CARLYLE REAL ESTATE LTD PARTNERSHIP XI, 10-K405, 2000-03-30

CARLYLE REAL ESTATE LTD PARTNERSHIP XI
10-K405, 2000-03-30
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year
ended December 31, 1999 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) (I.R.S. Employer Identification No.)

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

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

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

Name of each exchange on
Title of each class which registered
- ------------------- -------------------------
None None

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

LIMITED PARTNERSHIP INTERESTS
(Title of class)

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

Indicate by check mark 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 ]

State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.

Documents incorporated by reference: None

<PAGE>

TABLE OF CONTENTS

Page
----
PART I

Item 1. Business . . . . . . . . . . . . . . . . . . . . 1

Item 2. Properties . . . . . . . . . . . . . . . . . . . 5

Item 3. Legal Proceedings. . . . . . . . . . . . . . . . 7

Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . 7

PART II

Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters. . . . . . . . . 7

Item 6. Selected Financial Data. . . . . . . . . . . . . 8

Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . 10

Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . . . 15

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . . . 16

Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . 39

PART III

Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . . . 39

Item 11. Executive Compensation . . . . . . . . . . . . . 42

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . 44

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . . . 45

PART IV

Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K . . . . . . . 45

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 48

<PAGE>

PART I

ITEM 1. BUSINESS

All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report. Capitalized terms used herein, but
not defined, have the same meanings as used in the Notes.

The registrant, Carlyle Real Estate Limited Partnership - XI (the
"Partnership"), is a limited partnership formed in 1981 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois to invest in improved income-producing commercial and residential
real property. The Partnership sold $137,500,000 in Limited Partnership
Interests (the "Interests") to the public at $1,000 per Interest commencing
on May 8, 1981 pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (Registration No. 2-70724). The offering closed on
May 5, 1982. No Limited Partner has made any additional capital
contribution after such date. The Limited Partners of the Partnership
share in their portion of the benefits of ownership of the Partnership's
real property investments according to the number of Interests held.

The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments have been held by fee title, leasehold estates and/or
through joint venture partnership interests. The Partnership's real
property investments were located throughout the nation and it had no real
estate investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding
of the Partnership's business taken as a whole. Pursuant to the
Partnership Agreement, the Partnership is required to terminate no later
than December 31, 2031. The Partnership is self-liquidating in nature. At
sale of a particular property, the net proceeds, if any, are generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties. As discussed further in Item 7, the
Partnership sold its interest in/disposed of its remaining investment
properties and intends to conduct an orderly liquidation as quickly as
practicable upon expiration of the representations and warranties related
to the sale of the Partnership's interest in the Riverfront Office Park
joint venture. Consequently, the Partnership currently expects to wind up
its affairs in 2000. However, this will depend upon the Partnership's
ability to resolve real estate tax appeals relating to the Mall of Memphis.

The Partnership has made the real property investments set forth in
the following table:

<PAGE>

NAME, TYPE OF PROPERTY DATE OF SALE OR
AND LOCATION SIZE PURCHASE DISPOSITION DATE TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ------------------ ---------------------
<S> <C> <C> <C> <C>
1. River Hills Apartments
Arlington, Texas. . 476 units 4/14/81 11/26/84 fee ownership of land
and improvements
2. Wood Forest Glen
Apartments
Houston, Texas. . . 336 units 4/15/81 4/2/92 fee ownership of land
and improvements
3. Scotland Yard
Apartments-Phase I
Houston, Texas. . . 332 units 4/15/81 11/1/96 fee ownership of land
and improvements
4. Somerset Lake
Apartments
Indianapolis,
Indiana.. . . . . . 360 units 6/1/81 11/10/88 fee ownership of land
and improvements
5. Pavillion Towers
Office Complex
Aurora, Colorado. . 280,000 5/28/81 4/25/86 fee ownership of land
sq.ft. and improvements (through
n.r.a. joint venture partnership)
6. Bitter Creek
Apartments
Grand Prairie,
Texas . . . . . . . 472 units 6/1/81 6/10/92 fee ownership of land and
improvements (through
joint venture partner-
ship)
7. Mall of Memphis
Memphis, Tennessee. 493,000 8/3/81 5/14/99 fee ownership of land and
sq.ft. improvements (through joint
venture partnership)
(a)(b)
8. 767 Third Avenue
Office Building
New York, New York. 284,000 9/30/81 10/31/97 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnership)
(a)(b)

<PAGE>

NAME, TYPE OF PROPERTY DATE OF SALE OR
AND LOCATION SIZE PURCHASE DISPOSITION DATE TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ------------------ ---------------------

9. Riverfront Office
Building
Cambridge,
Massachusetts . . . 340,000 10/22/81 6/10/99 fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (through
joint venture partnership)
(a)(b)(c)
10. Fontaine Woods
Apartments
Red Bank,
Tennessee . . . . . 262 units 12/1/81 12/31/84 fee ownership of land and
improvements (through joint
venture partnership)
11. El Dorado View
Apartments
Webster, Texas. . . 244 units 7/31/81 7/23/96 fee ownership of land and
improvements
12. Gatehall Plaza
Office Building
Parsippany,
New Jersey. . . . . 118,000 3/11/82 10/31/91 fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (through
joint venture partnership)
13. 824 Market Street
Office Building
Wilmington,
Delaware. . . . . . 195,220 6/15/82 12/12/94 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnership)
14. Scotland Yard
Apartments-Phase II
Houston, Texas. . . 346 units 6/28/82 11/1/96 fee ownership of land and
improvements
15. South Point
Apartments
Houston, Texas. . . 244 units 5/11/82 7/29/93 fee ownership of land and
improvements
16. Meadowcrest
Apartments
Dallas, Texas . . . 352 units 7/1/82 6/9/92 fee ownership of land and
improvements

<PAGE>

NAME, TYPE OF PROPERTY DATE OF SALE OR
AND LOCATION SIZE PURCHASE DISPOSITION DATE TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ------------------ ---------------------

17. Coast Federal
Office Building
Pasadena,
California. . . . . 101,777 9/6/82 11/21/86 fee ownership of land and
sq.ft. improvements
n.r.a.
18. National City Center
Office Building
Cleveland, Ohio . . 786,400 7/27/83 12/18/97 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnership)(a)(b)
19. Yerba Buena West
Office Building
San Francisco,
California. . . . . 267,687 8/30/85 6/24/92 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnership)
<FN>
- -----------------------

(a) This property or the Partnership's interest in this property has been sold. Reference is made to the
Notes for a description of the sale of such real property investment.

(b) Reference is made to the Notes for a description of the joint venture partnership through which the
Partnership has made this real property investment.

(c) Reference is made to the Notes for a description of the leasehold interest, under a ground lease, in the
land on which this real property investment was situated.

</TABLE>

<PAGE>

The Partnership's remaining real property investments were subject to
competition from similar types of properties in the respective vicinities
in which they were located. Such competition was generally for the
retention of existing tenants. Additionally, with respect to the Mall of
Memphis, the Partnership was in competition for new tenants in a market
where significant vacancies were present. Approximate occupancy levels for
the properties owned in 1999 are set forth on a quarterly basis in the
table set forth in Item 2 below to which reference is hereby made. The
Partnership maintained the suitability and competitiveness of its
properties in its markets primarily on the basis of effective rents, tenant
mix, tenant allowances and service provided to tenants.

On May 14, 1999, the Partnership disposed of the Mall of Memphis
located in Memphis, Tennessee. Reference is made to the Notes for a
further description of such transaction.

On June 10, 1999, the Partnership sold its interest in the Riverfront
Office Park joint venture located in Cambridge, Massachusetts. Reference
is made to the Notes for a further description of such transaction.

The Partnership has no employees.

The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.

ITEM 2. PROPERTIES

The Partnership owned directly or through joint venture partnerships
the properties or interests in the properties referred to under Item 1
above to which reference is hereby made for a description of said
properties.

The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1999 and 1998 for the Partnership's investment properties owned
during 1999:

<PAGE>

<TABLE>
<CAPTION>
1998 1999
------------------------- -------------------------
At At At At At At At At
Principal Business 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> <C>
1. Mall of Memphis
Memphis, Tennessee (A). . . Retail 86% 86% 79% 75% 67% N/A N/A N/A

2. Riverfront Office
Building
Cambridge,
Massachusetts . . . . . . . Insurance/Soft- 96% 100% 97% 98% 100% N/A N/A N/A
ware Development
<FN>
- --------------------

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

(A) Occupancy levels include temporary tenants.

</TABLE>

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

The Partnership is not subject to any pending material legal
proceedings, other than ordinary litigation incidental to the business of
the Partnership.

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

There were no matters submitted to a vote of security holders during
1999 and 1998.

PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS

As of December 31, 1999, there were 13,899 record holders of the
137,410 Interests outstanding of the Partnership. There is no public
market for Interests and it is not anticipated that a public market for
Interests will develop. Upon request, the Corporate General Partner may
provide information relating to a prospective transfer of Interests to an
investor desiring to transfer his Interests. The price to be paid for the
Interests, as well as any economic aspects of the transaction, will be
subject to negotiation by the investor. There are certain conditions and
restrictions on the transfer of Interests, including, among other things,
the requirement that the substitution of a transferee of Interests as a
Limited Partner of the Partnership be subject to the written consent of the
Corporate General Partner, which may be granted or withheld in its sole and
absolute discretion. The rights of a transferee of Interests who does not
become a substituted Limited Partner will be limited to the rights to
receive his share of profits or losses and cash distributions from the
Partnership, and such transferee will not be entitled to vote such
Interests or have other rights of a Limited Partner. No transfer will be
effective until the first day of the next succeeding calendar quarter after
the requisite transfer form satisfactory to the Corporate General Partner
has been received by the Corporate General Partner. The transferee
consequently will not be entitled to receive any cash distributions or any
allocable share of profits or losses for tax purposes until such succeeding
calendar quarter. Profits or losses from operations of the Partnership for
a calendar year in which a transfer occurs will be allocated between the
transferor and the transferee based upon the number of quarterly periods in
which each was recognized as the holder of Interests, without regard to the
results of Partnership's operations during particular quarterly periods and
without regard to whether cash distributions were made to the transferor or
transferee. Profits or losses arising from the sale or other disposition
of Partnership properties will be allocated to the recognized holder of the
Interests as of the last day of the quarter in which the Partnership
recognized such profits or losses. Cash distributions to a holder of
Interests arising from the sale or other disposition of Partnership
properties will be distributed to the recognized holder of the Interests as
of the last day of the quarterly period with respect to which distribution
is made.

Reference is made to Item 6 below for a discussion of cash distribu-
tions made to the Limited Partners.

Reference is made to Item 7 for a discussion of unsolicited tender
offers received from unaffiliated third parties.

