JMB INCOME PROPERTIES LTD XI, 10-K405, 1995-03-30

JMB INCOME PROPERTIES LTD XI
10-K405, 1995-03-30
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, 1994 Commission file no. 0-15966

JMB INCOME PROPERTIES, LTD. - XI
(Exact name of registrant as specified in its charter)

Illinois 36-3254043
(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

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

Certain pages of the prospectus of the registrant dated July 11, 1984, as
supplemented July 24, 1984 and November 26, 1984 and filed pursuant to
Rules 424(b) and 424(c) under the Securities Act of 1933 are incorporated
by reference in Parts I and III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

Page
----
PART I

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

Item 2. Properties. . . . . . . . . . . . . . . . . 4

Item 3. Legal Proceedings . . . . . . . . . . . . . 6

Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . 6

PART II

Item 5. Market for the Partnership's Limited Partnership
Interests and Related Security Holder Matters6

Item 6. Selected Financial Data . . . . . . . . . . 7

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations13

Item 8. Financial Statements and Supplementary Data 20

Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . 63

PART III

Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . . 63

Item 11. Executive Compensation. . . . . . . . . . . 66

Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . . . 67

Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . 68

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . 68

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 70

PART I

ITEM 1. BUSINESS

All references to "Notes" are to Notes to Financial Statements
contained in this report.

The registrant, JMB Income Properties, Ltd. - XI (the "Partnership"),
is a limited partnership formed in 1983 and currently governed under 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 $173,406,000 in limited partnership interests (the
"Interests") commencing on July 11, 1984, pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933 (Registration No.
2-90503). A total of 173,406 Interests were sold to the public at $1,000
per Interest and the holders of 173,406 Interests were admitted to the
Partnership in fiscal 1985. The offering closed on November 30, 1984. No
Investor has made any additional capital contribution after such date. The
Investors in the Partnership share in 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 are held by fee title and/or through joint venture
partnership interests. The Partnership's real estate investments are
located throughout the nation and it has no real estate investments located
outside 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 on or before October
31, 2034. Accordingly, the Partnership intends to hold its remaining
properties for investment purposes until such time as sale or other
disposition appears to be advantageous. Unless otherwise described, the
Partnership expects to hold its properties for long-term investment where,
due to current market conditions, it is impossible to forecast the expected
holding period. At sale of a particular property, the proceeds, if any,
are generally distributed or reinvested in existing properties rather than
invested in acquiring additional properties.

The Partnership has made the real property investments set forth in
the following table:
<TABLE>
<CAPTION>

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (d) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Riverside Square
Mall
Hackensack,
New Jersey . . . . 341,000 sq.ft. 10-19-83 15% fee ownership of land
g.l.a. and improvements (b)(e)
2. Bank of Delaware
Office Building
Wilmington,
Delaware . . . . . 314,000 sq.ft. 12-14-84 11-15-94 fee ownership of land
n.r.a. and improvements (f)
3. Genesee Valley
Center
Flint, Michigan. . 358,000 sq.ft. 12-21-84 6-29-90 fee ownership of land
g.l.a. and improvements (d)
4. Park Center
Financial Plaza
San Jose,
California . . . . 422,000 sq.ft. 06-20-85 26% fee ownership of land
n.r.a. and improvements
(through a joint
venture partnership)
(c)
5. Royal Executive
Park-II
Rye Brook,
New York . . . . . 270,000 sq.ft. 02-12-87 20% fee ownership of land
n.r.a. and improvements
(through a joint
venture partnership)
(c)
<FN>
-----------------------
(a) The computation of this percentage for properties held at December 31,
1994 does not include amounts invested from sources other than the original
net proceeds of the public offering as described above and in Item 7.

(b) Reference is made to Note 4 and Schedule III for the current
outstanding principal balance and a description of the long-term mortgage
indebtedness secured by the Partnership's real property investments.

(c) Reference is made to Note 3 for a description of the joint venture
partnership through which the Partnership has made this real property
investment.

(d) Reference is made to Item 8 - Schedule III filed with this annual
report for further information concerning real estate taxes and
depreciation.

(e) Reference is made to Item 6 - Selected Financial Data for additional
operating and lease expiration data concerning this investment property.

(f) Reference is made to Note 2(c) for a description of the disposition of
this investment property.

</TABLE>

The Partnership's real property investments are subject to competition
from similar types of properties (including, in certain areas, properties
owned or advised by affiliates of the General Partners) in the respective
vicinities in which they are located. Such competition is generally for the
retention of existing tenants. Additionally, the Partnership is in
competition for new tenants in markets where significant vacancies are
present. Reference is made to Item 7 below for a discussion of competitive
conditions and future renovation and capital improvement plans of the
Partnership and certain of its significant investment properties.
Approximate occupancy levels for the properties are set forth in the table
in Item 2 below to which reference is hereby made. The Partnership
maintains the suitability and competitiveness of its properties in its
markets primarily on the basis of effective rents, tenant allowances and
service provided to tenants. In the opinion of the Managing General Partner
of the Partnership, all of the investment properties held at December 31,
1994 are adequately insured. Although there is earthquake insurance
coverage for a portion of the value of the Partnership's investment
properties, the Managing General Partner does not believe that such coverage
for the entire replacement cost of the investment properties is available on
economic terms.

On November 15, 1994, the lender realized upon its security interest in
the Bank of Delaware property via a deed in lieu of foreclosure as described
in the Partnership's Report on Form 8-K (File No. 0-15966) date November 15,
1994, which description is hereby incorporated herein by reference.
Reference is also made to Note 2(c) for a further description of such
transaction.

In August 1994, an affiliate of the General Partner assumed management
of the Royal Executive Park II investment property. Reference is made to
Note 3(c) for further discussion.

Reference is made to Note 7 for a schedule of minimum lease payments to
be received in each of the next five years, and in the aggregate thereafter,
under leases in effect at the Partnership's properties as of December 31,
1994.

The Partnership has approximately 10 full-time personnel and 3 part-
time individuals performing on-site duties at certain of the Partnership's
properties, none of whom are officers or directors of the Managing General
Partner of the Partnership.

The terms of transactions between the Partnership and the General
Partners and their affiliates of the Partnership 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 owns 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 1994 and 1993 for the Partnership's investment properties owned during
1994:
<TABLE>
<CAPTION>
1993 1994
--------------------------------------------------
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. Park Center
Financial Plaza
San Jose,
California . . . . . . . Accounting/
Legal 89% 88% 84% 84% 83% 83% 83% 84%

2. Riverside Square Mall
Hackensack,
New Jersey . . . . . . . Retail 83% 83% 80% 81% 86%(1)76%(1) 73%(1)81%(1)

3. Bank of Delaware
Office Building
Wilmington, Delaware . . Banking 92% 90% 90% 61% 61% 61% 61% N/A

4. Royal Executive
Park II
Rye Brook,
New York . . . . . . . . Communications 92% 92% 93% 92% 92% 93% 89% 97%

<FN>
--------------

An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter. Reference
is made to Note 2(c) for a description of the disposition of this investment property.

Reference is made to Item 6, Item 7 and Note 7 for further information regarding property occupancy,
competitive conditions and tenant leases at the Partnership's investment properties.

(1) The 1994 occupancies at Riverside Square Mall include the Saks Fifth Avenue space (107,000 square feet)

which was acquired in 1994 and therefore not included in the 1993 occupancies.

</TABLE>
ITEM 3. LEGAL PROCEEDINGS

The Partnership is not subject to any material pending legal
proceedings.

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

There were no matters submitted to a vote of security holders during
1994 or 1993.

PART II

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

As of December 31, 1994, there were 14,754 record holders of Interests
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 Managing 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 other
economic aspects of the transaction, will be subject to negotiation by the
investor.

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

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

YEARS ENDED DECEMBER 31, 1994, 1993, 1992, 1991 AND 1990

(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

<CAPTION>
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . .$ 14,048,836 14,618,038 15,185,097 15,309,347 21,752,033
============= ============= ============= ============ ==============

Operating earnings (loss)$ 35,393 1,677,866 (9,097,353) 2,122,059 215,576
Partnership's share of
operations of uncon-
solidated ventures . . 2,617,210 (4,262,005) (1,779,563) (9,667,835) (132,611)
------------- -------------- ------------ ------------- -------------
Net operating earnings
(loss) . . . . . . . . 2,652,603 (2,584,139) (10,876,916) (7,545,776) 82,965
Gain on disposition of
investment properties. 447,650 -- -- -- 43,328,288
------------- -------------- ------------ ------------- -------------
Earnings (loss) before
extraordinary item . . 3,100,253 (2,584,139) (10,876,916) (7,545,776) 43,411,253
Extraordinary item . . . (2,206,791) -- -- -- --
------------- -------------- ------------ ------------- -------------
Net earnings (loss). . .$ 893,462 (2,584,139) (10,876,916) (7,545,776) 43,411,253
============= ============== ============ ============= =============

Net earnings (loss)
per Interest (b):
Operating earnings
(loss) . . . . . .$ 14.60 (15.65) (62.90) (43.60) .46
Gain on disposition
of investment
properties . . . . 2.56 -- -- -- 222.47
Extraordinary item . (12.22) -- -- -- --
------------- -------------- ------------ ------------- -------------
Net earnings (loss). . .$ 4.94 (15.65) (62.90) (43.60) 222.93
============= ============== ============ ============= =============

Total assets . . . . . .$106,201,665 88,391,802 93,648,467 107,443,394 122,617,419
Long-term debt . . . . .$ 35,436,797 11,297,315 21,104,127 21,403,495 21,699,712
Cash distributions
per Interest (c) . . .$ 12.00 12.00 12.00 33.75 243.45
============= ============== ============ ============= =============
<FN>
-------------

(a) The above selected financial data should be read in conjunction
with the 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 the period (173,411).

(c) 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. Each
Partner's taxable income (or 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.

</TABLE>
<TABLE>

SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1994

Property
--------

Riverside Square
Mall a) The GLA occupancy rate and average base rent per square foot as of December 31 for each
of the last five years were as follows:

GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C>

1990 . . . . . 89% 24.66
1991 . . . . . 89% 24.48
1992 . . . . . 84% 26.90
1993 . . . . . 81% 31.26
1994 . . . . . 81% 18.10 (2)
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
(2) Average base rent per square foot decreased in 1994 due to the Saks Fifth Avenue
space (acquired in 1994) being included in the gross leasable area beginning in 1994.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option
------------------- ----------- --------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>

Saks Fifth Avenue 107,000 $90,000 6/2012 N/A
/TABLE
<PAGE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Riverside Square Mall:

Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>

1995 2 4,500 120,000 2.4%
1996 1 3,700 75,000 1.5%
1997 3 6,800 181,600 3.6%
1998 4 5,800 279,000 5.6%
1999 6 14,800 536,600 10.7%
2000 4 11,800 397,200 7.9%
2001 4 14,600 399,700 8.0%
2002 2 5,400 212,900 4.3%
2003 6 25,700 832,300 16.6%
2004 11 22,300 931,800 18.6%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>
<TABLE>

SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1994

Property
--------

Royal Executive
Park II
Office Complex a) The GLA rate and average base rent per square foot as of December 31 for each of the
last five years were as follows:

GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C>

1990 . . . . . 52% $23.45
1991 . . . . . 57% 23.07
1992 . . . . . 92% 17.35
1993 . . . . . 92% 20.73
1994 . . . . . 97% 19.92
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option
------------------- ----------- --------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>

MCI 90,000 $2,416,500 1/2001 N/A
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Royal Executive Park II Office Complex:

1995 -- -- -- --
1996 -- -- -- --
1997 1 2,500 56,300 1.1%
1998 2 12,400 262,000 5.0%
1999 4 39,000 875,200 16.5%
2000 2 18,400 440,100 8.3%
2001 1 90,000 2,416,500 45.7%
2002 3 77,100 1,262,300 23.9%
2003 -- -- -- --
2004 1 8,700 212,600 4.0%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>

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

LIQUIDITY AND CAPITAL RESOURCES

On July 11, 1984, the Partnership commenced an offering to the public
of $60,000,000, subject to increase up to $200,000,000, pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933. On
November 30, 1984, the initial and final closing of the offering was
consummated with the dealer manager of the public offering (an affiliate of
which is a limited partner of the Associate General Partner of the Partner-
ship), and 173,406 Interests were issued by the Partnership.

After deducting selling expenses and other offering costs, the
Partnership had approximately $156,493,000 with which to make investments
in commercial real property, to pay legal fees and other costs (including
acquisition fees) related to such investments and for working capital. A
portion of such proceeds was utilized to acquire the properties described
in Item 1 above.

At December 31, 1994, the Partnership had cash and cash equivalents of
approximately $7,200,000. Such funds and short-term investments of
approximately $7,531,000 may be utilized for distributions to partners and
for working capital requirements including operating deficits, re-leasing
costs of vacant space, and certain capital improvements currently being
incurred at Riverside Square Mall. Bank overdrafts of approximately
$415,000 as of December 31, 1994 have been subsequently repaid as of
January 1995. Additionally, funds may be utilized to fund the
Partnership's share of releasing costs and capital improvements at certain
portions of the Park Center Financial Plaza. As discussed in Note 2(c), a
major tenant at the Bank of Delaware investment property, brought a lawsuit
against the Partnership which was decided in the tenant's favor pursuant to
an arbitration ruling. The Partnership reimbursed the tenant approximately
$802,000, all of which was paid as of December 1992. The Partnership was
released from any further obligations pursuant to the assignment of title
to the property in November 1994 as described below. The Partnership and
its consolidated venture have currently budgeted in 1995 approximately
$2,110,000 for tenant improvements and other capital expenditures excluding
amounts budgeted for the renovation at Riverside Square Mall as discussed
below. The Partnership's share of such items and its share of such similar
items for its unconsolidated ventures for 1995 is currently budgeted to be
$2,716,000. Actual amounts expended in 1995 may vary depending on a number
of factors including actual leasing activity, results of property
operations, liquidity considerations and other market conditions over the
course of the year. The General Partners have been deferring receipt of
distributions in accordance with the subordination requirement of the
Partnership Agreement as discussed in Notes 5 and 8. The source of capital
for such items and for both short-term and long-term future liquidity and
distributions is expected to be through net cash generated by the
Partnership's investment properties and through the sale and/or refinancing
of such investments. In such regard, reference is made to the
Partnership's property specific discussions below and also to the
Partnership's disclosure of certain property lease expirations in Item 6.
The Partnership's and its ventures' mortgage obligations are all non-
recourse. Therefore, the Partnership and its ventures are not obligated to
pay mortgage indebtedness unless the related property produces sufficient
net cash flow from operations or sale.

During August 1994, San Jose received notification from the
Redevelopment Agency of the City of San Jose of its offer to purchase one
of the parking garage structures in the office building complex, for an
approved Agency project for $4,090,000. The price offered is deemed by the
Agency to be just compensation in compliance with applicable State and
Federal laws relating to the government's power of eminent domain. San
Jose is currently investigating its options with regard to the Agency's
offer, including the impact of any purchase on garage spaces leased to
tenants of other Partnership properties in the complex. Should the Agency
proceed to purchase the property, San Jose would recognize a gain for
financial reporting and Federal income tax purposes. However, it is
uncertain at this time whether a transfer of the garage to the Agency will
occur, or upon what terms.

San Jose, during the fourth quarter of 1994, finalized a loan
extension and modification with the mortgage lender on the 150 Almaden and
185 Park Avenue buildings and certain parking areas as the mortgage loan
secured by this portion of the complex matured on October 1, 1993 and was
extended to December 1, 1993. The modified and extended loan has an
interest rate of 8.4% per annum, requires monthly interest payments only
beginning December 1, 1994 through December 1, 1997 when the loan begins to
amortize until it matures November 30, 2001, when the unpaid principal and
interest balance is due. The refinancing resulted in a partial paydown of
the outstanding principal balance in the amount of $2.5 million of which
the Partnership's share was $1.25 million. (Reference is made to Note 3
(b)).

San Jose notified the tenants in and invitees to the complex that some
of the buildings, particularly the 100-130 Park Center Plaza Buildings and
the garage below them, could pose a life safety hazard under certain
unusually intense earthquake conditions. While the buildings and the
garage were designed to comply with the applicable codes for the period in
which they were constructed, and there is no legal requirement to upgrade
the buildings for seismic purposes, San Jose is working with consultants to
analyze ways in which such a potential life safety hazard could be
eliminated. Tenants occupying approximately 55,000 square feet
(approximately 13% of the buildings) of the Park Center Plaza investment
property have leases that expire in 1995, for which there can be no
assurance of renewals. In addition, new leases will likely require
expenditures for lease commissions and tenant improvements prior to tenant
occupancy. These anticipated costs upon re-leasing will result in a
decrease in cash flow from operations over the near term. However, since
the costs of both re-leasing space and any seismic program could be
substantial, San Jose has commenced discussions with the appropriate lender
for additional loan proceeds to pay for all or a portion of these costs.
Furthermore, should lender assistance be required to fund significant costs
at the 100-130 Park Center Plaza buildings but not be obtained, the
Partnership may decide not to commit any additional amounts to this portion
of the complex since such amounts are likely to be large in comparison to
the Partnership's current equity in this portion of the complex and the
likelihood of recovering such funds through increased capital appreciation
is remote. The result would be that the Partnership would no longer have
an ownership interest in this portion of the complex.

As a result, there is uncertainty about the ability to recover the net
carrying value of the property through future operations and sale and
accordingly, San Jose has made provisions for value impairment on the 100-
130 Park Center Plaza buildings and certain parking areas and the 170
Almaden building of $944,335 in the aggregate. Such provisions at
September 30, 1994 were recorded to reduce the net carrying values of these
buildings to the then outstanding balances of the related non-recourse
financing. Furthermore, at September 30, 1993, San Jose recorded a
provision for value impairment on the 150 Almaden and 185 Park Avenue
buildings and certain parking areas of $15,549,935 to reduce the net
carrying value of these buildings to the then outstanding balance of
related non-recourse financing. Additionally, at December 31, 1992, San
Jose recorded a provision for value impairment of $8,142,152 on certain
other portions of the complex to amounts equal to the then outstanding
balances of the related non-recourse financing. In the event the lender on
the 100-130 Park Center Plaza portion of the complex exercised its remedies
as discussed above, the result would likely be that San Jose would no
longer have an ownership interest in such portion. See Note 3(b) for
further discussion of this investment property.

Riverside Square Mall has been experiencing decreasing sales levels as
well as increasing competition for new tenants since a competing regional
retail center expanded its operations in 1990. Occupancy at the mall, not
including Saks Fifth Avenue, has decreased from 81% at December 31, 1993 to
72% at December 31, 1994 primarily due to a certain tenant vacating its
space as described below more fully. In an effort to improve the
property's competitive position, the Partnership has substantially
completed its renovation and is continuing to remerchandise the center. In
connection with the renovation, the Partnership, in early 1994, signed 15-
year operating covenant extensions with both Saks and Bloomingdales, the
latter of which owns their own store. In return for the additional 15-year
commitment to the center, the Partnership reimbursed Saks for their recent
store renovation in the amount of $6,100,000 and is obligated to pay
Bloomingdales $5,000,000 toward their upcoming store renovation (which
payment is expected to occur in 1995). In connection with the payment to
Saks, the Partnership also acquired title to the Saks building which had
previously been owned by Saks. The Partnership is also required to
complete the renovation of the mall, with an additional estimated cost of
approximately $12,000,000 which has been substantially completed as of
December 31, 1994. The Partnership continues to consider expanding the
mall at some point in the future as well. Furthermore, the Partnership has
commenced a $7,500,000 restoration of the parking deck. This restoration
should be completed by the end of 1995. During the third quarter of 1994,
the Partnership finalized a refinancing of the existing mortgage loan with
a new loan in the amount of $36,000,000. The new loan has an initial
interest rate of 8.35% per annum, requires monthly principal and interest
2payments of $286,252 beginning September 1, 1994, and matures December 1,
2006, when the unpaid principal and interest balance is due. The
refinancing resulted in net proceeds of approximately $22,300,000 (after
retirement of the previous mortgage loan with an outstanding balance of
approximately $13,000,000, and payment of a prepayment penalty of
approximately $650,000 which has been reflected as an extraordinary item in
1994 in the accompanying financial statements and as discussed in note
2(b)). Of such proceeds, approximately $11,200,000 was escrowed by the
lender pursuant to the loan agreement and will be released (none released
as of December 31, 1994), including interest earned, to fund certain costs
of the renovation and restoration as discussed above. The remaining
$11,100,000 represents the replenishment of the Partnership's working
capital for amounts paid or to be paid to Saks and Bloomingdales for tenant
allowances as discussed above. In connection with the negotiations
relating to the refinancing, the Partnership had escrowed approximately
$801,000 to serve as collateral to secure a letter of credit. Such letter
of credit was released and the funds were refunded to the Partnership in
September 1994 in connection with the loan funding.

The Partnership is continuing to attempt to lease the vacant space in
the mall, but the competitive nature of the surrounding retail area and the
fact that the mall was in need of a renovation has extended the time period
required to re-lease space as tenant leases expire and are not renewed.
On January 7, 1994, Conran's, a tenant occupying approximately 28,000
square feet or 12% of the building, filed for protection pursuant to a
Chapter 11 bankruptcy petition. During 1994, the Partnership bought the
rights to the Conran's lease for $475,000 through the bankruptcy auction
and is in control of the space. The Partnership is reviewing its possible
alternatives with respect to replacement tenants for the Conran's lease
which was originally scheduled to expire in January 2000.

In November 1994, due to the Partnership's default in payment of debt
service, the mortgage lender concluded proceedings to realize upon its
mortgage security interest represented by the land, building, and related
improvements of the Bank of Delaware investment property via a deed in lieu
of foreclosure. As a result of the disposition of the property, the
Partnership recognized a gain in 1994 for financial reporting purposes of
$447,650 and a loss for Federal income tax purposes of $4,756,937 with no
corresponding distributable proceeds. In December 1993, a major tenant,
E.I. duPont de Nemours ("duPont"), which comprised approximately 27% of the
building, vacated their space upon expiration of their lease. The property
had been operating at a cash deficit due to the significant costs incurred
in connection with the re-leasing of vacant space and certain capital
improvements. Due to the competitive nature of this marketplace, the
Partnership estimated the costs associated with re-leasing any vacant space
during the next few years, including those costs to remove the remaining
asbestos in tenant space, would have been substantial. As a result of
these leasing concerns, the Partnership recorded a provision for value
impairment on the Bank of Delaware Building at June 30, 1992 of $11,476,030
to reduce the net carrying value of the Bank of Delaware Building to the
then outstanding balance of the related non-recourse debt. Further, the
Partnership had commenced discussions with the building's first mortgage
lender in order to seek a loan modification. In connection with these
discussions, effective January 1994, the Partnership had suspended payment
of debt service to the lender. Under the terms of a mortgage and security
agreement, the Partnership, in its capacity as mortgagor of the building,
agreed to indemnify the mortgage lender, under certain circumstances,
against damages, claims, liabilities and expenses incurred by or asserted
against the mortgage lender in relation to asbestos in the building.
Asbestos had been abated or encapsulated in approximately 62% of the
building's space. The Partnership did not believe that any remaining
asbestos in the building presented a hazard and did not believe that such
asbestos was required to be removed. The Partnership estimated that the
cost of asbestos abatement in a portion of the building that could be
incurred under certain circumstances in the future would have been
approximately $800,000. However, the Partnership did not believe that it
would have likely been required to incur (or to indemnify the mortgage
lender against) any such cost, although there is no assurance that the
Partnership would not have been required to pay such cost or
indemnification. In conjunction with the transfer of title, the
Partnership paid the mortgage lender a sum of approximately $681,000 which
included the net cash flow of the property since the suspension of debt
service and an indemnification release fee for which the mortgage lender
released the Partnership from all liabilities respecting the property,
including those related to asbestos.

JWP, Inc. leased approximately 78,000 square feet of space
(approximately 29% of the property) at Royal Executive Park II in August
1992. As a result of the JWP, Inc. lease, the property has produced
sufficient cash flow to fund the Partnership's preferred level of return
for 1994 and in addition, recovered a portion of the cumulative shortfall
in this return since 1989. The Partnership expects to receive its
preferred level of return for 1995 in addition to a partial recovery of its
cumulative shortfall in this return since 1989. In early 1994, JWP filed
for protection pursuant to a Chapter 11 bankruptcy petition. JWP
subsequently subleased approximately 62,000 square feet of its space and
these subtenants have assumed the terms of JWP's lease and have become
direct tenants. Additionally, JWP formally rejected its lease and vacated
the remainder of its space in January 1995. However, this remaining space
(of approximately 16,000 square feet) has been leased for a term of one
year to a tenant who previously had assumed space sublet by JWP. Thus,
through 1995, all of the former JWP space has been re-leased. The previous
manager of the property, an affiliate of the venture partner, continued an
aggressive marketing program to lease the remaining vacant space but the
competitive nature of the market continued to extend the time period
required to lease space to initial tenants which will result in a decrease
in cash flow from operations over the near term. Effective July 1, 1994,
management and leasing activities at the complex were transferred to an
affiliate of the General Partners of the Partnership, who managed the
property until December 1994. In December 1994, one of the affiliated
property managers sold substantially all of its assets and assigned its
interest in its management contracts to an unaffiliated third party. In
addition, certain of the management personnel of the property manager
became management personnel of the purchaser and its affiliates.

Due to uncertainty about the ability to recover the net carrying value
of the property through future operations and sale, Royal Executive has
made a provision for value impairment of $25,378,894. Such provision at
September 30, 1994 was recorded to reduce the net carrying value of the
property to the then estimated valuation. The provision for value
impairment has been allocated fully to the venture partner to reflect their
subordination to the Partnership in distributions with regard to future
operation and sale or financing proceeds as discussed in Note 3(c).

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

Though the economy has recently shown signs of improvement and
financing is generally becoming more available for certain types of higher-
quality properties in healthy markets, real estate lenders are typically
requiring a lower loan-to-value ratio for mortgage financing than in the
2past. This has generally made it difficult for owners to refinance real
estate assets at their current debt levels unless the value of the
underlying property has appreciated significantly. As a consequence, and
due to the weakness of some of the local real estate markets in which the
Partnership's properties operate, the Partnership is taking steps to
preserve its working capital.

RESULTS OF OPERATIONS

The aggregate decrease in cash and cash equivalents and short-term
investments as of December 31, 1994 as compared to December 31, 1993 is
primarily due to funds utilized in 1994 for the acquisition of the Saks
Fifth Avenue building, and renovation work as described above at Riverside
Square Mall partially offset by the receipt of $11,100,000 in loan proceeds
from the refinancing of long-term debt at the Riverside Square Mall
property.

The increase in rents and other receivables at December 31, 1994 as
compared to December 31, 1993 is primarily due to the timing of rents
collected from certain tenants at the Riverside Square Mall property.

The increase in escrow deposits as of December 31, 1994 as compared to
December 31, 1993 is primarily due to escrow payments made pursuant to the
loan refinancing at Riverside Square Mall of approximately $11,500,000
including interest earned on escrowed fund. Reference is made to Note
2(b).

The decrease in land, accumulated depreciation, prepaid expenses, and
current portion of long-term debt as of December 31, 1994 as compared to
December 31, 1993 is primarily due to the lender obtaining title to the
Bank of Delaware building via a deed in lieu of foreclosure in November
1994 as discussed above. See Note 2(c).

The increase in building and improvements as of December 31, 1994 as
compared to December 31, 1993 is primarily due to tenant improvements
renovation work, and the purchase of the Saks store of approximately
$22,260,000 incurred in 1994 at Riverside Square Mall, as discussed above,
partially offset by the lender obtaining title to the Bank of Delaware
building via a deed in lieu of foreclosure as discussed above.

The increase in deferred expenses at December 31, 1994 as compared to
December 31, 1993 is primarily due to $371,000 of certain costs associated
with the August 31, 1994 refinancing of the mortgage loan at the Riverside
Square Mall property and $558,000 of deferred expenses due to increased
leasing activity during the fourth quarter of 1994.

The increase in accrued interest payable and long-term debt, less
current portion, as of December 31, 1994 as compared to the year ended
December 31, 1993 and the increase in mortgage interest expense for the
year ended December 31, 1994 as compared to the year ended December 31,
1993 is due to the refinancing of the debt at the Riverside Square Mall
property. Reference is made to Note 2(b).

The increase in construction costs payable as of December 31, 1994 as
compared to December 31, 1993, is due to the renovation at the Riverside
Square Mall property. See Note 2(b).

The decrease in rental income for the year ended December 31, 1994 as
compared to the year ended December 31, 1993 is primarily due to receiving
two months less of rent at the Bank of Delaware building due to the lender
taking title to the property via a deed in lieu of foreclosure and also due
to lower average occupancy at the Bank of Delaware building and the
Riverside Square Mall property. The decrease in rental income for the year
ended December 31, 1993 as compared to the year ended December 31, 1992 is
due to lower occupancy at the Bank of Delaware and tenant billing
adjustments in 1993 of approximately $223,000 at Riverside Square Mall.

The increase in interest income for the year ended December 31, 1994
as compared to the year ended December 31, 1993 is primarily due to
approximately $203,000 of interest earned on escrowed funds and net loan
proceeds related to the refinancing at Riverside Square Mall. The decrease
in interest income for the year ended December 31, 1993 as compared to
December 31, 1992 is primarily due to lower effective yields being earned
on U.S. Government obligations held during 1993.

The increase in depreciation expense for the year ended December 31,
1994 as compared to the year ended December 31, 1993 is primarily due to
the depreciation taken in 1994 on the Saks Fifth Avenue building acquired
in 1994 at the Riverside Square Mall property. The decrease in
depreciation expense for the year ended December 31, 1993 as compared to
the year ended December 31, 1992 is primarily due to a reduction of
approximately $223,000 in depreciation expense at the Bank of Delaware
building due to the $11,476,000 provision for value impairment recorded at
September 30, 1992. See Note 2(c).

The increase in property operating expenses for the year ended
December 31, 1994 as compared to the year ended December 31, 1993 is
primarily due to an increase in real estate taxes (partially recoverable
from tenants) of approximately $140,000 and an increase in the provision
for doubtful accounts of approximately $276,000 at the Riverside Square
Mall property. The increase in property operating expenses for the year
ended December 31, 1993 as compared to the year ended December 31, 1992 is
partially due to an increase of approximately $272,000 of snow removal
costs primarily due to a blizzard in early 1993 at the Riverside Square
Mall property.

The decrease in professional services for the year ended December 31,
1993 as compared to the year ended December 31, 1992 is primarily due to
legal fees incurred in 1992 by the Partnership in its defense of a lawsuit
and its subsequent appeal brought against the Riverside Square Mall
property concerning public access issues.

The provision for value impairment for the year ended December 31,
1992 is due to the Partnership recording a provision for value impairment
of $11,476,030 at the Bank of Delaware building at June 30, 1992 to reduce
the net carrying value of the investment property to the then outstanding
balance of the related non-recourse debt. See Note 1.

The Partnership's share of operations of unconsolidated ventures
increased for the year ended December 31, 1994 as compared to the year
ended December 31, 1993 primarily due to a provision for value impairment
of approximately $15,550,000 recorded at the San Jose investment property
at September 30, 1993 (of which the Partnership's share was approximately
$7,775,000), partially offset by the provision for value impairment
recorded at the San Jose investment property at September 30, 1994 of
approximately $944,000, of which the Partnership's share is approximately
$472,000. See Note 3(b).

The gain on disposition of investment property for the year ended
December 31, 1994 is due to the lender taking title to the Bank of Delaware
building via a deed in lieu of foreclosure in November 1994. See Note
2(c).

The $2,206,781 extraordinary item for the year ended December 31, 1994
is due to the refinancing of long-term debt at Riverside Square Mall. See
Note 2(b).<PAGE>
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.

To the extent that inflation in future periods does have an adverse
impact on property operating expenses, the effect will generally be offset
by amounts recovered from tenants as many of the long-term leases at the
Partnership's commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes. Therefore, there should be little effect on
operating earnings if the properties remain substantially occupied. In
addition, substantially all of the leases at the Partnership's shopping
center investments contain provisions which entitle the Partnership to
participate in gross receipts of tenants above fixed minimum amounts.

