CNL INCOME FUND XIII LTD - 10-K Annual Report

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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, 2001

OR

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

For the transition period from to

Commission file number 0-23968

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

Florida 59-3143094
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

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 ($10 per Unit)
(Title of class)

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

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

Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 4,000,000 units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $10 per Unit.

DOCUMENTS INCORPORATED BY REFERENCE:
None

PART I

Item 1. Business

CNL Income Fund XIII, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on September 25, 1992. The general partners of the Partnership are
Robert A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on March 31, 1993, the
Partnership offered for sale up to $40,000,000 of limited partnership interests
(the "Units") (4,000,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
March 17, 1993. The offering terminated on August 26, 1993, at which date the
maximum offering proceeds of $40,000,000 had been received from investors who
were admitted to the Partnership as limited partners (the "Limited Partners").

The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totaled
$35,324,831. The net offering proceeds were used to acquire 47 Properties,
including ten Properties consisting of only land, two Properties owned by joint
ventures in which the Partnership is a co-venturer, and one Property acquired as
tenants-in-common with affiliates of the General Partners, to pay acquisition
fees to an affiliate of the General Partners totaling $2,200,000, to pay
miscellaneous acquisition expenses and to establish a working capital reserve
for Partnership purposes. During the year ended December 31, 1996, the
Partnership sold its Property in Richmond, Virginia, consisting of land only,
and reinvested the proceeds in a Burger King Property located in Akron, Ohio,
with an affiliate of the General Partners as tenants-in-common, in 1997. In
addition, during the year ended December 31, 1997, the Partnership sold its
Property in Orlando, Florida, to a third party and reinvested the net sales
proceeds in a Chevy's Fresh Mex Property located in Miami, Florida, with an
affiliate of the General Partners as tenants-in-common. During the year ended
December 31, 1999, the Partnership sold its Jack in the Box Property in Houston,
Texas. During the year ended December 31, 2001, the Partnership sold its
Property in Mount Airy, North Carolina, to the tenant and reinvested the net
sales proceeds in a Golden Corral Property located in Blue Springs, Missouri,
with an affiliate of the General Partners as tenants-in-common. As of December
31, 2001, the Partnership owned 46 Properties. The 46 Properties include eight
Properties consisting of land only, interests in two Properties owned by joint
ventures in which the Partnership is a co-venturer and four Properties owned
with affiliates as tenants-in-common. Under the leases of the eight Properties
consisting of land only, the tenant owns the buildings currently on the land and
has the right, if not in default under the lease, to remove the buildings from
the land at the end of the lease terms. The Partnership generally leases the
Properties on a triple-net basis with the lessees responsible for all repairs
and maintenance, property taxes, insurance and utilities.

The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. 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.

On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term, "triple-net" basis to operators of
national and regional restaurant chains. Under the Agreement and Plan of Merger,
APF was to issue shares of its common stock as consideration for the Merger. On
March 1, 2000, the General Partners and APF announced that they had mutually
agreed to terminate the Agreement and Plan of Merger. The agreement to terminate
the Agreement and Plan of Merger was based, in large part, on the General
Partners' concern that, in light of market conditions relating to publicly
traded real estate investment trusts, the value of the transaction had
diminished. As a result of such diminishment, the General Partners' ability to
unequivocally recommend voting for the transaction, in the exercise of their
fiduciary duties, had become questionable. The General Partners are continuing
to evaluate strategic alternatives for the Partnership, including alternatives
to provide liquidity to the Limited Partners.

Leases

Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership and
joint ventures in which the Partnership is a co-venturer and Properties owned as
tenants-in-common with affiliates of the General Partners provide for initial
terms ranging from 10 to 20 years (the average being 18 years), and expire
between 2003 and 2018. All leases are generally on a triple-net basis, with the
lessees responsible for all repairs and maintenance, property taxes, insurance
and utilities. The leases of the Properties provide for minimum base annual
rental payments (payable in monthly installments) ranging from approximately
$30,600 to $229,800. A majority of the leases provide for percentage rent, based
on sales in excess of a specified amount. In addition, the majority of the
leases provide that, commencing in specified lease years, the annual base rent
required under the terms of the lease will increase.

Generally, the leases of the Properties provide for two to five
five-year renewal options subject to the same terms and conditions as the
initial lease. Lessees of 36 of the Partnership's 46 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 the Property on the same terms and
conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.

In addition, during 2001, the Partnership reinvested the majority of
the net sales proceeds it received from the sale of the Property in Mount Airy,
North Carolina in a Golden Corral located in Blue Springs, Missouri, as
tenants-in-common with CNL Income Fund XV, Ltd., an affiliate of the General
Partners and a Florida Limited Partnership, as described below in "Joint Venture
and Tenancy in Common Arrangements." The lease terms for this Property are
substantially the same as the Partnership's other leases, as described above.

Major Tenants

During 2001, three lessees of the Partnership, Flagstar Enterprises,
Inc., Long John Silver's, Inc., and Golden Corral Corporation, each contributed
more than ten percent of the Partnership's total rental and earned income
(including the Partnership's share of rental and earned income from Properties
owned by joint ventures and Properties owned with an affiliate of the General
Partners as tenants-in-common). As of December 31, 2001, Flagstar Enterprises,
Inc. was the lessee under leases relating to 11 restaurants, Long John Silver's,
Inc. was the lessee under leases relating to five restaurants, and Golden Corral
Corporation was the lessee under leases relating to four restaurants. It is
anticipated that, based on the minimum rental payments required by the leases,
these three lessees will each continue to contribute more than ten percent of
the Partnership's total rental and earned income in 2002. In addition, four
Restaurant Chains, Long John Silver's, Hardee's, Golden Corral Family Steakhouse
Restaurants ("Golden Corral"), and Burger King, each accounted for more than ten
percent of the Partnership's total rental and earned income during 2001
(including the Partnership's share of rental and earned income from Properties
owned by joint ventures and Properties owned with affiliates of the General
Partners as tenants-in-common). It is anticipated that these four Restaurant
chains each will continue to account for more than ten percent of the
Partnership's total rental and earned income under the terms of the leases in
2002. Any failure of these lessees or Restaurant Chains could materially affect
the Partnership's income if the Partnership is not able to re-lease the
Properties in a timely manner. No single tenant or group of affiliated tenants
lease Properties with an aggregate carrying value in excess of 20 percent of the
total assets of the Partnership.

Joint Venture and Tenancy in Common Arrangements

The Partnership has entered into two separate joint venture
arrangements: Attalla Joint Venture and Salem Joint Venture, with CNL Income
Fund XIV, Ltd., a limited partnership organized pursuant to the laws of the
state of Florida and an affiliate of the General Partners, for each joint
venture to purchase and hold one Property. The joint venture arrangements
provide for the Partnership and its joint venture partner to share in all costs
and benefits associated with the joint ventures in accordance with their
respective percentage interests in the joint ventures. The Partnership has a 50%
interest in Attalla Joint Venture and a 27.8% interest in Salem Joint Venture.
The Partnership and its joint venture partner are also jointly and severally
liable for all debts, obligations and other liabilities of the joint ventures.

Attalla Joint Venture and Salem Joint Venture have initial terms of 30
years and, after the expiration of the initial term, each joint venture
continues in existence from year to year unless terminated at the option of
either of the joint venturers or by an event of dissolution. Events of
dissolution include the bankruptcy, insolvency or termination of any joint
venturer, sale of the Property owned by the joint venture and mutual agreement
of the Partnership and its joint venture partners to dissolve the joint venture.

The Partnership shares management control equally with an affiliate of
the General Partners for Attalla Joint Venture and Salem Joint Venture. The
joint venture agreements restrict each venturer's ability to sell, transfer or
assign its joint venture interest without first offering it for sale to its
joint venture partner, either upon such terms and conditions as to which the
venturers may agree or, in the event the venturers cannot agree, on the same
terms and conditions as any offer from a third party to purchase such joint
venture interest.

Net cash flow from operations of Attalla Joint Venture and Salem Joint
Venture is distributed 50 percent and 27.8%, respectively, to the Partnership
and the balance is distributed to each other joint venture partner in accordance
with its percentage interest in the joint venture. Any liquidation proceeds,
after paying joint venture debts and liabilities and funding reserves for
contingent liabilities, will be distributed first to the joint venture partners
with positive capital account balances in proportion to such balances until such
balances equal zero, and thereafter in proportion to each joint venture
partner's percentage interest in the joint venture.

