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

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2002

OR

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

For the transition period from to

Commission file number 0-19140

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

Florida 59-2963871
(State or other jurisdiction o (I.R.S. Employer Identification No.)
incorporation or organization)

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

Registrant's telephone number, including area code: (407) 540-2000

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

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

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

Units of limited partnership interest ($1 per Unit)
(Title of class)

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

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

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2): Yes____ No X - -----

Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 30,000,000 units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $1 per Unit.

DOCUMENTS INCORPORATED BY REFERENCE:
None






PART I


Item 1. Business

CNL Income Fund VII, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on August 18, 1989. The general partners of the Partnership are Robert
A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on January 30, 1990, the
Partnership offered for sale up to $30,000,000 of limited partnership interests
(the "Units") (30,000,000 Units each at $1 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended. The
offering terminated on August 1, 1990, as of which date the maximum offering
proceeds of $30,000,000 had been received from investors who were admitted to
the Partnership as limited partners (the "Limited Partners").

The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totaled
$26,550,000, and were used to acquire 42 Properties, including interests in nine
Properties owned by joint ventures in which the Partnership is a co-venturer,
and to establish a working capital reserve for Partnership purposes.

As of December 31, 1999, the Partnership owned 27 Properties directly
and held interests in 13 Properties through joint venture or tenancy in common
arrangements. During the year ended December 31, 2000, the Partnership sold its
Property in Pueblo, Colorado and reinvested the net sales proceeds as
tenants-in-common, with affiliates of the General Partners, to purchase and hold
one restaurant Property in Colorado Springs, Colorado. The Partnership also
liquidated Halls Joint Venture and used the pro rata share of the liquidation
proceeds it received to enter into a joint venture arrangement, TGIF Pittsburgh
Joint Venture, to purchase and hold one restaurant Property. In addition, during
2000, the Partnership sold its three Properties in Jacksonville, Florida; one
Property in Lake City, Florida; one Property in Brunswick, Georgia and one
Property in Friendswood, Texas. In addition, during 2000, the Partnership
purchased an additional interest in Duluth Joint Venture from CNL Income Fund V,
Ltd. and CNL Income Fund XV, Ltd., affiliates of the General Partners. During
the year ended December 31, 2001, the Partnership purchased an additional
interest in TGIF Pittsburgh Joint Venture from CNL Income Fund XVIII, Ltd., an
affiliate of the General Partners. During 2001, the Partnership reinvested the
net sales proceeds from the sale of three of its Properties (two in
Jacksonville, Florida and one in Lake City, Florida) in a Property in Baton
Rouge, Louisiana that was acquired from CNL Funding 2001-A, LP, an affiliate of
the General Partners. The Partnership also used the proceeds from the sale of
the Property in Friendswood, Texas and the proceeds from the promissory note
related to the 1995 sale of the Property in Florence, South Carolina to invest
in CNL VII & XVII Lincoln Joint Venture with an affiliate of the General
Partners to purchase and hold one restaurant Property and used the remaining
proceeds from the promissory note to invest in CNL VII, XV Columbus Joint
Venture with an affiliate of the General Partners to construct and hold one
restaurant Property. In addition, during 2001, the Partnership sold its
Properties in Daytona Beach, Gainesville, and Saddlebrook, Florida. In
connection with the sale of the Property in Daytona Beach, Florida, the
Partnership accepted a promissory note in the principal sum of $103,581. During
2002, the Partnership collected the outstanding principal balance in full.

During the year ended December 31, 2002, CNL Restaurant Investments II,
in which the Partnership owns an 18% interest, sold its Property in Columbus,
Ohio and used the proceeds from the sale to acquire a Property in Dallas, Texas.
In addition, during 2002, CNL Restaurant Investments II sold its property in
Pontiac, Michigan and the Partnership used a portion of the return of capital
for its pro-rata share of the net sales proceeds relating to this Property to
make an additional contribution of approximately $63,900 to CNL Mansfield Joint
Venture. In 2002, the Partnership also used a portion of the net sales proceeds
from the 2001 sale of its properties in Saddlebrook, Gainesville and Daytona
Beach, Florida to enter into a joint venture arrangement, Arlington Joint
Venture, with an affiliate of the General Partners, to hold one restaurant
property. Also during 2002, CNL Mansfield Joint Venture, in which the
Partnership owns a 79% interest, sold its Property in Mansfield, Texas and
reinvested the proceeds in a Property in Arlington, Texas.





As of December 31, 2002, the Partnership owned 18 Properties directly
and held interests in 17 Properties indirectly through joint venture or tenancy
in common arrangements. The Properties are, in general, leased on a triple-net
basis with the lessees responsible for all repairs and maintenance, property
taxes, insurance and utilities.

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

Leases

Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership and
the joint ventures in which the Partnership is a co-venturer provide for initial
terms ranging from six to 20 years (the average being 16 years), and expire
between 2004 and 2022. Generally, the leases are on a triple-net basis, with the
lessee responsible for all repairs and maintenance, property taxes, insurance
and utilities. The leases of the Properties provide for minimum base annual
rental payments (payable in monthly installments) ranging from approximately
$30,000 to $259,900. The majority of the leases provide for percentage rent,
based on sales in excess of a specified amount. In addition, some of the leases
provide that, commencing in specified lease years (generally ranging from the
sixth to the eleventh lease year), the annual base rent required under the terms
of the lease will increase.

Generally, the leases of the Properties provide for two to five
five-year renewal options subject to the same terms and conditions as the
initial lease. Lessees of 26 of the Partnership's 35 Properties also have been
granted options to purchase Properties at the Property's then fair market value
after a specified portion of the lease term has elapsed. Fair market value will
be determined through an appraisal by an independent appraisal firm. Under the
terms of certain leases, the option purchase price may equal the Partnership's
original cost to purchase the Property (including acquisition costs), plus a
specified percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.

The leases also generally provide that, in the event the Partnership
wishes to sell the Property subject to that lease, the Partnership first must
offer the lessee the right to purchase that Property on the same terms and
conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.

During 2002, the Partnership reinvested the net sales proceeds it
received from the 2001 sale of the Property in Gainesville, Florida and an a
portion of the net sales proceeds from the sale of the Property in Saddlebrook,
Florida in a joint venture Property in Dallas, Texas owned by CNL Restaurant
Investments II. The Partnership also reinvested the remaining portion of the net
sales proceeds from the 2001 sale of the Property in Saddlebrook, Florida and a
portion of the net sales proceeds from the sale of the joint venture Property in
Columbus, Ohio, owned by CNL Restaurant Investments II in a joint venture
Property in Arlington, Texas owned by Arlington Joint Venture.

In addition, during 2002, CNL Mansfield Joint Venture reinvested the
net sales proceeds from the sale of its Property in Mansfield, Texas in another
Property in Arlington, Texas.

The lease terms for these three Properties are substantially the same
as the Partnership's other leases, as described above.

Major Tenants

During 2002, two lessees (or groups of affiliated tenants) of the
Partnership and its consolidated joint venture, (i) Golden Corral Corporation,
and (ii) Jack in the Box Inc. and Jack in the Box Eastern Division, L.P. (which
are affiliated entities under common control of Jack in the Box Inc.)
(hereinafter referred to as "Jack in the Box Inc."), each contributed more than
10% of the Partnership's total rental revenues and mortgage interest income
(including rental revenues from the Partnership's consolidated joint venture and
the Partnership's share of rental revenues from Properties owned by
unconsolidated joint ventures and Properties owned with affiliates of the
General Partners as tenants-in-common). As of December 31, 2002, Golden Corral
Corporation was the lessee under leases relating to six restaurants and Jack in
the Box Inc. was the lessee under leases relating to four restaurants. It is
anticipated that, based on the minimum rental payments required by the leases,
these two lessees each will continue to contribute more than 10% of the
Partnership's total rental revenues in 2003. In addition, three Restaurant
Chains, Golden Corral Family Steakhouse Restaurants ("Golden Corral"), Hardee's,
and Jack in the Box, each accounted for more than 10% of the Partnership's total
rental revenues and mortgage interest income in 2002 (including rental revenues
from the Partnership's consolidated joint venture and the Partnership's share of
rental revenues from Properties owned by unconsolidated joint ventures and
Properties owned with affiliates of the General Partners as tenants-in-common).
In 2003, it is anticipated that these three Restaurant Chains each will continue
to account for more than 10% of the Partnership's total rental revenues to which
the Partnership is entitled under the terms of the leases. Any failure of these
lessees or Restaurant Chains will materially affect the Partnership's income if
the Partnership is not able to re-lease the Properties in a timely manner. As of
December 31, 2002, Golden Corral Corporation leased Properties with an aggregate
carrying value in excess of 20% of the total assets of the Partnership.

Joint Venture and Tenancy in Common Arrangements

The Partnership has entered into the following joint venture and
tenancy in common arrangements as of December 31, 2002:



Entity Name Year Ownership Partners Property


San Antonio #849 Joint 1990 83.30 % Various Third Party Partners San Antonio,TX
Venture

CNL Restaurant Investments II 1991 18.00% CNL Income Fund VIII, Ltd. Dallas, TX
CNL Income Fund IX, Ltd. Hastings, MN
New Castle, IN
Raceland, LA
San Antonio, TX

Des Moines Real Estate Joint 1992 4.79% CNL Income Fund XI, Ltd. Des Moines, WA
Venture CNL Income Fund XII, Ltd.

CNL Mansfield Joint Venture 1997 79.00% CNL Income Fund XVII, Ltd. Arlington, TX

CNL Income Fund II, Ltd. and 1997 53.00% CNL Income Fund II, Ltd. Smithfield, NC
CNL Income Fund VII,
Ltd., Tenants in Common

CNL Income Fund III, Ltd., 1997 35.64% CNL Income Fund III, Ltd. Miami, FL
CNL Income Fund VII, CNL Income Fund X, Ltd.
Ltd., CNL Income Fund X, CNL Income Fund XIII, Ltd.
Ltd. and CNL Income Fund
XIII, Ltd., Tenants in
Common













CNL Income Fund VII, Ltd., 1999 71.00% CNL Income Fund IX, Ltd. Montgomery, AL
and CNL Income Fund IX,
Ltd., Tenants in Common

Duluth Joint Venture 1999 56.00% CNL Income Fund XIV, Ltd. Duluth, GA

TGIF Pittsburgh Joint Venture 2000 36.88% CNL Income Fund XV, Ltd. Homestead, PA
CNL Income Fund XVI, Ltd.
CNL Income Fund XVIII, Ltd.

CNL Income Fund VII, Ltd. and 2000 43.00% CNL Income Fund XII, Ltd. Colorado Springs, CO
CNL Income Fund XII,
Ltd., Tenants in Common

CNL VII & XVII Lincoln Joint 2001 14.00% CNL Income Fund XVII, Ltd. Lincoln, NE
Venture

CNL VII, XV Columbus Joint 2001 68.75% CNL Income Fund XV, Ltd. Columbus, GA
Venture

Arlington Joint Venture 2002 79.00% CNL Income Fund XVI, Ltd. Arlington, TX


CNL Restaurant Investments II was formed to hold six Properties,
however, all other joint ventures or tenancies in common were formed to hold one
Property. Currently, CNL Restaurant Investments II owns five Properties because
the joint venture sold a Property and distributed the net sales proceeds to the
Partnership and the other co-venturers, as described below. Each CNL Income Fund
is an affiliate of the General Partners and is a limited partnership organized
pursuant to the laws of the state of Florida. The Partnership has management
control of San Antonio #849 Joint Venture and shares management control equally
with the affiliates of the General Partners for the other joint ventures.

The joint venture and tenancy in common arrangements provide for the
Partnership and its partners to share in all costs and benefits in proportion to
each partner's percentage interest in the business entity. The Partnership and
its partners are also jointly and severally liable for all debts, obligations
and other liabilities of the joint venture or tenancy in common. Net cash flow
from operations is distributed to each joint venture or tenancy in common
partner in accordance with its respective percentage interest in the business
entity.

San Antonio #849 Joint Venture, Des Moines Real Estate Joint Venture,
CNL Mansfield Joint Venture and Duluth Joint Venture each have an initial term
of 20 years and, after the expiration of the initial term, continues in
existence from year to year unless terminated at the option of either joint
venturer or by an event of dissolution. Events of dissolution include the
bankruptcy, insolvency or termination of any joint venturer, sale of the
Property owned by the joint venture and mutual agreement of the Partnership and
its joint venture partner to dissolve the joint venture. Any liquidation
proceeds, after paying joint venture debts and liabilities and funding reserves
for contingent liabilities, will be distributed first to the joint venture
partners with positive capital account balances in proportion to such balances
until such balances equal zero, and thereafter in proportion to each joint
venture partner's percentage interest in the joint venture. CNL VII & XVII
Lincoln Joint Venture, CNL VII, XV Columbus Joint Venture, TGIF Pittsburgh Joint
Venture and Arlington Joint Venture each have an initial term of 30 years. CNL
Restaurant Investment II's joint venture agreement does not provide a fixed
term, but continues in existence until terminated by any of the joint venturers.

During 2002, the Partnership reinvested a portion of the net sales
proceeds from the 2001 sale of the Property in Saddlebrook, Florida and a
portion of the net sales proceeds from the sale of the joint venture Property in
Columbus Ohio, owned indirectly by CNL Restaurant Investments II, in Arlington
Joint Venture, to purchase and hold one Property.

The joint venture and tenancy in common agreements restrict each
party's ability to sell, transfer to assign its joint venture or tenancy in
common interest without first offering it for sale to its partner, either upon
such terms and conditions as to which the parties may agree or, in the event the
parties cannot agree, on the same terms and conditions as any offer from a third
party to purchase such joint venture or tenancy in common interest.

During 2002, CNL Restaurant Investments II sold its Property in
Columbus, Ohio and used the majority of the proceeds from the sale to acquire a
property in Dallas, Texas. In addition during 2002, CNL Restaurant Investments
II sold its property in Pontiac, Michigan and the Partnership used the return of
capital for its pro-rata share of the net sales proceeds relating to this
Property to make a contribution to CNL Mansfield Joint Venture to pay
construction costs. During 2002, CNL Mansfield Joint Venture sold its Property
in Mansfield, Texas and used the proceeds to acquire a Property in Arlington,
Texas. In addition, during 2002, the Partnership used the proceeds from the sale
of several Properties during 2001 to enter into a joint venture arrangement,
Arlington Joint Venture, with an affiliate of the General Partners to hold one
restaurant Property.

