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                       June 30, 1999
                               -------------------------------------------------

                                       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
                                     0-21560
                      ------------------------------------


                            CNL Income Fund XI, Ltd.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Florida                                         59-3078854
----------------------------------              -------------------------------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                          Identification No.)


400 East South Street
Orlando, Florida                                              32801
------------------------------------------      --------------------------------
 (Address of principal executive offices)                   (Zip Code)


Registrant's telephone number
(including area code)                                     (407) 650-1000
                                                --------------------------------


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                5-7

     Item 2.    Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                   8-13

     Item 3.    Quantitative and Qualitative Disclosures About
                    Market Risk                                             13

Part II.

     Other Information                                                   14-15



<PAGE>



                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>



                                                                           June 30,          December 31,
                                                                             1999                1998
                                                                       ---------------       ------------
<S> <C>
                               ASSETS

   Land and buildings on operating leases, less
       accumulated depreciation of $2,803,077 and
       $2,589,785, respectively                                           $ 21,808,299        $ 21,683,785
   Net investment in direct financing leases                                 7,428,455           6,786,286
   Investment in joint ventures                                              2,772,561           2,521,613
   Cash and cash equivalents                                                 1,804,990           1,559,240
   Restricted cash                                                                  --           1,640,936
   Receivables, less allowance for doubtful accounts
       of $562 and $5,820, respectively                                         82,368             132,311
   Prepaid expenses                                                             13,864              12,335
   Accrued rental income                                                     1,711,758           1,645,062
   Other assets                                                                122,024             122,024
                                                                    -------------------   -----------------

                                                                          $ 35,744,319        $ 36,103,592
                                                                    ===================   =================

                  LIABILITIES AND PARTNERS' CAPITAL

   Accounts payable                                                         $   89,097          $   14,461
   Accrued and escrowed real estate taxes payable                               15,677              15,138
   Distributions payable                                                       875,006             995,006
   Due to related party                                                         24,887              25,446
   Rents paid in advance and deposits                                           51,158              92,069
                                                                    -------------------   -----------------
       Total liabilities                                                     1,055,825           1,142,120

   Commitments and Contingencies (Note 4)

   Minority interest                                                           504,504             503,860

   Partners' capital                                                        34,183,990          34,457,612
                                                                    -------------------   -----------------

                                                                          $ 35,744,319        $ 36,103,592
                                                                    ===================   =================



            See accompanying notes to condensed financial statements.


<PAGE>


                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME

                                                                  Quarter Ended                   Six Months Ended
                                                                    June 30,                          June 30,
                                                              1999            1998              1999             1998
                                                           ------------    ------------     -------------     ------------
Revenues:
    Rental income from operating leases                      $ 646,271       $ 675,491       $ 1,289,771      $
                                                                                                               1,350,982
    Earned income from direct financing leases                 239,569         206,345           475,098         413,405
    Contingent rental income                                    34,651          42,996            54,893          62,764
    Interest and other income                                   21,121          85,643            42,055          98,048
                                                           ------------    ------------     -------------     ------------
                                                               941,612       1,010,475         1,861,817       1,925,199
                                                           ------------    ------------     -------------     ------------

Expenses:
    General operating and administrative                        29,589          44,999            71,949          74,457
    Professional services                                       11,634           9,241            22,472          14,193
    Management fees to related party                             9,724           9,710            19,200          19,052
    State and other taxes                                          157           1,036            28,346          24,370
    Depreciation and amortization                              106,646         114,665           213,292         229,330
    Transaction costs                                           85,130              --           120,097              --
                                                           ------------    ------------     -------------     ------------
                                                               242,880         179,651           475,356         361,402
                                                           ------------    ------------     -------------     ------------

Income Before Minority Interests in Income of
    Consolidated Joint Ventures and Equity in
    Earnings of Unconsolidated Joint Ventures                  698,732         830,824         1,386,461       1,563,797

Minority Interests in Income of Consolidated
    Joint Ventures                                             (16,797 )       (16,906 )         (33,206 )       (33,924  )

Equity in Earnings of Unconsolidated Joint
    Ventures                                                    65,134          57,604           123,135          97,605
                                                           ------------    ------------     -------------     ------------

