FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                    (X) QUARTERLY REPORT PURSUANT TO SECTION
                         13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT of 1934

               For the quarterly period ended September 30, 2004
   --------------------------------------------------------------------------

                                       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
incorporation or organization)                         Identification No.)


        450 South Orange Avenue
           Orlando, Florida                                  32801
-----------------------------------------       --------------------------------
(Address of principal executive offices)                   (Zip Code)


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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for 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  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act): Yes___ No X


<PAGE>


                                    CONTENTS




                                                                           Page
Part I.

     Item 1.      Financial Statements:

                      Condensed Balance Sheets                             1

                      Condensed Statements of Income                       2

                      Condensed Statements of Partners' Capital            3

                      Condensed Statements of Cash Flows                   4

                      Notes to Condensed Financial Statements              5-7

     Item 2.      Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                  8-10

     Item 3.      Quantitative and Qualitative Disclosures About
                      Market Risk                                          11

     Item 4.      Controls and Procedures                                  11


Part II.

     Other Information                                                     12-13


<PAGE>

                           CNL INCOME FUND VIII, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
<S><C>

                                                                           September 30,             December 31,
                                                                               2004                      2003
                                                                         ------------------       -------------------
                             ASSETS

Real estate properties with operating leases, net                        $       17,416,629       $       17,717,697
Net investment in direct financing leases                                         3,812,817                3,970,939
Real estate held for sale                                                                --                1,259,314
Investment in joint ventures                                                      3,874,936                3,912,953
Cash and cash equivalents                                                         3,516,884                1,709,779
Certificate of deposit                                                              388,009                  385,718
Receivables, less allowance for doubtful accounts of $15,814
    and $15,033 in 2004 and 2003, respectively                                      148,074                   44,739
Accrued rental income                                                             1,121,371                1,149,139
Other assets                                                                         90,079                   90,929
                                                                         ------------------       -------------------

                                                                         $       30,368,799       $       30,241,207
                                                                         ==================       ===================

               LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses                                    $           58,929       $            9,203
Real estate taxes payable                                                            22,989                   10,743
Distributions payable                                                               787,501                  787,501
Due to related parties                                                               78,898                   67,705
Rents paid in advance and deposits                                                  144,125                  160,072
                                                                         ------------------       -------------------
    Total liabilities                                                             1,092,442                1,035,224

Minority interests                                                                  208,036                  212,137

Partners' capital                                                                29,068,321               28,993,846
                                                                         ------------------       -------------------

                                                                         $       30,368,799       $       30,241,207
                                                                         ==================       ===================
</TABLE>
           See accompanying notes to condensed financial statements.

                                        1


<PAGE>

                           CNL INCOME FUND VIII, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
<S><C>

                                                            Quarter Ended                  Nine Months Ended
                                                            September 30,                    September 30,
                                                       2004              2003             2004            2003
                                                   --------------    --------------  --------------- ---------------
Revenues:
    Rental income from operating leases            $     564,905     $     561,916   $    1,688,725  $    1,674,724
    Earned income from direct financing leases           117,485           123,851          357,408         375,916
    Contingent rental income                               9,759             9,381           32,242          23,152
    Interest and other income                              2,614             2,679            7,333           7,974
                                                   --------------    --------------  --------------- ---------------
                                                         694,763           697,827        2,085,708       2,081,766
                                                   --------------    --------------  --------------- ---------------

Expenses:
    General operating and administrative                  90,520            55,300          268,402         195,569
    Property related                                       7,649             4,660           17,556          13,493
    State and other taxes                                     --                --           50,039          45,737
    Depreciation and amortization                        102,283           100,356          306,803         303,905
                                                   --------------    --------------  --------------- ---------------
                                                         200,452           160,316          642,800         558,704
                                                   --------------    --------------  --------------- ---------------

Income before minority interests and equity in
    earnings of unconsolidated joint ventures            494,311           537,511        1,442,908       1,523,062

Minority interests                                        (5,538)           (5,528)         (16,441)        (16,603)

Equity in earnings of unconsolidated joint
    ventures                                              96,287            95,961          286,234         287,488
                                                   --------------    --------------  --------------- ---------------

