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, 2001

                                       OR

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

                        For the transition period from to


                         Commission file number 0-19139

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

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

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

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

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

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

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

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

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

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

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

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None

<PAGE>

                                     PART I


Item 1.  Business

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

         The  Partnership  was organized to acquire both newly  constructed  and
existing  restaurant  properties,  as well as properties upon which  restaurants
were to be  constructed  (the  "Properties"),  which  are  leased  primarily  to
operators of national and regional fast-food and family-style  restaurant chains
(the "Restaurant Chains").  Net proceeds to the Partnership from its offering of
Units,  after  deduction  of  organizational  and  offering  expenses,   totaled
$30,975,000 and were used to acquire 38 Properties, including interests in eight
Properties  owned by joint  ventures in which the  Partnership is a co-venturer,
and to establish a working capital reserve for Partnership purposes.  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 Property 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,  in  Middleburg  Joint
Venture,  in which the  Partnership  is a  co-venturer  to purchase and hold one
property in Middleburg  Heights,  Ohio. Also, during the year ended December 31,
1996, the Partnership  sold its Property in Orlando,  Florida.  During 1998, the
Partnership  received a settlement from the Florida Department of Transportation
for a right of way  taking  relating  to a  parcel  of land on its  Property  in
Brooksville,  Florida. In addition, during the year ended December 31, 1999, the
Partnership  received a prepaid  principal payment from the borrower relating to
one of the promissory  notes the  Partnership  had previously  accepted.  During
1999,  the  Partnership  reinvested  the  prepaid  principal,   along  with  the
settlement  received in the right of way taking,  in Bossier Joint  Venture,  in
which the  Partnership  is a  co-venturer  to purchase  and hold one Property in
Bossier  City,  Louisiana.   During  the  year  ended  December  31,  2000,  the
Partnership sold four Properties one in each of Brooksville,  Bayonet Point, Sun
City, and  Jacksonville,  Florida;  the Partnership  reinvested a portion of the
sales  proceeds it received  from the sales of the  Properties  in a  Bennigan's
Property  located in  Deerfield,  Illinois  and a Pizza Hut Property in Hialeah,
Florida.  In 2000, the Partnership also used a portion of the net sales proceeds
from the sale of its  Properties  to acquire  an  interest  in a Baker's  Square
Property in Libertyville, Illinois, with an affiliate of the General Partners as
tenants-in-common. During the year ended December 31, 2001, the Partnership sold
its Property in Statesville,  North Carolina, and reinvested the majority of the
net sales  proceeds in a Jack in the Box Property  located in Walker,  Louisiana
and a Bennigan's Property located in Denver, Colorado, each held with affiliates
of the General  Partners,  which are Florida limited  partnerships,  as separate
tenants-in-common  arrangements.  In  addition,  during 2001,  Middleburg  Joint
Venture,  in which the Partnership owns a 12.46% interest,  sold its Property to
the tenant, and the Partnership  received a return of capital from the net sales
proceeds.  In April 2001,  the  Partnership  reinvested  the majority of the net
sales proceeds  received from Middleburg  Joint Venture and entered into a joint
venture arrangement,  CNL VIII, X, XII Kokomo Joint Venture,  with affiliates of
the General  Partners which are Florida  limited  partnerships,  to purchase and
hold one  Property  in  Kokomo,  Indiana,  indirectly  through  a joint  venture
arrangement in which the Partnership is a co-venturer.  As a result of the above
transactions,  as of December 31, 2001, the Partnership owned 37 Properties. The
37 Properties  included  interests in ten Properties  owned by joint ventures in
which  the  Partnership  is  a  co-venturer  and  three  Properties  owned  with
affiliates as  tenants-in-common.  In addition, in January 2002, the Partnership
reinvested a portion of the net sales  proceeds it received from the sale of the
Property in Statesville, North Carolina, and the prepaid principal relating to a
promissory  note,  in a Denny's  Property  located  in  Ontario,  Oregon,  at an
approximate  cost  of  $654,400.  The  Properties  are  generally  leased  on  a
triple-net  basis with the lessees  responsible for all repairs and maintenance,
property taxes, insurance and utilities.

         The  Partnership  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.  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.

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership  would be merged with and into a subsidiary  of APF (the  "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term,  "triple-net" basis to operators of
national and regional restaurant chains. Under the Agreement and Plan of Merger,
APF was to issue shares of its common stock as consideration  for the Merger. On
March 1, 2000,  the General  Partners and APF  announced  that they had mutually
agreed to terminate the Agreement and Plan of Merger. The agreement to terminate
the  Agreement  and Plan of Merger  was based,  in large  part,  on the  General
Partners'  concern  that,  in light of market  conditions  relating  to publicly
traded  real  estate  investment  trusts,  the  value  of  the  transaction  had
diminished.  As a result of such  diminishment,  the General Partners ability to
unequivocally  recommend  voting for the  transaction,  in the exercise of their
fiduciary duties, had become questionable.

Leases

         Although there are variations in the specific terms of the leases,  the
following  is  a  summarized   description  of  the  general  structure  of  the
Partnership's  leases. The leases of the Properties owned by the Partnership and
joint ventures in which the  Partnership is a co-venturer and the Property owned
as tenants-in-common with affiliates of the General Partners provide for initial
terms,  ranging  from 14 to 25 years (the  average  being 18 years),  and expire
between 2005 and 2020. The leases are generally on a triple-net  basis, with the
lessees responsible for all repairs and maintenance,  property taxes,  insurance
and  utilities.  The leases of the  Properties  provide for minimum  base annual
rental payments  (payable in monthly  installments)  ranging from  approximately
$49,200 to $251,500.  The majority of the leases  provide for  percentage  rent,
based on sales in excess of a specified amount.  In addition,  a majority of the
leases provide that, commencing in specified lease years (ranging from the third
to the sixth lease year),  the annual base rent required  under the terms of the
lease will increase.

         Generally,  the  leases  of the  Properties  provide  for  two to  four
five-year  renewal  options  subject  to the same  terms and  conditions  as the
initial lease.  Lessees of 27 of the  Partnership's 37 Properties also have been
granted options to purchase  Properties at the Property's then fair market value
after a specified portion of the lease term has elapsed.  Fair market value will
be determined  through an appraisal by an independent  appraisal firm. Under the
terms of certain leases,  the option purchase price may equal the  Partnership's
original cost to purchase the Property  (including  acquisition  costs),  plus a
specified percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.

         The leases 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.

         During 2001, the  Partnership  reinvested the majority of the net sales
proceeds  received  from the sale of the  Property  owned  by  Middleburg  Joint
Venture (as  described  above),  a joint  venture  arrangement  CNL VIII, X, XII
Kokomo Joint Venture, with affiliates of the General Partners, which are Florida
limited  partnerships,  to purchase and hold one  Property.  The lease terms for
this Property are substantially  the same as the Partnership's  other leases, as
described above.

         During 2001, the  Partnership  reinvested the majority of the net sales
proceeds  it  received  from  the sale of the  Property  in  Statesville,  North
Carolina, in two Properties located in Walker,  Louisiana and Denver,  Colorado,
each as separate  tenants-in-common  arrangements with affiliates of the General
Partners and Florida limited partnerships.  The lease terms for these Properties
are  substantially  the same as the  Partnership's  other  leases,  as described
above.

         During  2000,  the  tenant  of  the  Property  in  Palm  Bay,   Florida
experienced financial  difficulties and vacated the Property. In September 2001,
the Partnership entered into a new lease for this Property,  and rents commenced
in December 2001. The lease terms for this Property are  substantially  the same
as the Partnership's other leases, as described above.

         In January 2002, the Partnership  reinvested a portion of the net sales
proceeds  it  received  from  the sale of the  Property  in  Statesville,  North
Carolina,  and the prepaid principal relating to a promissory note, in a Denny's
Property located in Ontario,  Oregon,  at an approximate  cost of $654,400.  The
lease terms for this Property are  substantially  the same as the  Partnership's
other leases as described above.

         In February 2002, a tenant, Brandon Fast Food Services, Inc., filed for
bankruptcy.  The tenant has neither  rejected  nor affirmed the one lease it has
with the  Partnership.  As of March 15,  2002,  the  Partnership  has  continued
receiving a portion of the rental  payments  relating  to this lease.  While the
tenant has neither  rejected nor affirmed this lease,  there can be no assurance
that the lease will not be rejected in the future.  The lost revenues  resulting
from the possible  rejection  of this lease could have an adverse  effect on the
results  of  operations  of the  Partnership  if the  Partnership  is  unable to
re-lease the Property in a timely manner.

Major Tenants

         During 2001, two lessees of the Partnership and its consolidated  joint
venture,  Golden Corral  Corporation and Carrols  Corporation,  each contributed
more than ten percent of the  Partnership's  total  rental,  earned and mortgage
interest income (including rental,  earned and mortgage interest income from the
Partnership's  consolidated joint venture and the Partnership's  share of rental
and earned income from nine Properties  owned by  unconsolidated  joint ventures
and  three   Properties  owned  with  affiliates  of  the  General  Partners  as
tenants-in-common).  As of December 31, 2001, Golden Corral  Corporation was the
lessee under leases relating to five  restaurants,  and Carrols  Corporation was
the lessee under leases relating to five  restaurants.  It is anticipated  that,
based on the minimum rental payments  required by the leases,  these two lessees
each will  continue to  contribute  more than ten  percent of the  Partnership's
total rental,  earned and mortgage  interest  income in 2002.  In addition,  two
Restaurant Chains, Golden Corral Family Steakhouse Restaurants ("Golden Corral")
and Burger King,  each accounted for more than ten percent of the  Partnership's
total rental,  earned and mortgage interest income in 2001 (including rental and
earned  income  from  the  Partnership's  consolidated  joint  venture  and  the
Partnership's  share of rental and earned income from nine  Properties  owned by
unconsolidated  joint ventures and three Properties owned with affiliates of the
General  Partners as  tenants-in-common).  In 2002, it is anticipated that these
two Restaurant Chains each will continue to account for more than ten percent of
the Partnership's total rental, earned and mortgage interest income to which the
Partnership  is  entitled  under the terms of the  leases.  Any failure of these
lessees or Restaurant Chains could materially affect the Partnership's income if
the  Partnership is not able to re-lease the  Properties in a timely manner.  No
single tenant or group of affiliated  tenants lease Properties with an aggregate
carrying value in excess of 20 percent of the total assets of the Partnership.

Joint Venture and Tenancy in Common Arrangements

         The Partnership has entered into 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  with  CNL  Income  Fund VI,  Ltd.,  an
affiliate  of the General  Partners,  to  purchase  and hold one  Property;  CNL
Restaurant Investments II with CNL Income Fund VII, Ltd. and CNL Income Fund IX,
Ltd.,  affiliates of the General Partners,  to purchase and hold six Properties;
and Bossier  City Joint  Venture  with CNL Income Fund XII,  Ltd. and CNL Income
Fund XIV,  Ltd.,  affiliates of the General  Partners,  to purchase and hold one
Property.  In  addition,  in April 2001,  the  Partnership  entered into a joint
venture arrangement, CNL VIII, X, XII Kokomo Joint Venture, with CNL Income Fund
X, Ltd. and CNL Income Fund XII, Ltd.,  affiliates of the General Partners',  to
purchase and hold one Property.  Each of the affiliates is a limited partnership
organized pursuant to the laws of the State of Florida.

         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 has an 87.68% interest in Woodway Joint Venture,
an  85.54%  interest  in  Asheville  Joint  Venture,  a  36.8%  interest  in CNL
Restaurant  Investments II, a 34% interest in Bossier City Joint Venture,  and a
10% interest in CNL VIII, X, XII Kokomo Joint Venture.  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 Bossier City Joint
Venture each have an initial term of 20 years, and CNL VIII, X, XII Kokomo Joint
Venture has an initial term of 30 years and, after the expiration of the initial
term, 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, Bossier City Joint
Venture and CNL VIII, X, XII Kokomo 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.

         Net cash flow from operations of Woodway Joint Venture, Asheville Joint
Venture, CNL Restaurant Investments II, Bossier City Joint Venture and CNL VIII,
X,  XII  Joint  Venture  is  distributed  87.68%,  85.54%,  36.8%,  34% and 10%,
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.

