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, 1997

                                       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)

                              400 East South Street
                             Orlando, Florida 32801
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (407) 422-1574

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

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

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

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

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

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

         Aggregate market value of the voting stock held by nonaffiliates of the
registrant:   The  registrant   registered  an  offering  of  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,  totalled
$30,975,000,  and were used to acquire 38  Properties,  including  interests  in
eight  Properties  owned  by  joint  ventures  in  which  the  Partnership  is a
co-venturer,  and  to  establish  a  working  capital  reserve  for  Partnership
purposes.  During the year ended  December 31, 1995,  the  Partnership  sold its
Property in Ocoee, Florida and reinvested the majority of the net sales proceeds
in a Shoney's in North Fort Myers, Florida. Also, during the year ended December
31, 1995, the Partnership sold two Properties in Jacksonville,  Florida.  During
the year ended December 31, 1996, the  Partnership  reinvested the remaining net
sales proceeds from the 1995 sale of the Property in Ocoee,  Florida, to acquire
one  additional  Property  indirectly  through  a joint  venture  in  which  the
Partnership is a co-venturer. Also, during the year ended December 31, 1996, the
Partnership  sold its  Property  in Orlando,  Florida.  As a result of the above
transactions the Partnership  currently owns 36 Properties,  including interests
in nine  Properties  owned  by joint  ventures  in which  the  Partnership  is a
co-venturer.  The Properties  are leased on a triple-net  basis with the lessees
responsible  for all repairs and  maintenance,  property  taxes,  insurance  and
utilities.

         The  Partnership  will hold its Properties  until the General  Partners
determine that the sale or other  disposition of the Properties is  advantageous
in view of the Partnership's investment objectives.  In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation,  net cash flow and  federal  income  tax  considerations.  Certain
lessees also have been granted options to purchase Properties,  generally at the
Property's  then fair market  value after a specified  portion of the lease term
has elapsed.  In general,  the General Partners plan to seek the sale of some of
the  Properties  commencing  seven  to 12 years  after  their  acquisition.  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
the joint ventures in which the Partnership is a co-venturer provide for initial
terms,  ranging  from 14 to 20 years (the  average  being 18 years),  and expire
between 2005 and 2016.  All leases are 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 $41,300 to
$213,800.  All 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.  Certain  lessees  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. Under the terms of

                                        1

<PAGE>



certain leases,  the option purchase price may equal the Partnership's  original
cost to purchase the Property  (including  acquisition  costs), plus a specified
percentage  from  the  date  of  the  lease  or a  specified  percentage  of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.

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

Major Tenants

         During 1997,  three  lessees of the  Partnership  and its  consolidated
joint venture,  Golden Corral  Corporation,  Carrols  Corporation and Restaurant
Management  Services,  Inc.,  each  contributed  more  than ten  percent  of the
Partnership's   total  rental   income   (including   rental   income  from  the
Partnership's  consolidated joint venture and the Partnership's  share of rental
income from eight Properties  owned by  unconsolidated  joint  ventures).  As of
December  31,  1997,  Golden  Corral  Corporation  was the lessee  under  leases
relating to four  restaurants,  Carrols  Corporation was the lessee under leases
relating to five restaurants and Restaurant  Management  Services,  Inc. was the
lessee under leases relating to five restaurants.  It is anticipated that, based
on the minimum rental payments required by the leases,  these three lessees each
will continue to  contribute  more than ten percent of the  Partnership's  total
rental  income in 1998 and  subsequent  years.  In  addition,  three  Restaurant
Chains, Golden Corral Family Steakhouse  Restaurants,  Burger King and Shoney's,
each  accounted  for more than ten  percent of the  Partnership's  total  rental
income in 1997  (including  rental  income from the  Partnership's  consolidated
joint venture and the Partnership's share of rental income from eight Properties
owned by unconsolidated joint ventures).  In subsequent years, it is anticipated
that these three  Restaurant  Chains each will continue to account for more than
ten percent of the Partnership's total rental 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. No single
tenant  or  group of  affiliated  tenants  lease  Properties  with an  aggregate
carrying value,  excluding acquisition fees and certain acquisition expenses, in
excess of 20 percent of the total assets of the Partnership.

Joint Venture Arrangements

         The Partnership has entered into a joint venture  arrangement,  Woodway
Joint Venture, with an unaffiliated entity to purchase and hold one Property. In
addition,  the  Partnership  has  entered  into  three  separate  joint  venture
arrangements,  Asheville  Joint  Venture,  CNL  Restaurant  Investments  II, and
Middleburg  Joint Venture with affiliates of the General  Partners,  to purchase
and hold eight Properties.

         The joint  venture  arrangements  provide for the  Partnership  and its
joint venture  partners to share in all costs and benefits  associated  with the
joint ventures in accordance with their respective  percentage  interests in the
joint ventures.  The Partnership and its joint venture partners are also jointly
and severally  liable for all debts,  obligations  and other  liabilities of the
joint ventures.

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

         The  Partnership  has  management  control of Woodway Joint Venture and
shares  management  control equally with affiliates of the General  Partners for
Asheville  Joint  Venture,  CNL Restaurant  Investments II and Middleburg  Joint
Venture.  The joint venture agreements restrict each venturer's ability to sell,
transfer or assign its joint venture interest without first offering it for sale
to its joint venture partner,  either upon such terms and conditions as to which
the venturers may agree or, in the event the venturers cannot agree, on the same
terms and  conditions  as any offer from a third  party to  purchase  such joint
venture interest.


                                        2

<PAGE>



         Net cash flow from operations of Woodway Joint Venture, Asheville Joint
Venture,  CNL  Restaurant   Investments  II  and  Middleburg  Joint  Venture  is
distributed 88 percent, 86 percent, 37 percent and 12 percent,  respectively, to
the  Partnership  and the  balance  is  distributed  to each of the other  joint
venture partners in accordance with their respective  percentage interest in the
joint venture.  Any liquidation  proceeds,  after paying joint venture debts and
liabilities and funding reserves for contingent liabilities, will be distributed
first to the joint venture  partners with positive  capital account  balances in
proportion to such balances  until such balances  equal zero,  and thereafter in
proportion  to each joint  venture  partner's  percentage  interest in the joint
venture.

Certain Management Services

         CNL Income Fund Advisors,  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  through
September 30, 1995.  Under this  agreement,  CNL Income Fund Advisors,  Inc. was
responsible for collecting  rental  payments,  inspecting the Properties and the
tenants'  books and records,  assisting the  Partnership in responding to tenant
inquiries and notices and providing  information  to the  Partnership  about the
status of the leases and the  Properties.  CNL Income Fund  Advisors,  Inc. also
assisted the General Partners in negotiating the leases. For these services, the
Partnership  had agreed to pay CNL Income Fund  Advisors,  Inc. an annual fee of
one percent of the sum of gross operating  revenues from Properties wholly owned
by the Partnership plus the  Partnership's  allocable share of gross revenues of
joint ventures in which the  Partnership is a co-venturer,  but not in excess of
competitive fees for comparable services.  Under the management  agreement,  the
management  fee is  subordinated  to  receipt  by  the  Limited  Partners  of an
aggregate,  ten  percent,  cumulative,  noncompounded  annual  return  on  their
adjusted  capital  contributions  (the "10%  Preferred  Return"),  calculated in
accordance   with  the   Partnership's   limited   partnership   agreement  (the
"Partnership Agreement").

         Effective October 1, 1995, CNL Income Fund Advisors,  Inc. assigned its
rights  in,  and its  obligations  under,  the  management  agreement  with  the
Partnership  to CNL Fund  Advisors,  Inc. All of the terms and conditions of the
management agreement,  including the payment of fees, as described above, remain
unchanged.

         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.

         At the time the Partnership elects to dispose of its Properties,  other
than as a result of the exercise of tenant options to purchase  Properties,  the
Partnership  will be in  competition  with other  persons and entities to locate
purchasers for its Properties.

Employees

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









                                        3

<PAGE>




Item 2.  Properties

         As of December 31, 1997,  the  Partnership  owned,  either  directly or
through  joint  venture  arrangements,  36  Properties  located  in  12  states.
Reference  is made to the Schedule of Real Estate and  Accumulated  Depreciation
filed  with this  report for a listing of the  Properties  and their  respective
costs, including acquisition fees and certain acquisition expenses.

Description of Properties

         Land. The Partnership's  Property sites range from approximately 17,400
to 467,400  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.

         Buildings.  Each of the Properties owned by the Partnership  includes a
building that is one of a Restaurant  Chain's  approved  designs.  The buildings
generally are  rectangular  and are  constructed  from various  combinations  of
stucco,  steel,  wood, brick and tile.  Building sizes range from  approximately
1,300 to 10,900 square feet.  All buildings on Properties are  freestanding  and
surrounded by paved  parking  areas.  Buildings  are suitable for  conversion to
various uses, although modifications may be required prior to use for other than
restaurant operations.

         Generally,  a  lessee  is  required,  under  the  terms  of  its  lease
agreement,  to make such capital  expenditures as may be reasonably necessary to
refurbish  buildings,  premises,  signs and  equipment  so as to comply with the
lessee's  obligations,  if applicable,  under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.

         Leases  with  Major   Tenants.   The  terms  of  the  leases  with  the
Partnership's  major  tenants as of December  31,  1997 (see Item 1.  Business -
Major  Tenants),  are  substantially  the  same as  those  described  in Item 1.
Business - Leases.

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

         Restaurant Management Services leases four Shoney's restaurants and one
Popeyes restaurant. The initial term of each lease is 20 years (expiring between
2010 and  2015)  and the  average  minimum  base  annual  rent is  approximately
$104,500 (ranging from approximately $41,300 to $139,400).

         Carrols  Corporation  leases five Burger King restaurants.  The initial
term of each lease is 20 years  (expiring in 2011) and the average  minimum base
annual rent is approximately  $113,600 (ranging from  approximately  $108,800 to
$122,800).

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


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 a party to, or
subject to, any material pending legal proceedings.


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

         Not applicable.



                                        4

<PAGE>




                                     PART II

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

         As of  February  28,  1998,  there were 3,441  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.  Limited  Partners
who wish to sell  their  Units may offer  the  Units  for sale  pursuant  to the
Partnership's  distribution reinvestment plan (the "Plan"), and Limited Partners
who wish to have their  distributions  used to acquire  additional Units (to the
extent Units are available for  purchase),  may do so pursuant to such Plan. The
General Partners have the right to prohibit transfers of Units. Since inception,
the price paid for any Unit  transferred  pursuant to the Plan has been $.95 per
Unit. The price to be paid for any Unit  transferred  other than pursuant to the
Plan is 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 1997 and 1996 other than
pursuant to the Plan, net of commissions.

