UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-K

(Mark One)

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

                   For the fiscal year ended December 31, 2002

                                       OR

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

                        For the transition period from to


                         Commission file number 0-19139

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

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

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

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

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

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

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

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

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

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

         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in Exchange Act Rule 12b-2): Yes___ No X -

         Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 35,000,000 units of limited
partnership  interest  (the  "Units") on Form S-11 under the  Securities  Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $1 per Unit.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None

<PAGE>

                                     PART I


Item 1.  Business

         CNL Income Fund VIII, Ltd. (the "Registrant" or the "Partnership") is a
limited  partnership  which was  organized  pursuant to the laws of the State of
Florida on August 18, 1989. The General  Partners of the  Partnership are Robert
A.  Bourne,  James  M.  Seneff,  Jr.  and  CNL  Realty  Corporation,  a  Florida
corporation  (the  "General  Partners").   Beginning  on  August  2,  1990,  the
Partnership offered for sale up to $35,000,000 of limited partnership  interests
(the  "Units")  (35,000,000  Units at $1 per Unit)  pursuant  to a  registration
statement on Form S-11 under the Securities  Act of 1933, as amended,  effective
January 30, 1990.  The offering  terminated  on March 7, 1991, at which date the
maximum  offering  proceeds of $35,000,000  had been received from investors who
were admitted to the Partnership as limited partners (the "Limited Partners").

         The  Partnership  was organized to acquire both newly  constructed  and
existing  restaurant  properties,  as well as properties upon which  restaurants
were to be  constructed  (the  "Properties"),  which  are  leased  primarily  to
operators of national and regional fast-food and family-style  restaurant chains
(the "Restaurant Chains").  Net proceeds to the Partnership from its offering of
Units,  after  deduction  of  organizational  and  offering  expenses,   totaled
$30,975,000 and were used to acquire 38 Properties, including interests in eight
Properties  owned by joint  ventures in which the  Partnership is a co-venturer,
and to establish a working capital reserve for Partnership purposes.

         As of December 31, 1999, the  Partnership  owned 37 Properties,  either
directly or indirectly through joint venture or tenancy in common  arrangements.
During the year ended December 31, 2000, the Partnership  sold four  Properties,
one in each of Brooksville, Bayonet Point, Sun City, and Jacksonville,  Florida.
The Partnership  reinvested a portion of the sales proceeds it received from the
sales of the Properties in a Bennigan's Property located in Deerfield,  Illinois
and a Pizza Hut Property in Hialeah, Florida. In 2000, the Partnership also used
a portion of the net sales  proceeds from the sale of its  Properties to acquire
an interest in a Baker's  Square  Property in  Libertyville,  Illinois,  with an
affiliate of the General  Partners as  tenants-in-common.  During the year ended
December 31, 2001,  the  Partnership  sold its  Property in  Statesville,  North
Carolina, and reinvested the majority of the net sales proceeds in a Jack in the
Box Property located in Walker,  Louisiana and a Bennigan's  Property located in
Denver,  Colorado, each held with affiliates of the General Partners,  which are
Florida limited partnerships,  as separate  tenants-in-common  arrangements.  In
addition, during 2001, Middleburg Joint Venture, in which the Partnership owns a
12.46% interest, sold its Property to the tenant, and the Partnership received a
return of capital from the net sales  proceeds.  In April 2001, the  Partnership
reinvested the majority of the net sales proceeds received from Middleburg Joint
Venture and entered into a joint  venture  arrangement,  CNL VIII, X, XII Kokomo
Joint  Venture,  with  affiliates  of the  General  Partners,  which are Florida
limited partnerships,  to purchase and hold one Property in Kokomo,  Indiana. In
January 2002, the Partnership  reinvested a portion of the net sales proceeds it
received from the sale of the Property in Statesville,  North Carolina,  and the
2001 prepaid  principal  relating to a promissory  note,  in a Denny's  Property
located in  Ontario,  Oregon.  During  the year ended  December  31,  2002,  the
Partnership  sold its  Property in Baseball  City,  Florida and  reinvested  the
majority of the net sales proceeds in a Taco Cabana Property  located in Denton,
Texas. In 2002, CNL Restaurant  Investments II, in which the Partnership  owns a
36.8% interest, sold its Property in Columbus, Ohio and used the majority of the
proceeds from the sale to acquire a Taco Cabana  property in Dallas,  Texas.  In
addition in 2002,  CNL  Restaurant  Investments II sold its property in Pontiac,
Michigan and the  Partnership  reinvested the return of capital for its pro-rata
share of the uninvested net sales proceeds  relating to the Property in Pontiac,
Michigan   in  a  Texas   Roadhouse   Property   in   Kenosha,   Wisconsin,   as
tenants-in-common,  with an  affiliate  of the  general  partners  and a Florida
limited  partnership.  In addition in 2002, the Partnership  reinvested the 2002
prepaid  principal  relating to a promissory  note in a Boston  Market  Property
located in Eden Prairie, Minnesota. Finally in 2002, the Partnership, as tenants
in common,  with an  affiliate  of the General  Partners  and a Florida  limited
partnership,  in which the Partnership owns a 66% interest, sold its Property in
Libertyville,  Illinois,  and reinvested the liquidating  distribution  from the
sale to acquire an IHOP property in Buffalo Grove, Illinois, in a new tenancy in
common,  with  an  affiliate  of the  General  Partners  and a  Florida  limited
partnership.

         As of December 31, 2002, the  Partnership  owned 39 Properties.  The 39
Properties  included  interests in nine  Properties  owned by joint  ventures in
which the Partnership is a co-venturer and four Properties owned with affiliates
as tenants-in-common.  The Properties are generally leased on a triple-net basis
with the lessees  responsible for all repairs and  maintenance,  property taxes,
insurance and utilities.

         The  Partnership  holds  its  Properties  until  the  General  Partners
determine that the sale or other  disposition of the Properties is  advantageous
in view of the Partnership's investment objectives.  In deciding whether to sell
Properties,  the General  Partners  consider  factors such as potential  capital
appreciation,  net cash flow and  federal  income  tax  considerations.  Certain
lessees also have been granted options to purchase Properties,  generally at the
Property's  then fair market  value after a specified  portion of the lease term
has elapsed.  The  Partnership has no obligation to sell all or any portion of a
Property  at any  particular  time,  except as may be  required  under  property
purchase options granted to certain lessees.

Leases

         Although there are variations in the specific terms of the leases,  the
following  is  a  summarized   description  of  the  general  structure  of  the
Partnership's  leases. The leases of the Properties owned by the Partnership and
joint ventures in which the  Partnership is a co-venturer and the Property owned
as tenants-in-common with affiliates of the General Partners provide for initial
terms,  ranging  from 9 to 25 years (the  average  being 18  years),  and expire
between 2005 and 2020. The leases are generally on a triple-net  basis, with the
lessees responsible for all repairs and maintenance,  property taxes,  insurance
and  utilities.  The leases of the  Properties  provide for minimum  base annual
rental payments  (payable in monthly  installments)  ranging from  approximately
$49,200 to $251,500.  The majority of the leases  provide for  percentage  rent,
based on sales in excess of a specified amount.  In addition,  a majority of the
leases provide that, commencing in specified lease years (ranging from the third
to the sixth lease year),  the annual base rent required  under the terms of the
lease will increase.

         Generally,  the  leases  of the  Properties  provide  for  two to  four
five-year  renewal  options  subject  to the same  terms and  conditions  as the
initial lease.  Lessees of 31 of the  Partnership's 39 Properties also have been
granted options to purchase  Properties at the Property's then fair market value
after a specified portion of the lease term has elapsed.  Fair market value will
be determined  through an appraisal by an independent  appraisal firm. Under the
terms of certain leases,  the option purchase price may equal the  Partnership's
original cost to purchase the Property  (including  acquisition  costs),  plus a
specified percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.

         The leases generally provide that, in the event the Partnership  wishes
to sell the Property subject to that lease, the Partnership first must offer the
lessee the right to purchase the Property on the same terms and conditions,  and
for the same price, as any offer which the Partnership has received for the sale
of the Property.

         During  2002,  the  Partnership  reinvested  a portion of the net sales
proceeds  it  received  from  the sale of the  Property  in  Statesville,  North
Carolina,  and the 2001 prepaid  principal  relating to a promissory  note, in a
Denny's Property located in Ontario,  Oregon.  During 2002, the Partnership also
sold its Property in Baseball  City,  Florida and reinvested the majority of the
net sales  proceeds  in a Taco  Cabana  Property  located in Denton,  Texas.  In
addition in 2002, the Partnership reinvested the 2002 prepaid principal relating
to a  promissory  note in a Boston  Market  Property  located  in Eden  Prairie,
Minnesota.  The lease terms for these Properties are  substantially  the same as
the Partnership's other leases.

         In 2002, CNL Restaurant Investments II, in which the Partnership owns a
36.8% interest, sold its Property in Columbus, Ohio and used the majority of the
proceeds from the sale to acquire a Taco Cabana  property in Dallas,  Texas.  In
addition in 2002,  CNL  Restaurant  Investments II sold its property in Pontiac,
Michigan and the  Partnership  reinvested the return of capital for its pro-rata
share of the net  sales  proceeds  in a Texas  Roadhouse  Property  in  Kenosha,
Wisconsin, as tenants-in-common, with an affiliate of the general partners and a
Florida  limited   partnership.   The  lease  terms  for  these  Properties  are
substantially the same as the Partnership's other leases.

         In 2002,  the  Partnership  and an affiliate  of the general  partners,
which is a  Florida  limited  partnership,  as  tenants  in  common in which the
Partnership owns a 66% interest,  sold its Property in  Libertyville,  Illinois,
and reinvested  the  liquidating  distribution  from the sale to acquire an IHOP
property in Buffalo Grove,  Illinois,  as a new  tenants-in-common  arrangement,
with the same affiliate. The lease terms for this Property are substantially the
same as the Partnership's other leases.

         In February 2002, a tenant, Brandon Fast Food Services, Inc., filed for
bankruptcy.  The tenant has neither  rejected  nor affirmed the one lease it has
with the  Partnership.  A workout plan has not been  approved  since all parties
involved  have not been able to agree on a workout  plan.  As of March 10, 2003,
the Partnership has continued  receiving rental payments relating to this lease.
While the tenant has neither  rejected nor affirmed this lease,  there can be no
assurance  that the lease will not be rejected in the future.  The lost revenues
resulting from the possible  rejection of this lease will have an adverse effect
on the results of operations of the  Partnership if the Partnership is unable to
re-lease the Property in a timely manner.

Major Tenants

         During  2002,  two  lessees  (or groups of  affiliated  lessees) of the
Partnership and its consolidated  joint venture,  Golden Corral  Corporation and
the affiliated entities under common control, Carrols Corporation and Texas Taco
Cabana (hereinafter referred to as "Carrols Corporation"), each contributed more
than ten  percent  of the  Partnership's  total  rental  revenues  and  mortgage
interest income (including  rental revenues from the Partnership's  consolidated
joint venture and the  Partnership's  share of rental  revenues from  Properties
owned by  unconsolidated  joint ventures and Properties owned with affiliates of
the General  Partners as  tenants-in-common).  As of December 31,  2002,  Golden
Corral Corporation was the lessee under leases relating to five restaurants, and
Carrols  Corporation was the lessee under leases relating to seven  restaurants.
It is anticipated  that,  based on the minimum rental  payments  required by the
leases,  these two lessees (or groups of affiliated  lessees) each will continue
to contribute more than ten percent of the  Partnership's  total rental revenues
and mortgage interest income in 2003. In addition, two Restaurant Chains, Golden
Corral Family  Steakhouse  Restaurants  ("Golden  Corral") and Burger King, each
accounted for more than ten percent of the  Partnership's  total rental revenues
and  mortgage  interest  income  in 2002  (including  rental  revenues  from the
Partnership's  consolidated joint venture and the Partnership's  share of rental
revenues from Properties owned by  unconsolidated  joint ventures and Properties
owned with affiliates of the General Partners as tenants-in-common). In 2003, it
is anticipated  that these two  Restaurant  Chains each will continue to account
for more  than ten  percent  of the  Partnership's  total  rental  revenues  and
mortgage interest income to which the Partnership is entitled under the terms of
the leases.  Any failure of these lessees or Restaurant  Chains could materially
affect the  Partnership's  income if the Partnership is not able to re-lease the
Properties in a timely manner.  No single tenant or group of affiliated  tenants
lease Properties with an aggregate carrying value in excess of 20 percent of the
total assets of the Partnership.

Joint Venture and Tenancy in Common Arrangements

         The  partnership  has  entered  into the  following  joint  venture and
tenancy in common arrangements as of December 31, 2002:


<TABLE>
<CAPTION>

               Entity Name             Year      Ownership               Partners                   Property

 <c>
      Woodway Joint Venture            1991       87.68 %     Various Third Party Partners     Waco, TX

      Asheville Joint Venture          1991       85.54%      CNL Income Fund VI, Ltd.         Asheville, NC

      CNL Restaurant Investments II    1991       36.80%      CNL Income Fund VII, Ltd.        Dallas, TX
                                                              CNL Income Fund IX, Ltd.         Hastings, MN
                                                                                               New Castle, IN
                                                                                               Raceland, LA
                                                                                               San Antonio, TX
<page>
      Bossier City Joint Venture       1999       34.00%      CNL Income Fund XII, Ltd.        Bossier City, LA
                                                              CNL Income Fund XIV, Ltd.

      CNL VIII, X, XII Kokomo Joint    2001       10.00%      CNL Income Fund X, Ltd.          Kokomo, IN
           Venture                                            CNL Income Fund XII, Ltd.

      CNL Income Fund VIII, Ltd.       2001       17.00%      CNL Income Fund XVI, Ltd.        Walker, LA
           and CNL Income Fund XVI,
           Ltd., Tenants in Common

      CNL Income Fund VIII, Ltd.       2001       19.30%      CNL Income Fund  XVIII, Ltd.     Denver, CO
           and CNL Income Fund
           XVIII, Ltd., Tenants in
           Common

      CNL Income Fund VIII, Ltd.       2002       10.00%      CNL Income Fund XVII, Ltd.       Kenosha, WI
           and CNL Income Fund
           XVII, Ltd., Tenants in
           Common

      CNL  Income Fund VIII, Ltd.      2002       66.00%      CNL Income Fund IX, Ltd.         Buffalo Grove, IL
           and CNL Income Fund IX,
           Ltd., Tenants in Common
</TABLE>

         CNL  Restaurant  Investments  II was  formed  to hold  six  Properties;
however,  it currently holds only five. All other joint ventures or tenancies in
common were formed to hold one Property. Each CNL Income Fund is an affiliate of
the General Partners and is a limited partnership organized pursuant to the laws
of the state of Florida. The Partnership has management control of Woodway Joint
Venture,  and shares  management  control  equally  with the  affiliates  of the
General Partners for the other joint ventures.

         The joint  venture and tenancy in common  arrangements  provide for the
Partnership  and its joint venture or tenancy in common partners to share in all
costs and benefits in proportion to each  partner's  percentage  interest in the
business entity. The Partnership and its partners are also jointly and severally
liable for all debts,  obligations and other liabilities of the joint venture or
tenancy in common.  Net cash flow from  operations is  distributed to each joint
venture  or  tenancy  in  common  partner  in  accordance  with  its  respective
percentage interest in the business entity.

         Woodway Joint Venture,  Asheville  Joint Venture and Bossier City Joint
Venture each have an initial term of 20 years, and CNL VIII, X, XII Kokomo Joint
Venture has an initial term of 30 years and, after the expiration of the initial
term,  continues in existence from year to year unless  terminated at the option
of either joint  venturer or by an event of  dissolution.  Events of dissolution
include the bankruptcy, insolvency or termination of any joint venturer, sale of
the Property owned by the joint venture and mutual  agreement of the Partnership
and its joint venture  partners to dissolve the joint venture.  Any  liquidation
proceeds,  after paying joint venture debts and liabilities and funding reserves
for  contingent  liabilities,  will be  distributed  first to the joint  venture
partners with positive  capital account  balances in proportion to such balances
until such  balances  equal zero,  and  thereafter  in  proportion to each joint
venture  partner's  percentage  interest in the joint  venture.  CNL  Restaurant
Investments II's joint venture  agreement does not provide for a fixed term, but
continues in existence until terminated by any of the joint venturers.

         The joint  venture  and  tenancy  in common  agreements  restrict  each
party's  ability to sell,  transfer  or assign  its joint  venture or tenancy in
common interest without first offering it for sale to its partners,  either upon
such terms and conditions as to which the parties may agree or, in the event the
parties cannot agree, on the same terms and conditions as any offer from a third
party to purchase such joint venture or tenancy in common interest.

         In 2002, CNL  Restaurant  Investments II sold its Property in Columbus,
Ohio and used the  majority  of the  proceeds  from the sale to  acquire  a Taco
Cabana  property  in  Dallas,   Texas.  In  addition  in  2002,  CNL  Restaurant
Investments  II sold its  property  in  Pontiac,  Michigan  and the  Partnership
reinvested  the  return  of  capital  for its  pro-rata  share of the net  sales
proceeds  relating to the  Property in  Pontiac,  Michigan in a Texas  Roadhouse
Property in Kenosha, Wisconsin, as tenants-in-common.

         In addition in 2002,  the  Partnership  and an affiliate of the General
Partners, which is a Florida limited partnership, as tenants in common, sold its
Property in Libertyville,  Illinois, and reinvested the liquidating distribution
from the sale to acquire an IHOP property in Buffalo Grove,  Illinois,  as a new
tenants-in-common arrangement, with the same affiliate.

         The use of joint venture and tenancy in common  arrangements allows the
Partnership  to fully invest its available  funds at times at which it would not
have  sufficient  funds to purchase an additional  property,  or at times when a
suitable  opportunity to purchase an additional  property is not available.  The
use of joint  venture  and  tenancy in common  arrangements  also  provides  the
Partnership  with  increased  diversification  of its portfolio  among a greater
number of properties. In addition,  tenancy in common arrangements may allow the
Partnership  to defer the gain for federal  income tax purposes upon the sale of
the property if the proceeds are reinvested in an additional property.

Certain Management Services

         RAI Restaurants,  Inc. (formerly known as CNL Restaurants XVIII, Inc.),
an affiliate of the General  Partners,  provided  certain  services  relating to
management  of the  Partnership  and its  Properties  pursuant  to a  management
agreement with the Partnership. CNL APF Partners, LP assigned its rights in, and
its  obligations  under,  the management  agreement with the  Partnership to RAI
Restaurants,  Inc.  ("Advisor")  effective January 1, 2002. All of the terms and
conditions of the management agreement,  including the payment of fees, remained
unchanged.  Under this  agreement,  the Advisor is  responsible  for  collecting
rental  payments,  inspecting the Properties and the tenants' books and records,
assisting the  Partnership  in responding to tenant  inquiries and notices,  and
providing  information to the Partnership about the status of the leases and the
Properties.  The Advisor also assists the General  Partners in  negotiating  the
leases.  For these  services,  the  Partnership has agreed to pay the Advisor an
annual fee of one percent of the sum of gross operating revenues from Properties
wholly owned by the Partnership plus the Partnership's  allocable share of gross
revenues of joint ventures in which the Partnership is a co-venturer, but not in
excess  of  competitive  fees  for  comparable  services.   Under  the  property
management agreement,  the property management fee is subordinated to receipt by
the Limited  Partners of an aggregate,  ten percent,  cumulative,  noncompounded
annual  return on their  adjusted  capital  contributions  (the  "10%  Preferred
Return"),  calculated in accordance with the Partnership's  limited  partnership
agreement  (the  "Partnership  Agreement").  In any  year in which  the  Limited
Partners have not received the 10% Preferred Return, no property  management fee
will be paid.