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

Certain Management Services

RAI Restaurants, Inc. (formerly known as CNL Restaurants XVIII, Inc.),
an affiliate of the General Partners, provided certain services relating to
management of the Partnership and its Properties pursuant to a management
agreement with the Partnership. CNL APF Partners, LP assigned its rights in, and
its obligations under, the management agreement with the Partnership to RAI
Restaurants, Inc. ("Advisor") effective January 1, 2002. All of the terms and
conditions of the management agreement, including the payment of fees, remained
unchanged. Under this agreement, the Advisor is responsible for collecting
rental payments, inspecting the Properties and the tenants' books and records,
assisting the Partnership in responding to tenant inquiries and notices, and
providing information to the Partnership about the status of the leases and the
Properties. The Advisor also assists the General Partners in negotiating the
leases. For these services, the Partnership had agreed to pay the Advisor an
annual fee of one percent of the sum of gross rental revenues from Properties
wholly owned by the Partnership plus the Partnership's allocable share of gross
revenues of joint ventures in which the Partnership is a co-venturer and the
Property held as tenants-in-common with an affiliate, but not in excess of
competitive fees for comparable services. Under the property management
agreement, the property management fee is subordinated to receipt by the Limited
Partners of an aggregate, ten percent, cumulative, noncompounded annual return
on their adjusted capital contributions (the "10% Preferred Return"), calculated
in accordance with the Partnership's limited partnership agreement (the
"Partnership Agreement"). In any year in which the Limited Partners have not
received the 10% Preferred Return, no property management fee will be paid.

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

Competition

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






Employees

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


Item 2. Properties

As of December 31, 2002, the Partnership owned 35 Properties. Of the 35
Properties, 18 are owned by the Partnership in fee simple, 13 are owned
indirectly through joint venture arrangements and four are owned indirectly
through tenancy in common arrangements. See Item 1. Business - Joint Venture and
Tenancy in Common Arrangements. The Partnership is not permitted to encumber its
Properties under the terms of its partnership agreement. Reference is made to
the Schedule of Real Estate and Accumulated Depreciation for a listing of the
Properties and their respective costs including acquisition fees and certain
acquisition expenses.

Description of Properties

Land. The Partnership's Property sites range from approximately 20,600
to 110,200 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.

The following table lists the Properties owned, either directly or
indirectly, by the Partnership as of December 31, 2002 by state. More detailed
information regarding the location of the Properties is contained in the
Schedule of Real Estate and Accumulated Depreciation.

State Number of Properties

Alabama 1
Arizona 1
Colorado 1
Florida 3
Georgia 3
Indiana 1
Louisiana 2
Michigan 1
Minnesota 1
Nebraska 1
North Carolina 1
Ohio 6
Pennsylvania 1
Tennessee 2
Texas 9
Washington 1
-------
TOTAL PROPERTIES 35
=======





Buildings. Generally, each of the Properties owned, either directly or
indirectly, by the Partnership includes a building that is one of a Restaurant
Chain's approved designs. However, the building located on the Checkers Property
is owned by the tenant, while the land parcel is owned by the Partnership. The
buildings generally are rectangular and are constructed from various
combinations of stucco, steel, wood, brick and tile. The sizes of the buildings
owned by the Partnership range from approximately 700 to 10,600 square feet. All
buildings on Properties are freestanding and surrounded by paved parking areas.
Buildings are suitable for conversion to various uses, although modifications
may be required prior to use for other than restaurant operations. As of
December 31, 2002, the Partnership had no plans for renovation of the
Properties. Depreciation expense is computed for buildings and improvements
using the straight-line method using depreciable lives of 40 years for federal
income tax purposes.

As of December 31, 2002, the aggregate cost of the Properties owned by
the Partnership (including its consolidated joint venture) and the
unconsolidated joint ventures (including the Properties owned through tenancy in
common arrangements), for federal income tax purposes was $22,539,464 and
$16,104,595, respectively.

The following table lists the Properties owned, either directly or
indirectly, by the Partnership as of December 31, 2002 by Restaurant Chain.

Restaurant Chain Number of Properties

Bennigan's 1
Burger King 6
Checkers 1
Chevy's Fresh Mex 1
Donatos Pizzeria 1
Golden Corral 6
Hardee's 6
IHOP 1
Jack in the Box 4
KFC 1
Rally's 1
Roadhouse Grill 1
Sonny's Bar-B-Q 1
Taco Bell 1
Taco Cabana 2
TGI Friday's 1
-------
TOTAL PROPERTIES 35
=======

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

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

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






At December 31, 2002, 2001, 2000, 1999, and 1998, all of the Properties
were occupied. The following is a schedule of the average rent per Property for
each of the years ended December 31:



2002 2001 2000 1999 1998
------------- ------------- --------------- -------------- --------------


Rental Revenues (1) $ 2,832,401 $ 2,686,849 $ 2,801,210 $ 2,902,968 $2,879,831
Properties 35 35 35 40 40
Average Rent per
Property $ 80,926 $ 76,767 $ 80,035 $ 72,574 $ 71,996


(1) Rental revenues include the Partnership's share of rental revenues from
the Properties owned indirectly through joint venture and tenancy in
common arrangements.

The following is a schedule of lease expirations for leases in place as
of December 31, 2002 for the next ten years and thereafter.



Percentage of
Expiration Year Number Annual Rental Gross Annual
of Leases Revenues Rental Income
----------------- ---------------- ----------------- --------------------------


2003 -- $ -- --
2004 1 137,061 4.77%
2005 7 540,511 18.81%
2006 1 63,128 2.20%
2007 -- -- --
2008 2 122,134 4.25%
2009 -- -- --
2010 9 730,546 25.42%
2011 -- -- --
2012 4 299,895 10.44%
Thereafter 11 980,459 34.11%
------- ------------------ -------------
Total 35 $ 2,873,734 100.00%
======= ================== =============



Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants as of December 31, 2002 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.

Golden Corral Corporation leases six Golden Corral restaurants. The
initial term of each lease is 15 years (expiring between 2004 and 2015) and the
average minimum base annual rent is approximately $155,000 (ranging from
approximately $137,100 to $186,600).

Jack in the Box Inc. leases four Jack in the Box restaurants. The
initial term of each lease is 10 to 20 years (expiring between 2010 and 2018)
and the average minimum base annual rent is approximately $121,400 (ranging from
approximately $101,100 to $140,900).


Item 3. Legal Proceedings

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


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

Not applicable.





PART II


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

(a) As of March 10, 2003, there were 3,132 holders of record of the
Units. There is no public trading market for the Units, and it is not
anticipated that a public market for the Units will develop. During 2002,
Limited Partners who wished to sell their Units may have offered the Units for
sale pursuant to the Partnership's distribution reinvestment plan (the "Plan"),
and Limited Partners who wished to have their distributions used to acquire
additional Units (to the extent Units were available for purchase), may have
done so pursuant to such Plan. The General Partners have the right to prohibit
transfers of Units. From inception through December 31, 2002, the price paid for
any Unit transferred pursuant to the Plan was $.95 per Unit. The price paid for
any Unit transferred other than pursuant to the Plan was subject to negotiation
by the purchaser and the selling Limited Partner. The Partnership will not
redeem or repurchase Units.

The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 2002 and 2001 other than
pursuant to the Plan, net of commissions.



2002 (1) 2001 (1)
-------------------------------------- -----------------------------------
High Low Average High Low Average
-------- --------- ----------- --------- -------- ----------


First Quarter $ .79 $ .60 $ .66 (2) (2 ) (2 )
Second Quarter (2 ) (2 ) (2 ) (2) (2 ) (2 )
Third Quarter .95 .95 .95 1.00 .54 .73
Fourth Quarter 1.00 .60 .83 .88 .60 .82


(1) A total of $118,320 and 161,877 Units were transferred other than
pursuant to the Plan for the years ended December 31, 2002 and 2001,
respectively.

(2) No transfer of Units took place during the quarter other than pursuant
to the plan.

The capital contribution per Unit was $1. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.

For each of the years ended December 31, 2002 and 2001, the Partnership
declared cash distributions of $2,700,000 to the Limited Partners. Distributions
of $675,000 were declared to the Limited Partners at the close of each of the
Partnership's calendar quarters during 2002 and 2001. These amounts include
monthly distributions made in arrears for the Limited Partners electing to
receive distributions on this basis. No amounts distributed to partners for the
years ended December 31, 2002 and 2001, are required to be or have been treated
by the Partnership as a return of capital for purposes of calculating the
Limited Partners' return on their adjusted capital contributions. No
distributions have been made to the General Partners to date.

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

(b) Not applicable.






Item 6. Selected Financial Data



2002 2001 2000 1999 1998
-------------- -------------- --------------- -------------- --------------


Year ended December 31:
Continuing Operations:
Revenues $ 1,886,389 $ 2,043,814 $ 2,404,733 $ 2,581,576 $ 2,655,726
Equity in earnings of joint
ventures 1,027,311 717,096 456,050 429,997 311,081

Net Income (1) 2,343,522 2,215,570 3,221,515 2,545,690 2,466,018

Net Income per Unit:
Continuing operations 0.078 0.074 0.107 0.084 0.081

Cash distributions declared 2,700,000 2,700,000 2,700,000 2,700,000 2,700,000

Cash distributions declared per
Unit 0.090 0.090 0.090 0.090 0.090

At December 31:
Total assets $24,712,885 $ 25,073,220 $25,607,914 $ 25,146,133 $ 25,218,258
Total partners' capital 23,840,093 24,196,571 24,681,001 24,159,486 24,313,796


(1) Net income for the years ended December 31, 2001, 2000, 1999, and 1998,
includes $382,122, $878,347, $189,826, and $1,025, respectively, from
gains on sale of assets.

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


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

The Partnership was organized on August 18, 1989, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurant Properties, as well as land upon which restaurant
Properties were to be constructed, which are leased primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are generally triple-net leases, with the lessees generally responsible
for all repairs and maintenance, property taxes, insurance and utilities. The
leases provide for minimum base annual rental amounts (payable in monthly
installments) ranging from approximately $30,000 to $259,900. The majority of
the leases provide for percentage rent based on sales in excess of a specified
amount. In addition, the majority of the leases provide that, commencing in
specified lease years (generally the sixth lease year), the annual base rent
required under the terms of the lease will increase. As of December 31, 2000 and
2001, the Partnership owned 20 and 18 Properties directly and held interest in
15 and 17 Properties indirectly through joint venture or tenancy in common
arrangements. As of December 31, 2002, the Partnership owned 18 Properties
directly and held interest in 17 Properties indirectly through joint venture or
tenancy in common arrangements.

Capital Resources

Cash from operating activities was $2,648,131, $2,479,263, and
$2,620,009, for the years ended December 31, 2002, 2001, and 2000, respectively.
The increase in cash from operating activities during 2002 and the decrease
during 2001, each as compared to the previous year, was a result of changes in
the Partnership's working capital and changes in income and expenses.

Other significant sources and uses of cash included the following
during the years ended December 31, 2002, 2001, and 2000.


The Partnership had a mortgage note receivable relating to a sale in
1995 of a Property in Florence, South Carolina. In February 2001, the
Partnership received a balloon payment of $1,115,301 which included the
outstanding principal balance and $14,419 of accrued interest. The Partnership
used the majority of the net sales proceeds to acquire a Property in Lincoln,
Nebraska, and a Property in Columbus, Georgia, each of which is held with
affiliates of the General Partners as tenants-in-common.

During 2000, the Partnership and the joint venture partner liquidated
Halls Joint Venture and the Partnership received approximately $460,900,
representing its pro rata share of the liquidation proceeds. In June 2000, the
Partnership used a portion of the net sales proceeds from the sale of the
Property to enter into a joint venture arrangement, TGIF Pittsburgh Joint
Venture, with CNL Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., and CNL
Income Fund XVIII, Ltd., each a Florida limited partnership and an affiliate of
the General Partners, to purchase and hold one restaurant Property. As of
December 31, 2000, the Partnership owned a 17.16% interest in the profits and
losses of the joint venture. In January 2001, the Partnership acquired an
additional 19.72% interest in TGIF Pittsburgh Joint Venture, from CNL Income
Fund XVIII, Ltd. for an aggregate purchase price of approximately $500,000. As
of December 31, 2002, the Partnership owned a 36.88% interest in the profits and
losses of this joint venture.

During 2000, the Partnership contributed approximately $969,300, to
purchase land and pay for construction costs relating to Duluth Joint Venture.
In October 2000, the Partnership acquired an additional 45% interest in Duluth
Joint Venture from CNL Income Fund V, Ltd. and CNL Income Fund XV, Ltd. for an
aggregate purchase price of approximately $610,000. As of December 31, 2002, the
Partnership had a 56% interest in the profits and losses of this joint venture.

In June 2000, the Partnership sold its Property in Pueblo, Colorado, to
a third party and received net sales proceeds of $1,005,000, resulting in a gain
of $97,056. In August 2000, the Partnership used the majority of the net sales
proceeds to acquire an interest in a Property in Colorado Springs, Colorado,
from CNL BB Corp., an affiliate of the General Partners, for a purchase price of
$2,226,134 to be held as tenants-in-common with CNL Income Fund XII, Ltd., an
affiliate of the General Partners. CNL BB Corp. had purchased and temporarily
held title to this property in order to facilitate the acquisition of the
property by the Partnership and CNL Income Fund XII, Ltd. The purchase price
paid represents the costs incurred by CNL BB Corp. to acquire and carry the
Property.

In September 2000, the Partnership sold its Property in Brunswick,
Georgia, its Property in Lake City, Florida, and three Properties in
Jacksonville, Florida, to separate third parties and received net sales proceeds
of approximately $2,392,300, resulting in a total gain of $619,495. In January
2001, the Partnership reinvested the net sales proceeds received from the sales
of two Properties in Jacksonville, Florida and the Property in Lake City,
Florida in a Jack in the Box Property in Baton Rouge, Louisiana for a purchase
price of approximately $1,495,700. The Partnership acquired the Property from
CNL Funding 2001-A, LP, an affiliate of the General Partners. The Partnership
reinvested the remaining net sales proceeds in additional joint venture
Properties. A portion of the transaction relating to the sales of these
Properties and the reinvestment of the net sales proceeds in additional
Properties qualified as a like-kind exchange transaction for federal income tax
purposes.

In addition, in December 2000, the Partnership sold its Property in
Friendswood, Texas to its tenant and received net sales proceeds of $725,000
resulting in a gain of $160,649. In April 2001, the Partnership used a portion
of these proceeds and a portion of the amount collected from the promissory note
accepted in connection with the 1995 sale of a Property in Florence, South
Carolina, to invest in a joint venture arrangement, CNL VII & XVII Lincoln Joint
Venture, with CNL Income Fund XVII, Ltd., a Florida limited partnership and
affiliate of the General Partners, to purchase and hold a Property in Lincoln,
Nebraska for a total purchase price of $1,740,374. The joint venture acquired
the Property from CNL BB Corp., an affiliate of the General Partners, who had
purchased and temporarily held title to the Property in order to facilitate the
acquisition of the Property by the joint venture. The purchase price paid
represents the costs incurred by CNL BB Corp. to acquire and carry the Property.
As of December 31, 2002, the Partnership owned a 14% interest in the profits and
losses of the joint venture. In addition, in August 2001, the Partnership used
the other portion of the amount collected from the promissory note to invest in
a joint venture arrangement, CNL VII, XV Columbus Joint Venture, with CNL Income
Fund XV, Ltd., a Florida limited partnership and affiliate of the General
Partners, to purchase and construct one restaurant Property. During 2001, the
Partnership contributed approximately $1,025,500 to purchase land and pay for
construction costs relating to the joint venture and contributed $76,700 during
2002 to complete the construction. As of December 31, 2002, the Partnership had
a 68.75% interest in the profits and losses of this joint venture.