Future inflation may also cause capital appreciation of the
Partnership's investment properties over a period of time to the extent
that rental rates and replacement costs of properties increase.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

INDEX

Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Operations, years ended December 31, 1994,
1993 and 1992
Consolidated Statements of Partners' Capital Accounts (Deficit),
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows, years ended December 31, 1994, 1993
and 1992
Notes to Consolidated Financial Statements

SCHEDULE
--------

Real Estate and Accumulated Depreciation III

SCHEDULES NOT FILED:

All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the financial statements or related notes.

ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

INDEX

Independent Auditors' Report
Balance Sheets, December 31, 1994 and 1993
Statements of Operations, years ended December 31, 1994, 1993 and 1992
Statements of Partners' Capital Accounts, years ended December 31, 1994,
1993 and 1992
Statements of Cash Flows, years ended December 31, 1994, 1993 and 1992
Notes to Financial Statements

SCHEDULE
--------

Real Estate and Accumulated Depreciation III

SCHEDULES NOT FILED:

All schedules other than the one indicated in the index 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
JMB INCOME PROPERTIES, LTD. - XI:

We have audited the financial statements of JMB Income Properties,
Ltd. - XI (a limited partnership) as listed in the accompanying index. In
connection with our audits of the financial statements, we also have
audited the financial statement schedule as listed in the accompanying
index. These financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by 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 financial statements referred to above present
fairly, in all material respects, the financial position of JMB Income
Properties, Ltd. - XI at December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 27, 1995
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

BALANCE SHEETS

DECEMBER 31, 1994 AND 1993

ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . $ 7,200,333 267,127
Short-term investments (note 1). . . . . . . . . . . . . . . . . 7,530,660 23,681,340
Rents and other receivables, net of allowance for
doubtful accounts of $364,343 in 1994 and
$87,858 in 1993. . . . . . . . . . . . . . . . . . . . . . . . 1,984,395 1,690,050
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . 79,621 317,552
Escrow deposits (note 2(b)). . . . . . . . . . . . . . . . . . . 11,508,793 --
------------ -----------

Total current assets . . . . . . . . . . . . . . . . . . . 28,303,802 25,956,069
------------ -----------

Investment properties, at cost (note 2, 4 and 7) - Schedule III:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,796,561 4,563,638
Buildings and improvements . . . . . . . . . . . . . . . . . . . 61,610,179 53,218,947
------------ -----------

65,406,740 57,782,585
Less accumulated depreciation. . . . . . . . . . . . . . . . . . 12,951,168 17,673,020
------------ -----------

Investment properties, net of accumulated depreciation . . 52,455,572 40,109,565
Investment in unconsolidated ventures, at equity
(notes 1, 3 and 9) . . . . . . . . . . . . . . . . . . . . . . . 24,512,608 22,127,541
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . 929,683 198,627
------------ -----------

$106,201,665 88,391,802
============ ===========
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

BALANCE SHEETS

DECEMBER 31, 1994 AND 1993

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

1994 1993
------------ -----------
Current liabilities:
Bank overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . $ 415,003 --
Current portion of long-term debt (note 4) . . . . . . . . . . . 455,199 9,837,354
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 485,464 255,474
Construction costs payable . . . . . . . . . . . . . . . . . . . 3,431,926 --
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . 249,748 105,239
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . 5,037,340 10,198,067
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . 79,882 61,304
Long-term debt, less current portion (note 4). . . . . . . . . . . 35,436,797 11,297,315
------------ -----------
Commitments and contingencies (notes 2, 3 and 7)
Total liabilities. . . . . . . . . . . . . . . . . . . . . 40,554,019 21,556,686

Partners' capital accounts (deficit) (notes 1 and 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings. . . . . . . . . . . . . . . . . . . 5,270,362 5,233,888
Cumulative cash distributions. . . . . . . . . . . . . . . . (6,631,429) (6,631,429)
------------ -----------
(1,360,067) (1,396,541)
------------ -----------
Limited partners (173,411 interests):
Capital contributions, net of offering costs . . . . . . . . 156,493,238 156,493,238
Cumulative net earnings. . . . . . . . . . . . . . . . . . . 25,640,796 24,783,808
Cumulative cash distributions. . . . . . . . . . . . . . . . (115,126,321) (113,045,389)
------------ -----------
67,007,713 68,231,657
------------ -----------
Total partners' capital accounts . . . . . . . . . . . . . 65,647,646 66,835,116
------------ -----------
$106,201,665 88,391,802
============ ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>

1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . $13,022,234 13,836,131 14,197,911
Interest income. . . . . . . . . . . . . . . . 1,026,602 781,907 987,186
----------- ----------- -----------
14,048,836 14,618,038 15,185,097
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . 2,803,351 2,428,737 2,431,951
Depreciation . . . . . . . . . . . . . . . . . 1,726,612 1,574,625 1,816,616
Property operating expenses. . . . . . . . . . 8,778,556 8,300,029 7,667,064
Professional services. . . . . . . . . . . . . 343,023 285,158 485,943
Amortization of deferred expenses. . . . . . . 86,376 105,130 122,594
General and administrative . . . . . . . . . . 275,525 246,493 282,252
Provision for value impairment (notes 1 and 2) -- -- 11,476,030
----------- ----------- -----------
14,013,443 12,940,172 24,282,450
----------- ----------- -----------
Operating earnings (loss). . . . . . . . 35,393 1,677,866 (9,097,353)
Partnership's share of operations of
unconsolidated ventures (notes 1 and 3). . . . 2,617,210 (4,262,005) (1,779,563)
----------- ----------- -----------
Net operating earnings (loss). . . . . . 2,652,603 (2,584,139) (10,876,916)
Non-cash gain on disposition of investment
property (note 2(c)) . . . . . . . . . . . . . 447,650 -- --
----------- ----------- -----------
Net operating earnings (loss) before
extraordinary item . . . . . . . . . . 3,100,253 (2,584,139) (10,876,916)
Extraordinary item (note 2(b)) . . . . . . . . . (2,206,791) -- --
----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . $ 893,462 (2,584,139) (10,876,916)
=========== =========== ===========
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS - CONTINUED

1994 1993 1992
------------ ------------ ------------
Net earnings (loss) per limited
partnership interest (note 1):
Net operating earnings (loss). . . . . $ 14.60 (15.65) (62.90)
Gain on disposition of investment
property . . . . . . . . . . . . . . 2.56 -- --
Extraordinary item . . . . . . . . . . (12.22) -- --
----------- ----------- -----------
Net earnings (loss). . . . . . . . . $ 4.94 (15.65) (62.90)
=========== =========== ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT)

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (NOTE 1)
--------------------------------------------------- --------------------------------------------------
CONTRI-
BUTIONS
NET OF NET
CONTRI- NET CASH OFFERING EARNINGS CASH
BUTIONS EARNINGS DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------------------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
at Decem-
ber 31,
1991. . . . . $1,000 5,072,668 (6,631,429) (1,557,761) 156,493,238 38,406,084 (108,883,525) 86,015,797
Cash distri-
butions
($12.00 per
limited
partnership
interest) . . -- -- -- -- -- -- (2,080,932) (2,080,932)
Net earnings
(loss)
(note 5). . . -- 31,336 -- 31,336 -- (10,908,253) -- (10,908,253)
------ ---------- ---------- ---------- ----------- ----------- ------------- ----------
Balance
(deficit)
at Decem-
ber 31,
1992. . . . . 1,000 5,104,004 (6,631,429) (1,526,425) 156,493,238 27,497,831 (110,964,457) 73,026,612

Cash distri-
butions
($12 per
limited
partnership
interest) . . -- -- -- -- -- -- (2,080,932) (2,080,932)
Net earnings
(loss)
(note 5). . . -- 129,884 -- 129,884 -- (2,714,023) -- (2,714,023)
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT) - CONTINUED

GENERAL PARTNERS LIMITED PARTNERS (NOTE 1)
--------------------------------------------------- --------------------------------------------------
CONTRI-
BUTIONS
NET OF NET
CONTRI- NET CASH OFFERING EARNINGS CASH
BUTIONS EARNINGS DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------------------- ----------- ----------- ---------- -------------- ----------
Balance
(deficit)
at Decem-
ber 31,
1993. . . . . $1,000 5,233,888 (6,631,429) (1,396,541) 156,493,238 24,783,808 (113,045,389) 68,231,657

Cash distri-
butions
($12 per
limited
partnership
interest) . . -- -- -- -- -- -- (2,080,932) (2,080,932)
Net earnings
(note 5). . . -- 36,474 -- 36,474 -- 856,988 -- 856,988
------ ---------- ---------- ---------- ----------- ----------- ------------- ----------
Balance
(deficit)
at Decem-
ber 31,
1994. . . . . $1,000 5,270,362 (6,631,429) (1,360,067) 156,493,238 25,640,796 (115,126,321) 67,007,713
====== ========== ========== ========== =========== =========== ============= ==========

<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . $ 893,462 (2,584,139) (10,876,916)
Items not requiring (providing) cash
or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . 1,726,612 1,574,625 1,816,616
Amortization of deferred expenses. . . . . . . 86,376 105,130 122,594
Amortization of discounts on long-term debt. . 101,110 161,195 125,521
Partnership's share of operations of uncon-
solidated ventures, net of distributions . . (827,598) 7,609,901 4,442,528
Provision for value impairment
(notes 1 and 2). . . . . . . . . . . . . . . -- -- 11,476,030
Non-cash gain on disposition of investment
property (note 2(c)) . . . . . . . . . . . . (1,128,591) -- --
Extraordinary item (note 2(b)) . . . . . . . . 2,206,791 -- --
Changes in:
Rents and other receivables. . . . . . . . . . (511,436) (60,907) (323,953)
Prepaid expenses . . . . . . . . . . . . . . . 205,931 (28,888) (14,203)
Escrow deposits. . . . . . . . . . . . . . . . (330,151) -- --
Accounts payable . . . . . . . . . . . . . . . 3,661,916 (226,193) (280,948)
Accrued interest payable . . . . . . . . . . . 1,006,931 (85,540) (3,342)
Tenant security deposits . . . . . . . . . . . 18,578 (11,035) (16,634)
----------- ----------- -----------
Net cash provided by
operating activities . . . . . . . . . 7,109,931 6,454,149 6,467,293
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of
short-term investments . . . . . . . . . . . . . 16,150,680 (6,254,572) 669,636
Additions to investment properties . . . . . . . (23,028,260) (1,568,908) (1,780,027)
2 Partnership's distributions from
unconsolidated ventures. . . . . . . . . . . . -- 1,350,425 798,697
Partnership's contributions to
unconsolidated ventures. . . . . . . . . . . . (1,557,469) -- (575,000)
Payment of deferred expenses . . . . . . . . . . (760,391) (17,094) (37,749)
----------- ----------- -----------
Net cash used in investing
activities . . . . . . . . . . . . . . (9,195,440) (6,490,149) (924,443)
----------- ----------- -----------
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS - CONTINUED

1994 1993 1992
----------- ----------- -----------
Cash flows from financing activities:
Cash proceeds from refinancing of
long-term debt (note 2(b)) . . . . . . . . . . 11,102,785 -- --
Bank overdrafts. . . . . . . . . . . . . . . . . 415,003 -- (270,480)
Principal payments on long-term debt . . . . . . (418,141) (430,021) (391,195)
Distributions to limited partners. . . . . . . . (2,080,932) (2,080,932) (2,080,932)
----------- ----------- -----------

Net cash provided by (used in)
financing activities . . . . . . . . . 9,018,715 (2,510,953) (2,742,607)
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . 6,933,206 (2,546,953) 2,800,243
Cash and cash equivalents,
beginning of year. . . . . . . . . . . 267,127 2,814,080 13,837
----------- ----------- -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . . $ 7,200,333 267,127 2,814,080
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . $ 1,695,310 2,353,082 2,309,772
=========== =========== ===========
Non-cash investing and financing activities:
Disposition of investment property note 2(b):
Balance due on long-term debt cancelled . . . $ 9,500,000 -- --
Accrued interest expense on accelerated
long-term debt. . . . . . . . . . . . . . . 862,422 -- --
Reduction of investment property. . . . . . . (8,955,641) -- --
Reduction of deferred expenses. . . . . . . . (29,099) -- --
Reduction of other assets . . . . . . . . . . (249,091) -- --
----------- ----------- ----------
Non-cash gain recognized due to
lender realizing upon security . . . . $ 1,128,591 -- --
=========== =========== ==========
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS - CONTINUED

1994 1993 1992
----------- ----------- -----------
Refinancing of long-term debt, note 2(c):
Proceeds of refinancing, net of
refinancing costs. . . . . . . . . . . . . . $35,913,859 -- --
Retirement of debt, net of discount. . . . . . (12,983,269) -- --
Proceeds escrowed. . . . . . . . . . . . . . . (11,178,642) -- --
Prepayment penalty . . . . . . . . . . . . . . (649,163) -- --
----------- ----------- -----------
Cash proceeds from refinancing of
long-term debt . . . . . . . . . . . . $11,102,785 -- --
=========== =========== ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(1) BASIS OF ACCOUNTING

The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's interest in Royal
Executive Park II ("Royal Executive") and JMB/San Jose Associates ("San
Jose") (note 3). Accordingly, the accompanying financial statements do not
include the accounts of Royal Executive and San Jose.

The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying financial statements have been prepared from such records
after making appropriate adjustments to present the Partnership's accounts
in accordance with generally accepted accounting principles ("GAAP"). Such
adjustments are not recorded on the records of the Partnership. The net
effect of these items for the years ended December 31, 1994 and 1993 is
summarized as follows:
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

1994 1993
------------------------------ ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . $106,201,665 128,698,902 88,391,802 109,230,160

Partners' capital accounts
(deficit) (note 5):
General partners . . . . . . . (1,360,067) (1,524,886) (1,396,541) (1,479,706)
Limited partners . . . . . . . 67,007,713 90,408,334 68,231,657 97,141,280

Net earnings (loss) (note 5):
General partners . . . . . . . 36,474 (45,180) 129,844 56,695
Limited partners . . . . . . . 856,988 (4,652,014) (2,714,023) 1,360,682

Net earnings (loss) per
limited partnership
interest . . . . . . . . . . . . 4.94 (26.83) (15.65) 7.85
=========== ============ =========== ===========

</TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

The net earnings (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of the
period (173,411). Deficit capital accounts will result, through the
duration of the Partnership, in net gain for financial reporting and income
tax purposes.

Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
U.S. Government obligations at cost, which approximates market. For the
purposes of these statements, the Partnership's policy is to consider all
such amounts held with original maturities of three months or less
($7,200,333 and $0 at December 31, 1994 and 1993, respectively) as cash
equivalents with any remaining amounts (generally with original maturities
of one year or less) reflected as short-term investments being held to
maturity.

Deferred expenses consist primarily of loan fees and lease commissions
which are amortized over the terms stipulated in the related loan
agreements or over the terms of the related leases using the straight-line
method.

Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in the
minimum lease payments over the term of the lease, rental income is accrued
for the full period of occupancy on a straight-line basis.

In response to the uncertainties relating to the future recovery of
the carrying value of the Bank of Delaware investment property through
future operations or sale, the Partnership recorded a provision for value
impairment on the Bank of Delaware investment property of $11,476,030.
Such provision, made as of June 30, 1992, was recorded to reduce the net
carrying value of the investment property to the then outstanding balance
of the related non-recourse debt. Reference is made to note 2(c) for
further discussion of the current status of this investment property.

In response to the uncertainties relating to the San Jose joint
venture's ability to recover the net carrying value of certain buildings
within the Park Center Plaza investment property through future operations
or sale, the San Jose joint venture, at December 31, 1992, recorded a
provision for value impairment on certain portions of the complex of
$8,142,152. Such provision was recorded to reduce the net basis of these
portions to the then outstanding balance of the related non-recourse debt.
Additionally, a provision for value impairment on the 150 Almaden and 185
Park Avenue buildings and certain parking areas of $15,549,935 was recorded
at September 30, 1993 to reduce the net basis to the then outstanding
balance of the related non-recourse debt. Furthermore, the San Jose joint
venture, recorded a provision for value impairment at September 30, 1994 on
the 100-130 Park Center Plaza buildings and certain parking areas, and the
170 Almaden building of $944,335, in aggregate, to reduce the net carrying
values to the then outstanding balances of related non-recourse debt.
Reference is made to note 3(b) for further discussion of the current status
of this investment property.

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

No provision for State or Federal 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.

Certain amounts in the 1993 and 1992 financial statements have been
reclassified to conform to the 1994 presentation.

(2) INVESTMENT PROPERTIES

(a) General

The Partnership has acquired, either directly or through joint
ventures, two shopping centers and three office complexes. In June 1990,
the Partnership sold its interest in the Genesee Valley Shopping Center.
In November 1994, the lender realized upon its security interest and took
title to the Bank of Delaware building via a deed in lieu of foreclosure
(note 2(c)). All of the remaining properties were in operation at December
31, 1994. The cost of the investment properties represents the total cost
to the Partnership plus miscellaneous acquisition costs.

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

YEARS
-----

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

The investment properties are pledged as security for the long-term
debt, for which there is no recourse to the Partnership.

Maintenance and repair expenses are charged to operations as incurred.

Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives. Provisions for value impairment are
recorded with respect to the investment properties whenever the estimated
future cash flows from a property's operations and projected sales are less
than the property's carrying value.

(b) Riverside Square Mall

During October 1983, the Partnership acquired an existing enclosed
regional shopping center in Hackensack, New Jersey. The Partnership's
purchase price for the mall was $36,236,282. The Partnership made a cash
down payment at closing of $20,000,000. The balance of the purchase price
was represented by a first mortgage loan which had a balance at closing of
$16,236,282 prior to unamortized discount, based upon an imputed interest
rate of 12%. During the third quarter of 1994, the Partnership finalized

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

a refinancing of the first mortgage loan with a new loan in the amount of
$36,000,000 which matures December 1, 2006 and bear's interest at 8.35%.
See Note 4. The refinancing resulted in net proceeds of approximately
$22,300,000 (after retirement of the previous mortgage loan with an
outstanding balance of approximately $13,000,000 and payment of a
prepayment penalty of $649,163). Of such proceeds, approximately
$11,200,000 has been escrowed by the lender pursuant to the loan agreement
and will be released, including interest, to fund certain costs of the
renovation and restoration as discussed below. The remaining $11,100,000
represents the replenishment of the Partnership's working capital for
amounts paid or to be paid to Saks and Bloomingdales for tenant allowances
as discussed below. In connection with the negotiations relating to the
refinancing, the Partnership had escrowed approximately $801,000 to serve
as collateral to secure a letter of credit. Such letter of credit was
released and the funds were refunded to the Partnership in September 1994
in connection with the loan funding. Additionally, the Partnership has
recorded an extraordinary loss on refinancing of $2,206,791 representing
the write-off of unamortized discount on the original mortgage loan of
$1,557,628 and the $649,163 prepayment penalty as discussed above.

The Partnership has substantially completed its renovation of
Riverside Square Mall and is continuing to remerchandise the center. In
connection with the renovation, the Partnership, in early 1994, signed 15-
year operating covenant extensions with both Saks and Bloomingdales, the
latter of which owns their own store. In return for the additional 15-year
commitment to the center, the Partnership reimbursed Saks for their recent
store renovation in the amount of $6,100,000 and is obligated to pay
Bloomingdales $5,000,000 toward their upcoming store renovation. In
connection with the payment to Saks, the Partnership also acquired title to
the Saks building which had previously been owned by Saks. The Partnership
is also required to complete the renovation of the mall, with an additional
estimated cost of approximately $12,000,000 which has substantially been
completed as of December 31, 1994. The Partnership continues to consider
expanding the mall at some point in the future as well. Furthermore, the
Partnership has commenced a $7,500,000 restoration of the parking deck.
This restoration should be completed by the end of 1995.

In December 1984, the Partnership acquired an interest in an existing
office building in Wilmington, Delaware. The Partnership's purchase price
for the building was $20,900,000, of which approximately $5,945,000, was
represented by an existing first mortgage loan. In February 1989, the
Partnership refinanced the existing first mortgage loan and received net
refinancing proceeds of approximately $4,696,000 which were utilized
primarily to pay for the substantially completed renovation program and
other capital improvements.

A major tenant in the building brought a lawsuit against the
Partnership which sought reimbursement from the Partnership for certain
improvements made by the tenant to its space in the building. Pursuant to
an arbitration ruling, the Partnership reimbursed the tenant approximately
$802,000, all of which was paid as of December 1992. The Partnership was
released from any further obligations pursuant to the assignment of title
to the property in November 1994 as described below.

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

In December 1993, a major tenant, E.I. duPont de Nemours ("duPont"),
which comprised approximately 27% of the building, vacated their space upon
expiration of their lease. The property had been operating at a cash
deficit due to the significant costs incurred in connection with the re-
leasing of vacant space and certain capital improvements. Due to the
competitive nature of this marketplace, the Partnership estimated the costs
associated with re-leasing any vacant space during the next few years,
including those costs to remove the remaining asbestos in tenant space,
would have been substantial. As a result, the Partnership had commenced
discussions with the building's first mortgage lender in order to seek a
loan modification. In connection with these discussions, effective January
1994, the Partnership had suspended payment of debt service to the lender.
Under the terms of a mortgage and security agreement, the Partnership, in
its capacity as mortgagor of the building, agreed to indemnify the mortgage
lender, under certain circumstances, against damages, claims, liabilities
and expenses incurred by or asserted against the mortgage lender in
relation to asbestos in the building. Asbestos had been abated or
encapsulated in approximately 62% of the building's space. The Partnership
did not believe that any remaining asbestos in the building presented a
hazard and did not believe that such asbestos would have been required to
be removed. The Partnership estimated that the cost of asbestos abatement
in a portion of the building that could be incurred under certain
circumstances in the future would have been approximately $800,000.
However, the Partnership did not believe that it would have likely been
required to incur (or to indemnify the mortgage lender against) any such
cost, although there was no assurance that the Partnership would not have
been required to pay such cost or indemnification. In November 1994, due
to the Partnership's default in payment of debt service, the mortgage
lender concluded proceedings to realize upon its mortgage security interest
represented by the land, building, and related improvements of the property
via a deed in lieu of foreclosure. As a result of the disposition of the
property, the Partnership recognized a gain in 1994 for financial reporting
purposes of $447,650 and a loss for federal income tax purposes of
$4,756,937 with no corresponding distributable proceeds. In conjunction
with the transfer of title, the Partnership paid the mortgage lender a sum
of approximately $681,000 which included the net cash flow of the property
since the suspension of debt service and an indemnification release fee for
which the mortgage lender released the Partnership from all liabilities
respecting the property, including those related to asbestos.

An affiliate of the General Partner of the Partnership managed the
office building through the November 1994 date of property title assignment
for a fee equal to 3% of the gross revenues of the building plus leasing
commissions, subject to an aggregate annual maximum amount of 6% of the
gross receipts of the property.

(3) VENTURE AGREEMENTS

(a) General

The Partnership at December 31, 1994 is a party to two operating
venture agreements (San Jose and Royal Executive) and has made capital
contributions to the respective ventures as discussed below. Under certain
circumstances, either pursuant to the venture agreements or due to the
Partnership's obligations as a General Partner, the Partnership may be
required to make additional cash contributions to the ventures.

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

(b) San Jose

The Partnership has acquired, through San Jose, an interest in an
existing office building complex in San Jose, California (Park Center
Financial Plaza). San Jose acquired nine office buildings and two parking
garage structures in June 1985 for a purchase price of approximately
$32,472,000 subject to long-term indebtedness of approximately $6,347,000.
All of the properties were in operation when acquired.

In addition, in May 1986, San Jose purchased an additional office
building (150 Almaden) and a parking and retail building (185 Park Avenue)
in the Park Center Financial Plaza complex for a total purchase price of
approximately $47,476,000. In conjunction with the acquisitions, San Jose
reserved approximately $31,590,000 to fund debt service, leasing
commissions, and capital and tenant improvements.

In 1991, all remaining amounts originally set aside by the Partnership
to fund debt service, leasing commissions and capital and tenant
improvement costs at Park Center Financial Plaza were utilized.

In September 1986, San Jose obtained a mortgage loan in the amount of
$25,000,000 secured by the 150 Almaden and 185 Park Avenue buildings and
certain parking areas. The outstanding principal balance, which was non-
amortizable, bore interest at the rate of 9.5% per annum and had a
scheduled maturity in October 1993 and was extended to December 1, 1993.
San Jose, during the fourth quarter of 1994, finalized a loan extension and
modification with the mortgage lender. The modified and extended loan has
an interest rate of 8.4% per annum, requires monthly interest payments only
beginning December 1, 1994 through December 1, 1997 when the loan begins to
amortize until it matures November 30, 2001, when the unpaid principal and
interest balance is due. The refinancing resulted in the 1994 partial
paydown of the outstanding principal balance in the amount of $2.5 million.

The property was managed by an affiliate of the General Partners of
the Partnership for a fee calculated as 3% of gross receipts until December
1994 when the affiliated property manager sold substantially all of its
assets and assigned its interests in its management contracts to an
unaffiliated third party.

The partners of San Jose are the Partnership and JMB Income
Properties, Ltd.-XII, another partnership sponsored by the Managing General
Partner of the Partnership ("JMB-XII"). The terms of San Jose's
partnership agreement generally provide that contributions, distributions,
cash flow, sale or refinancing proceeds and profits and losses will be
distributed or allocated to the Partnership in their respective 50%
ownership percentages.

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

offer, including the impact of any purchase on garage spaces leased to
tenants of other Partnership properties in the complex. Should the Agency
proceed to purchase the property, San Jose would recognize a gain for
financial reporting and Federal income tax purposes. Therefore, it is
uncertain at this time whether a transfer of the garage to the Agency will
occur or upon what terms.

San Jose notified the tenants in and invitees to the Park Center Plaza
complex that some of the buildings, particularly the 100-130 Park Center
Plaza Buildings and the garage below them, could pose a life safety hazard
under certain unusually intense earthquake conditions. While the buildings
and the garage were designed to comply with the applicable codes for the
period in which they were constructed, and there is no legal requirement to
upgrade the buildings for seismic purposes, San Jose is working with
consultants to analyze ways in which such a potential life safety hazard
could be eliminated. In addition, tenants occupying approximately 55,000
square feet (approximately 13% of the building) of the Park Center Plaza
investment property have leases that expire in 1995, for which there can be
no assurance of renewals. However, since the costs of both re-leasing
space and any seismic program at the 100-130 Park Center Plaza buildings
could be substantial, San Jose has commenced discussions with the
appropriate lender for additional loan proceeds to pay for all or a portion
of these costs. Should lender assistance be required to fund significant
costs at the 100-130 Park Center Plaza buildings but not be obtained, San
Jose may decide not to commit any additional amounts to this portion of the
complex, since such amounts are likely to be large in comparison to the
Partnership's current equity in this portion of the complex and the
likelihood of recovering such funds through increased capital appreciation
is remote. The result would be that San Jose would no longer have an
ownership interest in this portion of the complex.

As a result, there is uncertainty about the ability to recover the net
carrying value of the property through future operations and sale and
accordingly, San Jose has made provisions for value impairment on the 100-
130 Park Center Plaza buildings and certain parking areas and the 170
Almaden building of $944,335 in the aggregate. Such provisions at
September 30, 1994 were recorded to reduce the net carrying values of these
buildings to the then outstanding balances of the related non-recourse
financing. Additionally, at September 30, 1993, San Jose recorded a
provision for value impairment on the 150 Almaden and 185 Park Avenue
buildings and certain parking areas of $15,549,935 to reduce the net
carrying value of these buildings to the then outstanding balance of
related non-recourse financing. Additionally, at December 31, 1992, San
Jose recorded a provision for value impairment of $8,142,152 on certain
other portions of the complex to amounts equal to the then outstanding
balances of the related non-recourse financing. In the event the lender on
the 100-130 Park Center Plaza portion of the complex exercised its remedies
as discussed above, the result would likely be that San Jose would no
longer have an ownership interest in such portion.

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

In December 1985, the Partnership entered into a commitment to fund a
$27,000,000 convertible first mortgage note on a three building office park
then under construction in Rye Brook, New York (Royal Executive Park II).
The first mortgage note called for monthly installments of interest only at
a rate of 10% through the period of equity conversion.

During February 1987, the Partnership exercised its option of
converting the $27,000,000 mortgage into an ownership position. Upon the
conversion of the mortgage note, the Partnership entered into a joint
venture (Royal Executive) with the borrower (joint venture partners).
Pursuant to the terms of the venture agreement, until certain rental
achievement levels are attained, the Partnership is entitled to a
cumulative preferred annual return equal to $2,430,000 per year. The next
$2,439,732 of annual cash flow is distributable to the joint venture
partners, on a non-cumulative basis, with any remaining cash flow
distributable 49.9% to the Partnership and 50.1% to the joint venture
partners. Therefore, the Partnership's receipt of cash distributions is
subject to the actual operations of the property. The Partnership is
entitled to any deficiency in its preferred annual return on a cumulative
basis as an annual priority distribution from future available operating
cash flow. The cumulative deficiency in the preferred annual return is
approximately $4,700,000 at December 31, 1994. The Partnership is entitled
to priority level of distribution of sale and refinancing proceeds of
$27,000,000 plus the cumulative deficiency in its preferred annual return.

Operating profits of the joint venture, in general, will be allocated
in proportion to, and to the extent of, distributions and then based on
relative ownership percentages. Operating losses, in general, will be
first allocated to the joint venture partners to the extent of any
additional contributions made to fund operations or the Partnership's
guaranteed return. Remaining losses, if any, will be allocated based upon
relative ownership interests. Depreciation and amortization will be
allocated based upon the relative ownership interests.

Effective July 1, 1994, management and leasing activities at the
complex were transferred to an affiliate of the General Partners of the
Partnership, who managed the property until December 1994. In December
1994, this affiliated property manager sold substantially all of its assets
and assigned its interest in its Management contracts to an unaffiliated
third party. In addition, certain of the management personnel of the
property manager became management personnel of the purchaser and its
affiliates.<PAGE>
(4) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1994 and
1993:

1994 1993
---------- ----------
8.35% mortgage note, secured by Riverside
Square Mall in Hackensack, New Jersey;
payable in monthly installments of
principal and interest of $286,252
through December 1, 2006, the scheduled
maturity date at which time the unpaid
principal and interest is due (note 2(b)) $35,891,996 --

9-1/2% first mortgage note, secured
by Riverside Square Mall in Hackensack,
New Jersey which was retired by the
loan described above. Balance is
net of unamortized discount of
$1,658,738 at December 31, 1993 based
on an imputed interest rate of 12%. . . . -- 11,634,669

10-3/8% mortgage note, secured by Bank of
Delaware Office Building in Wilmington,
Delaware; retired at disposition in
November 1994; was payable in monthly
installments of interest only of
$82,135 through March 1, 1999 the
scheduled maturity date (see note 2(c)) . -- 9,500,000
----------- ----------

Total debt . . . . . . . . . . . 35,891,996 21,134,669

Less current portion of long-term debt . . 455,199 9,837,354
----------- ----------

Total long-term debt . . . . . . $35,436,797 11,297,315
=========== ==========

Five year maturities of long-term debt are summarized as follows for
the years ending:

1995 . . . . . . . . . . $455,199
1996 . . . . . . . . . . 494,697
1997 . . . . . . . . . . 537,623
1998 . . . . . . . . . . 584,273
1999 . . . . . . . . . . 634,971
========

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

(5) PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale or
refinancing of investment properties will be allocated to the General
Partners: (i) to the greater of 1% of such profits or the amount of cash
distributable to the General Partner from any such sale or refinancing (as
described below); and (ii) in order to reduce deficits, if any, in the
General Partners' capital accounts to a level consistent with the gain
anticipated to be realized from the sale of properties. Losses from the
sale or refinancing of investment properties will be allocated 1% to the
General Partners. The remaining sale or refinancing profits and losses
will be allocated to the Limited Partners.

The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon termination
of the Partnership. In general, distributions of cash from operations will
be made 90% to the Limited Partners and 10% to the General Partners.
However, a portion of such distributions to the General Partners is
subordinated to the Limited Partners' receipt of a stipulated return on
capital.

