<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C. 20549-1004

                                   FORM 10-Q
                                        
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the 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                                0-15538
                                   ---------------------------------------------


               First Capital Income Properties, Ltd. - Series XI
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

          Illinois                                               36-3364279
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

Two North Riverside Plaza, Suite 1000, Chicago, Illinois         60606-2607
--------------------------------------------------------     -------------------
       (Address of principal executive offices)                  (Zip Code)

                                (312) 207-0020
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

                                Not applicable
--------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last 
                                    report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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
                                       -----    -----
Documents incorporated by reference:

The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the Partnership's Prospectus dated September 12, 1985,
included in the Partnership's Registration Statement on Form S-11, is
incorporated herein by reference in Part I of this report.
<PAGE>
 
                         PART I. FINANCIAL INFORMATION
 
                          ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                      March 31,
                                                        1999      December 31,
                                                     (Unaudited)      1998
------------------------------------------------------------------------------
<S>                                                  <C>          <C>
ASSETS
Investment in commercial rental properties:
 Land                                                $ 6,019,100  $ 6,070,100
 Buildings and improvements                           42,819,500   42,793,500
------------------------------------------------------------------------------
                                                      48,838,600   48,863,600
Accumulated depreciation and amortization            (17,545,300) (17,200,600)
------------------------------------------------------------------------------
 Total investment properties, net of accumulated
  depreciation and amortization                       31,293,300   31,663,000
Cash and cash equivalents                              3,748,400    1,160,100
Investments in debt securities                           985,400    2,995,700
Rents receivable                                         395,300      811,900
Other assets (including loan acquisition costs, net
 of accumulated amortization of $591,600 and
 $568,500, respectively)                                 197,700      299,800
------------------------------------------------------------------------------
                                                     $36,620,100  $36,930,500
------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' (DEFICIT)
Liabilities:
 Mortgage loans payable                              $25,019,000  $25,646,200
 Front-End Fees Loan payable to Affiliate              8,295,200    8,295,200
 Accounts payable and accrued expenses                 1,408,200    1,294,100
 Due to Affiliates, net                                2,087,400    1,956,800
 Security deposits                                       205,700      211,500
 Other liabilities                                       109,900      301,900
------------------------------------------------------------------------------
                                                      37,125,400   37,705,700
------------------------------------------------------------------------------
Partners' (deficit):
 General Partner                                        (505,300)    (775,200)
 Limited Partners (57,621 Units issued and
  outstanding)
------------------------------------------------------------------------------
                                                        (505,300)    (775,200)
------------------------------------------------------------------------------
                                                     $36,620,100  $36,930,500
------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 1999
and the year ended December 31, 1998
(Unaudited)
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                               General    Limited
                                               Partner    Partners   Total
-----------------------------------------------------------------------------
<S>                                           <C>         <C>      <C>
Partners' (deficit) capital, January 1, 1998  $ (989,300)   $ 0    $(989,300)
Net income for the year ended December 31,
 1998                                            214,100      0      214,100
-----------------------------------------------------------------------------
Partners' (deficit), December 31, 1998          (775,200)     0     (775,200)
Net income for the quarter ended March 31,
 1999                                            269,900      0      269,900
-----------------------------------------------------------------------------
Partners' (deficit), March 31, 1999           $ (505,300)   $ 0    $(505,300)
-----------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements
2
<PAGE>
 
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended March 31, 1999 and 1998
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
 
