UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q



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


      For the quarterly period ended            September 30, 1998
                                      ------------------------------------------


                                       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  0-9783
                           ---------



                        MCNEIL REAL ESTATE FUND XI, LTD.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)




         California                                 94-2669577
--------------------------------------------------------------------------------
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                      Identification No.)




              13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip code)



Registrant's telephone number, including area code      (972) 448-5800
                                                   -----------------------------



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 and (2) has been  subject to such  filing
requirements for the past 90 days. Yes X No
                                      ---  ---
<PAGE>
                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
----------------------------

                        MCNEIL REAL ESTATE FUND XI, LTD.

                                 BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       September 30,       December 31,
                                                                            1998               1997
                                                                       -------------       -------------
ASSETS
------

Real estate investments:
<S>                                                                    <C>                  <C>         
   Land .......................................................        $  4,407,325         $  4,407,325
   Buildings and improvements .................................          48,088,210           47,211,527
                                                                       ------------         ------------
                                                                         52,495,535           51,618,852
   Less:  Accumulated depreciation ............................         (32,559,858)         (30,941,665)
                                                                       ------------         ------------
                                                                         19,935,677           20,677,187

Assets held for sale ..........................................           4,730,291            5,910,865

Cash and cash equivalents .....................................           2,535,586            3,045,785
Cash segregated for security deposits .........................             455,394              413,487
Accounts receivable ...........................................             102,776               40,018
Prepaid expenses and other assets .............................             111,886              242,961
Escrow deposits ...............................................           1,017,490              683,785
Deferred borrowing costs (net of accumulated
   amortization of $643,128 and $677,649 at
   September 30, 1998 and December 31, 1997,
   respectively) ..............................................           1,207,186            1,355,831
                                                                       ------------         ------------
                                                                       $ 30,096,286         $ 32,369,919
                                                                       ============         ============

LIABILITIES AND PARTNERS' DEFICIT
---------------------------------

Mortgage notes payable, net ...................................        $ 36,163,013         $ 36,207,678
Mortgage note payable - affiliate .............................                  --            2,588,971
Accrued interest ..............................................             187,493              271,877
Accrued interest - affiliate ..................................                  --               20,889
Accrued expenses ..............................................             807,508              382,446
Payable to affiliates - General Partner .......................           3,029,715            2,231,389
Security deposits and deferred rental revenue .................             470,430              460,567
                                                                       ------------         ------------
                                                                         40,658,159           42,163,817
                                                                       ------------         ------------

Partners' deficit:
   Limited partners - 159,813 limited partnership units
     authorized  and outstanding at September 30, 1998
     and December 31, 1997 ....................................          (3,899,998)          (3,602,274)
   General Partner ............................................          (6,661,875)          (6,191,624)
                                                                       ------------         ------------
                                                                        (10,561,873)          (9,793,898)
                                                                       ------------         ------------
                                                                       $ 30,096,286         $ 32,369,919
                                                                       ============         ============
</TABLE>

The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        MCNEIL REAL ESTATE FUND XI, LTD.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Three Months Ended                     Nine Months Ended
                                                          September 30,                         September 30,
                                                 ------------------------------        ------------------------------
                                                     1998               1997               1998                1997
                                                 -----------        -----------        -----------        -----------
Revenue:
<S>                                              <C>                <C>                <C>                <C>        
   Rental revenue .......................        $ 3,693,935        $ 3,816,132        $11,276,346        $11,329,456
   Interest .............................             53,435             34,629            149,557             87,490
   Gain on sale of real estate ..........                 --                 --          3,319,137                 --
   Gain on involuntary
     conversion .........................                 --                 --                 --            172,987
                                                 -----------        -----------        -----------        -----------
     Total revenue ......................          3,747,370          3,850,761         14,745,040         11,589,933
                                                 -----------        -----------        -----------        -----------

Expenses:
   Interest .............................            948,619            882,605          2,656,708          2,655,158
   Interest - affiliate mortgage.........                 --             62,543             89,621            183,418
   Depreciation .........................            591,362            503,239          1,618,193          1,549,369
   Property taxes .......................            224,908            217,794            682,511            653,382
   Personnel expenses ...................            476,688            493,521          1,423,084          1,408,160
   Utilities ............................            309,706            313,379            857,481            860,057
   Repair and maintenance ...............            501,015            459,527          1,427,331          1,513,633
   Property management
     fees - affiliates ..................            181,129            189,258            557,958            563,127
   Other property operating
     expenses ...........................            205,240            213,088            600,266            588,442
   General and administrative ...........             94,884             50,370            442,961            151,590
   General and administrative -
     affiliates .........................             84,183             65,752            258,725            197,761
                                                 -----------        -----------        -----------        -----------
     Total expenses .....................          3,617,734          3,451,076         10,614,839         10,324,097
                                                 -----------        -----------        -----------        -----------