         In addition,  to the above joint venture  agreements,  the  Partnership
entered  into an  agreement  to hold a Property in  Libertyville,  Illinois,  as
tenants-in-common,  with CNL Income Fund IX,  Ltd.,  an affiliate of the General
Partners. In addition in 2001, the Partnership entered into agreements to hold a
Property in Walker,  Louisiana, as tenants-in-common,  with CNL Income Fund XVI,
Ltd.; and a Property in Denver, Colorado, as tenants-in-common,  with CNL Income
Fund XVIII,  Ltd. The agreements  provide for the Partnership and the affiliates
to share in the  profits and losses of the  Property  and net cash flow from the
Property,  in  proportion  to  each  co-venturer's   percentage  interest.   The
Partnership   owns  a  66%,  17%  and  19.3%   interest  in  the  Properties  in
Libertyville, Illinois; Walker, Louisiana; and Denver, Colorado, respectively.

         Each of the affiliates is a limited  partnership  organized pursuant to
the laws of the state of Florida. The tenancy in common agreement restricts each
party's  ability to sell,  transfer,  or assign its  interest  in the tenancy in
common's Property without first offering it for sale to the remaining parties.

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

Certain Management Services

         CNL APF Partners,  LP, an affiliate of the General  Partners,  provides
certain  services  relating to management of the  Partnership and its Properties
pursuant to a management  agreement with the Partnership.  Under this agreement,
CNL APF  Partners,  LP (the  "Advisor") is  responsible  for  collecting  rental
payments,  inspecting  the  Properties  and  the  tenants'  books  and  records,
assisting the  Partnership  in  responding  to tenant  inquiries and notices and
providing  information to the Partnership about the status of the leases and the
Properties.  The Advisor also assists the General  Partners in  negotiating  the
leases.  For these  services,  the  Partnership has agreed to pay the Advisor an
annual fee of one percent of the sum of gross operating revenues from Properties
wholly owned by the Partnership plus the Partnership's  allocable share of gross
revenues of joint ventures in which the Partnership is a co-venturer, but not in
excess  of  competitive  fees for  comparable  services.  Under  the  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").  In any year in which the Limited  Partners  have not
received the 10% Preferred Return, no management fee will be paid.

         During 2000,  CNL Fund Advisors,  Inc.  assigned its rights in, and its
obligations  under,  the management  agreement  with the  Partnership to CNL APF
Partners,  LP.  All of the terms and  conditions  of the  management  agreement,
including the payment of fees, as described, 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.

Employees

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


Item 2.  Properties

         As of December 31, 2001, the Partnership owned 37 Properties. Of the 37
Properties, 24 are owned by the Partnership in fee simple, ten are owned through
joint  venture  arrangements,  and  three are owned  through  tenancy  in common
arrangements.  See Item 1.  Business  - Joint  Venture  and  Tenancy  in  Common
Arrangements.  The Partnership is not permitted to encumber its Properties under
the terms of its  partnership  agreement.  Reference  is made to the Schedule of
Real Estate and  Accumulated  Depreciation  for a listing of the  Properties and
their  respective  costs,  including  acquisition  fees and certain  acquisition
expenses.

Description of Properties

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



<PAGE>


         The following table lists the Properties owned by the Partnership as of
December 31, 2001 by state. More detailed information  regarding the location of
the  Properties  is  contained  in the  Schedule of Real Estate and  Accumulated
Depreciation.

               State                                 Number of Properties

               Arizona                                         1
               Colorado                                        1
               Florida                                         4
               Illinois                                        2
               Indiana                                         2
               Louisiana                                       3
               Michigan                                        3
               Minnesota                                       1
               New York                                        2
               North Carolina                                  1
               Ohio                                            8
               Tennessee                                       2
               Texas                                           6
               Virginia                                        1
                                                         --------------
               TOTAL PROPERTIES                               37
                                                         ==============

         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
2,100 to 10,600 square feet.  All buildings on Properties are  freestanding  and
surrounded by paved  parking  areas.  Buildings  are suitable for  conversion to
various uses, although modifications may be required prior to use for other than
restaurant operations. As of December 31, 2001, the Partnership had no plans for
renovation of the Properties. Depreciation expense is computed for buildings and
improvements using the straight line method using a depreciable life of 40 years
for federal income tax purposes.

         As of December 31, 2001, the aggregate cost of the Properties  owned by
the   Partnership   (including   its   consolidated   joint   venture)  and  the
unconsolidated joint ventures (including the Properties owned through tenancy in
common  arrangements),  for federal  income tax  purposes  was  $24,018,253  and
$15,459,570, respectively.

         The following table lists the Properties owned by the Partnership as of
December 31, 2001 by Restaurant Chain.

                Restaurant Chain                      Number of Properties

                Baker's Square                                  1
                Bennigan's                                      2
                Burger King                                    13
                Denny's                                         1
                Golden Corral                                   5
                Hardee's                                        4
                IHOP                                            1
                Jack in the Box                                 3
                KFC                                             2
                Perkins                                         1
                Pizza Hut                                       1
                Shoney's                                        1
                Wendy's                                         1
                Other                                           1
                                                          --------------
                TOTAL PROPERTIES                               37
                                                          ==============

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

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

         Leases.  The Partnership leases the Properties to operators of selected
national and regional fast-food restaurant chains. The leases are generally on a
long-term  "triple  net"  basis,  meaning  that the  tenant is  responsible  for
repairs,  maintenance,  property taxes,  utilities and insurance.  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.  The terms of the leases of the
Properties owned by the Partnership are described in Item 1. Business - Leases.

         At December 31, 2001,  2000, 1999, 1998 and 1997, all of the Properties
were occupied.  The following is a schedule of the average rent per Property for
each of the years ended December 31:

<TABLE>
<CAPTION>

                                   2001              2000              1999              1998               1997
                               -------------     -------------    ---------------    --------------    ---------------

 <c>
Rental Revenues (1)             $ 3,364,048       $ 3,361,651        $ 3,527,515       $ 3,443,094         $3,467,720
Properties                               37                36                 37                36                 36
Average Rent per Property       $    90,920         $  93,379          $  95,338         $  95,642          $  96,326
</TABLE>

(1)      Rental income  includes the  Partnership's  share of rental income from
         the  Properties  owned  through  joint  venture  arrangements.   Rental
         revenues have been adjusted,  as applicable,  for any amounts for which
         the Partnership has established a provision for doubtful accounts.

         The following is a schedule of lease expirations for leases in place as
of December 31, 2001 for each year for the next ten years and thereafter.
<TABLE>
<CAPTION>

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

 <c>
              2002                             --                   $   --                      --
              2003                             --                       --                      --
              2004                             --                       --                      --
              2005                             10                  874,666                  26.20%
              2006                              1                  117,158                   3.51%
              2007                             --                       --                      --
              2008                             --                       --                      --
              2009                              1                  142,910                   4.28%
              2010                              7                  698,305                  20.92%
              2011                              9                  750,624                  22.48%
              Thereafter                        9                  754,744                  22.61%
                                        ----------            -------------           -------------
              Totals                           37              $ 3,338,407                 100.00%
                                        ==========            =============           =============
</TABLE>

         Leases  with  Major   Tenants.   The  terms  of  the  leases  with  the
Partnership's  major  tenants as of December  31,  2001 (see Item 1.  Business -
Major  Tenants),  are  substantially  the  same as  those  described  in Item 1.
Business - Leases.

         Golden Corral  Corporation leases five Golden Corral  restaurants.  The
initial  term of each lease is 15 years  (four  leases  expiring in 2005 and one
lease in  2016)  and the  average  minimum  base  annual  rent is  approximately
$176,000 (ranging from approximately $145,500 to $225,800).

         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  $100,100  (ranging from  approximately  $83,000 to
$111,700).


Item 3.  Legal Proceedings

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


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

         Not applicable.


                                     PART II


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

         (a) As of March 15,  2002,  there were  3,414  holders of record of the
Units.  There  is no  public  trading  market  for  the  Units,  and  it is  not
anticipated  that a public  market  for the Units  will  develop.  During  2001,
Limited  Partners  who wished to sell their Units may have offered the Units for
sale pursuant to the Partnership's  distribution reinvestment plan (the "Plan"),
and  Limited  Partners  who wished to have their  distributions  used to acquire
additional  Units (to the extent Units were  available for  purchase),  may have
done so pursuant to such Plan.  The General  Partners have the right to prohibit
transfers of Units. From inception through December 31, 2001, the price paid for
any Unit transferred  pursuant to the Plan was $.95 per Unit. The price paid for
any Unit transferred  other than pursuant to the Plan was subject to negotiation
by the purchaser  and the selling  Limited  Partner.  The  Partnership  will not
redeem or repurchase Units.

         The following table reflects,  for each calendar quarter, the high, low
and average  sales prices for transfers of Units during 2001 and 2000 other than
pursuant to the Plan, net of commissions.
<TABLE>
<CAPTION>

                                             2001 (1)                               2000 (1)
                                 ----------------------------------     ----------------------------------
                                   High         Low        Average        High         Low         Average
                                 ---------    --------    ----------    ---------    ---------    ----------

 <c>
         First Quarter              $0.80      $ 0.71        $ 0.75          (2)          (2)           (2)
         Second Quarter              0.95        0.72          0.80        $0.80       $ 0.70        $ 0.72
         Third Quarter               0.95        0.66          0.75         0.95         0.64          0.85
         Fourth Quarter              0.95        0.62          0.77         0.95         0.73          0.88
</TABLE>

(1)      A total of  551,448  and  176,000  Units  were  transferred  other than
         pursuant  to the Plan for the years ended  December  31, 2001 and 2000,
         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 each  year  ended  December  31,  2001 and  2000,  the  Partnership
declared cash distributions of $3,150,004 to the Limited Partners. Distributions
of $787,501  were  declared to the limited  partners at the close of each of the
Partnership's  calendar  quarters  during 2001 and 2000.  These amounts  include
monthly  distributions  made in arrears  for the  Limited  Partners  electing to
receive such distributions on this basis. No amounts distributed to partners for
the years  ended  December  31, 2001 and 2000,  are  required to be or have been
treated by the  Partnership  as a return of capital for purposes of  calculating
the  Limited  Partners'  return  on their  adjusted  capital  contributions.  No
distributions have been made to the General Partners to date.

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

(b)      Not applicable.


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

                                        2001               2000              1999              1998               1997
                                    --------------    ---------------    --------------    --------------    ---------------

 <c>
Year ended December 31:
    Revenues (1)                       $3,371,578         $3,528,989        $3,500,669        $3,625,906         $3,619,489
    Net income (2)                      2,336,546          3,587,171         2,810,064         3,288,912          3,241,567
    Cash distributions
      declared (3)                      3,150,004          3,150,004         3,150,004         3,850,003          3,150,003
    Net income per Unit
      (2)                                   0.067              0.102             0.079             0.093              0.092
    Cash distributions
      declared per Unit (3)                 0.090              0.090             0.090             0.110              0.090

At December 31:
    Total assets                      $30,977,243        $31,827,394       $31,479,495       $32,071,119        $32,258,296
    Partners' capital                  29,939,076         30,752,534        30,315,367        30,655,307         31,216,398
</TABLE>

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

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

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

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


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

         The  Partnership was organized on August 18, 1989, to acquire for cash,
either directly or through joint venture  arrangements,  both newly  constructed
and  existing  restaurant  Properties,  as well as land  upon  which  restaurant
Properties  were to be constructed,  which are leased  primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are generally  triple-net leases,  with the lessee generally  responsible
for all repairs and maintenance,  property taxes, insurance and utilities. As of
December 31, 2001,  the  Partnership  owned 37  Properties,  either  directly or
indirectly through joint venture arrangements.

Capital Resources

         The  Partnership's  primary  source  of  capital  for the  years  ended
December 31, 2001, 2000, and 1999 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 $3,196,595,  $3,349,897,
and  $3,321,006,  for the  years  ended  December  31,  2001,  2000,  and  1999,
respectively.  The decrease in cash from operations  during 2001, as compared to
2000, and the increase in cash from operations during 2000, as compared to 1999,
were  primarily  a result of changes in income and  expenses,  as  described  in
"Results of Operations" below, and changes in the Partnership's working capital.

         Other  sources and uses of capital  included the  following  during the
years ended December 31, 2001, 2000 and 1999.