In November 2001, the Partnership sold its Properties in Daytona Beach
and Gainesville, Florida to the tenant in accordance with the purchase option
under the lease agreement and received aggregate net sales proceeds of $499,813,
resulting in a gain of $184,894. In connection with the sales of the Properties,
the Partnership received $396,232 in cash and accepted an uncollateralized
promissory note in the amount of $103,581 related to the Property in Daytona
Beach, Florida. In October 2002, the Partnership received a payment of $114,304
which included the outstanding principal balance and $10,723 of accrued
interest.

In December 2001, the Partnership sold its Property in Saddlebrook,
Florida to a third party and received net sales proceeds of $698,050, resulting
in a gain of $74,232. The Partnership used the net sales proceeds to invest in
additional joint venture Properties.

During 2002, the Partnership used the proceeds from the sale of several
of its Properties in 2001 to enter into a joint venture arrangement, Arlington
Joint Venture, with CNL Income Fund XVI, Ltd., a Florida limited partnership and
an affiliate of the General Partners. The joint venture acquired a Property in
Arlington, Texas at an approximate cost of $1,003,600. In addition, in June
2002, CNL Restaurant Investments II, in which the Partnership owns an 18%
interest, sold its Property in Columbus, Ohio to the tenant for a sales price of
approximately $1,219,600 and received net sales proceeds of approximately
$1,215,700, resulting in a gain of $448,300. The joint venture used the proceeds
from this sale to acquire a Property in Dallas, Texas at an approximate cost of
$1,147,400. The joint ventures acquired these Properties from CNL Funding
2001-A, LP, a Delaware limited partnership and an affiliate of the General
Partners. The purchase price paid by the joint ventures represented the costs
incurred by CNL Funding 2001-A, LP to acquire and carry the Properties. The
transaction relating to the sale of the Property in Columbus, Ohio and the
reinvestment of the net sales proceeds was structured to qualify as a like-kind
exchange transaction for federal income tax purposes.

In June 2002, CNL Restaurant Investments II also sold its Property in
Pontiac, Michigan to the tenant for a sales price of $725,000 and received net
sales proceeds of approximately $722,600. The sale resulted in a loss to the
joint venture of approximately $189,800. The tenant exercised its option to
purchase the Property under the terms of the lease. As of December 31, 2002 the
Partnership received $129,888, representing its pro rata share of the net sales
proceeds as a return of capital.

In August 2002, CNL Mansfield Joint Venture sold its property in
Mansfield, Texas to the tenant for a sales price of $1,045,000 and received net
sales proceeds of approximately $1,011,500, resulting in a gain of approximately
$269,800. In September 2002, CNL Mansfield Joint Venture used the proceeds from
the sale of the Property and an additional contribution of approximately $63,900
received from the Partnership to acquire a Property in Arlington, Texas from CNL
Net Lease Investors, L.P. ("NLI"), a California limited partnership, at an
approximate cost of $1,089,900. The sale of the Property and the reinvestment of
the net sales proceeds was structured to qualify as a like-kind exchange
transaction for federal income tax purposes. During 2002, and prior to the joint
venture's acquisition of this Property, CNL Financial LP Holding, LP ("CFN"), a
Delaware limited partnership, and CNL Net Lease Investors GP Corp. ("GP Corp"),
a Delaware corporation, purchased the limited partner's interest and general
partner's interest, respectively, of NLI. Prior to this transaction, an
affiliate of the Partnership's general partners owned a 0.1% interest in NLI and
served as a general partner of NLI. The original general partners of NLI waived
their rights to benefit from this transaction. The acquisition price paid by CFN
for the limited partner's interest was based on the portfolio acquisition price.
The joint venture acquired the Property in Arlington, Texas at CFN's cost and
did not pay any additional compensation to CFN for the acquisition of the
Property. Each CNL entity is an affiliate of the Partnership's General Partners.

None of the Properties owned by the Partnership, or the joint ventures
or tenancy in common arrangements in which the Partnership owns an interest, is
or may be encumbered. Under its partnership agreement, the Partnership is
prohibited from borrowing for any purpose; provided, however, that the General
Partners or their affiliates are entitled to reimbursement, at cost, for actual
expenses incurred by the General Partners or their affiliates on behalf of the
Partnership. Affiliates of the General Partners from time to time incur certain
operating expenses on behalf of the Partnership for which the Partnership
reimburses the affiliates without interest.


Currently, rental income from the Partnership's Properties, any net
sales proceeds from the sale of Properties pending reinvestment in additional
Properties, and any amounts collected from the promissory notes are invested in
money market accounts or other short-term, highly liquid investments such as
demand deposit accounts at commercial banks, money market accounts and
certificates of deposit with less than a 90-day maturity date, pending the
Partnership's use of such funds to pay Partnership expenses, invest in
additional Properties, or make distributions to the partners. At December 31,
2002, the Partnership had $972,797 invested in such short-term investments as
compared to $1,747,363 at December 31, 2001. The decrease in cash and cash
equivalents was the result of the Partnership (i) investing the proceeds from
Properties sold in 2001 in Arlington Joint Venture, (ii) contributing amounts to
pay constructions costs related to CNL VII, XV Columbus Joint Venture and (iii)
contributing amounts toward the Property acquired by CNL Mansfield Joint
Venture. The decrease in cash and cash equivalents was partially offset by the
collection of a promissory note in October 2002. As of December 31, 2002, the
average interest rate earned on the rental income deposited in demand deposit
accounts at commercial banks was approximately one percent annually. The funds
remaining at December 31, 2002, after payment of distributions and other
liabilities, will be used to invest in additional Properties and to meet the
Partnership's working capital needs.

Short-Term Liquidity

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

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

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

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

The Partnership generally distributes cash from operating activities
remaining after the payment of the operating expenses of the Partnership, to the
extent that the General Partners determine that such funds are available for
distribution. Based primarily on current and anticipated future cash from
operations, the Partnership declared distributions to the Limited Partners of
$2,700,000 for each of the years ended December 31, 2002, 2001, and 2000. This
represents distributions of $0.090 per Unit for each of the years ended December
31, 2002, 2001, and 2000. No amounts distributed to the Limited Partners for the
years ended December 31, 2002, 2001, and 2000 are required to be or have been
treated by the Partnership as a return of capital for purposes of calculating
the Limited Partners' return on their adjusted capital contributions. The
Partnership intends to continue to make distributions of cash available for
distribution to the Limited Partners on a quarterly basis.

During 2000, the General Partners waived their right to receive future
distributions from the Partnership, including both distributions of operating
cash flow and distributions of liquidation proceeds, to the extent that the
cumulative amount of such distributions would exceed the balance in the General
Partners' capital account as of December 31, 1999. Accordingly, the General
Partners were not allocated any net income and did not receive any distributions
during the years ended December 31, 2002, 2001 and 2000.

As of December 31, 2002 and 2001, the Partnership owed $13,151 and
$21,837, respectively, to affiliates for accounting and administrative services
and other amounts. As of March 15, 2003, the Partnership had reimbursed the
affiliates for these amounts. Other liabilities, including distributions
payable, of the Partnership were $720,696 at December 31, 2002, as compared to
$713,022 at December 31, 2001. The General Partners believe that the Partnership
has sufficient cash on hand to meet its current working capital needs.


Long-Term Liquidity

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

Critical Accounting Policies

The Partnership's leases are accounted for under the provisions of
Statement of Accounting Standard No. 13, "Accounting for Leases" ("FAS 13"), and
have been accounted for using either the direct financing or the operating
method. FAS 13 requires management to estimate the economic life of the leased
property, the residual value of the leased property and the present value of
minimum lease payments to be received from the tenant. In addition, management
assumes that all payments to be received under its leases are collectible.
Changes in management's estimates or assumption regarding collectibility of
lease payments could result in a change in accounting for the lease at the
inception of the lease.

The Partnership accounts for its unconsolidated joint ventures using
the equity method of accounting. Under generally accepted accounting principles,
the equity method of accounting is appropriate for entities that are partially
owned by the Partnership, but for which operations of the investee are shared
with other partners. The Partnership's joint venture agreements require the
consent of all partners on all key decisions affecting the operations of the
underlying Property.

Management reviews the Partnership's Properties and investments in
unconsolidated entities periodically for impairment at least once a year or
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The assessment is based on the carrying amount
of the Property or investment at the date it is tested for recoverability
compared to the sum of the estimated future cash flows expected to result from
its operation and sale through the expected holding period. If an impairment is
indicated, the asset is adjusted to its estimated fair value.

When the Partnership makes the decision to sell or commits to a plan to
sell a Property within one year, its operating results are reported as
discontinued operations.

Results of Operations

Comparison of year ended December 31, 2002 to year ended December 31, 2001

Total rental revenues for the Partnership and its consolidated joint
venture were $1,780,431 for the year ended December 31, 2002 as compared to
$1,866,700 during the same period of 2001. The decrease in rental revenues was
primarily due to the sales of several of the Partnership's Properties during
2001 and the reinvestment of the net sales proceeds in a joint venture during
2002. As a result, net income earned by joint ventures increased in 2002 while
rental revenues decreased. The decrease in rental revenues was partially offset
by the fact that in January 2001, the Partnership reinvested a portion of these
net sales proceeds in a Property in Baton Rouge, Louisiana.

The Partnership also earned $74,165 in contingent rental income for the
year ended December 31, 2002 as compared to $75,571 for the same period of 2001.

During the year ended December 31, 2002 and 2001, the Partnership
earned $1,027,311 and $717,096, respectively, attributable to net income earned
by unconsolidated joint ventures. The increase in net income earned by joint
ventures during the year ended December 31, 2002, as compared to the same period
of 2001, was primarily due to the fact that in June 2002, CNL Restaurant
Investments II, in which the Partnership owns an 18% interest, sold its
Properties in Columbus, Ohio and Pontiac, Michigan to the tenant. The
Partnership recorded its pro-rata share of the gains resulting from the sales of
these Properties. The increase was also attributable to earnings received from
the new joint venture arrangements with affiliates of the General Partners, CNL
VII & XVII Lincoln Joint Venture and CNL VII, XV Columbus Joint Venture acquired
in April and August 2001, respectively, and Arlington Joint Venture acquired in
June 2002. The increase in net income earned by joint ventures during the year
ended December 31, 2002 was partially offset by the fact that the tenant of the
Property owned by Duluth Joint Venture, in which the Partnership owns a 56%
interest, experienced financial difficulties and ceased making rental payments
to the joint venture. As a result, Duluth Joint Venture stopped recording rental
revenues during the quarter ended March 31, 2002. During the second quarter of
2002, the tenant began making rental payments to the joint venture and the joint
venture recognized these amounts as rental revenues. In addition, during 2002,
the joint venture recorded a provision for write-down of assets of approximately
$65,800. The provision represented the difference between the Property's net
carrying value and its estimated fair value.


During the year ended December 31, 2002, two lessees (or groups of
affiliated tenants) of the Partnership and its consolidated joint venture, (i)
Golden Corral Corporation, and (ii) Jack in the Box Inc. and Jack in the Box
Eastern Division, L.P. (which are affiliated entities under common control of
Jack in the Box Inc.) (hereinafter referred to as "Jack in the Box Inc."), each
contributed more than 10% of the Partnership's total rental revenues and
mortgage interest income (including rental revenues from the Partnership's
consolidated joint venture and the Partnership's share of rental revenues from
Properties owned by unconsolidated joint ventures and Properties owned with
affiliates of the General Partners as tenants-in-common). As of December 31,
2002, Golden Corral Corporation was the lessee under a lease relating to six
restaurants, and Jack in the Box Inc. was the lessee under leases relating to
four restaurants. It is anticipated that, based on the minimum rental payments
required by the leases, Golden Corral Corporation and Jack in the Box Inc., each
will continue to contribute more than 10% of the Partnership's total rental
revenues during 2003. In addition, during the year ended December 31, 2002,
three Restaurant Chains, Golden Corral, Hardee's and Jack in the Box, each
accounted for more than 10% of the Partnership's total rental revenues and
mortgage interest income (including rental revenues from the Partnership's
consolidated joint venture and the Partnership's share of rental revenues from
Properties owned by unconsolidated joint ventures and Properties owned with
affiliates of the General Partners as tenants-in-common). In 2003, it is
anticipated that these three Restaurant Chains each will continue to account for
more than 10% of the Partnership's total rental revenues to which the
Partnership is entitled under the terms of the leases. Any failure of these
lessees or Restaurant Chains could materially affect the Partnership's income if
the Partnership is not able to re-lease the Properties in a timely manner.

During the years ended December 31, 2002 and 2001, the Partnership also
earned $31,793 and $101,543, respectively, in interest and other income. The
decrease in interest and other income during 2002 was primarily due to a
decrease in the average cash balance as a result of the reinvestment of sales
proceeds in additional Properties through joint venture arrangements during
2002, the collection of the promissory note, as well as a decline in interest
rates.

Operating expenses, including depreciation expense and provision for
write-down of assets, were $551,657 for the year ended December 31, 2002 as
compared to $909,120 for the same period of 2001. Operating expenses were higher
during 2001 due to the fact that the Partnership recorded a provision for
write-down of assets of $279,862 for the Property in Saddlebrook, Florida in
June 2001. The tenant ceased restaurant operations and vacated the Property. The
provision represented the difference between the carrying value of the Property
and its estimated fair value at June 30, 2001. In addition, the Partnership
incurred expenses such as repairs and maintenance and real estate taxes during
2001 in connection with this Property. The Partnership sold this Property in
December 2001.

The decrease in operating expenses during 2002, as compared to the same
period of 2001, was partially offset by the fact that during 2002, the
Partnership elected to reimburse the tenant of the Properties in El Paso,
Harlingen, and Odessa, Texas for certain renovation costs.

In addition, the decrease in operating expenses during 2002, as
compared to the same period of 2001, was partially due to a decrease in the
costs incurred for administrative expenses for servicing the Partnership and its
Properties and due to the Partnership incurring less depreciation expense during
2002 as a result of the sale of several Properties in 2001.

Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement requires that a long-lived asset
be tested for recoverability whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. The carrying amount of
a long-lived asset is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the
asset. The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when the
carrying amount of a long-lived asset exceeds its fair value. If an impairment
is recognized, the adjusted carrying amount of a long-lived asset is its new
cost basis. The statement also requires that the results of operations of a
component of an entity that either has been disposed of or is classified as held
for sale be reported as a discontinued operation if the disposal activity was
initiated subsequent to the adoption of the Standard.


During the year ended December 31 2002, CNL Restaurant Investments II
and CNL Mansfield Joint Venture identified and sold three Properties that each
met the criteria of this standard. During 2002, CNL Restaurant Investments II
sold its Property in Columbus, Ohio to the tenant and recognized a gain of
approximately $448,300 and sold its Property in Pontiac, Michigan to the tenant
resulting in a loss of approximately $189,800. CNL Mansfield Joint Venture sold
its Property in Mansfield, Texas and recognized a gain of approximately
$269,800. The financial results of these Properties are reflected as
Discontinued Operations in the condensed joint venture financial information
presented in the footnotes to the accompanying financial statements. The tenants
exercised their option to purchase the Properties under the terms of their
respective leases and the proceeds from the sales were reinvested in additional
income producing Properties.

