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

FORM 10-K
(Mark One)

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

For the fiscal year ended December 31, 2002

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 0-21560

CNL INCOME FUND XI, LTD.
(Exact name of registrant as specified in its charter)

Florida 59-3078854
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

450 South Oran ge Avenue
Orlando, Florida 32801
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (407) 540-2000

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class: Name of exchange on which registered:
None Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

Units of limited partnership interest ($10 per Unit)
(Title of class)

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 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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]

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

Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 4,000,000 units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $10 per Unit.

DOCUMENTS INCORPORATED BY REFERENCE:

None

PART I



Item 1. Business

CNL Income Fund XI, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on August 20, 1991. The general partners of the Partnership are Robert
A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on March 18, 1992, the
Partnership offered for sale up to $40,000,000 of limited partnership interests
(the "Units") (4,000,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
March 12, 1992. The offering terminated on September 28, 1992, at which date the
maximum offering proceeds of $40,000,000 had been received from investors who
were admitted to the Partnership as limited partners (the "Limited Partners").

The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totaled
$35,200,000, and were used to acquire 39 Properties, including interests in four
Properties owned by joint ventures in which the Partnership is a co-venturer,
and to establish a working capital reserve for Partnership purposes.

As of December 31, 1999, the Partnership owned 41 Properties, either
directly or indirectly through joint venture or tenancy in common arrangements.
During the year ended December 31, 2001, the Partnership sold its Property in
Sebring, Florida and the Property in Round Rock, Texas which was held as
tenants-in-common with an affiliate of the General Partners, and reinvested the
majority of these net sales proceeds in a Property in Houston, Texas. During the
year ended December 31, 2002, the Partnership sold its Properties in Columbus,
Ohio and East Detroit, Michigan, and reinvested the net sales proceeds in two
Properties located in Universal City and Schertz, Texas with an affiliate of the
General Partners and a Florida limited partnership, as two separate tenancy in
common arrangements. In addition, Ashland Joint Venture, in which the
Partnership has a 62.16% interest, sold its Property in Ashland, New Hampshire
and reinvested, in June 2002, the majority of the net sales proceeds in a
property in San Antonio, Texas. As of December 31, 2002, the Partnership owned
40 Properties. The 40 Properties include five Properties owned by joint ventures
in which the Partnership is a co-venturer and three Properties owned with
affiliates of the General Partners as tenants-in-common. In March 2003, the
Partnership sold the Property in Abilene, Texas. The Partnership expects to
reinvest these proceeds in an additional income producing Property. The
Partnership leases the Properties generally on a triple-net basis with the
lessees responsible for all repairs and maintenance, property taxes, insurance
and utilities.

The Partnership holds its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. The Partnership has no obligation to sell all or any portion of a
Property at any particular time, except as may be required under property
purchase options granted to certain lessees.

Leases

Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership, the
joint ventures in which the Partnership is a co-venturer and the property owned
with an affiliate of the General Partners as tenants-in-common provide for
initial terms ranging from 14 to 20 years (the average being 18 years) and
expire between 2006 and 2020. The leases are generally on a triple-net basis,
with the lessees responsible for all repairs and maintenance, property taxes,
insurance and utilities. The leases of the Properties provide for minimum base
annual rental payments (payable in monthly installments) ranging from
approximately $45,600 to $218,100. The majority of the leases provide for
percentage rent, based on sales in excess of a specified amount. In addition,
some of the leases provide that, commencing in specified lease years (generally
the sixth lease year), the annual base rent required under the terms of the
lease will increase.


Generally, the leases of the Properties provide for two to five
five-year renewal options subject to the same terms and conditions as the
initial lease. Lessees of 27 of the Partnership's 40 Properties also have been
granted options to purchase Properties at the Property's then fair market value
after a specified portion of the lease term has elapsed. Fair market value will
be determined through an appraisal by an independent appraisal firm. Under the
terms of certain leases, the option purchase price may equal the Partnership's
original cost to purchase the Property (including acquisition costs), plus a
specified percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.

The leases generally provide that, in the event the Partnership wishes
to sell the Property subject to that lease, the Partnership first must offer the
lessee the right to purchase the Property on the same terms and conditions, and
for the same price, as any offer which the Partnership has received for the sale
of the Property.

During 2001, Phoenix Restaurant Group, Inc. ("PRG") filed for
bankruptcy and neither rejected, nor affirmed the three leases it had with the
Partnership, including a lease held with an affiliate of the General Partners,
as tenants-in-common. The Partnership owns a 73% interest in the tenancy in
common. During 2002, the bankruptcy court assigned the leases relating to the
properties in Avon, Colorado, and Abilene and Corpus Christi, Texas to
CherryDen, LLC, SWAC, LLC, and RAI, LLC, respectively. CherryDen, LLC and RAI,
LLC are affiliates of the General Partners. In October 2002, SWAC, LLC assigned
its lease relating to the Property in Abilene, Texas to Continental Foods, Inc.,
a third party. All other lease terms remained the same.

During 2002, the Partnership reinvested the net sales proceeds it
received from the sales of the Properties in Columbus, Ohio and East Detroit,
Michigan, in two Taco Cabana Properties located in Universal City and Schertz,
Texas with an affiliate of the General Partners and a Florida limited
partnership, as two separate tenancy in common arrangements. Ashland Joint
Venture, in which the Partnership has a 62.16% interest, reinvested in June 2002
the majority of the net sales proceeds it received from the sale of its Property
in Ashland, New Hampshire in a Taco Cabana property located in San Antonio,
Texas. The lease terms for these Properties are substantially the same as the
Partnership's other leases.

Major Tenants

During 2002, three lessees (or groups of affiliated lessees) of the
Partnership and its consolidated joint ventures, (i) Golden Corral Corporation,
(ii) Jack in the Box Inc. and Jack in the Box Eastern, L.P. (which are
affiliated entities under common control) (hereinafter referred to as "Jack in
the Box Inc.") and (iii) Burger King Corporation and BK Acquisition, Inc. (which
are affiliated entities under common control) (hereinafter referred to as
"Burger King Corporation"), each contributed more than 10% of the Partnership's
total rental revenues (including rental revenues from the Partnership's
consolidated joint ventures, and the Partnership's share of rental revenues from
Properties owned by unconsolidated joint ventures and Properties owned with
affiliates of the General Partners as tenants-in-common). As of December 31,
2002, Golden Corral Corporation was the lessee under leases relating to three
restaurants, Jack in the Box Inc. was the lessee under leases relating to eight
restaurants, and Burger King Corporation was the lessee under leases relating to
four restaurants. It is anticipated that, based on the minimum rental payments
required by the leases, these three lessees (or groups of affiliated lessees)
each will continue to contribute more than 10% of the Partnership's total rental
revenues in 2003. In addition, four Restaurant Chains, Golden Corral Family
Steakhouse Restaurants ("Golden Corral"), Jack in the Box, Burger King, and
Denny's, each accounted for more than 10% of the Partnership's total rental
revenues during 2002 (including rental revenues from the Partnership's
consolidated joint ventures, and the Partnership's share of rental revenues from
Properties owned by unconsolidated joint ventures and Properties owned with
affiliates of the General Partners as tenants-in-common). In 2003, it is
anticipated that these four Restaurant Chains each will continue to account for
more than 10% of the Partnership's total rental revenues to which the
Partnership is entitled under the terms of the leases. Any failure of these
lessees or Restaurant Chains could materially affect the Partnership's income if
the Partnership is not able to re-lease the Properties in a timely manner. No
single tenant or group of affiliated tenants lease Properties with an aggregate
carrying value in excess of 20% of the total assets of the Partnership.


Joint Venture and Tenancy in Common Arrangements

The Partnership has entered into the following joint venture and
tenancy in common arrangements as of December 31, 2002



Entity Name Year Ownership Partners Property


CNL/Airport Joint Venture 1992 77.33 % Various Third Party Partners Orlando, FL

Ashland Joint Venture 1992 62.16 % CNL Income Fund IX, Ltd. San Antonio, TX
CNL Income Fund X, Ltd.

Des Moines Real Estate 1992 76.60 % CNL Income Fund VII, Ltd. Des Moines, WA
Joint Venture CNL Income Fund XII, Ltd.

Denver Joint Venture 1992 85.00 % Various Third Party Partners Denver, CO

CNL Income Fund XI, Ltd. and 1997 72.58% CNL Income Fund XVII, Ltd. Corpus Christi, TX
CNL Income Fund XVII
Ltd., Tenants in Common

Portsmouth Joint Venture 1999 42.80 % CNL Income Fund XVIII, Ltd. Portsmouth, VA

CNL Income Fund VI, Ltd. and 2002 85.80% CNL Income Fund VI, Ltd. Universal City, TX
CNL Income Fund XI,
Ltd., Tenants in Common

CNL Income Fund VI, Ltd. and 2002 90.50% CNL Income Fund VI, Ltd. Schertz, TX
CNL Income Fund XI,
Ltd., Tenants in Common


Each joint venture or tenancy in common was formed to hold one
Property. Each CNL Income Fund is an affiliate of the General Partners and is a
limited partnership organized pursuant to the laws of the state of Florida. The
Partnership has management control of CNL/Airport Joint Venture and Denver Joint
Venture, and shares management control equally with the affiliates of the
General Partners for the other joint ventures.

The joint venture and tenancy in common arrangements provide for the
Partnership and its joint venture or tenancy in common partners to share in all
costs and benefits in proportion to each partner's percentage interest in the
business entity. The Partnership and its partners are also jointly and severally
liable for all debts, obligations and other liabilities of the joint venture or
tenancy in common. Net cash flow from operations is distributed to each joint
venture or tenancy in common partner in accordance with its respective
percentage interest in the business entity.

Ashland Joint Venture has an initial term of 30 years, and each of the
other joint ventures has an initial term of 20 years and, after the expiration
of the initial term, continues in existence from year to year unless terminated
at the option of either joint venturer or by an event of dissolution. Events of
dissolution include the bankruptcy, insolvency or termination of any joint
venturer, sale of the Property owned by the joint venture and mutual agreement
of the Partnership and its joint venture partners to dissolve the joint venture.
Any liquidation proceeds, after paying joint venture debts and liabilities and
funding reserves for contingent liabilities, will be distributed first to the
joint venture partners with positive capital account balances in proportion to
such balances until such balances equal zero, and thereafter in proportion to
each joint venture partner's percentage interest in the joint venture.

The joint venture and tenancy in common agreements restrict each
party's ability to sell, transfer or assign its joint venture or tenancy in
common interest without first offering it for sale to its partners, either upon
such terms and conditions as to which the parties may agree or, in the event the
parties cannot agree, on the same terms and conditions as any offer from a third
party to purchase such joint venture or tenancy in common interest.


During 2002, the Partnership entered into two separate tenancy in
common agreements with CNL Income Fund VI, Ltd., each to hold a Property in
Universal City and Schertz, Texas.

The use of joint venture and tenancy in common arrangements allows the
Partnership to fully invest its available funds at times at which it would not
have sufficient funds to purchase an additional property, or at times when a
suitable opportunity to purchase an additional property is not available. The
use of joint venture and tenancy in common arrangements also provides the
Partnership with increased diversification of its portfolio among a greater
number of properties. In addition, tenancy in common arrangements may allow the
Partnership to defer the gain for federal income tax purposes upon the sale of
the property if the proceeds are reinvested in an additional property.

Certain Management Services

RAI Restaurants, Inc. (formerly known as CNL Restaurants XVIII, Inc.),
an affiliate of the General Partners, provides certain services relating to
management of the Partnership and its Properties pursuant to a management
agreement with the Partnership. CNL APF Partners, LP assigned its rights in, and
its obligations under, the management agreement with the Partnership to RAI
Restaurants, Inc. ("Advisor") effective January 1, 2002. All of the terms and
conditions of the management agreement, including the payment of fees, remained
unchanged. Under this agreement, the Advisor is responsible for collecting
rental payments, inspecting the Properties and the tenants' books and records,
assisting the Partnership in responding to tenant inquiries and notices, and
providing information to the Partnership about the status of the leases and the
Properties. The Advisor also assists the General Partners in negotiating the
leases. For these services, the Partnership had agreed to pay the Advisor an
annual fee of one percent of the sum of gross rental revenues from Properties
wholly owned by the Partnership plus the Partnership's allocable share of gross
revenues of joint ventures in which the Partnership is a co-venturer, but not in
excess of competitive fees for comparable services.

The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.

Competition

The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains, and restaurants in other well-known national chains, including
those offering different types of food and service.

Employees

The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of American Properties Fund, Inc.,
the parent company of the advisor, perform certain services for the Partnership.
In addition, the General Partners have available to them the resources and
expertise of the officers and employees of CNL Financial Group, Inc., a
diversified real estate company, and its affiliates, who may also perform
certain services for the Partnership.


Item 2. Properties

As of December 31, 2002, the Partnership owned 40 Properties. Of the 40
Properties, 32 are owned by the Partnership in fee simple, five are owned
through joint venture arrangements and three are owned through tenancy in common
arrangements. See Item 1. Business - Joint Venture and Tenancy in Common
Arrangements. The Partnership is not permitted to encumber its Properties under
the terms of its partnership agreement. Reference is made to the Schedule of
Real Estate and Accumulated Depreciation for a listing of the Properties and
their respective costs, including acquisition fees and certain acquisition
expenses.



Description of Properties

Land. The Partnership's Property sites, owned either directly or
indirectly, range from approximately 17,900 to 329,100 square feet depending
upon building size and local demographic factors. Sites purchased by the
Partnership are in locations zoned for commercial use which have been reviewed
for traffic patterns and volume.

The following table lists the Properties owned by the Partnership,
either directly or indirectly, as of December 31, 2002 by state. More detailed
information regarding the location of the Properties is contained in the
Schedule of Real Estate and Accumulated Depreciation.

State Number of Properties

Alabama 2
Arizona 1
California 1
Colorado 2
Connecticut 2
Florida 1
Kansas 1
Louisiana 1
Massachusetts 1
Mississippi 1
New Mexico 2
North Carolina 2
Ohio 3
Oklahoma 2
South Carolina 2
Texas 12
Virginia 2
Washington 2
--------------
TOTAL PROPERTIES 40
==============

Buildings. Each of the Properties owned by the Partnership, either
directly or indirectly, includes a building that is one of a Restaurant Chain's
approved designs. The buildings generally are rectangular and are constructed
from various combinations of stucco, steel, wood, brick and tile. Building sizes
range from approximately 2,100 to 11,400 square feet. All buildings on
Properties are freestanding and surrounded by paved parking areas. Buildings are
suitable for conversion to various uses, although modifications may be required
prior to use for other than restaurant operations. As of December 31, 2002, the
Partnership had no plans for renovation of the Properties. Depreciation expense
is computed for buildings and improvements using the straight line method using
depreciable lives of 40 years for federal income tax purposes.

As of December 31, 2002, the aggregate cost of the Properties owned by
the Partnership (including its consolidated joint ventures) and the
unconsolidated joint ventures (including Properties owned through tenancy in
common arrangements) for federal income tax purposes was $31,230,706 and
$6,269,062, respectively.



The following table lists the Properties owned by the Partnership,
either directly or indirectly, as of December 31, 2002 by Restaurant Chain.