Net Income                                                   $ 747,069       $ 871,522       $ 1,476,390      $
                                                                                                               1,627,478
                                                           ============    ============     =============     ============

Allocation of Net Income:
    General partners                                          $  7,471        $  8,715         $  14,764       $  16,275
    Limited partners                                           739,598         862,807         1,461,626       1,611,203
                                                           ------------    ------------     -------------     ------------

                                                             $ 747,069       $ 871,522       $ 1,476,390      $
                                                                                                               1,627,478
                                                           ============    ============     =============     ============

Net Income Per Limited Partner Unit                           $   0.18        $   0.22          $   0.37        $   0.40
                                                           ============    ============     =============     ============

Weighted Average Number of Limited Partner
    Units Outstanding                                        4,000,000       4,000,000         4,000,000       4,000,000
                                                           ============    ============     =============     ============



            See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL


                                                          Six Months Ended              Year Ended
                                                              June 30,                 December 31,
                                                                1999                       1998
                                                         ------------------         ------------------

General partners:
    Beginning balance                                           $  211,047                 $  176,232
    Net income                                                      14,764                     34,815
                                                         ------------------         ------------------
                                                                   225,811                    211,047
                                                         ------------------         ------------------

Limited partners:
    Beginning balance                                           34,246,565                 34,132,000
    Net income                                                   1,461,626                  3,774,589
    Distributions ($0.44 and $0.92 per
       limited partner unit, respectively)                      (1,750,012 )               (3,660,024 )
                                                         ------------------         ------------------
                                                                33,958,179                 34,246,565
                                                         ------------------         ------------------

Total partners' capital                                       $ 34,183,990               $ 34,457,612
                                                         ==================         ==================





            See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS


                                                                              Six Months Ended
                                                                                  June 30,
                                                                          1999              1998
                                                                     ---------------   -------------

Increase (Decrease) in Cash and Cash Equivalents

    Net Cash Provided by Operating Activities                            $1,797,730      $2,038,262
                                                                     ---------------   -------------

    Cash Flows from Investing Activities:
       Additions to land and buildings on
          operating        leases                                          (337,806 )            --
       Investment in direct financing leases                               (694,610 )            --
       Investment in joint venture                                         (247,286 )            --
       Decrease in restricted cash                                        1,630,296              --
                                                                     ---------------   -------------
          Net cash provided by investing activities                         350,594              --
                                                                     ---------------   -------------

    Cash Flows from Financing Activities:
       Distributions to limited partners                                 (1,870,012 )    (1,790,012 )
       Distributions to holders of minority interests                       (32,562 )       (34,830 )
                                                                     ---------------   -------------
              Net cash used in financing activities                      (1,902,574 )    (1,824,842 )
                                                                     ---------------   -------------

Net Increase in Cash and Cash Equivalents                                   245,750         213,420

Cash and Cash Equivalents at Beginning of Period                          1,559,240       1,272,386
                                                                     ---------------   -------------

Cash and Cash Equivalents at End of Period                               $1,804,990      $1,485,806
                                                                     ===============   =============

Supplemental Schedule of Non-Cash Financing
    Activities:

       Distributions declared and unpaid at end of
          period                                                          $ 875,006       $ 875,006
                                                                     ===============   =============

</TABLE>



            See accompanying notes to condensed financial statements.

<PAGE>



                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 1999 and 1998


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 six months ended June 30, 1999 may not be indicative of
         the results that may be expected for the year ending December 31, 1999.
         Amounts as of December 31, 1998, 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 XI, Ltd. (the  "Partnership")  for the year ended  December
         31, 1998.

         The  Partnership  accounts for its 85 percent  interest in Denver Joint
         Venture and its 77.33% interest in CNL/Airport  Joint Venture using the
         consolidation  method.  Minority interests represent the minority joint
         venture   partners'   proportionate   share  of  the   equity   in  the
         Partnership's consolidated joint ventures. All significant intercompany
         accounts and transactions have been eliminated.

2. Land and Buildings on Operating Leases:

         In January 1999, the Partnership  reinvested a portion of the net sales
         proceeds it received from the 1998 sale of the property in Nashua,  New
         Hampshire in a Burger King property located in Yelm, Washington,  at an
         approximate  cost  of  $1,032,400.  In  accordance  with  Statement  of
         Financial  Accounting  Standards No. 13,  "Accounting  for Leases," the
         land portion of this  property  was  classified  as an operating  lease
         while the building portion was classified as a capital lease.