Net income ..............................        $   129,636        $   399,685        $ 4,130,201        $ 1,265,836
                                                 ===========        ===========        ===========        ===========

Net income allocable to
   limited partners .....................        $   123,154        $   274,397        $ 3,923,691        $    71,586
Net income allocable
   to General Partner ...................              6,482            125,288            206,510          1,194,250
                                                 -----------        -----------        -----------        -----------
Net income ..............................        $   129,636        $   399,685        $ 4,130,201        $ 1,265,836
                                                 ===========        ===========        ===========        ===========

Net income per limited
   partnership unit .....................        $       .77        $      1.72        $     24.55        $       .45
                                                 ===========        ===========        ===========        ===========
Distribution per limited
   limited partnership unit .............        $     13.90        $        --        $     26.41        $        --
                                                 ===========        ===========        ===========        ===========
</TABLE>



The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        MCNEIL REAL ESTATE FUND XI, LTD.

                         STATEMENTS OF PARTNERS' DEFICIT
                                   (Unaudited)

              For the Nine Months Ended September 30, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                                Total
                                                      General            Limited               Partners'
                                                      Partner            Partners              Deficit
                                                 ---------------       -------------        -------------

<S>                                              <C>                   <C>                  <C>          
Balance at December 31, 1996 ............        $   (6,454,008)       $ (4,179,456)        $(10,633,464)

Net income ..............................             1,194,250              71,586            1,265,836

Management Incentive Distribution........              (667,026)                 --             (667,026)
                                                 --------------        ------------         ------------

Balance at September 30, 1997 ...........        $   (5,926,784)       $ (4,107,870)        $(10,034,654)
                                                 ==============        ============         ============


Balance at December 31, 1997 ............        $   (6,191,624)       $ (3,602,274)        $ (9,793,898)

Net income ..............................               206,510           3,923,691            4,130,201

Management Incentive Distribution .......              (676,761)                 --             (676,761)

Distributions to limited partners .......                    --          (4,221,415)          (4,221,415)
                                                 --------------        ------------         ------------

Balance at September 30, 1998 ...........        $   (6,661,875)       $ (3,899,998)        $(10,561,873)
                                                 ==============        ============         ============
</TABLE>






The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        MCNEIL REAL ESTATE FUND XI, LTD.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                                        Nine Months Ended
                                                                            September 30,
                                                                 ----------------------------------
                                                                     1998                 1997
                                                                 -------------        -------------
Cash flows from operating activities:
<S>                                                              <C>                  <C>         
   Cash received from tenants ...........................        $ 11,174,442         $ 11,357,484
   Cash paid to suppliers ...............................          (4,514,412)          (4,498,797)
   Cash paid to affiliates ..............................            (695,118)            (794,461)
   Interest received ....................................             149,557               87,490
   Interest paid ........................................          (2,564,090)          (2,515,433)
   Interest paid - affiliates ...........................            (110,510)            (185,768)
   Property taxes paid ..................................            (677,813)            (595,862)
                                                                 ------------         ------------
Net cash provided by operating activities ...............           2,762,056            2,854,653
                                                                 ------------         ------------

Cash flow from investing activities:
   Additions to real estate investments .................            (876,683)          (1,020,402)
   Additions to assets held for sale ....................            (168,755)                  --
   Proceeds from sale of real estate ....................           4,787,389                   --
   Insurance proceeds from fire .........................                  --              172,987
                                                                 ------------         ------------
Net cash provided by (used in)
   investing activities .................................           3,741,951             (847,415)
                                                                 ------------         ------------

Cash flows from financing activities:
   Principal payments on mortgage notes
     payable ............................................            (382,706)            (357,390)
   Proceeds from mortgage notes payable .................           8,860,000                   --
   Retirement of mortgage notes payable .................          (8,540,387)                  --
   Repayment of mortgage note payable - affiliate........          (2,588,971)                  --
   Deferred borrowing costs paid ........................            (140,727)                  --
   Management Incentive Distribution ....................                  --           (1,271,718)
   Distributions to limited partners ....................          (4,221,415)                  --
                                                                 ------------         ------------
Net cash used in financing activities ...................          (7,014,206)          (1,629,108)
                                                                 ------------         ------------