         As of December 31, 1999, the Partnership had accepted three  promissory
notes in connection  with the sale of three of its  Properties.  During the year
ended  December 31, 1999, the borrower  relating to one of the promissory  notes
prepaid  principal of $272,500,  which was applied to the outstanding  principal
balance.  During the year ended December 31, 2001, the borrower  relating to the
other two promissory  notes prepaid  principal of  approximately  $441,500 which
represented the outstanding principal balance.

         In November  1999, the  Partnership  reinvested the right of way taking
proceeds received in 1998 and the prepaid principal in a joint venture,  Bossier
City Joint  Venture,  with CNL Income  Fund XII,  Ltd.  and CNL Income Fund XIV,
Ltd., both Florida limited  partnerships and affiliates of the General Partners.
The joint venture was formed to purchase and hold one Property.  The Partnership
contributed  a total of $448,531 to the joint venture and owns a 34% interest in
its profits and losses.

         In July 2000,  the  Partnership  sold its  Properties  in  Brooksville,
Bayonet Point and Sun City,  Florida, to an unrelated third party for a total of
approximately  $3,465,100 and received net sales proceeds totaling approximately
$3,402,700, resulting in a total gain of approximately $484,800. The transaction
relating to the sale of the  Properties in Sun City and Bayonet  Point,  Florida
and the  reinvestment of the net sales proceeds,  was structured to qualify as a
like kind exchange  transaction  for federal income tax purposes.  However,  the
Partnership will distribute amounts sufficient to enable the Limited Partners to
pay federal and state income taxes, if any (at a level reasonably assumed by the
General Partners), resulting from the sale.

         In July 2000, the Partnership reinvested the sales proceeds it received
from the sale of the Properties in Sun City, Florida and Bayonet Point,  Florida
in a Bennigan's Property located in Deerfield,  Illinois, at an approximate cost
of  $2,462,700.  The  Partnership  acquired this Property from CNL BB Corp.,  an
affiliate of the General  Partners.  In connection  therewith,  the  Partnership
entered into a long term,  triple-net lease with terms substantially the same as
its other leases.

         In  August  2000,  the  Partnership  used a  portion  of the net  sales
proceeds  from the sale of its 2000  properties  to  acquire  an  interest  in a
Baker's Square Property in Libertyville,  Illinois, as  tenants-in-common,  with
CNL Income Fund IX, Ltd., a Florida limited partnership, and an affiliate of the
general partners.  As of December 31, 2001, the Partnership owned a 66% interest
in this Property.

         In September 2000, the Partnership  sold its property in  Jacksonville,
Florida,  for  approximately   $422,500  and  received  net  sales  proceeds  of
approximately  $420,000,  resulting  in a gain of  approximately  $127,900.  The
Partnership distributed amounts sufficient to enable the Limited Partners to pay
federal and state income  taxes,  if any (at a level  reasonably  assumed by the
General  Partners),  resulting from the sale. In October 2000,  the  Partnership
reinvested  the sales  proceeds  it  received  from the sale of its  Property in
Jacksonville,  Florida  in a  Pizza  Hut  Property  in  Hialeah,  Florida  at an
approximate cost of $472,300. In connection  therewith,  the Partnership entered
into a long term,  triple-net  lease with  terms  substantially  the same as its
other leases.

         In March 2001, Middleburg Joint Venture, in which the Partnership owned
a 12.46% interest, sold its Property to the tenant in accordance with the option
under its lease agreement to purchase the Property,  for $1,900,000.  Due to the
fact that the joint venture had recorded  accrued  rental  income,  representing
non-cash  amounts  that the joint  venture had  recognized  as income  since the
inception of the lease relating to the  straight-lining of future scheduled rent
increases in accordance with generally accepted accounting principles, a loss of
approximately  $61,900 was recorded in March 2001.  Middleburg Joint Venture was
dissolved in accordance with the joint venture  agreement and no gain or loss on
the dissolution of the joint venture was recorded.  As a result, the Partnership
received approximately $236,700 as a return of capital for its pro-rata share of
the net sales proceeds. In April 2001, the Partnership  reinvested the net sales
proceeds it received as a return of capital from  Middleburg  Joint Venture,  in
another joint venture arrangement,  CNL VIII, X, XII Kokomo Joint Venture,  with
CNL  Income  Fund X,  Ltd.  and CNL  Income  Fund  XII,  Ltd.,  Florida  limited
partnerships  and affiliates of the general  partners,  to purchase and hold one
restaurant  Property,  at a total cost of  approximately  $2,112,000.  The joint
venture  acquired  the Property  from CNL BB Corp.,  an affiliate of the general
partners, who had purchased and temporarily held title to this Property in order
to  facilitate  the  acquisition  of the  Property by the joint  venture.  As of
December 31, 2001, the Partnership had  contributed  approximately  $211,200 and
had an approximate 10% interest in the profits and losses of the joint venture.

         In May 2001, the Partnership  sold its Property in  Statesville,  North
Carolina,  and received net sales  proceeds of $877,000,  resulting in a gain of
approximately  $28,300.  In June 2001, the  Partnership  reinvested a portion of
these  sales  proceeds  in  an  additional  Property  in  Walker,  Louisiana  as
tenants-in-common  with CNL Income Fund XVI, Ltd., a Florida limited partnership
and affiliate of the general partners.  As of December 31, 2001, the Partnership
had contributed approximately $232,300 for a 17% interest in the Property.

         In addition, in July 2001, the Partnership reinvested the remaining net
sales proceeds it received from the sale of the property in  Statesville,  North
Carolina in a Bennigan's  property in Denver,  Colorado,  as  tenants-in-common,
with CNL Income Fund XVIII, Ltd., a Florida limited partnership and an affiliate
of  the  general  partners.  As  of  December  31,  2001,  the  Partnership  had
contributed approximately $422,500 for a 19.30% interest in the Property.

         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 such as
demand  deposit  accounts  at  commercial  banks,   money  market  accounts  and
certificates  of deposit  with less than a 90-day  maturity  date,  pending  the
Partnership's  use  of  such  funds  to  pay  Partnership  expenses  or to  make
distributions  to the  partners.  At December  31,  2001,  the  Partnership  had
$2,085,133 invested in such short-term  investments as compared to $1,226,635 at
December 31, 2000. As of December 31, 2001, the average  interest rate earned by
the  Partnership on the rental income  deposited in demand  deposit  accounts at
commercial  banks  was  approximately  3.6%  annually.  The funds  remaining  at
December 31, 2001,  after the payment of  distributions  and other  liabilities,
will be used to invest in an additional  Property and to meet the  Partnership's
working capital needs.

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

         In February 2002, a tenant, Brandon Fast Food Services, Inc., filed for
bankruptcy.  The tenant has neither  rejected  nor affirmed the one lease it has
with the  Partnership.  As of March 15,  2002,  the  Partnership  has  continued
receiving a portion of the rental  payments  relating  to this lease.  While the
tenant has neither  rejected nor affirmed this lease,  there can be no assurance
that the lease will not be rejected in the future.  The lost revenues  resulting
from the possible  rejection  of this lease could have an adverse  effect on the
results  of  operations  of the  Partnership  if the  Partnership  is  unable to
re-lease the Property in a timely manner.

Short-Term Liquidity

         The Partnership's  short-term liquidity  requirements consist primarily
of the  operating  expenses of the  Partnership.  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
generally on a triple-net  basis, it is not anticipated that a permanent reserve
for  maintenance  and repairs will be  established  at this time. To the extent,
however,  that the Partnership  has  insufficient  funds for such purposes,  the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs.

         The 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.

         The Partnership  generally  distributes cash from operations  remaining
after the payment of the operating  expenses of the  Partnership,  to the extent
that  the  General  Partners   determine  that  such  funds  are  available  for
distribution.   Based  on  cash  from  operations,   the  Partnership   declared
distributions  to the Limited Partners of $3,150,004 for each of the years ended
December 31, 2001,  2000 and 1999. This  represents  distributions  of $0.09 per
Unit for each of the years ended  December 31, 2001,  2000, and 1999. No amounts
distributed to the Limited Partners for the years ended December 31, 2001, 2000,
and 1999, are required to be or have been treated by the Partnership as a return
of capital for purposes of  calculating  the Limited  Partners'  return on their
adjusted  capital  contributions.  The  Partnership  intends to continue to make
distributions  of cash available for  distribution to the Limited  Partners on a
quarterly basis.

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

         As of December  31, 2001 and 2000,  the  Partnership  owed  $20,432 and
$4,351,  respectively,  to affiliates for such amounts as operating expenses and
accounting and  administrative  services.  As of March 15, 2002, the Partnership
had reimbursed the affiliates all such amounts. In addition,  as of December 31,
2001, the Partnership had incurred  $55,050 in real estate  disposition fees due
to an affiliate as a result of services in  connection  with the sale of several
Properties. The payment of such fees is deferred until the Limited Partners have
received  the sum of their  10%  Preferred  Return  and their  adjusted  capital
contributions.  Other  liabilities of the Partnership,  including  distributions
payable,  decreased to $855,851 at December 31, 2001,  from $906,941 at December
31, 2000.  The decrease in other  liabilities  was primarily  attributable  to a
decrease  in the rents paid in advance  and the  amounts  that were  accrued for
transaction  costs at December  31,  2001,  as  compared  to  December  31, 2000
relating  to the  proposed  and  terminated  merger with APF,  as  described  in
"Termination of Merger." The General  Partners  believe that the Partnership has
sufficient cash on hand to meet its current working capital needs.

Long-Term Liquidity

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

Critical Accounting Policies

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

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

         Management  reviews its  Properties and  investments in  unconsolidated
entities  periodically  (no less than once per  year)  for  impairment  whenever
events or changes in  circumstances  indicate  that the  carrying  amount of the
assets may not be recoverable through operations.  Management determines whether
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.

Results of Operations

         During 1999, the Partnership and its  consolidated  joint venture owned
and leased 28 wholly owned  Properties.  During 2000,  the  Partnership  and its
consolidated  joint venture,  Woodway Joint Venture,  owned and leased 30 wholly
owned Properties (including four Properties which were sold during 2000). During
2001, the Partnership and its consolidated joint venture, Woodway Joint Venture,
owned and leased 26 wholly owned  Properties  (including  one Property which was
sold during 2001) to operators of fast-food and family-style  restaurant chains.
During 1999,  the  Partnership  was a co-venturer  in three joint  ventures that
owned and leased a total of eight  Properties  (including one Property which was
sold during 2001).  In addition,  during 1999, the Partnership was a co-venturer
in one additional joint venture that owned and leased one Property. During 2000,
the Partnership also owned and leased one additional Property with affiliates of
the General  Partners,  as  tenants-in-common.  In addition,  during  2001,  the
Partnership  was a co-venturer  in one  additional  joint venture that owned and
leased one Property,  and also owned and leased two additional  Properties  with
affiliates of the General  Partners,  as  tenants-in-common.  As of December 31,
2001,  the  Partnership   owned,   either  directly  or  through  joint  venture
arrangements,  37  Properties  which are,  in  general,  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
$49,200 to $251,500. The majority of 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.

         During  the  years  ended  December  31,  2001,  2000,  and  1999,  the
Partnership and its consolidated  joint venture earned  $2,637,096,  $2,837,794,
and $2,901,093,  respectively, in rental income from operating leases and earned
income from direct  financing  leases.  The decrease in rental and earned income
during 2001 and 2000,  each as compared to the previous  year, was partially due
to the fact that the Partnership sold one and four Properties,  respectively, as
discussed in "Capital  Resources,"  resulting in a decrease in rental and earned
income of  approximately  $272,600 and $187,300  during the years ended December
31, 2001 and 2000,  respectively.  The decrease in rental and earned  income was
partially  offset by an  increase in rental and earned  income of  approximately
$204,800  and  $130,600,  during the years  ended  December  31,  2001 and 2000,
respectively,  as a result of the  Partnership  reinvesting a portion of the net
sales proceeds in two Properties in Deerfield, Illinois and Hialeah, Florida, as
described  in  "Capital  Resources."  Rental and earned  income are  expected to
remain at reduced amounts while equity in earnings of joint ventures is expected
to increase due to the fact that the Partnership reinvested a portion of the net
sales  proceeds,  from the sale of a Property in 2001,  in two  Properties  with
affiliates  of  the  General   Partners,   as  two  separate   tenants-in-common
arrangements.