3.   Investment in Joint Ventures:

         In February 1999, the Partnership reinvested a portion of the remaining
         net sales  proceeds it received  from the 1998 sale of the  property in
         Nashua, New Hampshire in a joint venture arrangement,  Portsmouth Joint
         Venture,  with CNL Income Fund XVIII, Ltd., an affiliate of the general
         partners,  to purchase and hold one restaurant property. As of June 30,
         1999, the  Partnership had  contributed  approximately  $247,000 to the
         joint  venture and owned a 42.8%  interest in the profits and losses of
         this joint venture. The Partnership accounts for its investment in this
         joint  venture  under the equity  method since the  Partnership  shares
         control with this affiliate.


<PAGE>


                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 1999 and 1998


3.   Investment in Joint Ventures - Continued:

         The following presents the combined,  condensed  financial  information
         for the joint ventures and the property held as tenants-in-common  with
         an affiliate at:

                                                   June 30,        December 31,
                                                     1999              1998
                                                -------------     -------------

             Land and buildings on operating
                 leases, less accumulated
                 depreciation                    $ 3,639,814       $ 3,427,681
             Net investment in direct
                 financing lease                     322,625                --
             Cash                                      2,009             1,109
             Receivables                              32,541                --
             Prepaid expenses                          3,246             8,290
             Accrued rental income                   149,398           130,585
             Partners' capital                     4,149,633         3,567,665
             Revenues                                232,703           399,305
             Net income                              181,750           300,036

         The Partnership  recognized  income totalling  $123,135 and $97,605 for
         the six months ended June 30, 1999 and 1998,  respectively,  from these
         joint  ventures,  $65,134  and  $57,604 of which was earned  during the
         quarters ended June 30, 1999 and 1998, respectively.

4.   Commitments and Contingencies:

         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").  As  consideration  for the Merger,  APF has agreed to
         issue 2,197,098  shares of its common stock,  par value $0.01 per share
         (the "APF  Shares")  which,  for the  purposes  of  valuing  the merger
         consideration,  have been  valued by APF at $20.00 per APF  Share,  the
         price  paid by APF  investors  (after an  adjustment  for a one for two
         reverse stock split  effective June 3, 1999) in three  previous  public
         offerings,  the most recent of which was completed in December 1998. In
         order to assist the general  partners in evaluating the proposed merger
         consideration,  the general partners retained Valuation  Associates,  a
         nationally  recognized  real estate  appraisal  firm,  to appraise  the
         Partnership's   restaurant  property  portfolio.   Based  on  Valuation
         Associates' appraisal, the Partnership's property portfolio and other


<PAGE>


                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 1999 and 1998


4.       Commitments and Contingencies - Continued:

         assets were valued on a going  concern basis  (meaning the  Partnership
         continues  unchanged) at  $43,333,961  as of December 31, 1998. The APF
         Shares  are  expected  to be listed  for  trading on the New York Stock
         Exchange   concurrently  with  the  consummation  of  the  Merger,  and
         therefore, would be freely tradable at the option of the former limited
         partners.  At a special  meeting of the partners that is expected to be
         held in the fourth quarter of 1999,  limited partners holding in excess
         of 50% of the Partnership's  outstanding limited partnership  interests
         must approve the Merger prior to  consummation of the  transaction.  If
         the limited  partners at the special  meeting  approve the Merger,  APF
         will own the  properties  and  other  assets  of the  Partnership.  The
         general  partners intend to recommend that the limited  partners of the
         Partnership    approve   the   Merger.   In   connection   with   their
         recommendation,  the general  partners  will solicit the consent of the
         limited partners at the special meeting. If the limited partners reject
         the Merger,  the  Partnership  will bear the portion of the transaction
         costs based upon the percentage of "For" votes and the general partners
         will  bear  the  portion  of such  transaction  costs  based  upon  the
         percentage of "Against" votes and abstentions.