<TABLE>
<CAPTION>
                                                        1999       1998
---------------------------------------------------------------------------
<S>                                                  <C>        <C>
Income:
 Rental                                              $2,181,500 $2,066,900
 Interest                                                47,300     46,400
 Gain on sale of land parcel                            291,800
---------------------------------------------------------------------------
                                                      2,520,600  2,113,300
---------------------------------------------------------------------------
Expenses:
 Interest:
  Affiliates                                            144,900    161,200
  Nonaffiliates                                         487,000    519,400
 Depreciation and amortization                          367,800    368,100
 Property operating:
  Affiliates                                             37,800     33,700
  Nonaffiliates                                         492,300    511,000
 Real estate taxes                                      352,000    296,400
 Insurance--Affiliate                                    30,500     26,700
 Repairs and maintenance                                298,800    234,600
 General and administrative:
  Affiliates                                              6,200      9,800
  Nonaffiliates                                          33,400     55,800
---------------------------------------------------------------------------
                                                      2,250,700  2,216,700
---------------------------------------------------------------------------
Net income (loss)                                    $  269,900 $ (103,400)
---------------------------------------------------------------------------
Net income (loss) allocated to General Partner       $  269,900 $ (103,400)
---------------------------------------------------------------------------
Net income (loss) allocated to Limited Partners      $        0 $        0
---------------------------------------------------------------------------
Net income (loss) allocated to Limited Partners per
 Unit (57,621 Units outstanding)                     $        0 $        0
---------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1999 and 1998
(Unaudited)
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                             1999        1998
---------------------------------------------------------------------------------
<S>                                                       <C>         <C>
Cash flows from operating activities:
 Net income (loss)                                        $  269,900  $ (103,400)
 Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
  Gain on sale of land parcel                               (291,800)
  Depreciation and amortization                              367,800     368,100
  Changes in assets and liabilities:
   Decrease in rents receivable                              416,600     405,700
   Decrease in other assets                                   79,000     135,300
   Increase in accounts payable and accrued expenses         114,100      26,900
   (Decrease) increase in due to Affiliates                  (14,300)     29,600
   (Decrease) in other liabilities                          (192,000)   (146,300)
---------------------------------------------------------------------------------
    Net cash provided by operating activities                749,300     715,900
---------------------------------------------------------------------------------
Cash flows from investing activities:
 Payments for capital and tenant improvements                (26,000)    (25,700)
 Proceeds from sale of land parcel                           342,800
 Maturity of investments in debt securities, net           2,010,300       9,400
---------------------------------------------------------------------------------
    Net cash provided by (used for) investing activities   2,327,100     (16,300)
---------------------------------------------------------------------------------
Cash flows from financing activities:
 Principal payments on mortgage loans payable               (283,200)   (245,200)
 Principal payments made from proceeds of sale of land
  parcel                                                    (344,000)
 Interest deferred on Front-End Fees loan payable to
  Affiliate                                                  144,900     161,200
 (Decrease) increase in security deposits                     (5,800)      6,700
---------------------------------------------------------------------------------
    Net cash (used for) financing activities                (488,100)    (77,300)
---------------------------------------------------------------------------------
Net increase in cash and cash equivalents                  2,588,300     622,300
Cash and cash equivalents at the beginning of the period   1,160,100   1,767,500
---------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period        $3,748,400  $2,389,800
---------------------------------------------------------------------------------
Interest paid to nonaffiliates during the period          $  489,400  $  520,400
---------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements
                                                                               3
<PAGE>
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 1999
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
incorporated herein by reference.
 
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). The Partnership utilizes the accrual
method of accounting. Under this method, revenues are recorded when earned and
expenses are recorded when incurred. Effective July 1, 1998, the Partnership
recognizes rental income, which is contingent upon tenants' achieving specified
targets only to the extent that such targets are attained.
 
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
 
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the three months ended March 31, 1999, are not necessarily indicative of the
operating results for the year ending December 31, 1999.
 
The financial statements include the Partnership's 50% interest in a joint
venture with an Affiliated partnership, which was formed for the purpose of
acquiring a 100% interest in certain real property. This joint venture is
operated under the common control of the General Partner. Accordingly, the
Partnership's pro rata share of the joint ventures' revenues, expenses, assets,
liabilities and Partners' capital is included in the financial statements.
 
