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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549-1004



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the period ended September 30, 2004



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 incorporation or organization) |  | (I.R.S. Employer 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   ̈



Indicate by
check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes   ̈    No  x



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.



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PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



FIRST CAPITAL INCOME PROPERTIES, LTD. SERIES XI



BALANCE SHEETS

(All dollars rounded to nearest 00s)



|                                                                                         |  |                                |            |                   |   |           
|---------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | ----------------- | - | ----------
|                                                                                         |  | September 30, 2004 (Unaudited) |            | December 31, 2003
|                                                                                        
|                                                                                         |  |                               
|ASSETS                                                                                   |  |                                |            |                   |   |           
|Real estate held for disposition                                                         |  | $                              |           |                   | $ | 7,000,000 
|Cash and cash equivalents                                                                |  |                                | 10,570,500 |                   |   | 5,725,200 
|Rents receivable                                                                         |  |                                | 29,400     |                   |   | 549,600   
|Other assets (net of accumulated amortization on leasing commissions of $13,400 in 2003) |  |                                | 30,200     |                   |   | 90,300    
|                                                                                        
|                                                                                         |  | $                              | 10,630,100 |                   | $ | 13,365,100
|                                                                                        
|                                                                                        
|LIABILITIES AND PARTNERS CAPITAL                                                       
|Liabilities:                                                                             |  |                                |            |                   |   |           
|Front-End Fees loan payable to Affiliate                                                 |  | $                              |           |                   | $ | 8,295,200 
|Accrued real estate taxes                                                                |  |                                |           |                   |   | 845,800   
|Accounts payable and accrued expenses                                                    |  |                                | 114,200    |                   |   | 489,500   
|Due to Affiliates                                                                        |  |                                |           |                   |   | 3,100     
|Security deposits                                                                        |  |                                |           |                   |   | 55,000    
|Distribution payable                                                                     |  |                                | 230,500    |                   |   | 230,500   
|                                                                                        
|                                                                                         |  |                                | 344,700    |                   |   | 9,919,100 
|                                                                                        
|Partners Capital:                                                                       |  |                                |            |                   |   |           
|General Partner                                                                          |  |                                |           |                   |   | 1,389,700 
|Limited Partners (57,621 Units issued and outstanding)                                   |  |                                | 10,285,400 |                   |   | 2,056,300 
|                                                                                        
|                                                                                         |  |                                | 10,285,400 |                   |   | 3,446,000 
|                                                                                        
|                                                                                         |  | $                              | 10,630,100 |                   | $ | 13,365,100
|                                                                                        

FIRST CAPITAL INCOME PROPERTIES, LTD. SERIES XI



STATEMENT OF PARTNERS CAPITAL

For the nine months
ended September 30, 2004

(Unaudited)

(All dollars rounded to nearest 00s)



|                                                                           |  |                 |            |   |                  |   |            |       |  |   |            |  
|-------------------------------------------------------------------------- |  | --------------- | ---------- | - | ---------------- | - | ---------- | ----- |  | - | ---------- | -
|                                                                           |  | General Partner |            |   | Limited Partners |   |            | Total | 
|                                                                           | 
|Partners capital, January 1, 2004                                         |  | $               | 1,389,700  |   |                  | $ | 2,056,300  |       |  | $ | 3,446,000  |  
|Net (loss) for the nine months ended September 30, 2004                    |  |                 | (7,200     | ) |                  |   | (757,100   | )     |  |   | (764,300   | )
|Capital adjustment, extinguishment of debt to affiliate of General Partner |  |                 |           |   |                  |   | 8,295,200  |       |  |   | 8,295,200  |  
|Reallocation of Partners Capital                                          |  |                 | (1,382,500 | ) |                  |   | 1,382,500  |       |  |   |           |  
|Distributions for the nine months ended September 30, 2004                 |  |                 |           |   |                  |   | (691,500   | )     |  |   | (691,500   | )
|                                                                           | 
|Partners capital, September 30, 2004                                      |  | $               |           |   |                  | $ | 10,285,400 |       |  | $ | 10,285,400 |  
|                                                                           | 



