<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                September 30, 1995
                          ------------------------------------------------------

                                      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 950, 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>
 
BALANCE SHEETS
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                  September 30,
                                                      1995       December 31,
                                                   (Unaudited)       1994
------------------------------------------------------------------------------
<S>                                               <C>            <C>
ASSETS
Investment in commercial rental properties:
 Land                                             $ 10,948,500   $ 10,948,500
 Buildings and improvements                         59,788,600     57,991,600
------------------------------------------------------------------------------
                                                    70,737,100     68,940,100
Accumulated depreciation and amortization          (17,989,500)   (16,292,000)
------------------------------------------------------------------------------
 Total investment properties, net of accumulated
  depreciation and amortization                     52,747,600     52,648,100
Cash and cash equivalents                              995,500      1,612,600
Restricted certificate of deposit and escrow
 deposits                                               79,700        187,300
Rents receivable                                       616,600        571,500
Other assets (net of accumulated amortization on
 loan acquisition costs of $911,500 and
 $855,600, respectively)                               511,000        532,100
------------------------------------------------------------------------------
                                                  $ 54,950,400   $ 55,551,600
------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
 Mortgage loans payable                           $ 40,620,600   $ 40,369,100
 Front-End Fees loan payable to Affiliate            8,295,200      8,295,200
 Accounts payable and accrued expenses               1,392,300      1,470,000
 Due to Affiliates                                     143,300        112,700
 Security deposits                                     200,100        195,100
 Other liabilities                                     700,900         68,200
------------------------------------------------------------------------------
                                                    51,352,400     50,510,300
------------------------------------------------------------------------------
Partners' (deficit) capital:
 General Partner                                      (303,300)      (288,900)
 Limited Partners (57,621 Units authorized,
  issued and outstanding)                            3,901,300      5,330,200
------------------------------------------------------------------------------
                                                     3,598,000      5,041,300
------------------------------------------------------------------------------
                                                  $ 54,950,400   $ 55,551,600
------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the nine months ended September 30, 1995
and the year ended December 31, 1994
(Unaudited)
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                 General     Limited
                                 Partner     Partners       Total
----------------------------------------------------------------------
<S>                             <C>        <C>           <C>
Partners' (deficit) capital,
 January 1, 1994                $(183,100) $ 15,804,900  $ 15,621,800
Net (loss) for
 the year ended
 December 31, 1994               (105,800)  (10,474,700)  (10,580,500)
----------------------------------------------------------------------
Partners' (deficit) capital,
 December 31, 1994               (288,900)    5,330,200     5,041,300
Net (loss) for
 the nine
 months ended September 30,
 1995                             (14,400)   (1,428,900)   (1,443,300)
----------------------------------------------------------------------
Partners' (deficit) capital,
 September 30, 1995             $(303,300)   $3,901,300    $3,598,000
----------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
                                                                               2
<PAGE>
 
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
 
<TABLE>
<CAPTION>
                                                      1995        1994
--------------------------------------------------------------------------
<S>                                                <C>         <C>
Income:
 Rental                                            $2,489,300  $2,679,300
 Interest                                              12,600      15,300
--------------------------------------------------------------------------
                                                    2,501,900   2,694,600
--------------------------------------------------------------------------
Expenses:
 Interest:
 Affiliate                                            168,700     151,400
 Nonaffiliates                                        929,700     876,900
 Depreciation and amortization                        596,600     638,300
 Property operating:
 Affiliates                                           160,800     120,200
 Nonaffiliates                                        595,200     564,400
 Real estate taxes                                    334,100     361,600
 Insurance--Affiliate                                  26,700      38,600
 Repairs and maintenance                              294,700     293,600
 General and administrative:
 Affiliates                                            16,000      17,200
 Nonaffiliates                                         34,900      49,600
--------------------------------------------------------------------------
                                                    3,157,400   3,111,800
--------------------------------------------------------------------------
Net (loss)                                         $ (655,500) $ (417,200)
--------------------------------------------------------------------------
Net (loss) allocated to General Partner            $   (6,600) $   (4,200)
--------------------------------------------------------------------------
Net (loss) allocated to Limited Partners           $ (648,900) $ (413,000)
--------------------------------------------------------------------------
Net (loss) allocated to Limited Partners per Unit
 (57,621 Units issued and outstanding)             $   (11.26) $    (7.17)
--------------------------------------------------------------------------
</TABLE>
 