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

Competition

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

Employees

         The  Partnership   has  no  employees.   The  officers  of  CNL  Realty
Corporation and the officers and employees of American  Properties  Fund,  Inc.,
the parent company of the Advisor, perform certain services for the Partnership.
In addition,  the General  Partners  have  available to them the  resources  and
expertise  of the  officers  and  employees  of CNL  Financial  Group,  Inc.,  a
diversified  real  estate  company,  and its  affiliates,  who may also  perform
certain services for the Partnership.

Item 2.  Properties

         As of December 31, 2002, the Partnership owned 39 Properties. Of the 39
Properties,  26 are  owned by the  Partnership  in fee  simple,  nine are  owned
through joint venture arrangements, and four are owned through tenancy in common
arrangements.  See Item 1.  Business  - Joint  Venture  and  Tenancy  in  Common
Arrangements.  The Partnership is not permitted to encumber its Properties under
the terms of its  partnership  agreement.  Reference  is made to the Schedule of
Real Estate and  Accumulated  Depreciation  for a listing of the  Properties and
their  respective  costs,  including  acquisition  fees and certain  acquisition
expenses.

Description of Properties

         Land. The Partnership's  Property sites, owned directly and indirectly,
range from  approximately  17,400 to 128,528 square feet depending upon building
size and local  demographic  factors.  Sites purchased by the Partnership are in
locations zoned for commercial use which have been reviewed for traffic patterns
and volume.

         The  following  table lists the  Properties  owned by the  Partnership,
directly  and  indirectly,  as of  December  31,  2002 by state.  More  detailed
information  regarding  the  location  of the  Properties  is  contained  in the
Schedule of Real Estate and Accumulated Depreciation.

               State                                Number of Properties

               Arizona                                        1
               Colorado                                       1
               Florida                                        3
               Illinois                                       2
               Indiana                                        2
               Louisiana                                      3
               Michigan                                       2
               Minnesota                                      2
               New York                                       2
               North Carolina                                 1
               Ohio                                           7
               Oregon                                         1
               Tennessee                                      2
               Texas                                          8
               Virginia                                       1
               Wisconsin                                      1
                                                        --------------
               TOTAL PROPERTIES                              39
                                                        ==============

         Buildings.  Each of the Properties owned by the  Partnership,  directly
and indirectly, includes a building that is one of a Restaurant Chain's approved
designs.  The  buildings  generally are  rectangular  and are  constructed  from
various  combinations of stucco,  steel,  wood,  brick and tile.  Building sizes
range  from  approximately  2,100  to  10,600  square  feet.  All  buildings  on
Properties are freestanding and surrounded by paved parking areas. Buildings are
suitable for conversion to various uses, although  modifications may be required
prior to use for other than restaurant operations.  As of December 31, 2002, the
Partnership had no plans for renovation of the Properties.  Depreciation expense
is computed for buildings and improvements  using the straight line method using
a depreciable life of 40 years for federal income tax purposes.

         As of December 31, 2002, the aggregate cost of the Properties  owned by
the   Partnership   (including   its   consolidated   joint   venture)  and  the
unconsolidated joint ventures (including the Properties owned through tenancy in
common  arrangements),  for federal  income tax  purposes  was  $25,620,634  and
$14,617,254, respectively.


<PAGE>


         The  following  table lists the  Properties  owned by the  Partnership,
directly and indirectly, as of December 31, 2002 by Restaurant Chain.

                Restaurant Chain                         Number of Properties

                Bennigan's                                         2
                Boston Market                                      1
                Burger King                                        10
                Denny's                                            2
                Golden Corral                                      5
                Hardee's                                           4
                IHOP                                               2
                Jack in the Box                                    3
                KFC                                                2
                Perkins                                            1
                Pizza Hut                                          1
                Shoney's                                           1
                Taco Cabana                                        2
                Texas Roadhouse                                    1
                Wendy's                                            1
                Other                                              1
                                                             --------------
                TOTAL PROPERTIES                                  39
                                                             ==============

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

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

         Leases.  The  Partnership  leases  substantially  all the Properties to
operators of selected national and regional  fast-food  restaurant  chains.  The
leases are generally on a long-term "triple net" basis,  meaning that the tenant
is  responsible  for  repairs,   maintenance,   property  taxes,  utilities  and
insurance.

         At December 31, 2002, 2001, 2000, 1999, and 1998, all of the Properties
were occupied.  The following is a schedule of the average rent per Property for
each of the years ended December 31:

<TABLE>
<CAPTION>

                                   2002              2001              2000              1999               1998
                               -------------     -------------    ---------------    --------------    ---------------

 <c>
Rental Revenues (1)             $ 3,226,476       $ 3,364,048        $ 3,361,651       $ 3,527,515        $ 3,443,094
Properties                               39                37                 36                37                 36
Average Rent per Property
                               $     82,730         $  90,920          $  93,379         $  95,338          $  95,642

</TABLE>

(1)      Rental revenues include the Partnership's share of rental revenues from
         the  Properties  owned  through  joint  venture  and  tenancy in common
         arrangements


<PAGE>



         The following is a schedule of lease expirations for leases in place as
of December 31, 2002 for each year for the next ten years and thereafter.
<TABLE>
<CAPTION>

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

 <c>
              2003                             --                   $   --                      --
              2004                             --                       --                      --
              2005                              8                  793,457                  22.09%
              2006                              1                  118,124                   3.29%
              2007                             --                       --                      --
              2008                             --                       --                      --
              2009                              1                  142,910                   3.98%
              2010                              7                  713,240                  19.86%
              2011                             10                  862,160                  24.00%
              2012                             --                       --                      --
              Thereafter                       12                  961,849                  26.78%
                                        ----------            -------------           -------------
              Totals                           39              $ 3,591,740                 100.00%
                                        ==========            =============           =============
</TABLE>

         Leases  with  Major   Tenants.   The  terms  of  the  leases  with  the
Partnership's  major  tenants as of December  31,  2002 (see Item 1.  Business -
Major  Tenants),  are  substantially  the  same as  those  described  in Item 1.
Business - Leases.

         Golden Corral  Corporation leases five Golden Corral  restaurants.  The
initial  term of each lease is 15 years  (four  leases  expiring in 2005 and one
lease in  2016)  and the  average  minimum  base  annual  rent is  approximately
$174,500 (ranging from approximately $145,500 to $218,200).

         Carrols Corporation and Texas Taco Cabana, LP, as a group of affiliated
lessees,  lease five  Burger  King and two Texas Taco  Cabana  restaurants.  The
initial term is 20 years for five  restaurants  and 19 years for two restaurants
(expiring in 2011 and 2020,  respectively)  and the average  minimum base annual
rent is approximately $98,000 (ranging from approximately $86,300 to $117,900).


Item 3.  Legal Proceedings

         Neither the  Partnership,  nor its General Partners or any affiliate of
the General Partners,  nor any of their respective  Properties,  is party to, or
subject to, any material pending legal proceedings.


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

         Not applicable.


                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

(a)      As of March 10, 2003,  there were 3,394 holders of record of the Units.
There is no public trading market for the Units,  and it is not anticipated that
a public market for the Units will develop.  During 2002,  Limited  Partners who
wished to sell their Units may have  offered the Units for sale  pursuant to the
Partnership's  distribution reinvestment plan (the "Plan"), and Limited Partners
who wished to have their  distributions used to acquire additional Units (to the
extent Units were  available  for  purchase),  may have done so pursuant to such
Plan. The General Partners have the right to prohibit  transfers of Units.  From
inception  through  December 31, 2002,  the price paid for any Unit  transferred
pursuant to the Plan was $.95 per Unit. The price paid for any Unit  transferred
other than pursuant to the Plan was subject to  negotiation by the purchaser and
the selling  Limited  Partner.  The  Partnership  will not redeem or  repurchase
Units.

         The following table reflects,  for each calendar quarter, the high, low
and average  sales prices for transfers of Units during 2002 and 2001 other than
pursuant to the Plan, net of commissions.
<TABLE>
<CAPTION>

                                             2002 (1)                               2001 (1)
                                 ----------------------------------     ----------------------------------
                                   High         Low        Average        High         Low         Average
                                 ---------    --------    ----------    ---------    ---------    ----------

 <c>
         First Quarter              $0.78      $ 0.65        $ 0.70        $0.80       $ 0.71        $ 0.75
         Second Quarter              0.95        0.95          0.95         0.95         0.72          0.80
         Third Quarter               0.95        0.72          0.89         0.95         0.66          0.75
         Fourth Quarter              0.87        0.78          0.83         0.95         0.62          0.77
</TABLE>

(1)      A total of  371,760  and  551,448  Units  were  transferred  other than
         pursuant  to the Plan for the years ended  December  31, 2002 and 2001,
         respectively.

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

         For the  years  ended  December  31,  2002 and  2001,  the  Partnership
declared cash distributions of $3,325,004 and $3,150,004,  respectively,  to the
Limited  Partners.  During the quarter ended December 31, 2002, the  Partnership
declared a special  distribution  to the  Limited  Partners  of  $175,000  which
represented cumulative excess operating reserves.  This special distribution was
effectively a return of a portion of the Limited Partners' investment,  although
in accordance with the partnership  agreement,  $175,000, was applied toward the
Limited Partners' 10% Preferred  Return. No amounts  distributed to partners for
the years  ended  December  31,  2002 and 2001 are  required  to be or have been
treated by the  Partnership  as a return of capital for purposes of  calculating
the  Limited  Partners'  return  on their  adjusted  capital  contributions.  No
distributions  have been made to the General  Partners to date.  As indicated in
the chart below,  these  distributions were declared at the close of each of the
Partnership's  calendar  quarters.  These amounts include monthly  distributions
made in arrears for the Limited Partners electing to receive such  distributions
on this basis.

                    Quarter Ended            2002                2001
              -------------------------- --------------   -----------------

              March 31                    $   787,501         $   787,501
              June 30                         787,501             787,501
              September 30                    787,501             787,501
              December 31                     962,501             787,501

         The  Partnership  intends to  continue  to make  distributions  of cash
available  for  distribution  to the  Limited  Partners  on a  quarterly  basis,
although some Limited  Partners,  in  accordance  with their  election,  receive
monthly distributions for an annual fee.

(b)      Not applicable.


<PAGE>


Item 6.  Selected Financial Data
<TABLE>
<CAPTION>

                                               2002             2001          2000         1999          1998
                                           --------------   ------------- ------------- ------------ --------------

 <c>
    Year ended December 31:

    Continuing Operations (3):
          Revenues                         $   2,874,812     $ 2,904,044   $ 3,129,562   $3,147,881     $3,266,188
          Equity in earnings
             unnconsolidated
             joint ventures                      649,791         390,505       319,184      276,012        276,721
          Income from continuing
             operations (1)                    2,762,035       2,246,518     3,493,610    2,719,884      3,192,397

    Discontinued Operations (3):
          Revenues                                55,304          90,028        93,561       90,180         96,515
          Income from discontinued
             operations (2)                      335,117          90,028        93,561       90,180         96,515

    Net income                                 3,097,152       2,336,546     3,587,171    2,810,064      3,288,912

    Net income per Unit:
          Continuing operations               $    0.078       $   0.064     $   0.099    $   0.077      $   0.091
          Discontinued
             operations                            0.010           0.003         0.003        0.003          0.003
                                           --------------   ------------- ------------- ------------ --------------
          Total                               $    0.088       $   0.067     $   0.102    $   0.080      $   0.094
                                           ==============   ============= ============= ============ ==============

    Cash distributions declared (4)         $  3,325,004     $ 3,150,004   $ 3,150,004   $3,150,004    $ 3,850,003
    Cash distributions declared per Unit (4)       0.095           0.090         0.090        0.090          0.110

    At December 31:
          Total assets                      $ 30,941,865     $30,977,243   $31,827,394  $31,479,495    $32,071,119
          Total partners' capital             29,711,224      29,939,076    30,752,534   30,315,367     30,655,307
</TABLE>

(1)      Income from continuing  operations for the year ended December 31, 2001
         includes $299,479 from provision for write-down of assets.  Income from
         continuing  operations for the year ended  December 31, 2001,  2000 and
         1998, includes $28,301, $612,693 and $108,176,  respectively, from gain
         on sale of assets.

(2)      Income from  discontinued  operations  for the year ended  December 31,
         2002 includes gain on sale of assets of $279,813.

(3)      Certain  items  in  prior  years'   financial   statements   have  been
         reclassified to conform to 2002 presentation.  These  reclassifications
         had no effect on net  income.  The  results of  operations  relating to
         properties  that were either disposed of or were classified as held for
         sale as of December 31, 2002 are reported as  discontinued  operations.
         The results of operations  relating to properties  that were identified
         for sale as of December 31, 2001 but sold  subsequently are reported as
         continuing operations.

(4)      Distributions  for the year ended  December 31, 2002 and 1998,  include
         special  distributions  to the Limited Partners for a total of $175,000
         and $700,000, which represented cumulative excess operating reserves.

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


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

         The  Partnership was organized on August 18, 1989, to acquire for cash,
either directly or through joint venture  arrangements,  both newly  constructed
and  existing  restaurant  Properties,  as well as land  upon  which  restaurant
Properties  were to be constructed,  which are leased  primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are generally  triple-net leases,  with the lessee generally  responsible
for all repairs and maintenance,  property taxes,  insurance and utilities.  The
leases  provide  for  minimum  base annual  rental  amounts  (payable in monthly
installments)  ranging from approximately  $49,200 to $251,500.  The majority of
the leases provide for percentage  rent, based on sales in excess of a specified
amount.  In addition,  some of the leases provide that,  commencing in specified
lease years  (generally  the sixth lease  year),  the annual base rent  required
under the terms of the lease will increase.

         As of December 31, 2002,  2001 and 2000, the  Partnership  owned 26, 24
and 25 Properties directly,  respectively. In addition, the Partnership owned 11
Properties indirectly through joint venture or tenancy in common arrangements as
of December 31, 2000, and 13 Properties as of December 31, 2002 and 2001.

Capital Resources

         For the  years  ended  December  31,  2002,  2001 and  2000,  cash from
operating  activities was $3,350,597,  $3,196,595 and $3,349,897,  respectively.
The increase in cash from operating activities during 2002, as compared to 2001,
and the decrease in cash from operating  activities  during 2001, as compared to
2000, resulted from changes in the Partnership's  working capital and changes in
income and expenses.

         Other sources and uses of cash included the following  during the years
ended December 31, 2002, 2001 and 2000.

         In July 2000,  the  Partnership  sold its  Properties  in  Brooksville,
Bayonet  Point and Sun City,  Florida,  to a third party and  received net sales
proceeds  totaling  approximately  $3,402,700,  resulting  in a  total  gain  of
approximately $484,800. In July 2000, the Partnership reinvested the majority of
these sales proceeds in a Bennigan's Property located in Deerfield, Illinois, at
an approximate cost of $2,462,700.  The Partnership  acquired this Property from
CNL BB Corp., an affiliate of the General Partners. In addition, in August 2000,
the  Partnership  also used a portion of these net sales  proceeds to acquire an
interest  in  a  Baker's  Square   Property  in   Libertyville,   Illinois,   as
tenants-in-common, with CNL Income Fund IX, Ltd., a Florida limited partnership,
and an affiliate of the General  Partners.  During 2002, the Partnership and the
affiliate,   as  tenants-in-common,   sold  this  Property  and  reinvested  the
liquidating distribution in another Property, as described below.

         In September 2000, the Partnership  sold its property in  Jacksonville,
Florida, and received net sales proceeds of approximately $420,000, resulting in
a gain of approximately  $127,900.  In October 2000, the Partnership  reinvested
these sales proceeds in a Property in Hialeah, Florida at an approximate cost of
$472,300.

         In March 2001, Middleburg Joint Venture, in which the Partnership owned
a 12.46% interest, sold its Property to the tenant in accordance with the option
under its lease agreement to purchase the Property, for $1,900,000, and recorded
a loss of  approximately  $61,900.  Middleburg  Joint  Venture was  dissolved in
accordance  with  the  joint  venture  agreement  and no  gain  or  loss  on the
dissolution  of the joint venture was  recorded.  As a result,  the  Partnership
received approximately $236,700 as a return of capital for its pro-rata share of
the net sales proceeds. In April 2001, the Partnership  reinvested the return of
capital from Middleburg Joint Venture in another joint venture arrangement,  CNL
VIII, X, XII Kokomo Joint  Venture,  with CNL Income Fund X, Ltd. and CNL Income
Fund XII,  Ltd.,  Florida  limited  partnerships  and  affiliates of the General
Partners,  to  purchase  and hold one  restaurant  Property,  at a total cost of
approximately  $2,112,000.  The joint venture  acquired the Property from CNL BB
Corp., an affiliate of the General  Partners,  who had purchased and temporarily
held  title to this  Property  in order to  facilitate  the  acquisition  of the
Property by the joint  venture.  As of December 31, 2002,  the  Partnership  had
contributed  approximately  $211,200 and had an approximate  10% interest in the
profits and losses of the joint venture.

         In May 2001, the Partnership  sold its Property in  Statesville,  North
Carolina,  and received net sales  proceeds of $877,000,  resulting in a gain of
approximately  $28,300.  In June and July 2001,  the  Partnership  reinvested  a
portion of these sales proceeds in two additional Properties,  Walker, Louisiana
and  Denver,  Colorado,  as two  separate  tenancy in common  arrangements  with
Florida  limited  partnerships  and  affiliates of the General  Partners.  As of
December 31, 2002, the Partnership had contributed  approximately $232,300 for a
17% interest, and approximately $422,500 for a 19.30% interest, respectively, to
these tenancies in common.

         In September  2001,  the borrower of two  promissory  notes accepted in
1999 in connection with the sale of two of the Partnership's Properties, prepaid
the total outstanding principal balance of approximately $441,500.

         In January 2002,  the  Partnership  reinvested the other portion of the
net sales  proceeds it received  from the sale of the  Property in  Statesville,
North  Carolina,  and the  prepaid  principal  received  in 2001,  in a  Denny's
Property located in Ontario, Oregon, at an approximate cost of $654,400.

         In February 2002, a tenant, Brandon Fast Food Services, Inc., filed for
bankruptcy.  The tenant has neither  rejected  nor affirmed the one lease it has
with the  Partnership.  A workout plan has not been  approved  since all parties
involved  have not been able to agree on a workout  plan.  As of March 10, 2003,
the Partnership has continued  receiving rental payments relating to this lease.
While the tenant has neither  rejected nor affirmed this lease,  there can be no
assurance  that the lease will not be rejected in the future.  The lost revenues
resulting from the possible  rejection of this lease will have an adverse effect
on the results of operations of the  Partnership if the Partnership is unable to
re-lease the Property in a timely manner.