<TABLE>
<CAPTION>

                                                    1997 (1)                            1996 (1)
                                      ----------------------------------       ---------------------------
<S> <C>
                                            High       Low      Average        High       Low      Average
         First Quarter                      $1.00     $ .80       $ .91        $ .95     $ .95       $ .95
         Second Quarter                       (2)       (2)         (2)          .95       .86         .93
         Third Quarter                       1.00       .88         .94          .90       .61         .75
         Fourth Quarter                       (2)       (2)         (2)          .75       .55         .65
</TABLE>

(1)      A total of  62,676  and  185,355  Units  were  transferred  other  than
         pursuant  to the Plan for the years ended  December  31, 1997 and 1996,
         respectively.

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

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

         For the  years  ended  December  31,  1997 and  1996,  the  Partnership
declared cash distributions of $3,150,003 and $3,412,500,  respectively,  to the
Limited  Partners.  For the quarter  ended  December 31, 1996,  the  Partnership
declared a special  distribution  to the  Limited  Partners of  $262,500,  which
represented   cumulative  excess  operating   reserves.   The  General  Partners
anticipate  that the  Partnership  will  declare a special  distribution  to the
Limited  Partners  during  the  quarter  ending  March  31,  1998,  representing
cumulative excess operating reserves. No amounts distributed to partners for the
years ended  December 31, 1997 and 1996, 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  distributions on
this basis.

         Quarter Ended              1997            1996
         -------------           ----------      -------
         March 31                  $787,500        $787,500
         June 30                    787,501         787,500
         September 30               787,501         787,500
         December 31 (1)            787,501       1,050,000

         (1) Includes special distributions to Limited Partners of $262,500, for
the quarter ended December 31, 1996.

         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.



                                        5

<PAGE>





Item 6.  Selected Financial Data

<TABLE>
<CAPTION>

                                      1997            1996            1995            1994           1993
                                 -------------   -------------   -------------   -------------  ------------
<S> <C>
Year Ended December 31:
  Revenues (1)                    $  3,619,489    $  3,593,610    $  3,667,137    $  3,670,207   $  3,674,304
  Net income (2)                     3,241,567       3,096,992       3,336,755       3,308,267      3,307,794
  Cash distributions declared (3)    3,150,003       3,412,500       3,325,002       3,307,500      3,150,000
  Net income per Unit (2)                 .092            .088            .094            .094           .094
  Cash distributions declared
     per Unit (3)                         .090            .098            .095            .095           .090

At December 31:
   Total assets                    $32,258,296     $32,437,106     $32,575,586     $32,615,349    $32,403,393
   Partners' Capital                31,216,398      31,124,834      31,440,342      31,428,589     31,427,822
</TABLE>

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

(2)      Net income for the year ended December 31, 1995,  includes $71,638 from
         a gain on sale of land and  building.  In addition,  net income for the
         years ended December 31, 1996 and 1995,  includes  $99,031 and $11,712,
         respectively, from a loss on sale of land and buildings.

(3)      Distributions for the years ended December 31, 1996 and 1995, include a
         special  distribution to the Limited Partners of $262,500 and $175,000,
         respectively, 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 triple-net  leases,  with the lessee  generally  responsible  for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 1997, the  Partnership  owned 36 Properties,  either  directly or indirectly
through joint venture arrangements.

Liquidity and Capital Resources

         The  Partnership's  primary  source  of  capital  for the  years  ended
December 31, 1997, 1996 and 1995 was cash from  operations  (which includes cash
received from tenants,  distributions from joint ventures and interest received,
less cash paid for expenses).  Cash from operations was  $3,543,056,  $3,462,668
and  $3,263,685  for  the  years  ended  December  31,  1997,   1996  and  1995,
respectively.  The  increase in cash from  operations  for 1997,  as compared to
1996,  was  primarily a result of changes in income and expenses as discussed in
"Results of Operations" below and changes in the Partnership's  working capital,
and the  increase in cash from  operations  for 1996,  as compared to 1995,  was
primarily a result of changes in the  Partnership's  working capital during each
of the respective years.

         Other  sources and uses of capital  included the  following  during the
years ended December 31, 1997, 1996 and 1995.

         In July 1995, the Partnership sold its Property in Ocoee,  Florida, for
$1,200,000 and received net sales proceeds of $1,184,865, resulting in a gain of
$71,638 for financial reporting purposes.  This Property was originally acquired
by the  Partnership in November 1990 and had a cost of  approximately  $927,900,
excluding acquisition fees and miscellaneous  acquisition costs; therefore,  the
Partnership sold the Property for approximately $257,000 in

                                        6

<PAGE>



excess of its original  purchase  price.  In  September  1995,  the  Partnership
reinvested $950,663 of the net sales proceeds in land and building of a Shoney's
in North Fort Myers, Florida.

         In  December  1995,  the   Partnership   sold  its  two  Properties  in
Jacksonville,  Florida,  to  the  subtenant  for a  total  of  $460,000,  and in
connection  therewith,  accepted  promissory  notes  in the  principal  sums  of
$240,000 and $220,000,  collateralized by mortgages on the Properties. The notes
bear interest at a rate of ten percent per annum and are being  collected in 119
equal  monthly  installments  of $2,106  and $1,931  with  balloon  payments  of
$218,252 and $200,324,  respectively,  due in December  2005. As a result of the
sale of the two  Properties,  the  Partnership  recognized a loss of $11,712 for
financial  reporting purposes for the year ended December 31, 1995. The mortgage
notes  receivable  balances at  December  31,  1997 and 1996,  of  $458,407  and
$461,255,   respectively,   include  accrued  interest  of  $3,788  and  $3,812,
respectively,  relating  to these two  Properties.  Proceeds  received  from the
collection of these mortgage  notes will be distributed to the Limited  Partners
or will be used for other Partnership purposes.

         In May  1996,  the  Partnership  reinvested  the  remaining  net  sales
proceeds of approximately  $234,100 from the 1995 sale of the Property in Ocoee,
Florida,  in Middleburg  Joint Venture.  The  Partnership  has an approximate 12
percent  interest in the profits and losses of Middleburg  Joint Venture and the
remaining  interest  in  this  joint  venture  is held  by an  affiliate  of the
Partnership which has the same General Partners.

         In October 1996, the Partnership sold its Property in Orlando, Florida,
to the tenant for $1,375,000.  In connection therewith, the Partnership accepted
a promissory  note in the principal sum of  $1,388,568,  representing  the gross
sales  price  of  $1,375,000  plus  tenant  closing  costs of  $13,568  that the
Partnership financed on behalf of the tenant. The promissory note bears interest
at a rate of  10.75%  per  annum  and is  collateralized  by a  mortgage  on the
Property.  The promissory note is being collected in 12 monthly  installments of
interest only,  afterwards,  in 24 monthly installments of $15,413 consisting of
principal and interest,  and thereafter in 144 monthly  installments  of $16,220
consisting of principal and interest.  The mortgage note receivable  balances at
December 31, 1997 and 1996 of $1,394,979 and $1,401,007,  respectively,  include
accrued  interest  of  $12,386  and  $12,439,  respectively,  relating  to  this
Property.  Proceeds  received from the  collection of this mortgage note will be
distributed  to the  Limited  Partners  or will be used  for  other  Partnership
purposes.  This Property was originally  acquired by the Partnership in December
1990 and had a cost of approximately $1,177,000,  excluding acquisition fees and
miscellaneous acquisition expenses; therefore, the Partnership sold the Property
for approximately  $198,000 in excess of its original purchase price. Due to the
fact  that the  Partnership  had  recognized  accrued  rental  income  since the
inception of the lease relating to the straight lining of future  scheduled rent
increases in accordance  with  generally  accepted  accounting  principles,  the
Partnership  wrote off the  cumulative  balance of such accrued rental income at
the  time of the  sale of this  Property,  resulting  in a loss of  $99,031  for
financial reporting purposes. Due to the fact that the straight lining of future
scheduled  rent  increases  over the term of the lease is a non-cash  accounting
adjustment,  the write off of these  amounts is a loss for  financial  statement
purposes only.

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

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions  to the  partners.  At December  31,  1997,  the  Partnership  had
$1,602,236 invested in such short-term  investments as compared to $1,476,274 at
December 31, 1996. The funds  remaining at December 31, 1997,  after the payment
of distributions and other  liabilities,  will be used to meet the Partnership's
working capital and other needs.

         During 1997, 1996 and 1995,  affiliates incurred $80,998,  $100,264 and
$95,550,   respectively,   for  certain  operating  expense  on  behalf  of  the
Partnership.  As of December 31, 1997 and 1996 the  Partnership  owed $4,599 and
$1,830,  respectively,  to  affiliates  for  such  amounts  and  accounting  and
administrative services. As of February 28, 1998, the Partnership had reimbursed
the  affiliates all such amounts.  In addition,  during the years ended December
31, 1996 and 1995, the Partnership  incurred $41,250 and $13,800,  respectively,
in real estate disposition

                                        7

<PAGE>



fees due to an affiliate as a result of its services in connection with the sale
of the Property in Orlando,  Florida,  and the two  Properties in  Jacksonville,
Florida. No such fees were incurred during the year ended December 31, 1997. The
payment of such fees is deferred  until the Limited  Partners  have received the
sum of their 10%  Preferred  Return and their  adjusted  capital  contributions.
Other liabilities of the Partnership, including distributions payable, decreased
to $873,875  December  31, 1997,  from  $1,147,333  at December  31,  1996.  The
decrease in other  liabilities is primarily  attributable  to the  Partnership's
accruing a special  distribution  payable to the Limited Partners of $262,500 at
December  31,  1996,  from  cumulative  excess  operating  reserves.  No special
distribution  payable was accrued at December  31,  1997.  The General  Partners
believe that the  Partnership  has  sufficient  cash on hand to meet its current
working capital needs.

         Based on cash from  operations,  and for the years ended  December  31,
1996 and 1995,  cumulative excess operating reserves,  the Partnership  declared
distributions to the Limited  Partners of $3,150,003,  $3,412,500 and $3,325,002
for the  years  ended  December  31,  1997,  1996 and 1995,  respectively.  This
represents  distributions  of $0.090  per Unit for the year ended  December  31,
1997,  $0.098 per Unit for the year ended  December 31, 1996 and $0.095 per Unit
for the year ended December 31, 1995. The General  Partners  anticipate that the
Partnership  will declare a special  distribution to the Limited Partners during
the quarter  ending March 31, 1998,  representing  cumulative  excess  operating
reserves.  No amounts  distributed  to the Limited  Partners for the years ended
December 31, 1997, 1996 and 1995, 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.

         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.

