CNL INCOME FUND VIII 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, 2000

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 0-19139

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

Florida 59-2963338
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

450 South Orange Avenue
Orlando, Florida 32801-3336
(Address of principal executive offices, including zip code)

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

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

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

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

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

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

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

Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 35,000,000 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 for such Units. Each Unit was originally sold at $1 per Unit.

DOCUMENTS INCORPORATED BY REFERENCE:
None

PART I

Item 1. Business

CNL Income Fund VIII, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on August 18, 1989. The General Partners of the Partnership are Robert
A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on August 2, 1990, the
Partnership offered for sale up to $35,000,000 of limited partnership interests
(the "Units") (35,000,000 Units at $1 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
January 30, 1990. The offering terminated on March 7, 1991, at which date the
maximum offering proceeds of $35,000,000 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
$30,975,000 and were used to acquire 38 Properties, including interests in eight
Properties owned by joint ventures in which the Partnership is a co-venturer,
and to establish a working capital reserve for Partnership purposes. During the
year ended December 31, 1995, the Partnership sold its Property in Ocoee,
Florida and reinvested the majority of the net sales proceeds in a Property in
North Fort Myers, Florida. Also, during the year ended December 31, 1995, the
Partnership sold two Properties in Jacksonville, Florida. During the year ended
December 31, 1996, the Partnership reinvested the remaining net sales proceeds
from the 1995 sale of the Property in Ocoee, Florida, in Middleburg Joint
Venture, in which the Partnership is a co-venturer to purchase and hold one
property in Middleburg Heights, Ohio. Also, during the year ended December 31,
1996, the Partnership sold its Property in Orlando, Florida. During 1998, the
Partnership received a settlement from the Florida Department of Transportation
for a right of way taking relating to a parcel of land on its Property in
Brooksville, Florida. In addition, during the year ended December 31, 1999, the
Partnership received a prepaid principal payment from the borrower relating to
one of the promissory notes the Partnership had previously accepted. During
1999, the Partnership reinvested the prepaid principal, along with the
settlement received in the right of way taking, in Bossier Joint Venture, in
which the Partnership is a co-venturer to purchase and hold one Property in
Bossier City, Louisiana. During the year ended December 31, 2000, the
Partnership sold four Properties one in each of Brooksville, Bayonet Point, Sun
City, and Jacksonville, Florida. In July 2000, the Partnership reinvested the
sales proceeds it received from the sale of the Properties in Sun City, and
Bayonet Point, Florida in a Bennigan's Property located in Deerfield, Illinois.
In August 2000, the Partnership used a portion of the net sales proceeds from
the sale of its Properties to acquire an interest in a Baker's Square Property
in Libertyville, Illinois, with CNL Income Fund IX, Ltd., a Florida limited
partnership, and an affiliate of the General Partners. In October 2000, the
Partnership used the remaining net sales proceeds to acquire a Pizza Hut
Property in Hialeah, Florida. As a result of the above transactions, as of
December 31, 2000, the Partnership owned 36 Properties. The 36 Properties
included interests in ten Properties owned by joint ventures in which the
Partnership is a co-venturer and one Property owned with an affiliate as
tenants-in-common. The Properties are generally leased 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.

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 the Property owned
as tenants-in-common with affiliates of the General Partners provide for initial
terms, ranging from 14 to 25 years (the average being 18 years), and expire
between 2005 and 2020. The 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
$51,900 to $251,500. The majority of the leases provide for percentage rent,
based on sales in excess of a specified amount. In addition, a majority of the
leases provide that, commencing in specified lease years (ranging from the third
to the sixth lease year), the annual base rent required under the terms of the
lease will increase.

Generally, the leases of the Properties provide for two to four
five-year renewal options subject to the same terms and conditions as the
initial lease. Lessees of 27 of the Partnership's 36 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 July 2000, the Partnership reinvested the sales proceeds it received
from the sale of the properties in Sun City, Florida and Bayonet Point, Florida
in a Bennigan's property, located in Deerfield, Illinois, from CNL BB Corp., an
affiliate of the general partners. In connection therewith, the Partnership
entered into a long term, triple-net lease with terms substantially the same as
its other leases.

In October 2000, the Partnership reinvested the sales proceeds it
received from the sale of its property in Jacksonville, Florida in a Pizza Hut
Property in Hialeah, Florida. In connection therewith, the Partnership entered
into a long term, triple-net lease with terms substantially the same as its
other leases.

During 2000, the Partnership reinvested the majority of the net sales
proceeds it received from the sale of the Property in Houston, Texas, in a
Baker's square Property located in Libertyville, Illinois, as tenants-in-common
with CNL Income Fund IX, 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.

During 2000, the tenant of the Property in North Fort Myers, Florida
Restaurant Management Services, Inc., assigned its lease to Golden Management,
Inc. All other leases remained unchanged and are substantially the same as the
Partnership's other leases as described above.

Major Tenants

During 2000, two lessees of the Partnership and its consolidated joint
venture, Golden Corral Corporation and Carrols Corporation, each contributed
more than ten percent of the Partnership's total rental, earned and mortgage
interest income (including rental, earned and mortgage interest income from the
Partnership's consolidated joint venture and the Partnership's share of rental
and earned income from nine Properties owned by unconsolidated joint ventures
and one Property owned with affiliates of the General Partners as
tenants-in-common). As of December 31, 2000, Golden Corral Corporation was the
lessee under leases relating to four restaurants, and Carrols Corporation was
the lessee under leases relating to five restaurants. It is anticipated that,
based on the minimum rental payments required by the leases, these two lessees
each will continue to contribute more than ten percent of the Partnership's
total rental, earned and mortgage interest income in 2001. In addition, three
Restaurant Chains, Golden Corral Family Steakhouse Restaurants ("Golden
Corral"), Burger King and Shoney's, each accounted for more than ten percent of
the Partnership's total rental, earned and mortgage interest income in 2000
(including rental and earned income from the Partnership's consolidated joint
venture and the Partnership's share of rental and earned income from nine
Properties owned by unconsolidated joint ventures and one Property owned with
affiliates of the General Partners as tenants-in-common). In 2001, it is
anticipated that these three Restaurant Chains each will continue to account for
more than ten percent of the Partnership's total rental, earned and mortgage
interest income to which the Partnership is entitled under the terms of the
leases. Any failure of these lessees or Restaurant Chains could materially
affect the Partnership's income if the Partnership is not able to re-lease the
Properties in a timely manner. 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 a joint venture arrangement, Woodway
Joint Venture, with an unaffiliated entity to purchase and hold one Property. In
addition, the Partnership has entered into four separate joint venture
arrangements: Asheville Joint Venture with CNL Income Fund VI, Ltd., an
affiliate of the General Partners, to purchase and hold one Property; CNL
Restaurant Investments II with CNL Income Fund VII, Ltd. and CNL Income Fund IX,
Ltd., affiliates of the General Partners, to purchase and hold six Properties;
Middleburg Joint Venture with CNL Income Fund XII, Ltd., an affiliate of the
General Partners, to purchase and hold one Property and Bossier City Joint
Venture with CNL Income Fund XII, Ltd. and CNL Income Fund XIV, Ltd., affiliates
of the General Partners, to purchase and hold one Property. Each of the
affiliates is a limited partnership organized pursuant to the laws of the State
of Florida.

The joint venture arrangements provide for the Partnership and its
joint venture partners to share in all costs and benefits associated with the
joint ventures in accordance with their respective percentage interests in the
joint ventures. The Partnership has an 87.68% interest in Woodway Joint Venture,
an 85.54% interest in Asheville Joint Venture, a 36.8% interest in CNL
Restaurant Investments II, a 12.46% interest in Middleburg Joint Venture and a
34% interest in Bossier City Joint Venture. The Partnership and its joint
venture partners are also jointly and severally liable for all debts,
obligations and other liabilities of the joint ventures.

Woodway Joint Venture, Asheville Joint Venture, Middleburg Joint
Venture and Bossier City Joint Venture each have an initial term of 20 years
and, after the expiration of the initial term, continue in existence from year
to year unless terminated at the option of either joint venturer or by an event
of dissolution. Events of dissolution include the bankruptcy, insolvency or
termination of any joint venturer, sale of the Property owned by the joint
venture and mutual agreement of the Partnership and each joint venture partner
to dissolve the joint venture. CNL Restaurant Investments II's joint venture
agreement does not provide for a fixed term, but continues in existence until
terminated by any of the joint venturers.

The Partnership has management control of Woodway Joint Venture and
shares management control equally with affiliates of the General Partners for
Asheville Joint Venture, CNL Restaurant Investments II, Middleburg Joint Venture
and Bossier City 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 Woodway Joint Venture, Asheville Joint
Venture, CNL Restaurant Investments II, Middleburg Joint Venture and Bossier
City Joint Venture is distributed 87.68%, 85.54%, 36.8%, 12.46% and 34%,
respectively, to the Partnership and the balance is distributed to each of the
other joint venture partners in accordance with their respective 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, in August 2000, the Partnership entered into an agreement
to hold a Baker's Square Property in Libertyville, Illinois, as
tenants-in-common, with affiliates of the General Partners. The agreement
provides for the Partnership and the affiliates to share in the profits and
losses of the Property and net cash flow from the Property, in proportion to
each co-venturer's percentage interest. The Partnership owns a 66 percent
interest in this Property.

Each of the affiliates is a limited partnership organized pursuant to
the laws of the state of Florida. The tenancy in common agreement restricts 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.