         On May 11,  1999,  four  limited  partners in several of the CNL Income
         Funds  served  a  lawsuit  against  the  general  partners  and  APF in
         connection  with the proposed  Merger.  On July 8, 1999 the  plaintiffs
         amended  the  complaint  to add three  additional  limited  partners as
         plaintiffs.  Additionally,  on June 22,  1999,  a  limited  partner  in
         certain of the CNL Income  Funds  served a lawsuit  against the general
         partners, APF and CNL Fund Advisors, Inc. and certain of its affiliates
         in connection with the proposed  Merger.  The general  partners and APF
         believe  that the  lawsuits  are  without  merit  and  intend to defend
         vigorously against the claims. See Part II - Item 1. Legal Proceedings.



<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         CNL Income  Fund XI,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was  organized on August 20, 1991 to acquire for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing  restaurants,  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 leases
are, in general, triple-net leases, with the lessees responsible for all repairs
and maintenance,  property taxes, insurance, and utilities. As of June 30, 1999,
the Partnership owned 40 Properties, which included interests in five Properties
owned by joint  ventures  in which  the  Partnership  is a  co-venturer  and one
Property owned with an affiliate of the general partners as tenants-in-common.

Capital Resources
-----------------

         The  Partnership's  primary  source of capital for the six months ended
June 30, 1999 and 1998 was cash from  operations  (which  includes cash received
from tenants,  distributions from joint ventures,  and interest and other income
received, less cash paid for expenses).  Cash from operations was $1,797,730 and
$2,038,262  for the six months ended June 30, 1999 and 1998,  respectively.  The
decrease  in cash from  operations  for the six months  ended  June 30,  1999 is
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
quarter ended June 30, 1999.

         In January 1999, the Partnership  reinvested a portion of the net sales
proceeds it received from the 1998 sale of the Property in Nashua, New Hampshire
in a Burger King Property located in Yelm, Washington, at an approximate cost of
$1,032,400.  In addition, in February 1999, the Partnership reinvested a portion
of the remaining net sales proceeds in a joint venture  arrangement,  Portsmouth
Joint  Venture,  with CNL Income Fund XVIII,  Ltd.,  an affiliate of the general
partners,  to  purchase  and  hold  one  restaurant  Property.  The  Partnership
contributed  approximately  $247,300 and had a 42.8% interest in the profits and
losses of the joint  venture as of June 30,  1999.  The  Partnership  intends to
invest the remaining net sales proceeds in an additional Property.

         Currently,  rental  income from the  Partnership's  Properties  and net
sales  proceeds  from  the  sale  of a  Property,  pending  reinvestment  in  an
additional Property,  are invested in money market accounts or other short-term,
highly liquid  investments  such as demand  deposit  accounts,  certificates  of
deposit,  and money  market  accounts  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 June 30, 1999,  the  Partnership  had
$1,804,990 invested in such short-term investments, as compared to $1,559,240 at
December 31,  1998.  The  increase in cash and cash  equivalents  during the six
months  ended June 30,  1999,  is  primarily  attributable  to the  release of a
portion of the funds held in escrow at December 31, 1998 relating to the sale of
the Property in Nashua,  New  Hampshire  during  1998,  net of  reinvestment  in
Properties,  as described  above.  The funds  remaining at June 30, 1999,  after
payment of  distributions  and other  liabilities,  will be used to invest in an
additional  Property  and 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.

         The Partnership  generally  distributes cash from operations  remaining
after the payment of 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,  and for the six  months  ended  June 30,  1998,
accumulated excess operating reserves, the Partnership declared distributions to
limited  partners of $1,750,012 and $1,790,012 for the six months ended June 30,
1999 and 1998,  respectively  ($875,006 for each of the quarters  ended June 30,
1999 and 1998).  This represents  distributions  of $0.44 and $0.45 per unit for
the six months  ended June 30, 1999 and 1998,  respectively  ($0.22 per unit for
each of the quarters ended June 30, 1999 and 1998). No  distributions  were made
to the general  partners for the quarters and six months ended June 30, 1999 and
1998. No amounts  distributed  to the limited  partners for the six months ended
June  30,  1999  and  1998  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.

         Total liabilities of the Partnership,  including distributions payable,
decreased to $1,055,825  at June 30, 1999 from  $1,142,120 at December 31, 1998,
primarily as a result of the payment in January  1999 of a special  distribution
accrued at December  31,  1998,  of  $120,000,  representing  cumulative  excess
operating  reserves.  The general  partners  believe  that the  Partnership  has
sufficient cash on hand to meet its current working capital needs.

