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

                                      OR

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

     For the transition period from                        to
                                         -----------------    -----------------

     Commission File Number                              0-15538
                                         --------------------------------------

               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 700, 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>
                                                      June 30,
                                                        1999      December 31,
                                                     (Unaudited)      1998
------------------------------------------------------------------------------
<S>                                                  <C>          <C>
ASSETS
Investment in commercial rental properties:
 Land                                                $ 3,019,100  $ 6,070,100
 Buildings and improvements                           26,236,100   42,793,500
------------------------------------------------------------------------------
                                                      29,255,200   48,863,600
 Accumulated depreciation and amortization           (11,684,500) (17,200,600)
------------------------------------------------------------------------------
 Total investment properties, net of accumulated
  depreciation and amortization                       17,570,700   31,663,000
Cash and cash equivalents                              1,621,900    1,160,100
Investments in debt securities                         4,691,000    2,995,700
Rents receivable                                         112,500      811,900
Other assets (including loan acquisition costs, net
 of accumulated amortization of $386,300 and
 $380,900, respectively)                                  19,500      299,800
------------------------------------------------------------------------------
                                                     $24,015,600  $36,930,500
------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>                                        <C>         <C>          <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
 Mortgage loans payable                    $ 6,971,000 $25,646,200
 Front-End Fees Loan payable to Affiliate    8,295,200   8,295,200
 Accounts payable and accrued expenses         997,600   1,294,100
 Due to Affiliates, net                      2,280,300   1,956,800
 Security deposits                             144,100     211,500
 Other liabilities                             111,800     301,900
---------------------------------------------------------------------------
                                            18,800,000  37,705,700
---------------------------------------------------------------------------
Partners' capital (deficit):
 General Partner                               429,300    (775,200)
 Limited Partners (57,621 Units issued and
  outstanding)                               4,786,300
---------------------------------------------------------------------------
                                             5,215,600    (775,200)
---------------------------------------------------------------------------
                                           $24,015,600 $36,930,500
---------------------------------------------------------------------------
</TABLE>

STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1999 (unaudited)
and the year ended December 31, 1998
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                               General    Limited
                                               Partner    Partners    Total
-------------------------------------------------------------------------------
<S>                                           <C>        <C>        <C>
Partners' (deficit), 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 six months ended June 30,
 1999                                         1,204,500   4,786,300  5,990,800
-------------------------------------------------------------------------------
Partners' capital, June 30, 1999              $ 429,300  $4,786,300 $5,215,600
-------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements
                                                                               2
<PAGE>

STATEMENTS OF INCOME AND EXPENSES
For the quarters ended June 30, 1999 and 1998
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)

<TABLE>
<CAPTION>
                                                      1999       1998
------------------------------------------------------------------------
<S>                                                <C>        <C>
Income:
 Rental                                            $1,820,400 $2,313,900
 Interest                                              78,600     58,300
 Gain on sale of property                           5,507,800
------------------------------------------------------------------------
                                                    7,406,800  2,372,200
------------------------------------------------------------------------
Expenses:
 Interest:
  Affiliates                                          145,300    160,300
  Nonaffiliates                                       313,200    517,200
 Depreciation and amortization                        256,000    370,000
 Property operating:
  Affiliates                                           32,900     31,700
  Nonaffiliates                                       426,400    464,500
 Real estate taxes                                    193,400    298,600
 Insurance--Affiliate                                  25,900     24,600
 Repairs and maintenance                              248,900    259,600
 General and administrative:
  Affiliates                                            7,700      3,700
  Nonaffiliates                                        36,200     52,900
------------------------------------------------------------------------
                                                    1,685,900  2,183,100
------------------------------------------------------------------------
Net income                                         $5,720,900 $  189,100
------------------------------------------------------------------------
Net income allocated to General Partner            $  934,600 $  189,100
------------------------------------------------------------------------
Net income allocated to Limited Partners           $4,786,300 $        0
------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
 (57,621 Units outstanding)                        $    83.07 $     0.00
------------------------------------------------------------------------
</TABLE>