STATEMENTS OF INCOME AND EXPENSES
For the nine months ended September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
 
<TABLE>
<CAPTION>
                                                      1995         1994
----------------------------------------------------------------------------
<S>                                                <C>          <C>
Income:
 Rental                                            $ 7,775,800  $ 8,334,900
 Interest                                               42,700       34,200
----------------------------------------------------------------------------
                                                     7,818,500    8,369,100
----------------------------------------------------------------------------
Expenses:
 Interest:
 Affiliate                                             505,800      408,100
 Nonaffiliates                                       2,792,300    2,664,000
 Depreciation and amortization                       1,753,400    1,979,700
 Property operating:
 Affiliates                                            446,400      406,300
 Nonaffiliates                                       1,637,900    1,759,600
 Real estate taxes                                     954,100    1,074,100
 Insurance--Affiliate                                   84,300      117,600
 Repairs and maintenance                               913,000    1,046,900
 General and administrative:
 Affiliates                                             31,100       34,100
 Nonaffiliates                                         143,500      157,300
 Loss on sale of property                                           101,500
----------------------------------------------------------------------------
                                                     9,261,800    9,749,200
----------------------------------------------------------------------------
Net (loss)                                         $(1,443,300) $(1,380,100)
----------------------------------------------------------------------------
Net (loss) allocated to General Partner            $   (14,400) $   (13,800)
----------------------------------------------------------------------------
Net (loss) allocated to Limited Partners           $(1,428,900) $(1,366,300)
----------------------------------------------------------------------------
Net (loss) allocated to Limited Partners per Unit
 (57,621 Units issued and outstanding)             $    (24.80) $    (23.71)
----------------------------------------------------------------------------
</TABLE>
 
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s)
 
<TABLE>
<CAPTION>
                                                          1995         1994
--------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Cash flows from operating activities:
 Net (loss)                                            $(1,443,300) $(1,380,100)
 Adjustments to reconcile net (loss) to net cash
  provided by operating activities:
 Depreciation and amortization                           1,753,400    1,979,700
 Loss on sale of property                                               101,500
 Changes in assets and liabilities:
  (Increase) decrease in rents receivable                  (45,100)      20,700
  (Increase) decrease in other assets                       (1,900)      88,500
  (Decrease) in accounts payable and accrued expenses      (77,700)     (48,900)
  Increase (decrease) in due to Affiliates                  30,600     (112,500)
  Increase in other liabilities                             32,700       15,800
--------------------------------------------------------------------------------
   Net cash provided by operating activities               248,700      664,700
--------------------------------------------------------------------------------
Cash flows from investing activities:
 Proceeds from sales of commercial rental property                    4,106,100
 Payments for capital and tenant improvements           (1,197,000)    (696,000)
 Maturity of (investment in) restricted certificate
  of deposit                                                75,000      (75,000)
 Decrease in restricted escrow deposit                      32,600
--------------------------------------------------------------------------------
   Net cash (used for) provided by investing
    activities                                          (1,089,400)   3,335,100
--------------------------------------------------------------------------------
Cash flows from financing activities:
 Proceeds from mortgage loans payable                    1,000,000      307,700
 Principal payments on mortgage loans payable             (748,500)  (4,000,200)
 Payment of loan extension fees                            (32,900)
 Increase (decrease) in security deposits                    5,000      (23,100)
--------------------------------------------------------------------------------
   Net cash provided by (used for) financing
    activities                                             223,600   (3,715,600)
--------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents      (617,100)     284,200
Cash and cash equivalents at the beginning of the
 period                                                  1,612,600    1,453,300
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period     $   995,500  $ 1,737,500
--------------------------------------------------------------------------------
Supplemental information:
 Interest paid to Affiliate during the period          $   499,500  $   440,100
--------------------------------------------------------------------------------
 Interest paid to nonaffiliates during the period      $ 2,790,700  $ 2,782,500
--------------------------------------------------------------------------------
</TABLE>
    The accompanying notes are an integral part of the financial statements.
3
<PAGE>
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1995
 
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. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
 
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 nine months ended September 30, 1995 are not necessarily
indicative of the operating results for the year ending December 31, 1995.
 
Certain reclassifications have been made to the previously reported 1994
statements in order to provide comparability with the 1995 statements. These
reclassifications have no effect on net (loss) or Partners' capital (deficit).
 