<PAGE>

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

DECEMBER 31, 1999, 1998, 1997, 1996 AND 1995
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

<CAPTION>
1999 1998 1997 1996 1995
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . . . $ 7,326,484 18,753,207 25,209,762 33,059,440 35,760,756
============ ============ ============ ============ ============
Earnings (loss) before
gains on sale or
disposition of
investment properties
or interest in invest-
ment properties and
extraordinary items . . . . $ (1,152,443) (725,993) (15,489,395) (14,103,120) (4,190,895)
Gains on sale of investment
properties or interest
in investment properties,
net of venture partner's
share . . . . . . . . . . . 31,131,464 400,000 10,705,403 13,480,719 --
Extraordinary items. . . . . 16,821,666 -- -- 1,180,286 --
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . $ 46,800,687 (325,993) (4,783,992) 557,885 (4,190,895)
============ ============ ============ ============ ============

Net earnings (loss) per
limited partnership
interest (b):
Earnings (loss) before
gains on sale or
disposition of
investment properties
or interest in invest-
ment properties and
extraordinary items . . $ (8.05) (5.07) (108.21) (98.52) (29.27)

<PAGE>

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

DECEMBER 31, 1999, 1998, 1997, 1996 AND 1995 - CONTINUED

1999 1998 1997 1996 1995
------------- ------------- ----------- ------------ ------------

Gains on sale or dis-
position of investment
properties or interest
in investment properties,
net of venture
partner's share. . . . . 224,29 2.88 77.13 97.12 --
Extraordinary items . . . 121.20 -- -- 8.50 --
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . $ 337.44 (2.19) (31.08) 7.10 (29.27)
============ ============ ============ ============ ============
Total assets . . . . . . . . $ 5,615,429 66,082,605 78,921,540 127,569,676 154,431,514
Long-term debt . . . . . . . $ -- 53,830,304 46,713,811 130,058,240 128,508,546
Cash distributions
per Interest (c). . . . . . $ 55.00 105.00 -- -- --
============ ============ ============ ============ ============
<FN>
- -------------

(a) The above selected financial data should be read in conjunction with the consolidated financial
statements and the related notes appearing elsewhere in this annual report.

(b) The net earnings (loss) per Interest is based upon the number of Interests outstanding at the end of each
period.

(c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each Partner's taxable income (loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the
cash generated or distributed by the Partnership. Accordingly, cash distributions to the Limited Partners since
the inception of the Partnership have not resulted in taxable income to such Limited Partners and have therefore
represented a return of capital.

</TABLE>

<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

As a result of the public offering of Interests as described in
Item 1, the Partnership had approximately $121,936,000 (after deducting
selling expenses and other offering costs) with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments and to satisfy working capital requirements. Portions of the
proceeds were utilized to acquire the properties described in Item 1 above.

The board of directors of JMB Realty Corporation ("JMB") the corporate
general partner of the Partnership, has established a special committee
(the "Special Committee") consisting of certain directors of JMB to deal
with all matters relating to tender offers for Interests in the
Partnership, including any and all responses to such tender offers.

During 1997 and 1998, some of the Holders of Interests in the
Partnership received from an unaffiliated third party unsolicited tender
offers, each to purchase up to 4.5% of the Interests in the Partnership at
between $20 and $110 per Interest. The Partnership recommended against
acceptance of these offers on the basis that, among other things, the offer
prices were inadequate. All of such offers have expired.

In 1999, unaffiliated third parties made unsolicited tender offers to
some of the Holders of Interests. These offers sought to purchase up to
3.0% of the Interests in the Partnership at between $35 and $40 per
Interest. The Special Committee recommended against acceptance of these
offers on the basis that, among other things, the offer prices were
inadequate. These offers have expired.

As of the date of this report, the Partnership is aware that 5.03% of
the Interests have been purchased by such unaffiliated third parties either
pursuant to such tender offers or through negotiated purchases. It is
possible that other offers for Interests may be made by unaffiliated third
parties in the future, although there is no assurance that any other third
party will commence an offer for Interests, the terms of any such offer or
whether any such offer, if made, will be consummated, amended or withdrawn.

At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $5,590,000. Such funds are available for potential
liabilities, if any, related to the representations and warranties made
upon the sale of the Partnership's interest in Riverfront Office Building,
working capital requirements and distribution to the Partners. The
Partnership currently has adequate cash and cash equivalents to maintain
the operations of the Partnership.

Although the Partnership distributed, in August 1999, proceeds from
the sale of its interest in the Riverfront Office Building of $7,557,550
($55 per Interest) to the Holders of Interests, the Holders of Interests
are expected to receive significantly less than their full original
investment from all sources. No further distributions are anticipated to
be made until the final liquidation of the Partnership. In connection with
the sale of the Partnership's interest in the Riverfront Office Building,
as is customary in similar transactions, the Partnership agreed to certain
representations and warranties with a stipulated survival period which
expires in June 2000. Due to these representations and warranties, the
Partnership had considered establishing a liquidating trust by December 31,
1999, which was expected to save administrative and other expenses.
However, the formation of a liquidating trust was subject to the
satisfaction of certain contingencies prior to year end, including certain
regulatory review and the ability of the Partnership to finalize the Yerba
Buena litigation and to resolve a pending real estate tax appeal relating

<PAGE>

to the Mall of Memphis, which were unable to be achieved by December 31,
1999. Consequently, the Partnership did not form the liquidating trust.
In February 2000, the Yerba Buena litigation was finalized, as discussed
below. The Partnership currently expects to wind up its affairs during the
year 2000. However, this will depend upon the Partnership's ability to
resolve the real estate tax appeal discussed above.

MALL OF MEMPHIS

The Mall of Memphis investment property operated in an overbuilt
market that was characterized by decreasing occupancy and reduced rent
levels. Such competitive conditions had resulted in net cash flow deficits
at the property. The lender was unwilling to grant an acceptable loan
modification to cover any future net operating deficits. In addition, as
more fully discussed below, the Partnership had decided not to commit any
additional amounts to the property to cover such deficits and, therefore,
suspended the payment of required debt service effective January 1, 1998.

The mall had experienced a number of store closings, many prior to
lease expiration, primarily as a result of tenants filing for bankruptcy
and liquidating. In addition, the property had been subjected to increased
competition for shoppers and tenants from strip centers and large discount
stores in its market area. Although certain tenants continued to perform
well, overall tenant sales at the property continued to decline. Due to
poor sales performances, many tenants elected not to renew their leases or
renewed at lower rates. The Partnership had granted rent relief to certain
tenants that could demonstrate that without a reduction in their rent, they
would no longer be able to remain in business at the mall. As a result of
these market and property conditions, the property's cash flow had been
decreasing.

The Partnership entered into negotiations with the lender and an
unaffiliated third party regarding the sale of the property to the
unaffiliated third party. In May 1999, the Partnership transferred title
to the land, building and improvements, and other assets and liabilities
related to the property in consideration of a discharge of the mortgage
loan, which resulted in the Partnership no longer having an ownership
interest in such property. The Partnership has no future liability for any
representations, warranties or covenants to the purchaser as a result of
the disposal of this property. The Partnership was released from its
environmental indemnity agreement as a result of this transaction, and was,
therefore, able to withdraw approximately $1,000,000 from an escrow account
primarily established to secure a portion of its potential obligation under
the environmental indemnity. Consequently, the Partnership recognized an
extraordinary gain on forgiveness of debt of $11,347,490 and an
extraordinary loss related to the write-off of deferred mortgage fees of
$498,896 for financial reporting purposes. The gain includes the effect of
an impairment loss recognized by the Partnership in 1997 of approximately
$13,143,000. The Partnership recognized a gain of $11,321,305 for Federal
income tax purposes with no corresponding distributable proceeds in 1999.

<PAGE>

Pursuant to the terms of a note payable by the Partnership to the
former venture partner, the Partnership guaranteed a portion of the debt
service payment payable on June 1, 1996 and June 1, 1997 each in the amount
of $300,000 on a recourse basis. The Partnership made the June 1, 1996 and
June 1, 1997 guaranteed debt service payments in December 1997 and December
1998, respectively. The remaining note payable was secured only by the
venture partner's former partnership interest in the joint venture and was
non-recourse to the Partnership. As a result of the Partnership
transferring title to the property owned by the joint venture in May 1999,
as discussed above, the Partnership is not obligated to pay the outstanding
principal and interest and recognized an extraordinary gain of $5,973,072
for financial reporting purposes and a gain of $5,909,072 for Federal
income tax purposes with no corresponding distributable proceeds in 1999.

The Partnership intends to file real estate tax appeals on behalf of
the Mall of Memphis property for the tax years 1990 through 1997. There
can be no assurance that the Partnership will be successful in appealing
the assessed values or that any significant funds will be available for
distribution to the partners after issuing refunds, if any, to tenants at
the mall and payment of expenses associated with the appeal.

The market conditions outlined above caused uncertainty regarding the
Partnership's ability to recover the net carrying value of the Mall of
Memphis investment property through future operations and sale. Therefore,
as of June 30, 1997, the Partnership recorded, as a matter of prudent
accounting practice a provision for value impairment of such investment of
$13,143,000. Such provision was recorded to reflect the then estimated
fair value of the property, less costs to sell.

RIVERFRONT OFFICE BUILDING

On June 10, 1999, the Partnership, through the Riverfront Office Park
joint venture, sold its interest in the Riverfront Office Building and the
ground lease of the underlying land. For its interest in the property, the
Partnership received a payment of $9,300,000 (before costs of sale) and
release of its liability for the mortgage debt secured by the property,
which had an outstanding balance of approximately $49,800,000 (of which the
Partnership's share is approximately $24,900,000) at closing. In addition,
for its interest in the property, the unaffiliated venture partner in the
venture (or the partners in such unaffiliated venture partner) received a
payment of approximately $455,000 and an approximate 9.6% interest in a
newly formed joint venture. The joint venture is not affiliated with the
Partnership or its General Partners, and the amount paid for the
Partnership's interest in the Property was determined by arm's-length
negotiations.

The joint venture had been marketing the property for sale and, in
this regard, the Partnership and the unaffiliated venture partner reached
an agreement to contribute their respective interests in the property
(including their interests as lessees under the ground lease) to a newly
formed joint venture, whose affiliate held the mortgage loan secured by the
property. The property was classified as held for sale or disposition as
of December 31, 1996 and therefore has not been subject to continued
depreciation from such date for financial reporting purposes. As a result
of this transaction, the Partnership recognized a gain of $31,131,464 for
financial reporting purposes and $23,145,103 for Federal income tax
purposes in 1999. In addition, in connection with the transfer of the
Partnership's interest and as is customary in such transactions, the
venture agreed to certain representations and warranties with a stipulated
survival period which expires June 10, 2000. Although it is not expected,
the Partnership may ultimately have some liability under such
representations and warranties which cannot exceed the cash payment
received by the Partnership for its interest in the property.