Restaurant Chain Number of Properties

Black-eyed Pea 1
Burger King 9
Casa del Rio 1
Denny's 6
Golden Corral 3
Gooney Bird's Sports Grill 1
Hardee's 4
Jack in the Box 8
KFC 1
Sagebrush Restaurant 1
Taco Bell 1
Taco Cabana 4
--------------
TOTAL PROPERTIES 40
==============

The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.

The General Partners believe that the Properties are adequately covered
by insurance. In addition, the General Partners have obtained contingent
liability and property coverage for the Partnership. This insurance is intended
to reduce the Partnership's exposure in the unlikely event a tenant's insurance
policy lapses or is insufficient to cover a claim relating to the Property.

Leases. The Partnership leases the majority of the Properties to
operators of selected national and regional fast-food restaurant chains. The
leases are generally on a long-term "triple net" basis, meaning that the tenant
is responsible for repairs, maintenance, property taxes, utilities and
insurance.

At December 31, 2002, 2001, 2000, 1999, and 1998, all of the Properties
were occupied. The following is a schedule of the average rent per Property for
each of the years ended with December 31:



2002 2001 2000 1999 1998
-------------- ------------- ------------- -------------- -------------


Rental Revenues (1) $ 4,333,193 $ 3,747,614 $ 3,914,520 $ 4,087,385 $ 4,064,778
Properties 40 40 41 41 38
Average Rent per Property $ 108,329 $ 93,690 $ 95,476 $ 99,692 $ 106,968




(1) Rental revenues include the Partnership's share of rental revenues from
the Properties owned through joint venture and tenancy in common
arrangements.



The following is a schedule of lease expirations for leases in place as
of December 31, 2002 for the next ten years and thereafter.



Percentage of
Expiration Year Number Annual Rental Gross Annual
of Leases Revenues Rental Income
----------------- ---------------- --------------------- --------------------------


2003 -- $ -- --
2004 -- -- --
2005 -- -- --
2006 4 360,538 9.04%
2007 3 498,758 12.51%
2008 -- -- --
2009 -- -- --
2010 9 845,071 21.19%
2011 2 95,355 2.39%
2012 14 1,441,989 36.17%
Thereafter 7 745,533 18.70%
---------- ------------- -------------
Total (1) 39 $ 3,987,244 100.00%
========== ============= =============


(1) Excludes one Property sold in March 2003.

Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants as of December 31, 2002 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.

Golden Corral Corporation leases three Golden Corral restaurants with
initial terms of 15 years (expiring in 2007) and average minimum base annual
rent of approximately $166,300 (ranging from approximately $157,300 to
$172,400).

Jack in the Box Inc. leases eight Jack in the Box restaurants with an
initial term of 18 years (expiring in 2010) and the average minimum base annual
rent is approximately $96,300 (ranging from approximately $78,800 to $110,300).

Burger King Corporation leases four Burger King restaurants with an
initial term of 14 years (expiring in 2006) and average minimum base annual rent
of approximately $90,100 (ranging from approximately $78,800 to $110,300).


Item 3. Legal Proceedings

Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective Properties, is party to, or
subject to, any material pending legal proceedings.


Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.




PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

(a) As of March 10, 2003, there were 3,184 holders of record of the
Units. There is no public trading market for the Units, and it is not
anticipated that a public market for the Units will develop. During 2002,
Limited Partners who wished to sell their Units may have offered the Units for
sale pursuant to the Partnership's distribution reinvestment plan (the "Plan"),
and Limited Partners who wished to have their distributions used to acquire
additional Units (to the extent Units were available for purchase) may have done
so pursuant to such Plan. The General Partners have the right to prohibit
transfers of Units. From inception through December 31, 2002, the price paid for
any Unit transferred pursuant to the Plan was $9.50 per Unit. The price paid for
any Unit transferred other than pursuant to the Plan was subject to negotiation
by the purchaser and the selling Limited Partner. The Partnership will not
redeem or repurchase Units.

The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 2002 and 2001, other than
pursuant to the Plan, net of commissions.



2002 (1) 2001 (1)
---------------------------------- -----------------------------------
High Low Average High Low Average
--------- -------- ---------- --------- --------- ----------


First Quarter $9.51 $ 6.61 $ 7.81 $7.33 $ 6.85 $ 7.09
Second Quarter 9.50 7.00 8.66 9.50 6.45 7.49
Third Quarter 9.50 6.35 7.63 9.50 6.65 7.85
Fourth Quarter 9.50 6.61 8.16 9.50 6.40 8.78



(1) A total of 52,106 and 35,160 Units were transferred other than pursuant
to the Plan for the years ended December 31, 2002 and 2001,
respectively.

The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.

For the years ended December 31, 2002 and 2001, the Partnership
declared cash distributions of $3,700,024 and $3,500,024, respectively, to the
Limited Partners. During the quarter ended December 31, 2002, the Partnership
declared a special distribution to the Limited Partners of $200,000 which
represented cumulative excess operating reserves. This special distribution was
effectively a return of a portion of the limited partners' investment, although
in accordance with the partnership agreement, $200,000 was applied toward the
limited partners' 10% Preferred Return. No amounts distributed to partners for
the years ended December 31, 2002 and 2001 are required to be or have been
treated by the Partnership as a return of capital for purposes of calculating
the Limited Partners' return on their adjusted capital contributions. No
distributions have been made to the General Partners to date. As indicated in
the chart below, these distributions were declared at the close of each of the
Partnership's calendar quarters. These amounts include monthly distributions
made in arrears for the Limited Partners electing to receive such distributions
on this basis.



Quarter Ended 2002 2001
--------------------------- ---------------- ----------------


March 31 $ 875,006 $ 875,006
June 30 875,006 875,006
September 30 875,006 875,006
December 31 1,075,006 875,006



The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.

(b) Not applicable.



Item 6. Selected Financial Data



2002 2001 2000 1999 1998
------------- -------------- ------------- -------------- -------------


Year ended December 31:
Continuing Operations (2):
Revenues $ 3,832,322 $ 3,388,613 $ 3,569,401 $ 3,671,193 $ 3,755,912
Equity in earnings (loss) of
unconsolidated joint
ventures 863,810 (147,538 ) 256,056 259,676 215,501
Income from continuing
operations (1) 3,806,470 1,584,154 2,956,840 2,997,386 3,673,961

Discontinued Operations (2):
Revenues 76,863 172,234 166,695 173,460 164,515
Income from discontinued
operations (3) 507,656 143,162 137,623 144,388 135,443

Net income 4,314,126 1,727,316 3,094,463 3,141,774 3,809,404

Net income per unit:
Continuing operations $ 0.95 $ 0.39 $ 0.74 $ 0.75 $ 0.92
Discontinued operations 0.13 0.04 0.03 0.04 0.03
------------- -------------- ------------- -------------- -------------
Total $ 1.08 $ 0.43 $ 0.77 $ 0.79 $ 0.95
============= ============== ============= ============== =============
Cash distributions
declared (4) $ 3,700,024 $ 3,500,024 $ 3,500,024 $ 3,500,024 $ 3,660,024

Cash distributions
declared per unit (4) 0.93 0.88 0.88 0.88 0.92

At December 31:
Total assets $34,320,216 $33,451,728 $35,227,373 $35,792,092 $36,103,592
Partners' capital 32,535,195 31,921,093 33,693,801 34,099,362 34,457,612


(1) Income from continuing operations for the years ended December 31, 2001
and 1998, includes $8,604 and $461,861, respectively, from gains on
sale of assets. Income from continuing operations for the years ended
December 31, 2001 and 2000 include $654,393 and $60,490 for provisions
for write-down of assets.

(2) Certain items in the prior year's financial statements have been
reclassified to conform to 2002 presentation. These reclassifications
had no effect on total net income. The results of operations relating
to properties that were either disposed of or were classified as held
for sale as of December 31, 2002 are reported as discontinued
operations. The results of operations relating to properties that were
identified for sale as of December 31, 2001 but sold subsequently are
reported as continuing operations.

(3) Income from discontinued operations for the year ended December 31,
2002 includes gains on sale of assets of $442,146.

(4) Distributions for the year ended December 31, 2002 and 1998, include
special distributions to the Limited Partners of $200,000 and $160,000,
respectively, which represented cumulative excess operating reserves.

The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.



Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The Partnership was organized on August 20, 1991, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurant Properties, as well as land upon which restaurant
Properties were to be constructed, which are leased primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are triple-net leases, with the lessees generally responsible for all
repairs and maintenance, property taxes, insurance and utilities. The leases
provide for minimum base annual rental amounts (payable in monthly installments)
ranging from approximately $45,600 to $218,100. The majority of the leases
provide for percentage rent, based on sales in excess of a specified amount. In
addition, some of the leases provide that, commencing in specified lease years
(generally the sixth lease year), the annual base rent required under the terms
of the lease will increase.

As of December 31, 2001 and 2000, the Partnership owned 34 Properties
directly, and six and five Properties indirectly through joint venture or
tenancy in common arrangements, respectively. As of December 31, 2002, the
Partnership owned 32 Properties directly and eight Properties indirectly through
joint venture or tenancy in common arrangements.

Capital Resources

For the years ended December 31, 2002, 2001 and 2000, cash from
operating activities was $4,229,263, $3,267,699, and $3,417,750, respectively.
The increase in cash from operating activities during 2002, as compared to 2001,
and the decrease in cash from operating activities during 2001, as compared to
2000, resulted from changes in the Partnership's working capital and changes in
income and expenses.

Other sources and uses of cash included the following during the years
ended December 31, 2002, 2001, and 2000.

In October 2001, the Partnership and CNL Income Fund VI, Ltd., a
Florida limited partnership and affiliate of the General Partners, as
tenants-in-common, sold the Property in Round Rock, Texas and received net sales
proceeds of approximately $1,510,700, resulting in a gain, to the
tenancy-in-common, of approximately $123,900. The Partnership owned a 23%
interest in this Property and received approximately $345,000 as a liquidating
distribution for its pro-rata share of the net sales proceeds. In November 2001,
the Partnership sold its Property in Sebring, Florida to the tenant and received
net sales proceeds of approximately $1,029,000, resulting in a gain of $8,604.
In December 2001, the Partnership reinvested approximately $1,376,800 of the net
sales proceeds received from the sale of the Property in Sebring, Florida and
from the liquidation proceeds received from the sale of the Property in Round
Rock, Texas, in a Property in Houston, Texas.

In June 2002, the Partnership sold its Burger King Properties in
Columbus, Ohio and East Detroit, Michigan, to the tenant and received net sales
proceeds of approximately $1,734,400, resulting in a gain of approximately
$442,100. The Partnership reinvested in June 2002 the majority of the net sales
proceeds from the sale of these Properties in two Properties in Universal City
and Schertz, Texas, each Property as a separate tenants-in-common arrangement
with CNL Income Fund VI, Ltd., a Florida limited partnership and affiliate of
the General Partners. The Partnership and CNL Income Fund VI, Ltd. entered into
agreements whereby each co-tenant will share in the profits and losses of each
Property in proportion to its applicable percentage interest. As of December 31,
2002, the Partnership contributed approximately $897,200 and $942,500 for an
85.8% and a 90.5% interest, respectively, in these Properties. In addition, in
June 2002, Ashland Joint Venture, in which the Partnership has a 62.16%
interest, sold its Burger King Property in Ashland, New Hampshire to the tenant
and received net sales proceeds of approximately $1,472,900, resulting in a gain
of approximately $500,900. The Joint Venture reinvested in June 2002 the
majority of the net sales proceeds from the sale of this Property in a Property
in San Antonio, Texas.

The Partnership acquired the Properties in Houston, Universal City,
Schertz, and San Antonio, Texas, from CNL Funding 2001-A, LP, a Delaware limited
partnership and an affiliate of the General Partners. CNL Funding 2001-A, LP had
purchased and temporarily held title to the Properties in order to facilitate
the acquisition of the Properties by the Partnership. The purchase prices paid
by the Partnership represented the costs incurred by CNL Funding 2001-A, LP to
acquire the Properties. The General Partners believe that the transactions, or a
portion thereof, relating to the sales of the Properties and the reinvestment of
the proceeds will qualify as like-kind exchange transactions for federal income
tax purposes.

In August 2002, the Partnership received a parcel of land adjacent to
its Property in Roswell, New Mexico from the tenant of the Partnership's
property in payment for approximately $32,500 of rental revenues owed. The
parcel of land is developed as a parking lot which is continuous to the parking
lot of the Partnership's Property. The Partnership accounted for this
transaction as a non-monetary exchange of assets at their fair value. No gain or
loss was recognized on this transaction.


None of the Properties owned by the Partnership, or the joint ventures
or tenancy in common arrangements in which the Partnership owns an interest, is
or may be encumbered. Subject to certain restrictions on borrowing, however, the
Partnership may borrow funds but will not encumber any of the Properties in
connection with any such borrowing. The Partnership will not borrow for the
purpose of returning capital to the Limited Partners. The Partnership will not
borrow under arrangements that would make the Limited Partners liable to
creditors of the Partnership. The General Partners further have represented that
they will use their reasonable efforts to structure any borrowing so that it
will not constitute "acquisition indebtedness" for federal income tax purposes
and also will limit the Partnership's outstanding indebtedness to three percent
of the aggregate adjusted tax basis of its Properties. Affiliates of the General
Partners from time to time incur certain operating expenses on behalf of the
Partnership for which the Partnership reimburses the affiliates without
interest.

Currently, rental income from the Partnership's Properties are invested
in short-term highly liquid investments such as demand deposit accounts at
commercial banks, money market accounts and certificates of deposit with less
than a 90-day maturity date, pending use of such funds to pay Partnership
expenses or to make distributions to partners. At December 31, 2002, the
Partnership had $1,763,878 invested in such short-term investments as compared
to $993,402 at December 31, 2001. As of December 31, 2002, the average interest
rate earned by the Partnership on the rental income deposited in demand deposit
accounts at commercial banks was approximately one percent annually. The funds
remaining at December 31, 2002, after payment of distributions and other
liabilities, will be used to meet the Partnership's working capital needs.

In March 2003, the Partnership sold the Property located in Abilene,
Texas, to the tenant and received net sales proceeds of approximately $931,900,
resulting in a gain of $377,961. The Partnership expects to reinvest these
proceeds in an additional income producing Property.

Short-Term Liquidity

The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The General Partners believe that the leases will continue to generate net cash
flow in excess of operating expenses.

The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.

The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.

Due to low operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because all leases of the Partnership's Properties are
generally on a triple-net basis, it is not anticipated that a permanent reserve
for maintenance and repairs will be established at this time. To the extent,
however, that the Partnership has insufficient funds for such purposes, the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs.

The Partnership generally distributes cash from operations remaining
after the payment of the operating expenses of the Partnership, to the extent
that the General Partners determine that such funds are available for
distribution. Based on cash from operations, and for the years ended December
31, 2002 and 2001, anticipated future cash from operations, the Partnership
declared distributions to the Limited Partners of $3,700,024 for the year ended
December 31, 2002, and $3,500,024 for each of the years ended December 31, 2001
and 2000. This represents distributions of $0.93 per Unit for the year ended
December 31, 2002, and $0.88 per Unit for each of the years ended December 31,
2001 and 2000. During the quarter ended December 31, 2002, the Partnership
declared a special distribution to the Limited Partners of $200,000, which
represented cumulative excess operating reserves. This special distribution was
effectively a return of a portion of the limited partners' investment, although
in accordance with the partnership agreement, the total amount was applied
toward the limited partners' 10% Preferred Return. No amounts distributed to the
Limited Partners for the years ended December 31, 2002, 2001 and 2000 are
required to be or have been treated by the Partnership as a return of capital
for purposes of calculating the Limited Partners' return on their adjusted
capital contributions. The Partnership intends to continue to make distributions
of cash available for distribution to the Limited Partners on a quarterly basis.