Net increase (decrease) in cash and cash
   equivalents ..........................................            (510,199)             378,130

Cash and cash equivalents at beginning of
   period ...............................................           3,045,785            2,351,879
                                                                 ------------         ------------

Cash and cash equivalents at end of period ..............        $  2,535,586         $  2,730,009
                                                                 ============         ============
</TABLE>




The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        MCNEIL REAL ESTATE FUND XI, LTD.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

              Reconciliation of Net Income to Net Cash Provided by
                              Operating Activities
<TABLE>
<CAPTION>
                                                                       Nine Months Ended
                                                                         September 30,
                                                               -------------------------------
                                                                   1998               1997
                                                               -----------         -----------
<S>                                                            <C>                 <C>        
Net income ............................................        $ 4,130,201         $ 1,265,836
                                                               -----------         -----------

Adjustments to reconcile net income to net cash
   provided  by  operating activities:
   Depreciation .......................................          1,618,193           1,549,369
   Amortization of deferred borrowing costs ...........            158,574             121,459
   Amortization of discounts on mortgage
     notes payable ....................................             18,428              17,649
   Gain on sale of real estate ........................         (3,319,137)                 --
   Gain on involuntary conversion .....................                 --            (172,987)
   Changes in assets and liabilities:
     Cash segregated for security deposits ............            (41,907)              1,342
     Accounts receivable ..............................            (62,758)             (7,281)
     Prepaid expenses and other assets ................            131,075             128,976
     Escrow deposits ..................................           (333,705)           (469,816)
     Accounts payable .................................                 --             (52,886)
     Accrued interest .................................            (84,384)                617
     Accrued interest-affiliates ......................            (20,889)             (2,350)
     Accrued expenses .................................            436,937             476,012
     Payable to affiliates - General Partner ..........            121,565             (33,573)
     Security deposits and deferred rental
       revenue ........................................              9,863              32,286
                                                               -----------         -----------
       Total adjustments ..............................         (1,368,145)          1,588,817
                                                               -----------         -----------

Net cash provided by operating activities .............        $ 2,762,056         $ 2,854,653
                                                               ===========         ===========

</TABLE>




The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND XI, LTD.

                          Notes to Financial Statements
                                   (Unaudited)

                               September 30, 1998

NOTE 1.
-------

McNeil Real Estate Fund XI, Ltd. (the  "Partnership") was organized June 2, 1980
as a limited  partnership under the provisions of the California Uniform Limited
Partnership Act. The general partner of the Partnership is McNeil Partners, L.P.
(the "General Partner"), a Delaware limited partnership,  an affiliate of Robert
A.  McNeil.  The  Partnership  is governed by an amended  and  restated  limited
partnership   agreement,   dated  August  6,  1991  (the  "Amended   Partnership
Agreement").  The principal  place of business for the  Partnership  and for the
General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.

In the opinion of management,  the financial  statements reflect all adjustments
necessary  for a fair  presentation  of the  financial  position  and results of
operations  of the  Partnership.  All  adjustments  were of a  normal  recurring
nature.  However,  the results of operations for the nine months ended September
30, 1998 are not  necessarily  indicative  of the results to be expected for the
year ending December 31, 1998.

NOTE 2.
-------

The  financial  statements  should  be read in  conjunction  with the  financial
statements  contained in the  Partnership's  Annual  Report on Form 10-K for the
year  ended  December  31,  1997,  and the  notes  thereto,  as  filed  with the
Securities and Exchange  Commission,  which is available upon request by writing
to McNeil Real Estate Fund XI, Ltd.,  c/o McNeil Real Estate  Management,  Inc.,
Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.

NOTE 3.
-------

The  Partnership  pays  property  management  fees  equal to 5% of gross  rental
receipts of the Partnership's properties to McNeil Real Estate Management,  Inc.
("McREMI"),  an  affiliate  of  the  General  Partner,  for  providing  property
management and leasing services.

The  Partnership  reimburses  McREMI  for  its  costs,  including  overhead,  of
administering the Partnership's affairs.

