FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended September 30, 2000
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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
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CNL Income Fund VIII, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-2963338
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801-3336
------------------------------------------ ----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _________
<PAGE>
CONTENTS
Page
Part I.
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
Part II.
Other Information 14-15
<PAGE>
CNL INCOME FUND VIII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
ASSETS
Land and buildings on operating leases, less
accumulated depreciation $ 15,880,986 $ 15,469,090
Net investment in direct financing leases 6,479,415 7,635,861
Investment in joint ventures 4,088,762 3,197,857
Mortgage notes receivable 1,437,214 1,473,571
Cash and cash equivalents 1,570,575 1,503,989
Restricted cash 423,440 --
Receivables, less allowance for doubtful accounts
of $459 and $5,764, respectively 89,776 112,454
Prepaid expenses 26,657 15,485
Accrued rental income, less allowance for doubtful
accounts of $4,501 in 1999 1,571,186 2,018,517
Other assets 52,671 52,671
------------------- -------------------
$ 31,620,682 $ 31,479,495
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 29,720 $ 114,170
Accrued and escrowed real estate taxes payable 28,436 9,157
Distributions payable 787,501 787,501
Due to related parties 151,210 121,327
Rents paid in advance -- 23,394
------------------- -------------------
Total liabilities 996,867 1,055,549
Minority interest 108,584 108,579
Partners' capital 30,515,231 30,315,367
------------------- -------------------
$ 31,620,682 $ 31,479,495
=================== ===================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND VIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------ ------------ ------------- -------------
Revenues:
Rental income from operating leases $ 481,549 $490,669 $1,470,044 $1,475,971
Adjustments to accrued rental income -- -- (123,370 ) --
Earned income from direct financing leases 216,819 234,358 663,305 706,845
Contingent rental income 6,153 -- 23,331 16,614
Interest and other income 79,421 56,972 206,839 168,381
------------ ------------ ------------- -------------
783,942 781,999 2,240,149 2,367,811
------------ ------------ ------------- -------------
Expenses:
General operating and administrative 54,720 30,006 146,847 102,515
Professional services -- 8,961 28,439 23,097
Real estate taxes 2,032 -- 7,708 --
State and other taxes -- -- 18,228 17,646
Depreciation 75,338 75,047 225,432 225,141
Transaction costs -- 65,171 67,801 186,261
------------ ------------ ------------- -------------
132,090 179,185 494,455 554,660
------------ ------------ ------------- -------------
Income Before Minority Interest in Income of
Consolidated Joint Venture, Equity in
Earnings of Unconsolidated Joint Ventures
and Gain on Sale of Land and Buildings 651,852 602,814 1,745,694 1,813,151
Minority Interest in Income of Consolidated
Joint Venture (3,350 ) (3,349 ) (9,971 ) (10,034 )
Equity in Earnings of Unconsolidated Joint
Ventures 75,397 67,121 213,951 196,999
Gain on Sale of Land and Buildings 612,693 -- 612,693 --
------------ ------------ ------------- -------------
Net Income $1,336,592 $ 666,586 $2,562,367 $2,000,116
============ ============ ============= =============
Allocation of Net Income:
General partners $ 10,391 $ 6,666 $ 22,649 $ 20,001
Limited partners 1,326,201 659,920 2,539,718 1,980,115
------------ ------------ ------------- -------------
$1,336,592 $ 666,586 $2,562,367 $2,000,116
============ ============ ============= =============
Net Income Per Limited Partner Unit $ 0.038 $ 0.019 $ 0.073 $ 0.057
============ ============ ============= =============
Weighted Average Number of Limited Partner
Units Outstanding 35,000,000 35,000,000 35,000,000 35,000,000
============ ============ ============= =============
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND VIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
2000 1999
------------------------- ----------------------
General partners:
Beginning balance $ 286,349 $ 258,248
Net income 22,649 28,101
------------------------- ----------------------
308,998 286,349
------------------------- ----------------------
Limited partners:
Beginning balance 30,029,018 30,397,059
Net income 2,539,718 2,781,963
Distributions ($0.068 and $0.090 per
limited partner unit, respectively) (2,362,503 ) (3,150,004 )
------------------------- ----------------------
30,206,233 30,029,018
------------------------- ----------------------
Total partners' capital $ 30,515,231 $ 30,315,367
========================= ======================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND VIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2000 1999
---------------- ----------------
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $2,411,275 $2,604,386
---------------- ----------------
Cash Flows from Investing Activities:
Additions to land and building on operating
leases (2,452,976 ) --
Proceeds from sale of land and buildings 3,822,716 --
Collections on mortgage notes receivable 36,036 321,012
Increase in restricted cash (417,928 ) --
Investment in joint ventures (960,068 ) --
---------------- ----------------
Net cash provided by investing activities 27,780 321,012
---------------- ----------------
Cash Flows from Financing Activities:
Distributions to limited partners (2,362,503 ) (2,712,503 )
Distributions to holder of minority interest (9,966 ) (10,043 )
---------------- ----------------
Net cash used in financing activities (2,372,469 ) (2,722,546 )
---------------- ----------------
Net Increase in Cash and Cash Equivalents 66,586 202,852
Cash and Cash Equivalents at Beginning of Period 1,503,989 1,809,258
---------------- ----------------
Cash and Cash Equivalents at End of Period $1,570,575 $2,012,110
================ ================
Supplemental Schedule of Non-Cash Financing
Activities:
Distributions declared and unpaid at end of
period $ 787,501 $ 787,501
================ ================
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL INCOME FUND VIII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. The financial statements reflect all
adjustments, consisting of normal recurring adjustments, which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods presented. Operating results for the quarter and nine
months ended September 30, 2000 may not be indicative of the results that
may be expected for the year ending December 31, 2000. Amounts as of
December 31, 1999, included in the financial statements, have been derived
from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with the
financial statements and notes thereto included in Form 10-K of CNL Income
Fund VIII, Ltd. (the "Partnership") for the year ended December 31, 1999.