Certain Management Services

CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership. Under this agreement,
CNL Fund Advisors, Inc. is responsible for collecting rental payments,
inspecting the Properties and the tenants' books and records, assisting the
Partnership in responding to tenant inquiries and notices and providing
information to the Partnership about the status of the leases and the
Properties. CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross
operating revenues from Properties wholly owned by the Partnership plus the
Partnership's allocable share of gross revenues of joint ventures in which the
Partnership is a co-venturer, but not in excess of competitive fees for
comparable services. Under the management agreement, the management fee is
subordinated to receipt by the Limited Partners of an aggregate, ten percent,
cumulative, noncompounded annual return on their adjusted capital contributions
(the "10% Preferred Return"), calculated in accordance with the Partnership's
limited partnership agreement (the "Partnership Agreement"). In any year in
which the Limited Partners have not received the 10% Preferred Return, no
management fee will be paid.

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

Competition

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

Employees

The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of APF, the parent company of CNL
Fund Advisors, Inc., perform certain services for the Partnership. In addition,
the General Partners have available to them the resources and expertise of the
officers and employees of CNL 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, 2000, the Partnership owned 36 Properties. Of the 36
Properties, 25 are owned by the Partnership in fee simple, ten are owned through
joint venture arrangements, and one is owned through tenancy in common
arrangement. 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 17,400
to 142,486 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, 2000 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

Arizona 1
Florida 4
Illinois 2
Indiana 1
Louisiana 2
Michigan 3
Minnesota 1
New York 2
North Carolina 2
Ohio 9
Tennessee 2
Texas 6
Virginia 1
--------------
TOTAL PROPERTIES 36
==============

Buildings. Each of the Properties owned by the Partnership includes a
building that is one of a Restaurant Chain's approved designs. The buildings
generally are rectangular and are constructed from various combinations of
stucco, steel, wood, brick and tile. Building sizes range from approximately
2,000 to 10,900 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, 2000, 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, 2000, the aggregate cost of the Properties owned by
the Partnership (including its consolidated joint venture) and the
unconsolidated joint ventures (including the Property owned through a tenancy in
common arrangement), for federal income tax purposes was $24,980,921 and
$11,672,122, respectively.

The following table lists the Properties owned by the Partnership as of
December 31, 2000 by Restaurant Chain.

Restaurant Chain Number of Properties

Baker's Square 1
Bennigan's 1
Burger King 13
Denny's 1
Golden Corral 5
Hardee's 4
IHOP 1
Jack in the Box 2
KFC 2
Perkins 1
Pizza Hut 1
Quincy's 1
Shoney's 2
Wendy's 1
--------------
TOTAL PROPERTIES 36
==============

The General Partners considers 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, 2000, 1999, 1998, 1997 and 1996, all of the Properties
were occupied. The following is a schedule of the average rent per Property for
each of the years ended December 31:

2000 1999 1998 1997 1996
------------- ------------- --------------- -------------- ---------------

Rental Revenues (1) $ 3,361,651 $ 3,527,515 $ 3,443,094 $3,467,720 $3,552,341
Properties 36 37 36 36 36
Average Rent per Property
$ 93,379 $ 95,338 $ 95,642 $ 96,326 $ 98,676

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

The following is a schedule of lease expirations for leases in place as
of December 31, 2000 for each year for the next ten years and thereafter.

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

2001 -- -- --
2002 -- -- --
2003 -- -- --
2004 -- -- --
2005 10 1,253,411 35.23%
2006 1 118,186 3.32%
2007 -- -- --
2008 -- -- --
2009 1 115,953 3.26%
2010 8 623,384 17.52%
Thereafter 16 1,447,088 40.67%
---------- ------------- -------------
Totals 36 $ 3,558,022 100.00%
========== ============= =============

Leases with Major Tenants. The terms of the leases with the
Partnership's major tenants as of December 31, 2000 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.

Golden Corral Corporation leases four Golden Corral restaurants. The
initial term of each lease is 15 years (expiring in 2005) and the average
minimum base annual rent is approximately $163,100 (ranging from approximately
$145,500 to $189,700).

Carrols Corporation leases five Burger King restaurants. The initial
term of each lease is 20 years (expiring in 2011) and the average minimum base
annual rent is approximately $100,053 (ranging from approximately $83,000 to
$105,000).

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, 2001, there were 3,418 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 2000, 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 had the right to prohibit transfers of Units. From
inception through December 31, 2000, the price paid for any Unit transferred
pursuant to the Plan was $.95 per Unit. The price paid for any Unit transferred
other than pursuant to the Plan was subject to negotiation by the purchaser and
the selling Limited Partner. The Partnership will not redeem or repurchase
Units.

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

2000 (1) 1999 (1)
---------------------------------- ----------------------------------
High Low Average High Low Average
--------- -------- ---------- --------- --------- ----------

First Quarter (2) (2) (2) $ 0.95 $ 0.95 $ 0.95
Second Quarter $0.80 $ 0.70 $ 0.72 0.88 0.81 0.85
Third Quarter 0.95 0.64 0.85 0.95 0.89 0.94
Fourth Quarter 0.95 0.73 0.88 0.90 0.81 0.86

(1) A total of 176,000 and 237,980 Units were transferred other than
pursuant to the Plan for the years ended December 31, 2000 and 1999,
respectively.

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

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

For each year ended December 31, 2000 and 1999, the Partnership
declared cash distributions of $3,150,004 to the Limited Partners. Distributions
of $787,501 were declared to the limited partners at the close of each of the
Partnership's calendar quarters during 2000 and 1999. These amounts include
monthly distributions made in arrears for the Limited Partners electing to
receive such distributions on this basis. No amounts distributed to partners for
the years ended December 31, 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. 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

2000 1999 1998 1997 1996
-------------- --------------- -------------- -------------- ---------------

Year ended December 31:
Revenues (1) $3,528,989 $3,500,669 $3,625,906 $3,619,489 $3,593,610
Net income (2) 3,587,171 2,810,064 3,288,912 3,241,567 3,096,992
Cash distributions
declared (3) 3,150,004 3,150,004 3,850,003 3,150,003 3,412,500
Net income per Unit
(2) 0.102 0.079 0.093 0.092 0.088
Cash distributions
declared per Unit (3) 0.090 0.090 0.110 0.090 0.098

At December 31:
Total assets $31,827,394 $31,479,495 $32,071,119 $32,258,296 $32,437,106
Partners' capital 30,752,534 30,315,367 30,655,307 31,216,398 31,124,834

(1) Revenues include equity in earnings of unconsolidated joint ventures
and minority interest in income of consolidated joint ventures.

(2) Net income for the year ended December 31, 2000 and 1998, includes
$612,693 and $108,176, respectively, from gain on sale of assets. In
addition, net income for the year ended December 31, 1996 includes
$99,031 from a loss on sale of assets.

(3) Distributions for the years ended December 31, 1998 and 1996, include
special distributions to the Limited Partners of $350,000 and $262,500,
respectively, which represented cumulative excess operating reserves.
Distributions for the year ended December 31, 1998 include an
additional special distribution to the Limited Partners of $350,000
declared the first quarter of 1998 from cumulative excess operating
reserves.

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

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

The Partnership was organized on August 18, 1989, to acquire for cash,
either directly or through joint venture arrangements, both newly
constructed and existing restaurant Properties, as well as land upon
which restaurant Properties were to be constructed, which are leased
primarily to operators of selected national and regional fast-food and
family-style Restaurant Chains. The leases are generally triple-net
leases, with the lessee generally responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of December
31, 2000, the Partnership owned 36 Properties, either directly or
indirectly through joint venture arrangements.

Capital Resources

The Partnership's primary source of capital for the years ended
December 31, 2000, 1999, and 1998 was 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 $3,349,897, $3,321,006, and $3,562,592 for the years
ended December 31, 2000, 1999, and 1998, respectively. The increase in
cash from operations during 2000, as compared to 1999, and the decrease
in cash from operations during 1999, as compared to 1998, were
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, 2000, 1999 and 1998.

In July 1998, the Partnership received $116,397 as a settlement from
the Florida Department of Transportation for a right of way taking
relating to a parcel of land on its Property in Brooksville, Florida.
In connection therewith, the Partnership recognized a gain of $108,176
for financial reporting purposes. 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 right of way taking. In November 1999,
the Partnership reinvested the proceeds in a joint venture, as
described below.

As of December 31, 1999, the Partnership had accepted three promissory
notes in connection with the sale of three of its Properties. During
the year ended December 31, 1999, the borrower relating to one of the
promissory notes prepaid principal of $272,500, which was applied to
the outstanding principal balance.

In November 1999, the Partnership reinvested the right of way taking
proceeds and the prepaid principal in a joint venture, Bossier City
Joint Venture, with CNL Income Fund XII, Ltd. and CNL Income Fund XIV,
Ltd., both Florida limited partnerships and affiliates of the General
Partners. The joint venture was formed to purchase and hold one
Property. The Partnership contributed a total of $448,531 to the joint
venture and owns a 34 percent interest in its profits and losses.

In July 2000, the Partnership sold its Properties in Brooksville,
Bayonet Point and Sun City, Florida, to an unrelated third party for a
total of approximately $3,465,100 and received net sales proceeds
totaling approximately $3,402,700, resulting in a total gain of
approximately $484,800 for financial reporting purposes. These
Properties were originally acquired by the Partnership in 1990 and
1991, and had costs totaling approximately $2,797,000, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the Properties for approximately $605,700 in excess of
their original purchase price. The transaction relating to the sale of
the Properties in Sun City and Bayonet Point, Florida and the
reinvestment of the net sales proceeds, was structured to qualify as a
like kind exchange transaction for federal income tax purposes.
However, the Partnership will distribute 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 July 2000, the Partnership reinvested the sales proceeds it received
from the sale of the Properties in Sun City, Florida and Bayonet Point,
Florida in a Bennigan's Property located in Deerfield, Illinois, at an
approximate cost of $2,462,700. The Partnership acquired this Property
from CNL BB Corp., an affiliate of the General Partners. In connection
therewith, the Partnership entered into a long term, triple-net lease
with terms substantially the same as its other leases.