In addition to the above joint venture agreements, the Partnership
entered into agreements to hold an Arby's Property, as tenants-in-common, with
CNL Income Fund II, Ltd.; a Burger King Property, as tenants-in-common, with CNL
Income Fund XVII, Ltd.; and a Chevy's Fresh Mex Property, as tenants-in-common,
with CNL Income Fund III, Ltd., CNL Income Fund VII, Ltd., and CNL Income Fund
X, Ltd. In addition, in April 2001, the Partnership entered into an agreement to
hold a Golden Corral Property, as tenants-in-common, with CNL Income Fund XV,
Ltd. Each of the CNL Income Funds is an affiliate of the General Partners and is
a limited partnership organized pursuant to the laws of the state of Florida.
The agreements provide for the Partnership and the affiliates to share in the
profits and losses of the Properties in proportion to each co-tenant's
percentage interest. The Partnership owns a 66.13%, 63.09%, 47.83% and 41%
interest in these Properties, respectively. The tenancy in common agreements
restrict each party's ability to sell, transfer, or assign its interest in the
tenancy in common's Property without first offering it for sale to the remaining
parties.

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 a
Property if the proceeds are reinvested in an additional Property.

Certain Management Service

CNL APF Partners, LP, an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership. Under this agreement,
CNL APF Partners, LP (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 has 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
Properties held as tenants-in-common with an affiliate, but not in excess of
competitive fees for comparable services.

During 2000, CNL Fund Advisors, Inc. assigned its rights in, and its
obligations under, the management agreement with the Partnership to CNL APF
Partners, LP. All of the terms and conditions of the management agreement,
including the payment of fees, as described above, remain unchanged.

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

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 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, 2001, the Partnership owned 46 Properties. Of the 46
Properties, 40 are owned by the Partnership in fee simple, two are owned through
joint venture arrangements and four are owned through tenancy in common
arrangements. See Item 1. Business - Joint Venture and Tenancy in Common
Arrangements. The Partnership is not permitted to encumber its Properties under
the terms of its partnership agreement. Reference is made to the Schedule of
Real Estate and Accumulated Depreciation for a listing of the Properties and
their respective costs, including acquisition fees and certain acquisition
expenses.

Description of Properties

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

The following table lists the Properties owned by the Partnership as of
December 31, 2001 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 3
Arizona 2
Arkansas 1
California 1
Colorado 1
Florida 10
Georgia 1
Indiana 1
Kansas 1
Louisiana 1
Maryland 1
Missouri 1
Ohio 4
Pennsylvania 3
South Carolina 2
Tennessee 5
Texas 8
------
TOTAL PROPERTIES 46
======

Buildings. Each of the Properties owned by the Partnership includes a
building that is one of a Restaurant Chain's approved designs. However, the
buildings located on the eight Checkers Properties are owned by the tenant while
the land parcels are owned by the Partnership. The buildings generally are
rectangular and are constructed from various combinations of stucco, steel,
wood, brick and tile. The sizes of the building owned by the Partnership range
from approximately 1,900 to 11,500 square feet. All buildings on Properties are
freestanding and surrounded by paved parking areas. Buildings are suitable for
conversion to various uses, although modifications may be required prior to use
for other than restaurant operations. As of December 31, 2001, the Partnership
had no plans for renovation of the Properties. Depreciation expense is computed
for buildings and improvements using the straight-line method using a
depreciable life of 40 years for federal income tax purposes.

As of December 31, 2001, the aggregate cost of the Properties owned by
the Partnership and joint ventures (including the Properties owned through
tenancy in common arrangements) for federal income tax purposes was $31,553,018
and $6,919,826, respectively.

The following table lists the Properties owned by the Partnership as of
December 31, 2001 by Restaurant Chain.

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

Arby's 2
Burger King 5
Checkers 8
Chevy's Fresh Mex 1
Denny's 3
Golden Corral 4
Hardee's 11
Jack in the Box 4
Lion's Choice 1
Long John Silver's 5
Steak-N-Shake 1
Wendy's 1
-----
TOTAL PROPERTIES 46
=====

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

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

Leases. The Partnership leases the Properties to operators of selected
national and regional fast-food restaurant chains. The leases are generally on a
long-term "triple net" basis, meaning that the tenant is responsible for
repairs, maintenance, property taxes, utilities and insurance. Generally, a
lessee is required, under the terms of its lease agreement, to make such capital
expenditures as may be reasonably necessary to refurbish buildings, premises,
signs and equipment so as to comply with the lessee's obligations, if
applicable, under the franchise agreement to reflect the current commercial
image of its Restaurant Chain. These capital expenditures are required to be
paid by the lessee during the term of the lease. The terms of the leases of the
Properties owned by the Partnership are described in Item 1. Business - Leases.

At December 31, 2001, 2000, 1999, and 1997 the Properties were fully
occupied. At December 31, 1998, the Properties were 98% occupied. The following
is a schedule of the average rent per Property for the years ended December 31:

2001 2000 1999 1998 1997
-------------- ------------- -------------- ------------- -------------

Rental Revenues (1)(2) $ 3,768,826 $3,753,973 $3,727,854 $3,482,136 $3,822,053
Properties (2) 46 46 46 47 47
Average Rent Per Property $ 81,931 $ 81,608 $ 81,040 $ 74,088 $ 81,320

(1) Rental income includes the Partnership's share of rental income from
the Properties owned through joint venture arrangements and the
Properties owned through tenancy in common arrangements. Rental
revenues have been adjusted, as applicable, for any amounts for which
the Partnership has established a provision for doubtful accounts.

(2) Excludes Properties that were vacant at December 31, and did not
generate rental revenues during the year ended December 31.

The following is a schedule of lease expirations for leases in place as
of December 31, 2001 for the next ten years and thereafter.

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

2002 -- $ -- --
2003 2 69,066 1.91%
2004 -- -- --
2005 -- -- --
2006 -- -- --
2007 1 37,763 1.04%
2008 2 347,428 9.58%
2009 2 247,790 6.84%
2010 2 130,126 3.59%
2011 3 264,139 7.29%
Thereafter 34 2,528,746 69.75%
--------- ---------------- -----------------
Total 46 3,625,058 100.00%
========= ================ =================

Leases with Major Tenants. The terms of the leases with the
Partnership's major tenants as of December 31, 2001 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.

Flagstar Enterprises, Inc. leases 11 Hardee's restaurants. The initial
term of each lease is 20 years (expiring in 2013) and the average minimum base
annual rent is approximately $65,800 (ranging from approximately $54,700 to
$73,600).

Long John Silver's, Inc. leases five Long John Silver's restaurants.
The initial term for four of the leases is 20 years (expiring in 2013) and the
initial term of the fifth lease, which the Partnership assumed from an
unrelated, third party in connection with the acquisition of the related
Property, is five years (expiring in 2005). The General Partners will seek to
re-lease this Property, or to sell the Property upon the expiration of the
lease. The average minimum base annual rent is approximately $81,600 (ranging
from approximately $34,800 to $118,100).

Golden Corral Corporation leases four Golden Corral restaurants. The
initial term of each lease is 15 years (expiring between 2008 and 2015) and the
average minimum base annual rent is approximately $190,900 (ranging from
approximately $168,600 to $229,800).

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 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 15, 2002, there were 3,049 holders of record of the Units. There
is no public trading market for the Units, and it is not anticipated that a
public market for the Units will develop. During 2001, 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, 2001, the price paid for any Unit transferred
pursuant to the Plan ranged from $8.67 to $9.50 per Unit. The price paid for any
Unit transferred other than pursuant to the Plan was subject to negotiation by
the purchaser and the selling Limited Partner. The Partnership will not redeem
or repurchase Units.

The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 2000 and 1999 other than
pursuant to the Plan.

2001(1) 2000(1)
--------------------------------------- -----------------------------------
High Low Average High Low Average
---------- ---------- ---------- -------- --------- ----------
First Quarter $ 7.08 $ 6.04 $ 6.65 $ 8.30 $8.30 $ 8.30
Second Quarter 7.01 6.57 6.76 7.06 7.06 7.06
Third Quarter 7.01 7.01 7.01 7.76 7.31 7.56
Fourth Quarter 7.45 6.39 6.97 7.00 5.75 6.80

(1) A total of 18,355 and 12,800 Units were transferred other than pursuant
to the Plan for the years ended December 31, 2001 and 2000,
respectively.

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

For each of the years ended December 31, 2001 and 2000, the Partnership
declared cash distributions of $3,400,008 to the Limited Partners. Distributions
of $850,002 were declared at the close of each of the Partnership's calendar
quarters during 2001 and 2000 to the Limited Partners. These amounts include
monthly distributions made in arrears for the Limited Partners electing to
receive such distributions on this basis. No amounts distributed to the Limited
Partners for the years ended December 31, 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. 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

2001 2000 1999 1998 1997
-------------- --------------- --------------- -------------- --------------
Year ended December 31:
Revenues (1) $3,737,845 $ 3,818,095 $3,719,734 $3,789,615 $3,832,470
Net income (2) 2,835,821 3,089,297 2,681,165 2,495,855 3,035,627
Cash distributions declared
3,400,008 3,400,008 3,400,008 3,400,008 3,400,008
Net income per Unit (2) 0.71 0.77 0.66 0.62 0.75
Cash distributions
declared per Unit 0.85 0.85 0.85 0.85 0.85

At December 31:
Total assets $33,149,433 $33,848,645 $34,337,261 $34,687,493 $35,523,590
Partners' capital 32,155,662 32,719,849 33,030,560 33,749,403 34,653,556

(1) Revenues include equity in earnings of joint ventures.