Under terms of the Amended  Partnership  Agreement,  the Partnership is paying a
Management  Incentive  Distribution  ("MID") to the General Partner. The maximum
MID is  calculated  as 1% of the tangible  asset value of the  Partnership.  The
maximum MID  percentage  decreases  subsequent to 1999.  Tangible asset value is
determined  by using the  greater  of (i) an amount  calculated  by  applying  a
capitalization  rate  of 9% to the  annualized  net  operating  income  of  each
property or (ii) a value of $10,000 per apartment unit to arrive at the property
tangible  asset value.  The property  tangible  asset value is then added to the
book value of all other assets excluding intangible items.



<PAGE>
MID will be paid to the extent of the lesser of the  Partnership's  excess  cash
flow, as defined,  or net operating income,  as defined,  and may be paid (i) in
cash,  unless there is insufficient  cash to pay the distribution in which event
any unpaid  portion not taken in limited  partnership  units  ("Units")  will be
deferred and is payable,  without interest, from the first available cash and/or
(ii) in Units.  A maximum of 50% of the MID may be paid in Units.  The number of
Units  issued in payment  of the MID is based on the  greater of $50 per Unit or
the net tangible asset value, as defined, per Unit.

Any  amount  of the MID that is paid to the  General  Partner  in Units  will be
treated as if cash is distributed to the General Partner and is then contributed
to the Partnership by the General Partner. The MID represents a return of equity
to the General Partner for increasing cash flow, as defined,  and accordingly is
treated as a distribution.

In November 1996, the  Partnership  obtained a loan from McNeil Real Estate Fund
XXVII, L.P., an affiliate of the General Partner,  for $2,588,971.  The note was
secured by The Village  Apartments and required monthly  interest-only  payments
equal to the prime  lending rate of Bank of America  plus 1% with the  principal
balance due  November  25, 1999.  This  mortgage  note was paid off on April 27,
1998.

Compensation,  reimbursements  and  distributions  paid  to or  accrued  for the
benefit of the General Partner and its affiliates are as follows:

<TABLE>
<CAPTION>
                                                                   Nine Months Ended
                                                                     September 30,
                                                               ------------------------
                                                                1998             1997
                                                               --------        --------
<S>                                                            <C>             <C>     
Property management fees - affiliates .................        $557,958        $563,127
Interest - affiliates .................................          89,621         183,418
Charged to general and administrative affiliates:
   Partnership administration .........................         258,725         197,761
                                                               --------        --------
                                                               $906,304        $944,306
                                                               ========        ========

Charged to General Partner's deficit:
   MID ................................................        $676,761        $667,026
                                                               ========        ========
</TABLE>


<PAGE>
NOTE 4.
-------

On April 30,1998, the Partnership sold to an unaffiliated buyer, The Park, a 192
unit  apartment  complex  in  Joplin,  Missouri,  for a cash  purchase  price of
$4,900,000.  Net cash  proceeds to the  Partnership,  after  payoff of the first
mortgage note and various closing costs,  amounted to approximately  $2,161,000.
Cash  proceeds from this  transaction,  as well as the gain on sale are detailed
below.

                                                  Gain on Sale     Cash Proceeds
                                                  ------------     -------------

Cash sales price ..........................        $ 4,900,000      $ 4,900,000

Selling costs .............................           (112,611)        (112,611)
Basis of real estate sold .................         (1,337,454)
Basis of deferred borrowing costs
  written off .............................           (130,798)
                                                   -----------

Gain on sale of real estate ...............        $ 3,319,137
                                                   ===========

Proceeds from sale of real estate .........                           4,787,389
Retirement of mortgage note payable                                  (2,565,604)
                                                                    -----------

Net cash proceeds .........................                         $ 2,221,785
                                                                    ===========

NOTE 5.
-------

On April 27, 1998, the Partnership refinanced The Village mortgage note. The new
mortgage  note,  in the amount of $2,635,000  bears  interest at a variable rate
equal to  1.75%  plus the  London  Interbank  Offered  Rate per  annum.  The new
mortgage note requires monthly  interest-only  payments and quarterly  principal
payments in an amount  necessary to reduce the principal  balance of the note by
5% annually.  The maturity  date of the new mortgage  note is May 1, 2001.  Cash
proceeds from the refinancing transaction are as follows:

       New mortgage note proceeds...........................      $  2,635,000
       Amount required to payoff existing debt..............         2,588,971
                                                                  ------------

       Cash proceeds from refinancing.......................      $     46,029
                                                                  ============

The  Partnership  incurred  $60,438 of deferred  borrowing  costs related to the
refinancing of The Village mortgage note.