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

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

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

Results of Operations

         During  1995,  the   Partnership   owned  and  leased  31  wholly-owned
Properties  (including  one Property in Ocoee,  Florida,  which was sold in July
1995, and two Properties in Jacksonville,  Florida,  which were sold in December
1995), during 1996, the Partnership owned and leased 28 wholly-owned  Properties
(including one Property in Orlando, Florida, which was sold in October 1996) and
during 1997, the  Partnership  owned and leased 28 wholly-owned  Properties.  In
addition,  during 1995, the  Partnership was a co-venturer in two separate joint
ventures  that each owned and leased one  Property,  and one joint  venture that
owned and leased six Properties, and during 1996 and 1997, the Partnership was a
co-venturer  in four  joint  ventures  that  owned  and  leased  a total of nine
Properties.  As of December 31, 1997, the Partnership owned,  either directly or
through  joint  venture  arrangements,   36  Properties  which  are  subject  to
long-term,  triple-net  leases. The leases of the Properties provide for minimum
base annual  rental  amounts  (payable  in monthly  installments)  ranging  from
approximately $41,300 to $213,800. All 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 sixth lease year), the annual base rent required under the terms of the lease
will  increase.   For  further  description  of  the  Partnership's  leases  and
Properties, see Item 1. Business - Leases and Item 2. Properties, respectively.

                                        8

<PAGE>




         During  the  years  ended  December  31,  1997,   1996  and  1995,  the
Partnership and its consolidated  joint venture,  Woodway Joint Venture,  earned
$3,015,642,  $3,182,058  and  $3,300,816,  respectively,  in rental  income from
operating leases and earned income from direct financing leases. The decrease in
rental  and earned  income  during  1997,  as  compared  to 1996,  is  primarily
attributable to a decrease of approximately $141,300, as a result of the sale of
the  Property  in Orlando,  Florida,  in October  1996,  as  described  above in
"Liquidity and Capital Resources."

         Rental and earned income  decreased  approximately  $53,600  during the
year ended  December 31, 1996, as compared to the year ended  December 31, 1995,
as a result of the sale of two Properties located in Jacksonville,  Florida,  in
December  1995. In addition,  rental and earned income  decreased  approximately
$45,400  during  1996,  as  compared  to 1995,  as a  result  of the sale of the
Property in Orlando,  Florida, in October 1996 as described above. However, as a
result  of  Partnership  accepting  mortgage  notes  for  the  sale  of the  two
Properties  located  in  Jacksonville,  Florida,  and the  Property  located  in
Orlando,  Florida, interest income increased during the years ended December 31,
1997 and 1996, each as compared to the previous year, as discussed below.

         For the years ended December 31, 1997,  1996 and 1995, the  Partnership
also earned $85,735,  $31,712 and $59,085,  respectively,  in contingent  rental
income.  The increase in  contingent  rental  income  during 1997 as compared to
1996,  is primarily  attributable  to (i) the  Partnership  adjusting  estimated
contingent rental amounts accrued at December 31, 1996, to actual amounts during
the year ended  December 31,  1997,  and (ii)  increased  gross sales of certain
restaurant  Properties  requiring the payment of contingent  rental income.  The
decrease in  contingent  rental  income  during  1996,  as compared to 1995,  is
partially   attributable  to  decreases  in  gross  sales  relating  to  certain
Properties.

         During  the  years  ended  December  31,  1997,   1996  and  1995,  the
Partnership  also  earned  $238,338 , $127,246  and  $76,445,  respectively,  in
interest and other income. The increase in interest and other income during 1997
and 1996,  each as compared to the previous year, is primarily  attributable  to
the interest  earned on the mortgage notes accepted in connection  with the sale
of the one  Property  located in Orlando,  Florida,  in October 1996 and the two
Properties located in Jacksonville, Florida, in December 1995.

         For the years ended December 31, 1997,  1996 and 1995, the  Partnership
also earned $293,480, $266,500 and $244,933,  respectively,  attributable to net
income earned by  unconsolidated  joint  ventures in which the  Partnership is a
co-venturer. The increase in net income earned by joint ventures during 1997 and
1996,  each as compared to the previous year, is primarily  attributable  to the
fact that the Partnership  invested in Middleburg  Joint Venture in May 1996, as
described above in "Liquidity and Capital Resources."

         During at least one of the years  ended  December  31,  1997,  1996 and
1995, four lessees of the Partnership and its  consolidated  joint venture,  (i)
Golden Corral Corporation,  (ii) Carrols Corporation (iii) Restaurant Management
Services, Inc. and (iv) Flagstar Enterprises,  Inc. and Quincy's Inc. (which are
affiliated entities under common control of Flagstar  Corporation) (herein after
referred to as Flagstar Corporation),  each contributed more than ten percent of
the  Partnership's  total  rental  income  (including  rental  income  from  the
Partnership's  consolidated joint venture and the Partnership's  share of rental
income from eight Properties owned by joint ventures).  As of December 31, 1997,
Golden  Corral  Corporation  was  the  lessee  under  leases  relating  to  four
restaurants,  Carrols  Corporation  was the lessee under leases relating to five
restaurants,  Restaurant  Management Services,  Inc. was the lessee under leases
relating to five  restaurants  and  Flagstar  Corporation  was the lessee  under
leases  relating to three  restaurants.  It is  anticipated  that,  based on the
minimum  annual  rental   payments   required  by  the  leases,   Golden  Corral
Corporation,  Carrols Corporation and Restaurant Management Services,  each will
continue to contribute more than ten percent of the  Partnership's  total rental
income during 1998 and subsequent years. In addition, during at least one of the
three years ended December 31, 1997,  1996 and 1995,  three  Restaurant  Chains,
Golden  Corral Family  Steakhouse  Restaurants,  Burger King and Shoney's,  each
accounted  for more than ten percent of the  Partnership's  total rental  income
(including rental income from the Partnership's  consolidated  joint venture and
the  Partnership's  share  of  rental  income  from  eight  Properties  owned by
unconsolidated  joint  ventures).  In subsequent  years, it is anticipated  that
these three  Restaurant  Chains each will  continue to account for more than ten
percent of the  Partnership's  total rental 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.

         Operating expenses,  including  depreciation and amortization  expense,
were $377,922, $397,587 and $390,308 for the years ended December 31, 1997, 1996
and 1995, respectively. The decrease in operating expenses

                                        9

<PAGE>



during 1997,  as compared to 1996,  is primarily  attributable  to a decrease in
accounting and administrative expenses associated with operating the Partnership
and its Properties.  The increase in operating  expenses during 1996 as compared
to  1995,  is  primarily   attributable   to  an  increase  in  accounting   and
administrative  expenses  associated  with  operating  the  Partnership  and its
Properties  and an  increase  in  insurance  expense as a result of the  General
Partners'  obtaining   contingent   liability  and  property  coverage  for  the
Partnership  beginning in 1995. The increase in operating  expenses during 1996,
as compared to 1995, was partially offset by a decrease in depreciation  expense
as a result of the sale of the two properties located in Jacksonville,  Florida,
in December 1995, as described above in "Liquidity and Capital Resources."

         As a result of the 1996 sale of the  Property in Orlando,  Florida,  as
described above in "Liquidity and Capital Resources," the Partnership recognized
a loss of $99,031 for the year ended December 31, 1996. In addition, as a result
of the 1995 sales of the Property in Ocoee,  Florida,  and the two Properties in
Jacksonville,  Florida, as described above in "Liquidity and Capital Resources,"
the   Partnership   recognized  a  gain  of  $71,638  and  a  loss  of  $11,712,
respectively,  during the year ended December 31, 1995. No Properties  were sold
during 1997.

         The General Partners of the Partnership are in the process of assessing
and addressing the impact of the year 2000 on its computer package software. The
hardware  and  built-in  software  are  believed  to  be  year  2000  compliant.
Accordingly, the General Partners do not expect this matter to materially impact
how the  Partnership  conducts  business  nor its  current or future  results of
operations or financial position.

         The Partnership's leases as of December 31, 1997, are triple-net leases
and contain  provisions that the General  Partners  believe mitigate the adverse
effect of inflation.  Such provisions  include clauses  requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic  increases  in base rent at  specified  times  during  the term of the
lease.  Management  expects  that  increases in  restaurant  sales volume due to
inflation  and real sales growth  should  result in an increase in rental income
over  time.  Continued  inflation  also may cause  capital  appreciation  of the
Partnership's Properties.  Inflation and changing prices, however, also may have
an  adverse  impact on the sales of the  restaurants  and on  potential  capital
appreciation of the Properties.

Item 8.   Financial Statements and Supplementary Data

                                       10

<PAGE>



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

                                    CONTENTS







                                                            Page

Report of Independent Accountants                            12

Financial Statements:

  Balance Sheets                                             13

  Statements of Income                                       14

  Statements of Partners' Capital                            15

  Statements of Cash Flows                                   16

  Notes to Financial Statements                              18

                                       11

<PAGE>







                        Report of Independent Accountants



To the Partners
CNL Income Fund VIII, Ltd.


We have audited the financial  statements and the financial  statement schedules
of CNL Income Fund VIII,  Ltd. (a Florida  limited  partnership)  listed in Item
14(a) of this Form 10-K.  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  in  accordance  with  generally   accepted  auditing
standards.  Those standards 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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of CNL Income Fund VIII, Ltd. as
of December 31, 1997 and 1996,  and the results of its  operations  and its cash
flows for each of the three  years in the  period  ended  December  31,  1997 in
conformity with generally accepted accounting  principles.  In addition,  in our
opinion, the financial statement schedules referred to above, when considered in
relation to the basic financial  statements taken as a whole, present fairly, in
all material respects, the information required to be included therein.



/s/ Coopers & Lybrand, L.L.P.
--------------------------------


Orlando, Florida
January 12, 1998

                                       12

<PAGE>



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

                                 BALANCE SHEETS


                                                       December 31,
              ASSETS                             1997              1996
              ------                          -----------       ------------

Land and buildings on operating
  leases, less accumulated
  depreciation                                $13,960,232       $14,169,203
Net investment in direct financing
  leases                                       10,044,975        10,223,225
Investment in joint ventures                    2,877,717         2,940,826
Mortgage notes receivable                       1,853,386         1,862,262
Cash and cash equivalents                       1,602,236         1,476,274
Receivables, less allowance for
  doubtful accounts of $19,228 and
  $4,775                                           51,393            25,675
Prepaid expenses                                    4,357             4,377
Accrued rental income, less
  allowance for doubtful accounts
  of $4,501 in 1997                             1,811,329         1,682,593
Other assets                                       52,671            52,671
                                              -----------       -----------

                                              $32,258,296       $32,437,106
                                              ===========       ===========


  LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                              $     8,359       $     7,693
Escrowed real estate taxes payable                 24,459            15,138
Distributions payable                             787,501         1,050,000
Due to related parties                             59,649            56,880
Rents paid in advance                              53,556            74,502
                                              -----------       -----------
    Total liabilities                             933,524         1,204,213

Minority interest                                 108,374           108,059

Partners' capital                              31,216,398        31,124,834
                                              -----------       -----------

                                              $32,258,296       $32,437,106
                                              ===========       ===========












                 See accompanying notes to financial statements.