Income from continuing operations                        585,060           627,944        1,712,701       1,793,947
                                                   --------------    --------------  --------------- ---------------

Discontinued operations:
    Income from discontinued operations                   37,692            46,743          123,383         127,170
    Gain on disposal of discontinued operations          209,778                --          600,894              --
                                                   --------------    --------------  --------------- ---------------
                                                         247,470            46,743          724,277         127,170
                                                   --------------    --------------  --------------- ---------------

Net income                                         $     832,530     $     674,687   $    2,436,978  $    1,921,117
                                                   ==============    ==============  =============== ===============

Income per limited partner unit:
    Continuing operations                          $       0.017     $       0.018   $        0.049  $        0.051
    Discontinued operations                                0.007             0.001            0.021           0.004
                                                   --------------    --------------  --------------- ---------------
                                                   $       0.024     $       0.019   $        0.070  $        0.055
                                                   ==============    ==============  =============== ===============

Weighted average number of limited partner
    units outstanding                                 35,000,000        35,000,000       35,000,000      35,000,000
                                                   ==============    ==============  =============== ===============

</TABLE>
           See accompanying notes to condensed financial statements.

                                        2

<PAGE>


                           CNL INCOME FUND VIII, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
<S><C>

                                                                        Nine Months Ended              Year Ended
                                                                          September 30,               December 31,
                                                                               2004                       2003
                                                                       ---------------------        -----------------
General partners:
    Beginning balance                                                  $            286,349         $        286,349
    Net income                                                                           --                       --
                                                                       ---------------------        -----------------
                                                                                    286,349                  286,349
                                                                       ---------------------        -----------------

Limited partners:
    Beginning balance                                                            28,707,497               29,424,875
    Net income                                                                    2,436,978                2,432,626
    Distributions ($0.068 and $0.090 per
       limited partner unit, respectively                                        (2,362,503)              (3,150,004)
                                                                       ---------------------        -----------------
                                                                                 28,781,972               28,707,497
                                                                       ---------------------        -----------------

Total partners' capital                                                $         29,068,321         $     28,993,846
                                                                       =====================        =================
</TABLE>
           See accompanying notes to condensed financial statements.

                                        3

<PAGE>

                           CNL INCOME FUND VIII, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S><C>

                                                                                     Nine Months Ended
                                                                                       September 30,
                                                                                  2004               2003
                                                                             ---------------     --------------

   Net cash provided by operating activities                                 $    2,342,160      $   2,617,457
                                                                             ---------------     --------------

   Cash flows from investing activities:
       Proceeds from sale of assets                                               1,847,990                 --
         Investments in certificates of deposit                                          --           (386,215)
         Redemption of certificates of deposit                                           --            376,202
                                                                             ---------------     --------------
             Net cash provided by (used in) investing activities                  1,847,990            (10,013)
                                                                             ---------------     --------------

   Cash flows from financing activities:
       Distributions to limited partners                                         (2,362,503)        (2,537,503)
       Distributions to holders of minority interests                               (20,542)           (20,602)
                                                                             ---------------     --------------
             Net cash used in financing activities                               (2,383,045)        (2,558,105)
                                                                             ---------------     --------------

   Net increase in cash and cash equivalents                                      1,807,105             49,339

   Cash and cash equivalents at beginning of period                               1,709,779          1,573,584
                                                                             ---------------     --------------

   Cash and cash equivalents at end of period                                $    3,516,884      $   1,622,923
                                                                             ===============     ==============

   Supplemental schedule of non-cash financing activities:

       Distributions declared and unpaid at end of
          period                                                             $      787,501      $     787,501
                                                                             ===============     ==============

</TABLE>
           See accompanying notes to condensed financial statements.

                                        4



<PAGE>


                           CNL INCOME FUND VIII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2004 and 2003


  1.     Basis of Presentation

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of the general partners, necessary for a fair
         statement of the results for the interim periods  presented.  Operating
         results  for the nine  months  ended  September  30,  2004,  may not be
         indicative  of the  results  that may be  expected  for the year ending
         December  31, 2004.  Amounts as of December  31, 2003,  included in the
         financial   statements,   have  been  derived  from  audited  financial
         statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund VIII, Ltd. (the  "Partnership") for the year ended December
         31, 2003.