The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the
Partnership amounts equal to the cumulative deferrals of any portion of
their 10% cash distribution and 3% of the selling price, and that the
remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, the Limited Partners shall receive 100% of such net sale proceeds
until the Limited Partners (i) have received cash distributions of sale or
refinancing proceeds in an amount equal to the Limited Partners' aggregate
initial capital investment in the Partnership, (ii) have received
cumulative cash distributions from the Partnership's operations which, when
combined with sale or refinancing proceeds previously distributed, equal a
7% annual return on the Limited Partners' 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 1985 and (iii) have received cash distributions of sale
and refinancing proceeds and of the Partnership operations, in an amount
equal to the Limited Partners' initial capital investment in the
Partnership plus a 10% annual return on the Limited Partners' average
capital investment.

(6) MANAGEMENT AGREEMENT

An affiliate of the General Partners of the Partnership manages
Riverside Square Mall for a fee equal to 4% of the fixed and percentage
rents of the shopping center plus leasing and operating covenant
commissions, subject to deferral if in excess of an aggregate annual
maximum amount of 6% of the gross receipts of the property.

JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

(7) LEASES

At December 31, 1994, the Partnership's principal asset is one
shopping center. The Partnership has determined that all leases relating
to this property are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of the properties,
excluding the cost of the land, is depreciated over the estimated useful
lives. Leases with tenants range in term from one to thirty-five years and
provide for fixed minimum rent and partial reimbursement of operating
costs. In addition, leases with shopping center tenants provide for
additional rent based upon percentages of tenants' sales volumes. A
substantial portion of the ability of retail tenants to honor their leases
is dependant upon the retail economic sector.

Cost and accumulated depreciation of the leased assets are summarized
as follows at December 31, 1994:

Shopping Center:
Cost. . . . . . . . . . . . . . . $65,406,740
Accumulated depreciation. . . . . (12,951,168)
-----------
$52,455,572
===========

Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit, to be received
in the future under the operating leases are as follows:

1995. . . . . . . . . . $ 4,924,779
1996. . . . . . . . . . 5,173,086
1997. . . . . . . . . . 5,226,960
1998. . . . . . . . . . 4,911,355
1999. . . . . . . . . . 4,470,724
Thereafter. . . . . . . 17,529,690
-----------

Total . . . . . . . $42,236,594
===========

Contingent rent (based on sales by property tenants) included in
rental income was as follows:

1992 . . . . . . . $296,014
1993 . . . . . . . 302,809
1994 . . . . . . . 274,431
=========

(8) TRANSACTIONS WITH AFFILIATES

Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of December 31,
1994 and for the years ended December 31, 1994, 1993 and 1992 were as
follows:
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

<CAPTION>
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees . . . . . . . . . . . $608,703 325,429 354,525 300,000
Insurance commissions. . . . . . . . 45,765 54,473 38,720 --
Reimbursement (at cost)
for out-of-pocket
expenses and salaries. . . . . . . 144,232 110,665 114,341 41,116
-------- ------- ------- -------

$798,700 490,567 507,586 341,116
======== ======= ======= =======

</TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONCLUDED

The General Partners have deferred receipt of certain of their
distributions (see note 5) of net cash flow of the Partnership. The amount
of such deferred distributions aggregated $1,323,705 as of December 31,
1994. The amount is being deferred in accordance with the subordination
requirements of the Partnership Agreement. In addition, an affiliate of
the General Partner has deferred $300,000 in leasing fees at Riverside
Square Mall pursuant to the management agreement (note 6). This amount or
amounts currently payable do not bear interest and may be paid in future
periods.

(9) INVESTMENT IN UNCONSOLIDATED VENTURES

Summary of combined financial information for San Jose and Royal
Executive (note 3) as of and for the years ended December 31, 1994 and 1993
are as follows:
1994 1993
------------ -----------

Current assets . . . . . . . . $ 8,388,581 2,535,033
Current liabilities. . . . . . (1,409,508) (26,399,404)
------------ -----------
Working capital. . . . . . 6,979,073 (23,864,371)
------------ -----------
Investment property, net . . . 54,189,046 80,714,163
Other assets, net. . . . . . . 1,585,304 4,293,567
Long-term debt . . . . . . . . (25,880,881) (3,784,508)
Other liabilities. . . . . . . (239,741) (190,834)
Venture partners' equity . . . (12,120,193) (35,040,476)
------------ -----------
Partnership's capital. . . $ 24,512,608 22,127,541
============ ===========
Represented by:
Invested capital . . . . . . $ 76,505,181 74,947,712
Cumulative distributions . . (36,233,524) (34,443,911)
Cumulative losses. . . . . . (15,759,050) (18,376,260)
------------ -----------
$ 24,512,607 22,127,541
============ ===========
Total income . . . . . . . . . $ 15,799,775 16,499,948
============ ===========
Expenses applicable to
operating loss . . . . . . . $ 38,119,456 28,375,860
============ ===========
Net loss . . . . . . . . . . . $ 22,319,680 11,875,912
============ ===========

Reference is made to note 3(b) regarding the provisions for value
impairments of $944,335 and $15,549,935 which were recorded in 1994 and
1993, respectively, by San Jose and to 3(c) regarding the provision for
value impairment of $25,378,894 which was recorded in 1994 by Royal
Executive.

The total income, expenses related to operating loss and net loss for
the above-mentioned ventures for the year ended December 31, 1992 were
$15,934,326, $21,658,285 and $5,723,959, respectively.

(10) SUBSEQUENT EVENT - DISTRIBUTION TO PARTNERS

In February 1995, the Partnership paid a distribution of $520,233
($3.00 per Interest) to the Limited Partners.

<TABLE>
SCHEDULE III
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1994

<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) ACQUISITION(B) AT CLOSE OF PERIOD (C)
------------------------------------- -------------------------------------
BUILDINGS BUILDINGS BUILDINGS
AND AND AND
ENCUMBRANCE LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (D)
----------- ------------------------------------- ---------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Hackensack,
New Jersey . . $35,891,996 3,796,561 30,880,649 30,729,530 3,796,561 61,610,179 65,406,740
=========== ========= ========== ========== ========= ========== ==========

</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1994

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1994
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ---------------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Hackensack,
New Jersey . . . . . . . . . . . $12,951,168 1977 10-19-83 5-30 years 1,546,088
=========== =========

-------------
<FN>
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the properties (net of
unamortized discount based upon an imputed interest rate), including amounts incurred subsequent to acquisition
which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
$67,613,723.

</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1994

(D) Reconciliation of real estate owned:

<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . . $57,782,585 56,213,677 65,909,680
Additions during period. . . . . . . . . . . . 23,028,260 1,568,908 1,780,027
Dispositions during period . . . . . . . . . . (15,404,105) -- --
Provision for value impairment . . . . . . . . -- -- (11,476,030)
----------- ----------- ----------
Balance at end of period . . . . . . . . . . . $65,406,740 57,782,585 56,213,677
=========== =========== ==========

(E) Reconciliation of accumulated depreciation:

Balance at beginning of period . . . . . . . . $17,673,020 16,098,395 14,281,779
Depreciation expense . . . . . . . . . . . . . 1,726,612 1,574,625 1,816,616
Accumulated depreciation written-off at
Bank of Delaware . . . . . . . . . . . . . . (6,448,464) -- --
----------- ----------- ----------

Balance at end of period . . . . . . . . . . . $12,951,168 17,673,020 16,098,395
=========== =========== ==========

</TABLE>

INDEPENDENT AUDITORS' REPORT

The Partners
Royal Executive Park II:

We have audited the financial statements of Royal Executive Park II (a
general partnership) as listed in the accompanying index. In connection
with our audits of the financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
financial statements are the responsibility of the General Partners of the
Partnership. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Royal Executive
Park II at December 31, 1994 and 1993, and the results of its operations
and its cash flows for each of the years in the three-year period ended
December 31, 1994, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information set forth
therein.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 27, 1995
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

BALANCE SHEETS

DECEMBER 31, 1994 AND 1993

ASSETS
------

<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . $ 728,964 448,443
Short-term investments (note 1). . . . . . . . . . . . . . . . 98,281 --
Rents and other receivables, net of allowance for
doubtful accounts of $193,379 in 1994 and
$140,000 in 1993 . . . . . . . . . . . . . . . . . . . . . . 1,579,627 971,728
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 15,686 14,576
----------- -----------

Total current assets . . . . . . . . . . . . . . . . . 2,422,558 1,434,747
----------- -----------

Investment property, at cost (notes 1 and 2) - Schedule III:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,569,125 5,568,277
Buildings and improvements . . . . . . . . . . . . . . . . . . 32,751,062 54,074,565
----------- -----------

35,320,187 59,642,842
Less accumulated depreciation. . . . . . . . . . . . . . . . . 13,044,923 12,147,495
----------- -----------

Total investment property,
net of accumulated depreciation. . . . . . . . . . . 22,275,264 47,495,347
----------- -----------

Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . 719,047 1,118,418
----------- -----------

$25,416,869 50,048,512
=========== ===========

ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

BALANCE SHEETS - CONTINUED

LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
1994 1993
------------ ------------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . $ 412,831 558,030
----------- -----------

Total current liabilities. . . . . . . . . . . . . . . 412,831 558,030

Tenant security deposits . . . . . . . . . . . . . . . . . . . . 167,648 120,537
----------- -----------
Commitments and contingencies (note 2)

Total liabilities. . . . . . . . . . . . . . . . . . . 580,479 678,567

Partners' capital accounts (notes 1 and 2) . . . . . . . . . . . 24,836,390 49,369,945
----------- -----------

$25,416,869 50,048,512
=========== ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . $ 6,517,638 6,129,400 5,081,175
Interest income. . . . . . . . . . . . . . . . 11,318 1,213 2,252
------------ ----------- -----------

6,528,956 6,130,613 5,083,427
------------ ----------- -----------

Expenses:
Depreciation . . . . . . . . . . . . . . . . . 897,428 1,825,448 1,813,286
Property operating expenses. . . . . . . . . . 3,355,481 2,782,717 2,568,457
Amortization of deferred expenses. . . . . . . 100,234 177,822 140,586
Provision for value impairment (note 1). . . . 25,378,894 -- --
------------ ----------- -----------

29,732,037 4,785,987 4,522,329
------------ ----------- -----------

Net earnings (loss). . . . . . . . . . $(23,203,081) 1,344,626 561,098
============ =========== ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

UNAFFILIATED
VENTURE JMB-XI TOTAL
------------- ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1991 . . . . . . . . . . . . . $31,891,676 20,198,518 52,090,194

Capital contributions. . . . . . . . . . . . . . . . . 1,024,074 -- 1,024,074
Cash distributions . . . . . . . . . . . . . . . . . . -- (2,161,693) (2,161,693)
Net earnings (loss) (note 2) . . . . . . . . . . . . . (801,898) 1,362,996 561,098
----------- ----------- -----------

Balance at December 31, 1992 . . . . . . . . . . . . . 32,113,852 19,399,821 51,513,673

Capital contributions. . . . . . . . . . . . . . . . . 209,967 -- 209,967
Cash distributions . . . . . . . . . . . . . . . . . . -- (3,698,321) (3,698,321)
Net earnings (loss) (note 2) . . . . . . . . . . . . . (1,003,638) 2,348,264 1,344,626
----------- ----------- -----------

Balance at December 31, 1993 . . . . . . . . . . . . . 31,320,181 18,049,764 49,369,945

Capital contributions. . . . . . . . . . . . . . . . . 459,138 -- 459,138
Cash distributions . . . . . . . . . . . . . . . . . . -- (1,789,612) (1,789,612)
Net earnings (loss) (note 2) . . . . . . . . . . . . . (25,378,591) 2,175,510 (23,203,081)
----------- ----------- -----------

Balance at December 31, 1994 . . . . . . . . . . . . . $ 6,400,728 18,435,662 24,836,390
============ =========== ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . $(23,203,081) 1,344,626 561,098
Items not requiring (providing) cash:
Depreciation . . . . . . . . . . . . . . . . 897,428 1,825,448 1,813,286
Amortization of deferred expenses. . . . . . 100,234 177,822 140,586
Provision for value impairment . . . . . . . 25,378,894 -- --
Changes in:
Rents and other receivables. . . . . . . . . (607,899) 72 (347,605)
Prepaid expenses . . . . . . . . . . . . . . (1,110) (946) 2,732
Accounts payable . . . . . . . . . . . . . . (145,199) 430,787 10,914
Tenant security deposits . . . . . . . . . . 47,111 1,817 118,720
----------- ----------- -----------
Net cash provided by
operating activities . . . . . . . . . 2,466,378 3,779,626 2,299,731

Cash flows from investing activities:
Net purchases of short-term
investments. . . . . . . . . . . . . . . . . (98,281) -- --
Additions to investment property . . . . . . . (525,677) (124,624) (578,633)
Payment of deferred expenses . . . . . . . . . (231,425) (31,960) (427,461)
----------- ----------- -----------
Net cash used in
investing activities . . . . . . . . . (855,383) (156,584) (1,006,094)
----------- ----------- -----------
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

STATEMENTS OF CASH FLOWS - CONTINUED

1994 1993 1992
----------- ----------- -----------
Cash flows from financing activities:
Capital contributed to venture . . . . . . . . 459,138 209,966 1,024,074
Distributions to partners. . . . . . . . . . . (1,789,612) (3,698,321) (2,161,693)
----------- ----------- -----------

Net cash used in financing activities. . (1,330,474) (3,488,355) (1,137,619)
----------- ----------- -----------
Net increase (decrease) increase
in cash and cash equivalents . . . . . 280,521 134,687 156,018

Cash and cash equivalents,
at beginning of year . . . . . . . . . 448,443 313,756 157,738
----------- ----------- -----------
Cash and cash equivalents,
at end of year . . . . . . . . . . . . $ 728,964 448,443 313,756
=========== =========== ===========

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . $ -- -- --
=========== =========== ===========
Non-cash investing and financing activity. . . $ -- -- --
=========== =========== ===========

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

ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(1) BASIS OF ACCOUNTING

The accompanying financial statements have been prepared for the
purpose of complying with Rule 3.09 of Regulation S-X of the Securities and
Exchange Commission. They include the accounts of the unconsolidated joint
venture, Royal Executive Park II venture ("Venture"), in which JMB Income
Properties, Ltd.-XI ("JMB Income-XI") and an unaffiliated venture are the
partners.

The Venture's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying financial statements have been prepared from such records
after making appropriate adjustments to present the Venture's accounts in
accordance with generally accepted accounting principles ("GAAP"). Such
adjustments are not recorded on the records of the Venture. The net effect
of these items for the years ended December 31, 1994 and 1993 is summarized
as follows:
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

Notes to Financial Statements - Continued

1994 1993
----------------------------- -----------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . $25,416,869 23,202,375 50,048,512 23,276,762

Partners' capital accounts . . . . 24,836,390 22,632,417 49,369,945 22,612,771

Net earnings (loss). . . . . . . . (23,203,081) 1,350,121 1,344,626 1,454,733
=========== =========== ========== ==========

</TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

Notes to Financial Statements - Continued

Statement of Financial Accounting Standards No. 95 requires the
Venture 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. In
addition, the Venture records amounts held in U.S. Government obligations
at cost, which approximates market. For purposes of these statements, the
Venture's policy is to consider all such amounts held with original
maturities of three months or less ($692,065 at December 31, 1994) as cash
equivalents with any remaining amounts (generally with original maturities
of one year or less) reflected as short-term investments being held to
maturity.

Depreciation on buildings and improvements has been provided over the
estimated useful lives of the assets (5 to 30 years) using the straight-
line method.

Deferred expenses consist primarily of lease commissions which are
amortized over the terms stipulated in the related leases using the
straight-line method.

Although certain leases of the Venture provide for tenant occupancy
during periods for which no rent is due and/or increases in the minimum
lease payments over the term of the lease, rental income is accrued for the
full period of occupancy on a straight-line basis.

Maintenance and repair expenses are charged to operations as incurred.

Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives.

In 1994, the Venture recorded a provision for value impairment of
$25,378,894.

No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the venture partners rather than the
Venture.

(2) VENTURE AGREEMENT

A description of the acquisition of the property is contained in Note
3(c) of the consolidated financial statements of JMB Income - XI. Such
note is incorporated herein by reference.

(3) MANAGEMENT AGREEMENT - OTHER THAN VENTURES

ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

(4) LEASES

As Property Lessor

At December 31, 1994, the Venture's principal asset is an office
building complex. The Venture has determined that all leases relating to
this property are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of the property,
excluding the cost of the land, is depreciated over the estimated useful
life. Leases with tenants range in term from one to twenty-five years and
provide for fixed minimum rent and partial reimbursement of operating
costs.

1995. . . . . . . . . . . . . $ 5,654,415
1996. . . . . . . . . . . . . 5,460,232
1997. . . . . . . . . . . . . 5,455,040
1998. . . . . . . . . . . . . 5,330,098
1999. . . . . . . . . . . . . 4,804,742
Thereafter. . . . . . . . . . 6,858,801
-----------
$33,563,328
===========

(5) TRANSACTIONS WITH AFFILIATES

Fees, commissions and other expenses required to be paid by the
Venture to the General Partners and their affiliates as of December 31,
1994 and for the years ended December 31, 1994, 1993 and 1992 were as
follows:

<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONCLUDED

<CAPTION>
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees . . . . . . . . . . . $14,268 -- -- --
------- ------- ------- -----
$14,268 -- -- --
======= ======= ======= =====

<FN>
All amounts currently payable to the General Partners and their affiliates do not bear interest and are
expected to be paid in future periods.

</TABLE>

<TABLE>
SCHEDULE III
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1994

INITIAL COST TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) AT CLOSE OF PERIOD (B)
----------------------- COSTS -------------------------------------
BUILDINGS CAPITALIZED BUILDINGS
AND SUBSEQUENT TO AND
ENCUMBRANCE LAND IMPROVEMENTSACQUISITION(C) LAND IMPROVEMENTS TOTAL (D)
----------- ------------------------------------- ---------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

OFFICE BUILDINGS:
Rye Brook,
New York . . . $ -- 5,568,277 50,554,899 (20,802,989) 2,569,125 32,751,062 35,320,187
=========== ========== ========== =========== ========== ========== ==========

</TABLE>

<TABLE>
SCHEDULE III - CONTINUED
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1994

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1994
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ---------------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OFFICE BUILDINGS:
Rye Brook,
New York. . . . . . . . . $13,044,923 1986 2/12/87 5-30 years 878,225
=========== =======
<FN>
--------------

Notes:
(A) The initial cost to the Venture represents the original purchase price of the property, including
amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.

(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
approximately $33,501,523.

</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1994

(D) Reconciliation of real estate owned:

<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . $59,642,842 59,518,218 58,939,584
Additions during period. . . . . . . . . . . 525,677 124,624 578,634
Provision for value impairment (C) . . . . . (24,848,332) -- --
----------- ----------- -----------

Balance at end of period . . . . . . . . . . $35,320,187 59,642,842 59,518,218
=========== =========== ===========

(E) Reconciliation of accumulated depreciation:

Balance at beginning of period . . . . . . . $12,147,495 10,322,047 8,508,761
Depreciation expense . . . . . . . . . . . . 897,428 1,825,448 1,813,286
----------- ----------- -----------

Balance at end of period . . . . . . . . . . $13,044,923 12,147,495 10,322,047
=========== =========== ===========

</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

There were no changes of or disagreements with accountants during 1993
and 1994.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Managing General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. JMB 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, Income Associates-XI, L.P., an Illinois limited
partnership with JMB as the sole general partner. The Associate General
Partner shall be directed by a majority in interest of its limited partners
(who are generally officers, directors and affiliates of JMB or its
affiliates) as to whether to provide its approval of any sale of real
property (or any interest therein) of the Partnership. Various
relationships of the Partnership to the Managing General Partner and its
affiliates are described under the caption "Conflicts of Interest" at pages
12-16 of the Prospectus, of which description is hereby incorporated herein
by reference to Exhibit 3-A to the Partnership's Report on Form 10-K for
December 31, 1992 (File No. 0-15966) dated March 19, 1993.

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

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

Judd D. Malkin Chairman 5/03/71
Director 5/03/71
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
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Jeffrey R. Rosenthal Managing Director-Corporate 4/22/91
Chief Financial Officer 8/01/93
Douglas H. Cameron Executive Vice President 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Ira J. Schulman Executive Vice President 6/01/88
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91

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 Managing General Partner to be held on
June 7, 1995. 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 Managing General Partner to be held on June 7,
1995. 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-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV
("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-
XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB
Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage Partners,
Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB
Income Properties, Ltd.-VIII ("JMB Income-VIII"), JMB Income Properties,
Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-X ("JMB Income-X"),
JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB Income Properties,
Ltd.-XII ("JMB Income-XII") and JMB Income Properties, Ltd.-XIII ("JMB
Income-XIII"). Most of the foregoing directors and officers are also
officer and/or directors of various affiliated companies of JMB including
Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.
("Arvida")), Arvida/JMB Managers-II, Inc. (the general partner of
Arvida/JMB Partners, L.P.-II ("Arvida-II")) and Income Growth Managers,
Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd.
("IDS/BIG")). Most of such directors and officers are also partners of
certain partnerships which are associate general partners in the following
real estate limited partnerships: Carlyle-VII, Carlyle-IX, Carlyle-X,
Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV,
Carlyle-XVI, Carlyle-XVII, JMB Income-VI, JMB Income-VII, JMB Income-VIII,
JMB Income-IX, JMB Income-X, JMB Income-XII, JMB Income-XIII, Mortgage
Partners, Mortgage Partners-II, Mortgage Partners-III, Mortgage
Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.

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

Judd D. Malkin (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is 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, and a director of
Catellus Development Corporation, a major diversified real estate
development company. He is a Certified Public Accountant.

Neil G. Bluhm (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is 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 a member of the
Bar of the State of Illinois and a Certified Public Accountant.

Burton E. Glazov (age 56) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.

Stuart C. Nathan (age 53) has been associated with JMB since July,
1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.

A. Lee Sacks (age 61) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.

John G. Schreiber (age 48) 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 which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. Since 1994, Mr. Schreiber has also
served as a trustee of Amli Residential Property Trust, a publicly-traded
real estate investment trust that invests in multi-family properties. Mr.
Schreiber 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 a
number of investment companies advised or managed by T. Rowe Price
Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.

H. Rigel Barber (age 45) has been associated with JMB since March,
1982. He holds a J.D. degree from Northwestern Law School and is a member
of the Bar of the State of Illinois.

Glenn E. Emig (age 47) has been associated with JMB since December,
1979. Prior to becoming Vice President of JMB in 1993, Mr. Emig was
Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters Degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.

Jeffrey R. Rosenthal (age 43) has been associated with JMB since
December, 1987. He is a Certified Public Accountant.

Douglas H. Cameron (age 45) is Executive Vice President of JMB. Mr.
Cameron has been associated with JMB since April, 1977. Prior to becoming
Executive Vice President of JMB in 1995, Mr. Cameron was Managing Director
of Capital Markets -- Property Sales from June 1990. He holds a Masters
Degree in Business Administration from the University of Southern
California.

Gary Nickele (age 42) 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.

Ira J. Schulman (age 43) has been associated with JMB since February,
1983. He holds a Masters degree in Business Administration from the
University of Pittsburgh.

Gailen J. Hull (age 46) 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.

Howard Kogen (age 59) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The General Partners of
the Partnership are entitled to receive a share of cash distributions, when
and as cash distributions are made to the Investors, and a share of profits
or losses as described under the caption "Compensation and Fees" at pages
8-12, "Cash Distributions" at pages 56-58, "Allocation of Profits or Losses
for Tax Purposes" at page 58 and "Cash Distributions; Allocations of
Profits and Losses" at pages A-8 to A-12 of the Partnership Agreement
included as an exhibit to the Prospectus, which descriptions are hereby
incorporated herein by reference to Exhibit 3-A to Partnership's Report on
Form 10-K for December 31, 1992 (File No. 0-15966) dated March 19, 1993.
Reference is also made to Notes 5 and 7 for a description of such
transactions, distributions and allocations. In 1994, 1993 and 1992, no
cash distributions were paid to the General Partners.

Affiliates of the Managing General Partner provided property
management services to the Partnership for 1994 for the Riverside Square
Mall in Hackensack, New Jersey at a fee not to exceed 4% of the fixed and
percentage rent of property, plus leasing commissions and the Bank of
Delaware Office Building in Wilmington, Delaware at fees calculated at 3%
of the gross revenues of the property plus leasing commissions. In 1994,
such affiliates earned property management and leasing fees amounting to
$608,703, of which $300,000 was unpaid as of December 31, 1994. As set
forth in the Prospectus of the Partnership, the Managing 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 6% of the
gross receipts 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 Managing General
Partner, earned and received insurance brokerage commissions in 1994 aggre-
gating $45,765 in connection with the provision of insurance coverage for
certain of the real property investments of the Partnership and its
venture. Such commissions are at rates set by insurance companies for the
classes of coverage provided.

The General Partners of the Partnership may be reimbursed for their
direct salaries and expenses relating to the administration of the
Partnership and the operation of the Partnership's real property
investments. In 1994, an affiliate of the General Partners earned
reimbursement for such expenses in the amount of $144,232, of which $41,116
was unpaid at December 31, 1994.

The Partnership is permitted to engage in various transactions
involving affiliates of the Managing General Partner of the Partnership, as
described under the captions "Compensation and Fees" at pages 8-12,
"Conflicts of Interest" at pages 12-16 and "Rights, Powers and Duties of
General Partners" at pages A-12 to A-22 of the Partnership Agreement,
included as an exhibit to the Prospectus, which descriptions are hereby
incorporated herein by reference to Exhibit 3-A to Partnership's Report on
Form 10-K for December 31, 1992 (File No. 0-15966) dated March 19, 1993.
The relationship of the Managing General Partner (and its directors and
officers) to its affiliates is set forth above in Item 10 above and Exhibit
21 hereto.

<TABLE>
<CAPTION>
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 Managing General Partner and its officers and directors 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 JMB Realty Corporation 5 Interests (1) Less than 1%
Interests indirectly

Limited Partnership Managing General 5 Interests (1) Less than 1%
Interests Partner and its indirectly
officers and
directors as a
group

<FN>
--------------

(1) Includes 5 Interests owned by the initial limited partner of the Partnership for which JMB Realty
Corporation, the indirect majority shareholder of the initial limited partner, is deemed to have the voting and
investment power.

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

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

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the General
Partners, the executive officers and directors of the Managing General Partner and persons who own more than ten
percent of the Interests to file an initial report of ownership or changes in ownership of Interests on Form 3, 4
or 5 with the Securities and Exchange Commission (the "SEC"). Such persons are also required by SEC rules to
furnish the Partnership with copies of all Section 16(a) forms they file. Timely filing of an initial report of
ownership on Form 3 or Form 5 was not made on behalf of Glenn Emig.

</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no significant transactions or business relationships with
the Managing 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 July 11,
1984 as supplemented July 24, 1984 and November 26, 1984, as filed with the
Commission pursuant to Rules 424(b) and 424(c), is hereby incorporated
herein by reference. Copies of pages 8-12, 56-58 and A-8 to A-12 are
hereby incorporated herein by reference to Exhibit 3-A to the Partnership's
Report on Form 10-K for December 31, 1992 (File No. 0-15966) dated March
19, 1993.

3-B. Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, which agreement is
hereby incorporated herein by reference to Exhibit 3-B to the Partnership's
Report on Form 10-K for December 31, 1992 (File No. 0-15966) dated March
19, 1993.

4-A. Mortgage loan agreement, Mortgage and Security
Agreement, Secured Promissory Note B, Secured Promissory Note A and
Assignment of Leases and Rents between the Partnership and Principal Mutual
Life Insurance Company dated August 30, 1994 are hereby incorporated herein
by reference to the Partnership's Report on Form 10-K for December 31, 1994
(File No. 0-15966) dated March 27, 1995.

4-B. Mortgage loan agreement between the Partnership
and Equitable Real Estate Investment Management, Inc. dated February 28,
1989 relating to the Bank of Delaware is hereby incorporated herein by
reference to Exhibit 4-B to the Partnership's Report on Form 10-K for
December 31, 1992 (File No. 0-15966) dated March 19, 1993.

4-C. Mortgage loan agreement between San Jose and
Connecticut General Life Insurance Co. dated June 20, 1985 relating to Park
Center Plaza are hereby incorporated by reference to the Partnership's
Report on Form 8-K (File No. 0-15966) dated June 20, 1985.

4-D. Mortgage loan agreement, Amended and Restated
Deed of Trust, Security Agreement with assignment of Rents and Fixture
Filing and Real Estate tax escrow and Security Agreement between San Jose
and Connecticut General Life Insurance Co. dated November 30, 1994 is filed
herewith.

10-A.Acquisition documents relating to the purchase by
the Partnership of Riverside Square in Hackensack, New Jersey are hereby
incorporated by reference to the Partnership's prospectus on Form S-11
(File No. 2-90503) dated July 11, 1984.

10-B.Acquisition documents relating to the purchase by
the Partnership of the Bank of Delaware Office Building in Wilmington,
Delaware are hereby incorporated by reference to the Partnership's Report
on Form 8-K (File No. 0-15966) dated December 27, 1984.

10-C.Acquisition documents including the venture
agreement relating to the purchase by the Partnership of Park Center Plaza
in San Jose, California are hereby incorporated by reference to the
Partnership's Report on Form 8-K (File No. 0-15966) dated June 20, 1985.

10-D.Sale documents and exhibits thereto relating to
the Partnership's sale of the Genesee Valley Shopping Center in Flint,
Michigan are hereby incorporated by reference to the Partnership's Report
on Form 8-K (File No. 0-15966) dated June 29, 1990.

10-E.Deed in Lieu of Foreclosure Agreement and
Memorandum of Mutual Releases dated November 15, 1994 between Three Hundred
Delaware Avenue Associates, L.P. and EML Associates are hereby incorporated
by reference to the Partnership's Report on Form 8-K (File No. 0-15966)
dated November 15, 1994.

21. List of Subsidiaries

24. Powers of Attorney

27. Financial Data Schedule

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

Although certain additional long-term debt instruments
of the Registrant have been excluded from Exhibit 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such agreements
to the Securities and Exchange Commissions upon request.

(b) The following report on Form 8-K has been filed for the
quarter covered by this report.

(i) The Partnership report on Form 8-K (File No.0-15966)
describing the deed in lieu of foreclosure agreement for the Bank of
Delaware.

No annual report or proxy material for the year 1994 has been sent to
the Partners of the Partnership. An annual report will be sent to the
Partners subsequent to this filing.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

JMB INCOME PROPERTIES, LTD. - XI

By: JMB Realty Corporation
Managing General Partner

GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 27, 1995

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
Managing General Partner

JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and Director
Date: March 27, 1995

NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 27, 1995

H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 27, 1995

GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 27, 1995

JEFFREY R. ROSENTHAL*
By: Jeffrey R. Rosenthal, Chief Financial Officer
Principal Financial Officer
Date: March 27, 1995

GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 27, 1995

A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 27, 1995

By: STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 27, 1995

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

GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 27, 1995

JMB INCOME PROPERTIES, LTD. - XI

EXHIBIT INDEX

DOCUMENT
INCORPORATED
BY REFERENCE Page
------------ ----

3-A. Pages 8-12, 56-58 and A-8 to
A-12 of the Prospectus dated
July 11, 1984 Yes

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

4-A. Mortgage loan agreement
related to Riverside Square Yes

4-B. Mortgage loan agreement
related to Bank of Delaware Yes

4-C. Mortgage loan agreement
related to Park Center
Financial Center Yes

4-D. Mortgage loan agreement
related to Park Center Plaza No

10-A. Acquisition documents
related to Riverside Square Yes

10-B. Acquisition documents
related to Bank of Delaware Yes

10-C. Acquisition documents
related to Park Center Plaza Yes

10-D. Sale documents related
to Genesee Valley Yes

10-E. Disposition documents related
to Bank of Delaware Yes

21. List of Subsidiaries No

24. Powers of Attorney No

27. Financial Data Schedule No

AMENDED AND RESTATED PROMISSORY NOTE
(150 Almaden/185 Park)

$22,500,000 November __, 1994

FOR VALUE RECEIVED, JMB/SAN JOSE ASSOCIATES, an Illinois
general partnership (hereinafter referred to as "Maker"), promises
to pay to the order of Connecticut General Life Insurance Company,
a Connecticut corporation having its principal address at 900
Cottage Grove Road, Hartford, Connecticut 06152-2215 (the
"Payee"), at such principal address or at such other place as the
Holder hereof may designate in writing (the legal holder from time
to time of this Note, including Payee as the initial holder,
hereinafter referred to as "Holder"), the principal sum of Twenty-
Two Million Five Hundred Thousand and No/100 Dollars
($22,500,000), or so much thereof as may be advanced to Maker by
Holder (hereinafter referred to as "Principal Indebtedness"),
together with interest thereon at an annual rate of eight and
four-tenths percent (8.4%) (the "Interest Rate"), in accordance
with the provisions hereinafter set forth.