During 2000, the General Partners waived their right to receive future
distributions from the Partnership, including both distributions of operating
cash flow and distributions of liquidation proceeds, to the extent that the
cumulative amount of such distributions would exceed the balance in the General
Partners' capital account as of December 31, 1999. Accordingly, the General
Partners were not allocated any net income and did not receive any distributions
during the years ended December 31, 2002 and 2001.

As of December 31, 2002 and 2001, the Partnership owed $20,101 and
$16,701, respectively, to affiliates for operating expenses, accounting and
administrative services, and management fees. As of March 15, 2003, the
Partnership had reimbursed the affiliates for these amounts. Other liabilities,
including distributions payable, increased to $1,256,929 at December 31, 2002,
from $1,004,557 at December 31, 2001. The General Partners believe that the
Partnership has sufficient cash on hand to meet its current working capital
needs.

Long-Term Liquidity

The Partnership has no long-term debt or other long-term liquidity
requirements.

Critical Accounting Policies

The Partnership's leases are accounted for under the provisions of
Statement of Accounting Standard No. 13, "Accounting for Leases" ("FAS 13"), and
have been accounted for as using either the direct financing or the operating
method. FAS 13 requires management to estimate the economic life of the leased
property, the residual value of the leased property and the present value of
minimum lease payments to be received from the tenant. In addition, management
assumes that all payments to be received under its leases are collectible.
Changes in management's estimates or assumptions regarding collectibility of
lease payments could result in a change in accounting for the lease at the
inception of the lease.

The Partnership accounts for its unconsolidated joint ventures using
the equity method of accounting. Under generally accepted accounting principles,
the equity method of accounting is appropriate for entities that are partially
owned by the Partnership, but for which operations of the investee are shared
with other partners. The Partnership's joint venture agreements require the
consent of all partners on all key decisions affecting the operations of the
underlying Property.

Management reviews the Partnership's Properties and investments in
unconsolidated entities periodically for impairment amount at least once a year
or whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. The assessment is based on the carrying
amount of the Property or investment at the date it is tested for recoverability
compared to the sum of the estimated future cash flows expected to result from
its operation and sale through the expected holding period. If an impairment is
indicated, the asset is adjusted to its estimated fair value.

When the Partnership makes the decision to sell or commits to a plan to
sell a Property, its operating results are reported as discontinued operations.

Results of Operations

Comparison of the year ended December 31, 2002 to the year ended
December 31, 2001

Total rental revenues were $3,479,707 for the year ended December 31,
2002, as compared to $3,096,309 for the year ended December 31, 2001. Rental
revenues were lower during the year ended December 31, 2001, as compared to the
same period in 2002, due to the fact that Phoenix Restaurant Group, Inc. and its
Subsidiaries (collectively referred to as "PRG"), the tenant of two Denny's
Properties, experienced financial difficulties and ceased paying rent in 2001.
As a result, the Partnership stopped recognizing rental revenues from the
Properties in Avon, Colorado and Abilene, Texas. In October 2001, PRG filed for
Chapter 11 bankruptcy protection. Since the bankruptcy filing, the tenant
resumed paying rent. The Partnership received from PRG the rent payments
relating to these Properties from the bankruptcy date through May 2002. During
May 2002, the bankruptcy court assigned its leases to two new tenants,
CherryDen, LLC and SWAC, LLC. CherryDen, LLC is an affiliate of the General
Partners. All other lease terms remained unchanged and are substantially the
same as the Partnership's other leases. As a result of the assignment relating
to the Property in Abilene, Texas, the Partnership collected and recognized as
revenue $158,000 representing 2001 and 2000 past due rents. In October 2002,
SWAC, LLC assigned its lease to Continental Foods, Inc., a third party. All
other lease terms remained unchanged and are substantially the same as the
Partnership's other leases.


The increase in rental revenues during the year ended December 31,
2002, as compared to the same period in 2001, was also partially due to the
acquisition in December 2001 of a Property in Houston, Texas with the majority
of the net sales proceeds received from the sale of the Property in Sebring,
Florida. The increase in rental revenues during the year ended December 31,
2002, as compared to the same period in 2001, was partially offset by the 2001
sale of the Property in Sebring, Florida.

The increase in rental revenues during the year ended December 31,
2002, was also partially offset by a rent reduction of $16,500 provided to the
tenant of the Property in Yelm, Washington. The Partnership does not anticipate
that the rent reduction will have an adverse effect on the financial position of
the Partnership.

During the year ended December 31, 2002 and 2001, the Partnership also
earned $294,891 and $233,365, respectively, in contingent rental income. The
increase in contingent rental income during the year ended December 31, 2002, as
compared to same period in 2001, was primarily attributable to an increase in
gross sales of certain restaurant Properties, the leases of which require the
payment of contingent rental income.

During the year ended December 31, 2002 and 2001, the Partnership
recognized income of $863,810 and a loss of $147,538, respectively, attributable
to net operating results reported by unconsolidated joint ventures. Net
operating results reported by joint ventures were lower during the year ended
December 31, 2001, as compared to the same period in 2002, due to PRG, the
tenant of Corpus Christi, Texas, filing for Chapter 11 bankruptcy protection in
October 2001, as described above. As a result, the Partnership and an affiliate
of the general partners, as tenants-in-common, in which the Partnership owns an
approximate 73% interest, stopped recording rental revenues. Net operating
results reported by joint ventures were also lower during the year ended
December 31, 2001, due to the Partnership incurring Property related expenses
such as legal fees, insurance and real estate taxes relating to this Property.
Since the bankruptcy filing, the tenant resumed paying rent. The Partnership and
the affiliate, as tenants-in-common, received from PRG the rent payments
relating to this Property from the bankruptcy date through April, 2002. During
April 2002, the bankruptcy court assigned its lease to a new tenant, an
affiliate of the General Partners. All other lease terms remained unchanged and
are substantially the same as the Partnership's other leases. As a result of the
assignment relating to this Property, the Partnership collected and recognized
as revenue from the new tenant $309,700 representing 2001 and 2000 past due
rents. The Partnership and the affiliate, as tenants-in-common of this Property,
recorded during the year ended December 31, 2001, a provision for write-down of
assets of approximately $356,700. The provision represented the difference
between the carrying value of the Property and its estimated fair value.

The increase in net income earned by unconsolidated joint ventures
during the year ended December 31, 2002, as compared to the same period in 2001,
was partially due to the fact that in June 2002, Ashland Joint Venture, in which
the Partnership owns a 62.16% interest, sold its Property in Ashland, New
Hampshire, to the tenant and recognized a gain of approximately $500,900. The
Joint Venture reinvested the majority of the net sales proceeds from this sale
in a Property in San Antonio, Texas.

In addition, the increase in net income earned by unconsolidated joint
ventures during 2002 was partially due to the Partnership reinvesting the net
sales proceeds, from the sale of two wholly owned Properties, in two Properties,
one in Universal City and the other in Schertz, Texas. Each Property is held as
a separate tenancy-in-common arrangement with CNL Income Fund VI, Ltd., a
Florida limited partnership and affiliate of the General Partners.

The increase in net income earned by joint ventures during the year
ended December 31, 2002, as compared to 2001, was partially offset by the fact
that in October 2001, the Partnership and CNL Income Fund VI, Ltd., as
tenants-in-common, sold the Property in Round Rock, Texas, in which the
Partnership owned a 23% interest. The tenancy in common recognized a gain of
approximately $123,900 during 2001.

During 2002, three lessees (or groups of affiliated lessees) of the
Partnership and its consolidated joint ventures, (i) Golden Corral Corporation,
(ii) Jack in the Box Inc. and Jack in the Box Eastern, L.P. (which are
affiliated entities under common control) (hereinafter referred to as "Jack in
the Box Inc.") and (iii) Burger King Corporation and BK Acquisition, Inc. (which
are affiliated entities under common control) (hereinafter referred to as
"Burger King Corporation"), each contributed more than 10% of the Partnership's
total rental revenues (including rental revenues from the Partnership's
consolidated joint ventures, and the Partnership's share of rental revenues from
Properties owned by unconsolidated joint ventures and Properties owned with
affiliates of the General Partners as tenants-in-common). As of December 31,
2002, Golden Corral Corporation was the lessee under leases relating to three
restaurants, Jack in the Box Inc. was the lessee under leases relating to eight
restaurants, and Burger King Corporation was the lessee under leases relating to
four restaurants. It is anticipated that, based on the minimum rental payments
required by the leases, these three lessees (or groups of affiliated lessees)
each will continue to contribute more than 10% of the Partnership's total rental
revenues in 2003. In addition, four Restaurant Chains, Golden Corral Family
Steakhouse Restaurants ("Golden Corral"), Jack in the Box, Burger King, and
Denny's, each accounted for more than 10% of the Partnership's total rental
revenues during 2002 (including rental revenues from the Partnership's
consolidated joint ventures, and the Partnership's share of rental revenues from
Properties owned by unconsolidated joint ventures and Properties owned with
affiliates of the General Partners as tenants-in-common). In 2003, it is
anticipated that these four Restaurant Chains each will continue to account for
more than 10% of the Partnership's total rental revenues to which the
Partnership is entitled under the terms of the leases. Any failure of these
lessees or Restaurant Chains could materially affect the Partnership's income if
the Partnership is not able to re-lease the Properties in a timely manner.

During the year ended December 31, 2002 and 2001, the Partnership and
its consolidated joint ventures earned $57,724 and $58,939, respectively, in
interest and other income. Interest income decreased due to the redemption of
certificates of deposit held by the Partnership. The decrease in interest income
during the year ended December 31, 2002 was offset by the Partnership collecting
and recognizing as income $29,800 in charges relating to the Property in
Abilene, Texas.

Operating expenses, including depreciation and amortization expense and
provision for write-down of assets, were $826,150 and $1,599,065 for the years
ended December 31, 2002 and 2001, respectively. Operating expenses were higher
during the year ended December 31, 2001, as compared to the same period in 2002,
due to the recording of approximately $610,400 in provisions for write-down of
assets for the Properties in Abilene, Texas and Avon, Colorado as a result of
the PRG bankruptcy. During the year ended December 31, 2001, the Partnership
also recorded a provision for write-down of assets of approximately $43,900
relating to the Property located in Sebring, Florida. The provisions represented
the difference between the carrying value of the Properties and their estimated
fair value at December 31, 2001. Operating expenses were also higher during the
year ended December 31, 2001, as compared to the same period in 2002, due to
provisions for doubtful accounts and real estate taxes incurred in 2001 relating
to the Properties in Avon, Colorado and Abilene, Texas. The bankruptcy court
assigned the leases relating to the two Properties in May 2002, and the
Partnership sold the Property in Sebring, Florida in November 2001.

During the year ended December 31, 2002, operating expenses were lower
because the Partnership incurred lower administrative expenses for servicing the
Partnership and its Properties. The decrease in operating expenses during the
year ended December 31, 2002, as compared to the same period in 2001, was
partially offset by the fact that during the year ended December 31, 2002, the
Partnership elected to reimburse the tenant of the Properties in Oklahoma City,
Oklahoma and McAllen, Texas for certain renovation costs.

Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement requires that a long-lived asset
be tested for recoverability whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. The carrying amount of
a long-lived asset is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the
asset. The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when the
carrying amount of a long-lived asset exceeds its estimated fair value. If an
impairment is recognized, the adjusted carrying amount of a long-lived asset is
its new cost basis. The statement also requires that the results of operations
of a component of an entity that either has been disposed of or is classified as
held for sale be reported as a discontinued operation if the disposal activity
was initiated subsequent to the adoption of the Standard.

During the year ended December 31, 2002, the Partnership identified and
sold two Properties in Columbus, Ohio and East Detroit, Michigan that met the
criteria of this standard. In June 2002, the Partnership received net proceeds
relating to the sale of these Properties of approximately $1,734,400, resulting
in gains of approximately $442,100. The financial results of these Properties
were classified as Discontinued Operations in the accompanying financial
statements. The net sales proceeds from the sales of these Properties were
reinvested in two Properties owned indirectly through two separate tenancy in
common arrangements.


During the year ended December 31, 2002, Ashland Joint Venture, in
which the Partnership owns a 62.16% interest, identified and sold the Property
in Ashland, New Hampshire. In June 2002, the joint venture received net proceeds
relating to the sale of this Property of approximately $1,472,900, resulting in
a gain of approximately $500,900. The financial results of this Property were
classified as Discontinued Operations in the condensed financial information for
the unconsolidated joint ventures and the properties held as tenants-in-common
with affiliates presented in the footnotes to the accompanying financial
statements. The joint venture reinvested the net sales proceeds from the sale of
this Property in an additional income producing Property.

Comparison of the year ended December 31, 2001 to the year ended
December 31, 2000

Total rental revenues were $3,096,309 for the year ended December 31,
2001, as compared to $3,279,295, for the same period in 2000. The decrease in
rental revenues during 2001 was partially attributable to the fact that PRG
experienced financial difficulties, and the Partnership stopped recording rental
revenues, as described above. In October 2001, PRG filed for Chapter 11
bankruptcy protection, and subsequently, the tenant resumed paying rent.

The decrease in rental revenues was also due to the sale in 2001 of the
Property in Sebring, Florida. The decrease in rental revenues was partially
offset by an increase in rental revenues from a Property in Houston, Texas,
which was acquired with the net sales proceeds from the sale of the Property in
Sebring, Florida.

During the years ended December 31, 2001 and 2000, the Partnership also
earned $233,365 and $200,925, respectively, in contingent rental income. The
increase in contingent rental income during 2001, was primarily due to the
collection of approximately $21,000 in contingent rents from the tenants of two
Properties that had ceased paying such rents.

During the years ended December 31, 2001 and 2000, the Partnership
recorded a loss of $147,538 and income of $256,056, respectively, attributable
to net operating results reported by unconsolidated joint ventures. Net
operating results from joint ventures decreased during 2001, as compared to
2000, because the Partnership and an affiliate of the General Partners, as
tenants-in-common of the Property in Corpus Christi, Texas, stopped recording
rental revenues due to PRG's financial difficulties, as described above. The
Partnership owns an approximate 73% interest on this Property. In addition, the
tenancy in common recorded a provision for write-down of assets of $356,719. The
provision represented the difference between the carrying value of the Property,
and its estimated fair value. The tenancy in common also incurred approximately
$58,400 in real estate taxes during 2001 relating to this Property. In October
2001, PRG filed for Chapter 11 bankruptcy protection, and resumed paying rent.

The decrease in net operating results reported by joint ventures during
2001, as compared to 2000, was partially offset by a gain of approximately
$123,900 recognized for the sale of a Property in Round Rock, Texas, which was
held by the Partnership in a tenancy in common arrangement. The Partnership
owned a 23% interest on this Property.

During the years ended December 31, 2001 and 2000, the Partnership
earned $58,939 and $89,181, respectively, in interest and other income. The
decrease in interest and other income during 2001, as compared to 2000, was
primarily attributable to a reduction in interest earned on the net sales
proceeds received from the sale of Properties due to reinvestment in additional
Properties.