         In May 2002,  the borrower,  relating to a promissory  note accepted in
1996 in connection with the sale of one of the Partnership's Properties,  repaid
the  outstanding  principal of  approximately  $917,900.  In September 2002, the
Partnership  reinvested  the  prepaid  principal  in a Property  located in Eden
Prairie,  Minnesota,  at an  approximate  cost of  $1,093,900.  The Property was
acquired from CNL Net Lease Investors,  L.P. ("NLI").  During 2002, and prior to
the  Partnership's  acquisition of this property,  CNL Financial LP Holding,  LP
("CFN") and CNL Net Lease Investors GP Corp.  ("GP Corp")  purchased the limited
partner's interest and general partner's interest,  respectively,  of NLI. Prior
to this transaction,  an affiliate of the Partnership's General Partners owned a
0.1%  interest  in NLI and  served as a general  partner  of NLI.  The  original
general  partners of NLI waived their  rights to benefit from this  transaction.
The acquisition price paid by CFN for the limited  partner's  interest was based
on the portfolio  acquisition  price.  The Partnership  acquired the property at
CFN's  cost  and  did  not  pay  any  additional  compensation  to CFN  for  the
acquisition   of  the  property.   Each  CNL  entity  is  an  affiliate  of  the
Partnership's General Partners.

         In May 2002, the  Partnership  also sold its property in Baseball City,
Florida  to  the  tenant  and  received  net  sales  proceeds  of  approximately
$1,184,600  resulting  in a gain  on  disposal  of  discontinued  operations  of
approximately $279,800. In June 2002, the Partnership reinvested the majority of
the net sales  proceeds  it  received  from the sale of this  Property in a Taco
Cabana Property located in Denton,  Texas, at an approximate cost of $1,147,600.
In June 2002, CNL Restaurant  Investments  II, in which the  Partnership  owns a
36.8% interest,  sold its Property in Columbus,  Ohio to the tenant and received
net  sales  proceeds  of  approximately  $1,215,700,  resulting  in  a  gain  of
approximately $448,300. The joint venture used the proceeds from the sale of the
property  in  Columbus,  Ohio to  acquire  a  property  in  Dallas,  Texas at an
approximate cost of $1,147,400. The Partnership acquired the Property in Denton,
Texas and the joint  venture  acquired  the  property in Dallas,  Texas from CNL
Funding  2001-A,  LP, a Delaware  limited  partnership  and an  affiliate of the
General  Partners.  CNL Funding 2001-A,  LP had purchased and  temporarily  held
title to the Properties in order to facilitate the acquisition of the Properties
by the  Partnership  and the  joint  venture.  The  purchase  price  paid by the
Partnership and the joint venture  represented the costs incurred by CNL Funding
2001-A,  LP to acquire the Properties.  The General  Partners believe that these
transactions,  or a portion thereof,  relating to the sales and the reinvestment
of the net sales proceeds,  will qualify as a like-kind  transaction for federal
income tax purpose.

         In  addition  in June  2002,  CNL  Restaurant  Investments  II sold its
property in Pontiac,  Michigan to the tenant and received net sales  proceeds of
approximately $722,600 resulting in a loss of $189,800. The tenant exercised its
option to purchase the Property  under the terms of the lease.  The  Partnership
received  approximately  $265,900  representing  a  return  of  capital  for its
pro-rata share of the uninvested net sales proceeds  relating to the Property in
Pontiac,  Michigan. In August 2002, the Partnership  reinvested a portion of the
return  of   capital  to  acquire  a  Property   in   Kenosha,   Wisconsin,   as
tenants-in-common,   with  CNL  Income  Fund  XVII,   Ltd.,  a  Florida  limited
partnership and an affiliate of the General Partners,  at an approximate cost of
$1,883,000 from a third party.  The Partnership and the affiliate of the General
Partners  entered into an agreement  whereby  each  co-tenant  will share in the
profits and losses of each property in proportion to its  applicable  percentage
interest.  As  of  December  2002,  the  Partnership  contributed  approximately
$188,300 for a 10% interest in this property.

         In September  2002,  the  Partnership,  as  tenants-in-common  with CNL
Income Fund IX, Ltd., an affiliate of the General Partners, sold its property in
Libertyville,  Illinois,  to a third party and  received  net sales  proceeds of
approximately  $1,630,400  resulting in a gain of  approximately  $199,300.  The
Partnership  owned a 66%  interest in this  Property.  The  Partnership  and the
affiliate  of the General  Partner,  under a new tenancy in common  arrangement,
used the  liquidating  distribution  from the sale of the  Property to acquire a
property in Buffalo Grove,  Illinois at an approximate  cost of $1,588,800.  The
Property  was  acquired  from NLI During  2002,  and prior to the  Partnership's
acquisition  of this property,  CFN and GP Corp purchased the limited  partner's
interest and General  Partner's  interest,  respectively,  of NLI. Prior to this
transaction,  an affiliate of the  Partnership's  General  Partners owned a 0.1%
interest in NLI and served as a General  Partner of NLI.  The  original  general
partners  of NLI waived  their  rights to  benefit  from this  transaction.  The
acquisition  price paid by CFN for the limited  partner's  interest was based on
the portfolio  acquisition price. The Partnership acquired the Property at CFN's
cost and did not pay any additional  compensation  to CFN for the acquisition of
the  Property.  Each CNL entity is an  affiliate  of the  Partnership's  General
Partners.

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

         Currently,  rental income from the Partnership's Properties is invested
in  short-term  highly liquid  investments  such as demand  deposit  accounts at
commercial  banks,  money market accounts and  certificates of deposit with less
than a 90-day  maturity  date,  pending  use of such  funds  to pay  Partnership
expenses,  or to make  distributions  to partners.  At December  31,  2002,  the
Partnership had $1,571,487  invested in such short-term  investments as compared
to $2,085,133 at December 31, 2001. The decrease in cash and cash equivalents at
December 31, 2002,  as compared to December 31, 2001,  was  primarily due to the
reinvestment  of the remaining  net sales  proceeds from the 2001 sale of one of
the Partnership's  Properties and the prepaid principal  received in 2001, in an
additional  Property.  As of December 31, 2002, the average interest rate earned
by the Partnership on the rental income  deposited in demand deposit accounts at
commercial  banks was  approximately  1.08%  annually.  The funds  remaining  at
December 31, 2002, after payment of distributions and other liabilities, will be
used to invest in an additional Property,  and to meet the Partnership's working
capital needs.

Short-Term Liquidity

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

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

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

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

         The Partnership  generally  distributes cash from operations  remaining
after the payment of the operating  expenses of the  Partnership,  to the extent
that  the  General  Partners   determine  that  such  funds  are  available  for
distribution.   Based  on  cash  from  operations,   the  Partnership   declared
distributions  to the Limited Partners of $3,325,004 for the year ended December
31, 2002, and $3,150,004 for each of the years ended December 31, 2001 and 2000.
This represents  distributions of $0.10 per Unit for the year ended December 31,
2002, and $0.09 per Unit for each of the years ended December 31, 2001 and 2000.
During the quarter ended December 31, 2002, the  Partnership  declared a special
distribution to the Limited Partners of $175,000,  which represented  cumulative
excess operating reserves. This special distribution was effectively a return of
a portion of the Limited Partners'  investment,  although in accordance with the
partnership agreement, the total amount was applied toward the Limited Partners'
10% Preferred  Return.  No amounts  distributed to the Limited  Partners for the
years ended  December  31,  2002,  2001 and 2000 are required to be or have been
treated by the  Partnership  as a return of capital for purposes of  calculating
the  Limited  Partners'  return on their  adjusted  capital  contributions.  The
Partnership  intends to continue to make  distributions  of cash  available  for
distribution to the Limited Partners on a quarterly basis.

         During 2000, the General  Partners waived their right to receive future
distributions  from the Partnership,  including both  distributions of operating
cash flow and  distributions  of  liquidation  proceeds,  to the extent that the
cumulative amount of such distributions  would exceed the balance in the General
Partners'  capital  account as of December  31, 1999.  Accordingly,  the General
Partners were not allocated any net income and did not receive any distributions
during the years ended December 31, 2002, 2001 and 2000.

         As of December  31, 2002 and 2001,  the  Partnership  owed  $14,333 and
$20,432,  respectively, to affiliates for such amounts as operating expenses and
accounting and  administrative  services.  As of March 15, 2002, the Partnership
had reimbursed the affiliates all such amounts. In addition,  as of December 31,
2002, the Partnership had incurred  $55,050 in real estate  disposition fees due
to an affiliate as a result of services in  connection  with the sale of several
Properties. The payment of such fees is deferred until the Limited Partners have
received  the sum of their  10%  Preferred  Return  and their  adjusted  capital
contributions.  Other liabilities, including distributions payable, increased to
$1,056,503 at December 31, 2002,  from $855,851 at December 31, 2001,  primarily
as a result of accruing a special  distribution  of $175,000  which  represented
cumulative  excess  operating  reserves.  The General  Partners believe that the
Partnership  has  sufficient  cash on hand to meet its current  working  capital
needs.

Long-Term Liquidity

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

Critical Accounting Policies

         The  Partnership's  leases are  accounted  for under the  provisions of
Statement of Accounting Standard No. 13, "Accounting for Leases" ("FAS 13"), and
have been  accounted  for using  either the direct  financing  or the  operating
method.  FAS 13 requires  management to estimate the economic life of the leased
property,  the residual  value of the leased  property and the present  value of
minimum lease payments to be received from the tenant.  In addition,  management
assumes  that all  payments  to be  received  under its leases are  collectible.
Changes in management's  estimates or assumptions  regarding  collectibility  of
lease  payments  could  result  in a change in  accounting  for the lease at the
inception of the lease.

         The Partnership  accounts for its  unconsolidated  joint ventures using
the equity method of accounting. Under generally accepted accounting principles,
the equity method of accounting is  appropriate  for entities that are partially
owned by the  Partnership,  but for which  operations of the investee are shared
with other partners.  The  Partnership's  joint venture  agreements  require the
consent of all partners on all key  decisions  affecting  the  operations of the
underlying Property.

         Management  reviews the  Partnership's  Properties  and  investments in
unconsolidated  entities  periodically  for  impairment  at least once a year or
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  The assessment is based on the carrying amount
of the  Property  or  investment  at the date it is  tested  for  recoverability
compared to the sum of the estimated  future cash flows  expected to result from
its operation and sale through the expected holding period.  If an impairment is
indicated, the asset is adjusted to its estimated fair value.

         When the Partnership makes the decision to sell or commits to a plan to
sell a Property, its operating results are reported as discontinued operations.

Results of Operations

Comparison of the year ended December 31, 2002 to the year ended December 31,
2001

         Total rental  revenues were  $2,719,772 for the year ended December 31,
2002 as  compared to  $2,552,879  in the same  period in 2001.  The  increase in
rental  revenues  during  2002,  as  compared  to the same  period in 2001,  was
primarily  due to the  fact  that in 2002  the  Partnership  reinvested  the net
proceeds  from the  2001 and 2002  sales  of  Statesville,  North  Carolina  and
Baseball City,  Florida and the prepaid principal  received in 2001 and 2002, in
three Properties located in Ontario,  Oregon;  Denton,  Texas; and Eden Prairie,
Minnesota.  The increase in rental revenues during 2002 was partially  offset by
the sale of a Property in 2001.

         During 2001,  the tenant of the Property in North Fort Myers,  Florida,
vacated the Property and ceased making rental  payments on this  Property.  As a
result,  the Partnership  stopped  recording  rental  revenues  relating to this
Property.  The lease  was  terminated  in July  2001.  In  September  2001,  the
Partnership  entered  into a new lease with a new tenant for this  Property  for
which  rental  payments  are lower  than  rents due  under the  previous  lease;
therefore,  the Partnership  expects that rental revenues in future periods will
remain at reduced amounts.  However, the General Partners do not anticipate that
any decrease in rental  revenues  relating to the new lease will have a material
adverse affect on the Partnership's financial position or results of operations.

         During the years ended December 31, 2002 and 2001, the Partnership also
earned $88,664 and $80,176, respectively, in contingent rental income.

         During the years  ended  December  31, 2002 and 2001,  the  Partnership
earned  $649,791  and  $390,505,  respectively,  attributable  to the net income
earned by  unconsolidated  joint  ventures.  The increase in  operating  results
reported by  unconsolidated  joint ventures during 2002, as compared to the same
period  in  2001,  was  partially  due to the  fact  that  the  Partnership,  as
tenants-in-common  with CNL Income Fund IX,  Ltd.,  an  affiliate of the General
Partners,  sold its  property in  Libertyville,  Illinois,  to a third party and
received net sales proceeds of approximately  $1,630,400  resulting in a gain of
approximately  $199,300.  The Partnership owned a 66% interest in this property.
The  Partnership  recognized  its pro-rata  share of the net gain resulting from
this sale.

         In addition,  CNL Restaurant  Investment  II, in which the  Partnership
owns a 36.8%  interest,  sold its property in  Columbus,  Ohio to the tenant and
received net sales proceeds of approximately  $1,215,700  resulting in a gain of
approximately $448,300. CNL Restaurant Investments II, also sold its property in
Pontiac, Michigan to the tenant and received net sales proceeds of approximately
$722,600  resulting  in a loss  of  $189,800.  The  Partnership  recognized  its
pro-rata share of the net gain resulting from these sales.

         Net operating  results reported by  unconsolidated  joint ventures also
increased during 2002,  because in 2002 and 2001, the Partnership  invested in a
joint  venture  and in four  Properties,  each as a  separate  tenants-in-common
arrangement,  with Florida  limited  partnerships  and affiliates of the General
Partners.  In addition,  net operating results reported by unconsolidated  joint
ventures were lower in 2001 because  Middleburg  Joint Venture sold its Property
and recognized a loss of approximately $61,900.

         During  2002,  two  lessees  (or groups of  affiliated  lessees) of the
Partnership and its consolidated joint venture,  Golden Corral Corporation,  and
the affiliated entities under common control, Carrols Corporation and Texas Taco
Cabana (hereinafter referred to as "Carrols Corporation"), each contributed more
than ten  percent  of the  Partnership's  total  rental  revenues  and  mortgage
interest income (including  rental revenues from the Partnership's  consolidated
joint venture and the  Partnership's  share of rental  revenues from  Properties
owned by  unconsolidated  joint ventures and Properties owned with affiliates of
the General  Partners as  tenants-in-common).  As of December 31,  2002,  Golden
Corral Corporation was the lessee under leases relating to five restaurants, and
Carrols  Corporation was the lessee under leases relating to seven  restaurants.
It is anticipated  that,  based on the minimum rental  payments  required by the
leases,  these two lessees (or groups of affiliated  lessees) each will continue
to contribute more than ten percent of the  Partnership's  total rental revenues
and mortgage interest income in 2003. In addition, two Restaurant Chains, Golden
Corral Family  Steakhouse  Restaurants  ("Golden  Corral") and Burger King, each
accounted for more than ten percent of the  Partnership's  total rental revenues
and  mortgage  interest  income  in 2002  (including  rental  revenues  from the
Partnership's  consolidated joint venture and the Partnership's  share of rental
revenues from Properties owned by  unconsolidated  joint ventures and Properties
owned with affiliates of the General Partners as tenants-in-common). In 2003, it
is anticipated  that these two  Restaurant  Chains each will continue to account
for more  than ten  percent  of the  Partnership's  total  rental  revenues  and
mortgage interest income to which the Partnership is entitled under the terms of
the leases.  Any failure of these lessees or Restaurant  Chains could materially
affect the  Partnership's  income if the Partnership is not able to re-lease the
Properties in a timely manner.

         During the years ended December 31, 2002 and 2001, the Partnership also
earned  $66,376  and  $270,989,  respectively,  in  interest  and other  income,
respectively.  The  decrease  in  interest  and  other  income  during  2002 was
partially due to a reduction in interest income as a result of the prepayment of
principal on two mortgage notes of  approximately  $441,500 during 2001, and the
prepayment  of  principal on a third  mortgage  note of  approximately  $917,900
during 2002. The proceeds were reinvested in 2002 in a Property in Eden Prairie,
Minnesota.  During  2001,  the  Partnership  received  and  recorded  as  income
additional  amounts  relating to a  settlement  from the Florida  Department  of
Transportation  for a  right-of-way  taking  relating to a parcel of land on its
Property in Brooksville, Florida. No such income was received during 2002.

         Operating expenses, including depreciation and amortization expense and
provision for  write-down of assets,  were $749,704 and $1,063,333 for the years
ended December 31, 2002 and 2001,  respectively.  Operating expenses were higher
during 2001, primarily as a result of the recording of provisions for write-down
of assets in the amounts of $181,815 and $117,664, relating to the Properties in
North Fort Myers,  Florida, and Statesville,  North Carolina because the tenants
ceased  operations and vacated the  Properties.  The provisions  represented the
difference  between the carrying value of the  Properties,  and their  estimated
fair value. The Partnership  also incurred  expenses such as, real estate taxes,
legal,  and repairs  and  maintenance,  relating  to the  Property in North Fort
Myers,  Florida during 2001. In September 2001, the  Partnership  entered into a
new lease with a new tenant for the Property in North Fort Myers,  Florida,  and
the new  tenant is  responsible  for the  property  expenses.  The  decrease  in
operating  expenses  was  partially  offset by legal  expenses  incurred in 2002
relating to the filing for  bankruptcy of a tenant,  Brandon Fast Food Services,
Inc. As of March 10,  2003,  the  Partnership  has  continued  receiving  rental
payments  relating to this  lease.  While the tenant has  neither  rejected  nor
affirmed the one lease it has with the  Partnership  relating to the Property in
Brandon,  Florida, there can be no assurance that the lease will not be rejected
in the future.  The lost revenues  that would result if the tenant  rejects this
lease  will  have  an  adverse  effect  on  the  results  of  operations  of the
Partnership  if the  Partnership  is unable to lease  the  Property  in a timely
manner.

         In addition,  the decrease in operating expenses during 2002 was due to
lower  administrative  expenses  incurred for servicing the  Partnership and its
Properties  and due to a decrease in state  taxes.  The  decrease  in  operating
expenses during 2002 was partially offset by an increase in depreciation expense
due to the  purchase  of three  Properties  during 2002 and the fact that during
2001, the Partnership  reclassified  the lease relating to the Property in North
Fort Myers, Florida from direct financial leases to operating leases as a result
of the tenant vacating the Property.

         The decrease in operating  expenses during 2002 was partially offset by
higher property  expenses in 2002 because the  Partnership  elected to reimburse
the tenant of several Golden Corral for certain renovation costs.

         Effective  January  1,  2002,  the  Partnership  adopted  Statement  of
Financial  Accounting  Standards  No.  144  "Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets." This statement requires that a long-lived asset
be tested  for  recoverability  whenever  events  or  changes  in  circumstances
indicate that its carrying amount may not be recoverable. The carrying amount of
a long-lived  asset is not recoverable if it exceeds the sum of the undiscounted
cash flows  expected  to result  from the use and  eventual  disposition  of the
asset.  The assessment is based on the carrying  amount of the asset at the date
it is tested for  recoverability.  An  impairment  loss is  recognized  when the
carrying  amount of a long-lived  asset exceeds its estimated fair value.  If an
impairment is recognized,  the adjusted carrying amount of a long-lived asset is
its new cost basis.  The statement  also requires that the results of operations
of a component of an entity that either has been disposed of or is classified as
held for sale be reported as a discontinued  operation if the disposal  activity
was initiated subsequent to the adoption of the Standard.