2

The
accompanying notes are an integral part of the financial statements



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FIRST CAPITAL INCOME PROPERTIES, LTD. SERIES
XI



STATEMENTS OF INCOME AND EXPENSES

For the quarters ended September 30, 2004 and 2003

(Unaudited)

(All dollars rounded to nearest 00s

except per Unit amounts)



|                                                                                                         |  |      |        |      |   |         |  
|-------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------- | -
|                                                                                                         |  | 2004 |        | 2003 |  
|                                                                                                         | 
|Income:                                                                                                  |  |      |        |      |   |         |  
|Interest                                                                                                 |  | $    | 32,300 |      | $ | 11,800  |  
|                                                                                                         | 
|Expenses:                                                                                                |  |      |        |      |   |         |  
|General and administrative:                                                                              |  |      |        |      |   |         |  
|Affiliates                                                                                               |  |      | 7,300  |      |   | 7,300   |  
|Nonaffiliates                                                                                            |  |      | 24,400 |      |   | 24,800  |  
|                                                                                                         | 
|                                                                                                         |  |      | 31,700 |      |   | 32,100  |  
|                                                                                                         | 
|Income (loss) from continuing operations                                                                 |  |      | 600    |      |   | (20,300 | )
|                                                                                                         | 
|Income from discontinued operations                                                                      |  |      | 19,800 |      |   | 243,700 |  
|                                                                                                         | 
|Net income                                                                                               |  | $    | 20,400 |      | $ | 223,400 |  
|                                                                                                         | 
|Net income allocated toGeneral Partner                                                                   |  | $    |       |      | $ | 2,200   |  
|                                                                                                         | 
|Net income allocated toLimited Partners                                                                  |  | $    | 20,400 |      | $ | 221,200 |  
|                                                                                                         | 
|Income (loss) from continuing operations allocated toLimited Partners per Unit(57,621 Units outstanding) |  | $    | 0.01   |      | $ | (0.35   | )
|                                                                                                         | 
|Net income allocated toLimited Partners per Unit(57,621 Units outstanding)                               |  | $    | 0.35   |      | $ | 3.84    |  
|                                                                                                         | 



FIRST CAPITAL INCOME PROPERTIES, LTD.
SERIES XI



STATEMENTS OF INCOME AND EXPENSES

For the nine months ended September 30, 2004 and 2003

(Unaudited)

(All dollars rounded to nearest 00s

except per Unit amounts)



|                                                                                                  |  |      |          |   |      |   |         |  
|------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------- | -
|                                                                                                  |  | 2004 |          |   | 2003 |  
|                                                                                                  | 
|Income:                                                                                           |  |      |          |   |      |   |         |  
|Interest                                                                                          |  | $    | 55,400   |   |      | $ | 46,000  |  
|                                                                                                  | 
|Expenses:                                                                                         |  |      |          |   |      |   |         |  
|General and administrative:                                                                       |  |      |          |   |      |   |         |  
|Affiliates                                                                                        |  |      | 21,800   |   |      |   | 21,800  |  
|Nonaffiliates                                                                                     |  |      | 88,200   |   |      |   | 84,400  |  
|                                                                                                  | 
|                                                                                                  |  |      | 110,000  |   |      |   | 106,200 |  
|                                                                                                  | 
|Loss from continuing operations                                                                   |  |      | (54,600  | ) |      |   | (60,200 | )
|                                                                                                  | 
|Discontinued operations:                                                                          |  |      |          |   |      |   |         |  
|(Loss) income from discontinued operations (including impairment charge of $900,000 in 2004)      |  |      | (614,100 | ) |      |   | 651,100 |  
|Loss on sale of property                                                                          |  |      | (95,600  | ) |      |   |        |  
|                                                                                                  | 
|(Loss) income from discontinued operations                                                        |  |      | (709,700 | ) |      |   | 651,100 |  
|                                                                                                  | 
|Net (loss) income                                                                                 |  | $    | (764,300 | ) |      | $ | 590,900 |  
|                                                                                                  | 
|Net (loss) income allocated to General Partner                                                    |  | $    | (7,200   | ) |      | $ | 5,900   |  
|                                                                                                  | 
|Net (loss) income allocated to Limited Partners                                                   |  | $    | (757,100 | ) |      | $ | 585,000 |  
|                                                                                                  | 
|Loss from continuing operations allocated to Limited Partners per Unit (57,621 Units outstanding) |  | $    | (0.94    | ) |      | $ | (1.03   | )
|                                                                                                  | 
|Net (loss) income allocated to Limited Partners per Unit (57,621 Units outstanding)               |  | $    | (13.14   | ) |      | $ | 10.15   |  
|                                                                                                  | 



