<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C. 20549-1004

                                   FORM 10-Q
                                        
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
 
     For the period ended                 March 31, 1998
                           -----------------------------------------------------
 
                                      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                           0-12537
                            ---------------------------------------------------
 
              First Capital Income Properties, Ltd. - Series VIII
-------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)
 
            Florida                                            59-2192277
-------------------------------                            ------------------
(State or other jurisdiction of                            (I.R.S. Employer 
incorporation or organization)                            Identification No.)
 
Two North Riverside Plaza, Suite 1000, Chicago, Illinois       60606-2607
--------------------------------------------------------  -------------------
     (Address of principal executive offices)                  (Zip Code)
 
                                (312) 207-0020
-------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)
 
                                Not applicable
-------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last 
                                    report)
 
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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
                                        -----     ----- 

Documents incorporated by reference:

The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the Partnership's Prospectus dated July 28, 1982, included
in the Partnership's Registration Statement on Form S-11, is incorporated herein
by reference in Part I of this report.


<PAGE>
 
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                  March 31,
                                                     1998      December 31,
                                                 (Unaudited)       1997
----------------------------------------------------------------------------
<S>                                              <C>           <C>
ASSETS
Investment in commercial rental properties:
 Land                                            $  6,086,700  $  6,086,700
 Buildings and improvements                        27,290,900    27,622,800
----------------------------------------------------------------------------
                                                   33,377,600    33,709,500
Accumulated depreciation and amortization         (12,828,300)  (12,642,700)
----------------------------------------------------------------------------
 Total investment properties, net of accumulated
  depreciation and amortization                    20,549,300    21,066,800
Cash and cash equivalents                           4,002,200     5,353,200
Investments in debt securities                      1,200,500
Rents receivable                                      146,200       123,400
Other assets                                           11,500        14,500
----------------------------------------------------------------------------
                                                 $ 25,909,700  $ 26,557,900
----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
 Accounts payable and accrued expenses           $    284,000  $    620,100
 Due to Affiliates, net                                54,900        28,200
 Distributions payable                                505,600       505,600
 Security deposits                                     50,300        58,300
 Other liabilities                                      2,300        32,700
----------------------------------------------------------------------------
                                                      897,100     1,244,900
----------------------------------------------------------------------------
Partners' capital:
 General Partners (deficit)                           (30,500)      (27,000)
 Limited Partners (70,000 Units issued and
  outstanding)                                     25,043,100    25,340,000
----------------------------------------------------------------------------
                                                   25,012,600    25,313,000
----------------------------------------------------------------------------
                                                 $ 25,909,700  $ 26,557,900
----------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 1998 (Unaudited)
and the year ended December 31, 1997
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                            General     Limited
                                           Partners    Partners       Total
-------------------------------------------------------------------------------
<S>                                        <C>        <C>          <C>
Partners' (deficit) capital, January 1,
 1997                                      $ (17,000) $26,443,000  $26,426,000
Net income for the year ended December
 31, 1997                                    192,200      717,000      909,200
Distributions for the year ended December
 31, 1997                                   (202,200)  (1,820,000)  (2,022,200)
-------------------------------------------------------------------------------
Partners' (deficit) capital, December 31,
 1997                                        (27,000)  25,340,000   25,313,000
Net income for the quarter ended March
 31, 1998                                     47,100      158,100      205,200
Distributions for the quarter ended
 March 31, 1998                              (50,600)    (455,000)    (505,600)
-------------------------------------------------------------------------------
Partners' (deficit) capital, March 31,
 1998                                      $ (30,500) $25,043,100  $25,012,600
-------------------------------------------------------------------------------
</TABLE>
 
    The accompanying notes are an integral part of the financial statements.
                                                                               2
<PAGE>
 
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended March 31, 1998 and 1997
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
 
