CARLYLE REAL ESTATE LTD PARTNERSHIP XI, 10-Q, 1994-11-14

CARLYLE REAL ESTATE LTD PARTNERSHIP XI
10-Q, 1994-11-14
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarter ended September 30, 1994 Commission file number 0-10494

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(Exact name of registrant as specified in its charter)

Illinois 36-3102608
(State of organization) (IRS Employer Identification No.)

900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code 312/915-1987

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

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Item 1. Financial Statements. . . . . . . . . . . . . . . . . . . 3

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 17

PART II OTHER INFORMATION

Item 5. Other Information . . . . . . . . . . . . . . . . . . . . 23

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 25

<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 1994 AND DECEMBER 31, 1993

(UNAUDITED)

ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,208,326 2,312,541
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . 1,847,307 2,288,265
Rents and other receivables (net of allowance for
doubtful accounts of $1,840,275 and $1,284,059 at
September 30, 1994 and December 31, 1993, respectively). . . . . . . . . . . . . . 485,151 2,230,844
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,303,646 1,636,340
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,518,611 1,510,402
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,363,041 9,978,392
------------ -----------

Mortgage notes receivable (net of reserve for
uncollectibility of $527,774, note 5(a)). . . . . . . . . . . . . . . . . . . . . . . 2,067,695 2,067,695
Investment properties, at cost:
Land and leasehold interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,333,011 18,333,011
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,985,732 193,684,179
------------ -----------
215,318,743 212,017,190
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . 77,661,365 72,509,329
------------ -----------
Total investment properties, net
of accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . 137,657,378 139,507,861
Investment in unconsolidated ventures,
at equity (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262,839 445,473
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,755,458 5,881,001
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,340,367 3,108,523
Venture partners' deficits in ventures . . . . . . . . . . . . . . . . . . . . . . . . 10,220,157 8,422,186
------------ -----------
$166,666,935 169,411,131
============ ===========

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------

SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt
(notes 3(c) and 3(d)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,221,035 48,194,235
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,339,781 1,587,865
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604,427 741,524
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,678,224 8,712,498
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,556,818 1,437,411
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 64,400,285 60,673,533
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,732 184,933
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . 107,819,544 106,140,597
------------ -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,366,561 166,999,063
Deferred gain on sale of investment property
(note 5(a)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,067,695 2,067,695
Venture partners' subordinated equity in ventures. . . . . . . . . . . . . . . . . . . 6,116,055 6,677,585
Partners' capital accounts (deficits) (note 1):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,306,325) (12,004,318)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (1,116,446) (1,116,446)
------------ -----------
(13,421,771) (13,119,764)
------------ -----------
Limited partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . 121,935,233 121,935,233
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (77,328,863) (70,080,706)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (45,067,975) (45,067,975)
------------ -----------
(461,605) 6,786,552
------------ -----------
Total partners' capital accounts (deficits). . . . . . . . . . . . . . . . . . (13,883,376) (6,333,212)
------------ -----------
Commitments and contingencies (notes 3, 4, 5, 6 and 7)
$166,666,935 169,411,131
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993

(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . $ 8,470,405 8,498,037 25,936,545 26,715,607
Interest income. . . . . . . . . . . . . . . . . . 36,503 55,828 125,961 178,718
----------- ----------- ---------- ----------
8,506,908 8,553,865 26,062,506 26,894,325
----------- ----------- ---------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . 5,206,719 5,739,752 14,776,110 15,324,680
Depreciation . . . . . . . . . . . . . . . . . . . 1,717,347 1,615,681 5,152,036 4,906,045
Property operating expenses. . . . . . . . . . . . 5,495,282 6,079,320 15,190,035 15,656,891
Professional services. . . . . . . . . . . . . . . 5,578 10,831 158,702 242,524
Amortization of deferred expenses. . . . . . . . . 236,555 242,037 713,438 737,233
General and administrative . . . . . . . . . . . . 41,398 40,314 144,777 131,823
----------- ----------- ---------- ----------
12,702,879 13,727,935 36,135,098 36,999,196
----------- ----------- ---------- ----------
Operating loss . . . . . . . . . . . . . . . (4,195,971) (5,174,070) (10,072,592) (10,104,871)

Partnership's share of operations of
unconsolidated ventures (note 1) . . . . . . . . . (10,973) (158,663) (342,343) (154,397)
Venture partners' share of ventures'
operations . . . . . . . . . . . . . . . . . . . . 1,110,722 1,383,386 2,864,771 2,878,354
----------- ----------- ---------- ----------
Net operating loss . . . . . . . . . . . . . (3,096,222) (3,949,347) (7,550,164) (7,380,914)

Gain from sale of investment
property (note 5(b)) . . . . . . . . . . . . . . . -- 1,433,916 -- 1,433,916
----------- ----------- ---------- ----------
Net loss . . . . . . . . . . . . . . . . . . $(3,096,222) (2,515,431) (7,550,164) (5,946,998)
=========== =========== ========== ==========

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF OPERATIONS - (CONTINUED)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------

Net earnings (loss) per
limited partnership
interest:
Net operating loss . . . . . . . . . . . . $ (21.62) (27.57) (52.73) (51.53)
Gain from sale of invest-
ment property . . . . . . . . . . . . . . -- 10.32 -- 10.32
----------- ----------- ---------- ----------

$ (17.25) (17.25) (52.73) (41.21)
=========== =========== ========== ==========
Cash distributions per
limited partnership
interest . . . . . . . . . . . . . . . . . $ -- -- -- --
=========== =========== ========== ==========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993

(UNAUDITED)

<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(7,550,164) (5,946,998)
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,152,036 4,906,045
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . 713,438 737,233
Reserve for mortgage notes receivable (note 5(a)). . . . . . . . . . . . . . . . . -- 527,774
Long-term debt - deferred accrued interest . . . . . . . . . . . . . . . . . . . . 1,956,758 795,828
Partnership's share of operations of unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342,343 154,397
Venture partner's share of venture's operations. . . . . . . . . . . . . . . . . . (2,864,771) (2,878,354)
Total gain on sale of investment property. . . . . . . . . . . . . . . . . . . . . -- (1,433,916)
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,745,693 367,801
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332,694 488,344
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,209) 938,627
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (231,844) 325,360
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751,995 120,503
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (137,097) 1,980
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,965,726 3,837,824
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,407 (387,752)
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38,201) (23,416)
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . 3,249,804 2,531,280
------------ -----------
Cash flows from investing activities:
Net sales and maturities of short-term investments . . . . . . . . . . . . . . . . . 440,958 1,119,298
Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . . . . (3,301,553) (3,815,072)
Partnership's contributions to unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (159,518) --
Cash proceeds from sale of investment property,
net of selling expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 932,576
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . (587,895) (2,057,429)
------------ -----------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . (3,608,008) (3,820,627)
------------ -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