         The Partnership accounts for its approximate 87.68% interest in Woodway
         Joint Venture and its 85.54%  interest in Asheville Joint Venture using
         the consolidation  method.  Minority  interests  represent the minority
         joint venture partners'  proportionate share of the equity in the joint
         ventures.  All significant  intercompany accounts and transactions have
         been eliminated.

         In December 2003,  the Financial  Accounting  Standards  Board issued a
         revision to FASB  Interpretation  No. 46 (originally  issued in January
         2003)  ("FIN  46R"),  "Consolidation  of  Variable  Interest  Entities"
         requiring  existing  unconsolidated  variable  interest  entities to be
         consolidated by their primary beneficiaries. The primary beneficiary of
         a variable  interest entity is the party that absorbs a majority of the
         entity's expected losses,  receives a majority of its expected residual
         returns, or both, as a result of holding variable interests,  which are
         the ownership,  contractual,  or other pecuniary interests in an entity
         that change with  changes in the fair value of the  entity's net assets
         excluding  variable  interests.  Prior to FIN 46R, a company  generally
         included  another  entity  in  its  financial  statements  only  if  it
         controlled the entity through voting interests.  Application of FIN 46R
         is  required  in  financial  statements  of public  entities  that have
         interests in variable  interest entities for periods ending after March
         15,  2004.  The  Partnership  adopted FIN 46R during the quarter  ended
         March 31, 2004,  which  resulted in the  consolidation  of a previously
         unconsolidated joint venture,  which was accounted for under the equity
         method.  FIN 46R  does not  require,  but does  permit  restatement  of
         previously  issued financial  statements.  The Partnership has restated
         prior year's financial statements to maintain comparability between the
         periods presented.  Such  consolidation  resulted in certain assets and
         minority  interest,  and  revenues  and  expenses,  of the entity being
         reported on a gross basis in the  Partnership's  financial  statements;
         however,  these  restatements had no effect on partners' capital or net
         income.

2.       Investment in Joint Ventures

         During 2003, CNL Restaurant  Investments  II, in which the  Partnership
         owns a 36.8% interest,  entered into negotiations with a third party to
         sell the property in San Antonio,  Texas. During 2004, the contract was
         terminated,  and as a result, the joint venture reclassified the assets
         from real estate held for sale to real estate properties with operating
         leases.

         CNL Restaurant Investments II owns five properties.  Bossier City Joint
         Venture  and CNL  VIII,  X, XII  Kokomo  Joint  Venture  each  owns one
         property. In addition, the Partnership and affiliates, in four separate
         tenancy in common arrangements, each own one property.
                                       5
<PAGE>

                           CNL INCOME FUND VIII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2004 and 2003


2.       Investment in Joint Ventures - Continued

         The following presents the combined,  condensed  financial  information
         for the joint  ventures and the  properties  held as  tenants-in-common
         with affiliates at:
<TABLE>
<CAPTION>
<S><C>
                                                                    September 30,                    December 31,
                                                                        2004                             2003
                                                                   ----------------                 ----------------
          Real estate properties with operating                    $    12,499,331                   $   12,729,434
          leases, net
          Net investment in direct financing leases                        953,191                          967,655
          Cash                                                              25,174                           66,531
          Accrued rental income                                            330,845                          252,850
          Liabilities                                                       13,828                           53,747
          Partners' capital                                             13,794,713                       13,962,723


                                                            Quarter Ended                  Nine Months Ended
                                                            September 30,                    September 30,
                                                      2004              2003             2004            2003
                                                   ------------    ----------------  -------------  ----------------

          Revenues                                 $   415,364     $       414,284   $  1,237,244   $     1,239,884
          Expenses                                     (78,950)            (80,823)      (235,289)         (236,804)
                                                   ------------    ----------------  -------------  ----------------

          Net income                               $   336,414     $       333,461   $  1,001,955   $     1,003,080
                                                   ============    ================  =============  ================
</TABLE>

         The Partnership  recognized  income of $286,234 and $287,488 during the
         nine months ended  September 30, 2004 and 2003,  respectively,  $96,287
         and $95,961 of which were earned during the third  quarters of 2004 and
         2003,  respectively,  from these joint  ventures and  tenants-in-common
         arrangements.