<TABLE>
<CAPTION>
                                                      1998       1997
------------------------------------------------------------------------
<S>                                                <C>        <C>
Income:
 Rental                                            $1,197,700 $1,130,000
 Interest on short-term investments                    72,700     63,200
------------------------------------------------------------------------
                                                    1,270,400  1,193,200
------------------------------------------------------------------------
Expenses:
 Depreciation and amortization                        185,600    180,300
 Property operating:
  Affiliates                                           53,400     40,800
  Nonaffiliates                                       176,800    193,600
 Real estate taxes                                    134,000    135,100
 Insurance--Affiliate                                  12,700     12,200
 Repairs and maintenance                              107,600    115,800
 General and administrative:
  Affiliates                                            8,200      7,000
  Nonaffiliates                                        36,900     45,900
Provision for value impairment                        350,000
------------------------------------------------------------------------
                                                    1,065,200    730,700
------------------------------------------------------------------------
Net income                                         $  205,200 $  462,500
------------------------------------------------------------------------
Net income allocated to General Partners           $   47,100 $   50,600
------------------------------------------------------------------------
Net income allocated to Limited Partners           $  158,100 $  411,900
------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
 (70,000 Units outstanding)                        $     2.26 $     5.88
------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1998 and 1997
(Unaudited)
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                          1998         1997
-------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Cash flows from operating activities:
 Net income                                            $   205,200  $  462,500
 Adjustments to reconcile net income to net cash
  provided by operating activities:
  Provision for value impairment                           350,000
  Depreciation and amortization                            185,600     180,300
  Changes in assets and liabilities:
   (Increase) in rents receivable                          (22,800)     (6,500)
   Decrease in other assets                                  3,000       1,700
   (Decrease) in accounts payable and accrued expenses    (336,100)   (290,200)
   Increase (decrease) in due to Affiliates                 26,700     (38,700)
   (Decrease) in other liabilities                         (30,400)    (59,100)
-------------------------------------------------------------------------------
    Net cash provided by operating activities              381,200     250,000
-------------------------------------------------------------------------------
Cash flows from investing activities:
 Payments for capital and tenant improvements              (18,100)     (7,800)
 Refund of lease commissions                                            69,500
 (Increase) in investments in debt securities, net      (1,200,500)   (734,700)
-------------------------------------------------------------------------------
    Net cash (used for) investing activities            (1,218,600)   (673,000)
-------------------------------------------------------------------------------
Cash flows from financing activities:
 Distributions paid to Partners                           (505,600)   (505,600)
 (Decrease) increase in security deposits                   (8,000)      1,400
-------------------------------------------------------------------------------
    Net cash (used for) financing activities              (513,600)   (504,200)
-------------------------------------------------------------------------------
Net (decrease) in cash and cash equivalents             (1,351,000)   (927,200)
Cash and cash equivalents at the beginning of the
 period                                                  5,353,200   4,029,600
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period     $ 4,002,200  $3,102,400
-------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
3
<PAGE>
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 1998
 
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
incorporated herein by reference.
 
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). The Partnership utilizes the accrual
method of accounting. Under this method, revenues are recorded when earned and
expenses are recorded when incurred.
 
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
 
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the three months ended March 31, 1998 are not necessarily indicative of the
operating results for the year ending December 31, 1998.
 
Commercial rental properties held for investment are recorded at cost, net of
any provisions for value impairment, and depreciated (exclusive of amounts
allocated to land) on the straight-line method over their estimated useful
lives. Upon classifying a commercial rental property as held for disposition,
no depreciation or amortization of such property is provided for in the
financial statements. Lease acquisition fees are recorded at cost and amortized
over the life of the lease. Repair and maintenance costs are expensed as
incurred; expenditures for improvements are capitalized and depreciated over
the estimated life of such improvements.
 
The Partnership evaluates its rental properties for impairment when conditions
exist which may indicate that it is probable that the sum of expected future
cash flows (undiscounted) from a property is less than its estimated carrying
basis. Upon determination that an impairment has occurred, the carrying basis
in the rental property is reduced to its estimated fair market value. Except as
disclosed in Note 3, management was not aware of any indicator that would
result in a significant impairment loss during the periods reported.
 
Cash equivalents are considered all highly liquid investments with maturity of
three months or less when purchased.
 
Investments in debt securities at March 31, 1998 are comprised of corporate
debt securities and are classified as held-to-maturity. These investments are
carried at their amortized cost basis in the financial statements, which
approximated fair value. All of these securities had maturities of less than
one year when purchased.
 