The financial statements include the Partnership's 70% undivided preferred
interest in a joint venture with an unaffiliated third party. The joint venture
owns a 100% interest in the Burlington Office Center I, II and III
("Burlington"). This joint venture is operated under the control of the General
Partner. Accordingly, the Partnership has included 100% of the venture's
revenues, expenses, assets, liabilities and Partners' capital in the financial
statements.
 
The Partnership has one reportable segment as the Partnership is in the
disposition phase of its life cycle, wherein it is seeking to liquidate its
remaining operating assets. Management's main focus, therefore, is to prepare
its assets for sale and find purchasers for its remaining assets when market
conditions warrant such an action. The Partnership has one tenant who occupies
15% of the Partnership's rental space at the Partnership's properties.
 
Commercial rental properties held for investment are recorded at cost, net of
any provisions for value impairment, and depreciated (exclusive of amounts
allocated to land) on the straight-line method over their estimated useful
lives. Upon classifying a commercial rental property as Held for Disposition,
no further depreciation or amortization of such property is provided for in the
financial statements. Lease acquisition fees are recorded at cost and amortized
over the life of each respective lease. Repair and maintenance costs are
expensed as incurred; expenditures for improvements are capitalized and
depreciated over the estimated life of such improvements.
 
The Partnership evaluates its commercial rental properties for impairment when
conditions exist which may indicate that it is probable that the sum of
expected future cash flows (undiscounted) from a property is less than its
carrying basis. Upon determination that an impairment has occurred, the
carrying basis in the rental property is reduced to its estimated fair value.
Management was not aware of any indicator that would result in a significant
impairment loss during the periods reported.
 
Loan acquisition costs are amortized over the term of the mortgage loan made in
connection with the acquisition of Partnership properties or refinancing of
Partnership loans. When a property is disposed of or a loan refinanced, the
related loan acquisition costs and accumulated amortization are removed from
the respective accounts and any unamortized balance is expensed.
 
Property sales are recorded when title transfers and sufficient consideration
has been received by the Partnership. Upon disposition the related costs and
accumulated depreciation and amortization are removed from the respective
accounts. Any gain or loss is recognized in accordance with GAAP.
 
Cash equivalents are considered all highly liquid investments with a maturity
of three months or less when purchased.
 
Investments in debt securities are comprised of corporate debt securities and
obligations of the United States government and are classified as held-to-
maturity. These investments are carried at their amortized cost basis in the
financial statements, which approximated fair value. These securities had a
maturity of less than one year when purchased.
 
Certain reclassifications have been made to the previously reported 1998
statements in order to provide comparability with the 1999 statements. These
reclassifications had no effect on net (loss) or Partners' (deficit).
 
Reference is made to the Partnership's Annual Report for the year ended
December 31, 1998, for a description of other accounting policies and
additional details of the Partnership's financial condition, results of
operations, changes in Partners' capital and changes in cash balances for the
year then ended. The details provided in the notes thereto have not changed
except as a result of normal transactions in the interim or as otherwise
disclosed herein.
 
2. RELATED PARTY TRANSACTIONS:
 
In accordance with the Partnership Agreement, Net Profits and Net Losses
(exclusive of Net Profits and Net Losses from the sale, disposition or
provision for value impairment of Partnership properties) shall be allocated 1%
to the
 