3

The accompanying notes are
an integral part of the financial statements



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FIRST CAPITAL INCOME PROPERTIES, LTD. SERIES
XI



STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2004 and 2003

(Unaudited)

(All dollars rounded to nearest 00s)



|                                                                                                   |  |      |            |   |      |   |           |  
|-------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                                                                                   |  | 2004 |            |   | 2003 |  
|                                                                                                   | 
|Cash flows from operating activities:                                                              |  |      |            |   |      |   |           |  
|Net (loss) income                                                                                  |  | $    | (764,300   | ) |      | $ | 590,900   |  
|Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |  |      |            |   |      |   |           |  
|Depreciation and amortization                                                                      |  |      | 13,800     |   |      |   | 6,200     |  
|Provision for value impairment                                                                     |  |      | 900,000    |   |      |   |          |  
|Loss on sale of property                                                                           |  |      | 95,600     |   |      |   |          |  
|Changes in assets and liabilities:                                                                 |  |      |            |   |      |   |           |  
|Decrease (increase) in rents receivable                                                            |  |      | 327,600    |   |      |   | (25,500   | )
|Decrease (increase) in other assets                                                                |  |      | 35,000     |   |      |   | (70,400   | )
|(Decrease) increase in accrued real estate taxes                                                   |  |      | (396,300   | ) |      |   | 483,900   |  
|(Decrease) in accounts payable and accrued expenses                                                |  |      | (375,300   | ) |      |   | (186,600  | )
|(Decrease) increase in due to Affiliates                                                           |  |      | (3,100     | ) |      |   | 84,300    |  
|(Decrease) in security deposits                                                                    |  |      | (55,000    | ) |      |   | (2,800    | )
|                                                                                                   | 
|Net cash (used in) provided by operating activities                                                |  |      | (222,000   | ) |      |   | 880,000   |  
|                                                                                                   | 
|Cash flows from investing activities:                                                              |  |      |            |   |      |   |           |  
|Payments for building and tenant improvements                                                      |  |      | (95,100    | ) |      |   | (239,600  | )
|Proceeds from sale of property                                                                     |  |      | 5,877,700  |   |      |   |          |  
|Leasing commissions paid                                                                           |  |      | (23,800    | ) |      |   | (22,700   | )
|                                                                                                   | 
|Cash provided by (used in) investing activities                                                    |  |      | 5,758,800  |   |      |   | (262,300  | )
|                                                                                                   | 
|Cash flows from financing activities:                                                              |  |      |            |   |      |   |           |  
|Distributions to Limited Partners                                                                  |  |      | (691,500   | ) |      |   | (691,500  | )
|                                                                                                   | 
|Cash (used in) financing activities                                                                |  |      | (691,500   | ) |      |   | (691,500  | )
|                                                                                                   | 
|Net increase (decrease) in cash and cash equivalents                                               |  |      | 4,845,300  |   |      |   | (73,800   | )
|Cash and cash equivalents at the beginning of the period                                           |  |      | 5,725,200  |   |      |   | 5,864,600 |  
|                                                                                                   | 
|Cash and cash equivalents at the end of the period                                                 |  | $    | 10,570,500 |   |      | $ | 5,790,800 |  
|                                                                                                   | 



4

The
accompanying notes are an integral part of the financial statements



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FIRST CAPITAL INCOME PROPERTIES, LTD.SERIES XI



NOTES TO FINANCIAL STATEMENTS



1. Organization and 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.



Accounting
policies:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for
interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States
for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter and nine months ended
September 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. Reference is made to the Partnerships Annual Report for the year ended December 31, 2003, 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.