Comparison of year ended December 31, 2001 to year ended December 31, 2000

Total rental revenues for the Partnership and its consolidated joint
venture were $1,866,700 for the year ended December 31, 2001 as compared to
$2,145,945 during the same period of 2000. The decrease in rental revenues
during 2001, as compared to 2000, was primarily a result of the sale of several
Properties, as described above. The decrease in rental revenues during 2001 was
also partially due to the fact that the tenant of the Property in Saddlebrook,
Florida ceased restaurant operations in April 2001. In July 2001, the
Partnership and the tenant terminated the lease relating to the Property and as
a result, the Partnership stopped recording rental revenue. In December 2001,
the Partnership sold the Property.

Rental revenues were lower during 2001, as compared to 2000, due to the
fact that during 2000, the lease relating to the Property in Marietta, Georgia
was amended to provide for rent reductions from November 2000 through October
2015. The decrease during 2001 as compared to 2000, was partially offset by the
reinvestment of a portion of the net sales proceeds received during 2000 in a
Property in Baton Rouge, Louisiana. However, as a result of the Partnership
reinvesting in joint ventures and in Properties owned with affiliates as
tenants-in-common, net income earned by unconsolidated joint ventures increased
in 2001.

The Partnership also earned $75,571 in contingent rental income for the
year ended December 31, 2001 as compared to $91,842 for the same period of 2001.
The decrease in contingent rental income during 2001, as compared to 2000, was
primarily attributable to the sale of several Properties during 2000. The
decrease during 2001 was partially offset by an increase in gross sales of
certain restaurant Properties, the leases of which require the payment of
contingent rent.

During the years ended December 31, 2001 and 2000, the Partnership
earned $717,096 and $456,050, respectively, attributable to net income earned by
unconsolidated joint ventures. The increase in net income earned by
unconsolidated joint ventures during 2001, as compared to the previous year, was
primarily due to the Partnership investing in CNL VII & XVII Lincoln Joint
Venture in April 2001, CNL VII, XV Columbus Joint Venture in August 2001, TGIF
Pittsburgh Joint Venture, in June 2000, and Properties in Colorado Springs,
Colorado and Montgomery, Alabama, with affiliates of the General Partners as
tenants-in-common in August 2000 and November 1999, respectively. In addition,
the increase in net income earned by unconsolidated joint ventures during 2001,
as compared to 2000, was partially the result of the Partnership acquiring an
additional 45% interest in Duluth Joint Venture in October 2000.

During the years ended December 31, 2001 and 2000, the Partnership
earned $101,543 and $166,946, respectively, in interest and other income. The
decrease in interest and other income during 2001, as compared to 2000, was
primarily attributable to the Partnership collecting the outstanding balance of
the mortgage note related to the 1995 sale of the Property in Florence, South
Carolina during 2001. The decrease in interest and other income during 2001 was
partially offset by an increase in interest income earned on the net sales
proceeds relating to the sale of several Properties pending the reinvestment of
the net sales proceeds in additional Properties.


Operating expenses, including depreciation expense, were $909,120 for
the year ended December 31, 2001 as compared to $498,933 for the same period of
2000. Operating expenses were higher in 2001 because the Partnership recorded a
provision for write-down of assets of $279,862 related to the Property in
Saddlebrook, Florida. The Partnership also incurred insurance and real estate
tax expenses in connection with this Property.

The increase in operating expenses during 2001, was also partially
attributable to an increase in the costs incurred for administrative expenses
for servicing the Partnership and its Properties. In addition, the increase in
operating expenses during 2001, as compared to 2000, was partially due to the
Partnership incurring additional state taxes in states in which the Partnership
conducts business. The increase in operating expenses during 2001, as compared
to 2000, was partially offset by a decrease in depreciation expense as a result
of the sales of several Properties during 2001 and 2000.

The Partnership incurred $35,134 during 2000 in transaction costs
related to the General Partners retaining financial and legal advisors to assist
them in evaluating and negotiating a proposed merger with APF. The merger
negotiations were terminated in March 2000.

During 2001, the Partnership collected the outstanding balance of the
mortgage note relating to the 1995 sale of the Property in Florence, South
Carolina. During 2001 and 2000, the Partnership recognized $122,996 and $1,147,
respectively, of previously deferred gains related to the sale of this Property.
The Partnership recorded the sale using the installment method, and as such, the
gain was deferred and recognized as income proportionally as payments under the
mortgage note were collected.

As a result of the sales of several Properties during 2001 and 2000,
the Partnership recognized gains totaling $382,122 and $878,347, respectively.

The restaurant industry has been relatively resilient during this
volatile time with steady performance during 2002. However, the industry remains
in a state of cautious optimism. Restaurant operators expect their business to
be better in 2003, according to a nationwide survey conducted by the National
Restaurant Association, but are concerned by the budget deficits being
experienced by many states and the potential of new taxes on the industry to
alleviate the situation.

The Partnership's leases as of December 31, 2002, are generally
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in base rent at specified times
during the term of the lease. Inflation, overall, has had a minimal effect on
results of operations of the Partnership. Continued inflation also may cause
capital appreciation of the Partnership's Properties. Inflation and changing
prices, however, also may have an adverse impact on the sales of the restaurants
and on potential capital appreciation of the Properties.

In January 2003, FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" to expand upon and strengthen
existing accounting guidance that addresses when a company should include the
assets, liabilities and activities of another entity in its financial
statements. To improve financial reporting by companies involved with variable
interest entities (more commonly referred to as special-purpose entities or
off-balance sheet structures), FIN 46 requires that a variable interest entity
be considered by a company if that company is subject to a majority risk of loss
from the variable interest entity's activities or entitled to receive a majority
of the entity's residual returns or both. Prior to FIN 46, a company generally
included another entity in its consolidated financial statements only if it
controlled the entity through voting interests. Consolidation of variable
interests entities will provide more complete information about the resources,
obligations, risks and opportunities of the consolidated company. The
consolidation requirements of FIN 46 apply immediately to variable interest
entities created after January 31, 2003, and to older entities in the first
fiscal year or interim period beginning after June 15, 2003. Management believes
adoption of this standard may result in either consolidation or additional
disclosure requirements with respect to the Partnership's unconsolidated joint
ventures or Properties held with affiliates of the General Partners as
tenants-in-common, which are currently accounted for under the equity method.
However, such consolidation is not expected to significantly impact the
Partnership's results of operations.






Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data





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

CONTENTS



Page

Report of Independent Certified Public Accountants 20
Financial Statements:
Balance Sheets 21
Statements of Income 22
Statements of Partners' Capital 23
Statements of Cash Flows 24-25
Notes to Financial Statements 26-39








Report of Independent Certified Public Accountants






To the Partners
CNL Income Fund VII, Ltd.

In our opinion, the accompanying balance sheets and the related statements of
income, of partners' capital and of cash flows present fairly, in all material
respects, the financial position of CNL Income Fund VII, Ltd. (a Florida limited
partnership) at December 31, 2002 and 2001, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2002 in conformity with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial statement
schedules listed in the index appearing under item 15(a)(2) present fairly, in
all material respects, the information set forth therein when read in
conjunction with the related financial statements. These financial statements
and financial statement schedules are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

As described in Note 1 to the financial statements, on January 1, 2002, the
Partnership adopted Statement of Financial Accounting Standard No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets."




/s/ PricewaterhouseCoopers LLP

Orlando, Florida
January 31, 2003









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

BALANCE SHEETS




December 31,
2002 2001
---------------- -----------------


ASSETS

Real estate properties with operating leases, net $ 11,109,588 $ 11,333,419
Net investment in direct financing leases 2,344,317 2,452,964
Investment in joint ventures 9,083,991 8,212,208
Mortgage and other notes receivable, less deferred gain -- 104,717
Cash and cash equivalents 972,797 1,747,363
Receivables 68,597 74,097
Due from related parties -- 12,968
Accrued rental income 1,042,794 1,058,589
Other assets 90,801 76,895
---------------- -----------------

$ 24,712,885 $ 25,073,220
================ =================

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable $ 4,551 $ 12,306
Distributions payable 675,000 675,000
Due to related parties 13,151 21,837
Rents paid in advance 41,145 25,716
---------------- -----------------
Total liabilities 733,847 734,859

Minority interest 138,945 141,790

Partners' capital 23,840,093 24,196,571
---------------- -----------------

$ 24,712,885 $ 25,073,220
================ =================



See accompanying notes to financial statements.




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

STATEMENTS OF INCOME




Year Ended December 31,
2002 2001 2000
------------------ ------------------ ---------------


Revenues:
Rental income from operating leases $ 1,486,761 $ 1,559,410 $ 1,765,623
Earned income from direct financing leases 293,670 307,290 380,322
Contingent rental income 74,165 75,571 91,842
Interest and other income 31,793 101,543 166,946
------------------ ------------------ ---------------
1,886,389 2,043,814 2,404,733
------------------ ------------------ ---------------
Expenses:
General operating and administrative 237,355 273,351 173,205
Property expenses 61,025 75,250 13,488
State and other taxes 29,446 33,922 14,209
Depreciation 223,831 246,735 262,897
Provision for write-down of assets -- 279,862 --
Transaction costs -- -- 35,134
------------------ ------------------ ---------------
551,657 909,120 498,933
------------------ ------------------ ---------------

Income Before Gain on Sale of Assets, Minority Interest in
Income of Consolidated Joint Venture and Equity in
Earnings of Unconsolidated Joint Ventures 1,334,732 1,134,694 1,905,800

Gain on Sale of Assets -- 382,122 878,347

Minority Interest in Income of Consolidated Joint Venture (18,521 ) (18,342 ) (18,682 )

Equity in Earnings of Unconsolidated Joint Ventures 1,027,311 717,096 456,050
------------------ ------------------ ---------------

Net Income $ 2,343,522 $ 2,215,570 $ 3,221,515
================== ================== ===============

Net Income Per Limited Partner Unit $ 0.078 $ 0.074 $ 0.107
================== ================== ===============

Weighted Average Number of
Limited Partner Units Outstanding 30,000,000 30,000,000 30,000,000
================== ================== ===============


See accompanying notes to financial statements.





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

STATEMENTS OF PARTNERS' CAPITAL

Years Ended December 31, 2002, 2001, and 2000




General Partners Limited Partners
-------------------------------------- ------------------------------------------------------
Accumulated Accumulated
Contributions Earnings Contributions Distributions Earnings
------------------ ----------------- ---------------- ---------------- -----------------


Balance, December 31, 1999 $ 1,000 $ 229,931 $ 30,000,000 $ 22,946,178 $(25,577,623 )


Distributions to limited
partners ($0.090 per
limited partner unit) -- -- -- (2,700,000 ) --
Net income -- -- -- -- 3,221,515
------------------ ------------ ---------------- ---------------- -----------------

Balance, December 31, 2000 1,000 229,931 30,000,000 (28,277,623 ) 26,167,693

Distributions to limited
partners ($0.090 per
limited partner unit) -- -- -- (2,700,000 ) --
Net income -- -- -- -- 2,215,570
------------------ ------------ ---------------- ---------------- -----------------

Balance, December 31, 2001 1,000 229,931 30,000,000 (30,977,623 ) 28,383,263

Distributions to limited
partners ($0.090 per
limited partner unit) -- -- -- (2,700,000 ) --
Net income -- -- -- -- 2,343,522
----------------- ----------------- --------------- ---------------- -----------------

Balance, December 31, 2002 $ 1,000 $ 229,931 $ 30,000,000 $ (33,677,623 ) $ 30,726,785
================== ================= ================ ================ =================


Syndication
Costs Total
-------------- --------------

$ (3,440,000) $24,159,486




-- (2,700,000 )
-- 3,221,515
-------------- --------------

(3,440,000 ) 24,681,001



-- (2,700,000 )
-- 2,215,570
-------------- --------------

(3,440,000 ) 24,196,571



-- (2,700,000 )
-- 2,343,522
------------- --------------

$ (3,440,000 ) $23,840,093
============== ==============


See accompanying notes to financial statments.




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

STATEMENTS OF CASH FLOWS




Year Ended December 31,
2002 2001 2000
---------------- ------------------- ---------------


Increase (Decrease) in Cash and Cash Equivalents:

Cash Flows from Operating Activities:
Net Income $ 2,343,522 $ 2,215,570 $ 3,221,515
----------------- ------------------- ------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 223,831 246,735 262,897
Amortization of net investment in direct
financing leases 108,647 95,360 100,821
Minority interest in income of consolidated joint
venture 18,521 18,342 18,682
Gain on sale on real estate properties -- (382,122 ) (878,347 )
Provision for loss on real estate properties -- 279,862 --
Equity in earnings of unconsolidated joint
ventures, net of distributions (66,871 ) 9,531 53,738
Decrease (increase) in receivables 5,546 12,254 (13,707 )
Decrease (increase) in due from related parties 12,922 (11,712 ) (1,256 )
Decrease (increase) in interest receivable 1,136 18,335 (13,064 )
Decrease (increase) in other assets (13,906 ) 10,635 (12,888 )
Decrease (increase) in accrued rental income 15,795 14,159 (59,795 )
Decrease in accounts payable (7,755 ) (19,109 ) (65,479 )
Increase (decrease) in due to related parties (8,686 ) (45,978 ) 8,684
Increase (decrease) in rents paid in advance and
deposits 15,429 17,401 (1,792 )
----------------- ------------------- ------------------
Total adjustments 304,609 263,693 (601,506 )
----------------- ------------------- ------------------

Net Cash Provided by Operating Activities 2,648,131 2,479,263 2,620,009
----------------- ------------------- ------------------
Cash Flows from Investing Activities:
Additions to real estate properties with operating leases -- (1,495,699 ) --
Proceeds from sale of real estate properties -- 1,094,282 4,122,336
Investment in certificate of deposit -- 100,000 (100,000 )
Investment in joint ventures (934,800 ) (1,769,135 ) (2,361,644 )
Liquidating distribution from joint venture -- -- 461,208
Return of capital from joint venture 129,888 -- --
Decrease (increase) in restricted cash -- 1,503,682 (1,503,682 )
Collections on mortgage notes receivable 103,581 1,101,865 10,279
----------------- ------------------- ------------------
Net cash (used in) provided by investing activities (701,331 ) 534,995 628,497
----------------- ------------------- ------------------

Cash Flows from Financing Activities:
Distributions to limited partners (2,700,000 ) (2,700,000 ) (2,700,000 )
Distributions to holders of minority interest (21,366 ) (20,920 ) (19,829 )
------------------- ------------------ ------------------
Net cash used in financing activities (2,721,366 ) (2,720,920 ) (2,719,829 )
----------------- ------------------- ------------------

Net Increase (Decrease) in Cash and Cash Equivalents (774,566 ) 293,338 528,677

Cash and Cash Equivalents at Beginning of Year 1,747,363 1,454,025 925,348
----------------- ------------------- ------------------

Cash and Cash Equivalents at End of Year $ 972,797 $ 1,747,363 $ 1,454,025
================= =================== ==================






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

STATEMENTS OF CASH FLOWS - CONTINUED




Year Ended December 31,
2001 2000 1999
----------------- --------------- --------------



Supplemental Schedule of Non-Cash Financing Activities:

Promissory note accepted in exchange for
sale of land and building $ -- $ 103,581 $ --
================= =============== ==============

Distributions declared and unpaid at
December 31 $ 675,000 $ 675,000 $ 675,000
================ =============== ==============










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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2002, 2001, and 2000

1. Significant Accounting Policies:
-------------------------------

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

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

Real Estate and Lease Accounting - The Partnership records the
acquisitions of real estate properties at cost, including acquisition
and closing costs. Real estate properties are leased to third parties
generally on a triple-net basis, whereby the tenant is generally
responsible for all operating expenses relating to the property,
including property taxes, insurance, maintenance and repairs. During
the years ended December 31, 2002, 2001, and 2000 tenants paid directly
to real estate taxing authorities $274,800, $264,900 and $267,600,
respectively, in real estate taxes in accordance with the terms of
their triple net leases with the Partnership.

