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 March 31, 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)

<TABLE>
<CAPTION>

<S> <C>
                       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
                                                                    ------------------------------------------------

</TABLE>

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                         

                      Condensed Statements of Income                   

                      Condensed Statements of Partners' Capital        

                      Condensed Statements of Cash Flows               

                      Notes to Condensed Financial Statements          

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

     Item 3.      Quantitative and Qualitative Disclosures About
                      Market Risk                                      

Part II.

     Other Information                                                 





<PAGE>



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


                                                                                March 31,               December 31,
                                                                                   1999                     1998
                                                                            -------------------      -------------------
<S> <C>
                               ASSETS

   Land and buildings on operating leases, less
       accumulated depreciation of $2,696,431 and
       $2,589,785                                                                 $ 21,914,945             $ 21,683,785
   Net investment in direct financing leases                                         7,455,352                6,786,286
   Investment in joint ventures                                                      2,759,981                2,521,613
   Cash and cash equivalents                                                         1,872,630                1,559,240
   Restricted cash                                                                          --                1,640,936
   Receivables, less allowance for doubtful accounts
       of $869 and $5,820                                                               36,172                  132,311
   Prepaid expenses                                                                     13,454                   12,335
   Accrued rental income                                                             1,677,835                1,645,062
   Other assets                                                                        122,024                  122,024
                                                                            -------------------      -------------------

                                                                                  $ 35,852,393             $ 36,103,592
                                                                            ===================      ===================

                  LIABILITIES AND PARTNERS' CAPITAL

   Accounts payable                                                                 $   42,816               $   14,461
   Accrued and escrowed real estate taxes payable                                       16,436                   15,138
   Distributions payable                                                               875,006                  995,006
   Due to related party                                                                 11,398                   25,446
   Rents paid in advance and deposits                                                   90,907                   92,069
                                                                            -------------------      -------------------
       Total liabilities                                                             1,036,563                1,142,120

   Minority interest                                                                   503,903                  503,860

   Partners' capital                                                                34,311,927               34,457,612
                                                                            -------------------      -------------------

                                                                                  $ 35,852,393             $ 36,103,592
                                                                            ===================      ===================

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




<PAGE>


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

<TABLE>
<CAPTION>

                                                                                    Quarter Ended
                                                                                      March 31,
                                                                                1999              1998
                                                                           ---------------    --------------
<S> <C>
Revenues:
    Rental income from operating leases                                         $ 643,500         $ 675,491
    Earned income from direct financing leases                                    235,529           207,060
    Contingent rental income                                                       20,242            19,768
    Interest and other income                                                      20,934            12,405
                                                                           ---------------    --------------
                                                                                  920,205           914,724
                                                                           ---------------    --------------

Expenses:
    General operating and administrative                                           42,360            29,458
    Professional services                                                          10,838             4,952
    Management fees to related party                                                9,476             9,342
    State and other taxes                                                          28,189            23,334
    Depreciation and amortization                                                 106,646           114,665
    Transaction costs                                                              34,967                --
                                                                           ---------------    --------------
                                                                                  232,476           181,751
                                                                           ---------------    --------------

Income Before Minority Interests in Income of
    Consolidated Joint Ventures and Equity in
    Earnings of Unconsolidated Joint Ventures                                     687,729           732,973

Minority Interests in Income of Consolidated
    Joint Ventures                                                                (16,409 )         (17,018 )

Equity in Earnings of Unconsolidated Joint Ventures                                58,001            40,001
                                                                           ---------------    --------------

Net Income                                                                      $ 729,321         $ 755,956
                                                                           ===============    ==============

Allocation of Net Income:
    General partners                                                            $   7,293         $   7,560
    Limited partners                                                              722,028           748,396
                                                                           ---------------    --------------

                                                                                $ 729,321         $ 755,956
                                                                           ===============    ==============

Net Income Per Limited Partner Unit                                              $   0.18          $   0.19
                                                                           ===============    ==============

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

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



<PAGE>


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

<TABLE>
<CAPTION>

                                                                             Quarter Ended           Year Ended
                                                                               March 31,            December 31,
                                                                                  1999                  1998
                                                                           -------------------    ------------------
<S> <C>
General partners:
    Beginning balance                                                             $   211,047            $  176,232
    Net income                                                                          7,293                34,815
                                                                           -------------------    ------------------
                                                                                      218,340               211,047
                                                                           -------------------    ------------------

Limited partners:
    Beginning balance                                                              34,246,565            34,132,000
    Net income                                                                        722,028             3,774,589
    Distributions ($0.22 and $0.92 per
       limited partner unit, respectively)                                           (875,006 )          (3,660,024 )
                                                                           -------------------    ------------------
                                                                                   34,093,587            34,246,565
                                                                           -------------------    ------------------

Total partners' capital                                                          $ 34,311,927          $ 34,457,612
                                                                           ===================    ==================