                                       13

<PAGE>



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

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                                 1997                1996               1995
                                              ----------          ----------         -------
<S> <C>
Revenues:
  Rental income from operating
    leases                                    $1,804,273          $1,867,968         $1,951,189
  Earned income from direct
    financing leases                           1,211,369           1,314,090          1,349,627
  Contingent rental income                        85,735              31,712             59,085
  Interest and other income                      238,338             127,246             76,445
                                              ----------          ----------         ----------
                                               3,339,715           3,341,016          3,436,346
                                              ----------          ----------         ----------

Expenses:
  General operating and
    administrative                               140,586             156,177            140,009
  Professional services                           23,284              27,682             25,927
  State and other taxes                            5,081               4,757              6,796
  Depreciation and amortization                  208,971             208,971            217,576
                                              ----------          ----------         ----------
                                                 377,922             397,587            390,308
                                              ----------          ----------         ----------

Income Before Minority Interest
  in Income of Consolidated Joint
  Venture, Equity in Earnings of
  Unconsolidated Joint Ventures and
  Gain (Loss) on Sale of Land and
  Buildings                                    2,961,793           2,943,429          3,046,038

Minority Interest in Income of
  Consolidated Joint Venture                     (13,706)            (13,906)           (14,142)

Equity in Earnings of
  Unconsolidated Joint Ventures                  293,480             266,500            244,933

Gain (Loss) on Sale of Land and
  Buildings                                           -              (99,031)            59,926
                                              ----------          ----------         ----------

Net Income                                    $3,241,567          $3,096,992         $3,336,755
                                              ==========          ==========         ==========

Allocation of Net Income:
  General partners                            $   32,416          $   31,413         $   32,714
  Limited partners                             3,209,151           3,065,579          3,304,041
                                              ----------          ----------         ----------

                                              $3,241,567          $3,096,992         $3,336,755
                                              ==========          ==========         ==========

Net Income Per Limited Partner Unit           $    0.092          $    0.088         $    0.094
                                              ==========          ==========         ==========

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


</TABLE>










                 See accompanying notes to financial statements.

                                       14

<PAGE>



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

                         STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>

                                   General Partners                           Limited Partners
                                            Accumu-                                    Accumu-
                                 Contri-     lated        Contri-         Distri-        lated        Syndication
                                 butions    Earnings      butions         butions       Earnings         Costs           Total
                                 -------    --------    -----------    ------------   -----------     -----------     ------------
<S> <C>
Balance, December 31, 1994        $1,000    $128,898    $35,000,000    $(12,447,136)  $12,760,827     $(4,015,000)    $31,428,589

  Distributions to limited
    partners ($0.095 per
     limited partner unit)            -           -              -       (3,325,002)           -               -       (3,325,002)
  Net income                          -       32,714             -               -      3,304,041              -        3,336,755
                                  ------    --------    -----------    ------------   -----------     -----------     -----------

Balance, December 31, 1995         1,000     161,612     35,000,000     (15,772,138)   16,064,868      (4,015,000)     31,440,342

  Distributions to limited
    partners ($0.098 per
     limited partner unit)            -           -              -       (3,412,500)           -               -       (3,412,500)
  Net income                          -       31,413             -               -      3,065,579              -        3,096,992
                                  ------    --------    -----------    ------------   -----------     -----------     -----------

Balance, December 31, 1996         1,000     193,025     35,000,000     (19,184,638)   19,130,447      (4,015,000)     31,124,834

  Distributions to limited
    partners ($0.090 per
    limited partner unit)             -           -              -       (3,150,003)           -               -       (3,150,003)
  Net income                          -       32,416             -               -      3,209,151              -        3,241,567
                                  ------    --------    -----------    ------------   -----------     -----------     -----------

Balance, December 31, 1997        $1,000    $225,441    $35,000,000    $(22,334,641)  $22,339,598     $(4,015,000)    $31,216,398
                                  ======    ========    ===========    ============   ===========     ===========     ===========

</TABLE>





                 See accompanying notes to financial statements.

                                       15

<PAGE>



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

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                              Year Ended December 31,
                                                  1997                 1996                 1995
                                              -----------          -----------          -----------
<S> <C>
Increase (Decrease) in Cash and
  Cash Equivalents:

    Cash Flows from Operating
      Activities:
        Cash received from tenants            $ 3,114,439          $ 3,222,903          $ 3,074,333
        Distributions from uncon-
          solidated joint ventures                356,589              323,531              295,114
        Cash paid for expenses                   (163,215)            (194,218)            (170,074)
        Interest received                         235,243              110,452               64,312
                                              -----------          -----------          -----------
            Net cash provided by
              operating activities              3,543,056            3,462,668            3,263,685
                                              -----------          -----------          -----------

    Cash Flows from Investing
      Activities:
        Proceeds from sale of land
          and buildings                                -                    -             1,184,865
        Additions to land and
          buildings on operating
          leases                                       -                (1,135)            (397,291)
        Investment in direct
          financing leases                             -                (1,326)            (550,911)
        Investment in joint
          venture                                      -              (234,059)                    -
        Collections on mortgage
          notes receivable                          8,799                2,557                   -
        Other                                          -               (34,793)                  -
                                              -----------          -----------          ----------
            Net cash provided by
              (used in) investing
              activities                            8,799             (268,756)             236,663
                                              -----------          -----------          -----------

    Cash Flows from Financing
      Activities:
        Distributions to limited
          partners                             (3,412,502)          (3,325,000)          (3,307,502)
        Distributions to holder of
          minority interest                       (13,391)             (13,503)             (11,526)
                                              -----------          -----------          -----------
            Net cash used in
              financing activities             (3,425,893)          (3,338,503)          (3,319,028)
                                              -----------          -----------          -----------

Net Increase (Decrease) in Cash
  and Cash Equivalents                            125,962             (144,591)             181,320

Cash and Cash Equivalents at
  Beginning of Year                             1,476,274            1,620,865            1,439,545
                                              -----------          -----------          -----------

Cash and Cash Equivalents at
  End of Year                                 $ 1,602,236          $ 1,476,274          $ 1,620,865
                                              ===========          ===========          ===========
</TABLE>



                 See accompanying notes to financial statements.

                                       16

<PAGE>



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

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                Year Ended December 31,
                                                     1997                 1996                 1995
                                                 -----------          -----------          --------
<S> <C>
Reconciliation of Net Income to
  Net Cash Provided by Operating
  Activities:

    Net income                                   $ 3,241,567          $ 3,096,992          $ 3,336,755
                                                 -----------          -----------          -----------
    Adjustments to reconcile net
      income to net cash provided
      by operating activities:
        Depreciation                                 208,971              208,971              216,295
        Amortization                                      -                    -                 1,281
        Minority interest in
          income of consolidated
          joint venture                               13,706               13,906               14,142
        Equity in earnings of
          unconsolidated joint
          ventures, net of
          distributions                               63,109               57,031               50,181
        Loss (gain) on sale of land
          and buildings                                   -                99,031              (59,926)
        Decrease (increase) in
          receivables                                (25,641)                 429               16,572
        Decrease (increase) in
          prepaid expenses                                20               (1,465)              (2,912)
        Decrease in net investment
          in direct financing leases                 178,250              157,194              122,052
        Increase in accrued rental
          income                                    (128,736)            (219,757)            (342,862)
        Increase (decrease) in
          accounts payable and
          accrued expenses                             9,987               12,203              (15,650)
        Increase (decrease) in due
          to related parties                           2,769               (4,505)               6,335
        Increase (decrease) in
          rents paid in advance                      (20,946)              42,638              (78,578)
                                                 -----------          -----------          -----------
            Total adjustments                        301,489              365,676              (73,070)
                                                 -----------          -----------          -----------

Net Cash Provided by Operating
  Activities                                     $ 3,543,056          $ 3,462,668          $ 3,263,685
                                                 ===========          ===========          ===========

Supplemental Schedule of Non-Cash
  Investing and Financing
  Activities:

    Mortgage notes accepted in
      exchange for sale of land
      and buildings                              $        -           $ 1,375,000          $   460,000
                                                 ===========          ===========          ===========

    Distributions declared and
      unpaid at December 31                      $   787,501          $ 1,050,000          $   962,500
                                                 ===========          ===========          ===========
</TABLE>

                 See accompanying notes to financial statements.

                                       17

<PAGE>



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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies:

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

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

         Real  Estate  and  Lease  Accounting  -  The  Partnership  records  the
         acquisition of land and buildings at cost,  including  acquisition  and
         closing costs. Land and buildings are leased to unrelated third parties
         on a triple-net basis, whereby the tenant is generally  responsible for
         all operating  expenses  relating to the property,  including  property
         taxes, insurance, maintenance and repairs. The leases are accounted for
         using either the direct financing or the operating method. Such methods
         are described below:

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

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

                                       18

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies - Continued:

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

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

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

         Investment  in Joint  Ventures - The  Partnership  accounts  for its 88
         percent  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 and  Middleburg  Joint Venture are accounted
         for using the equity method since the  Partnership  shares control with
         affiliates which have the same general partners.

                                       19

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies - Continued:

         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.  The  Partnership  limits  investment  of
         temporary cash investments to financial  institutions  with high credit
         standing;  therefore, the Partnership believes it is not exposed to any
         significant credit risk on cash and cash equivalents.

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

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

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



                                       20

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


2.       Leases:

         The Partnership leases its land and buildings primarily to operators of
         national and  regional  fast-food  and  family-style  restaurants.  The
         leases are accounted for under the provisions of Statement of Financial
         Accounting  Standards  No. 13,  "Accounting  for  Leases."  Some of the
         leases have been classified as operating  leases and some of the leases
         have been classified as direct  financing  leases.  For property leases
         classified as direct  financing  leases,  the building  portions of the
         majority  of  property  leases are  accounted  for as direct  financing
         leases  while the land  portions of these leases are  accounted  for as
         operating  leases.  Substantially all leases are for 15 to 20 years and
         provide for minimum and  contingent  rentals.  In addition,  the tenant
         pays all property taxes and  assessments,  fully maintains the interior
         and exterior of the building and carries insurance  coverage for public
         liability,  property  damage,  fire and  extended  coverage.  The lease
         options  generally  allow  tenants  to renew the leases for two to four
         successive  five-year  periods subject to the same terms and conditions
         of the initial lease. Most leases also allow the tenant to purchase the
         property  at fair market  value after a specified  portion of the lease
         has elapsed.

3.       Land and Buildings on Operating Leases:

         Land and  buildings on operating  leases  consisted of the following at
         December 31:

                                            1997                   1996
                                         -----------            -----------

                  Land                   $ 9,167,336            $ 9,167,336
                  Buildings                6,231,430              6,231,430
                                         -----------            -----------
                                          15,398,766             15,398,766
                  Less accumulated
                    depreciation         (1,438,534)            (1,229,563)
                                         -----------            -----------

                                         $13,960,232            $14,169,203
                                         ===========            ===========

                                       21

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


3.       Land and Buildings on Operating Leases - Continued:

         In October 1996, the Partnership sold its property in Orlando, Florida,
         to the tenant for  $1,375,000  and accepted  the sales  proceeds in the
         form of a  promissory  note  (Note 6).  This  property  was  originally
         acquired  by the  Partnership  in  December  1990  and  had a  cost  of
         approximately $1,177,000,  excluding acquisition fees and miscellaneous
         acquisition expenses;  therefore, the Partnership sold the property for
         approximately $198,000 in excess of its original purchase price. Due to
         the fact that the  Partnership  had  recognized  accrued  rental income
         since the  inception of the lease  relating to the  straight  lining of
         future  scheduled rent increases in accordance with generally  accepted
         accounting principles, the Partnership wrote off the cumulative balance
         of such accrued rental income at the time of the sale of this property,
         resulting in a loss of $99,031 for financial reporting purposes. Due to
         the fact that the  straight  lining of future rent  increases  over the
         term of the lease is a non-cash accounting adjustment, the write off of
         these amounts is a loss for financial statement purposes only.