         Rental and earned income  decreased  during the year ended December 31,
2001, as compared to the year ended December 31, 2000, by approximately  $58,300
due to the fact that during the year ended  December 31, 2001, the tenant of the
Property in North Fort Myers,  Florida,  vacated the Property and ceased  making
rental payments on this Property. As a result, the Partnership stopped recording
rental and earned  income  relating to this  Property.  In September  2001,  the
Partnership  entered  into a new lease with a new tenant for this  Property  for
which rental payments commenced in December 2001.

         For the years ended December 31, 2001,  2000, and 1999, the Partnership
also earned $85,987, $113,627, and $113,285,  respectively, in contingent rental
income.  The decrease in contingent rental income for 2001, as compared to 2000,
was primarily  attributable to a decrease in gross sales for certain  restaurant
Properties requiring the payment of contingent rental income.

         For the years ended December 31, 2001,  2000, and 1999, the Partnership
also earned $390,505, $319,184, and $276,012, 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 2001 and
2000,  each as compared to the previous year, was primarily due to the fact that
the  Partnership  invested in 1999 in a Joint Venture,  in 2000 in a Property as
tenants-in-common  with  affiliates  of the General  Partners,  and in 2001 in a
Joint Venture and in a Property,  as  tenants-in-common,  with affiliates of the
General  Partners,  as  described  in "Capital  Resources."  The increase in net
income earned by these joint  ventures  during the year ended  December 31, 2001
was partially  offset by a decrease in net income earned by these joint ventures
as a result of the sale of the Property  owned by  Middleburg  Joint  Venture in
March  2001.  In  addition,  in  conjunction  with  the  sale  of the  Property,
Middleburg Joint Venture,  recognized a loss of  approximately  $61,900 in March
2001, as described above in "Capital Resources."

         During the year ended December 31, 2001, two lessees of the Partnership
and its  consolidated  joint  venture,  Golden  Corral  Corporation  and Carrols
Corporation,  each contributed more than ten percent of the Partnership's  total
rental,  earned and mortgage interest income (including rental and earned income
from the Partnership's consolidated joint venture and the Partnership's share of
rental and earned income from nine Properties  owned by joint ventures and three
Properties owned with affiliates as tenants-in-common). As of December 31, 2001,
Golden  Corral  Corporation  was  the  lessee  under  leases  relating  to  five
restaurants,  and Carrols  Corporation  was the lessee under leases  relating to
five  restaurants.  It is anticipated  that,  based on the minimum annual rental
payments  required by the leases,  these two lessees will continue to contribute
more than ten percent of the  Partnership's  total  rental,  earned and mortgage
interest  income  during 2002. In addition,  during the year ended  December 31,
2001, two Restaurant  Chains,  Golden Corral and Burger King, each accounted for
more than ten percent of the  Partnership's  total  rental,  earned and mortgage
interest  income  (including  rental and earned  income  from the  Partnership's
consolidated  joint  venture  and the  Partnership's  share of rental and earned
income from nine  Properties  owned by  unconsolidated  joint ventures and three
Properties  owned  with  affiliates  as  tenants-in-common).   In  2002,  it  is
anticipated  that these two Restaurant  Chains each will continue to account for
more than ten percent of the  Partnership's  total  rental,  earned and mortgage
interest  income to which the  Partnership  is  entitled  under the terms of the
leases.  Any failure of these  lessees or  Restaurant  Chains  could  materially
affect the  Partnership's  income if the Partnership is not able to re-lease the
Property in a timely manner.

         During  the  years  ended  December  31,  2001,  2000,  and  1999,  the
Partnership  also earned  $270,989,  $271,702,  and $223,683,  respectively,  in
interest and other  income.  The  increase in interest  and other income  during
2000, as compared to 1999, was due to interest  earned on the net sales proceeds
received from the sale of Properties  described above,  pending  reinvestment in
additional  Properties,  as described above in "Capital Resources." The increase
in interest and other income  during 2000,  as compared to 1999,  was  partially
offset by a  reduction  in  interest  income as a result  of the  prepayment  of
principal  on a mortgage  note of $272,500  during 1999,  as described  above in
"Capital Resources."

         Operating expenses,  including  depreciation expense and provisions for
write-down of assets,  were $1,063,333,  $554,511,  and $690,605,  for the years
ended  December 31,  2001,  2000 and 1999,  respectively.  During the year ended
December 31, 2001, the Partnership recorded a provision for write-down of assets
in the amount of  $181,815,  including  $93,671  in  previously  accrued  rental
income,  relating to the Property in North Fort Myers,  Florida, due to the fact
that the tenant  ceased  operations  and vacated this  Property.  The  provision
represented the difference between the carrying value of the Property, including
the accumulated  accrued rental income and the General  Partners'  estimated net
realizable  value of the Property at December 31, 2001. In addition,  during the
year  ended  December  31,  2001,  the  Partnership  recorded  a  provision  for
write-down of assets of $117,664 in previously accrued rental income relating to
the property located in Statesville,  North Carolina. The tenant of the Property
defaulted  under the terms of its  lease,  discontinued  the  operations  of the
restaurant  and  vacated  the  Property.  The  accrued  rental  income  was  the
accumulated amount of non-cash  accounting  adjustments  previously  recorded in
order to recognize  future  scheduled  rent  increases as income evenly over the
term of the lease. The provision represented the difference between the carrying
value of the property,  including the accumulated accrued rental income, and the
general  partners'   estimated  net  realizable  value  of  the  property.   The
Partnership  sold this  Property  in May 2001,  as  described  above in "Capital
Resources."

         The increase in operating  expenses  during the year ended December 31,
2001,  as  compared  to  the  year  ended   December  31,  2000,  was  partially
attributable  to, and the decrease  during the year ended  December 31, 2000, as
compared  to the year ended  December  31,  1999,  was  partially  offset by, an
increase in the costs  incurred for  administrative  expenses for  servicing the
Partnership and its Properties,  as permitted by the Partnership  agreement.  In
addition,  the increase in operating expenses during the year ended December 31,
2001 was partially due to the Partnership  incurring  additional state taxes due
to changes in tax laws of a state in which the Partnership conducts business.

         In  addition,  the  increase in  operating  expenses  during  2001,  as
compared to 2000, was partially due to the fact the Partnership incurred certain
expenses such as legal fees and maintenance  relating to several Properties.  In
addition,  the Partnership  incurred real estate taxes during 2001,  relating to
the  Property  in North Fort  Myers,  Florida,  due to the tenant  vacating  the
Property.  The Partnership ceased collection efforts of these real estate taxes.
The  Partnership  entered into a new lease with a new tenant for this  Property,
and in accordance with the terms of the lease, the new tenant is responsible for
such expenses commencing December 2001.

         The increase in operating  expenses,  during 2001, as compared to 2000,
was partially  offset by, and the decrease during 2000, as compared to 1999, was
primarily  attributable  to, the fact that during 2000 and 1999 the  Partnership
incurred $32,424 and $185,446, respectively, in transaction costs related to the
General  Partners  retaining  financial  and legal  advisors  to assist  them in
evaluating  and  negotiating  the proposed  merger with CNL American  Properties
Fund,  Inc.  ("APF").  On March 1, 2000,  the General  Partners and APF mutually
agreed to terminate the merger. No such expenses were incurred during 2001.

         As a  result  of the  sales of the  Properties  as  described  above in
"Capital  Resources,"  the  Partnership  recorded a total  gain of  $28,301  and
$612,693  during the years ended December 31, 2001 and 2000. No Properties  were
sold during 1999.

         The  Partnership's  leases  as of  December  31,  2001,  are  generally
triple-net  leases and  contain  provisions  that the General  Partners  believe
mitigate  the adverse  effect of  inflation.  Such  provisions  include  clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified  level and/or  automatic  increases in based rent at specified times
during the term of the lease.  Inflation,  overall,  has had a minimal effect on
results of operations of the Partnership.  Continued inflation may cause capital
appreciation of the  Partnership's  Properties.  Inflation and changing  prices,
however,  also may have an adverse impact on the sales of the restaurants and on
potential capital appreciation of the Properties.

         The  restaurant  industry,  as a  whole,  has  been  one  of  the  many
industries  affected  by  the  general  slowdown  in  the  economy.   While  the
Partnership has experienced  some losses due to the financial  difficulties of a
limited number of restaurant operators, the General Partners remain confident in
the overall  performance  of the  fast-food  and family style  restaurants,  the
concepts that  comprise the  Partnership's  portfolio.  Industry data shows that
these  restaurant  concepts  continue to outperform  and remain more stable than
higher-end  restaurants,  which have been more adversely affected by the slowing
economy.

         In December 1999, the Securities and Exchange  Commission  released SAB
101, which provides the staff's view in applying generally  accepted  accounting
principles  to  selected  revenue  recognition  issues.  SAB  101  requires  the
Partnership  to defer  recognition  of certain  percentage  rental  income until
certain defined  thresholds are met. The  Partnership  adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material impact on the
Partnership's results of operations.

         In July 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141 "Business  Combinations" (FAS 141) and
Statement  of  Financial  Accounting  Standards  No.  142  "Goodwill  and  Other
Intangible  Assets" (FAS 142). The  Partnership has reviewed both statements and
has determined  that both FAS 141 and FAS 142 do not apply to the Partnership as
of December 31, 2001.

         In October  2001,  the  Financial  Accounting  Standards  Board  issued
Statement  of  Financial  Accounting  Standards  No.  144  "Accounting  for  the
Impairment or Disposal of Long-Lived  Assets" (FAS 144). This statement requires
that a long-lived asset be tested for recoverability  whenever events or changes
in circumstances  indicate that its carrying amount may not be recoverable.  The
carrying  amount of a long-lived  asset is not recoverable if it exceeds the sum
of the  undiscounted  cash flows  expected to result  from the use and  eventual
disposition of the asset.  The assessment is based on the carrying amount of the
asset  at the  date it is  tested  for  recoverability.  An  impairment  loss is
recognized  when the  carrying  amount of a  long-lived  asset  exceeds its fair
value.  If an  impairment  is  recognized,  the  adjusted  carrying  amount of a
long-lived asset is its new cost basis. The adoption of FAS 144 did not have any
effect on the  partnership's  recording of impairment  losses as this  Statement
retained  the  fundamental  provisions  of  FAS  No.  121  "Accounting  for  the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of".

Termination of Merger

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with APF,  pursuant to which the Partnership  would be merged with and
into a subsidiary of APF.  Under the  Agreement  and Plan of Merger,  APF was to
issue shares of its common stock as  consideration  for the Merger.  On March 1,
2000, the General  Partners and APF announced  that they had mutually  agreed to
terminate  the  Agreement  and Plan of Merger.  The  agreement to terminate  the
Agreement and Plan of Merger was based, in large part, on the General  Partners'
concern that,  in light of market  conditions  relating to publicly  traded real
estate  investment  trusts,  the value of the transaction  had diminished.  As a
result of such  diminishment,  the General  Partners'  ability to  unequivocally
recommend voting for the transaction, in the exercise of their fiduciary duties,
had become questionable.

Interest Rate Risk

         The Partnership accepted a promissory note in conjunction with the sale
of a Property. The principal amounts outstanding under the mortgage note totaled
$917,857 at December 31, 2001. The General  Partners  believe that the estimated
fair  value  of the  mortgage  notes  at  December  31,  2001  approximated  the
outstanding principal amounts.

         The  Partnership  is exposed to equity  loss in the event of changes in
interest  rates.  The fair value of the mortgage notes would decline if interest
rates rise.

         The following table presents the expected cash flows of principal that
are sensitive to these changes.

                                                    Mortgage Note
                                                      Fixed Rate
                                                  -------------------

                2002                                    $     55,609
                2003                                          61,890
                2004                                          68,881
                2005                                          76,662
                2006                                          85,321
                Thereafter                                   569,494
                                                  -------------------

                                                        $    917,857
                                                  ===================


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         This information is described above in Item 7. Management's  Discussion
and Analysis of Financial Condition -- Interest Rate Risk.


Item 8.  Financial Statements and Supplementary Data




<PAGE>


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

                                    CONTENTS







                                                                    Page

Report of Independent Certified Public Accountants                   18

Financial Statements:

     Balance Sheets                                                  19

     Statements of Income                                            20

     Statements of Partners' Capital                                 21

     Statements of Cash Flows                                     22-23

     Notes to Financial Statements                                24-41









<PAGE>





               Report of Independent Certified Public Accountants



To the Partners
CNL Income Fund VIII, Ltd.