3.       Discontinued Operations

         During 2004, the Partnership identified two properties for sale. During
         March 2004,  the  Partnership  sold its property in Tiffin,  Ohio, to a
         third party, and received net sales proceeds of approximately $791,100,
         resulting  in  a  gain  on  disposal  of  discontinued   operations  of
         approximately  $391,100.  In September 2004, the  Partnership  sold its
         property in Brandon,  Florida, to a third party, and received net sales
         proceeds of approximately  $1,056,900,  resulting in a gain on disposal
         of discontinued operations of approximately $209,800.

         The  following  presents  the  operating  results  of the  discontinued
         operations for these properties:
<TABLE>
<CAPTION>
<S><C>
                                                       Quarter Ended                Nine Months Ended
                                                       September 30,                  September 30,
                                                    2004           2003            2004            2003
                                                -------------  -------------- ---------------  --------------

                 Rental revenues                $     38,256   $      50,141   $     126,858    $    150,237
                 Expenses                               (564)         (3,398)         (3,475)        (23,067)
                                                -------------  -------------- ---------------  --------------
                 Income from discontinued
                    operations                  $     37,692   $      46,743   $     123,383    $    127,170
                                                =============  ============== ===============  ==============
</TABLE>
                                       6
<PAGE>

                           CNL INCOME FUND VIII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2004 and 2003


4.       Merger Transaction

         On August 9, 2004, the Partnership entered into a definitive  Agreement
         and Plan of Merger  pursuant  to which the  Partnership  will be merged
         with a subsidiary of U.S. Restaurant Properties,  Inc. (NYSE: USV). The
         merger is one of multiple concurrent  transactions pursuant to which 17
         other  affiliated  limited  partnerships  also  will be  merged  with a
         subsidiary  of  U.S.  Restaurant  Properties,  Inc.  and in  which  CNL
         Restaurant  Properties,  Inc., an  affiliate,  also will be merged with
         U.S.  Restaurant  Properties,  Inc.  CNL  Restaurant  Properties,  Inc.
         currently  provides  property  management  and  other  services  to the
         Partnership.  The merger of the  Partnership  (and each of the 17 other
         affiliated mergers) is subject to certain conditions including approval
         by a majority of the limited partners, consummation of a minimum number
         of limited partnership mergers representing at least 75.0% in value (as
         measured  by the  value of the  merger  consideration)  of all  limited
         partnerships,  consummation  of  the  merger  between  U.S.  Restaurant
         Properties,  Inc. and CNL Restaurant Properties,  Inc., approval of the
         shareholders of U.S. Restaurant  Properties,  Inc., and availability of
         financing.  The  transaction is expected to be consummated in the first
         quarter of 2005.

         Under  the  terms  of  the  merger  agreement,  if the  transaction  is
         approved,  the limited  partners  will receive total  consideration  of
         approximately  $35.15  million,   consisting  of  approximately  $29.39
         million in cash and  approximately  $5.76  million  in U.S.  Restaurant
         Properties, Inc. Series A Convertible Preferred Stock that is listed on
         the New York Stock  Exchange.  The general  partners will receive total
         consideration  of  approximately  $223,000  consisting of approximately
         $186,000 in cash and approximately $37,000 in preferred stock.
                                       7

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         CNL Income Fund VIII, Ltd. (the "Partnership," which may be referred to
as "we," "us," or "our") is a Florida limited  partnership that was organized on
August 18, 1989 to acquire for cash,  either  directly or through  joint venture
arrangements,  both newly constructed and existing restaurants,  as well as land
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 leases are generally triple-net leases, with
the  lessees  responsible  for all  repairs  and  maintenance,  property  taxes,
insurance and utilities.  We owned 24 and 26 Properties directly as of September
30,  2004 and 2003,  respectively.  In  addition,  we also  owned 13  Properties
indirectly  through  joint  venture  or  tenancy  in common  arrangements  as of
September 30, 2004 and 2003.

