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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 March 31, 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)



|                                                                                                           |  |                          |            |                  |   |           
|---------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ---------------- | - | ----------
|                                                                                                           |  | March 31,2004(Unaudited) |            | December 31,2003
|                                                                                                          
|                                                                                                           |  |                         
|ASSETS                                                                                                     |  |                          |            |                  |   |           
|Real estate held for disposition                                                                           |  | $                        | 6,100,000  |                  | $ | 7,000,000 
|Cash and cash equivalents                                                                                  |  |                          | 5,444,600  |                  |   | 5,725,200 
|Rents receivable                                                                                           |  |                          | 479,600    |                  |   | 549,600   
|Other assets (net of accumulated amortization on leasing commissions of $17,000 and $13,400, respectively) |  |                          | 95,300     |                  |   | 90,300    
|                                                                                                          
|                                                                                                           |  | $                        | 12,119,500 |                  | $ | 13,365,100
|                                                                                                          
|                                                                                                          
|LIABILITIES AND PARTNERS CAPITAL                                                                         
|Liabilities:                                                                                               |  |                          |            |                  |   |           
|Front-End Fees loan payable to Affiliate                                                                   |  | $                        | 8,295,200  |                  | $ | 8,295,200 
|Accrued real estate taxes                                                                                  |  |                          | 545,000    |                  |   | 845,800   
|Accounts payable and accrued expenses                                                                      |  |                          | 446,300    |                  |   | 489,500   
|Due to Affiliates                                                                                          |  |                          | 52,900     |                  |   | 3,100     
|Security deposits                                                                                          |  |                          | 55,600     |                  |   | 55,000    
|Distribution payable                                                                                       |  |                          | 230,500    |                  |   | 230,500   
|                                                                                                          
|                                                                                                           |  |                          | 9,625,500  |                  |   | 9,919,100 
|                                                                                                          
|Partners Capital:                                                                                         |  |                          |            |                  |   |           
|General Partner                                                                                            |  |                          | 1,382,500  |                  |   | 1,389,700 
|Limited Partners (57,621 Units issued and outstanding)                                                     |  |                          | 1,111,500  |                  |   | 2,056,300 
|                                                                                                          
|                                                                                                           |  |                          | 2,494,000  |                  |   | 3,446,000 
|                                                                                                          
|                                                                                                           |  | $                        | 12,119,500 |                  | $ | 13,365,100
|                                                                                                          



STATEMENT OF PARTNERS CAPITAL

For the quarter ended March 31, 2004 (Unaudited)

(All dollars rounded to
nearest 00s)



|                                                   |  |                |           |   |                 |   |           |       |  |   |           |  
|-------------------------------------------------- |  | -------------- | --------- | - | --------------- | - | --------- | ----- |  | - | --------- | -
|                                                   |  | GeneralPartner |           |   | LimitedPartners |   |           | Total | 
|                                                   | 
|Partners capital, January 1, 2004                 |  | $              | 1,389,700 |   |                 | $ | 2,056,300 |       |  | $ | 3,446,000 |  
|Net (loss) for the quarter ended March 31, 2004    |  |                | (7,200    | ) |                 |   | (714,300  | )     |  |   | (721,500  | )
|Distributions for the quarter ended March 31, 2004 |  |                |          |   |                 |   | (230,500  | )     |  |   | (230,500  | )
|                                                   | 
|Partners capital, March 31, 2004                  |  | $              | 1,382,500 |   |                 | $ | 1,111,500 |       |  | $ | 2,494,000 |  
|                                                   | 



2

The
accompanying notes are an integral part of the financial statements.



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STATEMENTS OF INCOME AND EXPENSES

For the quarters ended March 31, 2004 and 2003

(Unaudited)