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

<PAGE>


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

<TABLE>
<CAPTION>

                                                                                         Quarter Ended
                                                                                           March 31,
                                                                                    1999               1998
                                                                                --------------    ---------------
<S> <C>
Increase (Decrease) in Cash and Cash Equivalents

    Net Cash Provided by Operating Activities                                       $ 974,168         $1,024,997
                                                                                --------------    ---------------

    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 ventures                                                  (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                                             (995,006 )         (875,006 )
       Distributions to holders of minority interests                                 (16,366 )          (19,126 )
                                                                                --------------    ---------------
              Net cash used in financing activities                                (1,011,372 )         (894,132 )
                                                                                --------------    ---------------

Net Increase in Cash and Cash Equivalents                                             313,390            130,865

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

Cash and Cash Equivalents at End of Quarter                                        $1,872,630         $1,403,251
                                                                                ==============    ===============

Supplemental Schedule of Non-Cash Financing
    Activities:

       Distributions declared and unpaid at end of
          quarter                                                                   $ 875,006          $ 915,006
                                                                                ==============    ===============

</TABLE>

           See accompanying notes to condensed financial statements.


<PAGE>



                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     Quarters Ended March 31, 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  ended March 31, 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 March 31,
        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 Ended March 31, 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:
<TABLE>
<CAPTION>

                                                                           March 31,             December 31,
                                                                              1999                   1998
                                                                        -----------------      ------------------
<S> <C>
                Land and buildings on operating
                    leases, less accumulated
                    depreciation                                             $ 3,660,771             $ 3,427,681
                Net investment in direct
                    financing lease                                              323,424                      --
                Cash                                                               8,405                   1,109
                Prepaid expenses                                                   3,230                   8,290
                Accrued rental income                                            139,279                 130,585
                Liabilities                                                          155                      --
                Partners' capital                                              4,134,954               3,567,665
                Revenues                                                         111,420                 399,305
                Net income                                                        83,608                 300,036
</TABLE>

        The Partnership  recognized income totalling $58,001 and $40,001 for the
        quarters ended March 31, 1999 and 1998,  respectively,  from these joint
        ventures.

4.   Merger Transaction:

       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
       4,394,196 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 $10.00 per APF  Share,  the price paid by APF
       investors 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 of December


<PAGE>


                            CNL INCOME FUND XI, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     Quarters Ended March 31, 1999 and 1998


4.   Merger Transaction - Continued:

       31, 1998.  Legg Mason Wood Walker,  Incorporated  has rendered a fairness
       opinion that the APF Share consideration,  payable by APF, is fair to the
       Partnership  from a financial  point of view. 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  third  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 5, 1999, four limited  partners in several of the CNL Income Funds
       filed a lawsuit  against the general  partners and APF in connection with
       the  proposed  Merger  (see  Part II - Item 1.  Legal  Proceedings).  The
       general  partners and APF believe  that the lawsuit is without  merit and
       intend to defend vigorously  against the claims.  Because the lawsuit was
       so recently  filed,  it is premature to further comment on the lawsuit at
       this time.



<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 March 31, 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 as tenants-in-common.

Liquidity and Capital Resources

         The  Partnership's  primary  source of capital for the  quarters  ended
March 31, 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 $974,168 and
$1,024,997  for the quarters  ended March 31, 1999 and 1998,  respectively.  The
decrease  in cash from  operations  for the  quarter  ended  March  31,  1999 is
primarily a result of changes in the Partnership's working capital.

         Other  sources and uses of capital  included the  following  during the
quarter ended March 31, 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
$1,034,000.  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,  at a total cost of
approximately $584,100. The Partnership  contributed  approximately $247,300 and
had a 42.8%  interest in the profits and losses of the joint venture as of March
31, 1999. The Partnership  intends to invest the remaining net sales proceeds in
a replacement Property.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions to the partners. At March 31, 1999, the Partnership had $1,872,630
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 quarter  ended
March 31,  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.  The funds  remaining at March 31, 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.



<PAGE>


Liquidity and Capital Resources - Continued

         Total liabilities of the Partnership,  including distributions payable,
decreased to $1,036,563  at March 31, 1999 from  $1,142,120 at December 31, 1998
primarily as a result of the Partnership accruing a special distribution payable
to the limited partners of $120,000,  representing  cumulative  excess operating
reserves,  at December 31,  1998,  which was paid in January  1999.  The general
partners  believe that the  Partnership  has sufficient cash on hand to meet its
current working capital needs.

         Based on cash from  operations,  and for the  quarter  ended  March 31,
1998,   accumulated  excess  operating   reserves,   the  Partnership   declared
distributions  to limited  partners of $875,006  and  $915,006  for the quarters
ended March 31, 1999 and 1998,  respectively.  This represents  distributions of
$0.22  and  $0.23  per unit,  respectively.  No  distributions  were made to the
general  partners  for the  quarters  ended March 31, 1999 and 1998.  No amounts
distributed  to the limited  partners for the quarters  ended March 31, 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.

