MCNEIL REAL ESTATE FUND XI LTD, 10-K405, 1996-03-29

MCNEIL REAL ESTATE FUND XI LTD
10-K405, 1996-03-29
OPERATORS OF NONRESIDENTIAL BUILDINGS

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

FORM 10-K405

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

For the fiscal year ended December 31, 1995
--------------------------------------------------

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

For the transition period from ______________ to_____________

Commission file number 0-9783
--------

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

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

13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code (214) 448-5800
-----------------------------

Securities registered pursuant to Section 12(b) of the Act: None
- ----------------------------------------------------------

Securities registered pursuant to Section 12(g) of the Act: Limited partnership
units
- ----------------------------------------------------------

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

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 ]

159,500 of the registrant's 159,813 limited partnership units are held by
non-affiliates of this registrant. The aggregate market value of units held by
non-affiliates is not determinable since there is no public trading market for
limited partnership units and transfers of units are subject to certain
restrictions.

Documents Incorporated by Reference: See Item 14, Page 38

TOTAL OF 41 PAGES

<PAGE>

PART I
ITEM 1. BUSINESS
- ------- --------

ORGANIZATION
- ------------

McNeil Real Estate Fund XI, Ltd. (the "Partnership") was organized June 2, 1980
as a limited partnership under the provisions of the California Uniform Limited
Partnership Act. The general partner of the Partnership is McNeil Partners, L.P.
(the "General Partner"), a Delaware limited partnership, an affiliate of Robert
A. McNeil ("McNeil"). The Partnership is governed by an amended and restated
partnership agreement of limited partnership dated August 6, 1991, as amended
(the "Amended Partnership Agreement"). Prior to August 6, 1991, Pacific
Investors Corporation (the prior "Corporate General Partner"), a wholly-owned
subsidiary of Southmark Corporation ("Southmark"), and McNeil were the general
partners of the Partnership, which was governed by an agreement of limited
partnership dated June 2, 1980 (the "Original Partnership Agreement") as amended
August 29, 1980. The principal place of business for the Partnership and for the
General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.

On September 18, 1980, a Registration Statement on Form S-11 was declared
effective by the Securities and Exchange Commission whereby the Partnership
offered for sale $80,000,000 of limited partnership units ("Units"). The Units
represent equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
sale of Units closed on June 1, 1981, with 160,000 Units sold at $500 each, or
gross proceeds of $80,000,000 to the Partnership. In addition, the original
general partners purchased a total of 140 Units for $70,000. In 1993, 61 Units
were relinquished. An additional 162 and 104 Units were relinquished in 1994 and
1995, respectively, leaving 159,813 Units outstanding as of December 31, 1995.

SOUTHMARK BANKRUPTCY AND CHANGE IN GENERAL PARTNER
- --------------------------------------------------

On July 14, 1989, Southmark filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership, McNeil nor the
Corporate General Partner were included in the filing. Southmark's
reorganization plan became effective August 10, 1990. Under the plan, most of
Southmark's assets, which included Southmark's interests in the Corporate
General Partner, are being sold or liquidated for the benefit of creditors.

In accordance with Southmark's reorganization plan, Southmark, McNeil and
various of their affiliates entered into an asset purchase agreement on October
12, 1990, providing for, among other things, the transfer of control to McNeil
or his affiliates of 34 limited partnerships (including the Partnership) in the
Southmark portfolio.

On February 14, 1991, pursuant to the asset purchase agreement as amended on
that date: (a) an affiliate of McNeil purchased the Corporate General Partner's
economic interest in the Partnership; (b) McNeil became the managing general
partner of the Partnership pursuant to an agreement with the Corporate General
Partner that delegated management authority to McNeil; (c) McNeil Real Estate
Management, Inc. ("McREMI"), an affiliate of McNeil, acquired the assets
relating to the property management and partnership administrative business of
Southmark and its affiliates and commenced management of the Partnership's
properties pursuant to an assignment of the existing property management
agreements from the Southmark affiliates; and (d) the General Partner purchased
the short-term, unsecured loan owing from the Partnership to a Southmark
affiliate in the amount of $2,645,950. The unsecured loan has now been settled
in full.

<PAGE>

On August 6, 1991, the limited partners approved a restructuring proposal
providing for (i) the replacement of the Corporate General Partner and McNeil
with the General Partner; (ii) the adoption of the Amended Partnership
Agreement, which substantially alters the provisions of the Original Partnership
Agreement relating to, among other things, compensation, reimbursement of
expenses, and voting rights; and (iii) the approval of a new property management
agreement with McREMI, the Partnership's property manager.

The Amended Partnership Agreement provides for a Management Incentive
Distribution ("MID") to replace all other forms of general partner compensation,
other than property management fees and reimbursements of certain costs.
Additional Units may be issued in connection with the payment of the MID
pursuant to the Amended Partnership Agreement. See Item 8 - Note 2 -
"Transactions with Affiliates." For a discussion of the methodology for
calculating and distributing the MID, see Item 13 - Certain Relationships and
Related Transactions.

Settlement of Claims:

During 1990, the Partnership filed claims in the Southmark bankruptcy in the
amount of $1,180,040. McNeil also filed claims on behalf of the Partnership in
an indeterminate amount, some of which overlapped in whole or in part with
claims filed by the Partnership. No claims were filed by McNeil or the
Partnership on behalf of individual limited partners.

In July 1991, the United States Bankruptcy Court for the Northern District of
Texas, Dallas Division, approved an agreement whereby the Partnership settled
its claims against Southmark. Under the settlement agreement, an affiliate of
McNeil agreed to waive on a dollar-for-dollar basis an amount equal to the
settled claims against affiliate advances owed by the Partnership, which at June
30, 1991, were in excess of the amount of the claim. The reduction of affiliate
advances resulted in an extraordinary gain on extinguishment of debt of
$1,180,040 in 1991.

CURRENT OPERATIONS
- ------------------

General:

The Partnership is engaged in real estate activities, including the ownership,
operation and management of residential real estate and other real estate
related assets. At December 31, 1995, the Partnership owned eight
income-producing properties as described in Item 2 - Properties.

The Partnership does not directly employ any personnel. The Partnership is
managed by the General Partner, and, in accordance with the Amended Partnership
Agreement, the Partnership reimburses affiliates of the General Partner for
certain cost incurred by affiliates of the General Partner in connection with
the management of the Partnership's business. See Item 8 - Note 2 -
"Transactions with Affiliates."

The business of the Partnership to date has involved only one industry segment.
See Item 8 - Financial Statements and Supplementary Data. The Partnership has no
foreign operations. The business of the Partnership is not seasonal.

<PAGE>

Business Plan:

The Partnership's anticipated plan of operations for 1996 is to preserve or
increase the net operating income of its properties whenever possible, while at
the same time making whatever capital expenditures are reasonable under the
circumstances in order to preserve and enhance the value of the Partnership's
properties. The General Partner is evaluating market and other economic
conditions to determine the optimum time to commence an orderly liquidation of
the Partnership's properties in accordance with the terms of the Amended
Partnership Agreement. In conjunction therewith, the General Partner will
continue to explore potential avenues to enhance the value of the Units in the
Partnership, which may include, among other things, asset sales or refinancings
of the Partnership's properties which may result in distributions to the limited
partners. See Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.

Competitive Conditions:

Since the principal business of the Partnership is to own and operate real
estate, the Partnership is subject to all of the risks incident to ownership of
real estate and interests therein, many of which relate to the illiquidity of
this type of investment. These risks include changes in general or local
economic conditions, changes in supply or demand for competing properties in an
area, changes in interest rates and availability of permanent mortgage funds
which may render the sale or refinancing of a property difficult or
unattractive, changes in real estate and zoning laws, increases in real property
tax rates and Federal or local economic or rent controls. The illiquidity of
real estate investments generally impairs the ability of the Partnership to
respond promptly to changed circumstances. The Partnership competes with
numerous established companies, private investors (including foreign investors),
real estate investment trusts, limited partnerships and other entities (many of
which have greater resources than the Partnership) in connection with the sale,
financing and leasing of properties. The impact of these risks on the
Partnership, including losses from operations and foreclosures of the
Partnership's properties, is described in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations. See Item 2 -
Properties for discussion of competitive conditions at the Partnership's
properties.

Other Information:

The environmental laws of the federal government and of certain state and local
governments impose liability on current property owners for the clean-up of
hazardous and toxic substances discharged on the property. This liability may be
imposed without regard to the timing, cause or person responsible for the
release of such substances onto the property. The Partnership could be subject
to such liability in the event that it owns properties having such environmental
problems. The Partnership has no knowledge of any pending claims or proceedings
regarding such environmental problems.

In August 1995, High River Limited Partnership, a Delaware limited partnership
controlled by Carl C. Icahn ("High River") made an unsolicited tender offer (the
"HR Offer") to purchase from holders of Units up to approximately 45% of the
outstanding Units of the Partnership for a purchase price of $63 per Unit. In
addition, High River made unsolicited tender offers for certain other
partnerships controlled by the General Partner. The Partnership recommended that
the limited partners reject the HR Offer made with respect to the Partnership
and not tender their Units pursuant to the HR Offer. The HR Offer terminated,
after numerous extensions, on October 6, 1995. The General Partner believes that
as of February 29, 1996, High River has purchased approximately 5.9% of the
outstanding Units pursuant to the HR Offer. In addition, all litigation filed by
High River, Mr. Icahn and his affiliates in connection with the HR Offer has
been dismissed without prejudice.

<PAGE>

ITEM 2. PROPERTIES
- ------- ----------

The following table sets forth the real estate investment portfolio of the
Partnership at December 31, 1995. The buildings and the land on which they are
located are owned by the Partnership in fee, subject in each case to a first
lien deed of trust as set forth more fully in Item 8 - Note 5 - "Mortgage Notes
Payable". See also Item 8 - Note 4 - "Real Estate Investments" and Schedule III
- - "Real Estate Investments and Accumulated Depreciation." In the opinion of
management, the properties are adequately covered by insurance.

Net Basis 1995 Date
Property Description of Property Debt Property Tax Acquired
- -------- ----------- ----------- ---- ------------ --------
<S> <C> <C> <C> <C> <C>
Acacia Lakes (1) Apartments
Mesa, AZ 576 units $ 6,427,070 $ 8,937,249 $ 103,840 5/81

Gentle Gale (2) Apartments
Galveston, TX 133 units 1,859,855 2,629,508 82,953 5/81

Knollwood (3) Apartments
Kansas City, MO 315 units 2,455,810 4,472,878 71,798 5/81

The Park (4) Apartments
Joplin, MO 192 units 1,333,802 2,604,482 20,746 3/81

Rock Creek Apartments
Beaverton, OR 388 units 4,358,112 6,224,682 161,665 2/81

Sun Valley (5) Apartments
Charlotte, NC 311 units 4,484,894 6,585,644 101,809 8/81

Villa Del Rio (6) Apartments
Jacksonville, FL 444 units 4,366,232 5,634,662 164,411 5/81

The Village (7) Apartments
Gresham, OR 152 units 1,966,056 2,595,335 92,495 5/81
------------- ------------ -----------
$ 27,251,831 $ 39,684,440 $ 799,717
============= ============ ===========
</TABLE>

- -----------------------------------------
Total: Apartments - 2,511 units

(1) Acacia Lakes Apartments is owned by Acacia Lakes Fund XI Limited
Partnership which is wholly-owned by the Partnership.