<PAGE>

767 THIRD AVENUE OFFICE BUILDING

The property had been considered held for sale or disposition as of
December 31, 1996, and therefore, was not subject to continued
depreciation. On September 30, 1997, the 767 Third Avenue joint venture
was liquidated in contemplation of the sale of the Partnership's interest.
Accordingly, the pro rata share of the venture's assets and liabilities was
distributed to the venture partners in a non-cash transaction. The
operations of the 767 Third Avenue Office Building continued under a co-
tenancy agreement until October 31, 1997, when the Partnership sold its
undivided interest in the property for $11,000,000 (before selling costs
and prorations). Although replacement of the joint venture with this co-
tenancy arrangement had no economic effect on the Partnership, as of
October 1, 1997, the consolidated financial statements no longer reflected
767 Third Avenue Associates' former venture partner's minority interest and
reflected only the Partnership's distributed share of the assets and
liabilities of the venture. Reference is made to the Notes for a further
description of such sale.

NATIONAL CITY CENTER

On December 18, 1997, the Carlyle/National City joint venture sold the
land and related improvements of the National City Center office building
for $82,150,000. Reference is made to the Notes for a further description
of such event.

YERBA BUENA OFFICE BUILDING

Due to the default of the joint venture that owned the Yerba Buena
Office Building (a partnership comprised of the Partnership, two other
partnerships sponsored by the Partnership's Corporate General Partner, and
four unaffiliated limited partners) in the payment of required debt
service, the former lender to such joint venture realized on its security
by taking title to the property in June 1992. In return for a smooth
transition of title and management of the property (relative to which the
existing property manager that was affiliated with the Partnership's
Corporate General Partner agreed to continue to manage the property), the
joint venture was able to negotiate, among other things, a right of first
opportunity to purchase the property during the time frame from June 1995
through May 1998 should the lender wish to market the property for sale.
The lender sold the property in 1996. The sale price did not generate a
level of distributable proceeds where the joint venture would have been
entitled to a share. However, the joint venture was not given an
opportunity to purchase the property on the same terms for which it was
sold. As previously reported, such joint venture filed a lawsuit against
the lender for breach of its obligations. In June 1998, the court granted
the lender's motion for summary judgment and dismissed the lawsuit. The
joint venture appealed the dismissal. During the second quarter of 1999,
the joint venture reached an agreement in principle with the lender to
settle the lawsuit. In February 2000, the settlement was finalized and the
former lender paid $1,400,000 to the joint venture in resolution of the
above mentioned disputes. Simultaneously, the joint venture paid its
unaffiliated former venture partners $27,000 in settlement of any of their
potential claims related to the matter. The Partnership's share of such
amounts net of certain legal fees is approximately $800,000.

RESULTS OF OPERATIONS

Significant fluctuations between 1999 as compared to 1998 in the
accompanying consolidated financial statements are primarily the result of
the disposition of the Mall of Memphis in May 1999 and the sale of the
Partnership's interest in the Riverfront Office Building in June 1999.
Reference is made to the Notes in the accompanying consolidated financial
statements for discussions of the sale and disposition.

<PAGE>

Significant fluctuations between the year ended December 31, 1998 as
compared to the year ended December 31, 1997 in the accompanying
consolidated financial statements are primarily the result of the sale of
the Partnership's interest in the 767 Third Avenue Office Building in
October 1997.

The increase in cash and cash equivalents at December 31, 1999 as
compared to December 31, 1998 is primarily due to the sale proceeds
received (approximately $9,300,000) from the sale of the Partnership's
interest in the Riverfront Office Building in June 1999 offset by the
$7,557,550 ($55 per Interest) distribution to the Holders of Interests of a
portion of those proceeds in August 1999.

The decrease in interest income for the year ended December 31, 1998
as compared to the year ended December 31, 1997 is primarily due to
interest received in June 1997 as part of a settlement of past due rental
obligations with a former tenant at the 767 Third Avenue Office Building,
partially offset by the temporary investment of the approximately
$11,100,000 in proceeds from the 1997 sale of the Partnership's interest in
the 767 Third Avenue Office Building until the February 28, 1998
distribution of such proceeds to the Holders of Interest.

The decrease in depreciation expense for the year ended December 31,
1998 as compared to the year ended December 31, 1997 is due to the
classification of the Mall of Memphis as held for sale or disposition at
June 30, 1997 and, therefore, not subject to continued depreciation as of
that date.

The increase in professional services for the year ended December 31,
1998 as compared to the year ended December 31, 1997 is primarily due to
legal fees incurred in the suit against the lender of the Yerba Buena
Office Building for breach of its obligations, as more fully discussed
above, as well as legal costs associated with collection of amounts due
from certain tenants at the 767 Third Avenue Office Building.

The $13,143,000 provision for value impairment for the year ended
December 31, 1997 is due to the Partnership's recording as of June 30,
1997, a provision for value impairment of the Mall of Memphis investment
property.

The decrease in the Partnership's share of operations of
unconsolidated venture for the year ended December 31, 1998 as compared to
the year ended December 31, 1997 is due to the sale of the National City
Center Office Building in December 1997. The Partnership's share of
operations of unconsolidated venture for the year ended December 31, 1998
is primarily the Partnership's share of interest income earned by the
venture on the sale proceeds prior to the venture's distribution to the
Partnership of its share of such proceeds in February 1998.

The decrease in venture partner's share of ventures' operations for
the year ended December 31, 1998 as compared to the year ended December 31,
1997 is primarily due to a decrease in operating losses at the Riverfront
Office Building in 1998 due to an increase in property occupancy and rental
income.

The gain on sale of investment properties or interest in investment
properties for the year ended December 31, 1999 consists of the gain on the
sale of the Partnership's interest in the Riverfront Office Building in
June 1999 of $31,131,464. The gain on sale of investment properties or
interest in investment properties for the year ended December 31, 1998 is
due to $400,000 of deferred gain recognition as a result of the receipt in
the fourth quarter of 1998 of a final settlement of past due amounts on the
notes receivable related to the 1986 sale of Pavillion Towers. The gains
on sale of investment properties or interest in investment properties for
the year ended December 31, 1997 is due to the sale of the Partnership's
interest in the 767 Third Avenue office building in October 1997 and the
sale of the National City Center office building in December 1997.

<PAGE>

The extraordinary items for the year ended December 31, 1999 consist
of a gain on forgiveness of debt of $11,347,490 related to the disposition
of the Mall of Memphis (which includes the effect of an impairment loss
recognized by the Partnership in 1997 of approximately $13,143,000), a loss
of $498,896 related the unamortized portion of Mall of Memphis's deferred
mortgage and $5,973,072 of gain due the write-off of the debt secured by
the former venture partner's former partnership interest in the Mall of
Memphis Associates joint venture.

INFLATION

Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.

Inflation is not expected to significantly impact future operations
due to the expected liquidation of the Partnership in the 2000 timeframe.

YEAR 2000

The Partnership has not experienced any material disruption in its
operations or those of its properties in connection with the century change
and does not expect any such disruption in the future. The Partnership has
not needed to implement contingency plans, has not had any material
remediation costs and does not anticipate that its future costs of
remediation will be material. However, there can be no assurance that
disruption may not occur in the future or that the cost of any required
remediation may not be material.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership does not believe that it is exposed to market risk
relating to interest rate changes.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

INDEX

Independent Auditors' Report

Consolidated Balance Sheets, December 31, 1999 and 1998

Consolidated Statements of Operations, years ended December 31, 1999,
1998 and 1997

Consolidated Statements of Partners' Capital Accounts (Deficit),
years ended December 31, 1999, 1998 and 1997

Consolidated Statements of Cash Flows, years ended December 31,
1999, 1998 and 1997

Notes to Consolidated Financial Statements

SCHEDULES NOT FILED:

All schedules have been omitted as the required information is
inapplicable or the information is presented in the financial statements or
related notes.

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI:

We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XI (a limited partnership) and consolidated
ventures as listed in the accompanying index. These consolidated financial
statements are the responsibility of the General Partners of the
Partnership. Our responsibility is to express an opinion on these
consolidated financial statements 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 the General Partners of the
Partnership, 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XI and consolidated ventures at
December 31, 1999 and 1998, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1999, in conformity with generally accepted accounting
principles.

KPMG LLP

Chicago, Illinois
March 21, 2000

<PAGE>

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

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998

ASSETS
------
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . $ 5,589,641 3,240,125
Rents and other receivables (net of allowance for doubtful accounts
of $490,823 at December 31, 1998). . . . . . . . . . . . . . . . . . . 25,788 243,207
Escrow deposits and restricted funds . . . . . . . . . . . . . . . . . . -- 5,712,511
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 154,240
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 5,615,429 9,350,083
------------ ------------
Mortgage notes receivable (net of reserve for uncollectibility
of $327,774 in 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . -- --

Properties held for sale or disposition. . . . . . . . . . . . . . . . . . -- 53,497,132

Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,833,006
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . -- 136,191
Venture partner's deficit in venture . . . . . . . . . . . . . . . . . . . -- 1,266,193
------------ ------------

$ 5,615,429 66,082,605
============ ============

<PAGE>

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

LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1999 1998
------------ -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . $ -- 39,676,002
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,554 1,785,119
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 128,484
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 3,572,226
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . -- 488,681
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . 22,554 45,650,512

Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . -- 120,990
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . -- 53,830,304
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 131,061
------------ ------------
Commitments and contingencies

Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . 22,554 99,732,867

Partners' capital accounts (deficit):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . (12,999,916) (13,433,349)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . (1,123,608) (1,123,608)
------------ ------------
(14,122,524) (14,555,957)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . 121,935,233 121,935,233
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . (35,165,209) (81,532,463)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . (67,054,625) (59,497,075)
------------ ------------
19,715,399 (19,094,305)
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . 5,592,875 (33,650,262)
------------ ------------
$ 5,615,429 66,082,605
============ ============

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . $ 6,941,998 18,298,367 24,598,580
Interest income. . . . . . . . . . . . . . . . . . . . 384,486 454,840 611,182
----------- ----------- -----------
7,326,484 18,753,207 25,209,762
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . 3,773,184 9,214,385 12,069,706
Depreciation . . . . . . . . . . . . . . . . . . . . . -- -- 1,009,322
Property operating expenses. . . . . . . . . . . . . . 3,880,221 9,113,096 13,811,077
Professional services. . . . . . . . . . . . . . . . . 310,885 505,194 287,978
Amortization of deferred expenses. . . . . . . . . . . 179,595 495,790 944,813
General and administrative . . . . . . . . . . . . . . 349,056 458,747 450,104
Provision for value impairment . . . . . . . . . . . . -- -- 13,143,000
----------- ----------- -----------
8,492,941 19,787,212 41,716,000
----------- ----------- -----------

(1,166,457) (1,034,005) (16,506,238)

Partnership's share of operations of
unconsolidated venture . . . . . . . . . . . . . . . . -- 42,533 430,047
Venture partners' share of ventures'
operations . . . . . . . . . . . . . . . . . . . . . . 14,014 265,479 586,796
----------- ----------- -----------
Earnings (loss) before gains on
sale or disposition of investment
properties or interest in
investment properties. . . . . . . . . . . . (1,152,443) (725,993) (15,489,395)