Operating expenses, including depreciation and amortization expense,
and provisions for write-down of assets, were $1,599,065 and $801,011 for the
years ended December 31, 2001 and 2000, respectively. During 2001 and 2000, as a
result of PRG's financial difficulties, the Partnership recorded provisions for
write-down of assets of approximately $610,400 and $60,490, respectively,
relating to the Properties in Abilene, Texas and Avon, Colorado. The provisions
represented the difference between the carrying value of the Properties, and
their estimated fair value at December 31, 2001 and 2000.

In addition, as of March 2001, a provision for write-down of assets was
recorded of approximately $43,949 relating to the Property located in Sebring,
Florida. The provision represented the difference between the carrying value of
the Property and the estimated net sales proceeds from the anticipated sale of
the Property. The Partnership sold this Property in November 2001.



During 2001, the Partnership also recorded a provision for doubtful
accounts of approximately $34,400 for past due rental amounts relating to the
Properties in Avon, Colorado and Abilene, Texas, and incurred approximately
$111,300 in real estate taxes relating to these two Properties. Operating
expenses also increased during 2001 due to an increase in the costs incurred for
administrative expenses for servicing the Partnership and its Properties, as
permitted by the Partnership agreement.

During 2000, the Partnership incurred transaction costs related to the
General Partners retaining financial and legal advisors to assist them in
evaluating and negotiating the proposed merger with CNL American Properties
Fund, Inc. On March 1, 2000, the General Partners and APF mutually agreed to
terminate the merger.

As a result of the sale of the Property in Sebring, Florida, the
Partnership recognized a gain of $8,604 for the year ended December 31, 2001.

The restaurant industry has been relatively resilient during this
volatile time with steady performance during 2002. However, the industry remains
in a state of cautious optimism. Restaurant operators expect their business to
be better in 2003, according to a nationwide survey conducted by the National
Restaurant Association, but are concerned by the budget deficits being
experienced by many states and the potential of new taxes on the industry to
alleviate the situation.

The Partnership's leases as of December 31, 2002, are generally
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in base rent at specified times
during the term of the lease. Inflation, overall, has had a minimal effect on
results of operations of the Partnership. Continued inflation may cause capital
appreciation of the Partnership's Properties. Inflation and changing prices,
however, also may have an adverse impact on the sales of the restaurants and on
potential capital appreciation of the Properties.

In January 2003, FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" to expand upon and strengthen
existing accounting guidance that addresses when a company should include the
assets, liabilities and activities of another entity in its financial
statements. To improve financial reporting by companies involved with variable
interest entities (more commonly referred to as special-purpose entities or
off-balance sheet structures), FIN 46 requires that a variable interest entity
be considered by a company if that company is subject to a majority risk of loss
from the variable interest entity's activities or entitled to receive a majority
of the entity's residual returns or both. Prior to FIN 46, a company generally
included another entity in its consolidated financial statements only if it
controlled the entity through voting interests. Consolidation of variable
interests entities will provide more complete information about the resources,
obligations, risks and opportunities of the consolidated company. The
consolidation requirements of FIN 46 apply immediately to variable interest
entities created after January 31, 2003, and to older entities in the first
fiscal year or interim period beginning after June 15, 2003. Management believes
adoption of this standard may result in either consolidation or additional
disclosure requirements with respect to the Partnership's unconsolidated joint
ventures or Properties held with affiliates of the General Partners as
tenants-in-common, which are currently accounted for under the equity method.
However, such consolidation is not expected to significantly impact the
Partnership's results of operations.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.


Item 8. Financial Statements and Supplementary Data


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

CONTENTS







Page

Report of Independent Certified Public Accountants 18

Financial Statements:

Balance Sheets 19

Statements of Income 20

Statements of Partners' Capital 21

Statements of Cash Flows 22-23

Notes to Financial Statements 24-36







Report of Independent Certified Public Accountants



To the Partners
CNL Income Fund XI, Ltd.


In our opinion, the accompanying balance sheets and the related statements of
income, of partners' capital and of cash flows present fairly, in all material
respects, the financial position of CNL Income Fund XI, Ltd. (a Florida limited
partnership) at December 31, 2002 and 2001, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2002 in conformity with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial statement
schedules listed in the index appearing under item 15(a)(2) present fairly, in
all material respects, the information set forth therein when read in
conjunction with the related financial statements. These financial statements
and financial statement schedules are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

As described in Note 1 to the financial statements, on January 1, 2002, the
Partnership adopted Statement of Financial Accounting Standard No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets."




/s/ PricewaterhouseCoopers LLP

Orlando, Florida
January 31, 2003, except for Note 12, to which the date is March 4, 2003




23CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

BALANCE SHEETS




December 31,
2002 2001
------------------- -------------------


ASSETS

Real estate properties with operating leases, net $ 19,291,059 $ 19,645,302
Net investment in direct financing leases 6,768,822 6,941,611
Real estate held for sale -- 1,303,330
Investment in joint ventures 4,414,071 2,389,323
Cash and cash equivalents 1,763,878 993,402
Certificates of deposit -- 218,217
Receivables, less allowance for doubtful accounts of
$23,196 and $487,127, respectively 230,688 186,780
Accrued rental income 1,715,758 1,640,219
Other assets 135,940 133,544
------------------- -------------------

$ 34,320,216 $ 33,451,728
=================== ===================

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses $ 3,271 $ 9,153
Real estate taxes payable 15,632 54,185
Distributions payable 1,075,006 875,006
Due to related parties 20,101 16,701
Rents paid in advance and deposits 163,020 66,213
------------------- -------------------
Total liabilities 1,277,030 1,021,258

Minority interests 507,991 509,377

Partners' capital 32,535,195 31,921,093
------------------- -------------------

$ 34,320,216 $ 33,451,728
=================== ===================

See accompanying notes to financial statements.




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

STATEMENTS OF INCOME




Year Ended December 31,
2002 2001 2000
----------------- --------------- ---------------


Revenues:
Rental income from operating leases $ 2,471,705 $ 2,234,480 $ 2,366,141
Earned income from direct financing leases 1,008,002 861,829 913,154
Contingent rental income 294,891 233,365 200,925
Interest and other income 57,724 58,939 89,181
---------------
----------------- ---------------
3,832,322 3,388,613 3,569,401
----------------- --------------- ---------------
Expenses:
General operating and administrative 277,616 313,146 199,606
Property expenses 85,567 137,589 25,767
Provision for doubtful accounts -- 34,443 --
Management fees to related parties 44,392 36,076 39,227
State and other taxes 31,779 29,022 50,596
Depreciation 386,796 394,396 397,524
Provision for write-down of assets -- 654,393 60,490
Transaction costs -- -- 27,801
----------------- --------------- ---------------
826,150 1,599,065 801,011
----------------- --------------- ---------------

Income Before Gain on Sale of Assets, Minority Interests in
Income of Consolidated Joint Ventures, and Equity in
Earnings (Loss) of Unconsolidated Joint Ventures 3,006,172 1,789,548 2,768,390

Gain on Sale of Assets -- 8,604 --

Minority Interests in Income of Consolidated
Joint Ventures (63,512 ) (66,460 ) (67,606 )

Equity in Earnings (Loss) of Unconsolidated Joint
Ventures 863,810 (147,538 ) 256,056
----------------- --------------- ---------------

Income from Continuing Operations 3,806,470 1,584,154 2,956,840
----------------- --------------- ---------------
Discontinued Operations (Note 5):
Income from discontinued operations 65,510 143,162 137,623
Gain on disposal of discontinued operations 442,146 -- --
----------------- --------------- ---------------
507,656 143,162 137,623
----------------- --------------- ---------------
Net Income $ 4,314,126 $ 1,727,316 $ 3,094,463
================= =============== ===============

Income Per Limited Partner Unit
Continuing Operations $ 0.95 $ 0.39 $ 0.74
Discontinued Operations 0.13 0.04 0.03
----------------- --------------- ---------------
Total $ 1.08 $ 0.43 $ 0.77
================= =============== ===============

Net Income Per Limited Partner Unit $ 1.08 $ 0.43 $ 0.77
================= =============== ===============
Weighted Average Number of
Limited Partner Units Outstanding 4,000,000 4,000,000 4,000,000
================= =============== ===============


See accompanying notes to financial statements.



CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

STATEMENTS OF PARTNERS' CAPITAL

Years Ended December 31, 2002, 2001, and 2000




General Partners Limited Partners
--------------------------- -------------------------------------------------------------
Accumulated Accumulated Syndication
Contributions Earnings Contributions Distributions Earnings Costs
------------ -------------- -------------- -------------- ------------- --------------


Balance, December 31, 1999 $ 1,000 $ 241,465 $ 40,000,000 $ (25,715,158 ) $ 24,362,055 $ (4,790,000 )

Distributions to limited
partners ($0.88 per
limited partner unit) -- -- -- (3,500,024 ) -- --
Net income -- -- -- -- 3,094,463 --
------------ ------------- -------------- -------------- -------------- --------------

Balance, December 31, 2000 1,000 241,465 40,000,000 (29,215,182 ) 27,456,518 (4,790,000 )

Distributions to limited
partners ($0.88 per
limited partner unit) -- -- -- (3,500,024 ) -- --
Net income -- -- -- -- 1,727,316 --
------------ ------------- -------------- -------------- -------------- --------------

Balance, December 31, 2001 1,000 241,465 40,000,000 (32,715,206 ) 29,183,834 (4,790,000 )

Distributions to limited
partners ($0.93 per
limited partner unit) -- -- -- (3,700,024 ) -- --
Net income -- -- -- -- 4,314,126 --
------------ ------------- -------------- -------------- -------------- --------------

Balance, December 31, 2002 $ 1,000 $ 241,465 $ 40,000,000 $ (36,415,230 ) $ 33,497,960 $ (4,790,000 )
============ ============= ============== ============== ============== ==============


Total
--------------

$34,099,362



(3,500,024 )
3,094,463
--------------

33,693,801



(3,500,024 )
1,727,316
--------------

31,921,093



(3,700,024 )
4,314,126
--------------

$32,535,195
==============



See accompanying notes to financial statements.




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

STATEMENTS OF CASH FLOWS




Year Ended December 31,
2002 2001 2000
---------------- --------------- ---------------


Increase (Decrease) in Cash and Cash Equivalents:

Cash Flows from Operating Activities:

Net Income $ 4,314,126 $ 1,727,316 $ 3,094,463
---------------- --------------- --------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 397,899 423,468 426,596
Provision for doubtful accounts -- 34,443 --
Provision for write-down of assets -- 654,393 60,490
Gain on sale of assets (442,146 ) (8,604 ) --
Minority interests in income of consolidated joint
ventures 63,512 66,460 67,606
Equity in earnings and loss of unconsolidated joint
ventures, net of distributions (184,950 ) 338,292 4,311
Decrease (increase) in receivables (69,831 ) 13,656 (66,009 )
Amortization of investment in direct financing leases 172,789 1,629 124,176
Decrease (increase) in accrued rental income (75,539 ) (90,221 ) (135,691 )
Decrease(increase) in other assets (2,396 ) 109,374 966
Increase (decrease) in accounts payable and accrued
expenses (44,435 ) 16,859 (88,358 )
Increase (decrease) in due to related parties 3,400 (5,801 ) (48,098 )
Increase (decrease) in rents paid in advance and
deposits 96,807 (13,565 ) (22,702 )
---------------- --------------- ---------------
Total adjustments (84,890 ) 1,540,383 323,287
---------------- --------------- ---------------
Net Cash Provided by Operating Activities 4,229,236 3,267,699 3,417,750
---------------- --------------- ---------------
Cash Flows from Investing Activities:
Additions to real estate properties -- (1,376,792 ) --
Proceeds from sale of real estate properties 1,734,373 1,029,000 --
Investment in joint ventures (1,839,798 ) -- --
Liquidating distribution from joint venture -- 345,376 --
Investment in certificates of deposit -- (211,587 ) (500,000 )
Redemption of certificates of deposit 211,587 500,000 --
---------------- --------------- ---------------
Net cash provided by (used in) investing
activities 106,162 285,997 (500,000 )
---------------- --------------- ---------------

Cash Flows from Financing Activities:
Distributions to limited partners (3,500,024 ) (3,500,024 ) (3,500,024 )
Distributions to holders of minority interest (64,898 ) (66,890 ) (67,606 )
----------------
--------------- ---------------
Net cash used in financing activities (3,564,922 ) (3,566,914 ) (3,567,630 )
---------------- --------------- ---------------

Net Increase (Decrease) in Cash and Cash Equivalents 770,476 (13,218 ) (649,880 )

Cash and Cash Equivalents at Beginning of Year 993,402 1,006,620 1,656,500
---------------- --------------- ---------------

Cash and Cash Equivalents at End of Year $ 1,763,878 $ 993,402 $ 1,006,620
================ =============== ===============


See accompanying notes to financial statements.



CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

STATEMENTS OF CASH FLOWS - CONTINUED




Years Ended December 31,
2002 2001 2000
--------------- --------------- --------------


Supplemental Schedule of Non-Cash Investing and
Financing Activities:

Distributions declared and unpaid at
December 31 $ 1,075,006 $ 875,006 $ 875,006
=============== =============== =============

Addition to real estate properties $ 32,553 $ -- $ --
=============== =============== ==============


See accompanying notes to financial statements.





CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2002, 2001, and 2000


1. Significant Accounting Policies:

Organization and Nature of Business - CNL Income Fund XI, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants were to be
constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains.

The general partners of the Partnership are CNL Realty Corporation (the
"Corporate General Partner"), James M. Seneff, Jr. and Robert A.
Bourne. Mr. Seneff and Mr. Bourne are also 50% shareholders of the
Corporate General Partner. The general partners have responsibility for
managing the day-to-day operations of the Partnership.

Real Estate and Lease Accounting - The Partnership records the real
estate property acquisitions at cost. These properties are leased to
third parties on a triple-net basis, whereby the tenant is generally
responsible for all operating expenses relating to the property,
including property taxes, insurance, maintenance and repairs. During
the years ended December 31, 2002, 2001, and 2000, tenants paid
directly to real estate taxing authorities approximately $428,800,
$400,900, and $399,020, respectively, in real estate taxes in
accordance with the terms of their triple net leases with the
Partnership.

The leases of the Partnership provide for base minimum annual rental
payments payable in monthly installments. In addition, certain leases
provide for contingent rental revenues based on the tenants' gross
sales in excess of a specified threshold. The partnership defers
recognition of the contingent rental revenues until the defined
thresholds are met. The leases are accounted for using either the
direct financing or the operating methods. Such methods are described
below:

Direct financing method - Leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset). Unearned income is deferred and amortized
to income over the lease terms so as to produce a constant
periodic rate of return on the Partnership's net investment in
the leases. For the leases classified as direct financing
leases, the building portions of the property leases are
accounted for as direct financing leases while the land
portions of the majority of these leases are operating leases.

Operating method - Real estate property leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals vary during the lease term,
income is recognized on a straight-line basis so as to produce
a constant periodic rent over the lease term commencing on the
date the property is placed in service.

Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date.

Substantially all leases are for 14 to 20 years and provide
for minimum and contingent rentals. The lease options
generally allow tenants to renew the leases for two to five
successive five-year periods subject to the same terms and
conditions as the initial lease. Most leases also allow the
tenant to purchase the property at fair market value after a
specified portion of the lease has elapsed.