STATEMENTS OF INCOME AND EXPENSES
For the six months ended June 30, 1999 and 1998
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
                                                      1999       1998
------------------------------------------------------------------------
<S>                                                <C>        <C>
Income:
 Rental                                            $4,001,900 $4,380,800
 Interest                                             125,900    104,700
 Gain on sale of property                           5,799,600
------------------------------------------------------------------------
                                                    9,927,400  4,485,500
------------------------------------------------------------------------
Expenses:
 Interest:
  Affiliates                                          290,200    321,500
  Nonaffiliates                                       800,200  1,036,600
 Depreciation and amortization                        623,800    738,100
 Property operating:
  Affiliates                                           70,700     65,400
  Nonaffiliates                                       918,700    975,500
 Real estate taxes                                    545,400    595,000
 Insurance--Affiliate                                  56,400     51,300
 Repairs and maintenance                              547,700    494,200
 General and administrative:
  Affiliates                                           13,900     13,500
  Nonaffiliates                                        69,600    108,700
------------------------------------------------------------------------
                                                    3,936,600  4,399,800
------------------------------------------------------------------------
Net income                                         $5,990,800 $   85,700
------------------------------------------------------------------------
Net income allocated to General Partner            $1,204,500 $   85,700
------------------------------------------------------------------------
Net income allocated to Limited Partners           $4,786,300 $        0
------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
 (57,621 Units outstanding)                        $    83.07 $     0.00
------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1999 and 1998
(Unaudited)
(All dollars rounded to nearest 00s)

<TABLE>
<CAPTION>
                                                           1999         1998
--------------------------------------------------------------------------------
<S>                                                    <C>           <C>
Cash flows from operating activities:
 Net income                                            $  5,990,800  $   85,700
 Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization                             623,800     738,100
  (Gain) on sale of property                             (5,799,600)
  Changes in assets and liabilities:
  Decrease in rents receivable                              699,400     165,700
  Decrease in other assets                                  245,500     192,400
  (Decrease) in accounts payable and accrued expenses      (296,500)   (129,100)
  Increase in due to Affiliates                              33,300      26,900
  (Decrease) in other liabilities                          (190,100)   (147,800)
--------------------------------------------------------------------------------
   Net cash provided by operating activities              1,306,600     931,900
--------------------------------------------------------------------------------
Cash flows from investing activities:
 Proceeds from sale of property                          19,461,200
 (Increase) decrease in investments in debt
  securities                                             (1,695,300)    393,700
 Payments for capital and tenant improvements              (158,300)   (326,500)
--------------------------------------------------------------------------------
   Net cash provided by investing activities             17,607,600      67,200
--------------------------------------------------------------------------------
Cash flows from financing activities:
 Repayment of mortgage loans payable                    (18,142,000)
 Principal payments on mortgage loans payable              (533,200)   (525,300)
 Interest deferred on Front-End Fees loan payable to
  Affiliate                                                 290,200     321,500
 (Decrease) increase in security deposits                   (67,400)     10,800
--------------------------------------------------------------------------------
   Net cash (used for) financing activities             (18,452,400)   (193,000)
--------------------------------------------------------------------------------
Net increase in cash and cash equivalents                   461,800     806,100
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     $  1,621,900  $2,573,600
--------------------------------------------------------------------------------
Supplemental information:
 Interest paid to nonaffiliates during the period      $    830,000  $1,037,800
--------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements
3
<PAGE>

NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 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 quarter and six months ended June 30, 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. This joint venture was formed for the
purpose of acquiring a 100% interest in certain real property and 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' (deficit) 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
owned a 100% interest in the Burlington Office Center I, II and III
("Burlington"). Until the May 1999 sale of Burlington, this joint venture was
operated under the control of the General Partner. Accordingly, the Partnership
has included 100% of the venture's revenues, expenses, assets, liabilities and
Partner's 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 focus, therefore, is to prepare its
assets for sale and find purchasers for the remaining assets when market
conditions warrant such an action. The Partnership has two tenants who occupy
20% and 15% of the rental space at the Partnership's properties, respectively.

Commercial rental properties 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 on the straight-line
method over the life of each respective lease. Repair and maintenance costs are
expensed as incurred; expenditures for improvements are capitalized and
depreciated on the straight-line method 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 is 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 on sale 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. All of these securities
had a maturity of less than one year when purchased.

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' (deficit) 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 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 quarter and six months ended June 30,
1999, the General Partner was allocated Net Profits of $2,100 and $1,900,
respectively. In addition, the General Partner was allocated Net Profits for
the quarter and six months ended June 30, 1999 of $932,500 and $1,202,600 from
the sales of Partnership property, respectively. For the quarter and six months
ended June 30, 1998 the General Partner was allocated Net Profits of $189,100
and $85,700, respectively.