Gains on sale of investment properties or
interest in investment properties. . . . . . . . . . . 31,131,464 400,000 10,705,403
----------- ----------- -----------

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

1999 1998 1997
------------ ------------ ------------
Earnings (loss) before
extraordinary items. . . . . . . . . . . . . 29,979,021 (325,993) (4,783,992)

Extraordinary items. . . . . . . . . . . . . . . . . . . 16,821,666 -- --
----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . . . . $46,800,687 (325,993) (4,783,992)
=========== =========== ===========

Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gains on sale
or disposition of investment
properties or interest in
investment properties. . . . . . . . . . $ (8.05) (5.07) (108.21)
Gains on sale of investment properties
or interest in investment properties . . 224.29 2.88 77.13
Extraordinary items. . . . . . . . . . . . 121.20 -- --
----------- ----------- -----------

$ 337.44 (2.19) (31.08)
=========== =========== ===========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

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

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT)

YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------- -------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
December 31,
1996. . . . . $1,000 (12,895,787) (1,116,446) (14,011,233) 121,935,233 (76,960,040) (45,067,975) (92,782)

Net earnings
(loss). . . . -- (512,522) -- (512,522) -- (4,271,470) -- (4,271,470)
----- ----------- ------------ ------------ ----------- ----------- ------------ -----------

Balance
(deficit)
December 31,
1997. . . . . 1,000 (13,408,309) (1,116,446) (14,523,755) 121,935,233 (81,231,510) (45,067,975) (4,364,252)

Net earnings
(loss). . . . -- (25,040) -- (25,040) -- (300,953) -- (300,953)

Cash distri-
butions
($105 per
limited
Partner-
ship
interest. . . -- -- (7,162) (7,162) -- -- (14,429,100) (14,429,100)
----- ----------- ------------ ------------ ----------- ----------- ------------ -----------

Balance
(deficit)
December 31,
1998. . . . . 1,000 (13,433,349) (1,123,608) (14,555,957) 121,935,233 (81,532,463) (59,497,075) (19,094,305)

<PAGE>

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

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT) - CONTINUED

GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------- -------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
Net earnings
(loss). . . . -- 433,433 -- 433,433 -- 46,367,254 -- 46,367,254

Cash distri-
butions
($55 per
limited
Partner-
ship
interest. . . -- -- -- -- -- -- (7,557,550) (7,557,550)
----- ----------- ------------ ------------ ----------- ----------- ------------ -----------

Balance
(deficit)
December 31,
1999. . . . . $1,000 (12,999,916) (1,123,608) (14,122,524) 121,935,233 (35,165,209) (67,054,625) 19,715,399
====== =========== ============ ============ =========== =========== ============ ===========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<CAPTION>
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . $ 46,800,687 (325,993) (4,783,992)
Items not requiring (providing) cash
or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . -- -- 1,009,322
Amortization of deferred expenses. . . . . . . . . 179,595 495,790 944,813
Long-term debt - deferred interest . . . . . . . . 1,008,260 2,116,493 2,269,513
Provision for value impairment . . . . . . . . . . -- -- 13,143,000
Partnership's share of operations of
unconsolidated ventures. . . . . . . . . . . . . -- (42,533) (430,047)
Venture partners' share of ventures'
operations . . . . . . . . . . . . . . . . . . . (14,014) (265,479) (586,796)
Gains on sale of investment properties or
interest in investment properties. . . . . . . . (31,131,464) (400,000) (10,705,403)
Extraordinary items. . . . . . . . . . . . . . . . (16,821,666) -- --
Changes in:
Rents and other receivables. . . . . . . . . . . . . (163,864) 317,944 (79,028)
Escrow deposits and restricted funds . . . . . . . . 2,353,746 (2,656,934) (21,542)
Prepaid expenses . . . . . . . . . . . . . . . . . . 74,278 (14,732) 557,477
Accrued rents receivable . . . . . . . . . . . . . . 40,436 91,183 1,180,818
Accounts payable . . . . . . . . . . . . . . . . . . (371,571) (98,604) (302,184)
Unearned rents . . . . . . . . . . . . . . . . . . . 413,418 (305,228) (130,001)
Accrued interest . . . . . . . . . . . . . . . . . . (662,756) 2,398,152 612,716
Accrued real estate taxes. . . . . . . . . . . . . . (488,681) (223,895) (883)
Tenant security deposits . . . . . . . . . . . . . . (52,610) (59,498) 45,302
Deferred revenue . . . . . . . . . . . . . . . . . . (131,061) (36,405) (33,283)
------------ ----------- -----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . . 1,032,733 990,261 2,689,802
------------ ----------- -----------

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1999 1998 1997
------------ ----------- -----------
Cash flows from investing activities:
Additions to investment properties . . . . . . . . . . (309,986) (1,146,247) (1,627,130)
Payment of deferred expenses . . . . . . . . . . . . . (50,199) (469,283) (922,716)
Cash proceeds from sale or disposal of investment
properties, or interest in investment
properties, net of selling/disposal expenses . . . . 9,234,518 4,061,121 11,135,107
Collection of mortgage notes receivable. . . . . . . . -- 400,000 --
------------ ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . 8,874,333 2,845,591 8,585,261
------------ ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . -- -- (968,822)
Distributions to venture partners. . . . . . . . . . . -- -- (162,869)
Distributions to limited partners. . . . . . . . . . . (7,557,550) (14,429,100) --
Distributions to general partners. . . . . . . . . . . -- (7,162) --
------------ ----------- -----------
Net cash provided by (used in)
financing activities . . . . . . . . . . . . (7,557,550) (14,436,262) (1,131,691)
------------ ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . 2,349,516 (10,600,410) 10,143,372
Cash and cash equivalents,
beginning of year. . . . . . . . . . . . . . 3,240,125 13,840,535 3,697,163
------------ ----------- -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . . . . . $ 5,589,641 3,240,125 13,840,535
============ =========== ===========

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1999 1998 1997
------------ ----------- -----------
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . $ 3,427,680 4,699,740 9,187,477
============ =========== ===========
Non-cash investing and financing activities:
Escrowed funds applied by lender to
long-term debt . . . . . . . . . . . . . . . . . . $ -- -- 451,409
============ =========== ===========
Distribution of net assets to venture partner
upon liquidation of joint venture. . . . . . . . . $ -- -- 6,150,826
============ =========== ===========
Conversion of note payable and accrued interest
to venture partner's contribution
to venture . . . . . . . . . . . . . . . . . . . . $ -- -- 3,656,921
============ =========== ===========
Activity due to disposition of investment property:
Reduction of property held for disposition . . . . $(29,769,839) -- --
Reduction of long-term debt. . . . . . . . . . . . 44,676,002 -- --
Reduction of accrued interest payable. . . . . . . 2,840,205 -- --
Reduction of net (assets) liabilities. . . . . . . (924,702) -- --
------------ ----------- ----------
Extraordinary gains. . . . . . . . . . . . . . $ 16,821,666 -- --
============ =========== ===========
Activity due to sale of interest in investment
property:
Reduction of property held for disposition . . . . $(24,037,279) -- --
Reduction of long-term debt. . . . . . . . . . . . 49,838,564 -- --
Reduction of net (assets) liabilities. . . . . . . (3,942,587) -- --
------------ ----------- ----------
Partnership interest in investment
property sold. . . . . . . . . . . . . . . . $ 21,858,698 -- --
============ =========== ===========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1999, 1998 AND 1997

OPERATIONS AND BASIS OF ACCOUNTING

GENERAL

The Partnership held (through joint ventures) an equity investment in
an office building and an enclosed shopping mall. Business activities
consisted of rentals to a variety of commercial and retail companies, and
the ultimate sale or disposition of such real estate. The Partnership
currently intends to conduct an orderly liquidation and wind up its affairs
not later than December 31, 2000. However, this will depend upon the
Partnership's ability to resolve the real estate tax appeal relating to the
Mall of Memphis.

The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated ventures; Mall of Memphis
Associates ("Mall of Memphis") (which was disposed of in May 1999) and
Riverfront Office Park Joint Venture ("Riverfront") (in which the
Partnership's interest was sold in June 1999) in which the Partnership had
certain preferential claims and rights, as discussed below; also included
are the accounts of 767 Third Avenue Associates ("767 Third Avenue") (prior
to its liquidation in September 1997). The effect of all transactions
between the Partnership and the consolidated ventures has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interest 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 sold its
interest in Carlyle/National City Associates in December 1997.

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 as described
above. Such GAAP and consolidation adjustments are not recorded on the
records of the Partnership. The net effect of these items for the years
ended December 31, 1999 and 1998 is summarized as follows:

<PAGE>

1999 1998
------------------------------- ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (Unaudited) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ -----------

Total assets . . . . . . . . . . . . . $ 5,615,429 21,999,370 66,082,605 19,231,417

Partners' capital accounts
(deficit):
General partners.. . . . . . . . . (14,122,524) (5,587,025) (14,555,957) (9,143,316)
Limited partners.. . . . . . . . . 19,715,399 27,563,491 (19,094,305) (62,202)

Net earnings (loss):
General partners.. . . . . . . . . 433,433 3,556,291 (25,040) 866,944
Limited partners.. . . . . . . . . 46,367,254 35,183,243 (300,953) (321,119)

Net earnings (loss) per
limited partnership
interest . . . . . . . . . . . . . . 337.44 256.05 (2.19) (2.34)
============ =========== =========== ============

</TABLE>

<PAGE>

The net earnings (loss) per limited partnership 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 Federal income tax
purposes.

The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount 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.

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
such amounts held with original maturities of three months or less
($5,500,000 at December 31, 1999 and $3,218,280 at December 31, 1998) as
cash equivalents, which includes investments in an institutional mutual
fund which holds U.S. Government obligations, with any remaining amounts
(generally with original maturities of one year or less) reflected as
short-term investments being held to maturity.

Deferred expenses consisted primarily of leasing and financing fees
incurred in connection with the acquisition and operation of the
properties. Deferred leasing fees and deferred financing fees were
amortized using the straight-line method over the terms stipulated in the
related agreements.

Although certain leases of the Partnership provided for tenant
occupancy during periods for which no rent was due, the Partnership accrued
rental income over the full period of occupancy on a straight-line basis.

No provision for Federal or state income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.