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2002, 2001, and 2000


1. Significant Accounting Policies - Continued:

When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, are removed from the
accounts and gains or losses from sales are reflected in income. The
general partners of the Partnership review properties for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable through operations. The
general partners determine whether an impairment in value has occurred
by comparing the estimated future undiscounted cash flows, including
the residual value of the property, with the carrying cost of the
individual property. If an impairment is indicated, the assets are
adjusted to the estimated fair value.

When the collection of amounts recorded as rental or other income is
considered to be doubtful, a provision is recorded to increase the
allowance for doubtful accounts. If amounts are subsequently determined
to be uncollectible, the corresponding receivable and allowance for
doubtful accounts are decreased accordingly.

Investment in Joint Ventures - The Partnership accounts for its 85%
interest in Denver Joint Venture and its 77.33% interest in CNL/Airport
Joint Venture using the consolidation method. Minority interests
represent the minority joint venture partners' proportionate share of
equity in the Partnership's consolidated joint ventures. All
significant intercompany accounts and transactions have been
eliminated.

The Partnership's investments in Ashland Joint Venture, Des Moines Real
Estate Joint Venture and Portsmouth Joint Venture and the properties in
Corpus Christi, Universal City and Schertz, Texas, for which each
property is held as tenants-in-common, are accounted for using the
equity method since each joint venture agreement requires the consent
of all partners on all key decisions affecting the operations of the
underlying property.

Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value.

Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts.

Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.

Additionally, for tax purposes, syndication costs are included in
Partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs represent a reduction
of Partnership equity and a reduction in the basis of each partner's
investment.

Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. The more significant use of management
estimates relate to the allowance for doubtful accounts and future cash
flows associated with long-lived assets. Actual results could differ
from those estimates.


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


1. Significant Accounting Policies - Continued:

Reclassification - Certain items in the prior year's financial
statements have been reclassified to conform to 2002 presentation,
including a change in presentation of the statement of cash flows from
the direct to the indirect method. These reclassifications had no
effect on partner's capital, net income or cash flows.

Statement of Financial Accounting Standards No. 144 ("FAS 144") -
Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets." This statement requires that a
long-lived asset be tested for recoverability whenever events or
changes in circumstances indicate that its carrying amount may not be
recoverable. The carrying amount of a long-lived asset is not
recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset.
The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when
the carrying amount of a long-lived asset exceeds its estimated fair
value. If an impairment is recognized, the adjusted carrying amount of
a long-lived asset is its new cost basis. The statement also requires
that the results of operations of a component of an entity that either
has been disposed of or is classified as held for sale be reported as a
discontinued operation if the disposal activity was initiated
subsequent to the adoption of the Standard.

FASB Interpretation No. 46 ("FIN 46") - In January 2003, FASB issued
FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable
Interest Entities" to expand upon and strengthen existing accounting
guidance that addresses when a company should include the assets,
liabilities and activities of another entity in its financial
statements. To improve financial reporting by companies involved with
variable interest entities (more commonly referred to as
special-purpose entities or off-balance sheet structures), FIN 46
requires that a variable interest entity be considered by a company if
that company is subject to a majority risk of loss from the variable
interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. Prior to FIN 46, a company generally
included another entity in its consolidated financial statements only
if it controlled the entity through voting interests. Consolidation of
variable interests entities will provide more complete information
about the resources, obligations, risks and opportunities of the
consolidated company. The consolidation requirements of FIN 46 apply
immediately to variable interest entities created after January 31,
2003, and to older entities in the first fiscal year or interim period
beginning after June 15, 2003. Management believes adoption of this
standard may result in either consolidation or additional disclosure
requirements with respect to the Partnership's unconsolidated joint
ventures or properties held with affiliates of the general partners as
tenants-in-common, which are currently accounted for under the equity
method. However, such consolidation is not expected to significantly
impact the Partnership's results of operations.

2. Real Estate Properties with Operating Leases:

Real estate properties with operating leases consisted of the following
at December 31:



2002 2001
-------------------- --------------------


Land $ 11,540,346 $ 11,507,793
Buildings 11,508,936 11,508,936
-------------------- --------------------
23,049,282 23,016,729

Less accumulated depreciation (3,758,223 ) (3,371,427 )
-------------------- --------------------

$ 19,291,059 $ 19,645,302
==================== ====================



CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


2. Real Estate Properties with Operating Leases - Continued:

In 2001, the Partnership recorded a provision for write-down of assets
in the amount of $363,461 relating to the property in Avon, Colorado
due to the fact that on October 31, 2001, Phoenix Restaurant Group,
Inc. and its Subsidiaries (collectively referred to as "PRG"), a tenant
of the Partnership, experienced financial difficulties and filed for
Chapter 11 bankruptcy protection. The provision represented the
difference between the carrying value of the property at December 31,
2002 and its estimated fair value.

At March 2001, the Partnership recorded a provision for write-down of
assets of $43,949 relating to the property located in Sebring, Florida.
The provision represented the difference between the carrying value of
the property, and the estimated net sales proceeds from the anticipated
sale of the Property. In November 2001, the Partnership sold this
property to the tenant and received net sales proceeds of approximately
$1,029,000, resulting in a gain of $8,604. In December 2001, the
Partnership reinvested approximately $1,376,800 of the net sales
proceeds received from the sale of this Property and from the
liquidation proceeds received from the sale of the Property in Round
Rock, Texas, in a Property in Houston, Texas. The Partnership acquired
the Property from CNL Funding 2001-A, LP, an affiliate of the general
partners.

In August 2002, the Partnership received a parcel of land adjacent to
its Property in Roswell, New Mexico from the tenant of the
Partnership's property in payment for approximately $32,500 of rental
revenues owed. The parcel of land is developed as a parking lot which
is continuous to the parking lot of the Partnership's Property. The
Partnership accounted for this transaction as a non-monetary exchange
of assets at their fair value. No gain or loss was recognized on this
transaction.

The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2002:

2003 $ 2,502,055
2004 2,520,969
2005 2,531,612
2006 2,348,955
2007 1,952,743
Thereafter 8,452,531
--------------

$ 20,308,865
==============

3. Net Investment in Direct Financing Leases:

The following lists the components of the net investment in direct
financing leases at December 31:



2002 2001
----------------- -----------------


Minimum lease payments
receivable $ 11,078,894 $ 12,155,263
Estimated residual values 2,439,551 2,439,551
Less unearned income (6,749,623 ) (7,653,203 )
----------------- -----------------

Net investment in direct
financing leases $ 6,768,822 $ 6,941,611
================= =================





CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


3. Net Investment in Direct Financing Leases - Continued:

During 2001, the Partnership established a provision for write-down of
assets in the amount of $246,982 for its property in Abilene, Texas due
to the fact that on October 31, 2001, PRG, a tenant of the Partnership,
filed for Chapter 11 bankruptcy protection. The provision represented
the difference between the carrying value of the net investment in the
direct financing lease, and the estimated fair value of the investment
in the direct financing lease.

The following is a schedule of future minimum lease payments to be
received on the direct financing leases at December 31, 2002:

2003 $ 1,096,198
2004 1,096,198
2005 1,096,198
2006 1,096,198
2007 1,109,695
Thereafter 5,584,407
-------------

$ 11,078,894
=============

4. Investment in Joint Ventures:

The Partnership has a 62.16%, 76.6% and a 42.8% interest in the profits
and losses of Ashland Joint Venture, Des Moines Real Estate Joint
Venture and Portsmouth Joint Venture, respectively. The remaining
interests in these joint ventures are held by affiliates of the
Partnership which have the same General Partners. In addition, the
Partnership owns properties in Corpus Christi, Universal City, and
Schertz, Texas, as tenants-in-common with Florida limited partnerships
and affiliates of the General Partners. As of December 31, 2002, the
Partnership owned a 72.58%, 85.8% and 90.5% interest, respectively, in
these properties.

In October 2001, the Partnership and CNL Income Fund VI, Ltd., a
Florida limited partnership and affiliate of the General Partners, as
tenants-in-common, sold the property in Round Rock, Texas for a sales
price of approximately $1,539,000 and received net sales proceeds of
approximately $1,510,700, resulting in a gain, to the
tenancy-in-common, of approximately $123,900. The Partnership received
approximately $345,000 as a liquidating distribution for its pro-rata
share of the net sales proceeds.

In June 2002, the Partnership invested in two properties in Universal
City and Schertz, Texas, as two separate tenants-in-common arrangements
with CNL Income Fund VI, Ltd., a Florida limited partnership and
affiliate of the general partners. The Partnership acquired both
properties from CNL Funding 2001-A, LP, an affiliate of the general
partners. The Partnership and CNL Income Fund VI, Ltd. entered into
agreements whereby each co-tenant will share in the profits and losses
of each property in proportion to its applicable percentage interest.
As of December 31, 2002, the Partnership contributed approximately
$897,200 and $942,500 for an 85.8% and a 90.5% interest, respectively,
in these properties.


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


4. Investment in Joint Ventures - Continued:

In June 2002, Ashland Joint Venture, in which the Partnership has a
62.16% interest, sold its Burger King property in Ashland, New
Hampshire to the tenant and received net sales proceeds of
approximately $1,472,900, resulting in a gain of approximately
$500,900. The financial results relating to this property are reflected
as Discontinued Operations. The Joint Venture reinvested in June 2002
the majority of the net sales proceeds from the sale of this property
in a property in San Antonio, Texas. The Joint Venture acquired the
property from CNL Funding 2001-A, LP, an affiliate of the general
partners, for an approximate cost of $1,343,000.

Ashland Joint Venture, Des Moines Real Estate Joint Venture, Portsmouth
Joint Venture and the Partnership and affiliates, as tenants-in-common
in three separate tenancy in common arrangements, each own and lease
one property to an operator of national fast-food restaurants. The
following presents the combined financial information for the
unconsolidated joint ventures and the properties held as
tenants-in-common with affiliates at:



December 31,
2002 2001
----------------- -----------------


Real estate properties with operating
leases, net $ 5,551,686 $ 2,209,218
Net investment in direct financing
lease 308,883 313,339
Real estate held for sale -- 983,074
Cash 18,815 15,352
Receivables, less allowance for
doubtful accounts, net -- 7,383
Accrued rental income 142,283 115,767
Other assets 8,466 7,543
Liabilities 10,549 29,240
Partners' capital 6,019,584 3,622,436


Year Ended December 31,
2002 2001 2000
------------- -------------- -------------

Rental revenues $ 848,807 $ 329,956 $ 475,887
Expenses (100,798 ) (201,380 ) (84,274 )
Provision for write-down of assets -- (356,719 ) --
Gain on disposal of assets -- 123,893 --
------------- -------------- -------------
Income (loss) from continuing
operations 748,009 (104,250 ) 391,613
------------- -------------- -------------
Discontinued operations:

Income from discontinued operations, net 26,927 83,923 78,794
Gain on disposal of assets 500,912 -- --
------------- -------------- -------------
527,839 83,923 78,794
------------- -------------- -------------
Net Income (Loss) $1,275,848 $ (20,327 ) $ 470,407
============= ============== =============




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


4. Investment in Joint Ventures - Continued:

The Partnership recognized income totaling $863,810 and $256,056 for
the years ended December 31, 2002 and 2000, and a loss totaling
$147,538 for 2001, from these joint ventures.

5. Discontinued Operations:

In June 2002, the Partnership sold its Burger King properties in
Columbus, Ohio and East Detroit, Michigan to the tenant and received
net sales proceeds of approximately $1,734,400, resulting in gains of
approximately $442,100. The financial results for these properties are
reflected as Discontinued Operations in the accompanying financial
statements.

The operating results of discontinued operations are as follows:



Year Ended December 31,
2002 2001 2000
-------------- --------------- --------------


Rental revenues $ 76,863 $ 172,234 $ 166,695
Expenses (11,353 ) (29,072 ) (29,072 )
Gain on disposal of assets 442,146 -- --
-------------- --------------- --------------

Income from discontinued operations $ 507,656 $ 143,162 $ 137,623
============== =============== ==============



6. Allocations and Distributions:

From inception through December 31, 1999, generally, all net income and
net losses of the Partnership, excluding gains and losses from the sale
of properties, were allocated 99 percent to the limited partners and
one percent to the general partners. From inception through December
31, 1999, distributions of net cash flow were made 99 percent to the
limited partners and one percent to the general partners. However, the
one percent of net cash flow to be distributed to the general partners
was subordinated to receipt by the limited partners of an aggregate,
ten percent, cumulative, noncompounded annual return on their invested
capital contributions (the "Limited Partners' 10% Return").

From inception through December 31, 1999, generally, net sales proceeds
from the sale of properties not in liquidation of the Partnership, to
the extent distributed, were distributed first to the limited partners
in an amount sufficient to provide them with their Limited Partners'
10% Return, plus the return of their adjusted capital contributions.
The general partners then received, to the extent previously
subordinated and unpaid, a one percent interest in all prior
distributions of net cash flow and a return of their capital
contributions. Any remaining sales proceeds were distributed 95 percent
to the limited partners and five percent to the general partners. Any
gain from the sale of a property not in liquidation of the Partnership
was, in general, allocated in the same manner as net sales proceeds are
distributable. Any loss from the sale of a property was, in general,
allocated first, on a pro rata basis, to partners with positive
balances in their capital accounts; and thereafter, 95 percent to the
limited partners and five percent to the general partners.

CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


6. Allocations and Distributions - Continued:

Generally, net sales proceeds from a liquidating sale of properties,
will be used in the following order: (i) first to pay and discharge all
of the Partnership's liabilities to creditors, (ii) second, to
establish reserves that may be deemed necessary for any anticipated or
unforeseen liabilities or obligations of the Partnership, (iii) third,
to pay all of the Partnership's liabilities, if any, to the general and
limited partners, (iv) fourth, after allocations of net income, gains
and/or losses, to distribute to the partners with positive capital
accounts balances, in proportion to such balances, up to amounts
sufficient to reduce such positive balances to zero, and (v)
thereafter, any funds remaining shall then be distributed 95 percent to
the limited partners and five percent to the general partners.

Effective January 1, 2000, the general partners waived their right to
receive future distributions from the Partnership, including both
distributions of operating cash flow and distributions of liquidation
proceeds, to the extent that the cumulative amount of such
distributions would exceed the balance in the general partners' capital
account as of December 31, 1999. Accordingly, for years commencing
January 1, 2000 and after, the Partnership's net income will be
allocated entirely among the limited partners. However, if losses are
allocated to the general partners in a year, an amount of income equal
to the sum of such losses may be allocated to the general partners in
succeeding years. Accordingly, the general partners were not allocated
any net income and did not receive any distributions during the years
ended December 31, 2002, 2001 and 2000.

During the year ended December 31, 2002, the Partnership declared
distributions to the Limited Partners of $3,700,024. During each of the
years ended December 31, 2001 and 2000, the Partnership declared
distributions to the Limited Partners of $3,500,024. During the quarter
ended December 31, 2002, the Partnership declared a special
distribution to the Limited Partners of $200,000, which represented
cumulative excess operating reserves. This special distribution was
effectively a return of a portion of the limited partners' investment,
although in accordance with the partnership agreement, $200,000 was
applied toward the Limited Partners' 10% Preferred Return. No
distributions have been made to the general partners to date.