In our opinion,  the accompanying  balance sheets and the related  statements of
income,  of partners'  capital and of cash flows present fairly, in all material
respects,  the  financial  position  of CNL Income  Fund VIII,  Ltd.  (a Florida
limited  partnership)  at  December  31,  2001 and 2000,  and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United  States of  America.  In  addition,  in our  opinion,  the  financial
statement  schedules  listed in the index appearing under item 14(a)(2)  present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial  statements.  These financial  statements
and financial  statement  schedules are the  responsibility of the Partnership's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedules based on our audits. We conducted
our audits of these statements in accordance with auditing  standards  generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.




/s/ PricewaterhouseCoopers LLP

Orlando, Florida
February 8, 2002





<PAGE>


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

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                       December 31,
                                                                               2001                     2000
                                                                        -------------------      -------------------

 <c>
                             ASSETS

  Land and buildings on operating leases, less
       accumulated depreciation                                               $ 16,121,783             $ 16,275,305
  Net investment in direct financing leases                                      5,164,624                6,439,056
  Investment in joint ventures                                                   4,601,808                4,075,551
  Mortgage notes receivable                                                        926,080                1,424,436
  Cash and cash equivalents                                                      2,085,133                1,226,635
  Certificates of deposit                                                          378,889                  461,394
  Receivables, less allowance for doubtful accounts of
       $1,114 and $459, respectively                                                88,175                  105,075
  Due from related parties                                                          52,641                   30,010
  Accrued rental income                                                          1,488,236                1,710,973
  Other assets                                                                      69,874                   78,959
                                                                        -------------------      -------------------

                                                                              $ 30,977,243             $ 31,827,394
                                                                        ===================      ===================

               LIABILITIES AND PARTNERS' CAPITAL

  Accounts payable and accrued expenses                                         $    5,600               $   34,293
  Escrowed real estate taxes payable                                                10,654                   12,501
  Distributions payable                                                            787,501                  787,501
  Due to related parties                                                            75,482                   59,401
  Rents paid in advance and security deposits                                       52,096                   72,646
                                                                        -------------------      -------------------
           Total liabilities                                                       931,333                  966,342

  Minority interest                                                                106,834                  108,518

  Partners' capital                                                             29,939,076               30,752,534
                                                                        -------------------      -------------------

                                                                              $ 30,977,243             $ 31,827,394
                                                                        ===================      ===================



                See accompanying notes to financial statements.
<PAGE>


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

                              STATEMENTS OF INCOME


                                                                               Year Ended December 31,
                                                                      2001                2000               1999
                                                                ------------------   ---------------    ---------------

Revenues:
     Rental income from operating leases                             $  1,950,560       $ 1,976,318        $ 1,961,199
     Earned income from direct financing leases                           686,536           861,476            939,894
     Contingent rental income                                              85,987           113,627            113,285
     Interest and other income                                            270,989           271,702            223,683
                                                                ------------------   ---------------    ---------------
                                                                        2,994,072         3,223,123          3,238,061
                                                                ------------------   ---------------    ---------------
Expenses:
     General operating and administrative                                 293,533           175,678            150,176
     Professional services                                                 73,818            24,829             35,453
     Real estate taxes                                                     19,565                --                 --
     State and other taxes                                                 54,965            18,228             19,342
     Depreciation                                                         321,973           303,352            300,188
     Provision for write-down of assets                                   299,479                --                 --
     Transaction costs                                                         --            32,424            185,446
                                                                ------------------   ---------------    ---------------
                                                                        1,063,333           554,511            690,605
                                                                ------------------   ---------------    ---------------

Income Before Gain on Sale of Assets, Minority
     Interest in Income of Consolidated Joint Venture
     and Equity in Earnings of Unconsolidated Joint
     Ventures                                                           1,930,739         2,668,612          2,547,456

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

Minority Interest in Income of Consolidated
     Joint Venture                                                        (12,999  )        (13,318  )         (13,404  )

Equity in Earnings of Unconsolidated Joint
     Ventures                                                             390,505           319,184            276,012
                                                                ------------------   ---------------    ---------------

Net Income                                                           $  2,336,546       $ 3,587,171        $ 2,810,064
                                                                ==================   ===============    ===============

Allocation of Net Income
     General Partners                                                    $     --           $    --          $  28,101
     Limited partners                                                   2,336,546         3,587,171          2,781,963
                                                                ------------------   ---------------    ---------------

                                                                     $  2,336,546       $ 3,587,171        $ 2,810,064
                                                                ==================   ===============    ===============

Net Income Per Limited Partner Unit                                    $    0.067         $   0.102          $   0.079
                                                                ==================   ===============    ===============

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

                See accompanying notes to financial statements.
<PAGE>


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

                         STATEMENTS OF PARTNERS' CAPITAL

                                   Years Ended December 31, 2001, 2000, and 1999


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

Balance, December 31, 1998         $     1,000        $   257,248       $  35,000,000      $ (26,184,644 )     $  25,596,703

    Distributions to limited
       partners ($0.090 per
       limited partner unit)                --                 --                  --         (3,150,004 )                --
    Net income                              --             28,101                  --                 --           2,781,963
                             ------------------   ----------------   -----------------   ----------------   -----------------

Balance, December 31, 1999               1,000            285,349          35,000,000        (29,334,648 )        28,378,666

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

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

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

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



                See accompanying notes to financial statements.

<PAGE>

-----------
  Syndication
     Costs            Total
 --------------   --------------

  $ (4,015,000 )    $30,655,307



            --       (3,150,004 )
            --        2,810,064
 --------------   --------------

    (4,015,000 )     30,315,367



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

    (4,015,000 )     30,752,534



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

  $ (4,015,000 )    $29,939,076
 ==============   ==============

                See accompanying notes to financial statements.
<page>





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

                            STATEMENTS OF CASH FLOWS


                                                                                 Year Ended December 31,
                                                                     2001                 2000                  1999
                                                                ----------------     ----------------       ---------------

Increase (Decrease) in Cash and Cash Equivalents:

      Cash Flows from Operating Activities:
         Cash received from tenants                                $  2,960,023         $  3,160,831          $  3,014,746
         Distributions from unconsolidated joint ventures               493,525              401,558               336,445
         Cash paid for expenses                                        (461,707 )           (437,972 )            (247,332 )
         Interest received                                              204,754              225,480               217,147
                                                                ----------------     ----------------       ---------------
             Net cash provided by operating activities                3,196,595            3,349,897             3,321,006
                                                                ----------------     ----------------       ---------------

      Cash Flows from Investing Activities:
         Proceeds from sale of land and buildings                       877,000            3,822,716                    --
         Additions to land and buildings on operating leases                 --           (2,925,217 )                  --
         Liquidating distribution from joint venture                    236,665                   --                    --
         Investment in joint venture                                   (865,942 )           (960,068 )            (448,000 )
         Collections on mortgage notes receivable                       494,206               48,701               335,154
         Investment in certificates of deposit                         (368,111 )           (450,000 )                  --
         Redemption of certificates of deposit                          452,772                   --                    --
                                                                ----------------     ----------------       ---------------
             Net cash provided by (used in) investing
                activities                                              826,590             (463,868 )            (112,846 )
                                                                ----------------     ----------------       ---------------

      Cash Flows from Financing Activities:
         Distributions to limited partners                           (3,150,004 )         (3,150,004 )          (3,500,004 )
         Distributions to holder of minority interest                   (14,683 )            (13,379 )             (13,425 )
                                                                ----------------     ----------------       ---------------
             Net cash used in financing activities                   (3,164,687 )         (3,163,383 )          (3,513,429 )
                                                                ----------------     ----------------       ---------------

Net Increase (Decrease) in Cash and Cash Equivalents                    858,498             (277,354 )            (305,269 )

Cash and Cash Equivalents at Beginning of Year                        1,226,635            1,503,989             1,809,258
                                                                ----------------     ----------------       ---------------

Cash and Cash Equivalents at End of Year                           $  2,085,133         $  1,226,635          $  1,503,989
                                                                ================     ================       ===============

                See accompanying notes to financial statements.

<PAGE>


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

                      STATEMENTS OF CASH FLOWS - CONTINUED


                                                                               Year Ended December 31,
                                                                      2001               2000              1999
                                                                 ---------------    ---------------    --------------

Reconciliation of Net Income to Net Cash Provided
    by Operating Activities:

      Net Income                                                    $ 2,336,546        $ 3,587,171       $ 2,810,064
                                                                 ---------------    ---------------    --------------
      Adjustments to reconcile net income to net cash
         provided by operating activities:
             Depreciation                                               321,973            303,352           300,188
             Provision for write-down of assets                         299,479                 --                --
             Minority interest in income of
                consolidated joint venture                               12,999             13,318            13,404
             Equity in earnings of unconsolidated joint
                ventures, net of distributions                          103,020             82,374            60,433
             Gain on sale of assets                                     (28,301 )         (612,693 )              --
             Decrease (increase) in receivables                          18,894             (3,581 )         (25,188 )
             Increase in due from related parties                       (22,631 )          (30,010 )              --
             Decrease in net investment in direct
                financing leases                                        181,500            171,457           166,924
             Increase in accrued rental income                             (960 )          (61,481 )         (91,099 )
             Decrease (increase) in other assets                          9,085            (10,803 )         (11,526 )
             Increase (decrease) in accounts payable,
                accrued expenses, and escrowed real
                estate taxes payable                                    (30,540 )          (76,533 )          91,231
             Increase (decrease) in due to related
                parties                                                  16,081            (61,926 )          45,530
             Increase (decrease) in rents paid in
                advance and security deposits                           (20,550 )           49,252           (38,955 )
                                                                 ---------------    ---------------    --------------
                  Total adjustments                                     860,049           (237,274 )         510,942
                                                                 ---------------    ---------------    --------------

Net Cash Provided by Operating Activities                           $ 3,196,595        $ 3,349,897       $ 3,321,006
                                                                 ===============    ===============    ==============

Supplemental Schedule of Non-Cash
      Financing Activities:

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

                See accompanying notes to financial statements.

</TABLE>

<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 2001, 2000, and 1999


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
         generally  on a  triple-net  basis,  whereby  the  tenant is  generally
         responsible  for  all  operating  expenses  relating  to the  property,
         including  property  taxes,  insurance,  maintenance  and repairs.  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.




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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. Whenever a tenant defaults
                  under the terms of its lease, or events or changes in
                  circumstance indicate that the tenant will not lease the
                  property through the end of the lease term, the Partnership
                  either reserves or reverses the cumulative accrued rental
                  income balance.

         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.  Although the General Partners
         have  made  their  best  estimate  of these  factors  based on  current
         conditions,  it is reasonably  possible that changes could occur in the
         near term which could adversely affect the General  Partners'  estimate
         of net cash flows  expected to be generated from its properties and the
         need for asset impairment write-downs.

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


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

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

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

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

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

         Additionally,  for tax  purposes,  syndication  costs are  included  in
         Partnership equity and in the basis of each partner's  investment.  For
         financial  reporting  purposes,  syndication  costs are netted  against
         partners' capital and represent a reduction of Partnership equity and a
         reduction in the basis of each partner's investment. See "Income Taxes"
         footnote for a  reconciliation  of net income for  financial  reporting
         purposes to net income for federal income tax purposes.

         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

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         and future cash flows associated with long-lived assets. Actual results
         could differ from those estimates.

         Reclassification   -  Certain  items  in  the  prior  year's  financial
         statements  have been  reclassified  to conform  to 2001  presentation.
         These reclassifications had no effect on total partner's capital or net
         income.

         Staff  Accounting  Bulletin No. 101 ("SAB 101") - In December 1999, the
         Securities and Exchange Commission released SAB 101, which provides the
         staff's view in applying  generally accepted  accounting  principles to
         selected revenue  recognition  issues. SAB 101 requires the Partnership
         to defer recognition of certain  percentage rental income until certain
         defined  thresholds are met. The Partnership  adopted SAB 101 beginning
         January  1,  2000.  Implementation  of SAB 101 did not have a  material
         impact on the Partnership's results of operations.