         Some leases provide for escalating  guaranteed minimum rents throughout
         the  lease  terms.  Income  from  these  scheduled  rent  increases  is
         recognized on a straight-line  basis over the terms of the leases.  For
         the years ended  December  31,  1997,  1996 and 1995,  the  Partnership
         recognized  $128,736,  $219,757  and  $342,862,  respectively,  of such
         rental income.

         The following is a schedule of the future  minimum lease payments to be
         received on noncancellable operating leases at December 31, 1997:

                  1998                                  $ 1,704,859
                  1999                                    1,704,859
                  2000                                    1,735,498
                  2001                                    1,825,526
                  2002                                    1,871,537
                  Thereafter                             12,996,507
                                                        -----------

                                                        $21,838,786

         Since  lease  renewal  periods  are  exercisable  at the  option of the
         tenant, the above table only presents future minimum lease payments due
         during  the  initial  lease  terms.  In  addition,  this table does not
         include any amounts for future contingent rentals which may be received
         on the leases based on a percentage of the tenant's gross sales.

                                       22

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


4.       Net Investment in Direct Financing Leases:

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

                                                   1997               1996
                                               ------------       ------------

                  Minimum lease payments
                    receivable                 $ 18,939,788       $ 20,329,407
                  Estimated residual
                    values                        3,040,615          3,040,615
                  Less unearned income          (11,935,428)       (13,146,797)
                                               ------------       ------------

                  Net investment in
                    direct financing
                    leases                     $ 10,044,975       $ 10,223,225
                                               ============       ============

         In October 1996, the Partnership sold its property in Orlando, Florida,
         for  which  the  building  portion  had  been  classified  as a  direct
         financing lease. In connection therewith, the gross investment (minimum
         lease payments  receivable and estimated  residual values) and unearned
         income  relating to this property was removed from the accounts and the
         loss from the sale  relating to the land  portion of the  property  was
         reflected in income (Note 3).

         The  following  is a schedule of future  minimum  lease  payments to be
         received on direct financing leases at December 31, 1997:

                  1998                   $ 1,389,622
                  1999                     1,389,622
                  2000                     1,389,622
                  2001                     1,413,128
                  2002                     1,424,842
                  Thereafter              11,932,952
                                         -----------

                                         $18,939,788

         The above table does not include  future  minimum  lease  payments  for
         renewal  periods or for contingent  rental payments that may become due
         in future periods (see Note 3).



                                       23

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


5.       Investment in Joint Ventures:

         The  Partnership  has an 86 percent  and a 37 percent  interest  in the
         profits  and  losses of  Asheville  Joint  Venture  and CNL  Restaurant
         Investments II,  respectively.  The remaining  interests in these joint
         ventures are held by affiliates of the Partnership  which have the same
         general partners.

         In May 1996, the Partnership entered into a joint venture  arrangement,
         Middleburg  Joint Venture,  with an affiliate of the Partnership  which
         has the same  general  partners  to hold one  restaurant  property.  In
         connection therewith, the Partnership contributed $234,059 to the joint
         venture and has a 12 percent  interest in the profits and losses of the
         joint venture.

         Asheville Joint Venture and Middleburg Joint Venture each own and lease
         one property,  and CNL  Restaurant  Investments  II owns and leases six
         properties  to  an  operator  of  national  fast-food  or  family-style
         restaurants.  The  following  presents  the joint  ventures'  combined,
         condensed financial information at December 31:

                                                     1997            1996
                                                  ----------      ----------

                  Land and buildings on
                    operating leases,
                    less accumulated
                    depreciation                  $6,487,210      $6,654,361
                  Net investment in direct
                    financing lease                1,335,223       1,349,611
                  Cash                                   596           9,859
                  Receivables                         14,169          13,840
                  Prepaid expenses                     1,017             888
                  Accrued rental income              128,993          91,074
                  Liabilities                            864           9,992
                  Partners' capital                7,966,344       8,109,641
                  Revenues                         1,001,284         862,821
                  Net income                         824,576         688,253

         The Partnership  recognized  income  totalling  $293,480,  $266,500 and
         $244,933  for the  years  ended  December  31,  1997,  1996  and  1995,
         respectively, from these joint ventures.



                                       24

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


6.       Mortgage Notes Receivable:

         As of December 31, 1995,  the  Partnership  had accepted two promissory
         notes in the principal sum totalling  $460,000,  in connection with the
         sale of two of its properties in Jacksonville,  Florida. The promissory
         notes,  which are  collateralized by mortgages on the properties,  bear
         interest at a rate of ten percent per annum, and are being collected in
         119 equal  monthly  installments  of $2,106 and  $1,931,  with  balloon
         payments of $218,252 and $200,324, respectively, due in December 2005.

         In  addition,  in  connection  with the sale in 1996 of its property in
         Orlando,  Florida,  the  Partnership  accepted a promissory note in the
         principal  sum of  $1,388,568,  representing  the gross  sales price of
         $1,375,000  plus tenant  closing costs of $13,568 that the  Partnership
         financed on behalf of the tenant. The promissory note bears interest at
         a rate of 10.75%  per annum,  is  collateralized  by a mortgage  on the
         property and is being collected in 12 monthly  installments of interest
         only, in 24 monthly installments of $15,413 consisting of principal and
         interest,  and  thereafter  in  144  monthly  installments  of  $16,220
         consisting of principal and interest.

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

                                                     1997           1996
                                                  ----------     ----------

                  Principal balance               $1,837,212     $1,846,011
                  Accrued interest receivable         16,174         16,251
                                                  ----------     ----------

                                                  $1,853,386     $1,862,262
                                                  ==========     ==========

         The general  partners believe that the estimated fair value of mortgage
         notes  receivable  at  December  31,  1997 and 1996,  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.



                                       25

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


7.       Allocations and Distributions:

         Generally, all net income and net losses of the Partnership,  excluding
         gains and losses from the sale of properties,  are allocated 99 percent
         to the  limited  partners  and one  percent  to the  general  partners.
         Distributions  of net  cash  flow are made 99  percent  to the  limited
         partners and one percent to the general  partners;  provided,  however,
         that the one percent of net cash flow to be  distributed to the general
         partners  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").

         Generally,  net  sales  proceeds  from the sale of  properties,  to the
         extent  distributed,  will be 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  will  then  receive,   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 will be  distributed  95
         percent  to the  limited  partners  and  five  percent  to the  general
         partners.  Any  gain  from  the  sale of a  property  is,  in  general,
         allocated in the same manner as net sales  proceeds are  distributable.
         Any loss from the sale of a property is, 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.

         During  the  years  ended  December  31,  1997,   1996  and  1995,  the
         Partnership   declared   distributions   to  the  limited  partners  of
         $3,150,003,  $3,412,500 and $3,325,002,  respectively. No distributions
         have been made to the general partners to date.

                                       26

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


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>

                                                                1997             1996              1995
                                                             ----------       ----------        -------
<S> <C>
                  Net income for financial
                    reporting purposes                       $3,241,567       $3,096,992        $3,336,755

                  Depreciation for tax
                    reporting purposes in
                    in excess of depreci-
                    ation for financial
                    reporting purposes                         (204,419)        (219,372)         (219,653)

                  Direct financing leases
                    recorded as operating
                    leases for tax
                    reporting purposes                          178,250          157,197           122,052

                  Allowance for doubtful
                    accounts                                     18,954          (23,716)            8,067

                  Accrued rental income                        (133,237)        (219,757)         (342,862)

                  Rents paid in advance                         (21,446)          42,637           (70,010)

                  Gain or loss on sale of
                    land and buildings for
                    tax reporting purposes
                    in excess of gain or
                    loss for financial
                    reporting purposes                              670           99,031           161,548

                  Equity in earnings of
                    unconsolidated joint
                    ventures for tax
                    reporting purposes
                    in excess of (less than)
                    equity in earnings of
                    unconsolidated joint
                    ventures for financial
                    reporting purposes                           (2,987)          13,320            (4,016)

                  Minority interest in
                    timing differences of
                    consolidated joint
                    venture                                       1,571            1,677             2,783
                                                             ----------       ----------        ----------

                  Net income for federal
                    income tax purposes                      $3,078,923       $2,948,009        $2,994,664
                                                             ==========       ==========        ==========
</TABLE>

                                       27

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


9.       Related Party Transactions:

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal  shareholders  of CNL Group,  Inc., the parent company of
         CNL Fund Advisors, Inc. The other individual general partner, Robert A.
         Bourne, served as president of CNL Fund Advisors,  Inc. through October
         1997. CNL Income Fund Advisors,  Inc. was a wholly owned  subsidiary of
         CNL Group,  Inc. until its merger,  effective January 1, 1996, with CNL
         Fund Advisors,  Inc. During the years ended December 31, 1997, 1996 and
         1995,  CNL Income  Fund  Advisors,  Inc.  and CNL Fund  Advisors,  Inc.
         (hereinafter   referred  to  collectively  as  the  "Affiliates")  each
         performed certain services for the Partnership, as described below.

         During  the years  ended  December  31,  1997,  1996 and 1995,  certain
         Affiliates acted as manager of the Partnership's properties pursuant to
         a management agreement with the Partnership.  In connection  therewith,
         the  Partnership  agreed to pay  Affiliates  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  do  not  receive  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, 1997,  1996 and
         1995.

         Certain   Affiliates   are  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
         Affiliates  provide 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

                                       28

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


9.       Related Party Transactions - Continued:

         contributions.  During the years ended  December 31, 1996 and 1995, the
         Partnership  incurred $41,250 and $13,800,  respectively,  in deferred,
         subordinated real estate disposition fees as the result of the sales of
         the property in Orlando,  Florida,  and two properties in Jacksonville,
         Florida.
          No deferred,  subordinated real estate  disposition fees were incurred
         for the year ended December 1997.

         During the years ended  December  31, 1997,  1996 and 1995,  Affiliates
         provided accounting and administrative services to the Partnership on a
         day-to-day basis. The Partnership incurred $80,461, $89,317 and $73,365
         for the years ended December 31, 1997, 1996 and 1995, respectively, for
         such services.