(2) Net income for the years ended December 31, 2001, 2000 and 1998 include
provisions for write-down of assets of $56,506, $51,618 and $605,290,
respectively. Net income for the year ended December 31, 1999, includes
a loss on removal of building of $352,285 and a gain on sale of assets
of $176,159. Net income for the year ended December 31, 1997, includes
a loss on sale of assets of $48,538.

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

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

The Partnership was organized on September 25, 1992, to acquire for
cash, either directly or through joint venture arrangements, both newly
constructed and existing restaurant Properties, as well as land upon which
restaurant Properties were to be constructed and to be leased primarily to
operators of selected national and regional fast-food and family-style
Restaurant Chains. The leases are generally triple-net leases, with the lessee
generally responsible for all repairs and maintenance, property taxes, insurance
and utilities. As of December 31, 2001, the Partnership owned 46 Properties,
either directly or through joint venture or tenancy in common arrangements.

Capital Resources

The Partnership's primary source of capital is cash from operations
(which includes cash received from tenants, distributions from joint ventures
and interest received, less cash paid for expenses). Cash from operations was
$3,302,832, $3,360,034 and $3,312,989, for the years ended December 31, 2001,
2000, and 1999, respectively. The decrease in cash from operations during 2001,
as compared to 2000, and the increase during 2000, as compared to 1999, was
primarily a result of changes in income and expenses as described in "Results of
Operations" below and changes in the Partnership's working capital.

Other sources and uses of capital included the following during the
years ended December 31, 2001, 2000, and 1999:

In November 1998, the Partnership entered into a new lease for the
Property in Tampa, Florida, with a new tenant to operate the Property as a
Steak-n-Shake restaurant. In connection with the new lease agreement, the
Partnership agreed to renovate the Property; therefore, during the year ended
1999, the old building located on the Property was removed. During 1999, a new
building was constructed and was operational. In connection with the new lease,
the Partnership funded approximately $537,400 in construction costs for the new
building. The Partnership used a portion of the net sales proceeds from the 1999
sale of the Property in Houston, Texas, to pay such costs, as described below.

In May 1999, the Partnership entered into a new lease for the Property
in Philadelphia, Pennsylvania with the new tenant to operate the Property as an
Arby's restaurant. In connection therewith, the Partnership funded a total of
approximately $325,900 in renovation costs, of which approximately $87,600 was
incurred during the year ended December 31, 2000. The Partnership used a portion
of the net sales proceeds from the sale of the Property in Houston, Texas, to
pay such costs, as described below.

In July 1999, the Partnership sold its Property in Houston, Texas to a
third party for $1,073,887 and received net sales proceeds of $1,059,498,
resulting in a gain of $176,159. The Partnership used the majority of the net
sales proceeds to pay for the construction and renovation costs described above
and to pay Partnership liabilities. The Partnership distributed amounts
sufficient to enable the Limited Partners to pay federal and state income taxes,
if any (at a level reasonably assumed by the General Partners), resulting from
the sale.

In April 2001, the Partnership sold its Property in Mount Airy, North
Carolina and received net sales proceeds of approximately $947,000. Due to the
fact that during 2001 the Partnership had recorded a provision for write-down of
assets for this Property, no additional gain or loss was recognized upon sale.
In April 2001, the Partnership reinvested approximately $882,300 of these sales
proceeds in a Property in Blue Springs, Missouri, as tenants-in-common, with CNL
Income Fund XV, Ltd. ("CNL XV"), a Florida limited partnership and an affiliate
of the General Partners. The Partnership and CNL XV, as tenants-in-common,
acquired this Property from CNL BB Corp., an affiliate of the General Partners.
The affiliate had purchased and temporarily held title to the Property in order
to facilitate the acquisition of the Property by the Partnership and CNL XV, as
tenants-in-common. The purchase price paid by the Partnership and CNL XV, as
tenants-in-common, represented the costs incurred by the affiliate to acquire
the Property, including closing costs. As of December 31, 2001, the Partnership
owned a 41 percent interest in the profits and losses of the Property.

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

Currently, rental income from the Partnership Properties is 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 or to make
distributions to partners. At December 31, 2001, the Partnership had $785,750
invested in such short-term investments as compared to $818,231 at December 31,
2000. As of December 31, 2001, the average interest rate earned on the rental
income deposited in demand deposit accounts at commercial banks was
approximately 3.0% annually. The funds remaining at December 31, 2001, will be
used towards the payment of distributions and other liabilities.

Short-Term Liquidity

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

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

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

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

The Partnership generally distributes cash from operations remaining
after the payment of the operating expenses of the Partnership, to the extent
that the General Partners determine that such funds are available for
distribution. Based on current and future anticipated cash from operations, the
Partnership declared distributions to the Limited Partners of $3,400,008 for
each of the years ended December 31, 2001, 2000, and 1999. This represents
distributions of $0.85 per Unit for each of the years ended December 31, 2001,
2000, and 1999. No distributions were made to the General partners during the
years ended December 31, 2001, 2000 and 1999. No amounts distributed to the
Limited Partners for the years ended December 31, 2001, 2000, and 1999, 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 year ended December 31, 2001 and 2000.

As of December 31, 2001 and 2000, the Partnership owed $15,534 and
$132,671, respectively, to related parties for such amounts as accounting and
administrative services and management fees. As of March 15, 2002, the
Partnership had reimbursed the affiliates all of such amounts. Other
liabilities, including distributions payable, increased to $978,237 at December
31, 2001, from $996,125 at December 31, 2000. The decrease in other liabilities
is primarily attributable to the Partnership paying transaction costs that were
accrued at December 31, 2000 relating to the proposed merger with APF, as
described in "Termination of Merger." Total liabilities at December 31, 2001, to
the extent they exceed cash and cash equivalents, will be paid from anticipated
future cash from operations.

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 its Properties and investments in unconsolidated
entities periodically (no less than once per year) for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be recoverable through operations. Management determines whether
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.

Results of Operations

During 1999, the Partnership owned and leased 42 wholly owned
Properties (including one Property in Houston, Texas, which was sold in July
1999), and during 2000 and 2001, the Partnership owned and leased 41 wholly
owned Properties (including one Property in Mount Airy, North Carolina, which
was sold in April 2001.) During 2001, 2000, and 1999, the Partnership was a
co-venturer in two separate joint ventures that each owned and leased one
Property. During 2001, 2000, and 1999, the Partnership acquired and leased three
Properties with affiliates of the General Partners as tenants-in-common. During
2001, the Partnership acquired and leased one additional Property with an
affiliate of the General Partners, as tenants-in-common. As of December 31,
2001, the Partnership owned, either directly, as tenants-in-common with
affiliates or through joint venture arrangements, 46 Properties which are
generally subject to long-term, triple-net leases. The leases of the Properties
provide for minimum base annual rental amounts (payable in monthly installments)
ranging from approximately $30,600 to $229,800. A majority of the leases provide
for percentage rent based on sales in excess of a specified amount. In addition,
the majority of the leases provide that, commencing in specified lease years,
the annual base rent required under the terms of the lease will increase. For
further description of the Partnership's leases and Properties, see Item 1.
Business - Leases and Item 2. Properties, respectively.

During the years ended December 31, 2001, 2000, and 1999, the
Partnership earned $3,157,455, $3,238,178, and $3,162,395, respectively, in
rental income from operating leases and earned income from direct financing
leases from its wholly owned Properties. The decrease in rental and earned
income during the year ended December 31, 2001, as compared to the year ended
December 31, 2000, was primarily due to the fact that the Partnership sold its
Property in Mount Airy, North Carolina in April 2001, as described in "Capital
Resources." Rental and earned income are expected to remain at reduced amounts
while equity in earnings of joint ventures is expected to increase due to the
fact that the Partnership reinvested the majority of net sales proceeds relating
to the sale of the Property in Mount Airy, North Carolina, in a Property in Blue
Springs, Missouri with an affiliate of the General Partners, as
tenants-in-common, as described in "Capital Resources." The increase in rental
and earned income during 2000 and 1999, each as compared to the previous year,
was partially offset by a reduction in rental and earned income as a result of
the sale of the Property in Houston, Texas, as described above in "Capital
Resources."

The increase in rental income during 2000, as compared to 1999, was
partially attributable to an increase in rental income as a result of the
Partnership re-leasing several Properties affected by the bankruptcy of Long
John Silvers, Inc. that occurred during 1998. In August 1999, Long John
Silver's, Inc. assumed and affirmed its five remaining leases, and the
Partnership has continued receiving rental payments relating to these five
leases.

For the years ended December 31, 2001, 2000, and 1999, the Partnership
also earned $245,820, $277,246, and $273,136, respectively, in contingent rental
income. The decrease in contingent rental income during the year ended December
31, 2001, as compared to the year ended December 31, 2000, was partially
attributable to a decrease in gross sales for certain restaurant Properties
whose leases require the payment of contingent rental income.