In August 2000, the Partnership used a portion of the net sales
proceeds from the sale of its properties to acquire an interest in a
Baker's Square property in Libertyville, Illinois, with CNL Income Fund
IX, Ltd., a Florida limited partnership, and an affiliate of the
general partners. As of September 30, 2000, the Partnership owned a 66%
interest in this property.

In September 2000, the Partnership sold its property in Jacksonville,
Florida, for approximately $422,500 and received net sales proceeds of
approximately $420,000, resulting in a gain of approximately $127,900
for financial reporting purposes. This property was originally acquired
by the Partnership in 1990, and had a cost of approximately $352,400,
excluding acquisition fees and miscellaneous acquisition expenses;
therefore, the Partnership sold the property for approximately $67,600
in excess of its original purchase price. 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 October 2000, the
Partnership reinvested the sales proceeds it received from the sale of
its Property in Jacksonville, Florida in a Pizza Hut Property in
Hialeah, Florida at an approximate cost of $472,300. In connection
therewith, the Partnership entered into a long term, triple-net lease
with terms substantially the same as its other leases.

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

Currently, rental income from the Partnership's Properties 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 30-day maturity
date, pending the Partnership's use of such funds to pay Partnership
expenses or to make distributions to the partners. At December 31,
2000, the Partnership had $1,688,029 invested in such short-term
investments (including certificates of deposit of $461,394) as compared
to $1,503,989 at December 31, 1999. As of December 31, 2000, the
average interest rate earned by the Partnership on the rental income
deposited in demand deposit accounts at commercial banks was
approximately 3.41% annually. The funds remaining at December 31, 2000,
after the payment of distributions and other liabilities, will be used
to meet the Partnership's working capital and other needs.

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 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 generally 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, 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 cash from operations, and for the
year ended December 31, 1998, cumulative excess operating reserves, the
Partnership declared distributions to the Limited Partners of
$3,150,004, $3,150,004, and $3,850,003 for the years ended December 31,
2000, 1999 and 1998, respectively. This represents distributions of
$0.09, $0.09, and $0.11 per Unit for the years ended December 31, 2000,
1999, and 1998, respectively. No amounts distributed to the Limited
Partners for the years ended December 31, 2000, 1999, and 1998, 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, 2000.

As of December 31, 2000 and 1999, the Partnership owed $4,351 and
$66,277, respectively, to affiliates for such amounts as accounting and
administrative services. As of March 15, 2001, the Partnership had
reimbursed the affiliates all such amounts. In addition, as of December
31, 2000, the Partnership had incurred $55,050 in real estate
disposition fees due to an affiliate as a result of services in
connection with the sale of several Properties. The payment of such
fees is deferred until the Limited Partners have received the sum of
their 10% Preferred Return and their adjusted capital contributions.
Other liabilities of the Partnership, including distributions payable,
decreased to $906,941 at December 31, 2000, from $934,222 at December
31, 1999. The decrease in other liabilities was primarily attributable
to the amounts that were accrued for transaction costs at December 31,
1999 relating to the proposed and terminated merger with APF, as
described in "Termination of Merger." The General Partners believe that
the Partnership has sufficient cash on hand to meet its current working
capital needs.

Long-Term Liquidity

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

Results of Operations

During 2000, the Partnership and its consolidated joint venture,
Woodway Joint Venture, owned and leased 30 wholly owned Properties
(including four Properties which were sold during 2000). During 1999
and 1998, the Partnership and its consolidated joint venture owned and
leased 28 wholly owned Properties. During 1998, the Partnership was a
co-venturer in three joint ventures that owned and leased a total of
eight Properties. In addition, during 1999, the Partnership was a
co-venturer in one additional joint venture that owned and leased one
Property. During 2000, the Partnership also owned and leased one
additional Property with affiliates of the General Partners, as
tenants-in-common. As of December 31, 2000, the Partnership owned,
either directly or through joint venture arrangements, 36 Properties
which are, in general, 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 $51,900 to
$251,500. The majority of leases provide for percentage rent based on
sales in excess of a specified amount. In addition, a majority of the
leases provide that, commencing in specified lease years (ranging from
the third to sixth lease year), 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, 2000, 1999, and 1998, the
Partnership and its consolidated joint venture earned $2,837,794,
$2,901,093, and $2,991,048, respectively, in rental income from
operating leases and earned income from direct financing leases. The
decrease in rental and earned income during 2000, as compared to 1999,
was partially due to the fact that the Partnership sold four
Properties, as discussed in "Capital Resources," resulting in a
decrease in rental and earned income of approximately $187,300 during
the year ended December 31, 2000. The decrease in rental and earned
income was partially offset by an increase in rental and earned income
of approximately $130,600, during the year ended December 31, 2000, as
a result of the Partnership reinvesting a portion of the net sales
proceeds in two Properties in Deerfield, Illinois and Hialeah, Florida,
as described in "Capital Resources."

The decrease in rental and earned income during 1999, as compared to
1998, was primarily due to the fact that the leases relating to the
Burger King Properties in New City and Syracuse, New York and New
Philadelphia and Mansfield, Ohio, were amended to provide for rent
reductions from August 1998 through the end of the lease terms.

For the years ended December 31, 2000, 1999, and 1998, the Partnership
also earned $113,627, $113,285, and $101,911, respectively, in
contingent rental income. The increase in contingent rental income for
1999, as compared to 1998, was primarily attributable to an increase in
gross sales for certain restaurant Properties requiring the payment of
contingent rental income.

For the years ended December 31, 2000, 1999, and 1998, the Partnership
also earned $319,184, $276,012 and $276,721, 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
joint ventures increased during 2000, as compared to 1999, was
primarily due to the fact that in November 1999 and August 2000, the
Partnership invested in Bossier City Joint Venture and in a Property in
Libertyville, Illinois, as tenants-in-common with affiliates of the
General Partners, as described in "Capital Resources." The decrease in
net income by joint ventures for 1999, as compared to 1998, was
primarily due to the fact that the lease relating to the Burger King
Property in Asheville, North Carolina of Asheville Joint Venture was
amended to provide for rent reductions from August 1998 through the end
of the lease term.

During the year ended December 31, 2000, two lessees of the Partnership
and its consolidated joint venture, Golden Corral Corporation and
Carrols Corporation, each contributed more than ten percent of the
Partnership's total rental, earned and mortgage interest income
(including rental and earned income from the Partnership's consolidated
joint venture and the Partnership's share of rental and earned income
from nine Properties owned by joint ventures and one Property owned
with affiliates as tenants-in-common). As of December 31, 2000, Golden
Corral Corporation was the lessee under leases relating to four
restaurants, and Carrols Corporation was the lessee under leases
relating to five restaurants. It is anticipated that, based on the
minimum annual rental payments required by the leases, these two
lessees will continue to contribute more than ten percent of the
Partnership's total rental, earned and mortgage interest income during
2001. In addition, during the year ended December 31, 2000, three
Restaurant Chains, Golden Corral, Burger King and Shoney's, each
accounted for more than ten percent of the Partnership's total rental,
earned and mortgage interest income (including rental and earned income
from the Partnership's consolidated joint venture and the Partnership's
share of rental and earned income from nine Properties owned by
unconsolidated joint ventures and one Property owned with affiliates as
tenants-in-common). In 2001, it is anticipated that these three
Restaurant Chains each will continue to account for more than ten
percent of the Partnership's total rental, earned and mortgage interest
income to which the Partnership is entitled under the terms of the
leases. Any failure of these lessees or Restaurant Chains could
materially affect the Partnership's income if the Partnership is not
able to re-lease the Property in a timely manner.

During the years ended December 31, 2000, 1999, and 1998, the
Partnership also earned $271,702, $223,683, and $269,744, respectively,
in interest and other income. The increase in interest and other income
during 2000, as compared to 1999, was due to interest earned on the net
sales proceeds received from the sale of Properties described above,
pending reinvestment in additional Properties, as described above in
"Capital Resources." The increase in interest and other income during
2000, as compared to 1999, was partially offset by, and the decrease
during 1999, as compared to 1998, was primarily attributable to a
reduction in interest income as a result of the prepayment of principal
on a mortgage note of $272,500 during 1999, as described above in
"Capital Resources."

Operating expenses, including depreciation expense, were $554,511,
$690,605, and $445,170 for the years ended December 31, 2000, 1999 and
1998, respectively. The decrease in operating expenses during 2000, as
compared to 1999, and the increase during 1999, as compared to 1998,
was primarily attributable 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
in "Termination of Merger." The decrease in operating expenses during
2000 was partially offset by an increase in administrative expenses for
servicing the Partnership and its Properties.

The increase in operating expenses during 1999, as compared to 1998,
was partially due to an increase in depreciation expense relating to
the fact that during 1998, the Partnership reclassified the leases for
its Properties in New City and Syracuse, New York, and New Philadelphia
and Mansfield, Ohio, from direct financing leases to operating leases,
as a result of lease amendments, as described above.

As a result of the right of way settlement for the Partnership's
Property in Brooksville, Florida, as described above in "Capital
Resources," the Partnership recognized a gain on sale of land of
$108,176 during the year ended December 31, 1998, for financial
reporting purposes. As a result of the sale of the Properties as
described above in "Capital Resources," the Partnership recorded a
total gain of $612,693 for financial reporting purposes during the year
ended December 31, 2000. No Properties were sold during 1999.