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


7. Income Taxes:

The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:




2002 2001 2000
-------------- -------------- ---------------


Net income for financial reporting purposes $ 4,314,126 $ 1,727,316 $ 3,094,463

Effect of timing differences relating to
depreciation (80,379 ) (69,778 ) (68,371 )

Effect of timing differences relating to gains on
real estate property sales (438,269 ) 51,426 --

Direct financing leases recorded as operating
leases for tax reporting purposes 172,789 138,491 124,176

Effect of timing differences relating to equity
in earnings of unconsolidated joint ventures (430,774 ) 433,308 9,949

Deduction of transaction costs for tax reporting
purposes -- -- (221,629 )

Accrued rental income (67,582 ) (119,338 ) (135,691 )

Rents paid in advance 96,807 (13,565 ) (22,702 )

Effect of timing differences relating to allowance
for doubtful accounts (463,931 ) 347,670 127,810

Provision for write-down of assets -- 654,393 60,490

Effect of timing differences relating to minority
interests of consolidated joint ventures 1,124 5,385 11,888
-------------- -------------- ---------------

Net income for federal income tax purposes $ 3,103,911 $ 3,155,308 $ 2,980,383
============== ============== ===============




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


8. Related Party Transactions:

One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Holdings, Inc. The other individual
general partner, Robert A. Bourne, serves as President and Treasurer of
CNL Financial Group, Inc., a wholly owned subsidiary of CNL Holdings,
Inc. CNL APF Partners, LP, a wholly owned subsidiary of CNL American
Properties Fund, Inc. ("APF") served as the Partnership's advisor until
January 1, 2002, when it assigned its rights and obligations under a
management agreement to RAI Restaurants, Inc. (formerly known as CNL
Restaurants XVIII, Inc.). RAI Restaurants, Inc. ("the Advisor") is a
wholly owned subsidiary of APF. The individual general partners are
stockholders and directors of APF.

The Advisor provides services pursuant to a management agreement with
the partnership. In connection therewith, the Partnership agreed to pay
certain Advisor management fees of one percent of the sum of gross
revenues from properties wholly owned by the Partnership and the
Partnership's allocable share of gross revenues from joint ventures.
The Partnership incurred management fees of $44,392, $36,076, and
$39,227, for the years ended December 31, 2002, 2001, and 2000,
respectively.

The Advisor is also entitled to receive a deferred, subordinated real
estate disposition fee, payable upon the sale of one or more properties
based on the lesser of one-half of a competitive real estate commission
or three percent of the sales price if the Advisor provides a
substantial amount of services in connection with the sale. However, if
the sales proceeds are reinvested in a replacement property, no such
real estate disposition fees will be incurred until such replacement
property is sold and the net sales proceeds are distributed. The
payment of the real estate disposition fee is subordinated to the
receipt by the limited partners of their aggregate 10% Preferred
Return, plus their adjusted capital contributions. No deferred,
subordinated real estate disposition fees have been incurred since
inception.

During the years ended December 31, 2002, 2001, and 2000, the Advisor
and its affiliates provided accounting and administrative services. The
Partnership incurred $192,286, $219,365, and $101,316, for the years
ended December 31, 2002, 2001, and 2000, respectively, for such
services.

In December 2001, the Partnership acquired a property located in
Houston, Texas from CNL Funding 2001-A, LP, for approximately
$1,376,800. CNL Funding 2001-A, LP is an affiliate of the General
Partners. CNL Funding 2001-A, LP had purchased and temporarily held
title to the properties in order to facilitate the acquisition of the
properties by the Partnership. The purchase price paid by the
Partnership represented the costs incurred by CNL Funding 2001-A, LP to
acquire and carry the properties.

During 2001, Phoenix Restaurant Group, Inc. ("PRG") filed for
bankruptcy and neither rejected, nor affirmed the three leases it had
with the Partnership, including a lease held with an affiliate of the
general partners, as tenants-in-common. The Partnership owns a 73%
interest in the tenancy in common. During 2002, the bankruptcy court
assigned the leases relating to the properties in Avon, Colorado; and
Abilene and Corpus Christi, Texas to CherryDen, LLC; SWAC, LLC; and
RAI, LLC, respectively. CherryDen, LLC and RAI, LLC are affiliates of
the general partners. All other lease terms remained the same. In
connection with these leases, the Partnership recognized rental
revenues of approximately $110,900 and $52,900 relating to the
properties in Avon, Colorado and Abilene, Texas during the year ended
December 31, 2002, respectively. In October 2002, SWAC, LLC assigned
the lease relating to the Property in Abilene, Texas to Continental
Foods, Inc., a third party. All other lease terms remained the same.
The tenancy in common recognized rental revenues of approximately
$127,800 relating to the property in Corpus Christi, Texas during the
year ended December 31, 2002. The Partnership recognized its pro-rata
share of these amounts in equity in earnings of unconsolidated joint
ventures in the accompanying financial statements.


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


8. Related Party Transactions - Continued:

In June 2002, the Partnership and CNL Income Fund VI, Ltd. acquired two
properties in Universal City and Schertz, Texas, each Property as a
separate tenancy in common arrangement, from CNL Funding 2001-A, LP,
for a total of approximately $2,087,200. In addition, in June 2002,
Ashland Joint Venture acquired a property in San Antonio, Texas, from
CNL Funding 2001-A, LP, for approximately $1,343,000. CNL Funding
2001-A, LP, an affiliate of the general partners, had purchased and
temporarily held title to the properties in order to facilitate the
acquisition of the properties by the Partnership. The purchase price
paid by the Partnership and the joint venture represented the costs
incurred by CNL Funding 2001-A, LP to acquire and carry the properties.

The due to related parties at December 31, 2002 and 2001, totaled
$20,101 and $16,701, respectively.

9. Concentration of Credit Risk:

The following schedule presents total rental revenues from individual
lessees, each representing more than ten percent of rental revenues
(including the Partnership's share of rental revenues from the
unconsolidated joint ventures and the properties held as
tenants-in-common with affiliates of the General Partners), for each of
the years ended December 31:




2002 2001 2000
--------------- --------------- ---------------


Jack in the Box Inc. and Jack in
the Box Eastern Division,
L.P. $ 768,074 $ 768,070 $ 768,032
Golden Corral Corporation 675,245 600,548 580,241
Burger King Corporation and
BK Acquisition, Inc. 479,251 621,123 604,484


In addition, the following schedule presents total rental revenues from
individual restaurant chains, each representing more than ten percent
of rental revenues (including the Partnership's share of rental
revenues from the unconsolidated joint ventures and the properties held
as tenants-in-common with affiliates of the General Partners), for each
of the years ended December 31:



2002 2001 2000
---------------- ----------------- -----------------


Burger King $ 969,360 $ 1,148,827 $ 1,128,752
Denny's 907,510 492,804 642,085
Jack in the Box 768,074 588,204 768,032
Golden Corral Family
Steakhouse Restaurants 675,245 600,548 580,241


Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees or
restaurant chains could significantly impact the results of operations
of the Partnership if the Partnership is not able to re-lease the
Properties in a timely manner.


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


10. Selected Quarterly Financial Data:

The following table presents selected unaudited quarterly financial
data for each full quarter during the years ended December 31, 2002 and
2001.




2002 Quarter First Second Third Fourth Year
------------------------------- ----------- ------------- ------------ ------------- ------------


Continuing Operations (1):
Revenues $ 791,424 $1,015,751 $ 927,606 $1,097,541 $3,832,322
Equity in earnings
of unconsolidated
joint ventures 57,219 584,639 118,993 102,959 863,810
Income from
continuing
operations 660,725 1,380,359 829,562 935,824 3,806,470

Discontinued Operations(1):
Revenues 36,362 40,501 -- -- 76,863
Income from
discontinued
operations 28,843 478,813 -- -- 507,656

Net Income $ 689,568 $1,859,172 $ 829,562 $ 935,824 $4,314,126

Net income per limited
partner unit:
Continuing
Operations $ 0.16 $ 0.34 $ 0.21 $ 0.24 $ 0.95
Discontinued
Operations 0.01 0.12 -- -- 0.13
----------- ------------- ------------ ------------- ------------
Total $ 0.17 $ 0.46 $ 0.21 $ 0.24 $ 1.08
=========== ============= ============ ============= ============





CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 2002, 2001, and 2000


11. Selected Quarterly Financial Data - Continued:





2001 Quarter First Second Third Fourth Year
------------------------------- ----------- ------------- ------------ ------------- ------------


Continuing Operations (1):
Revenues $ 801,686 $ 806,496 $ 802,380 $ 978,051 $3,388,613
Equity in earnings
(loss) of
unconsolidated
joint ventures 5,956 (50,171 ) (157,573 ) 54,250 (147,538 )
Income (loss) from
continuing
operations 448,319 413,374 (97,009 ) 819,470 1,584,154

Discontinued Operations(1):
Revenues 41,204 42,425 41,147 47,458 172,234
Income from
discontinued
operations 33,936 35,157 33,879 40,190 143,162

Net Income (loss) $ 482,255 $ 448,531 $ (63,130 ) $ 859,660 $1,727,316

Net income (loss) per
limited partner unit:
Continuing
operations $ 0.11 $ 0.10 $ (0.03 ) $ 0.21 $ 0.39
Discontinued
operations 0.01 0.01 0.01 0.01 0.04
----------- ------------- ------------ ------------- ------------
Total $ 0.12 $ 0.11 $ (0.02 ) $ 0.22 $ 0.43
=========== ============= ============ ============= ============


(1) Certain items in the quarterly financial data have been
reclassified to conform to the 2002 presentation. This
reclassification had no effect on total net income. The results of
operations relating to properties that were either disposed of or
were classified as held for sale as of December 31, 2002 are
reported as discontinued operations for all periods presented. The
results of operations relating to properties that were identified
for sale as of December 31, 2001 but sold subsequently are reported
as continuing operations.

12. Subsequent Event:

In March 2003, the Partnership sold the Property located in Abilene,
Texas, to the tenant and received net sales proceeds of approximately
$931,900, resulting in a gain of $377,961.



Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.


PART III


Item 10. Directors and Executive Officers of the Registrant

The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL American Properties Fund, Inc. ("APF"), CNL Fund
Advisors, Inc., CNL Financial Group, Inc. and their affiliates, all of which are
affiliates of the General Partners.

James M. Seneff, Jr., age 56. Since 1971, Mr. Seneff has been active in
the acquisition, development, and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
co-venturer in over 100 real estate ventures. These ventures have involved the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of APF, a public, unlisted real
estate investment trust, since 1994. Mr. Seneff served as Chief Executive
Officer of APF from 1994 through August 1999, and has served as co-Chief
Executive Officer of APF since December 2000. Mr. Seneff served as Chairman of
the Board and Chief Executive Officer of CNL Fund Advisors, Inc., formerly the
Partnership's advisor, until it merged with a wholly-owned subsidiary of APF in
September 1999, and in June 2000, was re-elected to those positions of CNL Fund
Advisors, Inc. Mr. Seneff is a principal stockholder of CNL Holdings, Inc., the
parent company of CNL Financial Group, Inc. (formerly CNL Group, Inc.), a
diversified real estate company, and has served as a Director, Chairman of the
Board and Chief Executive Officer of CNL Financial Group, Inc. since its
formation in 1980. CNL Financial Group, Inc. is the parent company, either
directly or indirectly through subsidiaries, of CNL Real Estate Services, Inc.,
CNL Capital Markets, Inc., CNL Investment Company and CNL Securities Corp., all
of which are engaged in the business of real estate finance. Mr. Seneff also
serves as a Director, Chairman of the Board and Chief Executive Officer of CNL
Hospitality Properties, Inc., a public, unlisted real estate investment trust,
as well as, CNL Hospitality Corp., its advisor. In addition, he serves as a
Director, Chairman of the Board and Chief Executive Officer of CNL Retirement
Properties, Inc., a public, unlisted real estate investment trust and its
advisor, CNL Retirement Corp. Since 1992, Mr. Seneff has also served as a
Director, Chairman of the Board and Chief Executive Officer of Commercial Net
Lease Realty, Inc., a public real estate investment trust that is listed on the
New York Stock Exchange. Mr. Seneff has also served as a Director, Chairman of
the Board and Chief Executive Officer of CNL Securities Corp. since 1979; CNL
Investment Company since 1990; and CNL Institutional Advisors, Inc., a
registered investment advisor for pension plans, since 1990. Mr. Seneff formerly
served as a Director of First Union National Bank of Florida, N.A., and
currently serves as the Chairman of the Board of CNL Bank, an independent,
state-chartered commercial bank. Mr. Seneff previously served on the Florida
State Commission on Ethics and is a former member and past Chairman of the State
of Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.

Robert A. Bourne, age 55. Mr. Bourne has participated as a general
partner or co-venturer in over 100 real estate ventures involved in the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Bourne is a
Director of APF. Mr. Bourne served as President of APF from 1994 through
February 1999. He also served as Treasurer from February 1999 through August
1999 and from May 1994 through December 1994. He also served in various
executive positions with CNL Fund Advisors, Inc. prior to its merger with a
wholly-owned subsidiary of APF including, President from 1994 through September
1997, and Director from 1994 through August 1999. Mr. Bourne serves as President
and Treasurer of CNL Financial Group, Inc.; Director, Vice Chairman of the
Board, and Treasurer , and from 1997 until June 2002 served as President, of CNL
Hospitality Properties, Inc., a public, unlisted real estate investment trust;
as well as, Director, Vice Chairman of the Board, and Treasurer, and from 1997
until June 2002 served as President, of CNL Hospitality Corp., its advisor. In
addition, Mr. Bourne serves as Director, Vice Chairman of the Board, and
Treasurer, and from 1997 until June 2002 served as President, of CNL Retirement
Properties, Inc., a public, unlisted real estate investment trust; as well as, a
Director, Vice Chairman of the Board, and Treasurer, and from 1997 until June
2002 served as President, of its advisor, CNL Retirement Corp. Mr. Bourne also
serves as a Director of CNL Bank. He has served as a Director since 1992, Vice
Chairman of the Board since February 1996, Secretary and Treasurer from February
1996 through 1997, and President from July 1992 through February 1996, of
Commercial Net Lease Realty, Inc., a public real estate investment trust listed
on the New York Stock Exchange. Mr. Bourne also serves as Director, President
and Treasurer for various affiliates of CNL Financial Group, Inc. including, CNL
Investment Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a
registered investment advisor for pension plans. Mr. Bourne began his career as
a certified public accountant employed by Coopers & Lybrand, Certified Public
Accountants, from 1971 through 1978, where he attained the position of Tax
Manager in 1975. Mr. Bourne graduated from Florida State University in 1970
where he received a B.A. in Accounting, with honors.

Curtis B. McWilliams, age 47. Mr. McWilliams has served as Co-Chief
Executive Officer of APF since December 2000 and previously served as Chief
Executive Officer from September 1999 through December 2000. Prior to the
acquisition of CNL Fund Advisors, Inc., Mr. McWilliams served as President of
APF from February 1999 until September 1999. From February 1998 to February
1999, he served as Executive Vice President of APF. Mr. McWilliams joined CNL
Financial Group, Inc. in April 1997 and served as an Executive Vice President
from October 1997 until September 1999. In addition, Mr. McWilliams served as
President of CNL Fund Advisors, Inc. and CNL Financial Services, Inc., a
corporation engaged in the business of real estate financing, from April 1997
until the acquisition of such entities by wholly-owned subsidiaries of APF in
September 1999. From September 1983 through March 1997, Mr. McWilliams was
employed by Merrill Lynch & Co. The majority of his career at Merrill Lynch &
Co. was in the Investment Banking division where he served as a Managing
Director. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton University in 1977 and a Master of Business Administration degree with
a concentration in finance from the University of Chicago in 1983.