                                                                               4
<PAGE>

Fees and reimbursements paid and (receivable)/payable by the Partnership to
Affiliates during the quarter and six months ended June 30, 1999 were as
follows:

<TABLE>
<CAPTION>
                                 Paid
                           -----------------
                                      Six    (Receivable)
                           Quarter   Months    Payable
---------------------------------------------------------
<S>                        <C>      <C>      <C>
Property management and
 leasing fees              $ 30,900 $ 68,500 $  (10,100)
Interest expense on
 Front-End Fees loan
 (Note 3)                      None     None  2,257,300
Reimbursement of property
 insurance premiums          25,900   56,400       None
Legal                        45,500   63,600     29,500
Reimbursement of
 expenses, at cost:
 --Accounting                 2,800    8,800      2,400
 --Investor communication     2,000    4,900      1,200
---------------------------------------------------------
                           $107,100 $202,200 $2,280,300
---------------------------------------------------------
</TABLE>

The variance between amounts listed on this table and the Statement of Income
and Expenses is due to 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 for office space
at Prentice Plaza. During the quarter and six months ended June 30, 1999, ANTEC
paid $78,800 and $197,700, respectively, 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 quarter and six months ended June
30, 1999, MHC paid $19,400 and $44,100, respectively, 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 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 is
payable monthly at a rate no greater than the cost of funds obtained by the
Affiliate from unaffiliated lenders.

As of June 30, 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 documents. The weighted average interest
rate for the six months ended June 30, 1999 was 7.00%. For July 1999, the
interest rate was 7.18%.

Pursuant to a modification of this loan agreement, 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
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 June 30, 1999, the amount of interest deferred pursuant to this
modification was $2,257,300.

4. MORTGAGE LOANS PAYABLE:

Mortgage loans payable at June 30, 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
                                 ---------------------- Interest  Maturity
Property Pledged as Collateral    6/30/99    12/31/98   Rate (a)    Date
------------------------------------------------------------------------------
<S>                              <C>        <C>         <C>      <C>
Marquette Mall and               $1,616,400 $ 1,941,800   7.75%    7/1/2002(b)
 Office Building                    627,900     730,000   7.75%    7/1/2002(b)
                                    (c)       7,220,000             (c)
------------------------------------------------------------------------------
Burlington I, II and III Office
 Center                             (d)      11,000,000             (d)
------------------------------------------------------------------------------
Prentice Plaza (50%) (e)          4,726,700   4,754,400   7.00%  12/19/2000
------------------------------------------------------------------------------
                                 $6,971,000 $25,646,200
------------------------------------------------------------------------------
</TABLE>
(a) The average interest rate represents an average for the six months ended
    June 30, 1999. Interest rate is subject to change in accordance with the
    provisions of the loan document for Prentice Plaza. As of July 1, 1999, the
    interest rate on the mortgage loan collateralized by Prentice Plaza was
    7.79%.
(b) Loan is callable by Lender after August 1, 1999.
(c) On June 7, 1999, the Partnership repaid the junior mortgage collateralized
    by Marquette utilizing a portion of the proceeds generated from the sale of
    Burlington.
(d) On May 11, 1999, the Partnership repaid the mortgage collateralized by
    Burlington utilizing a portion of the proceeds generated from its sale. For
    further information regarding this sale, see Note 5.
(e) On July 12, 1999, the Partnership, repaid the mortgage collateralized by
    Prentice Plaza utilizing a portion of the proceeds generated from its sale.
    For further information regarding this sale, see Note 6.

For additional information regarding the mortgage loans payable, see notes to
the financial statements in the Partnership's Annual Report for the year ended
December 31, 1998.

5. PROPERTY SALES:

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 $325,500. These proceeds were utilized to
make principal payments on the loans collateralized by Marquette. The
Partnership recorded a gain of $274,500 in connection with this transaction.

On May 11, 1999, the joint venture in which the Partnership owns a 70%
preferred interest, sold Burlington for a sale price of $19,650,000. Net
proceeds from this transaction amounted to $8,135,700, which was net of actual
and estimated closing expenses and the repayment of the mortgage loan
collateralized by the property. The Partnership recorded a gain of $5,525,100
for the quarter and six months ended June 30, 1999 in connection with this
transaction. The Partnership utilized $6,798,000 of the proceeds generated from
this sale to pay off the junior mortgage loan collateralized by Marquette. The
remaining proceeds were added to working capital reserves.