The Partnership's leases as of December 31, 2000, are generally
triple-net leases and contain provisions that the General Partners
believe mitigate the adverse effect of inflation. Such provisions
include clauses requiring the payment of percentage rent based on
certain restaurant sales above a specified level and/or automatic
increases in base rent at specified times during the term of the lease.
Management expects that increases in restaurant sales volume due to
inflation and real sales growth should result in an increase in rental
income over time. Continued inflation also may cause capital
appreciation of the Partnership's Properties. Inflation and changing
prices, however, also may have an adverse impact on the sales of the
restaurants and on potential capital appreciation of the Properties.

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 June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments, embedded in other contracts
(collectively referred to as derivatives), and for hedging activities.
The Statement requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those
instruments at fair value. In June 1999, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, an Amendment
of FASB Statement No. 133." FAS 137 deferred the effective date of FAS
133 for one year. FAS 133, as amended, is now effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The
Partnership has reviewed both statements and has determined that both
FAS 133 and FAS 137 do not apply to the Partnership as of December 31,
2000.

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.

Interest Rate Risk

The Partnership accepted a promissory note in conjunction with the sale
of a Property. The principal amounts outstanding under the mortgage
notes totaled $1,412,064 at December 31, 2000. The General Partners
believe that the estimated fair value of the mortgage notes at December
31, 2000 approximated the outstanding principal amounts.

The Partnership is exposed to equity loss in the event of changes in
interest rates. The fair value of the mortgage notes would decline if
interest rates rise.

The following table presents the expected cash flows of principal that
are sensitive to these changes.

Mortgage Notes
Fixed Rates
-------------------

2001 $ 54,172
2002 60,256
2003 67,022
2004 74,553
2005 82,927
Thereafter 1,073,134
-------------------

$ 1,412,064
===================

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

This information is described above in Item 7. Management's Discussion
and Analysis of Financial Condition -- Interest Rate Risk.

Item 8. Financial Statements and Supplementary Data

CNL INCOME FUND VIII, 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 VIII, Ltd.

In our opinion, the financial statements listed in the index appearing under
item 14(a)(1) present fairly, in all material respects, the financial position
of CNL Income Fund VIII, Ltd. (a Florida limited partnership) at December 31,
2000 and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedules listed in the index
appearing under item 14(a)(2) present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
financial statements. These financial statements and financial statement
schedules are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits. We conducted our audits of
these statements in accordance with 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 2, 2001

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

BALANCE SHEETS

December 31,
2000 1999
------------------- -------------------

ASSETS

Land and buildings on operating leases, less
accumulated depreciation $ 16,275,305 $ 15,469,090
Net investment in direct financing leases 6,439,056 7,635,861
Investment in joint ventures 4,075,551 3,197,857
Mortgage notes receivable 1,424,436 1,473,571
Cash and cash equivalents 1,226,635 1,503,989
Certificates of deposit 461,394 --
Receivables, less allowance for doubtful accounts of
$459 and $5,764, respectively 105,075 112,454
Due from related party 30,010 --
Prepaid expenses 26,288 15,485
Accrued rental income, less allowance for
doubtful accounts of $4,501 in 1999 1,710,973 2,018,517
Other assets 52,671 52,671
------------------- -------------------

$ 31,827,394 $ 31,479,495
=================== ===================

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable $ 34,293 $ 114,170
Escrowed real estate taxes payable 12,501 9,157
Distributions payable 787,501 787,501
Due to related parties 59,401 121,327
Rents paid in advance 72,646 23,394
------------------- -------------------
Total liabilities 966,342 1,055,549

Minority interest 108,518 108,579

Partners' capital 30,752,534 30,315,367
------------------- -------------------

$ 31,827,394 $ 31,479,495
=================== ===================
See accompanying notes to financial statements.

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

STATEMENTS OF INCOME

Year Ended December 31,
2000 1999 1998
------------------ --------------- ---------------

Revenues:
Rental income from operating leases $ 1,976,318 $ 1,961,199 $1,897,209
Earned income from direct financing leases 861,476 939,894 1,093,839
Contingent rental income 113,627 113,285 101,911
Interest and other income 271,702 223,683 269,744
---------------
------------------ ---------------
3,223,123 3,238,061 3,362,703
------------------ --------------- ---------------
Expenses:
General operating and administrative 175,678 150,176 146,943
Professional services 24,829 35,453 24,837
State and other taxes 18,228 19,342 5,372
Depreciation 303,352 300,188 246,976
Transaction costs 32,424 185,446 21,042
------------------ --------------- ---------------
554,511 690,605 445,170
------------------ --------------- ---------------

Income Before Minority Interest in Income
of Consolidated Joint Venture, Equity in
Earnings of Unconsolidated Joint Ventures and
Gain on Sale of Assets 2,668,612 2,547,456 2,917,533

Minority Interest in Income of Consolidated
Joint Venture (13,318 ) (13,404 ) (13,518 )

Equity in Earnings of Unconsolidated Joint
Ventures 319,184 276,012 276,721

Gain on Sale of Assets 612,693 -- 108,176
------------------ --------------- ---------------

Net Income $ 3,587,171 $ 2,810,064 $ 3,288,912
================== =============== ===============

Allocation of Net Income
General Partners $ -- $ 28,101 $ 31,807
Limited partners 3,587,171 2,781,963 3,257,105
------------------ --------------- ---------------

$ 3,587,171 $ 2,810,064 $ 3,288,912
================== =============== ===============

Net Income Per Limited Partner Unit $ 0.102 $ 0.079 $ 0.093
================== =============== ===============

Weighted Average Number of
Limited Partner Units Outstanding 35,000,000 35,000,000 35,000,000
================== =============== ===============
See accompanying notes to financial statements.

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

STATEMENTS OF PARTNERS' CAPITAL

Years Ended December 31, 2000, 1999, and 1998

General Partners
--------------------------------------
Accumulated
Contributions Earnings
------------------ ----------------

Balance, December 31, 1997 $ 1,000 $ 225,441

Distributions to limited
partners ($0.110 per
limited partner unit) -- --
Net income -- 31,807
------------------ ----------------

Balance, December 31, 1998 1,000 257,248

Distributions to limited
partners ($0.090 per
limited partner unit) -- --
Net income -- 28,101
------------------ ----------------

Balance, December 31, 1999 1,000 285,349

Distributions to limited
partners ($0.090 per
limited partner unit) -- --
Net income -- --
------------------ ----------------

Balance, December 31, 2000 $ 1,000 $ 285,349
================== ================

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

Balance, December 31, 1997 $ 35,000,000 $ (22,334,641 ) $ 22,339,598 $ (4,015,000 ) $31,216,398

Distributions to limited
partners ($0.110 per
limited partner unit) -- (3,850,003 ) -- -- (3,850,003 )
Net income -- -- 3,257,105 -- 3,288,912
----------------- ---------------- ----------------- -------------- --------------

Balance, December 31, 1998 35,000,000 (26,184,644 ) 25,596,703 (4,015,000 ) 30,655,307

Distributions to limited
partners ($0.090 per
limited partner unit) -- (3,150,004 ) -- -- (3,150,004 )
Net income -- -- 2,781,963 -- 2,810,064
----------------- ---------------- ----------------- -------------- --------------

Balance, December 31, 1999 35,000,000 (29,334,648 ) 28,378,666 (4,015,000 ) 30,315,367

Distributions to limited
partners ($0.090 per
limited partner unit) -- (3,150,004 ) -- -- (3,150,004 )
Net income -- -- 3,587,171 -- 3,587,171
----------------- ---------------- ----------------- -------------- --------------

Balance, December 31, 2000 $ 35,000,000 $ (32,484,652 ) $ 31,965,837 $ (4,015,000 ) $30,752,534
================= ================ ================= ============== ==============

See accompanying notes to financial statements.

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

STATEMENTS OF CASH FLOWS

Year Ended December 31,
2000 1999 1998
---------------- --------------- ---------------

Increase (Decrease) in Cash and Cash Equivalents:

Cash Flows from Operating Activities:
Cash received from tenants $ 3,160,831 $ 3,014,746 $ 3,144,635
Distributions from unconsolidated joint ventures 401,558 336,445 344,643
Cash paid for expenses (437,972 ) (247,332 ) (185,270 )
Interest received 225,480 217,147 258,584
---------------- --------------- ---------------
Net cash provided by operating activities 3,349,897 3,321,006 3,562,592
---------------- --------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of land and buildings 3,822,716 -- 116,397
Additions to land and buildings on operating leases (2,925,217 ) -- --
Investment in certificates of deposit (450,000 ) -- --
Investment in joint venture (960,068 ) (448,000 ) --
Collections on mortgage notes receivable 48,701 335,154 41,292
Other -- -- 36
---------------- --------------- ---------------
Net cash provided by (used in) investing
activities (463,868 ) (112,846 ) 157,725
---------------- --------------- ---------------

Cash Flows from Financing Activities:
Distributions to limited partners (3,150,004 ) (3,500,004 ) (3,500,003 )
Distributions to holder of minority interest (13,379 ) (13,425 ) (13,292 )
----------------
--------------- ---------------
Net cash used in financing activities (3,163,383 ) (3,513,429 ) (3,513,295 )
---------------- --------------- ---------------

Net Increase (Decrease) in Cash and Cash Equivalents (277,354 ) (305,269 ) 207,022

Cash and Cash Equivalents at Beginning of Year 1,503,989 1,809,258 1,602,236
---------------- --------------- ---------------

Cash and Cash Equivalents at End of Year $ 1,226,635 $ 1,503,989 $ 1,809,258
================ =============== ===============

See accompanying notes to financial statements.