1. Terms of Payment. During the first three (3) Loan
Years (as hereinafter defined) Maker shall pay to Holder on the
first day of each calendar month commencing on the first calendar
day of the second month following the date hereof (such payment
dates being hereinafter referred to as "monthly payment dates" or
singularly as a "monthly payment date") interest on the Principal
Indebtedness from time to time outstanding, at the Interest Rate,
for the immediately preceding calendar month. Interest shall be
calculated and applied on the basis of a 360-day year consisting
of twelve 30-day months, except that interest for any partial
month shall be calculated and applied on the basis of a 365-day
year and the actual number of days in such partial month during
which the Principal Indebtedness is outstanding. Thereafter, on
each monthly payment date, commencing on the first calendar day of
the fourth Loan Year, through and including the Maturity Date
(hereinafter defined), Maker shall pay to Holder the sum of
$179,662.36, to be applied first to interest on the Principal
Indebtedness from time to time outstanding at the Interest Rate
and the balance to be applied in reduction of the Principal
Indebtedness. The interest component of the monthly payments
shall be calculated and applied on the basis of a 360-day year
consisting of twelve 30-day months. On November , 2001 (the
"Maturity Date") Maker shall pay to Holder the entire Principal
Indebtedness then remaining unpaid, together with accrued and
unpaid interest thereon at the Interest Rate and any other charges
due under this Note, the Deed of Trust (hereinafter defined), and
any other documents evidencing or securing or pertaining to the
advancement or disbursement of the Principal Indebtedness,
including, without limitation, the Environmental Indemnification
Agreement of even date herewith (the "Environmental Indemnity")
from Maker, among others, to Payee (collectively, the "Loan
Documents"). The period from and including the date hereof to the
Maturity Date will be referred to hereinafter as the "Term".

MAKER HEREBY ACKNOWLEDGES AND UNDERSTANDS THAT THE
FOREGOING INSTALLMENTS WILL NOT BE SUFFICIENT TO REPAY THE
PRINCIPAL AMOUNT OF THIS NOTE AS OF THE MATURITY DATE BECAUSE THE
COMBINED PRINCIPAL AND INTEREST PAYMENTS HEREUNDER REFLECT FULL
AMORTIZATION OVER A PERIOD OF TWENTY FIVE (25) YEARS AND THE TERM
OVER WHICH SUCH COMBINED PRINCIPAL AND INTEREST PAYMENTS ARE DUE
UNDER THIS NOTE IS APPROXIMATELY FOUR (4) YEARS AND, THEREFORE, A
SIGNIFICANT PORTION OF THE PRINCIPAL BALANCE OF THIS NOTE SHALL BE
UNPAID AND DUE AND PAYABLE ON THE MATURITY DATE.

2. Prepayment. Except as specifically provided herein or
in the Deed of Trust, no prepayment of the Principal Indebtedness
shall be allowed during the first two (2) Loan Years (the "Closed
Period"). "Loan Year" (or collectively, "Loan Years") shall mean
each consecutive 12-month period measured from the first day of
the first calendar month after the date hereof. Maker, whether or
not a debtor in a proceeding under Title 11, United States Code,
may prepay the Principal Indebtedness in full, but not in part, on
any monthly payment date after the Closed Period, provided Maker
gives Holder sixty (60) days prior written notice and pays, along
with all accrued, unpaid interest and all other sums due under any
of the Loan Documents, a prepayment fee as described below.

After the Closed Period the prepayment fee shall be
the greater of:

(a) one percent (1%) of the then-existing Principal
Indebtedness, or

(b) Yield Maintenance as defined below.

The foregoing prepayment fee will be due when the loan
is prepaid after the Closed Period and prior to the date which is
ninety (90) days prior to the Maturity Date, whether such
prepayment is voluntary or results from default, acceleration or
any other cause. Accordingly, the Principal Indebtedness may be
prepaid at par during the last ninety (90) days of the Term.

Except as otherwise expressly provided herein or in
any other Loan Document, in the event of a prepayment during the
Closed Period resulting from a default, acceleration or any other
reason, Maker shall pay to Holder a default prepayment fee
calculated as follows:

(d) Yield Maintenance as defined below:

Yield Maintenance: Yield Maintenance is defined as
the sum of the present values on the date of prepayment of each
Monthly Interest Shortfall for the remaining Term of the loan,
discounted at the monthly Treasury Yield.

The "Monthly Interest Shortfall" for any monthly
payment date is the product of (i) the positive difference, if
any, of the Semi-Annual Equivalent Rate less the Treasury Yield,
divided by 12, times (ii) the outstanding Principal Indebtedness,
on the monthly payment date for which the calculation is made for
each full and partial month remaining in the Term.

The present value is then determined by discounting
each Monthly Interest Shortfall at the Treasury Yield divided by
twelve.

The "Semi-Annual Equivalent Rate" for this loan is
8.548%.

The "Treasury Yield" will be determined by reference
to the Federal Reserve Statistical Release H.15 (519) of Selected
Interest Rates (or any similar successor publication of the
Federal Reserve) for the first week ending not less than two full
weeks prior to the prepayment date. If the remaining Term is less
than one year, the Treasury Yield will equal the yield for 1-Year
Treasury Constant Maturities. If the remaining Term is equal to
one of the maturities of the Treasury Constant Maturities (e.g.,
1-year, 2-year, etc.), then the Treasury Yield will equal the
yield for the Treasury Constant Maturity with a maturity equalling
the remaining Term. If the remaining Term is longer than one
year, but does not equal one of the maturities of the Treasury
Constant Maturities, then the Treasury Yield will equal the yield
for the Treasury Constant Maturity closest to, but not exceeding,
the remaining Term.

MAKER HEREBY EXPRESSLY (A) WAIVES ANY RIGHTS IT MAY
HAVE UNDER CALIFORNIA CIVIL CODE SECTION 2954.10 TO PREPAY THIS
NOTE, IN WHOLE OR IN PART, WITHOUT PENALTY, UPON ACCELERATION OF
THE MATURITY DATE OF THIS NOTE AND (B) AGREES THAT IF A PREPAYMENT
OF ANY OR ALL OF THIS NOTE IS MADE, UPON OR FOLLOWING ANY
ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER ON
ACCOUNT OF ANY DEFAULT BY MAKER, THEN MAKER SHALL BE OBLIGATED TO
PAY CONCURRENTLY THEREWITH, AS A PREPAYMENT FEE, THE APPLICABLE
SUM SPECIFIED IN THIS SECTION. BY INITIALLING THIS PROVISION IN
THE SPACE PROVIDED BELOW, MAKER HEREBY DECLARES THAT PAYEE'S
AGREEMENT TO MAKE THE LOAN EVIDENCED BY THIS NOTE AT THE INTEREST
RATE AND FOR THE TERM SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE
CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY MAKER, FOR THIS WAIVER
AND AGREEMENT.

Initials: Maker __________.

The aforesaid prepayment fees do not constitute a
penalty, but rather represent the reasonable estimate, agreed to
between Maker and Holder, of a fair compensation for the loss that
may be sustained by Holder due to prepayment of the Loan prior to
the Maturity Date. Any prepayment fee required pursuant to the
preceding paragraphs shall be paid without prejudice to the right
of Holder to collect any of the amounts owing under this Note or
the Deed of Trust or otherwise to enforce any of its rights or
remedies arising out of an Event of Default hereunder.

3. Security. This Note is secured by, among other
things, a Deed of Trust, Security Agreement with Assignment of
Rents and Fixture Filing (hereinafter referred to as the "Deed of
Trust") given by Maker to Payee, of even date herewith,
constituting a first lien on Maker's fee interest in certain real
estate located in the City of San Jose, County of Santa Clara,
State of California, and a first priority security interest in
Maker's personal property and an assignment of rents and leases,
each with respect to said real estate, and such other security
described in the Loan Documents (hereinafter referred to as the
"Security").

4. Location and Medium of Payments. The sums payable
under this Note or under the Deed of Trust shall be paid to Holder
at its principal address hereinabove set forth, or at such other
place as Holder may from time to time hereafter designate to Maker
in writing, in legal tender of the United States of America.

5. Acceleration of Maturity. At the option of Holder,
which may be exercised at any time after one or more of the
following events (each being an "Event of Default") shall have
occurred, the whole of the Principal Indebtedness, together with
all accrued, unpaid interest, applicable prepayment fees, if any,
and other charges due under any of the Loan Documents, shall
immediately become due and payable ("Acceleration of Maturity"):
(a) if any payment of any installment of the Principal
Indebtedness, interest and/or any other sum due hereunder is not
received by Holder within five (5) business days following the
date when such payment was due; or (b) if an Event of Default
shall occur under the Deed of Trust or any other of the Loan
Documents which is not cured within any applicable grace period
afforded therein, if any.

6. Late Charges; Interest Following Event of Default. If
any principal, interest or escrow payment due under this Note, the
Deed of Trust, or any other Loan Document, is not paid within five
(5) business days after the date when such payment is due, without
regard to any cure or grace period, Maker shall pay and Holder
shall be entitled to collect a late payment charge for each month
or fraction thereof during which such payment is not made within
five (5) business days after the date when such payment is due and
for each month thereafter that such sum remains unpaid, equal to
the lesser of four percent (4%) of such late payment or the
maximum amount that the parties may contract for under applicable
law, as the reasonable estimate by Holder and Maker of a fair
average compensation for the loss that may be sustained by Holder
due to the failure of Maker to make timely payments, and such
amount shall be secured by the Deed of Trust and the other Loan
Documents. Such late charge shall be paid without prejudice to
the right of Holder to collect any other amounts provided to be
paid or to declare an Event of Default under this Note or the Deed
of Trust.

In addition to any late payment charge which may be
due under this Note, Maker shall pay interest on all sums due
hereunder at a rate (the "Default Rate") equal to the lesser of
(i) the Interest Rate plus four percent (4%) per annum, or (ii)
the maximum rate that the parties may contract for under
applicable law, from and after the first to occur of the following
events: if Holder elects to cause the Acceleration of Maturity; if
an Event of Default occurs under Section 22(d) or 22(e) of the
Deed of Trust (which is not cured within any applicable grace
period afforded therein); or if all sums due hereunder are not
paid on the Maturity Date.

7. Collection and Enforcement Costs. Maker, within five
(5) business days of demand, shall pay Holder for all reasonable
out of pocket costs and expenses, including without limitation
attorneys' fees, paid or incurred by Holder in connection with the
collection of any sum due hereunder, or in connection with
enforcement of any of Holder's rights or Maker's obligations under
this Note, the Deed of Trust, or any of the other Loan Documents.

8. Continuing Liability. The obligation of Maker to pay
the Principal Indebtedness, interest and all other sums due
hereunder shall continue in full force and effect and in no way be
impaired, until the actual payment thereof to Holder, and in case
of a sale or transfer of all or any part of the Security, or in
case of any further agreement given to secure the payment of this
Note, or in case of any agreement or stipulation extending the
time or modifying the terms of payment above recited, Maker shall
nevertheless continue to be liable on this Note, as extended or
modified by any such agreement or stipulation, unless released and
discharged in writing by Holder.

9. Joint and Several Liability. If more than one person,
corporation, partnership or other entity shall have liability
under this Note, then each person and entity shall be fully liable
for all obligations of Maker hereunder, and such obligations shall
be joint and several, all subject to the provisions of
Paragraph 15 below.

10. No Oral Changes; Waivers. This Note may not be
changed orally, but only by an agreement in writing signed by the
party against whom enforcement of a change is sought. The
provisions of this Note shall extend and be applicable to all
renewals, amendments, extensions, consolidations, and
modifications of the other Loan Documents, and any and all
references herein to the Loan Documents shall be deemed to include
any such renewals, amendments, extensions, consolidations, or
modifications thereof.

Maker and any future indorsers, sureties, and
guarantors hereof, jointly and severally, waive presentment for
payment, demand, notice of nonpayment, notice of dishonor, protest
of any dishonor, notice of protest, and protest of this Note, and
all other notices in connection with the delivery, acceptance,
performance, default (except notice of default required hereby, if
any), or enforcement of the payment of this Note, and they agree
that the liability of each of them shall be unconditional without
regard to the liability of any other party and shall not be in any
manner affected by an indulgence, extension of time, renewal,
waiver, or modification granted or consented to by the Holder; and
Maker and all future indorsers, sureties and guarantors hereof
consent to any and all extensions of time, renewals, waivers, or
modifications that may be granted by the Holder hereof with
respect to the payment or other provisions of this Note, and to
the release of the collateral, or any part thereof, with or
without substitution, and agree that additional makers, indorsers,
guarantors, or sureties may become parties hereto without notice
to them or affecting their liability hereunder.

Holder shall not by any act of omission or commission
be deemed to waive any of its rights or remedies hereunder unless
such waiver be in writing and signed by Holder, and then only to
the extent specifically set forth therein; a waiver on one event
shall not be construed as continuing or as a bar to or waiver of
such right or remedy on a subsequent event. The acceptance by
Holder of payment hereunder that is less than payment in full of
all amounts due at the time of such payment shall not without the
express written consent of Holder: (i) constitute a waiver of the
right to exercise any of Holder's remedies at that time or at any
subsequent time, (ii) constitute an accord and satisfaction, or
(iii) nullify any prior exercise of any remedy.

No failure to cause an acceleration of the Maturity
Date hereof by reason of an Event of Default hereunder, acceptance
of a past due installment, or indulgences granted from time to
time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver
of such right of acceleration or of the right of Holder thereafter
to insist upon strict compliance with the terms of this Note, or
(ii) to prevent the exercise of such right of acceleration or any
other right granted hereunder or by the laws of the State of
California; and, to the maximum extent permitted by law, Maker
hereby expressly waives the benefit of any statute or rule of law
or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the
foregoing.

To the maximum extent permitted by law, Maker hereby
waives and renounces for itself, its heirs, successors and
assigns, all rights to the benefits of any statute of limitations
and any moratorium, reinstatement, marshalling, forbearance,
valuation, stay, extension, redemption and appraisement now
provided, or which may hereafter be provided, by the Constitution
and laws of the United States of America and of any state thereof,
both as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the
obligations evidenced by this Note.

11. Bind and Inure. This Note shall bind and inure to the
benefit of the parties hereto and their respective legal
representatives, heirs, successors and assigns.

12. Applicable Law. The provisions of this Note shall be
construed and enforceable in accordance with the laws of the State
of California.

If any provision of this Note or the application
hereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, neither the remainder of
this Note nor the application of such provision to any other
person or circumstance shall be affected thereby, but rather the
same shall be enforced to the greatest extent permitted by law.

13. Usury. It is hereby expressly agreed that if from any
circumstances whatsoever fulfillment of any provision of this
Note, at the time performance of such provision shall be due,
shall involve transcending the limit of validity presently
prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso
facto the obligation to be fulfilled shall be reduced to the limit
of such validity, so that in no event shall any exaction be
possible under this Note that is in excess of the limit of such
validity. In no event shall Maker be bound to pay for the use,
forbearance or detention of the money loaned pursuant hereto,
interest of more than the current legal limit; the right to demand
any such excess being hereby expressly waived by Holder.

14. Notice. Any notice, request, demand, statement or
consent made hereunder shall be in writing signed by the party
giving such notice, request, demand, statement or consent, and
shall be delivered personally, or delivered to a reputable
overnight delivery service providing a receipt, or deposited in
the United States Mail, postage prepaid and registered or
certified mail, return receipt requested, addressed as set forth
below or to such other address within the continental United
States of America as may have theretofore been designated in
writing. The effective date of any notice given as aforesaid
shall be the date of personal service, one (1) business day after
delivery to such overnight delivery service, or three (3) business
days after being deposited in the United States Mail, whichever is
applicable. For purposes hereof, the addresses are as follows:

If to Holder: Connecticut General Life Insurance Company
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Attn: Investment Services, S-319

With a copy to: CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Attn: Real Estate Division, S-215A

If to Maker: JMB/San Jose Associates
c/o JMB Realty Corporation
900 N. Michigan Avenue
Chicago, Illinois 60611
Attn: Director of Finance

With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, CA 90067
Attn: Real Estate Notices (DSB)

15. Nonrecourse. Notwithstanding any provision herein
or in any other Loan Document to the contrary, Maker's liability
for repayment of the Principal Indebtedness, interest and all
other sums due under this Note or any of the other Loan Documents
or the performance of any obligation hereunder or under any other
Loan Document shall be limited to the Security, except as provided
in this Section 15. Accordingly, no judgment for the repayment of
the Principal Indebtedness or the performance of any other
obligation, or to collect any amount payable under any of the Loan
Documents shall be enforced against Maker or any other party
personally in any action to foreclose the Deed of Trust or to
otherwise realize upon the Security or to collect any amount
payable under any Loan Document. Nothing herein contained shall
be construed as prohibiting Holder from exercising any and all
remedies which the Loan Documents permit, including the right to
bring actions or proceedings (including an action or suit for
judicial foreclosure) against Maker and to enter a judgment
against Maker, so long as the exercise of any remedy does not
extend to obtaining a judgment in the nature of a deficiency
judgment or to the execution against or recovery out of any
property of Maker or any direct or indirect partner in Maker other
than the Security and other security furnished under the Loan
Documents on account of a judgment in the nature of a deficiency
judgment. Notwithstanding the foregoing limitations, Maker and
its general partners (but not any other sub-tier entities) shall
be liable for the following acts or omissions, to the extent
described:

(a) (i) misapplying (i.e. using in a manner other
than as permitted under the Loan Documents) any condemnation
awards or insurance proceeds attributable to the Security, to the
full extent of such awards or proceeds so misapplied; (ii) at the
time of foreclosure or conveyance in lieu thereof, failing to turn
over any unapplied security deposits attributable to the Security
and required to be held by Maker under the terms of any and all
leases, to the full extent of such failure; (iii) collecting any
rents in advance in violation of any covenant contained in the
Loan Documents, to the full extent of such rents so collected in
advance; (iv) committing fraud, intentional misrepresentation or
waste in connection with the operation of the Security or the
making of the loan evidenced hereby, to the full extent of any
remedies available at law or in equity; (v) failing to pay when
due any debt service on any indebtedness related to the Security,
operating and maintenance charges, insurance premiums, deposits
into a reserve for replacements or any other sums due under the
Loan Documents (the existence of which are known to Maker), but
only to the extent that gross revenues from the Security during
the six (6) months prior to a notice of acceleration to Maker
through the date of foreclosure or conveyance in lieu thereof were
otherwise sufficient to pay such expenses but were not so used;
and

(b) Under any separate guaranty, master lease or
indemnity agreement from Maker or its general partners including,
but not limited to, the Environmental Indemnity, provided that
such agreement expressly states that recourse thereunder is an
exception to the limitation on liability provided herein.

Notwithstanding any provision hereof to the contrary,
Holder shall be permitted to bring an action against Maker and its
general partners personally but not against any sub-tier entities
and to execute against and recover out of any property of Maker or
its general partners (but not against or out of any property of
any other sub-tier entities), for all sums due pursuant to the
Loan Documents to the extent permitted by the terms of Section
726.5 of the California Code of Civil Procedure as it may be
amended from time to time ("Section 726.5"), and to have the
rights and remedies of an unsecured lender to the extent permitted
thereunder. If Holder exercises the rights and remedies of an
unsecured creditor in accordance with this grammatical paragraph,
Maker and its general partners (but not any other sub-tier
entities) promise to pay Holder, on demand by Holder, following
such exercise, all amounts owed to Holder under the Loan
Documents, and Maker and its general partners (but not any other
sub-tier entity) agree that Maker and its general partners (but
not any other sub-tier entities) will be personally liable for the
payment of all such sums.

Notwithstanding anything herein or in any other Loan
Document to the contrary, no present or future constituent partner
in or agent of the general partners of Maker or their respective
successors or assigns, nor any shareholder, officer, director,
employee, trustee, beneficiary or agent of any corporation or
trust of agent of Maker or of any constituent partner in Maker
shall be personally liable, directly or indirectly under or in
connection with this Note or any other Loan Document, or any
instrument or certificate securing or otherwise executed in
connection with this Note, the Deed of Trust, or any other Loan
Document or any amendments or modifications thereto made at any
times heretofore or hereafter and Holder and Holder's successors
and assigns hereby waive such personal liability. Accordingly,
with respect to the foregoing exceptions to the non-recourse
provisions contained in Section 15(a) and (b) of this Note, and
the Environmental Indemnity, Holder's recourse shall be limited
solely to the assets of Maker and its general partners (but of no
other sub-tier entity).

For the purposes of this Note, the Deed of Trust, each
of the other Loan Documents and any such instruments and
certificates and any amendments or modifications thereto, neither
a negative capital account of any constituent partner in Maker nor
any obligation to restore a negative capital account of Maker or
of any constituent partner in Maker shall at any time be deemed to
be the property or asset of Maker or any such other constituent
partner and neither Holder nor its successors and assigns shall
have the right to collect, enforce or proceed against or with
respect to any such negative capital account or a partner's
obligation to restore or contribute. As used in this paragraph,
"constituent partner" means a partner in Maker or in a partnership
that has a direct or indirect interest (through one or more
partnerships) in Maker.

16. Amendment and Restatement. This Amended and Restated
Promissory Note amends, modifies and restates, in its entirety,
that certain Promissory Note dated September 29, 1986 from Maker
to Holder in the original principal amount of $25,000,000, as well
as any and all amendments, restatements, modifications and
allonges thereto (the "Original Note"). All references to this
Note contained herein or in any of the other Loan Documents shall
be deemed to mean the Original Note as restated hereby. Maker
covenants and agrees that there are no defenses or off-sets with
respect to this Note, the indebtedness evidenced in connection
with same, or with respect to the enforcement or collection
thereof. Maker further covenants and agrees that each and every
provision of this Note is in full force and effect and is the
lawful and binding obligation of Maker, enforceable in accordance
with its terms. Maker and Payee do not intend that this Note be
construed as a novation of the Original Note or any other Loan
Document.

17. Time of the Essence. Time is of the essence in this
Note and the other Loan Documents.

18. Attorneys' Fees. Any reference to "attorney fees",
"attorney's fees", or "attorneys' fees" in this document means
both the reasonable out of pocket fees, charges and costs incurred
by Holder through its retention of outside legal counsel,
paralegals and legal assistants and the reasonable allocable fees,
costs and charges for services rendered by Holder's in-house
counsel, paralegals and legal assistants. Any reference to
"attorney fees", "attorney's fees", or "attorneys' fees" shall
also include but not be limited to those reasonable out of pocket
attorneys or legal fees, costs and charges incurred by Holder in
the collection of any Principal Indebtedness, the enforcement of
any obligations hereunder or under any other Loan Document, the
protection of the Security, the foreclosure of the Deed of Trust,
the sale of the Security by power of sale under the Loan
Documents, the defense of actions arising hereunder or under any
other Loan Document and the collection, protection or setoff of
any claim the Holder may have in a proceeding under Title 11,
United States Code. Attorneys' fees provided for hereunder shall
accrue whether or not Holder has provided notice of an Event of
Default or of an intention to exercise its remedies for such Event
of Default. Furthermore, any reference contained in this Note or
in any other Loan Document to "out of pocket" costs, fees, charges
or expenses shall include attorney's fees as described herein,
including, without limitation, any reasonable allocable fees,
costs, charges and expenses for services rendered by Holder's in-
house counsel, paralegals and legal assistants.

19. Waiver of Trial by Jury. Maker hereby waives its
rights to a trial by jury as to any matter arising out of or
concerning the subject matter of this Note.

IN WITNESS WHEREOF, Maker has duly executed this Note
as of the day and year first above written.

MAKER: JMB/SAN JOSE ASSOCIATES, an Illinois
general partnership

MAKER TO By: JMB Income Properties, Ltd.-XI,
INITIAL PAGE 3 an Illinois limited partnership,
General Partner

By: JMB Realty Corporation,
a Delaware corporation,
General Partner

By:

Name:

Its:

By: JMB Income Properties, Ltd.-XII,
an Illinois limited partnership,
General Partner

By: JMB Realty Corporation,
a Delaware corporation,
General Partner

By:

Name:

Its:

REAL ESTATE TAX
ESCROW AND SECURITY AGREEMENT
(150 Almaden/185 Park)

This Real Estate Tax Escrow and Security Agreement (this
"Agreement") is entered into as of the _____ day of November, 1994
by and among JMB/SAN JOSE ASSOCIATES, an Illinois general
partnership ("Borrower"), CONNECTICUT GENERAL LIFE INSURANCE
COMPANY, a Connecticut corporation ("Lender"), and BANK OF AMERICA
NT&SA, GLOBAL ESCROW DEPOSITORY SERVICES 8010 ("Escrow Holder").

RECITALS

A. Lender has loaned to Borrower a sum of money evidenced
by an Amended and Restated Promissory Note (the "Note") in the
face principal sum of Twenty-Two Million Five Hundred Thousand
Dollars ($22,500,000) of even date herewith, given by Borrower to
Lender, which Note is secured by, inter alia, an Amended and
Restated Deed of Trust, Security Agreement With Assignment of
Rents and Fixture Filing (the "Deed of Trust") of even date
herewith on a fee simple interest in certain real property located
in the City of San Jose, County of Santa Clara, State of
California, together with the improvements and collateral as
described in the Deed of Trust, and as more particularly described
in the Deed of Trust (collectively, the "Property") (collectively,
the Note, the Deed of Trust, and any other documents evidencing,
securing or otherwise relating to the loan evidenced by the Note
are referred to herein as the "Loan Documents").

B. Under the provisions of the Deed of Trust, Borrower
must make monthly deposits to an escrow account with a bank
selected by Lender, such deposits to be of sufficient funds (as
reasonably estimated by Lender from time to time) to permit the
payment in full of the next maturing real property taxes and
assessments before any penalty or interest for the nonpayment
thereof attaches or accrues (collectively, "taxes") on the
Property.

C. Lender and Borrower desire to enter into an escrow
agreement with Escrow Holder to provide for said deposits for
taxes, and Escrow Holder is willing to act as holder of the
deposits so made by Borrower on the terms and conditions
hereinafter set forth.

AGREEMENT

1. Recitals: The foregoing recitals are true and correct
and are incorporated herein by this reference.

2. Escrow Holder: Lender and Borrower hereby appoint and
designate the above-named Escrow Holder for the purposes set forth
herein. Lender hereby appoints Escrow Holder as its agent for the
purpose of possessing, segregating and holding the Escrow Account
(as hereinafter defined) and all contents, money, rights and
proceeds therein and thereof. Escrow Holder hereby accepts such
appointments subject to the terms of this Agreement, and
acknowledges that it shall hold the Escrow Account subject to the
terms of this Agreement.

3. Deposits into Escrow: On the date hereof, Borrower
has deposited with Escrow Holder the sum of $29,658.70. Said
deposit shall be deposited by Escrow Holder in a separate
interest-bearing escrow account in the name of "Connecticut
General Life Insurance Company, as secured party of JMB/San Jose
Associates Real Estate Tax Escrow Account" (the "Escrow Account").

The Escrow Account number is ___________. Thereafter, on the
first day of each succeeding month, commencing December 1, 1994,
Borrower shall make monthly deposits to Escrow Holder, in an
amount to be determined by Lender, in its reasonable discretion,
to be equal to one-twelfth (1/12) of the annual estimated taxes,
to be deposited by Escrow Holder in the Escrow Account. Lender
hereby informs Borrower and Escrow Holder that the initial monthly
deposit shall be $29,658.70. All funds so deposited by Escrow
Holder in the Escrow Account shall be disbursed in accordance with
the terms of this Agreement. If Lender determines that the amount
of the monthly deposit must increase or decrease, Lender shall
notify Borrower and Escrow Holder in writing of the new amount of
such monthly deposit and provide Borrower with information
substantiating the redetermination of the calculation. Commencing
on the later of the first day of the month next succeeding said
written notification or ten (10) days after written notice to
Borrower, Borrower shall deposit with Escrow Holder an amount
equal to the new amount for such monthly deposit set forth in such
written notification. If Borrower receives notification from the
tax collector of a change in the amount of the taxes, Borrower
shall promptly notify Lender and Escrow Holder in writing.

4. Withdrawal Terms:

(a) Payment of Taxes: Not more than thirty (30)
days before the date when any penalty or interest for the
nonpayment of an installment of taxes would attach or accrue,
Escrow Holder shall immediately issue a check against the funds in
the Escrow Account for the amount of said installment, to the
extent there exist such funds in the Escrow Account, and made
payable to the appropriate governmental authority, and notify
Borrower if the funds available are not sufficient to pay said
installment of taxes. Immediately upon said notification and
prior to the time said payment of taxes becomes delinquent,
Borrower shall deliver to Escrow Holder a check drawn on the
Borrower's account which is payable to the appropriate
governmental authority and in an amount equal to the difference
between the amount of the check delivered to Escrow Holder and the
amount of the installment of taxes then due. Upon receipt of
sufficient funds, Escrow Holder shall promptly pay said taxes, and
certify to Lender, in the form attached hereto as Schedule 1, that
such taxes have been paid.

(b) No Other Disbursements: Except for the payment
of interest as provided in the paragraph entitled "Interest
Payments" below, and except upon termination of this Agreement as
contemplated by the paragraph entitled "Termination of Escrow"
also below, Escrow Holder shall not disburse or otherwise pay any
funds from the Escrow Account other than in accordance with this
paragraph entitled "Withdrawal Terms". Payments from said
deposits for such purposes may be made even though subsequent
owners of the Property or holders of Borrower's fee simple
interest therein may thereby benefit.

5. Interest Payments: So long as (i) Borrower holds
title to and controls the Property, (ii) tax payments are paid in
full prior to the date when any penalty or interest attaches or
accrues, (iii) there then exists no default, by Borrower, or any
state of facts which, with the passage of time or giving of
notice, or both, would constitute a default hereunder or under any
of the Loan Documents, and (iv) Escrow Holder has not received
written notice from Lender of default by Borrower, or any state of
facts which, with the passage of time or giving of notice, or
both, would constitute a default hereunder or under any of the
Loan Documents, Escrow Holder shall pay directly to Borrower all
interest earned on the funds in the Escrow Account, less
reasonable escrow costs charged by the Escrow Holder, on each date
when tax payment withdrawals are made from the Escrow Account, and
upon termination of this Agreement pursuant to the paragraph
entitled "Termination of Escrow" below. Other than for gross
negligence or willful misconduct on the part of Lender, it is
specifically agreed that under no circumstances shall Lender be
liable or accountable to Borrower for interest or any other return
on or benefit accruing to funds delivered on deposit pursuant to
this Agreement.

6. Default Provisions: Upon receipt by Escrow Holder of
notice from Lender of a default by Borrower, or any state of facts
which, with the passage of time or giving of notice, or both,
would constitute a default hereunder or under any of the Loan
Documents, Escrow Holder shall provide Borrower with a copy of
such notice and immediately stop paying to Borrower the interest
earned on the funds in the Escrow Account. At the written request
of Lender, Escrow Holder shall forthwith pay over to Lender all
funds, including principal and interest, then in the Escrow
Account. Lender and Borrower agree that Lender shall be entitled
to apply such funds in accordance with the terms of the paragraph
entitled "Tax Deposits" in the Deed of Trust, and upon such
payment by Escrow Holder to Lender, this Agreement shall
terminate.

7. Security Interest:

(a) This Agreement is intended to provide additional
security for the payment of all amounts now and in the future
payable under any of the Loan Documents. To that end, Borrower
hereby grants, pledges, transfers and assigns to Lender a
continuing security interest in and right of set-off against the
following, whether now existing or hereafter acquired or arising:
all of Borrower's right, title and interest, in, to and under (i)
the Escrow Account, and all instruments, securities, documents,
accounts, general intangibles, money, and other property and
contents therein and thereof, and all rights relating thereto and
proceeds therefrom and thereof, including, without limitation, the
deposits made into the Escrow Account from time to time and all
earnings thereon at any time or from time to time in the
possession or control of Escrow Holder, (ii) all books and records
relating to the types and items of property described in the
foregoing clause (i), and (iii) all proceeds (whether cash or non-
cash, and including, without limitation, insurance proceeds) and
products of the property described in the foregoing clause (i),
and all replacements and substitutions therefor and all additions
and accessions thereto (hereinafter collectively called the
"Collateral").