         The Property in  Statesville,  North Carolina was sold in May 2001, and
the Partnership received net sales proceeds of approximately  $877,000 resulting
in a gain of approximately $28,300.

         During  2002,  the  Partnership  identified  and sold the  Property  in
Baseball City,  Florida,  which met the criteria of this standard.  In May 2002,
the Partnership  received net proceeds  relating to the sale of this Property of
approximately  $1,184,600,  resulting in a gain of approximately  $279,800.  The
financial results of this Property were classified as Discontinued Operations in
the accompanying  financial  statements.  The majority of the net sales proceeds
from the sale of this Property were reinvested in a Property in Denton, Texas.

         During 2002, CNL Restaurant  Investments  II, in which the  Partnership
owns a 36.8% interest,  identified and sold two Properties in Columbus, Ohio and
Pontiac,  Michigan,  which met the criteria of this standard.  In June 2002, the
joint venture sold its property in Columbus, Ohio to the tenant and received net
sales proceeds of approximately  $1,215,700 resulting in a gain of approximately
$448,300.  In addition in June 2002,  this joint  venture  sold its  property in
Pontiac, Michigan to the tenant and received net sales proceeds of approximately
$722,600  resulting in a loss of $189,800.  The joint  venture used the proceeds
from the sale of the property in Columbus, Ohio to acquire a property in Dallas,
Texas. The Partnership received  approximately $265,900 representing a return of
capital for its pro-rata share of the uninvested net sales proceeds  relating to
the Property in Pontiac,  Michigan. In August 2002, the Partnership reinvested a
portion  of the  return of  capital  in a  Property  in  Kenosha,  Wisconsin  as
tenants-in-common  with a Florida  limited  partnership  and an affiliate of the
General Partners.

         In addition,  during 2002, the Partnership,  as tenants-in  common with
CNL Income Fund IX, Ltd., an affiliate of the general  partners,  identified and
sold the Property in Libertyville,  Illinois,  to a third party and received net
sales proceeds of approximately  $1,630,400 resulting in a gain of approximately
$199,300. The Partnership owned a 66% interest in this property. The Partnership
and CNL IX,  as a new  tenancy  in  common  arrangement,  used  the  liquidating
distribution  from the sale of the  property  to acquire a  property  in Buffalo
Grove, Illinois.

         The financial  results of the  Properties in Columbus,  Ohio;  Pontiac,
Michigan; and Libertyville, Illinois were reported as Discontinued Operations in
the condensed  financial  information for the unconsolidated  joint ventures and
the  properties  held as  tenants-in-common  presented  in the  footnotes to the
accompanying financial statements.

Comparison of the year ended December 31, 2001 to the year ended December 31,
2000

         Total rental  revenues were  $2,552,879 for the year ended December 31,
2001 as  compared to  $2,755,294  in the same  period in 2000.  The  decrease in
rental  revenues  during  2001,  as  compared  to the same  period in 2000,  was
partially the result of the Partnership  selling several  Properties during both
years.  The decrease in rental  revenues was partially  offset by an increase in
rental revenues resulting from the Partnership  reinvesting a portion of the net
sales  proceeds in two Properties in Deerfield,  Illinois and Hialeah,  Florida.
Rental  revenues  are  expected  to remain at reduced  amounts  while  equity in
earnings  of joint  ventures  is  expected  to  increase  since the  Partnership
reinvested a portion of the net sales  proceeds,  from the sale of a Property in
2001, in two Properties with affiliates of the General Partners, as two separate
tenancies in common.

         Rental  revenues also decreased  during 2001,  because during 2001, the
tenant of the  Property in North Fort Myers,  Florida,  vacated the Property and
ceased making rental payments.  As a result,  the Partnership  stopped recording
rental  revenues  relating to this Property.  In September 2001, the Partnership
entered  into a new lease with a new tenant for this  Property  for which rental
payments commenced in December 2001.

         During the years ended December 31, 2001 and 2000, the Partnership also
earned $80,176 and $102,566,  respectively,  in contingent  rental  income.  The
decrease in contingent rental income during 2001, as compared to the same period
in 2000,  was  primarily  attributable  to a decrease in gross sales for certain
restaurant Properties requiring the payment of contingent rental income.

         During the years  ended  December  31, 2001 and 2000,  the  Partnership
earned $390,505 and $319,184, respectively, attributable to net income earned by
unconsolidated   joint   ventures.   The  increase  in  net  income   earned  by
unconsolidated  joint  ventures  during 2001,  as compared to the same period in
2000, was primarily due to the fact that the  Partnership  invested in 2000 in a
Property as  tenants-in-common  with affiliates of the General Partners,  and in
2001 in a Joint Venture and in a Property, as tenants-in-common, with affiliates
of the General  Partners.  The sale in 2001 of the Property  owned by Middleburg
Joint  Venture  partially  offset  the  increase  in net  income  earned  by the
unconsolidated  joint  ventures.  In conjunction  with the sale of the Property,
Middleburg  Joint Venture  recognized a loss of  approximately  $61,900 in March
2001.

         During the years ended December 31, 2001 and 2000, the Partnership also
earned  $270,989  and  $271,702 in interest and other  income.  Interest  income
during 2001 was lower because the Partnership  collected $441,500,  representing
the outstanding  principal  balance of a mortgage note. The decrease in interest
income  was  primarily  offset by the fact that  during  2001,  the  Partnership
received and recorded as income additional amounts relating to a settlement from
the Florida Department of Transportation for a right-of-way taking relating to a
parcel of land on its Property in Brooksville,  Florida.  The proceeds were used
to pay liabilities of the Partnership.

         Operating expenses,  including  depreciation expense and provisions for
write-down of assets,  were $1,063,333 and $554,511 for the years ended December
31,  2001 and 2000,  respectively.  During  2001,  the  Partnership  recorded  a
provision  for  write-down  of assets in the amount of $181,815  relating to the
Property in North Fort Myers,  Florida,  due to the fact that the tenant  ceased
operations and vacated this Property.  The provision  represented the difference
between the  carrying  value of the  Property  and its  estimated  fair value at
December  31,  2001.  In  addition,  during  2001,  the  Partnership  recorded a
provision for write-down of assets of $117,664  relating to the property located
in Statesville,  North Carolina.  The tenant of the Property defaulted under the
terms of its lease,  discontinued  operations  and  vacated  the  Property.  The
provision  represented the difference between the carrying value of the property
and its estimated fair value. The Partnership sold this Property in May 2001.

         The increase in operating  expenses  during 2001,  as compared to 2000,
was  partially   attributable   to  an  increase  in  the  costs   incurred  for
administrative expenses for servicing the Partnership and its Properties, and to
higher state taxes in some states in which the Partnership conducts business. In
addition, the Partnership incurred real estate taxes during 2001 relating to the
Property in North Fort Myers,  Florida, due to the tenant vacating the Property.
The Partnership  has re-leased this Property,  and the new tenant is responsible
for such expenses since December 2001.

         During 2000, the  Partnership  incurred  $32,424 in  transaction  costs
related to the General Partners retaining financial and legal advisors to assist
them in  evaluating  and  negotiating  the  proposed  merger  with CNL  American
Properties  Fund, Inc.  ("APF").  On March 1, 2000, the General Partners and APF
mutually agreed to terminate the merger.

         As a  result  of the  sales of the  Properties,  described  above,  the
Partnership recorded a total gain of $28,301 and $612,693 during 2001 and 2000.

         The  Partnership's  leases  as of  December  31,  2002,  are  generally
triple-net  leases and  contain  provisions  that the General  Partners  believe
mitigate  the adverse  effect of  inflation.  Such  provisions  include  clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified  level and/or  automatic  increases in base rent at specified  times
during the term of the lease.  Inflation,  overall,  has had a minimal effect on
results of operations of the Partnership.  Continued inflation may cause capital
appreciation of the  Partnership's  Properties.  Inflation and changing  prices,
however,  also may have an adverse impact on the sales of the restaurants and on
potential capital appreciation of the Properties.

         The  restaurant  industry  has been  relatively  resilient  during this
volatile time with steady performance during 2002. However, the industry remains
in a state of cautious optimism.  Restaurant  operators expect their business to
be better in 2003,  according to a nationwide  survey  conducted by the National
Restaurant  Association,   but  are  concerned  by  the  budget  deficits  being
experienced  by many states and the  potential  of new taxes on the  industry to
alleviate the situation.

         In January  2003,  FASB issued FASB  Interpretation  No. 46 ("FIN 46"),
"Consolidation  of Variable  Interest  Entities"  to expand upon and  strengthen
existing  accounting  guidance that  addresses when a company should include the
assets,   liabilities   and  activities  of  another  entity  in  its  financial
statements.  To improve financial  reporting by companies involved with variable
interest  entities (more  commonly  referred to as  special-purpose  entities or
off-balance sheet  structures),  FIN 46 requires that a variable interest entity
be considered by a company if that company is subject to a majority risk of loss
from the variable interest entity's activities or entitled to receive a majority
of the entity's  residual returns or both. Prior to FIN 46, a company  generally
included  another entity in its  consolidated  financial  statements  only if it
controlled  the entity  through  voting  interests.  Consolidation  of  variable
interests  entities will provide more complete  information about the resources,
obligations,   risks  and  opportunities  of  the  consolidated   company.   The
consolidation  requirements  of FIN 46 apply  immediately  to variable  interest
entities  created  after  January 31, 2003,  and to older  entities in the first
fiscal year or interim period beginning after June 15, 2003. Management believes
adoption  of this  standard  may result in either  consolidation  or  additional
disclosure  requirements with respect to the Partnership's  unconsolidated joint
ventures  or  Properties  held  with  affiliates  of  the  General  Partners  as
tenants-in-common,  which are currently  accounted for under the equity  method.
However,  such  consolidation  is  not  expected  to  significantly  impact  the
Partnership's results of operations.


<PAGE>



Item 7A. Quantitative and Qualitative Disclosures About Market Risk

         Not applicable.


Item 8.  Financial Statements and Supplementary Data




<PAGE>


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

                                    CONTENTS







                                                                         Page

Report of Independent Certified Public Accountants                        21

Financial Statements:

     Balance Sheets                                                       22

     Statements of Income                                                 23

     Statements of Partners' Capital                                      24

     Statements of Cash Flows                                          25-26

     Notes to Financial Statements                                     27-41









<PAGE>





               Report of Independent Certified Public Accountants






To the Partners
CNL Income Fund VIII, Ltd.



In our opinion,  the accompanying  balance sheets and the related  statements of
income,  of partners'  capital and of cash flows present fairly, in all material
respects,  the  financial  position  of CNL Income  Fund VIII,  Ltd.  (a Florida
limited  partnership)  at  December  31,  2002 and 2001,  and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2002 in conformity with accounting principles generally accepted in
the United  States of  America.  In  addition,  in our  opinion,  the  financial
statement  schedules  listed in the index appearing under item 15(a)(2)  present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial  statements.  These financial  statements
and financial  statement  schedules are the  responsibility of the Partnership's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedules based on our audits. We conducted
our audits of these statements in accordance with auditing  standards  generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

As  described in Note 1 to the  financial  statements,  on January 1, 2002,  the
Partnership   adopted  Statement  of  Financial   Accounting  Standard  No.  144
"Accounting for the Impairment or Disposal of Long-Lived Assets."




/s/ PricewaterhouseCoopers LLP

Orlando, Florida
January 31, 2003





<PAGE>


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

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                       December 31,
                                                                               2002                     2001
                                                                        -------------------      -------------------

 <c>
                             ASSETS

  Real estate properties with operating leases, net                          $  18,256,782       $       15,726,970
  Net investment in direct financing leases                                      4,559,231                4,722,393
  Real estate held for sale                                                             --                  926,538
  Investment in joint ventures                                                   4,609,998                4,601,808
  Mortgage notes receivable                                                             --                  926,080
  Cash and cash equivalents                                                      1,571,487                2,085,133
  Certificates of deposit                                                          382,249                  378,889
  Receivables, less allowance for doubtful accounts of
       $9,084 and $1,114, respectively                                              75,583                   88,175
  Due from related parties                                                           6,637                   52,641
  Accrued rental income                                                          1,392,675                1,398,742
  Other assets                                                                      87,223                   69,874
                                                                        -------------------      -------------------

                                                                             $  30,941,865       $       30,977,243
                                                                        ===================      ===================

               LIABILITIES AND PARTNERS' CAPITAL

  Accounts payable and accrued expenses                                        $     3,622              $     5,600
  Escrowed real estate taxes payable                                                 3,207                   10,654
  Distributions payable                                                            962,501                  787,501
  Due to related parties                                                            69,383                   75,482
  Rents paid in advance and security deposits                                       87,173                   52,096
                                                                        -------------------      -------------------
           Total liabilities                                                     1,125,886                  931,333

  Minority interest                                                                104,755                  106,834

  Partners' capital                                                             29,711,224               29,939,076
                                                                        -------------------      -------------------

                                                                             $  30,941,865            $  30,977,243
                                                                        ===================      ===================
</TABLE>
                See accompanying notes to financial statements.



<PAGE>


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

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                               Year Ended December 31,
                                                                      2002                2001               2000
                                                                ------------------   ---------------    ---------------

 <c>
Revenues:
     Rental income from operating leases                            $   2,131,424      $  1,906,835        $ 1,932,684
     Earned income from direct financing leases                           588,348           646,044            822,610
     Contingent rental income                                              88,664            80,176            102,566
     Interest and other income                                             66,376           270,989            271,702
                                                                ------------------   ---------------    ---------------
                                                                        2,874,812         2,904,044          3,129,562
                                                                ------------------   ---------------    ---------------
Expenses:
     General operating and administrative                                 268,405           335,950            176,544
     Property expenses                                                     86,336            50,966             23,963
     State and other taxes                                                 30,446            54,965             18,228
     Depreciation                                                         364,517           321,973            303,352
     Provision for write-down of assets                                        --           299,479                 --
     Transaction costs                                                         --                --             32,424
                                                                ------------------   ---------------    ---------------
                                                                          749,704         1,063,333            554,511
                                                                ------------------   ---------------    ---------------

Income Before Gain on Sale of Assets, Minority
     Interest in Income of Consolidated Joint Venture
     and Equity in Earnings of Unconsolidated Joint
     Ventures                                                           2,125,108         1,840,711          2,575,051

Gain on Sale of Assets                                                         --            28,301            612,693

Minority Interest in Income of Consolidated
     Joint Venture                                                        (12,864  )        (12,999  )         (13,318  )

Equity in Earnings of Unconsolidated Joint
     Ventures                                                             649,791           390,505            319,184
                                                                ------------------   ---------------    ---------------

Income from Continuing Operations                                       2,762,035         2,246,518          3,493,610
                                                                ------------------   ---------------    ---------------

Discontinued Operations (Note 6)
     Income from discontinued operations                                   55,304            90,028             93,561
     Gain on disposal of discontinued operations                          279,813                --                 --
                                                                ------------------   ---------------    ---------------

                                                                          335,117            90,028             93,561
                                                                ------------------   ---------------    ---------------


Net Income                                                          $   3,097,152      $  2,336,546       $  3,587,171
                                                                ==================   ===============    ===============

Income Per Limited Partner Unit
     Continuing Operations                                            $     0.078        $    0.064         $    0.099
     Discontinued Operations                                                0.010             0.003              0.003
                                                                ------------------   ---------------    ---------------


     Total                                                            $     0.088        $    0.067         $    0.102
                                                                ==================   ===============    ===============


Weighted Average Number of
     Limited Partner Units Outstanding                                 35,000,000        35,000,000         35,000,000
                                                                ==================   ===============    ===============

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


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

                         STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 2002, 2001, and 2000
<TABLE>
<CAPTION>


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

 <c>
Balance, December 31, 1999       $     1,000    $   285,349   $  35,000,000    $ (29,334,648 )  $  28,378,666     $ (4,015,000 )

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

Balance, December 31, 2000             1,000        285,349      35,000,000      (32,484,652 )     31,965,837       (4,015,000 )

    Distributions to limited
       partners ($0.090 per
       limited partner unit)              --             --              --       (3,150,004 )             --               --
    Net income                            --             --              --               --        2,336,546               --
                                -------------  -------------  --------------  ---------------   --------------   --------------

Balance, December 31, 2001             1,000        285,349      35,000,000      (35,634,656 )     34,302,383       (4,015,000 )

    Distributions to limited
       partners ($0.095 per
       limited partner unit)              --             --              --       (3,325,004 )             --               --
    Net income                            --             --              --               --        3,097,152               --
                                -------------  -------------  --------------  ---------------   --------------   --------------

Balance, December 31, 2002       $     1,000    $   285,349   $  35,000,000    $ (38,959,660 )  $  37,399,535     $ (4,015,000 )
                                =============  =============  ==============  ===============   ==============   ==============


   Total
 -------------

  $30,315,367



   (3,150,004 )
    3,587,171
--------------

   30,752,534



   (3,150,004 )
    2,336,546
--------------

   29,939,076



   (3,325,004 )
    3,097,152
--------------

  $29,711,224
==============

</TABLE>
                See accompanying notes to financial statements.


<PAGE>


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

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                                      2002               2001              2000
                                                                 ---------------    ---------------    --------------

 <c>
Increase (Decrease) in Cash and Cash Equivalents:

Cash Flows from Operating Activities:
      Net Income                                                   $  3,097,152       $  2,336,546      $  3,587,171
                                                                 ---------------    ---------------    --------------
      Adjustments to reconcile net income to net cash
         provided by operating activities:
             Depreciation                                               364,517            321,973           303,352
             Provision for write-down of assets                              --            299,479                --
             Minority interest in income of
                consolidated joint venture                               12,864             12,999            13,318
             Equity in earnings of unconsolidated joint
                ventures, net of distributions                         (108,898 )          103,020            82,374
             Gain on sale of assets                                    (279,813 )          (28,301 )        (612,693 )
             Decrease (increase) in receivables                          25,546             18,894            (3,581 )
             Increase (decrease) in due from related parties             46,004            (22,631 )         (30,010 )
             Amortization of investment in direct
                financing leases                                        187,666            181,500           171,457
             Increase (decrease) in accrued rental income                 3,355               (960 )         (61,481 )
             Decrease (increase) in other assets                        (17,349 )            9,085           (10,803 )
             Decrease in accounts payable,
                accrued expenses, and escrowed real
                estate taxes payable                                     (9,425 )          (30,540 )         (76,533 )
             Increase (decrease) in due to related
                parties                                                  (6,099 )           16,081           (61,926 )
             Increase (decrease) in rents paid in
                advance and security deposits                            35,077            (20,550 )          49,252
                                                                 ---------------    ---------------    --------------
                  Total adjustments                                     253,445            860,049          (237,274 )
                                                                 ---------------    ---------------    --------------

Net Cash Provided by Operating Activities                             3,350,597          3,196,595         3,349,897

      Cash Flows from Investing Activities:
         Proceeds from sale of real estate properties                 1,184,559            877,000         3,822,716
         Additions  to  real  estate   properties  with
             operating leases                                        (2,894,329 )               --        (2,925,217 )
         Return of capital from joint venture                           265,926                 --                --
         Liquidating distribution from joint venture                  1,076,041            236,665                --
         Investment in joint venture                                 (1,241,259 )         (865,942 )        (960,068 )
         Collections on mortgage notes receivable                       917,857            494,206            48,701
         Investment in certificates of deposit                         (376,202 )         (368,111 )        (450,000 )
         Redemption of certificates of deposit                          368,111            452,772                --
                                                                 ---------------    ---------------    --------------
             Net cash provided by (used in) investing
                activities                                             (699,296 )          826,590          (463,868 )
                                                                 ---------------    ---------------    --------------

Cash flows from Financing Activities:
         Distributions to limited partners                           (3,150,004 )       (3,150,004 )      (3,150,004 )
         Distributions to holder of minority interest                   (14,943 )          (14,683 )         (13,379 )
                                                                 ---------------    ---------------    --------------
             Net cash used in financing activities                   (3,164,947 )       (3,164,687 )      (3,163,383 )
                                                                 ---------------    ---------------    --------------

Net Increase (Decrease) in Cash and Cash Equivalents                   (513,646 )          858,498          (277,354 )

Cash and Cash Equivalents at Beginning of Year                        2,085,133          1,226,635         1,503,989
                                                                 ---------------    ---------------    --------------

Cash and Cash Equivalents at End of Year                           $  1,571,487       $  2,085,133      $  1,226,635
                                                                 ===============    ===============    ==============

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



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

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                               Year Ended December 31,
                                                                      2002               2001              2000
                                                                 ---------------    ---------------    --------------

 <c>
Supplemental Schedule of Non-Cash
      Financing Activities:

         Distributions declared and unpaid at
             December 31                                            $   962,501        $   787,501       $   787,501
                                                                 ===============    ===============    ==============


</TABLE>
                See accompanying notes to financial statements.