                                                                               4
<PAGE>
 
General Partner and 99% to the Limited Partners. Net Profits from the sale or
disposition of a Partnership property are allocated: first, prior to giving
effect to any distributions of Sale or Refinancing Proceeds from the
transaction, to the General Partner and Limited Partners with negative balances
in their Capital Accounts, pro rata in proportion to such respective negative
balances, to the extent of the total of such negative balances; second, to each
Limited Partner in an amount, if any, necessary to make the positive balance in
its Capital Account equal to the Sale or Refinancing Proceeds to be distributed
to such Limited Partner with respect to the sale or disposition of such
property; third, to the General Partner in an amount, if any, necessary to make
the positive balance in its Capital Account equal to the Sale or Refinancing
Proceeds to be distributed to the General Partner with respect to the sale or
disposition of such property; and fourth, the balance, if any, 25% to the
General Partner and 75% to the Limited Partners. Net Losses from the sale,
disposition or provision for value impairment of Partnership properties are
allocated: first, after giving effect to any distributions of Sale or
Refinancing Proceeds from the transaction, to the General Partner and Limited
Partners with positive balances in their Capital Accounts, pro rata in
proportion to such respective positive balances, to the extent of the total
amount of such positive balances; and second, the balance, if any, 1% to the
General Partner and 99% to the Limited Partners. Notwithstanding anything to
the contrary, there shall be allocated to the General Partner not less than 1%
of all items of Partnership income, gain, loss, deduction and credit during the
existence of the Partnership. For the three months ended March 31, 1999 and
1998, the General Partner was allocated 100% of the Net Profit/(Loss) of
$269,900 and $(103,400), respectively. No amounts will be allocated to Limited
Partners until such time as the cumulative computation of the Limited Partners'
capital account would result in a positive balance.
 
Fees and reimbursements paid and payable/(receivable) by the Partnership
to/(from) Affiliates during the three months ended March 31, 1999 were as
follows:
 
<TABLE>
<CAPTION>
                                                            Payable
                                                   Paid   (Receivable)
----------------------------------------------------------------------
<S>                                               <C>     <C>
Property management and leasing fees              $37,600  $  (26,500)
Interest expense on Front-End Fees Loan (Note 3)     None   2,112,000
Reimbursement of property insurance premiums       30,500        None
Legal                                              18,100        None
Reimbursement of expenses, at cost:
 --Accounting                                       6,000       1,300
 --Investor communication                           2,900         600
----------------------------------------------------------------------
                                                  $95,100  $2,087,400
----------------------------------------------------------------------
</TABLE>
 
The variance between the amounts listed on this table and the Statement of
Income and Expense is due capitalized legal costs.
 
ANTEC Corporation ("ANTEC"), which is in the business of designing,
engineering, manufacturing and distributing cable television products, and
approximately 18.5% owned by Anixter International Inc., an Affiliate of the
General Partner, is obligated to the Partnership under a lease of office space
at Prentice Plaza. During the three months ended March 31, 1999, ANTEC paid
$118,900 in rents and reimbursements of expenses. The Partnership owns a 50%
joint venture interest
 
in these amounts. The per square foot rent paid by ANTEC is comparable to that
paid by other tenants at Prentice Plaza.
 
Manufactured Home Communities, Inc. ("MHC"), a real estate investment trust,
which is an Affiliate of the General Partner and in the business of owning and
operating mobil home communities, is obligated to the Partnership under a lease
of office space at Prentice Plaza. During the three months ended March 31,
1999, MHC paid $24,700 in rents and reimbursements of expenses. The Partnership
owns a 50% joint venture interest in these amounts. The per square foot rent
paid by MHC is comparable to that paid by other tenants at Prentice Plaza.
 
On-site property management for certain of the Partnership's properties is
provided by independent real estate management companies for fees ranging from
3% to 6% of gross rents received by the properties. In addition, Affiliates of
the General Partner provide on-site property management, leasing and
supervisory services for fees based upon various percentage rates of gross
rents for certain of the properties. These fees range from 1% to 6% based upon
the terms of the individual management agreements.
 
3. FRONT-END FEES LOAN PAYABLE TO AFFILIATE:
 
The Partnership borrowed from an Affiliate of the General Partner an amount
needed for the payment of securities sales commissions, Offering and
Organizational Expenses and other Front-End Fees, other than Acquisition Fees.
Repayment of the principal amount of the Front-End Fees Loan is subordinated
(the "Subordination") to payment to the Limited Partners of 100% of their
Original Capital Contribution from Sale or Refinancing Proceeds (as defined in
the Partnership Agreement). Interest on the outstanding balance of this loan
accrues monthly at a rate no greater than the cost of funds obtained by the
Affiliate from unaffiliated lenders.
 