The Partnership had acquired, either directly or through joint
ventures, ten apartment complexes, eight office buildings, and an enclosed
shopping mall. During 1984, the Partnership sold its Arlington, Texas and
its Red Bank, Tennessee apartment complexes. During 1986, the Partnership
sold its interest in Am-Car Real Estate Partnership-I joint venture ("AM-
CAR"), which had ownership interests in the Pavillion Towers office complex
located in Aurora, Colorado and the Coast Federal Office Building located
in Pasadena, California. During 1988, the Partnership (through Somerset
Lake Associates) sold its Indianapolis, Indiana apartment complex. During
1991, the Partnership disposed of its interest in the Gatehall Plaza office
building located in Parsippany, New Jersey. During 1992, the Partnership
sold its interest in the Wood Forest Glen Apartments, the Meadowcrest
Apartments and the Bitter Creek Apartments. In addition, during 1992, the
lender realized upon its security and took title to the Yerba Buena West
Office Building. During 1993, the Partnership sold its interest in the
South Point Apartments. During 1994, the lender realized upon its security

<PAGE>

and took title to the 824 Market Street Office Building. During 1996, the
Partnership sold its interest in the Scotland Yard Phase I and II
Apartments, and the El Dorado View Apartments. During 1997, the
Partnership sold its interest in the 767 Third Avenue office building and
its interest in the National City Center office building. During 1999, the
Partnership disposed of the Mall of Memphis and sold its interest in the
Riverfront Office Park joint venture.

Depreciation on the operating properties has been provided over
estimated useful lives of the various components as follows:

YEARS
-----

Building and improvements --
straight-line . . . . . . . . . 30
Personal property --
straight-line . . . . . . . . . 5
==

Maintenance and repair expenses were charged to operations as
incurred. Significant betterments and improvements were capitalized and
depreciated over their estimated useful lives.

The Partnership adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 121") as required in the first quarter of 1996. SFAS 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" required that the Partnership record an
impairment loss on its properties to be held for investment whenever their
carrying value could not be fully recovered through estimated undiscounted
future cash flows from their operations and sale. The amount of the
impairment loss to be recognized was the difference between the property's
carrying value and the property's estimated fair value. The Partnership's
policy is to consider a property to be held for sale or disposition when
the Partnership had committed to a plan to sell or dispose of such property
and active marketing activity has commenced or was expected to commence in
the near term or the Partnership had concluded that it might dispose of the
property by no longer funding operating deficits or debt service
requirements of the property thus allowing the lender to realize upon its
security. In accordance with SFAS 121, any properties identified as "held
for sale or disposition" were no longer depreciated. Adjustments for
impairment loss for such properties (subsequent to the date of adoption of
SFAS 121) were made in each period as necessary to report these properties
at the lower of carrying value or fair value less costs to sell. In
certain situations, such estimated fair value was less than the existing
non-recourse debt which was secured by the property. There could be no
assurance that any estimated fair value of these properties would
ultimately be realized by the Partnership in any future sale or disposition
transaction.

Under the prior accounting policy, provisions for value impairment
were recorded with respect to investment properties whenever the estimated
future cash flows from a property's operations and projected sale were less
than the property's carrying value. The amount of any such impairment loss
recognized by the Partnership was limited to the excess, if any, of the
property's carrying value over the outstanding balance of the property's
non-recourse indebtedness. An impairment loss under SFAS 121 is determined
without regard to the nature or the balance of such non-recourse
indebtedness. Upon the disposition of a property with the related
extinguishment of the long-term debt for which an impairment loss has been
recognized under SFAS 121, the Partnership would recognize, at a minimum, a
net gain (comprised of gain on extinguishment of debt and gain or loss on
sale or disposition of property) for financial reporting purposes to the
extent of any excess of the then outstanding balance of the property's non-
recourse indebtedness over the then carrying value of the property,
including the effect of any reduction for impairment loss under SFAS 121.

<PAGE>

In addition, upon the disposition of an impaired property, the
Partnership will generally recognize more gain for financial reporting
purposes under SFAS 121 than it would have under the Partnership's prior
impairment policy, without regard to the amount, if any, of cash proceeds
received by the Partnership in connection with the disposition. Although
implementation of this accounting statement could significantly impact the
Partnership's reported earnings, there would be no impact on cash flows.
Further, any such impairment loss is not recognized for Federal income tax
purposes.

The net results of operations for consolidated properties classified
as held for sale or disposition as of December 31, 1999 or sold or disposed
of during the past three years were ($677,286), $64,727, and ($15,946,311),
respectively, for the years ended December 31, 1999, 1998 and 1997. In
addition, the accompanying consolidated financial statements include $0,
$42,533 and $430,047, respectively, of the Partnership's share of total
property operations of $0, $309,884 and $3,133,199, of National City Center
which was sold in December 1997.

The Partnership has adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." The Partnership defines each of
its property investments as an individual operating segment and has
determined that such property investments exhibit substantially identical
economic characteristics and meet the other criteria specified by SFAS
No. 131 which permits the property investments to be aggregated into one
reportable segment. The Partnership assesses and measures operating
results based on net operating income (rental income less property
operating expenses). With the exception of interest income, professional
services and general and administrative expenses, substantially all other
components of net earnings (loss) of the Partnership relate to property
investments. With the exception of cash and cash equivalents,
substantially all other assets of the Partnership relate to property
investments.

INVESTMENT PROPERTIES

NATIONAL CITY CENTER

In July 1983, the Partnership acquired, through Carlyle/National City
(a joint venture with Carlyle Real Estate Limited Partnership-XII, a
partnership sponsored by the Corporate General Partner of the Partnership
("Carlyle-XII")), an interest in an 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 provided that the capital contributions, annual cash flow, net
proceeds from sale or refinancing and profit or loss would be allocated or
distributed 13.7255% to the Partnership. The Partnership's net cash
investment in the property was $3,341,583 after distributions resulting
from the increase in the first mortgage loan.

On December 18, 1997, Carlyle/National City sold the National City
Center Office Building. As the Partnership had committed to a plan to sell
the property, the property was classified as held for sale or disposition
as of December 31, 1996 and therefore was no longer subject to continued
depreciation. The sale price of the land and improvements was $82,150,000.

Cash proceeds, after selling costs and the $54,277,977 mortgage assumed by
the purchaser, were $26,371,722 of which the Partnership's share was
$3,619,652. As a result of the sale, the Partnership recognized a gain of
$2,960,265 for financial reporting purposes and a gain of $7,764,780 for
Federal income tax purposes in 1997. In addition, in connection with the
sale of this property and as is customary in such transactions,
Carlyle/National City agreed to certain representations, warranties and
covenants with a stipulated survival period which expired December 17, 1998
without any liability to the joint venture.

<PAGE>

Carlyle/National City reached an agreement with the current mortgage
lender to refinance the existing mortgage effective April 28, 1994. The
loan was amortized over 22 years with a scheduled balloon payment due on
April 10, 2001. The lender required an escrow account of $612,300 to be
established at the inception of the refinancing for certain specific future
tenant improvement costs at the property. The escrowed funds were to be
released to the venture upon lender approval of such costs. The lender
also required an escrow of the tenant improvement costs related to the
extension of the Baker & Hostetler lease. The Venture was required to
escrow approximately $313,000 per year in 1994 through 1996 and to escrow
approximately $229,000 per year in 1997 and 1998. In 1996, approximately
$92,000 was received from the tenant improvement escrow. Additionally, in
January 1997, approximately $820,000 was received from the tenant
improvement escrow. All remaining amounts held in escrow prior to the sale
of National City Center (including interest earned on the escrowed funds)
were refunded to Carlyle/National City in the fourth quarter of 1997.

767 THIRD AVENUE OFFICE BUILDING

On September 30, 1997, the 767 Third Avenue joint venture was
liquidated in contemplation of the sale of the Partnership's interest.
Accordingly, the pro rata share of the venture's assets and liabilities was
distributed to the venture partner in a non-cash transaction. In addition,
the $2,500,000 unsecured promissory note payable to the venture partner was
satisfied by the venture partner's contribution at the liquidation of the
venture. The operations of the 767 Third Avenue office building continued
under a co-tenancy agreement until October 31, 1997, when the Partnership
sold its undivided interest in the property. Although replacement of the
joint venture with the co-tenancy arrangement had no economic effect on the
Partnership, as of October 1, 1997, the consolidated financial statements
no longer reflected 767 Third Avenue Associates' former venture partner's
minority interest and reflected only the Partnership's distributed share of
the assets and liabilities of the venture.

On October 31, 1997, the Partnership sold its undivided interest in
the building and related improvements of the 767 Third Avenue Office
Building located in New York City, New York to an affiliate of the former
venture partner for $11,000,000 which was received in cash at closing
(before selling costs and prorations). In addition, the Partnership has no
liability for the approximate $38,000,000 in mortgage debt secured by the
property subsequent to the sale of its interest in the property. As a
result of the sale, the Partnership recognized a gain of $7,745,138 for
financial reporting purposes and a gain of $19,727,956 for Federal income
tax purposes in 1997.

As the Partnership had committed to a plan to sell the property, the
property had been classified as held for sale or disposition as of
December 31, 1996, and therefore, was no longer subject to continued
depreciation.

RIVERFRONT OFFICE BUILDING

On June 10, 1999, the Partnership, through the Riverfront Office Park
joint venture, sold its interest in the Riverfront Office Building and the
ground lease of the underlying land. For its interest in the property, the
Partnership received a payment of $9,300,000 (before costs of sale) and
release of its liability for the mortgage debt secured by the property,
which had an outstanding balance of approximately $49,800,000 (of which the
Partnership's share is approximately $24,900,000) at closing. In addition,
for its interest in the property, the unaffiliated venture partner in the
venture (or the partners in such unaffiliated venture partner) received a
payment of approximately $455,000 and an approximate 9.6% interest in the
newly formed joint venture. The joint venture is not affiliated with the
Partnership or its General Partners, and the amount paid for the
Partnership's interest in the property was determined by arm's-length
negotiations.

<PAGE>

The joint venture had been marketing the property for sale and, in
this regard, the Partnership and the unaffiliated venture partner reached
an agreement to contribute their respective interests in the property
(including their interests as lessees under the ground lease) to a newly
formed joint venture, whose affiliate held the mortgage loan secured by the
property. As a result of this transaction, the Partnership recognized a
gain of $31,141,464 for financial reporting purposes and $23,145,103 for
Federal income tax purposes in 1999. In addition, in connection with the
transfer of the Partnership's interest and as is customary in such
transactions, the venture agreed to certain representations and warranties
with a stipulated survival period which expires June 10, 2000. Although it
is not expected, the Partnership may ultimately have some liability under
such representations and warranties which cannot exceed the cash payment
received by the Partnership for its interest in the property.

Effective November 1995, the joint venture entered into a Loan
Repayment Agreement with the existing lender. The terms of the agreement
generally provided for a loan restructure that retroactively reduced the
interest rate payable on the loans and adjusted the terms of the loans from
their present maturity. The loans (which previously accrued interest at
rates ranging from 10% to 14% per annum) accrued interest at 6% per annum
for the period January 1, 1993 through December 31, 1997. Thereafter, the
interest rate per annum was the greater of the rate derived using the
"Coverage Formula" (as defined) or 7% from January 1, 1998 to December 31,
1999; 8.25% from January 1, 2000 to December 31, 2002; and 9% from
January 1, 2003 to December 31, 2007. In addition, as participating
interest and taking into account the annual interest payable as set forth
above, the lender was entitled to earn a minimum internal rate of return
ranging from 9% to 10.5% per annum calculated over the restructured loan
term and a Residual Amount (as defined) of approximately 50% of the
proceeds from a sale of the property in excess of such minimum internal
rate of return upon repayment.