<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 2002, 2001, and 2000

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

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

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

         Real Estate and Lease  Accounting  - The  Partnership  records the real
         estate  property  acquisitions  at cost.  The  properties are leased to
         third parties  generally on a triple-net  basis,  whereby the tenant is
         generally  responsible  for  all  operating  expenses  relating  to the
         property, including property taxes, insurance, maintenance and repairs.
         During the years ended December 31, 2002, 2001, and 2000,  tenants paid
         directly  to real estate  taxing  authorities  approximately  $477,000,
         $433,000,  and  $411,500,   respectively,   in  real  estate  taxes  in
         accordance  with  the  terms  of  their  triple  net  leases  with  the
         Partnership.

         The leases of the  Partnership  provide for base minimum  annual rental
         payments payable in monthly installments.  In addition,  certain leases
         provide for  contingent  rental  revenues  based on the tenants'  gross
         sales in  excess  of a  specified  threshold.  The  Partnership  defers
         recognition  of  the  contingent  rental  revenues  until  the  defined
         thresholds  are met.  The leases  are  accounted  for using  either the
         direct  financing or the operating  method.  Such methods are described
         below:

                  Direct  financing  method - Leases  accounted  for  using  the
                  direct  financing  method are recorded at their net investment
                  (which at the inception of the lease generally  represents the
                  cost of the asset).  Unearned income is deferred and amortized
                  to income  over the lease  terms so as to  produce a  constant
                  periodic rate of return on the Partnership's investment in the
                  leases.  For property  leases  classified as direct  financing
                  leases,  the  building  portions  of the  majority of property
                  leases are accounted for as direct  financing leases while the
                  land  portions of these leases are  accounted for as operating
                  leases.

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

                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled rental payments to date.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000

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

         Substantially all leases are for 14 to 25 years and provide for minimum
         and contingent  rentals.  The lease options  generally allow tenants to
         renew the leases for two to four successive  five-year  periods subject
         to the same terms and conditions of the initial lease. Most leases also
         allow the tenant to purchase  the property at fair market value after a
         specified portion of the lease has elapsed.

         When  the  properties  are  sold,  the  related  cost  and  accumulated
         depreciation  for operating  leases and the net  investment  for direct
         financing leases,  plus any accrued rental income, are removed from the
         accounts and gains or losses from sales are  reflected  in income.  The
         General   Partners  of  the  Partnership   review  the  properties  for
         impairment  whenever events or changes in  circumstances  indicate that
         the  carrying  amount  of the  assets  may not be  recoverable  through
         operations.  The General  Partners  determine  whether an impairment in
         value has occurred by comparing the estimated future  undiscounted cash
         flows, including the residual value of the property,  with the carrying
         cost of the  individual  property.  If an impairment is indicated,  the
         assets are adjusted to their estimated fair value.

         When the  collection  of amounts  recorded as rental or other income is
         considered  to be  doubtful,  a provision  is recorded to increase  the
         allowance for doubtful accounts. If amounts are subsequently determined
         to be  uncollectible,  the  corresponding  receivable and allowance for
         doubtful accounts are decreased accordingly.

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

         The   Partnership's   investments  in  Asheville  Joint  Venture;   CNL
         Restaurant Investments II; Bossier City Joint Venture; and CNL VIII, X,
         XII Kokomo  Joint  Venture;  and a property  in  Walker,  Louisiana;  a
         property in Denver,  Colorado; a property in Kenosha,  Wisconsin; and a
         property in Buffalo  Grove,  Illinois  for which each  property is held
         with  affiliates  of the  General  Partners as  tenants-in-common,  are
         accounted  for  using  the  equity  method  since  each  joint  venture
         agreement  requires  the consent of all  partners on all key  decisions
         affecting the operations of the underlying property.

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

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

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

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


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000

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

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

         Reclassification   -  Certain  items  in  the  prior  year's  financial
         statements  have been  reclassified  to conform  to 2002  presentation,
         including a change in  presentation of the statement of cash flows from
         the  direct to the  indirect  method.  These  reclassifications  had no
         effect on partner's capital, net income or cash flows.

         Statement  of  Financial  Accounting  Standards  No. 144 ("FAS  144") -
         Effective  January  1,  2002,  the  Partnership  adopted  Statement  of
         Financial  Accounting  Standards No. 144 "Accounting for the Impairment
         or Disposal of  Long-Lived  Assets."  This  statement  requires  that a
         long-lived  asset be  tested  for  recoverability  whenever  events  or
         changes in  circumstances  indicate that its carrying amount may not be
         recoverable.   The  carrying  amount  of  a  long-lived  asset  is  not
         recoverable  if it  exceeds  the  sum of the  undiscounted  cash  flows
         expected to result from the use and eventual  disposition of the asset.
         The assessment is based on the carrying amount of the asset at the date
         it is tested for recoverability.  An impairment loss is recognized when
         the carrying  amount of a long-lived  asset exceeds its estimated  fair
         value. If an impairment is recognized,  the adjusted carrying amount of
         a long-lived  asset is its new cost basis.  The statement also requires
         that the results of  operations of a component of an entity that either
         has been disposed of or is classified as held for sale be reported as a
         discontinued   operation  if  the  disposal   activity  was   initiated
         subsequent to the adoption of the Standard.

         FASB  Interpretation  No. 46 ("FIN 46") - In January 2003,  FASB issued
         FASB  Interpretation  No. 46 ("FIN  46"),  "Consolidation  of  Variable
         Interest  Entities" to expand upon and strengthen  existing  accounting
         guidance  that  addresses  when a company  should  include  the assets,
         liabilities   and   activities  of  another  entity  in  its  financial
         statements.  To improve financial  reporting by companies involved with
         variable    interest   entities   (more   commonly   referred   to   as
         special-purpose  entities  or  off-balance  sheet  structures),  FIN 46
         requires that a variable  interest entity be considered by a company if
         that  company is subject to a majority  risk of loss from the  variable
         interest  entity's  activities or entitled to receive a majority of the
         entity's residual returns or both. Prior to FIN 46, a company generally
         included another entity in its consolidated  financial  statements only
         if it controlled the entity through voting interests.  Consolidation of
         variable  interests  entities  will provide more  complete  information
         about  the  resources,  obligations,  risks  and  opportunities  of the
         consolidated  company.  The consolidation  requirements of FIN 46 apply
         immediately  to variable  interest  entities  created after January 31,
         2003,  and to older entities in the first fiscal year or interim period
         beginning  after June 15, 2003.  Management  believes  adoption of this
         standard may result in either  consolidation  or additional  disclosure
         requirements  with respect to the  Partnership's  unconsolidated  joint
         ventures or properties held with affiliates of the general  partners as
         tenants-in-common,  which are currently  accounted for under the equity
         method.  However,  such  consolidation is not expected to significantly
         impact the Partnership's results of operations.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


2.       Real Estate Properties with Operating Leases:
         --------------------------------------------

         Real estate properties with operating leases consisted of the following
         at December 31:
<TABLE>
<CAPTION>

                                                                    2002                   2001
                                                             --------------------   --------------------

 <c>
                 Land                                             $    9,988,909         $    8,953,287
                 Buildings                                            10,928,236              9,069,529
                                                             --------------------   --------------------
                                                                      20,917,145             18,022,816

                 Less accumulated depreciation                        (2,660,363 )           (2,295,846 )
                                                             --------------------   --------------------

                                                                  $   18,256,782         $   15,726,970
                                                             ====================   ====================
</TABLE>


         In July 2000,  the  Partnership  sold its  properties  in  Brooksville,
         Bayonet  Point  and Sun  City,  Florida,  for a total of  approximately
         $3,465,100  and  received  net sales  proceeds  totaling  approximately
         $3,402,700, resulting in a total gain of approximately $484,800.

         In July 2000, the Partnership reinvested the sales proceeds it received
         from the sale of the properties in Sun City, Florida and Bayonet Point,
         Florida in a Bennigan's property located in Deerfield,  Illinois, at an
         approximate  cost of $2,462,700  from CNL BB Corp., an affiliate of the
         general partners.

         In September 2000, the Partnership  sold its property in  Jacksonville,
         Florida and  received  net sales  proceeds of  approximately  $420,000,
         resulting in a gain of  approximately  $127,900.  In October 2000,  the
         Partnership  reinvested  these sales proceeds in a Property in Hialeah,
         Florida at an approximate cost of $472,300.

         In May 2001, the Partnership  sold its property in  Statesville,  North
         Carolina,  and received net sales proceeds of $877,000,  resulting in a
         gain of approximately $28,300.

         In January 2002, the Partnership  reinvested a portion of the net sales
         proceeds it  received  from the sale of the  Property  in  Statesville,
         North Carolina,  and the prepaid principal received in 2001 relating to
         a promissory  note,  in a Property  located in Ontario,  Oregon,  at an
         approximate cost of $654,400.

         In June 2002, the Partnership  reinvested the majority of the net sales
         proceeds it received  from the sale of the  Property in Baseball  City,
         Florida, in a Property located in Denton, Texas, at an approximate cost
         of approximately $1,147,600. The property was acquired from CNL Funding
         2001-A, LP, an affiliate of the general partners.

         In September  2002, the  Partnership  reinvested the prepaid  principal
         received  in May 2002  relating  to a  promissory  note,  in a Property
         located  in  Eden  Prairie,   Minnesota,  at  an  approximate  cost  of
         $1,093,900.  The property was  acquired  from CNL Net Lease  Investors,
         L.P., an affiliate of the general partners.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


2.       Real Estate Properties with Operating Leases - Continued:
         --------------------------------------------------------

         The following is a schedule of the future  minimum lease payments to be
         received on noncancellable operating leases at December 31, 2002:

                2003                                        $  2,320,788
                2004                                           2,334,917
                2005                                           2,208,681
                2006                                           1,742,117
                2007                                           1,700,145
                Thereafter                                     9,618,929
                                                         ----------------

                                                            $ 19,925,577
                                                         ================

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

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

                                                 2002               2001
                                           -----------------   ---------------

         Minimum lease payments
            receivable                        $  6,215,952       $  6,930,618
         Estimated residual values               1,700,249          1,700,249
         Less unearned income                   (3,356,970 )       (3,908,474 )
                                            -----------------  ---------------

         Net investment in direct
            financing leases                  $  4,559,231      $   4,722,393
                                            =================  ===============

         In July 2000 and May 2001, the Partnership sold two and one properties,
         respectively,  for which the building  portion had been classified as a
         direct financing  lease.  Accordingly,  the gross  investment  (minimum
         lease  payments  receivable  and  the  estimated  residual  value)  and
         unearned income relating to the building were removed from the accounts
         and the gain from the sale of the property was reflected in income.

         At  June  30,  2001,  the  Partnership   established  a  provision  for
         write-down  of assets of $88,144 for its  property in North Fort Myers,
         Florida,   because  the  tenant  ceased  operations  and  vacated  this
         property. The provision represented the difference between the carrying
         value of the  property and its  estimated  fair value at June 30, 2001.
         During  July  2001,  this  lease  was  terminated.  As  a  result,  the
         Partnership reclassified the lease from direct financing leases to real
         estate   properties   with   operating   leases.   No   loss   on   the
         reclassification of the direct financing lease was recorded.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


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

         The  following  is a schedule of future  minimum  lease  payments to be
         received on direct financing leases at December 31, 2002:

                     2003                                 $   772,901
                     2004                                     772,901
                     2005                                     772,901
                     2006                                     799,228
                     2007                                     812,347
                     Thereafter                             2,285,674
                                                      ----------------

                                                         $  6,215,952
                                                      ================


4.       Investment in Joint Ventures:
         ----------------------------

         The  Partnership  has an 85.54%,  a 36.8%, a 34%, and a 10% interest in
         the profits  and losses of  Asheville  Joint  Venture,  CNL  Restaurant
         Investments II, Bossier City Joint Venture, and CNL VIII, X, XII Kokomo
         Joint  Venture,  respectively.  The remaining  interests in these joint
         ventures are held by affiliates of the Partnership  which have the same
         general partners.  Asheville Joint Venture, Bossier City Joint Venture,
         and CNL VIII,  X, XII  Kokomo  Joint  Venture  each owns and leases one
         property,  and CNL  Restaurant  Investments  II owns  and  leases  five
         properties,  to an  operator  of  national  fast-food  or  family-style
         restaurants.  In addition,  the Partnership  owns properties in Walker,
         Louisiana;  Denver,  Colorado;  Kenosha,  Wisconsin; and Buffalo Grove,
         Illinois as tenants-in-common  with affiliates of the General Partners.
         As of December 31, 2002, the Partnership  owned a 17%, 19.3%,  10%, and
         66%  interest,  respectively,  in these  properties,  as four  separate
         tenancy-in common arrangements.

         In  August  2000,  the  Partnership  used a  portion  of the net  sales
         proceeds  from sale of its  properties  to  acquire  an  interest  in a
         Baker's Square property in Libertyville, Illinois, with CNL Income Fund
         IX, Ltd., an affiliate of the general partners.  In September 2002, the
         tenancy in common sold its  property in  Libertyville,  Illinois,  to a
         third party and received net sales proceeds of approximately $1,630,400
         resulting in a gain of approximately  $199,300. The Partnership owned a
         66% interest in this  property.  The  Partnership  and CNL IX, as a new
         tenancy in common arrangement,  used the liquidating  distribution from
         the sale of the  property  to  acquire a  property  in  Buffalo  Grove,
         Illinois  at an  approximate  cost  of  $1,588,800.  The  property  was
         acquired  from CNL Net  Lease  Investors,  L.P.,  an  affiliate  of the
         general partners.  As of December 31, 2002, the Partnership owned a 66%
         interest in this property.

         In March 2001, Middleburg Joint Venture, in which the Partnership owned
         a 12.46% interest,  sold its property to the tenant, in accordance with
         the purchase  option under the lease  agreement,  for  $1,900,000,  and
         recorded a loss of approximately $61,900. The Partnership dissolved the
         joint venture and did not recognize any gain or loss on the dissolution
         of  the  joint  venture.   As  a  result,   the  Partnership   received
         approximately $236,700 as a return of capital for its pro-rata share of
         the net sales proceeds.

         In April 2001, the  Partnership  reinvested  the amounts  received as a
         return of capital  from  Middleburg  Joint  Venture  in  another  joint
         venture  arrangement,  CNL VIII, X, XII Kokomo Joint Venture,  with CNL
         Income Fund X, Ltd. and CNL Income Fund XII, Ltd.,  both  affiliates of
         the general partners.  The Partnership  acquired this interest from CNL
         BB Corp.,  an  affiliate  of the general  partners.  As of December 31,
         2002,


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


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

         the  Partnership  had  contributed  approximately  $211,200  for  a 10%
         interest  in  the  profits  and  losses  of  the  joint  venture.   The
         Partnership accounts for its investment in this joint venture under the
         equity method since the joint venture agreement requires the consent of
         all  partners on all key  decisions  affecting  the  operations  of the
         underlying property.

         In June  2001,  the  Partnership  reinvested  a  portion  of the  sales
         proceeds  from the  property  in  Statesville,  North  Carolina,  in an
         additional property in Walker,  Louisiana as tenants-in-common with CNL
         Income Fund XVI, Ltd., a Florida  limited  partnership and affiliate of
         the general  partners.  As of December 31, 2002,  the  Partnership  had
         contributed approximately $232,300 for a 17% interest in this property.
         In July 2001, the  Partnership  reinvested the remaining sales proceeds
         it  received  from  the  sale of the  property  in  Statesville,  North
         Carolina,   in  an  additional   property  in  Denver,   Colorado,   as
         tenants-in-common,  with CNL Income Fund XVIII, Ltd., a Florida limited
         partnership and affiliate of the general  partners.  As of December 31,
         2002, the  Partnership  had  contributed  approximately  $422,500 for a
         19.30%  interest  in the  profits  and  losses  of this  property.  The
         Partnership  accounts for its investment in these  properties under the
         equity method since the agreement  requires the consent of all partners
         on all  key  decisions  affecting  the  operations  of  the  underlying
         properties.

         In June 2002, CNL Restaurant  Investments  II, in which the Partnership
         owns a 36.8%  interest,  sold its  property  in  Columbus,  Ohio to the
         tenant and  received  net sales  proceeds of  approximately  $1,215,700
         resulting  in a gain of  approximately  $448,300.  In  addition in June
         2002, this joint venture sold its property in Pontiac,  Michigan to the
         tenant  and  received  net sales  proceeds  of  approximately  $722,600
         resulting  in a loss of $189,800.  The joint  venture used the proceeds
         from the sale of the property in  Columbus,  Ohio to acquire a property
         in  Dallas,  Texas at an  approximate  cost of  $1,147,400.  The  joint
         venture  acquired  this  property  from  CNL  Funding  2001-A,  LP,  an
         affiliate   of  the  general   partners.   The   Partnership   received
         approximately  $265,900  representing  a  return  of  capital  for  its
         pro-rata share of the  uninvested  net sales  proceeds  relating to the
         Property  in  Pontiac,   Michigan.  In  August  2002,  the  Partnership
         reinvested a portion of the return of capital in a Property in Kenosha,
         Wisconsin as  tenants-in-common  with CNL Income Fund XVII,  Ltd. ("CNL
         XVII"),  a Florida limited  partnership and an affiliate of the general
         partners,  at an approximate cost of $1,883,000 from a third party. The
         Partnership  and CNL  XVII  entered  into  an  agreement  whereby  each
         co-tenant  will share in the  profits  and losses of each  property  in
         proportion to its applicable  percentage  interest.  As of December 31,
         2002,  the  Partnership  contributed  approximately  $188,300 for a 10%
         interest in this property.