1994 1993
------------ -----------

Cash flows from financing activities:
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 7,600,000
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (251,011) (284,411)
Principal paydown on long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . -- (5,000,000)
Venture partners' contributions to venture . . . . . . . . . . . . . . . . . . . . . 505,000 3,441,649
Distributions to venture partners. . . . . . . . . . . . . . . . . . . . . . . . . . -- (2,993,630)
------------ -----------
Net cash provided by financing activities. . . . . . . . . . . . . . . . . . 253,989 2,763,608
------------ -----------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (104,215) 1,474,261
============ ===========

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . $ 9,853,626 10,691,028
============ ===========

Non-cash investing and financing activities:
Sale of South Point Apartments (note 5(b)):
Total sales proceeds, net of selling expenses. . . . . . . . . . . . . . . . . . $ -- 5,387,576
Principal balance due on mortgage payable. . . . . . . . . . . . . . . . . . . . -- 4,455,000
------------ -----------
Cash proceeds from sale of South Point
Apartments, net of selling expenses . . . . . . . . . . . . . . . . . . . . . $ -- 932,576
============ ===========

$ -- --
============ ===========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 1994 AND 1993

(UNAUDITED)

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1993, which
are included in the Partnership's 1993 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.

(1) BASIS OF ACCOUNTING

The accompanying consolidated financial statements include the
accounts of the Partnership and the following of its ventures (see note 4),
Mall of Memphis Associates ("Mall of Memphis"), 767 Third Avenue Associates
("767 Third Avenue"), Riverfront Office Park Joint Venture ("Riverfront")
and Excelsior Associates, LP ("824 Market Street"). The effect of all
transactions between the Partnership and the ventures has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interests in Carlyle/National City Associates ("Carlyle/National City").
Accordingly, the accompanying consolidated financial statements do not
include the accounts of Carlyle/National City.

The Partnership's records are maintained on the accrual basis of
accounting as adjusted for federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to reflect the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of the ventures described above.
Such adjustments are not recorded on the records of the Partnership. The
net effect of these items is summarized as follows for the nine months
ended September 30:
1994 1993
----------------------- ------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------

Net loss . . . . . $7,550,164 5,302,448 5,946,998 3,761,715
Net loss per
limited
partnership
interest. . . . . $ 52.73 37.03 41.21 25.46
========== ========= ========== =========

The net loss per limited partnership interest ("Interest") is based
upon the Limited Partnership Interests outstanding at the end of each
period. Deficit capital accounts will result, through the duration of the
Partnership, in net gain for financial reporting and income tax purposes.

Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
U.S. government obligations at cost, which approximates market. For the
purposes of these statements, the Partnership's policy is to consider all

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

such amounts held with original maturities of three months or less (none at
September 30, 1994 and December 31, 1993) as cash equivalents with any
remaining amounts (generally with original maturities of one year or less)
reflected as short-term investments being held to maturity.

Certain reclassifications have been made to the 1993 consolidated
financial statements to conform with the 1994 presentation.

(2) INVESTMENT PROPERTIES

All investment properties are pledged as security for long-term debt,
all of which are non-recourse to the Partnership. The Partnership
continues to make the scheduled payments on its existing mortgage
indebtedness related to its remaining investment properties, except as
described in note 3 below.

(3) LONG-TERM DEBT MODIFICATIONS AND REFINANCINGS

(a) General

As described below, the Partnership is seeking or has received
mortgage note modifications on certain properties. Upon expiration of such
modifications, should the Partnership not seek or be unable to secure new
or additional modifications to the loans, based upon current and
anticipated future market conditions, the Partnership may not commit any
significant additional amounts to these properties. This would likely
result in the Partnership no longer having an ownership (or security)
interest in such properties. Such decisions will be made on a property-by-
property basis and could result in a gain for financial reporting and
federal income tax purposes to the Partnership with no corresponding
distributable proceeds. Reference is made to Note 4 of Notes to
Consolidated Financial Statements contained in the Partnership's 1993
Annual Report.

(b) 767 Third Avenue Office Building

During 1991 and 1992, the leases for approximately 67% of the space at
the 767 Third Avenue office building located in New York, New York expired
(substantially all of which have been released as of September 1994 but at
lower effective rents). In order to reduce debt service payments during
the tenant turnover period, the 767 Third Avenue venture obtained from the
existing lender, in May 1992, a replacement mortgage loan which matures in
May 1999 and bears a substantially lower interest rate (10%) than the
original loan (12-3/8%). In connection with the replacement mortgage loan,
767 Third Avenue was required to fund $8,000,000 into an escrow account for
future leasing costs and debt service shortfalls resulting from anticipated
tenant turnover. At the inception of the escrow agreement, the venture was
allowed to reduce the required escrow contributions by approximately
$2,600,000 to reflect that certain leasing costs (described above) had
already been incurred. 767 Third Avenue had been reserving the property's
cash flow beginning with the second quarter of 1990; however, such amounts
were less than the net required reserve. The Partnership's venture partner
loaned $5,000,000 to the venture in order to fund the net escrow reserve
account. In 1993, the reserve account was depleted and the venture (by way
of partner contributions) is funding required leasing costs and debt
service shortfalls. The loan funded by the Partnership's venture partner
earns interest at an adjustable rate (approximately 8% at September 30,
1994) and provides for repayment of principal and interest out of the
available cash flow from property operations and sale or refinancing

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

proceeds. In June 1993, the Partnership purchased a 50% interest in the
venture partner's loan including the related accrued interest.
Accordingly, the Partnership's 50% interest in the principal portion of the
loan ($2,500,000) and the related interest has been eliminated in the
consolidated financial statements. In conjunction with the agreement with
the venture partner to loan the amounts necessary to fund the escrow
account, because the Partnership did not purchase its share of the
$5,000,000 loan by December 31, 1992, the Partnership's preferential return
was removed from the calculation of the allocation of sale or refinancing
proceeds. Because the reserve account has been depleted and the property
is operating at a deficit, the 767 Third Avenue venture intends to seek
refinancing of the mortgage loan. There can be no assurances that any
refinancing can be obtained. In addition, the venture partner has
approached the General Partner regarding purchasing the Partnership's 50%
interest in 767 Third Avenue. If a sale is finalized under the proposed
terms, the Partnership would recognize a gain for financial reporting and
Federal income tax purposes. The Partnership is currently reviewing the
proposal, however, there can be no assurances that a sale will be
finalized.