Merger Transaction

         The general  partners  believe their  primary  objective is to maintain
current operations with restaurant operators as successfully as possible,  while
evaluating  strategic  alternatives,  including  alternatives  that may  provide
liquidity to the limited  partners.  Real estate  markets are strong  throughout
much of the nation,  and the performance of restaurants  has generally  improved
after several  challenging years. As a result, the general partners believe that
this is an attractive  period for a strategic event to monetize the interests of
the limited partners.

         In furtherance of this, on August 9, 2004, we entered into a definitive
Agreement  and  Plan of  Merger  pursuant  to  which  we will be  merged  with a
subsidiary of U.S. Restaurant Properties, Inc. (NYSE: USV). The merger is one of
multiple concurrent  transactions  pursuant to which 17 other affiliated limited
partnerships  also  will  be  merged  with  a  subsidiary  of  U.S.   Restaurant
Properties,  Inc. and in which CNL  Restaurant  Properties,  Inc., an affiliate,
also will be merged with U.S. Restaurant  Properties,  Inc. Our merger (and each
of the 17 other affiliated  mergers) is subject to certain conditions  including
approval by a majority of the limited partners, consummation of a minimum number
of limited partnership mergers representing at least 75.0% in value (as measured
by  the  value  of  the  merger  consideration)  of  all  limited  partnerships,
consummation  of the merger  between U.S.  Restaurant  Properties,  Inc. and CNL
Restaurant  Properties,  Inc.,  approval of the shareholders of U.S.  Restaurant
Properties,  Inc., and availability of financing.  U.S.  Restaurant  Properties,
Inc.  is a real  estate  investment  trust  (REIT)  that  focuses  primarily  on
acquiring, owning and leasing restaurant properties. The transaction is expected
to be consummated in the first quarter of 2005.

         Under  the  terms  of  the  merger  agreement,  if the  transaction  is
approved, our limited partners will receive total consideration of approximately
$35.15  million,   consisting  of  approximately  $29.39  million  in  cash  and
approximately  $5.76  million  in U.S.  Restaurant  Properties,  Inc.  Series  A
Convertible  Preferred Stock that is listed on the New York Stock Exchange.  The
general  partners will receive total  consideration  of  approximately  $223,000
consisting  of  approximately  $186,000  in cash and  approximately  $37,000  in
preferred stock.

         We received an opinion from Wachovia  Capital  Markets,  LLC that as of
August 9, 2004 the merger  consideration  to be  received  by the holders of our
general and limited  partnership  interests is fair,  from a financial  point of
view, to such holders.

         As reflected  above, the  contemplated  transactions  are complex,  and
contingent upon certain conditions. The restaurant marketplace,  the real estate
industry,  and the equities markets, all individually or taken as a whole, could
impact the  economics of this  transaction.  As a result,  there is no assurance
that we will be successful in completing the contemplated transaction.

Capital Resources

         Net cash provided by operating activities was $2,342,160 and $2,617,457
for the nine  months  ended  September  30,  2004 and  2003,  respectively.  The
decrease in net cash  provided by  operating  activities  during the nine months
ended September 30, 2004, was a result of changes in our working  capital,  such
as the timing of transactions  relating to the collection of receivables and the
payment of  expenses,  and  changes in income and  expenses,  such as changes in
rental revenues and changes in operating and property related expenses.

                                       8
<PAGE>

         In March 2004,  we sold our  Property in Tiffin,  Ohio to a third party
and received net sales proceeds of approximately  $791,100,  resulting in a gain
on disposal of discontinued  operations of approximately  $391,100.  The general
partners  intend to reinvest the net sales proceeds in additional  Properties or
to pay liabilities.

         In September 2004, we sold our Property in Brandon, Florida, to a third
party and received net sales proceeds of approximately $1,056,900,  resulting in
a gain on disposal of discontinued  operations of  approximately  $209,800.  The
general  partners  intend to  reinvest  the net  sales  proceeds  in  additional
Properties or to pay liabilities.