         The financial  results  relating to the  properties in Columbus,  Ohio;
         Pontiac,   Michigan;  and  Libertyville,   Illinois  are  reflected  as
         Discontinued Operations below.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


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

         The following presents the combined,  condensed  financial  information
         for  the  unconsolidated  joint  ventures  and the  properties  held as
         tenants-in-common with affiliates at:
<TABLE>
<CAPTION>

                                                                                     December 31,
                                                                               2002                 2001
                                                                         -----------------     ---------------

 <c>
                  Real estate properties with operating
                      leases, net                                        $     13,743,163         $10,448,870
                  Net investment in direct financing
                      Lease                                                       985,387                  --
                  Real estate held for sale                                            --           3,134,176
                  Cash                                                             26,033              38,224
                  Receivables                                                          --              10,397
                  Accrued rental income                                           200,487             124,469
                  Liabilities                                                      16,475               4,452
                  Partners' capital                                            14,938,595          13,751,684


                                                                         Year Ended December 31,
                                                                 2002             2001             2000
                                                            ----------------  --------------  ----------------

                Rental revenues                                 $ 1,444,857       $ 997,803        $  852,201
                Expenses                                           (297,738 )      (223,476 )        (158,609 )
                                                            ----------------  --------------  ----------------
                    Income from continuing operations             1,147,119         774,327           693,592
                                                            ----------------  --------------  ----------------
                Discontinued operations:
                    Income from discontinued operations             173,750         297,399           210,251
                    Gain on disposal of assets                      457,786              --                --
                                                            ----------------  --------------  ----------------
                                                                    631,536         297,399           210,251
                                                            ----------------  --------------  ----------------

                Net Income                                      $ 1,778,655     $ 1,071,726        $  903,843
                                                            ================  ==============  ================
</TABLE>

         The Partnership  recognized  income totaling  $649,791,  $390,505,  and
         $319,184,  for the  years  ended  December  31,  2002,  2001 and  2000,
         respectively, from these joint ventures.

5.       Mortgage Notes Receivable:
         -------------------------

         In 1996,  the  Partnership  had  accepted two  promissory  notes in the
         principal sum totaling  $460,000 in connection  with the sale of two of
         its properties in Jacksonville,  Florida.  The promissory notes,  which
         were collateralized by mortgages on the properties,  bore interest at a
         rate of 10% per annum.  During the year ended  December 31,  2001,  the
         borrower   repaid   the  total   outstanding   principal   balance   of
         approximately $441,500.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


5.       Mortgage Notes Receivable - Continued:
         -------------------------------------

         In  addition,  in  connection  with the 1996  sale of its  property  in
         Orlando,  Florida,  the  Partnership  accepted a promissory note in the
         principal sum of $1,388,568,  representing the gross sales price of the
         property.  The  promissory  note bore  interest at a rate of 10.75% per
         annum, was  collateralized  by a mortgage on the property and was being
         collected in 12 monthly  installments  of interest  only, in 17 monthly
         installments  of $15,413  consisting  of principal  and  interest,  and
         thereafter  in  151  monthly  installments  of  $12,633  consisting  of
         principal and interest.  In 1999, the borrower  repaid a portion of the
         principal  in the amount of  $272,500.  In 2002,  the  borrower  repaid
         approximately  $917,900  which  represented  the remaining  outstanding
         principal balance.

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

                                               2002            2001
                                              ------------    ------------

            Principal balance                     $    --       $ 917,857
            Accrued interest receivable                --           8,223
                                              ------------    ------------

                                                  $    --       $ 926,080
                                              ============    ============


         The General  Partners believe that the estimated fair value of mortgage
         notes  receivable at December 31, 2001,  approximated  the  outstanding
         principal  amount based on  estimated  current  rates at which  similar
         loans would be made to borrowers  with  similar  credit and for similar
         maturities.

6.       Discontinued Operations:
         -----------------------

         In May 2002,  the  Partnership  sold its  property  in  Baseball  City,
         Florida to the tenant and received net sales proceeds of  approximately
         $1,184,600,  resulting in a gain on disposal of discontinued operations
         of approximately $279,800.

         The financial  results for this property are reflected as  Discontinued
         Operations  in the  accompanying  financial  statements.  The operating
         results of discontinued operations are as follows:
<TABLE>
<CAPTION>

                                                                              Year Ended December 31,
                                                                       2002             2001             2000
                                                                  ---------------    ------------    -------------

 <c>
           Rental revenues                                             $  55,304        $ 90,028         $ 93,561
           Gain on disposal of assets                                    279,813              --               --
                                                                  ---------------    ------------    -------------

           Income from discontinued operations                         $ 335,117        $ 90,028         $ 93,561
                                                                  ===============    ============    =============
</TABLE>



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


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

         From inception through December 31, 1999, generally, all net income and
         net losses of the Partnership, excluding gains and losses from the sale
         of  properties,  were  allocated  99% to the limited  partners  and one
         percent to the General  Partners.  From inception  through December 31,
         1999,  distributions  of net cash  flow  were  made 99% to the  limited
         partners  and one percent to the  General  Partners;  however,  the one
         percent of net cash flow to be distributed to the General  Partners was
         subordinated  to receipt by the limited  partners of an aggregate,  ten
         percent,  cumulative,  noncompounded  annual  return on their  adjusted
         capital contributions (the "10% Preferred Return").

         From inception through December 31, 1999, generally, net sales proceeds
         from the sale of properties not in liquidation of the  Partnership,  to
         the extent distributed,  were distributed first to the limited partners
         in an  amount  sufficient  to  provide  them with  their 10%  Preferred
         Return,  plus the return of their adjusted capital  contributions.  The
         General Partners then received,  to the extent previously  subordinated
         and unpaid,  a one percent  interest in all prior  distributions of net
         cash flow and a return of their  capital  contributions.  Any remaining
         sales proceeds were  distributed 95 percent to the limited partners and
         five  percent  to the  General  Partners.  Any gain  from the sale of a
         property  not  in  liquidation  of the  Partnership  was,  in  general,
         allocated in the same manner as net sales  proceeds are  distributable.
         Any loss from the sale of a property was, in general,  allocated first,
         on a pro rata  basis,  to  partners  with  positive  balances  in their
         capital  accounts;  thereafter,  95 percent to the limited partners and
         five percent to the General Partners.

         Generally,  net sales  proceeds from a liquidating  sale of properties,
         will be used in the following order: (i) first to pay and discharge all
         of  the  Partnership's   liabilities  to  creditors,  (ii)  second,  to
         establish  reserves that may be deemed necessary for any anticipated or
         unforeseen liabilities or obligations of the Partnership,  (iii) third,
         to pay all of the Partnership's liabilities, if any, to the general and
         limited partners,  (iv) fourth,  after allocations of net income, gains
         and/or  losses,  to distribute  to the partners  with positive  capital
         account  balances,  in  proportion  to  such  balances,  up to  amounts
         sufficient  to  reduce  such  positive   balances  to  zero,   and  (v)
         thereafter, any funds remaining shall then be distributed 95 percent to
         the limited partners and five percent to the General Partners.

         Effective  January 1, 2000, the General  Partners waived their right to
         receive  future  distributions  from the  Partnership,  including  both
         distributions  of operating cash flow and  distributions of liquidation
         proceeds,   to  the  extent   that  the   cumulative   amount  of  such
         distributions would exceed the balance in the General Partners' capital
         account as of December  31,  1999.  Accordingly,  for years  commencing
         January  1,  2000 and  after,  the  Partnership's  net  income  will be
         allocated entirely among the limited partners.  However,  if losses are
         allocated to the general  partners in a year, an amount of income equal
         to the sum of such losses may be allocated  to the General  Partners in
         succeeding years. Accordingly,  the General Partners were not allocated
         any net  income and did not  receive  any  distributions  for the years
         ended December 31, 2002, 2001 and 2000.

         During the year ended  December  31,  2002,  the  Partnership  declared
         distributions to the Limited Partners of $3,325,004. During each of the
         years  ended  December  31,  2001 and 2000,  the  Partnership  declared
         distributions to the limited partners of $3,150,004. During the quarter
         ended   December  31,  2002,   the   Partnership   declared  a  special
         distribution  to the Limited  Partners of $175,000,  which  represented
         cumulative  excess operating  reserves.  This special  distribution was
         effectively a return of a portion of the limited partners'  investment,
         although in accordance  with the  partnership  agreement,  $175,000 was
         applied  toward  the  limited   partners'  10%  Preferred   Return.  No
         distributions have been made to the general partners to date.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


8.       Income Taxes:
         ------------

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

                                                                    2002             2001              2000
                                                                --------------   --------------   ---------------

 <c>
          Net income for financial reporting purposes              $3,097,152    $   2,336,546       $ 3,587,171

          Effect of timing differences relating to
             depreciation                                             (23,691 )        (57,394 )         (99,400 )

          Provision for write-down of assets                             --          299,479                --

          Direct financing leases recorded as operating
              leases for tax reporting purposes                       299,623          181,500           171,457

          Effect of timing differences relating to
              allowance for doubtful accounts                           7,970          211,991            (5,305 )

          Accrued rental income                                         3,355         (212,295 )         (61,481 )

          Rents paid in advance                                        24,899          (32,217 )          49,252

          Effect of timing differences relating to gains on
               real estate property sales                            (256,869 )         60,643          (597,936 )

          Deduction of transaction costs for tax reporting
               purposes                                                    --               --          (206,488 )

          Effect of timing differences relating to equity
               in   earnings of unconsolidated joint ventures        (163,230 )         15,396            14,929

          Effect of timing differences relating to minority
               interest income of consolidated joint venture         (103,783 )           (481 )           1,113
                                                                --------------   --------------   ---------------

          Net income for federal income tax purposes              $ 2,885,426      $ 2,803,168       $ 2,853,312
                                                                ==============   ==============   ===============
</TABLE>


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


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

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal  shareholders of CNL Holdings,  Inc. The other individual
         general partner, Robert A. Bourne, serves as President and Treasurer of
         CNL Financial  Group,  Inc., a wholly owned subsidiary of CNL Holdings,
         Inc. CNL APF  Partners,  LP, a wholly owned  subsidiary of CNL American
         Properties Fund, Inc. ("APF") served as the Partnership's advisor until
         January 1, 2002,  when it assigned its rights and  obligations  under a
         management  agreement to RAI Restaurants,  Inc.  (formerly known as CNL
         Restaurants  XVIII,  Inc.). RAI Restaurants,  Inc. ("the Advisor") is a
         wholly owned  subsidiary of APF. The  individual  general  partners are
         stockholders and directors of APF.

         The Advisor provides services relating to management of the Partnership
         and  its  properties  pursuant  to  a  management  agreement  with  the
         Partnership. In connection therewith, the Partnership has agreed to pay
         the Advisor an annual,  noncumulative,  subordinated  management fee of
         one percent of the sum of gross revenues from  properties  wholly owned
         by the  Partnership  and the  Partnership's  allocable  share  of gross
         revenues from joint ventures, but not in excess of competitive fees for
         comparable  services.  These fees will be incurred  and will be payable
         only after the limited partners receive their 10% Preferred Return. Due
         to the fact that these fees are noncumulative,  if the limited partners
         have not received their 10% Preferred Return in any particular year, no
         management  fees will be due or payable  for such year.  As a result of
         such threshold, no management fees were incurred during the years ended
         December 31, 2002, 2001 and 2000.

         The Advisor is also entitled to receive a deferred,  subordinated  real
         estate disposition fee, payable upon the sale of one or more properties
         based on the lesser of one-half of a competitive real estate commission
         or  three  percent  of the  sales  price  if  the  Advisor  provides  a
         substantial amount of services in connection with the sale. However, if
         the net sales  proceeds are  reinvested in a replacement  property,  no
         such  real  estate   disposition  fees  will  be  incurred  until  such
         replacement   property  is  sold  and  the  net  sales   proceeds   are
         distributed.  The  payment  of  the  real  estate  disposition  fee  is
         subordinated to receipt by the limited  partners of their aggregate 10%
         Preferred  Return,  plus  their  adjusted  capital  contributions.   No
         deferred,  subordinated real estate  disposition fees were incurred for
         the years ended December 31, 2002, 2001 and 2000.

         During  the  years  ended  December  31,  2002,  2001,  and  2000,  the
         Partnership's  advisor  and  its  affiliates  provided  accounting  and
         administrative  services.  The Partnership  incurred $184,100 $201,158,
         and $95,548,  for the years ended  December 31, 2002,  2001,  and 2000,
         respectively, for such services.

         In April 2001, the Partnership, CNL Income Fund X, Ltd., and CNL Income
         Fund XII, Ltd., through a joint venture agreement, acquired an interest
         in a Golden  Corral  property  from CNL BB Corp.,  an  affiliate of the
         general partners, at an approximate cost of $2,112,000. CNL Income Fund
         X, Ltd. and CNL Income Fund XII, Ltd., are Florida limited partnerships
         and affiliates of the general partners.  CNL BB Corp. had purchased and
         temporarily  held title to this  property  in order to  facilitate  the
         acquisition of the property by the Partnership. The purchase price paid
         by the  Partnership  represents  the costs  incurred by CNL BB Corp. to
         acquire and carry the property.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


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

         In June 2002,  the  Partnership  acquired a property in Denton,  Texas,
         from CNL Funding 2001-A, LP, for approximately $1,147,600. In addition,
         in June 2002, CNL Restaurant Investments II also acquired a property in
         Dallas,   Texas,  from  CNL  Funding  2001-A,   LP,  for  approximately
         $1,147,400.  CNL  Funding  2001-A,  LP,  an  affiliate  of the  general
         partners, had purchased and temporarily held title to the properties in
         order  to  facilitate   the   acquisition  of  the  properties  by  the
         Partnership  and the joint  venture.  The  purchase  price  paid by the
         Partnership and the joint venture represented the costs incurred by CNL
         Funding 2001-A, LP to acquire and carry the properties.

         In  September  2002,  the  Partnership  acquired  a  property,  in Eden
         Prairie,  Minnesota,  from CNL Net Lease Investors, L.P. ("NLI"), at an
         approximate  cost of $1,093,900.  In addition,  the Partnership and CNL
         IX, as  tenants-in-common,  acquired  from NLI a  property  in  Buffalo
         Grove, Illinois at an approximate cost of $1,588,800.  During 2002, and
         prior  to  the  Partnership's  acquisition  of  these  properties,  CNL
         Financial LP Holding,  LP ("CFN") and CNL Net Lease  Investors GP Corp.
         ("GP  Corp")  purchased  the  limited  partner's  interest  and general
         partner's interest, respectively, of NLI. Prior to this transaction, an
         affiliate of the  Partnership's  general partners owned a 0.1% interest
         in NLI and served as a general  partner of NLI.  The  original  general
         partners of NLI waived their  rights to benefit from this  transaction.
         The acquisition  price paid by CFN for the limited  partner's  interest
         was based on the portfolio  acquisition price. The Partnership acquired
         the   properties  at  CFN's  cost  and  did  not  pay  any   additional
         compensation  to CFN for the  acquisition of the  properties.  Each CNL
         entity is an affiliate of the Partnership's general partners.

         The due to related parties consisted of the following at December 31:
<TABLE>
<CAPTION>

                                                                       2002                2001
                                                                 -----------------    ----------------

 <c>
             Due to Advisor and its Affiliates:
                  Accounting and administrative services               $   14,333          $    5,357
                  Deferred, subordinated real estate
                      disposition fee                                      55,050              55,050
                  Other                                                        --              15,075
                                                                 -----------------    ----------------

                                                                       $   69,383          $   75,482
                                                                 =================    ================
</TABLE>

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

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

<TABLE>
<CAPTION>
                                                              2002               2001                2000
                                                         ---------------    ---------------     ---------------

 <c>
         Golden Corral Corporation                            $ 710,351         $  703,279          $  694,735
         Carrols Corporation and Texas Taco
            Cabana, LP                                          512,513            421,048             422,375

</TABLE>

<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


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

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

                                                  2002               2001                2000
                                             ---------------    ---------------     ---------------

 <c>
           Golden Corral Family
               Steakhouse Restaurants             $ 710,351         $  680,395          $  722,115
           Burger King                              793,019            581,888             882,922
           Shoney's                                     N/A                N/A             363,946
</TABLE>

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

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

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

         The following table presents  selected  unaudited  quarterly  financial
         data for each full quarter during the years ended December 31, 2002 and
         2001:
<TABLE>
<CAPTION>

                       2002 Quarter                  First       Second         Third       Fourth         Year
          ---------------------------------------- ----------- ------------  ------------ ------------  ------------

 <c>
          Continuing Operations (1):
               Revenues                             $ 686,012    $ 646,295     $ 752,864    $ 789,641    $2,874,812
               Equity in earnings of
                 consolidated joint ventures          101,570      198,391       239,385      110,445       649,791
               Income from continuing
                 operations                           582,275      670,488       782,544      726,728     2,762,035

          Discontinued Operations (1):
               Revenues                                38,332       16,972            --           --        55,304
               Income from discontinued
                 operations                            38,332      296,785            --           --       335,117

          Net Income                                  620,607      967,273       782,544      726,728     3,097,152

          Net Income per limited partner unit:
               Continuing operations                  $ 0.017     $  0.020      $  0.022     $  0.020      $  0.079
               Discontinued operations                  0.001        0.008            --           --         0.009
                                                   ----------- ------------  ------------ ------------  ------------
                     Total                            $ 0.018     $  0.028      $  0.022     $  0.020      $  0.088
                                                   =========== ============  ============ ============  ============
</TABLE>


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2002, 2001, and 2000


11.      Selected Quarterly Financial Data - Continued:
         ---------------------------------------------
<TABLE>
<CAPTION>

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

 <c>
          Continuing Operations (1):
               Revenues                             $792,918     $ 703,354     $ 688,378     $719,394     $2,904,044
               Equity in earnings of
                 unconsolidated joint ventures        87,501        90,268       107,815      104,921        390,505
               Income from continuing
                 operations                          386,342       560,582       648,757      650,837      2,246,518

          Discontinued Operations (1):
               Revenues                               19,742        32,808        20,582       16,896         90,028
               Income from discontinued
                 operations                           19,742        32,808        20,582       16,896         90,028

          Net Income                                 406,084       593,390       669,339      667,733      2,336,546

          Net Income per limited partner unit:
               Continuing operations                 $ 0.011     $   0.016      $  0.018     $  0.019      $   0.064
               Discontinued operations                 0.001         0.001         0.001           --          0.003
                                                   ---------- -------------  ------------  -----------  -------------

               Total                                 $ 0.012     $   0.017      $  0.019     $  0.019      $   0.067
                                                   ========== =============  ============  ===========  =============
</TABLE>

         (1)    Certain  items  in  the  quarterly   financial  data  have  been
                reclassified  to  conform  to  the  2002   presentation.   These
                reclassifications  had no effect on net  income.  The results of
                operations  relating to properties  that were either disposed of
                or were  classified as held for sale as of December 31, 2002 are
                reported as discontinued  operations for all periods  presented.
                The  results of  operations  relating  to  properties  that were
                identified   for  sale  as  of   December   31,  2001  but  sold
                subsequently are reported as continuing operations.