The financial statements include the Partnership's 50% interest in three joint
ventures with Affiliated partnerships. Two of these joint ventures were formed
for the purpose of each acquiring a 100% interest in certain real property and
one of these joint ventures was formed for the purpose of acquiring a preferred
majority interest in certain real property. These joint ventures are operated
under the common control of the General Partner. In addition, the 1994
financial statements included the Partnership's 50% interest in three joint
ventures with Affiliated partnerships, one of which was formed for the purpose
of acquiring a 100% interest in certain real property and two of which were
formed for the purpose of each acquiring a preferred majority interest in
certain real property. These joint ventures were operated under the common
control of the General Partner prior to the sales of the properties.
Accordingly, the Partnership's pro rata share of the ventures' revenues,
expenses, assets, liabilities and capital is included in the financial
statements.
 
The financial statements also include the Partnership's 70% undivided interest
in a joint venture with an unaffiliated third party (the "Venture Partner").
The joint venture owns a 100% interest in the Burlington Office Center I, II
and III ("Burlington"). This joint venture is operated under the control of the
General Partner. The Partnership has included 100% of the venture's revenues,
expenses, assets, liabilities and capital in the financial statements. Cash
flow from operations (as defined in the general partnership agreement) is
distributed first, in the amount necessary to provide the Partnership with a
cumulative non-compounded return on its net invested capital balance of the
joint venture equal to 8.75% per annum, increasing 0.25% each year, up to a
maximum of 11% per annum (the return for 1995 is 10.5%); second, to the Venture
Partner in the amount necessary to provide a noncumulative non-compounded
return on its net invested capital balance of the joint venture equal to the
percentage return allocable to the Partnership for that year and third, the
remaining balance, if any, is distributed 70% to the Partnership and 30% to the
Venture Partner. For the quarter and nine months ended September 30, 1995, 100%
of cash flow (as defined in the general partnership agreement) was distributed
to the Partnership. Net operating profits are allocated first, to the
Partnership until the cumulative amount allocated equals the cumulative
distributions of the joint venture; second, to the venture partner until the
cumulative amount allocated equals his cumulative distributions of the joint
venture, and the balance, if any, 70% to the Partnership and 30% to the venture
partner. For the quarter and nine months ended September 30, 1995, the Venture
Partner was not allocated any net operating profits or losses.
 
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
 
Reference is made to the Partnership's annual report for the year ended
December 31, 1994 for a description of other accounting policies and additional
details of the Partnership's financial condition, results of operations,
changes in Partners' capital and changes in cash balances for the year then
ended. The details provided in the notes thereto have not changed except as a
result of normal transactions in the interim or as otherwise disclosed herein.
 
2. RELATED PARTY TRANSACTIONS:
 
In accordance with the Partnership Agreement, Net Profits and Net Losses
(exclusive of Net Profits and Net Losses from the sale or disposition of
Partnership properties) shall be allocated 1% to the General Partner and 99% to
the Unit Holders. 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
Unit Holders 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 Unit Holder 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 Unit Holder 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 Unit Holders.
Net Losses from the sale or disposition 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 Unit
Holders 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 Unit Holders. 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, 1995, the General Partner was allocated a Net Losses of $6,600 and $14,400,
respectively.
 
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and nine months ended September 30, 1995 were as follows:
 
<TABLE>
<CAPTION>
                                                        Paid
                                                --------------------
                                                Quarter  Nine Months Payable
-----------------------------------------------------------------------------
 <S>                                            <C>      <C>         <C>
 Interest expense on Front-End Fees loan (Note
  3)                                            $170,000 $  499,500  $ 54,400
 Property management and leasing fees            126,400    370,400    74,800
 Reimbursement of property insurance premiums,
  at cost                                         26,700     79,600      None
 Reimbursement of expenses, at cost:
 (1) Accounting                                    6,300     15,500     7,400
 (2) Investor communication                        1,200      4,600     6,700
 (3) Legal                                        26,700     68,700      None
-----------------------------------------------------------------------------
                                                $357,300 $1,038,300  $143,300
-----------------------------------------------------------------------------
</TABLE>
 
ANTEC Corporation ("ANTEC"), in the business of designing, engineering,
manufacturing and distributing cable television products, and is 30% owned by
Anixter International, Inc., an Affiliate of the General Partner, is obligated
to the Partnership under a lease of office space at Prentice Plaza. During the
quarter and nine months ended September 30, 1995, ANTEC paid $108,800 and
$312,100, respectively, in rent. The Partnership owns a 50% joint venture
interest in these rents. The rents paid by ANTEC are comparable to those paid
by other tenants at Prentice Plaza.
 