In order to reduce debt service payments during the tenant turnover period,
the venture had negotiated with the first mortgage lender for a possible
modification to the first mortgage note. Such negotiations were
unsuccessful and the venture received notice of default. The lender
commenced proceedings to realize upon its security and was the successful
bidder at the foreclosure sale held in October 1994. It is expected that
transfer of title of the property to the first mortgage lender will be
finalized in November of 1994. The 824 Market Street venture had decided,
based upon current and anticipated future market conditions, not to commit
any significant additional amounts to this property. As of September 30,
1994, the venture was twenty-seven months delinquent in making the
scheduled debt service payments of approximately $4,455,000 under the terms
of the first mortgage note. In addition, in connection with the
negotiations, the venture withheld payment of contingent interest due
related to 1987 through 1989 aggregating $134,525. Accordingly, for
financial reporting purposes, the long-term mortgage note of $12,570,000
has been reflected as a current liability in the accompanying consolidated
financial statements at September 30, 1994 and December 31, 1993. At the
first mortgage lender's request, beginning March 1993, payments on the
second mortgage loan of approximately $142,000 were also withheld. As a
result, the second mortgage loan of approximately $945,000 has also been
reflected as a current liability in the accompanying consolidated financial
statements at September 30, 1994 and December 31, 1993.

As a result of the expected transfer to the first mortgage lender as
discussed above, the Partnership will no longer have an ownership interest
in the property and expects to recognize a gain in 1994 of approximately
$4,900,000 and $6,200,000 for financial reporting and Federal income tax
purposes, respectively, with no corresponding distributable proceeds.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(d) Riverfront Office Building

On August 28, 1990, the Riverfront joint venture acquired additional
financing by way of a $5,800,000 fourth mortgage note in order to fund the
costs associated with leasing vacant space. To date, the joint venture has
received approximately $5,730,000 in proceeds. The balance of the
proceeds, a $70,000 engineering holdback, is payable to the joint venture
upon completion of certain structural repairs the extent of which are being
negotiated with the lender but are not expected to exceed the holdback
amount. Though physical occupancy at the property has increased from 73%
at June 30, 1993 to 91% at September 30, 1994, average rent paying
occupancy has decreased, due to (i) a major tenant, (vacating approximately
25% of the building in July 1992 due to a downsizing of its operations)
continuing to pay rent through the remaining terms of its leases which
expired in April 1993 and (ii) a second major tenant downsizing its
operations by approximately 38,000 square feet or 11% of the building in
May 1993 and receiving a rent reduction of approximately 23% on its
remaining leased space. The property began operating at a deficit in 1992
and, as a result, debt service payments since July 1992 were made on a
delayed basis. At September 30, 1994, the February 1993 through September
1994 scheduled debt service payments are delinquent by approximately
$5,925,340. Accordingly, the loan balance of approximately $34,298,000 has
been reflected as a current liability in the consolidated financial
statements at September 30, 1994 and December 31, 1993, respectively. In
order to reduce debt service payments, the joint venture has initiated
discussions with the lender to negotiate possible modifications to the
mortgage notes. There can be no assurances that any modification will be
obtained. If the joint venture is unable to secure modifications to the
mortgage notes, the joint venture would likely decide, based upon current
and anticipated future market conditions, not to commit any significant
additional amounts to this property. This would result in the Partnership
no longer having an ownership interest in this property and would result in
a gain for financial reporting and Federal income tax purposes to the
Partnership with no corresponding distributable proceeds.

(e) Mall of Memphis

In March 1993, the Mall of Memphis venture finalized additional
financing from the existing mortgage lender to repay renovation costs
funded by the venture. The venture received additional financing of a
$7,600,000 ten year loan at a rate of 10%. The Partnership's share of the
funding in 1993 was $4,719,095 (net of closing costs), of which $1,000,000
was required to be deposited in an escrow account as security against any
currently undiscovered environmental issues. In addition, a portion of
these funds were used to purchase the Partnership's share of a loan funded
by the Partnership's venture partner in the 767 Third Avenue venture, as
further discussed in note 3(b). The remaining funds may be used to fund
current and future Partnership obligations. The venture would have been
entitled to additional proceeds of $2,025,000 if the property had achieved
certain occupancy levels and debt coverage ratios by September 30, 1994,
however, the venture did not qualify for such additional proceeds. In May,
1994, an affiliate of the General Partners assumed property management and
leasing services. Property management fees are calculated as 3% of base
rent (as defined) and leasing commissions are calculated at a rate, which
approximates market, based on the terms of the related lease.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(f) Refinancings

Effective December 27, 1990, the Partnership obtained replacement
mortgage loans from an institutional lender to retire in full satisfaction,
at an aggregate discount, the previously modified existing long-term
mortgage notes secured by the Scotland Yard - Phase I and II, South Point
and El Dorado View apartment complexes. The Partnership sold South Point
Apartments in July 1993, as further discussed in note 5(b). Commencing
April 1, 1992, the loans provide for payment of contingent interest equal
to 35% of the amount by which gross receipts attributable to a fiscal year
(all as defined) exceed a base amount. For the fiscal years 1993 and 1992,
contingent interest was approximately $387,000 and $281,000, respectively.
As of September 30, 1994, the Partnership has recorded additional interest
expense of approximately $231,000 based on an estimate of the contingent
interest due for fiscal year 1994. In the event that these properties are
sold before the maturity date of the loan, the lender is entitled to a
prepayment penalty of 6% of the mortgage principal and, in general, the
higher of 65% of the sale proceeds or ten times the highest contingent
interest amount in any of the three full fiscal years preceding the sale
(all as defined) plus additional interest, if any, until the lender has
received an internal rate of return of 13.25% per annum if prepayment
occurs between January 1, 1994 and December 31 1995; 13.75% per annum if
prepayment occurs between January 1, 1996 and December 31, 1987 and 14% per
annum thereafter. Accordingly, the Partnership has recorded an estimate of
the minimum internal rate of return as deferred accrued interest which is
included in the balance of long-term debt in the accompanying consolidated
financial statements at September 30, 1994 and December 31, 1993. The
lender has the right to call the remaining loans at any time after January
1, 1996. The lender required the establishment of an escrow account,
initially of approximately $980,000 in the aggregate, to be used towards
the purchase of major capital items at the apartment complexes.
Additionally, the lender required $150,000 of the sale proceeds from South
Point Apartments to be added to the escrow account. At September 30, 1994,
the Partnership has been reimbursed from the escrow account approximately
$647,000 for capital improvements at the above-referenced apartment
complexes. As of the date of this report, the Partnership has been
reimbursed an additional $312,000 from the escrow account.