         Cash and cash  equivalents  increased to  $3,516,884  at September  30,
2004, from  $1,709,779 at December 31, 2003. At September 30, 2004,  these funds
were held in demand deposit  accounts at a commercial  bank and a certificate of
deposit  with a 90-day or less  maturity  date.  The  increase  in cash and cash
equivalents  at September  30,  2004,  was  primarily a result of holding  sales
proceeds  from current year sales.  The funds  remaining at September  30, 2004,
after the payment of distributions and other liabilities,  may be used to invest
in additional Properties and to meet our working capital needs.

Short-Term Liquidity

         Our  investment  strategy of acquiring  Properties for cash and leasing
them under triple-net leases to operators who meet specified financial standards
minimizes our operating  expenses.  The general partners believe that the leases
will generate net cash flow in excess of operating expenses.

         Our  short-term   liquidity   requirements  consist  primarily  of  our
operating expenses.

         The general  partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
our operations.

         We  generally  distribute  cash  from  operations  remaining  after the
payment of the  operating  expenses,  to the extent  that the  general  partners
determine that such funds are available for  distribution.  Based on current and
anticipated  future cash from operations,  we declared  distributions to limited
partners of $2,362,503 for each of the nine months ended  September 30, 2004 and
2003 ($787,501 for each of the quarters ended September 30, 2004 and 2003). This
represents  distributions  of $0.068 per unit for each of the nine months  ended
September 30, 2004 and 2003 ($0.023 per unit for each  applicable  quarter).  No
distributions were made to the general partners for the quarters and nine months
ended  September  30,  2004 and 2003.  No  amounts  distributed  to the  limited
partners for the nine months ended  September  30, 2004 and 2003 are required to
be or have been treated as a return of capital for purposes of  calculating  the
limited partners' return on their adjusted capital  contributions.  We intend to
continue to make  distributions  of cash to the limited  partners on a quarterly
basis.

         Total liabilities, including distributions payable, were $1,092,442 and
$1,035,224  at  September  30, 2004 and December  31,  2003,  respectively.  The
increase in total  liabilities  was due to  increases  in  accounts  payable and
accrued expenses,  real estate taxes payable and amounts due to related parties,
partially  offset by a  decrease  in rents  paid in advance  and  deposits.  The
general  partners  believe  that we  have  sufficient  cash on hand to meet  our
current working capital needs.

Long-Term Liquidity

         We have no long-term debt or other long-term liquidity requirements.

Results of Operations

         Rental revenues from continuing operations were $2,046,133 for the nine
months ended September 30, 2004, as compared to $2,050,640 in the same period in
2003, of which  $682,390 and $685,767  were earned during the third  quarters of
2004 and 2003, respectively. Rental revenues from continuing operations remained
relatively  constant because all of the changes in the leased Property portfolio
related to the two Properties accounted for as discontinued operations.

         In December 2003, Waving Leaves,  Inc., the tenant of the Properties in
Jefferson,  Lexington,  and  Grafton,  Ohio  filed  for  Chapter  11  bankruptcy
protection.  In May 2004,  the leases  were  assigned to and assumed by Hardee's
Food  Systems,  Inc. As of November 5, 2004,  we have received all of the rental
payments relating to these leases.

                                       9
<PAGE>

         In March 2004, we entered into an agreement, effective January 2004, to
provide  temporary  and partial  rent  deferral to a tenant who is  experiencing
liquidity  difficulties.  The general  partners  anticipate  that  deferring the
monthly rent  through  December  2004,  on the one lease the tenant has with us,
will provide the necessary relief to the tenant.  Rental payment terms revert to
the original terms beginning in January 2005.  Repayment of the deferred amounts
is  secured by letters  of credit  and  scheduled  to begin in January  2005 and
continue for 60 months.  The general partners do not believe that this temporary
decline  in cash  flows will have a  material  adverse  effect on our  operating
results.

         During the nine months  ended  September  30, 2004 and 2003,  we earned
$32,242 and $23,152,  respectively, in contingent rental income, of which $9,759
and $9,381 were earned during the third quarters of 2004 and 2003, respectively.
The increase in  contingent  rental income during 2004 was due to an increase in
reported gross sales of certain restaurants with leases that require the payment
of contingent rental income.