3. FRONT-END FEES LOAN PAYABLE TO AFFILIATE:
 
The Partnership originally 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 to
repayment to the Unit Holders 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 due and payable monthly at
a rate no greater than the cost of funds obtained by the Affiliate from
unaffiliated lenders.
 
As of September 30, 1995, the Partnership had drawn $8,295,200 under the Front-
End Fees loan agreement. The interest rate paid on the Front-End Fees loan is
subject to change in accordance with the loan agreement. The weighted average
interest rate for the quarter and nine months ended September 30, 1995 was
8.14% and 8.13%, respectively. As of September 30, 1995, the interest rate was
7.875%.
 
Pursuant to a modification of this loan agreement, the Partnership has the
option to defer payment of interest on this loan, for a 48-month period
beginning January 1, 1993. In addition, any interest payments paid by the
Partnership from January 1, 1993 through December 31, 1996 may be borrowed from
the Affiliate of the General Partner. All deferred and subsequently borrowed
amounts (including accrued interest thereon) shall be due and payable on
January 1, 1997, and shall not be subordinated to repayment to the Unit Holders
as discussed above. As of September 30, 1995, the Partnership has not exercised
its option to defer the payment of interest on this loan.
 
4. RESTRICTED ESCROW DEPOSIT:
 
Restricted escrow deposit at September 30, 1995 represented $159,400, of which
the Partnership's share has 50%, being held by the mortgage holder of the
Regency Park Shopping Center in a non-interest bearing escrow account. The
Partnership's share is refundable to the Partnership upon this property meeting
certain operating requirements as disclosed in the mortgage note.
                                                                               4
<PAGE>
 
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, 1994, for a discussion of the Partnership's business.
 
As the Partnership progresses through the disposition phase of its life cycle,
management's discussion and analysis of financial condition and results of
operations is complicated to compare between periods. Results of operations and
cash flows as defined by generally accepted accounting principles ("GAAP") as
well as Cash Flow (as defined in the Partnership Agreement) are generally
expected to decline as real property interests are sold or disposed of since
the Partnership no longer realizes the results generated from such real
property interests. Accordingly, rental income, interest expense, depreciation
and amortization expense, property operating expenses, repairs and maintenance
expenses, real estate taxes and insurance are expected to decline, but will
continue to comprise the significant components of operations and cash flows
(as defined by GAAP) as well as Cash Flow (as defined in the Partnership
Agreement) until the final property is sold. Also, during the disposition
phase, cash and cash equivalents increase as Sale and Refinancing Proceeds are
received and decrease as the Partnership utilizes these proceeds for the
purposes of repayment of mortgage loans payable, making capital improvements
and incurring leasing costs at the Partnership's remaining properties or other
working capital requirements. Prior to being utilized for such purposes, these
proceeds are invested in short-term money market instruments. Sale and
Refinancing Proceeds are excluded from the determination of Cash Flow (as
defined in the Partnership Agreement).
 
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the quarters and nine months ended September 30,
1995 and 1994. 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 Nine Months
                                   Ended                   Ended
                             9/30/95    9/30/94     9/30/95     9/30/94
--------------------------------------------------------------------------
<S>                         <C>        <C>         <C>         <C>
MARQUETTE MALL AND OFFICE BUILDING
Rental revenues             $ 974,100  $1,064,300  $2,988,300  $3,125,800
--------------------------------------------------------------------------
Property net (loss)         $(113,600) $   (6,800) $ (126,200) $  (22,800)
--------------------------------------------------------------------------
Average occupancy                 82%         81%         82%         81%
--------------------------------------------------------------------------
BURLINGTON OFFICE CENTER I, II AND III
Rental revenues             $ 575,300  $  757,400  $2,040,500  $2,304,700
--------------------------------------------------------------------------
Property net (loss) income  $(151,100) $    1,200  $  (85,200) $   37,800
--------------------------------------------------------------------------
Average occupancy                 68%         88%         76%         86%
--------------------------------------------------------------------------
</TABLE>
 