The leases of the Partnership provide for base minimum annual rental
payments payable in monthly installments. In addition, certain leases
provide for contingent rental revenues based on the tenants' gross
sales in excess of a specified threshold. The Partnership defers
recognition of the contingent rental revenues until the defined
thresholds are met. The leases are accounted for using either the
direct financing or the operating methods. Such methods are described
below:

Directfinancing method - Leases accounted for using the direct
financing method are recorded at their net investment (which at
the inception of the lease generally represents the cost of the
asset). Unearned income is deferred and amortized to income
over the lease terms so as to produce a constant periodic rate
of return on the Partnership's net investment in the leases.
For the leases classified as direct financing leases, the
building portions of the property leases are accounted for as
direct financing leases while the land portion of these leases
are operating leases.

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

Accrued rental income represents the aggregate amount of income
recognized on a straight-line basis in excess of scheduled
rental payments to date.

Substantially all leases are for 10 to 20 years and provide for minimum
and contingent rentals. The lease options generally allow tenants to
renew the leases for two to five successive five-year periods subject
to the same terms and conditions as the initial lease. Most leases also
allow the tenant to purchase the property at fair market value after a
specified portion of the lease has elapsed.






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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2002, 2001, and 2000


1. Significant Accounting Policies - Continued:

When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, are removed from the
accounts and gains or losses from sales are reflected in income. The
general partners of the Partnership review properties for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable through operations. The
general partners determine whether an impairment in value has occurred
by comparing the estimated future undiscounted cash flows, including
the residual value of the property, with the carrying cost of the
individual property. If an impairment is indicated, the assets are
adjusted to their fair value.

When the collection of amounts recorded as rental or other income is
considered to be doubtful, a provision is made to increase the
allowance for doubtful accounts. If amounts are subsequently determined
to be uncollectible, the corresponding receivable and allowance for
doubtful accounts are decreased accordingly.

Investment in Joint Ventures - The Partnership accounts for its 83.3%
interest in San Antonio #849 Joint Venture using the consolidation
method. Minority interest represents the minority joint venture
partner's proportionate share of the equity in the Partnership's
consolidated joint venture. All significant intercompany accounts and
transactions have been eliminated.

The Partnership's investments in CNL Restaurant Investments II, Des
Moines Real Estate Joint Venture, CNL Mansfield Joint Venture, Duluth
Joint Venture, and TGIF Pittsburgh Joint Venture, CNL VII & XVII
Lincoln Joint Venture and CNL VII, XV Columbus Joint Venture, Arlington
Joint Venture and a property in Smithfield, North Carolina, a property
in Miami, Florida, a property in Montgomery, Alabama, and a property in
Colorado Springs, Colorado, for which each of the four properties is
held as tenants-in-common with affiliates of the general partners, are
accounted for using the equity method since each joint venture
agreement requires the consent of all partners on all key decisions
affecting the operations of the underlying property.

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

Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts.

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




CNL INCOME FUND VII, LTD
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


1. Significant Accounting Policies - Continued:
-------------------------------------------

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

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

Reclassification - Certain items in the prior years' financial
statements have been reclassified to conform to 2002 presentation,
including a change in presentation of the statement of cash flows from
the direct to the indirect method. These reclassification had no effect
on total partners' capital, net income or cash flows.

Statement of Financial Accounting Standards No. 144 ("FAS 144") -
Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets." This statement requires that a
long-lived asset be tested for recoverability whenever events or
changes in circumstances indicate that its carrying amount may not be
recoverable. The carrying amount of a long-lived asset is not
recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset.
The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when
the carrying amount of a long-lived asset exceeds its fair value. If an
impairment is recognized, the adjusted carrying amount of a long-lived
asset is its new cost basis. The statement also requires that the
results of operations of a component of an entity that either has been
disposed of or is classified as held for sale be reported as a
discontinued operation if the disposal activity was initiated
subsequent to the adoption of the Standard.

FASB Interpretation No. 46 ("FIN 46") - In January 2003, FASB issued
FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable
Interest Entities" to expand upon and strengthen existing accounting
guidance that addresses when a company should include the assets,
liabilities and activities of another entity in its financial
statements. To improve financial reporting by companies involved with
variable interest entities (more commonly referred to as
special-purpose entities or off-balance sheet structures), FIN 46
requires that a variable interest entity be considered by a company if
that company is subject to a majority risk of loss from the variable
interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. Prior to FIN 46, a company generally
included another entity in its consolidated financial statements only
if it controlled the entity through voting interests. Consolidation of
variable interests entities will provide more complete information
about the resources, obligations, risks and opportunities of the
consolidated company. The consolidation requirements of FIN 46 apply
immediately to variable interest entities created after January 31,
2003, and to older entities in the first fiscal year or interim period
beginning after June 15, 2003. Management believes adoption of this
standard may result in either consolidation or additional disclosure
requirements with respect to the Partnership's unconsolidated joint
ventures or properties held with affiliates of the general partners as
tenants-in-common, which are currently accounted for under the equity
method. However, such consolidation is not expected to significantly
impact the Partnership's results of operations.






CNL INCOME FUND VII, LTD
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


2. Real Estate Properties with Operating Leases:
--------------------------------------------

Real estate properties with operating leases consisted of the following
at December 31:



2002 2001
----------------- -----------------


Land $ 6,756,854 $ 6,756,854
Buildings 6,714,927 6,714,927
----------------- -----------------
13,471,781 13,471,781

Less accumulated depreciation (2,362,193 ) (2,138,362 )
----------------- -----------------
$ 11,109,588 $ 11,333,419
================= =================


In June 2000, the Partnership sold its property in Pueblo, Colorado, to
a third party and received net sales proceeds of $1,005,000, resulting
in a gain of $97,056. In August 2000, the Partnership reinvested the
majority of the net sales proceeds in an additional Property in
Colorado Springs, Colorado as tenants-in-common with CNL Income Fund
XII, Ltd., a Florida limited partnership and an affiliate of the
general partners.

In September 2000, the Partnership sold its property in Brunswick,
Georgia, its property in Lake City, Florida, and three properties in
Jacksonville, Florida, for which the land and building of one of the
properties was classified as a direct financing lease, to separate
third parties for a total of approximately $2,404,800 and received net
sales proceeds of approximately $2,392,300, resulting in a total gain
of $619,495.

In addition, in December 2000, the Partnership sold its property in
Friendswood, Texas, for which the building was classified as a direct
financing lease, to the tenant in accordance with the purchase option
under the lease agreement for $725,000, resulting in a gain of
$160,649.

In January 2001, the Partnership reinvested the net sales proceeds
received from the 2000 sales of three of its properties, (two in
Jacksonville, Florida and one in Lake City, Florida), in a Property in
Baton Rouge, Louisiana at an approximate cost of $1,495,700.

In addition, in November 2001, the Partnership sold its properties in
Daytona Beach and Gainesville, Florida and received net sales proceeds
of $499,813, resulting in a gain of $184,894. In connection with the
sales of the properties, the Partnership received $396,232 in cash and
accepted a promissory note in the amount of $103,581.

During the year ended December 31, 2001, the Partnership established a
provision for write-down of assets in the amount of $279,862, relating
to the property in Saddlebrook, Florida. The tenant vacated the
property and ceased restaurant operations. The provision represented
the difference between the net carrying value of the property at
September 30, 2001 and its estimated fair value. In addition, in
December 2001, the Partnership sold its property in Saddlebrook,
Florida and received net sales proceeds of $698,050, resulting in a
gain of $74,232.





CNL INCOME FUND VII, LTD
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


2. Real Estate Properties with Operating Leases - Continued:
--------------------------------------------------------

The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2002:

2003 $ 1,481,956
2004 1,480,939
2005 1,178,653
2006 973,102
2007 951,805
Thereafter 4,580,051
--------------
$ 10,646,506
==============

3. Net Investment in Direct Financing Leases:
-----------------------------------------

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



2002 2001
----------------- -----------------


Minimum lease payments receivable $ 3,223,555 $ 3,625,871
Estimated residual values 768,233 768,233
Less unearned income (1,647,471 ) (1,941,140 )
----------------- -----------------

Net investment in direct financing leases $ 2,344,317 $ 2,452,964
================= =================


The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 2002:

2003 $ 402,342
2004 402,342
2005 402,342
2006 402,342
2007 402,342
Thereafter 1,211,845
--------------
$ 3,223,555
==============

4. Investment in Joint Ventures:
----------------------------

The Partnership has an 18% interest, a 4.79% interest, a 79% interest
and 56% interest in the profits and losses of CNL Restaurant
Investments II, Des Moines Real Estate Joint Venture, CNL Mansfield
Joint Venture, and Duluth Joint Venture, respectively. The remaining
interests in these joint ventures are held by affiliates of the
Partnership which have the same general partners. The Partnership also
has a 53% interest in a property in Smithfield, North Carolina, with an
affiliate of the general partners, as tenants-in-common, a 35.64%
interest in a property in Miami, Florida, with an affiliate of the
general partners, as tenants-in-common, a 71% interest in a property in
Montgomery, Alabama, with an affiliate of the general partners, as
tenants-in-common and a 43% interest in a property in Colorado Springs,
Colorado, with an affiliate of the general partners, as
tenants-in-common. Amounts relating to its investment are included in
investment in joint ventures.





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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


4. Investment in Joint Ventures - Continued:
----------------------------------------

In January 2001, the Partnership acquired an additional interest in
TGIF Pittsburgh Joint Venture from CNL Income Fund XVIII, Ltd., a
Florida limited partnership and an affiliate of the general partners,
for an aggregate purchase price of approximately $500,000. As of
December 31, 2002, the Partnership owned a 36.88% interest in the
profits and losses of the joint venture.

In April 2001, the Partnership used a portion of the net sales proceeds
from the sale of its property in Friendswood, Texas and a portion of
the 2001 collection of a promissory note to enter into a joint venture
arrangement, CNL VII & XVII Lincoln Joint Venture, with CNL Income Fund
XVII, Ltd., an affiliate of the general partners, to hold one
restaurant property. The joint venture acquired this property from CNL
BB Corp., an affiliate of the general partners. As of December 31,
2002, the Partnership owned a 14% interest in the profits and losses of
the joint venture.

In August 2001, the Partnership used the remaining portion of the 2001
collection of a promissory note to enter into joint venture
arrangement, CNL VII, XV Columbus Joint Venture, with CNL Income Fund
XV, Ltd., an affiliate of the general partners, to construct one
restaurant property in Columbus, Georgia. As of December 31, 2001, the
Partnership had contributed approximately $1,025,500 to purchase land
and pay for construction costs relating to the joint venture. During
2002, the Partnership contributed $76,700 to complete the construction.
As of December 31, 2002, the Partnership owned a 68.75% interest in the
profits and losses of the joint venture.

In June 2002, CNL Restaurant Investments II, in which the Partnership
owns an 18% interest, sold its property in Columbus, Ohio to the tenant
for a sales price of approximately $1,219,600 and received net sales
proceeds of approximately $1,215,700, resulting in a gain of $448,300.
In addition, in June 2002, CNL Restaurant Investments II sold its
property in Pontiac, Michigan to the tenant for a sales price of
$725,000 and received net sales proceeds of approximately $722,600,
resulting in a loss of $189,800. The tenants exercised their option to
purchase the properties under the terms of their respective leases. The
Partnership received $129,888 as a return of capital from the net sales
proceeds, and used approximately $63,900 to pay an additional
contribution to CNL Mansfield Joint Venture. The joint venture used the
proceeds from the sale of the property in Columbus, Ohio to acquire a
property in Dallas, Texas at an approximate cost of $1,147,400. The
joint venture acquired this property from CNL Funding 2001-A, LP, an
affiliate of the general partners. The financial results for these
properties are reflected as Discontinued Operations in the condensed
financial information presented below.

In addition, in June 2002, the Partnership used a portion of the net
sales proceeds from the 2001 sale of its properties in Saddlebrook,
Gainesville and Daytona Beach, Florida to enter into a joint venture
arrangement, Arlington Joint Venture, with CNL Income Fund XVI, Ltd.,
an affiliate of the general partners, to hold one restaurant property.
The joint venture acquired this property from CNL Funding 2001-A, LP,
an affiliate of the general partners. As of December 31, 2002, the
Partnership had contributed approximately $792,900 for a 79% interest
in the profits and losses of the joint venture.





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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


4. Investment in Joint Ventures - Continued:
----------------------------------------

In May 2002, CNL Mansfield Joint Venture, in which the Partnership owns
a 79% interest, entered into negotiations with the tenant to sell the
property in Mansfield, Texas. As a result, the joint venture
reclassified the assets relating to this property from land and
building on operating leases and accrued rental income to real estate
held for sale. The property was recorded at the lower of its carrying
amount or fair value less cost to sell. In addition, the joint venture
stopped recording depreciation and accrued rental income upon
identifying the property as held for sale. In August 2002, the joint
venture sold the property to the tenant for a sales price of $1,045,000
and received net sales proceeds of approximately $1,011,500, resulting
in a gain of approximately $269,800. The joint venture used the
proceeds from the sale of the property in Mansfield, Texas and an
additional contribution of approximately $63,900 received from the
Partnership, as described above, to acquire a property in Arlington,
Texas from CNL Net Lease Investors, L.P., at an approximate cost of
$1,089,900. CNL Net Lease Investors, L.P. is an affiliate of the
general partners. The financial results for this property are reflected
as Discontinued Operations in the condensed financial information
presented below.

As of December 31, 2002, CNL Restaurant Investments II owns and leases
five properties to operators of national fast-food or family-style
restaurants. Des Moines Joint Venture, CNL Mansfield Joint Venture,
Duluth Joint Venture, TGIF Pittsburgh Joint Venture, CNL VII & XVII
Lincoln Joint Venture, CNL VII, XV Columbus Joint Venture and Arlington
Joint Venture each own and lease one property to operators of national
fast-food or family-style restaurants. In addition, the Partnership and
affiliates, in four separate tenancy in common arrangements, each own
and lease one property to national fast-food or family-style
restaurants.