(2) Gentle Gale Apartments is owned by Gentle Gale Fund XI Limited Partnership
which is wholly-owned by the Partnership.

(3) Knollwood Apartments is owned by Knollwood Fund XI Associates which is
wholly-owned by the Partnership and the General Partner.

<PAGE>

(4) The Park Apartments is owned by The Park Fund XI Associates which is
wholly-owned by the Partnership and the General Partner.

(5) Sun Valley Apartments is owned by Sun Valley Fund XI Associates which is
wholly-owned by the Partnership and the General Partner.

(6) Villa Del Rio Apartments is owned by Villa Del Rio Fund XI Limited
Partnership which is wholly-owned by the Partnership.

(7) The Village Apartments is owned by Village Fund XI Associates which is
wholly-owned by the Partnership and the General Partner.

The following table sets forth the properties' occupancy rate and rent per
square foot for each of the last five years:

1995 1994 1993 1992 1991
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Acacia Lakes
Occupancy Rate............ 96% 97% 98% 96% 88%
Rent Per Square Foot...... $7.44 $6.64 $5.94 $5.16 $4.57

Gentle Gale
Occupancy Rate............ 88% 93% 98% 100% 94%
Rent Per Square Foot...... $7.86 $7.83 $7.70 $7.25 $5.73

Knollwood
Occupancy Rate............ 96% 93% 98% 95% 90%
Rent Per Square Foot...... $5.53 $5.17 $4.77 $4.56 $4.37

The Park
Occupancy Rate............ 90% 91% 93% 96% 90%
Rent Per Square Foot...... $6.18 $6.23 $5.98 $5.46 $5.22

Rock Creek
Occupancy Rate............ 99% 94% 98% 96% 94%
Rent Per Square Foot...... $7.91 $7.54 $7.25 $6.94 $6.46

Sun Valley
Occupancy Rate............ 97% 97% 87% 91% 88%
Rent Per Square Foot...... $7.12 $6.51 $5.81 $5.78 $5.58

Villa Del Rio
Occupancy Rate............ 100% 98% 92% 88% 87%
Rent Per Square Foot...... $5.46 $4.98 $4.87 $4.49 $4.39

The Village
Occupancy Rate............ 100% 100% 97% 98% 94%
Rent Per Square Foot...... $7.96 $7.76 $7.52 $7.03 $6.62

</TABLE>

Occupancy rate represents all units leased divided by the total number of units
of the property as of December 31 of the given year. Rent per square foot
represents all revenue, except interest, derived from the property's operations
divided by the leasable square footage of the property.

<PAGE>

Competitive Conditions at Properties
- ------------------------------------

Due to a substantial investment of capital since 1992, Acacia Lakes has
increased its rent per square foot by 44% over the last four years.
Additionally, the property has maintained higher occupancy rates than the
average market rate of 93%. Rental rates at Acacia Lakes are averaging $.62 per
square foot, while many competitors are averaging $.66 per square foot.

Gentle Gale is located in Galveston, Texas, where the local economy is dependent
upon the University of Texas Medical Branch and tourism. Over the last few years
the economy has been sluggish and this has been reflected in the drop in the
occupancy rates at the property. Gentle Gale is currently mirroring an average
market rate of 88%. Gentle Gale competes with properties that are newer and
offer better amenity packages. The property has been upgrading the units and
offering rental discounts to remain competitive in the market.

Knollwood finished 1995 just above the average market rate of 95%. The current
rental rates per square foot are between $.52 and $.55 for Knollwood's
townhouses and one and two bedroom apartments, while the market rate per square
foot is between $.52 and $.54. Capital improvements are planned to improve the
curb appeal and upgrade the apartments to take advantage of the strong market
conditions.

The Park is the largest apartment community in Joplin, Missouri where the
market's average occupancy rate is 90%. The local economy is expected to remain
stable; however, during 1995, an additional 160 units were built which saturated
the apartment market. The new units are entering the marketplace at $.44 per
square foot while The Park is averaging $.52 per square foot. To remain
competitive in the market, The Park has discounted rents.

Rock Creek is located in a strong rental market where the average occupancy rate
is 95% and the rent per square foot averages $.72. Over the past few years the
property has been upgrading the interiors of the units as well as improving the
outside appearance with landscaping and a renovation of the clubhouse and
office. These enhancements allowed the property to remain competitive with
rental rates per square foot averaging $.66. An additional 3,300 units are
scheduled to be built in the market during 1996. With the growth in employment,
the market should absorb these additional units without any adverse effect to
the property.

Strong market conditions are beginning to stimulate new developments in the area
surrounding Sun Valley. Currently, an additional 3,950 units are under
construction with numerous other projects in the planning stages. These new
units will have no adverse effect on the property. With the capital improvements
made at the property over the last few years, the property has been able to stay
competitive with the newer properties. Sun Valley finished 1995 above the market
average occupancy rate of 96%.

Villa Del Rio's occupancy rate has increased by 13% since 1991 and finished 1995
above the market average of 94%. The overall occupancy rate for Jacksonville has
remained strong. The city experienced its highest level of new construction of
apartment communities since 1986. Currently, 3,000 units are under construction
with several other apartment communities in the planning stages. These new units
will have no adverse effect on the property. Villa Del Rio's advantage over its
competitors is design and layout of the property. All units are single story
apartments and the property is spread over 25 acres.

<PAGE>

The Village finished the year fully leased for the second year in a row. The
area economy remains strong; and occupancy rates were at their highest in 5
years. The market rental rate per square foot and the rental rate at The Village
is $.66. As a result of the strong economy, 5,500 units were absorbed during
1995. The Village should remain competitive in the marketplace.

ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------

1) High River Limited Partnership v. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A. McNeil and
Carole J. McNeil (L95012) - High River ("HR") filed this action in the
United States District Court for the Southern District of New York against
McNeil Partners, L.P., McNeil Investors, Inc. and Mr. and Mrs. McNeil (as
defined in this Section 1, collectively, the "Defendants") requesting,
among other things, names and addresses of the limited partners in the
partnerships referenced above (as defined in this Section 1, the
"Partnerships"). The District Court issued a preliminary injunction against
the Partnerships requiring them to commence mailing materials relating to
the HR tender offer on August 14, 1995.

On August 18, 1995, the Defendants filed an Answer and Counterclaim. The
Counterclaim principally asserts (1) the HR tender offers have been
undertaken in violation of the federal securities laws, on the basis of
material, non-public, and confidential information, and (2) that the HR
offer documents omit and/or misrepresent certain material information about
the HR tender offers. The Counterclaim seeks a preliminary and permanent
injunction against the continuation of the HR tender offers and,
alternatively, ordering corrective disclosure with respect to allegedly
false and misleading statements contained in the tender offer documents.

This action was dismissed without prejudice in November 1995.

2) High River Limited Partnership v. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A. McNeil and
Carole J. McNeil - United States District Court for the Southern District
of New York, (Case No. 95 Civ. 9488) (Second Action).

On November 7, 1995, High River filed a second complaint with the District
Court which alleges, inter alia, that McNeil Partners, L.P.'s (the "General
Partner") Schedule 14D-9 filed in connection with the High River tender
offers was materially false and misleading, in violation of Sections 14(d)
and 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78n(d)
and (e), and the SEC Regulations promulgated thereunder; and that High
River further alleges that the General Partner has wrongfully refused to
admit High River as a limited partner to the ten partnerships referenced
above. Additionally, High River purports to assert claims derivatively on
behalf of McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund XI,

<PAGE>

Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XXIV, L.P.
and McNeil Real Estate Fund XXV, L.P., for breach of contract and breach of
fiduciary duty, asserting that the General Partner has charged these
partnerships excessive fees. High River's complaint seeks, inter alia,
preliminary injunctive relief requiring the General Partner to admit High
River as a limited partner in each of the ten partnerships referenced above
and to transfer the tendered units of interest in the partnerships to High
River; an unspecified award of damages payable to High River and an
additional unspecified award of damages payable to certain of the
partnerships; an order that defendants must discharge their fiduciary
duties and must account for all fees they have received from certain of the
partnerships; and attorneys' fees.

On January 31, 1996, this action was dismissed without prejudice.

3) Robert Lewis v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A.
McNeil et al - In the District Court of Dallas County, Texas, A-14th
Judicial District, Cause No. 95-08535 (Class Action) - Plaintiff, Robert
Lewis, is a limited partner with McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd.

Plaintiff brings this action on his own behalf and as a class action on
behalf of the class of all limited partners of McNeil Pacific Investors
Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund
IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd.,
McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P. and
McNeil Real Estate Fund XXV, Ltd. (as defined in this Section 3, the
"Partnerships") as of August 4, 1995.

Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil and other senior officers (as defined in this Section 3,
collectively, the "Defendants") breached their fiduciary duties by, among
other things, (1) failing to attempt to sell the properties owned by the
Partnerships (as defined in this Section 3, the "Properties") and extending
the lives of the Partnerships indefinitely, contrary to the Partnerships'
business plans, (2) paying distributions to themselves and generating fees
for their affiliates, (3) refusing to make significant distributions to the
class members, despite the fact that the Partnerships have positive cash
flows and substantial cash balances, and (4) failing to take steps to
create an auction market for equity interests of the Partnerships, despite
the fact that a third party bidder filed tender offers for approximately
forty-five percent (45%) of the outstanding units of each of the
Partnerships. Plaintiff also claims that Defendants have breached the
partnership agreements of the Partnerships by failing to take steps to
liquidate the Properties and by their alteration of the Partnerships'
primary purposes, their acts in contravention of these agreements, and
their use of the assets of the Partnerships for their own benefit instead
of for the benefit of the Partnerships.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

<PAGE>

4) James F. Schofield, Gerald C. Gillett and Donna S. Gillett v. McNeil
Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management,
Inc., Robert A. McNeil, Carole J. McNeil, McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P. et al - Superior Court
of the State of California for the County of Los Angeles, Case No. BC133799
(Class and Derivative Action Complaint) and United States District Court,
Southern District of New York, Case No. 95CIV.6711 (Class and Derivative
Action Complaint)

These are corporate/securities class and derivative actions brought in
state and federal court by limited partners of each of the nine (9) limited
partnerships that are named as nominal defendants as listed above (as
defined in this Section 4, the "Partnerships"). Plaintiffs allege that
McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc.
and four (4) of their senior officers and/or directors (as defined in this
Section 4, collectively, the "Defendants") have breached their fiduciary
duties. Specifically, Plaintiffs allege that Defendants have caused the
Partnerships to enter into several wasteful transactions that have no
business purpose or benefit to the Partnerships and which have rendered
such units highly illiquid and artificially depressed the prices that are
available for units on the limited resale market. Plaintiffs also allege
that Defendants have engaged in a course of conduct to prevent the
acquisition of units by Carl Icahn by disseminating false, misleading and
inadequate information. Plaintiffs further allege that Defendants have
acted to advance their own personal interests at the expense of the
Partnerships' public unit holders by failing to sell Partnership properties
and failing to make distributions to unitholders and, thereby, have
breached the partnership agreements.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend these actions.

5) Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P. - Superior Court of the State of California, County of Los
Angeles, Case No. BC133849 (Class Action Complaint)

Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above (as defined in this Section 5,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 5, collectively, the "Defendants") have breached their
fiduciary duties to the class members by, among other things, (1) taking
steps to prevent the consummation of the High River tender offers, (2)
failing to take steps to maximize unitholders' or limited partners' values,
including failure to liquidate the properties owned by the Partnerships,
(3) managing the Partnerships so as to extend indefinitely the present fee
arrangements, and (4) paying itself and entities owned and controlled by
the general partner excessive fees and reimbursements of general and
administrative expenses.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

<PAGE>

6) Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A.
McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil
Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real
Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate
Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund
XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV,
L.P. - Superior Court of the State of California, County of Los Angeles,
Case No. BC133957 (Class Action Complaint)

Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above (as defined in this Section 6,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 6, collectively, the "Defendants") have breached their
fiduciary duties to the class members by, among other things, (1) taking
steps to prevent the consummation of the High River tender offers, (2)
failing to take steps to maximize unitholders' or limited partners' values,
including failure to liquidate the properties owned by the Partnerships,
(3) managing the Partnerships so as to extend indefinitely the present fee
arrangements, and (4) paying itself and entities owned and controlled by
the general partner excessive fees and reimbursements of general and
administrative expenses.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

For a discussion of the Southmark bankruptcy, See Item 1 - Business - "Southmark
Bankruptcy and Change in General Partner."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND
- ------- ------------------------------------------------------------
RELATED SECURITY HOLDER MATTERS
-------------------------------

(A) There is no established public trading market for limited partnership
units, nor is one expected to develop.

(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------

Limited partnership units 8,674 as of February 16, 1996

(C) No distributions were made to the limited partners during 1995 or 1994, and
none are anticipated for 1996. The Partnership accrued distributions of
$871,503 and $769,448 for the benefit of the General Partner for the years
ended December 31, 1995 and 1994, respectively. Total distributions of
$2,449,555 remain unpaid at December 31, 1995. These distributions relate
to the contingent portion of the MID pursuant to the Amended Partnership
Agreement. See Item 8 - Note 2 - "Transactions with Affiliates." See Item 7
- Management's Discussion and Analysis of Financial Condition and Results
of Operations for a discussion of distributions and the likelihood that
they will be resumed to the limited partners.

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------

The following table sets forth a summary of certain financial data for the
Partnership. This summary should be read in conjunction with the Partnership's
financial statements and notes thereto appearing in Item 8.

Statements of Years Ended December 31,
Operations 1995 1994 1993 1992 1991
- ------------------ ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Rental revenue................. $ 14,304,055 $ 13,313,091 $ 12,527,359 $ 11,621,595 $ 10,906,110
Total revenue.................. 14,451,813 13,425,413 12,757,233 11,970,421 11,176,171
Loss on disposition of
of real estate................ - - - - (2,600,856)
Income (loss) before
extraordinary items........... 307,243 (193,822) (1,038,150) (1,316,607) (5,541,822)
Extraordinary items............ - - (521,380) 86,660 3,984,010
Net income (loss).............. 307,243 (193,822) (1,559,530) (1,229,947) (1,557,812)

Net income (loss)
per limited
partnership unit:
Income (loss) before
extraordinary items........... $ 1.83 $ (3.98) $ (6.16) $ (7.81) $ (33.52)
Extraordinary items............ - - (3.22) .51 24.33
------------ ------------ ------------- ------------ ----------
Net income (loss).............. $ 1.83 $ (3.98) $ (9.38) $ (7.30) $ (9.19)
============ ============ ============= ============ ==========

As of December 31,
Balance Sheets 1995 1994 1993 1992 1991
- -------------- ------------- ------------- -------------- ------------- ------------

Real estate investments, net... $ 27,251,831 $ 27,916,213 $ 28,103,619 $ 28,192,464 $29,330,188
Total assets................... 32,508,764 33,355,998 34,963,327 31,779,500 33,463,444
Mortgage notes payable, net.... 39,684,440 40,090,432 40,463,926 33,292,396 33,746,137
Partners' deficit.............. (11,323,378) (10,759,568) (9,796,298) (7,611,239) (5,942,739)
</TABLE>

See Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations. Woodhill Mall Shopping Center, previously owned by the
Partnership, was foreclosed on by the lender during March 1991.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------- -----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------

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

The Partnership was formed to acquire, operate and ultimately dispose of a
portfolio of income-producing real properties. As of December 31, 1995, the
Partnership owned eight apartment properties. All of the Partnership's
properties are subject to mortgage notes.

<PAGE>

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

1995 compared to 1994

Revenue:

Total Partnership revenues for 1995 increased by $1,026,400 or 8% as compared to
1994. Rental revenue and interest income increased $990,964 or 7% and $63,545 or
75%, respectively. In 1994, the Partnership recognized a gain on involuntary
conversion of $28,109 as a result of a fire at Sun Valley in 1993.

Rental revenue for 1995 was $14,304,055 as compared to $13,313,091 for 1994.
This increase of $990,964 is due to an increase in the rental rates at seven of
the Partnership's eight properties and increases in the occupancy rates at three
of the Partnership's properties. Of the three properties that experienced an
increase in their occupancy rate, Rock Creek showed the largest increase of 5%
from 94% at December 31, 1994 to 99% at December 31, 1995. This increase can be
attributed to the capital improvements made at the property over the last two
years.

Expenses:

Total Partnership expenses increased by $525,335 or 4% for the year ended
December 31, 1995 as compared to 1994.

Depreciation expense increased $142,940 or 6% in 1995 as compared to 1994. This
increase is due to capital improvements made at the properties. During 1995, the
Partnership made $1,820,043 in capital improvements.

Property taxes decreased $98,679 or 11% in 1995 as compared to 1994. This is due
to an decrease in the estimated tax liability at Gentle Gale, Knollwood, Rock
Creek, Sun Valley and The Park.

Repairs and maintenance increased by $128,072 or 8% in 1995 as compared to 1994.
This increase can be attributed to increases in ground maintenance,
exterminating, carpet cleaning and sheet rock repairs. Additionally, carpet
replacements, which met the Partnership's criteria for capitalization based on
the magnitude of replacements in 1994, were in part expensed for 1995.

General and administrative increased $242,009 or 160% in 1995 as compared to
1994. This increase was due to costs incurred by the Partnership in the third
quarter of 1995 to evaluate and disseminate information regarding an unsolicited
tender offer. See Item 8 - Note 8 - "Legal Proceedings."

General and administrative - affiliates increased $30,441 or 7% in 1995 as
compared to 1994. This is due to an increase in reimbursements to affiliates
because of fewer partnerships over which overhead costs are allocated.

1994 compared to 1993

Revenue:

Total Partnership revenues for 1994 increased by $668,180 or 5% as compared to
1993. Rental revenue and interest income increased $785,732 or 6% and $32,799 or
64%, respectively. In 1994, the Partnership recognized a gain on involuntary
conversion of $28,109 as compared to $178,460 in 1993 as a result of a fire at
Sun Valley in 1993.

<PAGE>

Rental revenue for 1994 was $13,313,091 as compared to $12,527,359 for 1993.
This increase of $785,732 is due to an increase in the rental rates at all of
the Partnership's properties and increases in the occupancy rates at three of
the Partnership's properties. Of the three properties that experienced an
increase in their occupancy rate, Sun Valley showed the largest increase of 10%
from 87% at December 31, 1993 to 97% at December 31, 1994. This increase can be
attributed to the capital improvements made at the property during 1994 and
1993.

Expenses:

Total Partnership expenses decreased $176,148 or 1% for the year ended December
31, 1994 as compared to 1993.

Interest expense - affiliates decreased by $142,055 in 1994 as compared to 1993.
This was due to the repayment of all affiliate advances and mortgage loans
during 1994 and 1993.

Depreciation expense increased $261,626 or 13% in 1994 as compared to 1993. This
increase is due to additional capital improvements at the properties. During
1994, the Partnership made $2,154,079 in capital improvements.

Expenses for property taxes, personnel, repairs and maintenance, utilities and
other property operating expenses increased $28,431 for 1994 as compared to
1993. Personnel expenses increased by $75,171 as a result of hiring additional
leasing personnel at Gentle Gale, The Village and Villa Del Rio and maintenance
personnel at Acacia Lakes, Knollwood, Rock Creek and Villa Del Rio. Other
property operating expenses increased by $40,040 in 1994 as compared to 1993 due
to an increase in cleaning and painting at Acacia Lakes and Knollwood. These
increases were somewhat offset by a decline in repairs and maintenance of
$90,989. This decrease is due to the reduction in the need for interior and
exterior repairs due to the significant amount of capital improvements made at
the properties during 1994, 1993 and 1992.

Property management fees - affiliates increased by $46,236 or 7% in 1994 as
compared to 1993. This increase is due to the increase in the rental receipts at
the properties, the basis for computing such fees.

General and administrative expense decreased $173,858 or 53% in 1994 as compared
to the same period in 1993. These decreases are due to savings the Partnership
achieved through a new tax processing and reporting system and reductions in
legal and professional fees.

General and administrative - affiliates decreased $49,344 or 10% due to the
elimination of the fixed portion of the MID effective July 1993. This decrease
due to the elimination of the fixed portion of the MID was somewhat offset by an
increase in reimbursements to affiliates due to fewer partnerships over which
the overhead costs are allocated.

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

The Partnership has experienced positive cash flow from operations of $5,967,767
for the three years ended December 31, 1995. During 1993, the Partnership
received net cash proceeds of $6,760,884 for the refinancing of Acacia Lakes,
Gentle Gale and Villa Del Rio. The Partnership also received insurance proceeds
of $305,254 from the 1993 fire at Sun Valley and $50,000 in advances and
mortgage notes from affiliates. Over the last three years, the Partnership has
used cash to fund $6,063,822 in additions to real estate investments, $1,322,129
in principal payments, $991,326 for additions to deferred borrowing costs,
$3,067,817 for the repayment of advances and mortgage notes from affiliates and
$567,142 for the payment of the contingent portion of the MID.

