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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934

For the quarterly period ended September 30, 2003
--------------------------------------

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
incorporation or organization) Identification No.)


450 South Orange Avenue
Orlando, Florida 32801
- ------------------------------------ --------------------------------
(Address of principal executive offices) (Zip Code)


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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act): Yes___ No X



CONTENTS





Page
Part I.

Item 1. Financial Statements:

Condensed Balance Sheets 1

Condensed Statements of Income 2

Condensed Statements of Partners' Capital 3

Condensed Statements of Cash Flows 4

Notes to Condensed Financial Statements 5-7

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11

Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11

Item 4. Controls and Procedures 11-12

Part II.

Other Information 13-14








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



September 30, December 31,
2003 2002
------------------ -------------------


ASSETS

Real estate properties with operating leases, net $ 19,012,726 $ 18,657,306
Net investment in direct financing leases 5,183,378 5,966,657
Real estate held for sale 960,000 1,573,394
Investment in joint ventures 4,365,927 4,414,071
Cash and cash equivalents 2,690,877 1,763,878
Receivables, less allowance for doubtful accounts of
$160,830 and $23,196, respectively -- 230,688
Accrued rental income 1,470,752 1,578,282
Other assets 143,569 135,940
------------------ -------------------

$ 33,827,229 $ 34,320,216
================== ===================

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses $ 10,520 $ 3,271
Real estate taxes payable 32,078 15,632
Distributions payable 875,006 1,075,006
Due to related parties 21,536 20,101
Rents paid in advance and deposits 164,434 163,020
------------------ -------------------
Total liabilities 1,103,574 1,277,030

Minority interests 501,079 507,991

Partners' capital 32,222,576 32,535,195
------------------ -------------------

$ 33,827,229 $ 34,320,216
================== ===================


See accompanying notes to condensed financial statements.



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



Quarter Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
------------- -------------- ----------------- ---------------


Revenues:
Rental income from operating leases $ 593,535 $ 591,911 $ 1,715,543 $ 1,767,460
Earned income from direct financing leases 161,356 200,688 523,836 588,569
Contingent rental income 15,933 50,699 18,764 79,404
Interest and other income 1,019 5,422 9,329 14,915
------------- -------------- ----------------- ---------------
771,843 848,720 2,267,472 2,450,348
------------- -------------- ----------------- ---------------
Expenses:
General operating and administrative 56,960 66,484 195,310 219,948
Property related 18,330 9,145 35,712 67,727
Management fees to related parties 9,118 8,224 28,608 32,158
State and other taxes 1,466 -- 33,820 31,779
Depreciation 102,948 92,039 300,516 290,097
Provision for write-down of assets -- -- 67,693 --
------------- -------------- ----------------- ---------------
188,822 175,892 661,659 641,709
------------- -------------- ----------------- ---------------

Income Before Minority Interests in Income of
Consolidated Joint Ventures and Equity in
Earnings of Unconsolidated Joint Ventures 583,021 672,828 1,605,813 1,808,639

Minority Interests in Income of Consolidated
Joint Ventures (11,476 ) (14,985 ) (40,607 ) (48,426 )

Equity in Earnings of Unconsolidated Joint
Ventures 110,325 118,993 320,819 760,851
------------- -------------- ----------------- ---------------

Income from Continuing Operations 681,870 776,836 1,886,025 2,521,064
------------- -------------- ----------------- ---------------

Discontinued Operations:
Income (loss) from discontinued operations (19,311 ) 52,726 48,413 415,093
Gain on disposal of discontinued operations -- -- 377,961 442,146
------------- -------------- ----------------- ---------------
(19,311 ) 52,726 426,374 857,239
------------- -------------- ----------------- ---------------

Net Income $ 662,559 $ 829,562 $ 2,312,399 $ 3,378,303
============= ============== ================= ===============

Income Per Limited Partner Unit:
Continuing Operations $ 0.17 $ 0.19 $ 0.47 $ 0.63
Discontinued Operations -- 0.02 0.11 0.21
------------- -------------- ----------------- ---------------

$ 0.17 $ 0.21 $ 0.58 $ 0.84
============= ============== ================= ===============

Weighted Average Number of Limited Partner
Units Outstanding 4,000,000 4,000,000 4,000,000 4,000,000
============= ============== ================= ===============

See accompanying notes to condensed financial statements.


CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL



Nine Months Ended Year Ended
September 30, December 31,
2003 2002
--------------------- ------------------


General partners:
Beginning balance $ 242,465 $ 242,465
Net income -- --
--------------------- ------------------
242,465 242,465
--------------------- ------------------
Limited partners:
Beginning balance 32,292,730 31,678,628
Net income 2,312,399 4,314,126
Distributions ($0.66 and $0.93 per
limited partner unit, respectively) (2,625,018 ) (3,700,024 )
--------------------- ------------------
31,980,111 32,292,730
--------------------- ------------------

Total partners' capital $ 32,222,576 $ 32,535,195
===================== ==================

See accompanying notes to condensed financial statements.




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS



Nine Months Ended
September 30,
2003 2002
--------------- ---------------


Net Cash Provided by Operating Activities $ 2,867,678 $ 3,225,494
--------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of assets 931,858 1,734,373
Investment in joint ventures -- (1,839,798 )
Redemption of certificates of deposit -- 211,587
--------------- ---------------
Net cash provided by investing activities 931,858 106,162
--------------- ---------------
Cash Flows from Financing Activities:
Distributions to limited partners (2,825,018 ) (2,625,018 )
Distributions to holders of minority interests (47,519 ) (51,133 )
--------------- ---------------
Net cash used in financing activities (2,872,537 ) (2,676,151 )
--------------- ---------------

Net Increase in Cash and Cash Equivalents 926,999 655,505

Cash and Cash Equivalents at Beginning of Period 1,763,878 993,402
--------------- ---------------

Cash and Cash Equivalents at End of Period $ 2,690,877 $ 1,648,907
=============== ===============

Supplemental Schedule of Non-Cash Financing
Activities:

Distributions declared and unpaid at end of period $ 875,006 $ 875,006
=============== ===============

See accompanying notes to condensed financial statements.




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2003 and 2002


1. Basis of Presentation

The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. The financial statements reflect all
adjustments, consisting of normal recurring adjustments, which are, in the
opinion of the general partners, necessary for a fair statement of the
results for the interim periods presented. Operating results for the
quarter and nine months ended September 30, 2003 may not be indicative of
the results that may be expected for the year ending December 31, 2003.
Amounts as of December 31, 2002, included in the financial statements, have
been derived from audited financial statements as of that date.

These unaudited financial statements should be read in conjunction with the
financial statements and notes thereto included in Form 10-K of CNL Income
Fund XI, Ltd. (the "Partnership") for the year ended December 31, 2002.

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 the equity in the Partnership's consolidated joint
ventures. All significant intercompany accounts and transactions have been
eliminated.

In January 2003, the Financial Accounting Standards Board ("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
consolidated 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. 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 ending after December 15, 2003. The
general partners believe adoption of this standard may result in either
consolidation or additional disclosure requirements of the Partnership's
unconsolidated joint ventures, which are currently accounted for under the
equity method. However, such consolidation is not expected to significantly
impact the Partnership's results of operations.

In May 2003, the FASB issued FASB Statement No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity" ("FAS 150"). FAS 150 establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics
of both liabilities and equity. FAS 150 will require issuers to classify
certain financial instruments as liabilities (or assets in some
circumstances) that previously were classified as equity. One requirement
of FAS 150 is that minority interests for majority owned finite lived
entities be classified as a liability and recorded at fair market value.
FAS 150 initially applied immediately to all financial instruments entered
into or modified after May 31, 2003, and otherwise was effective at the
beginning of the first interim period beginning after June 15, 2003.
Effective October 29, 2003, the FASB deferred implementation of FAS 150 as
it applies to minority interests of finite lived Partnerships. The deferral
of these provisions is expected to remain in effect while these interests
are addressed in either Phase II of the FASB's Liabilities and Equity
project or Phase II of the FASB's Business Combinations project; therefore,
no specific timing for the implementation of these provisions has been
stated. The implementation of the currently effective aspects of FAS 150
did not have an impact on the Partnership's results of operations. The
implementation of the provisions of FAS 150 that have been deferred is not
expected to have a material impact on the Partnership's results of
operations.




CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2003 and 2002


2. Reclassification

Certain items in the prior year's financial statements have been
reclassified to conform to 2003 presentation. These reclassifications had
no effect on total partners' capital or net income.

3. Net Investment in Direct Financing Leases

During the nine months ended September 30, 2003, the Partnership recorded a
provision for write-down of assets of approximately $67,700 relating to the
property in Yelm, Washington. The provision represented the difference
between the net carrying value of the property and its estimated fair
value. The tenant of this property experienced financial difficulties, and
in March 2003, the Partnership executed a termination of the tenant's lease
rights, and the tenant surrendered the premises. As a result, the
Partnership reclassified this property from direct financing leases to real
estate properties with operating leases. No loss on the reclassification
was recorded.

4. Discontinued Operations

During 2002, the Partnership identified and sold two properties that were
classified as Discontinued Operations in the accompanying financial
statements. During 2003, the Partnership identified for sale two additional
properties that were also classified as Discontinued Operations in the
accompanying financial statements. In March 2003, the Partnership sold the
property in Abilene, Texas, to the tenant and received approximately
$931,900 in net sales proceeds, resulting in a gain on disposal of assets
of approximately $378,000. The Partnership reclassified the assets relating
to the Property in Lynchburg, Virginia to real estate held for sale. The
reclassified asset was recorded at the lower of its carrying amount or fair
value, less cost to sell, which resulted in the Partnership recording a
provision for write-down of assets of approximately $41,200 during the
quarter and nine months ended September 30, 2003. The provision represented
the difference between the net carrying value of the property and its
estimated fair value.

The operating results of the discontinued operations for these properties
are as follows:


Quarter Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
--------------- ------------- ------------- -------------


Rental revenues $ 27,604 $ 52,259 $ 100,013 $ 386,643
Other income 538 570 538 40,326
Expenses (6,298 ) (103 ) (10,983 ) (11,876 )
Provision for write-down of assets (41,155 ) -- (41,155 ) --
--------------- ------------- ------------- -------------
Income (loss) from discontinued
operations $ (19,311 ) $ 52,726 $ 48,413 $ 415,093
=============== ============= ============= =============





CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2003 and 2002


5. Concentration of Credit Risk - Continued

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 periods ended
September 30:


2003 2002
-------------- ---------------


Jack in the Box Inc. and Jack in the Box Eastern
Division, L.P. $ 576,056 $ 576,056
Golden Corral Corporation 353,149 350,465
Denny's, Inc. and Denny's Corporation 336,718 341,575
Texas Taco Cabana, LP 304,716 N/A
Burger King Corporation and BK Acquisition,
Inc. N/A 383,883


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
periods ended September 30:


2003 2002
-------------- ---------------


Jack in the Box $ 576,056 $ 576,056
Burger King 475,983 738,170
Denny's 459,428 719,210
Golden Corral Family Steakhouse Restaurants 353,149 350,465
Taco Cabana 304,716 N/A


The information denoted by N/A indicates that for each period presented,
the tenant or group of affiliated tenants, and the chain did not represent
more than ten percent of the Partnership's total rental revenues.

Although the Partnership's properties have some geographical diversity in
the United States and the Partnership's lessees operate a variety of
restaurant concepts, default by any of these lessees or restaurant chains
will significantly impact the results of operations of the Partnership if
the Partnership is not able to re-lease the properties in a timely manner.





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

CNL Income Fund XI, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 20, 1991 to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurants, 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 leases
are, in general, triple-net leases, with the lessees responsible for all repairs
and maintenance, property taxes, insurance, and utilities. As of September 30,
2002, the Partnership owned 32 Properties directly and eight Properties
indirectly through joint venture or tenancy in common arrangements. As of
September 30, 2003, the Partnership owned 31 Properties directly and eight
Properties indirectly through joint venture or tenancy in common arrangements.

Capital Resources

Cash from operating activities was $2,867,678 for the nine months ended
September 30, 2003, as compared to $3,225,494 during the same period of 2002.
The decrease in cash from operating activities for the nine months ended
September 30, 2003, was a result of changes in the Partnership's income and
expenses. Other sources and uses of cash included the following during the nine
months ended September 30, 2003.

In March 2003, the Partnership sold its Property in Abilene, Texas to
the tenant and received net sales proceeds of approximately $931,900, resulting
in a gain of approximately $378,000. The Partnership intends to reinvest these
proceeds in an additional Property.