<PAGE>


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

         None.


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

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

         James M. Seneff, Jr., age 56. Since 1971, Mr. Seneff has been active in
the  acquisition,  development,  and  management  of real estate  projects  and,
directly or through an  affiliated  entity,  has served as a general  partner or
co-venturer in over 100 real estate  ventures.  These ventures have involved the
financing,  acquisition,   construction,  and  leasing  of  restaurants,  office
buildings,  apartment  complexes,  hotels, and other real estate. Mr. Seneff has
served as Director  and  Chairman of the Board of APF, a public,  unlisted  real
estate  investment  trust,  since 1994.  Mr.  Seneff  served as Chief  Executive
Officer  of APF from 1994  through  August  1999,  and has  served  as  co-Chief
Executive  Officer of APF since  December 2000. Mr. Seneff served as Chairman of
the Board and Chief Executive Officer of CNL Fund Advisors,  Inc.,  formerly the
Partnership's advisor, until it merged with a wholly-owned  subsidiary of APF in
September  1999, and in June 2000, was re-elected to those positions of CNL Fund
Advisors, Inc. Mr. Seneff is a principal stockholder of CNL Holdings,  Inc., the
parent  company of CNL  Financial  Group,  Inc.  (formerly CNL Group,  Inc.),  a
diversified real estate company,  and has served as a Director,  Chairman of the
Board and  Chief  Executive  Officer  of CNL  Financial  Group,  Inc.  since its
formation in 1980.  CNL  Financial  Group,  Inc. is the parent  company,  either
directly or indirectly through subsidiaries,  of CNL Real Estate Services, Inc.,
CNL Capital Markets,  Inc., CNL Investment Company and CNL Securities Corp., all
of which are engaged in the  business of real estate  finance.  Mr.  Seneff also
serves as a Director,  Chairman of the Board and Chief Executive  Officer of CNL
Hospitality  Properties,  Inc., a public, unlisted real estate investment trust,
as well as, CNL  Hospitality  Corp.,  its advisor.  In addition,  he serves as a
Director,  Chairman of the Board and Chief  Executive  Officer of CNL Retirement
Properties,  Inc.,  a public,  unlisted  real  estate  investment  trust and its
advisor,  CNL  Retirement  Corp.  Since  1992,  Mr.  Seneff has also served as a
Director,  Chairman of the Board and Chief  Executive  Officer of Commercial Net
Lease Realty,  Inc., a public real estate investment trust that is listed on the
New York Stock Exchange.  Mr. Seneff has also served as a Director,  Chairman of
the Board and Chief Executive  Officer of CNL Securities  Corp.  since 1979; CNL
Investment  Company  since  1990;  and  CNL  Institutional  Advisors,   Inc.,  a
registered investment advisor for pension plans, since 1990. Mr. Seneff formerly
served  as a  Director  of First  Union  National  Bank of  Florida,  N.A.,  and
currently  serves as the  Chairman  of the Board of CNL  Bank,  an  independent,
state-chartered  commercial  bank. Mr. Seneff  previously  served on the Florida
State Commission on Ethics and is a former member and past Chairman of the State
of Florida Investment Advisory Council, which recommends to the Florida Board of
Administration  investments for various Florida employee  retirement  funds. The
Florida Board of Administration,  Florida's  principal  investment  advisory and
money  management  agency,  oversees the  investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.

         Robert A.  Bourne,  age 55. Mr.  Bourne has  participated  as a general
partner  or  co-venturer  in over  100  real  estate  ventures  involved  in the
financing,  acquisition,   construction,  and  leasing  of  restaurants,  office
buildings,  apartment complexes,  hotels, and other real estate. Mr. Bourne is a
Director  of APF.  Mr.  Bourne  served as  President  of APF from  1994  through
February  1999. He also served as Treasurer  from  February 1999 through  August
1999  and from May  1994  through  December  1994.  He also  served  in  various
executive  positions  with CNL Fund  Advisors,  Inc.  prior to its merger with a
wholly-owned subsidiary of APF including,  President from 1994 through September
1997, and Director from 1994 through August 1999. Mr. Bourne serves as President
and  Treasurer of CNL  Financial  Group,  Inc.;  Director,  Vice Chairman of the
Board, and Treasurer , and from 1997 until June 2002 served as President, of CNL
Hospitality  Properties,  Inc., a public, unlisted real estate investment trust;
as well as, Director,  Vice Chairman of the Board, and Treasurer,  and from 1997
until June 2002 served as President,  of CNL Hospitality Corp., its advisor.  In
addition,  Mr.  Bourne  serves as  Director,  Vice  Chairman  of the Board,  and
Treasurer,  and from 1997 until June 2002 served as President, of CNL Retirement
Properties, Inc., a public, unlisted real estate investment trust; as well as, a
Director,  Vice Chairman of the Board,  and Treasurer,  and from 1997 until June
2002 served as President,  of its advisor,  CNL Retirement Corp. Mr. Bourne also
serves as a Director of CNL Bank. He has served as a Director  since 1992,  Vice
Chairman of the Board since February 1996, Secretary and Treasurer from February
1996 through  1997,  and  President  from July 1992 through  February  1996,  of
Commercial Net Lease Realty,  Inc., a public real estate investment trust listed
on the New York Stock  Exchange.  Mr. Bourne also serves as Director,  President
and Treasurer for various affiliates of CNL Financial Group, Inc. including, CNL
Investment Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a
registered  investment advisor for pension plans. Mr. Bourne began his career as
a certified public  accountant  employed by Coopers & Lybrand,  Certified Public
Accountants,  from 1971  through  1978,  where he attained  the  position of Tax
Manager in 1975.  Mr. Bourne  graduated  from Florida  State  University in 1970
where he received a B.A. in Accounting, with honors.

         Curtis B.  McWilliams,  age 47. Mr.  McWilliams  has served as Co-Chief
Executive  Officer of APF since  December  2000 and  previously  served as Chief
Executive  Officer from  September  1999  through  December  2000.  Prior to the
acquisition of CNL Fund Advisors,  Inc., Mr.  McWilliams  served as President of
APF from  February  1999 until  September  1999.  From February 1998 to February
1999, he served as Executive  Vice President of APF. Mr.  McWilliams  joined CNL
Financial  Group,  Inc. in April 1997 and served as an Executive  Vice President
from October 1997 until September 1999. In addition,  Mr.  McWilliams  served as
President  of CNL Fund  Advisors,  Inc.  and CNL  Financial  Services,  Inc.,  a
corporation  engaged in the business of real estate  financing,  from April 1997
until the  acquisition of such entities by  wholly-owned  subsidiaries of APF in
September  1999.  From  September  1983 through March 1997,  Mr.  McWilliams was
employed by Merrill  Lynch & Co. The  majority of his career at Merrill  Lynch &
Co.  was in the  Investment  Banking  division  where he  served  as a  Managing
Director.  Mr.  McWilliams  received  a  B.S.E.  in  Chemical  Engineering  from
Princeton University in 1977 and a Master of Business Administration degree with
a concentration in finance from the University of Chicago in 1983.

         Steven  D.  Shackelford,  age  39.  Mr.  Shackelford  was  promoted  to
Executive Vice President of APF in June 2000. He served as Senior Vice President
from September 1999 until his promotion in June 2000. Mr. Shackelford has served
as Chief  Financial  Officer  since January 1997 and has served as Secretary and
Treasurer of APF since September 1999. He also served as Chief Financial Officer
of CNL Fund Advisors,  Inc. from September  1996 to September  1999.  From March
1995 to July 1996, Mr.  Shackelford  was a senior manager in the national office
of Price  Waterhouse LLP where he was responsible  for advising  foreign clients
seeking to raise capital and a public listing in the United States.  From August
1992 to March  1995,  he was a  manager  in the  Paris,  France  office of Price
Waterhouse, serving several multi-national clients. Mr. Shackelford was an audit
staff and  senior  from  1986 to 1992 in the  Orlando,  Florida  office of Price
Waterhouse.  Mr.  Shackelford  received a Bachelor of Arts degree in Accounting,
with honors, and a Master of Business  Administration  degree from Florida State
University and is a certified public accountant.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section  16(a) of the Exchange Act requires the General  Partners,  the
officers of the  corporate  General  Partner,  and persons who own more than ten
percent  of  a  registered  class  of  the   Partnership's   equity   securities
(collectively,  the  "Reporting  Persons"),  to file  reports of  ownership  and
changes in  ownership  on Forms 3, 4 and 5 with the SEC.  Reporting  Persons are
required by SEC regulation to furnish the  Partnership  with copies of all Forms
3, 4 and 5 that they file.

         Based  solely on the  General  Partners'  review of the  copies of such
forms the  Partnership  has  received and written  representations  from certain
Reporting  Persons  that they  were not  required  to file  Forms 5 for the last
fiscal year, the General  Partners  believe that all Reporting  Persons complied
with all filing  requirements  applicable  to them with respect to  transactions
during fiscal 2002.

Item 11.  Executive Compensation

         Other than as  described in Item 13, the  Partnership  has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates.  There are no compensatory plans or arrangements  regarding
termination of employment or change of control.

Item 12. Security  Ownership of Certain Beneficial Owners and Management

         As of March 10,  2003,  no person was known to the  Registrant  to be a
beneficial owner of more than five percent of the Units.

         The following  table sets forth,  as of March 10, 2003,  the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>

                    Title of Class                           Name of Partner                 Percent of Class

 <c>
           General Partnership Interests                James M. Seneff, Jr.                           45%
                                                        Robert A. Bourne                               45%
                                                        CNL Realty Corporation                         10%
                                                                                                   --------
                                                                                                      100%
                                                                                                   ========
</TABLE>

         Neither the General  Partners,  nor any of their  affiliates,  owns any
interest in the Registrant, except as noted above.

         The Partnership does not have any equity compensation plans.


<PAGE>



Item 13.  Certain Relationships and Related Transactions

         The  table  below   summarizes  the  types,   recipients,   methods  of
computation and amounts of compensation,  fees and distributions paid or payable
by the  Partnership  to the General  Partners and their  affiliates for the year
ended  December 31, 2002,  exclusive of any  distributions  to which the General
Partners or their  affiliates  may be entitled by reason of their  purchase  and
ownership of Units.
<TABLE>
<CAPTION>

                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
          and Recipient                        Method of Computation                  Ended December 31, 2002
----------------------------------     --------------------------------------      ------------------------------

 <c>
Reimbursement  to affiliates  for      Operating  expenses are reimbursed at       Accounting and administra-
operating expenses                     the  lower  of  cost  or  90%  of the       tive services:  $184,100
                                       prevailing  rate at which  comparable
                                       services  could have been obtained in
                                       the     same     geographic     area.
                                       Affiliates  of the  General  Partners
                                       from  time  to  time  incur   certain
                                       operating  expenses  on behalf of the
                                       Partnership     for     which     the
                                       Partnership       reimburses      the
                                       affiliates without interest.

Annual, subordinated manage-           One  percent  of  the  sum  of  gross       $-0-
ment fee to affiliates                 revenues   (excluding   noncash   and
                                       lease accounting adjustments) from
                                       Properties wholly owned by the
                                       Partnership plus the Partnership's
                                       allocable share of gross revenues of
                                       joint ventures in which the Partnership
                                       is a co-venturer, subordinated to certain
                                       minimum returns to the Limited Partners.
                                       The management fee, will not exceed
                                       competitive fees for comparable services.
                                       Due to the fact that these are
                                       noncumulative, if the Limited Partners
                                       have not received their 10% Preferred
                                       Return in any particular years no
                                       management fees will be due or payable
                                       for such year.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
         and Recipient                         Method of Computation                  Ended December 31, 2002
---------------------------------      --------------------------------------      ------------------------------

 <c>
Deferred,    subordinated   real       A deferred,  subordinated real estate       $-0-
estate  disposition  fee payable       disposition  fee,  payable  upon sale
to affiliates                          of  one  or  more  Properties,  in an
                                       amount equal to the lesser of (i)
                                       one-half of a competitive real estate
                                       commission, or (ii) three percent of the
                                       sales price of such Property or
                                       Properties. Payment of such fee shall be
                                       made only if affiliates of the General
                                       Partners provide a substantial amount of
                                       services in connection with the sale of a
                                       Property or Properties and shall be
                                       subordinated to certain minimum returns
                                       to the Limited Partners. However, if the
                                       net sales are reinvested in a replacement
                                       Property, no such real estate disposition
                                       fee will be incurred until such
                                       replacement Property is sold and the net
                                       sales proceeds are distributed.

General   Partners'    deferred,       A deferred,  subordinated share equal       $-0-
subordinated       share      of       to   one   percent   of   Partnership
Partnership net cash flow              distributions   of  net  cash   flow,
                                       subordinated   to   certain   minimum
                                       returns to the Limited Partners.

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


<PAGE>
<TABLE>
<CAPTION>



                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
         and Recipient                         Method of Computation                  Ended December 31, 2002
---------------------------------      --------------------------------------      ------------------------------

 <c>
General Partners' share of             Distributions  of net sales  proceeds       $-0-
Partnership net sales proceeds         from   a    sale    or    sales    of
from a sale or sales in                substantially      all     of     the
liquidation of the Partnership         Partnership's    assets    will    be
                                       distributed in the following order or
                                       priority: (i) first, to pay all debts and
                                       liabilities of the Partnership and to
                                       establish reserves; (ii) second, to
                                       Partners with positive capital account
                                       balances, determined after the allocation
                                       of net income, net loss, gain and loss,
                                       in proportion to such balances, up to
                                       amounts sufficient to reduce such
                                       balances to zero; and (iii) thereafter,
                                       95% to the Limited Partners and 5% to the
                                       General Partners.
</TABLE>


         In June 2002,  the  Partnership  acquired a property in Denton,  Texas,
from CNL Funding 2001-A, LP, for approximately  $1,147,600. In addition, in June
2002, CNL Restaurant  Investments II also acquired a property in Dallas,  Texas,
from CNL Funding 2001-A, LP, for approximately  $1,147,400.  CNL Funding 2001-A,
LP, an affiliate of the general  partners,  had purchased and  temporarily  held
title to the properties in order to facilitate the acquisition of the properties
by the  Partnership  and the  joint  venture.  The  purchase  price  paid by the
Partnership and the joint venture  represented the costs incurred by CNL Funding
2001-A, LP to acquire and carry the properties.

         In  September  2002,  the  Partnership  acquired  a  property,  in Eden
Prairie,  Minnesota,  from  CNL Net  Lease  Investors,  L.P.  ("NLI"),  at an of
approximate  cost of $1,093,900.  In addition,  the  Partnership  and CNL IX, as
tenants-in-common, acquired from NLI a property in Buffalo Grove, Illinois at an
approximate  cost of  $1,588,800.  During 2002,  and prior to the  Partnership's
acquisition of these  properties,  CNL Financial LP Holding,  LP ("CFN") and CNL
Net Lease  Investors  GP Corp.  ("GP  Corp")  purchased  the  limited  partner's
interest and general  partner's  interest,  respectively,  of NLI. Prior to this
transaction,  an affiliate of the  Partnership's  general  partners owned a 0.1%
interest in NLI and served as a general  partner of NLI.  The  original  general
partners  of NLI waived  their  rights to  benefit  from this  transaction.  The
acquisition  price paid by CFN for the limited  partner's  interest was based on
the portfolio  acquisition  price.  The  Partnership  acquired the properties at
CFN's  cost  and  did  not  pay  any  additional  compensation  to CFN  for  the
acquisition  of  the  properties.  Each  CNL  entity  is  an  affiliate  of  the
Partnership's general partners.


Item 14.  Controls and Procedures

         The  General  Partners  maintain  a  set  of  disclosure  controls  and
procedures  designed to ensure that information  required to be disclosed in the
Partnership's  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 the
Partnership's  disclosure  controls and  procedures  within 90 days prior to the
filing  of this  Annual  Report  on Form  10-K and  have  determined  that  such
disclosure controls and procedures are effective.

         Subsequent to the above evaluation,  there were no significant  changes
in internal  controls or other  factors  that could  significantly  affect these
controls,   including  any   corrective   actions  with  regard  to  significant
deficiencies and material weaknesses.



<PAGE>


                                     PART IV


Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

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

         1.   Financial Statements
<TABLE>
<CAPTION>

 <c>
                  Report of Independent Certified Public Accountants

                  Balance Sheets at December 31, 2002 and 2001

                  Statements of Income for the years ended December 31, 2002, 2001, and 2000

                  Statements of Partners' Capital for the years ended December 31, 2002, 2001, and 2000

                  Statements of Cash Flows for the years ended December 31, 2002, 2001, and 2000

                  Notes to Financial Statements

         2.   Financial Statement Schedules

                  Schedule III - Real Estate and Accumulated Depreciation at December 31, 2002

                  Notes to Schedule III - Real Estate and Accumulated Depreciation at December 31, 2002

                  Schedule IV - Mortgage Loans on Real Estate at December 31, 2002
</TABLE>

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

         3.   Exhibits

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

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

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

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

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

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

                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.)

                99.1     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.)

                99.2     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)      The  Registrant  filed no reports on Form 8-K during the period October
         1, 2002 through December 31, 2002.


<PAGE>




                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 24th day of
March, 2003.

                                           CNL INCOME FUND VIII, LTD.

                                           By:CNL REALTY CORPORATION
                                              General Partner

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


                                           By:ROBERT A. BOURNE
                                              General Partner

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


                                           By:JAMES M. SENEFF, JR.
                                              General Partner

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




<PAGE>


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

               Signature                                  Title                                  Date

 <c>


/s/ Robert A. Bourne                     President,   Treasurer   and   Director            March 24, 2003
------------------------------------
Robert A. Bourne                         (Principal   Financial  and  Accounting
                                         Officer)

/s/ James M. Seneff, Jr.                 Chief  Executive  Officer and  Director            March 24, 2003
------------------------------------
James M. Seneff, Jr.                     (Principal Executive Officer)

</TABLE>

<PAGE>



                    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


         I, James M.  Seneff,  Jr.,  the Chief  Executive  Officer of CNL Realty
Corporation,  the corporate  general  partner of CNL Income Fund VIII, Ltd. (the
"registrant"), certify that:

         1. I have reviewed this annual report on Form 10-K of the registrant;

         2. Based on my  knowledge,  this  annual  report  does not  contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such  statements  were made, not misleading with respect
            to the period covered by this annual report;

         3. Based on my knowledge, the financial statements, and other financial
            information  included in this annual  report,  fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the  registrant as of, and for, the periods  presented
            in this annual report;

         4. The registrant's  other certifying officer and I are responsible for
            establishing and maintaining  disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant
            and have:

                a. designed such  disclosure  controls and  procedures to ensure
                   that  material   information   relating  to  the  registrant,
                   including its consolidated subsidiaries,  is made known to us
                   by others  within  those  entities,  particularly  during the
                   period in which this annual report is being prepared;

                b. evaluated the  effectiveness of the  registrant's  disclosure
                   controls and  procedures as of a date within 90 days prior to
                   the  filing  date  of this  annual  report  (the  "Evaluation
                   Date"); and

                c. presented  in this annual  report our  conclusions  about the
                   effectiveness of the disclosure controls and procedures based
                   on our evaluation as of the Evaluation Date;

         5. The  registrant's  other  certifying  officer and I have  disclosed,
            based on our most recent  evaluation,  to the registrant's  auditors
            and the audit  committee  of  registrant's  board of  directors  (or
            persons  performing the equivalent  functions):

                a. all  significant  deficiencies  in the design or operation of
                   internal   controls   which   could   adversely   affect  the
                   registrant's ability to record, process, summarize and report
                   financial  data  and  have  identified  for the  registrant's
                   auditors any material weaknesses in internal controls; and

                b. any fraud, whether or not material,  that involves management
                   or  other  employees  who  have  a  significant  role  in the
                   registrant's internal controls; and

         6. The registrant's  other  certifying  officer and I have indicated in
            this annual report whether or not there were significant  changes in
            internal  controls  or in other  factors  that  could  significantly
            affect internal  controls  subsequent to the date of our most recent
            evaluation,   including  any  corrective   actions  with  regard  to
            significant deficiencies and material weaknesses.