<PAGE>

The Partnership generated $2,345,896 through operating activities in 1995 as
compared to $3,155,585 in 1994. This decrease can be attributed to the increase
in the cash paid to affiliates for Partnership administrative expenses which had
previously been deferred as well as an increase in the cash paid to suppliers
during 1995. These cash changes were somewhat offset by an increase in tenant
receipts as a result of the increased rental rates at seven of the Partnership's
properties.

The Partnership generated $3,155,585 through operating activities in 1994 as
compared to $466,286 in 1993. This increase can be attributed to the increase in
cash received from tenants as a result of the increase in rental rates at all of
the properties as well as the reduction in the amount paid to suppliers during
1994. Property taxes paid decreased in 1994 as compared to 1993 due to the
original escrow deposits required as a result of the 1993 refinancings. Interest
paid to affiliates declined in 1994 due to the repayment of the affiliated
advances in January 1994.

The Partnership has funded $6,063,822 in additions to real estate investments
over the last three years. The expenditures are necessary to allow the
Partnership's aging properties to maintain their appeal to current and
prospective tenants.

In 1993, the Partnership received net cash proceeds of $6,760,884 for
refinancing the mortgage notes on three of it properties. This enabled the
Partnership to repay $2,131,440 in advances and mortgage notes from affiliates
in 1993 and $936,377 in advances from affiliates in 1994. The Partnership also
paid the General Partner the Contingent MID in 1993 and 1994.

Short-term liquidity:

The Partnership expended considerable resources during the past three years to
restore its properties to good operating condition. These expenditures have been
necessary to maintain the competitive position of the Partnership's aging
properties in each of their markets. The capital improvements made during the
past three years have enabled the Partnership to increase its rental revenues
and reduce certain of its repairs and maintenance expenses. The Partnership has
budgeted an additional $1.3 million of capital improvements for 1996, to be
funded from property operations and cash reserves.

At December 31, 1995, the Partnership held cash and cash equivalents of
$2,030,544. The General Partner considers this level of cash reserves to be
adequate to meet the Partnership's operating needs. The General Partner
anticipates resuming MID payments if the Partnership's properties continue to
perform as projected. The General Partner believes that anticipated operating
results for 1996 will be sufficient to fund the Partnership's budgeted capital
improvements for 1996 and to repay the current portion of the Partnership's
mortgage notes.

During 1996, the Partnership is faced with a mortgage maturity on The Village
totaling approximately $2,564,000. It is management's policy to negotiate
extensions or arrange refinancings for the mortgage notes due.

The General Partner has established a revolving credit facility not to exceed
$5,000,000 in the aggregate which is available on a "first-come, first-served"
basis to the Partnership and other affiliated partnerships if certain conditions
are met. Borrowings under the facility may be used to fund deferred maintenance,
refinancing obligations and working capital needs. The Partnership has repaid
all the advances received from this facility, and there is no assurance that the
Partnership will receive additional funds under the facility because no amounts
will be reserved for any particular partnership. As of December 31, 1995,
$2,662,819 remained available for borrowing under the facility; however,
additional funds could become available as other partnerships repay borrowings.
This commitment will terminate on August 6, 1996.

<PAGE>

Long-term liquidity:

For the long term, property operations will remain the primary source of funds.
While the present outlook for the Partnership's liquidity is favorable, market
conditions may change and property operations can deteriorate. In that event,
the Partnership would require other sources of working capital. No such other
sources have been identified, and the Partnership has no established lines of
credit. Other possible actions to resolve working capital deficiencies include
refinancing or renegotiating terms of existing loans, deferring major capital
expenditures on Partnership properties except where improvements are expected to
enhance the competitiveness or marketability of the properties, or arranging
working capital support from affiliates. All or a combination of these steps may
be inadequate or unfeasible in resolving such potential working capital
deficiencies. Affiliate support has been required in the past, but there is no
assurance that support would be provided in the future, since neither the
General Partner nor any affiliates have any obligation in this regard in excess
of the $5,000,000 revolving credit facility discussed above.

Income allocation and distributions:

Terms of the Amended Partnership Agreement specify that income before
depreciation is allocated to the General Partner to the extent of Contingent MID
paid in cash. Depreciation is allocated in the ratio of 95:5 to the limited
partners and the General Partner, respectively. Therefore, for the three year
period ended December 31, 1995, $15,362, $442,961, and $(57,121), respectively,
were allocated to the General Partner. The limited partners received allocations
of net income (loss) of $291,881, $(636,783) and $(1,502,409) for the three year
period ended December 31, 1995, respectively.

With the exception of the MID, distributions to partners have been suspended
since 1986 as part of the General Partner's policy of maintaining adequate cash
reserves. Distributions to the limited partners will remain suspended for the
foreseeable future. The General Partner will continue to monitor the cash
reserves and working capital needs of the Partnership to determine when cash
flows will support distributions to the limited partners. A distribution of
$871,053 for the MID has been accrued by the Partnership for the year ended
December 31, 1995 for the General Partner.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------

<TABLE>
<CAPTION>
Page
Number
------

INDEX TO FINANCIAL STATEMENTS
- -----------------------------

Financial Statements:

<S> <C>
Report of Independent Public Accountants................ 17

Balance Sheets at December 31, 1995 and 1994............ 18

Statements of Operations for each of the three years
in the period ended December 31, 1995................. 19

Statements of Partners' Deficit for each of the
three years in the period ended December 31, 1995.... 20

Statements of Cash Flows for each of the three years
in the period ended December 31, 1995................. 21

Notes to Financial Statements........................... 23

Financial Statement Schedule -

Schedule III - Real Estate Investments and
Accumulated Depreciation........................... 33

</TABLE>

All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
McNeil Real Estate Fund XI, Ltd.:

We have audited the accompanying balance sheets of McNeil Real Estate Fund XI,
Ltd. (a California limited partnership) as of December 31, 1995 and 1994, and
the related statements of operations, partners' deficit and cash flows for each
of the three years in the period ended December 31, 1995. These financial
statements and the schedule referred to below are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McNeil Real Estate Fund XI,
Ltd. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP

Dallas, Texas
March 13, 1996

<PAGE>
McNEIL REAL ESTATE FUND XI, LTD.

BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
-----------------------------------
1995 1994
--------------- --------------
ASSETS
- ------
<S> <C> <C>
Real estate investments:
Land..................................................... $ 5,938,464 $ 5,938,464
Buildings and improvements............................... 58,408,551 56,588,508
-------------- -------------
64,347,015 62,526,972
Less: Accumulated depreciation.......................... (37,095,184) (34,610,759)
-------------- -------------
27,251,831 27,916,213

Cash and cash equivalents................................... 2,030,544 1,932,351
Cash segregated for security deposits....................... 386,125 363,849
Accounts receivable......................................... 31,327 24,577
Prepaid expenses and other assets........................... 276,785 361,909
Escrow deposits............................................. 904,523 983,972
Deferred borrowing costs, net of accumulated
amortization of $507,241 and $361,743 at
December 31, 1995 and 1994, respectively................. 1,627,629 1,773,127
-------------- -------------
$ 32,508,764 $ 33,355,998
============== =============
LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------

Mortgage notes payable, net................................. $ 39,684,440 $ 40,090,432
Accounts payable............................................ 62,056 112,735
Accrued interest............................................ 302,329 240,267
Accrued expenses............................................ 456,984 318,628
Deferred gain............................................... 67,016 67,016
Payable to affiliates - General Partner..................... 2,851,851 2,919,444
Security deposits and deferred rental income................ 407,466 367,044
-------------- -------------
43,832,142 44,115,566
-------------- -------------

Partners' deficit:
Limited partners - 159,813 and 159,917 limited
partnership units issued and outstanding at
December 31, 1995 and 1994, respectively............... (4,983,492) (5,275,373)
General Partner.......................................... (6,339,886) (5,484,195)
-------------- -------------
(11,323,378) (10,759,568)
-------------- -------------
$ 32,508,764 $ 33,355,998
============== =============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND XI, LTD.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1995 1994 1993
-------------- -------------- ---------------
<S> <C> <C> <C>
Revenue:
Rental revenue.......................... $ 14,304,055 $ 13,313,091 $ 12,527,359
Interest................................ 147,758 84,213 51,414
Gain on involuntary conversion.......... - 28,109 178,460
------------- ------------- --------------
Total revenue......................... 14,451,813 13,425,413 12,757,233
------------- ------------- --------------

Expenses:
Interest................................ 3,905,403 3,901,700 4,048,884
Interest - affiliates................... - 3,589 145,644
Depreciation............................ 2,484,425 2,341,485 2,079,859
Property taxes.......................... 799,717 898,396 907,597
Personnel expenses...................... 1,722,218 1,741,104 1,665,933
Repairs and maintenance................. 1,718,236 1,590,164 1,681,153
Property management fees -
affiliates............................ 711,435 671,785 625,549
Utilities............................... 1,044,938 1,003,419 990,009
Other property operating expenses....... 899,517 881,362 841,322
General and administrative.............. 393,663 151,654 325,512
General and administrative -
affiliates............................ 465,018 434,577 483,921
------------- ------------- --------------
Total expenses 14,144,570 13,619,235 13,795,383
------------- ------------- --------------

Income (loss) before extraordinary
items................................... 307,243 (193,822) (1,038,150)
Extraordinary loss on
extinguishment of debt.................. - - (521,380)
------------- ------------- --------------
Net income (loss).......................... $ 307,243 $ (193,822) $ (1,559,530)
============= ============= ==============

Net income (loss) allocable to limited
partners................................ $ 291,881 $ (636,783) $ (1,502,409)
Net income (loss) allocable to
General Partner......................... 15,362 442,961 (57,121)
------------- ------------- --------------
Net income (loss).......................... $ 307,243 $ (193,822) $ (1,559,530)
============= ============= ==============

Net income (loss) per limited partnership
unit:
Income (loss) before extraordinary
items................................. $ 1.83 $ (3.98) $ (6.16)
Extraordinary gain (loss) on
extinguishment of debt................ - - (3.22)
------------- ------------- -------------
Net income (loss)....................... $ 1.83 $ (3.98) $ (9.38)
============= ============= =============
</TABLE>

See accompanying notes to financial statements.
<PAGE>

McNEIL REAL ESTATE FUND XI, LTD.

STATEMENTS OF PARTNERS' DEFICIT

For the Years Ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Deficit
---------------- ---------------- ----------------
<S> <C> <C> <C>
Balance at December 31, 1992.............. $ (4,475,058) $ (3,136,181) $ (7,611,239)

Net loss.................................. (57,121) (1,502,409) (1,559,530)

Contingent Management Incentive
Distribution........................... (625,529) - (625,529)
-------------- -------------- --------------

Balance at December 31, 1993.............. (5,157,708) (4,638,590) (9,796,298)

Net income (loss)......................... 442,961 (636,783) (193,822)

Contingent Management Incentive
Distribution........................... (769,448) - (769,448)
-------------- -------------- --------------

Balance at December 31, 1994.............. (5,484,195) (5,275,373) (10,759,568)

Net income................................ 15,362 291,881 307,243

Contingent Management Incentive
Distribution........................... (871,053) - (871,053)
-------------- -------------- --------------

Balance at December 31, 1995.............. $ (6,339,886) $ (4,983,492) $ (11,323,378)
============== ============== ==============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND XI, LTD.