As of March 31, 1999, the Partnership had drawn $8,295,200 under the Front-End
Fees Loan agreement. The interest rate on the Front-End Fees loan is subject to
change in accordance with the Loan Agreement. The weighted average interest
rate for the three months ended March 31, 1999 was 6.99%. For April 1999, the
interest rate was 6.94%.
 
Pursuant to a modification of this loan agreement, the Partnership has the
option to defer payment of interest on this loan for an 84-month period
beginning January 1, 1993. In addition, any interest payments made by the
Partnership from January 1, 1993 through December 31, 1999 may be borrowed from
the Affiliate. All deferred and subsequently borrowed amounts (including
accrued interest thereon) shall be due and payable on January 1, 2000, and
shall not be subject to the Subordination. Beginning with the interest payment
due on January 1, 1996, the Partnership has elected to defer payment of
interest. As of March 31, 1999, the amount of interest deferred pursuant to
this modification was $2,112,000.
 
5
<PAGE>
 
4. MORTGAGE LOANS PAYABLE:
 
Mortgage loans payable at March 31, 1999 and December 31, 1998 consisted of the
following loans, which are non-recourse to nor guaranteed by the Partnership,
unless otherwise disclosed:
 
<TABLE>
<CAPTION>
                           Partnership's Share of
                            Principal Balance at         Average
Property Pledged          ------------------------------ Interest  Maturity
as Collateral               3/31/99           12/31/98   Rate (b)    Date
-------------------------------------------------------------------------------
<S>                       <C>                <C>         <C>      <C>
Marquette Mall and        $  1,695,500       $ 1,941,800   7.75%    7/1/2002
 Office Building               679,500           730,000   7.75%    7/1/2002
 ("Marquette")               6,898,000(a)(c)   7,220,000   7.81%   9/30/1999
Burlington I, II and III
 Office Center              11,000,000(c)     11,000,000   7.08%   5/15/1999(d)
Prentice Plaza (50%)         4,746,000         4,754,400   6.97%  12/19/2000
-------------------------------------------------------------------------------
                          $ 25,019,000       $25,646,200
-------------------------------------------------------------------------------
</TABLE>
(a) The terms of the loan provide for monthly principal payments of $50,000 in
    addition to interest at 30 day LIBOR plus 275 basis points.
(b) The average interest rate represents an average for the three months ended
    March 31, 1999. Interest rates are subject to change in accordance with the
    provisions on Marquette's junior mortgage loan, Burlington's and Prentice
    Plaza's mortgage loans. As of March 31, 1999, interest rates on the
    mortgage loans collateralized by Prentice Plaza, Burlington and the junior
    mortgage collateralized by Marquette were 6.69%, 6.81% and 7.71%,
    respectively.
(c) Loan is recourse to the Partnership and prohibits distributions to
    Partners.
(d) The Partnership has exercised its option to extend the maturity date to May
    15, 2000, subject to the completion of the sale of Burlington.
 
For additional information regarding the mortgage loans payable, refer to the
Partnership's Annual Report for the year ended December 31, 1998.
 
5. SALE OF LAND PARCEL:
 
On March 30, 1999, the Partnership consummated the sale of a 1.056 acre
outparcel of land at Marquette for a sale price of $500,000. Proceeds from this
transaction, which were net of concessions to obtain requisite approvals and
transaction expenses, amounted to $342,800. These proceeds were utilized to
make principal payments on the loans collateralized by Marquette. The
Partnership recorded a gain of $291,800 in connection with this transaction.
 
