Advisor is  required  to  reimburse  the  Company  the amount by which the total
Operating  Expenses  paid  or  incurred  by  the  Company  exceed  in  any  four
consecutive  fiscal  quarters (the "Expense Year") the greater of two percent of
average invested assets or 25 percent of net income (the "Expense Cap").  During
the four quarters ended June 30, 2000, the Company's Operating Expenses exceeded
the Expense Cap by $213,886;  therefore, the Advisor reimbursed the Company such
amount in accordance with the Advisory Agreement. The amount to be received from
the Advisor was treated as a reduction  of the amount due to related  parties as
of June 30, 2000.

         Other

         As of June 30, 2000,  the tenant of the  Property  owned by the Company
had  established  an FF&E  Reserve.  Funds in the FF&E  Reserve  have been paid,
granted and  assigned to the  Company.  For the six months  ended June 30, 2000,
revenue relating to the FF&E Reserve  totalled $3,616.  Due to the fact that the
Property  is leased  on a  long-term,  triple-net  basis ,  management  does not
believe  that  other  working  capital  reserves  are  necessary  at this  time.
Management  has the right to cause the Company to maintain  additional  reserves
if, in their  discretion,  they determine such reserves are required to meet the
Company's working capital needs.


         Management  is  not  aware  of  any  material   trends,   favorable  or
unfavorable,  in either  capital  resources  or the outlook for  long-term  cash
generation,  nor does management expect any material changes in the availability
and relative cost of such capital  resources,  other than as referred to in this
Prospectus.


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


RESULTS OF OPERATIONS

         No operations commenced until the Company received the minimum offering
proceeds of $2,500,000 on July 14, 1999.


         As of June 30, 2000,  the Company had acquired one Property  consisting
of land,  building and equipment,  and had entered into a long-term,  triple-net
lease  agreement  relating to the Property.  The lease provides for minimum base
rental  payments of $103,867  payable every four weeks.  The lease also provides
that, after 24 months,  the base rent required under the terms of the lease will
increase.  In  addition  to annual  base  rent,  the tenant is  required  to pay
contingent  rent  computed  as a  percentage  of  tenant's  gross  sales  at the
Property. The lease also requires the establishment of an FF&E Reserve. The FF&E
Reserve is owned by the Company and has been recognized as additional  rent. For
the quarter ended June 30, 2000,  the Company  earned  $272,119 in rental income
from the Property.  The Company also earned $3,616 in FF&E Reserve income during
the quarter ended June 30, 2000. Because the Company has not yet acquired all of
its Properties,  revenues for the six months ended June 30, 2000, represent only
a portion of revenues which the Company is expected to earn in future periods.

         During  the six months  ended  June 30,  2000,  the  Company  owned one
Property.  The  lessee,  BG Orland  Park,  LLC,  contributed  100 percent of the
Company's  total  rental  income.  In  addition,  the  Property is operated as a
Marriott(R)  brand  chain.  Although the Company  intends to acquire  additional
Properties  located in various  states and regions and to  carefully  screen its
tenants  in order to reduce  risks of  default,  failure  of this  lessee or the
Marriott(R) brand chain 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 this  Property  for the
ongoing  operations of the lessee.  It is expected that the  percentage of total
rental income contributed by this lessee will decrease as additional  Properties
are acquired and leased during 2000 and subsequent years.

         During the six months  ended June 30, 2000 and the year ended  December
31, 1999,  the Company  earned  $92,849 and $86,231,  respectively,  in interest
income from investments in money market accounts. Interest income is expected to
increase as the Company invests subscription  proceeds received in the future 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,  the  percentage of the Company's  total  revenues  earned from
interest income from  investments in money market accounts or other  short-term,
highly liquid investments is expected to decrease.

         Operating  expenses , including  interest  expense and depreciation and
amortization  expense,  were $211,299 and $114,621 for the six months ended June
30, 2000 and the year ended December 31, 1999, respectively.  Operating expenses
represent only a portion of operating  expenses which the Company is expected to
incur during a full six-month and twelve-month  period in which the Company owns
Properties.  The dollar amount of operating  expenses is expected to increase as
the Company  acquires  additional  Properties  and  invests in  Mortgage  Loans.
However,  general and administrative  expenses as a percentage of total revenues
are  expected  to decrease as the Company  acquires  additional  Properties  and
invests in Mortgage Loans. Operating expenses included $35,000 in organizational
expenses for the year ended December 31, 1999. Organizational expenses represent
the cost  related to forming a new entity and are not expected to be incurred on
an ongoing basis.

         Pursuant  to  the  Advisory  Agreement,  the  Advisor  is  required  to
reimburse the Company the amount by which the total  Operating  Expenses paid or
incurred by the Company  exceed the Expense Cap in an Expense  Year.  During the
Expense Year ended June 30, 2000, the Company's  Operating Expenses exceeded the
Expense Cap by  $213,886;  therefore,  the Advisor  reimbursed  the Company such
amount in accordance with the Advisory Agreement.

         Other

         The Company has elected ,  pursuant to Internal  Revenue  Code  Section
856(c)(1),  to be taxed as a REIT under Sections 856 through 860 of the Internal
Revenue  Code of 1986,  as amended,  and  related  regulations.  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 earnings.  However,  the Company
believes  that it is  organized  and operates in such a manner as to qualify for
treatment  as a REIT for the year ended  December 31,  1999.  In  addition,  the
Company intends to continue to operate the Company so as to remain  qualified as
a REIT for federal income tax purposes.

         The Company  anticipates that its leases will be triple-net  leases and
will contain  provisions  that  management  believes will mitigate the effect of
inflation.  Such  provisions  will  include  clauses  requiring  the  payment of
percentage  rent based on certain  gross sales above a  specified  level  and/or
automatic  increases in the base rent at specified  times during the term of the
lease. Management expects that increases in gross 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 Properties and on potential  capital  appreciation of
the Properties.


         In  April  of  1998,  the  American   Institute  of  Certified   Public
Accountants  issued Statement of Position ("SOP") 98-5,  "Reporting on the Costs
of Start-Up Activities," which became effective for the Company January 1, 1999.
This SOP requires start-up and organization costs to be expensed as incurred and
also  requires  previously  deferred  start-up  costs  to  be  recognized  as  a
cumulative effect adjustment in the statement of earnings. During the year ended
December  31,  1999,   operating  expenses  include  a  charge  of  $35,000  for
organizational costs.

         Management  is not aware of any known  trends or  uncertainties,  other
than national  economic  conditions,  which may reasonably be expected to have a
material  impact,  favorable  or  unfavorable,  on  revenues  or income from the
acquisition  and  operations  of real  properties,  other than those  Properties
referred to in this Prospectus.

         There  currently  are  no  material  changes  being  considered  in the
objectives and policies of the Company as set forth in this Prospectus.


                                   MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS


         The  following  information  updates and  replaces the  "Directors  and
Executive Officers" section beginning on page 71 of the Prospectus.




<PAGE>


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

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


James M. Seneff, Jr.          54     Director, Chairman of the Board, and Chief
                                       Executive Officer
Robert A. Bourne              53     Director and President
David W. Dunbar               48     Independent Director
Timothy S. Smick              48     Independent Director
Edward A. Moses               58     Independent Director
Phillip M. Anderson, Jr.      40     Chief Operating Officer and Executive
                                       Vice President
Thomas J. Hutchison III       58     Executive Vice President
Lynn E. Rose                  51     Secretary and Treasurer

         James  M.  Seneff,  Jr.  Director,  Chairman  of the  Board  and  Chief
Executive  Officer.  Mr.  Seneff also is a  director,  Chairman of the Board and
Chief Executive Officer of CNL Retirement Corp., the Advisor to the Company. Mr.
Seneff is a principal  stockholder of CNL Holdings,  Inc., the parent company of
CNL Financial Group, Inc. (formerly CNL Group,  Inc.), a diversified real estate
company, and has served as a director, Chairman of the Board and Chief Executive
Officer of CNL Financial Group, Inc. and its subsidiaries  since CNL's formation
in 1973. CNL Financial  Group,  Inc. is the parent  company,  either directly or
indirectly  through  subsidiaries,  of  CNL  Real  Estate  Services,  Inc.,  CNL
Retirement  Corp.,  CNL Capital  Markets,  Inc., CNL Investment  Company and CNL
Securities Corp., the Managing Dealer in this offering.  CNL and the entities it
has established have more than $4 billion in assets,  representing  interests in
more than 2,000 properties and 900 mortgage loans in 48 states.  Mr. Seneff also
serves as a director,  Chairman of the Board and Chief Executive  Officer of CNL
Hospitality  Properties,  Inc., a public, unlisted real estate investment trust,
as well as CNL Hospitality Corp., its advisor. Since 1992, Mr. Seneff has served
as a director,  Chairman of the Board and Chief Executive  Officer of Commercial
Net Lease Realty,  Inc., a public real estate investment trust that is listed on
the New York Stock  Exchange.  In  addition,  he has  served as a  director  and
Chairman of the Board since  inception  in 1994,  and served as Chief  Executive
Officer from 1994 through August 1999, of CNL American  Properties Fund, Inc., a
public,  unlisted real estate  investment  trust.  He also served as a director,
Chairman of the Board and Chief  Executive  Officer of CNL Fund Advisors,  Inc.,
the advisor to CNL American  Properties  Fund,  Inc.,  until it merged with such
company in September 1999. Mr. Seneff has also served as a director, Chairman of
the Board and Chief Executive  Officer of CNL Securities  Corp.  since 1979; CNL
Investment  Company since 1990;  and CNL  Institutional  Advisors,  a registered
investment  advisor for pension plans, since 1990. Mr. Seneff formerly served as
a director of First Union National Bank of Florida,  N.A., and currently  serves
as the Chairman of the Board of CNLBank.  Mr. Seneff 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 is Florida's  principal  investment advisory and
money management  agency and oversees the investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.

         Robert A. Bourne.  Director and President.  Mr. Bourne also serves as a
director and President of CNL Retirement Corp., the Advisor to the Company.  Mr.
Bourne is also the  President  and  Treasurer of CNL  Financial  Group,  Inc.; a
director,   Vice  Chairman  of  the  Board  and  President  of  CNL  Hospitality
Properties, Inc., a public, unlisted real estate investment trust; as well as, a
director, Vice Chairman of the Board and President of CNL Hospitality Corp., its
advisor.  Mr.  Bourne also  serves as a director of CNLBank.  He has served as a
director since 1992,  Vice Chairman of the Board since February 1996,  Secretary
and Treasurer  from February  1996 through  1997,  and President  from July 1992
through  February  1996, of Commercial  Net Lease Realty,  Inc., a public,  real
estate  investment  trust listed on the New York Stock Exchange.  Mr. Bourne has
served as a  director  since  inception  in 1994,  President  from 1994  through
February  1999,  Treasurer  from  February  1999 through  August 1999,  and Vice
Chairman of the Board since  February  1999,  of CNL American  Properties  Fund,
Inc.,  a public,  unlisted  real estate  investment  trust.  He also served as a
director and held various executive  positions for CNL Fund Advisors,  Inc., the
advisor to CNL  American  Properties  Fund,  Inc.  prior to its merger with such
company,  from 1994 through  August 1999.  Mr. Bourne also serves as a director,
President  and Treasurer for various  affiliates of CNL Financial  Group,  Inc.,
including CNL Investment Company,  CNL Securities Corp., the Managing Dealer for
this offering,  and CNL Institutional  Advisors,  Inc., a registered  investment
advisor for pension  plans.  Since joining CNL  Securities  Corp.  in 1979,  Mr.
Bourne has overseen CNL's real estate and capital markets  activities  including
the  investment of nearly $2 billion in equity and the  financing,  acquisition,
construction and leasing of restaurants,  office buildings, apartment complexes,
hotels and other real estate.  Mr. Bourne began his career as a certified public
accountant



<PAGE>


employed by Coopers & Lybrand,  Certified Public Accountants,  from 1971 through
1978,  where he  attained  the  position  of tax  manager  in 1975.  Mr.  Bourne
graduated  from  Florida  State  University  in 1970 where he received a B.A. in
Accounting, with honors.


         David W. Dunbar.  Independent  Director.  Mr. Dunbar serves as chairman
and chief executive  officer of Peoples Bank,  which he organized and founded in
1996.  Mr.  Dunbar is also a member of the board of  trustees of Bay Care Health
System,  an alliance of ten non-profit  hospitals in the Tampa Bay area, as well
as vice  chairman of the board of  directors  of Morton Plant Mease Health Care,
Inc., an 841-bed, not-for-profit hospital and a member of the board of directors
of North Bay Hospital, a 122-bed facility. He is a former member of the board of
directors of Morton Plant Mease  Hospital  Foundation.  In addition,  Mr. Dunbar
serves as a member of the Florida Elections Commission, the body responsible for
investigating  and holding hearings  regarding  alleged  violations of Florida's
campaign  finance  laws.  During 1994 and 1995,  Mr.  Dunbar was a member of the
board of directors and an executive  officer of Peoples  State Bank.  Mr. Dunbar
was the chief executive officer of Republic Bank from 1981 through 1988 and from
1991 through 1993. From 1988 through 1991, Mr. Dunbar  developed  commercial and
medical office buildings and, through a financial consulting company he founded,
provided  specialized  lending  services  for real estate  development  clients,
specialized construction litigation support for national insurance companies and
strategic planning services for institutional  clients.  In 1990, Mr. Dunbar was
the chief executive officer, developer and owner of a 60,000 square foot medical
office building located on the campus of Memorial Hospital in Tampa, Florida. In
addition, in 1990, Mr. Dunbar served as the Governor's appointee to the State of
Florida  Taxation  and  Budget  Reform  Commission,  a 25  member,  blue  ribbon
commission established to review, study and make appropriate recommendations for
changes  to  state  tax laws  and  currently  serves  on the  Florida  Elections
Commission.  Mr. Dunbar began his  professional  career with  Southeast  Banking
Corporation  in Miami,  from 1975  through  1981,  serving  as a  regional  vice
president of commercial  mortgage lending.  Mr. Dunbar received a B.S. degree in
finance from Florida State University in 1975. He is also a 1977 graduate of the
American  Bankers   Association   National  Commercial  Lending  School  at  the
University of Oklahoma and a 1982 graduate of the School of Banking of the South
at Louisiana State University.

         Timothy S. Smick.  Independent  Director.  Mr.  Smick is  currently  an
independent investor. From 1996 through February 1998, Mr. Smick served as chief
operating  officer,  executive  vice  president  and a  member  of the  board of
directors  of  Sunrise  Assisted  Living,  Inc.,  one  of the  nation's  leading
providers of assisted living care for seniors with 68 communities  located in 13
states. In addition, Mr. Smick served as president of Sunrise Management Inc., a
wholly owned subsidiary of Sunrise Assisted Living,  Inc. During 1995, Mr. Smick
served as a senior housing consultant to LaSalle Advisory,  Ltd., a pension fund
advisory  company.  From 1985  through  1994,  Mr.  Smick was chairman and chief
executive  officer of  PersonaCare,  Inc., a company he co-founded that provided
sub-acute,  skilled  nursing and assisted  living care with 12 facilities in six
states. Mr. Smick's health care industry experience also includes serving as the
regional  operations  director  for  Manor  Healthcare,   Inc.,  a  division  of
ManorCare, Inc., and as operations director for Allied Health & Management, Inc.
Prior to  co-founding  PersonaCare,  Inc.,  Mr.  Smick was a partner in Duncan &
Smick, a commercial real estate  development  firm. Mr. Smick received a B.A. in
English from Wheaton College and pursued graduate studies at Loyola College.

         Edward A. Moses.  Independent Director. Dr. Moses served as dean of the
Roy E. Crummer Graduate School of Business at Rollins College from 1994 to 2000,
and has served as a professor  and Bank of America  professor  of finance  since
1989.  As dean,  Dr.  Moses  established  a  comprehensive  program of executive
education for health care  management at the Roy E. Crummer  Graduate  School of
Business.  From 1985 to 1989 he served as dean and  professor  of finance at the
University of North Florida.  He has also served in academic and  administrative
positions  at  the  University  of  Tulsa,  Georgia  State  University  and  the
University of Central Florida. Dr. Moses has written six textbooks in the fields
of  investments  and corporate  finance as well as numerous  articles in leading
business   journals.   He  has  held   offices  in  a  number  of   professional
organizations,  including  president of the Southern Finance and Eastern Finance
Associations,  served  on the  Board  of the  Southern  Business  Administration
Association,  and served as a consultant  for major banks as well as a number of
Fortune 500 companies.  He currently  serves as a faculty member in the Graduate
School of Banking at Louisiana State University, and is a member of the board of
directors of HTE, Inc. Dr. Moses received a B.S. in Accounting  from the Wharton
School at the  University  of  Pennsylvania  in 1965 and a Masters  of  Business
Administration  (1967) and Ph.D.  in finance from the  University  of Georgia in
1971.

         Phillip M.  Anderson,  Jr. Chief  Operating  Officer and Executive Vice
President.  Mr.  Anderson  joined CNL  Retirement  Corp.  in January 1999 and is
responsible for the planning and implementation of CNL's interest in health care
industry investments, including acquisitions,  development, project analysis and
due diligence.  He also currently serves as the Chief Operating  Officer of both
CNL Retirement Corp., the Company's Advisor,  and of CNL Retirement  Development
Corp. From 1987 through 1998, Mr. Anderson was employed by Classic  Residence by
Hyatt.  Classic  Residence by Hyatt  ("Classic") is affiliated with Hyatt Hotels
and Chicago's  Pritzker family.  Classic acquires,  develops,  owns and operates
seniors' housing,  assisted living,  skilled nursing and Alzheimer's  facilities
throughout  the  United  States.  Mr.  Anderson's   responsibilities  grew  from
overseeing   construction  of  Classic's  first   properties  to  acquiring  and
developing new properties.  After assuming responsibility for acquisitions,  Mr.
Anderson  doubled the number of senior living  apartments/beds  ("units") in the
portfolio  by adding  over 1,200  units.  In  addition,  the  development  of an
additional  1,000  units of  seniors'  housing  commenced  under Mr.  Anderson's
direction.  Mr. Anderson also served on Classic's  Executive  Committee  charged
with the  responsibility  of monitoring  performance of existing  properties and
development  projects.  Mr.  Anderson has been a member of the  American  Senior
Housing  Association  since 1994 and currently serves on the executive board. He
graduated from the Georgia  Institute of Technology in 1982, where he received a
B.S. in Civil Engineering, with honors.

         Thomas J. Hutchison III.  Executive Vice President.  Mr. Hutchison also
serves as an Executive Vice President of CNL  Retirement  Corp.,  the Advisor of
the Company, as well as President and Chief Operating Officer of CNL Real Estate
Services,  Inc.,  which is the parent  company of CNL  Retirement  Corp. and CNL
Hospitality Corp. He also serves as the President and Chief Operating Officer of
CNL Realty & Development Corp. In addition, Mr. Hutchison serves as an Executive
Vice President of CNL  Hospitality  Properties,  Inc. Mr.  Hutchison  joined CNL
Financial  Group,  Inc.  in  January  2000  with  more  than 30 years of  senior
management and consulting experience in the real estate development and services
industries.  He currently serves on the board of directors of Restore Orlando, a
nonprofit community volunteer organization.  Prior to joining CNL, Mr. Hutchison
was  president  and owner of  numerous  real  estate  services  and  development
companies.  From 1995 to 2000,  he was chairman and chief  executive  officer of
Atlantic Realty Services, Inc. and TJH Development  Corporation.  Since 1990, he
has  fulfilled  a  number  of  long-term   consulting   assignments   for  large
corporations, including managing a number of large international joint ventures.
From 1990 to 1991,  Mr.  Hutchison was the  court-appointed  president and chief
executive officer of General  Development  Corporation,  a real estate community
development  company,  where he assumed the  day-to-day  management  of the $2.6
billion NYSE-listed company entering re-organization.  From 1986 to 1990, he was
the  chairman  and chief  executive  officer of a number of real  estate-related
companies  engaged  in  the  master  planning  and  land  acquisition  of  forty
residential,  industrial and office development projects. From 1978 to 1986, Mr.
Hutchison was the president and chief executive  officer of Murdock  Development
Corporation  and  Murdock  Investment  Corporation,  as well as  Murdock's  nine
service  divisions.  In this capacity,  he managed an average of $350 million of
new  development  per year for over nine years.  Additionally,  he expanded  the
commercial real estate  activities to a national basis,  and established  both a
new extended care division and a hotel division that grew to 14 properties.  Mr.
Hutchison  was  educated at Purdue  University  and the  University  of Maryland
Business School.

         Lynn E.  Rose.  Secretary  and  Treasurer.  Ms.  Rose  also  serves  as
Secretary,  Treasurer and a director of CNL Retirement Corp., the Advisor to the
Company,  and as  Secretary  of the  subsidiaries  of the  Company.  Ms. Rose is
Secretary and Treasurer of CNL Hospitality Properties,  Inc., a public, unlisted
real estate investment  trust, and serves as Secretary of its  subsidiaries.  In
addition,  she serves as Secretary,  Treasurer and a director of CNL Hospitality
Corp.,  its advisor.  Ms. Rose served as  Secretary  of CNL American  Properties
Fund, Inc., a public,  unlisted real estate  investment trust, from 1994 through
August 1999, and served as Treasurer  from 1994 through  February 1999. She also
served as Treasurer of CNL Fund Advisors, Inc., from 1994 through July 1998, and
served as Secretary and a director from 1994 through  August 1999, at which time
it merged with CNL American  Properties  Fund, Inc. Ms. Rose served as Secretary
and  Treasurer  of  Commercial  Net Lease  Realty,  Inc.,  a public  real estate
investment  trust listed on the New York Stock  Exchange,  from 1992 to February
1996, and as Secretary and a director of CNL Realty Advisors, Inc., its advisor,
from its  inception  in 1991 through  1997.  She also served as Treasurer of CNL
Realty  Advisors,  Inc. from 1991 through  February  1996. Ms. Rose, a certified
public  accountant,  has served as Secretary of CNL Financial Group,  Inc. since
1987,  served as Controller  from 1987 to 1993 and has served as Chief Financial
Officer  since 1993.  She also serves as  Secretary of the  subsidiaries  of CNL
Financial Group,  Inc. and holds various other offices in the  subsidiaries.  In
addition,  she serves as Secretary for approximately 75 additional  corporations
affiliated with CNL Financial  Group,  Inc. and its  subsidiaries.  Ms. Rose has
served as Chief Financial  Officer and Secretary of CNL Securities  Corp.  since
July  1994.  Ms.  Rose  oversees  the tax and  legal  compliance  for  over  375
corporations,  partnerships and joint ventures, and the accounting and financial
reporting  for over 200  entities.  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. She was licensed as a certified public accountant in 1979.



<PAGE>


COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

         The following  information  updates and replaces the last  paragraph on
page 74 of the Prospectus.

         Each Director is entitled to receive $6,000 annually for serving on the
Board of Directors,  as well as fees of $750 per meeting attended ($375 for each
telephonic  meeting in which the  Director  participates),  including  committee
meetings.  In  addition  to the above  compensation,  the  Director  serving  as
Chairman of the Audit  Committee is entitled to receive fees of $750 per meeting
attended with the Company's  independent  accountants  ($375 for each telephonic
meeting in which the Chairman  participates)  as a  representative  of the Audit
Committee.  No executive officer or Director of the Company has received a bonus
from the Company.  The Company will not pay any compensation to the officers and
Directors  of the  Company  who also  serve as  officers  and  directors  of the
Advisor.



                     THE ADVISOR AND THE ADVISORY AGREEMENT

THE ADVISOR

         The following information updates and replaces "The Advisor" section on
page 75 of the Prospectus.


         CNL  Retirement  Corp.  (formerly  CNL Health  Care Corp.) is a Florida
corporation  organized  in  July  1997  to  provide  management,   advisory  and
administrative  services.  The  Company  originally  entered  into the  Advisory
Agreement with the Advisor  effective  September 15, 1998. CNL Retirement Corp.,
as Advisor, has a fiduciary responsibility to the Company and the stockholders.


The directors and officers of the Advisor are as follows:

     James M. Seneff, Jr.        Chairman of the Board, Chief Executive Officer,
                                    and Director
     Robert A. Bourne            President and Director
     Phillip M. Anderson, Jr.    Chief Operating Officer
     Thomas J. Hutchison III     Executive Vice President

     Lynn E. Rose                Secretary, Treasurer and Director

         The  backgrounds  of  these   individuals  are  described  above  under
"Management -- Directors and Executive Officers."


         Management  anticipates that any transaction by which the Company would
become self-advised would be submitted to the stockholders for approval.

         The Advisor  currently owns 20,000 Shares of Common Stock.  The Advisor
may not sell these Shares while the  Advisory  Agreement is in effect,  although
the Advisor may  transfer  such shares to  Affiliates.  Neither the  Advisor,  a
Director,  or any  Affiliate  may vote or consent on  matters  submitted  to the
stockholders  regarding  removal  of the  Advisor,  Directors  or  any of  their
Affiliates,  or  any  transaction  between  the  Company  and  any of  them.  In
determining  the  requisite  percentage  in interest  of shares of Common  Stock
necessary to approve a matter on which the Advisor, Directors, and any Affiliate
may not vote or  consent,  any shares of Common  Stock owned by any of them will
not be included.


                 CERTAIN RELATIONSHIPS AND RELATED 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 may be paid as  commissions  to other  broker-dealers.  For the
years ended  December  31,  1999 and 1998,  the Company  incurred  $388,109  and
$1,912, respectively , of such fees, of which $370,690 and $1,785, respectively,
has been paid by CNL Securities Corp. as commissions to other broker-dealers. In
addition,  during the period January 1, 2000 through August 3, 2000, the Company
incurred  $286,011 of such fees,  the majority of which has been or will be paid
by CNL Securities Corp. 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,  all or a  portion  of  which  may be
reallowed  to other  broker-dealers.  For the years ended  December 31, 1999 and
1998, the Company  incurred  $25,874 and $128,  respectively,  of such fees, the
majority of which has been or will be reallowed to other broker-dealers and from
which all bona fide due diligence expenses will be paid. In addition, during the
period January 1, 2000 through August 3, 2000, the Company  incurred  $19,067 of
such fees in connection  with this  offering,  the majority of which has been or
will be  reallowed  to other  broker-dealers  and from  which  all bona fide due
diligence expenses will be paid.

         In addition,  in connection with this offering,  the Company has agreed
to issue and sell Soliciting  Dealer Warrants to the Managing Dealer.  The price
for each  warrant  will be $0.0008 and one  warrant  will be issued for every 25
Shares sold by the Managing  Dealer.  All or a portion of the Soliciting  Dealer
Warrants may be  reallowed to  Soliciting  Dealers with prior  written  approval
from, and in the sole discretion of the Managing Dealer, except where prohibited
by either federal or state  securities  laws. The holder of a Soliciting  Dealer
Warrant  will be entitled to purchase one Share of Common Stock from the Company
at a price of $12.00 during the five-year  period  commencing  with the date the
offering  began. No Soliciting  Dealer  Warrants,  however,  will be exercisable
until one year from the date of  issuance.  During the six months ended June 30,
2000, the Company issued approximately 24,000 Soliciting Dealer Warrants.  As of
June 30, 2000, CNL Securities Corp. was entitled to receive  approximately 6,100
additional  Soliciting  Dealer  Warrants for Shares sold during the quarter then
ended.

         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 Total  Proceeds.  For the years ended December 31, 1999 and 1998, the
Company incurred $232,865 and $1,148,  respectively,  of such fees. In addition,
during the period January 1, 2000 through  August 3, 2000, the Company  incurred
$171,606 of such fees.

         The Company and the Advisor  have  entered  into an Advisory  Agreement
pursuant to which the Advisor will  receive a monthly  Asset  Management  Fee of
one-twelfth  of  0.60%  of  the  Company's  Real  Estate  Asset  Value  and  the
outstanding  principal  balance  of any  Mortgage  Loans  as of  the  end of the
preceding  month. The Asset 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 Asset  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 six months ended June 30,
2000,  the Company  incurred  $13,849 of such fees.  No such fees were  incurred
during the years ended December 31, 1999 and 1998.