STATEMENTS OF CASH FLOWS

Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------------
1995 1994 1993
--------------- --------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from tenants.............. $ 14,298,528 $ 13,292,954 $ 12,411,792
Cash paid to suppliers.................. (5,477,026) (5,037,523) (5,842,375)
Cash paid to affiliates................. (2,115,099) (667,861) (901,634)
Interest received....................... 147,758 84,213 51,414
Interest paid........................... (3,676,175) (3,839,943) (3,719,734)
Interest paid to affiliates............. - (3,589) (520,649)
Property taxes paid..................... (832,090) (672,666) (1,012,528)
------------- ------------- --------------
Net cash provided by operating
activities.............................. 2,345,896 3,155,585 466,286
------------- ------------- --------------

Cash flows from investing activities:
Additions to real estate
investments........................... (1,820,043) (2,154,079) (2,089,700)
Insurance proceeds from fire............ - 28,109 277,145
------------- ------------- --------------
Net cash used in investing activities...... (1,820,043) (2,125,970) (1,812,555)
------------- ------------- --------------

Cash flows from financing activities:
Net proceeds from refinancing of
mortgage notes payable................ - - 6,760,884
Principal payments on mortgage
notes payable......................... (427,660) (394,008) (500,461)
Deferred borrowing costs paid........... - (127,801) (863,525)
Reinstatement of mortgage principal
due to note modification.............. - - 180,287
Proceeds from mortgage note
payable - affiliate................... - - 50,000
Repayment of mortgage note
payable - affiliate................... - - (200,000)
Repayment of advances from
affiliates............................ - (936,377) (1,931,440)
Contingent Management Incentive
Distribution.......................... - (560,035) (7,107)
------------- ------------- --------------
Net cash provided by (used in)
financing activities.................. (427,660) (2,018,221) 3,488,638
------------- ------------- --------------
Net increase (decrease) in cash
and cash equivalents.................. 98,193 (988,606) 2,142,369

Cash and cash equivalents at
beginning of year..................... 1,932,351 2,920,957 778,588
------------- ------------- --------------
Cash and cash equivalents at end
of year............................... $ 2,030,544 $ 1,932,351 $ 2,920,957
============= ============= ==============
</TABLE>
See discussion of noncash investing and financing activities in Notes 6 and 7.

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND XI, LTD.

STATEMENTS OF CASH FLOWS

Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities

For the Years Ended December 31,
---------------------------------------------------
1995 1994 1993
----------- ------------- --------------
<S> <C> <C> <C>
Net income (loss).......................... $ 307,243 $ (193,822) $ (1,559,530)
------------- ------------- --------------

Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Extraordinary gain on
extinguishment of debt................ - - 521,380
Gain on involuntary conversion.......... - (28,109) (178,460)
Depreciation............................ 2,484,425 2,341,485 2,079,859
Amortization of discounts on
mortgage notes payable................ 21,668 20,514 209,441
Amortization of deferred borrowing
costs................................. 145,498 137,072 79,688
Net interest added to advances
from affiliates....................... - - 718
Changes in assets and liabilities:
Cash segregated for security
deposits............................ (22,276) (25,939) (38,648)
Accounts receivable................... (6,750) 3,889 (12,150)
Prepaid expenses and other
assets.............................. 85,124 60,668 (203,413)
Escrow deposits....................... 79,449 422,335 (64,146)
Accounts payable...................... (50,679) (112,570) (210,216)
Accrued interest...................... 62,062 (95,829) (335,702)
Accrued expenses...................... 138,356 154,930 (44,570)
Payable to affiliates - General
Partner............................. (938,646) 438,501 207,836
Security deposits and deferred
rental income....................... 40,422 32,460 14,199
------------- ------------- --------------

Total adjustments................. 2,038,653 3,349,407 2,025,816
------------- ------------- --------------

Net cash provided by operating
activities.............................. $ 2,345,896 $ 3,155,585 $ 466,286
============= ============= ==============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND XI, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 1995

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------

Organization
- ------------

Basis of Presentation
- ---------------------

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP"). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

The Partnership's financial statements include the accounts of the following
listed tier partnerships for the years ended December 31, 1995, 1994 and 1993.
These single asset tier partnerships were formed to accommodate the refinancing
of the respective property. The Partnership's and the General Partner's
ownership interest in each tier partnership is detailed below. The Partnership
retains effective control of each tier partnership. The General Partner's
minority interest is not presented as it is either negative or immaterial.

<TABLE>
<CAPTION>
% of Ownership Interest
Tier Partnership Partnership General Partner
---------------- ----------- ---------------
<S> <C> <C>
Limited Partnerships:
Acacia Lakes Fund XI Limited Partnership 99 1
Gentle Gale Fund XI Limited Partnership* 100 -
Villa Del Rio XI Limited Partnership* 100 -
Village Fund XI Associates 99 1

General Partnerships:
Knollwood XI Associates 99 1
The Park Fund XI Associates 99 1
Sun Valley Fund XI Associates 99 1
</TABLE>
* The general partner of these partnerships is a corporation whose stock is
100% owned by the Partnership.
<PAGE>
Real Estate Investments
- -----------------------

Real estate investments are generally stated at the lower of cost or net
realizable value. Real estate investments are monitored on an ongoing basis to
determine if the property has sustained a permanent impairment in value. At such
time, a write-down is recorded to reduce the basis of the property to its net
realizable value. A permanent impairment is determined to have occurred when a
decline in property value is considered to be other than temporary based upon
management's expectations with respect to projected cash flows and prevailing
economic conditions.

Improvements and betterments are capitalized and expensed through depreciation
charges. Repairs and maintenance are charged to operations as incurred.

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. This statement is effective for financial statements for fiscal
years beginning after December 15, 1995. The Partnership has not adopted the
principles of this statement within the accompanying financial statements;
however, it is not anticipated that adoption will have a material effect on the
carrying value of the Partnership's long-lived assets.

Depreciation
- ------------

Buildings and improvements are depreciated using the straight-line method over
the estimated useful lives of the assets, ranging from 3 to 40 years.

Cash and Cash Equivalents
- -------------------------

Cash and cash equivalents include cash on hand and cash on deposit with
financial institutions with original maturities of three months or less.
Carrying amounts for cash and cash equivalents approximate fair value.

Escrow Deposits
- ---------------

The Partnership is required to maintain escrow accounts in accordance with the
terms of various mortgage indebtedness agreements. These escrow accounts are
controlled by the mortgagee and are used for payment of property taxes, hazard
insurance, capital improvements and/or property replacements. Carrying amounts
for escrow deposits approximate fair value.

Deferred Borrowing Costs
- ------------------------

Loan fees and other related costs incurred to obtain long-term financing on real
property are capitalized and amortized using a method that approximates the
effective interest method over the terms of the related mortgage notes payable.
Amortization of deferred borrowing costs is included in interest expense on the
Statements of Operations.

<PAGE>

Discounts on Mortgage Notes Payable
- -----------------------------------

Discounts on mortgage notes payable are being amortized over the remaining terms
of the related mortgage notes using the effective interest method. Amortization
of discounts on the mortgage notes payable is included in interest expense on
the Statements of Operations.

Rental Revenue
- --------------

The Partnership leases its residential properties under short-term operating
leases. Lease terms generally are less than one year in duration. Rental revenue
is recognized as earned.

Income Taxes
- ------------

No provision for Federal income taxes is necessary in the financial statements
of the Partnership because, as a partnership, it is not subject to Federal
income tax, and the tax effect of its activities accrues to the partners.

Allocation of Net Income and Net Loss
- -------------------------------------

The Amended Partnership Agreement provides for net income of the Partnership for
both financial statement and income tax reporting purposes to be allocated as
indicated below. For allocation purposes, net income and net loss of the
Partnership are determined prior to deductions for depreciation:

a) first, deductions for depreciation shall be allocated 5% to the General
Partner and 95% to the limited partners;

b) then, net income in an amount equal to the cumulative amount paid to the
General Partner for the contingent portion of the Management Incentive
Distribution ("MID"), for which no previous income allocations have been
made, shall be allocated to the General Partner; provided, however, that if
all or a portion of such payment consists of limited partnership units
("Units"), the amount of net income allocated shall be equal to the amount
of cash the General Partner would have otherwise received; and

c) then, any remaining net income shall be allocated to achieve the allocation
of 5% to the General Partner and 95% to the limited partners.

The Amended Partnership Agreement provides that net losses, other than that
arising from a sale or refinancing, shall be allocated 5% to the General Partner
and 95% to the limited partners.

Net losses arising from a sale or refinancing shall be allocated 1% to the
General Partner and 99% to the limited partners.

Federal income tax law provides that the allocation of loss to a partner will
not be recognized unless the allocation is in accordance with a partner's
interest in the partnership or the allocation has substantial economic effect.
Internal Revenue Code Section 704(b) and accompanying Treasury Regulations
establish criteria for allocations of Partnership deductions attributable to
debt. The Partnership's tax allocations for 1995, 1994, and 1993 have been made
in accordance with these provisions.

<PAGE>

Distributions
- -------------

Pursuant to the Amended Partnership Agreement and at the discretion of the
General Partner, distributions during each taxable year shall be made as
follows:

(a) first, to the General Partner, in an amount equal to the contingent portion
of the MID; and

(b) any remaining distributable cash, as defined, shall be distributed 100% to
the limited partners.

No distributions were made to the limited partners in 1995, 1994 or 1993. The
Partnership accrued distributions of $871,503, $769,448 and $625,529 for the
benefit of the General Partner for the years ended December 31, 1995, 1994 and
1993, respectively. These distributions are the contingent MID pursuant to the
Amended Partnership Agreement.

Net Income (Loss) Per Limited Partnership Unit
- ----------------------------------------------

Net income (loss) per Unit is computed by dividing net income (loss) allocated
to the limited partners by the number of Units outstanding. Per Unit information
has been computed based on 159,813, 159,917 and 160,079 Units outstanding in
1995, 1994 and 1993, respectively.

NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------

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

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

Under terms of the Amended Partnership Agreement, the Partnership is paying the
MID to the General Partner. The maximum MID is calculated as 1% of the tangible
asset value of the Partnership. The maximum MID percentage decreases subsequent
to 1999. Tangible asset value is determined by using the greater of (i) an
amount calculated by applying a capitalization rate of 9% to the annualized net
operating income of each property or (ii) a value of $10,000 per apartment unit
for residential property to arrive at the property tangible asset value. The
property tangible asset value is then added to the book value of all other
assets excluding intangible items. Prior to July 1, 1993, the MID consisted of
two components: (i) the fixed portion which was payable without respect to the
net income of the Partnership and was equal to 25% of the maximum MID (the
"Fixed MID") and (ii) a contingent portion which was payable only to the extent
of the lesser of the Partnership's excess cash flow, as defined, or net
operating income (the "Entitlement Amount") and was equal to up to 75% of the
maximum MID (the "Contingent MID").