For financial reporting purposes, the principal amount of the loan and
accrued interest as of the effective date of the restructuring was
classified as long-term debt. In addition, notwithstanding the payments
specified above, interest accrued at the effective rate of approximately
9.7% based upon the future cash payments specified by the terms of the
Repayment Agreement. This additional accrued interest was classified as
long-term debt.

The loan restructure also required that net cash flow after debt
service and capital be paid into an escrow account controlled by the lender
to be used for future operating shortfalls, principal payments and costs
associated with additional leasing as approved by the lender. In this
regard, in July 1997, $451,409 of escrowed funds was applied by the lender
against the outstanding mortgage loan balance and, in October 1997,
$615,217 of escrowed funds was released by the lender to fund leasing costs
and other capital projects at the property. The agreement further
prohibited distributions of excess cash flow after full funding of the
escrow accounts. Such excess funds were to be retained and utilized prior
to withdrawing escrow deposits for operating shortfalls, principal payments
and costs associated with additional leasing as approved by the lender.

In addition, the property operated under a ground lease and the joint
venture had not made the scheduled ground lease payments since February
1993. The ground lessor was a general partner of the venture partner. In
this regard, as a condition of the loan restructure discussed above, the
ground lease was amended to provide for the deferral of any and all ground
lease payments since February 1993 until the earlier of any future mortgage

<PAGE>

loan prepayment date (resulting from a sale or refinancing of the property)
or December 31, 2007. Pursuant to this amendment, such unpaid ground rent
accrued at the lesser of (a) interest at the amended loan terms or (b) 14%
after repayment of the loan (net of any management fees received by the
lessor). However, if the property produced certain levels of gross
receipts (as defined by the restructured loan) for the years 1998 through
2003, the restructured loan allowed for partial payments of ground rent to
be reinstated. Ground rent payments did not resume before the sale of the
Partnership's interest in June 1999.

As the Partnership had committed to a plan to sell or dispose of the
property, the property was classified as held for sale or disposition as of
December 31, 1996, and therefore, was no longer subject to continued
depreciation.

MALL OF MEMPHIS

As discussed more fully below, in May 1999, the Partnership
transferred title to the land, building and improvements, and other assets
and liabilities related to the property in consideration of a discharge of
the mortgage loan.

Occupancy at the property was 67% at the date of the transfer. The
mall had experienced a number of store closings, many prior to lease
expiration, primarily as a result of tenants filing for bankruptcy and
liquidating. In addition, the property had been subjected to increased
competition for shoppers and tenants from strip centers and large discount
stores in its market area. Although certain tenants continued to perform
well, overall tenant sales at the property continued to decline. Due to
poor sales performances, many tenants were electing not to renew their
leases or were renewing at lower rates. Several other tenants whose leases
were not due to expire in the near term had approached the Partnership
seeking rent relief. The Partnership had granted rent relief to certain
tenants that could demonstrate that without a reduction in their rent, they
would no longer be able to remain in business at the mall. As a result of
these market and property conditions, the property's cash flow had been
decreasing and was expected to decline further in the future.

The Partnership initiated discussions with the underlying lender
regarding a loan modification and, in connection with these discussions,
advanced approximately $604,000 to cover the property's required debt
service payments through December 31, 1997. However, the lender was
unwilling to grant an acceptable loan modification to cover future
operating deficits. The Partnership therefore decided not to commit any
additional amounts to the property and, effective January 1, 1998,
suspended the payment of required debt service on its first, second and
third mortgage notes secured by the property. The lender agreed to allow
the Partnership to recoup its 1997 advance from 1998 operating cash flow.
During 1998, the Partnership recouped its 1997 advance and began remitting
cash flow payments to the lender. The Partnership entered into
negotiations with the lender and an unaffiliated third party regarding the
sale of the property to the unaffiliated third party. In May 1999, the
Partnership transferred title to the land, building and improvements, and
other assets and liabilities related to the property in consideration of a
discharge of the mortgage loan, resulting in the Partnership no longer
having an ownership interest in the property. The Partnership has no
future liability for any representations, warranties or covenants to the
purchaser as a result of the disposal of this property. The Partnership
was released from its environmental indemnity agreement as a result of this
transaction, and was, therefore, able to withdraw approximately $1,000,000
from an escrow account primarily established to secure a portion of its
potential obligation under the environmental indemnity. As a result, the
Partnership recognized an extraordinary gain on forgiveness of debt of
$11,347,490 and an extraordinary loss due to the write-off of the deferred
mortgage fees of $498,896 for financial reporting purposes. The gain
includes the effect of an impairment loss recognized by the Partnership in
1997 of approximately $13,143,000. The Partnership recognized a gain of
$11,381,305 for Federal income tax purposes with no corresponding
distributable proceeds in 1999.

<PAGE>

In May 1994, an affiliate of the General Partners had assumed management
of the property. Such affiliate had agreed at such time to pay the former
manager (an affiliate of the venture partner) an annual fee of $50,000 as
compensation for the assumption of the management contract. In conjunction
with the August 1995 transfer of the venture partner's interest, the
venture partner's rights to this annual management contract assumption fee
were assigned to the Partnership and settled for $250,000 by such affiliate
(subject to ratable refund by the Partnership should the management
agreement be terminated prior to January 1, 2001). In July 1999, the
Partnership due to the above discussed disposal paid the affiliate of the
General Partner $127,877 as its ratable refund.

Current and anticipated market conditions caused uncertainty regarding
the Partnership's ability to recover the net carrying value of the Mall of
Memphis investment property through future operations and sale. Therefore,
as of June 30, 1997, the Partnership recorded, as a matter of prudent
accounting practice a provision for value impairment of such investment of
$13,143,000. Such provision was recorded to reflect the then estimated
fair value of the property, less costs to sell.

YERBA BUENA OFFICE BUILDING

Due to the default of the joint venture that owned the Yerba Buena
Office Building (a partnership comprised of the Partnership, two other
partnerships sponsored by the Partnership's Corporate General Partner, and
four unaffiliated limited partners) in the payment of required debt
service, the former lender to such joint venture realized on its security
by taking title to the property in June 1992. In return for a smooth
transition of title and management of the property (relative to which the
existing property manager that was affiliated with the Partnership's
Corporate General Partner agreed to continue to manage the property), the
joint venture was able to negotiate, among other things, a right of first
opportunity to purchase the property during the time frame from June 1995
through May 1998 should the lender wish to market the property for sale.
The lender sold the property in 1996. The sale price did not generate a
level of distributable proceeds where the joint venture would have been
entitled to a share. However, the joint venture was not given an
opportunity to purchase the property on the same terms for which it was
sold. As previously reported, such joint venture filed a lawsuit against
the lender for breach of its obligations. In June 1998, the court granted
the lender's motion for summary judgment and dismissed the lawsuit. The
joint venture appealed the dismissal. During the second quarter of 1999,
the joint venture reached an agreement in principle with the lender to
settle the lawsuit. In February 2000, the settlement was finalized and the
former lender paid $1,400,000 to the joint venture in resolution of the
above mentioned disputes. Simultaneously, the joint venture paid its
unaffiliated former venture partners $27,000 in settlement of any of their
potential claims realted to the matter. The Partnership's share of such
amounts net of certain legal fees is approximately $800,000.

<PAGE>

<TABLE>
LONG-TERM DEBT

Long-term debt consisted of the following at December 31, 1999 and 1998:

<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
10% first mortgage note; secured by the Mall of Memphis
shopping center in Memphis, Tennessee; payable in monthly
installments of principal and interest of $279,823 through
January 1, 2018; additional interest payable equal to 20%
of certain rents in excess of a specified level ($0 in
1999 and 1998) (property disposed of in May 1999). . . . . . . . . . . . $ -- 29,034,462

14-1/2% second mortgage note; secured by the Mall of Memphis
shopping center in Memphis, Tennessee; payable in monthly
installments of principal and interest of $41,958 through
January 1, 2018 (property disposed of in May 1999) . . . . . . . . . . . -- 3,280,282

10% third mortgage note; secured by the Mall of Memphis
shopping center in Memphis, Tennessee; payable in monthly
installments of principal and interest of $66,696 through
April 1, 2003 (property disposed of in May 1999) . . . . . . . . . . . . -- 7,361,258

First mortgage note payable secured by the Riverfront office
building in Cambridge, Massachusetts; payable in monthly
installments of interest only at rates ranging from 6% to
9% (7% beginning January 1, 1998) until December 31, 2007, or
prepayment date, when the remaining balance, including the
Minimum Return and Residual Amount (as defined), is payable;
interest accrued at an effective rate of approximately 9.7%
commencing November 1995 (Partnership's interest sold in June 1999). . . -- 48,830,304

8% promissory payable; secured by the Partnership's
purchased interest in the Mall of Memphis Associates;
payable annually to the extent of Net Cash Flow (as defined);
subject to certain guaranteed minimum payments in 1996 and 1997;
due August 8, 2002 (property disposed of in May 1999). . . . . . . . . . -- 5,000,000
------------ -----------
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 93,506,306
Less current portion of long-term debt . . . . . . . . . . . . . -- 39,676,002
------------ -----------
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . $ -- 53,830,304
============ ===========
</TABLE>

<PAGE>

PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Holders
of Interests and 4% to the General Partners. Profits from the sale or
other disposition of investment properties are allocated first to the
General Partners in an amount equal to the greater of the amount
distributable to the General Partners from the proceeds of any such sale
(as described below) or 1% of the profits from the sale. Losses from the
sale or other disposition of investment properties will be allocated 1% to
the General Partners. The remaining sale profits and losses will be
allocated to the Holders of Interests.

The Partnership Agreement also generally provides that notwithstanding
any allocation contained in the Agreement, if at any time profits are
realized by the Partnership, any current or anticipated event which would
cause the deficit balance in absolute amount in the capital account of the
General Partners to be greater than their share of the Partnership's
indebtedness (as defined) after such event, then the allocation of profits
to the General Partners shall be increased to the extent necessary to cause
the deficit balance in the capital account of the General Partners to be no
less than their respective shares of the Partnership's indebtedness after
such event. In general, the effect of this provision is to allow the
deferral of the recognition of taxable gain to the Holders of Interests.

The General Partners are not required to make any capital contribu-
tions except under certain limited circumstances upon dissolution and
termination of the Partnership. Distributions of "net cash receipts" of
the Partnership are allocated 90% to the Holders of Interests and 10% to
the General Partners (of which 6.25% constitutes a management fee to the
Corporate General Partner for services in managing the Partnership).