Steven D. Shackelford, age 39. Mr. Shackelford was promoted to
Executive Vice President of APF in June 2000. He served as Senior Vice President
from September 1999 until his promotion in June 2000. Mr. Shackelford has served
as Chief Financial Officer since January 1997 and has served as Secretary and
Treasurer of APF since September 1999. He also served as Chief Financial Officer
of CNL Fund Advisors, Inc. from September 1996 to September 1999. From March
1995 to July 1996, Mr. Shackelford was a senior manager in the national office
of Price Waterhouse LLP where he was responsible for advising foreign clients
seeking to raise capital and a public listing in the United States. From August
1992 to March 1995, he was a manager in the Paris, France office of Price
Waterhouse, serving several multi-national clients. Mr. Shackelford was an audit
staff and senior from 1986 to 1992 in the Orlando, Florida office of Price
Waterhouse. Mr. Shackelford received a Bachelor of Arts degree in Accounting,
with honors, and a Master of Business Administration degree from Florida State
University and is a certified public accountant.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the General Partners, the
officers of the corporate General Partner, and persons who own more than ten
percent of a registered class of the Partnership's equity securities
(collectively, the "Reporting Persons"), to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the SEC. Reporting Persons are
required by SEC regulation to furnish the Partnership with copies of all Forms
3, 4 and 5 that they file.

Based solely on the General Partners' review of the copies of such
forms the Partnership has received and written representations from certain
Reporting Persons that they were not required to file Forms 5 for the last
fiscal year, the General Partners believe that all Reporting Persons complied
with all filing requirements applicable to them with respect to transactions
during fiscal 2002.


Item 11. Executive Compensation

Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.



Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 10, 2003, the beneficial
ownership interest of each person known to the Registrant to be a beneficial
owner of more than five percent of the Units.



Name and Address of Number of Percent
Title of Class Beneficial Owner Units of Class
----------------------------------- ---------------------------------- -------------- -------------


Units of Limited Partnership Public School Retirement 210,290 5.26
Interest System of the City of St. Louis
1 Firstar Plaza
Ste. 2510
St. Louis, MO 63101



The following table sets forth, as of March 10, 2003, the beneficial
ownership interests of the General Partners in the Registrant.



Title of Class Name of Partner Percent of Class


General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
--------
100%
========



Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.

The Partnership does not have any equity compensation plans.



Item 13. Certain Relationships and Related Transactions

The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 2002, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.



Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2002
- ---------------------------------- -------------------------------------- ------------------------------


Reimbursement to affiliates for Operating expenses are reimbursed at Accounting and administra-
operating expenses the lower of cost or 90% of the tive services: $192,286
prevailing rate at which comparable
services could have been obtained in
the same geographic area.
Affiliates of the General Partners
from time to time incur certain
operating expenses on behalf of the
Partnership for which the
Partnership reimburses the
affiliates without interest.

Annual, management fee to One percent of the sum of gross $44,392
affiliates revenues from Properties wholly
owned by the Partnership plus the
Partnership's allocable share gross
revenues of joint ventures in which
the Partnership is co-venturer. The
management fee, which will not
exceed competitive fees for
comparable fees for comparable
services in the same geographic
area, may or may not be taken, in
whole or in part as to any year, in
the sole discretion of affiliates.







Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2002
- --------------------------------- -------------------------------------- ------------------------------


Deferred, subordinated real A deferred, subordinated real estate $-0-
estate disposition fee payable disposition fee, payable upon sale
to affiliates of one or more Properties, in an
amount equal to the lesser of (i)
one-half of a competitive real
estate commission, or (ii) three
percent of the sales price of such
Property or Properties. Payment of
such fee shall be made only if
affiliates of the General Partners
provide a substantial amount of
services in connection with the sale
of a Property or Properties and
shall be subordinated to certain
minimum returns to the Limited
Partners. However, if the net sales
are reinvested in a replacement
Property, no such real estate
disposition fee will be incurred
until such replacement Property is
sold and the net sales proceeds are
distributed.

General Partners' deferred, A deferred, subordinated share equal $-0-
subordinated share of to one percent of Partnership
Partnership net cash flow distributions of net cash flow,
subordinated to certain minimum
returns to the Limited Partners.

General Partners' deferred, A deferred, subordinated share equal $-0-
subordinated share of to five percent of Partnership
Partnership net sales proceeds distributions of such net sales
from a sale or sales not in proceeds, subordinated to certain
liquidation of the Partnership minimum returns to the Limited
Partners.






Amount Incurred
Type of Compensation For the Year
And Recipient Method of Computation Ended December 31, 2002
- --------------------------------- -------------------------------------- ------------------------------


General Partners' share of Distributions of net sales proceeds $-0-
Partnership net sales proceeds from a sale or sales of
from a sale or sales in substantially all of the
liquidation of the Partnership Partnership's assets will be
distributed in the following order
or priority: (i) first, to pay all
debts and liabilities of the
Partnership and to establish
reserves; (ii) second, to Partners
with positive capital account
balances, determined after the
allocation of net income, net loss,
gain and loss, in proportion to such
balances, up to amounts sufficient
to reduce such balances to zero; and
(iii) thereafter, 95% to the Limited
Partners and 5% to the General
Partners.




During 2001, Phoenix Restaurant Group, Inc. ("PRG") filed for bankruptcy and
neither rejected, nor affirmed the three leases it had with the Partnership,
including a lease held with an affiliate of the general partners, as
tenants-in-common. The Partnership owns a 73% interest in the tenancy in common.
In April and May 2002, the bankruptcy court assigned the leases relating to the
properties in Avon, Colorado; and Abilene and Corpus Christi, Texas to
CherryDen, LLC; SWAC, LLC; and RAI, LLC, respectively. CherryDen, LLC and RAI,
LLC are affiliates of the General Partners. All other lease terms remained the
same. In connection with these leases, the Partnership recognized rental
revenues of approximately $110,900 and $52,900 relating to the properties in
Avon, Colorado and Abilene, Texas during the year ended December 31, 2002,
respectively. In October 2002, SWAC, LLC assigned the lease relating to the
Property in Abilene, Texas to Continental Foods, Inc., a third party. All other
lease terms remained the same. The tenancy in common recognized rental revenues
of approximately $127,800 relating to the property in Corpus Christi, Texas
during the year ended December 31, 2002. The Partnership recognized its pro-rata
share of these amounts in equity in earnings of unconsolidated joint ventures in
the accompanying financial statements.

In June 2002, the Partnership and CNL Income Fund VI, Ltd. acquired two
properties in Universal City and Schertz, Texas, each Property as a separate
tenants-in-common arrangement, from CNL Funding 2001-A, LP, for a total of
approximately $2,087,200. In addition, in June 2002, Ashland Joint Venture
acquired a property in San Antonio, Texas, from CNL Funding 2001-A, LP, for
approximately $1,343,000. CNL Funding 2001-A, LP, an affiliate of the general
partners, had purchased and temporarily held title to the properties in order to
facilitate the acquisition of the properties by the Partnership. The purchase
price paid by the Partnership and the joint venture represented the costs
incurred by CNL Funding 2001-A, LP to acquire and carry the properties.




Item 14. Controls and Procedures

The General Partners maintain a set of disclosure controls and
procedures designed to ensure that information required to be disclosed in the
Partnership's filings under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. The principal executive
and financial officers of the corporate General Partner have evaluated the
Partnership's disclosure controls and procedures within 90 days prior to the
filing of this Annual Report on Form 10-K and have determined that such
disclosure controls and procedures are effective.

Subsequent to the above evaluation, there were no significant changes
in internal controls or other factors that could significantly affect these
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.


PART IV




Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K


(a) The following documents are filed as part of this report.

1. Financial Statements

Report of Independent Certified Public Accountants

Balance Sheets at December 31, 2002 and 2001

Statements of Income for the years ended December 31, 2002, 2001, and 2000

Statements of Partners' Capital for the years ended December 31, 2002, 2001, and 2000

Statements of Cash Flows for the years ended December 31, 2002, 2001, and 2000

Notes to Financial Statements

2. Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts for December 31, 2002, 2001, and 2000

Schedule III - Real Estate and Accumulated Depreciation at December 31, 2002

Notes to Schedule III - Real Estate and Accumulated Depreciation at December 31, 2002

All other Schedules are omitted as the required information is inapplicable or is presented in the
financial
statements or notes thereto.


3. Exhibits

3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278 on Form S-11 and
incorporated herein by reference.)

4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278 on Form S-11 and
incorporated herein by reference.)


4.2 Amended and Restated Agreement of Limited Partnership of
CNL Income Fund XI, Ltd. (Included as Exhibit 4.2 to Form
10-K filed with the Securities and Exchange Commission on
April 15, 1993, and incorporated herein by reference.)

10.1 Management Agreement between CNL Income Fund XI, Ltd. and
CNL Investment Company (Included as Exhibit 10.1 to Form
10-K filed with the Securities and Exchange Commission on
April 15, 1993, and incorporated herein by reference.)

10.2 Assignment of Management Agreement from CNL Investment
Company to CNL Income Fund Advisors, Inc. (Included as
Exhibit 10.2 to Form 10-K filed with the Securities and
Exchange Commission on March 30, 1995, and incorporated
herein by reference.)

10.3 Assignment of Management Agreement from CNL Income Fund
Advisors, Inc. to CNL Fund Advisors, Inc. (Included as
Exhibit 10.3 to Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996, and incorporated
herein by reference.)

10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities and
Exchange Commission on August 13, 2001, and incorporated
herein by reference.)

10.5 Assignment of Management Agreement from CNL APF Partners,
LP to CNL Restaurants XVIII, Inc. (Included as Exhibit
10.5 to Form 10-Q filed with the Securities and Exchange
Commission on August 14, 2002, and incorporated herein by
reference.)

99.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. (Filed herewith.)

99.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. (Filed herewith.)

(b) The Registrant filed no reports on Form 8-K during the
period October 1, 2002 through December 31, 2002.





SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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, on the 24th day of
March, 2003.

CNL INCOME FUND XI, LTD.

By: CNL REALTY CORPORATION
General Partner

/s/ Robert A. Bourne
ROBERT A. BOURNE, President


By: ROBERT A. BOURNE
General Partner

/s/ Robert A. Bourne
ROBERT A. BOURNE


By: JAMES M. SENEFF, JR.
General Partner

/s/ James M. Seneff, Jr.
JAMES M. SENEFF, JR.




Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



Signature Title Date




/s/ Robert A. Bourne President, Treasurer and Director March 24, 2003
Robert A. Bourne (Principal Financial and Accounting
Officer)

/s/ James M. Seneff, Jr. Chief Executive Officer and Director March 24, 2003
James M. Seneff, Jr. (Principal Executive Officer)



CERTIFICATION OF CHIEF EXECUTIVE OFFICER
OF CORPORATE GENERAL PARTNER

PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, James M. Seneff, Jr., the Chief Executive Officer of CNL Realty
Corporation, the corporate general partner of CNL Income Fund XI, Ltd. (the
"registrant"), certify that:

1. I have reviewed this annual report on Form 10-K of the registrant;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:

a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and

c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):

a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date: March 24, 2003


/s/ James M. Seneff, Jr.
James M. Seneff, Jr.
Chief Executive Officer


CERTIFICATION OF CHIEF FINANCIAL OFFICER
OF CORPORATE GENERAL PARTNER

PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert A. Bourne, President and Treasurer of CNL Realty Corporation,
the corporate general partner of CNL Income Fund XI, Ltd. (the "registrant")
certify that:

1. I have reviewed this annual report on Form 10-K of the registrant;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:

a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and

c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):

a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


Date: March 24, 2003


/s/ Robert A. Bourne
Robert A. Bourne
President and Treasurer



CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2002, 2001, and 2000




Additions Deductions
----------------------------- ------------------------------

Collected
or Deter-
Balance at Charged to Charged to Deemed mined to Balance
Beginning of Costs and Other Uncollec- be Col- at End
Year Description Year Expenses Accounts tible lectible of Year
- ---------- ----------------- ---------------- ------------- -------------- ------------- ------------- ------------

2000 Allowance for
doubtful
accounts (a) $ 11,646 $ -- $ 222,143 (b) $ -- $ 33,843 $ 199,946
================ ============= ============== ============= ============= ============

2001 Allowance for
doubtful
accounts (a) $ 199,946 $ 105,501 $ 256,516 (b) $ 62,085 (c) $ 12,751 $ 487,127
================ ============= ============== ============= ============= ============

2002 Allowance for
doubtful
accounts (a) $ 487,127 $ 15,444 $ 19,025 (b) $ 300,072 (c) $ 198,328 $ 23,196
================ ============= ============== ============= ============= ============



(a) Deducted from receivables and accrued rental income on the
balance sheet.

(b) Reduction of rental and other income.

(c) Amounts written off as uncollectible.