6. SUBSEQUENT EVENT:
 
The joint venture in which the Partnership owns a 70% preferred interest, has
entered into an agreement to sell Burlington Office Center I, II and III. The
contract contains contingencies under which the purchaser may elect not to
consummate the transaction. There can be no assurance that the transaction
contemplated by this agreement will be consummated. However, failure on the
purchaser's part to close this transaction, absent seller default or failure to
satisfy contingencies, would result in the forfeiture in favor of the
Partnership of earnest money in the amount of $200,000.
 
                                                                               6
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Reference is made to the Partnership's Annual Report for the year ended
December 31, 1998 for a discussion of the Partnership's business.
 
Statements contained in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are not historical facts, may be
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof.
 
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. The
Partnership, in addition to being in the operation of properties phase, is in
the disposition phase of its life cycle. During the disposition phase of the
Partnership's life cycle, comparisons of operating results are complicated due
to the timing and effect of property sales and dispositions. Components of the
Partnership's operating results are generally expected to decline as real
property interests are sold or disposed of since the Partnership no longer
realizes income and incurs expenses from such real property interests.
 
OPERATIONS
The table below is a recap of the Partnership's share of certain operating
results of each of its properties for the three months ended March 31, 1999 and
1998. The discussion following the table should be read in conjunction with the
financial statements and notes thereto appearing in this report.
 
<TABLE>
<CAPTION>
                             Comparative
                          Operating Results
                         (a) For the Quarters
                                Ended
                           3/31/99    3/31/98
-----------------------------------------------
<S>                      <C>          <C>
MARQUETTE MALL AND OFFICE BUILDING
Rental revenues          $ 1,002,300  $981,800
-----------------------------------------------
Property net income (b)  $    38,300  $  6,000
-----------------------------------------------
Average occupancy                 81%       80%
-----------------------------------------------
BURLINGTON OFFICE CENTER I, II
 AND III
Rental revenues          $   804,700  $743,400
-----------------------------------------------
Property net income      $    42,300  $ 67,000
-----------------------------------------------
Average occupancy                100%       88%
-----------------------------------------------
PRENTICE PLAZA (50%)
Rental revenues          $   374,600  $349,700
-----------------------------------------------
Property net income      $    39,600  $ 12,200
-----------------------------------------------
Average occupancy                 95%       93%
-----------------------------------------------
</TABLE>
 
(a) Excludes certain income and expense items which are either not directly
    related to individual property operating results such as interest income,
    interest expense on the Partnership's Front-End Fees loan and general and
    administrative expenses or are related to properties disposed of by the
    Partnership prior to the periods under comparison.
(b) Property net income for 1999 does not include a gain of $291,800 recorded
    on the sale of land parcel.
 
Net (loss) income improved from $(103,400) for the three months ended March 31,
1998 to $269,900 for the three months ended March 31, 1999. The change was
primarily the result of a gain recorded in 1999 on the sale of a land parcel at
Marquette Mall and Office Building ("Marquette"). Also contributing to the
improvement was improved operating results at Marquette and Prentice Plaza. The
change was partially offset by diminished operating results at Burlington
Office Center I, II and III ("Burlington").
 
Rental revenues increased by $114,600 or 5.5% for the three months ended March
31, 1999 as compared to the three months ended March 31, 1998. The increase was
primarily due to an increase in base rental income at Burlington and Prentice
Plaza due to the increase in average occupancy and an increase in rates charged
to new and renewing tenants. The increase was partially offset by a decrease in
tenant expense reimbursements for real estate taxes at Prentice Plaza, which
was due to a 1998 overestimate of billings to tenants payable in 1999.
 
Interest expense on the Partnership's mortgage loans decreased by $32,400 for
the three months ended March 31, 1999 when compared to the three months ended
March 31, 1998. The decrease was primarily due to the effects of decreases in
the interest rates on the Partnership variable rate debt. Also contributing to
the decrease was the effects of principal payments made on the Partnership's
mortgage loans during the past 15 months.
 