The Partnership Agreement provides that the Holders of Interests shall
receive 99% and the General Partners shall receive 1% of the sale or
refinancing proceeds of a real property (net after expenses and retained
working capital) until the Holders of Interests (i) have received cash
distributions of sale or refinancing proceeds in an amount equal to the
Holders of Interests' aggregate initial capital investment in the
Partnership, and (ii) have received cumulative cash distributions from the
Partnership's operations which when combined with sale or refinancing
proceeds previously distributed, equal to a 6% annual return on the Holders
of Interests' average capital investment for each year (their initial
capital investment as reduced by sale or refinancing proceeds previously
distributed) commencing with the first fiscal quarter of 1983. After such
distributions, the General Partners shall receive (to the extent not
previously received) proceeds up to 3% of the aggregate sales price of
properties previously sold by the Partnership with any remaining proceeds
allocated 85% to the Holders of Interests and 15% General Partners. The
Holders of Interests shall receive 100% of such net sale or refinancing
proceeds until the Holders of Interests have received cash distributions of
such net sale or refinancing proceeds in an amount equal to the Holders of
Interests' aggregate initial capital investment in the Partnership. If
upon the completion of the liquidation of the Partnership and the
distribution of all Partnership funds the Holders of Interests have not
received cash disbursements to satisfy this requirement, the General
Partners will be required to return all of the 1% distribution of net sale
or refinancing proceeds received to date, which as of December 31, 1999
aggregate approximately $208,000. The Holders of Interests are not
expected to receive cash distributions of sale or refinancing proceeds in
an amount equal to their initial capital investment.

Allocations among the partners in the accompanying accrual basis
consolidated financial statements have been made in accordance with the
provisions of the Partnership Agreement and the venture agreements. The
allocation percentages may differ from year to year based on future events.

Differences may therefore result between allocations among the partners on
the GAAP basis and the tax basis. Such differences would have no
significant effect on total assets, total partners' capital or net loss.

<PAGE>

MANAGEMENT AGREEMENTS

An affiliate of the General Partners performed property management and
leasing services at the Mall of Memphis. Leasing commissions at the Mall
of Memphis were calculated at a rate, which approximated market, based on
the terms of the related lease.

TRANSACTIONS WITH AFFILIATES

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of and for the years ended December 31, 1999, 1998 and
1997 are as follows:
UNPAID AT
DECEMBER 31,
1999 1998 1997 1999
-------- -------- -------- ------------
Property management
and leasing fees. . . . . . $ 70,962 223,545 302,061 --
Insurance commissions. . . . 569 33,467 25,117 --
Reimbursement (at cost)
for accounting
services. . . . . . . . . . 2,724 26,079 19,001 66
Reimbursement (at cost)
for portfolio manage-
ment services . . . . . . . 40,878 32,619 39,521 6,456
Reimbursement (at cost)
for legal services. . . . . 13,323 13,346 7,364 2,906
Reimbursement (at cost)
for out-of-pocket
salary and salary-
related to the on-site
and other costs for
the Partnership and
its investment
properties. . . . . . . . . -- 14 28 --
-------- ------- ------- ------
$128,456 329,070 393,092 9,428
======== ======= ======= ======

The Corporate General Partner had deferred payment of partnership
management fees of $11,936. In addition, distributions to the General
Partners of net cash flow of the Partnership aggregating $7,162 had been
deferred. The General Partners and their affiliates had also deferred
payment of the Partnership's share of property management and leasing fees
of approximately $171,000 for the Partnership's unconsolidated venture.
These amounts, which did not bear interest, were paid during the quarter
ended March 31, 1998.

<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

There were no changes of or disagreements with accountants during
fiscal years 1999 and 1998.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. Substantially all of the
outstanding stock of JMB is owned, directly or indirectly, by certain of
its officers, directors, members of their families, and their affiliates.
JMB, as the Corporate General Partner, has responsibility for all aspects
of the Partnership's operations, subject to the requirement that sales of
real property must be approved by the Associate General Partner of the
Partnership, ABPP Associates, L.P. (formerly known as Realty Associates-XI,
L.P.), an Illinois limited partnership with JMB as its sole general
partner. The limited partners of the Associate General Partner are
generally current or former officers and directors of JMB and their
affiliates.

The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services have been and may
in the future be provided to the Partnership or its investment properties
by affiliates of the General Partners, including property management
services, insurance brokerage services and administrative services. In
general, such services are to be provided on terms no less favorable to the
Partnership than could be obtained from independent third parties and are
otherwise subject to conditions and restrictions contained in the
Partnership Agreement. The Partnership Agreement permits the General
Partners and their affiliates to provide services to, and otherwise deal
and do business with, persons who may be engaged in transactions with the
Partnership, and permits the Partnership to borrow from, purchase goods and
services from, and otherwise to do business with, persons doing business
with the General Partners or their affiliates. The General Partners and
their affiliates may have been in competition with the Partnership or its
investment properties under certain circumstances, including, in certain
geographical markets, for tenants and/or for the sale of property. Because
the timing and amount of cash distributions and profits and losses of the
Partnership may be affected by various determinations by the General
Partners under the Partnership Agreement, including whether and when to
sell a property, the establishment and maintenance of reasonable reserves
and the determination of the sources (i.e., offering proceeds, cash
generated from operations or sale proceeds) and uses or distribution of
such reserves, the timing of expenditures and the allocation of certain tax
items under the Partnership Agreement, the General Partners may have a
conflict of interest with respect to such determinations.

The names, positions held and length of service therein of each
director and the executive officers of the Corporate General Partner are as
follows:

<PAGE>

SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------

Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88

Effective May 31, 1996, the Board of Directors of JMB established a
special committee, consisting of Messrs. Malkin, Glazov, Nathan, Sacks and
Schreiber, to deal with all matters relating to tender offers for
Interests.

There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 6, 2000. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 6,
2000. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.

JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-
XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-
XV") and Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II"), and the
managing general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"),
JMB Income Properties, Ltd.-VII ("JMB Income-VII") and JMB Income
Properties, Ltd.-XI ("JMB Income-XI"). JMB is also the sole general
partner of the associate general partner of most of the foregoing
partnerships. The foregoing officers and directors are also officers
and/or directors of various affiliated companies of JMB including
Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners,
L.P.). Most of such directors and officers are also partners, directly or
indirectly, of certain partnerships which are associate general partners in
the following real estate limited partnerships: the Partnership, Carlyle-
XIII, Carlyle-XIV, Carlyle-XV, JMB Income-VII, JMB Income-XI and Carlyle
Income Plus-II.

<PAGE>

The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:

Judd D. Malkin (age 62) is an individual general partner of JMB
Income-V. Mr. Malkin has been associated with JMB since October, 1969.
Mr. Malkin is also a director of Urban Shopping Centers, Inc., an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is also a director of Chisox
Corporation, which is the general partner of a limited partnership that
owns the Chicago White Sox, a Major League Baseball team, and CBLS, Inc.,
which is the general partner of the general partner of a limited
partnership that owns the Chicago Bulls, a National Basketball Association
team. He is a Certified Public Accountant.

Neil G. Bluhm (age 62) is an individual general partner of JMB Income-
V. Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm
is also a principal of Walton Street Capital L.L.C., which sponsors real
estate investment funds, and a director of Urban Shopping Centers, Inc. He
is a member of the Bar of the State of Illinois and a Certified Public
Accountant.

Burton E. Glazov (age 61) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December
1990. Mr. Glazov is currently retired. He is a member of the Bar of the
State of Illinois.

Stuart C. Nathan (age 58) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.

A. Lee Sacks (age 66) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.

John G. Schreiber (age 53) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company engaged in the real estate investment business. He is also a
senior advisor and partner of Blackstone Real Estate Advisors, L.P., an
affiliate of the Blackstone Group, L.P. Mr. Schreiber is also a director
of Urban Shopping Centers, Inc., Host Marriott Corporation, the Brickman
Group, Ltd., which is engaged in the landscape maintenance business, and a
number of investment companies advised by T. Rowe Price Associates, Inc.
and its affiliates, and trustee of Amli Residential Properties Trust. He
holds a Masters degree in Business Administration from Harvard University
Graduate School of Business.

H. Rigel Barber (age 51) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.

Gary Nickele (age 47) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.

Gailen J. Hull (age 51) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Limited Partners, and a
share of profits or losses. Reference is also made to the Notes for a
description of such transactions, distributions and allocations. In 1997,
no cash distributions were paid to the General Partners. In 1998, the
General Partners were paid distributions of $7,162 and management fees of
$11,936 which had been deferred since 1991.

Urban Retail Properties, Co., an affiliate of the Corporate General
Partner, provided property management and leasing services at the Mall of
Memphis during 1999. In 1999, such affiliate earned and received property
management and leasing fees amounting to $70,962. As set forth in the
Prospectus of the Partnership, the Corporate General Partner must negotiate
such agreements on terms no less favorable to the Partnership than those
customarily charged for similar services in the relevant geographical area
(but in no event at rates greater than 5% of the gross income from a
property), and such agreements must be terminable by either party thereto,
without penalty, upon 60 days' notice.

JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1999
aggregating $569 in connection with the provision of insurance coverage for
certain of the real property investments of the Partnership. Such
commissions are at rates set by insurance companies for the classes of
coverage provided.

The Corporate General Partner of the Partnership and their affiliates
may be reimbursed for their salaries, salary-related and direct expenses
relating to the administration of the Partnership and the acquisition and
operation of the Partnership's real property investments. In 1999, the
Corporate General Partner of the Partnership was due reimbursement for such
expenses in the amount of $56,925. Cumulative amounts unpaid at
December 31, 1999 were $9,428.

The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership.
The relationship of the Corporate General Partner to its affiliates is set
forth above in Item 10.

In June 1999, Riverfront Office Park Joint Venture (the "Riverfront
Venture"), in which the Partnership owned an interest, contributed its
interest in the Riverfront Office Building (including its interest as
lessee under the ground lease), subject to a mortgage loan, to
BRE/Riverfront LLC ("BRE/Riverfront"). In exchange for its indirect
interest in the property, which contains approximately 340,000 square feet
net rentable space, the Partnership received $9,300,000, subject to
adjustment for closing costs, and a release of obligations under the
mortgage loan. For its interest in the property, the unaffiliated venture
partner in the Riverfront Venture received a payment of approximately
$455,000 and an approximate 9.6% interest in BRE/Riverfront. John G.
Schreiber is (i) a director of JMB Realty Corporation ("JMB"), which is the
Corporate General Partner of the Partnership, and (ii) a limited partner in
the Associate General Partner of the Partnership. (JMB is also the general
partner of the Associate General Partner.) Mr. Schreiber and his family
members, directly or indirectly, own limited partnership interests in
Blackstone Real Estate Advisors L.P. ("BREA") and certain of its
affiliates, through which Mr. Schreiber and his family members have an
interest of up to approximately 2.4% of the profits of BRE/Riverfront and
have also invested in BRE/Riverfront up to a specified percentage
(generally not in excess of 2%) of the equity capital invested by BREA and
its affiliates and will be entitled to receive any profits from such
investment in proportion to their equity capital invested. Mr. Schreiber

<PAGE>

or his family members also received a portion (approximately $132,000) of
the acquisition fee paid by BRE/Riverfront to BREA and are entitled to
receive a portion of the annual asset management fees to be paid by
affiliates of BRE/Riverfront to BREA. The price and other terms of the
transaction were determined by arm's-length negotiation. The decision on
behalf of the Partnership (either for itself or as one of the venture
partners in the Riverfront Venture) to enter into the transaction was made
by JMB, which, as noted above, is the Corporate General Partner (and the
general partner of the Associate General Partner) of the Partnership. Mr.
Schreiber did not participate in JMB's decision on behalf of the
Partnership to enter into the transaction, and Mr. Schreiber did not
participate in the decision of BRE/Riverfront in regard to the
consideration to be paid to the Partnership for its indirect interest in
the Riverfront Office Building.