Long-Term Liquidity:
--------------------

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

Results of Operations
---------------------

         During the six months ended June 30, 1999 and 1998, the Partnership and
its  consolidated  joint ventures,  Denver Joint Venture and  CNL/Airport  Joint
Venture,  owned and  leased 36  wholly  owned  Properties  (which  included  one
Property in Nashua, New Hampshire,  which was sold in October 1998) to operators
of fast-food and  family-style  restaurant  chains.  During the six months ended
June 30, 1999 and 1998, the  Partnership,  Denver Joint Venture and  CNL/Airport
Joint Venture earned $1,764,869 and $1,764,387,  respectively,  in rental income
from operating leases and earned income from direct financing  leases,  $885,840
and  $881,836 of which was earned  during the  quarters  ended June 30, 1999 and
1998, respectively.  In addition,  during the six months ended June 30, 1999 and
1998, the Partnership  earned $54,893 and $62,764,  respectively,  in contingent
rental income, $34,651 and $42,996 of which was earned during the quarters ended
June 30, 1999 and 1998, respectively.

         In addition, during the six months ended June 30, 1998, the Partnership
owned  and  leased  two  Properties   indirectly  through  other  joint  venture
arrangements   and  owned  and  leased  one   Property   with  an  affiliate  as
tenants-in-common.  During the six months  ended June 30,  1999 the  Partnership
owned and  leased  three  Properties  indirectly  through  other  joint  venture
arrangements   and  owned  and  leased  one   Property   with  an  affiliate  as
tenants-in-common. In connection therewith, during the six months ended June 30,
1999 and 1998,  the  Partnership  earned  $123,135  and  $97,605,  respectively,
$65,134 and $57,604 of which was earned during the quarters  ended June 30, 1999
and 1998,  respectively.  Net income  earned by  unconsolidated  joint  ventures
increased  during the six months  ended June 30,  1999,  as  compared to the six
months ended June 30, 1998, as a result of the fact that in February  1999,  the
Partnership reinvested a portion of the net sales proceeds from the 1998 sale of
the Property in Nashua,  New Hampshire,  in Portsmouth  Joint Venture,  with CNL
Income Fund XVIII, Ltd., an affiliate of the general partners. In addition,  net
income  earned by joint  ventures  during the six months ended June 30, 1998 was
less than that earned  during the six months ended June 30, 1999,  partially due
to the fact that Ashland  Joint Venture  adjusted  estimated  contingent  rental
amounts  accrued at December  31, 1997 to actual  amounts  during the six months
ended June 30, 1998.

         During the six months  ended June 30,  1999 and 1998,  the  Partnership
earned $42,055 and $98,048,  respectively, in interest and other income, $21,121
and  $85,643 of which was earned  during the  quarters  ended June 30,  1999 and
1998, respectively.  Interest and other income earned during the quarter and six
months ended June 30, 1998, was more than that earned during the quarter and six
months ended June 30, 1999,  primarily  because the  Partnership  collected  and
recognized  $60,000 in other income in May 1998, as a result of the execution of
an amendment to a purchase and sale  agreement  with a third party to extend the
closing  date for the sale of the Burger King  Property  located in Nashua,  New
Hampshire.  In accordance  with the terms of the amendment,  the Partnership was
deemed to have earned the $60,000 upon  execution of the amendment to extend the
closing date for the sale of this  Property.  This  Property was sold in October
1998.

         Operating expenses,  including  depreciation and amortization  expense,
were  $475,356  and  $361,402  for the six months  ended June 30, 1999 and 1998,
respectively,  $242,880 and $179,651 of which were incurred  during the quarters
ended June 30, 1999 and 1998,  respectively.  The increase in operating expenses
during the quarter and six months ended June 30, 1999,  as compared to 1998,  is
primarily  a  result  of  the  Partnership   incurring   $85,130  and  $120,097,
respectively,  in transaction  costs relating to the general partners  retaining
financial and legal  advisors to assist them in evaluating and  negotiating  the
proposed Merger with APF, as described below. If the limited partners reject the
Merger,  the Partnership  will bear the portion of the  transaction  costs based
upon the  percentage  of "For"  votes  and the  general  partners  will bear the
portion of such  transaction  costs based upon the percentage of "Against" votes
and abstentions.