Reference is made to the Partnership's annual report for the year ended
December 31, 1997 for a description of other accounting policies and additional
details of the Partnership's financial condition, results of operations,
changes in Partners' capital and changes in cash balances for the year then
ended. The details provided in the notes thereto have not changed except as a
result of normal transactions in the interim or as otherwise disclosed herein.
 
2. RELATED PARTY TRANSACTIONS:
 
In accordance with the Partnership Agreement, subsequent to December 23, 1982,
the Termination of the Offering, the General Partners are entitled to 10% of
Cash Flow (as defined in the Partnership Agreement), as a Partnership
Management Fee. In addition, Net Profits (exclusive of Net Profits from the
sale or disposition of Partnership properties) are allocated: first, to the
General Partners, in an amount equal to the greater of the General Partners'
Partnership Management Fee for such fiscal year, or 1% of such Net Profits; and
second, the balance, if any, to the Limited Partners. Net Profits from the sale
or disposition of a Partnership property are allocated: first, to the General
Partners and the Limited Partners with negative balances in their capital
accounts, pro rata in proportion to such respective negative balances, to the
extent of the total of such negative balances; second, to the General Partners,
in an amount necessary to make the aggregate amount of their capital accounts
equal to the greater of the Sale or Refinancing Proceeds to be distributed to
the General Partners with respect to the sale or disposition of such property
or 1% of such Net Profits; and third, the balance, if any, to the Limited
Partners. Net Losses (exclusive of Net Losses from the sale, disposition or
provision for value impairment of Partnership properties) are allocated 1% to
the General Partners and 99% to the Limited Partners. Net Losses from the sale,
disposition or provision for value impairment of Partnership properties are
allocated: first, to the extent that the balance in the General Partners'
capital accounts exceeds their Capital Investment or the balance in the capital
accounts of the Limited Partners exceeds the amount of their Capital Investment
(the "Excess Balances"), to the General Partners and the Limited Partners pro
rata in proportion to such Excess Balances until such Excess Balances are
reduced to zero; second, to the General Partners and the Limited Partners pro
rata in proportion to the balances in their respective capital accounts until
the balances in their capital accounts shall be reduced to zero; and third, the
balance, if any, 99% to the Limited Partners and 1% to the General Partners. In
all events there shall be allocated to the General Partners not less than 1% of
Net Profits and Net Losses from the sale, disposition or provision for value
impairment of a Partnership property. For the three months ended March 31, 1998
and 1997, the General Partners' were paid Cash Flow (as defined in the
Partnership Agreement) and allocated Net Profits of $50,600. In addition, for
the three months ended March 31, 1998, the General Partners were allocated
(losses) from a provision for value impairment of $(3,500).
 
 
4
<PAGE>
 
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter ended March 31, 1998 were as follows:
 
<TABLE>
<CAPTION>
                                                        Paid   Payable
-----------------------------------------------------------------------
<S>                                                    <C>     <C>
Property and asset management and leasing fees         $42,300 $  (800)
Reimbursement of property insurance premiums, at cost    3,700   9,000
Real estate commission (a)                                None  37,700
 Legal                                                   4,400    None
Reimbursement of expenses, at cost:
 --Accounting                                             None   8,100
 --Investor communications                                None     900
-----------------------------------------------------------------------
                                                       $50,400 $54,900
-----------------------------------------------------------------------
</TABLE>
(a) As of March 31, 1998, the Partnership owed $37,700 to the Managing General
    Partner for real estate commissions earned in connection with the sale of
    five of the warehouses comprising a portion of the Atlanta Gateway Park
    Industrial Center. These commissions have been accrued but not paid. In
    accordance with the Partnership Agreement, the Partnership will not pay the
    General Partners or any Affiliates a real estate commission from the sale
    of a Partnership property until Limited Partners have received cumulative
    distributions of Sale or Refinancing Proceeds equal to 100% of their
    Original Capital Contribution, plus a cumulative return (including all Cash
    Flow (as defined in the Partnership Agreement) which has been distributed
    to the Limited Partners from the initial date of investment) of 6% simple
    interest per annum on their Capital Investment.
 