<TABLE>
<S>                  <C>        <C>         <C>         <C>
SENTRY PARK WEST OFFICE CAMPUS
Rental revenues      $ 361,100  $  304,300  $1,024,800  $  844,800
-------------------------------------------------------------------
Property net (loss)  $ (74,900) $  (73,200) $ (271,500) $ (321,100)
-------------------------------------------------------------------
Average occupancy          87%         77%         86%         73%
-------------------------------------------------------------------
REGENCY PARK SHOPPING CENTER
Rental revenues      $ 292,900  $  264,500  $  886,100  $  787,800
-------------------------------------------------------------------
Property net (loss)  $ (32,200) $  (66,200) $ (107,500) $ (213,800)
-------------------------------------------------------------------
Average occupancy          88%         78%         88%         78%
-------------------------------------------------------------------
PRENTICE PLAZA
Rental revenues      $ 285,900  $  251,700  $  834,600  $  792,700
-------------------------------------------------------------------
Property net (loss)  $ (61,300) $  (69,400) $ (170,400) $ (195,500)
-------------------------------------------------------------------
Average occupancy          97%         91%         97%         92%
-------------------------------------------------------------------
PARK CENTRAL OFFICE PARK I, II AND III (B)
Rental revenues                 $   11,700              $  371,500
-------------------------------------------------------------------
Property net income             $    8,900              $    5,100
-------------------------------------------------------------------
Average occupancy                  (b)                     (b)
-------------------------------------------------------------------
SENTRY PARK EAST OFFICE CAMPUS (C)
Rental revenues                 $   25,300              $  107,600
-------------------------------------------------------------------
Property net (loss)             $   (5,100)             $  (59,900)
-------------------------------------------------------------------
Average occupancy                      63%                     61%
-------------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are either not directly
    related to individual property operating results such as interest income
    and general and administrative expenses or are related to properties
    disposed of by the Partnership prior to the periods under comparison.
(b) The joint ventures which owned Park Central Office Park I, II and III
    ("Park Central"), in which the Partnership had a 50% interest, sold Park
    Central on June 29, 1994. The property net income excludes the (loss) from
    the sale of the property which was included in the Statement of Income and
    Expenses for the nine months ended September 30, 1994.
(c) The joint venture which owned Sentry Park East Office Campus ("Sentry
    East"), in which the Partnership had a 50% interest, sold one of the
    remaining three office buildings situated in this office campus on April
    22, 1994. The property net (loss) excludes the (loss) from the sale
 
5
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  of the building which was previously reported by the Partnership as part of
  the provision for value impairment in 1992. In addition, on December 29,
  1994, the joint venture which owned Sentry East sold the remaining two office
  buildings situated in this office campus.
 
Net loss for the Partnership increased $238,300 or 57%, and $63,200 or 5%, for
the quarter and nine months ended September 30, 1995 when compared to the
quarter and nine months ended September 30, 1994, respectively. The increases
in net loss were primarily due to decreases in the quarterly and nine-month
operating results at Burlington Office Center I, II and III ("Burlington") and
Marquette Mall and Office Building ("Marquette") totaling $259,100 and
$226,400, respectively, and increases in interest expense of $17,300 and
$97,700, respectively, on the Partnership's Front-End Fees loan due to an
increase in the variable interest rate. Partially offsetting the increases in
net loss were: 1) improved operating results for the quarter and nine-month
periods under comparison at Regency Park Shopping Center ("Regency Park"),
Prentice Plaza totaling $42,100 and $131,400, respectively, as well as improved
operating results for the nine-month period under comparison for Sentry Park
West Office Campus ("Sentry West") of $49,600; 2) the absence for the nine-
month periods under comparison of the net loss of $101,500 from the sale of
Park Central on June 29, 1994 and the 1994 Sentry East property net loss of
$59,900; 3) lower general and administrative expenses of $15,900 and $16,800
for the quarter and nine-month periods under comparison, respectively,
primarily due to lower fees for professional services and 4) an increase of
$8,500 in interest income earned on short-term investments for the nine-month
period under comparison primarily due to a decrease in the funds available for
these investments.
 
For purposes of the following comparative discussion, the operating results of
Park Central and Sentry East have been excluded.
 