(4) VENTURE AGREEMENTS

(a) General

The Partnership at September 30, 1994 is a party to five operating
joint venture agreements. In general, the Partnership's venture partners,
who are either the sellers (or their affiliates) of the property
investments being acquired or parties which have contributed an interest in
the property being developed, or were subsequently, admitted to the
ventures, make no cash contributions to the ventures, but their retention
of an interest in the property, through the joint venture, is taken into
account in determining the purchase price of the Partnership's interest,
which is determined by arm's-length negotiations. Under certain
circumstances, either pursuant to the venture agreements or due to the
Partnership's obligations as a general partner, the Partnership may be
required to make additional cash contributions to the ventures.

There are certain risks associated with the Partnership's investments
made through ventures, including the possibility that the Partnership's
joint venture partners in an investment might become unable or unwilling to
fulfill their financial or other obligations, or that such venture partners
may have economic or business interests or goals that are inconsistent with
those of the Partnership.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(b) Carlyle/National City

In July 1983, the Partnership acquired, through Carlyle/National City
(a joint venture with Carlyle Real Estate Limited Partnership-XII), an
interest in an existing thirty-five story office building in Cleveland,
Ohio.

The Partnership made an initial contribution of $5,445,257 to
Carlyle/National City. The terms of the Carlyle/National City venture
agreement provide that the capital contributions, annual cash flow, net
proceeds from sale or refinancing and profit or loss will be allocated or
distributed 13.7255% to the Partnership. The Partnership's cash investment
in the property was $3,341,583 after distributions resulting from the
increase in the first mortgage loan.

In January 1994, the debt service payments under the existing mortgage
for the National City Center Office Building increased from 9-5/8% per
annum to 11-7/8% per annum until the scheduled maturity of the loan in
December 1995. The venture reached an agreement with the current mortgage
lender to refinance the existing mortgage effective April 28, 1994, with an
interest rate of 8.5% per annum. The loan will be amortized over 22 years
with a balloon payment due on April 10, 2001. The venture paid a
refundable loan commitment fee of $1,163,524 in 1993 in conjunction with
the refinancing. The venture also paid a prepayment penalty of $580,586,
based on the outstanding mortgage balance at the time of refinancing. In
addition, the lender required an escrow account of approximately $612,000
to be established at the inception of the refinancing which would be
supplemented from time to time for scheduled future tenant improvement
costs at the property. The $1,163,524 refundable loan commitment fee paid
by the venture in 1993 was applied to accrued interest and the prepayment
penalty, with the balance of $238,215 refunded to the venture in 1994.

(5) SALES OF INVESTMENT PROPERTIES

(a) Pavillion Towers

During April 1986, the Partnership sold its interest in Am-Car Real
Estate Partnership - I ("Am-Car") (which owns the Pavillion Towers office
complex located in Aurora, Colorado) to its venture partners for $1,000,000
in cash, promissory notes aggregating $3,750,000 and the venture partners'
assumption of the Partnership's share of the debt encumbering the property.

The two promissory notes of $3,000,000 and $750,000 bear interest at
various rates and are due in April 1996. Beginning in 1991, the
Partnership has not received the scheduled interest payments of $15,000 on
the $750,000 note and as of the date of this report, the Partnership has
not received the 1994 or 1993 scheduled interest payment of $60,000 on the
$3,000,000 note. Collection of all past due and future amounts from these
notes are considered unlikely; however, the Partnership is evaluating all
of its legal options, including the possibility of a substantial discounted
payment. Due to the uncertainty of collection of all past due and future
amounts from these notes, a $527,774 reserve was established at September
30, 1993 to reduce the mortgage notes receivable balance to an amount not
to exceed the related deferred gain on sale.

The sale was accounted for by the installment method whereby the gain
on sale of $3,057,695 (net of discount on the promissory notes receivable
of $1,682,305) was recognized as collections of principal were received.
Effective January 1, 1990, the Partnership adopted the cost recovery method
of accounting. The interest received in 1992 and 1991 ($60,000 and
$60,000, respectively) was applied against the outstanding principal
balance. No profit has been recognized in 1994, 1993, 1992 or 1991.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(b) South Point Apartments

On July 29, 1993, the Partnership sold the land, buildings and related
improvements and personal property of the South Point apartments complex
located in Houston, Texas to an unaffiliated buyer at a sales price
determined by arm's-length negotiations. The sales price of the property
was $5,600,000 (before closing costs and prorations). A major portion of
the sales proceeds was utilized to retire the related underlying mortgage
principal of $4,455,000. The Partnership received in connection with the
sale, after all fees and expenses, approximately $932,000. Of this amount,
the lender was entitled to approximately $606,000 as participation in the
sales proceeds. From the sale, the Partnership received a net amount of
cash of approximately $326,000, of which $150,000 was required by the
lender to be escrowed for the benefit of the Partnership's other properties
financed by the lender, as more fully discussed in note 3(f). As a result
of the sale, the Partnership recognized in 1993 a gain of $1,433,916 and
$3,512,797 for financial reporting purposes and for federal income tax
purposes, respectively.

(6) TRANSACTIONS WITH AFFILIATES

Certain of the Partnership's properties are managed by affiliates of
the General Partners. In October 1994, one of the affiliated property
managers agreed to sell substantially all of its assets to an unaffiliated
third party. In addition, substantially all of the management personnel of
the property manager will also become management personnel of the purchaser
or its affiliates if the sale is completed. The sale is subject to certain
closing conditions. In the event that the sale is completed, it is
expected that the successor to the affiliated property manager's assets
would act as the property manager of Scotland Yard apartments Phase I & II,
El Dorado View apartments and Carlyle/National City Center after the sale
on the same terms that existed prior to the sale.

Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of September
30, 1994 and for the nine months ended September 30, 1994 and 1993 were as
follows:

Unpaid at
September 30,
1994 1993 1994
-------- ------- -------------
Property management
and leasing fees. . . . . . . . . $207,651 224,800 --
Insurance commissions. . . . . . . 14,525 34,053 --
Management fees to
corporate general
partner . . . . . . . . . . . . . -- -- 11,936
Reimbursement
(at cost) for
out-of-pocket
expenses. . . . . . . . . . . . . 359 13,338 --
-------- ------- ------

$222,535 272,191 11,936
======== ======= ======

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED

The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Corporate General Partner and its affiliates relating to the
administration of the Partnership and operation of the Partnership's
investment properties. Such costs aggregated $236,393 for the nine months
ended September 30, 1994 and $79,611 for 1993, all of which has been paid
as of September 30, 1994.

The Corporate General Partner has deferred payment of partnership
management fees as set forth in the above table. In addition,
distributions to the General Partners of the first quarter 1991 net cash
flow of the Partnership, aggregating $7,161, have also been deferred.
These amounts do not bear interest and are expected to be paid in future
periods.

(7) COMMITMENTS AND CONTINGENCIES

The Partnership is a defendant in several actions brought against it
arising in the ordinary course of business. It is the belief of the
Corporate General Partner, based on its knowledge of facts and advice of
counsel, that the claims made against the Partnership in such actions will
not result in a material adverse effect on the Partnership's consolidated
financial position or results of operations.

(8) ADJUSTMENTS

In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of September 30,
1994 and for the three and nine months ended September 30, 1994 and 1993.

PART I. FINANCIAL INFORMATION

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

LIQUIDITY AND CAPITAL RESOURCES

All references herein to "Notes" are to Notes to Consolidated
Financial Statements filed with this report.

At September 30, 1994, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $2,208,000. Such funds and
short-term investments of approximately $1,847,000 are available for future
distributions to partners and for working capital requirements including
the Partnership's portion of the anticipated net cash flow deficits at the
767 Third Avenue office building and the National City Center office
building. The Partnership and its consolidated ventures have currently
budgeted in 1994 approximately $4,866,000 for tenant improvements and other
capital expenditures. The Partnership's share of such items and its share
of such similar items for its unconsolidated ventures in 1994 is currently
budgeted to be approximately $3,637,000. Actual amounts expended in 1994
may vary depending on a number of factors including actual leasing
activity, results of property operations, liquidity considerations and
other market conditions over the course of the year. Certain of the
Partnership's investment properties and properties in which the Partnership
has a security interest currently operate in overbuilt markets which are
characterized by lower than normal occupancies and/or reduced rent levels.
Such competitive conditions will contribute to the anticipated net cash
flow deficits described above. The sources of capital for such items and
for both short-term and long-term future liquidity and distributions to
partners are expected to be from net cash generated by the Partnership's
investment properties and through the sale of such investments. The
Partnership does not consider the notes receivable arising from the
previous sales of the Partnership's investment properties to be sources of
future liquidity as collections of any past due or future payments on the
Partnership's notes are considered unlikely. Reference is made to Note
5(a). The Partnership's and its ventures' mortgage obligations are all
non-recourse. Therefore, the Partnership and its ventures are not
obligated to pay mortgage indebtedness unless the related property produces
sufficient net cash flow from operations or sale.

The Partnership currently has adequate cash and cash equivalents to
maintain the operations of the Partnership. However, based upon estimated
operations of certain of the Partnership's investment properties, the
Partnership decided to suspend distributions to the Limited and General
Partners effective as of the second quarter of 1991. In addition, the
Partnership has deferred cash distributions and partnership management fees
related to the first quarter of 1991 as discussed in Note 6. These
amounts, which do not bear interest, are approximately $19,000 and are
expected to be paid in future periods.

As described more fully in Note 3, the Partnership is seeking or has
received mortgage loan modifications on certain of its properties. If the
Partnership is unable to secure new or additional modifications to the
loans, based upon current market conditions, the Partnership may not commit
any significant additional amounts to any of the properties which are
incurring, or in the future do incur, operating deficits or deficits to
underlying mortgage holders. This would result in the Partnership no
longer having an ownership (or security) interest in such properties. Such
decisions will be made on a property-by-property basis and may result in a
gain to the Partnership for financial reporting and federal income tax
purposes, with no corresponding distributable proceeds.

The lender of the long-term mortgage notes secured by the Scotland
Yard-Phase I and II, South Point, and El Dorado View apartment complexes
required the establishment of an escrow account, initially of approximately
$980,000 in the aggregate, to be used towards the purchase of major capital
items at the apartment complexes. Additionally, the lender required
$150,000 of the proceeds from the sale of the South Point Apartments, as
more fully discussed in Note 5(b), to be added to the escrow account. As
of September 30, 1994, the Partnership has been reimbursed from the escrow
account approximately $647,000 for capital improvements at the above-
referenced apartment complexes. As of the date of this report, the
Partnership has been reimbursed an additional $312,000 from the escrow
account. Reference is made to Note 3(f).

767 Third Avenue Office Building

Occupancy at the property is 87% at September 30, 1994, down slightly
from 87% during the previous quarter. The 767 Third Avenue venture is
aggressively marketing the vacant space. The Partnership is obligated to
fund its share of the net cash flow deficits resulting from costs
associated with any leasing activity at the property.