Effective July 1, 1993, the General Partner amended the Amended Partnership
Agreement as a settlement to a class action complaint. This amendment eliminates
the Fixed MID and makes the entire MID payable to the extent of the Entitlement
Amount. In all other respects the calculation and payment of the MID remain the
same.

<PAGE>
Fixed MID was payable in Units unless the Entitlement Amount exceeded the amount
necessary to pay the Contingent MID, in which case, at the General Partner's
option, the Fixed MID was paid in cash to the extent of such excess.

Contingent MID will be paid to the extent of the Entitlement Amount, and may be
paid (i) in cash, unless there is insufficient cash to pay the distribution in
which event any unpaid portion not taken in Units will be deferred and is
payable, without interest, from the first available cash and/or (ii) in Units. A
maximum of 50% of the MID may be paid in Units. The number of Units issued in
payment of the MID is based on the greater of $50 per Unit or the net tangible
asset value per Unit, as defined. No Units were issued in payment of the MID in
1995, 1994 or 1993.

During 1991, the Partnership amended its capitalization policy and began
capitalizing certain costs of improvements and betterments which under policies
of prior management had been expensed when incurred. The purpose of the
amendment was to more properly recognize items which were capital in nature. The
effect of the amendment standing alone was evaluated at the time the change was
made and determined not to be material to the financial statements of the
Partnership in 1991, nor was it expected to be material in any future year.
However, the amendment can have a material effect on the calculation of the
Entitlement Amount which determines the amount of Contingent MID earned and the
amount of Fixed MID payable in cash. Capital improvements are excluded from cash
flow, as defined. The majority of base period cash flow was measured under the
previous capitalization policy, while incentive period cash flow is determined
using the amended policy. Under the amended policy, more items are capitalized,
and cash flow increases. The amendment of the capitalization policy did not
materially affect the MID for 1995, 1994 or 1993 because the Entitlement Amount
was sufficient to pay Contingent MID notwithstanding the amendment to the
capitalization policy.

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

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

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1995 1994 1993
-------------- -------------- ---------------
<S> <C> <C> <C>
Property management fees - affiliates...... $ 711,435 $ 671,785 $ 625,549
Interest - affiliates...................... - 3,589 145,644
Charged to general and
administrative - affiliates:
Partnership administration.............. 465,018 434,577 401,868
Fixed MID............................... - - 82,053
------------- ------------- --------------
$ 1,176,453 $ 1,109,951 $ 1,255,114
============= ============= ==============
Charged to General Partner's deficit:
Contingent MID.......................... $ 871,053 $ 769,448 $ 625,529
============= ============= ==============
</TABLE>

<PAGE>

Payable to affiliates - General Partner at December 31, 1995 and 1994 consists
primarily of reimbursable costs, unpaid property management fees and accrued but
unpaid Contingent MID. These payables are due and payable from current
operations.

NOTE 3 - TAXABLE INCOME (LOSS)
- ------------------------------

McNeil Real Estate Fund XI, Ltd. is a partnership and is not subject to Federal
and state income taxes. Accordingly, no recognition has been given to income
taxes in the accompanying financial statements of the Partnership since the
income or loss of the Partnership is to be included in the tax returns of the
individual partners. The tax returns of the Partnership are subject to
examination by Federal and state taxing authorities. If such examinations result
in adjustments to distributive shares of taxable income or loss, the tax
liability of the partners could be adjusted accordingly.

The Partnership's net assets and liabilities for tax purposes were less than the
net assets and liabilities for financial reporting purposes by $62,005 in 1995,
$415,728 in 1994, and $371,525 in 1993.

NOTE 4 - REAL ESTATE INVESTMENTS
- --------------------------------

The basis and accumulated depreciation of the Partnership's real estate
investments at December 31, 1995 and 1994 are set forth in the following tables:

Buildings and Accumulated Net Book
1995 Land Improvements Depreciation Value
---- -------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Acacia Lakes
Mesa, AZ $ 1,953,090 $ 12,687,204 $ (8,213,224) $ 6,427,070
Gentle Gale
Galveston, TX 450,155 3,577,012 (2,167,312) 1,859,855
Knollwood
Kansas City, MO 330,547 6,423,419 (4,298,156) 2,455,810
The Park
Joplin, MO 165,329 4,238,254 (3,069,781) 1,333,802
Rock Creek
Beaverton, OR 1,365,810 9,663,748 (6,671,446) 4,358,112
Sun Valley
Charlotte, NC 562,797 8,204,402 (4,282,305) 4,484,894
Villa Del Rio
Jacksonville, FL 636,634 9,261,056 (5,531,458) 4,366,232
The Village
Gresham, OR 474,102 4,353,456 (2,861,502) 1,966,056
------------- ------------- ------------- -------------
$ 5,938,464 $ 58,408,551 $ (37,095,184) $ 27,251,831
============= ============= ============= =============

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Buildings and Accumulated Net Book
1994 Land Improvements Depreciation Value
---- -------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Acacia Lakes $ 1,953,090 $ 12,325,108 $ (7,717,064) $ 6,561,134
Gentle Gale 450,155 3,476,917 (1,992,803) 1,934,269
Knollwood 330,547 6,071,771 (4,041,889) 2,360,429
The Park 165,329 4,133,153 (2,896,491) 1,401,991
Rock Creek 1,365,810 9,423,597 (6,207,808) 4,581,599
Sun Valley 562,797 7,899,254 (3,958,479) 4,503,572
Villa Del Rio 636,634 9,000,503 (5,167,379) 4,469,758
The Village 474,102 4,258,205 (2,628,846) 2,103,461
------------- ------------- ------------- -------------
$ 5,938,464 $ 56,588,508 $ (34,610,759) $ 27,916,213
============= ============= ============= =============
</TABLE>

The Partnership's real estate properties are encumbered by mortgage indebtedness
as discussed in Note 5.

NOTE 5 - MORTGAGE NOTES PAYABLE
- -------------------------------

The following table sets forth the mortgage notes payable of the Partnership at
December 31, 1995 and 1994. All mortgage notes are secured by real estate
investments.

<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date (c) 1995 1994
- -------- ------------ ------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Acacia Lakes First 8.700 $ 71,069 01/01 $ 8,937,249 $ 9,003,355
------------- --------------

Gentle Gale First 8.150 22,327 07/03 2,694,292 2,740,563
Discount (b) (64,784) (71,678)
------------- --------------
2,629,508 2,668,885
------------- --------------

Knollwood First 7.750 32,506 05/24 4,472,878 4,514,538
------------- --------------

The Park First 10.500 24,021 05/24 2,604,482 2,618,451
------------- --------------

Rock Creek First 11.875 67,860 02/01 6,224,682 6,295,202
------------- --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date (c) 1995 1994
- -------- ------------ ------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Sun Valley First 7.875 48,384 06/24 $ 6,585,644 $ 6,645,073
------------- --------------

Villa Del Rio First 8.150 47,843 07/03 5,773,484 5,872,634
Discount (b) (138,822) (153,596)
------------- ---------------
5,634,662 5,719,038
------------- --------------

The Village First 10.875 26,219 11/96 2,595,335 2,625,890
------------- --------------
$ 39,684,440 $ 40,090,432
============= ==============
</TABLE>

(a) The debt is non-recourse to the Partnership.

(b) Discounts are based on an effective interest rate of 8.62%.

<TABLE>
<CAPTION>
Property Balloon Payment Date
-------- --------------- ----
<S> <C> <C>
The Village $ 2,564,000 11/96
Acacia Lakes 8,468,000 01/01
Rock Creek 5,704,000 02/01
Gentle Gale 2,197,000 07/03
Villa Del Rio 4,707,000 07/03
</TABLE>

Scheduled principal maturities of the mortgage notes, before consideration of
discounts of $203,606, are as follows:

<S> <C>
1996.................................... $ 3,035,587
1997.................................... 481,222
1998.................................... 526,120
1999.................................... 575,334
2000.................................... 629,296
Thereafter.............................. 34,640,487
-----------
Total $ 39,888,046
===========
</TABLE>

<PAGE>

Based on borrowing rates currently available to the Partnership for mortgage
loans with similar terms and average maturities, the fair value of notes payable
was approximately $40,765,000 as of December 31, 1995.

NOTE 6 - GAIN ON INVOLUNTARY CONVERSION
- ---------------------------------------

On March 15, 1993, 8 units at Sun Valley were destroyed by fire causing $317,100
in damages. The Partnership received $277,145 in insurance reimbursements as of
December 31, 1993, to cover the cost to repair Sun Valley. The property received
an additional $28,109 in insurance reimbursements in 1994. Insurance
reimbursements received in excess of the basis of the property damaged were
recorded as a gain on involuntary conversion. The Partnership recorded a gain of
$28,109 and $178,460 in 1994 and 1993, respectively.

NOTE 7 - REFINANCING OF MORTGAGE NOTES PAYABLE
- ----------------------------------------------

On November 23, 1993, the Partnership refinanced the mortgage note payable on
Acacia Lakes. A summary of the proceeds from refinancing is as follows:

<S> <C>
New loan proceeds........................... $ 9,075,000
Existing debt retired....................... (6,340,109)
----------
Net cash proceeds from refinancing.......... $ 2,734,891
==========
</TABLE>

The Partnership deposited $183,751 into property taxes, insurance and
replacement escrows and incurred loan costs of $376,292 relating to the
refinancing. The Partnership also recognized an extraordinary loss on early
extinguishment of debt on Acacia Lakes in the amount of $285,501, which is
attributable to the unamortized discount on the retired mortgage.

On June 24, 1993, the General Partner refinanced a portfolio of properties via a
Real Estate Mortgage Investment Conduit ("REMIC"). This REMIC consists of a pool
of properties from various partnerships affiliated with McNeil. Gentle Gale and
Villa Del Rio were included in the REMIC. The properties in the REMIC are not
collateralized across the partnerships, but are cross-collateralized within the
same partnership. The new mortgage loans bear an interest rate of 8.15%, which
have been discounted to an effective rate of 8.62%, and mature in July 2003.
Following is a summary of the cash proceeds relating to the refinancings:

<TABLE>
<CAPTION>
Gentle Gale Villa Del Rio Total
------------- ------------- -------------

<S> <C> <C> <C>
New loan proceeds.................... $ 2,800,000 $ 6,000,000 $ 8,800,000
Existing debt retired................ (1,673,558) (2,754,791) (4,428,349)
Mortgage discount.................... (81,363) (174,352) (255,715)
Prepayment penalty................... (33,472) (56,471) (89,943)
----------- ----------- -----------
Net cash proceeds from
refinancing........................ $ 1,011,607 $ 3,014,386 $ 4,025,993
=========== =========== ===========
</TABLE>

<PAGE>

The Partnership deposited $328,157 into separate escrow accounts for property
taxes, insurance and replacement reserves and incurred loan costs of $487,233
relating to the refinancings. The Partnership recognized an extraordinary loss
on early extinguishment of debt on Gentle Gale in the amount of $179,408, which
is attributable to the unamortized discount and prepayment penalty relating to
the retired mortgage. The Partnership also recognized an extraordinary loss on
early extinguishment of debt on Villa Del Rio in the amount of $56,471, which is
attributable to the prepayment penalty relating to the retired mortgage.