         The Company incurs  Operating  Expenses  which,  in general,  are those
expenses relating to administration of the Company on an ongoing basis. Pursuant
to the Advisory Agreement  described above, the Advisor is required to reimburse
the Company the amount by which the total Operating Expenses paid or incurred by
the Company  exceed,  in any four  consecutive  fiscal  quarters  (the  "Expense
Year"),  the greater of 2% of Average  Invested Assets or 25% of Net Income (the
"Expense  Cap").  During  the four  fiscal  quarters  ended June 30,  2000,  the
Company's  Operating  Expenses exceeded the Expense Cap by $213,886;  therefore,
the Advisor  reimbursed the Company such amount in accordance  with the Advisory
Agreement.

         The Advisor and its Affiliates provide various administrative  services
to the Company,  including  services related to accounting;  financial,  tax and
regulatory compliance reporting;  stockholder  distributions and reporting;  due
diligence  and  marketing;  and  investor  relations  (including  administrative
services in connection with the offering of Shares) on a day-to-day  basis.  For
the six months ended June 30, 2000,  the years ended December 31, 1999 and 1998,
and the period December 22, 1997 (date of inception)  through December 31, 1997,
the Company incurred $176,284, $373,480, $196,184 and $15,202, respectively, for
these  services.  For the six  months  ended  June 30,  2000 and the year  ended
December 31, 1999, $25,687 and $328,229, respectively, of such costs represented
stock issuance costs, $30,491 and $6,455, respectively,  represented acquisition
related  costs and  $120,106  and  $38,796,  respectively,  represented  general
operating  and  administrative  expenses.  For 1998 and 1997,  such  amounts are
included in deferred offering costs.


         The Company believes that all amounts paid or payable by the Company to
Affiliates  are fair and  comparable  to amounts  that would be paid for similar
services provided by unaffiliated third parties.




<PAGE>



                          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. Prior public programs have invested only in restaurant
properties and hotel properties and have not invested in Health Care Facilities.
Investors in the Company should not assume that they will experience returns, if
any,  comparable  to those  experienced  by  investors in such prior public real
estate  programs.  Investors  who purchase  Shares will not thereby  acquire any
ownership  interest in any  partnerships  or corporations 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 18 publicly offered
CNL Income Fund  partnerships,  and as directors and/or officers of two unlisted
public REITs.  None of these  limited  partnerships  or unlisted  REITs 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 programs,
Messrs.  Bourne  and Seneff  believe  that each of such  programs  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.  In  addition,
Messrs.  Bourne  and  Seneff  currently  serve  as  directors  of  CNL  American
Properties Fund, Inc., an unlisted public REIT organized to invest in fast-food,
family-style and casual-dining restaurant properties, mortgage loans and secured
equipment  leases;  and as directors and officers of CNL Hospitality  Properties
Inc., an unlisted public REIT organized to invest in hotel properties,  mortgage
loans and secured  equipment  leases.  Both of the  unlisted  public  REITs have
investment  objectives similar to those of the Company. As of June 30, 2000, the
18 partnerships  and the two unlisted REITs had raised a total of  approximately
$1.9  billion  from  a  total  of  approximately  94,000  investors,  and  owned
approximately  1,500  fast-food,   family-style  and  casual-dining   restaurant
properties,  and 15  hotels.  None  of the 18  public  partnerships  or the  two
unlisted public REITs has invested in Health Care Facilities. Certain additional
information  relating to the offerings and  investment  history of the 18 public
partnerships and the two unlisted public REITs is set forth below.

<TABLE>
<CAPTION>
<S> <C>
                                                                                    Number of          Date 90% of Net
                                                                                     Limited            Proceeds Fully
                             Maximum                                               Partnership           Invested or
Name of                      Offering                                               Units or             Committed to
Entity                       Amount (1)                Date Closed                 Shares Sold          Investment (2)
------                       ----------                -----------                 -----------          --------------

CNL Income                   $15,000,000               December 31, 1986             30,000             December 1986
Fund, Ltd.                   (30,000 units)

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)


                                                                                    Number of          Date 90% of Net
                                                                                     Limited            Proceeds Fully
                             Maximum                                               Partnership           Invested or
Name of                      Offering                                               Units or             Committed to
Entity                       Amount (1)                Date Closed                 Shares Sold          Investment (2)
------                       ----------                -----------                 -----------          --------------

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               April 22, 1992               4,000,000           June 1992
Fund X, Ltd.                 (4,000,000 units)

CNL Income                   $40,000,000               October 8, 1992              4,000,000           September 1992
Fund XI, Ltd.                (4,000,000 units)

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

CNL Income                   $40,000,000               September 13, 1993           4,000,000           August 1993
Fund XIII, Ltd.              (4,000,000 units)

CNL Income                   $45,000,000               March 23, 1994               4,500,000           May 1994
Fund XIV, Ltd.               (4,500,000 units)

CNL Income                   $40,000,000               September 22, 1994           4,000,000           December 1994
Fund XV, Ltd.                (4,000,000 units)

CNL Income                   $45,000,000               July 18, 1995                4,500,000           August 1995
Fund XVI, Ltd.               (4,500,000 units)

CNL Income                   $30,000,000               October 10, 1996             3,000,000           December 1996
Fund XVII, Ltd.              (3,000,000 units)

CNL Income                   $35,000,000               February 6, 1998             3,500,000           December 1997
Fund XVIII, Ltd.             (3,500,000 units)

CNL American                 $747,464,413              January 20, 1999 (3)         37,373,221 (3)      February 1999 (3)
Properties Fund, Inc.        (37,373,221 shares)

CNL Hospitality              $425,072,637                      (4)                     (4)                   (4)
Properties, Inc.             (42,507,264 shares)

</TABLE>


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

(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. The number of shares of common stock for CNL
       American  Properties Fund, Inc.  ("APF")  reflects a one-for-two  reverse
       stock split, which was effective on June 3, 1999.

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

(3)    In April 1995,  APF  commenced  an  offering  of a maximum of  16,500,000
       shares of common stock  ($165,000,000).  On February 6, 1997, the initial
       offering  closed upon  receipt of  subscriptions  totalling  $150,591,765
       (15,059,177  shares),  including  $591,765  (59,177  shares)  through the
       reinvestment  plan.  Following  completion  of the  initial  offering  on
       February  6,  1997,  APF  commenced  a  subsequent  offering  (the  "1997
       Offering") of up to 27,500,000 shares  ($275,000,000) of common stock. On
       March 2, 1998,  the 1997  Offering  closed upon receipt of  subscriptions
       totalling $251,872,648 (25,187,265 shares), including $1,872,648 (187,265
       shares) through the reinvestment plan.  Following  completion of the 1997
       Offering on March 2, 1998, APF commenced a subsequent offering (the "1998
       Offering") of up to 34,500,000 shares  ($345,000,000) of common stock. As
       of  December  31,  1998,   APF  had  received   subscriptions   totalling
       $345,000,000  (34,500,000 shares),  including $3,107,848 (310,785 shares)
       through the reinvestment plan, from the 1998 Offering.  The 1998 Offering
       closed in  January  1999,  upon  receipt  of the  proceeds  from the last
       subscriptions.  As of March 31, 1999,  net proceeds to APF from its three
       offerings totalled  $670,151,200 and all of such amount had been invested
       or committed for investment in properties and mortgage loans.

(4)    Effective  July  9,  1997,  CNL  Hospitality  Properties,   Inc.  ("CHP")
       commenced an offering of up to 16,500,000 shares ($165,000,000) of common
       stock.  On June 17,  1999,  the initial  offering  closed upon receipt of
       subscriptions  totalling  $150,072,637  (15,007,264  shares),   including
       $72,637  (7,264  shares)  through  the   reinvestment   plan.   Following
       completion  of the initial  offering on June 17,  1999,  CHP  commenced a
       subsequent  offering (the "1999  Offering")  of up to  27,500,000  shares
       ($275,000,000)  of common  stock.  As of June 30, 2000,  CHP had received
       subscriptions  totalling  $235,011,997  (23,501,200  shares),   including
       $965,145  (96,514  shares) through the  reinvestment  plan, from the 1999
       Offering. As of such date, CHP had purchased,  directly or indirectly, 15
       properties. Upon completion of the 1999 Offering, CHP intends to commence
       a subsequent  offering (the "2000  Offering") of up to 45,000,000  shares
       ($450,000,000) of common stock.

         As of June 30, 2000,  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 all of these 69 nonpublic
limited  partnerships  had terminated as of June 30, 2000. These 69 partnerships
raised  a  total  of  $185,927,353  from  approximately  4,600  investors,   and
purchased,  directly  or  through  participation  in a joint  venture or limited
partnership, interests in a total of 216 projects as of June 30, 2000. These 216
projects  consist of 19 apartment  projects  (comprising 10% of the total amount
raised by all 69 partnerships),  11 office buildings (comprising 4% of the total
amount  raised  by  all  69  partnerships),  169  fast-food,   family-style,  or
casual-dining  restaurant properties and business investments (comprising 69% of
the total amount raised by all 69  partnerships),  one  condominium  development
(comprising  0.5% of the  total  amount  raised  by all 69  partnerships),  four
hotels/motels (comprising 5% of the total amount raised by all 69 partnerships),
ten commercial/retail  properties  (comprising 11% of the total amount raised by
all 69 partnerships), and two tracts of undeveloped land (comprising 0.5% of the
total amount raised by all 69 partnerships).

         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 37 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 90 real estate limited  partnerships  whose offerings had closed
as of June 30, 2000 (including 18 CNL Income Fund limited partnerships) in which
Mr.  Seneff  and/or Mr.  Bourne serve or have served as general  partners in the
past,  39 invested in  restaurant  properties  leased on a  "triple-net"  basis,
including  eight  which  also  invested  in  franchised   restaurant  businesses
(accounting  for  approximately  93% of the total  amount  raised by all 90 real
estate limited partnerships).

         The  following  table sets forth  summary  information,  as of June 30,
2000, regarding property acquisitions by the 18 limited partnerships and the two
unlisted REITs .

<TABLE>
<CAPTION>
<S> <C>

      Name of                    Type of                                            Method of            Type of
       Entity                   Property                    Location                Financing            Program
       ------                   --------                    --------                ---------            -------

CNL Income Fund,           22 fast-food or           AL, AZ, CA, FL, GA,             All cash            Public
Ltd.                       family-style              LA, MD, OK, PA, TX,
                           restaurants               VA, WA

CNL Income Fund II,        50 fast-food or           AL, AZ, CO, FL, GA,             All cash            Public
Ltd.                       family-style              IL, IN, KS, LA, MI,
                           restaurants               MN, MO, NC, NM, OH,
                                                     TN, TX, WA, WY


<PAGE>


      Name of                    Type of                                            Method of            Type of
       Entity                   Property                    Location                Financing            Program
       ------                   --------                    --------                ---------            -------

CNL Income Fund            40 fast-food or           AL, AZ, CA, CO, FL,             All cash            Public
III, Ltd.                  family-style              GA, IA, IL, IN, KS,
                           restaurants               KY, MD, MI, MN, MO,
                                                     NC, NE, OK, TX

CNL Income Fund IV,        47 fast-food or           AL, DC, FL, GA, IL,             All cash            Public
Ltd.                       family-style              IN, KS, MA, MD, MI,
                           restaurants               MS, NC, OH, PA, TN,
                                                     TX, VA

CNL Income Fund V,         36 fast-food or           AZ, FL, GA, IL, IN,             All cash            Public
Ltd.                       family-style              MI, NH, NY, OH, SC,
                           restaurants               TN, TX, UT, WA

CNL Income Fund VI,        60 fast-food or           AR, AZ, CA, FL, GA,             All cash            Public
Ltd.                       family-style              IL, IN, KS, MA, MI,
                           restaurants               MN, NC, NE, NM, NY,
                                                     OH, OK, PA, TN, TX,
                                                     VA, WA, WY

CNL Income Fund            52 fast-food or           AL, AZ, CO, FL, GA,             All cash            Public
VII, Ltd.                  family-style              IN, LA, MI, MN, NC,
                           restaurants               OH, PA, SC, TN, TX,
                                                     UT, WA

CNL Income Fund            43 fast-food or           AZ, FL, IN, LA, MI,             All cash            Public
VIII, Ltd.                 family-style              MN, NC, NY, OH, TN,
                           restaurants               TX, VA

CNL Income Fund IX,        46 fast-food or           AL, CA, CO, FL, GA,             All cash            Public
Ltd.                       family-style              IL, IN, LA, MI, MN,
                           restaurants               MS, NC, NH, NY, OH,
                                                     SC, TN, TX

CNL Income Fund X,         55 fast-food or           AL, AZ, CA, CO, FL,             All cash            Public
Ltd.                       family-style              ID, IL, LA, MI, MO,
                           restaurants               MT, NC, NE, NH, NM,
                                                     NY, OH, PA, SC, TN,
                                                     TX, WA

CNL Income Fund XI,        44 fast-food or           AL, AZ, CA, CO, CT,             All cash            Public
Ltd.                       family-style              FL, KS, LA, MA, MI,
                           restaurants               MS, NC, NH, NM, OH,
                                                     OK, PA, SC, TX, VA, WA


<PAGE>

      Name of                    Type of                                            Method of            Type of
       Entity                   Property                    Location                Financing            Program
       ------                   --------                    --------                ---------            -------

CNL Income Fund            52 fast-food or           AL, AZ, CA, FL, GA,             All cash            Public
XII, Ltd.                  family-style              LA, MO, MS, NC, NM,
                           restaurants               OH, SC, TN, TX, WA

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

CNL Income Fund            68 fast-food or           AL, AZ, CO, FL, GA,             All cash            Public
XIV, Ltd.                  family-style              IL, KS, LA, MN, MO,
                           restaurants               MS, NC, NJ, NV, OH,
                                                     SC, TN, TX, VA

CNL Income Fund XV,        57 fast-food or           AL, CA, FL, GA, KS,             All cash            Public
Ltd.                       family-style              KY, MN, MO, MS, NC,
                           restaurants               NJ, NM, OH, OK, PA,
                                                     SC, TN, TX, VA

CNL Income Fund            49 fast-food or           AZ, CA, CO, DC, FL,             All cash            Public
XVI, Ltd.                  family-style              GA, ID, IN, KS, MN,
                           restaurants               MO, NC, NM, NV, OH,
                                                     PA, TN, TX, UT, WI

CNL Income Fund            32 fast-food,             CA, FL, GA, IL, IN,             All cash            Public
XVII, Ltd.                 family-style or           MI, NC, NV, OH, SC,
                           casual-dining             TN, TX, WA
                           restaurants

CNL Income Fund            26 fast-food,             AZ, CA, FL, GA, IL,             All cash            Public
XVIII, Ltd.                family-style or           KY, MD, MN, NC, NV,
                           casual-dining             NY, OH, PA, TN, TX, VA
                           restaurants

CNL American               703 fast-food,            AL, AZ, CA, CO, CT,               (1)             Public REIT
Properties Fund,           family-style or           DE, FL, GA, IA, ID,
Inc.                       casual-dining             IL, IN, KS, KY, LA,
                           restaurants               MD, MI, MN, MO, MS,
                                                     NC, NE, NH, NJ, NM,
                                                     NV, NY, OH, OK, OR,
                                                     PA, RI, SC, TN, TX,
                                                     UT, VA, WA, WI, WV

CNL Hospitality            15 limited                AZ, CA, CO, GA, MA,               (2)             Public REIT
Properties, Inc.           service, extended         NV, PA, TX, WA
                           stay or full
                           service hotels


</TABLE>


<PAGE>


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

(1)    As of  March  31,  1999,  all of APF's  net  offering  proceeds  had been
       invested or committed for  investment in properties  and mortgage  loans.
       Since April 1, 1999,  APF has used  proceeds from its lines of credit and
       other  borrowing to acquire and develop  properties  and to fund mortgage
       loans and secured equipment leases.

(2)    In 1998,  CHP used  proceeds  from its line of  credit  and net  offering
       proceeds to fund the acquisition of two of its properties. As of June 30,
       2000,  CHP had  repaid  amounts  borrowed  on its  line of  credit  using
       additional  net offering  proceeds.  In 1999, CHP acquired an interest in
       seven additional properties through CNL Hotel Investors,  Inc. ("CHI"), a
       real estate  investment trust jointly owned by CHP and Five Arrows Realty
       Securities II L.L.C. ("Five Arrows").  In connection with the acquisition
       of these seven properties, CHI used proceeds from permanent financing, in
       addition to net offering  proceeds from CHP and cash  contributions  from
       Five Arrows.  In addition,  CHP acquired a majority interest in a limited
       liability company (the "LLC") that owns one property.  In connection with
       the acquisition of the property, the LLC used permanent financing to fund
       part of the acquisition.

         A more detailed  description of the acquisitions by real estate limited
partnerships  and the two unlisted REITs 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 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.,  CNL American
Properties  Fund, Inc. and CNL Hospitality  Properties,  Inc. 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 and as
directors and officers of the two unlisted  REITs,  including those set forth in
the foregoing table,  certain financial and other  information  concerning those
limited  partnerships  and the two  unlisted  REITs with  investment  objectives
similar to one or more of the Company's  investment  objectives,  is provided in
the Prior  Performance  Tables  included as Appendix  C.  Information  about the
previous  public  partnerships,  the offerings of which became fully  subscribed
between July 1995 and June 2000, is included therein. Potential stockholders are
encouraged to examine the Prior  Performance  Tables  attached as Appendix C (in
Table III), which include information as to the operating results of these prior
programs,  for more detailed  information  concerning  the experience of Messrs.
Seneff and Bourne.


                       INVESTMENT OBJECTIVES AND POLICIES

CERTAIN INVESTMENT LIMITATIONS

         The  following  information  updates and replaces Item 16 on page 86 of
the Prospectus.

         16. The Company  will not make loans to the Advisor or its  Affiliates,
except (A) mortgage loans subject to the restrictions  governing  mortgage loans
in the  Articles  of  Incorporation  (including  the  requirement  to  obtain an
appraisal from an independent expert) or (B) to wholly owned subsidiaries of the
Company.



                               DISTRIBUTION POLICY

DISTRIBUTIONS

         The  following  information  updates and replaces  the  "Distributions"
section on page 87 of the Prospectus.



<PAGE>


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

                               Total           Distributions
       Month               Distributions         per Share
--------------------       --------------      ---------------

August 1999                 $   7,422              $0.025
September 1999                  9,038               0.025
October 1999                   10,373               0.025
November 1999                  11,289               0.025
December 1999                  12,282               0.025
January 2000                   13,501               0.025
February 2000                  14,530               0.025
March 2000                     15,562               0.025
April 2000                     24,822               0.037

May 2000                       40,804               0.058
June 2000                      43,306               0.058
July 2000                      50,847               0.058
August 2000                    53,716               0.058
September 2000                 57,134               0.058


         The  Company  intends to  continue  to make  regular  Distributions  to
stockholders.   Distributions  will  be  made  to  those  stockholders  who  are
stockholders  as of  the  record  date  selected  by the  Directors.  Currently,
Distributions  are  declared  monthly  and paid  quarterly  during the  offering
period. In addition,  Distributions are expected to be declared monthly and paid
quarterly  during any  subsequent  offering,  and  declared  and paid  quarterly
thereafter.  However, in the future, the Board of Directors,  in its discretion,
may  determine  to declare  Distributions  on a daily basis  during the offering
period. The Company is required to distribute  annually at least 95% of its real
estate  investment trust taxable income (90% in 2001 and thereafter) 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 might not reduce stockholders'
aggregate Invested Capital. 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.


         For the six months  ended June 30,  2000 and the period  July 13,  1999
(the date operations of the Company  commenced)  through December 31, 1999, 100%
of the Distributions declared and paid were considered to be ordinary income for
federal  income tax purposes.  No amounts  distributed to  stockholders  for the
periods  presented  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
Invested  Capital.  Due to the fact  that the  Company  had  only  acquired  one
Property  and  was  still  in the  offering  stage  as of  June  30,  2000,  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  periods.   In  addition,   the
characterization  for tax purposes of Distributions  declared for the six months
ended June 30, 2000 may not be  indicative  of the results  that may be expected
for the year ending December 31, 2000.


         Distributions  will  be  made  at  the  discretion  of  the  Directors,
depending  primarily on net cash from  operations  (which includes cash received
from  tenants  except  to the  extent  that  such  cash  represents  a return of
principal  in regard to the lease of a Property  consisting  of  building  only,
distributions from joint ventures, and interest income from lessees of Equipment
and  borrowers  under  Mortgage  Loans,  less  expenses  paid)  and the  general
financial  condition of the Company,  subject to the obligation of the Directors
to cause the  Company to  qualify  and remain  qualified  as a REIT for  federal
income tax purposes. The Company intends to increase Distributions in accordance
with increases in net cash from operations.



                                 SUMMARY OF THE
                      ARTICLES OF INCORPORATION AND BYLAWS

DESCRIPTION OF CAPITAL STOCK

         The following  information  updates and replaces the last  paragraph on
page 88 and the first paragraph on page 89 of the Prospectus.

         General.  The Company has authorized a total of  206,000,000  shares of
capital stock, consisting of 100,000,000 shares of Common Stock, $0.01 par value
per  share,  3,000,000  shares  of  Preferred  Stock  ("Preferred  Stock"),  and
103,000,000 additional shares of excess stock ("Excess Shares"), $0.01 par value
per share.  Of the  103,000,000  Excess  Shares,  100,000,000  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 August 3, 2000,
the Company had 921,376  Shares of Common Stock  outstanding  (including  20,000
Shares  issued to the Advisor  prior to the  commencement  of this  offering and
5,046 Shares issued pursuant to the Reinvestment Plan) and no Preferred Stock or
Excess  Shares  outstanding.  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.

         The Company will not issue share  certificates  except to  stockholders
who make a written request to the Company. Each stockholder's investment will be
recorded  on  the  books  of  the  Company,   and  information   concerning  the
restrictions  and rights  attributable  to Shares (whether in connection with an
initial issuance or a transfer) will be sent to the stockholder receiving Shares
in connection  with an issuance or transfer.  A stockholder  wishing to transfer
his or her Shares will be required to send only an executed form to the Company,
and the Company will provide the required form upon a stockholder's request. The
executed  form and any other  required  documentation  must be  received  by the
Company on or before the 15th of the month for the transfer to be effective  the
following  month.  Subject to  restrictions  in the  Articles of  Incorporation,
transfers of Shares shall be effective, and the transferee of the Shares will be
recognized  as the  holder of such  Shares as of the first day of the  following
month  on  which  the  Company   receives   properly   executed   documentation.
Stockholders  who are  residents  of New York may not  transfer  fewer  than 250
shares at any time.





<PAGE>

                                   APPENDIX B

                              FINANCIAL INFORMATION

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

          THE UPDATED PRO FORMA FINANCIAL STATEMENTS AND THE UNAUDITED
             FINANCIAL STATEMENTS OF CNL RETIREMENT PROPERTIES, INC.
          (FORMERLY CNL HEALTH CARE PROPERTIES, INC.) CONTAINED IN THIS
          ADDENDUM SHOULD BE READ IN CONJUNCTION WITH APPENDIX B TO THE
                   ATTACHED PROSPECTUS, DATED MARCH 31, 2000.

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




<PAGE>



                          INDEX TO FINANCIAL STATEMENTS

                         CNL RETIREMENT PROPERTIES, INC.
                   (formerly CNL Health Care Properties, Inc.)
<TABLE>
<CAPTION>
<S> <C>

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

     Pro Forma Consolidated Balance Sheet as of June 30, 2000                                            B-2

     Pro Forma Consolidated Statement of Operations for the six months ended June 30, 2000               B-3

     Pro Forma Consolidated Statement of Operations for the year ended December 31, 1999                 B-4

     Notes to Pro Forma Consolidated Financial Statements for the six months ended
        June 30, 2000 and the year ended December 31, 1999                                               B-5

Updated Unaudited Condensed Consolidated Financial Statements:

     Condensed Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999                     B-7

     Condensed Consolidated Statements of Earnings for the quarters and six months ended
        June 30, 2000 and 1999                                                                           B-8

     Condensed Consolidated Statements of Stockholders' Equity for the six months ended
        June 30, 2000 and the year ended December 31, 1999                                               B-9

     Condensed Consolidated Statements of Cash Flows for the six months ended
        June 30, 2000 and 1999                                                                           B-10

     Notes to Condensed Consolidated Financial Statements for the quarters and six months
        ended June 30, 2000 and 1999                                                                     B-12

</TABLE>


<PAGE>


                  PRO FORMA CONSOLIDATED FINANCIAL INFORMATION



         The  following  Unaudited Pro Forma  Consolidated  Balance Sheet of CNL
Retirement  Properties,  Inc.  (formerly CNL Health Care  Properties,  Inc.) and
subsidiaries  (the  "Company")  gives  effect to (i) the  receipt  of an initial
capital contribution of $200,000 from the Advisor,  $8,521,527 in gross offering
proceeds  from the sale of 852,153  shares of common  stock for the period  from
inception  through  June 30,  2000,  and the  application  of such  funds to pay
offering  expenses  and  miscellaneous  acquisition  expenses  and to purchase a
property,  (ii) the receipt of $492,235 in gross offering proceeds from the sale
of 49,224  additional  shares for the period July 1, 2000 through August 3, 2000
and the accrual of related offering expenses, acquisition fees and miscellaneous
acquisition expenses, as reflected in the pro forma adjustments described in the
related notes. The Unaudited Pro Forma Consolidated Balance Sheet as of June 30,
2000  includes  the  transactions  described in (i) above,  from the  historical
balance sheet,  adjusted to give effect to the  transactions in (ii) above as if
they had occurred on June 30, 2000.

         The Unaudited Pro Forma  Consolidated  Statements of Operations for the
six months ended June 30, 2000 and the year ended December 31, 1999, include the
operating  results  of the  property  described  in (i) above  from the date the
property became operational through the end of the pro forma period presented.

         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  indicative of the  Company's  financial  results or conditions in the
future.



<PAGE>



                         CNL RETIREMENT PROPERTIES, INC.
                                AND SUBSIDIARIES
                   (formerly CNL Health Care Properties, Inc.)
                 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2000

<TABLE>
<CAPTION>
<S> <C>
                                                                           Pro Forma
                           ASSETS                       Historical        Adjustments               Pro Forma
                                                       ------------      -------------          -------------

Land, building and equipment on operating lease          $14,553,953           $    --           $ 14,553,953
Cash and cash equivalents                                    659,311           492,235    (a)       1,151,546
Receivable                                                     3,631                --                  3,631
Loan costs                                                                          --                 53,711
                                                              53,711
Other assets                                                  95,626            22,151    (a)         117,777
                                                       -------------     -------------          -------------
                                                        $ 15,366,232        $  514,386           $ 15,880,618
                                                       =============     =============          =============



               LIABILITIES AND STOCKHOLDERS'
                           EQUITY

Liabilities:
    Line of credit                                       $ 6,800,000                --            $ 6,800,000
    Accounts payable and accrued expenses                      4,445                --                  4,445
    Due to related parties                                 1,795,033            61,530    (a)       1,856,563
    Interest payable                                          16,705                --                 16,705
    Security deposits                                        553,956                --                553,956
    Deferred rental income                                    46,900                --                 46,900
                                                       -------------     -------------          -------------
          Total liabilities                                9,217,039            61,530              9,278,569
                                                       -------------     -------------          -------------


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 103,000,000 shares                 --                --                     --
    Common stock, $0.01 par value per share.
       Authorized 100,000,000 shares; issued and
       outstanding 872,153 shares; issued and
       outstanding, as adjusted, 921,377 shares                8,721               492    (a)           9,213
    Capital in excess of par value                         6,214,506           452,364    (a)       6,666,870
    Accumulated deficit                                      (74,034)               --                (74,034)
                                                       -------------     -------------          -------------
          Total stockholders' equity                       6,149,193           452,856              6,602,049
                                                       -------------     -------------          -------------
                                                        $ 15,366,232       $  514 ,386           $ 15,880,618
                                                       =============     =============          =============

</TABLE>





                  See accompanying notes to unaudited pro forma
                       consolidated financial statements.