Rental revenues decreased $152,900 or 6%, and $81,500 or 1%, respectively, for
the quarter and nine months ended September 30, 1995 when compared the same
quarterly and nine-month periods in 1994. The decreases were primarily due to:
1) lower average occupancy rates at Burlington; 2) the receipt of a one-time
lease termination fee in 1994 of $90,000 at Marquette; 3) lower tenant expense
reimbursements as a result of a refund to tenants in 1995 of previously billed
1994 expense reimbursements at Marquette and Prentice Plaza and 4) additional
1993 expense reimbursements received in 1994 at Marquette. Partially offsetting
the decreases in rental revenues were increases in the average occupancy rates
at Sentry West, Regency Park, and Prentice Plaza as well as an increase in
percentage rents at Marquette.
 
Interest expense increased $70,100 and $281,300, respectively, for the quarter
and nine months ended September 30, 1995 when compared to the quarter and nine
months ended September 30, 1994. The increases were primarily due to an
increase in the principal balance on the junior mortgage loan collateralized by
Marquette as well as increases in the variable interest rates on the mortgage
loans collateralized by Marquette and Sentry West and on the Partnership's
Front-End Fees loan.
 
Property operating expenses increased $82,800 and $81,000 for the quarter and
nine months ended September 30, 1995 when compared to the quarter and nine
months ended September 30, 1994, respectively. The increases were primarily due
to: 1) increases in property management and leasing fees at Prentice Plaza,
Sentry West and Regency Park as a result of the increases in rental revenues
and at Burlington due to lower leasing fees paid to non-affiliates and an
underestimate of prior year fees; 2) an increase in fees for professional
services at all of the Partnership's properties and 3) an increase in
advertising and promotional fees as well as security costs at Marquette.
Partially offsetting the increase in property operating expenses was lower
utility costs at Burlington and Marquette.
 
Depreciation and amortization expense decreased $41,200 and $128,700,
respectively, for the quarterly and nine-month periods under comparison
primarily as a result of the provisions for value impairment recorded at
Marquette and Burlington as of December 31, 1994.
 
Real estate tax expenses decreased $22,000 and $99,100, respectively, for the
periods under comparison. The primary factors which contributed to these
decreases were: 1) a lower projected tax rate as well as an overestimate of the
1994 tax liability at Marquette; 2) a lower expense at Burlington as a result
of the Partnership's successful protest in 1993 which has resulted in reduced
billings in subsequent periods and 3) an overestimate in the 1994 liability
paid in 1995 at Prentice Plaza.
 
Repair and maintenance expenses increased $15,000 and decreased $28,400, for
the quarter and nine months ended September 30, 1995 when compared to the
quarter and nine months ended September 30, 1994, respectively. The primary
factor attributable to these changes was the changes in the average occupancy
rates at the Partnership's properties. As average occupancy rates increase or
decrease, the cost in maintaining the properties increase or decrease. In
addition, partially offsetting the quarterly increase and contributing to the
nine-month decrease was expenditures made in 1994 at Marquette to enhance the
appearance of the property.
 
Insurance expense decreased $10,000 and $24,600, respectively, for the quarter
and nine months ended September 30, 1995, when compared to the prior year
periods. The decreases were primarily due to lower group rates on the
Partnership's combined insurance coverage as a result of a minimal amount of
claims made over the past several years, which provided a good loss experience
relative to the Partnership's properties.
 
To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated 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
building brochures; 2) early renewal of existing tenants 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 remaining
                                                                               6
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
properties. Cash Flow (as defined in the Partnership Agreement) is generally
not equal to Partnership net loss or cash flows as defined 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 loss or cash flows
(as defined by GAAP). The following table includes a reconciliation of Cash
Flow (Deficit) (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 necessarily be considered as
an alternative to the results disclosed in the Statements of Income and
Expenses and Statements of Cash Flows.
 
<TABLE>
<CAPTION>
                                                         Comparative Cash
                                                       Flow Results for the
                                                         Nine Months Ended
                                                        9/30/95      9/30/94
-------------------------------------------------------------------------------
<S>                                                   <C>          <C>
Amount of Cash Flow (Deficit) (as defined in the
 Partnership Agreement)                               $  (139,000) $   293,100
Items of reconciliation:
 Principal payments on mortgage loans payable             449,100      408,000
 (Increase) decrease in current assets                    (47,000)     109,200
 (Decrease) in current liabilities                        (14,400)    (145,600)
-------------------------------------------------------------------------------
Net cash provided by operating activities             $   248,700  $   664,700
-------------------------------------------------------------------------------
Net cash (used for) provided by investing activities  $(1,089,400) $ 3,335,100
-------------------------------------------------------------------------------
Net cash provided by (used for) financing activities  $   223,600  $(3,715,600)
-------------------------------------------------------------------------------
</TABLE>
 