Repairs and maintenance expense increased by $64,200 for the three months ended
March 31, 1999 when compared to the three months ended March 31, 1998. The
increase was primarily due to an increase in snow removal costs at Marquette.
The increase was also due to an increase in elevator repairs at Prentice Plaza
and an increase in janitorial services at Burlington.
 
Real estate taxes increased by $55,600 for the three months ended March 31,
1999 when compared to the three months ended March 31, 1998. The increase was
primarily due to an increase in estimated 1999 taxes at Burlington. The
increase was partially offset by a decrease at Marquette, which was due to an
overestimate of 1998 taxes payable in 1999.
 
Property operating expenses decreased by $14,600 for the three-month periods
under comparison. The decrease was primarily the result of a decrease in
professional services and advertising at Marquette. The decrease was partially
offset by an increase in utility costs at Prentice Plaza.
 
To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its asset and property management groups,
continues to take the following actions: 1) implementation of marketing
programs, including hiring of third-party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
property brochures; 2) early renewal of existing tenants' leases and addressing
any expansion needs these tenants may have; 3) promotion of local broker events
and networking with local brokers; 4) networking with national level retailers;
5) cold-calling other businesses and tenants in the market area and 6)
providing rental concessions or competitively pricing rental rates depending on
market conditions.
 
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement
 
7
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
of the maximum possible sales price. In the interim, the Partnership continues
to manage and maintain it properties. Cash Flow (as defined in the Partnership
Agreement) is generally not equal to net income or cash flows as determined by
generally accepted accounting principles ("GAAP"), since certain items are
treated differently under the Partnership Agreement than under GAAP. Management
believes that to facilitate a clear understanding of the Partnership's
operations, an analysis of Cash Flow (as defined in the Partnership Agreement)
should be examined in conjunction with an analysis of net income or cash flows
as determined by GAAP. The following table includes a reconciliation of Cash
Flow (as defined in the Partnership Agreement) to cash flow provided by
operating activities as determined by GAAP. Such amounts are not indicative of
actual distributions to Partners and should not be considered as an alternative
to the results disclosed in the Statements of Income and Expenses and
Statements of Cash Flow.
 
<TABLE>
<CAPTION>
                                                         Comparative Cash
                                                         Flow Results For
                                                        the Quarters Ended
                                                         3/31/99    3/31/98
-----------------------------------------------------------------------------
<S>                                                     <C>         <C>
Cash Flow (as defined in the Partnership Agreement)     $   62,700  $ 19,500
Items of reconciliation:
 Scheduled principal payments on mortgage loans payable    283,200   245,200
 Decrease in current assets                                495,600   541,000
 (Decrease) in current liabilities                         (92,200)  (89,800)
-----------------------------------------------------------------------------
Net cash provided by operating activities               $  749,300  $715,900
-----------------------------------------------------------------------------
Net cash provided by (used for) investing activities    $2,327,100  $(16,300)
-----------------------------------------------------------------------------
Net cash (used for) financing activities                $ (488,100) $(77,300)
-----------------------------------------------------------------------------
</TABLE>
 
Cash Flow (as defined in the Partnership Agreement) increased by $43,200 for
the three months ended March 31, 1999 when compared to the three months ended
March 31, 1998. The increase was primarily the result of improved operating
results, exclusive of depreciation and amortization, as previously discussed.
The increase was partially offset by an increase in principal payments on the
Partnership's mortgage loan obligations.
 
The net increase in the Partnership's cash position of $2,588,300 for the three
months ended March 31, 1999 was primarily the result of maturities of certain
of the Partnership's investments in debt securities. In addition, net cash
provided by operating activities exceeded principal payments on mortgage loans
payable and payments for capital and tenant improvements and leasing costs.
Liquid assets of the Partnership as of March 31, 1999 were comprised of amounts
held for working capital purposes.
 
Net cash provided by operating activities increased by $33,400 for the three
months ended March 31, 1999 when compared to the three months ended March 31,
1998. The increase was primarily due to the timing of the payment of certain
expenses at Marquette and by the improved operating results, exclusive of
depreciation and amortization at Marquette and Prentice Plaza, as previously
discussed.
 