<PAGE>


                         CNL RETIREMENT PROPERTIES, INC.
                                AND SUBSIDIARIES
                   (formerly CNL Health Care Properties, Inc.)
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                         SIX MONTHS ENDED JUNE 30, 2000

<TABLE>
<CAPTION>
<S> <C>
                                                                       Pro Forma
                                                  Historical          Adjustments            Pro Forma
                                                  -----------       ---------------          ------------

Revenues:
    Rental income from operating lease            $ 272,119           $   417,761    (1)     $  689,880
    FF&E Reserve income                               3,616                 9,809    (2)         13,425
    Interest and other income                        92,849               (90,959)   (3)          1,890
                                                -----------       ---------------          ------------
                                                    368,584               336,611               705,195
                                                -----------       ---------------          ------------
Expenses:
    Interest                                        129,776               216,563    (4)        346,339
    General operating and administrative            193,613                    --               193,613
    Asset management fees to related party           13,849                27,698    (5)         41,547
    Reimbursement of operating expenses from
       related party                               (213,886)              125,624    (6)        (88,262)
    Depreciation and amortization                    87,947               134,694    (7)        222,641
                                                -----------       ---------------          ------------
                                                    211,299               504,579               715,878
                                                -----------       ---------------          ------------


Net Earnings (Loss)                               $ 157,285           $  (167,968)           $  (10,683)
                                                ===========       ===============          ============

Earnings (Loss) Per Share of Common Stock
  (Basic and Diluted) (8)                         $    0.24                                  $    (0.02)
                                                ===========                                ============

Weighted Average Number of Shares of Common
    Stock Outstanding                               665,899                                     712,042
                                                ===========                                ============

</TABLE>





                  See accompanying notes to unaudited pro forma
                       consolidated financial statements.


<PAGE>


                         CNL RETIREMENT PROPERTIES, INC.
                                AND SUBSIDIARIES
                   (formerly CNL Health Care Properties, Inc.)
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
<S> <C>
                                                                                 Pro Forma
                                                         Historical              Adjustments                 Pro Forma
                                                         -----------           ---------------             --------------

Revenues:
    Rental income from operating lease                   $        --               $   304,141    (1)         $   304,141
    FF&E Reserve income                                           --                     7,296    (2)               7,296
    Interest and other income                                 86,231                   (43,169)   (3)              43,062
                                                         -----------           ---------------             --------------
                                                              86,231                   268,268                    354,499
                                                         -----------           ---------------             --------------
Expenses:
    Interest                                                      --                   161,438    (4)             161,438
    General operating and administrative                      79,621                        --                     79,621
    Asset management fees to related party                        --                    13,849    (5)              13,849
    Organizational costs                                      35,000                        --                     35,000
    Depreciation and amortization                                 --                   100,180    (7)             100,180
                                                         -----------           ---------------             --------------
                                                             114,621                   275,467                    390,088
                                                         -----------           ---------------             --------------


Net Loss                                                   $ (28,390)              $    (7,199)               $   (35,589)
                                                         ===========           ===============             ==============

Loss Per Share of Common Stock (Basic and
    Diluted) (8)                                            $  (0.07)                                           $    (0.07)
                                                         ===========                                        ==============

Weighted Average Number of Shares of Common
    Stock Outstanding                                        412,713                                               514,035
                                                         ===========                                        ==============

</TABLE>





                 See accompanying notes to unaudited pro forma
                       consolidated financial statements.


<PAGE>


                         CNL RETIREMENT PROPERTIES, INC.
                                AND SUBSIDIARIES
                   (formerly CNL Health Care Properties, Inc.)
                    NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
                              FINANCIAL STATEMENTS
                       SIX MONTHS ENDED JUNE 30, 2000 AND
                          YEAR ENDED DECEMBER 31, 1999


Unaudited Pro Forma Consolidated Balance Sheet:

(a)      Represents  gross  proceeds of $492,235  from the sale of 49,223 shares
         during the period July 1, 2000  through  August 3, 2000 and the accrual
         of related  acquisition fees, selling commissions and offering expenses
         which have been netted against stockholders' equity.

Unaudited Pro Forma Consolidated Statements of Operations:

(1)      Represents adjustment to rental income from the operating lease for the
         property  acquired  by the  Company  on April 20,  2000 (the "Pro Forma
         Property")  for the period  commencing  the date the Pro Forma Property
         became operational by the previous owner to 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.  The date the Pro Forma  Property  is
         treated  as  becoming  operational  by the  previous  owner as a rental
         property  for  purposes  of the Pro Forma  Consolidated  Statements  of
         Operations was October 11, 1999.

         The lease  provides for the payment of  percentage  rent in addition to
         base rental income; however, no percentage rent was due under the lease
         for the Pro Forma Property during the period the Company was assumed to
         have held the property.

(2)      Represents  reserve  funds which will be used for the  replacement  and
         renewal of furniture,  fixtures and equipment relating to the Pro Forma
         Property  (the "FF&E  Reserve").  The funds in the FF&E Reserve and all
         property  purchased  with  funds  from the FF&E  Reserve  will be paid,
         granted and  assigned to the Company.  In  connection  therewith,  FF&E
         Reserve income was earned at approximately $2,200 per month.

(3)      Represents  adjustment  to interest  income due to the  decrease in the
         amount of cash  available for investment in interest  bearing  accounts
         during the period  commencing  the date the Pro Forma  Property  became
         operational  by the  previous  owner to 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,  as  described in Note (1). The pro forma
         adjustment  is based upon the fact that  interest  income from interest
         bearing accounts was earned at a rate of approximately five percent per
         annum by the Company  during the year ended  December  31, 1999 and the
         six months ended June 30, 2000.

(4)      Represents  adjustment to interest  expense incurred at a rate of 8.75%
         per annum in connection  with the assumed  borrowings  from the line of
         credit of $8,100,000 on October 11, 1999.

(5)      Represents  increase in asset management fees relating to the Pro Forma
         Property  for the  period  commencing  the date the Pro Forma  Property
         became operational by the previous owner to 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,  as  described  in Note  (1).  Asset
         management  fees  are  equal to 0.60%  per year of the  Company's  Real
         Estate Asset Value as defined in the Company's prospectus.


<PAGE>


                         CNL RETIREMENT PROPERTIES, INC.
                                AND SUBSIDIARIES
                   (formerly CNL Health Care Properties, Inc.)
                    NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
                        FINANCIAL STATEMENTS - CONTINUED
                   FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND
                        THE YEAR ENDED DECEMBER 31, 1999


Unaudited Pro Forma Consolidated Statements of Operations - Continued:

(6)      Pursuant  to  the  advisory   agreement,   CNL  Retirement  Corp.  (the
         "Advisor") is required to reimburse the Company the amount by which the
         total operating  expenses paid or incurred by the Company exceed in any
         four  consecutive  fiscal  quarters (the "Expense Year") the greater of
         two percent of average invested assets or 25 percent of net income (the
         "Expense  Cap.")  During the  Expense  Year ended  June 30,  2000,  the
         Company's operating expenses exceeded the Expense Cap by $213,886.

         As a result of the Pro Forma  Property  being  treated in the Pro Forma
         Consolidated  Statements of Operations as operational since October 11,
         1999,  the  Expense  Cap  increased  based on two  percent  of  average
         invested  assets;   therefore,  the  amount  of  the  reimbursement  of
         operating  expenses  from related party was adjusted for the six months
         ended June 30, 2000.

(7)      Represents  increase in  depreciation  expense of the  building and the
         furniture,  fixture and  equipment  ("FF&E")  portions of the Pro Forma
         Property  accounted for as an operating  lease using the  straight-line
         method.  The building and FF&E are depreciated  over useful lives of 40
         and seven years, respectively. Also represents amortization of the loan
         costs of $55,917 (.5% origination fee on the $8,100,000 from borrowings
         on the  line of  credit,  associated  legal  fees  and  closing  costs)
         amortized under the straight-line method over a period of five years.

(8)      Historical  earnings per share were calculated  based upon the weighted
         average  number of shares of common  stock  outstanding  during the six
         months ended June 30, 2000 and the year ended December 31, 1999.

         As a result of the Pro Forma  Property  being  treated in the Pro Forma
         Consolidated  Statements of Operations as operational since October 11,
         1999, the Company assumed  approximately 670,638 shares of common stock
         were  sold,  and the  net  offering  proceeds  were  available  for the
         purchase of this property.  Due to the fact that approximately  270,400
         of these shares of common stock were actually sold subsequently, during
         the period  October 11,  1999  through  April 20,  2000,  the  weighted
         average  number of shares  outstanding  for the pro forma  periods were
         adjusted.  Pro forma earnings per share were calculated  based upon the
         weighted  average  number of shares of  common  stock  outstanding,  as
         adjusted,  during the six months ended June 30, 2000 and the year ended
         December 31, 1999.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
<S> <C>
                                                                    June 30,            December 31,
                                                                      2000                  1999
                                                                 -------------          ------------

                                ASSETS

Land, building and equipment on operating lease, net               $14,553,953                $   --
Cash                                                                   659,311             4,744,222
Receivables                                                              3,631                    --
Loan costs, less accumulated amortization of $2,206                     53,711                    --
Other assets                                                            95,626               344,338
                                                                --------------         -------------

                                                                   $15,366,232            $5,088,560
                                                                ==============         =============

                   LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
    Line of credit                                                  $6,800,000                $   --
    Due to related parties                                           1,795,033             1,775,256
    Accounts payable and accrued expenses                                4,445                21,167
    Interest payable                                                    16,705                    --
    Security deposit                                                   553,956                    --
    Deferred rental income                                              46,900                    --
                                                                --------------         -------------
       Total liabilities                                             9,217,039             1,796,423
                                                                --------------         -------------


Stockholders' equity:
    Preferred stock, without par value.
       Authorized and unissued  3,000,000  shares                           --                    --
    Excess shares, $.01 par value per share.
       Authorized and unissued  103,000,000  shares                         --                    --
    Common stock, $.01 par value per share.
       Authorized 100,000,000 shares, issued and
       outstanding 872,153 and 540,028 shares, respectively              8,721                 5,400
    Capital in excess of par value                                   6,214,506             3,365,531
    Accumulated deficit                                                (74,034)              (78,794)
                                                                --------------         -------------
       Total stockholders' equity                                    6,149,193             3,292,137
                                                                --------------         -------------

                                                                   $15,366,232            $5,088,560
                                                                ==============         =============

</TABLE>





                See accompanying notes to condensed consolidated
                             financial statements.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
<S> <C>

                                                                  Quarter                              Six Months
                                                               Ended June 30,                        Ended June 30,
                                                            2000             1999                2000               1999
                                                       -------------     ------------       --------------    ------------

Revenues:
    Rental income from operating lease                      $ 272,119           $  --            $ 272,119          $ --
    FF&E Reserve income                                         3,616              --                3,616            --
    Interest income                                            19,887              --               92,849            --
                                                       ---------------   -------------       --------------   -------------
                                                              295,622                              368,584
                                                       ---------------   -------------       --------------   -------------

Expenses:
    Interest                                                  129,776              --              129,776            --
    General operating and administrative                       95,473              --              193,613            --
    Asset management fees to related party                     13,849              --               13,849            --
    Reimbursement of operating expenses
     from related party                                      (213,886)             --             (213,886)           --
    Depreciation and amortization                              87,947              --               87,947            --
                                                       ---------------   -------------       --------------   -------------
                                                              113,159              --              211,299            --
                                                       ---------------   -------------       --------------   -------------

Net Earnings                                                $ 182,463           $  --            $ 157,285         $  --
                                                       ===============   =============       ==============   =============

Net Earnings Per Share of Common Stock
    (Basic and Diluted)                                      $   0.25           $  --             $   0.24         $  --
                                                       ===============   =============       ==============   =============

Weighted Average Number of Shares of
    Common Stock Outstanding                                  730,041              --              665,899            --
                                                       ===============   =============       ==============   =============

</TABLE>





                See accompanying notes to condensed consolidated
                             financial statements.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

         Six Months Ended June 30, 2000 and Year Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>

                                                     Common stock
                                              ---------------------------     Capital in
                                                  Number           Par        excess of     Accumulated
                                                of Shares         value       par value       deficit         Total
                                              ------------   ------------   ------------   ------------   ------------

  Balance at December 31, 1998                      20,000        $   200      $ 199,800         $   --      $ 200,000

  Subscriptions received for common
    stock through public offering
    and distribution reinvestment plan             543,528          5,435      5,429,848             --      5,435,283

  Subscriptions held in escrow                     (23,500)          (235)      (234,765)            --       (235,000)

  Stock issuance costs                                  --             --     (2,029,352)            --     (2,029,352)

  Net loss                                              --             --             --        (28,390)       (28,390)

  Distributions declared and paid
    ($.125 per share)                                   --             --             --        (50,404)       (50,404)
                                              ------------   ------------   ------------   ------------   ------------

  Balance at December 31, 1999                     540,028          5,400      3,365,531        (78,794)     3,292,137

  Subscriptions received for common
    stock through public offering and
    distribution reinvestment plan                 332,125          3,321      3,317,941             --      3,321,262

  Stock issuance costs                                  --             --       (468,966)            --       (468,966)

  Net earnings                                          --             --             --        157,285        157,285

  Distributions declared and paid
    ($.229 per share)                                   --             --             --       (152,525)      (152,525)
                                              ------------   ------------   ------------   ------------   ------------

  Balance at June 30, 2000                         872,153   $     8,721      $6,214,506      $ (74,034)   $ 6,149,193
                                              ============   ============   ============   ============   ============


</TABLE>





                See accompanying notes to condensed consolidated
                             financial statements.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
<S> <C>

                                                                          Six Months Ended
                                                                              June 30,
                                                                      2000                1999
                                                                 --------------      --------------
Increase (Decrease) in Cash and Cash Equivalents:

    Net Cash Provided by Operating Activities                         $ 657,668             $    --
                                                                 --------------      --------------

     Net Cash Provided by Investing Activities:
       Additions to land, building and
          equipment on operating lease                              (13,848,900)                 --
       Payment of acquisition costs                                    (366,078)                 --
                                                                 --------------      --------------
            Net cash used in investing activities                   (14,214,978)                 --
                                                                 --------------      --------------

    Net Cash Provided by Financing Activities:
       Repayment of offering and acquisition costs paid by
          related party on behalf of the Company                                                 --
                                                                       (223,302)
       Proceeds from line of credit                                   8,100,000                  --
       Payment of loan costs                                            (55,917)                 --
       Repayment of borrowings on line of credit                     (1,300,000)                 --
       Subscriptions received from stockholders                       3,321,262                  --
       Distributions to stockholders                                   (152,525)                 --
       Payment of stock issuance costs                                 (217,119)                 --
                                                                 --------------      --------------
            Net cash provided by financing activities                 9,472,399                  --
                                                                 --------------      --------------

Net Decrease in Cash and Cash
    Equivalents                                                      (4,084,911)                 --

Cash and Cash Equivalents at Beginning
    of Period                                                         4,744,222                  92
                                                                 --------------      --------------

Cash and Cash Equivalents at End of
    Period                                                            $ 659,311             $    92
                                                                 ==============      ==============


</TABLE>





                See accompanying notes to condensed consolidated
                             financial statements.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>
<S> <C>
                                                             Six Months Ended
                                                                 June 30,
                                                        2000                 1999
                                                    --------------    --------------

Supplemental Schedule of Non-Cash
    Investing and Financing Activities:

       Amounts paid by related parties
         on behalf of the Company and
         its subsidiaries:
           Acquisition costs                           $    56,129       $        --
           Deferred offering costs                              --           235,071
           Stock issuance costs                            178,708                --
                                                    --------------    --------------
                                                       $   234,837       $   235,071
                                                    ==============    ==============
       Costs incurred by the Company and unpaid
         at period end:
           Acquisition costs                           $   360,336       $   110,915
           Deferred offering costs                              --           269,877
           Stock issuance costs                             67,956                --
                                                    --------------    --------------

                                                       $   428,292       $   380,792
                                                    ==============    ==============

</TABLE>





              See accompanying notes to condensed consolidated
                             financial statements.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

              Quarters and Six Months Ended June 30, 2000 and 1999


1.       Organization and Nature of Business:

         CNL Health Care Properties,  Inc. was organized pursuant to the laws of
         the state of Maryland on December  22,  1997.  CNL Health Care GP Corp.
         and CNL Health  Care LP Corp.  are  wholly  owned  subsidiaries  of CNL
         Health Care Properties,  Inc., each of which was organized  pursuant to
         the laws of the state of  Delaware in  December  1999.  CNL Health Care
         Partners, LP is a Delaware limited partnership formed in December 1999.
         CNL Health Care GP Corp.  and CNL Health Care LP Corp.  are the general
         and limited partner, respectively, of CNL Health Care Partners, LP. The
         term "Company"  includes,  unless the context otherwise  requires,  CNL
         Health Care Properties,  Inc., CNL Health Care Partners, LP, CNL Health
         Care GP Corp. and CNL Health Care LP Corp.

         The Company intends to use the proceeds from its public offerings after
         deducting   offering   expenses,   primarily  to  acquire  real  estate
         properties (the "Property" or "Properties")  related to health care and
         seniors'  housing  facilities  (the "Health Care  Facilities")  located
         across the  United  States.  The Health  Care  Facilities  may  include
         congregate  living,  assisted  living and skilled  nursing  facilities,
         continuing care retirement  communities and life care communities,  and
         medical office buildings and walk-in  clinics.  The Company may provide
         mortgage  financing (the "Mortgage  Loans") to operators of Health Care
         Facilities in the aggregate  principal  amount of approximately 5 to 10
         percent of the  Company's  total  assets.  The  Company  also may offer
         furniture, fixture and equipment financing ("Secured Equipment Leases")
         to operators of Health Care Facilities.  Secured  Equipment Leases will
         be funded from the proceeds of a loan in an amount up to ten percent of
         the Company's total assets.

         The Company was a development  stage  enterprise from December 22, 1997
         through  July 13,  1999.  Since  operations  had not begun,  activities
         through July 13, 1999 were devoted to the organization of the Company.

         The Company  acquired  its first  Property,  a Brighton  Gardens(R)  by
         Marriott(R),  on April 20,  2000.  This  Property  is located in Orland
         Park,  Illinois.  In connection with the purchase of the Property,  the
         Company,  as  lessor,  entered  into  a  long-term,   triple-net  lease
         agreement.

2.       Basis of Presentation:

         The accompanying  unaudited condensed consolidated financial statements
         have been prepared in accordance with the instructions to Form 10-Q and
         do not include all of the information and note disclosures  required by
         generally accepted accounting  principles.  The condensed  consolidated
         financial  statements  reflect all  adjustments,  consisting  of normal
         recurring  adjustments,  which are, in the  opinion of the  management,
         necessary to a fair  statement  of the results for the interim  periods
         presented.  Operating results for the quarter and six months ended June
         30, 2000 may not be  indicative of the results that may be expected for
         the year ending  December 31, 2000.  Amounts  included in the financial
         statements  as of December  31,  1999 have been  derived  from  audited
         financial statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in the Form 10-K of
         CNL Health Care  Properties,  Inc.  and its  subsidiaries  for the year
         ended December 31, 1999.

         The accompanying  unaudited condensed consolidated financial statements
         include the accounts of CNL Health Care Properties, Inc. and its wholly
         owned  subsidiaries,  CNL Health  Care GP Corp.  and CNL Health Care LP
         Corp.,  as well as the  accounts of CNL Health Care  Partners,  LP. All
         significant   intercompany   balances   and   transactions   have  been
         eliminated.



<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              Quarters and Six Months Ended June 30, 2000 and 1999


3.       Public Offerings:

         The Company has a currently  effective  registration  statement on Form
         S-11  with  the  Securities  and  Exchange  Commission.  A  maximum  of
         15,500,000 shares  ($155,000,000) may be sold (the "Initial Offering"),
         including  500,000  shares  ($5,000,000)  which 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.  In addition,  the Company has  registered
         600,000 shares  issuable upon the exercise of warrants to be granted to
         the managing  dealer of the Initial  Offering as Shares are sold. As of
         June 30,  2000,  the  Company  had  received  subscription  proceeds of
         $8,521,527  (852,153 shares),  including $50,427 (5,043 shares) through
         the distribution reinvestment plan.

         On May 19, 2000,  the Company  filed a  registration  statement on Form
         S-11 with the Securities and Exchange Commission in connection with the
         proposed sale by the Company of up to 15,500,000  additional  shares of
         common  stock  ($155,000,000)  (the  "2000  Offering")  in an  offering
         expected  to  commence  immediately  following  the  completion  of the
         Company's Initial Offering. Of the 15,500,000 shares of common stock to
         be offered, up to 500,000 will be available to stockholders  purchasing
         shares  through the  reinvestment  plan.  The price per share and other
         terms of the 2000 Offering,  including the percentage of gross proceeds
         payable (i) to the managing dealer for selling commissions and expenses
         in connection  with the offering and (ii) to the Company's  advisor for
         acquisition  fees, are substantially the same for the Company's Initial
         Offering.  The Company  expects to use the net  proceeds  from the 2000
         Offering to purchase  additional  Properties  and, to a lesser  extent,
         make Mortgage Loans.

4.       Land, Building and Equipment on Operating Lease:

         The Company  leases its land,  building and  equipment to a health care
         facility  operator.  The lease is accounted for under the provisions of
         Statement of Financial  Accounting  Standards No. 13,  "Accounting  for
         Leases," and has been  classified as an operating  lease.  The lease is
         for 15 years, provides for minimum and contingent rent and requires the
         tenant  to pay  executory  costs.  In  addition,  the  tenant  pays all
         property  taxes and  assessments  and carries  insurance  coverage  for
         public  liability,  property damage,  fire and extended  coverage.  The
         lease options  allow the tenant to renew the lease for four  successive
         five-year  periods  subject  to the same  terms and  conditions  of the
         initial lease.  The lease also requires the  establishment of a capital
         expenditure  reserve fund,  which will be used for the  replacement and
         renewal of  furniture,  fixtures and  equipment  relating to the health
         care Property (the "FF&E Reserve"). Funds in the FF&E Reserve have been
         earned, granted and assigned to the Company as additional rent.

         The company records the acquisition of land,  building and equipment at
         cost, including  acquisition and closing costs.  Building and equipment
         are depreciated on the straight-line method over their estimated useful
         life of 40 and seven years, respectively.  Land, building and equipment
         on operating lease consisted of the following at:

                                                     June 30,      December 31,
                                                       2000            1999
                                                -------------      ------------
             Land                                  $2,083,948          $     --
             Building                              11,530,358                --
             Equipment                              1,025,388                --
                                                -------------      ------------
                                                   14,639,694                --
             Less accumulated depreciation            (85,741)               --
                                                -------------      ------------
                                                  $14,553,953          $     --
                                                =============      ============


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              Quarters and Six Months Ended June 30, 2000 and 1999


4.       Land, Building and Equipment on Operating Lease - Continued:

         The lease  provides  for an increase  in the  minimum  annual rent at a
         predetermined  interval  during the term of the lease.  Such  amount is
         recognized  on a  straight-line  basis  over  the  term  of  the  lease
         commencing  on the date the  Property  was placed in service.  Deferred
         rental income represents the aggregate amount of cash payments received
         in excess of rental  revenue  recognized  on a  straight-line  basis to
         date.

         The lease  requires that the tenant pay lease payments every four weeks
         in  advance.  The  following  is a  schedule  of future  minimum  lease
         payments to be received on the  noncancellable  operating lease at June
         30, 2000:

               2000                                            $    675,134
               2001                                               1,350,267
               2002                                               1,373,391
               2003                                               1,384,890
               2004                                               1,384,890
               Thereafter                                        14,223,932
                                                             --------------
                                                               $ 20,392,504
                                                             ==============

         Since the lease is  renewable  at the option of the  tenant,  the above
         table  only  presents  future  minimum  lease  payments  due during the
         initial  lease  term.  In  addition,  this table does not  include  any
         amounts for future contingent rents, which may be received on the lease
         based on a percentage of the tenant's gross sales.

5.       Other Assets:

         Other assets as of June 30, 2000 and December 31, 1999 were $95,626 and
         $344,338,   respectively,  which  consisted  of  acquisition  fees  and
         acquisition  expenses which will be allocated to future  Properties and
         miscellaneous prepaid expenses.

6.       Line of Credit:

         On April 20, 2000, the Company  entered into a revolving line of credit
         and security agreement with a bank to be used by the Company to acquire
         health care  Properties.  The line of credit  provides that the Company
         may receive advances of up to $25,000,000 until April 19, 2005, with an
         annual  review to be performed  by the bank to indicate  that there has
         been no substantial deterioration, in the bank's reasonable discretion,
         of the Company's credit quality. Interest expense on each advance shall
         be payable monthly, with all unpaid interest and principal due no later
         than five years from the date of the advance. Generally, advances under
         the line of credit  will bear  interest  at either (i) a rate per annum
         equal to the London Interbank  Offered Rate (LIBOR) plus the difference
         between  LIBOR and the bank's  base rate at the time of the  advance or
         (ii) a rate  equal to the  bank's  base  rate,  whichever  the  Company
         selects  at the time  advances  are  made.  The  interest  rate will be
         adjusted daily in accordance with  fluctuations with the bank's rate or
         the LIBOR rate, as applicable.  Notwithstanding the above, the interest
         rate on the first $9,700,000 drawn will be 8.75% through April 1, 2002,
         and  thereafter  will bear  interest  at either (i) or (ii) above as of
         April 1, 2002.  In addition,  a fee of 0.5% per advance will be due and
         payable to the bank on funds as  advanced.  Each advance made under the
         line of credit will be  collateralized  by the  assignment of rents and
         leases. In addition,  the line of credit provides that the Company will
         not be able to further encumber the applicable Property during the term
         of the  advance  without  the  bank's  consent.  The  Company  will  be
         required,  at each closing, to pay all costs, fees and expenses arising
         in  connection  with the line of credit.  The Company must also pay the
         bank's  attorney's  fees,   subject  to  a  maximum  cap,  incurred  in
         connection with the line of credit and each advance.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              Quarters and Six Months Ended June 30, 2000 and 1999


6.       Line of Credit - Continued:

         The Company had obtained an advance of $8,100,000  relating to the line
         of credit and had an  outstanding  balance of $6,800,000 as of June 30,
         2000. In  connection  with the line of credit,  the Company  incurred a
         commitment  fee, legal fees and closing costs of $55,917.  The proceeds
         were used in connection with the purchase of a health care Property.

7.       Stock Issuance Costs:

         The Company has incurred  certain  expenses of its offering,  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 offering. Preliminary
         costs incurred  prior to raising  capital were advanced by an affiliate
         of  the  Company,  CNL  Health  Care  Corp.  (the  "Advisor")  and  its
         affiliates.  The  Advisor  has  agreed  to pay  all  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 in connection
         with the offerings.

         During  the six  months  ended  June 30,  2000 and  1999,  the  Company
         incurred $468,966 and $504,200,  respectively, in stock issuance costs,
         including  $265,700 and  $197,184,  respectively,  in  commissions  and
         marketing  support and due diligence  expense  reimbursement  fees (see
         Note 9). These amounts have been charged to stockholders' equity.

8.       Distributions:

         For  the  six  months  ended  June  30,   2000,   100  percent  of  the
         distributions paid to stockholders were considered  ordinary income for
         federal income tax purposes. No amounts distributed to the stockholders
         for the six months  ended June 30, 2000 are required to be or have been
         treated  by  the  Company  as a  return  of  capital  for  purposes  of
         calculating the  stockholders'  return on their invested  capital.  The
         characterization for tax purposes of distributions declared for the six
         months   ended   June   30,   2000  may  not  be   indicative   of  the
         characterization  of  distributions  that may be expected  for the year
         ending December 31, 2000.

9.       Related Party Arrangements:

         Certain  directors  and officers of the Company hold similar  positions
         with the Advisor and the managing  dealer,  CNL Securities  Corp. These
         affiliates  receive  fees  and  compensation  in  connection  with  the
         offerings,  and the  acquisition,  management and sale of the assets of
         the Company.

         CNL Securities  Corp. is entitled to receive  commissions  amounting to
         7.5% of the total amount raised from the sale of shares for services in
         connection with the offering,  a substantial  portion of which has been
         or will be paid as commissions to other broker-dealers.  During the six
         months ended June 30, 2000, the Company incurred $249,094 of such fees,
         of which $216,037 has been 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,  all or a portion of
         which may be reallowed to other  broker-dealers.  During the six months
         ended June 30, 2000,  the Company  incurred  $16,606 of such fees,  the
         majority of which was reallowed to other  broker-dealers and from which
         all bona fide due diligence expenses were or will be paid.