(All dollars rounded to nearest 00s

except per Unit amounts)



|                                                                                             |  |      |          |   |      |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------- | -
|                                                                                             |  | 2004 |          |   | 2003 |  
|                                                                                             | 
|Income:                                                                                      |  |      |          |   |      |   |         |  
|Interest                                                                                     |  | $    | 11,500   |   |      | $ | 17,600  |  
|                                                                                             | 
|Expenses:                                                                                    |  |      |          |   |      |   |         |  
|General and administrative:                                                                  |  |      |          |   |      |   |         |  
|Affiliates                                                                                   |  |      | 7,300    |   |      |   | 7,300   |  
|Nonaffiliates                                                                                |  |      | 27,000   |   |      |   | 32,300  |  
|                                                                                             | 
|                                                                                             |  |      | 34,300   |   |      |   | 39,600  |  
|                                                                                             | 
|(Loss) from continuing operations                                                            |  |      | (22,800  | ) |      |   | (22,000 | )
|                                                                                             | 
|(Loss) income from discontinued operations (including impairment charge of $900,000 in 2004) |  |      | (698,700 | ) |      |   | 296,800 |  
|                                                                                             | 
|Net (loss) income                                                                            |  | $    | (721,500 | ) |      | $ | 274,800 |  
|                                                                                             | 
|Net (loss) income allocated toGeneral Partner                                                |  | $    | (7,200   | ) |      | $ | 2,700   |  
|                                                                                             | 
|Net (loss) income allocated toLimited Partners                                               |  | $    | (714,300 | ) |      | $ | 272,100 |  
|                                                                                             | 
|Net (loss) income allocated toLimited Partners per Unit(57,621 Units outstanding)            |  | $    | (12.40   | ) |      | $ | 4.72    |  
|                                                                                             | 







STATEMENTS OF CASH FLOWS

For the quarters ended March 31, 2004 and 2003

(Unaudited)

(All dollars rounded to nearest 00s)



|                                                                                                   |  |      |           |   |      |   |           |  
|-------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                                                                   |  | 2004 |           |   | 2003 |  
|                                                                                                   | 
|Cash flows from operating activities:                                                              |  |      |           |   |      |   |           |  
|Net (loss) income                                                                                  |  | $    | (721,500  | ) |      | $ | 274,800   |  
|Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |  |      |           |   |      |   |           |  
|Depreciation and amortization                                                                      |  |      | 3,600     |   |      |   | 2,000     |  
|Provision for value impairment                                                                     |  |      | 900,000   |   |      |   |          |  
|Changes in assets and liabilities:                                                                 |  |      |           |   |      |   |           |  
|Decrease in rents receivable                                                                       |  |      | 70,000    |   |      |   | 62,500    |  
|(Increase) decrease in other assets                                                                |  |      | (3,400    | ) |      |   | 28,900    |  
|(Decrease) increase in accrued real estate taxes                                                   |  |      | (300,800  | ) |      |   | 161,939   |  
|(Decrease) in accounts payable and accrued expenses                                                |  |      | (43,200   | ) |      |   | (131,039  | )
|Increase (decrease) in due to Affiliates                                                           |  |      | 49,800    |   |      |   | (93,300   | )
|Increase in security deposits                                                                      |  |      | 600       |   |      |   | 1,400     |  
|                                                                                                   | 
|Net cash (used in) provided by operating activities                                                |  |      | (44,900   | ) |      |   | 307,200   |  
|                                                                                                   | 
|Cash flows from investing activities:                                                              |  |      |           |   |      |   |           |  
|Payments for building and tenant improvements                                                      |  |      |          |   |      |   | (5,100    | )
|Leasing commissions paid                                                                           |  |      | (5,200    | ) |      |   | (15,500   | )
|                                                                                                   | 
|Cash (used in) investing activities                                                                |  |      | (5,200    | ) |      |   | (20,600   | )
|                                                                                                   | 
|Cash flows from financing activities:                                                              |  |      |           |   |      |   |           |  
|Distributions to Limited Partners                                                                  |  |      | (230,500  | ) |      |   | (230,500  | )
|                                                                                                   | 
|Cash (used in) financing activities                                                                |  |      | (230,500  | ) |      |   | (230,500  | )
|                                                                                                   | 
|Net (decrease) increase in cash and cash equivalents                                               |  |      | (280,600  | ) |      |   | 56,100    |  
|                                                                                                   | 
|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                                                 |  | $    | 5,444,600 |   |      | $ | 5,920,700 |  
|                                                                                                   | 



3

The accompanying notes are
an integral part of the financial statements.



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NOTES TO FINANCIAL STATEMENTS

(Unaudited)



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 three months ended March 31, 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 is currently being held for sale.