At September 30, 2003, the Partnership had $2,690,877 in cash and cash
equivalents, as compared to $1,763,878 at December 31, 2002. At September 30,
2003, these funds were primarily held in demand deposit accounts at commercial
banks. The increase in cash and cash equivalents at September 30, 2003 was a
result of the Partnership holding the net proceeds from the sale of the Property
in Abilene, Texas pending reinvestment in an additional Property. The funds
remaining at September 30, 2003, after payment of distributions and other
liabilities will be used to invest in an additional Property and to meet the
Partnership's working capital needs.

Short-Term Liquidity

The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who meet specified
financial standards minimizes the Partnership's operating expenses. The general
partners believe that the leases will 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 Partnership's operations.

The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on current cash from operations, the Partnership declared distributions to
limited partners of $2,625,018 for each of the nine months ended September 30,
2003 and 2002 ($875,006 for each of the quarters ended September 30, 2003 and
2002). This represents distributions of $0.66 per unit for each of the nine
months ended September 30, 2003 and 2002 ($0.22 per unit for each applicable
quarter). No distributions were made to the general partners for the nine months
ended September 30, 2003 and 2002. No amounts distributed to the limited
partners for the nine months ended September 30, 2003 and 2002 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.


Total liabilities, including distributions payable, were $1,103,574 at
September 30, 2003, as compared to $1,277,030 at December 31, 2002. The decrease
in total liabilities was primarily a result of the payment of a special
distribution to the limited partners during the nine months ended September 30,
2003, which was accrued at December 31, 2002. The special distribution of
$200,000 represented accumulated, excess operating reserves. 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.

Results of Operations

Total rental revenues were $2,239,379 for the nine months ended
September 30, 2003, as compared to $2,356,029 during the same period of 2002,
$754,891 and $792,599 of which were earned during the third quarters of 2003 and
2002, respectively. Rental revenues were lower during the quarter and nine
months ended September 30, 2003, as compared to the same periods of 2002,
because the Partnership provided a rent reduction to the tenant of the Property
in Yelm, Washington when the tenant experienced financial difficulties in 2002.
In March 2003, the Partnership executed a termination of the tenant's lease
rights, and the tenant surrendered the premises. The restaurant has continued to
operate under a temporary lease agreement with a new tenant until the
negotiations for a new contract with this lessee are finalized. The Partnership
expects that the new tenant will continue to operate as a Burger King with lease
terms substantially the same as the Partnership's other leases.

Rental revenues were also lower during the nine months ended September
30, 2003, because the Partnership stopped recording rental revenues relating to
the Property in Dayton, Ohio when the tenant experienced financial difficulties.
During the third quarter of 2003, the Partnership collected and recognized as
revenues a portion of these past due rents. In addition, Denver Joint Venture,
in which the Partnership owns an 85% interest and accounts for under the
consolidation method, also stopped recording rental revenues because the tenant
of the Property owned by this joint venture experienced financial difficulties.

In April 2003, a tenant, The Melodie Corporation, filed for bankruptcy.
The tenant has neither affirmed nor rejected the one lease it has with the
Partnership. Subsequent to the tenant filing for bankruptcy, the Partnership has
continued receiving rental payments relating to this lease.

The Partnership and its consolidated joint ventures also earned $18,764,
in contingent rental income during the nine months ended September 30, as
compared to $79,404 during the same period of 2002, $15,933 and $50,699 of which
were earned during the third quarters of 2003 and 2002, respectively. The
decrease in contingent rental income during the quarter and nine months ended
September 30, 2003, as compared to the same periods of 2002, was due to a
reduction in the reported gross sales of the restaurants as compared to the same
period in 2002. The decrease in contingent rental income during the quarter and
nine months ended September 30, 2003, was also due to the Partnership recording
lower contingent rental income relating to the Properties in Dayton, Ohio and
Roswell, New Mexico, whose tenants experienced financial difficulties.