<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              Quarters and Six Months Ended June 30, 2000 and 1999


9.       Related Party Arrangements - Continued:

         In addition,  in connection with the Initial Offering,  the Company has
         agreed to issue and sell soliciting dealer warrants ("Soliciting Dealer
         Warrants")  to CNL  Securities  Corp.  The  price for each  warrant  is
         $0.0008  and one  warrant  is issued  for  every 25 shares  sold by the
         managing dealer except where  prohibited by federal or state securities
         laws.  All  or a  portion  of the  Soliciting  Dealer  Warrants  may be
         reallowed to soliciting  dealers with prior written  approval from, and
         in the sole discretion of, the managing dealer, except where prohibited
         by either federal or state  securities laws. The holder of a Soliciting
         Dealer  Warrant  will be entitled to purchase one share of common stock
         from the  Company  at a price of $12.00  during  the  five-year  period
         commencing  with the date the  offering  began.  No  Soliciting  Dealer
         Warrant,  however,  will be exercisable until one year from the date of
         issuance. During the six months ended June 30, 2000, the Company issued
         approximately  24,000 Soliciting Dealer Warrants.  As of June 30, 2000,
         CNL  Securities  Corp.  was  entitled  to receive  approximately  6,100
         additional  Soliciting  Dealer  Warrants  for  shares  sold  during the
         quarter then ended.

         The  Advisor is entitled to receive  acquisition  fees for  services in
         identifying  Properties  and  structuring  the  terms of  leases of the
         Properties  and Mortgage  Loans equal to 4.5% of gross  proceeds of the
         offering,   loan   proceeds  from   permanent   financing  and  amounts
         outstanding  on the line of credit,  if any, at the time of listing the
         Company's shares of common stock on a national  securities  exchange or
         over-the-counter  market,  but excluding  that portion of the permanent
         financing  used to finance  Secured  Equipment  Leases.  During the six
         months ended June 30, 2000, the Company incurred $149,456 of such fees.
         These fees are included in land,  building  and  equipment on operating
         lease and other assets at June 30, 2000.

         The Company incurs  operating  expenses  which,  in general,  are those
         expenses relating to administration of the Company on an ongoing basis.
         Pursuant  to  the  advisory  agreement,  the  Advisor  is  required  to
         reimburse the Company the amount by which the total operating  expenses
         paid or incurred by the Company exceed in any four  consecutive  fiscal
         quarters  (the  "Expense  Year") the  greater of two percent of average
         invested assets or 25 percent of net income (the "Expense Cap"). During
         the four quarters ended June 30, 2000, the Company's operating expenses
         exceeded  the  Expense Cap by  $213,886;  therefore,  the Advisor  will
         reimburse  the Company  such  amount in  accordance  with the  advisory
         agreement.  The amount to be received from the Advisor has been treated
         as a  reduction  of the amount  due to  related  parties as of June 30,
         2000.

         The Company and the Advisor  have  entered  into an advisory  agreement
         pursuant to which the Advisor will receive a monthly  asset  management
         fee of  one-twelfth  of 0.60% of the Company's  real estate asset value
         and the  outstanding  principal  balance of any Mortgage Loan as of the
         end of the preceding month. During the quarter ended June 30, 2000, the
         Company incurred $13,849 of such fees.


<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              Quarters and Six Months Ended June 30, 2000 and 1999


9.       Related Party Arrangements - Continued:

         The Advisor and its affiliates provide various administrative  services
         to the Company,  including  services related to accounting;  financial,
         tax and regulatory compliance reporting;  stockholder distributions and
         reporting;   due  diligence  and  marketing;   and  investor  relations
         (including administrative services in connection with the offering), on
         a day-to-day  basis.  The expenses  incurred  for these  services  were
         classified as follows for the six months ended June 30:
<TABLE>
<CAPTION>
<S> <C>
                                                                2000                1999
                                                           -------------       -------------

Deferred offering costs                                       $       --          $  167,392
Stock issuance costs                                              25,687                  --
Other assets                                                      30,491                  --
General operating and administrative expenses                    120,106                  --
                                                           -------------       -------------

                                                              $  176,284          $  167,392
                                                           =============       =============

Amounts due to related parties consisted of the following at:

                                                              June 30,           December 31,
                                                                2000                 1999
                                                           -------------       -------------

Due to (from) the Advisor:
  Expenditures incurred for organizational and offering
      expenses on behalf of the Company                       $1,570,983          $1,432,291
  Accounting and administrative services due to
     (reimbursable from) the Advisor                            (179,027)              6,739
  Acquisition fees and expenses                                  358,238             336,226
                                                           -------------       -------------
                                                               1,750,194           1,775,256
                                                           -------------       -------------

Due to CNL Securities Corp.:
  Commissions                                                     42,027                  --
  Marketing support and due diligence
     expense reimbursement fee                                     2,812                  --
                                                           -------------       -------------
                                                                  44,839                  --
                                                           -------------       -------------

                                                              $1,795,033          $1,775,256
                                                           =============        ============

</TABLE>





<PAGE>


                        CNL HEALTH CARE PROPERTIES, INC.
                                AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              Quarters and Six Months Ended June 30, 2000 and 1999


10.      Concentration of Credit Risk:

         All of the  Company's  rental  income for the six months ended June 30,
         2000 was earned from one lessee,  BG Orland Park,  LLC,  which operates
         the Property as a Brighton Gardens(R) by Marriott(R).

         Although the company intends to acquire  Properties  located in various
         states and  regions  and to  carefully  screen its  tenants in order to
         reduce risks of default, failure of any one health care chain or lessee
         that  contributes  more than ten percent of the Company's rental income
         could  significantly  impact the result 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 this  Property  for the
         ongoing operations of the lessee.

         It is expected that the  percentage of total rental income  contributed
         by this lessee will decrease as additional  Properties are acquired and
         leased in 2000 and subsequent years.

11.      Subsequent Events:

         During the period July 1 through  July 31, 2000,  the Company  received
         subscription  proceeds for an additional  35,723  shares  ($357,230) of
         common  stock.  As of July 31,  2000,  the Company had  received  total
         subscription proceeds of $8,878,760.

         On July 1, 2000 the Company declared distributions totaling $50,847, or
         $0.058  per  share of common  stock,  payable  in  September  2000,  to
         stockholders of record on July 1, 2000.


<PAGE>






                       INDEX TO OTHER FINANCIAL STATEMENTS



The following financial information is provided in connection with the Company's
acquisition of the Orland Park Property.  Due to the fact that the tenant of the
Company is a newly formed  entity,  the  information  presented  represents  the
historical  financial  information  of the  operations  of the  assisted  living
facility.  The Orland Park Property became operational on October 11, 1999. This
information was obtained from the seller of the Property.  The Company  acquired
the  Property on April 20,  2000,  but does not own any interest in the tenant's
operations of the assisted living facility.  For information on the Property and
the  long-term,  triple-net  lease which the Company  entered,  see "Business --
Property Acquisitions."


BRIGHTON GARDENS BY MARRIOTT
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)

Updated Financial  Statements (unaudited):

<TABLE>
<CAPTION>
<S> <C>
    Condensed Statement of Assets and Liabilities as of March 24, 2000                                    B-20

    Condensed Statement of Revenues and Operating Expenses for the period from
     January 1, 2000 through March 24, 2000                                                               B-21

    Condensed Statement of Excess of Assets Over Liabilities for the period from
     January 1, 2000 through March 24, 2000                                                               B-22

    Condensed Statement of Cash Flows for the period from January 1, 2000 through
     March 24, 2000                                                                                       B-23

    Notes to Condensed Financial Statements for the period from January 1, 2000
     through March 24, 2000                                                                               B-24

</TABLE>


<PAGE>



Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Condensed Statement of Assets and Liabilities
March 24, 2000
--------------------------------------------------------------------------------


              Assets

Current Assets:
    Cash                                                           $   9,339
    Other assets                                                       5,015
                                                                -------------
          Total current assets                                        14,354

Property and Equipment, at cost, less accumulated
    depreciation of $191,602                                      12,593,208
                                                                -------------

                                                                 $12,607,562
                                                                =============


      Liabilities and Excess of Assets Over Liabilities

Current Liabilities:
    Accounts payable and accrued expenses                         $   12,678
    Unearned revenue                                                  27,280
    Due to Marriott Senior Living Services, Inc.                     259,690
                                                                -------------
          Total current liabilities                                  299,648

Excess of Assets Over Liabilities                                 12,307,914
                                                                -------------

                                                                 $12,607,562
                                                                =============











              The accompanying notes are an integral part of these
                             financial statements.


<PAGE>


Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Condensed  Statement of Revenues and Operating  Expenses  Period from January 1,
2000 through March 24, 2000
--------------------------------------------------------------------------------



Revenue:
    Resident fees                                                $ 402,195
    Other income                                                    10,846
                                                              -------------
                                                                   413,041
                                                              -------------

Expenses:
    Operating, selling, general and administrative                 538,173
    Depreciation                                                   100,843
                                                              -------------
                                                                   639,016
                                                              -------------

Excess of Operating Expenses Over Revenues                      $ (225,975)
                                                              =============










              The accompanying notes are an integral part of these
                             financial statements.


<PAGE>


Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Condensed Statement of Excess of Assets Over Liabilities
Period from January 1, 2000 through March 24, 2000
--------------------------------------------------------------------------------



Balance at Beginning of Period                                   $ 12,533,889

    Excess of operating expenses over revenues                       (225,975)
                                                              ----------------

Excess of Assets Over Liabilities at March 24, 2000              $ 12,307,914
                                                              ================











              The accompanying notes are an integral part of these
                             financial statements.


<PAGE>


Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Condensed  Statement of Cash Flows Period from January 1, 2000 through
March 24, 2000
--------------------------------------------------------------------------------



Cash Flows from Operating Activities:
    Net loss                                                        $ (225,975)
    Depreciation                                                       100,843
    Changes in assets and liabilities:
       Decrease (increase) in assets:
          Decrease in accounts receivable                                7,333
          Decrease in other assets                                       2,744
       Increase (decrease) in liabilities:
          Decrease in accounts payable and accrued expenses             (2,546)
          Increase in unearned revenue                                  27,280
          Increase in due to Marriott Senior Living Services, Inc.      83,131
                                                                    -----------

                Net cash used in operating activities                   (7,190)

Cash at Beginning of Period                                             16,529
                                                                    -----------

Cash at End of Period                                                $   9,339
                                                                    ===========





              The accompanying notes are an integral part of these
                             financial statements.


<PAGE>


Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Notes to  Condensed  Financial  Statements  Period from  January 1, 2000 through
March 24, 2000
--------------------------------------------------------------------------------


1.       Organization and Nature of Business:

         Brighton  Gardens by Marriott (the  "Property")  is an  assisted-living
         facility  located in Orland Park,  Illinois.  The Property  includes 82
         assisted-living  units and 24  Alzheimer's  units.  The  Property is an
         unincorporated  division of Marriott Senior Living Services,  Inc. (the
         "Owner"),  a subsidiary  of Marriott  International,  Inc. The property
         became operational on October 11, 1999.


2.       Basis of Presentation:

         The  accompanying  unaudited  condensed  financial  statements  do  not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The  condensed  financial
         statements  reflect all  adjustments,  consisting  of normal  recurring
         adjustments,  which are, in the opinion of  management,  necessary to a
         fair statement of results for the interim period  presented.  Operating
         results for the period  from  January 1, 2000 to March 24, 2000 may not
         be  indicative  of the results that may be expected for the year ending
         December 29, 2000. These unaudited financial  statements should be read
         in conjunction with the audited financial statements as of December 31,
         1999.



<PAGE>



                                   APPENDIX C

                            PRIOR PERFORMANCE TABLES

            ------------------------------------------------------
            |                                                    |
            |  THE FOLLOWING  INFORMATION UPDATES AND REPLACES   |
            |  THE CORRESPONDING INFORMATION IN APPENDIX C  TO   |
            |  THE ATTACHED PROSPECTUS, DATED MARCH 31, 2000.    |
            |                                                    |
            ------------------------------------------------------

<PAGE>


                                   APPENDIX C

                            PRIOR PERFORMANCE TABLES

         The information in this Appendix 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 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 Hospitality Properties, Inc., to invest in hotel
properties. No Prior Public Programs sponsored by the Company's Affiliates have
invested in health care facilities leased on a triple-net basis to operators of
health care facilities.

         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.,
CNL American Properties Fund, Inc., and CNL Hospitality Properties, 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 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
Hospitality Properties, Inc., through investment in 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 June 30, 2000. 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 July 1995 and June 2000.

         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.

                                      C-1
<PAGE>

         Table II - Compensation to Sponsor

         Table II provides information, on a total dollar basis, regarding
amounts and types of compensation paid to two of the Company's principals and
their Affiliates which sponsored 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 July 1995 and June 2000. 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 June 30, 2000.

         Table III - Operating Results of Prior Programs

         Table III presents a summary of operating results for the period from
inception through December 31, 1999, of the Prior Public Programs, the offerings
of which became fully subscribed between July 1995 and June 2000.

         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 an investing or financing nature.
These items include proceeds from capital contributions of investors and
disbursements made from these sources of funds, such as syndication (or stock
issuance) and organizational costs, acquisition of the properties and other
costs which are related more to the organization of the entity and the
acquisition of properties than to the actual operations of the entities.

         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 Appendix C because none of the Prior
Public Programs have completed operations (meaning they no longer hold
properties).

         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 July 1995 and June 2000.

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

                                      C-2
<PAGE>
                                     TABLE I
                    EXPERIENCE IN RAISING AND INVESTING FUNDS


<TABLE>
<CAPTION>
                                                CNL American           CNL Income            CNL Income        CNL Hospitality
                                              Properties Fund,         Fund XVII,           Fund XVIII,          Properties,
                                                    Inc.                  Ltd.                  Ltd.                 Inc.
                                              -----------------       --------------       ---------------    -------------------
                                                  (Note 1)                                                         (Note 2)

<S>                                               <C>                   <C>                   <C>
Dollar amount offered                             $747,464,420          $30,000,000           $35,000,000           $150,072,637
                                              =================       ==============       ===============    ===================

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

Less offering expenses:

   Selling commissions and discounts                      (7.5)                (8.5)                 (8.5)                  (7.5)
   Organizational expenses                                (2.2)                (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)
                                              -----------------       --------------       ---------------    -------------------
                                                         (10.2)               (12.0)                (12.0)                 (11.0)
                                              -----------------       --------------       ---------------    -------------------
Reserve for operations                                      --                   --                    --                      --
                                              -----------------       --------------       ---------------    -------------------

Percent available for investment                          89.8%                88.0%                 88.0%                  89.0%
                                              =================       ==============       ===============    ===================

Acquisition costs:

   Cash down payment                                      85.3%                83.5%                83.5%                   84.5%
   Acquisition fees paid to affiliates                     4.5                  4.5                  4.5%                    4.5%
   Loan costs                                               --                   --                    --                      --
                                              -----------------       --------------       ---------------    -------------------

Total acquisition costs                                   89.8%                88.0%                 88.0%                  89.0%
                                              =================       ==============       ===============    ===================

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

Date offering began                                    4/19/95,              9/02/95               9/20/96                7/09/97
                                                    2/06/97 and
                                                        3/02/98

Length of offering (in months)                   22, 13 and 9,                   12                    17                     23
                                                  respectively

Months to invest 90% of amount
   available for investment measured
   from date of offering                        23, 16 and 11,                   15                    17                    29
                                                 respectively
</TABLE>

Note 1:           Pursuant to a Registration Statement on Form S-11 under the
                  Securities Act of 1933, as amended, effective March 29, 1995,
                  CNL American Properties Fund, Inc. ("APF") registered for sale
                  $165,000,000 of shares of common stock (the "Initial
                  Offering"), including $15,000,000 available only to
                  stockholders participating in the company's reinvestment plan.
                  The Initial Offering of APF commenced April 19, 1995, and upon
                  completion of the Initial Offering on February 6, 1997, had
                  received subscription proceeds of $150,591,765 (7,529,588
                  shares), including $591,765 (29,588 shares) issued pursuant to
                  the reinvestment plan. Pursuant to a Registration Statement on
                  Form S-11 under the Securities Act of 1933, as amended,
                  effective January 31, 1997, APF registered for sale
                  $275,000,000 of shares of common stock (the "1997 Offering"),
                  including $25,000,000 available only to stockholders
                  participating in the company's reinvestment plan. The 1997
                  Offering of APF commenced following the completion of the
                  Initial Offering on February 6, 1997, and upon completion of
                  the 1997 Offering on March 2, 1998, had received subscription
                  proceeds of $251,872,648 (12,593,633 shares), including
                  $1,872,648 (93,632 shares) issued pursuant to the reinvestment
                  plan. Pursuant to a Registration Statement on Form S-11 under
                  the Securities Act of 1933, as amended, effective May 12,
                  1998, APF registered for sale $345,000,000 of shares of common
                  stock (the "1998 Offering"). The 1998 Offering of APF
                  commenced following the completion of the 1997 Offering on
                  March 2, 1998. As of January 31, 1999, APF had received
                  subscriptions totalling approximately $345,000,000 (17,250,000
                  shares), from the 1998 Offering, including $3,107,848 (155,393
                  shares) issued pursuant to the company's reinvestment plan.
                  The 1998 Offering became fully subscribed in December 1998 and
                  proceeds from the last subscriptions were received in January
                  1999.


                                      C-3
<PAGE>


Note 2:           Pursuant to a Registration Statement on Form S-11 under the
                  Securities Act of 1933, as amended, effective July 9, 1997,
                  CNL Hospitality Properties, Inc. ("CHP") registered for sale
                  $165,000,000 of shares of common stock (the "Initial
                  Offering"), including $15,000,000 available only to
                  stockholders participating in the company's reinvestment plan.
                  The Initial Offering of CHP commenced September 11, 1997, and
                  upon completion of the Initial Offering on June 17, 1999 had
                  received $150,072,637 (15,007,264 shares), including $72,637
                  (7,264 shares) issued pursuant to the reinvestment plan.
                  Pursuant to a Registration Statement on Form S-11 under the
                  Securities Act of 1933, as amended, effective June 17, 1999,
                  CHP registered for sale up to $275,000,000 of shares of common
                  stock (the "1999 Offering"). The 1999 Offering of CHP
                  commenced following the completion of the Initial Offering on
                  June 17, 1999. As of June 30, 2000, CHP had received
                  subscription proceeds of $235,011,997 (23,501,199 shares) from
                  its 1999 Offering, including $965,145 (96,514 shares) issued
                  pursuant to the reinvestment plan. Pursuant to a Registration
                  Statement on Form S-11 under the Securities Act of 1933, as
                  amended, effective May 23, 2000, CHP registered for sale up to
                  $450,000,000 of shares of common stock (the "2000 Offering").
                  The 2000 Offering is expected to commence immediately
                  following the completion of the 1999 Offering.


                                      C-4
<PAGE>
                                    TABLE II
                             COMPENSATION TO SPONSOR

<TABLE>
<CAPTION>
                                                     CNL American        CNL Income       CNL Income       CNL Hospitality
                                                   Properties Fund,      Fund XVII,       Fund XVIII,        Properties,
                                                         Inc.               Ltd.             Ltd.                Inc.
                                                  -------------------  ---------------  ----------------  -------------------
<S>                                                       <C>               <C>               <C>                 <C>
                                                  (Notes 1, 2 and 6)                                           (Note 4)
Date offering commenced                             4/19/95, 2/06/97          9/02/95           9/20/96   7/9/97 and 6/17/99
                                                         and 3/02/98

Dollar amount raised                                    $747,464,420      $30,000,000       $35,000,000         $385,084,634
                                                  ===================  ===============  ================  ===================
Amount paid to sponsor from proceeds
   of offering:
     Selling commissions and discounts                    56,059,832        2,550,000         2,975,000           27,756,378
     Real estate commissions                                      --               --                --                   --
     Acquisition fees (Notes 5, 6 and 8)                  33,604,618        1,350,000         1,575,000           17,257,561
     Marketing support and due diligence
       expense reimbursement fees
       (includes amounts reallowed to
       unaffiliated entities)                              3,737,322          150,000           175,000            1,850,425
                                                  -------------------  ---------------  ----------------  -------------------
Total amount paid to sponsor                              93,401,772        4,050,000         4,725,000           46,864,364
                                                  ===================  ===============  ================  ===================
Dollar amount of cash generated from (used in)
   operations before deducting payments
   to sponsor:
     2000 (6 months) (Note 7)                            (46,945,156)       1,051,688         1,342,621           15,248,151
     1999 (Note 7)                                       311,630,414        2,567,164         2,921,071           13,348,795
     1998                                                 42,216,874        2,638,733         2,964,628            2,985,455
     1997                                                 18,514,122        2,611,191         1,471,805               29,358
     1996                                                  6,096,045        1,340,159            30,126                   --
     1995                                                    594,425           11,671                --                   --
     1994                                                         --               --                --                   --
     1993                                                         --               --                --                   --
Amount paid to sponsor from operations
   (administrative, accounting and
   management fees) (Note 6):
     2000 (6 months)                                         956,233           66,591            72,061              501,203
     1999                                                  4,369,200          117,146           124,031              458,634
     1998                                                  3,100,599          117,814           132,890              208,490
     1997                                                  1,437,908          116,077           110,049                6,889
     1996                                                    613,505          107,211             2,980                   --
     1995                                                     95,966            2,659                --                   --
     1994                                                         --               --                --                   --
     1993                                                         --               --                --                   --
Dollar amount of property sales and
   refinancing before deducting payments
   to sponsor:
     Cash (Note 3)                                        25,163,154        1,675,385           688,997                   --
     Notes                                                        --               --                --                   --
Amount paid to sponsors from property
   sales and refinancing:
     Real estate commissions                                      --               --                --                   --
     Incentive fees                                               --               --                --                   --
     Other                                                        --               --                --                   --
</TABLE>

Note 1:           Pursuant to a Registration Statement on Form S-11 under the
                  Securities Act of 1933, as amended, effective March 29, 1995,
                  CNL American Properties Fund, Inc. ("APF") registered for sale
                  $165,000,000 of shares of common stock (the "Initial
                  Offering"), including $15,000,000 available only to
                  stockholders participating in the company's reinvestment plan.
                  The Initial Offering of APF commenced April 19, 1995, and upon
                  completion of the Initial Offering on February 6, 1997, had
                  received subscription proceeds of $150,591,765 (7,529,588
                  shares), including $591,765 (29,588 shares) issued pursuant to
                  the reinvestment plan. Pursuant to a Registration Statement on
                  Form S-11 under the Securities Act of 1933, as amended,
                  effective January 31, 1997, APF registered for sale
                  $275,000,000 of shares of common stock (the "1997 Offering"),
                  including $25,000,000 available only to stockholders
                  participating in the company's reinvestment plan. The 1997
                  Offering of APF commenced following the completion of the
                  Initial Offering on February 6, 1997, and upon completion of
                  the 1997 Offering on March 2, 1998, had received subscription
                  proceeds of $251,872,648 (12,593,633 shares), including
                  $1,872,648 (93,632 shares) issued pursuant to the reinvestment
                  plan. Pursuant to a Registration Statement on Form S-11 under
                  the Securities Act of 1933, as amended, effective May 12,
                  1998, APF registered for sale $345,000,000 of shares of common
                  stock (the "1998 Offering"). The 1998 Offering of APF
                  commenced following the completion of the 1997 Offering on
                  March 2, 1998. As of January 31, 1999, APF had received
                  subscriptions totalling approximately $345,000,000 (17,250,000
                  shares), from the 1998 Offering, including $3,107,848 (155,393
                  shares) issued pursuant to the company's reinvestment plan.
                  The 1998 Offering became fully subscribed in December 1998 and
                  proceeds from the last subscriptions were received in January
                  1999. The amounts shown represent the combined results of the
                  Initial Offering, the 1997 Offering and the 1998 Offering as
                  of January 31, 1999, including shares issued pursuant to the
                  company's reinvestment plan.


                                      C-5
<PAGE>

TABLE II - COMPENSATION TO SPONSOR - CONTINUED




Note 2:           For negotiating secured equipment leases and supervising the
                  secured equipment lease program, APF was required to pay its
                  external advisor 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 (see Note 6).
                  During the years ended December 31, 1999, 1998, 1997 and 1996,
                  APF incurred $77,317, $54,998, $87,665 and $70,070,
                  respectively, in secured equipment lease servicing fees.

Note 3:           Excludes properties sold and substituted with replacement
                  properties, as permitted under the terms of the lease
                  agreements.

Note 4:           Pursuant to a Registration Statement on Form S-11 under the
                  Securities Act of 1933, as amended, effective July 9, 1997,
                  CNL Hospitality Properties, Inc. ("CHP") registered for sale
                  $165,000,000 of shares of common stock (the "Initial
                  Offering"), including $15,000,000 available only to
                  stockholders participating in the company's reinvestment plan.
                  The offering of shares of CHP commenced September 11, 1997,
                  and upon completion of the Initial Offering on June 17, 1999,
                  had received subscription proceeds of $150,072,637 (15,007,264
                  shares), including $72,637 (7,264 shares) issued pursuant to
                  the reinvestment plan. Pursuant to a Registration Statement on
                  Form S-11, as amended, effective June 17, 1999, CHP registered
                  for sale $275,000,000 of shares of common stock (the "1999
                  Offering"). The 1999 Offering of CHP commenced following the
                  completion of the Initial Offering on June 17, 1999. The
                  amounts shown represent the combined results of the Initial
                  Offering and the 1999 Offering, including subscription
                  proceeds issued pursuant to the reinvestment plan as of June
                  30, 2000. Pursuant to a Registration Statement on Form S-11
                  under the Securities Act of 1933, as amended, effective May
                  23, 2000, CHP registered for sale up to $450,000,000 of shares
                  of common stock (the "2000 Offering"). The 2000 Offering is
                  expected to commence immediately following the completion of
                  the 1999 Offering.

Note 5:           In addition to acquisition fees paid on gross proceeds from
                  the offerings, prior to becoming self advised on September 1,
                  1999, APF also incurred acquisition fees relating to proceeds
                  from its line of credit to the extent the proceeds were used
                  to acquire properties. Such fees were paid using proceeds from
                  the line of credit, and as of December 31, 1999, APF had
                  incurred $6,175,521 of such fees (see Note 6).

Note 6:           On September 1, 1999, APF issued 6,150,000 shares of common
                  stock (with an exchange value of $20 per share) to affiliates
                  of APF to acquire its external advisor and two companies which
                  make and service mortgage loans and securitize portions of
                  such loans. As a result of the acquisition, APF ceased payment
                  of acquisition fees, administrative, accounting, management
                  and secured equipment lease servicing fees. APF continues to
                  outsource several functions to affiliates such as investor
                  services, public relations, corporate communications,
                  knowledge and technology management, and tax and legal
                  compliance.

Note 7:           In September 1999, APF acquired two companies which make and
                  service mortgage loans and securitize portions of loans.
                  Effective with these acquisitions, APF classifies its
                  investments in mortgage loans, proceeds from sale of mortgage
                  loans, collections of mortgage loans, proceeds from
                  securitization transactions and purchases of other investments
                  as operating activities in its financial statements. Prior to
                  these acquisitions, these types of transactions were
                  classified as investing activities in its financial
                  statements.

Note 8:           During 1999, CHP with Five Arrows Realty Securities II L.L.C.
                  ("Five Arrows") formed a jointly owned real estate investment
                  trust, CNL Hotel Investors, Inc. ("Hotel Investors"), which
                  acquired seven hotel properties. In order to fund the
                  acquisition of the properties, Five Arrows invested
                  approximately $48 million and CHP invested approximately $38
                  million in Hotel Investors. Hotel Investors funded the
                  remaining amount of approximately $88 million with permanent
                  financing, collateralized by Hotel Investors' interests in the
                  properties. The advisor is entitled to receive acquisition
                  fees for services relating to identifying the properties,
                  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 gross proceeds of the offerings, loan
                  proceeds from permanent financing and the line of credit that
                  are used to acquire properties, but excluding amounts used to
                  finance secured equipment leases. In April 1999, CHP paid the
                  advisor approximately $1.9 million related to the permanent
                  financing for the properties held by Hotel Investors. These
                  acquisition fees were not paid using proceeds from the
                  offering and; therefore, were excluded from the table.


                                      C-6
<PAGE>
                                    TABLE III
                       Operating Results of Prior Programs
                       CNL AMERICAN PROPERTIES FUND, INC.