(b) In addition to all rights and remedies given to
Lender by this Agreement, Lender shall have the rights and
remedies of a secured party under the California Commercial Code
and any other applicable law. Upon notice from Lender, Borrower
will promptly execute such financing statements, continuation
statements and other documents as may be necessary or convenient
to perfect, continue or otherwise evidence said security interest
and pay all reasonable out of pocket expenses and fees for the
preparation and filing thereof.

8. Warranties: Borrower does hereby warrant and
represent to Lender that, as of the date hereof, Borrower is the
owner of all of the Collateral, and (i) Borrower has not
heretofore made any assignment or pledge of, granted a security
interest in, or otherwise transferred or encumbered all or any
part of its interest in all or any part of the Collateral, and
(ii) the Collateral is free and clear of any security interest,
pledge, assignment or other encumbrance other than the security
interest created hereby. Escrow Holder does hereby warrant and
represent to Lender that Escrow Holder has not received notice
from any individual or entity, except Lender, claiming an interest
in the Collateral.

9. Termination of Escrow: Provided this Agreement has
not been terminated pursuant to the paragraph entitled "Default
Provisions" hereof, this Agreement, and the escrow provided for
herein, shall automatically terminate when Escrow Holder receives
written notification from Lender that all amounts due from
Borrower to Lender have been paid in full, the Note has been
cancelled, and the Deed of Trust discharged. Upon termination of
this Agreement as provided in this paragraph, Escrow Holder shall
deliver the remaining funds, including interest, then in the
Escrow Account to Borrower.

10. Investment of Funds in Escrow Account: Any monies
held as a part of the Escrow Account shall be invested or
reinvested by Escrow Holder in Permitted Investments, as
hereinafter defined, in the name of Escrow Holder.

(a) Borrower's Right to Direct Investments: Until
Escrow Holder shall have received written notice from Lender of a
default by Borrower continuing beyond expiration of any applicable
cure periods, if any, Lender grants to Borrower the privilege of
selecting among the Permitted Investments, by written direction
from Borrower to Escrow Holder. Lender and Borrower acknowledge
and agree that Escrow Holder shall have no obligation to honor any
such written direction until the expiration of one business day
after the Escrow Holder's receipt of the same, or such later
period as is consistent with both the nature of the Permitted
Investment utilized or committed to be utilized prior to receipt
of such notice and the nature of the Permitted Investment
specified by such written notice. Such investments shall have
maturities consonant with the need for funds as provided
hereinabove in the paragraph entitled "Withdrawal Terms."
Consistent with the need for funds as aforesaid, Escrow Holder may
sell any such investments at any time, and the proceeds of such
sale, and of all payments at maturity and upon redemption of such
investments, shall be credited to the Escrow Account. Escrow
Holder shall not be responsible for any loss of interest or
penalties incurred as a result of the redemption of investments
prior to their stated maturities if such redemption is required to
comply with this Agreement. All payments of money and of other
property received in respect of the Escrow Account, including,
without limitation, all interest, dividends, profits and other
income or proceeds received on monies or securities or other
investments in the Escrow Account, shall be credited to the Escrow
Account and shall be deemed to become, and shall be treated as
part of, the escrowed funds for purposes of this Agreement, and
shall be disbursed by Escrow Holder as provided in this Agreement.

(b) Permitted Investments: The term "Permitted
Investments" as used herein shall mean:

(i) short term obligations of the United
States Treasury;

(ii) short term obligations of an agency of the
United States Government;

(iii) any certificate of deposit up to $100,000
issued by or savings account with any of the fifty federally-
chartered banks with the greatest total assets ("Qualifying
Banks");

(iv) any commercial paper issued by an issuer
rated Prime-1 by Moody's or A-1 by S&P;

(v) any repurchase agreement with a Qualifying
Bank (provided it is issued by an agency of the United States
Government, is 102% collateralized, and possession is given to the
Escrow Holder);

(vi) any banker's acceptance of which a
Qualifying Bank is the accepting bank;

(vii) any certificate of deposit up to
$5,000,000 with any bank on Lender's approved list;

(viii) Variable Rate Master Notes (Trust Demand
Notes) rated A-1 and P-1 by Standard & Poor's or Moody's,
respectively;

(ix) any AAA or AA rated corporate securities
on Lender's approved list; and

(x) FNMA or FHLMC mortgage pool securities.

Notwithstanding the foregoing, Lender's approval of
any investment of funds held in the Escrow Account in any of the
foregoing shall be conditioned on Lender's receiving such
assurances as it requires that its security interest in any such
instrument, account, or investment is perfected and shall remain
perfected. Lender may limit or change the aforementioned list of
Permitted Investments in order to assure its ability to perfect
its security interest therein; provided that any change in the
type of investment shall be subject also to Borrower's approval.

In addition, at any time as any Permitted Investment
is with a depository that does not satisfy Lender's financial and
solvency requirements, Lender may require that such investment be
terminated with such depository and re-invested with another
depository reasonably approved by Lender.

11. Responsibilities of Escrow Holder:

(a) Books, Records, and Statements: Escrow Holder
shall at all times during the term of this Agreement keep and
maintain accurate, complete, and up to date books and records with
respect to the Escrow Account, and all investments thereof,
earnings thereon, and disbursements therefrom. Escrow Holder
shall provide monthly statements to Lender and Borrower showing
the balance of the Escrow Account, the earnings thereof and the
disposition of said earnings.

(b) Notice of Default: In the event that Borrower
shall fail to make any such required monthly deposit, Escrow
Holder shall notify both Lender and Borrower, in accordance with
the paragraph entitled "Notices" herein (or such other party as
Lender or Borrower may designate in writing from time to time), no
later than the 5th day of the month for which such payment was
required.

(c) Escrow Holder's Right to Resign: Escrow Holder
reserves the right to resign hereunder by sixty (60) days written
notice to Lender and Borrower. At or before ten (10) days prior
to the effective date of such resignation, Escrow Holder shall pay
over to Lender all funds and deliver all evidence of investment in
the Escrow Account to be held pursuant to the terms of the Deed of
Trust, in the same manner as though Lender were a substitute
escrow holder hereunder. However, if prior to the time such funds
are paid over or such evidence of investment delivered to Lender,
Lender requests in writing that such funds be paid over to another
party, (i) Escrow Holder shall forthwith pay over to such party
all such funds, (ii) this Agreement shall terminate, and (iii)
Escrow Holder shall not have any further liability under this
Agreement, except rights of Lender, Borrower or both against
Escrow Holder for its willful misconduct or gross negligence.

12. Expenses: Borrower shall pay all charges of Escrow
Holder in accordance with Schedule 2 attached hereto, and such
reasonable out-of-pocket attorneys' fees, expenses and other costs
as may be incurred by Escrow Holder in connection with the
administration of this Agreement. Said charges, attorneys' fees,
expenses and other costs are collectively referred to hereinafter
as the "Expenses." Any Expenses may be offset against interest
earned, and only against such interest, on the Escrow Account.

13. Liability of Parties: Borrower shall have sole
liability for the taxes and shall be responsible for seeing that
sufficient funds are made available to Escrow Holder or Lender in
adequate time for payment of the taxes before same become
delinquent. Lender or Escrow Holder shall be liable severally and
not jointly, and only for accounting for funds received by it, and
for its gross negligence or willful misconduct in performing any
act required of it hereunder.

14. Hold Harmless: Borrower hereby agrees to indemnify,
protect, save and hold harmless Escrow Holder, and its successors
and assigns and agents pursuant to this Agreement, from any and
all liabilities, obligations, losses, damages, claims, actions,
suits, and out of pocket costs or expenses (including, without
limitation, reasonable attorneys' fees) of whatsoever kind or
nature imposed on, incurred by or asserted against Escrow Holder
which in any way relate to or arise out of the execution and
delivery of this Agreement and any action taken hereunder;
provided, however, that Borrower shall have no such obligation to
indemnify, save and hold harmless Escrow Holder for any liability
incurred by, imposed upon or established against Escrow Holder, as
the case may be, for its willful misconduct or gross negligence.

15. Waiver of Offset: Except for fees due Escrow Holder
as provided in the paragraph entitled "Expenses" above, Escrow
Holder specifically and irrevocably waives any and all rights
Escrow Holder now has or may in the future have to offset any
amounts due from Lender or Borrower to Escrow Holder against the
funds in the Escrow Account. Except to the extent expressly
provided for in the paragraph entitled "Expenses" hereof, Escrow
Holder further agrees not to pay or attempt to pay to itself any
funds in the Escrow Account to satisfy any claims Escrow Holder
may have against Borrower or Lender.

16. Notices: Any notice, demand, request, statement or
consent made hereunder shall be in writing, signed by the party
giving such notice, request, demand, statement, or consent, and
shall be deemed to have been properly given when either delivered
personally, delivered to a reputable overnight delivery service
providing a receipt or deposited in the United States mail,
postage prepaid and registered or certified return receipt
requested, at the address set forth below, or at such other
address within the continental United States of America as may
have theretofore have been designated in writing. The effective
date of any notice given as aforesaid shall be the date of
personal service, one (1) business day after delivery to such
overnight delivery service, or three (3) business days after being
deposited in the United States mail, whichever is applicable. For
purposes hereof, the addresses are as follows:

If to Borrower: JMB/San Jose Associates
c/o JMB Realty Corporation
900 North Michigan Avenue
Chicago, IL 60611

With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, CA 90067
Attn: Real Estate Notices (DSB)

and if to Lender: Connecticut General Life Insurance Company
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152
Attn: Investment Services, S-319

with a copy to: CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, CT 06152
Attn: Real Estate Division, S-215A

and if to
Escrow Holder: Bank of America
Global Escrow Depository Services 8010
333 South Beaudry Avenue, 25th Floor
Los Angeles, California 90017
Attention: Katherine L. Veith
Telephone: (213) 345-0670

17. Applicable Law: This Agreement shall be governed by
and interpreted in accordance with the laws of the State of
California.

18. Headings: The paragraph headings used herein are for
convenience only and are not to be used in interpreting this
Agreement.

19. Amendments: This Agreement may only be amended or
revoked by a written amendment executed by all the parties hereto.

20. Attorneys' Fees and Expenses: Borrower shall pay all
reasonable out of pocket charges of Lender, and such reasonable
attorneys' fees (whether charged by staff counsel or outside
counsel), expenses and other costs as may be incurred by Lender in
connection with the enforcement of this Agreement.
Notwithstanding the foregoing, if any action is instituted to
enforce the terms hereof, only the prevailing party shall be
entitled to reasonable attorneys' fees, costs and expenses (in the
case of Lender, whether charged by staff counsel or outside
counsel); provided, however, the provisions of the paragraph
entitled "Hold Harmless" hereof shall control as to any claim
against Escrow Holder. Any reference in this Agreement to "out of
pocket" costs, fees, charges and expenses of Lender shall include,
without limitation, any reasonable allocable fees, costs, charges
and expenses for services rendered by Lender's in-house counsel,
paralegals and legal assistants.

21. Assignment: This Agreement may not be assigned by
Borrower or Escrow Holder without the written consent of Lender.
Should an assignment be permitted hereunder, this Agreement shall
inure to the benefit of and bind the successors and assigns of the
parties hereto.

22. Execution in Counterparts: This Agreement may be
executed in any number of counterparts, each of which may be
executed by any one or more of the parties hereto, but all of
which shall constitute one instrument, and shall be binding and
effective when all parties hereto have executed at least one
counterpart.

23. No Personal Liability: The provisions set forth in
Section 15 of the Note and Section 36 of the Deed of Trust are
incorporated herein by this reference.

IN WITNESS WHEREOF, the parties have executed this
Agreement under seal effective as of the day and year first above
written.

BORROWER: JMB/SAN JOSE ASSOCIATES, an Illinois
general partnership

By: JMB Income Properties, Ltd.- XI,
an Illinois limited partnership,
General Partner

By: JMB Realty Corporation,
a Delaware corporation,
General Partner

By:

Name:

Its:

By: JMB Income Properties, Ltd.-XII,
an Illinois limited partnership,
General Partner

By: JMB Realty Corporation,
a Delaware corporation,
General Partner

By:

Name:

Its:

LENDER: CONNECTICUT GENERAL LIFE INSURANCE
COMPANY, a Connecticut corporation

By: CIGNA Investments, Inc.,
a Delaware corporation,
its authorized signatory

By:

Name:

Its:

ESCROW HOLDER: BANK OF AMERICA, NT&SA
GLOBAL ESCROW DEPOSITORY SERVICES
8010

By:

Name:

Its:
REAL ESTATE TAX
ESCROW AND SECURITY AGREEMENT

(150 Almaden/185 Park)
<PAGE>
TABLE OF CONTENTS
TO
REAL ESTATE TAX ESCROW AND SECURITY AGREEMENT

Page

1. Recitals . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Escrow Holder. . . . . . . . . . . . . . . . . . . . . . 1

3. Deposits into Escrow . . . . . . . . . . . . . . . . . . 1

4. Withdrawal Terms . . . . . . . . . . . . . . . . . . . . 2

5. Interest Payments. . . . . . . . . . . . . . . . . . . . 2

6. Default Provisions . . . . . . . . . . . . . . . . . . . 3

7. Security Interest. . . . . . . . . . . . . . . . . . . . 3

8. Warranties . . . . . . . . . . . . . . . . . . . . . . . 3

9. Termination of Escrow. . . . . . . . . . . . . . . . . . 4

10. Investment of Funds in Escrow Account. . . . . . . . . . 4

11. Responsibilities of Escrow Holder. . . . . . . . . . . . 5

12. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 6

13. Liability of Parties . . . . . . . . . . . . . . . . . . 6

14. Hold Harmless. . . . . . . . . . . . . . . . . . . . . . 6

15. Waiver of Offset . . . . . . . . . . . . . . . . . . . . 6

16. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 6

17. Applicable Law . . . . . . . . . . . . . . . . . . . . . 7

18. Headings . . . . . . . . . . . . . . . . . . . . . . . . 7

19. Amendments . . . . . . . . . . . . . . . . . . . . . . . 7

20. Attorneys' Fees and Expenses . . . . . . . . . . . . . . 7

21. Assignment . . . . . . . . . . . . . . . . . . . . . . . 7

22. Execution in Counterparts. . . . . . . . . . . . . . . . 7

23. No Personal Liability. . . . . . . . . . . . . . . . . . 8

Recording Requested By and
When Recorded Mail To:

Morrison & Foerster
345 California Street
San Francisco, CA 94104-1250
Attn: Caryl B. Welborn, Esq.

AMENDED AND RESTATED
DEED OF TRUST, SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
AND FIXTURE FILING

(150 Almaden/185 Park)

THIS AMENDED AND RESTATED DEED OF TRUST is made as of
the ______ day of November, 1994, by JMB/SAN JOSE ASSOCIATES, an
Illinois general partnership, whose sole general partners are JMB
Income Properties, Ltd.-XI, an Illinois limited partnership and
JMB Income Properties, Ltd.-XII, an Illinois limited partnership,
having its principal place of business at 900 N. Michigan Avenue,
Chicago, Illinois 60611 (herein referred to as "Trustor") to
COMMONWEALTH LAND TITLE COMPANY, subject to substitution as
provided in Section 44 (herein referred to as "Trustee") in favor
of CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a Connecticut
corporation having its principal place of business at 900 Cottage
Grove Road, Hartford, Connecticut 06152-2215 (hereinafter
referred to as "Beneficiary").

W I T N E S S E T H:

THAT, to secure (i) payment to Beneficiary of the
principal indebtedness of Twenty-Two Million Five Hundred Thousand
and No/100 Dollars ($22,500,000.00), together with interest
thereon, as evidenced by that certain Amended and Restated
Promissory Note (hereinafter referred to as the "Note") of even
date herewith, and any renewals, extensions or modifications
thereof, given by Trustor to Beneficiary and made payable to the
order of Beneficiary in and by which Note the Trustor promises to
pay the said principal indebtedness and interest at the rate and
in installments as provided in the Note, (ii) the performance of
the covenants herein contained and the payment of any monies
expended by the Beneficiary in connection therewith, (iii) the
payment of all obligations and the performance of all covenants of
Trustor under any other loan documents, agreements or instruments
between Trustor and Beneficiary given in connection with or
related to this Deed of Trust or the Note, including, without
limitation, the Environmental Indemnification Agreement (the
"Environmental Indemnity") of even date from Trustor, among
others, in favor of Beneficiary, and (iv) any and all additional
advances made by Beneficiary to protect or preserve the Security
or the security interest created hereby on the Security, or for
taxes, assessments, or insurance premiums as hereinafter provided
or for performance of any of Trustor's obligations hereunder or
for any other purpose provided herein (whether or not the original
Trustor remains the owner of the Security at the time of such
advances) (all of the aforesaid indebtedness and obligations of
Trustor being herein called the "Indebtedness", and all of the
documents, agreements and instruments between Trustor and
Beneficiary now or hereafter evidencing or securing the repayment
of, or otherwise pertaining to, the Indebtedness, being herein
collectively called the "Loan Documents"); the Trustor does hereby
mortgage, grant, bargain, sell, assign, pledge, transfer, and
convey unto Trustee and to Trustee's successors and assigns, in
trust, with power of sale and right of entry and possession, all
of the following described land, improvements, real and personal
property and rents and leases and all of Trustor's estate, right,
title and interest therein (hereinafter collectively called the
"Security"):

The land described in Exhibit A attached hereto and
made a part hereof situate, lying and being in the City of San
Jose, County of Santa Clara, and State of California (the "Land");

TOGETHER with all buildings and other improvements now
or hereafter located on said Land or any part thereof, including
but not limited to, all extensions, betterments, renewals,
renovations, substitutes and replacements of, and all additions
and appurtenances to the Security (the "Improvements");

TOGETHER with all of the right, title and interest of
Trustor in and to the land lying in the bed of any street, road,
highway or avenue in front of or adjoining the Land to the center
lines thereof;

TOGETHER with the right to use, in perpetuity, in
connection with the operation of the Security any trademarks owned
by Trustor, service marks or tradenames, and good will of Trustor
associated therewith, used in connection with the Security;

TOGETHER with all easements now or hereafter located
on or appurtenant to the Land and/or the Improvements or under or
above the same or any part thereof, rights-of-way, licenses,
permits, approvals, and privileges, belonging or in any way
appertaining to the Land and/or Improvements including without
limitation (i) any drainage ponds or other like drainage areas not
located on the Land which may be required for water run-off, (ii)
any easements necessary to obtain access from the Land to such
drainage areas, or to any other location to which Trustor has a
right to drain water or sewage,(iii) any land required to be
maintained as undeveloped land by the zoning rules and regulations
applicable to the Land, and (iv) any easements and agreements
which are or may be established to allow satisfactory ingress to,
egress from and operation of the Land and/or the Improvements,
including utility easements;

TOGETHER with any and all awards heretofore made and
hereafter to be made by any governmental, municipal or state
authorities to the present and all subsequent owners of the
Security for the taking of all or any portion of the Security by
power of eminent domain, including, without limitation, awards for
damage to the remainder of the Security and any awards for any
change or changes of grade of streets affecting the Security,
which said awards are hereby assigned to Beneficiary, and
Beneficiary, at its option, is hereby authorized, directed and
empowered to collect and receive the proceeds of any such awards
from the authorities making the same and to give proper receipts
and acquittances therefor, and to apply the same, subject to the
provisions of this Deed of Trust, toward the payment of the
Indebtedness, notwithstanding the fact that such amount may not
then be due and payable; and Trustor hereby covenants and agrees
to and with Beneficiary, upon request by Beneficiary, to make,
execute and deliver, at Trustor's expense, any and all assignments
and other instruments reasonably sufficient for the purpose of
assigning the aforesaid awards to Beneficiary, free, clear and
discharged of any and all encumbrances of any kind or nature
whatsoever, subject to the provisions of this Deed of Trust; (all
of the foregoing Land, Improvements, rights, easements, rights-of-
way, licenses, privileges, and awards, collectively, the "Real
Property").

TOGETHER with all proceeds, insurance or otherwise,
paid for the damage done to any of the Security and all proceeds
of the conversion, voluntarily or involuntarily, of any of the
Security into cash or liquidated claims;

TOGETHER with all fixtures, machinery, equipment,
goods, and every other article of personal property, tangible or
intangible, now or hereafter attached to or used in connection
with the Real Property, or placed on any part thereof and whether
or not attached thereto, appertaining or adapted to the use,
management, operation or improvement of the Real Property, insofar
as the same and any reversionary right thereto may now or
hereafter be owned or acquired by Trustor, including, but without
limitation: all partitions; screens; awnings; shades; blinds;
floor coverings; hall and lobby equipment; heating, lighting,
plumbing, ventilating, refrigerating, incinerating, elevator,
escalator, air conditioning and communication plants or systems
with appurtenant fixtures; vacuum cleaning systems; call systems;
sprinkler systems and other fire prevention and extinguishing
apparatus and materials; all equipment, manual, mechanical and
motorized, for the construction, maintenance, repair and cleaning
of, and removal of snow from, parking areas, walks, underground
ways, truck ways, driveways, common areas, roadways, highways and
streets; all equipment, manual, mechanical and motorized, for the
transportation of customers or employees to and from the store
facilities on the Real Property; all telephone, computer and other
electronic equipment and appurtenances thereto, including
software; and all other machinery, pipes, poles, appliances,
equipment, wiring, fittings, panels and fixtures; and any proceeds
therefrom, any replacements thereof or additions or accessions
thereto; and all building materials, supplies and other property
delivered to the Real Property for incorporation into the
Improvements thereon, all of which are declared to be a part of
the realty and covered by the lien hereof, but said lien shall not
cover any fixture, machinery, equipment or article of personal
property which is owned by any party other than Trustor, provided
said fixture, machinery, equipment or article of personal property
is not permanently affixed to the realty and may be removed
without material damage thereto and is not a replacement of any
item which shall have been subject to the lien hereof, but said
lien shall include any other fixture, machinery, equipment or
article of personal property so incorporated into the Improvements
so as to constitute realty under applicable law, whether or not
owned by the Trustor;

TOGETHER with all of Trustor's books of account and
records relating to the Security;

TOGETHER with all proceeds and revenue arising from or
out of the Real Property or any part thereof; all bank accounts of
Trustor used in connection with operation of the Security or for
holding security deposits under leases thereof; any sums of
Trustor on deposit with Beneficiary hereunder; any refunds and
rebates of taxes and assessments of every kind and nature imposed
upon the Security, including all sums held in escrow pursuant to a
certain Real Estate Tax Escrow and Security Agreement of even date
herewith among Trustor, Beneficiary, and Bank of America, NT & SA
Global Escrow Depository Services 8010, all licenses, permits,
franchises, governmental approvals and all sanitary sewer,
drainage, water, utility service and other service agreements
benefiting the Real Property or any part thereof, together with
all accounts, accounts receivable, credit card receipts, contract
rights, reserve accounts required to be established hereunder,
general intangibles, documents, instruments and chattel paper and
proceeds of any of the foregoing owned by Trustor arising from or
in connection with the Real Property, including all books and
records in connection therewith; all rights of Trustor under any
leases, covenants, agreements, easements, restrictions or
declarations recorded with respect to, or as an appurtenance to,
the Real Property or any part thereof; and, Trustor's interest, as
lessee, under any lease of property included within the
description of Personal Property above (all of the tangible and
intangible personal property described in this and the previous
two paragraphs, collectively, the "Personal Property");

TOGETHER with all of Trustor's right, title and
interest, as the owner of the Real Property, in, to and under the
following instruments: (i) that certain Parking Agreement dated as
of June 18, 1985, between Trustor and New Almaden Associates, a
California general partnership, (ii) that certain Supplemental
Parking Agreement dated as of June 18, 1985, between Trustor and
New Almaden Associates, (iii) that certain Parcel 2 Public Parking
Covenant and Easement from New Almaden to the Redevelopment Agency
of the City of San Jose (the "Agency") and recorded in the
Official Records of Santa Clara County, California, as Instrument
No. 8566697; and (iv) that certain Parcels 1, 3, and 4 Public
Parking Covenant and Easement from Borrower to the Agency and
recorded in the Official Records of Santa Clara County, California
as Instrument No. 8566696 (such documents are sometimes
collectively referred to herein as the "Parking Agreements");

TOGETHER with all of the right, title and interest of
Trustor in and to all and singular the tenements, hereditaments
and appurtenances thereunto belonging to or in any way pertaining
to the Security; all the estate, right, title and claim whatsoever
of Trustor, either at law or in equity, in and to the Security;
and any and all other, further or additional title, estate,
interest or right which may at any time be acquired by Trustor in
or to the Security, and if Trustor shall at any time acquire any
further estate or interest in or to Security, the lien of this
Deed of Trust shall attach, extend to, cover and be a lien upon
such further estate or interest automatically without further
instrument or instruments, and Trustor, upon request of
Beneficiary, shall execute such instrument or instruments as shall
reasonably be requested by Beneficiary to confirm such lien, and
Trustor hereby irrevocably appoints Beneficiary as Trustor's
attorney-in-fact (which appointment is coupled with an interest)
to execute all such instruments if Trustor shall fail to do so
within ten (10) days after demand, provided, however, that Trustor
shall not incur any additional recourse liability as a result of
such appointment;

TO HAVE AND TO HOLD the Security, and each and every
part thereof, unto the Trustee and its successors and assigns in
trust, for the purposes and uses herein set forth.

AND, Trustor hereby further covenants, agrees and
warrants as follows:

1. Payment of Indebtedness. Trustor will pay the
Indebtedness and interest thereon in accordance with the
provisions of the Note and all prepayment charges, late charges
and fees required thereunder, and all extensions, renewals,
modifications, amendments and replacements thereof, and will keep
and perform all the covenants, promises and agreements and pay all
sums provided in (i) each of the Note or any other promissory note
or notes at any time hereafter issued to evidence the
Indebtedness, (ii) this Deed of Trust and (iii) any and all other
Loan Documents, all in the manner herein or therein set forth.
Subject to the provisions of Section 36 below, each of the persons
and/or entities constituting Trustor hereunder shall be fully
liable for such payment and performance, and such liability shall
be joint and several.

2. Covenants of Title. Trustor has good and indefeasible
title to the entire Real Property in fee simple, has absolute
unencumbered title to the Personal Property, and has good right
and full power to sell, mortgage and convey the same; the Security
is free and clear of easements, restrictions, liens, leases and
encumbrances, except those easements, restrictions, liens, leases
and encumbrances stated in Schedule B, Part 1, of the policy or
policies of title insurance delivered to Beneficiary as of the
recordation of this Deed of Trust (the "Permitted Encumbrances"),
to which this Deed of Trust is expressly subject, or which may
hereafter be created in accordance with the terms hereof and to
which this Deed of Trust may be subordinated; and Trustor will
warrant and defend title to the Security against all claims and
demands whatsoever except the Permitted Encumbrances. Beneficiary
shall have the right, at its option and at such time or times as
it, in its sole discretion, shall deem necessary, to take whatever
action it may deem necessary to defend or uphold the lien of this
Deed of Trust or otherwise enforce any of the rights of
Beneficiary hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal
proceedings for such purposes.

3. Usury. It is hereby expressly agreed that if from any
circumstances whatsoever fulfillment of any provision of the Note,
this Deed of Trust, or any other Loan Documents at the time
performance of such provision shall be due, shall involve
transcending the limit of validity presently prescribed by any
applicable usury statute or any other law, with regard to
obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such
validity, so that in no event shall any exaction be possible under
the Loan Documents that is in excess of the limit of such
validity. In no event shall Trustor be bound to pay for the use,
forbearance or detention of the money loaned pursuant to the Loan
Documents, interest of more than the current legal limit, the
right to demand any such excess being hereby expressly waived by
Beneficiary.

4. Impositions. Trustor will pay, not later than thirty
(30) days before the last day on which the same may be paid
without penalty or interest, all real estate taxes, sewer rents,
water charges and all other municipal and governmental
assessments, rates, charges, impositions and liens (hereinafter
referred to as "Impositions") which now or hereafter are imposed
by law upon the Security. If any Imposition is not paid within
the time hereinabove specified, Beneficiary shall have the right
to pay the same, together with any penalty and interest thereon,
and the amount or amounts so paid or advanced shall forthwith be
payable by Trustor to Beneficiary and shall be secured by the lien
of this Deed of Trust; but Trustor may in good faith contest, at
Trustor's own cost and expense, by proper legal proceedings, the
validity or amount of any Imposition, on the condition that
Trustor first shall deposit with Beneficiary, as security for the
payment of such contested item, an amount equal to the contested
item plus all penalties and interest which would be payable if
Trustor is ultimately required to pay such contested item, or if
Trustor shall first post an appropriate bond reasonably
satisfactory to Beneficiary from a surety company reasonably
acceptable to Beneficiary for the full contested amount, and on
the further condition that no amount so contested may remain
unpaid for such length of time as shall permit the Security, or
the lien thereon created by the item being contested, to be sold
for the nonpayment thereof, or as shall permit an action, either
of foreclosure or otherwise, to be commenced by the holder of any
such lien. Trustor will not claim any credit on, or make any
deduction from the Indebtedness by reason of the payment of any
Imposition.

Trustor hereby assigns to Beneficiary all rights of
Trustor now or hereafter arising in and to the refund of any
Imposition and any interest thereon; provided that so long as
there exists no default hereunder or under of the other Loan
Documents, without regard to any applicable notice and cure
periods, Trustor shall be entitled to collect any such refund. If
following receipt of any such refund by Beneficiary, there exists
an Event of Default (as hereafter defined) or any default under
this Deed of Trust or any of the other Loan Documents, or any
condition which with the passage of time or the giving of notice
or both, shall constitute a default hereunder or thereunder, then
Beneficiary may apply said refund in reduction of the Indebtedness
in whatever order Beneficiary may elect. Notwithstanding the
foregoing to the contrary, Beneficiary shall not be entitled to
apply in reduction of the Principal Indebtedness the portion of
any such refund which Trustor is required to refund to a tenant
under a tenant lease. If following receipt of any such refund by
Beneficiary no such default or Event of Default then exists, then
Beneficiary shall pay over the same to Trustor promptly after
demand.

5. Tax Deposits. Trustor shall deposit with Beneficiary
or with an escrow agent selected by Trustor and reasonably
approved by Beneficiary, on the first day of the second calendar
month immediately following the date of this Deed of Trust and on
the first day of each calendar month thereafter (each of which
dates is hereinafter called the "monthly tax deposit date") until
the payment in full of the Indebtedness, a sum equal to one-
twelfth of the Impositions to be levied, charged, assessed or
imposed upon or for the Security within one year after said
monthly tax deposit date. If on any monthly tax deposit date the
amount of Impositions to be levied, charged, assessed or imposed
within the ensuing one year period shall not be fixed, such amount
for the purpose of computing the deposit to be made by Trustor
hereunder, shall be reasonably estimated by Beneficiary, with
appropriate adjustment when the amount of such Impositions is
fixed.

If the sums deposited by Trustor under this Section
shall be held in an interest-bearing account, such interest shall
be retained by Beneficiary and free of trust except to the extent,
if any, that applicable law shall otherwise require, and all such
sums and interest shall be applied in payment of such Impositions
when due. Trustor shall give thirty (30) days prior written
notice to Beneficiary in each instance when an Imposition is due,
specifying the Imposition to be paid and the amount thereof, the
place of payment and the last day on which the same may be paid in
order to be within the time limit specified in Section 4 hereof
entitled "Impositions".

Notwithstanding the foregoing provision and so long as
Trustor holds title to and controls the Security, Impositions are
paid in full when due and there has been no default, or any state
of facts which, with the passage of time or giving of notice, or
both, would constitute a default under the Loan Documents, the
interest (if any) earned by such escrows, less reasonable escrow
costs, will be paid to Trustor on each real estate tax payment
date.