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2002



Costs Capitalized
Subsequent To
Initial Cost Acquisition
-------------------------- ---------------------
Encum- Buildings and Improve- Carrying
brances Land Improvements ments Costs
----------- ------------ ------------ ------------ -------


Properties the Partnership
has Invested in Under
Operating Leases:

Burger King Restaurants:
Amesbury, Massachusetts - $359,458 $791,913 - -
Bloomfield, Connecticut - 266,685 555,656 - -
Gonzales, Louisiana - 362,073 575,454 - -
Denver, Colorado - 438,756 - - -
Dayton, Ohio - 472,964 441,860 - -
Lawrence, Kansas - 321,505 411,353 - -
Roswell, New Mexico (j) - 205,379 461,219 - -
Danbury, Connecticut (h) - 220,496 498,434 - -
Yelm, Washington - 337,806 - - -

Casa Del Rio Restaurant:
Wadsworth, Ohio - 187,368 - - -

Denny's Restaurants:
Orlando, Florida - 627,065 - - -
Abilene, Texas - 274,220 - - -
Avon, Colorado - 755,815 - 569,297 -
Ocean Springs, Mississippi - 303,267 - - -

Golden Corral Family
Steakhouse Restaurants:
McAllen, Texas - 649,484 947,085 - -
Midwest City, Oklahoma - 506,420 975,640 - -
Oklahoma City, Oklahoma- 650,655 975,170 - -

Hardee's Restaurants:
Dothan, Alabama - 275,791 - - -
Huntersville, North Carolin- 308,894 - - -
North Augusta, South Caroli-a 201,056 - - -

Jack in the Box Restaurants:
Houston, Texas - 475,618 447,374 - -
Houston, Texas - 350,115 607,530 - -
Houston, Texas - 362,591 582,149 - -
Kingswood, Texas - 373,894 544,539 - -
Rockwall, Texas - 348,497 652,932 - -
Antelope, California - 500,623 524,823 - -
Show Low, Arizona - 185,602 503,343 - -

KFC Restaurant:
Deming, New Mexico - 150,455 - - -

Sagebrush Reataurant:
Lynchburg, Virginia - 359,532 - - -

Other:
Houston, Texas (i) - 843,699 533,093 - -
------------ ------------ ------------ -------

$11,675,783 $11,029,567 $569,297 -
============ ============ ============ =======

Property of Joint Venture in Which
the Partnership has a 76.6%
Interest and has Invested in
Under an Operating Lease:

Jack in the Box Restaurant:
Des Moines, Washington - $322,726 $791,658 - -
============ ============ ============ =======

Property of Joint Venture in Which
the Partnership has a 62.16%
Interest and has Invested in
Under an Operating Lease:

Taco Cabana
San Antonio, Texas (k) - $695,797 $647,181 - -
============ ============ ============ =======

Property in Which the Partnership
has a 72.58% Interest as Tenants-
in-Common and has Invested in
Under an Operating Lease:

Black-eyed Pea Restaurant:
Corpus Christi, Texas - $715,052 $726,005 - -
============ ============ ============ =======

Property of Joint Venture in Which
the Partnership has a 42.8%
Interest and has Invested in
Under an Operating Lease:

Taco Bell Restaurant
Portsmouth, Virginia - $254,045 - - -
============ ============ ============ =======

Property in Which the Partnership
has an 85.8% Interest as Tenants-
in-Common and has Invested in
Under an Operating Lease:

Taco Cabana
Universal City, Texas (l) $355,448 $690,295
============ ============ ============ =======

Property in Which the Partnership
has a 90.5% Interest as Tenants-
in-Common and has Invested in
Under an Operating Lease:

Taco Cabana
Schertz, Texas (m) $449,091 $592,400
============ ============ ============ =======

Properties the Partnership has
Invested in Under Direct
Financing Leases:

Burger King Restaurants:
Denver, Colorado - - - $403,692 -
Yelm, Washington - - 694,610 - -

Casa Del Rio Restaurant:
Wadsworth, Ohio - - 264,861 - -

Denny's Restaurants:
Orlando, Florida - - - 696,187 -
Abilene, Texas - - - 534,519 -
Kent, Ohio - 101,488 421,645 - -
Cullman, Alabama - 191,016 577,043 - -
Ocean Springs, Mississippi - - 324,225 - -

Gooney Birds Sports Grill:
Laurens, South Carolina (g)- 170,905 537,361 - -



Hardee's Restaurants:
Dothan, Alabama - - 407,368 - -
Huntersville, North Carolin- - 465,665 - -
North Augusta, South Caroli-a - 457,712 - -
Old Fort, North Carolina - 100,413 457,747 - -

KFC Restaurant:
Deming, New Mexico - - - 389,033 -

Sagebrush Restaurant:
Lynchburg, Virginia - - 648,972 - -
------------ ------------ -------
------------

$563,822 $5,257,209 $2,023,431 -
============ ============ ============ =======

Property of Joint Venture in Which
the Partnership has a 42.8%
Interest and has Invested in
Under a Direct Financing Lease:

Taco Bell Restaurant:
Portsmouth, Virginia - - $323,725 - -
============ ============ ============ =======



Life on Which
Net Cost Basis at Which Depreciation in
Carried at Close of Period (c) Date Latest Income
- -----------------------------------------
Buildings and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation structionAcquired Computed
- ------------- ------------ ------------ ----------- ------- ------- -------------






$359,458 $791,913 $1,151,371 $277,423 1982 06/92 (b)
266,685 555,656 822,341 194,657 1990 06/92 (b)
362,073 575,454 937,527 201,593 1989 06/92 (b)
438,756 (f) 438,756 - 1992 06/92 (d)
472,964 441,860 914,824 151,080 1987 09/92 (b)
321,505 411,353 732,858 140,649 1982 09/92 (b)
237,932 461,219 699,151 157,699 1986 09/92 (b)
220,496 498,434 718,930 89,231 1983 09/98 (b)
337,806 (f) 337,806 - 1997 01/99 (d)


187,368 (f) 187,368 - 1992 09/92 (d)


627,065 (f) 627,065 - 1992 06/92 (d)
274,220 (f) 274,220 - 1992 07/92 (d)
587,825 479,369 1,067,194 182,795 1993 09/92 (b)
303,267 (f) 303,267 - 1992 09/92 (d)



649,484 947,085 1,596,569 332,734 1992 06/92 (b)
506,420 975,640 1,482,060 342,766 1992 06/92 (b)
650,655 975,170 1,625,825 345,362 1992 05/92 (b)


275,791 (f) 275,791 - 1992 09/92 (d)
308,894 (f) 308,894 - 1992 09/92 (d)
201,056 (f) 201,056 - 1992 09/92 (d)


475,618 447,374 922,992 153,129 1992 09/92 (b)
350,115 607,530 957,645 207,947 1992 09/92 (b)
362,591 582,149 944,740 199,260 1992 09/92 (b)
373,894 544,539 918,433 186,387 1992 09/92 (b)
348,497 652,932 1,001,429 223,487 1992 09/92 (b)
500,623 524,823 1,025,446 179,638 1992 09/92 (b)
185,602 503,343 688,945 172,286 1992 09/92 (b)


150,455 (f) 150,455 - 1993 09/92 (d)


359,532 (f) 359,532 - 1992 09/92 (d)


843,699 533,093 1,376,792 20,100 1998 12/01 (b)
- ------------- ------------ ------------ -----------

$11,540,346 $11,508,936 $23,049,282 $3,758,223
============= ============ ============ ===========







$322,726 $791,658 $1,114,384 $269,451 1992 10/92 (b)
============= ============ ============ ===========







$695,797 $647,181 $1,342,978 $12,582 1994 06/02 (b)
============= ============ ============ ===========







$584,525 $614,142 $1,198,667 $138,649 1992 01/97 (b)
============= ============ ============ ===========







$254,045 (f) $254,045 (d) 1997 02/99 (d)
============= ============







$355,448 $690,296 $1,045,744 $13,422 06/02 (d)
============= ============ ============ ===========







$449,091 $592,400 $1,041,491 $11,519 06/02 (d)
============= ============ ============ ===========






- (f) (f) (d) 1992 06/92 (d)
- (f) (f) (d) 1997 01/99 (d)


- (f) (f) (d) 1992 09/92 (d)


- (f) (f) (d) 1992 06/92 (d)
- (f) (f) (d) 1992 07/92 (d)
(f) (f) (f) (e) 1987 07/92 (e)
(f) (f) (f) (e) 1992 09/92 (e)
- (f) (f) (d) 1992 09/92 (d)


(f) (f) (f) (e) 1992 09/92 (e)




- (f) (f) (d) 1992 09/92 (d)
- (f) (f) (d) 1992 09/92 (d)
- (f) (f) (d) 1992 09/92 (d)
(f) (f) (f) (e) 1992 09/92 (e)


- (f) (f) (d) 1993 09/92 (d)


- (f) (f) (d) 1992 09/92 (d)
- -------------

-
=============







(f) (f) (f) (d) 1997 02/99 (d)






CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2002


(a) Transactions in real estate and accumulated depreciation are summarized
below. The balances in 1999, 2000 and 2001 have been adjusted to reflect the
reclassification of properties accounted for as discontinued operations.



Accumulated
Cost Depreciation
---------------- -------------------


Properties the Partnership has Invested
in Under Operating Leases:

Balance, December 31, 1999 $ 23,033,703 $ 2,800,170
Depreciation expense -- 397,524
---------------- -----------------
Balance, December 31, 2000 23,033,703 3,197,694
Disposition (1,135,848 ) (220,663 )
Acquisition 1,376,792 --
Provision for write-down of assets (257,918 ) --
Depreciation -- 394,396
---------------- -----------------
Balance, December 31, 2001 23,016,729 3,371,427
Acquisitions 32,553 --
Dispositions -- --
Depreciation expense -- 386,796
---------------- -----------------
Balance, December 31, 2002 $ 23,049,282 $ 3,758,223
================ =================

Property of Joint Venture in Which the Partnership has
a 76.6% Interest and has Invested in Under an
Operating Lease:

Balance, December 31, 1999 $ 1,114,384 $ 190,284
Depreciation expense -- 26,389
---------------- -----------------

Balance, December 31, 2000 1,114,384 216,673
Depreciation expense -- 26,389
---------------- -----------------

Balance, December 31, 2001 1,114,384 243,062
Depreciation expense -- 26,389
---------------- -----------------
---------------- -----------------

Balance, December 31, 2002 $ 1,114,384 $ 269,451
================ =================




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED

DEPRECIATION - CONTINUED

December 31, 2002




Accumulated
Cost Depreciation
---------------- -------------------


Property of Joint Venture in Which the Partnership has
62.16% Interest and has Invested in Under Operating
Leases:

Balance, December 31, 1999 $ 1,290,582 $ 241,034
Depreciation expense -- 33,236
---------------- -----------------

Balance, December 31, 2000 1,290,582 274,270
Depreciation expense -- 33,236
---------------- -----------------

Balance, December 31, 2001 1,290,582 307,506
Acquisition 1,342,978 (318,587 )
Disposition (1,290,582 ) 23,663
Depreciation expense --
---------------- -----------------

Balance, December 31, 2002 $ 1,342,978 $ 12,582
================ =================

Property in Which the Partnership has a 72.58%
Interest as Tenants-in-Common and has Invested in
Under an Operating Lease:

Balance, December 31, 1999 $ 1,441,057 $ 70,850
Depreciation expense -- 24,201
---------------- -----------------

Balance, December 31, 2000 1,441,057 95,051
Provision for write-down of assets (242,390 ) --
Depreciation expense -- 19,767
---------------- -----------------

Balance, December 31, 2001 1,198,667 114,818
Depreciation expense -- 23,831
---------------- -----------------

Balance, December 31, 2002 $ 1,198,667 $ 138,649
================ =================





CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED

DEPRECIATION - CONTINUED

December 31, 2002



Accumulated
Cost Depreciation
---------------- -----------------


Property in Which the Partnership has a 23% Interest
as Tenants-in-Common and has Invested in Under an
Operating Lease:

Balance, December 31, 1999 $ 1,392,037 $ 4,247
Depreciation expense -- 23,546
---------------- -----------------

Balance, December 31, 2000 1,392,037 27,793
Dispositions (1,392,037 ) (45,454 )
Depreciation expense -- 17,661
---------------- -----------------

Balance, December 31, 2001 -- --
Depreciation expense --
---------------- -----------------

Balance, December 31, 2002 $ -- $ --
================= ================

Property of Joint Venture in Which the Partnership has
an 42.8% Interest and has Invested in Under an
Operating Lease:

Balance, December 31, 1999 $ 254,045 $ --
Depreciation expense -- --
---------------- -----------------

Balance, December 31, 2000 254,045 --
Depreciation expense -- --
---------------- -----------------

Balance, December 31, 2001 254,045 --
Depreciation expense -- --
---------------- -----------------

Balance, December 31, 2002 $ 254,045 $ --
================ =================

Property in Which the Partnership has an 85.80%
Interest as Tenants-in-Common and has Invested in
Under an Operating Lease:

Balance, December 31, 2001 $ -- $ --
Acquisition 1,045,744 --
Depreciation expense -- 13,422
---------------- -----------------
Balance, December 31, 2002 $ 1,045,744 $ 13,422
================ =================




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED

DEPRECIATION - CONTINUED

December 31, 2002



Accumulated
Cost Depreciation
---------------- -----------------


Property in Which the Partnership has a 90.50%
Interest as Tenants-in-Common and has Invested in
Under an Operating Lease:

Balance, December 31, 2001 $ -- $ --
Acquisition 1,041,491 --
Depreciation expense -- 11,519
---------------- -----------------
Balance, December 31, 2002 $ 1,041,491 $ 11,519
================ =================



(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.

(c) As of December 31, 2002, the aggregate cost of the Properties owned by
the Partnership and its consolidated joint ventures, and the
unconsolidated joint ventures for federal income tax purposes was
$31,230,706 and $6,269,062, respectively. All of the leases are treated
as operating leases for federal income tax purposes.

(d) The portion of the lease relating to the building has been recorded as
a direct financing lease. The cost of the building has been included in
net investment in direct financing leases; therefore, depreciation is
not applicable.

(e) The lease for the land and building has been recorded as a direct
financing lease. The cost of the land and building has been included in
net investment in direct financing leases; therefore, depreciation is
not applicable.

(f) Certain components of the lease relating to land and building have been
recorded as a direct financing lease. Accordingly, costs relating to
these components of this lease are not shown.

(g) The restaurant on this Property was converted from a Denny's restaurant
to a Hardee's restaurant during 1994.

(h) This Property was exchanged for a Burger King Property previously owned
and located in Columbus, Ohio during 1998.

(i) During the year ended December 31, 2001, the Partnership purchased a
real estate Property from 2001-A, LP, an affiliate of the General
Partners, for an aggregate cost of approximately $1,376,800.

(j) In August 2002, the Partnership received a parcel of land adjacent to
its Property in Roswell, New Mexico for approximately $32,500. The
parcel of land is developed as a parking lot which is continuous to the
parking lot of the Partnership's Property. The Partnership accounted
for this transaction as a non-monetary exchange of assets at their fair
value.

(k) During the year ended December 31, 2002, Ashland Joint Venture
purchased a real estate property from CNL Funding 2001-A, LP, an
affiliate of the General Partners, for an aggregate cost of
approximately $1,343,000.


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)

NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED

DEPRECIATION - CONTINUED

December 31, 2002


(l) During the year ended December 31, 2002, the Partnership and an
affiliate purchased real estate Property from CNL Funding 2001-A, LP,
an affiliate of the General Partners, for an aggregate cost of
approximately $1,045,700.

(m) During the year ended December 31, 2002, the Partnership and an
affiliate purchased real estate Property from CNL Funding 2001-A, LP,
an affiliate of the General Partners, for an aggregate cost of
approximately $1,041,500.



EXHIBIT INDEX


Exhibit Number

(a) Exhibits

3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XI, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-43278 on Form S-11 and incorporated herein by
reference.)

4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XI, Ltd. (Included Exhibit 3.2 to Registration Statement
33-43278 on Form S-11 and incorporated herein by reference.)

4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XI, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on April 15,
1993, and incorporated herein by reference.)

10.1 Management Agreement between CNL Income Fund XI, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K filed
with the Securities and Exchange Commission on April 15, 1993,
and incorporated herein by reference.)

10.2 Assignment of Management Agreement from CNL Investment Company
to CNL Fund Advisors, Inc. (Included as Exhibit 10.2 to Form
10-K filed with the Securities and Exchange Commission on March
30, 1995, and incorporated herein by reference.)

10.3 Assignment of Management Agreement from CNL Income Fund
Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit
10.3 to Form 10-K filed with the Securities and Exchange
Commission on April 1, 1996, and incorporated herein by
reference.)

10.4 Assignment of Management Agreement from CNL Fund Advisors, Inc.
to CNL APF Partners, LP (Included as Exhibit 10.4 to Form 10-Q
filed with the Securities and Exchange Commission on August 14,
2001, and incorporated herein by reference.)

10.5 Assignment of Management Agreement from CNL APF Partners, LP to
CNL Restaurants XVIII, Inc. (Included as Exhibit 10.5 to Form
10-Q filed with the Securities and Exchange Commission on
August 14, 2002, and incorporated herein by reference.)

99.1 Certification of Chief Executive Officer of Corporate General
Partner Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)

99.2 Certification of Chief Financial Officer of Corporate General
Partner Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)


EXHIBIT 99.1





EXHIBIT 99.2