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 accounting principles generally accepted in the United States 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.



Commercial rental property held for investment is 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 expenditures are expensed as incurred;
expenditures for improvements are capitalized and depreciated over the estimated life of such improvements.



The Partnership evaluates its commercial rental property 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.



Since 1999, the Partnership has owned only one property, Marquette Mall and Office Building (Marquette), which has 382,052 net leasable
square feet, is located in Michigan City, Indiana and was sold on June 11, 2004.



The
FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long Lived Assets. Statement 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The
Standard was adopted in 2002. In April 2004, the Partnership entered into a Purchase and Sale Agreement for the sale of Marquette for approximately $6,100,000 and the property was sold on June 11, 2004. In the first quarter of 2004, the Partnership
elected to write down the investment in Marquette to the approximate sales value resulting in an impairment charge of $900,000. Marquettes operations through the date of sale have been disclosed as discontinued operations for each period
presented. A final real estate tax bill for Marquette was received during the quarter ended September 30, 2004. An adjustment to the estimated real estate tax liability was required and is reflected in discontinued operations in the statement of
income.



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 on sale is recognized in accordance with accounting principles generally
accepted in the United States.



The Partnership has disposed of its real estate
properties and upon resolution of post-closing sale matters, the Partnership will make a liquidating distribution and dissolve.



Cash equivalents are considered all highly liquid investments with a maturity of three months or less when purchased.



Certain prior year amounts have been reclassified to conform to the current year presentation.



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



5



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FIRST CAPITAL INCOME PROPERTIES, LTD.SERIES XI



NOTES TO FINANCIAL STATEMENTScontinued



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 nine months ended September 30, 2004, the General Partner was allocated Net Profits (Losses) of $0 and $(7,200), respectively. For the quarter and nine months ended September 30, 2003, the General Partner was
allocated Net Profits (Losses) of $2,200 and $5,900, respectively.



Fees and
reimbursements paid and payable by the Partnership to Affiliates during the quarter and nine months ended September 30, 2004 were as follows:



|                                               |  |         |        |            |   |        |  |   |     
|---------------------------------------------- |  | ------- | ------ | ---------- | - | ------ |  | - | ----
|                                               |  | Paid    |        | Payable   
|                                               |  |         |        |           
|                                               |  | Quarter |        | NineMonths |  
|                                              
|Discontinued operations:                       |  |         |        |            |   |        |  |   |     
|Asset management fees                          |  | $       | 5,300  |            | $ | 7,900  |  | $ | None
|Reimbursement of property insurance premiums   |  |         | None   |            |   | 43,100 |  |   | None
|Real estate tax services                       |  |         | 1,600  |            |   | 3,500  |  |   | None
|General and administrative:                    |  |         |        |            |   |        |  |   |     
|Reimbursement of expenses, at cost:Accounting |  |         | 7,300  |            |   | 21,800 |  |   | None
|                                              
|                                               |  | $       | 14,200 |            | $ | 76,300 |  | $ | None
|                                              



3. Front-End Fees loan payable to Affiliate:



The Partnership borrowed $8,295,200 from an Affiliate of the General Partner, the
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 to payment to the
Limited Partners of 100% of their Original Capital Contribution from Sale or Refinancing Proceeds (as defined in the Partnership Agreement). In the event that the Front-End Fees loan is not repaid, such amount will be reclassed to Partners
Capital.

Pursuant to a modification of this loan agreement, beginning January 1, 1996, the Partnership elected to defer payment of interest on the Front-End Fees
Loan. During the year ended December 31, 1999, the Affiliate of the General Partner elected to waive the Partnerships obligation for all outstanding deferred interest on this loan and charge no interest in the future. During the year ended
December 31, 1999, the Partnership reflected the waiver of deferred interest in the financial statements through an adjustment of $2,257,700 to Partners Capital.



Based upon the current estimated value of its assets, net of its outstanding liabilities, the General Partner believes that the Partnerships
cumulative distributions to its Limited Partners from inception through the termination of the Partnership will be less than such Limited Partners Original Capital Contribution. Accordingly, during the quarter ended June 30, 2004, the Front
End Fees loan was considered extinguished in accordance with the terms of the note and reflected as an increase to Partners Capital.