In addition, for the years ended December 31, 2001, 2000 and 1999, the
Partnership earned $309,381, $244,344 and $242,158, respectively, attributable
to net income earned by unconsolidated joint ventures in which the Partnership
is a co-venturer. The increase in net income earned by unconsolidated joint
ventures during 2001, as compared to 2000, was primarily attributable to the
fact that in April 2001, the Partnership used the majority of the net sales
proceeds received from the sale of its Property in Mount Airy, North Carolina,
to acquire an interest in a Property in Blue Springs, Missouri, as
tenants-in-common with CNL XV, as described above in "Capital Resources." The
increase in net income earned by joint ventures, during the year ended December
31, 2001, is also partially due to an increase in contingent rental income
attributable to an increase in gross sales of the restaurant Property in Miami,
Florida, the lease of which requires the payment of contingent rental income.
The Partnership owns approximately a 47.83% interest in this Property, as
tenants-in-common, with CNL Income Fund III, Ltd., CNL Income Fund VII, Ltd.,
and CNL Income Fund X, Ltd., each a Florida limited partnership and affiliate of
the General Partners.

During the year ended December 31, 2001, three of the Partnership's
lessees, Flagstar Enterprises, Inc., Long John Silver's, Inc., and Golden Corral
Corporation, each contributed more than ten percent of the Partnership's total
rental and earned income (including the Partnership's share of rental and earned
income from Properties owned by joint ventures and Properties owned with
affiliates of the General Partners as tenants-in-common). As of December 31,
2001, Flagstar Enterprises, Inc. was the lessee under leases relating to 11
restaurants, Long John Silver's, Inc. was the lessee under leases relating to
five restaurants, and Golden Corral Corporation was the lessee under leases
relating to four restaurants. It is anticipated that based on the minimum rental
payments required by the leases, each of the lessees will continue to contribute
more than ten percent of the Partnership's total rental and earned income during
2002. In addition, during the year ended December 31, 2001, four Restaurant
Chains, Long John Silver's, Hardee's, Golden Corral, and Burger King, each
accounted for more than 10% of the Partnership's total rental and earned income
(including the Partnership's share of rental and earned income from Properties
owned by joint ventures and Properties owned with affiliates of the General
Partners as tenants-in-common). It is anticipated that these four Restaurant
chains each will continue to account for more than 10% of the total rental and
earned income under the terms of its leases in 2002. 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, 2001, 2000 and 1999, the
Partnership also earned $25,189, $58,327 and $42,045, respectively, in interest
and other income. Interest and other income were higher during 2000, as compared
to 2001 and 1999, due to interest earned on the net sales proceeds received from
the 1999 sale of a Property, as described above, pending reinvestment in
construction and renovation costs relating to two Properties, as described above
in "Capital Resources."

Operating expenses, including depreciation and amortization expense,
and provisions for write-down of assets were $902,024, $728,798, and $862,443
for the years ended December 31, 2001, 2000, and 1999, respectively. The
increase in operating expenses during the year ended December 31, 2001, as
compared to the year ended December 31, 2000, was partially attributable to an
increase in the costs incurred for administrative expenses for servicing the
Partnership and its Properties, as permitted by the Partnership agreement.

The increase in operating expenses during the year ended December 31,
2001, as compared to the year ended December 31, 2000, was partially due to the
Partnership incurring additional state taxes due to changes in tax requirements
in several states in which the Partnership conducts business. In addition, the
increase in operating expenses during the year ended December 31, 2001, as
compared to the year ended December 31, 2000, was partially due to the fact that
the Partnership incurred expenses such as legal fees relating to several
Properties with a tenant who experienced financial difficulties and assigned the
leases to a new tenant, for which the Partnership approved the assignment. The
Partnership incurred additional legal fees due to lease amendments relating to
these assignments. The general partners do not anticipate that the Partnership
will continue to incur legal fees relating to these Properties.

In addition, the increase in operating expenses during 2001, as
compared to 2000, was partially attributable to an increase in depreciation
expense due to the fact that the tenant of the Property in Peoria, Arizona,
assigned its lease to Denny's, Inc. In connection with the assignment, the
Partnership reclassified this asset from net investment in direct financing
leases to land and buildings on operating leases. In accordance with Statement
of Financial Accounting Standards No. 13, "Accounting for Leases," the
Partnership recorded the reclassified asset at the lower of original cost,
present fair value, or present carrying amount. No loss on the reclassification
of the direct financing lease was incurred.

In March 2001, the Partnership recorded a provision for write-down of
assets of $56,506 for the Property in Mount Airy, North Carolina. The provision
represented the difference between the carrying value of the Property and the
net sales proceeds received in April 2001 from the sale of this Property. During
2000, the Partnership recorded a provision for write-down of assets of
approximately $51,600 in previously accrued rental income relating to two
Denny's Properties due to financial difficulties the tenant experienced. The
accrued rental income was the accumulated amount of non-cash accounting
adjustments previously recorded in order to recognize future scheduled rent
increases as income evenly over the term of the lease. The provision represents
the difference between the carrying value of the Property, including the
accumulated accrued rental income at December 31, 2001 and the General Partners'
current estimate of net realizable value for this Property.

The decrease in operating expenses during 2000, as compared to 1999,
was partially due to the amount of transaction costs the Partnership incurred
related to the General Partners retaining financial and legal advisors to assist
them in evaluating and negotiating the proposed and terminated merger with APF,
as described below in "Termination of Merger." No such expenses were incurred in
2001.

The decrease in operating expenses during 2000, as compared to 1999,
was also partially attributable to the fact that during 2000, the Partnership
received reimbursement from Long John Silver's, Inc. for amounts previously
incurred by the Partnership as expenses. In addition, the decrease during 2000,
as compared to 1999, was partially attributable to, a decrease in depreciation
expense due to the 1999 sale of the Property in Houston, Texas, as described
above.

During 1999, the Partnership entered into a new lease for its Property
in Tampa, Florida, with a Steak-n-Shake operator. In connection with the new
lease, the Partnership agreed to renovate the Property; therefore, the old
building located on the Property was removed. As a result, the Partnership
removed the remaining undepreciated cost of the building from its accounts
resulting in a loss of $352,285 during the year ended December 31, 1999.

In addition, during 1999, as a result of the sale of the Property in
Houston, Texas, described above in "Capital Resources," the Partnership
recognized a gain of $176,159. No properties were sold during 2000.

The restaurant industry, as a whole, has been one of the many
industries affected by the general slowdown in the economy. The General Partners
remain confident in the overall performance of the fast-food and family style
restaurants, the concepts that comprise the Partnership's portfolio. Industry
data shows that these restaurant concepts continue to outperform and remain more
stable than higher-end restaurants, which have been more adversely affected by
the slowing economy.

The Partnership's leases as of December 31, 2001, are generally
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in based rent at specified times
during the term of the lease. Inflation, overall, has had a minimal effect on
results of operations of the Partnership. Continued inflation 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 December 1999, the Securities and Exchange Commission released SAB
101, which provides the staff's view in applying generally accepted accounting
principles to selected revenue recognition issues. SAB 101 requires the
Partnership to defer recognition of certain percentage rental income until
certain defined thresholds are met. The Partnership adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material impact on the
Partnership's results of operations.

In July 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141 "Business Combinations" (FAS 141) and
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" (FAS 142). The Partnership has reviewed both statements and
has determined that both FAS 141 and FAS 142 do not apply to the Partnership as
of December 31, 2001.

In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" (FAS 144). 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 adoption of FAS 144 did not have any
effect on the partnership's recording of impairment losses as this Statement
retained the fundamental provisions of FAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of".

Termination of Merger

On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with APF, pursuant to which the Partnership would be merged with and
into a subsidiary of APF. Under the Agreement and Plan of Merger, APF was to
issue shares of its common stock as consideration for the Merger. On March 1,
2000, the General Partners and APF announced that they had mutually agreed to
terminate the Agreement and Plan of Merger. The agreement to terminate the
Agreement and Plan of Merger was based, in large part, on the General Partners'
concern that, in light of market conditions relating to publicly traded real
estate investment trusts, the value of the transaction had diminished. As a
result of such diminishment, the General Partners' ability to unequivocally
recommend voting for the transaction, in the exercise of their fiduciary duties,
had become questionable.

Item 7a. Quantitative and Qualitative Disclosures About market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

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

CONTENTS
--------

Page
----

Report of Independent Certified Public Accountants 16
Financial Statements:
Balance Sheets 17
Statements of Income 18
Statements of Partners' Capital 19
Statements of Cash Flows 20-21
Notes to Financial Statements 22-37

Report of Independent Certified Public Accountants

To the Partners
CNL Income Fund XIII, 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 XIII, Ltd. (a Florida
limited partnership) at December 31, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America. In addition, in our opinion, the financial
statement schedule listed in the index appearing under item 14(a)(2) present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial statements. These financial statements
and financial statement schedule 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.