         During the nine months  ended  September  30, 2004 and 2003,  we earned
$286,234  and  $287,488,  respectively,  attributable  to net  income  earned by
unconsolidated  joint ventures,  of which $96,287 and $95,961 were earned during
the  third  quarters  of 2004 and  2003,  respectively.  Net  income  earned  by
unconsolidated  joint ventures  remained  relatively  constant,  as the Property
portfolio  owned by the joint  ventures and  tenancies in common did not change.
During 2003,  CNL Restaurant  Investments  II, in which the  Partnership  owns a
36.8%  interest,  entered  into  negotiations  with a third  party  to sell  the
Property in San Antonio,  Texas. In 2004, the contract was terminated,  and as a
result, the joint venture reclassified the assets from real estate held for sale
to real estate properties with operating leases.

         Operating expenses,  including  depreciation and amortization  expense,
were  $642,800 and $558,704  for the nine months  ended  September  30, 2004 and
2003,  respectively,  of which  $200,452 and $160,316 were  incurred  during the
third quarters of 2004 and 2003,  respectively.  Operating  expenses were higher
during the nine months and quarter ended September 30, 2004, primarily due to an
increase in general operating and administrative expenses including,  primarily,
legal fees incurred in connection with the merger transaction discussed above.

         We recognized income from discontinued operations (rental revenues less
property related expenses) of $123,383 and $127,170 during the nine months ended
September  30, 2004 and 2003,  respectively,  of which  $37,692 and $46,743 were
recognized  during the third quarters of 2004 and 2003,  respectively.  In March
2004, we sold our Property in Tiffin,  Ohio to a third party resulting in a gain
on disposal of discontinued  operations of approximately  $391,100. In September
2004, we sold our property in Brandon,  Florida to a third party  resulting in a
gain on disposal of discontinued operations of approximately $209,800.

         In December 2003,  the Financial  Accounting  Standards  Board issued a
revision to FASB Interpretation No. 46 (originally issued in January 2003) ("FIN
46R"),   "Consolidation  of  Variable  Interest  Entities"   requiring  existing
unconsolidated  variable  interest  entities to be consolidated by their primary
beneficiaries.  The primary  beneficiary  of a variable  interest  entity is the
party that  absorbs a  majority  of the  entity's  expected  losses,  receives a
majority  of its  expected  residual  returns,  or both,  as a result of holding
variable  interests,  which are the ownership,  contractual,  or other pecuniary
interests  in an  entity  that  change  with  changes  in the fair  value of the
entity's net assets excluding  variable  interests.  Prior to FIN 46R, a company
generally  included  another  entity  in its  financial  statements  only  if it
controlled  the  entity  through  voting  interests.  Application  of FIN 46R is
required in  financial  statements  of public  entities  that have  interests in
variable  interest  entities for periods ending after March 15, 2004. We adopted
FIN 46R  during  the  quarter  ended  March  31,  2004,  which  resulted  in the
consolidation  of a previously  unconsolidated  joint venture,  Asheville  Joint
Venture,  which was  accounted  for under the  equity  method.  FIN 46R does not
require, but does permit restatement of previously issued financial  statements.
We restated prior year's financial statements to maintain  comparability between
the  periods  presented.  Such  consolidation  resulted  in  certain  assets and
minority interest,  and revenues and expenses, of the entity being reported on a
gross basis in our financial  statements;  however,  these  restatements  had no
effect on partners' capital or net income.

                                       10
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.


ITEM 4.  CONTROLS AND PROCEDURES

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

         There was no change in internal  control over financial  reporting that
occurred during the most recent fiscal quarter that has materially affected,  or
is  reasonably  likely to materially  affect,  internal  control over  financial
reporting.

                                       11
<PAGE>


                           PART II. OTHER INFORMATION


Item 1.  Legal Proceedings.   Inapplicable.
         -----------------

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
         -----------------------------------------------------------
         Inapplicable.