Proposed 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 (the "Merger").  As consideration  for the Merger,  APF
has agreed to issue  2,197,098  shares of its common stock,  par value $0.01 per
share  (the  "APF  Shares")  which,  for the  purposes  of  valuing  the  merger
consideration,  have been valued by APF at $20.00 per APF Share,  the price paid
by APF  investors  (after an  adjustment  for a one for two reverse  stock split
effective June 3, 1999) in three previous public  offerings,  the most recent of
which was completed in December 1998. In order to assist the general partners in
evaluating the proposed  merger  consideration,  the general  partners  retained
Valuation  Associates,  a nationally  recognized real estate  appraisal firm, to
appraise the Partnership's  restaurant  property  portfolio.  Based on Valuation
Associates'  appraisal,  the Partnership's  property  portfolio and other assets
were  valued  on a  going  concern  basis  (meaning  the  Partnership  continues
unchanged) at  $43,333,961  as of December 31, 1998. The APF Shares are expected
to be listed for trading on the New York Stock  Exchange  concurrently  with the
consummation  of the  Merger,  and  therefore,  would be freely  tradable at the
option of the former limited partners. At a special meeting of the partners that
is expected to be held in the fourth quarter of 1999,  limited  partners holding
in excess of 50% of the Partnership's  outstanding limited partnership interests
must approve the Merger prior to consummation of the transaction. If the limited
partners at the special meeting approve the Merger,  APF will own the Properties
and other assets of the  Partnership.  The general  partners intend to recommend
that the limited partners of the Partnership  approve the Merger.  In connection
with their recommendation,  the general partners will solicit the consent of the
limited  partners at the special  meeting.  If the limited  partners  reject the
Merger,  the Partnership  will bear the portion of the  transaction  costs based
upon the  percentage  of "For"  votes  and the  general  partners  will bear the
portion of such  transaction  costs based upon the percentage of "Against" votes
and abstentions.

         On May 11,  1999,  four  limited  partners in several of the CNL Income
Funds served a lawsuit  against the general  partners and APF in connection with
the proposed Merger. On July 8, 1999 the plaintiffs amended the complaint to add
three additional limited partners as plaintiffs. Additionally, on June 22, 1999,
a limited  partner in certain of the CNL Income Funds  served a lawsuit  against
the  general  partners,  APF and CNL Fund  Advisors,  Inc.  and  certain  of its
affiliates, in connection with the proposed Merger. The general partners and APF
believe  that the  lawsuits  are without  merit and intend to defend  vigorously
against the claims. See Part II - Item 1. Legal Proceedings.

Year 2000 Readiness Disclosure
------------------------------

         The Year  2000  problem  concerns  the  inability  of  information  and
non-information  technology  systems to  properly  recognize  and  process  date
sensitive  information  beyond  January  1,  2000.  As  of  June  30,  1999  the
Partnership did not have any information or non-information  technology systems.
The general  partners  and  certain of the  affiliates  of the general  partners
provide  all  services  requiring  the use of  information  and  non-information
technology systems pursuant to a management agreement with the Partnership.  The
information technology system of the affiliates of the general partners consists
of a network of personal computers and servers built using hardware and software
from  mainstream  suppliers.  The  non-information  technology  systems  of  the
affiliates of the general  partners are primarily  facility  related and include
building  security  systems,  elevators,  fire  suppressions,  HVAC,  electrical
systems and other  utilities.  The  affiliates  of the general  partners have no
internally generated programmed software coding to correct because substantially
all of the software utilized by the general partners and affiliates is purchased
or  licensed  from  external  providers.   The  maintenance  of  non-information
technology systems at the Partnership's  Properties is the responsibility of the
tenants of the  Properties  in  accordance  with the terms of the  Partnership's
leases.