The decrease in Cash Flow (Deficit) (as defined in the Partnership Agreement)
of $432,100 for the nine months ended September 30, 1995 when compared to nine
months ended September 30, 1994 was primarily due to the increase in the net
loss previously discussed, exclusive of the decrease in depreciation and
amortization expense and the loss on the sale of Park Central, and an increase
in scheduled principal payments made on the Partnership's regularly scheduled
amortizing mortgage loans payable.
 
The decrease in the Partnership's cash position as of September 30, 1995 when
compared to December 31, 1994 was primarily the result of payments for capital
and tenant improvements and leasing costs and principal payments on mortgage
loans payable exceeding the proceeds received on the junior mortgage loan
collateralized by Marquette, the net cash provided by operating activities as
well as the releases of the restricted certificate of deposit at Regency Park
and the restricted escrow deposit for Marquette. The liquid assets of the
Partnership as of September 30, 1995 were comprised of undistributed Sale and
Refinancing Proceeds as well as net cash from operations retained for working
capital purposes.
 
Net cash provided by operating activities continues to be the Partnership's
primary source of funds. Net cash provided by operating activities decreased
$416,000 for the nine months ended September 30, 1995 when compared to the nine
months ended September 30, 1994. This decrease was primarily due to the
increase in net loss as well as a decrease in the net cash provided by
operating activities at Marquette and Burlington and the increase in interest
expense on the Partnership's Front-End Fees loan.
 
Net cash (used for) provided by investing activities changed $(4,424,500) for
the nine months ended September 30, 1995 when compared to the nine months ended
September 30, 1994. This change was primarily due to the sale proceeds received
on the sales of Park Central and Sentry East in 1994 and an increase in 1995 in
the cash used for capital and tenant improvements and leasing costs. The
Partnership maintains working capital reserves to pay for capital expenditures
such as building and tenant improvements and leasing costs. During the nine
months ended September 30, 1995, the Partnership spent $1,197,000 for building
and tenant improvements and leasing costs. Of this amount, $600,000 relates to
the refurbishment and modernization of one of the major department stores at
Marquette which was funded by proceeds received on the junior mortgage loan
collateralized by Marquette. In addition, the Partnership anticipates spending
approximately $400,000 during the remainder of 1995. Included in this remaining
amount are building and tenant improvements and leasing costs for: 1) Sentry
West of $160,000; 2) Marquette of $125,000; 3) Prentice Plaza of $50,000; 4)
Burlington of $40,000 and 5) Regency Park of $25,000. 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.
 
On September 24, 1994, the joint venture which owns Regency Park, in which the
Partnership has a 50% interest, invested $150,000 in a restricted certificate
of deposit which collateralized a letter of credit for a construction allowance
to a major new tenant which occupies 40,150 leasable square feet at Regency
Park. This amount, of which the Partnership's share was $75,000, was reimbursed
to the new tenant during the quarter ended March 31, 1995 in compliance with
the lease section pertaining to this construction allowance. As of April 1,
1995, this letter of credit has expired.
     
Restricted escrow deposits at December 31, 1994 included $32,600, which
represented an amount being held by the holder of the junior mortgage loan
collateralized by Marquette. The amount in escrow was being funded to the
Partnership for certain tenant improvements and leasing costs at Marquette
provided that the Partnership matched these funds dollar for dollar. This
escrow was released to the Partnership in February 1995.
 
Net cash provided by (used for) financing activities changed $3,939,200 for the
nine months ended September 30, 1995 compared to the nine months ended
September 30, 1994. Factors which impacted this change were: 1) the payoff in
1994 of the mortgage loan collateralized by Park Central I and II from the sale
proceeds of Park Central, as previously discussed; 2) $1,000,000 in proceeds
received in 1995 on the junior mortgage loan collateralized by Marquette; 3)
the receipt in 1994 of additional proceeds on the loan collateralized by Sentry
West; 4) a partial principal paydown in 1995 on the mortgage loan
collateralized by Sentry West and 5) an increase in the amount of scheduled
principal
payments made in 1995 on the Partnership's mortgage loans.
7
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 
In 1993 the joint venture which owns Sentry West, in which the Partnership has
a 50% interest, entered into a letter agreement whereby the joint venture which
owns Sentry West obtained consent from its lender to terminate the lease
agreement with a tenant at Sentry West in order that this tenant may purchase
and occupy one of the five buildings at Sentry East. Pursuant to this
agreement, the joint venture was obligated to pay the lender 50% of the excess
net sale proceeds over $1,300,000 from the sales of the remaining four
buildings at Sentry East as principal paydowns. On December 29, 1994 the
remaining two buildings at Sentry East were sold and in January 1995 the joint
venture paid the lender $598,700, of which the Partnership's share was
$299,350, from the net proceeds received from the sales of these two buildings.
 