4. Reallocation of Partners Capital:



As stated in Footnote 3, the General Partner believes that the Partnerships cumulative distributions to its Limited Partners from inception through the termination of the
Partnership will be less than such Limited Partners Original Capital Contribution therefore, under the terms of the Partnership Agreement, the General Partner will not be entitled to any distributions. During the quarter ended June 30, 2004,
the General Partner concluded that all remaining cash will be distributed to the Limited Partners and as a result, there was a reallocation of equity from the General Partner to the Limited Partners.



Since the final distribution will be contingent upon estimated liquidation and dissolution costs that
have not yet been recognized in the financial statements, the amount and timing of the final distribution to the Limited Partners has not yet been determined and may not equal the $10,285,400 reflected on the Balance Sheet as Limited Partners
Capital.



5. Property Sale:



On June 11, 2004, the Partnership completed the sale of Marquette Mall and Office Building for a sale
price of $6,100,000. Net proceeds from this transaction amounted to $5,877,700 which was net of actual and estimated closing and post-closing sale expenses. The Partnership reported a (loss) on sale for financial reporting purposes of $(95,600) for
the nine-months ended September 30, 2004.



6



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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, 2003 for a discussion of the Partnerships business.



Certain statements in the Quarterly Report on Form 10-Q may constitute forward-looking
statements as defined in Section 27A of the Securities Act of 1933 (the Securities Act), Section 21E of the Securities Exchange Act of 1934 (the Exchange Act), the Private Securities Litigation Reform Act of 1995 (the
PSLRA) or in releases made by the SEC, all as may be amended from time to time. Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance
or achievements of the Partnership, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking
statements. Forward looking statements can be identified by, among other things, the use of forward-looking language, such as the words plan, believe, expect, anticipate, intend,
estimate, project, may, will, would, could, should, seeks, or scheduled to, or other similar words, or the negative of these terms or other
variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of
the safe harbor provisions of such laws. The Partnership cautions investors that any forward-looking statements made by the Partnership are not guarantees or indicative of future performance. Important assumptions and other important
factors could cause actual results to differ materially from those forward-looking statements with respect to the Partnership. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not
be placed on such statements.



Although the Partnership believes that its plans,
intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any of its forward-looking statements. The Partnerships future
financial condition and results of operations, as well as any forward-looking statements, are made only as of the date hereof and the partnership does not have or undertake any obligation to update or revise any forward-looking statements whether as
a result of new information, subsequent events or otherwise, unless otherwise required by law.



On June 11, 2004 the Partnership completed the sale of Marquette. Please refer to the Form 8-K filed on June 25, 2004 for more information regarding the sale. The sale of Marquette constituted the sale of the remaining property held by the
Partnership. The remaining assets of the partnership primarily consist of cash and cash equivalents held for distribution to Partners and amounts held to resolve post-closing sale matters which are reflected as receivables and payables on the
Partnerships balance sheet. Operating results for the nine months ended September 30, 2004 reflect Marquettes operations through its sale on June 11, 2004. Other than post-closing sale matters, Marquette operations will have no material
impact on future operating results of the Partnership.



Based upon the current estimated
value of its assets, net of its outstanding liabilities, the General Partner believes that the Partnerships cumulative distributions to its Limited Partnersfrom inception through the termination of the
Partnership will be less than such Limited Partners Original Capital Contribution therefore, under the terms of the Partnership Agreement, the General Partner will not be entitled to any distributions. During the quarter ended June 30, 2004,
the General Partner concluded that all remaining cash will be distributed to the Limited Partners and as a result, there was a reallocation of equity from the General Partner to the Limited Partners. Since the final distribution will be contingent
upon estimated liquidation and dissolution costs that have not yet been recognized in the financial statements, the amount and timing of the final distribution to the Limited Partners has not yet been determined and may not equal the $10,285,400
reflected on the Balance Sheet as Limited Partners Capital.