During the nine months ended September 30, 2003 and 2002, the
Partnership earned $320,819 and $760,851, respectively, attributable to net
income earned by unconsolidated joint ventures, $110,325 and $118,993 of which
were earned during the third quarters of 2003 and 2002, respectively. Net income
earned by unconsolidated joint ventures was higher during the nine months ended
September 30, 2002 partially because 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
Partnership recognized its pro-rata share of this gain as equity in earnings of
joint ventures. The joint venture reinvested the majority of the net sales
proceeds from this sale in a Property in San Antonio, Texas.

Net income earned by unconsolidated joint ventures was also higher
during the nine months ended September 30, 2002 partially because the
Partnership and an affiliate of the general partners, as tenants-in-common,
collected and recognized as income approximately $307,700 in past due amounts
relating to the Property in Corpus Christie, Texas that was formerly leased by
Phoenix Restaurant Group, Inc. ("PRG"). The Partnership owns a 73% interest in
this Property. In October 2001, PRG filed for bankruptcy. During 2002, the
bankruptcy court



assigned this lease to a new tenant and all other lease terms remained the same.
The new tenant is a Delaware limited liability company and an affiliate of the
general partners.

The decrease in net income earned by unconsolidated joint ventures during
the nine months ended September 30, 2003 was partially offset by the Partnership
reinvesting in June 2002 the majority of the net sales proceeds from the sales
of the Properties in Columbus, Ohio and East Detroit, Michigan, 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.

During the nine months ended September 30, 2003, four lessees (or groups of
affiliated lessees) of the Partnership and its consolidated joint ventures, (i)
Jack in the Box Inc. and Jack in the Box Eastern Division, L.P. (which are
affiliated entities under common control) (hereinafter referred to as "Jack in
the Box Inc."), (ii) Golden Corral Corporation, (iii) Denny's, Inc. and Denny's
Corporation (which are affiliated entities under common control) (hereinafter
referred to as "Denny's, Inc."), and (iv) Texas Taco Cabana, LP, 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). It is anticipated that, based on the minimum rental payments
required by the leases, these four lessees (or groups of affiliated lessees)
each will continue to contribute more than 10% of the Partnership's total rental
revenues. In addition during the nine months ended September 30, 2003, five
restaurant chains, Jack in the Box, Burger King, Denny's, Golden Corral Family
Steakhouse Restaurants ("Golden Corral"), and Taco Cabana, each accounted for
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). It is anticipated that these five 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 will materially affect the
Partnership's results of operations if the Partnership is not able to re-lease
the Properties in a timely manner.

Operating expenses, including depreciation and provision for write-down of
assets, were $661,659 and $641,709 for the nine months ended September 30, 2003
and 2002, respectively, $188,822 and $175,892 of which were incurred during the
third quarters of 2003 and 2002, respectively. The increase in operating
expenses during the nine months ended September 30, 2003 was caused by the
Partnership recording a provision for write-down of assets of approximately
$67,700 relating to the Property in Yelm, Washington. The provision represented
the difference between the net carrying value of the Property and its estimated
fair value. The tenant of this Property experienced financial difficulties and a
new operator has continued to operate the Property under a temporary agreement,
as described above. The increase in operating expenses during the quarter and
nine months ended September 30, 2003, was also partially due to an increase in
depreciation expense relating to the Property in Yelm, Washington. The asset
relating to this Property was reclassified from net investment in direct
financing lease to real estate properties with operating leases when the tenant
surrendered the premises in March 2003.

The increase in operating expenses during the nine months ended September
30, 2003 was partially offset by a decrease in the costs incurred for
administrative expenses for servicing the Partnership and its Properties and a
decrease in property expenses, such as legal fees, repairs and maintenance and
real estate taxes, relating to tenants who were experiencing financial
difficulties. Property related expenses were higher during 2002 because the
Partnership elected to reimburse the tenant of the Properties in Oklahoma City,
Oklahoma and McAllen, Texas for certain renovation costs.

