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 June 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                                            10

     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>

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

Real estate properties with operating leases, net    $      17,995,452       $      18,196,164
Net investment in direct financing leases                    4,237,680               4,351,840
Real estate held for sale                                           --                 399,946
Investment in joint ventures                                 3,888,113               3,912,953
Cash and cash equivalents                                    2,471,733               1,709,779
Certificate of deposit                                         387,247                 385,718
Receivables, less allowance for doubtful accounts
    of $15,033 in 2004 and 2003                                 90,246                  44,739
Accrued rental income                                        1,130,627               1,149,139
Other assets                                                    81,957                  90,929
                                                     ------------------      ------------------

                                                     $      30,283,055       $      30,241,207
                                                     ==================      ==================

        LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses                $          26,863       $           9,203
Real estate taxes payable                                       24,330                  10,743
Distributions payable                                          787,501                 787,501
Due to related parties                                          76,174                  67,705
Rents paid in advance and deposits                             135,434                 160,072
                                                     ------------------      ------------------
    Total liabilities                                        1,050,302               1,035,224

Minority interests                                             209,461                 212,137

Partners' capital                                           29,023,292              28,993,846
                                                     ------------------      ------------------

                                                     $      30,283,055       $      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                   Six Months Ended
                                                              June 30,                          June 30,
                                                        2004             2003             2004             2003
                                                   --------------   --------------   --------------   --------------
Revenues:
    Rental income from operating leases            $     580,711    $     577,094    $   1,161,435    $   1,143,169
    Earned income from direct financing leases           135,224          142,239          272,290          286,091
    Contingent rental income                               9,616            6,282           22,483           13,771
    Interest and other income                              3,218            3,603            4,719            6,067
                                                   --------------   --------------   --------------   --------------
                                                         728,769          729,218        1,460,927        1,449,098
                                                   --------------   --------------   --------------   --------------

Expenses:
    General operating and administrative                  89,761           63,277          177,882          140,363
    Property related                                      10,275            8,376           12,818           22,234
    State and other taxes                                     --               --           50,039           45,737
    Depreciation and amortization                        103,404          100,356          204,520          203,549
                                                   --------------   --------------   --------------   --------------
                                                         203,440          172,009          445,259          411,883
                                                   --------------   --------------   --------------   --------------

Income before minority interests and equity in
    earnings of unconsolidated joint ventures            525,329          557,209        1,015,668        1,037,215

Minority interests                                        (5,498)         (5,485)          (10,903)         (11,075)

Equity in earnings of unconsolidated joint
    ventures                                              94,976           95,051          189,947          191,527
                                                   --------------   --------------   --------------   --------------

Income from continuing operations                        614,807          646,775        1,194,712        1,217,667
                                                   --------------   --------------   --------------   --------------

Discontinued operations:
    Income from discontinued operations                       --           14,382           18,620           28,763
    Gain on disposal of discontinued operations               --               --          391,116               --
                                                   --------------   --------------   --------------   --------------
                                                              --           14,382          409,736           28,763
                                                   --------------   --------------   --------------   --------------

Net income                                         $     614,807    $     661,157    $   1,604,448    $   1,246,430
                                                   ==============   ==============   ==============   ==============

Income per limited partner unit:
    Continuing operations                          $       0.018    $       0.018    $       0.034    $       0.035
    Discontinued operations                                   --            0.001            0.012            0.001
                                                   --------------   --------------   --------------   --------------
                                                   $       0.018    $       0.019    $       0.046    $       0.036
                                                   ==============   ==============   ==============   ==============

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>

                                                Six Months Ended             Year Ended
                                                    June 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                                         1,604,448                 2,432,626
    Distributions ($0.045 and $0.090 per
       limited partner unit, respectively             (1,575,002)               (3,150,004)
                                               ------------------        ------------------
                                                      28,736,943                28,707,497
                                               ------------------        ------------------

Total partners' capital                        $      29,023,292         $      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>

                                                                    Six Months Ended
                                                                        June 30,
                                                                 2004               2003
                                                            --------------     --------------


   Net cash provided by operating activities                $   1,559,473      $   1,758,002
                                                            --------------     --------------

   Cash flows from investing activities:
       Proceeds from sale of assets                               791,062                 --
                                                            --------------     --------------
             Net cash provided by investing activities            791,062                 --
                                                            --------------     --------------

   Cash flows from financing activities:
       Distributions to limited partners                       (1,575,002)        (1,750,002)
       Distributions to holders of minority interests             (13,579)           (13,734)
                                                            --------------     --------------
             Net cash used in financing activities             (1,588,581)        (1,763,736)
                                                            --------------     --------------

   Net increase (decrease) in cash and cash equivalents           761,954             (5,734)

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

   Cash and cash equivalents at end of period               $   2,471,733      $   1,567,850
                                                            ==============     ==============

   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 Six Months Ended June 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 six months ended June 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 the  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.       Reclassification

         Certain  items in the  prior  year's  financial  statements  have  been
         reclassified to conform to 2004 presentation.  These  reclassifications
         had no effect on total partners' capital or net income.

3.       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.

                                       5
<PAGE>

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

3.       Investment in Joint Ventures - Continued

         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.