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, and management has committed to disposing of its remaining real estate
asset. In April 2004, the Partnership entered into a Purchase and Sale Agreement for the sale of Marquette for approximately $6,100,000. In the first quarter of 2004, the Partnership has elected to write down the investment in Marquette to the
approximate sales value resulting in an impairment charge of $900,000. Marquettes operations have been disclosed as discontinued operations for each quarter presented as follows:



|                               |  |                                |          |   |      |   |        
|------------------------------ |  | ------------------------------ | -------- | - | ---- | - | -------
|                               |  | For the quarter endedMarch 31,
|                               |  | 2004                           |          |   | 2003
|                              
|Income                         |  | $                              | 830,000  |   |      | $ | 947,600
|Expenses                       |  |                                | 628,700  |   |      |   | 650,800
|Provision for value impairment |  |                                | 900,000  |   |      |   |       
|                              
|Discontinued operations        |  | $                              | (698,700 | ) |      | $ | 296,800
|                              



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.



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



4



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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.



4. Subsequent Event:



In April 2004, the Partnership entered into an original and amended Purchase and Sale Agreement for the sale of Marquette. The purchase price agreed
upon in the amended Agreement is $6,100,000.



sale or disposition of such property; and fourth, the balance, if any, 25% to the General Partner and 75% to the Limited Partners. Net Losses from the sale,
disposition or provision for value impairment of Partnership properties are allocated: first, after giving effect to any distributions of Sale or Refinancing Proceeds from the transaction, to the General Partner and Limited Partners with positive
balances in their Capital Accounts, pro rata in proportion to such respective positive balances, to the extent of the total amount of such positive balances; and second, the balance, if any, 1% to the General Partner and 99% to the Limited Partners.
Notwithstanding anything to the contrary, there shall be allocated to the General Partner not less than 1% of all items of Partnership income, gain, loss, deduction and credit during the existence of the Partnership. For the three months ended March
31, 2004 and 2003, the General Partner was allocated Net (Losses) Profits of $(7,200) and $2,700, respectively.



Fees and reimbursements paid and payable by the Partnership to Affiliates during the three months ended March 31, 2004 were as follows:



|                                    |  |      |       |         |   |       
|----------------------------------- |  | ---- | ----- | ------- | - | ------
|                                    |  | Paid |       | Payable
|                                   
|Discontinued operations:            |  |      |       |         |   |       
|Asset management fees               |  | $    | 2,600 |         | $ | 2,500 
|Reimbursement of property           |  |      |       |         |   |       
|insurance premiums                  |  |      | None  |         |   | 43,100
|Real estate tax services            |  |      | 300   |         |   | None  
|General and administrative:         |  |      |       |         |   |       
|Reimbursement of expenses, at cost: |  |      |       |         |   |       
|Accounting                         |  |      | None  |         |   | 7,300 
|                                   
|                                    |  | $    | 2,900 |         | $ | 52,900
|                                   



5



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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.



The Partnership, in
addition to being in the operation of properties phase, is in the disposition phase of its life cycle. During the disposition phase of the Partnerships life cycle, comparisons of operating results are complicated due to the timing and effect
of property sales and dispositions. Components of the Partnerships operating results are generally expected to decline as real property interests are sold or disposed of since the Partnership no longer realizes income and incurs expenses from
such real property interests. 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 and management has committed to disposing of its remaining real estate asset. In April 2004, the Partnership entered into a Purchase and Sale Agreement for the sale of Marquette for
approximately $6,100,000. During the firstquarter 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. Please
refer to the Form 8-K filed on April 20, 2004 for more information regarding this transaction. The impairment charge is reflected in Discontinued Operations on the Statements of Income and Expenses. Marquettes operations have been disclosed as
discontinued operations for each year presented as follows:



|                        |  |                                |          |   |      |   |        
|----------------------- |  | ------------------------------ | -------- | - | ---- | - | -------
|                        |  | For the quarter endedMarch 31,
|                        |  | 2004                           |          |   | 2003
|                       
|Income                  |  | $                              | 830,000  |   |      | $ | 947,600
|Expenses                |  |                                | 628,700  |   |      |   | 650,800
|Impairment charge       |  |                                | 900,000  |   |      |   |       
|                       
|Discontinued operations |  | $                              | (698,700 | ) |      | $ | 296,800
|                       



Operations

The table below is a recap of certain operating results of Marquette for the three months ended March 31, 2004 and 2003, included in discontinued operations. The discussion
following the table should be read in conjunction with the financial statements and notes thereto appearing in this report.