<PAGE>

NOTE 6.
-------

On September 28, 1998, the Partnership  refinanced the Rock Creek mortgage note.
The new mortgage note, in the amount of $6,225,000  bears interest at a variable
rate equal to 1.75% plus the London  Interbank  Offered Rate per annum.  The new
mortgage note requires monthly  interest-only  payments and quarterly  principal
payments in an amount  necessary to reduce the principal  balance of the note by
5% annually. The maturity date of the new mortgage note is October 1, 2001. Cash
proceeds from the refinancing transaction are as follows:

       New mortgage note proceeds...........................    $  6,225,000
       Amount required to payoff existing debt..............       5,974,783
                                                                ------------

       Cash proceeds from refinancing.......................    $    250,217
                                                                ============

The  Partnership  incurred  $80,289 of deferred  borrowing  costs related to the
refinancing of the Rock Creek mortgage note.

NOTE 7.
-------

James F.  Schofield,  Gerald C. Gillett,  Donna S. Gillett,  Jeffrey  Homburger,
Elizabeth Jung,  Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors,  Inc., McNeil Real Estate Management,  Inc., Robert A. McNeil,
Carole J. McNeil,  McNeil Pacific  Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX,  Ltd.,  McNeil Real  Estate  Fund X, Ltd.,  McNeil Real Estate Fund XI,
Ltd.,  McNeil  Real Estate Fund XII,  Ltd.,  McNeil Real Estate Fund XIV,  Ltd.,
McNeil Real Estate Fund XV, Ltd.,  McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P.,  McNeil Real Estate Fund XXII,  L.P.,  McNeil Real Estate
Fund XXIV,  L.P.,  McNeil Real Estate  Fund XXV,  L.P.,  McNeil Real Estate Fund
XXVI, L.P., and McNeil Real Estate Fund XXVII,  L.P., et al. - Superior Court of
the State of California for the County of Los Angeles,  Case No. BC133799 (Class
and Derivative Action Complaint).

The action involves  purported  class and derivative  actions brought by limited
partners of each of the fourteen limited partnerships that were named as nominal
defendants as listed above (the  "Partnerships").  Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management,  Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their  fiduciary  duties and certain  obligations  under the respective  Amended
Partnership  Agreement.  Plaintiffs  allege that  Defendants  have rendered such
Units highly illiquid and  artificially  depressed the prices that are available
for Units on the resale market.  Plaintiffs also allege that Defendants  engaged
in a course of conduct to prevent the  acquisition  of Units by an  affiliate of
Carl  Icahn  by  disseminating  purportedly  false,  misleading  and  inadequate
information.  Plaintiffs  further allege that Defendants  acted to advance their
own personal  interests at the expense of the Partnerships'  public unit holders
by failing to sell Partnership  properties and failing to make  distributions to
unitholders.






<PAGE>
On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs  are suing for breach of  fiduciary  duty,  breach of contract and an
accounting,  alleging,  among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive,  that these fees should
be reduced retroactively and that the respective Amended Partnership  Agreements
governing the Partnerships are invalid.

Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint. The case was stayed pending settlement discussions.  A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties.  Preliminary
Court  approval  was  received  on  October 6,  1998.  A hearing on final  Court
approval is scheduled for December 17, 1998.

Plaintiff's  counsel  intend  to seek an  order  awarding  attorney's  fees  and
reimbursements  of their  out-of-pocket  expenses.  The  amount of such award is
undeterminable  until  final  approval  is  received  from the  court.  Fees and
expenses shall be allocated amongst the Partnerships on a pro rata basis,  based
upon  tangible  asset value of each such  partnership,  less total  liabilities,
calculated in accordance with the Amended Partnership Agreements for the quarter
most recently ended.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------  ---------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

FINANCIAL CONDITION
-------------------

The Partnership is engaged in real estate  activities,  including the ownership,
operation and management of residential and other real estate related assets. At
September 30, 1998, the Partnership owned seven apartment properties,  which are
all subject to mortgage notes.

The Partnership  recorded a $3,319,137 gain on the sale of The Park  Apartments.
Net  proceeds  from the sale,  after  repayment  of the related  mortgage  note,
amounted  to  $2,221,785.  The net  proceeds  from  the sale  were  added to the
Partnership's balance of cash reserves.