         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>
                                                                       June 30,            December 31,
                                                                         2004                  2003
                                                                   ----------------      ----------------
          Real estate properties with operating
              leases, net                                          $    12,576,032       $    12,729,434
          Net investment in direct financing
              leases                                                       958,129               967,655
          Cash                                                              44,727                66,531
          Accrued rental income                                            304,847               252,850
          Liabilities                                                       31,588                53,747
          Partners' capital                                             13,852,147            13,962,723


                                     Quarter Ended                    Six Months Ended
                                       June 30,                           June 30,
                                 2004             2003             2004             2003
                            --------------   --------------   --------------   --------------
          Revenues          $     410,658    $     411,100    $     821,880    $     825,600
          Expenses                (77,665)         (78,229)        (156,339)        (155,981)
                            --------------   --------------   --------------   --------------

          Net income        $     332,993    $     332,871    $     665,541    $     669,619
                            ==============   ==============   ==============   ==============
</TABLE>


         The Partnership  recognized  income of $189,947 and $191,527 during the
         six months  ended June 30,  2004 and 2003,  respectively,  $94,976  and
         $95,051 of which were  earned  during the second  quarters  of 2004 and
         2003,  respectively,  from these joint  ventures and  tenants-in-common
         arrangements.

4.       Discontinued Operations

         During 2004, the Partnership  identified one property 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.


                                       6
<PAGE>

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


4.       Discontinued Operations - continued

         The  following  presents  the  operating  results  of the  discontinued
         operations for this property:
<TABLE>
<CAPTION>
<S> <C>

                                                        Quarter Ended                     Six Months Ended
                                                           June 30,                           June 30,
                                                     2004             2003             2004              2003
                                                --------------   --------------   ---------------   --------------

                 Rental revenues                $          --    $      17,469    $       18,620    $      34,937
                 Expenses                                  --           (3,087)               --           (6,174)
                                                --------------   --------------   ---------------   --------------
                 Income from discontinued
                     operations                 $          --    $      14,382    $       18,620    $      28,763
                                                ==============   ==============   ===============   ==============
</TABLE>


5.       Subsequent Event

         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  transaction,  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 25 and 26 Properties  directly as of June 30,
2004 and 2003, respectively. In addition, we also owned 13 Properties indirectly
through joint venture or tenancy in common  arrangements as of June 30, 2004 and
2003.

Capital Resources

         Net cash provided by operating activities was $1,559,473 and $1,758,002
for the six months ended June 30, 2004 and 2003,  respectively.  The decrease in
net cash provided by operating  activities  during the six months ended June 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.

         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.

         Cash and cash  equivalents  increased to  $2,471,733  at June 30, 2004,
from $1,709,779 at December 31, 2003. At June 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 June
30, 2004, was primarily a result of holding sales proceeds from the current year
sale. The funds remaining at June 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  $1,575,002  for each of the six months ended June 30, 2004 and 2003
($787,501  for  each of the  quarters  ended  June  30,  2004  and  2003).  This
represents  distributions for each applicable quarter of $0.045 per unit ($0.023
per unit for each applicable quarter). No distributions were made to the general
partners  for the  quarters  and six  months  ended June 30,  2004 and 2003.  No
amounts  distributed  to the limited  partners for the six months ended June 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 $1,050,302 and
$1,035,224 at June 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 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.

                                       8
<PAGE>

Long-Term Liquidity

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

Results of Operations

         Rental revenues from continuing  operations were $1,433,725 for the six
months  ended June 30,  2004,  as compared to  $1,429,260  in the same period in
2003, of which  $715,935 and $719,333 were earned during the second  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 Property 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 August 9, 2004,  we have  received  all of the rental
payments relating to these leases.

         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 six months ended June 30, 2004 and 2003,  we earned  $22,483
and $13,771,  respectively,  in contingent  rental  income,  of which $9,616 and
$6,282 were earned  during the second  quarters of 2004 and 2003,  respectively.
The increase in  contingent  rental income during 2004 was due to an increase in
reported gross sales of the restaurants  with leases that require the payment of
contingent rental income.

         During the six months ended June 30, 2004 and 2003, we earned  $189,947
and $191,527, respectively,  attributable to net income earned by unconsolidated
joint  ventures,  of which  $94,976  and $95,051  were earned  during the second
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  $445,259  and  $411,883  for the six months  ended June 30, 2004 and 2003,
respectively,  of which  $203,440 and $172,009 were  incurred  during the second
quarters of 2004 and 2003,  respectively.  Operating expenses were higher during
the six months and quarter  ended June 30, 2004,  primarily  because we incurred
additional general operating and administrative expenses,  including legal fees.
The  increase  during the six months was  partially  offset by a decrease in the
amount of property related expenses,  such as real estate taxes, relating to the
Property in Brandon, Florida.

         We recognized income from discontinued operations (rental revenues less
property  related  expenses) of $28,763 and $18,620  during the six months ended
June 30, 2003 and 2004, respectively, of which $14,382 was recognized during the
second quarter of 2003, relating to the Property in Tiffin, Ohio. In March 2004,
we sold this  Property  to a third  party  resulting  in a gain on  disposal  of
discontinued operations of approximately $391,100.

                                       9
<PAGE>

         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.

         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  transaction,  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.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Not applicable.

                                       10
<PAGE>

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.  Changes in Securities.  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

              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.)

         (b)  Reports on Form 8-K

              No reports on Form 8-K were filed  during the  quarter  ended June
              30, 2004.

                                       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 9th day of August 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

         (c)  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.)

              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.)

              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