The Partnership accounts for its approximate 88 percent interest in Woodway
Joint Venture using the consolidation method. Minority interest represents
the minority joint venture partner's proportionate share of the equity in
the Partnership's consolidated joint venture. All significant intercompany
accounts and transactions have been eliminated.
2. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
Land $ 9,326,090 $ 9,159,115
Buildings 8,450,848 8,295,673
------------------- -------------------
17,776,938 17,454,788
Less accumulated depreciation (1,895,952 ) (1,985,698 )
=================== ===================
$ 15,880,986 $ 15,469,090
=================== ===================
</TABLE>
<PAGE>
CNL INCOME FUND VIII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
2. 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 for financial reporting purposes.
These properties were originally acquired by the Partnership in 1990 and
1991, and had costs totaling approximately $2,797,000, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the properties for approximately $605,700 in excess of
their original purchase price.
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.
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 for financial
reporting purposes. This property was originally acquired by the
Partnership in 1990, and had a cost of approximately $352,400, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the property for approximately $67,600 in excess of its
original purchase price.
3. Net Investment in Direct Financing Leases:
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 2).
4. Investment in Joint Ventures:
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 Partnership shares control with an affiliate. As of
September 30, 2000, the Partnership owned a 66% interest in this property.
<PAGE>
CNL INCOME FUND VIII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
4. Investment in Joint Ventures - Continued:
The following presents the combined, condensed financial information for
the joint ventures at:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------- ------------------
<S> <C>
Land and buildings on operating leases,
less accumulated depreciation $ 8,772,898 $ 7,467,574
Net investment in direct financing lease 1,285,595 1,300,856
Cash 39,682 74,120
Receivables 4,085 39,740
Prepaid expense 1,003 1,264
Accrued rental income 243,933 194,666
Liabilities 14,171 47,270
Partners' capital 10,333,025 9,030,950
Revenue 809,194 1,039,787
Net income 645,728 855,805
</TABLE>
The Partnership recognized income totaling $213,951 and $196,999 during the
nine months ended September 30, 2000 and 1999, respectively from these
joint ventures, of which $75,397 and $67,121 was earned during the quarters
ended September 30, 2000 and 1999, respectively.
5. Restricted Cash:
As of September 30, 2000, the net sales proceeds of $420,005 from the sale
of the property in Jacksonville, Florida, plus accrued interest of $3,435,
were being held in an interest-bearing escrow account pending the release
of funds by the escrow agent to reinvest in an additional property in the
future.
6. Related Party Transactions:
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 accordance
<PAGE>
CNL INCOME FUND VIII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
6. Related Party Transactions-Continued:
with the Statement of Policy of Real Estate Programs for the North American
Securities Administrators Association, Inc., all income, expenses, profits
and losses generated by or associated with the property were treated as
belonging to the Partnership. For the nine months ended September 30, 2000,
other income of the Partnership included $6,679 of such amounts. In
connection therewith, the Partnership entered into a long term, triple-net
lease with terms substantially the same as its other leases.
7. Termination of Merger:
On March 1, 2000, the general partners and CNL American Properties Fund,
Inc. ("APF") mutually agreed to terminate the Agreement and Plan of Merger
entered into in March 1999. The general partners are continuing to evaluate
strategic alternatives for the Partnership, including alternatives to
provide liquidity to the limited partners.