|                    |  |                                                                 |         |      |   |        
|------------------- |  | --------------------------------------------------------------- | ------- | ---- | - | -------
|                    |  | ComparativeOperating Results (a)For the QuartersEnded March 31,
|                    |  | 2004                                                            |         | 2003
|                   
|Rental revenues     |  | $                                                               | 830,000 |      | $ | 947,600
|                   
|Property net income |  | $                                                               | 201,300 |      | $ | 296,800
|                   
|Average occupancy   |  |                                                                 | 77%     |      |   | 79%    
|                   



|(a) | Excludes certain income and expense items which are either not directly related to individual property operating results such as interest income, interest expense on the Partnerships
Front-End Fees loan, general and administrative and state income tax expenses and provision for value impairment or are related to properties disposed of by the Partnership prior to the periods under comparison.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net income for the Partnership decreased by $996,300 for the three months ended March 31, 2004 when
compared to the three months ended March 31, 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 has written down the
investment in Marquette to the approximate sales value resulting in an impairment charge of $900,000 during the first quarter of 2004. Please refer to the Form 8-K filed on April 20, 2004 for more information regarding this transaction. This was the
primary reason for the decrease in net income during the first three months of 2004 versus the same period in 2003.



Net income, exclusive of the impairment charge decreased by $96,300 for the three months ended March 31, 2004 when compared to the three months ended March 31, 2003. This was
primarily due to a slight decline in the operating results of Marquette for the first three months of 2004 versus the same period in 2003.



The following comparative discussion includes only the operating results of Marquette.



Rental revenues decreased by $117,600 or 12.4% for the three months ended March 31, 2004 when compared to the



6



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONScontinued



three months ended March 31, 2003. The decrease was primarily due to a reduction in the real estate tax recoveries billable to the tenants. In late 2003, the State of Indiana completed a statewide reassessment of real estate taxes effective
for the 2002 tax year. As a result of the reassessment process, the actual real estate taxes assessed for Marquette significantly declined. The tenants of Marquette are responsible for paying their proportionate share of the assessed taxes and as a
result of the decline in those taxes, the related recovery income also declined. In addition, percentage rent income declined from 2003 to 2004. Occupancy at Marquette has remained relatively stable, however, the leases and short term licenses that
have been signed to extend or renew existing tenants have not been on as favorable terms as the previous leases.



Insurance expense increased by $11,700 or 35.6% for the three months ended March 31, 2004 when compared to the three months ended March 31, 2003. The increase was due to an
increase in property and liability insurance costs.



Real estate taxes decreased by
$47,000 or 29% for the three months ended March 31, 2004 when compared to the three months ended March 31, 2003. As was previously discussed, the State of Indiana completed a statewide reassessment of real estate taxes effective for the 2002 tax
year. As a result, real estate taxes for Marquette declined significantly.



All other
expenses remained relatively unchanged for the periods under comparison.



To increase
and/or maintain occupancy level at the Partnerships remaining property, the General Partner, through its asset and property management groups, continues to take the following actions: 1) implementation of marketing programs, including hiring
of third-party leasing agents or providing on-site leasing personnel, advertising, direct mail campaigns and development of property brochures; 2) early renewal of existing tenants leases and addressing any expansion needs these tenants may
have; 3) networking with national level retailers; 4) cold-calling other businesses and tenants in the market area; and 5) providing rental concessions or competitively pricing rental rates depending on market conditions.