/s/ PricewaterhouseCoopers LLP

Orlando, Florida
February 8, 2002

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

BALANCE SHEETS

December 31,
2001 2000
----------------------- ----------------------

ASSETS

Land and buildings on operating leases, net $ 21,299,059 $ 21,157,116
Net investment in direct financing leases 5,784,718 7,449,706
Investment in joint ventures 3,318,655 2,434,759
Cash and cash equivalents 785,750 818,231
Receivables, less allowance for doubtful accounts
of $5,674 in 2000 46,553 243,086
Accrued rental income 1,866,515 1,682,363
Other assets 48,183 63,384
----------------------- ----------------------

$ 33,149,433 $ 33,848,645
======================= ======================

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses $ 5,945 $ 38,373
Escrowed real estate taxes payable 5,372 --
Distributions payable 850,002 850,002
Due to related parties 15,534 132,671
Rents paid in advance and deposits 91,470 80,653
Deferred rental income 25,448 27,097
----------------------- ----------------------
Total liabilities 993,771 1,128,796

Partners' capital 32,155,662 32,719,849
----------------------- ----------------------

$ 33,149,433 $ 33,848,645
======================= ======================

See accompanying notes to financial statements.

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

STATEMENTS OF INCOME

Year Ended December 31,
2001 2000 1999
---------------- ---------------- --------------
Revenues
Rental income from operating leases $ 2,469,628 $ 2,401,921 $ 2,367,931
Earned income from direct financing leases 687,827 836,257 794,464
Contingent rental income 245,820 277,246 273,136
Interest and other income 25,189 58,327 42,045
---------------- ---------------- --------------
3,428,464 3,573,751 3,477,576
---------------- ---------------- --------------
Expenses:
General operating and administrative 277,453 165,389 152,089
Professional services 61,865 33,202 51,773
Management fees to related parties 36,671 36,142 36,152
Real estate taxes -- -- 7,877
State and other taxes 57,457 21,731 23,362
Depreciation and amortization 412,072 385,470 399,174
Provision for write-down of assets 56,506 51,618 --
Transaction costs -- 35,246 192,016
---------------- ---------------- --------------
902,024 728,798 862,443
---------------- ---------------- --------------

Income Before Gain on Sale of Assets, Loss on Removal of
Building and Equity in Earnings of Joint Ventures 2,526,440 2,844,953 2,615,133

Gain on Sale of Assets -- -- 176,159

Loss on Removal of Building -- -- (352,285)

Equity in Earnings of Joint Ventures 309,381 244,344 242,158
---------------- ---------------- --------------

Net Income $ 2,835,821 $ 3,089,297 $ 2,681,165
================ ================ ==============

Allocation of Net Income:
General partners $ -- $ -- $ 28,060
Limited partners 2,835,821 3,089,297 2,653,105
---------------- ---------------- --------------
$ 2,835,821 $ 3,089,297 $ 2,681,165
================ ================ ==============

Net Income Per Limited Partner Unit $ 0.71 $ 0.77 $ 0.66
================ ================ ==============

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

See accompanying notes to financial statements.

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

STATEMENTS OF PARTNERS' CAPITAL

Years Ended December 31, 2001, 2000 and 1999

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

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

Distributions to limited
partners ($0.85 per
limited partner unit) -- -- -- (3,400,008) -- -- (3,400,008)
Net income -- 28,060 -- -- 2,653,105 -- 2,681,165
-------------- ------------ --------------- --------------- --------------- ----------- ------------

Balance, December 31, 1999 1,000 190,934 40,000,000 (21,128,416) 18,632,211 (4,665,169) 33,030,560

Distributions to limited
partners ($0.85 per
limited partner unit) -- -- -- (3,400,008) -- -- (3,400,008)
Net income -- -- -- -- 3,089,297 -- 3,089,297
-------------- ------------ --------------- --------------- --------------- ----------- ------------

Balance, December 31, 2000 1,000 190,934 40,000,000 (24,528,424) 21,721,508 (4,665,169) 32,719,849

Distributions to limited
partners ($0.85 per
limited partner unit) -- -- -- (3,400,008) -- -- (3,400,008)
Net income -- -- -- -- 2,835,821 -- 2,835,821
-------------- ------------ --------------- --------------- ---------------- ---------- ------------

Balance, December 31, 2001 $ 1,000 $ 190,934 $ 40,000,000 $ (27,928,432) $ 24,557,329 $ (4,665,169) $ 32,155,662
============== ============ =============== =============== =============== =========== ============

See accompanying notes to financial statements.

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

STATEMENTS OF CASH FLOWS

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

Increase ( Decrease) in Cash and Cash Equivalents:

Cash Flows from Operating Activities:
Cash received from tenants $ 3,545,145 $ 3,404,302 $ 3,342,666
Distributions from joint ventures 307,790 254,957 247,710
Cash paid for expenses (568,238) (329,070) (314,517)
Interest received 18,135 29,845 37,130
------------------ ------------------ --------------------
Net cash provided by operating
activities 3,302,832 3,360,034 3,312,989
------------------ ------------------ --------------------

Cash Flows from Investing Activities:
Proceeds from sale of assets 947,000 -- 1,059,498
Additions to land and buildings -- (87,597) (238,257)
Investment in direct financing leases -- -- (537,404)
Investment in joint ventures (882,305) -- --
Payment of lease costs -- -- (17,875)
------------------ ------------------ --------------------
Net cash provided by (used in)
investing activities 64,695 (87,597) 265,962
------------------ ------------------ --------------------

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

Net Increase (Decrease) in Cash and Cash Equivalents (32,481) (127,571) 178,943

Cash and Cash Equivalents at Beginning of Year
818,231 945,802 766,859
------------------ ------------------ --------------------

Cash and Cash Equivalents at End of Year $ 785,750 $ 818,231 $ 945,802
================== ================== ====================

See accompanying notes to financial statements.

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

STATEMENT OF CASH FLOWS - CONTINUED

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

Reconciliation of Net Income to Net Cash
Provided by Operating Activities

Net income $ 2,835,821 $ 3,089,297 $ 2,681,165
----------------- ----------------- -----------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 410,264 383,489 397,150
Amortization 1,808 1,981 2,024
Equity in earnings of joint
ventures, net of distributions (1,591 ) 10,613 5,552
Loss on removal of building in
connection with renovation -- -- 352,285
Gain on sale of assets -- -- (176,159 )
Provision for write-down of assets 56,506 51,618 --
Decrease (increase) in receivables 196,533 (107,654 ) (10,493 )
Decrease in net investment in
direct financing leases 109,275 107,487 90,732
Increase in accrued rental income (184,152 ) (178,371 ) (195,625 )
Decrease (increase) in
other assets 13,393 (15,264 ) (7,510 )
Increase (decrease) in
accounts payable, accrued
expenses, and escrowed real
estate taxes payable (27,056 ) (108,030 ) 135,412
Increase (decrease) in due to
related parties (117,137 ) 63,437 46,705
Increase (decrease) in rents paid
in advance and deposits 9,168 61,431 (8,249 )
----------------- ----------------- -----------------
Total adjustments 467,011 270,737 631,824
----------------- ----------------- -----------------

Net Cash Provided by Operating
Activities $ 3,302,832 $ 3,360,034 $ 3,312,989
================= ================= =================

Supplemental Schedule of Non-Cash
Financing Activities:

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

See accompanying notes to financial statements.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000 and 1999

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

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

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

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

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

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

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

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

Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date. In contrast, deferred
rental income represents the aggregate amount of scheduled
rental payments to date (including rental payments due during
construction and prior to the property being placed in
service) in excess of income recognized on a straight-line
basis over the lease term commencing on the date the property
is placed in service. Whenever a tenant defaults under the
terms of its lease, or events or changes in circumstance
indicate that the tenant will not lease the property through
the end of the lease term, the Partnership either reserves or
reverses the cumulative accrued rental income balance.

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

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

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

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

Investment in Joint Ventures - The Partnership accounts for its
interests in Attalla Joint Venture and Salem Joint Venture, and a
property in Arvada, Colorado, a property in Akron, Ohio, a property in
Miami, Florida, and a property in Blue Springs, Missouri, for which
each property is held as tenants-in-common with affiliates, 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.

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

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

Additionally, for tax purposes, syndication costs are included in
partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment. See "Income Taxes"
footnote for a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

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

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 2001 presentation.
These reclassifications had no effect on total partners' capital or net
income.

Staff Accounting Bulletin No. 101 ("SAB 101") - In December 1999, the
Securities and Exchange Commission released SAB 101, which provides the
staff's view in applying generally accepted accounting principles to
selected revenue recognition issues. SAB 101 requires the Partnership
to defer recognition of certain percentage rental income until certain
defined thresholds are met. The Partnership adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material
impact on the Partnership's results of operations.