8. Subsequent Event:
In October 2000, the Partnership acquired an interest in a Pizza Hut
property in Hialeah, Florida. In connection therewith, the Partnership
entered into a long term, triple-net lease with terms substantially the
same as its other leases.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund VIII, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 18, 1989 to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurants, as well as land upon which restaurants were to be
constructed (the "Properties"), which are leased primarily to operators of
national and regional fast-food and family-style restaurant chains. The leases
are, in general, triple-net leases, with the lessees responsible for all repairs
and maintenance, property taxes, insurance and utilities. As of September 30,
2000, the Partnership owned 35 Properties, which included interests in ten
Properties owned by joint ventures in which the Partnership is a co-venturer and
one Property owned with an affiliate as tenants-in-common.
Capital Resources
During the nine months ended September 30, 2000 and 1999, the
Partnership generated cash from operations (which includes cash received from
tenants, distributions from joint ventures and interest and other income
received, less cash paid for expenses) of $2,411,275 and $2,604,386,
respectively. The decrease in cash from operations for the nine months ended
September 30, 2000, was primarily a result of changes in revenues and expenses
as described below in "Results of Operations" and changes in the Partnership's
working capital.
Other sources and uses of capital included the following during the nine
months ended September 30, 2000.
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 for financial
reporting purposes. In July 2000, the Partnership reinvested the net sales
proceeds it received from the sale of the Properties in Sun City and Bayonet
Point, Florida in a Bennigan's Property in Deerfield, Illinois. The Partnership
acquired the Property from an affiliate of the general partners. These
properties were originally acquired by the Partnership in 1990 and 1991, and had
costs totaling approximately $2,797,000, excluding acquisition fees and
miscellaneous acquisition expenses; therefore, the Partnership sold the
Properties for approximately $605,700 in excess of their original purchase
price. 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 August 2000, the Partnership used a portion of the net sales proceeds
from sale of the properties in Florida, described above, 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 affiliate of the general
partners. The Partnership accounts for its investment using the equity method
since the Partnership shares control with an affiliate. As of September 30,
2000, 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 for
financial reporting purposes. This Property was originally acquired by the
Partnership in 1990, and had a cost of approximately $352,400, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the Property for approximately $67,600 in excess of its
original purchase price.
In October 2000, the Partnership acquired an interest in a Pizza Hut
Property in Hialeah, Florida. In connection therewith, the Partnership entered
into a long term, triple-net lease with terms substantially the same as its
other leases.
Currently, rental income from the Partnership's Properties and any net
sales proceeds from the sale of Properties, pending the reinvestment in
additional Properties, are 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 30-day maturity date, pending the Partnership's use of such funds to pay
Partnership expenses or to make distributions to the partners. At September 30,
2000, the Partnership had $1,570,575 invested in such short-term investments, as
compared to $1,503,989 at December 31, 1999. The funds remaining at September
30, 2000, after payment of distributions and other liabilities, will be used to
meet the Partnership's working capital and other needs.
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.
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.
Total liabilities of the Partnership, including distributions payable,
decreased to $996,867 at September 30, 2000, from $1,055,549 at December 31,
1999, primarily as a result of a decrease in accounts payable at September 30,
2000, as compared to December 31, 1999. The decrease in liabilities at September
30, 2000 was partially offset by an increase in amounts due to related parties
at September 30, 2000, as compared to December 31, 1999. The general partners
believe that the Partnership has sufficient cash on hand to meet its current
working capital needs.
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 limited partners of $2,362,503 for each of the nine months
ended September 30, 2000 and 1999 ($787,501 for each of the quarters ended
September 30, 2000 and 1999). This represents distributions for each applicable
nine months of $0.068 per unit ($0.023 per unit for each applicable quarter). No
distributions were made to the general partners for the quarters and nine months
ended September 30, 2000 and 1999. No amounts distributed to the limited
partners for the nine months ended September 30, 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.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During the nine months ended September 30, 1999, the Partnership and its
consolidated joint venture, Woodway Joint Venture, owned and leased 28 wholly
owned Properties and during the nine months ended September 30, 2000, the
Partnership and its consolidated joint venture, Woodway Joint Venture, owned and
leased 29 wholly owned Properties (which included four Properties which were
sold in 2000) to operators of fast-food and family-style restaurant chains. In
connection therewith, during the nine months ended September 30, 2000 and 1999,
the Partnership and Woodway Joint Venture earned $2,009,979 and $2,182,816,
respectively, in rental income from operating leases (net of adjustments to
accrued rental income) and earned income from direct financing leases, $698,368
and $725,027 of which was earned during the quarters ended September 30, 2000
and 1999, respectively. The decrease in rental and earned income during the nine
months ended September 30, 2000, as compared to the nine months ended September
30, 1999, was primarily due to the fact that during the nine months ended
September 30, 2000, the tenant of the Property in Statesville, North Carolina
defaulted under the terms of its lease, discontinued the operations of the
restaurant and vacated the Property. As a result, the Partnership reversed
approximately $123,400 of accrued rental income during the nine months ended
September 30, 2000. 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
general partners will continue to pursue collection of rental amounts relating
to this Property and will recognize such amounts as income if collected. The
Partnership will not recognize rental amounts relating to this Property until a
new tenant is located or until the Partnership sells the Property and reinvests
in an additional Property. The general partners are seeking a new tenant or
purchaser for this Property.