Previously, in July 1997, BRE/ROPA, Inc. ("BRE/ROPA") had acquired the
interest of Teachers Insurance and Annuity Associate of America, Inc.
("TIAA") as the lender under a mortgage loan secured by the Riverfront
Office Building. Mr. Schreiber and his family members, directly or
indirectly, through their ownership of limited partnership interests in
BREA and its affiliates, had an interest of up to approximately 2.4% of the
profits of BRE/ROPA and were entitled to receive a portion of the annual
asset management fees paid by affiliates of BRE/ROPA to BREA. As a result
of its acquisition of the loan, BRE/ROPA was entitled to receive payments
when due, and otherwise exercise the rights of the lender, under the
mortgage loan, including the right to receive a residual amount of
approximately 50% of the proceeds from a sale of the property in excess of
the lender's minimum internal rate of return amount for the loan.
Reference is made to the discussion under "Riverfront Office Building" in
the Notes to Consolidated Financial Statements filed with this report for
further information concerning the terms of the loan. BRE/ROPA had
negotiated its acquisition of the lender's interest under the mortgage loan
directly with TIAA. In connection with the June 1999 transaction, the
mortgage loan which had an outstanding principal balance of approximately
$49,800,000 was refinanced.

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding Interests of the
Partnership.

(b) The Corporate General Partner, its executive officers and directors and the Associate General Partner beneficially
own the following Interests of the Partnership:

NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests JMB Realty Corporation 85 Interests directly (1) Less than 1%

Limited Partnership
Interests Corporate General 85 Interests directly (1) Less than 1%
Partner, its
executive officers
and directors and
the Associate
General Partner
as a group

<FN>

(1) Includes 85 Interests owned by JMB Realty Corporation, for which it is deemed to have sole voting and investment power.

No executive officer or director of the Corporate General Partner of the Partnership possesses a right to acquire beneficial
ownership of Interests of the Partnership.

Reference is made to Item 10 for information concerning ownership of the Corporate General Partner.

(c) There exists no arrangements, known to the Partnership, the operation of which may at a subsequent date result in a
change in control of the Partnership.

</TABLE>

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.

PART IV

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

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

(1) Financial Statements (See Index to Financial Statements filed
with this annual report).

(2) Exhibits.

3-A.* The Prospectus of the Partnership dated May 8, 1981, as
supplemented on July 27, 1981, October 9, 1981, November 5, 1981, December
10, 1981, February 19, 1982 and April 23, 1982, as filed with the
Commission pursuant to Rules 424(b) and 424(c), is hereby incorporated
herein by reference to Exhibit 3-A to the Partnership's Form 10-K Report
for December 31, 1994 filed on March 27, 1995.

3-B.* Amended and Restated Agreement of Limited Partnership
set forth as Exhibit A to the Prospectus, which agreement is hereby
incorporated by reference to Exhibit 3-B to the Partnership's Form 10-K
Report for December 31, 1994 filed on March 27, 1995.

4-A. Long-term debt modification relating to the 767 Third
Avenue Office Building in New York, New York is hereby incorporated by
reference to Exhibit 4-A to the Partnership's Report on Form 10-K (File No.
0-10494) for December 31, 1994 dated on March 27, 1995.

4-B. Mortgage loan documents secured by 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.

4-C. First through third mortgage loan documents secured by
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.

4-D.* Fourth mortgage loan document secured by the Riverfront
Office Building in Cambridge, Massachusetts is hereby incorporated by
reference to Exhibit 4-D to the Partnership's Report on Form 10-K for
December 31, 1994 dated on March 27, 1995.

4-E. Deed of trust note document dated March 31, 1993
secured by the Mall of Memphis in Memphis, Tennessee is hereby incorporated
by reference to Exhibit 4-E to the Partnership's Report on Form 10-K for
December 31, 1994 dated on March 27, 1995.

<PAGE>

4-F. Loan repayment agreement related to the first through
fourth mortgage loan documents secured by the Riverfront Office Building in
Cambridge Massachusetts, is incorporated by reference to Exhibit 4-F to the
Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-10494)
dated March 21, 1997.

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. 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.

10-E. Acquisition documents relating to the purchase by the
Partnership of the venture partner's interest in the Mall of Memphis in
Memphis, Tennessee, incorporated by reference to the Partnership's Report
for September 30, 1995 on Form 10-Q (File No. 0-10494) dated November 9,
1995.

10-F. Agreement of Sale between Carlyle Real Estate Limited
Partnership - XI and John Street Fee, LLC dated July 31, 1997 relating to
the sale of the Partnership's interest in the 767 Third Avenue Office
Building is hereby incorporated herein by reference to the Partnership's
Report on Form 8-K (File No. 0-10494) dated November 12, 1997.

10-G. Purchase Agreement and Exhibits thereto between
Carlyle/National City Associates and BRE/City Center, LLC dated December 3,
1997 is hereby incorporated by reference to the Partnership's Report on
Form 8-K (File No. 0-10494) dated January 16, 1998.

10-H. Agreement for Deed in Lieu of Foreclosure and Exhibits
thereto, by and between Mall of Memphis Associates and the American Mall of
Memphis, LLC dated May 14, 1999 are hereby incorporated herein by reference
to the Partnership's report for May 14, 1999, on Form 8-K (File No. 0-
10494) dated June 1, 1999.

10-I. Letter Agreement to the Deed in Lieu of Foreclosure and
Exhibits thereto dated May 24, 1999, related to the Mall of Memphis is
hereby incorporated herein by reference to the Partnership's report for May
14, 1999, on Form 8-K (File No. 0-10494) dated June 1, 1999.

<PAGE>

10-J. Contribution agreement by and between Riverfront Office
Park Joint Venture and BRE/Riverfront LLC dated June 10, 1999 is hereby
incorporated herein by reference to the Partnership's report for June 10,
1999, on Form 8-K (File No. 0-10494) dated June 24, 1999.

24. Powers of Attorney

27. Financial Data Schedule

_____________

* Previously filed in Exhibits 3-A, 3-B and 4-D to the
Partnership's Report on Form 10-K for December 31, 1992 of the Securities
Exchange Act of 1934 (File No. 0-10494) filed on March 19, 1993.

(b) No reports on Form 8K were filed since the beginning of the last
quarter covered by this report.

No annual report or proxy material for the fiscal year 1999 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership 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

GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 24, 2000

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.

By: JMB Realty Corporation
Corporate General Partner

JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 24, 2000

NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 24, 2000

H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 24, 2000

GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 24, 2000

A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 24, 2000

STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 24, 2000

*By: GAILEN J. HULL, Pursuant to a Power of Attorney

GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 24, 2000

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
EXHIBIT INDEX

DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----
3-A. The Prospectus of the
Partnership dated May 8,
1981 Yes

3-B. Amended and Restated Agreement of
Limited Partnership Yes

4-A. Mortgage loan documents secured
by the 767 Third Avenue
Office Building Yes

4-B. Mortgage loan documents secured
by the Mall of Memphis Yes

4-C. First through third mortgage
loan documents secured by the
Riverfront Office Building Yes

4-D. Fourth mortgage loan document
secured by the Riverfront
Office Building Yes

4-E. Deed of trust note dated
March 31, 1993 secured by the
Mall of Memphis Yes

4-F. Loan Repayment Agreement
secured by the Riverfront
Office Building Yes

10-A. Acquisition documents related
to the 767 Third Avenue
Office Building Yes

10-B. Acquisition documents related
to the Mall of Memphis Yes

10-C. Acquisition documents related
to the Riverfront Office Building Yes

10-D. Amended and Restated Promissory
Note, between Carlyle/National
City Center Office Building Yes

10-E. Acquisition documents relating
to the purchase by the Partnership
of the venture partner's interest
in the Mall of Memphis Yes

10-F. Agreement of Sale between
Carlyle Real Estate Limited
Partnership - XI and John Street
Fee LLC Yes

10-G. Purchase Agreement and Exhibits
thereto between Carlyle/National
City Associates and BRE/City
Center, LLC Yes

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
EXHIBIT INDEX - CONTINUED

DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----

10-H. Agreement for Deed in Lieu of
Foreclosure and Exhibits thereto
between Mall of Memphis Associates
and American Mall of Memphis, LLC Yes

10-I. Letter Agreement to the Deed in
Lieu of Foreclosure and Exhibits
thereto related to the Mall of
Memphis Yes

10-J. Contribution Agreement between
Riverfront Office Park Joint
Venture and BRE/Riverfront, LLC Yes

24. Powers of Attorney No

27. Financial Data Schedule No

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XI, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1999, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 2000.

H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer

The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1999,
and any and all amendments thereto, the 31st day of January, 2000.

GARY NICKELE
-----------------------
Gary Nickele

GAILEN J. HULL
-----------------------
Gailen J. Hull

DENNIS M. QUINN
-----------------------
Dennis M. Quinn

<PAGE>

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and/or
directors of JMB Realty Corporation, the corporate general partner of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI, do hereby nominate,
constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any
of them, attorneys and agents of the undersigned with full power of
authority to sign in the name and on behalf of the undersigned officer or
directors a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1999, and any and all amendments thereto, hereby
ratifying and confirming all that said attorneys and agents and any of them
may do by virtue hereof.

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 2000.

NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm

JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin

A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks

STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner

The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers and/or
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1999, and any and all amendments thereto, the 31st day
of January, 2000.

GARY NICKELE
-----------------------
Gary Nickele

GAILEN J. HULL
-----------------------
Gailen J. Hull

DENNIS M. QUINN
-----------------------
Dennis M. Quinn

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999

<CASH> 5,589,641
<SECURITIES> 0
<RECEIVABLES> 25,788
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,615,429
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,615,429
<CURRENT-LIABILITIES> 22,554
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 5,592,875
<TOTAL-LIABILITY-AND-EQUITY> 5,615,429
<SALES> 6,941,998
<TOTAL-REVENUES> 7,326,484
<CGS> 0
<TOTAL-COSTS> 4,059,816
<OTHER-EXPENSES> 659,941
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,773,184
<INCOME-PRETAX> (1,166,457)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,152,443)
<DISCONTINUED> 31,131,464
<EXTRAORDINARY> 16,821,666
<CHANGES> 0
<NET-INCOME> 46,800,687
<EPS-BASIC> 337.44
<EPS-DILUTED> 337.44

</TABLE>