Statement of Financial Accounting Standards No. 141 ("FAS 141") and
Statement of Financial Accounting Standards No. 142 ("FAS 142") - In
July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 "Business Combinations" and
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets". The Partnership has reviewed both statements and
has determined that both FAS 141 and FAS 142 do not apply to the
Partnership as of December 31, 2001.

Statement of Financial Accounting Standards No. 144 ("FAS 144") - In
October 2001, the Financial Accounting Standards Board issued 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

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

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

recognized, the adjusted carrying amount of a long-lived asset is its
new cost basis. The adoption of FAS 144 did not have any effect on the
partnership's recording of impairment losses as this Statement retained
the fundamental provisions of FAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of".

1. Leases:
------

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

3. Land and Buildings on Operating Leases:
--------------------------------------

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

2001 2000
-------------------- --------------------

Land $ 12,374,488 $ 12,374,488
Buildings 12,084,577 11,532,370
-------------------- --------------------
24,459,065 23,906,858
Less accumulated depreciation (3,160,006) (2,749,742)
-------------------- --------------------

$ 21,299,059 $ 21,157,116
==================== ====================

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

3. Land and Buildings on Operating Leases - Continued:
--------------------------------------------------

In May 1999, the Partnership entered into a new lease for the property
in Philadelphia, Pennsylvania, with a new tenant to operate the
property as an Arby's restaurant. In connection therewith, the
Partnership funded a total of approximately $325,900 in renovation
costs, of which approximately $87,600 and $238,300 were incurred during
2000 and 1999, respectively. The portion of the lease relating to the
building portion of the property is classified as a direct financing
lease (see Note 4).

During 2000, the Partnership recorded a provision for write-down of
assets of $51,618 in previously accrued rental income relating to the
properties in Peoria and Mesa, Arizona due to financial difficulties
the tenant experienced. The accrued rental income was the accumulated
amount of non-cash accounting adjustments previously recorded in order
to recognize future scheduled rent increases as income evenly over the
term of the lease. The provision represented the difference between the
carrying value of the property, including the accumulated accrued
rental income, and the general partners' estimated net realizable value
for the property.

The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2001:

2002 $ 2,293,808
2003 2,350,309
2004 2,448,907
2005 2,464,839
2006 2,490,369
Thereafter 14,910,987
------------------

$ 26,959,219
==================

Since lease renewal periods are exercisable at the option of the
tenant, the above table only presents future minimum lease payments due
during the initial lease terms. In addition, this table does not
include any amounts for future contingent rentals which may be received
on the leases based on a percentage of the tenant's gross sales.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

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

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

2001 2000
--------------------- ----------------------

Minimum lease payments receivable
$ 10,242,278 $ 13,545,749
Estimated residual values 1,982,699 2,555,822
Less unearned income (6,440,259) (8,651,865)
--------------------- ----------------------

Net investment in direct financing
leases $ 5,784,718 $ 7,449,706
===================== ======================

During 2001 the Partnership recorded a provision for write-down of
assets of $56,506 for the property in Mount Airy, North Carolina. The
provision represented the difference between the carrying value of the
property at and the net sales proceeds received in April 2001 from the
sale of this property, for which the land and building had been
classified as a direct financing lease. The gross investment (minimum
lease payments receivable and the estimated residual value) and the
unearned income relating to the land and building were removed from the
accounts.

During 2001, one of the Partnership's leases was amended. As a result,
the Partnership reclassified the amended lease from a direct financing
lease to land and building on operating leases. In accordance with the
Statement of Financial Accounting Standards No. 13., "Accounting for
Leases," the Partnership recorded the reclassified lease at the lower
of original cost, present fair value, or present carrying amount No
loss on the reclassification of the direct financing lease was
recorded.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

4. Net Investment in Direct Financing Leases - Continued:
-----------------------------------------------------

The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 2001:

2002 $ 774,241
2003 774,783
2004 780,746
2005 780,746
2006 789,457
Thereafter 6,342,305
----------------

$10,242,278
================

The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (see Note 3).

5. Investment in Joint Ventures:
----------------------------

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

The Partnership also owns properties in Arvada, Colorado; Akron, Ohio;
and Miami, Florida; each as tenants-in-common with affiliates of the
general partners. As of December 31, 2001, the Partnership owned a
66.13%, 63.09% and 47.83% interest, respectively, in the properties.

Attalla Joint Venture, Salem Joint Venture and the Partnership and
affiliates, as tenants-in-common in three separate tenancy-in-common
arrangements, each own and lease one property to an operator of
national fast-food or family-style restaurants.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

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

In April 2001, the Partnership used the majority of the net sales
proceeds from the sale of its property in Mount Airy, North Carolina to
acquire an interest in a Golden Corral property in Blue Springs,
Missouri, as tenants-in-common, with CNL Income Fund XV, Ltd., a
Florida limited partnership, and an affiliate of the general partners.
The Partnership and CNL Income Fund XV, Ltd., a tenants-in-common,
acquired this interest from CNL BB Corp., an affiliate of the general
partners (see Note 8). The Partnership accounts for its investment
using the equity method since the agreement requires the consent of all
partners on all key decisions affecting the operations of the
underlying property. As of December 31, 2001, the Partnership owned a
41% interest in this property.

The following presents the combined, condensed financial information
for the joint ventures and the properties held as tenants-in-common
with affiliates at December 31:

2001 2000
-------------------- ---------------------

Land and buildings on operating
leases, net $ 6,045,197 $ 4,009,712
Net investment in direct financing lease
344,884 351,555
Cash 41,693 50,579
Receivables 67,370 --
Accrued rental income 377,299 318,016
Other assets 1,028 474
Liabilities 20,621 29,459
Partners' capital 6,856,850 4,700,877
Revenues 760,782 568,987
Net income 630,846 476,978

The Partnership recognized income totaling $309,381, $244,344, and
$242,158, for the years ended December 31, 2001, 2000, and 1999
respectively, from these joint ventures and the properties held as
tenants-in-common with affiliates.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

6. Allocations and Distributions - Continued:
-----------------------------------------

From inception through December 31, 1999, generally 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; provided,
however, that 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 invested capital contributions (the "Limited Partners' 10%
Return").

From inception through December 31, 1999, generally, net sales proceeds
from the sales 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 Limited Partners'
10% 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 a 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 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.

Generally, net sales proceeds from a sale of properties, in liquidation
of the Partnership 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 the partners with
positive capital account 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.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

6. Allocations and Distributions - Continued
-----------------------------------------

Effective January 1, 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 partner in
succeeding years. Accordingly, the general partners were not allocated
any net income and did not receive any distributions during the year
ended December 31, 2001 and 2000.

During each of the years ended December 31, 2001, 2000, and 1999, the
Partnership declared distributions to the limited partners of
$3,400,008. No distributions have been made to the general partners to
date.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

7. Income Taxes:
------------

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

2001 2000 1999
---------------- ---------------- ----------------

Net income for financial reporting purposes $ 2,835,821 $ 3,089,297 $ 2,681,165

Depreciation for tax reporting purposes in excess of
depreciation for financial reporting purposes (54,090) (95,523) (76,982)

Direct financing leases recorded as operating leases for
tax reporting purposes 109,275 107,487 90,732

Capitalization (deduction) of transaction costs for tax
reporting purposes -- (215,307) 192,016

Equity in earning of joint ventures for tax reporting
purposes less than equity in earnings of joint
ventures for financial reporting purposes (19,015) (14,242) (25,801)

Gain on sale of property for financial reporting
purposes deferred for tax reporting purposes -- -- 36,702

Loss on sale of property for financial reporting
purposes in excess of loss for tax reporting -- -- 352,285
purposes

Gain on sale of property for financial reporting less
than gain for tax reporting purposes 66,579 -- --

Provision for write-down of assets 56,506 51,618 --

Allowance for doubtful accounts (5,674) 5,674 (532)

Accrued rental income (184,152) (178,371) (195,625)

Rents paid in advance 9,168 61,431 (8,249)
---------------- ---------------- ----------------

Net income for federal income tax purposes $ 2,814,418 $ 2,812,064 $ 3,045,711
================ ================ ================

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

8. 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 Group, Inc., a wholly owned subsidiary of CNL Holdings, Inc. CNL
APF Partners, LP (the "Advisor") is a wholly owned subsidiary of CNL
American Properties Fund, Inc. ("APF"). CNL Fund Advisors, Inc., a
majority owned subsidiary of CNL Financial Group, Inc. until it merged
with and into APF effective September 1, 1999, served as the
Partnership's advisor until it assigned its rights and obligations
under a management agreement with the Partnership to the Advisor
effective July 1, 2000. The individual general partners are
stockholders and directors of APF.