         Statement of  Financial  Accounting  Standards  No. 141 ("FAS 141") and
         Statement of Financial  Accounting  Standards  No. 142 ("FAS 142") - In
         July 2001, the Financial Accounting Standards Board issued Statement of
         Financial  Accounting  Standards  No. 141 "Business  Combinations"  and
         Statement of Financial Accounting Standards No. 142 "Goodwill and Other
         Intangible  Assets".  The  Partnership has reviewed both statements and
         has  determined  that  both  FAS 141 and  FAS 142 do not  apply  to the
         Partnership as of December 31, 2001.

         Statement of Financial  Accounting  Standards  No. 144 ("FAS 144") - In
         October 2001, the Financial Accounting Standards Board issued Statement
         of  Financial   Accounting   Standards  No.  144  "Accounting  for  the
         Impairment or Disposal of Long-Lived  Assets".  This statement requires
         that a long-lived asset be tested for recoverability whenever events or
         changes in  circumstances  indicate that its carrying amount may not be
         recoverable.   The  carrying  amount  of  a  long-lived  asset  is  not
         recoverable  if it  exceeds  the  sum of the  undiscounted  cash  flows
         expected to result from the use and eventual  disposition of the asset.
         The assessment is based on the carrying amount of the asset at the date
         it is tested for recoverability.  An impairment loss is recognized when
         the carrying amount of a long-lived asset exceeds its fair value. If an
         impairment is recognized,  the adjusted carrying amount of a long-lived
         asset is its new cost basis.  The  adoption of FAS 144 did not have any
         effect on the  partnership's  recording  of  impairment  losses as this
         Statement retained the fundamental provisions of FAS No. 121

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         "Accounting for the Impairment of Long-Lived  Assets and for Long-Lived
         Assets to be Disposed of".

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 14 to 25 years and
         provide for minimum and  contingent  rentals.  In addition,  the tenant
         generally 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:
<TABLE>
<CAPTION>

                                                                    2001                   2000
                                                             --------------------   --------------------

 <c>
                 Land                                               $  9,348,100           $  9,605,325
                 Buildings                                             9,069,529              8,643,853
                                                             --------------------   --------------------
                                                                      18,417,629             18,249,178

                 Less accumulated depreciation                        (2,295,846 )           (1,973,873 )
                                                             --------------------   --------------------

                                                                    $ 16,121,783           $ 16,275,305
                                                             ====================   ====================
</TABLE>



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


3.       Land and Buildings on Operating Leases - Continued:
         --------------------------------------------------

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

         In July 2000, the Partnership reinvested the sales proceeds it received
         from the sale of the properties in Sun City, Florida and Bayonet Point,
         Florida in a Bennigan's property located in Deerfield,  Illinois, at an
         approximate  cost of $2,462,700  from CNL BB Corp., an affiliate of the
         general partners. In connection therewith, the Partnership entered into
         a long term,  triple-net lease with terms substantially the same as its
         other leases (see Note 9).

         In September 2000, the Partnership  sold its property in  Jacksonville,
         Florida,  for $422,506 and received net sales proceeds of approximately
         $420,000, resulting in a gain of approximately $127,900.

         In October  2000,  the  Partnership  reinvested  the sales  proceeds it
         received  from the sale of its property in  Jacksonville,  Florida in a
         Pizza Hut  Property  in  Hialeah,  Florida  at an  approximate  cost of
         $472,300. In connection therewith,  the Partnership entered into a long
         term,  triple-net lease with terms  substantially the same as its other
         leases.

         In May 2001, the Partnership  sold its property in  Statesville,  North
         Carolina,  and received net sales proceeds of $877,000,  resulting in a
         gain of approximately $28,300 (see Note 4).

         The following is a schedule of the future  minimum lease payments to be
         received on noncancellable operating leases at December 31, 2001:

                2002                                  $2,031,058
                2003                                   2,063,300
                2004                                   2,077,429
                2005                                   1,951,193
                2006                                   1,475,826
                Thereafter                             8,239,630
                                                 ----------------

                                                     $17,838,436
                                                 ================



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


3.       Land and Buildings on Operating Leases - Continued:
         --------------------------------------------------

         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.

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

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

                                                        2001                  2000
                                                   ----------------      ----------------

 <c>
               Minimum lease payments
                    receivable                         $ 7,516,731          $ 10,334,143
               Estimated residual values                 1,838,111             2,152,532
               Less unearned income                     (4,190,218 )          (6,047,619 )
                                                   ----------------      ----------------

               Net investment in direct
                    financing leases                   $ 5,164,624           $ 6,439,056
                                                   ================      ================
</TABLE>

         In July  2000,  the  Partnership  sold two  properties,  for  which the
         building  portion had been classified as a direct  financing  lease. In
         connection  therewith,  the gross  investment  (minimum  lease payments
         receivable  and the  estimated  residual  value)  and  unearned  income
         relating to the  building  were  removed from the accounts and the gain
         from the sale of the property was reflected in income (see Note 3).

         In May 2001, the  Partnership  sold a property,  for which the building
         portion had been classified as a direct  financing lease. In connection
         therewith,  the gross investment (minimum lease payments receivable and
         the  estimated  residual  value) and  unearned  income  relating to the
         building  were  removed from the accounts and the gain from the sale of
         the property was reflected in income (see Note 3).




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         At  June  30,  2001,  the  Partnership   established  a  provision  for
         impairment in carrying  value in the amount of $88,144 for its property
         in North Fort Myers,  Florida,  due to the fact that the tenant  ceased
         operations and vacated this  property.  The provision  represented  the
         difference  between the  carrying  value of the net  investment  in the
         direct  financing  lease  and  the  general  partners'   estimated  net
         realizable  value of the  investment in the direct  financing  lease at
         June 30, 2001.  During July 2001,  this lease was terminated due to the
         fact  that the  tenant  vacated  the  property  and  ceased  restaurant
         operations.  As a result,  the Partnership  reclassified the lease from
         direct financing leases to land and buildings on operating  leases.  In
         accordance with the Statement of Financial Accounting Standards No. 13,
         "Accounting  for Leases,"  the  Partnership  recorded the  reclassified
         lease at the lower of original  cost,  present  fair value,  or present
         carrying  amount.  No  loss  on  the  reclassification  of  the  direct
         financing lease was recorded.

         The  following  is a schedule of future  minimum  lease  payments to be
         received on direct financing leases at December 31, 2001:

                     2002                                      $ 831,145
                     2003                                        831,145
                     2004                                        831,145
                     2005                                        831,145
                     2006                                        857,472
                     Thereafter                                3,334,679
                                                         ----------------

                                                              $7,516,731
                                                         ================

         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).

5.       Investment in Joint Ventures:
         ----------------------------

         The  Partnership  has an 85.54%,  a 36.8%,  and a 34%  interest  in the
         profits  and  losses  of  Asheville   Joint  Venture,   CNL  Restaurant
         Investments  II, and  Bossier  City Joint  Venture,  respectively.  The
         remaining  interests in these joint  ventures are held by affiliates of
         the Partnership which have the same general  partners.  Asheville Joint
         Venture  and  Bossier  City  Joint  Venture  each owns and  leases  one
         property, and CNL Restaurant Investments

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         II owns and leases six properties, to an operator of national fast-food
         or family-style restaurants.

         In  August  2000,  the  Partnership  used a  portion  of the net  sales
         proceeds  from sale of its  properties  to  acquire  an  interest  in a
         Baker's Square property in Libertyville, Illinois, with CNL Income Fund
         IX, Ltd., ("CNL IX") a Florida limited partnership, and an affiliate of
         the general partners. The Partnership accounts for its investment using
         the equity  method  since the  agreement  requires  the  consent of all
         partners  on  all  key  decisions   affecting  the  operations  of  the
         underlying  property.  As of December 31, 2001, the Partnership owned a
         66% interest in this property.

         In March 2001, Middleburg Joint Venture, in which the Partnership owned
         a 12.46% interest,  sold its property to the tenant, in accordance with
         the purchase option under the lease agreement,  for $1,900,000.  Due to
         the fact that the joint  venture had recorded  accrued  rental  income,
         representing  non-cash amounts that the joint venture had recognized as
         income since the inception of the lease relating to the straight-lining
         of  future  scheduled  rent  increases  in  accordance  with  generally
         accepted  accounting  principles,  a loss of approximately  $61,900 was
         recorded by the joint venture in March 2001. The Partnership  dissolved
         the  joint   venture  and  did  not  recognize  any  gain/loss  on  the
         dissolution of the joint venture. As a result, the Partnership received
         approximately $236,700 as a return of capital for its pro-rata share of
         the  net  sales  proceeds.  The  Partnership  reinvested  the  proceeds
         received  as a return of  capital  from  Middleburg  Joint  Venture  in
         another joint venture arrangement, as described below.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         In April 2001, the  Partnership  reinvested  the amounts  received as a
         return of capital  from  Middleburg  Joint  Venture  in  another  joint
         venture  arrangement,  CNL VIII, X, XII Kokomo Joint Venture,  with CNL
         Income Fund X, Ltd. and CNL Income Fund XII, Ltd., both Florida limited
         partnerships  and affiliates of the general  partners.  The Partnership
         acquired this  interest from CNL BB Corp.,  an affiliate of the general
         partners  (see Note 9). As of December 31, 2001,  the  Partnership  had
         contributed  approximately  $211,200  for a 10% interest in the profits
         and  losses of the joint  venture.  The  Partnership  accounts  for its
         investment  in this joint  venture  under the equity  method  since the
         joint venture agreement requires the consent of all partners on all key
         decisions affecting the operations of the underlying property.

         In June  2001,  the  Partnership  reinvested  a  portion  of the  sales
         proceeds from the property in Statesville,  North  Carolina,  described
         above,   in  an   additional   property   in   Walker,   Louisiana   as
         tenants-in-common  with CNL Income Fund XVI,  Ltd.,  a Florida  limited
         partnership and affiliate of the general  partners.  As of December 31,
         2001, the Partnership had contributed  approximately $232,300 for a 17%
         interest in the property.  The Partnership  accounts for its investment
         under the equity method since the agreement requires the consent of all
         partners  on  all  key  decisions   affecting  the  operations  of  the
         underlying property.

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




<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         The  following  presents  the  joint  ventures'   combined,   condensed
         financial information at December 31:
<TABLE>
<CAPTION>

                                                                               2001                 2000
                                                                         -----------------     ---------------

 <c>
                  Land and buildings on operating
                      leases, net                                             $13,562,341          $8,714,670
                  Net investment in direct financing
                      lease                                                            --           1,280,255
                  Cash                                                             38,224             117,189
                  Receivables                                                       9,601              28,510
                  Accrued rental income                                           145,174             247,527
                  Other assets                                                        796                 566
                  Liabilities                                                       4,452              80,916
                  Partners' capital                                            13,751,684          10,307,801
                  Revenues                                                      1,377,783           1,128,453
                  Net income                                                    1,071,726             903,843
</TABLE>

         The Partnership  recognized  income totaling  $390,505,  $319,184,  and
         $276,012,  for the years  ended  December  31,  2001,  2000,  and 1999,
         respectively, from these joint ventures.

6.       Mortgage Notes Receivable:
         -------------------------

         As of December 31, 1996,  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 10% 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.  During
         the year ended December 31, 2001, the borrower repaid  principal in the
         amount  of   approximately   $441,500  which   represented   the  total
         outstanding principal balance for both notes.

         In  addition,  in  connection  with the 1996  sale of its  property  in
         Orlando,  Florida,  the  Partnership  accepted a promissory note in the
         principal  sum of  $1,388,568,  representing  the gross  sales price of
         $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

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


6.       Mortgage Notes Receivable - Continued:
         -------------------------------------

         collected in 12 monthly  installments  of interest  only, in 17 monthly
         installments  of $15,413  consisting  of principal  and  interest,  and
         thereafter  in  151  monthly  installments  of  $12,633  consisting  of
         principal and interest.  During the year ended  December 31, 1999,  the
         borrower  repaid  principal in the amount of $272,500.  This amount was
         applied to the outstanding principal balance.

         The mortgage  notes  receivable  consisted of the following at December
         31:
<TABLE>
<CAPTION>

                                                          2001                 2000
                                                     ----------------     ----------------

 <c>
                 Principal balance                         $ 917,857          $ 1,412,064
                 Accrued interest receivable                   8,223               12,372
                                                     ----------------     ----------------

                                                           $ 926,080          $ 1,424,436
                                                     ================     ================
</TABLE>

         The General  Partners believe that the estimated fair value of mortgage
         notes  receivable  at  December  31,  2001 and 2000,  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.