If for any reason the sums on deposit with Beneficiary
or escrow agent under this Section shall not be sufficient to pay
an Imposition within the time specified in Section 4 hereof, then
Trustor shall, within fifteen (15) days after written demand by
Beneficiary, deposit sufficient sums so that Beneficiary may pay
such Imposition in full, together with any penalty and interest
thereon. Beneficiary may change its estimate of Impositions for
any period, on the basis of a change in an assessment or tax rate
or equalization factor or on the basis of a prior miscalculation
or for any other reason, in which event Trustor shall deposit with
Beneficiary or escrow agent within fifteen (15) days after demand
the amount of any excess of the deposits which would theretofore
have been payable under the revised estimate over the sums
actually deposited.

If any Imposition shall be levied, charged, assessed
or imposed upon or for the Security, or any portion thereof, and
if such Imposition shall also be a levy, charge, assessment or
imposition upon or for any other premises not covered by the lien
of this Deed of Trust, then the computation of the amounts to be
deposited under this Section shall be based upon the entire amount
of such Imposition and Trustor shall not have the right to
apportion any deposit with respect to such Imposition.

Upon an assignment of this Deed of Trust by
Beneficiary, Beneficiary shall transfer all amounts deposited and
still in its possession to the assignee and Beneficiary shall
thereupon be completely released from all liability with respect
to such deposit arising after such assignment and Trustor or owner
of the Security shall look solely to the assignee or transferee in
reference thereto.

Upon the payment in full by Trustor of the entire
Indebtedness, any sums then held by Beneficiary under this Section
shall be refunded promptly to Trustor.

All amounts deposited shall be held by Beneficiary as
additional security for the sums secured by this Deed of Trust,
and Trustor hereby grants to Beneficiary a security interest in
such sums, and upon the occurrence and continued existence of an
Event of Default hereunder Beneficiary may, in its sole and
absolute discretion, apply said amounts to the payment of the
Indebtedness in whatever order Beneficiary may elect.

Immediately upon receipt of such by Trustor, Trustor
shall deliver to Beneficiary copies of all notices, demands,
claims, bills, and receipts in relation to the Impositions.

Notwithstanding the foregoing provisions, Beneficiary
will waive the requirement for deposits as to that portion of
Impositions payable directly to the governmental or other
authority by tenants under the terms of leases approved by
Beneficiary, provided satisfactory proof of payment is promptly
furnished to Beneficiary.

6. Change in Taxes. In the event any tax shall be due or
become due and payable to the United States of America, any state
or any political subdivision thereof with respect to the execution
and delivery or recordation of this Deed of Trust or any other
Loan Document or the interest of Beneficiary in the Security,
Trustor shall pay such tax at the time and in the manner required
by applicable law and Trustor shall hold Beneficiary harmless and
shall indemnify Beneficiary against any liability of any nature
whatsoever as a result of the imposition of any such tax. In the
event of the enactment, after the date of this instrument, of any
law changing in any way the present law as to the taxation of
notes or debts secured by mortgages, for Federal, State, or local
purposes, or the manner of collection of any Impositions, so as to
affect this Deed of Trust or the Note secured hereby, then Trustor
shall upon demand make such payments to Beneficiary and take such
other steps, as may be necessary in Beneficiary's reasonable
judgment, to place Beneficiary in the same financial position as
it was prior to any such enactment, failing which, or if Trustor
is not permitted by law to make such payments, the Indebtedness
shall, at the option of Beneficiary, become due and payable one
hundred twenty (120) days after Beneficiary's demand.

7. Insurance.

(a) Trustor will at all times, unless otherwise
indicated, provide, maintain and keep in force:

(i) policies of insurance insuring the
Security against loss or damage by fire and lightning; against
loss or damage by other risks embraced by coverage of the type now
known as All Risk Replacement Cost Insurance with agreed amount
endorsement, including but not limited to riot and civil
commotion, vandalism, and malicious mischief; and against such
other risks or hazards as Beneficiary from time to time reasonably
may designate in an amount sufficient to prevent Beneficiary or
Trustor from becoming a co-insurer under the terms of the
applicable policies, but in any event in an amount not less than
100% of the then full replacement cost of the Improvements
(exclusive of the cost of excavations, foundations and footings
below the lowest basement floor) without deduction for physical
depreciation;

(ii) comprehensive general liability insurance
in a minimum amount of $1,000,000, and excess or umbrella
liability of at least $10,000,000. Any proceeds of such liability
insurance shall not be included in the term "Insurance Proceeds"
as defined in Section 8;

(iii) policies of insurance insuring the
Security against the loss of "rental value" of the buildings which
constitute a part of the Improvements on a "rented or vacant
basis" arising out of the perils insured against pursuant to
subparagraph (i) above in an amount equal to not less than one
year's gross "rental value" of the improvements. "Rental value"
as used herein is defined as the sum of (A) the total anticipated
gross rental income from tenant occupancy of such buildings as
furnished and equipped by Trustor and (B) the amount of all
charges which are the legal obligation of tenants and which would
otherwise be the obligation of Trustor and (C) the fair rental
value of any portion of such buildings which is occupied by
Trustor. Trustor hereby assigns the proceeds of such insurance to
Beneficiary, to be applied in payment of the interest and
principal on the Note secured by this Deed of Trust, insurance
premiums, taxes, assessments and private impositions until such
time as such buildings shall have been restored and placed in full
operation, at which time, provided there then exists no default
under this Deed of Trust, the balance of such insurance proceeds,
if any, held by Beneficiary shall be returned to Trustor. Such
insurance proceeds shall not be included in the term "Insurance
Proceeds" as defined in Section 8;

(iv) flood insurance upon the Security in the
event that such insurance is commercially available pursuant to
the provisions of the Flood Disaster Protection Act of 1973 or
other applicable legislation (Beneficiary reserves the right to
require that Trustor secure flood insurance in excess of the
amount provided by the Flood Disaster Protection Act of 1973 if
such insurance is commercially available up to the amount provided
in subparagraph (i) above);

(v) boiler and pressure vessel insurance,
including air tanks, pressure piping and major air conditioning
equipment, provided any building which constitutes a part of the
Security contains equipment of the nature ordinarily covered by
such insurance, in such an amount as Beneficiary may require;

(vi) war risk insurance upon the Security as
and when such insurance is obtainable from the United States of
America or any agency or instrumentality thereof at a reasonable
premium, in any amount not less than 100% of the then full
replacement cost of the Improvements (exclusive of the cost of
excavations, foundations, and footings below the lowest basement
floor) without deduction for physical depreciation, to the extent
obtainable, and if not so obtainable, in the maximum amount
obtainable;

(vii) during any period of restoration under
this Section 7 or Sections 8 or 9, a policy or policies of
builder's "all risk" insurance in an amount not less than the full
insurable value of the Improvements against such risks (including,
without limitation, fire and extended coverage, collapse of the
Improvements and earthquake coverage to agreed limits) as
Beneficiary may request, in form and substance acceptable to
Beneficiary; and

(viii) such other insurance (including, but not
limited to, earthquake insurance), and in such amounts, if any, as
may from time to time be reasonably required by Beneficiary
against the same or other insurable hazards which at the time are
commonly insured against in the case of premises similarly
situated, due regard being given to the height and type of
buildings thereon and their construction, use and occupancy.

(b) All policies of insurance required under this
Section 7 shall be issued by companies approved by Beneficiary
which shall have Best's ratings of not less than A:XII, shall be
subject to the reasonable approval of Beneficiary as to amount,
content, form and expiration date, shall contain a Non-
Contributory Standard Mortgagee Clause and the Lender's Loss
Payable Endorsement (Form 438 BFU NS), or their equivalents, in
favor of Beneficiary, shall name Beneficiary as an additional
insured, and shall provide that the proceeds thereof shall be
payable to Beneficiary (to the extent of its interest).
Beneficiary shall be furnished with the original insurance
certificates evidencing each policy required to be provided by
Trustor hereunder, which certificates shall provide that such
policies shall not be modified or cancelled without thirty (30)
days written notice to Beneficiary. At least thirty (30) days
prior to expiration of any policy required to be provided by
Trustor hereunder, Trustor shall furnish Beneficiary appropriate
proof of issuance of a policy continuing in force the insurance
covered by the policy so expiring. Trustor shall furnish
Beneficiary receipts for the payment of premiums on such insurance
policies or other evidence of such payment reasonably satisfactory
to Beneficiary. In the event that Trustor does not deposit with
Beneficiary a new policy of insurance with evidence of payment of
premiums thereon at least thirty (30) days prior to the expiration
of any expiring policy, then Beneficiary may, but shall not be
obligated to, procure such insurance and pay the premiums therefor
and Trustor agrees to repay to Beneficiary the premiums thereon
promptly on demand, together with interest thereon at the Default
Rate.

(c) Trustor hereby assigns to Beneficiary all
proceeds of any insurance which Trustor may be entitled to receive
for loss or damage to the Security. In the event of any loss or
damage to the Security, all insurance proceeds shall be payable to
Beneficiary, and Trustor hereby authorizes and directs any
affected insurance company to make payment of the insurance
proceeds directly to Beneficiary. In the event that any such
insurance proceeds or condemnation awards are paid directly to
Trustor, Trustor shall make such proceeds or awards available to
Beneficiary within ten (10) days of Trustor's receipt thereof.
Trustor hereby authorizes and empowers Beneficiary to settle,
adjust or compromise any claims for loss, damage or destruction to
the Security in excess of $500,000, regardless of whether or not
there are insurance proceeds available or whether any such
insurance proceeds are sufficient in amount to fully compensate
for such loss or damage, and Trustor hereby authorizes the
application or release by Beneficiary of any such insurance
proceeds under any policy or policies of insurance. The
application or release by Beneficiary of any such insurance
proceeds shall not cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to such notice. In
the case of loss or damage to the Security in an amount not more
than Five Hundred Thousand Dollars ($500,000), Trustor shall have
the right, without Beneficiary's consent but subject to the
requirements on application or use thereof set forth herein,
provided that there then exists no default, or condition which
with the passage of time or giving of notice, would constitute a
default hereunder or under any of the Loan Documents, to (i)
receive all such insurance proceeds, and (ii) settle, adjust or
compromise such claim.

(d) In the event of the foreclosure of this Deed of
Trust or other transfer of the title to the Security in
extinguishment, in whole or in part, of the Indebtedness, all
right, title and interest of Trustor in and to any insurance
policy, or premiums or payments in satisfaction of claims or any
other rights thereunder then in force, shall pass to the purchaser
or grantee notwithstanding the amount of any bid at such
foreclosure sale. Nothing contained herein shall prevent the
accrual of interest as provided in the Note on any portion of the
principal balance due under the Note until such time as the
Insurance Proceeds are actually received and applied to reduce the
principal balance outstanding.

8. Casualty.

(a) Occurrence of Casualty. After the happening of
any casualty to the Security, whether or not required to be
insured against under the policies to be provided by Trustor
hereunder, Trustor shall give prompt written notice thereof to
Beneficiary generally describing the nature and cause of such
casualty and the extent of the damage or destruction to the
Security.

(b) Application of Insurance Proceeds. As used
herein, "Insurance Proceeds" means all proceeds of any insurance
which Trustor may be entitled to receive for loss or damage to the
Security, other than insurance proceeds under Section 7(a)(ii) and
Section 7(a)(iii). In the case of loss or damage to the Security
in an amount not more than Five Hundred Thousand Dollars
($500,000), Trustor shall have the right, without Beneficiary's
consent but subject to the requirements on application or use
thereof set forth herein, provided that there then exists no
default, or condition which with the passage of time or giving of
notice, would constitute a default hereunder or under the Loan
Documents, to (i) receive all Insurance Proceeds, and (ii) settle,
adjust or compromise such claim. If within one hundred twenty
(120) days after the casualty Beneficiary receives Trustor's
request to release the Insurance Proceeds to pay for restoration
of the Deed or Trust Property, Beneficiary shall release the
Insurance Proceeds (less Beneficiary's reasonable out of pocket
expenses for collecting and disbursing the Insurance Proceeds, or
otherwise incurred in connection with said casualty) provided:
(i) there is no existing default under the Loan Documents; (ii)
not more than 30% of the Improvements are damaged; (iii) Trustor
can demonstrate to Beneficiary's reasonable satisfaction that
Trustor has the financial ability to pay the scheduled debt
service and other amounts which may become due, if any, under the
Loan Documents, during reconstruction from the proceeds of rent
insurance or otherwise; (iv) such damage or destruction occurs
prior to the last Loan Year (as defined in the Note) (v) Insurance
Proceeds are released held in escrow and released under funding
arrangements reasonably satisfactory to Beneficiary, including,
without limitation, those set forth in Section 8(e) hereof; (vi)
the excess of annual income from leases then in effect and
approved by Beneficiary that will survive the Restoration, or
otherwise satisfying the requirements of the Loan Documents such
that Beneficiary's approval is not required, over all operating
expenses and real estate taxes incurred with respect to the
Security during the year prior to the damage, is at least 1.20
times the annual debt service payments required under the Note.
The Insurance Proceeds, and any other amounts which are
contributed to the Restoration, if any, are called the
"Restoration Funds". In the event that the Insurance Proceeds are
released by Beneficiary as provided under this grammatical
paragraph, and provided that Trustor meets and is otherwise in
compliance with the requirements of this Deed of Trust, Trustor
shall not be required to contribute any additional amounts to the
Insurance Proceeds for the purposes of increasing Restoration
Funds or effectuating the Restoration. However, in the event that
Beneficiary is not obligated to release funds under this Deed of
Trust, but may elect to release such funds, Beneficiary may
require that additional funds be contributed by Trustor as a
condition to such release.

Upon release of the Restoration Funds, Trustor shall
commence and diligently pursue to completion in accordance with
this Section 8 repairs to the portion of the Security that has
been partially damaged or destroyed, in compliance with all legal
requirements and to the same condition, character and at least
equal value and general utility as nearly as possible to that
existing prior to such damage or destruction (the "Restoration").
In the event that Beneficiary is not obligated to release the
Insurance Proceeds for Restoration under the preceding grammatical
paragraph, Beneficiary may, at its option, elect to apply the
Insurance Proceeds to the reduction of the indebtedness secured by
this Deed of Trust in such order as Beneficiary may determine, or
to the cost of Restoration, and at Beneficiary's option and in its
sole discretion, Beneficiary may, within one hundred twenty (120)
days of such damage or destruction, declare the entire
Indebtedness secured hereby immediately due and payable without
any prepayment premium.

(c) Requirements for Restoration. In the event the
Restoration Funds are to be used for the Restoration, Trustor
shall, prior to the commencement of any construction work on the
Security in connection with the Restoration (the "Work"), deliver
to Beneficiary (i) complete plans and specifications for the Work
which (A) have been approved by all governmental authorities whose
approval is then required, (B) bear the signed approval of an
architect satisfactory to Beneficiary ("Architect") and (C) are
accompanied by Architect's signed estimate of the total estimated
cost of the Restoration which shall provide that upon completion
of the Work, the Improvements shall be at least equal in value and
general utility to their value and general utility immediately
prior to the damage or destruction or condemnation (such plans and
specifications shall be subject to Beneficiary's approval, which
approval shall not be unreasonably withheld (the "Approved
Plans")); (ii) copies of all permits and approvals (temporary or
permanent) required by law in connection with the commencement and
conduct of the Restoration; (iii) a contract for construction
executed by Trustor and a contractor reasonably satisfactory to
Beneficiary ("Contractor") in form, scope and substance
satisfactory to Beneficiary (including the customary retention)
for performance of the Work; and (iv) if the estimated cost of the
Restoration exceeds Five Hundred Thousand Dollars ($500,000), a
surety bond for and/or guarantee satisfactory to Beneficiary of
payment for and completion of, the Restoration, which bond or
guarantee shall be (A) in form, scope and substance satisfactory
to Beneficiary, (B) signed by a surety or sureties, or guarantor
or guarantors, as the case may be, who are acceptable to
Beneficiary, and (C) in an amount not less than Architect's total
estimated cost of completing the Restoration less the amount of
the net Insurance Proceeds, if any, then held by Beneficiary.

(d) Performance of Restoration. Trustor shall not
commence any portion of the Work, other than temporary work to
protect the Improvements or prevent interference with business,
until Trustor shall have complied with the requirements of Section
8(c). After commencing the Work, Trustor shall perform or cause
Contractor to perform the Work diligently and in good faith in
accordance with the Approved Plans.

(e) Disbursement of Restoration Funds. Beneficiary
shall disburse the Restoration Funds in increments to Trustor or
to parties to whom payments for work are then due, as Beneficiary
shall elect from time to time as the Work progresses, to pay (or
reimburse Trustor for) the costs of the Restoration, but subject
to the following conditions, any of which Beneficiary may waive in
its sole discretion:

(i) The Work shall be in the charge of an
experienced construction manager reasonably satisfactory to
Beneficiary (which may be an employee of Trustor or its
affiliates) with the consultation of Architect;

(ii) Beneficiary shall make such payments not
more often than at thirty (30) day intervals and only upon not
less than ten (10) days' prior written notice from Trustor to
Beneficiary and Trustor's delivery to Beneficiary of (A) Trustor's
written request for payment (a "Request for Payment") accompanied
by a certificate by Architect in form, scope and substance
reasonably satisfactory to Beneficiary which states that all of
the Work completed to that date has been done in compliance with
the Approved Plans and in accordance with applicable law, that the
amount requested has been paid or is then due and payable and is
properly a part of the cost of the Restoration and that when added
to all sums, if any, previously paid out by Beneficiary, the
requested amount does not exceed the value of the Work done to the
date of such certificate; (B) evidence reasonably satisfactory to
Beneficiary that there are no mechanic's or similar liens for
labor or material supplied in connection with the Work to date or
that any such liens have been adequately provided for to
Beneficiary's reasonable satisfaction; and (C) evidence reasonably
satisfactory to Beneficiary that the balance of the Restoration
Funds remaining after making the payments will be sufficient to
pay for the Restoration not then completed (giving in such
reasonable detail as Beneficiary may require an estimate of the
cost of such completion). Each Request for Payment shall be
accompanied by waivers of liens reasonably satisfactory to
Beneficiary covering that part of the Work previously paid for, if
any, and by a search prepared by a title company or by other
evidence reasonably satisfactory to Beneficiary that no mechanic's
liens or other liens or instruments for the retention of title in
respect of any part of the Work have been filed against the
Security and not discharged of record or otherwise bonded over or
insured over to Beneficiary's reasonable satisfaction and that,
except as otherwise expressly permitted herein, no encumbrance
exists on or affecting the Security other than encumbrances, if
any, which are set forth in the title policy issued to Beneficiary
insuring the lien of this Deed of Trust;

(iii) There shall then exist no Event of Default
by Trustor under the Note or under any other Loan Documents, or
any state of facts existing which, with the giving of notice or
the passage of time or both, would constitute an Event of Default;
and

(iv) Any final Request for Payment after the
Restoration has been completed shall be accompanied by a copy of
any permanent or temporary certificate or certificates required by
law (the "Certificate of Occupancy"), if any, to render occupancy
of the Improvements legal.

Upon Beneficiary's receipt of the Certificate of
Occupancy for the Improvements and final lien waivers evidencing
that the Restoration has been completed and the costs thereof paid
in full, and satisfactory evidence that no mechanic's or similar
liens for labor or material supplied in connection with the
Restoration are outstanding against the Security and provided that
Trustor is not then in default under any of the Loan Documents,
Beneficiary shall pay any remaining Restoration Funds then held by
Beneficiary to Trustor; provided, however, nothing contained
herein shall prevent Beneficiary from applying at any time the
whole or any part of the Restoration Funds to the curing of any
Event of Default under the Loan Documents.

(f) Application of Restoration Funds to
Indebtedness. If, within sixty (60) days after the occurrence of
any damage or destruction to the Security requiring Restoration,
Trustor fails to request that the Insurance Proceeds be disbursed
as above permitted; or if, within one hundred twenty (120) days
after the occurrence of such damage or destruction to the Security
(unless, in the event that Beneficiary is not obligated to permit
Trustor to restore the Security under subparagraph (b) above, but
nevertheless elects to do so, then one hundred twenty (120) days
from such election), Trustor (i) fails to submit to Beneficiary
and receive Beneficiary's approval of plans and specifications or
(ii) fails to deposit with Beneficiary any additional amounts
which may be required by Beneficiary in accordance with this Deed
of Trust to accomplish the Restoration, or (iii) Trustor fails to
commence promptly or diligently continue to completion the
Restoration after such plans and specifications are approved by
all such governmental authorities and Beneficiary, or (iv) Trustor
becomes delinquent in payment to mechanics, materialmen or others
for the costs incurred in connection with the Restoration; then,
in addition to all of the rights herein set forth and after thirty
(30) days' written notice of the nonfulfillment of one or more of
the foregoing conditions, Beneficiary, or any lawfully appointed
receiver of the Security, may at their respective options, (A)
perform or cause the Work to be performed, and may take such other
steps as they deem advisable to perform the Work, and may enter
upon the Security for the foregoing purposes and/or (B) apply the
Restoration Funds then or thereafter held by Beneficiary to reduce
the unpaid Indebtedness in such order as Beneficiary may elect
without prepayment premium. Any application of such proceeds to
the Indebtedness shall be at par and shall cause a pro rata
reduction in payments of interest and, if applicable, principal,
under the Note (based on a reamortization, as applicable),
provided, however, that if there exists an Event of Default, the
prepayment fee (prorated based upon the amount being prepaid) as
provided in the Note shall also be due.

(g) Payment of Restoration Funds to Trustor. In the
event that Beneficiary applies all or any portion of the
Restoration Funds to reduce the unpaid Indebtedness as provided in
this Section 8, after payment in full of all sums secured by the
Loan Documents, any remaining Restoration Funds shall be paid to
Trustor.

9. Condemnation. Should the Security or any part thereof
be taken or damaged by reason of any public improvement or
condemnation proceeding, or in any other manner, Beneficiary shall
be entitled to all compensation, awards and other payments or
relief therefor, and may, at its option, commence, appear in and
prosecute in its own name any action or proceeding or make any
compromise or settlement in connection with such taking or damage.

In no event shall Trustor commence, appear in and prosecute any
action or proceeding or make any compromise or settlement in
connection with such taking or damage without the prior written
consent of Beneficiary. All such compensation, awards, damages,
rights of action and proceeds (the "Condemnation Proceeds") are
hereby assigned to Beneficiary, who shall, after deducting
therefrom all its reasonable expenses, including attorneys' fees,
and so long as there is no default hereunder or under the Loan
Documents or any condition which, with the passage of time or the
giving of notice or both, would constitute a default hereunder or
thereunder, apply or release the Condemnation Proceeds to repair
any damage to the Improvements remaining on the portion of the
Security not subject to the taking, as provided in Section 8 above
with respect to disposition of Insurance Proceeds; provided,
however, that if the taking results in a loss of the Security to
an extent which, in Beneficiary's sole and absolute opinion,
renders or will render the Security not economically viable, or
otherwise impairs or will impair Beneficiary's security under the
Loan Documents, Beneficiary may apply all or any part of the
Condemnation Proceeds to reduce the unpaid Indebtedness in such
order as Beneficiary may elect. Any application of such proceeds
to the principal indebtedness shall be at par and shall cause a
pro rata reduction in payments of interest and, if applicable,
principal, under the Note (based on a reamortization, if
applicable); provided, however, that if there exists an Event of
Default, the prepayment fee (prorated on the basis of the amount
being prepaid) as provided in the Note shall also be due.
Beneficiary may require a contribution of additional funds for the
repair or restoration of the Security as a condition to releasing
Condemnation Proceeds for such purpose.

Nothing contained herein shall prevent the accrual of
interest as provided in the Note on any portion of the principal
balance due under the Note until such time as the Condemnation
Proceeds are actually received and applied to reduce the principal
balance outstanding.

10. Repair; Alterations; Waste. Trustor shall keep all of
the Security in good repair, and expressly agrees that it will
neither permit nor commit any waste upon the Security nor do any
other act or suffer or permit any act to be done, whereby the
Security or the lien hereof may be impaired, and shall comply with
all zoning laws, building codes, subdivision laws, and other laws,
ordinances, rules and regulations made or promulgated by any
government or municipality, or by any agency thereof or by any
other lawful authority, which are now or may hereafter become
applicable to the Security, provided that compliance with
environmental laws shall be governed by Section 11 hereof.
Subject to the provisions of Sections 8 and 9 hereof, Trustor
shall repair or restore any building now or hereafter under
construction on the Security and complete the same within a
reasonable period of time. Trustor agrees not to initiate or
acquiesce in any material zoning variance or reclassification
which materially affects the Security, without Beneficiary's prior
written consent, which consent shall not be unreasonably withheld.

Trustor shall not construct any additional building or buildings
or make any other improvements on the Land nor alter, remove or
demolish any building or other Improvements on the Land, without
the prior written consent of Beneficiary.

In furtherance but not in limitation of Trustor's
obligations hereunder, Trustor shall implement the ADA compliance
requirements described as items to be addressed in the "ADA
Worksheets" (8 pages) for the Security prepared in 1991 and
transmitted to Beneficiary by letter dated September 7, 1994.

If Trustor fails to observe any of the provisions of
this Section or suffers or permits any Event of Default to exist
under this Section, Beneficiary or a lawfully appointed receiver
of the Security at their respective options, from time to time,
may perform, or cause to be performed, any and all repairs and
such other work as they deem necessary to bring the Security into
compliance with the provisions of this Section and may enter upon
the Security for any of the foregoing purposes, and, except for
Beneficiary's gross negligence and willful misconduct, Trustor
hereby waives any claim against Beneficiary and/or such receiver,
arising out of such entry or out of any other act carried out
pursuant to this Section. Trustor shall within ten (10) days of
written demand repay to Beneficiary and such receiver, with
interest at the Default Rate, all amounts expended or incurred by
them, respectively, in connection with any action taken pursuant
to this Section, and such repayment shall be secured by the lien
of this Deed of Trust.

Trustor represents and warrants that there are and at
all times will be at least 689 parking spaces on and as part of
the Security.

11. Environmental.

(a) Except as disclosed in that certain
environmental audit dated August, 1994 and prepared by Blasland,
Bouck & Lee, Inc., a copy of which has been furnished to
Beneficiary (the "Environmental Audit"), or in that certain
Borrower's Certificate by Trustor of even date herewith (the
"Borrower's Certificate"), Trustor represents and warrants that,
Trustor has not used and will not use, in violation of any of the
Environmental Laws (hereinafter defined) and, to the best of
Trustor's knowledge, no prior owner or current or prior tenant,
subtenant, or other occupant of all or any part of the Security
has used or is using Hazardous Materials (hereinafter defined) on,
from or affecting the Security in any manner that violates
federal, state or local laws, ordinances, rules, regulations or
policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production, or disposal of
Hazardous Materials, and that, to the best of Trustor's knowledge,
no Hazardous Materials have been disposed of on or within the
Security in violation of any of the Environmental Laws,
intentionally or unintentionally, directly or indirectly, by any
person whether related or unrelated to Trustor nor have any
Hazardous Materials migrated onto or from the Security in
violation of any Environmental Laws (hereinafter defined).
Trustor covenants that it will use reasonable efforts to not
permit or suffer any violation of any Environmental Laws
(hereinafter defined).

(b) For purposes of this Deed of Trust, "Hazardous
Materials" shall mean and include all products or substances which
are or contain petroleum, natural gas, natural gas liquids,
asbestos or polychlorinated biphenyls or any chemicals known to
cause cancer or reproductive toxicity and published pursuant to
California Health and Safety Code Subsection 25249.5 et. seq and those
elements, compounds, materials, mixtures and substances which are
now or hereafter are contained in any list of hazardous substances
adopted by the United States Environmental Protection Agency (the
"EPA") or any list of toxic pollutants designated by Congress or
the EPA or which are defined as hazardous, toxic, pollutant,
infectious, flammable or radioactive by any other Federal, State,
or local statute, law, ordinance, code, rule, regulation, order,
or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic, or
dangerous waste, substance, element, compound, mixture or
material, as now or at any time hereafter in effect, including,
without limitation, the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Subsection 9601 et seq., the Federal Hazardous Materials
Transportation Act, the Federal Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Subsection 6901 et seq., the Federal Toxic
Substance Control Act, 15 U.S.C. Subsection 2601 et seq., the Federal
Clean Air Act, the Federal Water Pollution Control Act, the
California Health & Safety Code (including without limitation
those chemicals known to cause cancer or reproductive toxicity,
Subsection 25249.5, et seq.,) or rules and regulations of the EPA, the
California Department of Health Services or any other agency or
governmental board or entity having jurisdiction over the Security
(collectively, the "Environmental Laws").

(c) Except as may be disclosed in the Environmental
Audit or in the Borrower's Certificate, Trustor represents and
warrants that, to its actual knowledge, as of the date hereof, no
use, generation, manufacture, production, treatment, storage or
disposal of any Hazardous Materials has occurred or is occurring
on or within the Security in violation of any of the Environmental
Laws and that Trustor will use reasonable efforts to not permit or
suffer any such use, generation, manufacture, production,
treatment, storage or disposal of Hazardous Materials on, under,
about or within the Security in violation of any of the
Environmental Laws or permit any lien or designation regarding
environmental matters under any California or Federal law, rule,
or regulation to attach to the Security or any portion thereof or
any interest therein. Trustor represents and warrants that, to
its actual knowledge, as of the date hereof, it has not received
any notice from any governmental agency or any tenant of the
Security with regard to such Hazardous Materials, and has received
no notice that the environmental condition of the Security is in
violation of any Environmental Law.

(d) Except as may be disclosed in the Environmental
Audit or in the Borrower's Certificate, Trustor represents and
warrants that Trustor has not installed on or in the Security any
asbestos containing material and, to Trustor's actual knowledge as
of the date hereof, the Security does not contain, and has not in
the past contained, any asbestos containing material in friable
form, and there is no current or potential airborne contamination
of the Security by asbestos fiber, including any potential
contamination that would be caused by maintenance or tenant finish
activities in the building(s).

(e) Trustor represents and warrants that, to its
actual knowledge, as of the date hereof, it has not received any
notice that the soil, surface water, and ground water of or on the
Security are not free from any spills of oil or other solid or
liquid waste, toxic or hazardous substance or contaminate, and
Trustor has no actual knowledge of any such spill.

(f) In the event that any investigation, site
monitoring, containment, clean-up, removal, restoration or other
remedial work of any kind or nature (the "Remedial Work") is
required under any applicable local, state or federal law or
regulation, any judicial order, or by any governmental entity or
person because of, or in connection with, the current or future
presence, suspected presence, release or suspected release of a
Hazardous Material in or about the air, soil, ground water,
surface water or soil vapor at, on, about, under or within the
Security (or any portion thereof), Trustor shall within forty-five
(45) days after written demand for performance thereof by
Beneficiary (or such shorter period of time as may be required
under any applicable law, regulation, order or agreement),
commence and thereafter diligently prosecute to completion, all
such Remedial Work. All Remedial Work shall be performed by
contractors reasonably approved in advance by Beneficiary, and
under the supervision of a consulting engineer reasonably approved
by Beneficiary. All costs and expenses of such Remedial Work
shall be paid by Trustor including, without limitation,
Beneficiary's reasonable attorneys' fees and out of pocket costs
incurred in connection with monitoring or review of such Remedial
Work. In the event Trustor shall fail to timely prosecute to
completion such Remedial Work, after the expiration of any
applicable notice and cure periods, Beneficiary may, but shall not
be required to, cause such Remedial Work to be performed and all
reasonable costs and expenses thereof, or incurred in connection
therewith, shall be payable by Trustor within ten (10 days after
written demand.

Trustor shall have the right to contest, at Trustor's
sole cost and expense, Trustor's requirement of any Remedial Work
provided that: (i) as a condition to any such contest, Trustor
shall deliver to Beneficiary, at Trustor's sole cost and expense,
such test results, consultants' reports and other information
regarding the then current environmental condition of the Security
and the effect that any additional delay that may result from any
such contest would have on such environmental condition, as
Beneficiary may reasonably require; (ii) Trustor shall have no
right to contest if the delay that might result from any such
contest would result in any deterioration in the environmental
condition of the Security or any portion thereof or in any
deterioration in the environmental condition of any other
property; (iii) Trustor shall have no such right to contest if, as
a result of such contest, any governmental agency would have the
right to claim a lien on all or any portion of the Security; and
(iv) Trustor shall give prior written notice to Beneficiary of
Trustor's intention to exercise such right of contest and, upon
written request of Beneficiary, shall deliver to Beneficiary a
good and sufficient bond or other security reasonably satisfactory
to Beneficiary for the costs which would be incurred in complying
with such requirement of Remedial Work.