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

                                                            1997        1996
                                                          -------     ---------

                  Due to Affiliates:
                    Accounting and administrative
                      services                            $ 4,599     $ 1,830
                    Deferred, subordinated real
                      estate disposition fee               55,050      55,050
                                                          -------     -------

                                                          $59,649     $56,880

                                       29

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


10.      Concentration of Credit Risk:

         The  following  schedule  presents  total rental and earned income from
         individual  lessees,  each  representing  more than ten  percent of the
         Partnership's   total   rental  and  earned   income   (including   the
         Partnership's  share  of  total  rental  and  earned  income  from  the
         unconsolidated  joint  ventures)  for at least one of the  years  ended
         December 31:
<TABLE>
<CAPTION>

                                                  1997             1996              1995
                                                --------         --------          ------
<S> <C>
                  Golden Corral
            Corporation                         $706,839         $663,889          $663,943
                  Restaurant Management
            Services, Inc.                       531,110          533,990           525,260
                  Carrols Corporation            523,517          526,034           532,990
                  Flagstar Enterprises,
            Inc. and Quincy's
            Restaurants, Inc.                    232,876          356,720           363,335
</TABLE>

         In addition,  the following  schedule  presents total rental and earned
         income from individual  restaurant chains,  each representing more than
         ten  percent  of the  Partnership's  total  rental  and  earned  income
         (including  the  Partnership's  share of total rental and earned income
         from the unconsolidated joint ventures),  for at least one of the years
         ended December 31:
<TABLE>
<CAPTION>

                                               1997             1996              1995
                                             --------         --------          ---------
<S> <C>
                  Burger King              $1,003,419         $989,480          $987,871
                  Golden Corral
                    Family Steakhouse
                    Restaurants               735,949          681,042           663,943
                  Shoney's                    607,054          609,072           526,649
</TABLE>

         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. However, the general partners believe that the risk
         of such a default is reduced due to the  essential or important  nature
         of these Properties for the on-going operations of the lessees.

                                       30

<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 Fund Advisors,  Inc., CNL Group,  Inc. and their
affiliates, all of which are affiliates of the General Partners.

         James M. Seneff, Jr., age 51, is a principal  stockholder of CNL Group,
Inc., a diversified  real estate company,  and has served as its Chairman of the
Board of Directors,  director and Chief Executive Officer since its formation in
1980.  CNL Group,  Inc.  is the  parent  company of CNL  Securities  Corp.,  CNL
Investment Company, CNL Fund Advisors,  Inc., CNL Real Estate Advisors, Inc. and
prior to its merger with CNL Fund Advisors, Inc., effective January 1, 1996, CNL
Income Fund Advisors, Inc. Mr. Seneff is Chief Executive Officer, and has been a
director and registered  principal of CNL Securities Corp.,  which served as the
managing dealer in the Partnership's  offering of Units,  since its formation in
1979.  Mr.  Seneff also has held the position of President and a director of CNL
Management  Company,  a registered  investment  advisor,  since its formation in
1976,  has served as Chief  Executive  Officer and  Chairman of the Board of CNL
Investment  Company,  and Chief  Executive  Officer and Chairman of the Board of
Commercial Net Lease Realty,  Inc. since 1992, has served as the Chairman of the
Board and the Chief  Executive  Officer of CNL Realty  Advisors,  Inc. since its
inception in 1991 through  December 31, 1997, at which time CNL Realty Advisors,
Inc.  merged with Commercial Net Lease Realty,  Inc.,  served as Chairman of the
Board and Chief  Executive  Officer of CNL Income Fund Advisors,  Inc. since its
inception in 1994 through December 31, 1995, has served as a director,  Chairman
of the Board and Chief  Executive  Officer of CNL Fund Advisors,  Inc. since its
inception in 1994,  and has held the position of Chief  Executive  Officer and a
director of CNL Institutional  Advisors,  Inc., a registered investment advisor,
since its inception in 1990.  In addition,  Mr. Seneff has served as a director,
Chairman of the Board and Chief  Executive  Officer of CNL  American  Properties
Fund,  Inc. since 1994, and has served as a director,  Chairman of the Board and
Chief Executive  Officer of CNL American Realty Fund, Inc. since 1996 and of CNL
Real Estate Advisors,  Inc. since January 1997. 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.  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
joint  venturer in over 100 real  estate  ventures  involved  in the  financing,
acquisition,  construction and rental of office buildings,  apartment complexes,
restaurants,  hotels  and other  real  estate.  Included  in these  real  estate
ventures are approximately 65 privately offered real estate limited partnerships
in which Mr.  Seneff,  directly or through an affiliated  entity,  serves or has
served as a general partner. Also included are CNL Income Fund, Ltd., CNL Income
Fund II, Ltd.,  CNL Income Fund III,  Ltd., CNL Income Fund IV, Ltd., CNL Income
Fund V, Ltd.,  CNL Income Fund VI, Ltd.,  CNL Income Fund VII,  Ltd., CNL Income
Fund IX, Ltd.,  CNL Income Fund X, Ltd.,  CNL Income Fund XI,  Ltd.,  CNL Income
Fund XII,  Ltd.,  CNL Income Fund XIII,  Ltd.,  CNL Income Fund XIV,  Ltd.,  CNL
Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII,  Ltd. and
CNL Income Fund XVIII,  Ltd. (the "CNL Income Fund  Partnerships"),  public real
estate limited  partnerships with investment  objectives similar to those of the
Partnership,  in which  Mr.  Seneff  serves  as a general  partner.  Mr.  Seneff
received his degree in Business  Administration from Florida State University in
1968.


                                       31

<PAGE>



         Robert A.  Bourne,  age 50, is  President  and  Treasurer of CNL Group,
Inc., President,  a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, and prior to its merger with
CNL Fund Advisors,  Inc.,  effective  January 1, 1996, CNL Income Fund Advisors,
Inc., and Chief Investment Officer,  Vice Chairman of the Board of Directors,  a
director  and  Treasurer  of CNL  Institutional  Advisors,  Inc.,  a  registered
investment  advisor.  Mr.  Bourne  served  as  President  of  CNL  Institutional
Advisors,  Inc. from the date of its inception  through June 30, 1997 and served
as President of CNL Fund Advisors,  Inc. from the date of its inception  through
October 1997.  Mr. Bourne also has served as a director since 1992, as President
from July 1992 to February  1996, as Secretary and Treasurer  from February 1996
through  December 1997, and since February 1996,  served as Vice Chairman of the
Board of Directors of Commercial Net Lease Realty, Inc. In addition,  Mr. Bourne
has served as a director  since its inception in 1991, as President from 1991 to
February  1996, as Secretary from February 1996 to July 1996, and since February
1996, served as Treasurer and Vice Chairman of CNL Realty Advisors, Inc. through
December  31,  1997,  at which  time  CNL  Realty  Advisors,  Inc.  merged  with
Commercial  Net Lease  Realty,  Inc.  In  addition,  Mr.  Bourne  has  served as
President and a director of CNL American  Properties  Fund, Inc. since 1994, and
has served as President and a director of CNL American  Realty Fund,  Inc. since
1996 and of CNL Real Estate  Advisors,  Inc. since January 1997. Upon graduation
from Florida State  University in 1970,  where he received a B.A. in Accounting,
with honors,  Mr.  Bourne  worked as a certified  public  accountant  and,  from
September  1971  through  December  1978,  was  employed  by  Coopers & Lybrand,
Certified  Public  Accountants,  where  he  held  the  position  of tax  manager
beginning in 1975.  From January 1979 until June 1982,  Mr. Bourne was a partner
in the  accounting  firm of Cross & Bourne  and from July 1982  through  January
1987, he was a partner in the accounting firm of Bourne & Rose, P.A.,  Certified
Public  Accountants.  Mr. Bourne,  who joined CNL Securities  Corp. in 1979, has
participated  as a general  partner or joint  venturer  in over 100 real  estate
ventures  involved in the  financing,  acquisition,  construction  and rental of
office  buildings,  apartment  complexes,  restaurants,  hotels  and other  real
estate.  Included in these real estate ventures are  approximately  64 privately
offered  real  estate  limited  partnerships  in which Mr.  Bourne,  directly or
through an affiliated  entity,  serves or has served as a general partner.  Also
included  are the CNL Income  Fund  Partnerships,  public  real  estate  limited
partnerships with investment objectives similar to those of the Partnership,  in
which Mr. Bourne serves as a general partner.

         CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida.  Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners.  CNL
Realty  Corporation  was organized to serve as the corporate  general partner of
real estate limited partnerships,  such as the Partnership,  organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships.

         CNL  Fund  Advisors,  Inc.  provides  certain  management  services  in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation  organized  in 1994 under the laws of the State of Florida,  and its
principal  office is located at 400 East South Street,  Orlando,  Florida 32801.
CNL Fund  Advisors,  Inc. is a wholly  owned  subsidiary  of CNL Group,  Inc., a
diversified  real  estate  company,   and  was  organized  to  perform  property
acquisition, property management and other services.

         CNL  Group,  Inc.,  which is the parent  company of CNL Fund  Advisors,
Inc.,  was organized in 1980 under the laws of the State of Florida.  CNL Group,
Inc. is a diversified  real estate  company which  provides a wide range of real
estate,  development  and  financial  services to companies in the United States
through the  activities  of its  subsidiaries.  These  activities  are primarily
focused  on the  franchised  restaurant  and  hospitality  industries.  James M.
Seneff,  Jr., an individual General Partner of the Partnership,  is the Chairman
of the Board,  Chief Executive  Officer,  and a director of CNL Group,  Inc. Mr.
Seneff and his wife own all of the outstanding shares of CNL Group, Inc.

         The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or  subsidiaries  in the discretion of the Boards of Directors of
those companies,  but, except as specifically indicated, do not serve as members
of the Boards of Directors of those  entities.  The Boards of Directors have the
responsibility for creating and implementing the policies of CNL Group, Inc. and
its affiliated companies.



                                       32

<PAGE>



         Curtis B. McWilliams,  age 42, joined CNL Fund Advisors,  Inc. in April
1997 and  currently  serves  as  President  of CNL Fund  Advisors,  Inc.  and as
Executive Vice President of CNL American Properties Fund, Inc. In addition,  Mr.
McWilliams  serves  as  Executive  Vice  President  of CNL  Group,  Inc.  and as
President of CNL Financial Services,  Inc. and certain other subsidiaries of CNL
Group,  Inc. From September 1983 through March 1997, Mr. McWilliams was employed
by Merrill  Lynch.  From  January  1991 to August  1996,  Mr.  McWilliams  was a
managing director in the corporate  banking group of Merrill Lynch's  investment
banking division.  During this time, he was a senior  relationship  manager with
Merrill  Lynch and as such was  responsible  for a number of the  firm's  larger
clients.  From February 1990 to February  1993, he also served as co-head of one
of the  Industrial  Banking  Groups within Merrill  Lynch's  investment  banking
division and had administrative responsibility for a group of bankers and client
relationships, including the firm's transportation group. From September 1996 to
March  1997,  Mr.  McWilliams  served as  Chairman  of Merrill  Lynch's  Private
Advisory Services. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton  University  in 1977 and a Masters of Business  Administration  with a
concentration in finance from the University of Chicago in 1983.