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

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

         From inception through December 31, 1999, generally, net sales proceeds
         from the sale of properties not in liquidation of the  Partnership,  to
         the extent distributed,  were distributed first to the limited partners
         in an  amount  sufficient  to  provide  them with  their 10%  Preferred
         Return,  plus the return of their adjusted capital  contributions.  The
         General Partners then received,  to the extent previously  subordinated
         and unpaid, a one percent

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         interest  in all prior  distributions  of net cash flow and a return of
         their  capital   contributions.   Any  remaining  sales  proceeds  were
         distributed 95 percent to the limited  partners and five percent to the
         General  Partners.  Any  gain  from  the  sale  of a  property  not  in
         liquidation of the Partnership  was, in general,  allocated in the same
         manner as net sales proceeds are distributable.  Any loss from the sale
         of a property was, in general, allocated first, on a pro rata basis, to
         partners with positive balances in their capital accounts;  thereafter,
         95 percent to the  limited  partners  and five  percent to the  General
         Partners.

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

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

         During each of the years ended  December 31, 2001,  2000,  and 1999 the
         Partnership   declared   distributions   to  the  limited  partners  of
         $3,150,004.  No distributions have been made to the General Partners to
         date.


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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>

                                                                    2001             2000              1999
                                                                --------------   --------------   ---------------

 <c>
          Net income for financial reporting purposes               2,336,546      $ 3,587,171        $2,810,064

          Depreciation for tax reporting purposes in
               excess of depreciation for financial
               reporting purposes                                     (57,394 )        (99,400 )        (113,202 )

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

            Direct financing leases recorded as operating
               leases for tax reporting purposes                      181,500          171,457           166,924

            Allowance for doubtful accounts                           211,991           (5,305 )         (18,872 )

          Accrued rental income                                      (212,295 )        (61,481 )         (91,099 )

          Rents paid in advance                                       (32,217 )         49,252           (38,955 )

          Gain or loss on sale of assets for tax
               reporting purposes in excess of (less than)
              gain or loss for financial reporting purposes            60,643         (597,936 )          38,341

          Capitalization (deduction) of transaction costs
             for tax reporting purposes                                    --         (206,488 )         185,446

          Equity in earnings of unconsolidated joint
               ventures for tax reporting purposes in excess
               of equity in earnings of unconsolidated
               joint ventures for financial reporting purposes         15,396           14,929            21,563

          Minority interest in timing differences of
               consolidated joint venture                                (481 )          1,113             1,292
                                                                --------------   --------------   ---------------

          Net income for federal income tax purposes              $ 2,803,168      $ 2,853,312       $ 2,961,502
                                                                ==============   ==============   ===============

</TABLE>

<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal  shareholders of CNL Holdings,  Inc. The other individual
         general partner, Robert A. Bourne, serves as President and Treasurer of
         CNL Group,  Inc., a wholly owned  subsidiary of CNL Holdings,  Inc. CNL
         APF Partners,  LP (the  "Advisor") is a wholly owned  subsidiary of CNL
         American  Properties  Fund, Inc.  ("APF").  CNL Fund Advisors,  Inc., a
         majority owned subsidiary of CNL Financial Group,  Inc. until it merged
         with  and  into  APF  effective   September  1,  1999,  served  as  the
         Partnership's  advisor  until it  assigned  its rights and  obligations
         under a  management  agreement  with  the  Partnership  to the  Advisor
         effective   July  1,  2000.  The   individual   general   partners  are
         stockholders and directors of APF.

         The Advisor  provides  certain  services  relating to management of the
         Partnership and its properties pursuant to a management  agreement with
         the Partnership. In connection therewith, the Partnership has agreed to
         pay the Advisor an annual,  noncumulative,  subordinated management fee
         of one  percent of the sum of gross  revenues  from  properties  wholly
         owned by the Partnership and the Partnership's allocable share of gross
         revenues from joint ventures, but not in excess of competitive fees for
         comparable  services.  These fees will be incurred  and will be payable
         only after the limited partners receive their 10% Preferred Return. Due
         to the fact that these fees are noncumulative,  if the limited partners
         have not received their 10% Preferred Return in any particular year, no
         management  fees will be due or payable  for such year.  As a result of
         such threshold, no management fees were incurred during the years ended
         December 31, 2001, 2000, and 1999.

         The Advisor is also entitled to receive a deferred,  subordinated  real
         estate disposition fee, payable upon the sale of one or more properties
         based on the lesser of one-half of a competitive real estate commission
         or  three  percent  of the  sales  price  if  the  Advisor  provides  a
         substantial amount of services in connection with the sale. However, if
         the net sales  proceeds are  reinvested in a replacement  property,  no
         such  real  estate   disposition  fees  will  be  incurred  until  such
         replacement   property  is  sold  and  the  net  sales   proceeds   are
         distributed.  The  payment  of  the  real  estate  disposition  fee  is
         subordinated to receipt by the limited  partners of their aggregate 10%
         Preferred  Return,  plus  their  adjusted  capital  contributions.   No
         deferred,  subordinated real estate  disposition fees were incurred for
         the years ended December 31, 2001, 2000 and 1999.



<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         In July 2000, the Partnership reinvested the sales proceeds it received
         from the sale of the properties in Sun City, Florida and Bayonet Point,
         Florida in a Bennigan's property located in Deerfield,  Illinois, at an
         approximate  cost of $2,462,700  from CNL BB Corp., an affiliate of the
         general partners. CNL BB Corp. had purchased and temporarily held title
         to this property in order to facilitate the acquisition of the property
         by  the  Partnership.  The  purchase  price  paid  by  the  Partnership
         represents  the costs incurred by CNL BB Corp. to acquire and carry the
         property, including closing costs.

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

         During  the  years  ended  December  31,  2001,  2000,  and  1999,  the
         Partnership's  advisor  and  its  affiliates  provided  accounting  and
         administrative  services  to the  Partnership  on a  day-to-day  basis,
         including  services  during 2000 and 1999  relating to the proposed and
         terminated merger.  The Partnership  incurred  $201,158,  $95,548,  and
         $118,104,  for the years  ended  December  31,  2001,  2000,  and 1999,
         respectively, for such services.

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

                                                                       2001                 2000
                                                                 -----------------    ------------------

 <c>
             Due to Advisor and its Affiliates:
                  Accounting and administrative
                      services                                          $   5,357             $   4,351
                  Deferred, subordinated real
                      estate disposition fee                               55,050                55,050
                  Other                                                    15,075                    --
                                                                 -----------------    ------------------

                                                                        $  75,482             $  59,401
                                                                 =================    ==================

</TABLE>

<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         The  following  schedule  presents  total  rental,  earned and mortgage
         interest income from individual  lessees,  each  representing more than
         ten percent of the  Partnership's  total  rental,  earned and  mortgage
         interest income (including the Partnership's  share of total rental and
         earned income from the  unconsolidated  joint ventures and the property
         held as tenants-in-common with affiliates of the general partners), for
         each of the years ended December 31:
<TABLE>
<CAPTION>

                                                  2001               2000                1999
                                             ---------------    ---------------     ---------------

 <c>
         Golden Corral Corporation                 $703,279           $694,735           $ 711,714
         Carrols Corporation                        421,048            422,375             419,844
         Restaurant Management Services,
              Inc.                                      N/A                N/A             572,803
</TABLE>

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

                                                  2001               2000                1999
                                             ---------------    ---------------     ---------------

 <c>
           Burger King                             $581,888           $882,922           $ 887,291
           Golden Corral Family
               Steakhouse Restaurants               680,395            722,115             747,008
           Shoney's                                     N/A            363,946             599,081
</TABLE>

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

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

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


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

         The following table presents  selected  unaudited  quarterly  financial
         data for each full quarter during the years ended December 31, 2001 and
         2000:
<TABLE>
<CAPTION>

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

 <c>
        Revenue (1)                      $896,847         $823,190          $813,529          $ 838,012        $3,371,578
        Net income                        406,084          593,390           669,339            667,733         2,336,546
        Net income per
            limited partner
            unit                            0.012            0.017             0.019              0.019             0.067

             2000 Quarter               First            Second            Third             Fourth             Year
        ------------------------     -------------    -------------     -------------    ---------------    --------------

        Revenue (1)                      $857,005         $731,135          $855,989         $1,084,860        $3,528,989
        Net income                        657,317          568,458         1,336,592          1,024,804         3,587,171
        Net income per
            limited partner
            unit                         $  0.019         $  0.016          $  0.038           $  0.029          $  0.102
</TABLE>

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

12.      Subsequent Event:
         ----------------

         In January 2002, the Partnership  reinvested a portion of the net sales
         proceeds it  received  from the sale of the  property  in  Statesville,
         North  Carolina and the proceeds  received  relating to its  promissory
         notes,  in a  Denny's  property  located  in  Ontario,  Oregon,  at  an
         approximate cost of $654,400.

         In February 2002, a tenant, Brandon Fast Food Services, Inc., filed for
         bankruptcy.  The tenant has neither rejected nor affirmed the one lease
         it has with the Partnership.  While the tenant has neither rejected nor
         affirmed this lease,  there can be no assurance that the lease will not
         be rejected in the future.



<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 Financial Group,  Inc.
and their affiliates, all of which are affiliates of the General Partners.

         James M. Seneff, Jr., age 55. Since 1971, Mr. Seneff has been active in
the  acquisition,  development,  and  management  of real estate  projects  and,
directly or through an  affiliated  entity,  has served as a general  partner or
co-venturer in over 100 real estate  ventures.  These ventures have involved the
financing,  acquisition,   construction,  and  leasing  of  restaurants,  office
buildings,  apartment  complexes,  hotels, and other real estate. Mr. Seneff has
served as Director of CNL American  Properties  Fund,  Inc.  ("APF"),  a public,
unlisted real estate  investment  trust,  since 1994. Mr. Seneff served as Chief
Executive  Officer of APF from 1994 through  August 1999, has served as Chairman
of the Board from 1994 to 2000,  and has been  Co-CEO  since  2000.  Mr.  Seneff
served as Chairman of the Board and Chief Executive Officer of CNL Fund Advisors
(the  "Advisor")  until it merged with APF in September  1999, and in June 2000,
was  re-elected  to those  positions of the Advisor.  Mr.  Seneff is a principal
stockholder of CNL Holdings,  Inc.,  the parent company of CNL Financial  Group,
Inc.  (formerly CNL Group,  Inc.), a diversified  real estate  company,  and has
served as a Director,  Chairman of the Board and Chief Executive  Officer of CNL
Financial Group,  Inc. since its formation in 1980. CNL Financial Group, Inc. is
the parent company,  either directly or indirectly through subsidiaries,  of CNL
Real Estate Services,  Inc., CNL Capital Markets,  Inc., CNL Investment  Company
and CNL Securities  Corp. Mr. Seneff also serves as a Director,  Chairman of the
Board and Chief Executive Officer of CNL Hospitality Properties, Inc., a public,
unlisted real estate  investment  trust, as well as, CNL Hospitality  Corp., its
advisor. In addition,  he serves as a Director,  Chairman of the Board and Chief
Executive Officer of CNL Retirement  Properties,  Inc., a public,  unlisted real
estate  investment  trust and its advisor,  CNL Retirement Corp. Since 1992, Mr.
Seneff has also served as a Director,  Chairman of the Board and Chief Executive
Officer of Commercial  Net Lease Realty,  Inc., a public real estate  investment
trust that is listed on the New York Stock Exchange.  Mr. Seneff has also served
as a  Director,  Chairman  of the  Board  and  Chief  Executive  Officer  of CNL
Securities  Corp.  since  1979;  CNL  Investment  Company  since  1990;  and CNL
Institutional Advisors, Inc., a registered investment advisor for pension plans,
since 1990.  Mr. Seneff  formerly  served as a Director of First Union  National
Bank of Florida,  N.A., and currently serves as the Chairman of the Board of CNL
Bank. Mr. Seneff previously served on the Florida State Commission on Ethics and
is a former member and past Chairman of the State of Florida Investment Advisory
Council, which recommends to the Florida Board of Administration investments for
various Florida employee  retirement funds. The Florida Board of Administration,
Florida's principal  investment  advisory and money management agency,  oversees
the investment of more than $60 billion of retirement funds. Mr. Seneff received
his degree in Business Administration from Florida State University in 1968.