<TABLE>
<CAPTION>
                                                            1994                                                1997
                                                          (Note 1)          1995              1996            (Note 2)
                                                         ------------    ------------     -------------     -------------
<S>                                                          <C>           <C>              <C>             <C>
Gross revenue                                                $     0       $ 539,776        $4,363,456      $ 15,516,102
Equity in earnings of joint venture                                0               0                 0                 0
Gain (loss) on sale of assets (Notes 7, 15 and 18)                 0               0                 0                 0
Provision for losses on assets (Notes 12, 14 and 17)               0               0                 0                 0
Interest income                                                    0         119,355         1,843,228         3,941,831
Less:  Operating expenses                                          0        (186,145)         (908,924)       (2,066,962)
       Transaction costs                                           0               0                 0                 0
       Interest expense                                            0               0                 0                 0
       Depreciation and amortization                               0        (104,131)         (521,871)       (1,795,062)
       Advisor acquisition expense (Note 16)                       0               0                 0                 0
       Minority interest in income of consolidated
         joint ventures                                            0             (76)          (29,927)          (31,453)
                                                         ------------    ------------     -------------     -------------
Net income (loss) - GAAP basis                                     0         368,779         4,745,962        15,564,456
                                                         ============    ============     =============     =============
Taxable income
    -  from operations (Note 8)                                    0         379,935         4,894,262        15,727,311
                                                         ============    ============     =============     =============
    -  from gain (loss) on sale (Notes 7, 15 and 18)               0               0                 0           (41,115)
                                                         ============    ============     =============     =============

Cash generated from (used in) operations (Notes 4, 5
       and 19)                                                     0         498,459         5,482,540        17,076,214
Cash generated from sales (Notes 7, 15, 18 and 20)                 0               0                 0         6,289,236
Cash generated from refinancing                                    0               0                 0                 0
                                                         ------------    ------------     -------------     -------------
Cash generated from (used in) operations, sales and
       refinancing                                                 0         498,459         5,482,540        23,365,450
Less:  Cash distributions to investors (Note 9)
      -  from operating cash flow (Note 4)                         0        (498,459)       (5,439,404)      (16,854,297)
      -  from sale of properties                                   0               0                 0                 0
      -  from cash flow from prior period                          0               0                 0                 0
      -  from return of capital (Note 10)                          0        (136,827)                0                 0
                                                         ------------    ------------     -------------     -------------
Cash generated (deficiency) after cash distributions               0        (136,827)           43,136         6,511,153
Special items (not including sales of real estate and
    refinancing):
      Subscriptions received from stockholders                     0      38,454,158       100,792,991       222,482,560
      Sale of common stock to CNL Fund
       Advisors, Inc.                                        200,000               0                 0                 0
      Retirement of shares of common stock
       (Note 13)                                                   0               0                 0                 0
      Contributions from minority interest                         0         200,000            97,419                 0
      Distributions to holder of minority interest                 0               0           (39,121)          (34,020)
      Stock issuance costs                                       (19)     (3,680,704)       (8,486,188)      (19,542,862)
      Acquisition of land and buildings                            0     (18,835,969)      (36,104,148)     (143,542,667)
      Investment in direct financing leases                        0      (1,364,960)      (13,372,621)      (39,155,974)
      Proceeds from sales of equipment direct
        financing leases                                           0               0                 0           962,274
      Investment in joint venture                                  0               0                 0                 0
      Increase in restricted cash                                  0               0                 0                 0
      Purchase of other investments (Note 19)                      0               0                 0                 0
      Investment in mortgage notes receivable (Note 19)            0               0       (13,547,264)       (4,401,982)
      Collections on mortgage notes receivable (Note 19)           0               0           133,850           250,732
      Investment in equipment and other notes
        receivable                                                 0               0                 0       (12,521,401)
      Collections on equipment and other notes
        receivable                                                 0               0                 0                 0
      Investment in (redemption of) certificates of
        deposit                                                    0               0                 0        (2,000,000)
      Proceeds of borrowing on line of credit and
        note payables                                              0               0         3,666,896        19,721,804
      Payment on line of credit                                    0               0          (145,080)      (20,784,577)
      Reimbursement of organization, acquisition, and
        deferred offering and stock issuance costs paid
        on behalf of CNL American Properties Fund,
        Inc. by related parties                             (199,036)     (2,500,056)         (939,798)       (2,857,352)
      Increase in intangibles and other assets                     0        (628,142)       (1,103,896)                0
      Proceeds from borrowings on mortgage
        warehouse facility                                         0               0                 0                 0
      Payments on mortgage warehouse facility                      0               0                 0                 0
      Payments of loan costs                                       0               0                 0                 0
      Other                                                        0               0           (54,533)           49,001
                                                         ------------    ------------     -------------     -------------
Cash generated (deficiency) after cash distributions
    and special items                                            945      11,507,500        30,941,643         5,136,689
                                                         ============    ============     =============     =============
</TABLE>

                                      C-7
<PAGE>
<TABLE>
<CAPTION>
                                                                                                 6 months
                                                                1998              1999             2000
                                                              (Note 3)          (Note 3)         (Note 3)
                                                        ---------------   ---------------   --------------
<S>                                                         <C>              <C>              <C>
Gross revenue                                               $33,202,491      $ 62,165,451     $ 42,275,405
Equity in earnings of joint venture                              16,018            97,307           48,665
Gain (loss) on sale of assets (Notes 7, 15 and 18)                    0        (1,851,838)         198,682
Provision for losses on assets (Notes 12, 14 and 17)           (611,534)       (7,779,195)        (174,641)
Interest income                                               8,984,546        13,335,146       10,110,235
Less:  Operating expenses                                    (5,354,859)      (12,078,868)     (11,481,633)
       Transaction costs                                              0        (6,798,803)      (6,702,955)
       Interest expense                                               0       (10,205,197)     (18,288,098)
       Depreciation and amortization                         (4,054,098)      (10,346,143)      (7,742,567)
       Advisor acquisition expense (Note 16)                          0       (76,333,516)               0
       Minority interest in income of consolidated
         joint ventures                                         (30,156)          (41,678)        (208,663)
                                                         ---------------   ---------------   --------------
Net income (loss) - GAAP basis                               32,152,408       (49,837,334)       8,034,430
                                                         ===============   ===============   ==============
Taxable income
    -  from operations (Note 8)                              33,553,390        58,152,473        7,777,866
                                                         ===============   ===============   ==============
    -  from gain (loss) on sale (Notes 7, 15 and 18)           (149,948)         (789,861)        (482,056)
                                                         ===============   ===============   ==============

Cash generated from (used in) operations (Notes 4, 5
       and 19)                                               39,116,275       307,261,214      (47,901,389)
Cash generated from sales (Notes 7, 15, 18 and 20)            2,385,941         5,302,433        6,486,944
Cash generated from refinancing                                       0                 0                0
                                                         ---------------   ---------------   --------------
Cash generated from (used in) operations, sales and
       refinancing                                           41,502,216       312,563,647      (41,414,445)
Less:  Cash distributions to investors (Note 9)
      -  from operating cash flow (Note 4)                  (39,116,275)      (60,078,825)               0
      -  from sale of properties                                      0                 0                0
      -  from cash flow from prior period                      (265,053)                0      (33,164,804)
      -  from return of capital (Note 10)                       (67,821)                0                0
                                                         ---------------   ---------------   --------------
Cash generated (deficiency) after cash distributions          2,053,067       252,484,822      (74,579,249)
Special items (not including sales of real estate and
    refinancing):
      Subscriptions received from stockholders              385,523,966           210,736                0
      Sale of common stock to CNL Fund
       Advisors, Inc.                                                 0                 0                0
      Retirement of shares of common stock
       (Note 13)                                               (639,528)          (50,891)               0
      Contributions from minority interest                            0           740,621                0
      Distributions to holder of minority interest              (34,073)          (66,763)         (52,585)
      Stock issuance costs                                  (34,579,650)         (737,190)               0
      Acquisition of land and buildings                    (200,101,667)     (286,411,210)     (27,279,430)
      Investment in direct financing leases                 (47,115,435)      (63,663,720)     (23,301,254)
      Proceeds from sales of equipment direct
        financing leases                                              0         2,252,766          483,669
      Investment in joint venture                              (974,696)         (187,452)               0
      Increase in restricted cash                                     0                 0       (3,467,086)
      Purchase of other investments (Note 19)               (16,083,055)                0                0
      Investment in mortgage notes receivable (Note 19)      (2,886,648)       (4,041,427)               0
      Collections on mortgage notes receivable (Note 19)        291,990           393,468                0
      Investment in equipment and other notes
        receivable                                           (7,837,750)      (26,963,918)      (4,152,100)
      Collections on equipment and other notes
        receivable                                            1,263,633         3,500,599        1,712,462
      Investment in (redemption of) certificates of
        deposit                                                       0         2,000,000                0
      Proceeds of borrowing on line of credit and
        note payables                                         7,692,040       439,941,245      333,401,000
      Payment on line of credit                                  (8,039)      (61,580,289)    (278,000,000)
      Reimbursement of organization, acquisition, and
        deferred offering and stock issuance costs paid
        on behalf of CNL American Properties Fund,
        Inc. by related parties                              (4,574,925)       (1,492,310)      (1,422,056)
      Increase in intangibles and other assets               (6,281,069)       (1,862,036)      (1,776,564)
      Proceeds from borrowings on mortgage
        warehouse facility                                            0        27,101,067       71,481,448
      Payments on mortgage warehouse facility                         0      (352,808,966)        (549,093)
      Payments of loan costs                                          0        (5,947,397)      (3,209,908)
      Other                                                     (95,101)                0                0
                                                         ---------------   ---------------   --------------
Cash generated (deficiency) after cash distributions
    and special items                                        75,613,060       (77,188,245)     (10,710,746)
                                                         ===============   ===============   ==============
</TABLE>

                                      C-8
<PAGE>

<TABLE>
<CAPTION>
                                                     1994                                                    1997
                                                   (Note 1)             1995              1996             (Note 2)
                                                 --------------     -------------     --------------     -------------
<S>                                                          <C>              <C>                <C>               <C>
TAX AND DISTRIBUTION DATA PER
    $1,000 INVESTED (Note 6)
Federal income tax results:
Ordinary income (loss) (Notes 9 and 11)
    -  from operations (Note 8)                              0                20                 61                67
                                                 ==============     =============     ==============     =============
    -  from recapture                                        0                 0                  0                 0
                                                 ==============     =============     ==============     =============
Capital gain (loss) (Notes 7, 15 and 18)                     0                 0                  0                 0
                                                 ==============     =============     ==============     =============
Cash distributions to investors
    Source (on GAAP basis)
    -  from investment income                                0                19                 59                66
    -  from capital gain                                     0                 0                  0                 0
    -  from investment income from prior
         period                                              0                 0                  0                 0
   -  from return of capital (Note 10)                       0                14                  8                 6
                                                 --------------     -------------     --------------     -------------
Total distributions on GAAP basis (Note 11)                  0                33                 67                72
                                                 ==============     =============     ==============     =============
   Source (on cash basis)
    -  from sales                                            0                 0                  0                 0
    -  from refinancing                                      0                 0                  0                 0
    -  from operations (Note 4)                              0                26                 67                72
    -  from cash flow from prior period                      0                 0                  0                 0
    -  from return of capital (Note 10)                      0                 7                  0                 0
                                                 --------------     -------------     --------------     -------------
Total distributions on cash basis (Note 11)                  0                33                 67                72
                                                 ==============     =============     ==============     =============
Total cash distributions as a percentage of
    original $1,000 investment (Notes 6 and 21)           0.00%             5.34%              7.06%             7.45%
Total cumulative cash distributions per
    $1,000 investment from inception                         0                33                100               172
Amount (in percentage terms) remaining
    invested in program properties at the end
    of each year (period) presented (original
    total acquisition cost of properties
    retained, divided by original total
    acquisition cost of all properties in
    program)  (Notes 7, 15 and 18)                         N/A               100%               100%              100%
</TABLE>


                                      C-9
<PAGE>
<TABLE>
<CAPTION>

                                                                                              6 months
                                                         1998                 1999              2000
                                                       (Note 3)             (Note 3)          (Note 3)
                                                 ------------------    ---------------   ---------------
<S>                                                      <C>                  <C>              <C>
TAX AND DISTRIBUTION DATA PER
    $1,000 INVESTED (Note 6)
Federal income tax results:
Ordinary income (loss) (Notes 9 and 11)
    -  from operations (Note 8)                                 63                 74                 9
                                                 ==================    ===============   ===============
    -  from recapture                                            0                  0                 0
                                                 ==================    ===============   ===============
Capital gain (loss) (Notes 7, 15 and 18)                         0                 (1)               (1)
Cash distributions to investors                  ==================    ===============   ===============
    Source (on GAAP basis)
    -  from investment income                                   60                  0                 9
    -  from capital gain                                         0                  0                 0
    -  from investment income from prior
         period                                                  0                  0                 0
   -  from return of capital (Note 10)                          14                 76                29
                                                 ------------------    ---------------   ---------------
Total distributions on GAAP basis (Note 11)                     74                 76                38
                                                 ==================    ===============   ===============
   Source (on cash basis)
    -  from sales                                                0                  0                 0
    -  from refinancing                                          0                  0                 0
    -  from operations (Note 4)                                 73                 76                 0
    -  from cash flow from prior period                          1                  0                38
    -  from return of capital (Note 10)                          0                  0                 0
                                                 ------------------    ---------------   ---------------
Total distributions on cash basis (Note 11)                     74                 76                38
                                                 ==================    ===============   ===============
Total cash distributions as a percentage of
    original $1,000 investment (Notes 6 and 21)              7.625%             7.625%            7.625%
Total cumulative cash distributions per
    $1,000 investment from inception                           246                322               360
Amount (in percentage terms) remaining
    invested in program properties at the end
    of each year (period) presented (original
    total acquisition cost of properties
    retained, divided by original total
    acquisition cost of all properties in
    program)  (Notes 7, 15 and 18)                             100%               100%              100%
</TABLE>



Note 1:           Pursuant to a Registration Statement on Form S-11 under the
                  Securities Act of 1933, as amended, effective March 29, 1995,
                  CNL American Properties Fund, Inc. ("APF") registered for sale
                  $165,000,000 of shares of common stock (the "Initial
                  Offering"), including $15,000,000 available only to
                  stockholders participating in the company's reinvestment plan.
                  The Initial Offering of APF commenced April 19, 1995, and upon
                  completion of the Initial Offering on February 6, 1997, had
                  received subscription proceeds of $150,591,765 (7,529,588
                  shares), including $591,765 (29,588 shares) issued pursuant to
                  the reinvestment plan. Pursuant to a Registration Statement on
                  Form S-11 under the Securities Act of 1933, as amended,
                  effective January 31, 1997, APF registered for sale
                  $275,000,000 of shares of common stock (the "1997 Offering"),
                  including $25,000,000 available only to stockholders
                  participating in the company's reinvestment plan. The 1997
                  Offering of APF commenced following the completion of the
                  Initial Offering on February 6, 1997, and upon completion of
                  the 1997 Offering on March 2, 1998, had received subscription
                  proceeds of $251,872,648 (12,593,633 shares), including
                  $1,872,648 (93,632 shares) issued pursuant to the reinvestment
                  plan. Pursuant to a Registration Statement on Form S-11 under
                  the Securities Act of 1933, as amended, effective May 12,
                  1998, APF registered for sale $345,000,000 of shares of common
                  stock (the "1998 Offering"). The 1998 Offering of APF
                  commenced following the completion of the 1997 Offering on
                  March 2, 1998. As of January 31, 1999, APF had received
                  subscriptions totalling approximately $345,000,000 (17,250,000
                  shares), from the 1998 Offering, including $3,107,848 (155,393
                  shares) issued pursuant to the company's reinvestment plan.
                  The 1998 Offering became fully subscribed in December 1998 and
                  proceeds from the last subscriptions were received in January
                  1999. Activities through June 1, 1995, were devoted to
                  organization of APF and operations had not begun.

Note 2:           The amounts shown represent the combined results of the
                  Initial Offering and the 1997 Offering.

Note 3:           The amounts shown represent the combined results of the
                  Initial Offering, 1997 Offering and 1998 Offering.

Note 4:           Cash generated from operations from inception through
                  September 1999 included cash received from tenants, less cash
                  paid for expenses, plus interest received. In September 1999,
                  APF acquired two companies which make and service mortgage
                  loans and securitize portions of loans. Effective with these
                  acquisitions, APF classifies its investments in mortgage
                  loans, proceeds from sale of mortgage loans, collections of
                  mortgage loans, proceeds from securitization transactions and
                  purchases of other investments as operating activities in its
                  financial statements. Prior to these acquisitions, these types
                  of transactions were classified as investing activities in its
                  financial statements.

Note 5:           Cash generated from operations per this table agrees to cash
                  generated from operations per the statement of cash flows
                  included in the financial statements of APF.

Note 6:           Total cash distributions as a percentage of original $1,000
                  investment are calculated based on actual distributions
                  declared for the period.

Note 7:           In May 1997 and July 1997, APF sold four properties and one
                  property, respectively, to a tenant for $5,254,083 and
                  $1,035,153, respectively, which was equal to the carrying
                  value of the properties at the time of sale. In May and July
                  1998, APF sold two and one properties, respectively, to third
                  parties for $1,605,154 and $1,152,262, respectively (and
                  received net sales proceeds of approximately $1,233,700 and
                  $629,435, respectively, after deduction of construction costs
                  incurred but not paid by APF as of the date of the sale),
                  which approximated the carrying value of the properties at the
                  time of sale. As a result, no gain or loss was recognized for
                  financial reporting purposes.

Note 8:           Taxable income presented is before the dividends paid
                  deduction.

Note 9:           For the six months ended June 30, 2000 and the years ended
                  December 31, 1999, 1998, 1997, 1996 and 1995, 67%, 97%,
                  84.87%, 93.33%, 90.25% and 59.82%, respectively, of the
                  distributions received by stockholders were considered to be
                  ordinary income and 33%, 15%, 15.13%, 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 six months ended June 30, 2000 and the years ended
                  December 31, 1999, 1998, 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.


                                      C-10
<PAGE>
TABLE III - CNL AMERICAN PROPERTIES FUND, INC. (continued)


Note 10:          Cash distributions presented above as a return of capital on a
                  GAAP basis represent the amount of cash distributions in
                  excess of accumulated net income on a GAAP basis. Accumulated
                  net income (loss) includes deductions for depreciation and
                  amortization expense and income from certain non-cash items.
                  This amount is not required to be presented as a return of
                  capital except for purposes of this table, and APF has not
                  treated this amount as a return of capital for any other
                  purpose. During the year ended December 31, 1999, accumulated
                  net loss included a non-cash deduction for the advisor
                  acquisition expense of $76,333,516 (see Note 16).

Note 11:          Tax and distribution data and total distributions on GAAP
                  basis were computed based on the weighted average dollars
                  outstanding during each period presented.

Note 12:          During the year ended December 31, 1998, APF recorded
                  provisions for losses on land and buildings in the amount of
                  $611,534 for financial reporting purposes relating to two
                  Shoney's properties and two Boston Market properties. The
                  tenants of these properties experienced financial difficulties
                  and ceased payment of rents under the terms of their lease
                  agreements. The allowances represent the difference between
                  the carrying value of the properties at December 31, 1998 and
                  the estimated net realizable value for these properties.

Note 13:          In October 1998, the Board of Directors of APF elected to
                  implement APF's redemption plan. Under the redemption plan,
                  APF elected to redeem shares, subject to certain conditions
                  and limitations. During the year ended December 31, 1998,
                  69,514 shares were redeemed at $9.20 per share ($639,528) and
                  retired from shares outstanding of common stock. During 1999,
                  as a result of the stockholders approving a one-for-two
                  reverse stock split of common stock, the Company agreed to
                  redeem fractional shares (2,545 shares).

Note 14:          During the year ended December 31, 1999, APF recorded
                  provisions for losses on buildings in the amount of $7,779,495
                  for financial reporting purposes relating to several
                  properties. The tenants of these properties experienced
                  financial difficulties and ceased payment of rents under the
                  terms of their lease agreements. The allowances represent the
                  difference between the carrying value of the properties at
                  December 31, 1999 and the estimated net realizable value for
                  these properties.

Note 15:          During the year ended December 31, 1999, APF sold six
                  properties and received aggregate net sales proceeds of
                  $5,302,433, which resulted in a total aggregate loss of
                  $781,192 for financial reporting purposes. APF reinvested the
                  proceeds from the sale of properties in additional properties.
                  In addition, APF recorded a loss on securitization of
                  $1,070,646 for financial reporting purposes.

Note 16:          On September 1, 1999, APF issued 6,150,000 shares of common
                  stock to affiliates of APF to acquire its external advisor and
                  two companies which make and service mortgage loans and
                  securitize portions of loans. APF recorded an advisor
                  acquisition expense of $76,333,516 relating to the acquisition
                  of the external advisor, which represented the excess purchase
                  price over the net assets acquired.

Note 17:          During the six months ended June 30, 2000, APF recorded
                  provision for losses on buildings in the amount of $174,641
                  for financial reporting purposes relating to several
                  properties. The tenants of these properties experienced
                  financial difficulties and ceased payment of rents under the
                  terms of their lease agreements. The allowances represent the
                  difference between the carrying value of the properties at
                  June 30, 2000 and the estimated net realizable value for these
                  properties.

Note 18:          During the six months ended June 30, 2000, APF sold nine
                  properties for aggregate net sales proceeds of $9,262,269
                  (after deduction of construction costs incurred but not paid
                  by APF as of the date of the sale). As of June 30, 2000, APF
                  had collected $6,486,944 of these net sales proceeds and in
                  July 2000, collected the remaining $2,775,325 in net sales
                  proceeds.

Note 19:          In September 1999, APF acquired two companies which make and
                  service mortgage loans and securitize portions of loans.
                  Effective with these acquisitions, APF classifies its
                  investments in mortgage loans, proceeds from sale of mortgage
                  loans, collections of mortgage loans, proceeds from
                  securitization transactions and purchases of other investments
                  as operating activities in its financial statements. Prior to
                  these acquisitions, these types of transactions were
                  classified as investing activities in its financial
                  statements.

Note 20:          Cash generated from sales during the six months ended June 30,
                  2000 do not include net sales proceeds totaling $2,775,325
                  relating to the June 30, 2000 sales of the properties in
                  Nanuet, New York, Jefferson City, Missouri and Alton,
                  Illinois. The net sales proceeds were recorded as accounts
                  receivable for financial reporting purposes at June 30, 2000
                  due to receiving the net sales proceeds in July 2000.

Note 21:          Certain data for columns representing less than 12 months have
                  been annualized.


                                      C-11
<PAGE>
                                    TABLE III
                       Operating Results of Prior Programs
                           CNL INCOME FUND XVII, LTD.

<TABLE>
<CAPTION>
                                                           1995
                                                         (Note 1)            1996               1997               1998
                                                      --------------    --------------     -------------      --------------
<S>                                                        <C>            <C>               <C>                 <C>
Gross revenue                                              $      0       $ 1,195,263       $ 2,643,871         $ 2,816,845
Equity in earnings of unconsolidated joint                        0             4,834           100,918             140,595
   ventures
Loss on dissolution of consolidated joint
   venture  (Note 7)                                              0                 0                 0                   0
Provision for loss on land and buildings (Note 8)                 0                 0                 0                   0
Interest income                                              12,153           244,406            69,779              51,240
Less:  Operating expenses                                    (3,493)         (169,536)         (181,865)           (168,542)
       Transaction costs                                          0                 0                 0             (14,139)
       Interest expense                                           0                 0                 0                   0
       Depreciation and amortization                           (309)         (179,208)         (387,292)           (369,209)
       Minority interest in income of
         consolidated joint venture (Note 7)                      0                 0           (41,854)            (62,632)
                                                      --------------    --------------     -------------      --------------
Net income - GAAP basis                                       8,351         1,095,759         2,203,557           2,394,158
                                                      ==============    ==============     =============      ==============
Taxable income
    -  from operations                                       12,153         1,114,964         2,058,601           2,114,039
                                                      ==============    ==============     =============      ==============
    -  from gain (loss) on sale (Note 7)                          0                 0                 0                   0
                                                      ==============    ==============     =============      ==============
Cash generated from operations (Notes
    2 and 3)                                                  9,012         1,232,948         2,495,114           2,520,919
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                                               9,012         1,232,948         2,495,114           2,520,919
Less:  Cash distributions to investors (Note 4)
      -  from operating cash flow                            (1,199)         (703,681)       (2,177,584)         (2,400,000)
      -  from prior period                                        0                 0                 0                   0
                                                      --------------    --------------     -------------      --------------
Cash generated (deficiency) after cash
    distributions                                             7,813           529,267           317,530             120,919
Special items (not including sales and
    refinancing):
      Limited partners' capital contributions             5,696,921        24,303,079                 0                   0
      General partners' capital contributions                 1,000                 0                 0                   0
      Contributions from minority interest                        0           140,676           278,170                   0
      Distribution to holder of minority interest                 0                 0           (41,507)            (49,023)
      Distribution to holder of minority interest
        from dissolution of consolidated joint
        venture                                                   0                 0                 0                   0
      Syndication costs                                    (604,348)       (2,407,317)                0                   0
      Acquisition of land and buildings                    (332,928)      (19,735,346)       (1,740,491)                  0
      Investment in direct financing leases                       0        (1,784,925)       (1,130,497)                  0
      Investment in joint ventures                                0          (201,501)       (1,135,681)           (124,452)
      Reimbursement of organization, syndication
        and acquisition costs paid on behalf of
        CNL Income Fund XVII, Ltd. by related
        parties                                            (347,907)         (326,483)          (25,444)                  0
      Increase in other assets                             (221,282)                0                 0                   0
      Reimbursement from developer of
         construction costs                                       0                 0                 0             306,100
      Other                                                    (410)              410                 0                   0
                                                      --------------    --------------     -------------      --------------
Cash generated (deficiency) after cash
    distributions and special items                       4,198,859           517,860        (3,477,920)            253,544
                                                      ==============    ==============     =============      ==============
TAX AND DISTRIBUTION DATA PER
    $1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
    -  from operations                                           36                37                69                  70
                                                      ==============    ==============     =============      ==============
    -  from recapture                                             0                 0                 0                   0
                                                      ==============    ==============     =============      ==============
Capital gain (loss) (Note 7)                                      0                 0                 0                   0
                                                      ==============    ==============     =============      ==============
</TABLE>

                                      C-12
<PAGE>
<TABLE>
<CAPTION>
                                                                             6 months
                                                            1999               2000
                                                      -----------------    --------------
<S>                                                          <C>               <C>
Gross revenue                                                $ 2,403,040       $ 1,042,922
Equity in earnings of unconsolidated joint
   ventures                                                      182,132            90,427
Loss on dissolution of consolidated joint
   venture  (Note 7)                                             (82,914)                0
Provision for loss on land and buildings (Note 8)                      0          (353,622)
Interest income                                                   44,184            14,771
Less:  Operating expenses                                       (219,361)         (157,897)
       Transaction costs                                         (71,366)          (23,382)
       Interest expense                                                0                 0
       Depreciation and amortization                            (384,985)         (199,123)
       Minority interest in income of
         consolidated joint venture (Note 7)                     (31,461)                0
                                                        -----------------    --------------
Net income - GAAP basis                                        1,839,269           414,096
                                                        =================    ==============
Taxable income
    -  from operations                                         2,003,243           898,708
                                                        =================    ==============
    -  from gain (loss) on sale (Note 7)                         (23,150)                0
                                                        =================    ==============
Cash generated from operations (Notes
    2 and 3)                                                   2,450,018           985,097
Cash generated from sales (Note 7)                             2,094,231                 0
Cash generated from refinancing                                        0                 0
                                                        -----------------    --------------
Cash generated from operations, sales and
    refinancing                                                4,544,249           985,097
Less:  Cash distributions to investors (Note 4)
      -  from operating cash flow                             (2,400,000)         (985,097)
      -  from prior period                                             0          (214,903)
                                                        -----------------    --------------
Cash generated (deficiency) after cash
    distributions                                              2,144,249          (214,903)
Special items (not including sales and
    refinancing):
      Limited partners' capital contributions                          0                 0
      General partners' capital contributions                          0                 0
      Contributions from minority interest                             0                 0
      Distribution to holder of minority interest                (46,567)                0
      Distribution to holder of minority interest
        from dissolution of consolidated joint
        venture                                                 (417,696)                0
      Syndication costs                                                0                 0
      Acquisition of land and buildings                                0        (1,630,164)
      Investment in direct financing leases                            0                 0
      Investment in joint ventures                              (527,864)              (12)
      Reimbursement of organization, syndication
        and acquisition costs paid on behalf of
        CNL Income Fund XVII, Ltd. by related
        parties                                                        0                 0
      Increase in other assets                                         0                 0
      Reimbursement from developer of
         construction costs                                            0                 0
      Other                                                            0                 0
                                                        -----------------    --------------
Cash generated (deficiency) after cash
    distributions and special items                            1,152,122        (1,845,079)
                                                        =================    ==============
TAX AND DISTRIBUTION DATA PER
    $1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
    -  from operations                                                66                30
                                                        =================    ==============
    -  from recapture                                                  0                 0
                                                        =================    ==============
Capital gain (loss) (Note 7)                                          (1)                0
                                                        =================    ==============