On-site property management for the Partnership's properties is provided by an
Affiliate of the Managing General Partner and a third-party management group
for fees equal to 3% of gross rents received from the properties. The Affiliate
and the third-party property management group are entitled to leasing fees
equal to 3% of gross rents received from the properties, reduced by leasing
fees, if any, paid to other third parties.
 
3. ASSET HELD FOR DISPOSITION:
 
The Managing General Partner has determined that, based on economic conditions
in the region where Old Mill Place Shopping Center ("Old Mill") is located, it
is in the best interest of the Partnership to sell Old Mill. Accordingly, the
Partnership is currently marketing Old Mill for sale. Net income for Old Mill,
exclusive of the provision for value impairment referred to below, included in
the Partnership's Statements of Income and Expenses for the three months ended
March 31, 1998 and 1997, was $159,500 and $140,900, respectively.
 
Efforts during 1998 indicated that additional price concessions would be
necessary to successfully complete a transaction. Accordingly, the Partnership
adjusted the carrying basis of the property by recording a provision for value
impairment of $350,000 during the three months ended March 31, 1998. The
carrying basis, net of accumulated depreciation and amortization, of Old Mill
on the Partnership's Balance Sheet as of March 31, 1998 was $5,644,500, which
does not exceed the estimated fair value, less costs to sell.
<PAGE>
 
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Reference is made to the Partnership's annual report for the year ended
December 31, 1997 for a discussion of the Partnership's business.
 
Statements contained in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are not historical facts, may be
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof.
 
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the quarters ended March 31, 1998 and 1997. The
discussion following the table should be read in conjunction with the financial
statements and notes thereto appearing in this report.
 
<TABLE>
<CAPTION>
                                   Comparative
                                Operating Results
                                   (a) For the
                                 Quarters Ended
                                3/31/98  3/31/97
-------------------------------------------------
<S>                             <C>      <C>
BROOKWOOD METROPLEX OFFICE BUILDINGS I
 & II
Rental revenues                 $683,100 $591,700
-------------------------------------------------
Property net income             $247,800 $169,600
-------------------------------------------------
Average occupancy                    99%      98%
-------------------------------------------------
OLD MILL PLACE SHOPPING CENTER
Rental revenues                 $257,600 $256,400
-------------------------------------------------
Property net income (b)         $159,500 $140,900
-------------------------------------------------
Average occupancy                    82%      82%
-------------------------------------------------
WALKER SPRINGS PLAZA SHOPPING CENTER
Rental revenues                 $257,100 $281,900
-------------------------------------------------
Property net income             $120,500 $141,600
-------------------------------------------------
Average occupancy                    89%     100%
-------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items, which are not directly related
    to individual property operating results such as interest income on short-
    term investments and general and administrative expenses.
(b) Property net income excludes a provision for value impairment of $350,000
    recorded during the three months ended March 31, 1998.
 
Net income decreased by $257,300 for the three months ended March 31, 1998 when
compared to the three months ended March 31, 1997. The decrease was primarily
the result of a provision for value impairment of $350,000 recorded on Old Mill
Place Shopping Center ("Old Mill") during the three months ended March 31,
1998. Net income, exclusive of the provision for value impairment, increased by
$92,700 for the three months ended March 31, 1998 when compared to the three
months ended March 31, 1997. The increase was primarily due to improved
operating results at Brookwood Metroplex Office Buildings I & II ("Brookwood")
and Old Mill. The increase was partially offset by diminished operating results
at Walker Springs Plaza Shopping Center ("Walker Springs").
 
Rental revenues increased by $67,700 or 6% for the three months ended March 31,
1998 when compared to the three months ended March 31, 1997. The increase was
primarily due to a 1997 correction of a 1996 overaccrual of tenant expense
reimbursements, payable in 1997, at Brookwood. Also contributing to the
increase was an increase in base rents at Brookwood due to an increase in rates
charged to new and renewing tenants. The increase was partially offset by a
1998 correction of a 1997 overaccrual of tenant expense reimbursements, payable
in 1998, at Walker Springs.
 
Repairs and maintenance expense decreased by $8,200 for the three-month periods
under comparison. The increase was primarily the result of a decrease in minor
repairs to the parking garage at Brookwood.
 