Liquidity and Capital Resources

The Partnership remains committed to selling Marquette. In the interim, the Partnership continues to manage and maintain its remaining property. Notwithstanding the Partnerships intention relative to property sales,
another primary objective of the Partnership is to provide cash distributions to Partners from Partnership operations. To the extent cumulative cash distributions exceed net income, such excess distributions will be treated as a return of capital.
Cash Flow (as defined in the Partnership Agreement) is generally not equal to 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 thePartnership 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 CashFlow Results For the Three MonthsEnded March 31, |         
|                                                           |  | 2004                                                             |          |   | 2003 |  
|                                                           | 
|Cash Flow (as defined in                                   |  |                                                                  |          |   |      |   |          |  
|the Partnership Agreement)                                 |  | $                                                                | 182,100  |   |      | $ | 276,800  |  
|Items of reconciliation:                                   |  |                                                                  |          |   |      |   |          |  
|Decrease in current assets                                 |  |                                                                  | 66,600   |   |      |   | 91,400   |  
|(Decrease) in current liabilities                          |  |                                                                  | (293,600 | ) |      |   | (61,000  | )
|                                                           | 
|Net cash (used in) provided by operating activities (GAAP) |  | $                                                                | (44,900  | ) |      | $ | 307,200  |  
|                                                           | 
|Net cash (used in) investing activities (GAAP)             |  | $                                                                | (5,200   | ) |      | $ | (20,600  | )
|                                                           | 
|Net cash (used in) financing activities (GAAP)             |  | $                                                                | (230,500 | ) |      | $ | (230,500 | )
|                                                           | 



Cash Flow (as defined in the Partnership
Agreement) decreased by $94,700 for the three months ended March 31, 2004 when compared to the three months ended March 31, 2003. The decrease was primarily due to the decrease in percentage rent and real estate tax reimbursement income due from the
tenants as well as the increase in insurance costs and was partially offset by a decrease in real estate tax expense.



The net decrease in the Partnerships cash position of $280,600 for the three months ended March 31, 2004 was primarily due to the payment of the 2002 real estate taxes. As
previously discussed, the State of Indiana completed a statewide reassessment of real estate taxes effective for the 2002 tax year and those taxes became due in January 2004. Liquid assets of the Partnership as of March 31, 2004 were comprised of
amounts held for working capital purposes.



Net cash provided by operating activities
decreased by $352,100 for the three months ended March 31, 2004 when compared to the three months ended March 31, 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 used in investing activities decreased by $15,400 for the three
months ended March 31, 2004 when compared to the three months ended March 31, 2003. The decrease was due to a reduction in expenditures for building and tenant improvements and leasing commissions.



The Partnership maintains working capital reserves to pay for capital expenditures such as building
and tenant improvements and leasing costs. During the three months ended March 31, 2004, the Partnership spent $5,200 for leasing costs and has projected to spend approximately $179,700 during the remainder of 2004. Actual amounts expended may vary
depending on a number of factors including actual leasing activity, results of property operations and other market conditions throughout the year. The General Partner believes that these improvements and leasing costs



7



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONScontinued



are necessary in order to increase and/or maintain occupancy levels in a very competitive market, maximize rental rates charged to new and renewing tenants and to prepare the remaining property for eventual disposition.



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



Pursuant to a modification of the Partnerships Front-End Fees loan agreement, the Affiliate of
the General Partner has elected to waive the Partnerships obligation for all deferred interest on this loan and charge no interest in the future.



Distributions to Limited Partners for the three months ended March 31, 2004 were declared in the amount of $230,500 or $4.00 per Unit. Cash distributions are made 60 days after the
last day of each fiscal quarter. The amount of future distributions to Limited Partners will ultimately be dependent upon the performance of Marquette as well as the General Partners determination of the amount of cash necessary to supplement
working capital reserves to meet future liquidity requirements of the Partnership. Accordingly, there can be no assurance as to the amounts of cash for future distributions to Limited Partners.



Based upon the current estimated value of its assets, net of its outstanding liabilities, together
with its expected operating results and capital expenditure requirements, the General Partner believes that the Partnerships cumulative distributions to its Limited Partners from inception through the termination of the Partnership will be
substantially less than such Limited Partners Original Capital Contribution.





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:



The Partnership filed Current Reports on Form 8-K as follows:



|               |  |                                                                                                    
|-------------- |  | ---------------------------------------------------------------------------------------------------
|Date           |  | Description                                                                                        
|April 20, 2004 |  | Purchase and Sale Agreement dated April 8, 2004 for the sale of Marquette Mall and Office Building.



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: May 14, 2004 |  | By: |  | /s/    DONALD J. LIEBENTRITT                               
|                   |  |     |  | DONALD J. LIEBENTRITT President and Chief Executive Officer

|                   |  |     |  |                                                    
|------------------ |  | --- |  | ---------------------------------------------------
|                   |  |    
|Date: May 14, 2004 |  | By: |  | /s/    PHILIP TINKLER                              
|                   |  |     |  | PHILIP TINKLER Vice
PresidentFinance and Treasurer



11