The Advisor provides certain services relating to management of the
Partnership and its properties pursuant to a management agreement with
the Partnership. In connection therewith, the Partnership agreed to pay
the Advisor a management fee of one percent of the sum of gross
revenues from properties wholly owned by the Partnership and the
Partnership's allocable share of gross revenues from joint ventures.
The management fee, which will not exceed fees which are competitive
for similar services in the same geographic area, may or may not be
taken, in whole or in part as to any year, in the sole discretion of
the Advisor. All or any portion of the management fee not taken as to
any fiscal year shall be deferred without interest and may be taken in
such other fiscal year as the Advisor shall determine. The Partnership
incurred management fees of $36,671, $36,142, and $36,152, for the
years ended December 31, 2001, 2000, and 1999, respectively.

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
Limited Partners' 10% Return plus their invested capital contributions.
No deferred, subordinated real estate disposition fees have been
incurred since inception.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

8. Related Party Transactions - Continued:
---------------------------------------

In April 2001, the Partnership and CNL Income Fund XV, Ltd. ("CNL XV"),
as tenants-in-common, acquired an interest in a Golden Corral property
from CNL BB Corp., an affiliate of the general partners, for a purchase
price of approximately $2,152,000. CNL XV is a Florida limited
partnership and 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
XV, as tenants-in-common. The purchase price paid by the Partnership
and CNL XV, as tenants-in-common, represents the costs incurred by CNL
BB Corp. to acquire and carry the property, including closing costs.

During the years ended December 31, 2001, 2000, and 1999, the
Partnership's advisor and its affiliates provided accounting and
administrative services to the Partnership on a day-to-day basis,
including services during 2000 and 1999 relating to the proposed and
terminated merger. For the years ended December 31, 2001, 2000, and
1999, the expenses incurred for these services were $211,205, $99,772,
and $121,160, respectively.

The amount due to related parties at December 31, 2001 and 2000 totaled
$15,534, and $132,671, respectively.

9. Concentration of Credit Risk:
----------------------------

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

2001 2000 1999
--------------- --------------- ----------------

Flagstar Enterprises, Inc. $ 640,524 $ 644,467 $ 647,065
Golden Corral Corp. 616,239 548,540 530,686
Long John Silver's, Inc. 414,556 415,012 423,498
Jack in the Box Inc. (formerly
Foodmaker, Inc.) N/A N/A 413,069

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

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

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

2001 2000 1999
--------------- --------------- ----------------

Hardee's $ 640,524 $ 644,467 $ 647,065
Golden Corral Family Steakhouse Restaurants
616,239 548,540 530,686
Burger King 412,489 454,645 465,469
Long John Silver's 414,556 415,012 423,498
Jack in the Box N/A N/A 413,069

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

Although the Partnership's properties are geographically diverse
throughout the United States of America, and the Partnership's lessees
operate a variety of restaurant concepts, default by any lessee or
restaurant chain contributing more than ten percent of the
Partnership's revenues 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.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2001, 2000, and 1999

10. Selected Quarterly Financial Data:
---------------------------------

The following table presents selected unaudited quarterly financial
data for each full quarter during the years ended December 31, 2001 and
2000:

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

Revenue (1) $909,091 $956,078 $920,597 $952,079 $3,737,845
Net income 533,006 768,469 757,644 776,702 2,835,821
Net income per
Limited partner
Unit 0.13 0.19 0.19 0.20 0.71

2000 Quarter First Second Third Fourth Year
------------------------ -------------- ------------- ------------- --------------- --------------

Revenue (1) $926,862 $912,896 $944,979 $1,033,358 $3,818,095
Net income 685,941 728,592 774,105 900,659 3,089,297
Net income per
limited partner
unit 0.17 0.18 0.19 0.23 0.77

(1) Revenues include equity in earnings of joint ventures.

(2) Revenues have been adjusted to reclassify any reversals of
accrued rental income to provisions for write-down of assets.
This reclassification had no effect on total net income.

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

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

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

James M. Seneff, Jr., age 55. 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 CNL American Properties Fund,
Inc. ("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., 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.
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. 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 54. 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
Director of the Board of Directors 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, President and Treasurer of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust; as well as, Director, Vice
Chairman of the Board, President and Treasurer of CNL Hospitality Corp., its
advisor. In addition, Mr. Bourne serves as Director, Vice Chairman of the Board,
President and Treasurer of CNL Retirement Properties, Inc., a public, unlisted
real estate investment trust; as well as, a Director, Vice Chairman of the
Board, President and Treasurer 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 46. 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. 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 38. 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.

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 15, 2002, 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 15, 2002, 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.

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, 2001, 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, 2001
- --------------------------------- -------------------------------------- ------------------------------

Reimbursement to affiliates for Operating expenses are reimbursed at Accounting and
operating expenses the lower of cost or 90% of the administrative services:
prevailing rate at which comparable $211,205
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 management fee to One percent of the sum of gross $36,671
affiliates revenues from Properties wholly
owned by the Partnership plus the
Partnership's allocable share of
gross revenues of joint ventures in
which the Partnership is a
co-venturer and the property owned
with an affiliate as
tenants-in-common. The management
fee, which will not exceed
competitive fees for comparable
services in the same geographic
area, may or may not be taken, in
whole or in part as to any year, in
the sole discretion of affiliates of
the General Partners. All or any
portion of the management fee not
taken as to any fiscal year shall be
deferred without interest and may be
taken in such other fiscal year as
the affiliates shall determine.

Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2001
- --------------------------------- -------------------------------------- ------------------------------

Deferred, subordinated real A deferred, subordinated real estate $-0-
estate disposition fee payable disposition fee, payable upon sale
to affiliates 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 equal $-0-
subordinated share of to one percent of Partnership
Partnership net cash flow distributions of net cash flow,
subordinated to certain minimum
returns to the Limited Partners.

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

Amount Incurred
Type of Compensation For the Year
And Recipient Method of Computation Ended December 31, 2001
- --------------------------------- -------------------------------------- ------------------------------

General Partners' share of Distributions of net sales proceeds $-0-
Partnership net sales proceeds from a sale or sales of
from a sale or sales in substantially all of the
liquidation of the Partnership 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.

In addition, in April 2001, the Partnership and CNL Income Fund XV, Ltd. ("CNL
XV"), as tenants-in-common, acquired an interest in a Golden Corral property
from CNL BB Corp., an affiliate of the general partners, for a purchase price of
approximately $2,152,000. CNL XV is a Florida limited partnership and 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 XV, as tenants-in-common. The purchase price
paid by the Partnership and CNL XV, as tenants-in-common, represents the costs
incurred by CNL BB Corp. to acquire and carry the property, including closing
costs.

PART IV

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

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

1. Financial Statements

Report of Independent Certified Public Accountants

Balance Sheets at December 31, 2001 and 2000

Statements of Income for the years ended December 31, 2001,
2000, and 1999

Statements of Partners' Capital for the years ended December
31, 2001, 2000, and 1999

Statements of Cash Flows for the years ended December 31,
2001, 2000, and 1999

Notes to Financial Statements

2. Financial Statement Schedule

Schedule III - Real Estate and Accumulated Depreciation at
December 31, 2001

Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 2001

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

3. Exhibits

3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-53672-01 on Form
S-11 and incorporated herein by reference.)

4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-53672-01 on Form
S-11 and incorporated herein by reference.)

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

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

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

10.3 Assignment of Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 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 14, 2001, and incorporated
herein by reference.)

(b) The Registrant filed no reports on Form 8-K during the period October
1, 2001 through December 31, 2001.

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 26th day of
March, 2002.

CNL INCOME FUND XIII, LTD.

By: CNL REALTY CORPORATION
General Partner

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

By: ROBERT A. BOURNE
General Partner

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

By: JAMES M. SENEFF, JR.
General Partner

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

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 26, 2002
------------------------------------ (Principal Financial and Accounting
Robert A. Bourne Officer)

/s/ James M. Seneff, Jr. Chief Executive Officer and Director March 26, 2002
------------------------------------ (Principal Executive Officer)
James M. Seneff, Jr.