The mortgage loan collateralized by Regency Park is scheduled to mature on
December 31, 1995. The General Partner has initiated discussions with the
current lender with the intent of extending and/or modifying the current loan.
There can be no assurance that the General Partner will be successful in these
discussions. If unsuccessful in its attempt to extend or modify the current
loan, the Partnership could face the loss of its 50% interest in Regency Park
through foreclosure.
 
The mortgage loan collateralized by Prentice Plaza is scheduled to mature on
December 31, 1995. The General Partner is currently attempting to refinance
this property in order to satisfy the total $4,125,000 principal balance
expected to be outstanding at the time of maturity. The General Partner
believes that the current market value of Prentice Plaza exceeds the amount
outstanding on its mortgage debt. The General Partner believes that refinancing
the mortgage loan should be feasible, however, there can be no assurance that
such refinancing will be accomplished.
 
As of the date of this report, Marquette and Sentry West are being marketed for
sale. The General Partner believes that the sale of one or both of these
properties will enhance the liquidity of the Partnership.
 
The Partnership has significant financial obligations during the coming twelve
months. In addition to the loan maturities of Regency Park and Prentice Plaza
(as discussed above), the mortgage loan collateralized by Sentry West matures
in September 1996. The Partnership's share of the outstanding balance on this
recourse loan upon maturity will be $4,662,600. Also, under the terms of the
existing loan agreements, during 1996 additional principal payments of $550,000
and $75,000 are due on the junior mortgage loan collateralizing Marquette and
the mortgage loan collateralizing Sentry West, respectively. In February 1996,
the Partnership is obligated to pay an additional $600,000 to a major
department store at Marquette for the refurbishment and modernization of its
store, and will incur ongoing capital and tenant improvement costs at its
properties necessary to maintain a competitive level in their respective
locations. The General Partner believes that the successful refinancing of
Prentice Plaza, the sale or refinancing of Sentry West, funds currently
available to the Partnership from existing cash and amounts that can be
borrowed and payments that can be deferred pursuant to the modification of the
Front-End Fees loan (see Note 3 in Notes to Financial Statements) should be
sufficient to fulfill these obligations. Since there can be no assurance that
the refinancing or sale of Prentice Plaza and Sentry West will occur prior to
the maturity dates of their respective loans, the Partnership may have
inadequate liquidity to meet its current obligations.
 
The recourse junior mortgage loan collateralized by Marquette and the mortgage
loan collateralized by Burlington mature in 1997. The Partnership's ability to
satisfy these maturities is dependent upon the successful sale of Marquette (as
discussed above) or the refinancing of its mortgage and the ability to sell or
refinance Burlington prior to the maturity date of these mortgage loans. The
failure to sell Marquette or refinance its recourse junior mortgage loan prior
to its maturity date would result in the Partnership having inadequate
liquidity to meet its current obligations.
 
In light of the uncertainties with respect to the liquidity of the Partnership
as well as the restrictions under the loan agreements for Marquette and Sentry
West, the Partnership will retain all cash available.
      
8
<PAGE>
 


                          PART II. OTHER INFORMATION

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

          (a) Exhibits:  Financial Data Schedule

          (b) Reports on Form 8-K:

              There were no reports filed on Form 8-K during the quarter
              ended September 30, 1995.




<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: November 14, 1995           By: /s/     DOUGLAS CROCKER II
      -----------------               ---------------------------------------
                                              DOUGLAS CROCKER II
                                        President and Chief Executive Officer


Date: November 14, 1995           By: /s/      NORMAN M. FIELD
      -----------------               ---------------------------------------
                                               NORMAN M. FIELD
                                        Vice President - Finance and Treasurer