The following presents the combined, condensed financial information
for all of the Partnership's investments in joint ventures and
properties held as tenants-in-common with affiliates at:



December 31, December 31,
2002 2001
------------------ ----------------


Land and buildings on operating leases, net $ 19,271,302 $ 16,405,484
Net investment in direct financing lease 1,743,852 1,765,740
Real estate held for sale - 2,443,638
Cash 52,263 62,669
Receivables 2,445 146,025
Accrued rental income 424,858 355,752
Other assets 512 1,471
Liabilities 149,219 256,902
Partners' capital 21,346,013 20,923,877







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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


4. Investment in Joint Ventures - Continued:
----------------------------------------



Years Ended December 31,
2002 2001 2000
--------------- -------------- ---------------


Continuing Operations:
Revenues $ 2,289,015 $ 2,111,821 $ 1,349,662
Expenses (450,972 ) (362,045 ) (264,642 )
Provision for write-down of assets (65,755 ) -- --
--------------- -------------- ---------------
Income from Continuing Operations 1,772,288 1,749,776 1,085,020
--------------- -------------- ---------------

Discontinued Operations:

Revenues 167,216 200,960 311,630
Expenses (25,973 ) (45,010 ) (70,570 )
Gain on disposal of assets 528,296 -- --
--------------- -------------- ---------------
Income from Discontinued Operations 669,539 155,950 241,060
--------------- -------------- ---------------
Net Income $ 2,441,827 $ 1,905,726 $ 1,326,080
=============== ============== ===============


The Partnership recognized income totaling $1,027,311, $717,096, and
$456,050 for the years ended December 31, 2002, 2001, and 2000,
respectively, from these joint ventures and the properties held as
tenants in common with affiliates.

5. Allocations and Distributions:
-----------------------------

From inception through December 31, 1999, all net income and net losses
of the Partnership, excluding gains and losses from the sale of
properties, were allocated 99 percent to the limited partners and one
percent to the general partners. From inception through December 31,
1999, distributions of net cash flow were made 99 percent to the
limited partners and one percent to the general partners. However, the
one percent of net cash flow to be distributed to the general partners
was subordinated to receipt by the limited partners of an aggregate,
ten percent, cumulative, noncompounded annual return on their adjusted
capital contributions (the "10% Preferred Return").

From inception through December 31, 1999, generally, net sales proceeds
from the sale of properties not in liquidation of the Partnership, to
the extent distributed, were distributed first to the limited partners
in an amount sufficient to provide them with their 10% Preferred
Return, plus the return of their adjusted capital contributions. The
general partners then received, to the extent previously subordinated
and unpaid, a one percent interest in all prior distributions of net
cash flow and a return of their capital contributions. Any remaining
sales proceeds were distributed 95 percent to the limited partners and
five percent to the general partners. Any gain from the sale of a
property not in liquidation of the Partnership was, in general,
allocated in the same manner as net sales proceeds are distributable.
Any loss from the sale of a property not in liquidation of the
Partnership was, in general, allocated first, on a pro rata basis, to
partners with positive balances in their capital accounts; and
thereafter, 95 percent to the limited partners and five percent to the
general partners.





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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


5. Allocations and Distributions - Continued:
-----------------------------------------

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

Effective January 2000, the general partners waived their right to
receive future distributions from the Partnership, including both
distributions of operating cash flow and distributions of liquidation
proceeds, to the extent that the cumulative amount of such
distributions would exceed the balance in the general partners' capital
account as of December 31, 1999. Accordingly, for years commencing
January 1, 2000 and after, the Partnership's net income will be
allocated entirely among the limited partners. However, if losses are
allocated to the general partners in a year, an amount of income equal
to the sum of such losses may be allocated to the general partners in
succeeding years. Accordingly, the general partners were not allocated
any net income and did not receive any distribution during the years
ended December 31, 2002, 2001 and 2000.

During each of the years ended December 31, 2002, 2001, and 2000, the
Partnership declared distributions to the limited partners of
$2,700,000. No distributions have been made to the general partners to
date.





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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


6. Income Taxes:
------------

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



2002 2001 2000
------------- ------------- ------------



Net income for financial reporting purposes $ 2,343,522 $2,215,570 $ 3,221,515

Effect of timing differences relating to
depreciation (17,790 ) (14,382 ) (19,345 )

Effect of timing differences relating to
gains/losses on property sales -- 109,317 (832,083 )

Provision for loss on assets -- 279,862 --

Direct financing leases recorded as operating
leases for tax reporting purposes 108,647 95,360 100,821

Effect of timing differences relating to equity
in earnings of unconsolidated joint ventures (318,050 ) (59,325 ) (6,585 )

Accrued rental income 12,040 14,159 (59,795 )

Rents paid in advance 4,628 17,901 (1,792 )

Effect of timing differences relating to
minority interest of consolidated joint venture 12,630 (728 ) 981

Effect of timing differences relating to
allowance for doubtful accounts -- (504 ) (16,175 )

Deduction of transaction costs for tax reporting
purposes -- -- (179,206 )
------------- ------------- ------------
Net income for federal income tax purposes $ 2,145,627 $2,657,230 $ 2,208,336
============= ============= ============







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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


7. Related Party Transactions:
--------------------------

One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Holdings, Inc. The other individual
general partner, Robert A. Bourne, serves as President and Treasurer of
CNL Financial Group, Inc., a wholly owned subsidiary of CNL Holdings,
Inc. CNL APF Partners, LP, a wholly owned subsidiary of CNL American
Properties Fund, Inc. ("APF") served as the Partnership's advisor until
January 1, 2002, when it assigned its rights and obligations under a
management agreement to RAI Restaurants, Inc. (formerly known as CNL
Restaurants XVIII, Inc.). RAI Restaurants, Inc. ("the Advisor") is a
wholly owned subsidiary of APF. The individual general partners are
stockholders and directors of APF.

In connection therewith, the Partnership has agreed to pay the Advisor
an annual, noncumulative, subordinated management fee of one percent of
the sum of gross revenues from properties wholly owned by the
Partnership and the Partnership's allocable share of gross revenues
from joint ventures and the properties held as tenants-in-common with
affiliates, but not in excess of competitive fees for comparable
services. These fees will be incurred and will be payable only after
the limited partners receive their 10% Preferred Return. Due to the
fact that these fees are noncumulative, if the limited partners have
not received their 10% Preferred Return in any particular year, no
management fee will be due or payable for such year. As a result of
such threshold, no management fees were incurred during the years ended
December 31, 2002, 2001, and 2000.

The Advisor is also entitled to receive a deferred, subordinated real
estate disposition fee, payable upon the sale of one or more properties
based on the lesser of one-half of a competitive real estate commission
or three percent of the sales price if the Advisor provides a
substantial amount of services in connection with the sale. However, if
the net sales proceeds are reinvested in a replacement property, no
such real estate disposition fees will be incurred until such
replacement property is sold and the net sales proceeds are
distributed. The payment of the real estate disposition fee is
subordinated to the receipt by the limited partners of their aggregate
10% Preferred Return, plus their adjusted capital contributions. No
deferred, subordinated real estate disposition fees were incurred for
the years ended December 31, 2002, 2001, and 2000.

During the years ended December 31, 2002, 2001, and 2000, the
Partnership's advisor and its affiliate provided accounting and
administrative services to the Partnership. The Partnership incurred
$166,302, $170,123, and $91,926 for the years ended December 31, 2002,
2001, and 2000, respectively, for such services.

In January 2001, the Partnership acquired a property located in Baton
Rouge, Louisiana from CNL Funding 2001-A, LP, for a purchase price of
approximately $1,495,700. CNL Fund 2001-A, LP is a an affiliate of the
general partners. CNL Funding 2001-A, LP had purchased and temporarily
held title to the property in order to facilitate the acquisition of
the property by the Partnership. The purchase price paid by the
Partnership represented the cost incurred by CNL Funding 2001-A, LP to
acquire and carry the property.

In April 2001, the Partnership and CNL Income Fund XVII, Ltd., through
a joint venture arrangement, CNL VII & XVII Lincoln Joint Venture,
acquired a Golden Corral property from CNL BB Corp., an affiliate of
the general partners, for a total purchase price of $1,740,374. CNL
Income Fund XVII, Ltd. is an affiliate of the general partners. CNL BB
Corp. had purchased and temporarily held title to this property in
order to facilitate the acquisition of the property by the joint
venture. The purchase price paid by the joint venture represented the
costs incurred by CNL BB Corp. to acquire and carry the property.





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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


7. Related Party Transactions - Continued:
--------------------------------------

In June 2002, the Partnership and CNL Income Fund XVI, Ltd. through a
joint venture arrangement, Arlington Joint Venture, acquired a
property, in Arlington, Texas, from CNL Funding 2001-A, LP, for a
purchase price of approximately $1,003,600. In addition, in June 2002,
CNL Restaurant Investments II Joint Venture acquired a property in
Dallas, Texas from CNL Funding 2001-A, LP for a purchase price of
approximately $1,147,400. CNL Funding 2001-A, LP is an affiliate of the
general partners. CNL Funding 2001-A, LP had purchased and temporarily
held title to the properties in order to facilitate the acquisition of
the properties by the joint ventures. The purchase price paid by the
joint ventures represented the costs incurred by CNL Funding 2001-A, LP
to acquire and carry the properties.

In September 2002, CNL Mansfield Joint Venture acquired a property in
Arlington, Texas from CNL Net Lease Investors, L.P. ("NLI"), at an
approximate cost of $1,089,900. During 2002, and prior to the joint
venture's acquisition of this property, CNL Financial LP Holding, LP
("CFN") and CNL Net Lease Investors GP Corp. ("GP Corp") purchased the
limited partner's interest and general partner's interest,
respectively, of NLI. Prior to this transaction, an affiliate of the
Partnership's general partners owned a 0.1% interest in NLI and served
as a general partner of NLI. The original general partners of NLI
waived their rights to benefit from this transaction. The acquisition
price paid by CFN for the limited partner's interest was based on the
portfolio acquisition price. The joint venture acquired the property in
Arlington, Texas at CFN's cost and did not pay any additional
compensation to CFN for the acquisition of the property. Each CNL
entity is an affiliate of the Partnership's general partners.

The amounts due to related parties totaled $13,151 and $21,837 at
December 31, 2002 and 2001, respectively.

8. Concentration of Credit Risk:
----------------------------

The following schedule presents total rental revenues and mortgage
interest income from individual lessees, or affiliated groups of
lessees, each representing more than 10% of the Partnership's total
rental revenues and mortgage interest income (including the
Partnership's share of total rental revenues from the unconsolidated
joint ventures and the properties held as tenants-in-common with
affiliates of the general partners) for each of the years ended
December 31:



2002 2001 2000
------------- ------------- -------------


Golden Corral Corporation $ 766,789 $ 763,975 $ 732,948
Jack in the Box Inc. 366,284 349,985 N/A
Restaurant Management
Services, Inc. N/A N/A 328,244
Waving Leaves, Inc. N/A 283,072 289,268







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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


8. Concentration of Credit Risk - Continued:
----------------------------------------

In addition, the following schedule presents total rental revenues and
mortgage interest income from individual restaurant chains, each
representing more than 10% of the Partnership's total rental revenues
and mortgage interest income (including the Partnership's share of
total rental revenues from the unconsolidated joint ventures and the
properties held as tenants-in-common with affiliates) for each of the
years ended December 31:



2002 2001 2000
------------- -------------- -------------


Golden Corral Family
Steakhouse Restaurants $ 766,789 $ 763,975 $ 732,948
Hardees 415,447 426,841 544,275
Jack in the Box 366,284 349,985 N/A
Burger King N/A 305,348 313,857


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

The information denoted by N/A indicates that for each period
presented, the tenant or restaurant chain did not represent more than
10% of the Partnership's total rental revenues.

9. Selected Quarterly Financial Data:
---------------------------------

The following table presents selected unaudited quarterly financial
data for each full quarter during the years ended December 31, 2002 and
2001:



2002 Quarter First Second Third Fourth Year
---------------------------- ------------ --------------- ------------ --------------- ---------------


Revenues $455,426 $ 426,613 $ 486,651 $ 517,699 $ 1,886,389
Equity in earnings of
joint ventures 155,988 244,877 426,399 200,047 1,027,311
Net Income 450,360 534,578 757,687 600,897 2,343,522
Net Income per limited
partner unit: 0.015 0.018 0.025 0.020 0.078








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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


9. Selected Quarterly Financial Data - Continued:
---------------------------------------------



2001 Quarter First Second Third Fourth Year
---------------------------- ------------- ------------- ------------ --------------- ---------------


Revenues $ 539,964 $ 496,159 $ 471,150 $ 536,541 $ 2,043,814
Equity in earnings of
joint venture 162,637 176,240 185,282 192,937 717,096
Net Income 610,040 223,679 538,628 843,223 2,215,570
Net Income per limited
partner unit: 0.020 0.008 0.018 0.028 0.074








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

None


PART III


Item 10. Directors and Executive Officers of the Registrant

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

James M. Seneff, Jr., age 56. Since 1971, Mr. Seneff has been active in
the acquisition, development, and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
co-venturer in over 100 real estate ventures. These ventures have involved the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of APF, a public, unlisted real
estate investment trust, since 1994. Mr. Seneff served as Chief Executive
Officer of APF from 1994 through August 1999, and has served as co-Chief
Executive Officer of APF since December 2000. Mr. Seneff served as Chairman of
the Board and Chief Executive Officer of CNL Fund Advisors, Inc., formerly the
Partnership's advisor, until it merged with a wholly-owned subsidiary of APF in
September 1999, and in June 2000, was re-elected to those positions of CNL Fund
Advisors, Inc. 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. since its
formation in 1980. CNL Financial Group, Inc. is the parent company, either
directly or indirectly through subsidiaries, of CNL Real Estate Services, Inc.,
CNL Capital Markets, Inc., CNL Investment Company and CNL Securities Corp., all
of which are engaged in the business of real estate finance. 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. In addition, he serves as a
Director, Chairman of the Board and Chief Executive Officer of CNL Retirement
Properties, Inc., a public, unlisted real estate investment trust and its
advisor, CNL Retirement Corp. Since 1992, Mr. Seneff has also 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. 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, Inc., 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 CNL Bank, an independent,
state-chartered commercial bank. Mr. Seneff previously served on the Florida
State Commission on Ethics and is a former member and past Chairman of the State
of Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.

Robert A. Bourne, age 55. Mr. Bourne has participated as a general
partner or co-venturer in over 100 real estate ventures involved in the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Bourne is a
Director of APF. Mr. Bourne served as President of APF from 1994 through
February 1999. He also served as Treasurer from February 1999 through August
1999 and from May 1994 through December 1994. He also served in various
executive positions with CNL Fund Advisors, Inc. prior to its merger with a
wholly-owned subsidiary of APF including, President from 1994 through September
1997, and Director from 1994 through August 1999. Mr. Bourne serves as President
and Treasurer of CNL Financial Group, Inc.; Director, Vice Chairman of the
Board, and Treasurer , and from 1997 until June 2002 served as President, of CNL
Hospitality Properties, Inc., a public, unlisted real estate investment trust;
as well as, Director, Vice Chairman of the Board, and Treasurer, and from 1997
until June 2002 served as President, of CNL Hospitality Corp., its advisor. In
addition, Mr. Bourne serves as Director, Vice Chairman of the Board, and
Treasurer, and from 1997 until June 2002 served as President, of CNL Retirement
Properties, Inc., a public, unlisted real estate investment trust; as well as, a
Director, Vice Chairman of the Board, and Treasurer, and from 1997 until June
2002 served as President, of its advisor, CNL Retirement Corp. Mr. Bourne also
serves as a Director of CNL Bank. 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 also serves as Director, President
and Treasurer for various affiliates of CNL Financial Group, Inc. including, CNL
Investment Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a
registered investment advisor for pension plans. Mr. Bourne began his career as
a certified public accountant 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.