All other expenses remained relatively unchanged for the periods under
comparison.
 
To increase and/or maintain occupancy levels at the Partnership's properties,
the Managing General Partner, through its asset and property management groups,
continues to take the following actions: 1) implementation of marketing
programs, including hiring of third-party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
building brochures; 2) early renewal of existing tenants' leases and addressing
any expansion needs these tenants may have; 3) promotion of local broker events
and networking with local brokers; 4) networking with national level retailers;
5) cold-calling other businesses and tenants in the market area and 6)
providing rental concessions or competitively pricing rental rates depending on
market conditions.
 
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its remaining
properties. Notwithstanding the Partnership's intention relative to property
sales, another primary objective of the Partnership is to provide cash
distributions to Partners from Partnership operations. To the extent cumulative
cash distributions exceed net income during a fiscal year, such excess
distributions will be treated as a return of capital. Cash Flow (as defined in
the Partnership Agreement) is generally not equal to net income or cash flows
as determined by generally accepted accounting principles ("GAAP"), since
certain items are treated differently under the Partnership Agreement than
under GAAP. Management believes that to facilitate a clear understanding of the
Partnership's operations, an analysis of Cash Flow (as defined in the
Partnership Agreement) should be examined in conjunction with an analysis of
net income or cash flows as determined by GAAP. The following table includes a
reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash
flow provided by operating activities as determined by GAAP and are not
indicative of actual distributions to Partners and should not necessarily be
considered as an alternative to the results disclosed in the Statements of
Income and Expenses and Statements of Cash Flows.
 
                                                                               6
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 
 
<TABLE>
<CAPTION>
                                                          Comparative
                                                       Cash Flow Results
                                                       For the Quarters
                                                             Ended
                                                       3/31/98     3/31/97
----------------------------------------------------------------------------
<S>                                                  <C>          <C>
Cash Flow (as defined in the Partnership Agreement)  $   740,800  $ 642,800
Items of reconciliation:
 (Increase) in current assets                            (19,800)    (4,800)
 (Decrease) in current liabilities                      (339,800)  (388,000)
----------------------------------------------------------------------------
Net cash provided by operating activities            $   381,200  $ 250,000
----------------------------------------------------------------------------
Net cash (used for) investing activities             $(1,218,600) $(673,000)
----------------------------------------------------------------------------
Net cash (used for) financing activities             $  (513,600) $(504,200)
----------------------------------------------------------------------------
</TABLE>
 
The increase in Cash Flow (as defined in the Partnership Agreement) of $98,000
for the three months ended March 31, 1998 when compared to three months ended
March 31, 1997 was primarily due to the increase in net income, exclusive of
depreciation, amortization and provisions for value impairment, as previously
discussed.
 
The decrease in the Partnership's cash position of $1,351,000 for the three
months ended March 31, 1998 was primarily the result of the investments in debt
securities, distributions paid to Partners and expenditures made for capital
and tenant improvements and leasing costs exceeding net cash provided by
operating activities. Liquid assets (including cash, cash equivalents and
investments in debt securities) of the Partnership as of March 31, 1998 are
comprised of amounts held for working capital purposes.
 
Net cash provided by operating activities increased by $131,200 for the three
months ended March 31, 1998 when compared to the three months ended March 31,
1997. This increase was primarily due to improved operating results, as
previously discussed.
 
Net cash used for investing activities increased by $545,600 for the three
months ended March 31, 1998 when compared to the three months ended March 31,
1997. The increase was primarily due to the net increase in amounts invested in
debt securities. The increase in investments in debt securities is a result of
the continued extension of the maturities of certain of the Partnership's
short-term investments in an effort to maximize the return on these amounts as
they are held for working capital purposes. These investments are of
investment-grade and generally mature less than one year from their date of
purchase.
 