RESULTS OF OPERATIONS
---------------------

Revenue:

Partnership  revenues  decreased  $90,996  for the three  months  and  increased
$3,340,489 for the nine months ended  September 30, 1998 as compared to the same
period  last year.  Excluding  the  effects of the sale of The Park  Apartments,
Partnership  revenues  increased  $352,690  or 3%  for  the  nine  months  ended
September 30, 1998.  Interest income increased $18,806 and $62,067 for the three
and nine  months  ended  September  30, 1998 as compared to the same period last
year.  This  increase is due to an increase in cash balances  being  invested in
interest bearing accounts.

<PAGE>
Rental  revenues   increased  at  all  seven  of  the  Partnership's   remaining
properties.  Excluding  rental revenue at The Park  Apartments,  rental revenues
increased  $84,272 and $298,579 for the three months and nine months compared to
the same period last year.  The  properties  reporting the largest  increases in
rental revenue were Acacia Lakes, Rock Creek and Villa Del Rio. This increase in
revenue on Acacia  Lakes,  Rock Creek and Villa Del Rio is due to an increase in
the rental rates, as compared to the prior year.

Expenses:

Partnership  expenses  increased  $166,658 and $290,742 for the three months and
nine months ended  September  30, 1998 as compared to the same period last year.
Excluding the effects of the sale of The Park Apartments,  Partnership  expenses
increased $261,701 or 1% for the nine months ended September 30, 1998.

Interest expense - affiliates decreased by $62,543 and $93,797 for the three and
nine months ended September 30, 1998. This decrease is due to the refinancing of
the mortgage loan at The Village in April 1998,  which  replaced  affiliate debt
with a third party mortgage note payable.

General and administrative expenses increased $291,371 for the first nine months
of 1998 as compared to the same period last year. The increase was mainly due to
costs incurred to explore  alternatives to maximize the value of the Partnership
(see  Liquidity and Capital  Resources).  The increase was  partially  offset by
decreases  attributable to investor services.  During 1997, charges for investor
services  were  provided by a third party  vendor.  Beginning  with 1998,  these
services are provided by affiliates of the General Partner.

General and  administrative - affiliates expense increased by $60,964 or 31% for
the first nine  months of 1998 as  compared  to the same period last year due to
the change in investor services charges as discussed above.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Partnership generated $2,762,056 through operating activities for the period
ending September 30, 1998 as compared to $2,854,653 for the same period in 1997.
This decrease is primarily due to a decrease in cash received from tenants,  and
an increase in property taxes paid.

The Partnership  expended $1,045,438 and $1,020,402 for capital  improvements to
its  properties  in the first nine  months of 1998 and 1997,  respectively.  The
Partnership  also received  proceeds of  $4,787,389  for the sale of The Park in
April 1998.

Total  principal  payments on mortgage  notes payable were $382,706 for the nine
months ended  September  30, 1998 as compared to $357,390 for the same period in
1997.  The  Partnership  used  $2,565,604  of the proceeds from The Park sale to
retire the related mortgage note payable.

On April 27, 1998, the  Partnership  refinanced the mortgage note payable on The
Village.  The new mortgage note, in the amount of $2,635,000 bears interest at a
variable rate equal to 1.75% plus the London  Interbank  Offered Rate per annum.
The new mortgage  note  requires  monthly  interest  only payments and quarterly
principal  payments in the amount  necessary to reduce the principal  balance of
the note by 5% annually.  The maturity  date of the new mortgage  note is May 1,
2001. The Partnership  realized  $46,029 of cash proceeds from the  transaction;
however,  $60,438 of the cash proceeds  together with  additional  cash reserves
were used to fund various deferred borrowing costs related to the transaction.
<PAGE>
On September 28, 1998, the  Partnership  refinanced the mortgage note payable on
Rock Creek. The new mortgage note, in the amount of $6,225,000 bears interest at
a variable rate equal to 1.75% plus the London Interbank Offered Rate per annum.
The new mortgage  note  requires  monthly  interest  only payments and quarterly
principal  payments in the amount  necessary to reduce the principal  balance of
the note by 5% annually.  The maturity  date of the new mortgage note is October
1,  2001.  The  Partnership   realized   $250,217  of  cash  proceeds  from  the
transaction;  however,  $80,289 of the cash proceeds and cash reserves were used
to fund various deferred borrowing costs related to the transaction.

The Partnership  used its cash flow from operations as well as its cash reserves
to  distribute  $4,221,415  to the limited  partners in 1998.  The  distribution
amounted to $26.41 per limited partnership unit.