Curtis B. McWilliams, age 47. Mr. McWilliams has served as Co-Chief
Executive Officer of APF since December 2000 and previously served as Chief
Executive Officer from September 1999 through December 2000. Prior to the
acquisition of CNL Fund Advisors, Inc., Mr. McWilliams served as President of
APF from February 1999 until September 1999. From February 1998 to February
1999, he served as Executive Vice President of APF. Mr. McWilliams joined CNL
Financial Group, Inc. in April 1997 and served as an Executive Vice President
from October 1997 until September 1999. In addition, Mr. McWilliams served as
President of CNL Fund Advisors, Inc. and CNL Financial Services, Inc., a
corporation engaged in the business of real estate financing, from April 1997
until the acquisition of such entities by wholly-owned subsidiaries of APF in
September 1999. From September 1983 through March 1997, Mr. McWilliams was
employed by Merrill Lynch & Co. The majority of his career at Merrill Lynch &
Co. was in the Investment Banking division where he served as a Managing
Director. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton University in 1977 and a Master of Business Administration degree with
a concentration in finance from the University of Chicago in 1983.

Steven D. Shackelford, age 39. Mr. Shackelford was promoted to
Executive Vice President of APF in June 2000. He served as Senior Vice President
from September 1999 until his promotion in June 2000. Mr. Shackelford has served
as Chief Financial Officer since January 1997 and has served as Secretary and
Treasurer of APF since September 1999. He also served as Chief Financial Officer
of CNL Fund Advisors, Inc. from September 1996 to September 1999. From March
1995 to July 1996, Mr. Shackelford was a senior manager in the national office
of Price Waterhouse LLP where he was responsible for advising foreign clients
seeking to raise capital and a public listing in the United States. From August
1992 to March 1995, he was a manager in the Paris, France office of Price
Waterhouse, serving several multi-national clients. Mr. Shackelford was an audit
staff and senior from 1986 to 1992 in the Orlando, Florida office of Price
Waterhouse. Mr. Shackelford received a Bachelor of Arts degree in Accounting,
with honors, and a Master of Business Administration degree from Florida State
University and is a certified public accountant.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the General Partners, the
officers of the corporate General Partner, and persons who own more than ten
percent of a registered class of the Partnership's equity securities
(collectively, the "Reporting Persons"), to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the SEC. Reporting Persons are
required by SEC regulation to furnish the Partnership with copies of all Forms
3, 4 and 5 that they file.

Based solely on the General Partners' review of the copies of such
forms the Partnership has received and written representations from certain
Reporting Persons that they were not required to file Forms 5 for the last
fiscal year, the General Partners believe that all Reporting Persons complied
with all filing requirements applicable to them with respect to transactions
during fiscal 2002.







Item 11. Executive Compensation

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


Item 12. Security Ownership of Certain Beneficial Owners and Management

As of March 10, 2003, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.

The following table sets forth, as of March 10, 2003, the beneficial
ownership interests of the General Partners in the Registrant.



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


General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
--------
100%
========


Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.

The Partnership does not have any equity compensation plans.






Item 13. Certain Relationships and Related Transactions

The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 2002, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.



Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2002
------------- --------------------- -----------------------


Reimbursement to affiliates for Operating expenses are reimbursed Accounting and administrative
operating expenses at the lower of cost or 90% of the services: $166,302
prevailing rate at which
comparable services could have
been obtained in the same
geographic area. Affiliates of the
General Partners from time to time
incur certain operating expenses
on behalf of the Partnership for
which the Partnership reimburses
the affiliates without interest.

Annual, subordinated manage-ment fee to One percent of the sum of gross $ - 0 -
affiliates operating revenues from Properties
wholly owned by the Partnership
plus the Partnership's allocable
share of gross revenues of joint
ventures in which the Partnership
is a co-venturer and the
Properties owned with affiliates
as tenants-in-common, subordinated
to certain minimum returns to the
Limited Partners. The management
fee will not exceed competitive
fees for comparable services. Due
to the fact that these fees are
non-cumulative, if the Limited
Partners have not received their
10% Preferred Return in any
particular year, no management
fees will be due or payable for
such year.











Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2002
------------- --------------------- ----------------------------


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

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

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










Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2002
------------- --------------------- -----------------------------------


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



CNL Restaurant Investments II acquired a Taco Cabana property in Dallas, Texas
from CNL Funding 2001-A, LP, an affiliate of the general partners at an
approximated cost of $1,147,400. CNL Funding 2001-A, LP had purchased and
temporarily held title to the property in order to facilitate the acquisition of
the property by the joint venture. The purchase price paid by the joint venture
represents the costs incurred by CNL Funding 2001-A, LP to acquire and carry the
property.

The Partnership entered into a joint venture arrangement with CNL Income Fund
XVI, Ltd., an affiliate of the general partners to acquire a Taco Cabana
property in Arlington, Texas from CNL Funding 2001-A, LP, an affiliate of the
general partners at an approximated cost of $1,003,600. CNL Funding 2001-A, LP
had purchased and temporarily held title to this property in order to facilitate
the acquisition of the property by the Partnership. The purchase price paid by
the Partnership represents the costs incurred by CNL Funding 2001-A, LP. to
acquire and carry the property.

Mansfield Joint Venture acquired a Jack in the Box property in Arlington, Texas
from CNL Net Lease Investors, L.P. ("NLI"), an affiliate of the general partners
at an approximated cost of $1,089,900. During 2002, and prior to the joint
venture's acquisition of this property, CNL Financial LP Holding, LP ("CFN") and
CNL Net Lease Investors GP Corp. ("GP Corp") purchased the limited partner's
interest and general partner's interest, respectively, of NLI. Prior to this
transaction, an affiliate of the Partnership's general partners owned a 0.1%
interest in NLI and served as a general partner of NLI. The original general
partners of NLI waived their rights to benefit from this transaction. The
acquisition price paid by CFN for the limited partner's interest was based on
the portfolio acquisition price. The joint venture acquired the property in
Arlington, Texas at CFN's cost and did not pay any additional compensation to
CFN for the acquisition of the property. Each CNL entity is an affiliate of the
Partnership's general partners.


Item 14. Controls and Procedures

The general partners maintain a set of disclosure controls and
procedures designed to ensure that information required to be disclosed in the
Partnership's filings under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. The principal executive
and financial officers of the corporate general partner have evaluated the
Partnership's disclosure controls and procedures within 90 days prior to the
filing of this Annual Report on Form 10-K and have determined that such
disclosure controls and procedures are effective.

Subsequent to the above evaluation, there were no significant changes
in internal controls or other factors that could significantly affect these
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

PART IV




Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K


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

1. Financial Statements

Report of Independent Certified Public Accountants

Balance Sheets at December 31, 2002 and 2001

Statements of Income for the years ended December 31, 2002, 2001, and 2000

Statements of Partners' Capital for the years ended December 31, 2002, 2001, and 2000

Statements of Cash Flows for the years ended December 31, 2002, 2001, and 2000

Notes to Financial Statements

2. Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts for the years
ended December 31, 2002, 2001, and 2000

Schedule III - Real Estate and Accumulated Depreciation at December 31, 2002

Notes to Schedule III - Real Estate and Accumulated Depreciation at December 31, 2002

Schedule IV - Loans on Real Estate at December 31, 2002

All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.


3. Exhibits

**3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund VII, Ltd. (Included as Exhibit 4.1 to
Registration Statement No. 33-31482 on Form S-11 and
incorporated herein by reference.)

**4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund VII, Ltd. (Included as Exhibit 4.1 to
Registration Statement No. 33-31482 on Form S-11 and
incorporated herein by reference.)

**4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund VII, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange
Commission on April 1, 1996, and incorporated herein
by reference.)

**10.1 Management Agreement between CNL Income Fund VII, Ltd.
and CNL Investment Company (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on April 1, 1996, and incorporated herein
by reference.)

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

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

**10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities
and Exchange Commission on August 10, 2001, and
incorporated herein by reference.)

**10.5 Assignment of Management Agreement from CNL APF
Partners, LP to CNL Restaurants XVIII, Inc. (Included
as Exhibit 10.5 to Form 10-Q filed with the Securities
and Exchange Commission on August 13, 2002, and
incorporated herein by reference.)

99.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)

99.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)

(b) The Registrant filed no reports on Form 8-K during the period
from October 1, 2002 through December 31, 2002.

(c) Not applicable.

(d) Other Financial Information

The Partnership is required to file audited financial
information of one of its tenants (Golden Corral Corporation)
as a result of this tenant leasing more than 20% of the
Partnership's total assets for the year ended December 31,
2002. Golden Corral Corporation is a privately-held company and
its financial information is not available to the Partnership
to include in this filing. The Partnership will file this
financial information under cover of a Form 10-K/A as soon as
it is available.

** previously filed





SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 27th day of
March, 2003.

CNL INCOME FUND VII, LTD.

By: CNL REALTY CORPORATION
General Partner

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

By: ROBERT A. BOURNE
General Partner

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

By: JAMES M. SENEFF, JR.
General Partner

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





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



Signature Title Date


/s/ Robert A. Bourne President, Treasurer and Director March 27, 2003
- -------------------------------
Robert A. Bourne (Principal Financial and Accounting Officer)

/s/ James M. Seneff, Chief Executive Officer and Director March 27, 2003
- -------------------------------
James M. Seneff, Jr. (Principal Executive Officer)









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

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2002, 2001, and 2000




Additions Deductions
--------------------------------- -------------------------------


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

2000 Allowance for
doubtful
accounts (a) $ 26,524 $ -- $ 504 (b) $ -- (c) $ 16,679 $ 10,349
============== =============== ================ ============= ============ ============

2001 Allowance for
doubtful
accounts (a) $ 10,349 $ -- $ -- (b) $ 9,845 (c) $ 504 $ --
============== =============== ================ ============= ============ ============

2002 Allowance for
doubtful
accounts (a) $ -- $ -- $ -- $ -- $ -- $ --
============== =============== ================ ============= ============ ============



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

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

(c) Amounts written off as uncollectible.






CERTIFICATION OF CHIEF EXECUTIVE OFFICER
OF CORPORATE GENERAL PARTNER

PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, James M. Seneff, Jr., the Chief Executive Officer of CNL Realty
Corporation, the corporate general partner of CNL Income Fund VII, Ltd. (the
"registrant"), certify that:

1. I have reviewed this annual report on Form 10-K of the
registrant;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:

a. designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;

b. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this annual report
(the "Evaluation Date"); and

c. presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a. all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and

b. any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date: March 27, 2003


/s/ James M. Seneff, Jr.
- ---------------------------
James M. Seneff, Jr.
Chief Executive Officer





CERTIFICATION OF CHIEF FINANCIAL OFFICER
OF CORPORATE GENERAL PARTNER

PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert A. Bourne, President and Treasurer of CNL Realty Corporation,
the corporate general partner of CNL Income Fund VII, Ltd. (the "registrant")
certify that:

1. I have reviewed this annual report on Form 10-K of the
registrant;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:

a. designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;

b. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this annual report
(the "Evaluation Date"); and

c. presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a. all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and

b. any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date: March 27, 2003


/s/ Robert A. Bourne
- ---------------------------
Robert A. Bourne
President and Treasurer




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

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2002




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


Properties the Partnership
has Invested in Under
Operating Leases:

Burger King Restaurants:
Jefferson City, Tenn-ssee $216,633 $546,967 - -
Sierra Vista, Arizon- 421,170 - - -

Checkers Drive-In Restaurant:
Winter Springs, Flor-da 397,536 - - -

Donatos Pizza Restaurant:
Marietta, Georgia - 534,421 507,133 - -

Golden Corral Family
Steakhouse Restaurants:
Odessa, Texas - 502,364 815,831 - -
Midland, Texas - 481,748 857,185 - -
El Paso, Texas - 745,506 - 802,132 -
Harlingen, Texas- 503,799 - 890,878 -

Hardee's Restaurants:
Akron, Ohio - 198,086 - - -
Dalton, Ohio - 180,556 - - -
Minerva, Ohio - 143,775 - - -
Orrville, Ohio - 176,169 - - -
Seville, Ohio - 245,648 - - -
Clinton, Tennessee - 295,861 - - -

Jack in the Box Restaurant:
Baton Rouge, Lousian-a 562,533 933,167 - -
San Antonio, Texas - 525,720 - 381,591 -

KFC Restaurant:
Arcadia, Florida - 175,020 333,759 - -

Rally's Restaurant:
Toledo, Ohio - 281,880 196,608 47,002 -

Taco Bell Restaurant:
Detroit, Michigan - 168,429 - 402,674 -
---------- ----------- ---------- ------

$6,756,854 $4,190,650 $2,524,277 -
========== =========== ========== ======

Properties of Joint Venture in
Which the Partnership has
an 18% Interest and has
Invested in Under Operating
Leases:

Burger King Restaurants:
San Antonio, Texas - $350,479 $623,615 - -
Raceland, Louisiana - 174,019 986,879 - -
New Castle, Indiana - 264,239 662,265 - -
Hastings, Minnesota - 155,553 657,159 - -

Taco Cabana Restaurants:
Dallas, Texas - 633,492 513,931 - -
---------- ----------- ---------- ------
$1,577,782 $3,443,849 - -
========== =========== ========== ======
Property of Joint Venture in
Which the Partnership has a
4.79% Interest and has Invested
in Under an Operating Lease:

Jack in the Box Restaurant:
Des Moines, Washingt-n $322,726 $791,658 - -
========== =========== ========== ======

Property of Joint Venture in
Which the Partnership has a 79%
Interest and has Invested in
Under an Operating Lease:

Jack in the Box Restaurant:
Arlington, Texas (I)-j) $409,795 $680,086 - -
========== =========== ========== ======

Property of Joint Venture in
Which the Partnership has a 56%
Interest and had Invested
in Under an Operating Lease:

Roadhouse Grill Restaurant:
Duluth, Georgia - $1,078,469 - - -
========== =========== ========== ======

Property of Joint Venture in
Which the Partnership has a 36.88%
Interest and has Invested
in Under an Operating Lease:

TGI Friday's Restaurant:
Homestead, Pennsylva-ia $1,036,297 $1,499,296 - -
========== =========== ========== ======

Property in which the
Partnership has a 43%
Interest as Tenants-in-Common
and has Invested
in Under an Operating Lease:

Bennigan's Restaurant:
Colorado Springs, Co-orado $947,120 $1,279,013 - -
========== =========== ========== ======

Property in Which the Partnership
has a 53% Interest as Tenants-
in-Common and has Invested
in Under an Operating Lease:

Golden Corral Family
Steakhouse Restaurants:
Smithfield, Nor-h Carolin$264,272 $1,155,018 - -
========== =========== ========== ======

Property in Which the Partnership
has a 35.64% Interest as Tenants-
in-Common and has Invested
in Under an Operating Lease:

Chevy's Fresh Mex Restaurant:
Miami, Florida - $976,357 $974,016 - -
========== =========== ========== ======

Property of Joint Venture in
Which the Partnership has a 14.00%
Interest and has Invested
in Under an Operating Lease:

Golden Corral Family
Steakhouse Restaurants:
Lincoln, Nebra-ka (k) $485,390 $1,264,417 - -
========== =========== ========== ======

Property of Joint Venture in
Which the Partnership has a 68.75%
Interest and has Invested
in Under an Operating Lease:

Sonny's Bar-B-Q:
Columbus, Georgi- $408,880 $1,194,307 - -
========== =========== ========== ======

Property in Which the Partnership
has a 71% Interest as Tenants-
in-Common and has Invested
in Under an Operating Lease:

IHOP Restaurant:
Montgomery, Alabama - $584,126 - - -
========== =========== ========== ======

Property of Joint Venture in
Which the Partnership has a 79.00%
Interest and has Invested
in Under an Operating Lease:

Taco Cabana Restaurant:
Arlington, Texas- $456,544 $547,070 - -
========== =========== ========== ======

Properties the Partnership has
Invested in Under Direct
Financing Leases:

Burger King Restaurant:
Sierra Vista, Arizon- - - $333,212 -

Hardee's Restaurants:
Akron, Ohio - - 540,215 - -
Dalton, Ohio - - 490,656 - -
Minerva, Ohio - - 436,663 - -
Orrville, Ohio - - 446,337 - -
Seville, Ohio - - 487,630 - -
Clinton, Tennessee - - 338,216 - -

- $2,739,717 $333,212 -
========== =========== ========== ======

Property of Joint Venture in
Which the Partnership has a 56%
and has Invested in Under a Direct
Financing Lease:

Roadhouse Grill Restaurant:
Duluth, Georgia - - - - $865,185
========== =========== ========== ======

Property in Which the Partnership has
a 71% Interest as Tenants-in-Common
and has Invested in Under a Direct
Financing Lease:

IHOP Restaurant:
Montgomery, Alabama - - $933,873 - -
========== =========== ========== ======



Life on Which
Net Cost Basis at Which Depreciation in
Carried at Close of Period (c) Date Latest Income
---------------------------------
Buildings and Accumulatedof Con-Date Statement is
Land Improvements Total DepreciatiostructiAcquired Computed
--------- ---------------------- ------------------------------------

$216,633 $546,967 $763,600 $229,526 1988 01/90 (b)
421,170 (f) 421,170 - 1990 06/90 (d)


397,536 - 397,536 (g) - 07/94 (g)


534,421 507,133 1,041,554 104,290 1994 10/96 (b)



502,364 815,831 1,318,195 346,970 1990 03/90 (b)
481,748 857,185 1,338,933 364,010 1990 04/90 (b)
745,506 802,132 1,547,638 328,471 1990 05/90 (b)
503,799 890,878 1,394,677 367,253 1990 06/90 (b)


198,086 (f) 198,086 - 1990 11/90 (d)
180,556 (f) 180,556 - 1990 11/90 (d)
143,775 (f) 143,775 - 1990 11/90 (d)
176,169 (f) 176,169 - 1990 11/90 (d)
245,648 (f) 245,648 - 1990 11/90 (d)
295,861 (f) 295,861 - 1992 09/92 (d)


562,533 933,167 1,495,700 62,211 2000 01/01 (b)
525,720 381,591 907,311 158,108 1990 05/90 (b)


175,020 333,759 508,779 138,015 1985 08/90 (b)


281,880 243,610 525,490 97,378 1990 01/91 (b)


168,429 402,674 571,103 165,961 1990 06/90 (b)
--------- ---------- ---------- ---------

$6,756,854 $6,714,927 $13,471,781 $2,362,193
========= ========== ========== =========






CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2002


(a) Transactions in real estate and accumulated depreciation are
summarized below. The balances in 2001, 2000, and 1999 have been adjusted to
reflect the reclassification of properties accounted for as discontinued
operations.



Accumulated
Cost Depreciation
----------------- ----------------


Properties the Partnership has Invested
in Under Operating Leases:

Balance, December 31, 1999 $ 16,586,787 $ 2,602,453
Dispositions (3,064,187) (639,790 )
Depreciation expense -- 262,897
----------------- ----------------

Balance, December 31, 2000 13,522,600 2,225,560
Acquisitions 1,495,700 --
Dispositions (1,546,519) (333,933 )
Depreciation expense -- 246,735
----------------- ----------------

Balance, December 31, 2001 13,471,781 2,138,362
Depreciation expense -- 223,831
----------------- ----------------

Balance, December 31, 2002 $ 13,471,781 $ 2,362,193
================= ================

Properties of Joint Venture in Which the Partnership has an 18%
Interest and has Invested in Under Operating Leases:

Balance, December 31, 1999 $ 6,131,281 $ 1,257,109
Depreciation expense -- 152,137
---------------- ---------------

Balance, December 31, 2000 6,131,281 1,409,246
Depreciation expense -- 152,137
---------------- ---------------

Balance, December 31, 2001 6,131,281 1,561,383
Acquisitions 1,147,423 --
Dispositions (2,257,073 ) (577,213 )
Depreciation expense -- 125,814
---------------- ---------------

Balance, December 31, 2002 $ 5,021,631 $ 1,109,984
================ ===============







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

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

December 31, 2002




Accumulated
Cost Depreciation
---------------- ---------------


Property of Joint Venture in Which the Partnership
has a 4.79% Interest and has Invested
in Under an Operating Lease:

Balance, December 31, 1999 $ 1,114,384 $ 190,284
Depreciation expense -- 26,389
---------------- ---------------

Balance, December 31, 2000 1,114,384 216,673
Depreciation expense -- 26,389
---------------- ---------------

Balance, December 31, 2001 1,114,384 243,062
Depreciation expense -- 26,389
---------------- ---------------

Balance, December 31, 2002 $ 1,114,384 $ 269,451
================ ===============

Property of Joint Venture in Which the Partnership has a 79% Interest
and has Invested in Under an Operating Lease:

Balance, December 31, 2001 (i) $ -- $ --
Acquisition (j) 1,089,881 --
Depreciation expense -- 10,075
----------------- ----------------

Balance, December 31, 2002 $ 1,089,881 $ 10,075
================= ================






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

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

December 31, 2002




Accumulated
Cost Depreciation
------------------ -----------------


Property of Joint Venture in Which the Partnership
has a 36.88% Interest and has Invested in Under an Operating Lease:

Balance, December 31, 1999 $ -- $ --
Acquisition 2,535,593 --
Depreciation expense -- 29,288
------------------ -----------------

Balance, December 31, 2000 2,535,593 29,288
Depreciation expense -- 49,977
------------------ -----------------

Balance, December 31, 2001 2,535,593 79,265
Depreciation expense -- 49,977
------------------ -----------------

Balance, December 31, 2002 $ 2,535,593 $ 129,242
================== =================

Property of Joint Venture in Which the Partnership has a 53% Interest as
Tenants-in-Common and has Invested in Under an Operating Lease:

Balance, December 31, 1999 $ 1,419,290 $ 77,951
Depreciation expense -- 38,501
---------------- ----------------

Balance, December 31, 2000 1,419,290 116,452
Depreciation expense -- 38,501
---------------- ----------------

Balance, December 31, 2001 1,419,290 154,953
Depreciation expense -- 38,501
---------------- ----------------

Balance, December 31, 2002 $ 1,419,290 $ 193,454
================ ================







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

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

December 31, 2002



Accumulated
Cost Depreciation
------------------ -----------------


Property in Which the Partnership has a 35.64% Interest as Tenants-in-
Common and has Invested in Under an Operating Lease:

Balance, December 31, 1999 $ 1,950,373 $ 65,023
Depreciation expense -- 32,467
------------------ -----------------

Balance, December 31, 2000 1,950,373 97,490
Depreciation expense -- 32,467
------------------ -----------------

Balance, December 31, 2001 1,950,373 129,957
Depreciation expense -- 32,467
------------------ -----------------

Balance, December 31, 2002 $ 1,950,373 $ 162,424
================== =================

Property of Joint Venture in Which the Partnership has a 56% Interest
and has Invested in Under an Operating Lease:

Balance, December 31, 1999 $ 1,083,153 $ --
Acquisition 860,501 --
Depreciation expense -- 7,210
------------------ -----------------

Balance, December 31, 2000 1,943,654 7,210
Reclassified to capital lease (865,185 ) (7,210 )
Depreciation expense (d) -- --
------------------ -----------------

Balance, December 31, 2001 1,078,469 --
Depreciation expense (d) -- --
------------------ -----------------

Balance, December 31, 2002 $ 1,078,469 $ --
================== =================







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

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

December 31, 2002




Accumulated
Cost Depreciation
------------------ -----------------


Property of Joint Venture in Which the Partnership has a 14% Interest
and has Invested in Under an Operating Lease:

Balance, December 31, 2000 $ -- $ --
Acquisition 1,740,374 --
Depreciation expense -- 31,374
------------------ -----------------

Balance, December 31, 2001 1,740,374 31,374
Capitalization of additional
construction costs (k) 9,433 --
Depreciation expense -- 42,384
------------------ -----------------
Balance, December 31, 2002 $ 1,749,807 $ 73,758
================== =================

Property of Joint Venture in Which the Partnership has a 68.75% Interest
and has Invested in Under an Operating Lease:

Balance, December 31, 2000 $ -- $ --
Acquisition 1,587,188 --
Depreciation expense -- 3,317
------------------ -----------------

Balance, December 31, 2001 1,587,188 3,317
Acquisition 15,999 --
Depreciation expense -- 39,811
------------------ -----------------
Balance, December 31, 2002 $ 1,603,187 43,128
================== =================

Property in Which the Partnership has a 71% Interest as Tenants-in
Common and has Invested in Under an Operating Lease:

Balance, December 31, 1999 $ -- $ --
Acquisition 584,126 --
Depreciation expense (d) -- --
------------------ -----------------

Balance, December 31, 2000 584,126 --
Depreciation expense (d) -- --
------------------ -----------------

Balance, December 31, 2001 584,126 --
Depreciation expense (d) -- --
------------------ -----------------

Balance, December 31, 2002 $ 584,126 $ --
================== =================






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

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

December 31, 2002



Accumulated
Cost Depreciation
------------------ -----------------


Property in Which the Partnership has a 43% Interest as
Tenants-in Common and has Invested in Under an
Operating Lease:

Balance, December 31, 1999 $ -- $ --
Acquisition 2,226,133 --
Depreciation expense -- 17,765
------------------ -----------------

Balance, December 31, 2000 2,226,133 17,765
Depreciation expense -- 42,634
------------------ -----------------

Balance, December 31, 2001 2,226,133 60,399
Depreciation expense -- 42,634
------------------ -----------------
Balance, December 31, 2002 $ 2,226,133 $ 103,033
================== =================

Property of Joint Venture in Which the
Partnership has a 79% Interest and
hasInvested in Under an Operating
Lease:

Balance, December 31, 2001 $ -- $ --
Acquisition 1,003,614 --
Depreciation expense -- 10,637
------------------ -----------------
Balance, December 31, 2002 $ 1,003,614 $ 10,637
================== =================



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

(c) As of December 31, 2002, the aggregate cost of the Properties owned by
the Partnership and its consolidated joint venture, and the
unconsolidated joint ventures (including the Properties held as
tenants-in-common) for federal income tax purposes was $ 22,539,464 and
$ 16,104,595, respectively. All of the leases are treated as operating
leases for federal income tax purposes.

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

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

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


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

(h) During the year ended December 31, 2002, the Partnership and an
affiliate, as a Joint Venture, purchased land and buildings from CNL
Funding 2001-A, LP, an affiliate of the General Partners, for an
aggregate cost of approximately $ 2,151,037.

(i) In August 2002, Mansfield Joint Venture sold the property in Mansfield,
Texas. As a result, the Joint Venture reclassified the assets relating
to this property from real estate with operating leases to real estate
held for sale.

(j) During the year ended December 31, 2002, the Partnership and an
affiliate, as a Joint Venture, purchased land and building from CNL Net
Lease Investors, LP, an affiliate of the General Partners, for an
aggregate cost of approximately $ 1,089,881.

(k) During the year ended December 31, 2002, the joint venture capitalized
additional costs paid to the developer upon final construction costs
reconciliation. In connection therewith, the building value was
adjusted accordingly.





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

SCHEDULE IV - LOANS ON REAL ESTATE

December 31, 2002




Principal
Amount of
Loans
Subject to
Final Periodic Face Carrying Delinquent
Interest Maturity Payment Prior Amount of Amount of Principal
Description Rate Date Terms Liens Mortgages Mortgages(2) or Interest
- ------------------ --------- ----------------- ----------- ---------- ------------- -------------- -------------


Church's-
Daytona Beach,
Florida 12.34% November 2004 (1) $ -- $ 103,581 $ $ --
--
---------- ------------- -------------- -------------

Total $ -- $ 103,581 $ $ --
--
========== ============= ============== =============



(1) Monthly payments of interest only at an annual rate of 12.34%, with a
balloon payment at maturity of $103,581.

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



2002 2001 2000
------------------ --------------- ---------------


Balance at beginning of period $ 104,717 $ 994,593 $ 994,408

New promissory note -- 103,581 --

Interest earned 9,587 9,243 113,379

Collection of principal and interest (114,304 ) (1,125,696 ) (114,341 )

Recognition of deferred gain on sale
of land and building -- 122,996 1,147

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

Balance at end of period $ -- $ 104,717 $ 994,593
================== =============== ===============







EXHIBIT INDEX


Exhibit Number

(a) Exhibits

3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund VII, Ltd. (Included as Exhibit 4.1 to Registration
Statement No. 33-31482 on Form S-11 and incorporated herein by
reference.)

4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund VII, Ltd. (Included as Exhibit 4.1 to Registration
Statement No. 33-31482 on Form S-11 and incorporated herein by
reference.)

4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund VII, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on April 1,
1996, and incorporated herein by reference.)

10.1 Management Agreement between CNL Income Fund VII, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on April 1,
1996, and incorporated herein by reference.)

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

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

10.4 Assignment of Management Agreement from CNL Fund Advisors,
Inc. to CNL APF Partners, LP. (Included as Exhibit 10.4 to
Form 10-Q filed with the Securities and Exchange Commission on
August 10, 2001, and incorporated herein by reference.)

10.5 Assignment of Management Agreement from CNL APF Partners, LP
to CNL Restaurants XVIII, Inc. (Included as Exhibit 10.5 to
Form 10-Q filed with the Securities and Exchange Commission on
August 13, 2002, and incorporated herein by reference.)

99.1 Certification of Chief Executive Officer of Corporate General
Partner Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)

99.2 Certification of Chief Financial Officer of Corporate General
Partner Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)





EXHIBIT 99.1







EXHIBIT 99.2