         In early 1998, the general  partners and affiliates  formed a Year 2000
team, for the purpose of identifying,  understanding  and addressing the various
issues  associated  with the Year 2000  problem.  The Y2K Team  consists  of the
general  partners  and members  from  certain of the  affiliates  of the general
partners, including representatives from senior management, information systems,
telecommunications,   legal,   office   management,   accounting   and  property
management. The Y2K Team's initial step in assessing the Partnership's Year 2000
readiness  consists of  identifying  any systems  that are  date-sensitive  and,
accordingly,  could have potential  Year 2000  problems.  The Y2K Team is in the
process of conducting inspections, interviews and tests to identify which of the
Partnership's systems could have a potential Year 2000 problem.

         The  information  system of the  affiliates of the general  partners is
comprised of hardware  and  software  applications  from  mainstream  suppliers.
Accordingly, the Y2K Team is in the process of contacting the respective vendors
and  manufacturers  to verify the Year 2000  compliance  of their  products.  In
addition,  the Y2K Team has also requested and is evaluating  documentation from
other   companies  with  which  the  Partnership  has  a  material  third  party
relationship,   including  the   Partnership's   tenants,   vendors,   financial
institutions and the  Partnership's  transfer agent. The Partnership  depends on
its  tenants  for  rents  and  cash  flows,   its  financial   institutions  for
availability  of cash and its  transfer  agent to  maintain  and track  investor
information.  The Y2K Team has also  requested and is  evaluating  documentation
from the  non-information  technology systems providers of the affiliates of the
general  partners.  Although the general  partners  continue to receive positive
responses  from the  companies  with  which  the  Partnership  has  third  party
relationships regarding their Year 2000 compliance,  the general partners cannot
be assured that the  tenants,  financial  institutions,  transfer  agent,  other
vendors and system  providers have adequately  considered the impact of the Year
2000. The general  partners are not able to measure the effect on the operations
of the Partnership of any third party's failure to adequately address the impact
of the Year 2000.

         The general  partners and their  affiliates  have  identified  and have
implemented  upgrades for certain hardware equipment.  In addition,  the general
partners and their  affiliates have  identified  certain  software  applications
which will require upgrades to become Year 2000 compliant.  The general partners
expect  that all of these  upgrades,  as well as any  other  necessary  remedial
measures on the information  technology systems used in the business  activities
and  operations  of the  Partnership,  to be completed  by  September  30, 1999,
although,  the general  partners  cannot be assured  that the upgrade  solutions
provided by the vendors  have  addressed  all  possible  Year 2000  issues.  The
general  partners  do not expect the  aggregate  cost of the Year 2000  remedial
measures to be material to the results of operations of the Partnership.

         The general partners and their  affiliates have received  certification
from the  Partnership's  transfer agent of its Year 2000 compliance.  Due to the
material  relationship of the Partnership  with its transfer agent, the Y2K Team
is evaluating the Year 2000  compliance of the systems of the transfer agent and
expects to have the  evaluation  completed  by September  30, 1999.  Despite the
positive  response  from the transfer  agent and the  evaluation of the transfer
agent's system by the Y2K Team, the general  partners cannot be assured that the
transfer  agent has addressed  all possible Year 2000 issues.  In the event that
the  systems of the  transfer  agent are not Year 2000  compliant,  the  general
partners and their  affiliates  will have to allocate  resources  to  internally
perform  the  functions  of the  transfer  agent.  The  general  partners do not
anticipate  that the additional  cost of these  resources  would have a material
impact on the Partnership.

         Based upon the progress the general  partners and their affiliates have
made in addressing  the Year 2000 issues and their plan and timeline to complete
the compliance  program,  the general partners do not foresee  significant risks
associated  with Year 2000  compliance  at this time.  The general  partners and
their affiliates plan to address their significant Year 2000 issues prior to the
Partnership  being  affected  by  them;  therefore,  we  have  not  developed  a
comprehensive  contingency  plan.  However,  if the general  partners  and their
affiliates identify significant risks related to their Year 2000 compliance,  or
if their progress deviates from the anticipated  timeline,  the general partners
and their affiliates will develop  contingency plans as deemed necessary at that
time.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.



<PAGE>


                           PART II. OTHER INFORMATION


Item 1.       Legal Proceedings.