(g) Trustor shall provide Beneficiary with prompt
written notice (a) upon Trustor's becoming aware of any release or
threat of release of any Hazardous Materials upon, under or from
the Security in violation of any of the Environmental Laws; (b)
upon Trustor's receipt of any notice from any federal, state,
municipal or other governmental agency or authority in connection
with any Hazardous Materials located upon or under or emanating
from the Security; and (c) upon Trustor's obtaining knowledge of
any incurrence of expense by any governmental agency or authority
in connection with the assessment, containment or removal of any
Hazardous Materials located upon or under or emanating from the
Security.

(h) In the event that (1) there exists an Event of
Default hereunder or under any of the Loan Documents or (2)
Beneficiary reasonably believes that there may be a violation or
threatened violation by Trustor of any requirements of
Environmental Law or a violation or threatened violation by
Trustor of any covenant under this Section 11, Beneficiary is
authorized by itself, its agents, employees or workmen to enter at
any reasonable time upon any part of the Real Property for the
purposes of inspecting the same for Hazardous Materials and
Trustor's compliance with this Section 11 and such inspections may
include, without limitation, soil borings. Beneficiary's rights
hereunder include its rights under California Civil Code Section
2929.5, as such Section may be amended from time to time. Trustor
acknowledges that, pursuant to California Code of Civil Procedure
Section 564(c), as such Section may be amended from time to time,
Beneficiary may be entitled to the appointment of a receiver to
enforce its rights under California Civil Code Section 2929.5.
Trustor agrees to pay to Beneficiary, upon Beneficiary's demand,
all out of pocket expenses, costs or other amounts incurred by
Beneficiary in performing any inspection and/or testing for the
purposes set forth in this clause (i), including, without
limitation, all out of pocket expenses, costs or other amounts
incurred by Beneficiary in obtaining the appointment of a receiver
as aforesaid. Beneficiary is under no duty, however, to visit or
observe the Real Property or to conduct tests, and any such acts
by Beneficiary shall be for the sole purpose of protecting
Beneficiary's security and preserving Beneficiary's and Trustee's
rights under the Loan Documents. In no event shall any site
visit, observation or testing by Beneficiary be a representation
that Hazardous Materials are or are not present in, on, or under
the Real Property, or that the construction is free from defective
materials or workmanship, or that there has been or shall be
compliance with any Loan Document or any applicable governmental
law. Neither Trustor nor any other party is entitled to rely on
any site visit, observation or testing by Beneficiary.
Beneficiary owes no duty of care to protect Trustor or any other
party against any Hazardous Materials, any negligent or defective
design or construction of the Improvements, or any other adverse
condition affecting the Real Property.

(i) The foregoing provisions of this Section 11 do
not apply to any ordinary use and incidental storage of small and
insignificant amounts of substances reasonably necessary for the
regular and ordinary maintenance of the Real Property, or consumed
in the regular and ordinary use of common office business
machines, nor to gasoline, oil, and other ordinary automotive
fluids to the extent that they are contained in the common and
ordinary manner in motor vehicles visiting the Real Property, in
each case provided that the same does not constitute a violation
of any of the Environmental Laws.

12. Independence of Security. Trustor shall not hereafter
by act or omission permit any building or other improvement on
premises not subject to the lien of this Deed of Trust to rely on
the Security or any part thereof or any interest therein to
fulfill any municipal or governmental requirement, and Trustor
hereby assigns to Beneficiary any and all rights to give consent
for all or any portion of the Security or any interest therein to
be so used. Similarly, except as provided in the Parking
Agreements, no part of the Security shall rely on any premises not
subject to the lien of this Deed of Trust or any interest therein
to fulfill any governmental or municipal requirement. Trustor
shall not hereafter by act or omission impair the integrity of the
Security as a single zoning lot, and as one or more complete tax
parcels, separate and apart from all other premises. Any act or
omission by Trustor which would result in a violation of any of
the provisions of this Section shall be void.

13. No Other Liens. Trustor shall not consent, agree to,
or permit any mortgage, lien, or security interest upon or
affecting the Security or any part thereof except for the
Permitted Encumbrances (as defined in Section 2 hereof), and as
granted or permitted in this Deed of Trust and any other lien or
security interest granted to Beneficiary.

Trustor will promptly pay and discharge any and all
amounts which are now or hereafter become liens against the
Security whether or not superior to the lien hereof or to any
assignment of rents and leases given to Beneficiary, subject to
Trustor's right to contest taxes and mechanic's liens in
accordance with this Deed of Trust.

14. Management. Trustor shall at all times retain an
entity which is owned by, controlled by or under common control
with JMB Realty Corporation or JMB Properties Co. to operate and
manage the Security, and no change in such management shall be
made without the prior written approval of Beneficiary, except to
Heitman Properties, Ltd., and any such attempted change in
management without such consent shall be void. The management
agreement with JMB Properties Company dated January 1, 1987 may
not be modified or amended and any successor agreement may not be
entered into or any other management company appointed without
Beneficiary's prior written approval. The management agreement,
including payment of any fees thereunder or lien to which the
manager shall be entitled, must be subordinate to the lien of this
Deed of Trust.

15. Ground Lease. Trustor hereby represents and warrants
to Beneficiary that there exist no ground leases relating to or
executed in connection with the Security.

16. Sidewalks, Municipal Charges. Trustor will promptly
pay and discharge any and all license fees and similar charges,
with penalties and interest thereon, which may be imposed by the
municipality in which the Security is situated, for the use of
vaults, chutes, areas and other space beyond the lot line and
under or abutting the public sidewalks in front of or adjoining
the Security, and Trustor will promptly cure any violation of law
and comply with any order of such municipality respecting the
repair, replacement or condition of the sidewalk or curb in front
of or adjoining the Security, and if Trustor fails to do same
within any applicable time periods permitted by such law or order,
Beneficiary may, upon ten (10) days written notice to Trustor, pay
any and all such license fees or similar charges, with penalties
and interest thereon, and the charges of the municipality for such
repair or replacement, and any amount so paid or advanced by
Beneficiary and all reasonable out of pocket costs and expenses
incurred in connection therewith (including, without limitation,
reasonable attorneys' fees), with interest thereon at the default
rate specified in the Note, shall be a demand obligation of
Trustor to Beneficiary, and, to the extent permitted by law, shall
be added to the Indebtedness and shall be secured by the lien of
this Deed of Trust.

17. Assignment of Rents and Leases. Trustor hereby
presently, irrevocably, absolutely, and unconditionally grants,
transfers, assigns and sets over unto Beneficiary all of its
right, title and interest in and to all present and future leases,
license agreements, concession agreements, lease termination
agreements and other occupancy agreements of any nature, oral or
written, of the Land and of space in the Improvements together
with all modifications, supplements, extensions, renewals and
replacements thereof now existing or hereafter made, and also
together with the rights to sue for, collect and receive all
rents, prepaid rents, additional rents, royalties, security
deposits, damages payable upon default by tenant, or other sums in
any of said leases provided to the lessor thereunder, profits,
income, license fees, concession fees, lease termination fees and
issues of the Security (collectively, the "Rents"), to be applied
by Beneficiary in payment of the Indebtedness, and also together
with any and all guaranties of the obligations of the tenants
thereunder and the rights of Trustor to receive, hold and apply
all bonds and security in all of said leases provided to be
furnished to the lessor thereunder, and also together with the
rights of Trustor to enforce any and all of the agreements, terms,
covenants and conditions in all of said leases provided and to
give notices thereunder. Beneficiary grants to Trustor a
revocable license to collect the Rents as they become due and to
enforce such leases, so long as no Event of Default exists
hereunder. Beneficiary may receive and collect the Rents
personally or through a receiver upon the occurrence of an Event
of Default so long as any such Event of Default shall exist and
during the pendency of any foreclosure proceeding and during any
redemption period. Trustor agrees to consent to a receiver if
this is believed necessary or desirable by Beneficiary to enforce
its rights under this Section.

Trustor shall not otherwise assign or pledge, or
contract, expressly or by implication, to assign or pledge, any
lease of the Land or space in the Improvements or the rights to
sue for, collect and receive any Rents, or the rights to receive,
hold and apply any bonds and security in any of said leases
provided to be furnished to the lessor thereunder, or the rights
to enforce any of the agreements, terms, covenants or conditions
of said leases or to give notices thereunder, unless in each
instance the written consent thereto of Beneficiary be first
obtained.

Nothing in this Deed of Trust shall be construed to
obligate Beneficiary, expressly or by implication, to perform any
of the covenants of Trustor as lessor under any of the leases
hereinabove assigned or to pay any sum of money or damages therein
provided to be paid by the lessor.

If Beneficiary shall from time to time suffer or
permit Trustor to sue for, collect or receive any Rents, or to
receive, hold or apply any bonds or security under said leases, or
to enforce any of the agreements, terms, covenants or conditions
thereunder or to give notices thereunder, neither such sufferance
nor permission shall constitute a waiver or relinquishment by
Beneficiary of the rights hereunder and hereby assigned to
Beneficiary with respect to any subsequent Rents, or with respect
to any subsequent receipt, holding or application of bonds or
security or any subsequent enforcement of such agreements, terms,
covenants or conditions or any subsequent notices.

18. Future Leases. Trustor will not hereafter make any
lease to any tenant, or amend, modify, terminate, renew or extend
any lease (other than a renewal to which a tenant is entitled
under the terms of an existing lease or contained in a lease that
is subsequently approved by Beneficiary), affecting the Security
unless Beneficiary shall first consent in writing to the form and
substance of said lease or amendment, modification, renewal or
extension, which consent shall not be unreasonably withheld.
Leases (or amendments, modifications, renewals or extensions of
then existing Leases) submitted for Beneficiary's review and
approval shall be deemed approved if Beneficiary fails to respond
(e.g. approve, reject, comment about, request more information or
other reasonable response) within thirty (30) days from
Beneficiary's receipt of the submitted request for approval.
Trustor may, however, if the particular circumstances require,
request an expedited review, in which case the lease shall be
deemed approved if Beneficiary fails to respond within ten (10)
business days of receipt. Notwithstanding the foregoing, a lease
shall only be deemed approved if (i) the cover letter accompanying
the lease submission clearly and conspicuously states that such
lease will be automatically deemed approved under the Loan
Documents if no response is forthcoming from Beneficiary, along
with the date that such automatic approval would be effective,
(ii) such lease will not be used to qualify for the reduction,
release or earnout on any letter of credit, escrow, guarantee,
indemnification or other form of additional collateral for the
loan, nor will such lease be used to qualify for any right or
privilege of Trustor under the Loan Documents which is triggered
by, among other things, a debt service coverage test (however,
leases expressly approved by Beneficiary may be used for such
purposes), (iii) the lease submission date commences when
Beneficiary actually receives a complete and final draft of the
lease at the address for its Investment Services department set
forth in the notice provision of this Deed of Trust, (iv) there is
not Event of Default under the Loan Documents which remains
uncured at the time such lease would be deemed approved, and (v)
in the case of "expedited review" requests, the circumstances
which require such expedited review are not caused solely by the
Trustor, and such circumstances are clearly and fully explained in
the cover letter accompanying the lease submission.

All leases must be subordinate to the lien of this
Deed of Trust unless Beneficiary otherwise specifies. Each lease
must contain a provision that, upon notice to tenant by
Beneficiary, the lease shall become superior, in whole or in part,
to the lien of this Deed of Trust. Without limiting the
foregoing, Beneficiary hereby reserves the right to subordinate
this Deed of Trust to any lease subsequently made by recording in
the Official Records of Santa Clara County in which this Deed of
Trust is recorded a declaration to that effect, executed by
Beneficiary, which declaration once so recorded shall be binding
upon the tenant under such lease and such tenant's successors and
assigns.

To the extent any tenant estoppel certificate or
agreement from a tenant relating to subordination and attornment
for any Lease is required under this Deed of Trust or any other
Loan Document, the forms attached hereto as Exhibit B and Exhibit
C, respectively, shall be acceptable to Beneficiary for such
purposes.

Trustor will furnish to Beneficiary a true and
complete copy of each lease, amendment, modification, extension,
or renewal of lease, hereafter made by Trustor with respect to
space in the Security within ten (10) days after execution and
delivery of each such lease, amendment, modification, extension,
or renewal by the parties thereto. Trustor shall also furnish to
Beneficiary an original mortgagee subordination and attornment
agreement executed by each tenant and an original estoppel,
addressed to Beneficiary, from each tenant in form and substance
satisfactory to Beneficiary.

Trustor will from time to time upon demand of
Beneficiary, confirm in writing the assignment to Beneficiary of
any or all leases of the Land and space in the Improvements, and
such written confirmation shall be in such form as Beneficiary
shall require and as shall be necessary to make the same
recordable.

19. Trustor's Obligations as Lessor.

(a) Trustor shall, at Trustor's cost and expense,
promptly and fully perform each and every covenant, condition,
promise and obligation on the part of the lessor to be performed
pursuant to the terms of each and every lease or letting, written
or oral, now or hereafter made with respect to the Security or any
part or parts thereof, and shall not suffer or permit there to
exist any default in such performance on the part of such lessor
or permit any event to occur which would give the tenant under any
such lease the right to terminate the same or to offset rent.

(b) Trustor shall give Beneficiary prompt written
notice of any default under any lease or of the receipt by Trustor
of any written notice of default from the lessee or its successors
or assigns under a lease, and Trustor shall furnish to Beneficiary
promptly any and all information which Beneficiary may reasonably
request concerning the performance and observance of all
covenants, agreements and conditions contained in the leases by
the lessor thereunder to be kept, observed and performed and
concerning the compliance with all terms and conditions of the
leases.

(c) In the event of any failure by Trustor to keep,
observe or perform any covenant, agreement or condition contained
in the leases or to comply with the terms and conditions of the
leases, any performance, observance or compliance by Beneficiary
pursuant to this Deed of Trust on behalf of Trustor shall not
remove or waive, as between Trustor and Beneficiary, the
corresponding Event of Default under the terms of this Deed of
Trust.

20. Leases; Foreclosure. Any proceedings or other steps
taken by Beneficiary to foreclose this Deed of Trust, or otherwise
to protect the interests of Beneficiary hereunder, shall not
operate to terminate the rights of any present or future tenant of
space in the Improvements, notwithstanding that said rights may be
subject and subordinate to the lien of this Deed of Trust, unless
Beneficiary specifically elects otherwise in the case of any
particular tenant. The failure to make any such tenant a
defendant in any such foreclosure proceeding and to foreclose such
tenant's rights will not be asserted by Trustor or any other
defendant in such foreclosure proceeding instituted by Beneficiary
to foreclose this Deed of Trust or otherwise protect the interests
of Beneficiary hereunder.

21. Operating Agreements. Trustor will perform its
obligations under all agreements relating to or executed in
connection with the Security that require or provide for the
operation of the Security in any manner and will not enter into
any such agreements which would bind Beneficiary if Beneficiary
becomes the owner of the Security, except for the Permitted
Exceptions and Parking Agreements.

22. Events of Default. Each of the following shall
constitute an "Event of Default" hereunder and shall entitle the
Beneficiary to exercise its remedies hereunder and under any of
the other Loan Documents or as otherwise provided by law:

(a) Any payment of any installment of principal or
interest due under the Note, or any escrow payment due under any
of the Loan Documents, is not received by Beneficiary within five
(5) business days following the date when such payment was due, or
any other payment of money or indebtedness as required by this
Deed of Trust or by any other Loan Document is not made within ten
(10) days of when due and payable;

(b) Failure of Trustor in the observance or
performance of any covenant, promise or agreement provided in this
Deed of Trust or in any other Loan Document other than relating to
the payment of indebtedness or money ("failure to perform") for
thirty (30) days after written notice to Trustor specifying the
nature of the failure to perform; provided, however, that if the
nature of such failure to perform is such that the same cannot be
cured within such thirty (30) day period, such failure to perform
shall not be deemed an Event of Default if Trustor shall within
such period commence to cure that failure to perform and
thereafter diligently prosecute the cure to completion, but in no
event more than one hundred twenty (120) days in the aggregate.
Notwithstanding anything contained herein to the contrary, the
notice and cure period provided under this clause (b) shall not be
applicable to and shall not be in addition to any specific notice
and cure or performance period provided under any other provision
of this Deed of Trust, and the specific notice and cure or
performance period provided for in such provision shall control,
except and to the extent that such provision expressly states that
such notice or cure period is in addition to notice and cure
periods provided elsewhere, and a failure by Trustor to cure a
default under such provision within the applicable cure period
shall be an Event of Default under this Deed of Trust;

(c) Any representation, warranty, or statement of
Trustor or the managing general partner of Trustor contained
herein or in any of the Loan Documents proves to be untrue in any
material respect as of the date when made;

(d) Trustor or the managing general partner of
Trustor shall (i) have an order for relief entered in a proceeding
under Title 11, United States Code, whether such order shall
result from a voluntary or involuntary petition, provided that, in
the case of an involuntary filing, Trustor shall have also failed
to obtain a dismissal within ninety (90) days of the petition
date, (ii) seek or consent to the appointment of a receiver or
trustee for itself or for any of the Security, (iii) file a
petition or initiate a proceeding under the bankruptcy,
insolvency, receivership, or similar laws of the United States,
any state or any jurisdiction, or (iv) make a general assignment
for the benefit of creditors;

(e) A court shall enter an order, judgment or decree
appointing, without the consent of Trustor or the managing general
partner of Trustor, a receiver or trustee for it or for any of the
Security or approving a petition filed against Trustor which seeks
relief under the bankruptcy or other similar laws of the United
States, any state or any jurisdiction, and such order, judgment or
decree shall remain in force, undischarged or unstayed, ninety
days after it is entered;

(f) Without the prior written consent of the
Beneficiary, which may be given or withheld in Beneficiary's sole
and absolute discretion, whether voluntary or involuntary, by
operation of law or otherwise, (i) the Security or any portion
thereof, or interest therein, shall be mortgaged, encumbered,
sold, assigned or otherwise transferred by the Trustor or by
operation of law, including without limitation, the sale or
execution of a contract to sell or option to purchase, assignment,
pledge, grant of a security interest in, conditional sale,
execution of a title retention agreement, lease for space within
the Security containing an option to purchase, or other alienation
of a property interest in the Security, or (ii) JMB Income
Properties, Ltd.-XI or JMB Income Properties, Ltd.-XII, both
Illinois general partnerships, transfer all or any portion of
their respective interests in Trustor or cease to be the co-
managing general partners of Trustor, responsible for and in
control of the management and affairs of Trustor, or (iii) JMB
Realty Corporation, a Delaware corporations, transfers all or any
portion of its interest in or ceases to be the managing general
partners of JMB Income Properties, Ltd.-XI or JMB Income
Properties, Ltd.-XII, or (iv) the partnership agreement of Trustor
or of such general partners is cancelled or materially amended or
modified. Notwithstanding the foregoing to the contrary:

(i) Provided that Beneficiary is notified at
least thirty (30) days prior to such transfer, transfers of the
partnership interests in Trustor or the partners of Trustor shall
be permitted, provided that, immediately following such transfer,
JMB Realty Corporation, an Illinois corporation ("JMB") or one or
more majority-owned direct or indirect subsidiaries of JMB, or the
shareholders of JMB, shall beneficially own and control, directly
or indirectly, and in the aggregate, more than fifty percent (50%)
of the interests in Trustor and the Security. Without limiting
the foregoing, no transfer by a limited partner of its interest in
JMB Income Properties, Ltd.-XI or in JMB Income Properties, Ltd.-
XII shall constitute an Event of Default under the Loan Documents.

(ii) Trustor shall have the right to a one-time
sale, transfer or assignment in whole or in part of its interest
in the Security to any party of equal qualification and
creditworthiness, provided:

(A) there then is no default under the
Loan Documents;

(B) a property inspection by Beneficiary
or Beneficiary's designee shows that all reasonably necessary
maintenance on or damage or destruction to the Security has been
completed or repaired;

(D) the aggregate annual debt service
coverage (based on Annual Net Income, as hereinafter defined) on
the Indebtedness and any applicable secondary financing exceeds
1.3 times;

(E) the proposed transferee has specific
related real estate experience in the Metropolitan Statistical
Area where the Security is located;

(F) the proposed transferee must own or
manage a minimum of 5,000,000 square feet of office space;

(G) At least 90 days prior to such a
transfer, Trustor must provide Beneficiary with all of the
material provisions of such transfer including without limitation
the proposed date of transfer, and the name, net worth, background
and address of the proposed transferee and the purchase price;

(H) Trustor shall provide Beneficiary
with such evidence as Beneficiary may require that the proposed
transferee shall fulfill each and every obligation of Trustor
under the Loan Documents and that such transfer shall not affect
or impair Beneficiary's security and rights under the Loan
Documents;

(I) such transfer may only occur during
the first five Loan Years (as defined in the Note);

(J) such notice received under (vii)
above shall be accompanied by the payment to Beneficiary of a non-
refundable fee in the amount of $168,750 in cash or certified
check to be retained by Beneficiary in order to induce Beneficiary
to allow the proposed transferee to assume the obligations of
Trustor under the Loan Documents, and such fee shall be returned
to Trustor if Beneficiary disapproves of such transfer;

(K) the loan-to-value ratio based on a
then current appraisal obtained at Trustor's expense and
acceptable to Beneficiary must not exceed 75%; and

(L) Trustor shall pay for all of
Beneficiary's costs and expenses associated with the transfer,
including without limitation, attorneys' fees charged by
Beneficiary's staff counsel or special counsel.

As used herein, the term "Qualified Real Estate
Investor" as any reputable corporation, partnership, joint
venture, joint-stock company, trust or individual with a minimum
net worth of $50,000,000, real estate assets of $250,000,000, a
minimum current cash position of $5,000,000, based in the United
States and free from any bankruptcy, reorganization or insolvency
proceedings or any criminal charges or proceedings and shall not
have been, at the time of transfer or in the past, a litigant,
plaintiff or defendant in any suit brought against or by
Beneficiary. Beneficiary agrees to be reasonable in the review of
such qualifications and agrees that if the prospective purchaser
is a partnership, the net worth of the general partners thereof
shall be included for the purposes of the foregoing net worth
calculation.

As used herein, the term "Annual Net Income" is
defined as actual rental income (adjusted as set forth below),
parking income and regular recurring charges paid by current
tenants in occupancy of the Security for the preceding six (6)
months, multiplied by two (2), less actual operating expenses
(adjusted as set forth below) and real estate taxes and
assessments relating to the preceding six (6) month period,
multiplied by two (2). Rental income shall be reduced by the
amount of any outstanding monetary obligations to any tenants
(such as free rent, above standard improvements, moving allowances
or other monetary tenant inducement for which the landlord has an
outstanding responsibility) and shall exclude any extraordinary
payment from a tenant which exceeds the regular amounts due
throughout its lease term. Operating expenses, if not already
included, shall be increased to include any customary annual costs
at market rates (such as market rate management fees, repair and
maintenance costs, janitorial costs and insurance costs) which an
institutional owner would incur as an expense of owning the
Security. Operating expenses shall exclude any extraordinary non-
recurring expenses.

With respect to any direct or indirect transfer of
interests in the Security or in Trustor permitted under the Loan
Documents, Beneficiary may require, as applicable, (i) that the
transferee enter into an assumption agreement or other reasonably
necessary amendments to any of the Loan Documents, (ii) new UCC
financing statements, (iii) copies of organizational documents of
any entities directly or indirectly assuming any obligations under
the Loan Documents, (iv) an appropriate endorsement to
Beneficiary's title insurance policy, (v) an attorney's opinion
(as to due organization and authorization of assignee, as well as
enforceability of assumption and related transfer documents, but
not enforceability of existing Loan Documents) and (v) payment by
Trustor of all reasonable costs of Beneficiary (including without
limitation, staff and local attorneys' fees) incurred in
connection with such transfer; or

(g) A default occurs under the Environmental
Indemnity.

23. Remedies Upon Default. Immediately upon the
occurrence of any Event of Default, the Trustee and Beneficiary
shall have the option, in addition to and not in lieu of or
substitution for all other rights and remedies provided in this
Deed of Trust or any other Loan Document or provided by law or in
equity, and is hereby authorized and empowered by Trustor, to do
any or all of the following:

(a) Declare without notice the entire unpaid amount
of the Indebtedness immediately due and payable, by commencing an
action to foreclose this Deed of Trust as a mortgage, and/or by
delivery to Trustee of a written declaration of default and demand
for sale and of written notice of default and of election to cause
to be sold the Security, which notice Trustee shall cause to be
duly filed for record in case of foreclosure by exercise of the
power of sale herein.

(i) Beneficiary may elect to cause the
Security or any part thereof to be sold under power of sale herein
granted in any manner permitted by applicable law. In connection
with any sale or sales hereunder, Beneficiary may elect to treat
any of the Security which consists of a right in action or which
is property that can be severed from the real property covered
hereby or any improvements thereon without causing structural
damage thereto as if the same were personal property, and dispose
of same in accordance with applicable law, separate and apart from
the sale of the real property. Any sale of any personal property
hereunder shall be conducted in a manner permitted by Section 9501
or any other applicable section of the California Commercial Code.

Where the Security consists of real and personal property or
fixtures, whether or not such personal property is located on or
within the real property, Beneficiary may elect in its discretion
to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner
as is now or hereafter permitted by applicable law.

(ii) Without limiting the generality of the
foregoing, Beneficiary may, in its sole and absolute discretion
and without regard to the adequacy of its security, elect to
proceed against any or all of the real property, personal property
and fixtures in any manner permitted under Section 9501(4)(a) of
the California Commercial Code; and if the Beneficiary elects to
proceed in a manner permitted under Section 9501(4)(a) 9 (ii) of
the California Commercial Code, the power of sale granted herein
shall be exercisable with respect to all or any of the real
property, personal property and fixtures covered hereby, as
designated by Beneficiary, and the Trustee is hereby authorized
and empowered to conduct any such sale of any real property,
personal property and fixtures in accordance with the procedures
applicable to real property.

(iii) Where the Security consists of real
property and personal property, any reinstatement of the
obligation secured hereby, following an Event of Default and an
election by Beneficiary to accelerate the maturity of said
obligation, which is made by Trustor or any other person or entity
permitted to exercise the right of reinstatement under Section
2924c of the California Civil Code or any successor statute,
shall, in accordance with the terms of California Commercial Code
Section 9501(4)(c)(iii), not prohibit the Beneficiary from
conducting a sale or other disposition of any personal property or
fixtures or from otherwise proceeding against or continuing to
proceed against any personal property or fixtures in any manner
permitted by the California Commercial Code; nor shall any such
reinstatement invalidate, rescind or otherwise affect any sale,
disposition or other proceeding held, conducted or instituted with
respect to any personal property or fixtures prior to such
reinstatement or pending at the time of such reinstatement. Any
sums paid to Beneficiary in effecting any reinstatement pursuant
to Section 2924c of the California Civil Code shall be applied to
the secured obligation and to Beneficiary's and Trustee's
reasonable out of pocket costs and expenses in the manner required
by said Section 2924c.

(iv) Should Beneficiary elect to sell any
portion of the Security which is real property or which is
personal property or fixtures that Beneficiary has elected under
Section 9501(4)(a)(ii) of the California Commercial Code to sell
together with real property in accordance with the laws governing
a sale of real property, Beneficiary and Trustee shall give such
notice of sale as may then be required by law. Thereafter, upon
the expiration of such time and the giving of such notice as may
then be required by law, and without the necessity of any demand
on Trustor, Trustee, at the time and place specified in such
notice of sale, shall sell such real property or part thereof at
public auction to the highest bidder for cash in lawful money of
the United States. Trustee may, and upon request of Beneficiary
shall, from time to time, postpone any sale hereunder by public
announcement thereof at the time and place noticed therefor.

(v) If the Security consists of several lots,
parcels or items of property, Beneficiary may: (i) designate the
order in which such lots, parcels or items of property shall be
offered for sale or sold, or (ii) elect to offer such lots,
parcels or items through a single sale, or through two or more
successive sales, or in any other manner Beneficiary deems in its
best interest. Any person, including Trustor, Trustee or
Beneficiary, may purchase at any sale hereunder, and Beneficiary
shall have the right to purchase at any sale hereunder by
crediting upon the bid price the amount of all,or any part of the
indebtedness hereby secured. Should Beneficiary decide that more
than one sale or other disposition of the Security be conducted,
Beneficiary may, at its option, cause the same to be conducted
simultaneously, or successively, on the same day, or at such
different days or times and in such order as Beneficiary may deem
to be in its best interests, and no such sale shall terminate or
otherwise affect the lien of this Deed of Trust or any other Loan
Document on any part of the Security not sold until all
indebtedness secured hereby has been fully paid. In the event
that the Beneficiary elects to dispose of the Security through
more than one sale, Trustor agrees to pay the costs of each such
sale and of any judicial proceedings wherein the same may be made,
including reasonable compensation to Trustee, its agents and
counsel, and to pay all out of pocket expenses, liabilities and
advances made or incurred by Trustee and Beneficiary in connection
with such sale or sales, together with interest on all such
advances made by Trustee at the Default Rate.

(vi) Should Beneficiary elect to foreclose by
exercise of the power of sale herein, Beneficiary shall also
deposit with Trustee this Deed of Trust and the Note and such
receipts and evidence of expenditures made and secured hereby as
Trustee may require, and notice of sale having been given as then
required by law and after lapse of such time as may then be
required by law after recordation of such notice of default,
Trustee, without demand on Trustor, shall sell the Security at the
time and place of sale fixed by it in such notice of sale as
Beneficiary may direct, either as a whole or in separate parcels,
as Beneficiary may determine, at public auction to the highest
bidder for cash in lawful money of the United States, payable at
time of sale. Beneficiary shall have the right to direct the
order in which separate parcels shall be sold and Trustor shall
have no right to direct the order in which separate parcels are
sold. Trustee may postpone sale of all or any portion of the
Security by public announcement at such time and place of sale,
and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement.
Trustee shall deliver to such purchaser its deed conveying the
Security, or any portion thereof, so sold, but without any
covenant or warranty, express or implied. The recitals in such
deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustor, Trustee or
Beneficiary, may purchase at such sale.

(b) Proceed against the Personal Property in
accordance with Beneficiary's rights and remedies with respect to
the Personal Property, including the right to sell the Personal
Property together with the Real Property, separately, and without
regard to the remainder of the Security in accordance with
Beneficiary's rights and remedies provided by the California
Uniform Commercial Code as well as other rights and remedies
available at law or in equity.

(c) Beneficiary may, at Trustor's expense, cause to
be brought down to date a title examination and tax histories of
the Security, procure title insurance or title reports or, if
necessary, procure new abstracts and tax histories.

(d) Procure an updated or entirely new environmental
audit of the Security including building, soil, ground water and
subsurface investigations; have the Improvements inspected by an
engineer or other qualified inspector and procure a building
inspection report; procure an MAI or other appraisal of the
Security or any portion thereof; enter upon the Security at any
time and from time to time to accomplish the foregoing and to show
the Security to potential purchasers and potential bidders at
foreclosure sale; make available to potential purchasers and
potential bidders all information obtained pursuant to the
foregoing and any other information in the possession of
Beneficiary regarding the Security.