6. SUBSEQUENT EVENT:

On July 12, 1999, a joint venture in which the Partnership owned a 50% interest
consummated the sale of Prentice Plaza for a sale price of $22,100,000. Net
proceeds from this transaction amounted to $6,175,000, which was net of actual
and estimated closing expenses and the repayment of the mortgage loan
collateralized by the property. The Partnership will record a gain of
approximately $4,600,000 for the quarter ended September 30, 1999 in connection
with this sale. In connection with this transaction, the Partnership intends to
distribute $5,474,000 or $95.00 per unit on November 30, 1999 to Limited
Partners of record as of July 12, 1999.

5
<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. Components of the Partnership's
operating results are generally expected to decline as real property interests
are sold since the Partnership no longer realizes income nor incurs expenses
from such real property interests. During the quarter ended June 30, 1999, the
Partnership sold Burlington Office Center I, II and III ("Burlington").

OPERATIONS
The table below is a recap of the Partnership's share of certain operating
results of each of its properties for the quarters and six months ended June
30, 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     For the Six Months
                                 Ended                 Ended
                         --------------------- ---------------------
                          6/30/99    6/30/98    6/30/99    6/30/98
--------------------------------------------------------------------
<S>                      <C>        <C>        <C>        <C>
MARQUETTE MALL AND OFFICE BUILDING
Rental revenues          $1,106,700 $1,108,100 $2,109,000 $2,089,900
--------------------------------------------------------------------
Property net income (b)  $  203,700 $  128,400 $  242,000 $  134,400
--------------------------------------------------------------------
Average occupancy               81%        81%        81%        81%
--------------------------------------------------------------------
PRENTICE PLAZA (50%)
Rental revenues          $  382,600 $  382,500 $  757,200 $  732,200
--------------------------------------------------------------------
Property net income (c)  $   12,600 $   72,900 $   52,200 $   85,100
--------------------------------------------------------------------
Average occupancy               88%        94%        91%        94%
--------------------------------------------------------------------
BURLINGTON OFFICE CENTER I, II AND III
Rental revenues          $  331,000 $  823,100 $1,135,700 $1,566,500
--------------------------------------------------------------------
Property net income (d)  $  102,800 $  154,100 $  145,100 $  221,100
--------------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are 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 the 1999 periods does not include a gain of
    $274,500 recorded on the sale of land parcel (for further information, see
    Note 5 of Notes to Financial Statements).
(c) Property was sold on July 12, 1999 (for further information, see Note 6 of
    Notes to Financial Statements).
(d) Property net income for the 1999 periods does not include a gain of
    $5,525,100 recorded on the sale of the property (for further information,
    see Note 5 of Notes to Financial Statements).

Unless otherwise disclosed, discussions of fluctuations between 1999 and 1998
refer to both the quarters and six months ended June 30, 1999 and 1998.

Net income for the Partnership increased by $5,531,800 and $5,905,100 for the
quarter and six months ended June 30, 1999 when compared to the quarter and six
months ended June 30, 1998, respectively. The increases were primarily due to
the gain recorded on the 1999 sale of Burlington. The increase for the six-
month periods under comparison was also due to the gain recorded on the 1999
sale of a land parcel at Marquette Mall and Office Building ("Marquette"). The
increases were partially offset by the partial absence of 1999 operating
results at Burlington due to its May 1999 sale.

Net (loss) income exclusive of Burlington changed from $(135,400) for the six
months ended June 30, 1998 to $46,100 the six months ended June 30, 1999. The
change was primarily due to improved operating results at Marquette together
with increases in interest earned on the Partnership's short-term investments.
Partially offsetting the changes were diminished operating results at Prentice
Plaza.

Net income, exclusive of Burlington, increased by $75,300 for the quarter ended
June 30, 1999 when compared to the quarter ended June 30, 1998. The increase
was primarily due to improved operating results at Marquette and an increase in
interest earned on the Partnership's short-term investments. The increase was
partially offset by diminished operating results at Prentice Plaza.

The following comparative discussion excludes the operating results of
Burlington.

Rental revenues increased by $44,100 or 1.6% for the six months ended June 30,
1999 when compared to the six months ended June 30, 1998. The increase was
primarily due to the 1999 receipt of consideration for the early termination of
a tenant's lease at Marquette. In addition, the increase was due to an increase
in base rental income at Prentice Plaza, which was due to an increase in rates
charged to new and renewing tenants, partially offset by the decline in
occupancy. The increase was partially offset by a decrease in percentage rental
income at Marquette, which was due to the 1999 recognition of rental income
that is contingent upon tenants achieving specified targets only to the extent
that such targets are achieved. The Partnership adopted this method for periods
beginning after July 1, 1998. Rental revenues for the comparable quarterly
periods remained relatively unchanged.