Item 3.  Defaults upon Senior Securities.  Inapplicable.
         -------------------------------

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

Item 5.  Other Information.  Inapplicable.
         -----------------

Item 6.  Exhibits and Reports on Form 8-K.
         ---------------------------------

         (a)    Exhibits

                2.1     Agreement  and  Plan of  Merger  among  U.S.  Restaurant
                        Properties, Inc., Ivanhoe Acquisition VIII, LLC, and CNL
                        Income  Fund  VIII,  Ltd.,  dated as of August 9,  2004.
                        (Included  as  Exhibit  99.2 to Form 8-K filed  with the
                        Securities  and Exchange  Commission  on August 9, 2004,
                        and incorporated herein by reference.)

                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.)

                10.4    Assignment  of  Management   Agreement   from  CNL  Fund
                        Advisors,  Inc. to CNL APF  Partners,  LP.  (Included as
                        Exhibit 10.4 to Form 10-Q filed with the  Securities and
                        Exchange  Commission on August 9, 2001, and incorporated
                        herein by reference.)

                10.5    Assignment   of  Management   Agreement   from  CNL  APF
                        Partners, LP to CNL Restaurants XVIII, Inc. (Included as
                        Exhibit 10.5 to Form 10-Q filed with the  Securities and
                        Exchange Commission on August 14, 2002, and incorporated
                        herein by reference.)
                                       12
<PAGE>

                31.1    Certification  of Chief  Executive  Officer of Corporate
                        General  Partner  Pursuant  to Rule  13a-14  as  Adopted
                        Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
                        2002. (Filed herewith.)

                31.2    Certification  of Chief  Financial  Officer of Corporate
                        General  Partner  Pursuant  to Rule  13a-14  as  Adopted
                        Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
                        2002. (Filed herewith.)

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

                32.2    Certification  of Chief  Financial  Officer of Corporate
                        General  Partner  Pursuant to 18 U.S.C.  Section 1350 as
                        Adopted  Pursuant to Section  906 of the  Sarbanes-Oxley
                        Act of 2002. (Filed herewith.)
                                       13
<PAGE>


                                   SIGNATURES



         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 11th day of November 2004.


                                CNL INCOME FUND VIII, LTD.

                                By:   CNL REALTY CORPORATION
                                      General Partner


                                      By:   /s/ James M. Seneff, Jr.
                                           -------------------------------------
                                            JAMES M. SENEFF, JR.
                                            Chief Executive Officer
                                            (Principal Executive Officer)


                                      By:   /s/ Robert A. Bourne
                                           -------------------------------------
                                            ROBERT A. BOURNE
                                            President and Treasurer
                                            (Principal Financial and
                                            Accounting Officer)

<PAGE>


                                  EXHIBIT INDEX

Exhibit Number


                Exhibits

                2.1     Agreement  and  Plan of  Merger  among  U.S.  Restaurant
                        Properties, Inc., Ivanhoe Acquisition VIII, LLC, and CNL
                        Income  Fund  VIII,  Ltd.,  dated as of August 9,  2004.
                        (Included  as  Exhibit  99.2 to Form 8-K filed  with the
                        Securities  and Exchange  Commission  on August 9, 2004,
                        and incorporated herein by reference.)

                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.)

                10.4    Assignment  of  Management   Agreement   from  CNL  Fund
                        Advisors,  Inc. to CNL APF  Partners,  LP.  (Included as
                        Exhibit 10.4 to Form 10-Q filed with the  Securities and
                        Exchange  Commission on August 9, 2001, and incorporated
                        herein by reference.)

                10.5    Assignment   of  Management   Agreement   from  CNL  APF
                        Partners, LP to CNL Restaurants XVIII, Inc. (Included as
                        Exhibit 10.5 to Form 10-Q filed with the  Securities and
                        Exchange Commission on August 14, 2002, and incorporated
                        herein by reference.)

                31.1    Certification  of Chief  Executive  Officer of Corporate
                        General  Partner  Pursuant  to Rule  13a-14  as  Adopted
                        Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
                        2002. (Filed herewith.)

                31.2    Certification  of Chief  Financial  Officer of Corporate
                        General  Partner  Pursuant  to Rule  13a-14  as  Adopted
                        Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
                        2002. (Filed herewith.)
<PAGE>

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

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

<PAGE>




                                  EXHIBIT 31.1




<PAGE>



                                  EXHIBIT 31.2




<PAGE>



                                  EXHIBIT 32.1



<PAGE>


                                  EXHIBIT 32.2