</TABLE>
                                     C-13
<PAGE>
TABLE III - CNL INCOME FUND XVII, LTD. (continued)

<TABLE>
<CAPTION>
                                                    1995
                                                  (Note 1)             1996              1997               1998
                                                --------------     -------------     -------------      -------------
<S>                                                         <C>              <C>               <C>                <C>
Cash distributions to investors
    Source (on GAAP basis)
    -  from investment income                               4                23                73                 79
    -  from capital gain                                    0                 0                 0                  0
    -  from investment income from prior
       period                                               0                 0                 0                  1
    -  from return of capital                               0                 0                 0                  0
                                                --------------     -------------     -------------      -------------
Total distributions on GAAP basis (Note 4)                  4                23                73                 80
                                                ==============     =============     =============      =============
    Source (on cash basis)
    -  from sales                                           0                 0                 0                  0
    -  from prior period                                    0                 0                 0                  0
    -  from operations                                      4                23                73                 80
                                                --------------     -------------     -------------      -------------
Total distributions on cash basis (Note 4)                  4                23                73                 80
                                                ==============     =============     =============      =============
Total cash distributions as a percentage of
    original $1,000 investment (Notes 5 and 9)           5.00%             5.50%            7.625%              8.00%
Total cumulative cash distributions per
    $1,000 investment from inception                        4                27               100                180
Amount (in percentage terms) remaining
    invested in program properties at the end
    of each year (period) presented (original
    total acquisition cost of properties
    retained, divided by original total
    acquisition cost of all properties in
    program)  (Notes 6 and 7)                             N/A               100%              100%               100%

TABLE III - CNL INCOME FUND XVII, LTD. (continued)

<CAPTION>
                                                                           6 months
                                                        1999                 2000
                                                ------------------    ----------------
Cash distributions to investors
    Source (on GAAP basis)
    -  from investment income                                  61                  14
    -  from capital gain                                        0                   0
    -  from investment income from prior
       period                                                  19                   0
    -  from return of capital                                   0                  26
                                                ------------------    ----------------
Total distributions on GAAP basis (Note 4)                     80                  40
                                                ==================    ================
    Source (on cash basis)
    -  from sales                                               0                   0
    -  from prior period                                        0                   7
    -  from operations                                         80                  33
                                                ------------------    ----------------
Total distributions on cash basis (Note 4)                     80                  40
                                                ==================    ================
Total cash distributions as a percentage of
    original $1,000 investment (Notes 5 and 9)               8.00%               8.00%
Total cumulative cash distributions per
    $1,000 investment from inception                          260                 300
Amount (in percentage terms) remaining
    invested in program properties at the end
    of each year (period) presented (original
    total acquisition cost of properties
    retained, divided by original total
    acquisition cost of all properties in
    program)  (Notes 6 and 7)                                  94%                100%
</TABLE>



                                      C-14
<PAGE>


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. each registered for sale $30,000,000 units of
                  limited partnership interests ("Units"). The offering of Units
                  of CNL Income Fund XVII, Ltd. commenced September 2, 1995.
                  Pursuant to the registration statement, CNL XVIII could not
                  commence until the offering of Units of CNL Income Fund XVII,
                  Ltd. was terminated. CNL Income Fund XVII, Ltd. terminated its
                  offering of Units on September 19, 1996, at which time
                  subscriptions for the maximum offering proceeds of $30,000,000
                  had been received. Upon the termination of the offering of
                  Units of CNL Income Fund XVII, Ltd., CNL XVIII commenced its
                  offering of Units. Activities through November 3, 1995, were
                  devoted to organization of the partnership and operations had
                  not begun.

Note 2:           Cash generated from operations includes cash received from
                  tenants, plus distributions from joint ventures, less cash
                  paid for expenses, plus interest received.

Note 3:           Cash generated from operations per this table agrees to cash
                  generated from operations per the statement of cash flows
                  included in the financial statements of CNL XVII.

Note 4:           Distributions declared for the quarters ended December 31,
                  1995, 1996, 1997, 1998 and 1999 are reflected in the 1996,
                  1997, 1998, 1999 and 2000 columns, respectively, due to the
                  payment of such distributions in January 1996, 1997, 1998,
                  1999 and 2000, respectively. As a result of distributions
                  being presented on a cash basis, distributions declared and
                  unpaid as of December 31, 1995, 1996, 1997, 1998 and 1999, and
                  June 30, 2000, are not included in the 1995, 1996, 1997, 1998,
                  1999 and 2000 totals, respectively.

Note 5:           Total cash distributions as a percentage of original $1,000
                  investment are calculated based on actual distributions
                  declared for the period. (See Note 4 above)

Note 6:           During 1998, CNL XVII received approximately $306,100 in
                  reimbursements from the developer upon final reconciliation of
                  total construction costs relating to the properties in Aiken,
                  South Carolina and Weatherford, Texas, in accordance with the
                  related development agreements. During 1999, CNL XVII had
                  reinvested these amounts, plus additional funds, in a property
                  as tenants-in-common with an affiliate of the general partners
                  and in Ocean Shores Joint Venture, with an affiliate of CNL
                  XVII which has the same general partners.

Note 7:           During 1999, CNL/El Cajon Joint Venture, CNL XVII's
                  consolidated joint venture in which CNL XVII owned an 80%
                  interest, sold its property to the 20% joint venture partner
                  and dissolved the joint venture. CNL XVII did not recognize
                  any gain or loss from the sale of the property for financial
                  reporting purposes. As a result of the dissolution, CNL XVII
                  recognized a loss on dissolution of $82,914 for financial
                  reporting purposes. In January 2000, the Partnership
                  reinvested approximately $1,630,200 of the net sales proceeds
                  received from the 1999 sale of this property in a Baker's
                  Square property in Wilmette, Illinois.

Note 8:           During the six months ended June 2000, the Partnership
                  recorded a provision for loss on land and building in the
                  amount of $353,622 for financial reporting purposes relating
                  to the Boston Market property in Long Beach, California. The
                  tenant of this property filed for bankruptcy in October 1998
                  and ceased payment of rents under the terms of its lease
                  agreement. The allowance represents the difference between the
                  carrying value of the property at June 30, 2000 and the
                  estimated net realizable value for this property.

Note 9:           Certain data for columns representing less than 12 months have
                  been annualized.


                                      C-15
<PAGE>
                                    TABLE III
                       Operating Results of Prior Programs
                           CNL INCOME FUND XVIII, LTD.

<TABLE>
<CAPTION>
                                                          1995
                                                        (Note 1)            1996               1997               1998
                                                      --------------    --------------     -------------      --------------
<S>                                                        <C>              <C>             <C>                 <C>
Gross revenue                                              $      0         $   1,373       $ 1,291,416         $ 2,956,349
Equity in earnings of joint venture                               0                 0                 0                   0
Gain on sale of properties (Note 7)                               0                 0                 0                   0
Provision for loss on land (Note 5)                               0                 0                 0            (197,466)
Lease termination refund to tenant (Note 8)                       0                 0                 0                   0
Interest income                                                   0            30,241           161,826             141,408
Less:  Operating expenses                                         0            (3,992)         (156,403)           (207,974)
       Transaction costs                                          0                 0                 0             (15,522)
       Interest expense                                           0                 0                 0                   0
       Depreciation and amortization                              0              (712)         (142,079)           (374,473)
                                                      --------------    --------------     -------------      --------------
Net income - GAAP basis                                           0            26,910         1,154,760           2,302,322
                                                      ==============    ==============     =============      ==============
Taxable income
    -  from operations                                            0            30,223         1,318,750           2,324,746
                                                      ==============    ==============     =============      ==============
    -  from gain on sale (Note 7)                                 0                 0                 0                   0
                                                      ==============    ==============     =============      ==============
Cash generated from operations (Notes
    2 and 3)                                                      0            27,146         1,361,756           2,831,738
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            27,146         1,361,756           2,831,738
Less:  Cash distributions to investors (Note 4)
      -  from operating cash flow                                 0            (2,138)         (855,957)         (2,468,400)
      -  from prior period                                        0                 0                 0                   0
                                                      --------------    --------------     -------------      --------------
Cash generated (deficiency) after cash
    distributions                                                 0            25,008           505,799             363,338
Special items (not including sales and
refinancing):
    Limited partners' capital contributions                       0         8,498,815        25,723,944             854,241
    General partners' capital contributions                   1,000                 0                 0                   0
    Contributions from minority interest                          0                 0                 0                   0
    Syndication costs                                             0          (845,657)       (2,450,214)           (161,142)
    Acquisition of land and buildings                             0        (1,533,446)      (18,581,999)         (3,134,046)
    Investment in direct financing leases                         0                 0        (5,962,087)            (12,945)
    Investment in joint venture                                   0                 0                 0            (166,025)
    Decrease (increase) in restricted cash                        0                 0                 0                   0
    Reimbursement of organization, syndication
      and acquisition costs paid on behalf of CNL
      Income Fund XVIII, Ltd. by related parties                  0          (497,420)         (396,548)            (37,135)
    Increase in other assets                                      0          (276,848)                0                   0
    Other                                                       (20)             (107)          (66,893)            (10,000)
                                                      --------------    --------------     -------------      --------------
Cash generated (deficiency) after cash
    distributions and special items                             980         5,370,345        (1,227,998)         (2,303,714)
                                                      ==============    ==============     =============      ==============
TAX AND DISTRIBUTION DATA PER
    $1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
    -  from operations                                            0                 6                57                  66
                                                      ==============    ==============     =============      ==============
    -  from recapture                                             0                 0                 0                   0
                                                      ==============    ==============     =============      ==============
Capital gain (loss) (Note 7)                                      0                 0                 0                   0
                                                      ==============    ==============     =============      ==============
</TABLE>

                                      C-16
<PAGE>
<TABLE>
<CAPTION>
                                                                         6 months
                                                           1999             2000
                                                      ---------------   -------------
<S>                                                        <C>               <C>
Gross revenue                                            $ 3,075,379     $ 1,366,920
Equity in earnings of joint venture                           61,656          32,475
Gain on sale of properties (Note 7)                           46,300               0
Provision for loss on land (Note 5)                                0               0
Lease termination refund to tenant (Note 8)                        0         (84,873)
Interest income                                               55,336          33,111
Less:  Operating expenses                                   (256,060)       (130,979)
       Transaction costs                                     (74,734)        (22,874)
       Interest expense                                            0               0
       Depreciation and amortization                        (392,521)       (193,400)
                                                      ---------------   -------------
Net income - GAAP basis                                    2,515,356       1,000,380
                                                      ===============   =============
Taxable income
    -  from operations                                     2,341,350       1,066,303
                                                      ===============   =============
    -  from gain on sale (Note 7)                             80,170               0
                                                      ===============   =============
Cash generated from operations (Notes
    2 and 3)                                               2,797,040       1,270,560
Cash generated from sales (Note 7)                           688,997               0
Cash generated from refinancing                                    0               0
                                                      ---------------   -------------
Cash generated from operations, sales and
    refinancing                                            3,486,037       1,270,560
Less:  Cash distributions to investors (Note 4)
      -  from operating cash flow                         (2,797,040)     (1,270,560)
      -  from prior period                                    (2,958)       (129,440)
                                                      ---------------   -------------
Cash generated (deficiency) after cash
    distributions                                            686,039        (129,440)
Special items (not including sales and
refinancing):                                                      0               0
    Limited partners' capital contributions                        0               0
    General partners' capital contributions                        0               0
    Contributions from minority interest                           0               0
    Syndication costs                                        (25,792)              0
    Acquisition of land and buildings                              0               0
    Investment in direct financing leases                   (526,138)     (1,001,592)
    Investment in joint venture                             (688,997)        688,997
    Decrease (increase) in restricted cash
    Reimbursement of organization, syndication
      and acquisition costs paid on behalf of CNL
      Income Fund XVIII, Ltd. by related parties              (2,495)              0
    Increase in other assets                                       0               0
    Other                                                       (117)              0
                                                      ---------------   -------------
Cash generated (deficiency) after cash
    distributions and special items                         (557,500)       (442,035)
                                                      ===============   =============
TAX AND DISTRIBUTION DATA PER
    $1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
    -  from operations                                            66              30
                                                      ===============   =============
    -  from recapture                                              0               0
                                                      ===============   =============
Capital gain (loss) (Note 7)                                       2               0
                                                      ===============   =============

</TABLE>
                                      C-17

<PAGE>
TABLE III - CNL INCOME FUND XVIII, LTD. (continued)

<TABLE>
<CAPTION>
                                                    1995
                                                  (Note 1)             1996              1997               1998
                                                --------------     -------------     --------------     -------------
<S>                                                         <C>               <C>               <C>               <C>
Cash distributions to investors
    Source (on GAAP basis)
    -  from investment income                               0                 0                 38                65
    -  from capital gain                                    0                 0                  0                 0
    -  from return of capital                               0                 0                  0                 0
    -  from investment income from prior
       period                                               0                 0                  0                 6
                                                --------------     -------------     --------------     -------------
Total distributions on GAAP basis (Note 4)                  0                 0                 38                71
                                                ==============     =============     ==============     =============
   Source (on cash basis)
    -  from sales (Note 7)                                  0                 0                  0                 0
    -  from prior period                                    0                 0                  0                 0
    -  from operations                                      0                 0                 38                71
                                                --------------     -------------     --------------     -------------
Total distributions on cash basis (Note 4)                  0                 0                 38                71
                                                ==============     =============     ==============     =============
Total cash distributions as a percentage of
    original $1,000 investment from
    inception (Note 9)                                   0.00%             5.00%              5.75%             7.63%
Total cumulative cash distributions per
    $1,000 investment (Note 6)                              0                 0                 38               109
Amount (in percentage terms) remaining
    invested in program properties at the end
    of each year (period) presented (original
    total acquisition cost of properties
    retained, divided by original total
    acquisition cost of all properties in
    program) (Note 7)                                     N/A               100%               100%              100%

<CAPTION>
                                                                      6 months
                                                     1999               2000
                                                ----------------    -------------

Cash distributions to investors
    Source (on GAAP basis)
    -  from investment income                                71               28
    -  from capital gain                                      1                0
    -  from return of capital                                 0                9
    -  from investment income from prior
       period                                                 8                3
                                                ----------------    -------------
Total distributions on GAAP basis (Note 4)                   80               40
                                                ================    =============
   Source (on cash basis)
    -  from sales (Note 7)                                    0                0
    -  from prior period                                      0                4
    -  from operations                                       80               36
                                                ----------------    -------------
Total distributions on cash basis (Note 4)                   80               40
                                                ================    =============
Total cash distributions as a percentage of
    original $1,000 investment from
    inception (Note 9)                                     8.00%            8.00%
Total cumulative cash distributions per
    $1,000 investment (Note 6)                              189              229
Amount (in percentage terms) remaining
    invested in program properties at the end
    of each year (period) presented (original
    total acquisition cost of properties
    retained, divided by original total
    acquisition cost of all properties in
    program) (Note 7)                                        98%             100%

</TABLE>
                                      C-18
<PAGE>

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 XVIII, Ltd ("CNL XVIII") and CNL Income Fund
                  XVII, Ltd. each registered for sale $30,000,000 units of
                  limited partnership interest ("Units"). The offering of Units
                  of CNL Income Fund XVII, Ltd. commenced September 2, 1995.
                  Pursuant to the registration statement, CNL XVIII could not
                  commence until the offering of Units of CNL Income Fund XVII,
                  Ltd. was terminated. CNL Income Fund XVII, Ltd. terminated its
                  offering of Units on September 19, 1996, at which time the
                  maximum offering proceeds of $30,000,000 had been received.
                  Upon the termination of the offering of Units of CNL Income
                  Fund XVII, Ltd., CNL XVIII commenced its offering of Units.
                  Activities through October 11, 1996, were devoted to
                  organization of the partnership and operations had not begun.

Note 2:           Cash generated from operations includes cash received from
                  tenants, less cash paid for expenses, plus interest received.

Note 3:           Cash generated from operations per this table agrees to cash
                  generated from operations per the statement of cash flows
                  included in the financial statements of CNL XVIII.

Note 4:           Distributions declared for the quarters ended December 1996,
                  1997, 1998 and 1999 are reflected in the 1997, 1998, 1999 and
                  2000 columns, respectively, due to the payment of such
                  distributions in January 1997, 1998, 1999 and 2000,
                  respectively. As a result of distributions being presented on
                  a cash basis, distributions declared and unpaid as of December
                  31, 1996, 1997, 1998 and 1999, and June 30, 2000, are not
                  included in the 1996, 1997, 1998, 1999 and 2000 totals,
                  respectively.

Note 5:           During the year ended December 31, 1998, CNL XVIII established
                  an allowance for loss on land of $197,466 for financial
                  reporting purposes relating to the property in Minnetonka,
                  Minnesota. The tenant of this Boston Market property declared
                  bankruptcy and rejected the lease relating to this property.
                  The loss represents the difference between the Property's
                  carrying value at December 31, 1998 and the estimated net
                  realizable value.

Note 6:           Total cash distributions as a percentage of original $1,000
                  investment are calculated based on actual distributions
                  declared for the period. (See Note 4 above)

Note 7:           In December 1999, CNL XVIII sold one of its properties and
                  received net sales proceeds of $688,997, resulting in a gain
                  of $46,300 for financial reporting purposes. In June 2000, the
                  Partnership used the net sales proceeds from this sale to
                  enter into a joint venture arrangement with CNL Income Fund
                  VII, Ltd., CNL Income Fund XV, Ltd. and CNL Income Fund XVI,
                  Ltd., each a Florida limited partnership and an affiliate of
                  the general partners, to hold one restaurant property.

Note 8:           The lease termination refund to tenant of $84,873 during the
                  six months ended June 30, 2000 is due to lease termination
                  negotiations during the six months ended June 30, 2000 related
                  to the 1999 sale of the Partnership's Property in Atlanta,
                  Georgia. The Partnership does not anticipate incurring any
                  additional costs related to the sale of this property.

Note 9:           Certain data for columns representing less than 12 months have
                  been annualized.


                                      C-19
<PAGE>
                                    TABLE III
                       Operating Results of Prior Programs
                        CNL HOSPITALITY PROPERTIES, INC.

<TABLE>
<CAPTION>
                                                                                                                   6 months
                                                    1996           1997                             1999             2000
                                                  (Note 1)       (Note 1)           1998          (Note 2)         (Note 3)
                                                 ------------   ------------     ------------   -------------    -------------
<S>                                                  <C>            <C>          <C>             <C>              <C>
Gross revenue                                        $     0        $     0      $ 1,316,599     $ 4,230,995      $ 6,456,916
Dividend income (Note 10)                                  0              0                0       2,753,506        1,853,735
Interest and other income                                  0         46,071          638,862       3,693,004        3,961,188
Less:  Operating expenses                                  0        (22,386)        (257,646)       (802,755)      (1,140,802)
       Interest expense                                    0              0         (350,322)       (248,094)         (16,222)
       Depreciation and amortization                       0           (833)        (388,554)     (1,267,868)      (2,000,144)
       Equity in loss of unconsolidated
         subsidiary after deduction of
         preferred stock dividends (Note 10)               0              0                0        (778,466)        (260,437)
       Minority interest                                   0              0                0         (64,334)        (266,210)
                                                 ------------   ------------     ------------   -------------    -------------
Net income - GAAP basis                                    0         22,852          958,939       7,515,988        8,588,024
                                                 ============   ============     ============   =============    =============
Taxable income
    -  from operations (Note 6)                            0         46,071          886,556       7,488,184        5,730,974
                                                 ============   ============     ============   =============    =============
    -  from gain (loss) on sale                            0              0                0               0                0
                                                 ============   ============     ============   =============    =============
Cash generated from operations (Notes
    3 and 4)                                               0         22,469        2,776,965      12,890,161       14,746,948
Less:  Cash distributions to investors (Note 7)
      -  from operating cash flow                          0        (22,469)      (1,168,145)    (10,765,881)     (11,936,334)
      -  from sale of properties                           0              0                0               0                0
      -  from cash flow from prior period                  0              0                0               0                0
      -  from return of capital (Note 8)                   0         (7,307)               0               0                0
                                                 ------------   ------------     ------------   -------------    -------------
Cash generated (deficiency) after cash
    distributions                                          0         (7,307)       1,608,820       2,124,280        2,810,614
Special items (not including sales of real
    estate and refinancing):
      Subscriptions received from
       stockholders                                        0     11,325,402       31,693,678     245,938,907       96,126,550
      Sale of common stock to CNL
       Hospitality Corp. (formerly CNL               200,000              0                0               0                0
       Hospitality Advisors, Inc.)
      Contribution from minority interest                  0              0                0       7,150,000                0
      Distributions to holders of minority
       interest                                            0              0                0               0         (264,022)
      Stock issuance costs                          (197,916)     (1,979,371)     (3,948,669)    (26,472,318)     (12,414,132)
      Acquisition of land, buildings and
       equipment                                           0              0      (28,752,549)    (85,089,887)     (78,421,993)
      Investment in unconsolidated subsidiary              0              0                0     (39,879,638)               0
      Investment in certificate of deposit                 0              0       (5,000,000)              0                0
      Increase in restricted cash                          0              0          (82,407)       (193,223)        (445,355)
      Proceeds of borrowing on line of credit              0              0        9,600,000               0                0
      Payment on line of credit                            0              0                0      (9,600,000)              0
      Payment of loan costs                                0              0          (91,262)        (47,334)               0
      Increase in intangibles and other assets             0       (463,470)        (676,026)     (5,068,727)      (2,844,259)
      Retirement of shares of common stock                 0              0                0        (118,542)        (578,455)
      Other                                                0         (7,500)           7,500               0          (15,002)
                                                 ------------   ------------     ------------   -------------    -------------
Cash generated (deficiency) after cash
    distributions and special items                    2,084      8,867,754        4,359,085      88,743,518        3,953,946
                                                 ============   ============     ============   =============    =============
TAX AND DISTRIBUTION DATA PER
    $1,000 INVESTED (Note 5)
Federal income tax results:
Ordinary income (loss) (Note 9)
    -  from operations (Note 6)                            0              7               37              47               22
                                                 ============   ============     ============   =============    =============
    -  from recapture                                      0              0                0               0                0
                                                 ============   ============     ============   =============    =============
Capital gain (loss) (Note 7)                               0              0                0               0                0
                                                 ============   ============     ============   =============    =============
</TABLE>

                                      C-20
<PAGE>
TABLE III - CNL HOSPITALITY PROPERTIES, INC. (continued)

<TABLE>
<CAPTION>
                                                                                                              6 months
                                                 1996            1997                            1999           2000
                                               (Note 1)        (Note 1)          1998          (Note 2)       (Note 2)
                                              ------------    -----------     -----------    -------------   -----------
<S>                                                     <C>            <C>            <C>              <C>           <C>
Cash distributions to investors
    Source (on GAAP basis)
    -  from investment income                           0              3              40               47            22
    -  from capital gain                                0              0               0                0             0
    -  from investment income from
       prior period                                     0              0               0                0             0
    -  from return of capital (Note 8)                  0              1               9               21            13
                                              ------------    -----------     -----------    -------------   -----------
Total distributions on GAAP basis
   (Note 9)                                             0              4              49               68            35
                                              ============    ===========     ===========    =============   ===========
   Source (on cash basis)
    -  from sales                                       0              0               0                0             0
    -  from refinancing                                 0              0               0                0             0
    -  from operations                                  0              3              49               68            35
    -  from cash flow from prior period                 0              0               0                0             0
    -  from return of capital (Note 8)                  0              1               0                0             0
                                              ------------    -----------     -----------    -------------   -----------
Total distributions on cash basis (Note 9)              0              4              49               68            35
                                              ============    ===========     ===========    =============   ===========
Total cash distributions as a percentage
    of original $1,000 investment (Notes
    5 and 11)                                         N/A           3.00%           4.67%            7.19%         7.38%
Total cumulative cash distributions per
    $1,000 investment from inception                  N/A              4              53              121           213
Amount (in percentage terms) remaining
    invested in program properties at the
    end of each year (period) presented
    (original total acquisition cost of
    properties retained, divided by original
    total acquisition cost of all properties          N/A            N/A             100%             100%          100%
    in program)
</TABLE>

Note 1:           Pursuant to a Registration Statement on Form S-11 under the
                  Securities Act of 1933, as amended, effective July 9, 1997,
                  CNL Hospitality Properties, Inc. ("CHP") registered for sale
                  $165,000,000 of shares of common stock (the "Initial
                  Offering"), including $15,000,000 available only to
                  stockholders participating in the company's reinvestment plan.
                  The Initial Offering of CHP commenced September 11, 1997, and
                  upon completion of the Initial Offering on June 17, 1999, had
                  received subscription proceeds of $150,072,637 (15,007,264
                  shares), including $72,637 (7,264 shares) issued pursuant to
                  the reinvestment plan. Pursuant to a Registration Statement on
                  Form S-11 under the Securities Act of 1933, as amended,
                  effective June 17, 1999, CHP registered for sale $275,000,000
                  of shares of common stock (the "1999 Offering"). The 1999
                  Offering of CHP commenced following the completion of the
                  Initial Offering on June 17, 1999. As of June 30, 2000, CHP
                  had received subscription proceeds totalling $235,011,997 from
                  the 1999 Offering, including $965,145 issued pursuant to the
                  company's reinvestment plan. Activities through October 15,
                  1997, were devoted to organization of CHP and operations had
                  not begun. Pursuant to a Registration Statement on Form S-11
                  under the Securities Act of 1933, as amended, effective May
                  23, 2000, CHP registered for sale up to $450,000,000 of shares
                  of common stock (the "2000 Offering"). The 2000 Offering is
                  expected to commence immediately following the completion of
                  the 1999 Offering.

Note 2:           The amounts shown represent the combined results of the
                  Initial Offering and the 1999 Offering.

Note 3:           Cash generated from operations includes cash received from
                  tenants and dividend, interest and other income, less cash
                  paid for operating expenses.

Note 4:           Cash generated from operations per this table agrees to cash
                  generated from operations per the statement of cash flows
                  included in the consolidated financial statements of CHP.

Note 5:           Total cash distributions as a percentage of original $1,000
                  investment are calculated based on actual distributions
                  declared for the period.

Note 6:           Taxable income presented is before the dividends paid
                  deduction.

Note 7:           For the six months ended June 30, 2000 and the years ended
                  December 31, 1999, 1998 and 1997, approximately 51%, 75%, 76%
                  and 100%, respectively, of the distributions received by
                  stockholders were considered to be ordinary income and
                  approximately 49%, 25%, 24% and 0%, respectively, were
                  considered a return of capital for federal income tax
                  purposes. No amounts distributed to stockholders for the six
                  months ended June 30, 2000 and the years ended December 31,
                  1999, 1998 and 1997 are required to be or have been treated by
                  the company as a return of capital for purposes of calculating
                  the stockholders' return on their invested capital.

                                      C-21
<PAGE>
TABLE III - CNL HOSPITALITY PROPERTIES, INC. (continued)


Note 8:           Cash distributions presented above as a return of capital on a
                  GAAP basis represent the amount of cash distributions in
                  excess of accumulated net income on a GAAP basis. Accumulated
                  net income includes deductions for depreciation and
                  amortization expense and income from certain non-cash items.
                  In addition, cash distributions presented as a return of
                  capital on a cash basis represents the amount of cash
                  distributions in excess of cash generated from operating cash
                  flow and excess cash flows from prior periods. These amounts
                  have not been treated as a return of capital for purposes of
                  calculating the amount of stockholders' invested capital.