Interest expense on the Partnership's mortgage loans decreased by $80,500 and
$99,200 for the quarter and six months ended June 30, 1999 when compared to the
quarter and six months ended June 30, 1998, respectively. The decreases were
primarily due to the June 1999 repayment of the junior mortgage loan
collateralized by Marquette. The decreases were also due to the effects of
principal payments made over the past 18 months on the Partnership's mortgage
loans.

                                                                               6
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Repair and maintenance expenses increased by $18,200 and $65,600 for the
quarter and six months ended June 30, 1999 when compared to the quarter and six
months ended June 30, 1998, respectively. The increase for the six-month
periods was primarily due to increased snow removal costs at Marquette for
1999. The increases were also due to increased cleaning costs at Prentice Plaza
and repairs to the energy plant at Marquette.

Real estate tax expense increased by $22,900 for the six-month periods under
comparison. The increase was primarily due to an increase in projected 1999
expense at Prentice Plaza. Real estate tax expense remained relatively
unchanged for the quarterly periods under comparison.

Property operating expenses increased by $24,900 and $14,700 for the quarter
and six months ended June 30, 1999 when compared to the quarter and six months
ended June 30, 1998, respectively. The increases were primarily due to an
increase in management and leasing fees at Prentice Plaza, which was due to a
greater portion of 1999's leasing fees were expensed than in the comparable
1998 periods.

To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated and unaffiliated 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 of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its properties.
Notwithstanding the Partnership's intention relative to property sales, another
primary objective of the Partnership is to provide cash distributions to
Partners from Partnership operations. To the extent cumulative cash
distributions exceed net income, such excess distributions will be treated as a
return of capital. 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 Six
                                                             Months Ended
                                                        -----------------------
                                                          6/30/99      6/30/98
--------------------------------------------------------------------------------
<S>                                                     <C>           <C>
Cash Flow (as defined in the Partnership Agreement)     $    281,800  $ 298,500
Items of Reconciliation:
 Scheduled principal payments on mortgage loans payable      533,200    525,300
 Decrease in current assets                                  944,900    358,100
 (Decrease) in current liabilities                          (453,300)  (250,000)
--------------------------------------------------------------------------------
Net cash provided by operating activities               $  1,306,600  $ 931,900
--------------------------------------------------------------------------------
Net cash provided by investing activities               $ 17,607,600  $  67,200
--------------------------------------------------------------------------------
Net cash (used for) financing activities                $(18,452,400) $(193,000)
--------------------------------------------------------------------------------
</TABLE>

Cash Flow (as defined in the Partnership Agreement) decreased by $16,700 for
the six months ended June 30, 1999 when compared to the six months ended June
30, 1998. The decrease was primarily the result of the partial absence of
operating results from Burlington exclusive of depreciation and amortization
due to its sale in May 1999 and an increase in principal payments on the
Partnership's mortgage loan obligations.

The net increase in the Partnership's cash position of $461,800 for the six
months ended June 30, 1999 was primarily the result of net cash provided by
operating activities and net proceeds from property sales exceeded principal
payments on mortgage loans payable and payments for capital and tenant
improvements and leasing costs. The increase was partially offset by an
increase in investments in debt securities, which was almost entirely due to
the investment of the excess proceeds from property sales after repayment of
debt. Liquid assets of the Partnership as of June 30, 1999 were comprised of
amounts held for working capital purposes.

The increase in net cash provided by operating activities of $374,700 was
primarily due to the timing of the receipt of rental income at Marquette. The
increase was also due to improved operating results, exclusive of depreciation
and amortization and gain on sale of property, as previously discussed.

Net cash provided by investing activities increased by $17,540,400 for the six
months ended June 30, 1999 when compared to the six months ended June 30, 1998.
The increase was primarily due to the 1999 sale of Burlington. The increase was
partially offset by a net increase in 1999 in investment in debt securities as
opposed to a net maturity of 1998 investments in debt securities.

The Partnership maintains working capital reserves to pay for capital
expenditures such as building and tenant

7
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
improvements and leasing costs. During the six months ended June 30, 1999, the
Partnership spent $158,300 for capital and tenant improvements and leasing
costs and has projected to spend approximately $175,000 during the remainder of
1999. Included in the projected amount are improvement and leasing costs of
approximately $125,000 for Prentice Plaza and $50,000 for Marquette. Actual
amounts expended may vary depending on a number of factors including actual
leasing activity, results of property operations 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 purchase.