During 1992 and 1991, the leases for approximately 67% of the space at
the 767 Third Avenue office building expired (substantially all of which
have been released as of September 1994 but at lower effective rents).
During the first quarter of 1994, a tenant vacated a portion of its space
(approximately 6,450 square feet or 2% of the building's leasable space)
prior to its lease expiration of January 1997. The venture reached an
agreement with the tenant whereby the lease obligation was terminated in
return for a $800,000 payment to the venture. This space was subsequently
released to a new tenant. Vacancy rates in Midtown Manhattan (the sub-
market for this property) remain high and the increased competition for
tenants has resulted in lower effective rental rates (contract rates less
the amortization of tenant improvements and free rent concessions). The
adverse market conditions and the negative impact of effective rental rates
are expected to continue over the next few years. While this building is
in a premier location, it has been adversely impacted by the lower
effective rental rates on leasing and by releasing costs. In order to
reduce debt service payments during the tenant turnover period, the 767
Third Avenue venture obtained from the existing lender, in May 1992, a
replacement mortgage loan bearing a substantially lower interest rate than
the original loan. In connection with the replacement mortgage loan, 767
Third Avenue was required to fund $8,000,000 into an escrow account in
order to fund any future leasing costs and debt shortfalls resulting from
anticipated tenant turnover. At the inception of the escrow agreement, the
venture was allowed to reduce the required reserve contributions by
approximately $2,600,000 to reflect certain leasing costs that had already
been incurred. The Partnership's venture partner loaned $5,000,000 to the
venture in order to fund the net escrow reserve account. The Partnership
purchased a 50% interest in this loan in June 1993. In 1993, the reserve
account was depleted and the venture (by way of partner contributions) is
funding required leasing costs and debt service shortfalls. Because the
reserve account has been depleted and the property is operating at a
deficit, the 767 Third Avenue venture intends to seek refinancing of the
mortgage loan. There can be no assurances that any refinancing can be
obtained. Reference is made to Note 3(b). In addition, the venture
partner has approached the General Partner regarding purchasing the
Partnership's 50% interest in 767 Third Avenue. If a sale is finalized
under the proposed terms, the Partnership would recognize a gain for
financial reporting and Federal income tax purposes. The Partnership is
currently reviewing the proposal, however, there can be no assurances that
a sale will be finalized.

824 Market Street

Occupancy at the 824 Market Street office building located in
Wilmington, Delaware is currently 56%. The 824 Market Street venture was
aggressively seeking replacement tenants for the vacant space, however,
competition has risen significantly due to new office building development
in the area over the last few years and the contraction of tenants in the
financial services industry, resulting in lower effective rental rates. In
order to reduce debt service payments during the tenant turnover period,
the venture had negotiated with the first mortgage lender for a possible
modification to the first mortgage note. Such negotiations were
unsuccessful and the venture received notice of default. The first
mortgage lender commenced proceedings to realize upon its security and was
the successful bidder at the foreclosure sale held in October. It is
expected that transfer of title of the property to the first mortgage
lender will be finalized in November of 1994. The 824 Market Street
venture had decided, based upon current and anticipated future market
conditions, not to commit any significant additional amounts to this
property. As of September 30, 1994, the venture was twenty-seven months
delinquent in making the scheduled debt service payments of approximately
$4,455,000 under the terms of the note and, in connection with the
negotiations, the venture had withheld payments of contingent interest
related to 1987 through 1989 aggregating $134,525. Accordingly, for
financial reporting purposes, the long-term mortgage note of approximately
$12,570,000 has been reflected as a current liability in the accompanying
consolidated financial statements at September 30, 1994 and December 31,
1993. At the first mortgage lender's request, beginning March 1993,
payments of approximately $142,000 on the second mortgage loan were also
withheld. As a result, the second mortgage loan of approximately $945,000
has also been reflected as a current liability in the accompanying
consolidated financial statements at September 30, 1994 and December 31,
1993. As a result of the expected transfer to the first mortgage lender as
discussed above, the Partnership will no longer have an ownership interest
in the property and expects to recognize a gain in 1994 of approximately
$4,900,000 and $6,200,000 for financial reporting and Federal income tax
purposes, respectively, with no corresponding distributable proceeds.
Reference is made to Note 3(c).

Riverfront Office Building

On August 28, 1990, the Riverfront joint venture acquired additional
financing by way of a $5,800,000 fourth mortgage note in order to fund the
costs associated with leasing vacant space. To date, the joint venture has
received approximately $5,730,000 in proceeds. The balance of the
proceeds, a $70,000 engineering holdback, is payable to the joint venture
upon completion of certain structural repairs the extent of which are being
negotiated with the lender but are not expected to exceed the holdback
amount. Though physical occupancy at the property has increased from 73%
at June 30, 1993 to 91% at September 30, 1994, average rent paying
occupancy has decreased, due to (i) a major tenant, (vacating approximately
25% of the building in July 1992 due to a downsizing of its operations)
continuing to pay rent through the remaining terms of its leases which
expired in April 1993 and (ii) a second major tenant downsizing its
operations by approximately 38,000 square feet or 11% of the building and
receiving a rent reduction of approximately 23% on its remaining leased
space. The property began operating at a deficit in 1992 and, as a result,
debt service payments since July 1992 were made on a delayed basis. At
September 30, 1994, the February 1993 through September 1994 scheduled debt
service payments are delinquent by approximately $5,925,340. Accordingly,
the loan balance of approximately $34,298,000 has been reflected as a
current liability in the consolidated financial statements at September 30,
1994 and December 31, 1993, respectively. In order to reduce debt service
payments, the joint venture has initiated discussions with the lender to
negotiate possible modifications to the mortgage notes. There can be no
assurances that any modification will be obtained. If the joint venture is
unable to secure modifications to the mortgage notes, the joint venture
would likely decide, based upon current and anticipated future market
conditions, not to commit any significant additional amounts to this
property. This would result in the Partnership no longer having an
ownership interest in this property and would result in a gain for
financial reporting and Federal income tax purposes to the Partnership with
no corresponding distributable proceeds. Reference is made to Note 3(d).

Mall of Memphis

Although occupancy had been increasing, in order for the Mall of
Memphis to maintain its competitive position in the marketplace, the Mall
of Memphis venture completed a mall renovation in 1991. The renovation
costs had been funded by the venture until additional financing was in
place. The Partnership contributed approximately $2,252,000 in addition to
foregoing their share of 1990 and a portion of the 1991 distributable cash
flow from the property to cover their portion of the renovation costs. In
March 1993, the venture finalized additional financing of a $7,600,000 ten
year loan at a rate of 10%. The Partnership's share of the funding in 1993
was $4,719,095 (net of closing costs). Of the amount funded, the
Partnership was required to deposit $1,000,000 in an escrow account as
security against any currently undiscovered environmental issues. The
venture would have been entitled to additional proceeds of $2,025,000 if
the property had achieved certain occupancy levels and debt coverage ratios
by September 30, 1994, however, the venture did not qualify for such
additional proceeds as leasing did not achieve budgeted goals. In May,
1994, an affiliate of the General Partners assumed property management and
leasing services. Property management fees are calculated as 3% of base
rent (as defined) and leasing commissions are calculated at a rate, which
approximates market, based on the terms of the related lease. Reference is
made to Note 3(e).

General

There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's venture partner(s) in an investment might become unable or
unwilling to fulfill its (their) financial or other obligations, or that
such venture partner(s) may have economic or business interests or goals
that are inconsistent with those of the Partnership.