         Robert A.  Bourne,  age 54. Mr.  Bourne has  participated  as a general
partner  or  co-venturer  in over  100  real  estate  ventures  involved  in the
financing,  acquisition,   construction,  and  leasing  of  restaurants,  office
buildings,  apartment  complexes,  hotels,  and other real estate. Mr. Bourne is
Director of the Board of Directors of APF. Mr. Bourne served as President of APF
from 1994 through  February 1999. He also served as Treasurer from February 1999
through  August 1999 and from May 1994 through  December 1994. He also served in
various  executive  positions  with the  Advisor  prior to its  merger  with APF
including,  President from 1994 through  September  1997, and Director from 1994
through  August  1999.  Mr.  Bourne  serves as  President  and  Treasurer of CNL
Financial Group, Inc. (formerly CNL Group, Inc.); Director, Vice Chairman of the
Board and President of CNL Hospitality Properties, Inc., a public, unlisted real
estate  investment  trust; as well as, Director,  President and Treasurer of CNL
Hospitality  Corp.,  its advisor.  In addition,  Mr.  Bourne serves as Director,
President and Treasurer of CNL Retirement Properties,  Inc., a public,  unlisted
real estate investment trust; as well as, a Director, President and Treasurer of
its advisor,  CNL  Retirement  Corp. Mr. Bourne also serves as a Director of CNL
Bank. He has served as a Director  since 1992,  Vice Chairman of the Board since
February  1996,  Secretary  and Treasurer  from February 1996 through 1997,  and
President from July 1992 through  February 1996, of Commercial Net Lease Realty,
Inc.,  a public  real  estate  investment  trust  listed  on the New York  Stock
Exchange.  Mr.  Bourne also serves as  Director,  President  and  Treasurer  for
various  affiliates of CNL  Financial  Group,  Inc.  including,  CNL  Investment
Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a registered
investment advisor for pension plans. Mr. Bourne began his career as a certified
public accountant  employed by Coopers & Lybrand,  Certified Public Accountants,
from 1971 through  1978,  where he attained the position of Tax Manager in 1975.
Mr. Bourne  graduated from Florida State  University in 1970 where he received a
B.A. in Accounting, with honors.

         Curtis B.  McWilliams,  age 46. Mr.  McWilliams  has served as Co-Chief
Executive  Officer of APF since  December  2000 and  previously  served as Chief
Executive  Officer from  September  1999  through  December  2000.  Prior to the
acquisition  of the  Advisor,  Mr.  McWilliams  served as  President of APF from
February 1999 until  September  1999.  From  February 1998 to February  1999, he
served as Executive Vice President of APF. Mr.  McWilliams  joined CNL Financial
Group, Inc.  (formerly CNL Group, Inc.) in April 1997 and served as an Executive
Vice President until February 1999 and served as President from February 1999 to
September 1999. In addition,  Mr.  McWilliams served as President of the Advisor
and CNL Financial  Services,  Inc. from April 1997 until the acquisition of such
entities by APF in September  1999.  From September 1983 through March 1997, Mr.
McWilliams  was  employed by Merrill  Lynch & Co. The  majority of his career at
Merrill Lynch & Co. was in the Investment  Banking division where he served as a
Managing Director. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton University in 1977 and a Master of Business Administration degree with
a concentration in finance from the University of Chicago in 1983.

         Steven  D.  Shackelford,  age  38.  Mr.  Shackelford  was  promoted  to
Executive Vice President of APF in July 2000. He served as Senior Vice President
and Chief  Financial  Officer of APF from January 1997 until his promotion.  Mr.
Shackelford  also served as Secretary and Treasurer of APF since September 1999.
He also served as Chief Financial  Officer of the Advisor from September 1996 to
September  1999.  From  March 1995 to July 1996,  Mr.  Shackelford  was a senior
manager in the national office of Price  Waterhouse LLP where he was responsible
for advising  foreign  clients  seeking to raise capital and a public listing in
the United  States.  From  August  1992 to March  1995,  he was a manager in the
Paris,  France  office  of  Price  Waterhouse,  serving  several  multi-national
clients.  Mr. Shackelford was an audit staff and senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse. Mr. Shackelford received a Bachelor
of  Arts  degree  in  Accounting,   with  honors,   and  a  Master  of  Business
Administration  degree from Florida State  University and is a certified  public
accountant.


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.




<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of March 15,  2002,  no person was known to the  Registrant  to be a
beneficial owner of more than five percent of the Units.

         The following  table sets forth,  as of March 15, 2002,  the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>

                    Title of Class                           Name of Partner                 Percent of Class
                    --------------                           ---------------                 ----------------

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

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



<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, 2001,  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, 2001
----------------------------------     --------------------------------------      ------------------------------

 <c>
Reimbursement  to affiliates  for      Operating  expenses are reimbursed at       Accounting and administra-
operating expenses                     the  lower  of  cost  or  90%  of the       tive services:  $201,158
                                       prevailing rate at which comparable
                                       services could have been obtained in
                                       the     same     geographic     area.
                                       Affiliates of the General Partners
                                       from time to time incur certain
                                       operating expenses on behalf of the
                                       Partnership     for     which     the
                                       Partnership       reimburses      the
                                       affiliates without interest.

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


<PAGE>



                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
         and Recipient                         Method of Computation                  Ended December 31, 2001
---------------------------------      --------------------------------------      ------------------------------

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

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

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


<PAGE>



                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
         and Recipient                         Method of Computation                  Ended December 31, 2001
---------------------------------      --------------------------------------      ------------------------------

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

</TABLE>

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




<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 Certified Public Accountants

                  Balance Sheets at December 31, 2001 and 2000

                  Statements of Income for the years ended December 31, 2001,
                  2000, and 1999

                  Statements of Partners' Capital for the years ended December
                  31, 2001, 2000, and 1999

                  Statements of Cash Flows for the years ended December 31,
                  2001, 2000, and 1999

                  Notes to Financial Statements

         2.   Financial Statement Schedules

                  Schedule III - Real Estate and Accumulated Depreciation at
                  December 31, 2001

                  Notes to Schedule III - Real Estate and Accumulated
                  Depreciation at December 31, 2001

                  Schedule IV - Mortgage Loans on Real Estate at December 31,
                  2001

                  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.)


<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.)

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

(b)      The  Registrant  filed no reports on Form 8-K during the period October
         1, 2001 through December 31, 2001.




<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 26th day of
March, 2002.

                                         CNL INCOME FUND VIII, LTD.

                                         By:      CNL REALTY CORPORATION
                                                  General Partner

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


                                         By:      ROBERT A. BOURNE
                                                  General Partner

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


                                         By:      JAMES M. SENEFF, JR.
                                                  General Partner

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




<PAGE>



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

               Signature                                  Title                                  Date

 <c>


/s/ Robert A. Bourne                     President,   Treasurer   and   Director            March 26, 2002
------------------------------------
Robert A. Bourne                         (Principal   Financial  and  Accounting
                                         Officer)

/s/ James M. Seneff, Jr.                 Chief  Executive  Officer and  Director            March 26, 2002
------------------------------------
James M. Seneff, Jr.                     (Principal Executive Officer)
</TABLE>



<PAGE>

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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 2001


(a)      Transactions in real estate and accumulated  depreciation  during 2001,
         2000, and 1999, are summarized as follows:
<TABLE>
<CAPTION>

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

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

                 Balance, December 31, 1998                                 $ 17,454,788        $  1,685,510
                 Depreciation expense                                                 --             300,188
                                                                         ----------------   -------------------

                 Balance, December 31, 1999                                   17,454,788           1,985,698
                 Dispositions                                                 (2,130,827 )          (315,177 )
                 Acquisitions                                                  2,925,217                  --
                 Depreciation expense                                                 --             303,352
                                                                         ----------------   -------------------

                 Balance, December 31, 2000                                   18,249,178           1,973,873
                 Reclassified to operating lease(j)                              425,676                  --
                 Dispositions                                                   (257,225 )                --
                 Depreciation expense                                                 --             321,973
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                 $ 18,417,629        $  2,295,846
                                                                         ================   =================

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

                 Balance, December 31, 1998                                  $   889,127         $   116,948
                 Depreciation expense                                                 --              15,014
                                                                         ----------------   -----------------

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

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

                 Balance, December 31, 2001                                  $   889,127         $   161,990
                                                                         ================   =================


<PAGE>


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

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

                                December 31, 2001

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

                 Balance, December 31, 1999                                     $     --            $     --
                 Acquisition                                                   1,454,649                  --
                 Depreciation expense                                                 --              11,528
                                                                         ----------------   -----------------

                 Balance, December 31, 2000                                    1,454,649              11,528
                 Depreciation expense                                                 --              27,667
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                 $  1,454,649         $    39,195
                                                                         ================   =================

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

                 Balance, December 31, 1998                                 $  6,131,281        $  1,104,972
                 Depreciation expense                                                 --             152,137
                                                                         ----------------   -----------------

                 Balance, December 31, 1999                                    6,131,281           1,257,109
                 Depreciation expense                                                 --             152,137
                                                                         ----------------   -----------------

                 Balance, December 31, 2000                                    6,131,281           1,409,246
                 Depreciation expense                                                 --             152,137
                                                                         ----------------   -----------------

                 Balance, December 31, 2001                                 $  6,131,281        $  1,561,383
                                                                         ================   =================

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

                 Balance, December 31, 1998                                     $     --            $     --
                 Acquisition                                                   1,319,208                  --
                 Depreciation expense                                                 --               4,542
                                                                         ----------------   -----------------

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

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

                 Balance, December 31, 2001                                 $  1,319,208         $    62,290
                                                                         ================   =================


<PAGE>


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

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

                                December 31, 2001

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

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

                 Balance, December 31, 2001                                 $  2,112,011         $    36,696
                                                                         ================   =================

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

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

                 Balance, December 31, 2001                                 $  1,366,405         $    14,354
                                                                         ================   =================

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

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

                 Balance, December 31, 2001                                 $  2,188,872         $    23,304
                                                                         ================   =================
</TABLE>

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

(c)      As of December 31, 2001, 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
         $24,018,253  and  $15,549,570,  respectively.  All  of the  leases  are
         treated as operating leases for federal income tax purposes.

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

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


<PAGE>


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

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

                                December 31, 2001

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

(g)      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.

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

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

(k)      During the year ended December 31, 2001, the Partnership and affiliates
         of the  General  Partners,  as  tenant-in-common,  purchased  land  and
         building from CNL BB Corp., an affiliate of the General  Partners,  for
         an aggregate cost of $2,112,011.




<PAGE>


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

                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

                                December 31, 2001
<TABLE>
<CAPTION>

                                                                                                      Principal
                                                                                                        Amount
                                                                                                       of Loans
                                                                                                      Subject to
                                                                                        Carrying      Delinquent
                                              Final       Periodic         Face         Amount of     Principal or
                Interest     Maturity        Payment       Prior         Amount of     Mortgages      Description
                  Rate         Date           Terms        Liens         Mortgages        (1)          Interest
                ---------- ---------------  -----------  -----------   -------------- -------------  ---------------

 <c>
Ponderosa
Orlando, FL
First Mortgage   10.75%    October 2011        (2)        $  --        $ 1,388,568     $ 926,080          $    --
                                                         ===========   ============== =============  ===============
</TABLE>


(1)      The tax carrying value notes is $917,857.

(2)      Monthly payments of $12,633 were consisting of principal and interest
         at an annual rate of 10.75%. During 1999, the Partnership received a
         prepaid principal payment from the borrower that was applied to the
         unpaid principal balance, reflected in the carrying amount of mortgage.

(3)      The changes in the carrying amounts are summarized as follows:
<TABLE>
<CAPTION>

                                                     2001            2000            1999
                                                 -------------   -------------   --------------

 <c>
                Balance at beginning of
                     period                        $1,424,436      $1,473,571       $1,811,726

                Interest earned                       131,931         150,897          162,182

                Collection of principal and
                     interest                        (630,287 )      (200,032 )       (500,337 )
                                                 -------------   -------------   --------------

                Balance at end of period            $ 926,080      $1,424,436       $1,473,571
                                                 =============   =============   ==============
</TABLE>