NOTE 8 - LEGAL PROCEEDINGS
- --------------------------

This action was dismissed without prejudice in November 1995.

<PAGE>
above. Additionally, High River purports to assert claims derivatively on
behalf of McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XXIV, L.P.
and McNeil Real Estate Fund XXV, L.P., for breach of contract and breach of
fiduciary duty, asserting that the General Partner has charged these
partnerships excessive fees. High River's complaint seeks, inter alia,
preliminary injunctive relief requiring the General Partner to admit High
River as a limited partner in each of the ten partnerships referenced above
and to transfer the tendered units of interest in the partnerships to High
River; an unspecified award of damages payable to High River and an
additional unspecified award of damages payable to certain of the
partnerships; an order that defendants must discharge their fiduciary
duties and must account for all fees they have received from certain of the
partnerships; and attorneys' fees.

On January 31, 1996, this action was dismissed without prejudice.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

<PAGE>

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend these actions.

<PAGE>

steps to prevent the consummation of the High River tender offers, (2)
failing to take steps to maximize unit holders' or limited partners'
values, including failure to liquidate the properties owned by the
Partnerships, (3) managing the Partnerships so as to extend indefinitely
the present fee arrangements, and (4) paying itself and entities owned and
controlled by the general partner excessive fees and reimbursements of
general and administrative expenses.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above (as defined in this Section 6,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 6, collectively, the "Defendants") have breached their
fiduciary duties to the class members by, among other things, (1) taking
steps to prevent the consummation of the High River tender offers, (2)
failing to take steps to maximize unitholders' or limited partners' values,
including failure to liquidate the properties owned by the Partnerships,
(3) managing the Partnerships so as to extend indefinitely the present fee
arrangements, and (4) paying itself and entities owned and controlled by
the general partner excessive fees and reimbursements of general and
administrative expenses.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

NOTE 9 - SUBSEQUENT EVENT
- -------------------------

On January 8, 1996, 23 units and a laundry facility, totaling 23,347 square feet
at Knollwood Apartments were destroyed by fire causing approximately $865,000 in
damages. Management believes the insurance reimbursements to cover the cost of
repair will exceed the basis of the property damaged by approximately $705,000.

<PAGE>

McNEIL REAL ESTATE FUND XI, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1995

<TABLE>
<CAPTION>
Cumulative Costs
Initial Cost (b) Write-down Capitalized
Related (b) Buildings and and Permanent Subsequent
Description Encumbrances Land Improvements Impairment To Acquisition
- ----------- --------------- -------------- ------------- ------------- --------------
APARTMENTS:
<S> <C> <C> <C> <C> <C>
Acacia Lakes
Mesa, AZ $ 8,937,249 $ 1,953,090 $ 10,784,729 $ - $ 1,902,475

Gentle Gale
Galveston, TX 2,629,508 450,155 2,925,081 (21,141) 673,072

Knollwood
Kansas City, MO 4,472,878 330,547 5,122,225 - 1,301,194

The Park
Joplin, MO 2,604,482 165,329 3,795,607 - 442,647

Rock Creek
Beaverton, OR 6,224,682 1,365,810 8,314,604 - 1,349,144

Sun Valley
Charlotte, NC 6,585,644 562,797 7,056,988 - 1,147,414

Villa Del Rio
Jacksonville, FL 5,634,662 636,634 7,685,383 - 1,575,673

The Village
Gresham, OR 2,595,335 474,102 3,372,567 - 980,889
-------------- -------------- -------------- ------------ -------------

$ 39,684,440 $ 5,938,464 $ 49,057,184 $ (21,141) $ 9,372,508
============== ============== ============== ============ =============
</TABLE>

(b) The initial cost and encumbrances reflect the present value of future loan
payments discounted, if appropriate, at a rate estimated to be the
prevailing interest rate at the date of acquisition or refinancing.

See accompanying notes to Schedule III.

<PAGE>

McNEIL REAL ESTATE FUND XI, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1995

<TABLE>
<CAPTION>
Gross Amount at
Which Carried at Close of Period Accumulated
Buildings and Depreciation
Description Land Improvements Total (a) and Amortization
- ----------- ----- ------------- --------- ----------------
APARTMENTS:
<S> <C> <C> <C> <C>
Acacia Lakes
Mesa, AZ $ 1,953,090 $ 12,687,204 $ 14,640,294 $ (8,213,224)

Gentle Gale
Galveston, TX 450,155 3,577,012 4,027,167 (2,167,312)

Knollwood
Kansas City, MO 330,547 6,423,419 6,753,966 (4,298,156)

The Park
Joplin, MO 165,329 4,238,254 4,403,583 (3,069,781)

Rock Creek
Beaverton, OR 1,365,810 9,663,748 11,029,558 (6,671,446)

Sun Valley
Charlotte, NC 562,797 8,204,402 8,767,199 (4,282,305)

Villa Del Rio
Jacksonville, FL 636,634 9,261,056 9,897,690 (5,531,458)

The Village
Gresham, OR 474,102 4,353,456 4,827,558 (2,861,502)
-------------- -------------- ---------------- -------------
$ 5,938,464 $ 58,408,551 $ 64,347,015 $ (37,095,184)
============== ============== ================ =============
</TABLE>

(a) For Federal income tax purposes, the properties are depreciated over lives
ranging from 15-25 years using ACRS or MACRS methods. The aggregate cost of
real estate investments for Federal income tax purposes was approximately
$72,720,420 and accumulated depreciation was $58,365,830 December 31, 1995.

See accompanying notes to Schedule III.

<PAGE>

McNEIL REAL ESTATE FUND XI, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1995

Date of Date Depreciable
Description Construction Acquired lives (years)
- ----------- ------------ -------- -------------
APARTMENTS:

Acacia Lakes
<S> <C> <C> <C>
Mesa, AZ 1980 05/81 3-33

Gentle Gale
Galveston, TX 1980 05/81 3-21

Knollwood
Kansas City, MO 1970 05/81 3-29

The Park
Joplin, MO 1977 03/81 3-35

Rock Creek
Beaverton, OR 1975 02/81 3-30

Sun Valley
Charlotte, NC 1980 08/81 3-40

Villa Del Rio
Jacksonville, FL 1976 05/81 3-40

The Village
Gresham, OR 1974 05/81 3-30

</TABLE>

See accompanying notes to Schedule III.

<PAGE>

McNEIL REAL ESTATE FUND XI, LTD.

Notes to Schedule III

Real Estate Investments and
Accumulated Depreciation

A summary of activity for the real estate investments and accumulated
depreciation is as follows:

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1995 1994 1993
-------------- -------------- ---------------
Real estate investments:
- ------------------------
<S> <C> <C> <C>
Balance at beginning of year............... $ 62,526,972 $ 60,372,893 $ 58,471,885

Improvements............................... 1,820,043 2,154,079 2,089,700

Replacements of assets..................... - - (188,692)
------------- ------------- --------------

Balance at end of year..................... $ 64,347,015 $ 62,526,972 $ 60,372,893
============= ============= ==============

Accumulated depreciation:
- -------------------------

Balance at beginning of year............... $ 34,610,759 $ 32,269,274 $ 30,279,422

Depreciation............................... 2,484,425 2,341,485 2,079,859

Replacements of assets..................... - - (90,007)
------------- ------------- --------------

Balance at end of year..................... $ 37,095,184 $ 34,610,759 $ 32,269,274
============= ============= ==============

</TABLE>

<PAGE>

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
- -------- --------------------------------------------------

Neither the Partnership nor the General Partner has any directors or executive
officers. The names and ages of, as well as the positions held by, the officers
and directors of McNeil Investors, Inc., the general partner of the General
Partner, are as follows:

<TABLE>
<CAPTION>
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------

<S> <C> <C>
Robert A. McNeil, 75 Mr. McNeil is also Chairman of the Board and Director of McNeil Real
Chairman of the Estate Management, Inc. ("McREMI") which is an affiliate of the General
Board and Director Partner. He has held the foregoing positions since the formation of such
entity in 1990. Mr. McNeil received his B.A. degree from Stanford
University in 1942 and his L.L.B. degree from Stanford Law School in
1948. He is a member of the State Bar of California and has been involved
in real estate financing since the late 1940's and in real estate
acquisitions, syndications and dispositions since 1960. From 1986 until
active operations of McREMI and McNeil Partners, L.P. began in February
1991, Mr. McNeil was a private investor. Mr. McNeil is a member of the
International Board of Directors of the Salk Institute, which promotes
research in improvements in health care.

Carole J. McNeil 52 Mrs. McNeil is Co-Chairman, with husband Robert A. McNeil, of McNeil
Co-Chairman of the Investors, Inc. Mrs. McNeil has twenty years of real estate experience,
Board most recently as a private investor from 1986 to 1993. In 1982, she
founded Ivory & Associates, a commercial real estate brokerage firm in
San Francisco, CA. Prior to that, she was a commercial real estate
associate with the Madison Company and, earlier, a commercial sales
associate and analyst with Marcus and Millichap in San Francisco.
In 1978, Mrs. McNeil established Escrow Training Centers,
California's first accredited commercial training program for title
company escrow officers and real estate agents needing college credits
to qualify for brokerage licenses. She began in real estate as Manager
and Marketing Director of Title Insurance and Trust in Marin County, CA.
Mrs. McNeil serves on the International Board of Directors of the Salk
Institute.

</TABLE>

<PAGE>

Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------

<S> <C> <C>
Donald K. Reed, 50 Mr. Reed is President, Chief Executive Officer and Director of McREMI
Director, President, which is an affiliate of the General Partner. Prior to joining McREMI in
and Chief Executive March 1993, Mr. Reed was President, Chief Operating Officer and Director
Officer of Duddlesten Management Corporation and Duddlesten Realty Advisors, Inc.,
with responsibility for a management portfolio of office, retail,
multi-family and mixed-use land projects representing $2 billion in asset
value. He was also Chief Operating Officer, Director and member of the
Executive Committee of all Duddlesten affiliates. Mr. Reed started with
the Duddlesten companies in 1976 and served as Senior Vice President
and Chief Financial Officer and as Executive Vice President and Chief
Operating Officer of Duddlesten Management Corporation before his
promotion to President in 1982. He was President and Chief Operating
Officer of Duddlesten Realty Advisors, Inc., which has been engaged in
real estate acquisitions, marketing and dispositions, since its
formation in 1989.