The Partnership,
following the sale of its operating assets, 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. Accordingly, operating results are not comparable as a result of the sale and the disposition of the operating assets of the Partnership and may not provide any indication of the future operating results of the Partnership. The
FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long Lived Assets. Statement 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The
standard was adopted in 2002. In April 2004, the Partnership entered into a Purchase and Sale Agreement for the sale of Marquette for approximately $6,100,000 and the property was sold on June 11, 2004. During the first quarter of 2004, the
Partnership wrote down the investment in Marquette to the approximate sales value resulting in an impairment charge of $900,000. The impairment charge is reflected in Discontinued Operations on the Statements of Income and Expenses.



Operations



Net income for the Partnership decreased by $203,000 and $1,355,200 for the quarter and nine months ended September 30, 2004 when compared to the
quarter and nine months ended September 30, 2003. As previously discussed, the Partnership entered into a Purchase and Sale Agreement for the sale of Marquette for approximately $6,100,000. Accordingly, the Partnership wrote down the investment in
Marquette to the approximate sales value resulting in an impairment charge of $900,000 during the first quarter of 2004. On June 11, 2004, the Partnership sold Marquette and recognized a (loss) for book purposes of $(95,600) during the second
quarter of 2004. The write-down and loss on the sale of Marquette were the primary reasons for the decrease in net income during the first nine months of 2004 versus the same period in 2003. The absence of operating results from Marquette due to its
sale on June 11, 2004 was the primary reason for the decrease in net income during the quarter ended September 30, 2004 versus the same period in 2003.



Net income, exclusive of the impairment charge and the (loss) on the sale of Marquette decreased by $203,000 and $359,600 for the quarter and nine months ended September 30, 2004
when compared to the quarter and nine months ended September 30, 2003. Operations at Marquette were impacted by its sale on June 11, 2004. The absence of



7



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONScontinued



operating results from Marquette due to its sale on June 11, 2004 was the primary reason for the decrease in net income during the quarter and nine months ended September 30, 2004 versus the same periods in 2003.



Liquidity and Capital Resources



One of the primary objectives 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 the Partnerships net income or cash flows (primarily from
operating activities) as determined by accounting principles generally accepted in the United States (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.
Management believes the primary users of the financial statements are limited partners who are most concerned with this performance measure. 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 Flows.



|                                                           |  |                                                                       |           |   |      |   |          |  
|---------------------------------------------------------- |  | --------------------------------------------------------------------- | --------- | - | ---- | - | -------- | -
|                                                           |  | Comparative Cash Flow Results For the Nine Months Ended September 30, |          
|                                                           |  | 2004                                                                  |           |   | 2003 |  
|                                                           | 
|Cash Flow (as defined in the Partnership Agreement)        |  | $                                                                     | 245,100   |   |      | $ | 597,100  |  
|Items of reconciliation:                                   |  |                                                                       |           |   |      |   |          |  
|Decrease (increase) in current assets                      |  |                                                                       | 362,600   |   |      |   | (95,900  | )
|(Decrease) increase in current liabilities                 |  |                                                                       | (829,700  | ) |      |   | 378,800  |  
|                                                           | 
|Net cash (used in) provided by operating activities (GAAP) |  | $                                                                     | (222,000  | ) |      | $ | 880,000  |  
|                                                           | 
|Net cash provided by (used in) investing activities (GAAP) |  | $                                                                     | 5,758,800 |   |      | $ | (262,300 | )
|                                                           | 
|Net cash (used in) financing activities (GAAP)             |  | $                                                                     | (691,500  | ) |      | $ | (691,500 | )
|                                                           | 



Cash Flow (as defined in the Partnership
Agreement) decreased by $352,000 for the nine months ended September 30, 2004 when compared to the nine months ended September 30, 2003. The absence of operating results from Marquette due to its sale on June 11, 2004 was the primary reason for the
decrease.



The net increase in the Partnerships cash position of $4,845,300 for
the nine months ended September 30, 2004 was primarily due to the receipt of proceeds from the sale of Marquette. Liquid assets of the Partnership as of September 30, 2004 were comprised of amounts held for distribution to Partners and amounts held
to resolve potential post-closing sale matters.