         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.

         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. APF has agreed to issue shares of its
common stock, par value $0.01 per share (the "APF Shares"), as consideration for
the Merger. APF has agreed to issue 4,394,196 APF Shares which, for the purposes
of valuing the merger  consideration,  have been valued by APF at $10.00 per APF
Share, the price paid by APF investors 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.  Legg Mason Wood
Walker,  Incorporated  has  rendered  a  fairness  opinion  that  the APF  Share
consideration, payable by APF, is fair to the Partnership from a financial point
of view.  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


<PAGE>


Liquidity and Capital Resources - Continued

tradable at the option of the former limited  partners.  At a special meeting of
the partners that is expected to be held in the third  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 5,  1999,  four  limited  partners  in several of the CNL Income
Funds filed a lawsuit  against the general  partners and APF in connection  with
the  proposed  Merger  (see Part II - Item 1. Legal  Proceedings).  The  general
partners and APF believe that the lawsuit is without  merit and intend to defend
vigorously against the claims.  Because the lawsuit was so recently filed, it is
premature to further comment on the lawsuit at this time.

Results of Operations

         During the quarters ended March 31, 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. In connection therewith, during
the  quarters  ended  March 31, 1999 and 1998,  the  Partnership,  Denver  Joint
Venture  and   CNL/Airport   Joint   Venture   earned   $879,029  and  $882,551,
respectively,  in rental  income from  operating  leases and earned  income from
direct financing leases.  In addition,  during the quarters ended March 31, 1999
and  1998,  the  Partnership  earned  $20,242  and  $19,768,   respectively,  in
contingent rental income.

         In addition,  during the quarter ended March 31, 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,  and during the quarter ended March 31, 1999 the  Partnership
owned and  leased  three  Properties  indirectly  through  other  joint  venture
arrangements   and  owned  and  leased  one  Property   with  and  affiliate  as
tenants-in-common.  In connection therewith, during the quarters ended March 31,
1999 and  1998,  the  Partnership  earned  $58,001  and  $40,001,  respectively,
attributable to net income earned by unconsolidated  joint ventures.  Net income
earned by joint  ventures  during the quarter ended March 31, 1998 was less than
that earned during the quarter  ended March 31, 1999,  primarily due to the fact
that Ashland Joint Venture adjusted estimated  contingent rental amounts accrued
at December 31, 1997 to actual amounts during the quarter ended March 31, 1998.



<PAGE>


Results of Operations - Continued

         Operating expenses,  including  depreciation and amortization  expense,
were  $232,476  and  $181,751  for the  quarters  ended March 31, 1999 and 1998,
respectively.  The increase in operating  expenses  during 1999,  as compared to
1998, is primarily a result of the Partnership  incurring $34,967 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  above in "Liquidity and Capital  Resources." 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.

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. The Partnership does not have any
information or  non-information  technology  systems.  The general  partners and
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
committee  (the "Y2K 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 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.



<PAGE>


Year 2000 Readiness Disclosures - Continued

         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 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 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  would 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.



<PAGE>


Year 2000 Readiness Disclosures - Continued

         Based upon the progress the general  partners and 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,  they  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 5, 1999, four limited partners in several of the CNL Income
              Funds  filed a  lawsuit,  Jon Hale,  Mary J.  Hewitt,  Charles  A.
              Hewitt, and Gretchen M. Hewitt v. James M. Seneff,  Jr., Robert A.
              Bourne, CNL Realty Corporation,  and CNL American Properties Fund,
              Inc., Case No.  CIO-99-0003561,  in the Circuit Court of the Ninth
              Judicial  Circuit of Orange  County,  Florida,  alleging  that the
              Messrs.  Seneff and Bourne and CNL Realty Corporation,  as general
              partners of the CNL Income Funds,  breached their fiduciary duties
              and  violated  the  provisions  of certain of the CNL Income  Fund
              partnership agreements in connection with the proposed acquisition
              of the  CNL  Income  Funds  by APF.  The  plaintiffs  are  seeking
              unspecified damages and equitable relief. The general partners and
              APF believe that the lawsuit is without merit and intend to defend
              vigorously  against  such  claims.  Because  the  lawsuit  was  so
              recently  filed, it is premature to further comment on the lawsuit
              at this time.

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

                     2.1        Agreement  and Plan of Merger by and between the
                                Registrant  and CNL  American  Properties  Fund,
                                Inc.  ("APF")  dated  March 11,  1999  (filed as
                                Appendix B to the Prospectus  Supplement for the
                                Registrant    constituting   a   part   of   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.)



<PAGE>


                     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

                      Current  Report on Form 8-K dated March 11, 1999 and filed
                      March 12,  1999,  describing  the  proposed  merger of the
                      Partnership  with and into a  subsidiary  of CNL  American
                      Properties Fund, Inc.





<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 14th day of May, 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)