With the exception of variable rate debt, the Partnership has no financial
instruments for which there are significant risks. Based on variable rate
outstanding as of June 30, 1999, for every 1% change in interst rates, the
Partnership's annual interest expense would change by $130,200. 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 $18,259,400 for the six
months ended June 30, 1999 when compared to the six months ended June 30, 1998.
The increase was primarily due to the 1999 repayment of mortgage loans
utilizing the proceeds from the sale of Burlington.

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 distributions to Limited Partners of amounts equal to their
utilized Original Capital Contributions. Beginning with the interest payment
due on January 1, 1996, the Partnership has elected to defer payment of
interest.

On May 11, 1999, a joint venture in which the Partnership owned a 70% preferred
majority interest, completed the sale of Burlington for a sale price of
$19,650,000. Sale Proceeds of $8,135,700 were utilized to repay the $6,798,000
junior mortgage collateralized by Marquette, with the remaining proceeds added
to working capital reserves.

On July 12, 1999, a joint venture in which the Partnership owned a 50%
interest, consummated the sale of Prentice Plaza for a sale price of
$22,100,000. Sale proceeds from this transaction amounted to $6,175,000 which
was net of actual estimated closing expenses as repayment of the mortgage loan
collateralized by the property. The Partnership intends to distribute
$5,474,000 or $95.00 per unit on November 30, 1999 to Limited Partners of
record as of July 12, 1999.

The Year 2000 problem is the result of the inability of existing computer
programs to distinguish between a year beginning with "20" rather than "19".
This is the result of computer programs using two rather than four digits to
define an applicable year. If not corrected, any program having time sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a variety of problems including miscalculations,
loss of data and failure of entire systems. Critical areas that could be
effected are accounts receivable and rent collections, accounts payable,
general ledger, cash management, fixed assets, investor services, computer
hardware, telecommunications systems and health, security, fire and safety
systems.

The Partnership has engaged Affiliated and unaffiliated entities to perform all
of its critical functions that utilize software that may have time-sensitive
applications. All of these service providers are providing these services for
their own organizations as well as for other clients. The General Partner, on
behalf of the Partnership, has been in close communications with each of these
service providers regarding steps that are being taken to assure that there
will be no serious interruption of the operations of the Partnership resulting
from Year 2000 problems. Based on the results of the inquiries, as well as a
review of the disclosures by these service providers, the General Partner
believes that the Partnership will be able to continue normal business
operations and will incur no material costs related to Year 2000 issues.

The Partnership has not formulated a written contingency plan. However, the
General Partner believes that based on the size of the Partnership's portfolio
and its limited number of transactions, aside from catastrophic failure of
banks, government agencies, etc., it could carry out substantially all of its
critical operations on a manual basis or easily convert to systems that are
Year 2000 compliant.

During 1999, the Partnership sold two of its remaining three properties. With
one property remaining in its portfolio, the Partnership believes that the cash
generated by the remaining properties, deducting amounts to be utilized for
building and tenant improvements and principal payments on the Partnership's
loans, may not be substantial enough to maintain distributions of Cash Flow (as
defined in the Partnership Agreement). Accordingly, cash distributions of Cash
Flow (as defined in the Partnership Agreement) to Partners continue to be
suspended. The General Partner believes that Cash Flow (as defined in the
Partnership Agreement) is one of the best and least expensive sources of cash
available to the Partnership. For the six months ended June 30, 1999, Cash Flow
(as defined in the Partnership Agreement) of $281,800 was retained to
supplement working capital reserves.

Based upon the current estimated value of its assets, net of its outstanding
liabilities, together with its expected operating results and capital
expenditure requirements, the General Partner believes that the Partnership's
cumulative distributions to its Limited Partners from inception through the
termination of the Partnership will be substantially less than such Limited
Partners' Original Capital Contributions. There can be no assurance as to the
amount and/or availability of cash for future distributions to Partners.

                                                                               8
<PAGE>

                          PART II. OTHER INFORMATION

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

     (a)  Exhibits: None

     (b)  Reports on Form 8-K:

          A report was filed on Form 8-K in May, 1999 reporting the sale of
          Burlington.
          A report was filed on Form 8-K on July 27, 1999 reporting the sale of
          Prentice Plaza.

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

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