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

STATEMENTS OF CASH FLOWS - CONTINUED

Year Ended December 31,
2000 1999 1998
--------------- --------------- --------------

Reconciliation of Net Income to Net Cash Provided
by Operating Activities:

Net Income $ 3,587,171 $ 2,810,064 $ 3,288,912
--------------- --------------- --------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 303,352 300,188 246,976
Minority interest in income of
consolidated joint venture 13,318 13,404 13,518
Equity in earnings of unconsolidated joint
ventures, net of distributions 82,374 60,433 67,922
Gain on sale of assets (612,693 ) -- (108,176 )
Increase in receivables (3,581 ) (25,188 ) (32,504 )
Increase in due from related party (30,010 ) -- --
Decrease (increase) in prepaid expenses (10,803 ) (11,526 ) 398
Decrease in net investment in direct
financing leases 171,457 166,924 177,947
Increase in accrued rental income (61,481 ) (91,099 ) (116,089 )
Increase (decrease) in accounts payable
and accrued expenses (76,533 ) 91,231 (722 )
Increase (decrease) in due to related
parties (61,926 ) 45,530 15,617
Increase (decrease) in rents paid in
advance 49,252 (38,955 ) 8,793
--------------- --------------- --------------
Total adjustments (237,274 ) 510,942 273,680
--------------- --------------- --------------

Net Cash Provided by Operating Activities $ 3,349,897 $ 3,321,006 $ 3,562,592
=============== =============== ==============

Supplemental Schedule of Non-Cash
Financing Activities:

Distributions declared and unpaid at
December 31 $ 787,501 $ 787,501 $ 1,137,501
=============== =============== ==============

See accompanying notes to financial statements.

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

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2000, 1999, and 1998

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

Organization and Nature of Business - CNL Income Fund VIII, 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 generally
responsible for all operating expenses relating to the property,
including property taxes, insurance, maintenance and repairs. The
leases are accounted for using either the direct financing or the
operating method. Such methods are described below:

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

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

Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date. Whenever a tenant defaults
under the terms of its lease, or events or changes in
circumstance indicate that the tenant will not lease the
property through the end of the lease term, the Partnership
either reserves or 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 the properties for
impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable through
operations. The General Partners determine whether an impairment in
value has occurred by comparing the estimated future undiscounted cash
flows, including the residual value of the property, with the carrying
cost of the individual property. If an impairment is indicated, the
assets are adjusted to their fair value. Although the General Partners
have made their best estimate of these factors based on current
conditions, it is reasonably possible that changes could occur in the
near term which could adversely affect the General Partners' estimate
of net cash flows expected to be generated from its properties and the
need for asset impairment write-downs.

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

Investment in Joint Ventures - The Partnership accounts for its 87.68%
interest in Woodway Joint Venture using the consolidation method.
Minority interest represents the minority joint venture partner's
proportionate share of the equity in the Partnership's consolidated
joint venture. All significant intercompany accounts and transactions
have been eliminated.

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

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

The Partnership's investments in Asheville Joint Venture; CNL
Restaurant Investments II; Middleburg Joint Venture; and Bossier City
Joint Venture; and a property in Libertyville, Illinois held with an
affiliate of the General Partners as tenants-in-common, are accounted
for using the equity method since the Partnership shares control with
affiliates which have the same General Partners.

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

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

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

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

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

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

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

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. 133 ("FAS 133") and
Statement of Financial Accounting Standards No. 137 ("FAS 137") - In
June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments, embedded in other contracts
(collectively referred to as derivatives), and for hedging activities.
The Statement requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those
instruments at fair value. In June 1999, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, an Amendment
of FASB Statement No. 133." FAS 137 deferred the effective date of FAS
133 for one year. FAS 133, as amended, is now effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The
Partnership has reviewed both statements and has determined that both
FAS 133 and FAS 137 do not apply to the Partnership as of December 31,
2000.

2. Leases:
------

The Partnership leases its land and buildings primarily 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 have been classified as operating leases and some of the leases
have been classified as direct financing leases. For property leases
classified as direct financing leases, the building portions of the
majority of property leases are accounted for as direct financing
leases while the land portions of these leases are accounted for as
operating leases. Substantially all leases are for 14 to 25 years and
provide for minimum and contingent rentals. In addition, the tenant
generally pays all

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

2. Leases - Continued:
------------------

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 four
successive five-year periods subject to the same terms and conditions
of 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:

2000 1999
-------------------- --------------------

Land $ 9,605,325 $ 9,159,115
Buildings 8,643,853 8,295,673
-------------------- --------------------
18,249,178 17,454,788

Less accumulated depreciation (1,973,873 ) (1,985,698 )
-------------------- --------------------

$ 16,275,305 $ 15,469,090
==================== ====================

In July 2000, the Partnership sold its properties in Brooksville,
Bayonet Point and Sun City, Florida, for a total of approximately
$3,465,100 and received net sales proceeds totaling approximately
$3,402,700, resulting in a total gain of approximately $484,800 for
financial reporting purposes. These properties were originally acquired
by the Partnership in 1990 and 1991, and had costs totaling
approximately $2,797,000, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the properties
for approximately $605,700 in excess of their original purchase price.

In July 2000, the Partnership reinvested the sales proceeds it received
from the sale of the properties in Sun City, Florida and Bayonet Point,
Florida in a Bennigan's property located in Deerfield, Illinois, at an
approximate cost of $2,462,700 from CNL BB Corp., an affiliate of the
general partners. In connection therewith, the Partnership entered into
a long term, triple-net lease with terms substantially the same as its
other leases (see Note 9).

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

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

In September 2000, the Partnership sold its property in Jacksonville,
Florida, for $422,506 and received net sales proceeds of approximately
$420,000, resulting in a gain of approximately $127,900 for financial
reporting purposes. This property was originally acquired by the
Partnership in 1990, and had a cost of approximately $352,400,
excluding acquisition fees and miscellaneous acquisition expenses;
therefore, the Partnership sold the property for approximately $67,600
in excess of its original purchase price.

In October 2000, the Partnership reinvested the sales proceeds it
received from the sale of its property in Jacksonville, Florida in a
Pizza Hut Property in Hialeah, Florida at an approximate cost of
$472,300. In connection therewith, the Partnership entered into a long
term, triple-net lease with terms substantially the same as its other
leases.

Some leases provide for escalating guaranteed minimum rents throughout
the lease terms. Income from these scheduled rent increases is
recognized on a straight-line basis over the terms of the leases. For
the years ended December 31, 2000, 1999, and 1998, the Partnership
recognized $61,481, $91,099, and $116,089, respectively, of such rental
income.

The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2000:

2001 $2,008,473
2002 2,049,500
2003 2,080,110
2004 2,092,571
2005 1,967,710
Thereafter 10,188,451
----------------

$20,386,815
================

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 VIII, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

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

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

2000 1999
---------------- ----------------

Minimum lease payments
receivable $ 10,334,143 $ 12,988,936
Estimated residual values 2,152,532 2,457,620
Less unearned income (6,047,619 ) (7,810,695 )
---------------- ----------------

Net investment in direct
financing leases $ 6,439,056 $ 7,635,861
================ ================

In July 2000, the Partnership sold two properties, for which the
building portion had been classified as a direct financing lease. In
connection therewith, the gross investment (minimum lease payments
receivable and the estimated residual value) and unearned income
relating to the building were removed from the accounts and the gain
from the sale of the property was reflected in income (see Note 3).

The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 2000:

2001 $ 977,631
2002 989,345
2003 989,345
2004 989,345
2005 989,345
Thereafter 5,399,132
----------------

$10,334,143
================

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).

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999 and 1998

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

The Partnership has an 85.54%, a 36.8%, and a 12.46% interest in the
profits and losses of Asheville Joint Venture, CNL Restaurant
Investments II, and Middleburg Joint Venture, respectively. The
remaining interests in these joint ventures are held by affiliates of
the Partnership which have the same general partners. Asheville Joint
Venture and Middleburg Joint Venture each own and lease one property,
and CNL Restaurant Investments II owns and leases six properties to an
operator of national fast-food or family-style restaurants.

In November 1999, the Partnership entered into a joint venture
arrangement, Bossier City Joint Venture, with CNL Income Fund XII, Ltd.
and CNL Income Fund XIV, Ltd., both Florida limited partnerships and,
affiliates of the general partners, to hold one restaurant property. As
of December 31, 2000, the Partnership had acquired a 34 percent
interest in the profits and losses of the joint venture.

In August 2000, the Partnership used a portion of the net sales
proceeds from sale of its properties to acquire an interest in a
Baker's Square property in Libertyville, Illinois, with CNL Income Fund
IX, Ltd., ("CNL IX") a Florida limited partnership, and an affiliate of
the general partners. The Partnership accounts for its investment using
the equity method since the Partnership shares control with an
affiliate. As of December 31, 2000, the Partnership owned a 66%
interest in this property.

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999 and 1998

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

The following presents the joint ventures' combined, condensed
financial information at December 31:

2000 1999
---------------- ---------------

Land and buildings on operating
leases, less accumulated
depreciation $ 8,714,670 $7,467,574
Net investment in direct financing
lease 1,280,255 1,300,856
Cash 117,189 74,120
Receivables, less allowance for
doubtful accounts 28,510 39,740
Prepaid expenses 566 1,264
Accrued rental income 247,527 194,666
Liabilities 80,916 47,270
Partners' capital 10,307,801 9,030,950
Revenues 1,128,453 1,039,787
Net income 903,843 855,805

The Partnership recognized income totaling $319,184, $276,012, and
$276,721 for the years ended December 31, 2000, 1999, and 1998,
respectively, from these joint ventures.