Though the economy has recently shown signs of improvement and
financing is generally becoming more available for certain types of higher-
quality properties in healthy markets, real estate lenders are typically
requiring a lower loan-to-value ratio for mortgage financing than in the
past. This has made it difficult for owners to refinance real estate
assets at their current debt levels unless the value of the underlying
property has appreciated significantly. As a consequence, and due to the
weakness of some of the local real estate markets in which the
Partnership's properties operate, the Partnership is taking steps to
preserve its working capital. Therefore, the Partnership is carefully
scrutinizing the appropriateness of any discretionary expenditures,
particularly in relation to the amount of working capital it has available.

By conserving working capital, the Partnership will be in a better position
to meet future needs of its properties without having to rely on external
financing sources.

Due to the factors discussed above and the general lack of buyers of
real estate today, it is likely that the Partnership may hold some of its
investment properties longer than originally anticipated in order to
maximize the return to the Limited Partners. Although sale proceeds from
the disposition of the Partnership's remaining assets are expected, in
light of the current severely depressed real estate markets, without a
dramatic improvement in market conditions, the Limited Partners will not
receive a full return of their original investment.

RESULTS OF OPERATIONS

The decrease in cash and cash equivalents and short-term investments
at September 30, 1994 as compared to December 31, 1993 is due primarily to
operating deficits at 767 Third Avenue and Partnership contributions to
fund its share of operating deficits at National City Center.

The decrease in rents and other receivables at September 30, 1994 as
compared to December 31, 1993 is primarily due to (i) a reduction in the
1993 lump-sum expense recoveries due from tenants resulting from tax
refunds received in 1993 at the Mall of Memphis and (ii) to an increase in
the provision for doubtful accounts attributable to the uncertainty of
collectibility of amounts due from certain tenants at 767 Third Avenue and
the Riverfront office buildings.

The decrease in prepaid expenses at September 30, 1994 as compared to
December 31, 1993 is primarily due to the timing of the payments of
insurance premiums at the Mall of Memphis, 767 Third Avenue, and 824 Market
Street.

The increase in building and improvements at September 30, 1994 as
compared to December 31, 1993 is primarily due to capitalization of tenant
leasehold improvement costs for new tenants at the 767 Third Avenue office
building and the Mall of Memphis.

The decrease in investments in unconsolidated ventures at September
30, 1994 as compared to December 31, 1993 and the corresponding increase in
Partnership's share of loss of operations of unconsolidated ventures for
the nine months ended September 30, 1994 as compared to the nine months
ended September 30, 1993 is primarily due to higher interest expense from
January to April 1994 this decrease is partially offset by a $268,000 real
estate tax refund received during the third quarter of 1994 related to tax
years 1991, 1992 and 1993 which is partially reimbursable to tenants at the
Carlyle/National City investment property. The decrease in the Partner-
ship's share of loss of operations of unconsolidated ventures for the three
months ended September 30, 1994 as compared to the three months ended
September 30, 1993 is due to reduced interest expense and the real estate
tax refund (as discussed above) at the Carlyle/National City investment
property. (Reference is made to Note 4(b)).

The increase in the balance of accrued rents receivable at September
30, 1994 as compared to December 31, 1993 is primarily due to the
Partnership accruing rental income for certain major tenant leases at
certain investment properties over the full period of occupancy rather than
as due per the terms of their respective leases.

The increase in venture partners' deficit in venture at September 30,
1994 as compared to December 31, 1993 is primarily due to reduced rental
income at the Riverfront office building, higher interest expense at the
Mall of Memphis and an increase in the provision for doubtful accounts
attributable to the uncertainty of collectibility of amounts due from
certain tenants at 767 Third Avenue and the Riverfront office buildings.

The increase in accounts payable at September 30, 1994 as compared to
December 31, 1993 is primarily due to the timing of payment of certain
recoverable operating expenses at certain of the Partnership's investment
properties.

The decrease in unearned rents at September 30, 1994 as compared to
December 31, 1993 is primarily due to the timing of receipt of rental
income at certain of the Partnership's investment properties.

The increase in accrued interest at September 30, 1994 as compared to
December 31, 1993 is primarily due to participating interest accruals at
Scotland Yard I & II and El Dorado View apartments and interest accruals
associated with the non-recourse mortgage loans secured by the 824 Market
Street office building and the Riverfront office building. The Partnership
is delinquent in debt service payments at 824 Market Street and the
Riverfront office building, as more fully described in Notes 3(c) and 3(d).

The decrease in rental income for the three and nine months ended
September 30, 1994 as compared to the three and nine months ended September
30, 1993 is due primarily to (i) reduced rental income at the Riverfront
office building, as more fully discussed in Note 3(d), (ii) the loss of
revenue resulting from the sale of the South Point Apartments in July 1993,
as more fully discussed in Note 5(b) and (iii) a reduction in the 1993
lump-sum expense recoveries due from tenants resulting from tax refunds
received in 1993 at the Mall of Memphis. This decrease is partially offset
by the receipt of an $800,000 lease termination payment in the first
quarter of 1994 at the 767 Third Avenue office building, as more fully
discussed above.

The decrease in interest income for the three and nine months ended
September 30, 1994 as compared to the three and nine months ended September
30, 1993 is due primarily to a decrease in the average balance of U.S.
Government obligations in 1994 due to operating deficits at 767 Third
Avenue and Partnership contributions to fund its share of operating
deficits at National City Center.

The decrease in mortgage and other interest expense for the three and
nine months ended September 30, 1994 as compared to the three and nine
months ended September 30, 1993 is due primarily to the sale of South Point
Apartments in July 1993. This decrease is partially offset by additional
financing secured by the Mall of Memphis, as more fully discussed in Note
3(e) and to the accrual of participation interest at Scotland Yard I & II
and El Dorado View Apartments.

The increase in depreciation for the three and nine months ended
September 30, 1994 as compared to the three and nine months ended September
30, 1993 is due primarily to tenant leasehold improvement additions at
certain of the Partnership's investment properties.

The decrease in property operating expenses for the three and nine
months ended September 30, 1994 as compared to the three and nine months
ended September 30, 1993 is due primarily to the sale of South Point
Apartments in July 1993.

The decrease in professional services for the three and nine months
ended September 30, 1994 as compared to the three and nine months ended
September 30, 1993 is due to higher legal fees for collection of
receivables and leasing in 1993 at certain of the Partnership's investment
properties.