Note 9:           Tax and distribution data and total distributions on GAAP
                  basis were computed based on the weighted average shares
                  outstanding during each period presented.

Note 10:          In February 1999, the company executed a series of agreements
                  with Five Arrows Realty Securities II, L.L.C. to jointly own a
                  real estate investment trust, CNL Hotel Investors, Inc., for
                  the purpose of acquiring seven hotels. During the six months
                  ended June 30, 2000 and the year ended December 31, 1999, the
                  company recorded $1,853,735 and $2,753,506, respectively, in
                  dividend income and $260,437 and $778,466, respectively, in an
                  equity in loss after deduction of preferred stock dividends,
                  resulting in net earnings of $1,593,298 and $1,975,040,
                  respectively, attributable to this investment.

Note 11:          Certain data for columns representing less than 12 months have
                  been annualized.


                                      C-22
<PAGE>
                                     TABLE V
                        SALES OR DISPOSALS OF PROPERTIES

<TABLE>
<CAPTION>
                                                                              Selling Price, Net of
                                                                        Closing Costs and GAAP Adjustments
                                                          ---------------------------------------------------------------
                                                                                       Purchase
                                                                           Mortgage      money      Adjustments
                                                                           balance     mortgage    resulting from
                                  Date        Date of   Cash received net  at time    taken back   application of
        Property                Acquired        Sale    of closing costs   of sale     by program       GAAP           Total
============================== ============ =========== ================= =========   ===========   ============    ============
<S>                               <C>           <C>            <C>           <C>        <C>              <C>       <C>
CNL Income Fund, Ltd.:
   Burger King -
     San Dimas, CA (14)         02/05/87     06/12/92     $1,169,021          0            0              0         $1,169,021
   Wendy's -
     Fairfield, CA (14)         07/01/87     10/03/94      1,018,490          0            0              0          1,018,490
   Wendy's -
     Casa Grande, AZ            12/10/86     08/19/97        795,700          0            0              0            795,700
   Wendy's -
     North Miami, FL (9)        02/18/86     08/21/97        473,713          0            0              0            473,713
   Popeye's -
     Kissimmee, FL (14)         12/31/86     04/30/98        661,300          0            0              0            661,300
   Golden Corral -
     Kent Island, MD (21)       11/20/86     10/15/99        870,457          0            0              0            870,457

CNL Income Fund II, Ltd.:
   Golden Corral -
     Salisbury, NC              05/29/87     07/21/93        746,800          0            0              0            746,800
   Pizza Hut -
     Graham, TX                 08/24/87     07/28/94        261,628          0            0              0            261,628
   Golden Corral -
     Medina, OH (11)            11/18/87     11/30/94        825,000          0            0              0            825,000
   Denny's -
     Show Low, AZ (8)           05/22/87     01/31/97        620,800          0            0              0            620,800
   KFC -
     Eagan, MN                  06/01/87     06/02/97        623,882          0       42,000              0            665,882
   KFC -
     Jacksonville, FL           09/01/87     09/09/97        639,363          0            0              0            639,363
   Wendy's - Farmington
     Hills, MI (12)             05/18/87     10/09/97        833,031          0            0              0            833,031
   Wendy's - Farmington
      Hills, MI (13) (14)       05/18/87     10/09/97      1,085,259          0            0              0          1,085,259
   Denny's -
     Plant City, FL             11/23/87     10/24/97        910,061          0            0              0            910,061
   Pizza Hut -
     Mathis, TX                 12/17/87     12/04/97        297,938          0            0              0            297,938
   KFC -
     Avon Park, FL (14)         09/02/87     12/10/97        501,975          0            0              0            501,975
   Golden Corral -
     Columbia, MO               11/17/87     03/23/99        678,888          0            0              0            678,888
   Little House -
     Littleton, CO              10/07/87     11/05/99        150,000          0            0              0            150,000
   KFC -
     Jacksonville, FL (14)      09/01/87     06/15/00        601,400          0            0              0            601,400

CNL Income Fund III, Ltd.:
   Wendy's -
     Chicago, IL (14)           06/02/88     01/10/97        496,418          0            0              0            496,418
   Perkins -
     Bradenton, FL              06/30/88     03/14/97      1,310,001          0            0              0          1,310,001

<CAPTION>
                                              Cost of Properties
                                            Including Closing and
                                                  Soft Costs
                               -----------------------------------------
                                                                             Excess
                                                    Total                 (deficiency)
                                               acquisition cost,          of property
                                                   capital               operating cash
                                   Original     improvements             receipts over
                                   mortgage     closing and                   cash
        Property                  financing     soft costs (1)   Total     expenditures
==============================   ============== ============= ============ =============
<S>                                   <C>          <C>            <C>          <C>
CNL Income Fund, Ltd.:
   Burger King -
     San Dimas, CA (14)               0         $955,000       $955,000     $214,021
   Wendy's -
     Fairfield, CA (14)               0          861,500        861,500      156,990
   Wendy's -
     Casa Grande, AZ                  0          667,255        667,255      128,445
   Wendy's -
     North Miami, FL (9)              0          385,000        385,000       88,713
   Popeye's -
     Kissimmee, FL (14)               0          475,360        475,360      185,940
   Golden Corral -
     Kent Island, MD (21)             0          726,600        726,600      143,857

CNL Income Fund II, Ltd.:
   Golden Corral -
     Salisbury, NC                    0          642,800        642,800      104,000
   Pizza Hut -
     Graham, TX                       0          205,500        205,500       56,128
   Golden Corral -
     Medina, OH (11)                  0          743,000        743,000       82,000
   Denny's -
     Show Low, AZ (8)                 0          484,185        484,185      136,615
   KFC -
     Eagan, MN                        0          601,100        601,100       64,782
   KFC -
     Jacksonville, FL                 0          405,000        405,000      234,363
   Wendy's - Farmington
     Hills, MI  (12)                  0          679,000        679,000      154,031
   Wendy's - Farmington
     Hills, MI  (13) (14)             0          887,000        887,000      198,259
   Denny's -
     Plant City, FL                   0          820,717        820,717       89,344
   Pizza Hut -
     Mathis, TX                       0          202,100        202,100       95,838
   KFC -
     Avon Park, FL (14)               0          345,000        345,000      156,975
   Golden Corral -
     Columbia, MO                     0          511,200        511,200      167,688
   Little House -
     Littleton, CO                    0          330,456        330,456     (180,456)
   KFC -
     Jacksonville, FL (14)            0          441,000        441,000      160,400

CNL Income Fund III, Ltd.:
   Wendy's -
     Chicago, IL (14)                 0          591,362        591,362      (94,944)
   Perkins -
     Bradenton, FL                    0        1,080,500      1,080,500      229,501
</TABLE>

                                      C-23
<PAGE>
                                     TABLE V
                        SALES OR DISPOSALS OF PROPERTIES

<TABLE>
<CAPTION>
                                                                              Selling Price, Net of
                                                                        Closing Costs and GAAP Adjustments
                                                          ---------------------------------------------------------------
                                                                                       Purchase
                                                                           Mortgage      money      Adjustments
                                                                           balance     mortgage    resulting from
                                  Date        Date of   Cash received net  at time    taken back   application of
        Property                Acquired        Sale    of closing costs   of sale     by program       GAAP           Total
============================== ============ =========== ================= =========   ===========   ============    ============
<S>                               <C>           <C>            <C>           <C>        <C>              <C>       <C>
CNL Income Fund III, Ltd.
(Continued):
   Pizza Hut -
     Kissimmee, FL               02/23/88      04/08/97      673,159           0             0            0           673,159
   Burger King -
     Roswell, GA                 06/08/88      06/20/97      257,981           0       685,000            0           942,981
   Wendy's -
     Mason City, IA              02/29/88      10/24/97      217,040           0             0            0           217,040
   Taco Bell -
     Fernandina Beach, FL (14)   04/09/88      01/15/98      721,655           0             0            0           721,655
   Denny's -
     Daytona Beach, FL (14)      07/12/88      01/23/98    1,008,976           0             0            0         1,008,976
   Wendy's -
     Punta Gorda, FL             02/03/88      02/20/98      665,973           0             0            0           665,973
   Po Folks -
     Hagerstown, MD              06/21/88      06/10/98      788,884           0             0            0           788,884
   Denny's-
     Hazard, KY                  02/01/88      12/23/98      432,625           0             0            0           432,625
   Perkins -
     Flagstaff, AZ               09/30/88      04/30/99    1,091,193           0             0            0         1,091,193
   Denny's -
     Hagerstown, MD              08/14/88      06/09/99      700,977           0             0            0           700,977

CNL Income Fund IV, Ltd.:
   Taco Bell -
     York, PA                    03/22/89      04/27/94      712,000           0             0            0           712,000
   Burger King -
     Hastings, MI                08/12/88      12/15/95      518,650           0             0            0           518,650
   Wendy's -
     Tampa, FL                   12/30/88      09/20/96    1,049,550           0             0            0         1,049,550
   Checkers -
     Douglasville, GA            12/08/94      11/07/97      380,695           0             0            0           380,695
   Taco Bell -
     Fort Myers, FL (14)         12/22/88      03/02/98      794,690           0             0            0           794,690
   Denny's -
     Union Township, OH (14)     11/01/88      03/31/98      674,135           0             0            0           674,135
   Perkins -
     Leesburg, FL                01/11/89      07/09/98      529,288           0             0            0           529,288
   Taco Bell -
     Naples, FL                  12/22/88      09/03/98      533,127           0             0            0           533,127
   Wendy's
     Detroit, MI (14)            10/21/88      06/29/00    1,056,475           0             0            0         1,056,475

CNL Income Fund V, Ltd.:
   Perkins -
     Myrtle Beach, SC (2)        02/28/90      08/25/95            0           0      1,040,000           0         1,040,000
   Ponderosa -
     St. Cloud, FL (14) (24)     06/01/89      10/24/96       73,713           0      1,057,299           0         1,131,012
   Franklin National Bank -
     Franklin, TN                06/26/89      01/07/97      960,741           0             0            0           960,741

<CAPTION>
                                              Cost of Properties
                                            Including Closing and
                                                  Soft Costs
                               -----------------------------------------
                                                                             Excess
                                                    Total                 (deficiency)
                                               acquisition cost,          of property
                                                   capital               operating cash
                                   Original     improvements             receipts over
                                   mortgage     closing and                   cash
        Property                  financing     soft costs (1)   Total     expenditures
==============================   ============== ============= ============ =============
<S>                                   <C>          <C>            <C>          <C>
CNL Income Fund III, Ltd.
(Continued):
   Pizza Hut -
     Kissimmee, FL                   0          474,755      474,755       198,404
   Burger King -
     Roswell, GA                     0          775,226      775,226       167,755
   Wendy's -
     Mason City, IA                  0          190,252      190,252        26,788
   Taco Bell -
     Fernandina Beach, FL (14)       0          559,570      559,570       162,085
   Denny's -
     Daytona Beach, FL (14)          0          918,777      918,777        90,799
   Wendy's -
     Punta Gorda, FL                 0          684,342      684,342       (18,369)
   Po Folks -
     Hagerstown, MD                  0        1,188,315    1,188,315      (399,431)
   Denny's-
     Hazard, KY                      0          647,622      647,622      (214,997)
   Perkins -
     Flagstaff, AZ                   0          993,508      993,508        97,685
   Denny's -
     Hagerstown, MD                  0          861,454      861,454      (160,477)

CNL Income Fund IV, Ltd.:
   Taco Bell -
     York, PA                        0          616,501      616,501        95,499
   Burger King -
     Hastings, MI                    0          419,936      419,936        98,714
   Wendy's -
     Tampa, FL                       0          828,350      828,350       221,200
   Checkers -
     Douglasville, GA                0          363,768      363,768        16,927
   Taco Bell -
     Fort Myers, FL (14)             0          597,998      597,998       196,692
   Denny's -
     Union Township, OH (14)         0          872,850      872,850      (198,715)
   Perkins -
     Leesburg, FL                    0          737,260      737,260      (207,972)
   Taco Bell -
     Naples, FL                      0          410,546      410,546       122,581
   Wendy's
     Detroit, MI (14)                0          614,500      614,500       441,975

CNL Income Fund V, Ltd.:
   Perkins -
     Myrtle Beach, SC (2)            0          986,418      986,418        53,582
   Ponderosa -
     St. Cloud, FL (14) (24)         0          996,769      996,769       134,243
   Franklin National Bank -
     Franklin, TN                    0        1,138,164    1,138,164      (177,423)
</TABLE>

                                      C-24
<PAGE>
                                     TABLE V
                        SALES OR DISPOSALS OF PROPERTIES

<TABLE>
<CAPTION>
                                                                              Selling Price, Net of
                                                                        Closing Costs and GAAP Adjustments
                                                          ---------------------------------------------------------------
                                                                                       Purchase
                                                                           Mortgage      money      Adjustments
                                                                           balance     mortgage    resulting from
                                  Date        Date of   Cash received net  at time    taken back   application of
        Property                Acquired        Sale    of closing costs   of sale     by program       GAAP           Total
============================== ============ =========== ================= =========   ===========   ============    ============
<S>                               <C>           <C>            <C>           <C>        <C>              <C>       <C>
CNL Income Fund V, Ltd.
(Continued):
   Shoney's -
     Smyrna, TN                  03/22/89     05/13/97        636,788         0           0             0              636,788
   KFC -
     Salem, NH                   05/31/89     09/22/97      1,272,137         0           0             0            1,272,137
   Perkins -
     Port St. Lucie, FL          11/14/89     09/23/97      1,216,750         0           0             0            1,216,750
   Hardee's -
     Richmond, IN                02/17/89     11/07/97        397,785         0           0             0              397,785
   Wendy's -
     Tampa, FL (14)              02/16/89     12/29/97        805,175         0           0             0              805,175
   Denny's -
     Port Orange, FL (14)        07/10/89     01/23/98      1,283,096         0           0             0            1,283,096
   Shoney's
     Tyler, TX                   03/20/89     02/17/98        844,229         0           0             0              894,229
   Wendy's -
     Ithaca, NY                  12/07/89     03/29/99        471,248         0           0             0              471,248
   Wendy's -
     Endicott, NY                12/07/89     03/29/99        642,511         0           0             0              642,511
   Burger King -
     Halls, TN (20)              01/05/90     06/03/99        433,366         0           0             0              433,366
   Hardee's -
     Belding, MI                 03/08/89     03/03/00        124,346         0           0             0              124,346

CNL Income Fund VI, Ltd.:
   Hardee's -
     Batesville, AR              11/02/89     05/24/94        791,211         0           0             0              791,211
   Hardee's -
     Heber Springs, AR           02/13/90     05/24/94        638,270         0           0             0              638,270
   Hardee's -
     Little Canada, MN           11/28/89     06/29/95        899,503         0           0             0              899,503
   Jack in the Box -
     Dallas, TX                  06/28/94     12/09/96        982,980         0           0             0              982,980
   Denny's -
     Show Low, AZ (8)            05/22/87     01/31/97        349,200         0           0             0              349,200
   KFC -
     Whitehall Township, MI      02/26/90     07/09/97        629,888         0           0             0              629,888
   Perkins -
     Naples, FL                  12/26/89     07/09/97      1,487,725         0           0             0            1,487,725
   Burger King -
     Plattsmouth, NE             01/19/90     07/18/97        699,400         0           0             0              699,400
   Shoney's -
     Venice, FL                  08/03/89     09/17/97      1,206,696         0           0             0            1,206,696
   Jack in the Box -
     Yuma, AZ (10)               07/14/94     10/31/97        510,653         0           0             0              510,653
   Denny's
     Deland, FL                  03/22/90     01/23/98      1,236,971         0           0             0            1,236,971
   Wendy's -
     Liverpool, NY               12/08/89     02/09/98        145,221         0           0             0              145,221

<CAPTION>
                                              Cost of Properties
                                            Including Closing and
                                                  Soft Costs
                               -----------------------------------------
                                                                             Excess
                                                    Total                 (deficiency)
                                               acquisition cost,          of property
                                                   capital               operating cash
                                   Original     improvements             receipts over
                                   mortgage     closing and                   cash
        Property                  financing     soft costs (1)   Total     expenditures
==============================   ============== ============= ============ =============
<S>                                   <C>          <C>            <C>          <C>
CNL Income Fund V, Ltd.
(Continued):
   Shoney's -
     Smyrna, TN                         0           554,200      554,200        82,588
   KFC -
     Salem, NH                          0         1,079,310    1,079,310       192,827
   Perkins -
     Port St. Lucie, FL                 0         1,203,207    1,203,207        13,543
   Hardee's -
     Richmond, IN                       0           695,464      695,464      (297,679)
   Wendy's -
     Tampa, FL (14)                     0           657,800      657,800       147,375
   Denny's -
     Port Orange, FL (14)               0         1,021,000    1,021,000       262,096
   Shoney's
     Tyler, TX                          0           770,300      770,300        73,929
   Wendy's -
     Ithaca, NY                         0           471,297      471,297           (49)
   Wendy's -
     Endicott, NY                       0           471,255      471,255       171,256
   Burger King -
     Halls, TN (20)                     0           329,231      329,231       104,135
   Hardee's -
     Belding, MI                        0           630,432      630,432      (506,086)

CNL Income Fund VI, Ltd.:
   Hardee's -
     Batesville, AR                     0           605,500      605,500       185,711
   Hardee's -
     Heber Springs, AR                  0           532,893      532,893       105,377
   Hardee's -
     Little Canada, MN                  0           821,692      821,692        77,811
   Jack in the Box -
     Dallas, TX                         0           964,437      964,437        18,543
   Denny's -
     Show Low, AZ (8)                   0           272,354      272,354        76,846
   KFC -
     Whitehall Township, MI             0           725,604      725,604       (95,716)
   Perkins -
     Naples, FL                         0         1,083,869    1,083,869       403,856
   Burger King -
     Plattsmouth, NE                    0           561,000      561,000       138,400
   Shoney's -
     Venice, FL                         0         1,032,435    1,032,435       174,261
   Jack in the Box -
     Yuma, AZ (10)                      0           448,082      448,082        62,571
   Denny's
     Deland, FL                         0         1,000,000    1,000,000       236,971
   Wendy's -
     Liverpool, NY                      0           341,440      341,440      (196,219)
</TABLE>

                                      C-25
<PAGE>
                                     TABLE V
                        SALES OR DISPOSALS OF PROPERTIES

<TABLE>
<CAPTION>
                                                                              Selling Price, Net of
                                                                        Closing Costs and GAAP Adjustments
                                                          ---------------------------------------------------------------
                                                                                       Purchase
                                                                           Mortgage      money      Adjustments
                                                                           balance     mortgage    resulting from
                                  Date        Date of   Cash received net  at time    taken back   application of
        Property                Acquired        Sale    of closing costs   of sale     by program       GAAP           Total
============================== ============ =========== ================= =========   ===========   ============    ============
<S>                               <C>           <C>            <C>           <C>        <C>              <C>       <C>
CNL Income Fund VI, Ltd.
(Continued):
   Perkin's -
     Melbourne, FL                02/03/90     02/12/98         552,910        0               0          0              552,910
   Hardee's -
     Bellevue, NE                 05/03/90     06/05/98         900,000        0               0          0              900,000
   Burger King -
     Greeneville, TN              01/05/90     06/03/99       1,059,373        0               0          0            1,059,373
   Burger King -
     Broadway, TN                 01/05/90     06/03/99       1,059,200        0               0          0            1,059,200
   Burger King -
     Sevierville, TN              01/05/90     06/03/99       1,168,298        0               0          0            1,168,298
   Burger King -
     Walker Springs, TN           01/10/90     06/03/99       1,031,274        0               0          0            1,031,274

CNL Income Fund VII, Ltd.:
   Taco Bell -
     Kearns, UT                   06/14/90     05/19/92         700,000        0               0          0              700,000
   Hardee's -
     St. Paul, MN                 08/09/90     05/24/94         869,036        0               0          0              869,036
   Perkins -
     Florence, SC (3)             08/28/90     08/25/95               0        0       1,160,000          0            1,160,000
   Church's Fried Chicken -
     Jacksonville, FL (14)(25)    04/30/90     12/01/95               0        0         240,000          0              240,000
   Shoney's -
     Colorado Springs, CO         07/03/90     07/24/96       1,044,909        0               0          0            1,044,909
   Hardee's -
     Hartland, MI                 07/10/90     10/23/96         617,035        0               0          0              617,035
   Hardee's -
     Columbus, IN                 09/04/90     05/30/97         223,590        0               0          0              223,590
   KFC -
     Dunnellon, FL                08/02/90     10/07/97         757,800        0               0          0              757,800
   Jack in the Box -
     Yuma, AZ (10)                07/14/94     10/31/97         471,372        0               0          0              471,372
   Burger King -
     Maryville, TN                05/04/90     06/03/99       1,059,954        0               0          0            1,059,954
   Burger King -
     Halls, TN (20)               01/05/90     06/03/99         451,054        0               0          0              451,054
   Shoney's
     Pueblo, CO                   08/21/90     06/20/00       1,005,000        0               0          0            1,005,000

CNL Income Fund VIII, Ltd.:
   Denny's -
     Ocoee, FL                    03/16/91     07/31/95       1,184,865        0               0          0            1,184,865
   Church's Fried Chicken -
     Jacksonville, FL (4) (14)    09/28/90     12/01/95               0        0         240,000          0              240,000
   Church's Fried Chicken -
     Jacksonville, FL (5) (14)    09/28/90     12/01/95               0        0         220,000          0              220,000
   Ponderosa -
     Orlando, FL (6) (14)         12/17/90     10/24/96               0        0       1,353,775          0            1,353,775

<CAPTION>
                                              Cost of Properties
                                            Including Closing and
                                                  Soft Costs
                               -----------------------------------------
                                                                             Excess
                                                    Total                 (deficiency)
                                               acquisition cost,          of property
                                                   capital               operating cash
                                   Original     improvements             receipts over
                                   mortgage     closing and                   cash
        Property                  financing     soft costs (1)   Total     expenditures
==============================   ============== ============= ============ =============
<S>                                   <C>          <C>            <C>          <C>
CNL Income Fund VI, Ltd.
(Continued):
   Perkin's -
     Melbourne, FL                      0           692,850       692,850     (139,940)
   Hardee's -
     Bellevue, NE                       0           899,512       899,512          488
   Burger King -
     Greeneville, TN                    0           890,240       890,240      169,133
   Burger King -
     Broadway, TN                       0           890,036       890,036      169,164
   Burger King -
     Sevierville, TN                    0           890,696       890,696      277,602
   Burger King -
     Walker Springs, TN                 0           864,777       864,777      166,497

CNL Income Fund VII, Ltd.:
   Taco Bell -
     Kearns, UT                         0           560,202       560,202      139,798
   Hardee's -
     St. Paul, MN                       0           742,333       742,333      126,703
   Perkins -
     Florence, SC (3)                   0         1,084,905     1,084,905       75,095
   Church's Fried Chicken -
     Jacksonville, FL (14)(25)          0           233,728       233,728        6,272
   Shoney's -
     Colorado Springs, CO               0           893,739       893,739      151,170
   Hardee's -
     Hartland, MI                       0           841,642       841,642     (224,607)
   Hardee's -
     Columbus, IN                       0           219,676       219,676        3,914
   KFC -
     Dunnellon, FL                      0           546,333       546,333      211,467
   Jack in the Box -
     Yuma, AZ (10)                      0           413,614       413,614       57,758
   Burger King -
     Maryville, TN                      0           890,668       890,668      169,286
   Burger King -
     Halls, TN (20)                     0           342,669       342,669      108,385
   Shoney's
     Pueblo, CO                         0           961,582       961,582       43,418

CNL Income Fund VIII, Ltd.:
   Denny's -
     Ocoee, FL                          0           949,199       949,199      235,666
   Church's Fried Chicken -
     Jacksonville, FL (4) (14)          0           238,153       238,153        1,847
   Church's Fried Chicken -
     Jacksonville, FL (5) (14)          0           215,845       215,845        4,155
   Ponderosa -
     Orlando, FL (6) (14)               0         1,179,210     1,179,210      174,565
</TABLE>

                                      C-26
<PAGE>
                                     TABLE V
                        SALES OR DISPOSALS OF PROPERTIES

<TABLE>
<CAPTION>
                                                                              Selling Price, Net of
                                                                        Closing Costs and GAAP Adjustments
                                                          ---------------------------------------------------------------
                                                                                       Purchase
                                                                           Mortgage      money      Adjustments
                                                                           balance     mortgage    resulting from
                                  Date        Date of   Cash received net  at time    taken back   application of
        Property                Acquired        Sale    of closing costs   of sale     by program       GAAP           Total
============================== ============ =========== ================= =========   ===========   ============    ============
<S>                               <C>           <C>            <C>           <C>        <C>              <C>       <C>
CNL Income Fund IX, Ltd.:
   Burger King -
     Woodmere, OH (15)          05/31/91     12/12/96        918,445          0             0            0             918,445
   Burger King -
     Alpharetta, GA             09/20/91     06/30/97      1,053,571          0             0            0           1,053,571
   Shoney's -
     Corpus Christi, TX         10/28/91     02/12/99      1,350,000          0             0            0           1,350,000
   Perkins -
     Rochester, NY              12/20/91     03/03/99      1,050,000          0             0            0           1,050,000
   Perkins -
     Williamsville, NY          12/20/91     05/15/00        693,350          0             0            0             693,350

CNL Income Fund X, Ltd.:
   Shoney's -
     Denver, CO                 03/04/92      08/11/95     1,050,186          0             0            0           1,050,186
   Jack in the Box -
     Freemont, CA               03/26/92      09/23/97     1,366,550          0             0            0           1,366,550
   Jack in the Box -
     Sacramento, CA             12/19/91      01/20/98     1,234,175          0             0            0           1,234,175
   Pizza Hut -
     Billings, MT               04/16/92      10/07/98       359,990          0             0            0             359,990
   Perkins -
     Amherst, NY                02/26/92      03/03/99     1,150,000          0             0            0           1,150,000
   Shoney's -
     Fort Myers Beach, FL       09/08/95      08/26/99       931,725          0             0            0             931,725

CNL Income Fund XI, Ltd.:
   Burger King -
     Philadelphia, PA           09/29/92      11/07/96     1,044,750          0             0            0           1,044,750
   Burger King -
     Columbus, OH (19)          06/29/92      09/30/98       795,264          0             0            0             795,264
   Burger King -
     Nashua, NH                 06/29/92      10/07/98     1,630,296          0             0            0           1,630,296

CNL Income Fund XII, Ltd.:
   Golden Corral -
     Houston, TX                12/28/92      04/10/96     1,640,000          0             0            0           1,640,000
   Long John Silver's -
     Monroe, NC                 06/30/93      12/31/98       483,550          0             0            0             483,550
   Long John Silver's -
     Morganton, NC (23)         07/02/93      05/17/99       467,300          0        55,000            0             522,300
   Denny's -
     Cleveland, TN              12/23/92      03/03/00       797,227          0             0            0             797,227

CNL Income Fund XIII, Ltd.:
   Checkers -
     Houston, TX                03/31/94      04/24/95       286,411          0             0            0             286,411
   Checkers -
     Richmond, VA               03/31/94      11/21/96       550,000          0             0            0             550,000

<CAPTION>
                                              Cost of Properties
                                            Including Closing and
                                                  Soft Costs
                               -----------------------------------------
                                                                             Excess
                                                    Total                 (deficiency)
                                               acquisition cost,          of property
                                                   capital               operating cash
                                   Original     improvements             receipts over
                                   mortgage     closing and                   cash
        Property                  financing     soft costs (1)   Total     expenditures
==============================   ============== ============= ============ =============
<S>                                   <C>          <C>            <C>          <C>
CNL Income Fund IX, Ltd.:
   Burger King -
     Woodmere, OH (15)                  0           918,445      918,445            0
   Burger King -
     Alpharetta, GA                     0           713,866      713,866      339,705
   Shoney's -
     Corpus Christi, TX                 0         1,224,020    1,224,020      125,980
   Perkins -
     Rochester, NY                      0         1,064,815    1,064,815      (14,815)
   Perkins -
     Williamsville, NY                  0           981,482      981,482     (288,132)