Short-term liquidity:

At  September  30,  1998,  the  Partnership  held cash and cash  equivalents  of
$2,535,586.  The General  Partner  considers  this level of cash  reserves to be
adequate to meet the Partnership's operating needs. The General Partner believes
that  anticipated  operating  results  for 1998 will be  sufficient  to fund the
Partnership's  budgeted  $1.3  million in capital  improvements  for 1998 and to
repay the current portion of the Partnership's mortgage notes.

Long-term liquidity:

For the long-term,  property operations will remain the primary source of funds.
In this regard,  the General Partner expects that the capital  improvements made
by the  Partnership  during the past will yield improved cash flow from property
operations in the future. If the Partnership's cash position  deteriorates,  the
General Partner may elect to defer certain of the capital  improvements,  except
where  such  improvements  are  expected  to  increase  the  competitiveness  or
marketability of the Partnership's properties.

As previously announced, the Partnership has retained PaineWebber,  Incorporated
("PaineWebber")  as its exclusive  financial advisor to explore  alternatives to
maximize  the  value  of  the  Partnership  including,   without  limitation,  a
transaction  in which  limited  partnership  interests  in the  Partnership  are
converted  into  cash.  The  Partnership,   through  PaineWebber,  has  provided
financial  and  other  information  to  interested   parties  and  is  currently
conducting  discussions  with one such party in an attempt to reach a definitive
agreement  with respect to a sale  transaction.  It is possible that the General
Partner  and its  affiliates  will  receive  non-cash  consideration  for  their
ownership  interests in connection  with any such  transaction.  There can be no
assurance that any such agreement will be reached nor the terms thereof.

Income/Loss Allocation and Distributions:

Terms of the Amended  Partnership  Agreement  specify  that  income/loss  before
depreciation  is allocated  to the General  Partner to the extent of MID paid in
cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and
the  General  Partner,  respectively.  Therefore,  for  the  nine  months  ended
September   30,  1998  and  1997,   net  income  of  $206,510  and   $1,194,250,
respectively,  was  allocated  to the  General  Partner.  The  limited  partners
received net income  allocations  of $3,923,691  and $71,586 for the nine months
ended September 30, 1998 and 1997, respectively.

The  Partnership  distributed  $4,221,415  to the limited  partners  in 1998.  A
distribution of $676,761 for the MID has been accrued by the Partnership for the
nine month period ending September 30, 1998 for the General Partner.
<PAGE>
Forward-Looking Information:

Within this document,  certain  statements are made as to the expected occupancy
trends,  financial  condition,  results  of  operations,  and cash  flows of the
Partnership  for periods after  September 30, 1998. All of these  statements are
forward-looking  statements  made pursuant to the safe harbor  provisions of the
Private  Securities  Litigation  Reform Act of 1995.  These  statements  are not
historical  and  involve  risks  and  uncertainties.  The  Partnership's  actual
occupancy trends, financial condition, results of operations, and cash flows for
future  periods may differ  materially  due to several  factors.  These  factors
include,  but are not limited to, the  Partnership's  ability to control  costs,
make necessary  capital  improvements,  negotiate  sales or  refinancings of its
properties, and respond to changing economic and competitive factors.

Other Information:

Management has reviewed its information  technology  infrastructure  to identify
any  systems  that could be  affected  by the year 2000  problem.  The year 2000
problem is the result of computer programs being written using two digits rather
than four to define the applicable  year. Any programs that have  time-sensitive
software  may  recognize a date using "00" as the year 1900 rather than the year
2000.  This  could  result in major  systems  failure  or  miscalculations.  The
information  systems  used  by  the  Partnership  for  financial  reporting  and
significant  accounting  functions were made year 2000  compliant  during recent
systems conversions.

Management  is  in  the  process  of  evaluating  the  mechanical  and  embedded
technological systems at the various properties. Management intends to inventory
all such systems and query  suppliers,  vendors and  manufacturers  to determine
year 2000 compliance.  In circumstances of  non-compliance  management will work
with the vendor to remedy the problem or seek alternative  suppliers who will be
in compliance.  Management believes that the remediation of any outstanding year
2000  conversion  issues  will not have a  material  or  adverse  effect  on the
Partnership's operations.  However, no estimates can be made as to the potential
adverse impact  resulting from the failure of third party service  providers and
vendors to be year 2000  compliant.  Management is in the process of identifying
those risks as well as  developing  a  contingency  plan to  mitigate  potential
adverse effects from non-compliance.