Net cash (used for) provided by investing activities changed from $(16,300) for
the three months ended March 31, 1998 to $2,327,100 for the three months ended
March 31, 1999. The change was primarily due to the maturities of certain of
the Partnership's investments in debt securities. Also contributing to the
change was the 1999 receipt of proceeds from the sale of a land parcel at
Marquette.
 
The Partnership maintains working capital reserves to pay for capital
expenditures such as building and tenant improvements and leasing costs. During
the three months ended March 31, 1999, the Partnership spent $26,000 for
capital and tenant improvements and leasing costs and has projected to spend
approximately $250,000 during the remainder of 1999. Included in the projected
amount are improvement and leasing costs of approximately $75,000 for Marquette
and $175,000 for Prentice Plaza. Actual amounts expended may vary depending on
a number of factors including actual leasing activity, results of property
operations, liquidity considerations, the sale of a property and other market
conditions throughout the year. The General Partner believes these improvements
and leasing costs are necessary in order to increase and/or maintain occupancy
levels in very competitive markets, maximize rental rates charged to new and
renewing tenants and to prepare the remaining properties for eventual
disposition.
 
Investments in debt securities are the result of the extension of the
maturities of the Partnership's short-term investments as they are held for
working capital purposes. These investments are of investment grade and mature
less than one year from their date of purchase.
 
With the exception of variable rate mortgage debt, the Partnership has no
financial instruments for which there are significant risks. Based on variable
rate debt outstanding as of March 31, 1999, for every 1% change in interest
rates, the Partnership's annual interest expense would change by $226,400. Due
to the timing of the maturities and liquid nature of its investments in debt
securities, the Partnership believes that it does not have material risk.
 
Net cash used for financing activities increased by $410,800 for the three
months ended March 31, 1999 when compared to the three months ended March 31,
1998. The increase was primarily due to an increase in principal payments on
the Partnership's mortgage obligations, which was substantially due to the
utilization of the proceeds from the sale of the Marquette land parcel to
reduce debt.
 
Pursuant to a modification of the Partnership's Front-End Fees loan agreement
with an Affiliate of the General Partner, the Partnership has the option to
defer payment of interest on this loan for a 84-month period beginning January
1, 1993. In addition, any interest payments paid by the Partnership from
January 1, 1993 through December 31, 1999 may be borrowed from this Affiliate.
All deferred and subsequently borrowed amounts (including accrued interest
thereon) shall be due and payable on January 1, 2000, and shall not be
subordinated to payment of Original Capital Contributions to Limited Partners.
Beginning with the interest payment due on January 1, 1996, the Partnership
elected to defer payment of interest.
 
The junior mortgage loan collateralized by Marquette with a balance of
$6,898,000 as of March 31, 1999, matures on September 30, 1999. This loan
contains a prohibition on the payment of distributions to Partners and is
recourse to the Partnership. The Partnership is currently evaluating possible
alternative financing. There can be no assurance that these efforts will be
successful.
 
                                                                               8
<PAGE>
 
                          PART II. OTHER INFORMATION

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

     (a) Exhibits:  None

     (b) Reports on Form 8-K:

         There were no reports filed on Form 8-K for the three months ended 
         March 31, 1999.
<PAGE>
 
                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                         FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES XI

                         By: FIRST CAPITAL FINANCIAL CORPORATION
                             GENERAL PARTNER

Date:  May 13, 1999      By:  /s/ DOUGLAS CROCKER II
       ------------          --------------------------------------
                                  DOUGLAS CROCKER II
                             President and Chief Executive Officer

Date:  May 13, 1999      By: /s/ NORMAN M. FIELD
       ------------          --------------------------------------
                                 NORMAN M. FIELD
                             Vice President - Finance and Treasurer