              On May 11, 1999, four limited partners in several CNL Income Funds
              served a derivative and purported class action lawsuit filed April
              22, 1999 against the general partners and APF in the Circuit Court
              of the Ninth Judicial Circuit of Orange County, Florida,  alleging
              that the general  partners  breached  their  fiduciary  duties and
              violated  provisions of certain of the CNL Income Fund partnership
              agreements in connection with the proposed Merger.  The plaintiffs
              are seeking  unspecified  damages and equitable relief. On July 8,
              1999, the plaintiffs filed an amended complaint which, in addition
              to naming three  additional  plaintiffs,  includes  allegations of
              aiding and abetting and  conspiring  to breach  fiduciary  duties,
              negligence and breach of duty of good faith against certain of the
              defendants and seeks additional  equitable relief. As amended, the
              caption  of the  case is Jon  Hale,  Mary J.  Hewitt,  Charles  A.
              Hewitt,  Gretchen  M.  Hewitt  Bernard J.  Schulte,  Edward M. and
              Margaret  Berol Trust,  and Vicky Berol v. James M.  Seneff,  Jr.,
              Robert  A.  Bourne,  CNL  Realty  Corporation,  and  CNL  American
              Properties Fund, Inc., Case No. CIO-99-0003561.

              On June 22,  1999,  a limited  partner of several CNL Income Funds
              served a  purported  class  action  lawsuit  filed  April 29, 1999
              against the general partners and APF, Ira Gaines, individually and
              on  behalf  of a class  of  persons  similarly  situated,  v.  CNL
              American  Properties Fund,  Inc., James M. Seneff,  Jr., Robert A.
              Bourne,  CNL Realty  Corporation,  CNL Fund  Advisors,  Inc.,  CNL
              Financial  Corporation  a/k/a CNL Financial  Corp.,  CNL Financial
              Services,  Inc. and CNL Group, Inc., Case NO. CIO-99-3796,  in the
              Circuit  Court of the Ninth  Judicial  Circuit  of Orange  County,
              Florida,   alleging  that  the  general  partners  breached  their
              fiduciary  duties and that APF aided and abetted  their  breach of
              fiduciary  duties in  connection  with the  proposed  Merger.  The
              plaintiff is seeking unspecified damages and equitable relief.

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.



<PAGE>


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

              (a)  Exhibits

                    2.1    Agreement  and  Plan of  Merger  by and  between  the
                           Registrant  and CNL American  Properties  Fund,  Inc.
                           ("APF")  dated March 11, 1999 and as amended  June 4,
                           1999   (Filed  as   Appendix  B  to  the   Prospectus
                           Supplement for the Registrant  constituting a part of
                           Amendment No. 1 to the Registration  Statement of APF
                           on Form S-4, File No. 74329.)

                    3.1    Affidavit and  Certificate of Limited  Partnership of
                           CNL Income Fund XI, Ltd.  (Included as Exhibit 3.2 to
                           Registration  Statement No. 33-43278 on Form S-11 and
                           incorporated herein by reference.)

                    4.1    Affidavit and  Certificate of Limited  Partnership of
                           CNL Income  Fund XI,  Ltd.  (Included  Exhibit 3.2 to
                           Registration  Statement  33-43278  on Form  S-11  and
                           incorporated herein by reference.)

                    4.2    Amended and Restated Agreement of Limited Partnership
                           of CNL Income Fund XI, Ltd.  (Included as Exhibit 4.2
                           to Form 10-K filed with the  Securities  and Exchange
                           Commission on April 15, 1993, and incorporated herein
                           by reference.)

                    10.1   Management Agreement between CNL Income Fund XI, Ltd.
                           and CNL Investment  Company (Included as Exhibit 10.1
                           to Form 10-K filed with the  Securities  and Exchange
                           Commission on April 15, 1993, and incorporated herein
                           by reference.)

                    10.2   Assignment   of   Management   Agreement   from   CNL
                           Investment   Company  to  CNL  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
                    June 30, 1999.


<PAGE>

                                   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 9th day of August, 1999.


                                     CNL INCOME FUND XI, LTD.

                                     By: CNL REALTY CORPORATION
                                         General Partner


                                     By: /s/ James M. Seneff, Jr.
                                         -----------------------------------
                                         JAMES M. SENEFF, JR.
                                         Chief Executive Officer
                                         (Principal Executive Officer)


                                     By: /s/ Robert A. Bourne
                                         -----------------------------------
                                         ROBERT A. BOURNE
                                         President and Treasurer
                                         (Principal Financial and
                                         Accounting Officer)