         John T. Walker,  age 39, is the Chief  Operating  Officer and Executive
Vice President of CNL Fund Advisors, Inc. and CNL American Properties Fund, Inc.
and serves as Executive Vice President of CNL American Realty Fund, Inc. and CNL
Real Estate  Advisors,  Inc. From May 1992 to May 1994,  he was  Executive  Vice
President for Finance and Administration and Chief Financial Officer of Z Music,
Inc., a cable  television  network  which was  subsequently  acquired by Gaylord
Entertainment, where he was responsible for overall financial and administrative
management  and planning.  From January 1990 through April 1992,  Mr. Walker was
Chief Financial  Officer of the First Baptist Church in Orlando,  Florida.  From
April 1984 through  December  1989, he was a partner in the  accounting  firm of
Chastang,  Ferrell & Walker,  P.A.,  where he was the partner in charge of audit
and  consulting  services,  and  from  1981 to  1984,  Mr.  Walker  was a Senior
Consultant/Audit Senior at Price Waterhouse.  Mr. Walker is a Cum Laude graduate
of Wake Forest  University with a B.S. in Accountancy and is a certified  public
accountant.

         Lynn E. Rose,  age 49, a  certified  public  accountant,  has served as
Chief  Financial  Officer of CNL Group,  Inc. since December 1993, has served as
Secretary of CNL Group,  Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until  December  1993. In addition,  Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She has
served as Chief Operating Officer, Vice President and Secretary of CNL Corporate
Services,  Inc. since November 1994. Ms. Rose also has served as Chief Financial
Officer and Secretary of CNL Institutional Advisors, Inc. since its inception in
1990, served as a director and Secretary of CNL Realty Advisors,  Inc. since its
inception in 1991 through  December 31, 1997, at which time CNL Realty Advisors,
Inc.  merged with  Commercial  Net Lease Realty,  Inc.,  Treasurer of CNL Realty
Advisors, Inc. from 1991 to February 1996, Secretary and Treasurer of Commercial
Net Lease Realty, Inc. from 1992 to February 1996,  Secretary of CNL Income Fund
Advisors,  Inc.  since its inception in 1994 to December  1995,  and a director,
Secretary and Treasurer of CNL Fund Advisors,  Inc. since 1994 and has served as
a director,  Secretary and  Treasurer of CNL Real Estate  Advisors,  Inc.  since
January  1997.  Ms.  Rose also has  served as  Secretary  and  Treasurer  of CNL
American  Properties  Fund,  Inc.  since 1994,  and has served as Secretary  and
Treasurer of CNL American  Realty Fund, Inc. since 1996. Ms. Rose also currently
serves as Secretary  for  approximately  50  additional  corporations.  Ms. Rose
oversees the management information services, administration,  legal compliance,
accounting,   tenant  compliance,  and  reporting  for  over  300  corporations,
partnerships,  and joint ventures.  Prior to joining CNL, Ms. Rose was a partner
with Robert A. Bourne in the accounting firm of Bourne & Rose,  P.A.,  Certified
Public  Accountants.  Ms. Rose holds a B.A. in Sociology  from the University of
Central Florida. She was licensed as a certified public accountant in 1979.



                                       33

<PAGE>



         Jeanne A. Wall,  age 39, has served as Chief  Operating  Officer of CNL
Investment  Company and of CNL  Securities  Corp.  since  November  1994 and has
served as Executive Vice President of CNL Investment Company since January 1991.
In 1984,  Ms. Wall joined CNL  Securities  Corp.  In 1985,  Ms. Wall became Vice
President of CNL Securities Corp., in 1987, she became Senior Vice President and
in July 1997, she became  Executive  Vice  President of CNL Securities  Corp. In
this  capacity,  Ms. Wall serves as national  marketing  and sales  director and
oversees  the  national  marketing  plan  for the CNL  investment  programs.  In
addition, Ms. Wall oversees product development,  partnership administration and
investor  services for  programs  offered  through  participating  brokers,  and
corporate  communications for CNL Group, Inc. and Affiliates.  Ms. Wall also has
served  as  Senior  Vice  President  of  CNL  Institutional  Advisors,  Inc.,  a
registered  investment  advisor,  from 1990 to 1993,  as Vice  President  of CNL
Realty  Advisors,  Inc.  since  its  inception  in 1991  through  1997,  as Vice
President of  Commercial  Net Lease  Realty,  Inc.  from 1992 through  1997,  as
Executive Vice President of CNL Fund Advisors, Inc. since 1994, and as Executive
Vice President of CNL American  Properties  Fund,  Inc. since 1994. In addition,
Ms. Wall has served as Executive  Vice  President  of CNL Real Estate  Advisors,
Inc. since January 1997 and as Executive  Vice President of CNL American  Realty
Fund,  Inc.  since 1996. Ms. Wall holds a B.A. in Business  Administration  from
Linfield College and is a registered  principal of CNL Securities Corp. Ms. Wall
currently serves as a trustee on the board of the Investment Program Association
and on the Direct  Participation  Program committee for the National Association
of Securities Dealers (NASD).

         Steven D. Shackelford, age 34, has served as Chief Financial Officer of
CNL Fund Advisors,  Inc. since September 1996 and as Chief Financial  Officer of
CNL American  Properties  Fund, Inc. since January 1997. From March 1995 to July
1996, he was a senior manager in the national office of Price  Waterhouse  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 served
as a manager in the Price  Waterhouse,  Paris,  France  office  serving  several
multinational  clients. Mr. Shackelford was an audit staff and audit senior from
1986 to 1992 in the Orlando, Florida office of Price Waterhouse. Mr. Shackelford
received  a  B.A.  in  Accounting,  with  honors,  and  a  Masters  of  Business
Administration   from  Florida  State  University  and  is  a  certified  public
accountant.


Item 11.  Executive Compensation

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


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of February 28, 1998, 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 February 28, 1998, the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>

                 Title of Class                   Name of Partner                       Percent of Class
<S> <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.  There are no  arrangements
which at a subsequent date may result in change in control of the Registrant.



                                       34

<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, 1997,  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, 1997
        -----------------------                   ---------------------                   -----------------------
<S> <C>
Reimbursement to affiliates for          Operating expenses are reimbursed        Operating expenses incurred on
operating expenses                       at the lower of cost or 90 percent       behalf of the Partnership: $80,998
                                         of the prevailing rate at which
                                         comparable services could have
                                         been obtained in the same
                                         geographic area.  Affiliates of the
                                         General Partners from time to
                                         time incur certain operating
                                         expenses on behalf of the                Accounting and administrative
                                         Partnership for which the                services:  $80,461
                                         Partnership  reimburses  the affiliates
                                         without interest.

Annual, subordinated  manage-            One percent of the sum of gross          $ - 0 -
ment fee to affiliates                   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,   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   non-cumulative   if  the  Limited
                                         Partners  do  not  receive   their  10%
                                         Preferred   Return  in  any  particular
                                         years no management fees will be due or
                                         payable for such year.
==========================================================================================================================
</TABLE>


                                       35

<PAGE>


<TABLE>
<CAPTION>

==========================================================================================================================
                                                                                              Amount Incurred
         Type of Compensation                                                                  For the Year
              and Recipient                       Method of Computation                   Ended December 31, 1997
        -----------------------                   ---------------------                   -----------------------
<S> <C>
Deferred, subordinated real estate       A deferred, subordinated real            $ - 0 -
disposition fee payable to               estate disposition fee, payable
affiliates                               upon sale 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 an
                                         the net sales proceeds are distributed.

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

General Partners' deferred, sub-         A deferred, subordinated share           $ - 0 -
ordinated share of Partnership net       equal to five percent of
sales proceeds from a sale or            Partnership distributions of such
sales                                    net sales proceeds, subordinated to
                                         certain minimum returns to the
                                         Limited Partners.
==========================================================================================================================
</TABLE>



                                       36

<PAGE>



                                     PART IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

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

          1.  Financial Statements

                  Report of Independent Accountants

                  Balance Sheets at December 31, 1997 and 1996

                  Statements  of Income for the years ended  December  31, 1997,
                  1996 and 1995

                  Statements of Partners'  Capital for the years ended  December
                  31, 1997, 1996 and 1995

                  Statements  of Cash  Flows for the years  ended  December  31,
                  1997, 1996 and 1995

                  Notes to Financial Statements

          2.  Financial Statement Schedules

                  Schedule  III - Real Estate and  Accumulated  Depreciation  at
                  December 31, 1997

                  Notes  to  Schedule   III  -  Real   Estate  and   Accumulated
                  Depreciation at December 31, 1997

                  Schedule IV - Mortgage  Loans on Real  Estate at December  31,
                  1997

                  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.)


                                       37

<PAGE>



                  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.)

                  27       Financial Data Schedule (Filed herewith.)

          (b)     The Registrant  filed no reports on Form 8-K during the period
                  October 1, 1997 through December 31, 1997.

                                       38

<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 13th day of
March, 1998.

                                  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
<S> <C>
/s/ Robert A. Bourne                         President, Treasurer and Director       March 13, 1998
--------------------------                   (Principal Financial and Accounting
Robert A. Bourne                             Officer)



/s/ James M. Seneff, Jr.                     Chief Executive Officer and Director    March 13, 1998
--------------------------                   (Principal Executive Officer)
James M. Seneff, Jr.
</TABLE>



<PAGE>



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

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997


<TABLE>
<CAPTION>

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

    Burger King Restaurants:
      Brandon, Florida                       -         $  478,467         $       -        $       -      $     -
      New City, New York                     -            372,977                 -                -            -
      Mansfield, Ohio                        -            377,395                 -                -            -
      Syracuse, New York                     -            363,431                 -                -            -
      New Philadelphia, Ohio                 -            310,920                 -                -            -
      Baseball City, Florida (g)             -            394,813                 -                -            -

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

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

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

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

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

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

    Popeyes Famous Fried
      Chicken Restaurant:
        Jacksonville, Florida                -            103,063            114,507          149,978           -

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

</TABLE>

<PAGE>








<TABLE>
<CAPTION>



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

<S> <C>




        $  478,467               (f)           $   478,467         $       -            1991            10/90             (d)
           372,977               (f)               372,977                 -            1977            03/91             (d)
           377,395               (f)               377,395                 -            1989            03/91             (d)
           363,431               (f)               363,431                 -            1987            03/91             (d)
           310,920               (f)               310,920                 -            1989            03/91             (d)
           394,813               (f)               394,813                 -            1991            02/91             (d)


           143,592           $  335,971            479,563              49,371          1990           03/91              (h)



           517,623              877,505          1,395,128             213,567          1990           09/90              (b)
           663,999            1,129,910          1,793,909             264,058          1990           10/90              (b)
           552,646              893,054          1,445,700             225,588          1990           11/90              (b)
           681,824              914,235          1,596,059             221,754          1990           11/90              (b)