CNL Income Fund X, Ltd.:
   Shoney's -
     Denver, CO                         0           987,679      987,679       62,507
   Jack in the Box -
     Freemont, CA                       0         1,102,766    1,102,766      263,784
   Jack in the Box -
     Sacramento, CA                     0           969,423      969,423      264,752
   Pizza Hut -
     Billings, MT                       0           302,000      302,000       57,990
   Perkins -
     Amherst, NY                        0         1,141,444    1,141,444        8,556
   Shoney's -
     Fort Myers Beach, FL               0           931,725      931,725            0

CNL Income Fund XI, Ltd.:
   Burger King -
     Philadelphia, PA                   0           818,850      818,850      225,900
   Burger King -
     Columbus, OH (19)                  0           795,264      795,264            0
   Burger King -
     Nashua, NH                         0         1,217,015    1,217,015      413,281

CNL Income Fund XII, Ltd.:
   Golden Corral -
     Houston, TX                        0         1,636,643    1,636,643        3,357
   Long John Silver's -
     Monroe, NC                         0           239,788      239,788      243,762
   Long John Silver's -
     Morganton, NC (23)                 0           304,002      304,002      218,298
   Denny's -
     Cleveland, TN                      0           622,863      622,863      174,364

CNL Income Fund XIII, Ltd.:
   Checkers -
     Houston, TX                        0           286,411      286,411            0
   Checkers -
     Richmond, VA                       0           413,288      413,288      136,712
</TABLE>

                                      C-27
<PAGE>
                                     TABLE V
                        SALES OR DISPOSALS OF PROPERTIES

<TABLE>
<CAPTION>
                                                                              Selling Price, Net of
                                                                        Closing Costs and GAAP Adjustments
                                                          ---------------------------------------------------------------
                                                                                       Purchase
                                                                           Mortgage      money      Adjustments
                                                                           balance     mortgage    resulting from
                                  Date        Date of   Cash received net  at time    taken back   application of
        Property                Acquired        Sale    of closing costs   of sale     by program       GAAP           Total
============================== ============ =========== ================= =========   ===========   ============    ============
<S>                               <C>           <C>            <C>           <C>        <C>              <C>       <C>
CNL Income Fund XIII, Ltd.
(Continued):
   Denny's -
     Orlando, FL                      09/01/93     10/24/97       932,849       0          0             0              932,849
   Jack in the Box -
     Houston, TX                      07/27/93     07/16/99     1,063,318       0          0             0            1,063,318

CNL Income Fund XIV, Ltd.:
   Checkers -
     Knoxville, TN                    03/31/94     03/01/95       339,031       0          0             0              339,031
   Checkers -
     Dallas, TX                       03/31/94     03/01/95       356,981       0          0             0              356,981
   TGI Friday's -
     Woodridge, NJ (7)                01/01/95     09/27/96     1,753,533       0          0             0            1,753,533
   Wendy's -
     Woodridge, NJ (7)                11/28/94     09/27/96       747,058       0          0             0              747,058
   Hardee's -
     Madison, AL                      12/14/93     01/08/98       700,950       0          0             0              700,950
   Checkers -
     Richmond, VA (#548)              03/31/94     01/29/98       512,462       0          0             0              512,462
   Checkers -
     Riviera Beach, FL                03/31/94     04/14/98       360,000       0          0             0              360,000
   Checkers -
     Richmond, VA (#486)              03/31/94     07/27/98       397,985       0          0             0              397,985
   Long John Silver's -
     Stockbridge, GA                  03/31/94     05/25/99       696,300       0          0             0              696,300
   Long John Silver's -
     Shelby, NC                       06/22/94     11/12/99       494,178       0          0             0              494,178
   Checker's -
     Kansas City, MO                  03/31/94     12/10/99       268,450       0          0             0              268,450
   Checker's -
     Houston, TX                      03/31/94     12/15/99       385,673       0          0             0              385,673

CNL Income Fund XV, Ltd.:
   Checkers -
     Knoxville, TN                    05/27/94     03/01/95       263,221       0          0             0              263,221
   Checkers -
     Leavenworth, KS                  06/22/94     03/01/95       259,600       0          0             0              259,600
   Checkers -
     Knoxville, TN                    07/08/94     03/01/95       288,885       0          0             0              288,885
   TGI Friday's -
     Woodridge, NJ (7)                01/01/95     09/27/96     1,753,533       0          0             0            1,753,533
   Wendy's -
     Woodridge, NJ (7)                11/28/94     09/27/96       747,058       0          0             0              747,058
   Long John Silver's -
     Gastonia, NC                     07/15/94     11/12/99       631,304       0          0             0              631,304
   Long John Silver's
     Lexington, NC                    10/22/94     01/12/00       562,130       0          0             0              562,130

<CAPTION>
                                              Cost of Properties
                                            Including Closing and
                                                  Soft Costs
                               -----------------------------------------
                                                                             Excess
                                                    Total                 (deficiency)
                                               acquisition cost,          of property
                                                   capital               operating cash
                                   Original     improvements             receipts over
                                   mortgage     closing and                   cash
        Property                  financing     soft costs (1)   Total     expenditures
==============================   ============== ============= ============ =============
<S>                                   <C>          <C>            <C>          <C>
CNL Income Fund XIII, Ltd.
(Continued):
   Denny's -
     Orlando, FL                      0             934,120      934,120      (1,271)
   Jack in the Box -
     Houston, TX                      0             861,321      861,321     201,997

CNL Income Fund XIV, Ltd.:
   Checkers -
     Knoxville, TN                    0             339,031      339,031           0
   Checkers -
     Dallas, TX                       0             356,981      356,981           0
   TGI Friday's -
     Woodridge, NJ (7)                0           1,510,245    1,510,245     243,288
   Wendy's -
     Woodridge, NJ (7)                0             672,746      672,746      74,312
   Hardee's -
     Madison, AL                      0             658,977      658,977      41,973
   Checkers -
     Richmond, VA (#548)              0             382,435      382,435     130,027
   Checkers -
     Riviera Beach, FL                0             276,409      276,409      83,591
   Checkers -
     Richmond, VA (#486)              0             352,034      352,034      45,951
   Long John Silver's -
     Stockbridge, GA                  0             738,340      738,340     (42,040)
   Long John Silver's -
     Shelby, NC                       0             608,611      608,611    (114,433)
   Checker's -
     Kansas City, MO                  0             209,329      209,329      59,121
   Checker's -
     Houston, TX                      0             311,823      311,823      73,850

CNL Income Fund XV, Ltd.:
   Checkers -
     Knoxville, TN                    0             263,221      263,221           0
   Checkers -
     Leavenworth, KS                  0             259,600      259,600           0
   Checkers -
     Knoxville, TN                    0             288,885      288,885           0
   TGI Friday's -
     Woodridge, NJ (7)                0           1,510,245    1,510,245     243,288
   Wendy's -
     Woodridge, NJ (7)                0             672,746      672,746      74,312
   Long John Silver's -
     Gastonia, NC                     0             776,248      776,248    (144,944)
   Long John Silver's
     Lexington, NC                    0             646,203      646,203     (84,073)
</TABLE>

                                      C-28
<PAGE>
                                     TABLE V
                        SALES OR DISPOSALS OF PROPERTIES

<TABLE>
<CAPTION>
                                                                              Selling Price, Net of
                                                                        Closing Costs and GAAP Adjustments
                                                          ---------------------------------------------------------------
                                                                                       Purchase
                                                                           Mortgage      money      Adjustments
                                                                           balance     mortgage    resulting from
                                  Date        Date of   Cash received net  at time    taken back   application of
        Property                Acquired        Sale    of closing costs   of sale     by program       GAAP           Total
============================== ============ =========== ================= =========   ===========   ============    ============
<S>                               <C>           <C>            <C>           <C>        <C>              <C>       <C>
CNL Income Fund XVI, Ltd.:
   Long John Silver's -
     Appleton, WI                06/24/95     04/24/96        775,000         0            0             0            775,000
   Checker's -
     Oviedo, FL                  11/14/94     02/28/97        610,384         0            0             0            610,384
   Boston Market -
     Madison, TN (16)            05/05/95     05/08/98        774,851         0            0             0            774,851
   Boston Market -
     Chattanooga, TN (17)        05/05/95     06/16/98        713,386         0            0             0            713,386
   Boston Market -
     Lawrence, KS                05/08/98     11/23/99        667,311         0            0             0            667,311

CNL Income Fund XVII, Ltd.:
   Boston Market -
     Troy, OH (18)               07/24/96     06/16/98        857,487         0            0             0            857,487
   Golden Corral -
     El Cajon, CA (22)           04/29/97     12/02/99      1,675,385         0            0             0          1,675,385

CNL Income Fund XVIII, Ltd.:
   Black Eyed Pea -
     Atlanta, GA                 03/26/97     12/06/99        688,997         0            0             0            688,997

CNL American Properties
Fund, Inc.:
   TGI Friday's -
     Orange, CT                  10/30/95     05/08/97      1,312,799         0            0             0          1,312,799
   TGI Friday's -
     Hazlet, NJ                  07/15/96     05/08/97      1,324,109         0            0             0          1,324,109
   TGI Friday's -
     Marlboro, NJ                08/01/96     05/08/97      1,372,075         0            0             0          1,372,075
   TGI Friday's -
     Hamden, CT                  08/26/96     05/08/97      1,245,100         0            0             0          1,245,100
   Boston Market -
     Southlake, TX               07/02/97     07/21/97      1,035,153         0            0             0          1,035,135
   Boston Market -
     Franklin, TN (26)           08/18/95     04/14/98        950,361         0            0             0            950,361
   Boston Market -
     Grand Island, NE (27)       09/19/95     04/14/98        837,656         0            0             0            837,656
   Burger King -
     Indian Head Park, IL        04/03/96     05/05/98        674,320         0            0             0            674,320
   Boston Market -
     Dubuque, IA (28)            10/04/95     05/08/98        969,159         0            0             0            969,159
   Boston Market -
     Merced, CA (29)             10/06/96     05/08/98        930,834         0            0             0            930,834
   Boston Market -
     Arvada, CO (30)             07/21/97     07/28/98      1,152,262         0            0             0          1,152,262
   Boston Market -
      Ellisville, MO             09/03/96     04/28/99        822,824         0            0             0            822,824

<CAPTION>
                                             Cost of Properties
                                           Including Closing and
                                                 Soft Costs
                              -----------------------------------------
                                                                            Excess
                                                   Total                 (deficiency)
                                              acquisition cost,          of property
                                                  capital               operating cash
                                  Original     improvements             receipts over
                                  mortgage     closing and                   cash
        Property                 financing     soft costs (1)   Total     expenditures
==============================  ============== ============= ============ =============
<S>                                   <C>          <C>            <C>          <C>
CNL Income Fund XVI, Ltd.:
   Long John Silver's -
     Appleton, WI                    0          613,838       613,838      161,162
   Checker's -
     Oviedo, FL                      0          506,311       506,311      104,073
   Boston Market -
     Madison, TN (16)                0          774,851       774,851            0
   Boston Market -
     Chattanooga, TN (17)            0          713,386       713,386            0
   Boston Market -
     Lawrence, KS                    0          774,851       774,851     (107,540)

CNL Income Fund XVII, Ltd.:
   Boston Market -
     Troy, OH (18)                   0          857,487       857,487            0
   Golden Corral -
     El Cajon, CA (22)               0        1,692,994     1,692,994      (17,609)

CNL Income Fund XVIII, Ltd.:
   Black Eyed Pea -
     Atlanta, GA                     0          617,610       617,610       71,387

CNL American Properties
Fund, Inc.:
   TGI Friday's -
     Orange, CT                      0        1,310,980     1,310,980        1,819
   TGI Friday's -
     Hazlet, NJ                      0        1,294,237     1,294,237       29,872
   TGI Friday's -
     Marlboro, NJ                    0        1,324,288     1,324,288       47,787
   TGI Friday's -
     Hamden, CT                      0        1,203,136     1,203,136       41,964
   Boston Market -
     Southlake, TX                   0        1,035,135     1,035,135            0
   Boston Market -
     Franklin, TN (26)               0          950,361       950,361            0
   Boston Market -
     Grand Island, NE (27)           0          837,656       837,656            0
   Burger King -
     Indian Head Park, IL            0          670,867       670,867        3,453
   Boston Market -
     Dubuque, IA (28)                0          969,159       969,159            0
   Boston Market -
     Merced, CA (29)                 0          930,834       930,834            0
   Boston Market -
     Arvada, CO (30)                 0        1,152,262     1,152,262            0
   Boston Market -
      Ellisville, MO                 0        1,026,746     1,026,746     (203,922)
</TABLE>

                                      C-29
<PAGE>
                                     TABLE V
                        SALES OR DISPOSALS OF PROPERTIES

<TABLE>
<CAPTION>
                                                                              Selling Price, Net of
                                                                        Closing Costs and GAAP Adjustments
                                                          ---------------------------------------------------------------
                                                                                       Purchase
                                                                           Mortgage      money      Adjustments
                                                                           balance     mortgage    resulting from
                                  Date        Date of   Cash received net  at time    taken back   application of
        Property                Acquired        Sale    of closing costs   of sale     by program       GAAP           Total
============================== ============ =========== ================= =========   ===========   ============    ============
<S>                               <C>           <C>            <C>           <C>        <C>              <C>       <C>
CNL American Properties
Fund, Inc.
   (Continued):
   Golden Corral -
     Brooklyn, OH                08/23/96     05/18/99        974,560        0             0             0            974,560
   Boston Market -
     Edgewater, CO               08/19/97     08/11/99        634,122        0             0             0            634,122
   Black Eyed Pea -
     Houston, TX (31)            10/01/97     08/24/99        648,598        0             0             0            648,598
   Big Boy -
     Topeka, KS (32)             02/26/99     09/22/99        939,445        0             0             0            939,445
   Boston Market -
     LaQuinta, CA                12/16/96     10/13/99        833,140        0             0             0            833,140
   Sonny's -
     Jonesboro, GA               06/02/98     12/22/99      1,098,342        0             0             0          1,098,342
   Golden Corral -
     Waldorf, MD (32) (33)       04/05/99     01/03/00      2,501,175        0             0             0          2,501,175
   Jack in the Box -
     Los Angeles, CA             06/30/95     02/18/00      1,516,800        0             0             0          1,516,800
   Golden Corral
     Dublin, GA                  08/07/98     05/01/00      1,323,205        0             0             0          1,323,205
   Boston Market -
     San Antonio, TX             04/30/97     05/02/00        517,495        0             0             0            517,495
   Boston Market -
     Corvallis, OR               07/09/96     06/20/00        717,019        0             0             0            717,019
   Big Boy -
     St. Louis, MO               01/19/99     06/28/00      1,463,050        0             0             0          1,463,050
   Ground Round -
     Nanuet, NY                  12/02/97     06/30/00        964,825        0             0             0            964,825
   Big Boy -
     Jefferson City, MO          01/19/99     06/30/00        905,250        0             0             0            905,250
   Big Boy -
     Alton, IL                   01/19/99     06/30/00        905,250        0             0             0            905,250

<CAPTION>
                                             Cost of Properties
                                           Including Closing and
                                                 Soft Costs
                              -----------------------------------------
                                                                            Excess
                                                   Total                 (deficiency)
                                              acquisition cost,          of property
                                                  capital               operating cash
                                  Original     improvements             receipts over
                                  mortgage     closing and                   cash
        Property                 financing     soft costs (1)   Total     expenditures
==============================  ============== ============= ============ =============
<S>                                   <C>          <C>            <C>          <C>
CNL American Properties
Fund, Inc.
   (Continued):
   Golden Corral -
     Brooklyn, OH                    0          997,296       997,296      (22,736)
   Boston Market -
     Edgewater, CO                   0          904,691       904,691     (270,569)
   Black Eyed Pea -
     Houston, TX (31)                0          648,598       648,598            0
   Big Boy -
     Topeka, KS (32)                 0        1,062,633     1,062,633     (123,188)
   Boston Market -
     LaQuinta, CA                    0          987,034       987,034     (153,894)
   Sonny's -
     Jonesboro, GA                   0        1,098,342     1,098,342            0
   Golden Corral -
     Waldorf, MD (32) (33)           0        2,430,686     2,430,686       70,489
   Jack in the Box -
     Los Angeles, CA                 0        1,119,567     1,119,567      397,233
   Golden Corral
     Dublin, GA                      0        1,272,765     1,272,765       50,440
   Boston Market -
     San Antonio, TX                 0          757,069       757,069     (239,574)
   Boston Market -
     Corvallis, OR                   0          925,427       925,427     (208,408)
   Big Boy -
     St. Louis, MO                   0        1,345,100     1,345,100      117,950
   Ground Round -
     Nanuet, NY                      0          927,273       927,273       37,552
   Big Boy -
     Jefferson City, MO              0        1,113,383     1,113,383     (208,133)
   Big Boy -
     Alton, IL                       0        1,012,254     1,012,254     (107,004)
</TABLE>

(1)  Amounts shown do not include pro rata share of original offering costs or
     acquisition fees.
(2)  Amount shown is face value and does not represent discounted current value.
     The mortgage note bears interest at a rate of 10.25% per annum and provides
     for a balloon payment of $991,331 in July 2000.
(3)  Amount shown is face value and does not represent discounted current value.
     The mortgage note bears interest at a rate of 10.25% per annum and provides
     for a balloon payment of $1,105,715 in July 2000.
(4)  Amount shown is face value and does not represent discounted current value.
     The mortgage note bears interest at a rate of 10.00% per annum and provides
     for a balloon payment of $218,252 in December 2005.
(5)  Amount shown is face value and does not represent discounted current value.
     The mortgage note bears interest at a rate of 10.00% per annum and provides
     for a balloon payment of $200,063 in December 2005.
(6)  Amount shown is face value and does not represent discounted current value.
     The mortgage note bears interest at a rate of 10.75% per annum and provides
     for 12 monthly payments of interest only and thereafter, 24 equal monthly
     payments of principal and interest until November 1999, when the remaining
     144 equal monthly payments of principal and interest will be reduced due to
     a lump sum payment received in March 1999 in advance from the borrower.
(7)  CNL Income Fund XIV, Ltd. and CNL Income Fund XV, Ltd. each owned a 50
     percent interest in Wood-Ridge Real Estate Joint Venture, which owned two
     properties. The amounts presented for CNL Income Fund XIV, Ltd. and CNL
     Income Fund XV, Ltd. represent each partnership's 50 percent interest in
     the properties owned by Wood-Ridge Real Estate Joint Venture.
(8)  CNL Income Fund II, Ltd. owns a 64 percent interest and CNL Income Fund VI,
     Ltd. owns a 36 percent interest in this joint venture. The amounts
     presented for CNL Income Fund II, Ltd. and CNL Income Fund VI, Ltd.
     represent each partnership's percent interest in the property owned by Show
     Low Joint Venture.

                                      C-30
<PAGE>
(9)  CNL Income Fund, Ltd. owned a 50 percent interest in this joint venture.
     The amounts presented represent the partnerships percent interest in the
     property owned by Seventh Avenue Joint Venture. A third party owns the
     remaining 50 percent interest in this joint venture.
(10) CNL Income Fund VI, Ltd. and CNL Income Fund VII, Ltd. own a 52 percent and
     48 percent interest, respectively, in the property in Yuma, Arizona. The
     amounts presented for CNL Income Fund VI, Ltd. and CNL Income Fund VII,
     Ltd. represent each partnership's respective interest in the property.
(11) Cash received net of closing costs includes $198,000 received as a lease
     termination fee.
(12) Cash received net of closing costs includes $93,885 received as a lease
     termination fee.
(13) Cash received net of closing costs includes $120,115 received as a lease
     termination fee.
(14) Closing costs deducted from net sales proceeds do not include deferred,
     subordinated real estate disposition fees payable to CNL Fund Advisors,
     Inc. or its affiliates.
(15) The Burger King property in Woodmere, Ohio was exchanged on December 12,
     1996 for a Burger King property in Carrboro, NC at the option of the tenant
     as permitted under the terms of the lease agreement. Due to the exchange,
     the Burger King property in Carrboro, NC is being leased under the same
     lease as the Burger King property in Woodmere, OH.
(16) The Boston Market property in Madison, TN was exchanged on May 8, 1998 for
     a Boston Market property in Lawrence, KS at the option of the tenant as
     permitted under the terms of the lease agreement. Due to the exchange, the
     Boston Market property in Lawrence, KS is being leased under the same lease
     as the Boston Market property in Madison, TN.
(17) The Boston Market property in Chattanooga, TN was exchanged on June 16,
     1998 for a Boston Market property in Indianapolis, IN at the option of the
     tenant as permitted under the terms of the lease agreement. Due to the
     exchange, the Boston Market property in Indianapolis, IN is being leased
     under the same lease as the Boston Market property in Chattanooga, TN.
(18) The Boston Market property in Troy, OH was exchanged on June 16, 1998 for a
     Boston Market property in Inglewood, CA at the option of the tenant as
     permitted under the terms of the lease agreement. Due to the exchange, the
     Boston Market property in Inglewood, CA is being leased under the same
     lease as the Boston Market property in Troy, OH.
(19) The Burger King property in Columbus, OH was exchanged on September 30,
     1998 for a Burger King property in Danbury, CT at the option of the tenant
     as permitted under the terms of the lease agreement. Due to the exchange,
     the Burger King property in Danbury, CT is being leased under the same
     lease as the Burger King property in Columbus, OH.
(20) CNL Income Fund V, Ltd. owns a 49 percent interest and CNL Income Fund VII,
     Ltd. owns a 51 percent interest in this joint venture. The amounts
     presented for CNL Income Fund V, Ltd. and CNL Income Fund VII, Ltd.
     represent each partnership's percent interest in the property owned by
     Halls Joint Venture.
(21) Cash received net of closing costs includes $50,000 received as a lease
     termination fee.
(22) CNL Income Fund XVII, Ltd. owned an 80 percent interest in this joint
     venture. The amounts presented represent the partnership's percent interest
     in the property owned by El Cajon Joint Venture. A third party owned the
     remaining 20 percent interest in this joint venture.
(23) Amount shown is face value and does not represent discounted current value.
     The mortgage note bears interest at a rate of 10.25% per annum and provides
     for 60 equal monthly payments of principal and interest.
(24) Amount shown is face value and does not represent discounted current value.
     The mortgage note bore an interest rate of 10.75% per annum and provided
     for 12 monthly payments of interest only and thereafter, 168 equal monthly
     payments of principal and interest. The borrower prepaid the mortgage note
     in full in April 1999.
(25) Amount shown is face value and does not represent discounted current value.
     The mortgage note bore an interest rate of 10.00% per annum and was paid in
     full in July 1999.
(26) The Boston Market property in Franklin, TN was exchanged on April 14, 1998
     for a Boston Market property in Glendale, AZ at the option of the tenant as
     permitted under the terms of the lease agreement. Due to the exchange, the
     Boston Market property in Glendale, AZ is being leased under the same lease
     as the Boston Market property in Franklin, TN.
(27) The Boston Market property in Grand Island, NE was exchanged on April 14,
     1998 for a Boston Market property in Warwick, RI at the option of the
     tenant as permitted under the terms of the lease agreement. Due to the
     exchange, the Boston Market property in Warwick, RI is being leased under
     the same lease as the Boston Market property in Grand Island, NE.
(28) The Boston Market property in Dubuque, IA was exchanged on May 8, 1998 for
     a Boston Market property in Columbus, OH at the option of the tenant as
     permitted under the terms of the lease agreement. Due to the exchange, the
     Boston Market property in Columbus, OH is being leased under the same lease
     as the Boston Market property in Dubuque, IA.
(29) Cash received net of closing costs includes $362,949 in construction costs
     incurred but not paid by CNL American Properties Fund, Inc. as of the
     closing date, which were deducted from the actual net sales proceeds
     received by CNL American Properties Fund, Inc.
(30) Cash received net of closing costs includes $522,827 in construction costs
     incurred but not paid by CNL American Properties Fund, Inc. as of the
     closing date, which were deducted from the actual net sales proceeds
     received by CNL American Properties Fund, Inc.
(31) The Black Eyed Pea property in Houston, TX was exchanged on August 24, 1999
     for a Black Eyed Pea property in Dallas, TX at the option of the tenant as
     permitted under the terms of the lease agreement. Due to the exchange, the
     Black Eyed Pea property in Dallas, TX is being leased under the same lease
     as the Black Eyed Pea property in Houston, TX.
(32) This property was being constructed and was sold prior to completion of
     construction.
(33) Cash received net of closing costs includes $1,551,800 in construction
     costs incurred but not paid by CNL American Properties Fund, Inc. as of the
     closing date, which were deducted from the actual net sales proceeds
     received by CNL American Properties Fund, Inc.


                                      C-31


<PAGE>




                                   APPENDIX E

                             STATEMENT OF ESTIMATED
                            TAXABLE OPERATING RESULTS
                         BEFORE DIVIDENDS PAID DEDUCTION

            ------------------------------------------------------
            |                                                    |
            |  THE FOLLOWING  INFORMATION UPDATES AND REPLACES   |
            |  THE CORRESPONDING INFORMATION IN APPENDIX E  TO   |
            |  THE ATTACHED PROSPECTUS, DATED MARCH 31, 2000.    |
            |                                                    |
            ------------------------------------------------------

<PAGE>


                         CNL RETIREMENT PROPERTIES, INC.
                   (formerly CNL Health Care Properties, Inc.)

                STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
                         BEFORE DIVIDENDS PAID DEDUCTION
                      OF PROPERTIES ACQUIRED FROM INCEPTION
                             THROUGH AUGUST 3, 2000

                For the Year Ended December 31, 1999 (Unaudited)


         The following schedule presents  unaudited  estimated taxable operating
results before dividends paid deduction of the Property  acquired by the Company
as of  August  3,  2000  The  statement  presents  unaudited  estimated  taxable
operating results for the Property as if it had been acquired and operational on
January 1, 1999 through  December 31, 1999. The schedule should be read in light
of the accompanying footnotes.

         These estimates do not purport to present actual or expected operations
of the Company for any period in the future.  The estimates were prepared on the
basis  described in the  accompanying  notes which should be read in conjunction
herewith.

                                       Brighton Gardens by Marriott
                                          Orland Park Property

Estimated Taxable Operating
    Results Before Dividends
    Paid Deduction:
Rental Income (1)                                $1,350,268

FF&E Reserve Income (2)                              32,476

Asset Management Fees (3)                           (83,093)

Interest Expense (4)                               (708,750)

General and Administrative
    Expenses (5)                                   (110,422)
                                               ------------

Estimated Cash Available from
    Operations                                      480,479

Depreciation  and Amortization
    Expense (6) (7)                                (453,025)
                                               ------------
Estimated Taxable Operating
    Results Before Dividends
    Paid Deduction                               $   27,454
                                               ============


                                  See Footnotes

<PAGE>




FOOTNOTES:

(1)      Rental income does not include  percentage  rents which will become due
         if specified levels of gross receipts are achieved.

(2)      Reserve  funds  will  be  used  for  the  replacement  and  renewal  of
         furniture,  fixtures and equipment  related to the Orland Park Property
         ("FF&E  Reserve").  The  funds in the  FF&E  Reserve  and all  property
         purchased  with the funds from the FF&E Reserve  will be paid,  granted
         and  assigned to the Company.  In  connection  therewith,  FF&E Reserve
         income  will be earned  at 1% of gross  receipts  for  lease  years one
         through four and has been estimated based on projected gross revenues.

(3)      The  Properties  will be  managed  pursuant  to an  advisory  agreement
         between the Company and CNL Retirement Corp. (the "Advisor"),  pursuant
         to which the Advisor will receive  monthly asset  management fees in an
         amount equal to  one-twelfth of .60% of the Company's Real Estate Asset
         Value  as of  the  end  of the  preceding  month  as  defined  in  such
         agreement. See "Management Compensation."

(4)      Estimated  at 8.75% per annum based on the bank's base rate as of April
         20, 2000.

(5)      Estimated  at  8%  of  gross  rental  income,  based  on  the  previous
         experience of Affiliate of the Advisor with another public REIT.

(6)      The  estimated  federal  tax basis of the  depreciable  portion  of the
         property  and the number of years the assets have been  depreciated  on
         the straight-line method is as follows:

                                                      Furniture and
                                        Buildings       Fixtures
                                       (39 years)     (5-15 years)
                                      -----------     -----------

         Orland Park Property         $11,530,358      $1,025,388

(7)      Loan costs of $55,917  (.5%  origination  fee on the $8.1  million from
         borrowings  on the  Line of  Credit,  legal  fees  and  closing  costs)
         amortized under the straight-line method over a period of five years.




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