During the year ended December 31, 2002, the Partnership identified and
sold two Properties that were classified as Discontinued Operations in the
accompanying financial statements. In addition, during 2003, the Partnership
identified for sale two additional Properties, one in Abilene, Texas and one in
Lynchburg, Virginia, that were also classified as Discontinued Operations in the
accompanying financial statements. In March 2003, the Partnership sold the
Property in Abilene, Texas. As of November 7, 2003, the Partnership had not sold
the Property in Lynchburg, Virginia. The Partnership reclassified this asset to
real estate held for sale. The reclassified asset was recorded at the lower of
its carrying amount or fair value, less cost to sell, which resulted in the
Partnership recording a provision for write-down of assets of approximately
$41,200 during the quarter and nine months ended September 30, 2003. The
Partnership recognized net rental income (rental revenues less Property related


expenses and provision for write-down of assets) of $52,726 and $415,093 during
the quarter and nine months ended September 30, 2002, respectively, relating to
these Properties, prior to the sales. Rental revenues during 2002 included
because the Partnership received payment and recognized as income past due rents
of approximately $158,000 relating to the Property in Abilene, Texas, which was
formerly leased by Phoenix Restaurant Group, Inc. ("PRG"). In October 2001, PRG
filed for bankruptcy and the Partnership stopped recording rental revenues
relating to this Property. During 2002, the bankruptcy court assigned the lease
relating to this Property to a new tenant and all other lease terms remained the
same. In June 2002, the Partnership sold the Properties in Columbus, Ohio and
East Detroit, Michigan to the tenant resulting in a gain on disposal of assets
of approximately $442,100. The Partnership recognized net rental income of
$48,413 during the nine months ended September 30, 2003, relating to the
Properties in Abilene, Texas and Lynchburg, Virginia. In March 2003, the
Partnership sold the Property in Abilene, Texas, resulting in a gain on disposal
of assets of approximately $378,000. The Partnership recognized a net rental
loss of $19,311 during the quarter ended September 30, 2003, relating to the
Property in Lynchburg, Virginia. The net rental loss was a result of the
Partnership recording a provision for write-down of assets, as described above.

In January 2003, the Financial Accounting Standards Board ("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 consolidated 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. 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 ending after December 15,
2003. The general partners believe adoption of this standard may result in
either consolidation or additional disclosure requirements of the Partnership's
unconsolidated joint ventures, which are currently accounted for under the
equity method. However, such consolidation is not expected to significantly
impact the Partnership's results of operations.

In May 2003, the FASB issued FASB Statement No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity" ("FAS 150"). FAS 150 establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics of both
liabilities and equity. FAS 150 will require issuers to classify certain
financial instruments as liabilities (or assets in some circumstances) that
previously were classified as equity. One requirement of FAS 150 is that
minority interests for majority owned finite lived entities be classified as a
liability and recorded at fair market value. FAS 150 initially applied
immediately to all financial instruments entered into or modified after May 31,
2003, and otherwise was effective at the beginning of the first interim period
beginning after June 15, 2003. Effective October 29, 2003, the FASB deferred
implementation of FAS 150 as it applies to minority interests of finite lived
Partnerships. The deferral of these provisions is expected to remain in effect
while these interests are addressed in either Phase II of the FASB's Liabilities
and Equity project or Phase II of the FASB's Business Combinations project;
therefore, no specific timing for the implementation of these provisions has
been stated. The implementation of the currently effective aspects of FAS 150
did not have an impact on the Partnership's results of operations. The
implementation of the provisions of FAS 150 that have been deferred is not
expected to have a material impact on the Partnership's results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


ITEM 4. 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 as of the end of the period
covered by this Quarterly Report on Form 10-Q and have determined that such
disclosure controls and procedures are effective.

There was no change in internal control over financial reporting that
occurred during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, internal control over financial
reporting.


PART II. OTHER INFORMATION


Item 1. Legal Proceedings. Inapplicable.

Item 2. Changes in Securities. Inapplicable.

Item 3. Defaults upon Senior Securities. Inapplicable.

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

Item 5. Other Information. Inapplicable.

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

(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 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 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.)

31.1 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. (Filed herewith.)


31.2 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. (Filed herewith.)

32.1 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.)

32.2 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) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended
September 30, 2003.



SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

DATED this 10th day of November 2003.


CNL INCOME FUND XI, LTD.

By: CNL REALTY CORPORATION
General Partner


By: /s/ James M. Seneff, Jr.
-----------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)


By: /s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)




EXHIBIT INDEX


Exhibit Number

(c) 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 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.)

31.1 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. (Filed herewith.)

31.2 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. (Filed herewith.)


32.1 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.)

32.2 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 31.1




EXHIBIT 31.2



EXHIBIT 32.1



EXHIBIT 32.2