The gain from sale of investment property for the three and nine
months ended September 30, 1993 is due to the sale of the South Point
Apartments in July 1993 (see Note 5(b)).

PART II. OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Reference is made to Notes 3(c) and 3(d) of Notes to Consolidated
Financial Statements and the Liquidity and Capital Resources section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations included with this report for a discussion of the attempts to
obtain modifications of, and the defaults due to delinquency in payment of
interest due on, the mortgage loans with Teachers Insurance and Annuity
Association and Wilmington Savings Fund Society secured by the 824 Market
Street Office Building and the mortgage loans with Teachers Insurance and
Annuity Association secured by the Riverfront Office Building.

<TABLE>
PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

OCCUPANCY

The following is a listing of approximate occupancy levels by quarter for the Partnership's investment properties.

<CAPTION>
1993 1994
----------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Scotland Yard Apartments-Phase II
Houston, Texas. . . . . . . . . . . . . . . . . . . . . 92% 93% 97% 95% 92% 89% 95%
2. South Point Apartments
Houston, Texas (c). . . . . . . . . . . . . . . . . . . 95% 93% N/A N/A N/A N/A N/A
3. 824 Market Street
Wilmington, Delaware (a). . . . . . . . . . . . . . . . 42% 46% 46% 49% 42% 56% 56%
4. Mall of Memphis
Memphis, Tennessee. . . . . . . . . . . . . . . . . . . 88% 90% 90% 91% 88% 85% 87%
5. Riverfront Office Building
Cambridge, Massachusetts (b). . . . . . . . . . . . . . 80% 73% 72% 85% 89% 90% 91%
6. Scotland Yard Apartments-Phase I
Houston, Texas. . . . . . . . . . . . . . . . . . . . . 94% 93% 98% 93% 92% 91% 92%
7. El Dorado View Apartments
Houston, Texas. . . . . . . . . . . . . . . . . . . . . 95% 98% 91% 93% 93% 94% 93%
8. 767 Third Ave. Office Building
New York, New York. . . . . . . . . . . . . . . . . . . 67% 78% 81% 83% 86% 87% 86%
9. National City Center Office Building
Cleveland, Ohio . . . . . . . . . . . . . . . . . . . . 96% 96% 96% 96% 94% 94% 94%
<PAGE>
<FN>
- - - - ---------------

An "N/A" indicates that the property was not owned by the Partnership at
the end of the quarter.

(a) In January 1990, a major tenant began vacating its space; however,
the tenant was obligated to pay rent to the venture through the original
terms of their leases which were due to expire at various dates from
December 1990 to April 1994. The venture terminated the remaining lease
obligation during the first quarter, 1994 in return for a negotiated
payment to the venture. Therefore, this property was leased to 73% at
March 31, 1993; 77% at June 30, 1993 and September 30, 1993 and 80% at
December 31, 1993.

(b) In July 1992, a major tenant vacated its space; however, the tenant
was obligated to pay rent to the joint venture through the original terms
of its lease which expired in April 1993.

</TABLE>
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K

Response:

(a) Exhibits:

10-A. Acquisition documents relating to the purchase by the
Partnership of an interest in the 767 Third Avenue Office Building in New
York, New York are hereby incorporated by reference to the Partnership's
Registration Statement on Post-Effective Amendment No. 2 to Form S-11 (File
No. 2-70724) dated May 8, 1981.

10-B. Acquisition documents relating to the purchase by the
Partnership of an interest in the Mall of Memphis in Memphis, Tennessee are
hereby incorporated by reference to the Partnership's Registration
Statement on Post-Effective Amendment No. 2 to Form S-11 (File No. 2-70724)
dated May 8, 1981.

10-C. Acquisition documents relating to the purchase by the
Partnership of an interest in the Riverfront Office Building in Cambridge,
Massachusetts are hereby incorporated by reference to the Partnership's
Registration Statement on Post-Effective Amendment No. 3 to Form S-11 (File
No 2-70724) dated May 8, 1981.

10-D. Purchase and Sale Agreement between Carlyle Real Estate
Limited Partnership-XI and Centeq Acquisition Inc., dated April 14, 1993,
and exhibits thereto, and the First and Second Amendments to the Purchase
and Sale Agreement, dated May 24, 1993 and June 1, 1993, respectively, are
hereby incorporated by reference to the Partnership's Form 8-K (File No. 0-
10494) dated August 30, 1993.

10-E. Assignment of Purchase and Sale Agreement between Centeq
Acquisition Inc. and Camden Property Trust, dated July 9, 1993 is hereby
incorporated by reference to the Partnership's Form 8-K (File No. 0-10494)
dated August 30, 1993.

10-F. Third Amendment to Purchase and Sale Agreement between
Carlyle Real Estate Limited Partnership-XI and Camden Property Trust, dated
July 19, 1993 is hereby incorporated by reference to the Partnership's Form
8-K (File No. 0-10494) dated August 30, 1993.

10-G Amended and Restated Promissory Note, dated April 30, 1994
between Carlyle/National City Associates and New York Life Insurance
Company relating to the National City Center Office Building is hereby
incorporated by reference to the Partnership's report for June 30, 1994 on
Form 10-Q (File No. 0-10494) dated August 12, 1994.

27. Financial Data Schedule

(b) No Reports on Form 8-K has been filed for the quarter covered
by this report.
SIGNATURES

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI

BY: JMB Realty Corporation
(Corporate General Partner)

By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: November 10, 1994

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.

GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: November 10, 1994

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<CIK> 0000350667
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI

<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994

<CASH> 2,208,326
<SECURITIES> 1,847,307
<RECEIVABLES> 3,307,408
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,363,041
<PP&E> 215,318,743
<DEPRECIATION> (77,661,365)
<TOTAL-ASSETS> 166,666,935
<CURRENT-LIABILITIES> (64,400,285)
<BONDS> (107,819,544)
<COMMON> 0
0
0
<OTHER-SE> (13,883,376)
<TOTAL-LIABILITY-AND-EQUITY> (166,666,935)
<SALES> (25,936,545)
<TOTAL-REVENUES> (26,062,506)
<CGS> 0
<TOTAL-COSTS> 21,055,509
<OTHER-EXPENSES> 303,479
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,776,110
<INCOME-PRETAX> 10,072,592
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,550,164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,550,164
<EPS-PRIMARY> 52.73
<EPS-DILUTED> 0

</TABLE>