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

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2001

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

Properties the Partnership
has Invested in Under
Operating Leases:

Arby's Restaurant:
Philadelphia, Pennsylvan-a (j) $274,580 - - -

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

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

Denny's Restaurants:
Peoria, Arizona (i) - 460,107 - 552,207 -
Mesa, Arizona - 530,494 - 540,983 -

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

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

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

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

Long John Silver's Restaurants:
Penn Hills, Pennsylvania-(k) 292,370 356,444 - -
Arlington, Texas - 362,939 - - -
Johnstown, Pennsylvania - 254,412 - - -
Orlando, Florida - 299,696 139,676 - -
Austin, Texas - 463,937 - - -

Steak -n- Shake Restaurant:
Tampa, Florida - 372,748 - - -

Wendy's Old Fashioned Hamburger
Restaurant:
Salisbury, Maryland - 290,195 641,709 - -
------------ ----------- ---------- -------

$12,374,488 $9,887,950 $2,196,627 -
============ =========== ========== =======

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

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

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

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

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

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

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

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

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

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

Property in Which the
Partnership has a 41.00%
Interest as Tenants-in-
Common and has Invested
in Under an Operating Lease:

Golden Corral Restaurant:
Blue Springs, Missouri (-) $786,973 $1,364,990 - -
============ =========== ========== =======

Properties the Partnership has
Invested in Under Direct
Financing Leases

Arby's Restaurant
Philadelphia, Pennsylvan-a - $515,075 - -

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

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

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

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

Steak-n-Shake Restaurant:
Tampa, Florida - - - 537,404 -
------------ ----------- ---------- -------

$495,290 $4,805,086 $964,956 -
============ =========== ========== =======

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

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

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

$274,580 (f) $274,580 - 1993 07/93 (d)

256,901 669,537 926,438 188,021 1988 07/93 (b)
211,835 771,616 983,451 216,687 1988 07/93 (b)
247,183 723,304 970,487 203,120 1989 07/93 (b)
174,843 618,815 793,658 173,777 1990 07/93 (b)

445,389 - 445,389 (g) - 03/94 (g)
380,055 - 380,055 (g) - 03/94 (g)
280,409 - 280,409 (g) - 03/94 (g)
424,323 - 424,323 (g) - 03/94 (g)
501,416 - 501,416 (g) - 03/94 (g)
374,675 - 374,675 (g) - 03/94 (g)
386,638 - 386,638 (g) - 10/94 (g)
326,175 - 326,175 (g) - 04/95 (g)

460,107 552,207 1,012,314 22,832 1994 10/93 (i)
530,494 540,983 1,071,477 137,765 1994 12/93 (b)

611,589 1,071,838 1,683,427 308,141 1991 05/93 (b)
625,527 964,122 1,589,649 275,941 1993 06/93 (b)
617,016 1,103,437 1,720,453 286,767 1994 11/93 (b)

197,336 417,418 614,754 117,220 1992 07/93 (b)
160,149 424,977 585,126 119,343 1992 07/93 (b)
164,004 (f) 164,004 - 1991 07/93 (d)
218,639 460,364 679,003 129,280 1993 07/93 (b)
204,516 (f) 204,516 - 1992 07/93 (d)
240,363 412,621 652,984 115,873 1992 07/93 (b)
226,815 431,574 658,389 121,196 1993 07/93 (b)

323,929 601,054 924,983 170,436 1992 06/93 (b)
315,842 590,708 906,550 165,938 1993 07/93 (b)
404,752 592,173 996,925 166,295 1993 08/93 (b)

452,691 (f) 452,691 - 1993 12/93 (d)

292,370 356,444 648,814 33,528 1993 07/93 (k)
362,939 (f) 362,939 - 1993 08/93 (d)
254,412 (f) 254,412 - 1993 08/93 (d)
299,696 139,676 439,372 37,910 1983 11/93 (b)
463,937 (f) 463,937 - 1993 12/93 (d)

372,748 (f) 372,748 - 1994 12/93 (d)

290,195 641,709 931,904 169,936 1993 01/94 (b)
- ------------- ------------ ----------- -----------

$12,374,488 $12,084,577 $24,459,065 $3,160,006
============= ============ =========== ===========

$196,274 $434,428 $630,702 $116,561 1993 11/93 (b)
============= ============ =========== ===========

$260,439 $545,126 $805,565 $132,222 1994 09/94 (b)
============= ============ =========== ===========

$131,762 (f) $131,762 - 1991 03/95 (d)
============= ============ =========== ===========

$355,595 $517,030 $872,625 $84,926 1970 01/97 (b)
============= ============ =========== ===========

$976,357 $974,016 $1,950,373 $129,962 1995 12/97 (b)
============= ============ =========== ===========

$786,973 $1,364,990 $2,151,963 $34,122 2000 04/01 (b)
============= ============ =========== ===========

- (f) (f) (d) 1993 07/93 (d)

- (f) (f) (d) 1991 07/93 (d)
(f) (f) (f) (e) 1992 07/93 (e)
- (f) (f) (d) 1992 07/93 (d)
(f) (f) (f) (e) 1992 07/93 (e)
(f) (f) (f) (e) 1992 07/93 (e)

(f) (f) (f) (e) 1988 11/93 (e)

- (f) (f) (d) 1993 12/93 (d)

- (f) (f) (d) 1993 08/93 (d)
- (f) (f) (d) 1993 08/93 (d)
- (f) (f) (d) 1993 12/93 (d)

- (f) (f) (d) 1994 12/93 (d)

- (f) (f) (d) 1991 03/95 (d)

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

NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2001

(a) Transactions in real estate and accumulated depreciation during 2001,
2000, and 1999 are summarized as follows:

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

Properties the Partnership has invested in Under Operating
Leases:

Balance, December 31, 1998 $ 25,350,867 $ 2,107,624
Disposition (935,524 ) (112,983 )
Reclassified from net investment in direct financing lease 356,444 --
Reclassified to net investment in direct financing lease (360,090 ) (7,805 )
Depreciation expense -- 397,150
------------------ -------------------

Balance, December 31, 1999 24,411,697 2,383,986
Reclassified to net investment in direct financing lease (504,839 ) (17,733 )
Depreciation expense -- 383,489
------------------ -------------------

Balance, December 31, 2000 23,906,858 2,749,742
Reclassified from net investment in direct financing lease 552,207 --
Depreciation expense -- 410,264
------------------ -------------------

Balance, December 31, 2001 $ 24,459,065 $ 3,160,006
================== ===================

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

Balance, December 31, 1998 $ 630,702 $ 73,118
Depreciation expense -- 14,481
------------------ -------------------

Balance, December 31, 1999 630,702 87,599
Depreciation expense -- 14,481
------------------ -------------------

Balance, December 31, 2000 630,702 102,080
Depreciation expense -- 14,481
------------------ -------------------

Balance, December 31, 2001 $ 630,702 $ 116,561
================== ===================

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

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

December 31, 2001

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

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

Balance, December 31, 1998 $ 805,565 $ 77,712
Depreciation expense -- 18,170
---------------- -----------------

Balance, December 31, 1999 805,565 95,882
Depreciation expense -- 18,170
---------------- -----------------

Balance, December 31, 2000 805,565 114,052
Depreciation expense -- 18,170
---------------- -----------------

Balance, December 31, 2001 $ 805,565 $ 132,222
================ =================

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

Balance, December 31, 1998 $ 131,762 $ --
Depreciation expense (d) -- --
---------------- -----------------

Balance, December 31, 1999 131,762 --
Depreciation expense (d) -- --
---------------- -----------------

Balance, December 31, 2000 131,762 --
Depreciation expense (d) -- --
---------------- -----------------

Balance, December 31, 2001 $ 131,762 $ --
================ =================

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

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

December 31, 2001

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

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

Balance, December 31, 1998 (h) $ 872,625 $ 33,221
Depreciation expense -- 17,235
---------------- ------------------

Balance, December 31, 1999 (h) 872,625 50,456
Depreciation expense -- 17,235
---------------- ------------------

Balance, December 31, 2000 (h) 872,625 67,691
Depreciation expense -- 17,235
---------------- ------------------

Balance, December 31, 2001 (h) $ 872,625 $ 84,926
================ ==================

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

Balance, December 31, 1998 $ 1,950,373 $ 32,556
Depreciation expense -- 32,466
---------------- ------------------

Balance, December 31, 1999 1,950,373 65,022
Depreciation expense -- 32,470
---------------- ------------------

Balance, December 31, 2000 1,950,373 97,492
Depreciation expense -- 32,470
---------------- ------------------

Balance, December 31, 2001 $ 1,950,373 $ 129,962
================ ==================

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

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

December 31, 2001

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

Property in Which the Partnership has a 41% Interest as
Tenants-in-Common and has Invested in Under an
Operating Lease:

Balance, December 31, 2000 $ -- $ --
Acquisition 2,151,963 --
Depreciation expense -- 34,122
---------------- ------------------

Balance, December 31, 2001 $ 2,151,963 $ 34,122
================ ==================

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

(c) As of December 31, 2001, the aggregate cost of the Properties owned by
the Partnership and joint ventures (including the Properties owned as
tenants-in-common) for federal income tax purposes was $31,553,018 and
$6,919,826, 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
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
the 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, 1997, the Partnership and an
affiliate as tenants-in-common, purchased land and building from CNL BB
Corp., an affiliate of the General Partners, for an aggregate cost of
$872,625.

(i) Effective February 2001, the lease for this Property was amended
resulting in the reclassification of the building portion of the lease
as an operating lease. The building was recorded at net book value and
depreciated over its remaining estimated life of approximately 22
years.

(j) Effective May 1999, the Partnership entered into a new lease and
converted the building to a new concept, resulting in the
reclassification of the building portion of the lease as a direct
financing lease.

(k) Effective October 1999, the lease for this Property was amended
resulting in the reclassification of the building portion of the lease
as an operating lease. The building was recorded at net book value and
depreciated over its remaining estimated life of approximately 24
years.

(l) During the year ended December 31, 2001, the Partnership and an
affiliate as tenants-in-common purchased land and building from CNL BB
Corp., an affiliate of the General Partners, for an aggregate cost of
$2,151,963.