6. Mortgage Notes Receivable:
-------------------------

As of December 31, 1996, the Partnership had accepted two promissory
notes in the principal sum totalling $460,000 in connection with the
sale of two of its properties in Jacksonville, Florida. The promissory
notes, which are collateralized by mortgages on the properties, bear
interest at a rate of ten percent per annum, and are being collected in
119 equal monthly installments of $2,106 and $1,931, with balloon
payments of $218,252 and $200,324, respectively, due in December 2005.

In addition, in connection with the 1996 sale of its property in
Orlando, Florida, the Partnership accepted a promissory note in the
principal sum of $1,388,568, representing the gross sales price of
$1,375,000, plus tenant closing costs of $13,568 that the Partnership
financed on behalf of the tenant. The promissory note bears interest at
a rate of 10.75% per annum, is collateralized by a mortgage on the
property and is being

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

6. Mortgage Notes Receivable - Continued:
-------------------------------------

collected in 12 monthly installments of interest only, in 17 monthly
installments of $15,413 consisting of principal and interest, and
thereafter in 151 monthly installments of $12,633 consisting of
principal and interest. During the year ended December 31, 1999, the
borrower prepaid principal in the amount of $272,500. This amount was
applied to the outstanding principal balance.

The mortgage notes receivable consisted of the following at December
31:

2000 1999
---------------- ----------------

Principal balance $ 1,412,064 $1,460,765
Accrued interest receivable 12,372 12,806
---------------- ----------------

$ 1,424,436 $1,473,571
================ ================

The General Partners believe that the estimated fair value of mortgage
notes receivable at December 31, 2000 and 1999, approximated the
outstanding principal amount based on estimated current rates at which
similar loans would be made to borrowers with similar credit and for
similar maturities.

7. Allocations and Distributions:
-----------------------------

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 adjusted capital contributions (the "10% Preferred Return").

From inception through December 31, 1999, generally, net sales proceeds
from the sale of properties not in liquidation of the Partnership, to
the extent distributed, were distributed first to the limited partners
in an amount sufficient to provide them with their

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

7. Allocations and Distributions - Continued:
-----------------------------------------

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

Generally, net sales proceeds from a liquidating sale of properties,
will be used in the following order: (i) first to pay and discharge all
of the Partnership's liabilities to creditors, (ii) second, to
establish reserves that may be deemed necessary for any anticipated or
unforeseen liabilities or obligations of the Partnership, (iii) third,
to pay all of the Partnership's liabilities, if any, to the general and
limited partners, (iv) fourth, after allocations of net income, gains
and/or losses, to distribute to the partners with positive capital
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.

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 Partners 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, 2000.

During each of the years ended December 31, 2000 and 1999, the
Partnership declared distributions to the limited partners of
$3,150,004. During the year ended December 31, 1998, the Partnership
declared distributions of $3,850,003. No distributions have been made
to the General Partners to date.

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

8. 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:

2000 1999 1998
-------------- -------------- ---------------

Net income for financial reporting purposes $ 3,587,171 $2,810,064 $ 3,288,912

Depreciation for tax reporting purposes in
excess of depreciation for financial
reporting purposes (99,400 ) (113,202 ) (166,412 )

Direct financing leases recorded as operating
leases for tax reporting purposes 171,457 166,924 177,946

Allowance for doubtful accounts (5,305 ) (18,872 ) 5,408

Accrued rental income (61,481 ) (91,099 ) (116,089 )

Rents paid in advance 49,252 (38,955 ) 9,293

Gain or loss on sale of assets for tax
reporting purposes in excess of (less than)
gain or loss for financial reporting purposes (597,936 ) 38,341 3,170

Capitalization (deduction) of transaction costs
for tax reporting purposes (206,488 ) 185,446 21,042

Equity in earnings of unconsolidated joint
ventures for tax reporting purposes in excess
of equity in earnings of unconsolidated
joint ventures for financial reporting purposes 14,929 21,563 15,563

Minority interest in timing differences of
consolidated joint venture 1,113 1,292 1,443
-------------- -------------- ---------------

Net income for federal income tax purposes $ 2,853,312 $ 2,961,502 $ 3,240,276
============== ============== ===============

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

9. Related Party Transactions:
--------------------------

One of the individual General Partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Holdings, Inc. The other individual
general partner, Robert A. Bourne, serves as President and Treasurer of
CNL Financial Group, Inc., a wholly owned subsidiary of CNL Holdings,
Inc.. CNL Fund Advisors, Inc. (the "Advisor") was majority owned
subsidiary of CNL Financial Group, Inc. until it merged with CNL
American Properties Fund, Inc. ("APF"), effective September 1, 1999.
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 has agreed to
pay the Advisor an annual, noncumulative, subordinated management fee
of one percent of the sum of gross revenues from properties wholly
owned by the Partnership and the Partnership's allocable share of gross
revenues from joint ventures, but not in excess of competitive fees for
comparable services. These fees will be incurred and will be payable
only after the limited partners receive their 10% Preferred Return. Due
to the fact that these fees are noncumulative, if the limited partners
have not received their 10% Preferred Return in any particular year, no
management fees will be due or payable for such year. As a result of
such threshold, no management fees were incurred during the years ended
December 31, 2000, 1999, and 1998.

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 receipt by the limited partners of their aggregate 10%
Preferred Return, plus their adjusted capital contributions. No
deferred, subordinated real estate disposition fees were incurred for
the years ended December 31, 2000, 1999 and 1998.

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

9. Related Party Transactions - Continued:
--------------------------------------

In July 2000, the Partnership reinvested the sales proceeds it received
from the sale of the properties in Sun City, Florida and Bayonet Point,
Florida in a Bennigan's property located in Deerfield, Illinois, at an
approximate cost of $2,462,700 from CNL BB Corp., 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. The purchase price paid by the Partnership
represents the costs incurred by CNL BB Corp. to acquire and carry the
property, including closing costs. In accordance with the Statement of
Policy of Real Estate Programs for the North American Securities
Administrators Association, Inc., all income, expenses, profits and
losses generated by or associated with the property were treated as
belonging to the Partnership. For the year ended December 31, 2000,
other income of the Partnership included $6,679 of such amounts. In
connection therewith, the Partnership entered into a long term,
triple-net lease with terms substantially the same as its other leases.

During the years ended December 31, 2000, 1999, and 1998, the Advisor
and its affiliates provided accounting and administrative services to
the Partnership on a day-to-day basis including services relating to
the proposed and terminated merger. The Partnership incurred $95,548,
$118,104, and $96,202, for the years ended December 31, 2000, 1999, and
1998, respectively, for such services.

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

2000 1999
----------------- ------------------

Due to Advisor and its Affiliates:
Accounting and administrative
services $ 4,351 $ 66,277
Deferred, subordinated real
estate disposition fee 55,050 55,050
------------------
-----------------

$ 59,401 $ 121,327
================= ==================

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

10. Concentration of Credit Risk:
----------------------------

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

2000 1999 1998
--------------- --------------- ---------------

Golden Corral Corporation $694,735 $ 711,714 $ 728,641
Carrols Corporation 422,375 419,844 482,081
Restaurant Management Services,
Inc. N/A 572,803 527,360

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

2000 1999 1998
-------------- --------------- ----------------

Burger King $882,922 $ 887,291 $ 961,542
Golden Corral Family
Steakhouse Restaurants 722,115 747,008 750,869
Shoney's 363,946 599,081 603,304

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

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

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2000, 1999, and 1998

11. Selected Quarterly Financial Data:
---------------------------------

The following table presents selected unaudited quarterly financial
data for each full quarter during the years ended December 31, 2000 and
1999:

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

Revenue (1) $857,005 $731,135 $855,989 $1,084,860 $3,528,989
Net income 657,317 568,458 1,336,592 1,024,804 3,587,171
Net income per
limited partner
unit $ 0.019 $ 0.016 $ 0.038 $ 0.029 $ 0.102

1999 Quarter First Second Third Fourth Year
------------------------ ------------- ------------- ------------- --------------- --------------

Revenue (1) $844,368 $864,637 $845,771 $ 945,893 $3,500,669
Net income 674,843 658,687 666,586 809,948 2,810,064
Net income per
limited partner
unit $ 0.019 $ 0.019 $ 0.019 $ 0.023 $ 0.079

(1) Revenues include equity in earnings of unconsolidated joint ventures
and minority interest in income of consolidated joint ventures.

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

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

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

James M. Seneff, Jr., age 54. 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 (the "Advisor") until it merged with APF in September 1999,
and in June 2000, was re-elected to those positions of the Advisor. Mr.
Seneff is a principal stockholder of CNL Holdings, Inc., the parent
company of CNL Financial Group, Inc. (formerly CNL Group, Inc.), a
diversified real estate company, and has served as a director, Chairman
of the Board and Chief Executive Officer of CNL Financial Group, Inc.
since its formation in 1980. CNL Financial Group, Inc. is the parent
company, either directly or indirectly through subsidiaries, of CNL
Real Estate Services, Inc., CNL Capital Markets, Inc., CNL Investment
Company and CNL Securities Corp. 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 53. 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 and Vice Chairman 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 the Advisor prior to its merger with 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. (formerly CNL Group, Inc.);
Director, Vice Chairman of the Board and President of CNL Hospitality
Properties, Inc., a public, unlisted real estate investment trust; as
well as, Director and President of CNL Hospitality Corp., its advisor.
In addition, Mr. Bourne serves as Director and President of CNL
Retirement Properties, Inc., a public, unlisted real estate investment
trust; as well as, a Director and President of its advisor, CNL
Retirement Corp. Mr. Bourne also serves as a Director of CNL Bank. He
has served as a Director since 1992, Vice Chairman of the Board since
February 1996, Secretary and Treasurer from February 1996 through 1997,
and President from July 1992 through February 1996, of Commercial Net
Lease Realty, Inc., a public real estate investment trust listed on the
New York Stock Exchange. Mr. Bourne also serves as Director, President
and Treasurer for various affiliates of CNL Financial Group, Inc.
including, CNL Investment Company, CNL Securities Corp. and CNL
Institutional Advisors, Inc., a registered investment advisor for
pension plans. Mr. Bourne began his career as a certified public
accountant employed by Coopers & Lybrand, Certified Public Accountants,
from 1971 through 1978, where he attained the position of Tax Manager
in 1975. Mr. Bourne graduated from Florida State University in 1970
where he received a B.A. in Accounting, with honors.