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


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


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


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



           103,063              264,485            367,548              61,449          1979            09/90              (b)


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

                                       F-1

<PAGE>



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

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 1997


<TABLE>
<CAPTION>

                                                                                                                  Costs Capitalized
                                                                                                                     Subsequent
                                                                                          Initial Cost             To Acquisition
                                                                                           Buildings
                                                           Encum-                             and             Improve-      Carrying
                                                          brances           Land          Improvements         ments         Costs
<S> <C>
    Shoney's Restaurants:
      Sun City, Florida                                        -            382,883                 -           736,865           -
      Brooksville, Florida                                     -            233,288                 -                -            -
      Bayonet Point, Florida                                   -            418,464                 -                -            -
      Memphis, Tennessee                                       -            368,290            601,660               -            -
      North Fort Myers, Florida                                -            398,423                 -                -            -

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

                                                                         $9,167,336         $1,052,138       $5,179,292     $     -
                                                                         ==========         ==========       ==========     =======

Property of Joint Venture
  in Which the Partnership
  has an 86% Interest and
  has Invested in Under an
  Operating Lease:

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

Properties of Joint Venture in Which
  the Partnership has a 37% Interest and has
  Invested in Under Operating Leases:

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

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

Property of Joint Venture
  in Which the Partnership
  has a 12% Interest and has
  Invested in Under an
  Operating Lease:

    Golden Corral Family
      Steakhouse Restaurant:
        Middleburg Heights, OH                                 -         $  521,571         $       -        $       -      $     -
                                                                         ==========         ==========       ==========     =======
</TABLE>


<PAGE>










<TABLE>
<CAPTION>

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

           382,883              736,865          1,119,748             167,764          1991           10/90            (b)
           233,288                (f)              233,288                 -            1991            12/90           (d)
           418,464                (f)              418,464                 -            1989            06/91           (d)
           368,290              601,660            969,950             128,134          1991           08/91            (b)
           398,423                (f)              398,423                  -           1991            09/95           (d)



           365,601              477,745            843,346             106,849          1991           03/91            (b)
        ----------           ----------        -----------          ----------

        $9,167,336           $6,231,430        $15,398,766          $1,438,534
        ==========           ==========        ===========          ==========








        $  438,695           $  450,432        $   889,127          $  101,934          1986           03/91            (b)
        ==========           ==========        ===========          ==========








        $  345,696           $  651,985        $   997,681          $  136,114          1986           09/91            (b)
           350,479              623,615            974,094             130,190          1986           09/91            (b)
           277,192              982,200          1,259,392             205,051          1987           09/91            (b)
           174,019              986,879          1,160,898             206,028          1988           09/91            (b)
           264,239              662,265            926,504             138,259          1988           09/91            (b)
           155,553              657,159            812,712             137,193          1990           09/91            (b)
        ----------           ----------        -----------          ----------

        $1,567,178           $4,564,103        $ 6,131,281          $  952,835
        ==========           ==========        ===========          ==========









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

                                       F-2

<PAGE>



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

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 1997

<TABLE>
<CAPTION>


                                                                                                                 Costs Capitalized
                                                                                                                    Subsequent
                                                                                Initial Cost                      To Acquisition
                                                                                           Buildings
                                                           Encum-                             and             Improve-      Carrying
                                                          brances           Land          Improvements         ments         Costs
<S> <C>
Properties the Partnership
  has Invested in Under
  Direct Financing Leases:

    Burger King Restaurants:
      Brandon, Florida                                         -         $       -          $       -        $  483,107     $     -
      New City, New York                                       -                 -             629,110               -            -
      Mansfield, Ohio                                          -                 -             560,698               -            -
      Syracuse, New York                                       -                 -             549,253               -            -
      New Philadelphia, Ohio                                   -                 -             592,918               -            -
      Baseball City, Florida (g)                               -                 -                  -           551,446           -

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

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

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

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

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

    Shoney's Restaurants:
      Brooksville, Florida                                     -                 -                  -           644,369           -
      Bayonet Point, Florida                                   -                 -             575,985               -            -
      North Fort Myers, Florida                                -                 -             552,240               -            -
                                                                         ----------         ----------       ----------     -------

                                                                         $  476,173         $7,603,389       $2,679,821     $     -
                                                                         ==========         ==========       ==========     =======

Property of Joint Venture
  in Which the Partnership
  has a 12% Interest and has
  Invested in Under a Direct
  Financing Lease:

    Golden Corral Family
      Steakhouse Restaurant:
        Middleburg Heights, Ohio                               -         $       -          $1,357,288       $       -      $     -
                                                                         ==========         ==========       ==========     =======
</TABLE>


<PAGE>








<TABLE>
<CAPTION>



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





             -                       (f)                  (f)             (d)               1991            10/90         (d)
             -                       (f)                  (f)             (d)               1977            03/91         (d)
             -                       (f)                  (f)             (d)               1989            03/91         (d)
             -                       (f)                  (f)             (d)               1987            03/91         (d)
             -                       (f)                  (f)             (d)               1989            03/91         (d)
             -                       (f)                  (f)             (d)               1991            02/91         (d)


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


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


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


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



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


             -                       (f)                  (f)             (d)               1991            12/90         (d)
             -                       (f)                  (f)             (d)               1989            06/91         (d)
             -                       (f)                  (f)             (d)               1991            09/95         (d)











             -                       (f)                  (f)             (d)               1995            05/96         (d)
</TABLE>

                                                                  F-3

<PAGE>



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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997



(a)        Transactions in real estate and accumulated depreciation during 1997,
           1996 and 1995, are summarized as follows:
<TABLE>
<CAPTION>

                                                                              Accumulated
                                                               Cost           Depreciation
<S> <C>
                  Properties the Partnership
                    has Invested in Under
                    Operating Leases:

                      Balance, December 31, 1994           $16,437,205          $  845,665
                      Acquisitions                             398,423                  -
                      Dispositions                            (928,665)            (41,368)
                      Depreciation expense                          -              216,295
                                                           -----------          ----------

                      Balance, December 31, 1995            15,906,963           1,020,592
                      Dispositions                            (508,197)                 -
                      Depreciation expense                          -              208,971
                                                           -----------          ----------

                      Balance, December 31, 1996            15,398,766           1,229,563
                      Dispositions                                  -                   -
                      Depreciation expense                          -              208,971
                                                           -----------          ----------

                      Balance, December 31, 1997           $15,398,766          $1,438,534
                                                           ===========          ==========


                  Property of Joint Venture in
                    Which the  Partnership has an 86%
                    Interest and has Invested in
                    Under an Operating Lease:

                      Balance, December 31, 1994           $   889,127          $   56,891
                      Depreciation expense                          -               15,015
                                                           -----------          ----------

                      Balance, December 31, 1995               889,127              71,906
                      Depreciation expense                          -               15,014
                                                           -----------          ----------

                      Balance, December 31, 1996               889,127              86,920
                      Depreciation expense                          -               15,014
                                                           -----------          ----------

                      Balance, December 31, 1997           $   889,127          $  101,934
                                                           ===========          ==========
</TABLE>


                                       F-4

<PAGE>



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

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

                                December 31, 1997


<TABLE>
<CAPTION>

                                                                                Accumulated
                                                                 Cost           Depreciation
<S> <C>
                  Properties of Joint Venture in
                    Which the Partnership has a 37%
                    Interest and has Invested in
                    Under Operating Leases:

                      Balance, December 31, 1994             $ 6,131,281          $  496,424
                      Depreciation expense                            -              152,137
                                                             -----------          ----------

                      Balance, December 31, 1995               6,131,281             648,561
                      Depreciation expense                            -              152,137
                                                             -----------          ----------

                      Balance, December 31, 1996               6,131,281             800,698
                      Depreciation expense                            -              152,137
                                                             -----------          ----------

                      Balance, December 31, 1997             $ 6,131,281          $  952,835
                                                             ===========          ==========


                  Property of Joint Venture in Which
                    the Partnership has a 12%
                    Interest and has Invested in
                    Under an Operating Lease:

                      Balance, December 31, 1995             $        -           $       -
                        Acquisitions                             521,571                  -
                        Depreciation expense (d)                      -                   -
                                                             -----------          ---------

                      Balance, December 31, 1996                 521,571                  -
                      Depreciation expense                            -                   -
                                                             -----------          ---------

                      Balance, December 31, 1997             $   521,571          $       -
                                                             ===========          =========
</TABLE>


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

(c)      As of December 31, 1997, 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
         $26,172,699 and $8,899,267, respectively. All of the leases are treated
         as operating leases for federal income tax purposes.

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

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


                                       F-5

<PAGE>



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

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

                                December 31, 1997


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

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

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

                                       F-6

<PAGE>



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

                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

                                December 31, 1997

<TABLE>
<CAPTION>

                                                                                                               Principal
                                                                                                                 Amount
                                                                                                                of Loans
                                                                                             Carrying         Subject to
                                            Final       Periodic                  Face       Amount of         Delinquent
                          Interest        Maturity      Payment     Prior       Amount of    Mortgages         Principal
Description                 Rate            Date         Terms      Liens       Mortgages            (1)      or Interest
--------------------      --------     -------------    --------    -----      ----------   ----------      --------------
<S> <C>
Church's
Jacksonville, FL
First Mortgage             10.00%      December 2005       (2)       $  -      $  240,000    $  239,169      $        -

Church's
Jacksonville, FL
First Mortgage             10.00%      December 2005       (3)          -         220,000       219,238               -

Ponderosa
Orlando, FL
First Mortgage             10.75%      October 2011        (4)           -       1,388,568     1,394,979               -
                                                                      -----     ----------    ----------      ----------

    Total                                                             $  -       $1,848,568    $1,853,386     $        -
                                                                      =====      ==========    ==========     ==========

</TABLE>


(1)      The tax carrying value of the notes is $1,682,045.

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

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

(4)      Twelve  monthly  payments of interest only,  afterwards,  in 24 monthly
         installments  of $15,413  consisting  of principal  and  interest,  and
         thereafter  in  144  monthly  installments  of  $16,220  consisting  of
         principal and interest at an annual rate of 10.75%.

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

<TABLE>
<CAPTION>

                                             1997                  1996                 1995
                                          ----------            ----------           -------
<S> <C>
         Balance at beginning of
           period                         $1,862,262            $  463,833           $       -

         New mortgage loans                       -              1,388,568              460,000

         Interest earned                     194,784                74,059                3,833

         Collection of principal and
           interest                         (203,660)              (64,198)                  -
                                         -----------           -----------           ---------

         Balance at end of period         $1,853,386            $1,862,262           $  463,833
                                          ==========            ==========           ==========
</TABLE>


                                       F-7

<PAGE>



                                    EXHIBITS


<PAGE>


                                  EXHIBIT INDEX


Exhibit Number                                                            Page

      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.)

     27           Financial Data Schedule (Filed herewith.)

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