Net cash provided by operating activities decreased by $1,102,000 for the nine months ended September 30, 2004 when
compared to the nine months ended September 30, 2003. The decrease was primarily due to the payment of the 2002 real estate taxes and the decrease in net income as previously discussed.



Net cash provided by investing activities increased by $6,021,100 for the nine months ended September 30, 2004 when compared to the nine months ended
September 30, 2003. The increase was primarily due to the receipt of proceeds from the sale of Marquette.



The Partnership has no financial instruments for which there are significant risks.



At December 31, 2003, the Partnership owed an Affiliate of the General Partner for amounts borrowed for the payment of securities sales commissions, Offering and Organizational Expenses and other Front-End Fees, other than
Acquisition Fees. Repayment of the Front-End Fees loan is subordinated to payment to the Limited Partners of 100% of their Original Capital Contribution from Sale or Refinancing Proceeds (as defined in the Partnership Agreement). Pursuant to a
modification of the Partnerships Front-End Fees loan agreement in 1996, the Affiliate of the General Partner elected to waive the Partnerships obligation for all deferred interest on this loan and charge no interest in the future.



Based upon the current estimated value of its assets, net of its outstanding
liabilities, the General Partner believes that the Partnerships cumulative distributions to its Limited Partners from inception through the termination of the Partnership will be less than such Limited Partners Original Capital
Contribution. Accordingly, during the quarter ended June 30, 2004, the Front End Fees loan was considered extinguished in accordance with the terms of the note and reflected as an increase to Partners Capital.



Under the terms of the Partnership Agreement, the General Partner will not be entitled to any
distributions. Therefore, during the quarter ended June 30, 2004, the General Partner concluded that all remaining cash will be distributed to the Limited Partners and as a result, there was a reallocation of equity from the General Partner to the
Limited Partners. Since the final distribution will be contingent upon estimated liquidation and dissolution costs that have not yet been recognized in the financial statements, the amount and timing of the final distribution to the Limited Partners
has not yet been determined and may not equal the $10,285,400 reflected on the Balance Sheet as Limited Partners Capital.



Distributions to Limited Partners for the three months ended September 30, 2004 were declared in the amount of $230,500 or $4.00 per Unit to Limited Partners of record as of
September 30, 2004. Cash distributions are made 60 days after the last day of each fiscal quarter.



8



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ITEM 4. CONTROLS AND PROCEDURES



The principal executive officer of the General Partner, Donald J. Liebentritt, and the principal financial officer of the General Partner, Philip Tinkler, have evaluated the
effectiveness of the Partnerships disclosure controls and procedures, as required by Rule 13a-15(e) and 15d15(e) under the Securities Exchange Act of 1934 (the Exchange Act). Based upon the results of that evaluation, these
executive officers have concluded that as of the end of the period covered by this quarterly report, the Partnerships disclosure controls and procedures were effective in all material respects to ensure that the information required to be
disclosed by the Partnership in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms.



The Partnership also maintains a system of internal control over financial reporting (as defined in
Rules 13A-15(f) and 15d-15(f)) designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in
the United States. During the most recent fiscal quarter, there have been no changes in internal control over financial reporting that occurred that have materially affected or are reasonably likely to materially affect internal control over
financial reporting.



The executive officers of the General Partner do not expect that
the Partnerships disclosure controls and procedures or internal controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Partnership have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management
override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.



9



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PART II. OTHER INFORMATION



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



(a) Exhibits:



31.1: Certification of Principal Executive Officer required by Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).



31.2: Certification of Principal Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).



32: Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith).



(b) Reports on Form 8-K:



There were no reports filed on Form 8-K for the three months ended September 30, 2004.



10



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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, L.L.C. GENERAL PARTNER            
|                        |  |                                                
|Date: November 12, 2004 |  | By:                                             |  | /s/    DONALD J. LIEBENTRITT                               
|                        |  |                                                 |  | DONALD J. LIEBENTRITT President and Chief Executive Officer
|                        |  |                                                
|Date: November 12, 2004 |  | By:                                             |  | /s/    PHILIP TINKLER                                      
|                        |  |                                                 |  | PHILIP TINKLER Vice PresidentFinance and Treasurer        



11