Curtis B. McWilliams, age 45. 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 the Advisor, Mr. McWilliams served as
President of APF from February 1999 until September 1999. From April
1997 to February 1999, he served as Executive Vice President of APF.
Mr. McWilliams joined CNL Financial Group, Inc. (formerly CNL Group,
Inc.) in April 1997 and served as an Executive Vice President until
September 1999. In addition, Mr. McWilliams served as President of the
Advisor and CNL Financial Services, Inc. from April 1997 until the
acquisition of such entities by 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.

John T. Walker, age 42. Mr. Walker has served as President of APF since
September 1999 and as Chief Operating Officer since March 1995. Mr.
Walker also served as a board member of CNL Restaurant Property
Services, Inc., a subsidiary of APF from December 1999 until December
2000. Previously, he served as Executive Vice President of APF from
January 1996 to September 1999. Mr. Walker joined the Advisor in
September 1994, as Senior Vice President responsible for Research and
Development. He served as the Chief Operating Officer of the Advisor
from April 1995 until September 1999 and as Executive Vice President
from January 1996 until September 1999, at which time it merged with
APF. Mr. Walker also served as Executive Vice President of CNL
Hospitality Properties, Inc. and CNL Hospitality Corp. (formerly CNL
Hospitality Advisors, Inc.) from 1997 to October 1998. From May 1992 to
May 1994, he was Executive Vice President for Finance and
Administration and Chief Financial Officer of Z Music, Inc., a cable
television network which was subsequently acquired by Gaylord
Entertainment, where he was responsible for overall financial and
administrative management and planning. From January 1990 through April
1992, Mr. Walker was Chief Financial Officer of the First Baptist
Church in Orlando, Florida. From April 1984 through December 1989, he
was a partner in the accounting firm of Chastang, Ferrell & Walker,
P.A., where he was the partner in charge of audit and consulting
services, and from 1981 to 1984, Mr. Walker was a Senior
Consultant/Audit Senior at Price Waterhouse. Mr. Walker is a cum laude
graduate of Wake Forest University with a Bachelor of Science degree in
Accountancy and is a certified public accountant.

Steven D. Shackelford, age 37. Mr. Shackelford was promoted to
Executive Vice President and Chief Financial Officer of APF in July
2000. He served as Senior Vice President and Chief Financial Officer of
APF since January 1997. Mr. Shackelford also served as Secretary and
Treasurer of APF since September 1999. He also served as Chief
Financial Officer of the Advisor 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, 2001, 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, 2001, 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, 2000, 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, 2000

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

Reimbursement to affiliates for Operating expenses are reimbursed at Accounting and administra-
operating expenses the lower of cost or 90 percent of tive services: $95,548
the prevailing rate at which
comparable services could have been
obtained in the same geographic
area. Affiliates of the General
Partners from time to time incur
certain operating expenses on behalf
of the Partnership for which the
Partnership reimburses the
affiliates without interest.

Annual, subordinated manage- One percent of the sum of gross $-0-
ment fee to affiliates revenues (excluding noncash and
lease accounting adjustments) 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,
subordinated to certain minimum
returns to the Limited Partners.
The management fee, will not exceed
competitive fees for comparable
services. Due to the fact that
these are noncumulative, if the
Limited Partners have not received
their 10% Preferred Return in any
particular years no management fees
will be due or payable for such year.

Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- --------------------------------- -------------------------------------- ------------------------------

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
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, 2000
- --------------------------------- -------------------------------------- ------------------------------

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, during 2000, the Partnership acquired a Bennigan's Property from
CNL BB Corp., an affiliate of the General Partners, for an aggregate purchase
price of approximately $2,462,700. CNL BB Corp. had purchased and temporarily
held title to this Property in order to facilitate the acquisition of the
Property by the Partnership. The purchase price paid by the Partnership
represents the costs incurred by CNL 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, 2000 and 1999

Statements of Income for the years ended December 31, 2000,
1999, and 1998

Statements of Partners' Capital for the years ended December
31, 2000, 1999, and 1998

Statements of Cash Flows for the years ended December 31,
2000, 1999, and 1998

Notes to Financial Statements

2. Financial Statement Schedules

Schedule III - Real Estate and Accumulated Depreciation at
December 31, 2000

Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 2000

Schedule IV - Mortgage Loans on Real Estate at December 31,
2000

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 VIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-31482 on Form S-11
and incorporated herein by reference.)

4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund VIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-31482 on Form S-11
and incorporated herein by reference.)

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

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

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

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

(b) The Registrant filed no reports on Form 8-K during
the period October 1, 2000 through December 31,
2000.

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 28th day of
March, 2001.

CNL INCOME FUND VIII, 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 28, 2001
- ------------------------------------
Robert A. Bourne (Principal Financial and Accounting
Officer)

/s/ James M. Seneff, Jr. Chief Executive Officer and Director March 28, 2001
- ------------------------------------
James M. Seneff, Jr. (Principal Executive Officer)

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

Bennigan's Restaurant
Deerfield, Illinois - $1,296,452 $ $1,156,526 $ -

Burger King Restaurants:
Brandon, Florida - 478,467 - - -
New City, New York - 372,977 - 557,832 -
Mansfield, Ohio - 377,395 - 496,524 -
Syracuse, New York - 363,431 - 485,920 -
New Philadelphia, Ohio - 310,920 - 523,967 -
Baseball City, Florida (g- 394,813 - - -

Denny's Restaurant:
Tiffin, Ohio - 143,592 335,971 - -

Golden Corral Family
Steakhouse Restaurants:
College Station, Texa- 517,623 - 877,505 -
Houston, Texas - 663,999 - 1,129,910 -
Beaumont, Texas - 552,646 - 893,054 -
Grand Prairie, Texas - 681,824 - 914,235 -

Hardee's Restaurant:
Jefferson, Ohio - 150,587 - - -

Jack in the Box Restaurants:
Waco, Texas - 412,942 - - -
Mesa, Arizona - 609,921 - - -

KFC Restaurant:
Norton Shores, Michigan - 177,897 - - -

Perkins Restaurant:
Memphis, Tennessee - 431,065 - - -

Pizza Hut Restaurant:
Hialeah, Florida - 279,235 193,004 - -

Quincy's Family Steakhouse
Restaurant:
Statesville, North Ca-olina 257,225 - - -

Shoney's Restaurants:
Memphis, Tennessee - 368,290 601,660 - -
North Fort Myers, Florida- 398,423 - - -

Wendy's Old Fashioned
Hamburger Restaurant:
Midlothian, Virginia - 365,601 - 477,745 -
---------- ---------- ---------- ------

$9,605,325 $1,130,635 $7,513,218 $ -
========== ========== ========== ======

Property of Joint Venture in Which
the Partnership has a 66%
Interest and had Invested in
Under an Operating Lease:

Bakers Square Restaurant
Libertyville, Illinois - $624,626 $830,023 $ - $ -
========== ========== ========== ======

Property of Joint Venture in Which
the Partnership has an 85.54%
Interest and has Invested in
Under an Operating Lease:

Burger King Restaurant:
Asheville, North Caroli-a $438,695 $450,432 $ - $ -
========== ========== ========== ======

Properties of Joint Venture in
Which the Partnership has a
36.8% Interest and has Invested
in Under an Operating Leases:

Burger King Restaurants:
Columbus, Ohio - $345,696 $651,985 $ - $ -
San Antonio, Texas - 350,479 623,615 - -
Pontiac, Michigan - 277,192 982,200 - -
Raceland, Louisiana - 174,019 986,879 - -
New Castle, Indiana - 264,239 662,265 - -
Hastings, Minnesota - 155,553 657,159 - -
---------- ---------- ---------- ------

$1,567,178 $4,564,103 $ - $ -
========== ========== ========== ======

Property of Joint Venture in Which
the Partnership has a 12.46%
Interest and has Invested in
Under an Operating Lease:

Golden Corral Family
Steakhouse Restaurant:
Middleburg Heights,-Ohio $521,571 $ - $ - $ -
========== ========== ========== ======

Property of Joint Venture in Which
the Partnership has a 34%
Interest and has Invested in
Under an Operating Lease:

IHOP Restaurant
Bossier City, Louisiana $453,016 $866,192 $ - $ -
========== ========== ========== ======

Properties the Partnership has
Invested in Under Direct
Financing Leases:

Burger King Restaurants:
Brandon, Florida - $ - - $483,107 $ -
Baseball City, Florida -g) - - 551,446 -

Hardee's Restaurants:
Brunswick, Ohio - 116,199 457,907 - -
Grafton, Ohio - 66,092 411,798 - -
Jefferson, Ohio - - 443,444 - -
Lexington, Ohio - 124,707 433,264 - -

Jack in the Box Restaurants:
Waco, Texas - - - 406,745 -
Mesa, Arizona - - 561,477 - -

KFC Restaurants:
Grand Rapids, Michigan - 169,175 620,623 - -
Norton Shores, Michigan- - 509,228 - -