Date:  March 24, 2003


/s/ James M. Seneff, Jr.
---------------------------
James M. Seneff, Jr.
Chief Executive Officer

<PAGE>


                    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

         I, Robert A. Bourne, President and Treasurer of CNL Realty Corporation,
the corporate  general partner of CNL Income Fund VIII, Ltd. (the  "registrant")
certify that:

         1. I have reviewed this annual report on Form 10KQ of the registrant;

         2. Based on my  knowledge,  this  annual  report  does not  contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such  statements  were made, not misleading with respect
            to the period covered by this annual report;

         3. Based on my knowledge, the financial statements, and other financial
            information  included in this annual  report,  fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the  registrant as of, and for, the periods  presented
            in this annual report;

         4. The registrant's  other certifying officer and I are responsible for
            establishing and maintaining  disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant
            and have:

                a. designed such  disclosure  controls and  procedures to ensure
                   that  material   information   relating  to  the  registrant,
                   including its consolidated subsidiaries,  is made known to us
                   by others  within  those  entities,  particularly  during the
                   period in which this annual report is being prepared;

                b. evaluated the  effectiveness of the  registrant's  disclosure
                   controls and  procedures as of a date within 90 days prior to
                   the  filing  date  of this  annual  report  (the  "Evaluation
                   Date"); and

                c. presented  in this annual  report our  conclusions  about the
                   effectiveness of the disclosure controls and procedures based
                   on our evaluation as of the Evaluation Date;

         5. The  registrant's  other  certifying  officer and I have  disclosed,
            based on our most recent  evaluation,  to the registrant's  auditors
            and the audit  committee  of  registrant's  board of  directors  (or
            persons performing the equivalent functions):

                a. all  significant  deficiencies  in the design or operation of
                   internal   controls   which   could   adversely   affect  the
                   registrant's ability to record, process, summarize and report
                   financial  data  and  have  identified  for the  registrant's
                   auditors any material weaknesses in internal controls; and

                b. any fraud, whether or not material,  that involves management
                   or  other  employees  who  have  a  significant  role  in the
                   registrant's internal controls; and

         6. The registrant's  other  certifying  officer and I have indicated in
            this annual report whether or not there were significant  changes in
            internal  controls  or in other  factors  that  could  significantly
            affect internal  controls  subsequent to the date of our most recent
            evaluation,   including  any  corrective   actions  with  regard  to
            significant deficiencies and material weaknesses.


Date:  March 24, 2003


/s/ Robert A. Bourne
Robert A. Bourne
----------------------------
President and Treasurer



<PAGE>
                           CNL INCOME FUND VIII, LTD.
                         (A Florida Limited Partnership)
             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 2002

<TABLE>
<CAPTION>

 <c>
                                                                      Costs Capitalized
                                                                      Subsequent To
                                                Initial Cost          Acquisition
                                      ---------------------  -----------------
                          Encum-                 Buildings anImprove-   Carrying
                         brances        Land      Improvementsments     Costs
                         ---------    ---------- ----------  ---------  ------
Properties the Partnership
  has Invested in Under
  Operating Leases:

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

    Boston Market Restaurant:
     Eden Prairie, Minnesota-(m)        293,917    799,934          -       -

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

    Denny's Restaurant:
     Tiffin, Ohio           -           143,592    335,971          -       -
     Ontario, Oregon        -           215,796    432,093          -       -

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

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

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

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

    O'Sullivan's Irish American
      Restaurant:
     North Fort Myers, Flori-a          398,423    425,676          -       -

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

    Pizza Hut Restaurant:
     Hialeah, Florida       -           284,269    193,004          -       -

    Shoney's Restaurants:
     Memphis, Tennessee     -           368,290    601,660          -       -

    Taco Cabana
     Denton, Texas (n)      -           520,875    626,680          -       -

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

                                      $9,988,909 $3,415,018  $7,513,218     -
                                      ========== ==========  =========  ======

Properties of Joint Venture in Which
   the Partnership has a 85.54%
   Interest and has Invested in
   Under an Operating Leases:

    Burger King Restaurant:
        Asheville, North Car-lina      $438,695   $450,432   $      -   $   -
                                      ========== ==========  =========  ======

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

    Burger King Restaurants:
        San Antonio, Texas  -          $350,479   $623,615          -       -
        Raceland, Louisiana -           174,019    986,879          -       -
        New Castle, Indiana -           264,239    662,265          -       -
        Hastings, Minnesota -           155,553    657,159          -       -

    Taco Cabana Restaurant:
     Dallas, Texas (l)      -           633,492    513,931          -       -
                                      ---------- ----------  ---------  ------

                                      $1,577,782 $3,443,849  $      -   $   -
                                      ========== ==========  =========  ======

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

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

Property of Joint Venture in Which
   the Partnership has a 10.00%
   Interest and has Invested in
   Under an Operating Lease:

    Golden Corral Family
           Steakhouse Restaurant:
           Kokomo, Indiana (-)         $644,163  $1,397,579       $ -     $ -
                                      ========== ==========  =========  ======

Property in Which the Partner-
    ship has a 17.00% Interest as
    Tenants-in-Common and
    has Invested in Under an
    Operating Lease:

    Jack in the Box Restaurants:
     Walker, Louisiana      -          $517,354   $861,245        $ -     $ -
                                      ========== ==========  =========  ======

Property in Which the Partner-
    ship has a 19.30% Interest as
    Tenants-in-Common and
    has Invested in Under an
    Operating Lease:

    Bennigan's Restaurants:
     Denver, Colorado       -          $802,413  $1,398,252       $ -     $ -
                                      ========== ==========  =========  ======

Property of Joint Venture in Which
   the Partnership has a 10.00%
   Interest and has Invested in
   Under an Operating Lease:

    Texas Roadhouse Restaurant:
     Kenosha, Wisconsin     -          $645,886  $1,237,163         -       -
                                      ========== ==========  =========  ======

Property in Which the Partner-
    ship has a 66% Interest as
    Tenants-in-Common and
    has Invested in Under an
    Operating Lease:

    IHOP Restaurant:
     Buffalo Grove, Illinois-(k)       $598,976          -          -       -
                                      ========== ==========  =========  ======

Properties the Partnership has
   Invested in Under Direct
   Financing Leases:

    Burger King Restaurants:
        Brandon, Florida    -          $      -          -   $483,107   $   -

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

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

    KFC Restaurants:
        Grand Rapids, Michig-n          169,175    620,623          -       -
        Norton Shores, Michi-an               -    509,228          -       -

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

                                       $476,173  $3,437,741  $1,484,006 $   -
                                      ========== ==========  =========  ======

Property in Which the Partner-
    ship has a 66% Interest as
    Tenants-in-Common and
    has Invested in Under a
    Direct Financing Lease:

    IHOP Restaurant:
     Buffalo Grove, Illinois-(k)       $      -   $991,278   $      -   $   -
                                      ========== ==========  =========  ======







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





$1,296,452   $1,156,526 $2,452,978    $93,165    2000    07/00         (b)


   293,917     799,934   1,093,851      8,510    1996    09/02         (b)


   478,467          (f)    478,467          -    1991    10/90         (d)
   372,977     557,832     930,809    108,872    1977    03/91         (h)
   377,395     496,524     873,919     96,906    1989    03/91         (h)
   363,431     485,920     849,351     94,836    1987    03/91         (h)
   310,920     523,967     834,887    102,262    1989    03/91         (h)


   143,592     335,971     479,563    111,085    1990    03/91         (g)
   215,796     432,093     647,889     14,403    1978    01/02         (b)



   517,623     877,505   1,395,128    359,817    1990    09/90         (b)
   663,999   1,129,910   1,793,909    452,377    1990    10/90         (b)
   552,646     893,054   1,445,700    374,431    1990    11/90         (b)
   681,824     914,235   1,596,059    374,126    1990    11/90         (b)


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


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


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



   398,423     425,676     824,099     28,029    1991    09/95         (i)


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


   284,269     193,004     477,273     14,475    2000    10/00         (b)


   368,290     601,660     969,950    228,411    1991    08/91         (b)


   520,875     626,680   1,147,555     12,185    1992    06/02         (b)



   365,601     477,745     843,346    186,473    1991    03/91         (b)
-----------  ---------- -----------  ---------

$9,988,909   $10,928,236$20,917,145  $2,660,363
===========  ========== ===========  =========







  $438,695    $450,432    $889,127   $177,004    1986    03/91         (b)
===========  ========== ===========  =========







  $350,479    $623,615    $974,094   $234,126    1986    09/91         (b)
   174,019     986,879   1,160,898    370,508    1988    09/91         (b)
   264,239     662,265     926,504    248,637    1988    09/91         (b)
   155,553     657,159     812,712    246,721    1990    09/91         (b)


   633,492     513,931   1,147,423      9,993    1992    06/02         (b)
-----------  ---------- -----------  ---------

$1,577,782   $3,443,849 $5,021,631   $1,109,985
===========  ========== ===========  =========







  $453,016    $866,192  $1,319,208    $91,164    1998    11/99         (b)
===========  ========== ===========  =========








  $644,163   $1,397,579 $2,041,742    $81,525    2000     4/01         (b)
===========  ========== ===========  =========








  $517,354    $861,245  $1,378,599    $43,062    2001     6/01         (b)
===========  ========== ===========  =========








  $802,413   $1,398,252 $2,200,665    $69,912    2001     7/01         (b)
===========  ========== ===========  =========







  $645,886   $1,237,163 $1,883,049    $17,182    2002    08/02         (b)
===========  ========== ===========  =========








  $598,976          (f)   $598,976          -    1987    09/02         (d)
===========  ========== ===========  =========






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


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


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


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


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

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








 $       -          (f)         (f)        (d)   1987    09/02         (d)
===========


</TABLE>


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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 2002


(a)      Transactions in real estate and accumulated depreciation are summarized
         below.  The  balances  in 1999,  2000 and 2001  have been  adjusted  to
         reflect  the   reclassification   of   properties   accounted   for  as
         discontinued operations.

<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                              Cost            Depreciation
                                                                         ----------------   -------------------

 <c>
            Properties the Partnership has Invested in Under
              Operating Leases:

                 Balance, December 31, 1999                                 $ 17,059,975        $  1,985,698
                 Dispositions                                                 (2,130,827 )          (315,177 )
                 Acquisitions                                                  2,925,217                  --
                 Depreciation expense                                                 --             303,352
                                                                         ----------------   -------------------

                 Balance, December 31, 2000                                   17,854,365           1,973,873
                 Reclassified to operating lease(i)                              425,676                  --
                 Dispositions                                                   (257,225 )                --
                 Depreciation expense                                                 --             321,973
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                   18,022,816           2,295,846
                 Acquisitions                                                  2,894,329                  --
                 Depreciation expense                                                 --             364,517
                                                                         ----------------   -----------------

                 Balance, December 31, 2002                                 $ 20,917,145        $  2,660,363
                                                                         ================   =================

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

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

                 Balance, December 31, 2000                                      889,127             146,976
                 Depreciation expense                                                 --              15,014
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                      889,127             161,990
                 Depreciation expense                                                 --              15,014
                                                                         ----------------   -----------------

                 Balance, December 31, 2002                                  $   889,127         $   177,004
                                                                         ================   =================

</TABLE>

<PAGE>


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

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

                                December 31, 2002
<TABLE>
<CAPTION>

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

 <c>
            Property of Joint Venture in Which the Partnership has
               36.8% Interest and has Invested in Under Operating
              Leases:

                 Balance, December 31, 1999                                 $  3,874,208         $   806,998
                 Depreciation expense                                                 --              97,664
                                                                         ----------------   -----------------

                 Balance, December 31, 2000                                    3,874,208             904,662
                 Depreciation expense                                                 --              97,664
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                    3,874,208           1,002,326
                 Acquisition (l)                                               1,147,423                  --
                 Depreciation expense                                                 --             107,659
                                                                         ----------------   -----------------

                 Balance, December 31, 2002                                 $  5,021,631        $  1,109,985
                                                                         ================   =================

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

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

                 Balance, December 31 2000                                     1,319,208              33,416
                 Depreciation expense                                                 --              28,874
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                    1,319,208              62,290
                 Depreciation expense                                                 --              28,874
                                                                         ----------------   -----------------

                 Balance, December 31, 2002                                 $  1,319,208         $    91,164
                                                                         ================   =================

            Property of Joint Venture in Which the Partnership has a 10%
              Interest and has Invested in Under an Operating Lease:

                 Balance, December 31, 2000                                     $     --            $     --
                 Acquisition (j)                                               2,112,011                  --
                 Depreciation expense                                                 --              36,696
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                    2,112,011              36,696
                 Reimbursement of construction costs (j)                         (70,269 )            (1,759 )
                 Depreciation expense                                                 --              46,588
                                                                         ----------------   -----------------

                 Balance, December 31, 2002                                 $  2,041,742         $    81,525
                                                                         ================   =================

</TABLE>

<PAGE>


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

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

                                December 31, 2002

<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                              Cost            Depreciation
                                                                         ----------------   -----------------

 <c>
            Property in Which the Partnership has a 17% Interest and has
              Invested in Under an Operating Lease:

                 Balance, December 31, 2000                                     $     --            $     --
                 Acquisition                                                   1,366,405                  --
                 Depreciation expense                                                 --              14,354
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                    1,366,405              14,354
                 Acquisition                                                      12,194                  --
                 Depreciation expense                                                 --              28,708
                                                                         ----------------   -----------------

                 Balance, December 31, 2002                                 $  1,378,599         $    43,062
                                                                         ================   =================

            Property in Which the Partnership has a 19.3% Interest and has
              Invested in Under an Operating Lease:

                 Balance, December 31, 2000                                     $     --            $     --
                 Acquisition                                                   2,188,872                  --
                 Depreciation expense                                                 --              23,304
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                    2,188,872              23,304
                 Acquisition                                                      11,793                  --
                 Depreciation expense                                                 --              46,608
                                                                         ----------------   -----------------

                                                                            $  2,200,665         $    69,912
                                                                         ================   =================

            Property in Which the Partnership has a 10% Interest
              and has Invested in Under an Operating Lease

                 Balance, December 31, 2001                                     $     --            $     --
                 Acquisition                                                   1,883,049                  --
                 Depreciation expense                                                 --              17,182
                                                                         ----------------   -----------------

                 Balance, December 31, 2002                                 $  1,883,049         $    17,182
                                                                         ================   =================

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

                 Balance, December 31, 2001                                     $     --            $     --
                 Acquisition (k)                                                 598,976                  --
                 Depreciation expense (d)                                             --                  --
                                                                         ----------------   -----------------

                 Balance, December 31, 2002                                  $   598,976            $     --
                                                                         ================   =================

</TABLE>

<PAGE>


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

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

                                December 31, 2002


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

(c)      As of December 31, 2002, the aggregate cost of the Properties  owned by
         the  Partnership   and  its   consolidated   joint  venture,   and  the
         unconsolidated  joint  ventures  for federal  income tax  purposes  was
         $25,620,634  and  $14,617,254,  respectively.  All  of the  leases  are
         treated as operating leases for federal income tax purposes.

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

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

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

(g)      Effective  January 1, 1994,  the lease for this  Property  was amended,
         resulting in the  reclassification of the building portion of the lease
         as an operating  lease.  The building was recorded at net book value as
         of January 1, 1994, and depreciated  over its remaining  estimated life
         of approximately 27 years.

(h)      Effective  August 1, 1998,  the lease for this  Property  was  amended,
         resulting in the  reclassification of the building portion of the lease
         as an operating  lease.  The building was recorded at net book value as
         of August 1, 1998, and depreciated over its remaining estimated life of
         approximately 23 years.

(i)      Effective  July 16, 2001,  the lease for this Property was  terminated,
         resulting in the  reclassification of the building portion of the lease
         as an operating  lease.  The building was recorded at net book value as
         of July 16, 2001, and depreciated over its remaining  estimated life of
         approximately 24 years.

(j)      During the year ended December 31, 2001, the Partnership and affiliates
         of the  General  Partners,  as  tenant-in-common,  purchased  land  and
         building from CNL BB Corp., an affiliate of the General  Partners,  for
         an aggregate  cost of  $2,112,011.  During the year ended  December 31,
         2002, the Partnership  received  reimbursements from the developer upon
         final construction costs reconciliation.  In connection therewith,  the
         land and building values were adjusted accordingly.

(k)      During  the year  ended  December  31,  2002,  the  Partnership  and an
         affiliate of the General Partners, as tenant-in-common,  purchased land
         and  building  from CNL Net Lease  Investors,  LP, an  affiliate of the
         General  Partners,  for an aggregate cost of approximately  $1,588,800.
         The portion of the lease  relating to the building has been recorded as
         a direct financing lease.

(l)      During  the  year  ended  December  31,  2002,  the   Partnership   and
         affiliates, purchased land and building from CNL Funding 2001-A, LP, an
         affiliate  of  the  General   Partners,   for  an  aggregate   cost  of
         approximately $1,147,400.

(m)      During  the  year  ended  December  31,  2002,  the   Partnership   and
         affiliates,  purchased land and building from CNL Net Lease  Investors,
         LP, an affiliate  of the General  Partners,  for an  aggregate  cost of
         approximately $1,093,900.


<PAGE>


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

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

                                December 31, 2002


(n)      During  the  year  ended  December  31,  2002,  the   Partnership   and
         affiliates, purchased land and building from CNL Funding 2001-A, LP, an
         affiliate  of  the  General   Partners,   for  an  aggregate   cost  of
         approximately $1,147,600



<PAGE>


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

                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

                                December 31, 2002


All notes  receivable have been fully collected since the borrowers  prepaid all
outstanding  principal  balances in 2002 and 2001.  The changes in the  carrying
amounts are summarized as follows:
<TABLE>
<CAPTION>

                                               2002            2001            2000
                                           -------------   -------------   --------------

 <c>
          Balance at beginning of
               period                         $ 926,080      $1,424,436       $1,473,571

          Interest earned                        34,910         131,931          150,897

          Collection of principal and
               interest                        (960,990 )      (630,287 )       (200,032 )
                                           -------------   -------------   --------------

          Balance at end of period              $    --       $ 926,080       $1,424,436
                                           =============   =============   ==============
</TABLE>



<PAGE>



                                  EXHIBIT INDEX



Exhibit Number


          (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.)

                    99.1   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.)

                    99.2   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 99.1


<PAGE>



                                  EXHIBIT 99.2