Rental and earned income also decreased during the quarter and nine
months ended September 30, 2000 due to the fact that as discussed in "Capital
Resources," the Partnership sold four properties resulting in a decrease in
rental and earned income of approximately $77,200 and $79,100 during the quarter
and nine months ended September 30, 2000, respectively. The decrease in rental
and earned income was partially offset by an increase in rental and earned
income during the quarter and nine months ended September 30, 2000, as a result
of reinvesting a portion of the net sales proceeds in a Property in Deerfield,
Illinois, in July 2000, as described in "Capital Resources."
In addition, during the nine months ended September 30, 2000 and 1999,
the Partnership earned $206,839 and $168,381, respectively, in interest and
other income, $79,421 and $56,972 of which were earned during the quarters ended
September 30, 2000 and 1999, respectively. The increase in interest and other
income for the quarter and nine months ended September 30, 2000, as compared to
the quarter and nine months ended September 30, 1999, was due to interest earned
on the net sales proceeds received from the sale of Properties described above,
pending reinvestment in additional Properties.
During the nine months ended September 30, 2000 and 1999, the
Partnership owned and leased nine and eight Properties, respectively, indirectly
through other joint venture arrangements. In addition, during the nine months
ended September 30, 2000, the Partnership owned one Property with an affiliate,
as tenants-in-common. In connection therewith, during the nine months ended
September 30, 2000 and 1999, the Partnership earned $213,951 and $196,999,
respectively, attributable to net income earned by these unconsolidated joint
ventures, $75,397 and $67,121 of which was earned during the quarters ended
September 30, 2000 and 1999, respectively. The increase in net income earned by
unconsolidated joint ventures for the quarter and nine months ended September
30, 2000, was primarily due to the fact that the Partnership invested in Bossier
City Joint Venture in November 1999 and acquired an interest in a Baker's Square
Property with an affiliate, as tenants-in-common, in August 2000, as described
above in "Capital Resources."
Operating expenses, including depreciation and amortization expense,
were $494,455 and $554,660 for the nine months ended September 30, 2000 and
1999, respectively, of which $132,090 and $179,185 were incurred during the
quarters ended September 30, 2000 and 1999, respectively. The decrease in
operating expenses for the quarter and nine months ended September 30, 2000, was
primarily attributable to the fact that the Partnership incurred less
transaction costs relating 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"), due to the termination of the
proposed merger, as described below in "Termination of Merger". The decrease in
operating expenses for the nine months ended September 30, 2000 was partially
offset by an increase in (i) administrative expenses for servicing the
Partnership and its Properties, (ii) real estate tax expense due to the default
of the tenant of the Property in Statesville, North Carolina, as described
above, and (iii) professional services as a result of the 1999 appraisal updates
obtained to prepare an annual statement of unit valuation to qualified plans in
accordance with the Partnership agreement, during the nine months ended
September 30, 2000. The Partnership incurred the cost of the 1998 appraisal
updates during the year ended December 31, 1998.
As a result of the sale of the Properties as described above in "Capital
Resources," the Partnership recorded a total gain of $612,693 for financial
reporting purposes during the quarter and nine months ended September 30, 2000.
No properties were sold during the quarter and nine months ended September 30,
1999.
Termination of Merger
On March 1, 2000, the general partners and APF mutually agreed to
terminate the Agreement and Plan of Merger entered into in March 1999. The
general partners are continuing to evaluate strategic alternatives for the
Partnership, including alternatives to provide liquidity to the limited
partners.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No material changes in the Partnership's market risk occurred from
December 31, 1999 through September 30, 2000. Information regarding the
Partnership's market risk at December 31, 1999 is included in its Annual Report
on Form 10-K for the year ended December 31, 1999.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund VIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-31482 on Form S-11
and incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund VIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-31482 on Form S-11
and incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited
Partnership of CNL Income Fund VIII, Ltd. (Included
as Exhibit 4.2 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund VIII,
Ltd. and CNL Investment Company (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996, and
incorporated herein by reference.)
10.2 Assignment of Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc.
(Included as Exhibit 10.2 to Form 10-K filed with
the Securities and Exchange Commission on March 30,
1995, and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with
the Securities and Exchange Commission on April 1,
1996, and incorporated herein by reference.)
27 Financial Data Schedule (Filed herewith)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 10th day of November, 2000.
CNL INCOME FUND VIII, LTD.
By: CNL REALTY CORPORATION
General Partner
By:/s/ James M. Seneff, Jr.
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JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Robert A. Bourne
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ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