Ron K. Taylor 38 Mr. Taylor is a Senior Vice President of McREMI and has been in this
Vice President capacity since McREMI commenced active operations in 1991. He also serves
as Acting Chief Financial Officer of McREMI since the resignation of
Robert C. Irvine on January 31, 1996. Mr. Taylor is primarily responsible
for Asset Management functions at McREMI, including property dispositions,
commercial leasing, real estate finance and portfolio management. Prior
to joining McREMI, Mr. Taylor served as an Executive Vice President for a
national syndication/property management company. Mr. Taylor has been
involved in the real estate industry since 1983.
</TABLE>

Each director shall serve until his successor shall have been duly elected and
qualified.

ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------

No direct compensation was paid or payable by the Partnership to directors or
officers (since it does not have any directors or officers) for the year ended
December 31, 1995, nor was any direct compensation paid or payable by the
Partnership to directors or officers of the general partner of the General
Partner for the year ended December 31, 1995. The Partnership has no plans to
pay any such remuneration to any directors or officers of the general partner of
the General Partner in the future.

See Item 13 - Certain Relationships and Related Transactions for amounts of
compensation and reimbursements paid by the Partnership to the General Partner
and its affiliates.

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------

(A) Security ownership of certain beneficial owners.

No individual or group, as defined by Section 13(d)(3) of the
Securities Exchange Act of 1934, known to the Partnership is the
beneficial owner of more than 5 percent of the Partnership's Units,
other than High River Limited Partnership, which owns 9,460 Units
(approximately 5.9% of the outstanding Units) as of February 29, 1996.
The business address for High River Limited Partnership is 100 South
Bedford Road, Mount Kisco, New York 10549.

(B) Security ownership of management.

The General Partner and the officers and directors of its general
partner, collectively, own 313 Units which represent less than 1% of
the outstanding Units.

None.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------

Under the terms of the Amended Partnership Agreement, the Partnership is paying
the MID to the General Partner. The maximum MID is calculated as 1% of the
tangible asset value of the Partnership. The maximum MID percentage decreases
subsequent to 1999. Tangible asset value is determined by using the greater of
(i) an amount calculated by applying a capitalization rate of 9% to the
annualized net operating income of each property or (ii) a value of $10,000 per
apartment unit for residential property to arrive at the property tangible asset
value. The property tangible asset value is then added to the book value of all
other assets excluding intangible items. Prior to July 1, 1993, the MID
consisted of two components: (i) the fixed portion which was payable without
respect to the net income of the Partnership and was equal to 25% of the maximum
MID (the "Fixed MID") and (ii) a contingent portion which was payable only to
the extent of the lesser of the Partnership's excess cash flow, as defined, or
net operating income (the "Entitlement Amount") and was equal to up to 75% of
the maximum MID (the "Contingent MID").

Effective July 1, 1993, the General Partner amended the Amended Partnership
Agreement as a settlement to a class action complaint. This amendment eliminates
the Fixed MID portion and makes the entire MID payable to the extent of the
Entitlement Amount. In all other respects, the calculation and payment of the
MID remain the same.

Contingent MID will be paid to the extent of the Entitlement Amount, and may be
paid (i) in cash, unless there is insufficient cash to pay the distribution in
which event any unpaid portion not taken in Units will be deferred and is
payable, without interest, from the first available cash and/or (ii) in Units. A
maximum of 50% of the MID may be paid in Units. The number of Units issued in
payment of the MID is based on the greater of $50 per Unit or the net tangible
asset value, as defined. For the year ended December 31, 1995, the Partnership
accrued for the General Partner Contingent MID in the amount of $871,053.

<PAGE>

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

The Partnership pays property management fees equal to 5% of the gross rental
receipts of the Partnership's properties to McREMI for providing property
management and leasing services. Effective February 14, 1991, the Partnership
began reimbursing McREMI for its costs, including overhead, of administering the
Partnership's affairs. For the year ended December 31, 1995, the Partnership
paid or accrued for McREMI $1,176,453 in property management fees and
reimbursements.

See Item 1 - Business, Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Item 8 - Note 2 -
"Transactions with Affiliates."

<PAGE>

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
- -------- -----------------------------------------------------------------

See accompanying index to financial statements at Item 8.

(A) Exhibits

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

<S> <C>
3. Limited Partnership Agreement
(Incorporated by reference to the
Annual Report on Form 10-K for the
fiscal year ended September 30,
1987).

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

3.2 Amendment No. 1 to the Amended and
Restated Partnership Agreement of
McNeil Real Estate Fund XI, Ltd.,
dated March 28, 1994. (2)

3.3 Amendment No. 2 to the Amended and
Restated Partnership Agreement of
McNeil Real Estate Fund XI, Ltd.,
dated March 28, 1994. (2)

10.1 Deed of Trust Note, dated April 5,
1989, between Knollwood Fund XI
Associates and American Mortgages,
Inc. (1)

10.2 Deed of Trust Note, dated May 5,
1989, between Sun Valley Fund XI
Associates and American Mortgages,
Inc. (1)

10.3 Termination Agreement, dated as of
August 6, 1991, between The Park
Fund XI Associates and McNeil
Partners, L.P. regarding McNeil
Real Estate Fund XI, Ltd. (1)

10.4 Termination Agreement, dated as of
August 6, 1991 between Sun Valley
Fund XI Associates and McNeil Real
Estate Management, Inc. (1)
</TABLE>

<PAGE>

(A) Exhibits

Exhibit
Number Description
------- -----------
<S> <C>
10.6 Termination Agreement, dated as of
August 6, 1991, between Knollwood
Fund XI Associates and McNeil Real
Estate Management, Inc. (1)

10.6 Termination Agreement, dated as of
August 6, 1991 among Southmark
Management Corporation, Southmark
Commercial Management Company,
McNeil Real Estate Fund XI, Ltd.
and McNeil Real Estate Fund XI, Ltd.
and McNeil Real Estate Management,
Inc. (1)

10.7 Property Management Agreement,
dated as of August 6, 1991, between
McNeil Real Estate Fund XI, Ltd.
and McNeil Real Estate Management,
Inc. (1)

10.8 Property Management Agreement,
dated as of August 6, 1991, between
Knollwood Fund XI Associates and
McNeil Real Estate Management,
Inc. (1)

10.9 Property Management Agreement, dated
as of August 6, 1991, between Sun
Valley Fund XI Associates and McNeil
Real Estate Management, Inc.
(1)

10.10 Property Management Agreement,
dated as of August 6, 1991 between
The Park Fund XI Associates and
McNeil Real Estate Management,
Inc. (1)

10.11 Revolving Credit Agreement dated
August 6, 1991, between McNeil Real
Estate Fund XI, Ltd. and McNeil
Partners, L.P. (1)
</TABLE>

<PAGE>

(A) Exhibits

Exhibit
Number Description
------- -----------
<S> <C>
10.12 Amendment of Property Management
Agreement, dated March 5, 1993,
between McNeil Real Estate Fund
XI, Ltd. and McNeil Real Estate
Management, Inc. (Incorporated by
reference, to the Annual Report of
McNeil Real Estate Fund XI, Ltd.
(File No. 0-9783), on Form 10-K for
the period ended December 31, 1992)

10.13 Loan Agreement dated June 24,
1993, between Lexington Mortgage
Company and McNeil Real Estate Fund
XI, Ltd. (2)

10.14 Master Property Management
Agreement, dated as of June 24,
1993, between McNeil Real Estate
Management, Inc. and McNeil Real
Estate Fund XI, Ltd. (2)

10.15 Multifamily Note, dated November
1, 1993 between Value Line Mortgage
Corporation and Acacia Lakes Fund XI
Limited Partnership. (2)

10.16 Modification of Deed of Trust Note,
dated December 15, 1993, between
American Mortgages, Inc. and
Knollwood Fund XI Associates. (2)

10.17 Modification of Deed of Trust Note,
dated December 20, 1993, between
American Mortgages, Inc. and Sun
Valley Fund XI Associates. (2)

10.18 Deed of Trust Note, dated April 5,
1989, between The Park Fund XI
Associates and American Mortgages,
Inc. (3)

10.19 Installment Note, dated December
28, 1990, between The State of
Oregon Public Employees' Retirement
Fund and McNeil Real Estate Fund
XI, Ltd. (3)

10.20 Promissory Note, dated November
25, 1991, between Village Fund XI
Associates Limited Partnership and
Sun Life Insurance Company of
America. (3)
</TABLE>

<PAGE>

(A) Exhibits

Exhibit
Number Description
------- -----------
<S> <C>
11. Statement regarding computation
of Net Income (Loss) per limited
partnership unit (see Note 1 to
Financial Statements).

22. List of subsidiaries of the
Partnership. (2)

(1) Incorporated by reference to the
Annual Report of McNeil Real Estate
Fund XI, Ltd. (File No. 0-9783),
on Form 10-K for the period ended
December 31, 1991, as filed
with the Securities and Exchange
Commission on March 29, 1992.

(2) Incorporated by reference to the
Annual Report of McNeil Real Estate
Fund XI, Ltd. (File No. 0-9783),
on Form 10-K for the period ended
December 31, 1993, as filed with
the Securities and Exchange
Commission on March 30, 1994.

(3) Incorporated by reference to the
Annual Report of McNeil Real Estate
Fund XI, Ltd. (File No. 0-9783),
on Form 10-K for the period ended
December 31, 1994, as filed with
the Securities and Exchange
Commission on March 30, 1995.

27. Financial Data Schedule for the year
ended December 31, 1995.

</TABLE>

(B) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended December 31, 1995.

<PAGE>

McNEIL REAL ESTATE FUND XI, LTD.
A Limited Partnership

SIGNATURE PAGE

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.

McNEIL REAL ESTATE FUND XI, LTD.

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

By: McNeil Investors, Inc., General Partner

<S> <C>
March 29, 1996 By: /s/ Robert A. McNeil
- -------------- --------------------------------------------------
Date Robert A. McNeil
Chairman of the Board and Director
(Principal Executive Officer)

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.

March 29, 1996 By: /s/ Donald K. Reed
- -------------- --------------------------------------------------
Date Donald K. Reed
President and Director of McNeil Investors, Inc.

March 29, 1996 By: /s/ Ron K. Taylor
- -------------- --------------------------------------------------
Date Ron K. Taylor
Acting Chief Financial Officer
of McNeil Investors, Inc.

March 29, 1996 By: /s/ Brandon K. Flaming
- -------------- --------------------------------------------------
Date Brandon K. Flaming
Chief Accounting Officer of McNeil Real Estate
Management, Inc.

</TABLE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,030,544
<SECURITIES> 0
<RECEIVABLES> 31,327
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 64,347,015
<DEPRECIATION> (37,095,184)
<TOTAL-ASSETS> 32,508,764
<CURRENT-LIABILITIES> 0
<BONDS> 39,684,440
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 32,508,764
<SALES> 14,304,055
<TOTAL-REVENUES> 14,451,831
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,239,167
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,905,403
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 307,243
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 307,243
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>