The Partnership maintains working capital reserves to pay for capital
expenditures such as building and tenant improvements and leasing costs. During
the three months ended March 31, 1998, the Partnership spent $18,100 for
capital and tenant improvements and leasing costs. Amounts to be spent for
building and tenant improvements and leasing costs during 1998 depends to a
large extent on the retenanting issues at Brookwood and Walker Springs, as
discussed below. The Managing General Partner believes that ongoing
improvements and leasing costs are necessary in order to increase and/or
maintain occupancy levels in very competitive markets, maximize rental rates
charged to new and renewing tenants and to prepare the remaining properties for
disposition.
 
The Partnership has been notified that the tenant occupying approximately 67%
of the rentable square footage at Brookwood does not intend to exercise its
option ("Option") to renew its lease expiring on December 31, 1998. Market
rental rates currently being quoted by competing properties are greater than
the Option rate. Retenanting Brookwood would require a significant amount of
capital and would likely take an extended period of time. The Managing General
Partner is currently evaluating various options with respect to this property.
These include, but are not limited to: 1) immediately marketing the property
for sale; 2) begin securing new tenants for the property to replace the old
tenant upon its lease expiration and then marketing the property for sale or 3)
begin securing new tenants for the property, while marketing the property for
sale to a buyer that would be in position to complete the retenanting process.
 
In September 1997, a tenant occupying 11% of Walker Springs filed for
bankruptcy and in January 1998 turned their space over to a liquidator, who
vacated the space in March 1998. In addition, another tenant occupying 15% of
the space at Walker Springs has a lease which expired on April 30, 1998. This
tenant has no options to extend the term of their lease and will be vacating
their space at the end of May. The Partnership has sent proposals to two
potential tenants to fill the vacant space. There can be no assurance that the
Partnership will be successful in its efforts to secure either of these
tenants. Results at Walker Springs can be expected to be adversely impacted
during the remainder of 1998 until a new tenant(s) can be secured to occupy the
available space. The securing of a new tenant(s) could result in substantial
tenant improvement costs.
 
The increase in net cash used for financing activities of $9,400 for the three
months ended March 31, 1998 as compared to the three months ended March 31,
1997 was primarily the result of net refunds of security deposits to tenants.
 
The Managing General Partner, on behalf of the Partnership, has contracted for
substantially all of its business activities with certain principal entities
for which computer programs are utilized. Each of these companies is
financially responsible and have represented to management of the Managing
General Partner that they are taking appropriate steps for modifications needed
to their respective systems to accommodate processing data by Year 2000.
Accordingly, the Partnership anticipates incurring no material Year 2000 costs
and is currently not aware of any material contingencies related to this
matter.
 
The Managing General Partner continues to take a conservative approach to
projections of future rental income in its determination of adequate levels of
cash reserves due to the anticipated capital and tenant improvements and
leasing costs necessary to be made at the Partnership's properties during the
next several years. As a result of this, cash continues to be retained to
supplement working capital reserves. For the three months ended March 31, 1998,
Cash Flow (as defined in the Partnership Agreement) retained to supplement
working capital reserves amounted to $235,200.
 
Distributions to Limited Partners for the quarter ended March 31, 1998 were
declared in the amount of $455,000, or $6.50 per Unit. Cash distributions are
made 60 days after the last day of each fiscal quarter. The amount of future
distributions to Partners will ultimately be dependent upon the performance of
the Partnership's investments as well as the Managing General Partner's
determination of the amount of cash necessary to supplement working capital
reserves to meet future liquidity requirements of the Partnership. Accordingly,
there can be no assurance as to the amounts of cash for future distributions to
Partners.
 
7
<PAGE>
 
                           Part II OTHER INFORMATION

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

         (a)  Exhibits: None  

         (b)  Reports on Form 8-K:

         There were no reports filed on Form 8-K during the quarter ended March
         31, 1998. 

<PAGE>
 
                                  SIGNATURES

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

                             FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES VIII

                             By: FIRST CAPITAL FINANCIAL CORPORATION
                                 MANAGING GENERAL PARTNER

Date: May 15, 1998           By: /s/ DOUGLAS CROCKER II
      ------------               --------------------------------------
                                     DOUGLAS CROCKER II
                                 President and Chief Executive Officer

Date: May 15, 1998           By: /s/ NORMAN M. FIELD
      ------------               --------------------------------------
                                     NORMAN M. FIELD
                                 Vice President - Finance and Treasurer