<PAGE>

                          PART II. - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
-------  -----------------

James F.  Schofield,  Gerald C. Gillett,  Donna S. Gillett,  Jeffrey  Homburger,
Elizabeth Jung,  Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors,  Inc., McNeil Real Estate Management,  Inc., Robert A. McNeil,
Carole J. McNeil,  McNeil Pacific  Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX,  Ltd.,  McNeil Real  Estate  Fund X, Ltd.,  McNeil Real Estate Fund XI,
Ltd.,  McNeil  Real Estate Fund XII,  Ltd.,  McNeil Real Estate Fund XIV,  Ltd.,
McNeil Real Estate Fund XV, Ltd.,  McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P.,  McNeil Real Estate Fund XXII,  L.P.,  McNeil Real Estate
Fund XXIV,  L.P.,  McNeil Real Estate  Fund XXV,  L.P.,  McNeil Real Estate Fund
XXVI, L.P., and McNeil Real Estate Fund XXVII,  L.P., et al. - Superior Court of
the State of California for the County of Los Angeles,  Case No. BC133799 (Class
and Derivative Action Complaint).

The action involves  purported  class and derivative  actions brought by limited
partners of each of the fourteen limited partnerships that were named as nominal
defendants as listed above (the  "Partnerships").  Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management,  Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their  fiduciary  duties and certain  obligations  under the respective  Amended
Partnership  Agreement.  Plaintiffs  allege that  Defendants  have rendered such
Units highly illiquid and  artificially  depressed the prices that are available
for Units on the resale market.  Plaintiffs also allege that Defendants  engaged
in a course of conduct to prevent the  acquisition  of Units by an  affiliate of
Carl  Icahn  by  disseminating  purportedly  false,  misleading  and  inadequate
information.  Plaintiffs  further allege that Defendants  acted to advance their
own personal  interests at the expense of the Partnerships'  public unit holders
by failing to sell Partnership  properties and failing to make  distributions to
unitholders.

On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs  are suing for breach of  fiduciary  duty,  breach of contract and an
accounting,  alleging,  among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive,  that these fees should
be reduced retroactively and that the respective Amended Partnership  Agreements
governing the Partnerships are invalid.

Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint. The case was stayed pending settlement discussions.  A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties.  Preliminary
Court  approval  was  received  on  October 6,  1998.  A hearing on final  Court
approval is scheduled for December 17, 1998.

Plaintiff's  counsel  intend  to seek an  order  awarding  attorney's  fees  and
reimbursements  of their  out-of-pocket  expenses.  The  amount of such award is
undeterminable  until  final  approval  is  received  from the  court.  Fees and
expenses shall be allocated amongst the Partnerships on a pro rata basis,  based
upon  tangible  asset value of each such  partnership,  less total  liabilities,
calculated in accordance with the Amended Partnership Agreements for the quarter
most recently ended.


<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-------  --------------------------------

(a)      Exhibits.

         Exhibit
         Number                     Description
         -------                    -----------

         4.                         Amended  and  Restated  Limited  Partnership
                                    Agreement   dated  as  of  August  6,  1991.
                                    (Incorporated  by reference to the Quarterly
                                    Report on Form 10-Q,  for the quarter  ended
                                    June 30, 1991).

         11.                        Statement regarding  computation of net loss
                                    per limited  partnership  unit: Net loss per
                                    limited  partnership  unit  is  computed  by
                                    dividing  net loss  allocated to the limited
                                    partners    by   the   number   of   limited
                                    partnership  units  outstanding.   Per  unit
                                    information   has  been  computed  based  on
                                    159,813    limited     partnership     units
                                    outstanding in 1998 and 1997.

         27.                        Financial  Data  Schedule  for   the quarter
                                    ended September 30, 1998.

(b)      Reports on Form   8-K.  There  were no reports on Form 8-K filed during
         the quarter ended September 30, 1998.



<PAGE>


                        McNEIL REAL ESTATE FUND XI, LTD.

                                   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:



                             McNEIL REAL ESTATE FUND XI, Ltd.

                             By:  McNeil Partners, L.P., and General Partner

                                  By: McNeil Investors, Inc., General Partner






November 16, 1998                 By: /s/  Ron K. Taylor
-----------------                     ------------------------------------------
Date                                  Ron K. Taylor
                                      President and Director of McNeil 
                                       Investors, Inc.
                                      (Principal Financial Officer)




November 16, 1998                 By: /s/  Brandon K. Flaming
-----------------                     ------------------------------------------
Date                                  Brandon K. Flaming
                                      Vice President of McNeil Investors, Inc.
                                      (Principal Accounting Officer)