Perkins Restaurant:
Memphis, Tennessee - - - 594,154 -

Quincy's Family Steakhouse
Restaurant:
Statesville,
North Carolina - - 705,444 - -

Shoney's Restaurants:
North Fort Myers, Flori-a - 552,240 - -
---------- ---------- ---------- ------

$476,173 $4,695,425 $2,035,452 $ -
========== ========== ========== ======

Property of Joint Venture in Which
the Partnership has a 12.46%
Interest and has Invested in
Under a Direct Financing Lease:

Golden Corral Family
Steakhouse Restaurant:
Middleburg Heights, Oh-o $ - $1,357,288 $ - $ -
========== ========== ========== ======

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

$1,296,452 $1,156,526 $2,452,978 $16,063 2000 07/00 (b)

478,467 (f) 478,467 - 1991 10/90 (d)
372,977 557,832 930,809 59,571 1977 03/91 (i)
377,395 496,524 873,919 53,024 1989 03/91 (i)
363,431 485,920 849,351 51,892 1987 03/91 (i)
310,920 523,967 834,887 55,955 1989 03/91 (i)
394,813 (f) 394,813 - 1991 02/91 (d)

143,592 335,971 479,563 86,400 1990 03/91 (h)

517,623 877,505 1,395,128 301,317 1990 09/90 (b)
663,999 1,129,910 1,793,909 377,049 1990 10/90 (b)
552,646 893,054 1,445,700 314,893 1990 11/90 (b)
681,824 914,235 1,596,059 313,177 1990 11/90 (b)

150,587 (f) 150,587 - 1990 11/90 (d)

412,942 (f) 412,942 - 1991 11/90 (d)
609,921 (f) 609,921 - 1991 02/92 (d)

177,897 (f) 177,897 - 1990 03/91 (d)

431,065 (f) 431,065 - 1990 11/90 (d)

279,235 193,004 472,239 1,608 2000 10/00

257,225 (f) 257,225 - 1991 10/91 (d)

368,290 601,660 969,950 188,300 1991 08/91 (b)
398,423 (f) 398,423 - 1991 09/95 (d)

365,601 477,745 843,346 154,624 1991 03/91 (b)
----------- ----------- ----------- ----------

$9,605,325 $8,643,853 $18,249,178 $1,973,873
=========== =========== =========== ==========

$624,626 $830,023 $1,454,649 $11,528
=========== =========== =========== ==========

$438,695 $450,432 $889,127 $146,976 1986 03/91 (b)
=========== =========== =========== ==========

$345,696 $651,985 $997,681 $201,311 1986 09/91 (b)
350,479 623,615 974,094 192,552 1986 09/91 (b)
277,192 982,200 1,259,392 303,271 1987 09/91 (b)
174,019 986,879 1,160,898 304,716 1988 09/91 (b)
264,239 662,265 926,504 204,486 1988 09/91 (b)
155,553 657,159 812,712 202,910 1990 09/91 (b)
----------- ----------- ----------- ----------

$1,567,178 $4,564,103 $6,131,281 $1,409,246
=========== =========== =========== ==========

$521,571 (f) $521,571 $ - 1995 05/96 (d)
=========== =========== ==========

$453,016 $866,192 $1,319,208 $33,416 1998 11/99 (b)
=========== =========== =========== ==========

$ - (f) (f) (d) 1991 10/90 (d)
- (f) (f) (d) 1991 02/91 (d)

(f) (f) (f) (e) 1990 11/90 (e)
(f) (f) (f) (e) 1990 11/90 (e)
- (f) (f) (d) 1990 11/90 (d)
(f) (f) (f) (e) 1990 11/90 (e)

- (f) (f) (d) 1991 11/90 (d)
- (f) (f) (d) 1991 02/92 (d)

(f) (f) (f) (e) 1990 02/91 (e)
- (f) (f) (d) 1990 03/91 (d)

- (f) (f) (d) 1990 11/90 (d)

- (f) (f) (d) 1991 10/91 (d)

- (f) (f) (d) 1991 09/95 (d)
-----------

$ -
===========

$ - (f) (f) (d) 1995 05/96 (d)
===========

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

NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2000

(a) Transactions in real estate and accumulated depreciation during 2000,
1999, and 1998, are summarized as follows:

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

Properties the Partnership has Invested in Under
Operating Leases:

Balance, December 31, 1997 $ 15,398,766 $ 1,438,534
Reclassified to operating lease 2,064,243 --
Dispositions (8,221 ) --
Depreciation expense -- 246,976
---------------- -------------------

Balance, December 31, 1998 17,454,788 1,685,510
Depreciation expense -- 300,188
---------------- -------------------

Balance, December 31, 1999 17,454,788 1,985,698
Dispositions (2,130,827 ) (315,177 )
Acquisitions 2,925,217 --
Depreciation expense -- 303,352
---------------- -----------------

Balance, December 31, 2000 $ 18,249,178 $ 1,973,873
================ =================

Property of Joint Venture in Which the Partnership
has an 85.54% Interest and has Invested in Under
an Operating Lease:

Balance, December 1997 889,127 101,934
Depreciation expense -- 15,014
---------------- -----------------

Balance, December 31, 1998 889,127 116,948
Depreciation expense -- 15,014
---------------- -----------------

Balance, December 31, 1999 889,127 131,962
Depreciation expense -- 15,014
---------------- -----------------

Balance, December 31, 2000 $ 889,127 $ 146,976
================ =================

Property of Joint Venture in Which the Partnership
has a 66% Interest and has Invested in Under an
Operating Lease

Balance, December 31, 1999 $ -- $ --
Acquisition 1,454,649 --
Depreciation expense -- 11,528
---------------- -----------------

Balance, December 31, 2000 $ 1,454,649 $ 11,528
================ =================

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

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

December 31, 2000

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

Property of Joint Venture in Which the Partnership has
36.8% Interest and has Invested in Under Operating

Leases:

Balance, December 31, 1997 $ 6,131,281 $ 952,835
Depreciation expense -- 152,137
---------------- -----------------

Balance, December 31, 1998 6,131,281 1,104,972
Depreciation expense -- 152,137
---------------- -----------------

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

Balance, December 31, 2000 $ 6,131,281 $ 1,409,246
================ =================

Property of Joint Venture in Which the Partnership has
a 34% Interest and has Invested in Under an
Operating Lease

Balance, December 31, 1998 $ -- $ --
Acquisition 1,319,208 --
Depreciation expense -- 4,542
---------------- -----------------

Balance, December 31, 1999 1,319,208 4,542
Depreciation expense -- 28,874
---------------- -----------------

Balance, December 31. 2000 $ 1,319,208 $ 33,416
================ =================

Property of Joint Venture in Which the Partnership
has a 12.46% Interest and has Invested in Under an
Operating Lease:

Balance, December 31, 1997 $ 521,571 $ --
Depreciation expense -- --
---------------- -----------------

Balance, December 31, 1998 521,571 --
Depreciation expense -- --
---------------- -----------------

Balance, December 31, 1999 521,571 --
Depreciation expense -- --
---------------- -----------------

Balance, December 31, 2000 $ 521,571 $ --
================ =================

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

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

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

December 31, 2000

(c) As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and its consolidated joint venture, and the
unconsolidated joint ventures for federal income tax purposes was
$24,980,921 and $11,672,122, respectively. All of the leases are
treated as operating leases for federal income tax purposes.

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

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

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

(g) The restaurant on this Property was converted from a Popeyes Famous
Fried Chicken Restaurant to a Burger King restaurant in February 1993.

(h) Effective January 1, 1994, 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 as
of January 1, 1994, and depreciated over its remaining estimated life
of approximately 27 years.

(i) Effective August 1, 1998, 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 as
of August 1, 1998, and depreciated over its remaining estimated life of
approximately 23 years.

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

SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

December 31, 2000

Principal
Amount
of Loans
Subject to
Carrying Delinquent
Final Periodic Face Amount of Principal or
Interest Maturity Payment Prior Amount of Mortgages Description
Rate Date Terms Liens Mortgages (1) Interest
--------- ----------------- ----------- ----------- -------------- ------------- ---------------

Church's
Jacksonville, FL
First Mortgage 10.00% December 2005 (2) $ -- $ 240,000 $ 233,710 $ --

Church's
Jacksonville, FL
First Mortgage 10.00% December 2005 (3) -- 220,000 214,234 --

Ponderosa
Orlando, FL
First Mortgage 10.75% October 2011 (4) -- 1,388,568 976,492 --
----------- -------------- ------------- ---------------

$ -- $ 1,848,568 $ 1,424,436 $ --
=========== ============== ============= ===============

(1) The tax carrying value of the notes is $1,412,063.

(2) Monthly payments of principal and interest at an annual rate of 10%,
with a balloon payment at maturity of $218,252.

(3) Monthly payments of principal and interest at an annual rate of 10%,
with a balloon payment at maturity of $200,324.

(4) Monthly payments of $12,633 were consisting of principal and interest
at an annual rate of 10.75%. During 1999, the Partnership received a
prepaid principal payment from the borrower that was applied to the
unpaid principal balance, reflected in the carrying amount of mortgage.

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

2000 1999 1998
------------- ------------- --------------

Balance at beginning of
period $1,473,571 $1,811,726 $1,853,386

Interest earned 150,897 162,182 191,738

Collection of principal and
interest (200,032 ) (500,337 ) (233,398 )
------------- ------------- --------------

Balance at end of period $1,424,436 $1,473,571 $1,811,726
============= ============= ==============

EXHIBITS

EXHIBIT INDEX

Exhibit Number

3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund VIII, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-31482 on Form S-11 and incorporated herein by
reference.)

4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund VIII, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-31482 on Form S-11 and incorporated herein by
reference.)

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

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

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

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