Either by itself or by its agent to be appointed
by it for that purpose or by a receiver appointed by a court of
competent jurisdiction, as a matter of strict right, without
notice and without regard to the adequacy or value of any security
for the Indebtedness or the solvency of any party bound for its
payment, to take possession of the Security and, whether or not
Beneficiary has taken possession of the Security, to operate the
Security, Trustor hereby waiving any right Trustor might have to
object to or oppose any such possession, and to collect and apply
the Rents, including those past due and unpaid, in such order and
manner as Beneficiary or such receiver in its sole discretion
shall consider advisable, to or upon the following, in such order
and amounts as Beneficiary shall elect: the expenses of
receivership, if any; the proper costs of upkeep, maintenance,
repair and/or operation of the Security; the repayment of any sums
theretofore or thereafter advanced pursuant to the terms of this
Deed of Trust; the interest then due or next to become due upon
the Indebtedness; the taxes and assessments upon the Security then
due or next to become due; and/or the unpaid principal of such
Indebtedness. The collection and/or receipt of Rents from the
Security by Beneficiary, its agent or receiver, after declaration
of default and election to cause the Security to be sold under and
pursuant to the terms of this Deed of Trust, shall not affect or
impair such default or declaration of default or election to cause
the Security to be sold or any sale proceedings predicated
thereon, but such proceedings may be conducted and sale effected
notwithstanding the receipt and/or collection of any such Rents.
Any such Rents in the possession of Beneficiary, its agent or
receiver, at the time of sale and not theretofore applied as
herein provided, shall be applied in the same manner and for the
same purposes as the proceeds of the sale. Beneficiary's rights
hereunder include its rights under California Code of Civil
Procedure Section 564, as such Section may be amended from time to
time. Except for damage caused by Beneficiary's or Beneficiary's
agents', employees', contractors', successors' and assigns'
willful misconduct or gross negligence, Trustor hereby waives any
claim Trustor may have against Beneficiary for mismanagement of
the Security during Beneficiary's operation of the Security under
this subparagraph or as mortgagee in actual possession under
applicable statutes.

(f) Beneficiary may, at its option, pay, perform or
observe any defaulted term, covenant or condition contained herein
or in any lease, the Management Agreement, the Parking Agreements
or any other Loan Document, and all payments made or out of pocket
costs or expenses incurred by Beneficiary in connection therewith
shall be secured hereby and shall be, within ten (10) days after
written demand, repaid by Trustor to Beneficiary with interest
thereon at the default rate provided in the Note. Beneficiary
shall be the sole judge of the necessity for any such actions and
of the amounts to be paid. Beneficiary is hereby empowered to
enter and to authorize others to enter upon the Security or any
part thereof for the purpose of performing or observing any such
defaulted term, covenant or condition without hereby becoming
liable to Trustor or any person in possession holding under
Trustor.

(g) Apply against the Indebtedness in such order as
Beneficiary shall determine any funds held for the benefit of
Trustor in escrow by Beneficiary or by any third-party escrow
agent under any of the Loan Documents, including without
limitation any funds held under the escrow established by Section
5 of this Deed of Trust.

(h) In the event of any sale of the Security
pursuant to Section 23(a), the proceeds of any such sale which are
applied in accordance with this Deed of Trust shall be applied in
the order following to: (i) all out of pocket expenses incurred
for the collection of the Indebtedness and the foreclosure of this
Deed of Trust, including reasonable compensation to Trustee and
Beneficiary, Trustee's and Beneficiary's agents and attorneys;
(ii) all out of pocket sums expended or incurred by Beneficiary
and Trustee directly or indirectly in carrying out the terms,
covenants and agreements of the Note or notes evidencing the
Indebtedness, of this Deed of Trust and any other Loan Documents,
together with interest thereon as therein provided; (iii) all late
payment charges, prepayment fees, advances and other amounts due
under any of the Loan Documents; (iv) all accrued and unpaid
interest upon the Indebtedness; (v) the unpaid principal amount of
the Indebtedness; and (vi) the surplus, if any, to the person or
persons legally entitled thereto.

In the event of any acceleration of the Indebtedness
pursuant to paragraph (a) of this Section, Trustor shall pay to
Beneficiary together with the principal indebtedness and interest
thereon an amount equal to the prepayment fee provided for in the
Note, and such fee shall be included as part of the Indebtedness,
provided, however, that in the event that Trustor reinstates the
loan evidenced by the Note, Trustor shall not be obligated to pay
any prepayment fee or premium on account of such acceleration.

(i) As described in Section 36 of this Deed of
Trust, Beneficiary may, to the extent permitted under California
Code of Civil Procedure Section 726.5, as such Section may be
amended from time to time ("Section 726.5"), exercise the rights
and remedies of an unsecured creditor to the extent permitted by
law thereunder. In the event Beneficiary so elects, pursuant to
Section 726.5 and this Deed of Trust, the valuation of the real
property, the determination of the environmentally impaired status
of such security and any cause of action for a money judgement
shall, at the request of Beneficiary, be referred to a referee in
accordance with California Code of Civil Procedure Sections 638 et
seq. Such referee shall be an M.A.I. appraiser selected by
Beneficiary and approved by Trustor, which approval shall not be
unreasonably withheld or delayed. The decision of such referee
shall be binding upon both Trustor and Beneficiary, and judgment
upon the award rendered by such referee shall be entered in the
court in which such proceeding was commenced in accordance with
California Code of Civil Procedure Sections 644 and 645.

(j) Subject to the provisions of Section 36 of this
Deed of Trust, Beneficiary may, in accordance with Section 736, as
such section may be amended from time to time, bring an action
against Trustor for breach of any "environmental provision" (as
such term in defined in Civil Code Section 736) made by Trustor
herein or in any other Loan Document, for the recovery of damages
and/or the enforcement of any such "environmental provision".

Neither Trustee nor Beneficiary shall be under any
obligation to make any of the payments or do any of the acts
referred to in this Section and any of the actions referred to in
this Section may be taken by Beneficiary irrespective of whether
any notice of default or election to sell has been given hereunder
and without regard to the adequacy of the security for the
indebtedness evidenced by the Note.

Failure to exercise any right, power or remedy
hereunder shall not constitute a waiver of the Event of Default or
of the right to exercise such option at a later time, or a waiver
of the right to exercise such option, right, power or remedy in
the event of any other Event of Default or circumstance specified
above.

24. Acceleration Interest. In addition to any late
payment charge which may be due under the Note, Trustor shall pay
interest on all sums due hereunder at a rate (the "Default Rate")
equal to the lesser of (i) the interest rate set forth in the Note
plus four percent (4%) per annum, or (ii) the maximum rate that
the parties may contract for under applicable law, from and after
the first to occur of the following events: if Beneficiary elects
to cause the acceleration of the Indebtedness; if an Event of
Default occurs under Section 22(d) or 22(e) of this Deed of Trust
(which is not cured within any applicable grace period afforded
therein); or if all sums due hereunder are not paid on the
Maturity Date as set forth in the Note.

25. Late Charge. In the event any sums principal,
interest or escrow payments due under the Note, this Deed of Trust
or any other Loan Document are not paid by Trustor within five (5)
business days of when due, without regard to any cure or grace
period, Trustor shall pay to Beneficiary a late charge for the
month during which such payment is not made when due and for each
month or fraction thereof that such sum remains unpaid, equal to
the lesser of four percent (4%) of such installment or the maximum
rate that the parties may contract for under applicable law, as
the reasonable estimate by Beneficiary and Trustor of a fair
average compensation for the loss that may be sustained by
Beneficiary due to the failure of Trustor to make timely payments,
and such amount shall be secured hereby. Such late charge shall
be paid without prejudice to the right of Beneficiary to collect
any other amounts provided to be paid or to declare an Event of
Default under this Deed of Trust or any other Loan Document.

26. Waiver of Statutory Rights. Trustor agrees, to the
full extent permitted by law, that in an Event of Default on the
part of Trustor hereunder, neither Trustor nor anyone claiming
through or under Trustor will set up, claim, or seek to take
advantage of any moratorium, reinstatement, forbearance,
appraisement, valuation, stay, homestead, extension, exemption or
redemption laws now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Deed of Trust, or
the sale of the Security, or the delivery of possession thereof
immediately after such sale to the purchaser at such sale, and
Trustor, for itself and all who may at any time claim through or
under it, hereby waives to the full extent that it may lawfully do
so, the benefit of all such laws, and any and all rights to have
the assets subject to the security interest of this Deed of Trust
marshalled upon any foreclosure or sale under the power granted
herein.

27. Security Interest. This Deed of Trust shall, as to
any equipment and other Personal Property covered hereby and all
additions thereto, substitutions therefore and proceeds thereof,
be deemed to constitute a security agreement, and Trustor, as
debtor, hereby grants to Beneficiary, as secured party, a security
interest therein pursuant to the California Uniform Commercial
Code. Trustor agrees, upon request of Beneficiary, to furnish an
inventory of Personal Property owned by Trustor and subject to
this Deed of Trust and, upon request by Beneficiary, to execute
and file and/or record all at Trustor's expense any supplements to
this Deed of Trust, any separate security agreement and any
financing statements and continuation statements in order to
include specifically said inventory of Personal Property or
otherwise to perfect the security interest granted hereby.
Without the prior written consent of Beneficiary, Trustor shall
not create or suffer to be created any other security interest in
said property, including replacements and additions thereto.
Except as previously disclosed to and approved by Beneficiary in
writing, Trustor warrants and agrees that there is no existing
financing statement covering such property, or any part thereof,
on file in any public office (other than those in favor of
Beneficiary, as secured party) and agrees that all or such portion
of any such property now or hereafter subject to this Deed of
Trust is, and shall be, kept (except with the written consent of
Beneficiary) free and clear from any other lien, security interest
or encumbrance. Upon any Event of Default, Beneficiary shall have
all of the rights and remedies provided in said Code or otherwise
provided by law or by this Deed of Trust, including but not
limited to the right to require Trustor to assemble such Personal
Property and make it available to Beneficiary at a place to be
designated by Beneficiary which is reasonably convenient to both
parties, the right to take possession of such Personal Property
with or without demand and with or without process of law and the
right to sell and dispose of the same and distribute the proceeds
according to law. The parties hereto agree that any requirement
of reasonable notice shall be met if Beneficiary sends such notice
to Trustor at least ten (10) days prior to the date of sale,
disposition or other event giving rise to the required notice, and
that the proceeds of any disposition of any such Personal Property
may be applied by Beneficiary first to the reasonable expenses in
connection therewith, including reasonable attorneys' fees and
legal expenses incurred, and then to payment of the Indebtedness
in such order and amounts as Beneficiary shall elect. With
respect to the Personal Property that has become so attached to
the Real Property that an interest therein arises under the real
property law of the State, this Deed of Trust shall also
constitute a financing statement and a fixture filing under the
California Uniform Commercial Code.

28. Right of Entry. Subject to the rights of tenants
under the tenant leases, Beneficiary and Beneficiary's
representatives may at all times upon five (5) days prior notice
to Trustor (except in the case of an emergency, in which case no
notice shall be required) enter upon the Security and inspect the
same, or cause it to be inspected by agents, employees, or
independent contractors of Beneficiary, and show the same to
others, but Beneficiary shall not be obligated to make any such
entry or inspection. Beneficiary's rights hereunder shall include
its rights under California Civil Code Section 2929.5 as such
Section may be amended from time to time.

29. Estoppel Certificate. Both Trustor and Beneficiary,
within fifteen (15) days after written request from the other
party, will furnish a signed statement in writing, duly
acknowledged, of the amount then due or outstanding hereunder and
whether or not any offsets or defenses exist against the
Indebtedness, and if so, specifying such offsets and defenses.
Upon request by Beneficiary, Trustor shall exercise any right it
may have to request an estoppel certificate from any or all of the
tenants on the Security within fifteen (15) days following
Beneficiary's request.

30. Annual Statements. Trustor shall, within ninety (90)
days after the end of each fiscal year of Trustor, deliver to
Beneficiary a balance sheet, statement of sources and uses, rent
roll acceptable to Beneficiary, and a statement of operating cash
flow and accounts receivable in reasonable detail. These annual
reports are to be certified by a managing general partner of
Trustor, confirming that they have been prepared in accordance
with generally accepted accounting principles together with any
"Notes to Financial Statements". In addition, Trustor agrees to
upon request provide Beneficiary with unaudited quarterly cash
flow reports and current rent roll and Trustor agrees to provide a
proforma income statement and current expense statement for the
current and prior year by January 15 of the current year.
Beneficiary may, at any time, require that the annual reports be
accompanied by an unqualified opinion of independent certified
public accountants who are satisfactory to Beneficiary, the cost
of which shall be paid by Trustor, provided however, that in no
event shall Trustor be required to deliver the same prior to the
date which is the later of (i) 90 days after Beneficiary's request
or (ii) 90 days after the end of Trustor's fiscal year.

If Trustor omits to prepare and deliver promptly any
report required by this Section, Beneficiary shall have the right,
but not the obligation, in addition to exercising any remedy for
an Event of Default as provided for in this Deed of Trust, to make
an audit of all books and records of Trustor and its
beneficiaries, including without limitation their bank accounts,
which in any way pertain to the Security, and to prepare the
statement or statements which Trustor failed to procure and
deliver. Such audit shall be made and such statements shall be
prepared by an independent Certified Public Accountant to be
selected by Beneficiary. Trustor shall pay all expenses of the
audit and other services, which expenses shall be secured hereby
as part of the Indebtedness and shall be immediately due and
payable with interest thereon at the Default Rate set forth
herein.

Beneficiary shall use reasonable care to maintain the
confidentiality of any information received pursuant to this
Section and all other non-public information about Trustor or any
indemnitor or guarantor or the physical condition of the Security;
provided, however, that Beneficiary may disclose such information
to its officers, employees, directors, agents, loan
correspondents, independent auditors, engineering consultants,
counsel or similar professionals, and to any prospective
transferee (or agent or broker of such transferee) of all or any
portion of Beneficiary's investment in connection with a
contemplated sale of the loan evidenced by the Note, or as
Beneficiary may deem necessary to allow for a fair sale of the
Security in any foreclosure sale, and may disclose to such other
persons or entities such information (i) as may become generally
available to the public, (ii) as shall be required or appropriate
in any report, statement or testimony submitted to, or made
available in any audit conducted by, any municipal, state or
federal regulatory body, the National Association of Insurance
Commissioners or similar organizations or their successors, or any
other regulatory or rating agency or company, (iii) as shall be
required or appropriate in response to any summons or subpoena or
in connection with any litigation, or (iv) to the extent
Beneficiary shall believe it appropriate to protect Beneficiary's
investment, or in order to comply with any law, order, regulation
or ruling applicable to Beneficiary.

31. Rights Cumulative. Each right and remedy of
Beneficiary under this Deed of Trust, the Note and any other Loan
Documents, shall be in addition to every other right and remedy of
Beneficiary and such rights and remedies may be enforced
separately or in any combination.

32. Subrogation. To the extent that proceeds of the
Indebtedness are used to pay any outstanding lien, charge or
encumbrance affecting the Security, such proceeds have been
advanced by Beneficiary at Trustor's request, and Beneficiary
shall be subrogated to all rights, interest and liens owned or
held by any owner or holder of such outstanding liens, charges and
encumbrances, irrespective of whether such liens, charges or
encumbrances are released of record; provided, however, that the
terms and provisions hereof shall govern the rights and remedies
of Beneficiary and shall supersede the terms, provisions, rights,
and remedies under the lien or liens to which Beneficiary is
subrogated hereunder.

33. No Waiver. Any failure by Beneficiary or Trustee to
insist upon the strict performance by Trustor of any of the terms
and provisions hereof shall not be deemed to be a waiver of any of
the terms and provisions hereof, and Beneficiary, notwithstanding
any such failure, shall have the right thereafter to insist upon
the strict performance by Trustor of any and all of the terms and
provisions hereof to be performed by Trustor.

34. Deed of Trust Extension. The lien hereof shall remain
in full force and effect during any postponement or extension of
the time of payment of the Indebtedness, or of any part thereof,
and any number of extensions or modifications hereof, or any
additional notes taken by Beneficiary, shall not affect the lien
hereof or the liability of Trustor or of any subsequent obligor to
pay the Indebtedness unless and until such lien or liability be
expressly released in writing by Beneficiary.

35. Indemnification. Trustor shall indemnify and hold
Beneficiary harmless from and against all obligations,
liabilities, losses, costs, expenses, fines, penalties or damages
(including reasonable attorneys' fees) which Beneficiary may incur
by reason of this Deed of Trust or with regard to the Security
prior to the exercise of any remedies under this Deed of Trust.
Trustor shall defend Beneficiary against any claim or litigation
involving Beneficiary for the same, and shall have the right to
select counsel reasonably acceptable to Beneficiary. In the event
that Beneficiary incurs such obligation, liability, loss, cost,
expense, fine, penalty or damage, then Trustor shall reimburse
Beneficiary within ten (10) days of demand. Any amount owed
Beneficiary under this provision shall bear interest at the
Default Rate set forth herein and shall be secured hereby.

36. Nonrecourse. Notwithstanding any provision herein or
in any other Loan Document to the contrary, Trustor's liability
for repayment of the Indebtedness or the performance of any
obligation hereunder or under any Loan Document shall be limited
to the Security, except as provided in this Section 36.
Accordingly, no judgment for the repayment of the Indebtedness or
the performance of any obligation, or to collect any amount
payable under any of the Loan Documents shall be enforced against
Trustor or any other party personally in any action to foreclose
this Deed of Trust or to otherwise realize upon the Security or
to collect any amount payable under any Loan Document.

Nothing herein contained shall be construed as
prohibiting Beneficiary from exercising any and all remedies which
the Loan Documents permit, including the right to bring actions or
proceedings (including an action or suit for judicial foreclosure)
against Trustor and to enter a judgment against Trustor, so long
as the exercise of any remedy does not extend to obtaining a
judgment in the nature of a deficiency judgment or to the or the
execution against or recovery out of any property of Trustor or
any direct or indirect partner in Trustor other than the Security
or other security furnished under the Loan Documents on account of
a judgment in the nature of a deficiency judgment.
Notwithstanding the foregoing limitations, Trustor and its general
partners (but not any other sub-tier entities) shall be liable for
the following acts or omissions, to the extent described:

(a) (i) misapplying (i.e. using in a manner other
than as permitted under the Loan Documents) any condemnation
awards or insurance proceeds attributable to the Security, to the
full extent of such awards or proceeds so misapplied; (ii) at the
time of foreclosure or conveyance in lieu thereof, failing to turn
over any unapplied security deposits attributable to the Security
and required to be held by Trustor under the terms of any and all
leases, to the full extent of such failure; (iii) collecting any
rents in advance in violation of any covenant contained in the
Loan Documents, to the full extent of such rents so collected in
advance; (iv) committing fraud, intentional misrepresentation or
waste in connection with the operation of the Security or the
making of the loan secured hereby, to the full extent of any
remedies available at law or in equity; (v) failing to pay when
due any debt service on any indebtedness related to the Security,
operating and maintenance charges, insurance premiums, deposits
into a reserve for replacements or any other sums due under the
Loan Documents (the existence of which are known to Trustor), but
only to the extent that gross revenues from the Security during
the six (6) months prior to a notice of acceleration to Trustor
through the date of foreclosure or conveyance in lieu thereof were
otherwise sufficient to pay such expenses but were not so used;
and

(b) Under any separate guaranty, master lease or
indemnity agreement from Trustor or its general partners
including, but not limited to, the Environmental Indemnity,
provided that such agreement expressly states that recourse
thereunder is an exception to the limitation on liability provided
herein.

Notwithstanding any provision hereof to the contrary,
Beneficiary shall be permitted to bring an action against Trustor
and its general partners personally (but not against any sub-tier
entities) and to execute against and recover out of any property
of Trustor or its general partners (but not against or out of
property of any other sub-tier entity), for all sums due pursuant
to the Loan Documents to the extent permitted by the terms of
Section 726.5, and to have the rights and remedies of an unsecured
lender to the extent permitted thereunder. If Beneficiary
exercises the rights and remedies of an unsecured creditor in
accordance with this grammatical paragraph, Trustor and its
general partners (but not any other sub-tier entities) promise to
pay Beneficiary, on demand by Beneficiary, following the exercise,
all amounts owed to Beneficiary under the Loan Documents, and
Trustor and its general partners (but not any other sub-tier
entity) agree that Trustor and its general partners (but not any
other sub-tier entity) will be personally liable for the payment
of all such sums.

Notwithstanding anything herein or in any other Loan
Document to the contrary, no present or future constituent partner
in or agent of the general partners of Trustor or their respective
successors or assigns, nor any shareholder, officer, director,
employee, trustee, beneficiary or agent of any corporation or
trust of agent of Trustor or of any constituent partner in Trustor
shall be personally liable, directly or indirectly under or in
connection with the Note, this Deed of Trust or any other Loan
Document, or any instrument or certificate securing or otherwise
executed in connection with the Note, this Deed of Trust, or any
other Loan Document or any amendments or modifications thereto
made at any times heretofore or hereafter and Beneficiary and
Beneficiary's successors and assigns hereby waive such personal
liability. Accordingly, with respect to the foregoing exceptions
to the non-recourse provisions contained in Sections 36(a) and
36(b) of this Deed of Trust, and the Environmental Indemnity,
Beneficiary's recourse shall be limited solely to the assets of
Trustor and its general partners (but of no other sub-tier
entity).

For the purposes of the Note, this Deed of Trust, each
of the other Loan Documents and any such instruments or
certificates and any amendments and modifications thereto, neither
a negative capital account of any constituent partner in Trustor
nor any obligation to restore any negative capital account of
Trustor or of any constituent partner in Trustor shall at all
times be deemed to be the property or asset of Trustor or any
other constituent partner and neither Beneficiary nor its
successors and assigns shall have the right to collect, enforce or
proceed against or with respect to any such negative capital
account or a partner's obligation to restore or contribute. As
used in this paragraph, "constituent partner" means a partner in
Trustor or in a partnership that has a direct or indirect interest
(through one or more partnerships) in Trustor.

37. Attorneys' Fees. Any reference to "attorney fees",
"attorneys' fees" or attorney's fees" in this document means both
the reasonable out of pocket fees, charges and costs incurred by
Beneficiary or Trustee through Beneficiary's or Trustee's
retention of outside legal counsel, paralegals or legal
assistants, and the reasonable allocable fees, costs and charges
for services rendered by Beneficiary's in-house counsel,
paralegals and legal assistants. Any reference to "attorney
fees", "attorneys' fees" or attorney's fees" in this document
shall also include but not be limited to those reasonable out of
pocket attorneys or legal fees, costs and charges incurred by
Beneficiary or Trustee in the collection of any Indebtedness, the
enforcement of obligations hereunder, the protection of the
Security, the appointment of a receiver as permitted hereunder,
the foreclosure of this Deed of Trust, the sale of the Security by
power of sale under the Loan Documents , any action by Beneficiary
pursuant to Section 726.5, the defense of actions arising
hereunder and the collection, protection or setoff of any claim
Beneficiary may have in a proceeding under Title 11, United States
Code, or any state bankruptcy or insolvency statute. Attorneys'
fees provided for hereunder shall accrue whether or not
Beneficiary has provided notice of default or of an intention to
exercise its remedies for such default. Furthermore, any
reference in this Deed of Trust or any other Loan Document to "out
of pocket" fees, costs, charges or expenses shall include
attorneys' fees as described herein, including, without
limitation, any reasonable allocable fees, costs, charges and
expenses for services rendered by Beneficiary's in-house counsel,
paralegals or legal assistants.

38. Trustee's Costs and Expenses; Governmental Charges.
Trustor shall pay all costs, fees and expenses of Trustee, its
agents and counsel in connection with the performance of its
duties hereunder, including without limitation the cost of any
trustee's sale guaranty or other title insurance coverage ordered
in connection with any foreclosure proceedings hereunder, and
shall pay all taxes (except federal and state income taxes) or
other governmental charges or impositions imposed by any
governmental authority on Trustee or Beneficiary by reason of
their interest in the Loan Documents.

39. Protection of Security; Costs and Expenses. Trustor
shall appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary
or Trustee, and shall pay all costs and expenses, including
without limitation cost of evidence of title and reasonable
attorneys' fees, in any such action or proceeding in which
Beneficiary or Trustee may appear, and in any suit brought by
Beneficiary to foreclose this Deed of Trust or to enforce or
establish any other rights or remedies of Beneficiary hereunder
(including, without limitation, any action pursuant to Section
726.5). If Trustor fails to perform any of the covenants or
agreements contained in this Deed of Trust within applicable
notice or cure periods, if any, or if any action or proceeding is
commenced which affects Beneficiary's or Trustee's interest in the
Security or any part thereof, including, but not limited to,
eminent domain, code enforcement, or proceedings of any nature
whatsoever under any federal or state law, whether now existing or
hereafter enacted or amended, relating to bankruptcy, insolvency,
arrangement, reorganization or other form of debtor relief, or to
a decedent, then Beneficiary or Trustee may, but without
obligation to do so and without notice to or demand upon Trustor
and without releasing Trustor from any obligation hereunder, make
such appearances, disburse such sums and take such action as
Beneficiary or Trustee deems necessary or appropriate to protect
Beneficiary's or Trustee's interest, including, but not limited
to, disbursement of reasonable attorneys' fees, entry upon the
Security to make repairs or take other action to protect the
security hereof, and pay, purchase, contest or compromise any
encumbrance, charge or lien which in the judgment of either
Beneficiary or Trustee appears to be prior or superior hereto.
Trustor further agrees to pay all reasonable expenses of
Beneficiary or Trustee (including without limitation fees and
disbursements of counsel) incident to the protection of the rights
of Beneficiary hereunder, or to enforcement or collection of
payment of the Indebtedness, whether by judicial or non-judicial
proceedings, or in connection with any bankruptcy, insolvency,
arrangement, reorganization or other debtor relief proceeding of
Trustor, or otherwise. Any amounts disbursed by Beneficiary or
Trustee pursuant to this Section shall be additional indebtedness
of Trustor secured by the Loan Documents as of the date of
disbursement and shall bear interest at the Default Rate. All
such amounts shall be payable by Trustor within ten (10) days of
demand. Nothing contained in this Section shall be construed to
require Beneficiary or Trustee to incur any expense, make any
appearance, or take any other action.

40. Notices. Any notice, demand, request, statement or
consent made hereunder shall be in writing, signed by the party
giving such notice, request, demand, statement, or consent, and
shall be delivered personally, or delivered to a reputable
overnight delivery service providing a receipt, or deposited in
the United States mail, postage prepaid and registered or
certified mail, return receipt requested, addressed as set forth
below or to such other address within the continental United
States of America as may have theretofore have been designed in
writing. The effective date of any notice given as aforesaid
shall be the date of personal service, one (1) business day after
delivery to such overnight delivery service, or three (3) business
days after being deposited in the United States mail, whichever is
applicable. For purposes hereof, the addresses are as follows:

If to Beneficiary: Connecticut General Life Insurance
Company
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Attn: Investment Services, S-319

with a copy to: CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Attn: Real Estate Division, S-215A

If to Trustor: JMB/San Jose Associates
c/o JMB Realty Corporation
900 N. Michigan Avenue
Chicago, Illinois 60611
Attn: Director of Finance

With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, CA 90067
Attn: Real Estate Notices (DSB)

41. Reconveyance. Upon the payment in full of all sums
secured by this Deed of Trust, Beneficiary shall request Trustee
to reconvey the Security and shall surrender this Deed of Trust
and all notes evidencing indebtedness secured by this Deed of
Trust to Trustee. Upon payment of its fees and any other sums
owing to it under this Deed of Trust, Trustee shall reconvey the
Security without warranty to the person or persons legally
entitled thereto. Such person or persons shall pay all costs or
recordation, if any. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness
thereof. The grantee in such reconveyance may be described as
"the person or persons legally entitled thereto." Five (5) years
after issuance of such full reconveyance, Trustee may destroy said
notes and this Deed of Trust unless otherwise directed by
Beneficiary.

42. Applicable Law. The provisions hereof shall be
construed in accordance with the laws of the State of California.

43. Substitution of Trustee. Beneficiary may remove
Trustee at any time or from time to time for any reason (with or
without cause) and appoint a successor trustee, and upon such
appointment, all powers, rights, duties and authority of Trustee,
as aforesaid, shall thereupon become vested in such successor.
Such substitute trustee shall be appointed by written instrument
duly recorded in the county or counties where the Security covered
hereby is located, which appointment may be executed by any
authorized agent of Beneficiary or in any other manner permitted
by applicable law.

44. Invalidity. If any provision of this Deed of Trust
shall be held invalid or unenforceable, the same shall not affect
in any respect whatsoever the validity of the remainder of this
Deed of Trust.

45. Captions. The captions in this instrument are
inserted only as a matter of convenience and for reference, and
are not and shall not be deemed to be any part hereof.

46. Modifications. This Deed of Trust may not be changed
or terminated except in writing by both Trustor and Beneficiary.
The provisions of this Deed of Trust shall extend and be
applicable to all renewals, amendments, extensions,
consolidations, and modifications of the other Loan Documents, and
any and all references herein to the Loan Documents shall be
deemed to include any such renewals, extensions, amendments,
consolidations, or modifications thereof.

47. Bind and Inure. The provisions of this Deed of Trust
shall be binding on Trustor and its heirs, successors and assigns,
and any subsequent owners of the Security. The covenants of
Trustor herein shall run with the land, and this Deed of Trust and
all of the covenants herein contained shall inure to the benefit
of Beneficiary, its successors and assigns.

48. Replacement of Note. Upon receipt of evidence
reasonably satisfactory to Trustor of the loss, theft, destruction
or mutilation of the Note, Trustor will execute and deliver, in
lieu thereof, a replacement Note,identical in form and substance
to the Note and dated as of the date of the Note, and upon such
execution and delivery all references in this Deed of Trust to the
Note shall be deemed to refer to such replacement Note.

49. Time of the Essence. Time is of the essence with
respect to each and every covenant, agreement and obligation of
Trustor under this Deed of Trust, the Note and any of the other
Loan Documents.

Amendment and Restatement. This Deed of Trust amends,
modifies and restates in its entirety that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing dated
September 29, 1986 from Trustor in favor of Beneficiary and
recorded in the Official Records of Santa Clara County as
Instrument No. 8963704, together with any and all extensions,
modifications and amendments thereto (the "Original Deed of
Trust"). All references to the "Deed of Trust" contained herein
or in any of the other Loan Documents shall mean the Original Deed
of Trust as restated hereby. Trustor covenants and agrees that
there are no defenses or set-offs with respect to this Deed of
Trust, the indebtedness secured by same, or with respect to the
collection or enforcement thereof. Trustor further covenants that
each and every provision of this Deed of Trust are in full force
and effect and are lawful and binding obligations of the Trustor
and are enforceable in accordance with their terms. Nothing
herein contained shall be construed to impair the lien created by
the Original Deed of Trust or the priority thereof. The parties
do not intend this agreement to be construed as a novation of the
Note or any other Loan Document.

REQUEST FOR NOTICE

Trustor hereby requests that a copy of any Notice of Default and
Notice of Sale as may be required by law be mailed to Trustor at
its address above stated.

IN WITNESS WHEREOF, Trustor has duly executed this
Deed of Trust as of the day and year first above written.

TRUSTOR: JMB/SAN JOSE ASSOCIATES, an Illinois
general partnership

By: JMB Income Properties, Ltd.-XI,
an Illinois limited partnership,
General Partner

By: JMB Realty Corporation,
a Delaware corporation,
General Partner

By:

Name:

Its:

By: JMB Income Properties, Ltd.-XII,
an Illinois limited partnership,
General Partner

By: JMB Realty Corporation,
a Delaware corporation,
General Partner

By:

Name:

Its:

AMENDED AND RESTATED

DEED OF TRUST, SECURITY AGREEMENT

WITH ASSIGNMENT OF RENTS AND FIXTURE FILING

DEED OF TRUST, SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS AND FIXTURE FILING

TABLE OF CONTENTS

Page

1. Payment of Indebtedness. . . . . . . . . . . . . . . . . 4

2. Covenants of Title . . . . . . . . . . . . . . . . . . . 4

3. Usury. . . . . . . . . . . . . . . . . . . . . . . . . . 5

4. Impositions. . . . . . . . . . . . . . . . . . . . . . . 5

5. Tax Deposits . . . . . . . . . . . . . . . . . . . . . . 6

6. Change in Taxes. . . . . . . . . . . . . . . . . . . . . 7

7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 7

8. Casualty . . . . . . . . . . . . . . . . . . . . . . . . 10

9. Condemnation . . . . . . . . . . . . . . . . . . . . . . 13

10. Repair; Alterations; Waste . . . . . . . . . . . . . . . 14

11. Environmental. . . . . . . . . . . . . . . . . . . . . . 15

12. Independence of Security . . . . . . . . . . . . . . . . 18

13. No Other Liens . . . . . . . . . . . . . . . . . . . . . 18

14. Management . . . . . . . . . . . . . . . . . . . . . . . 18

15. Ground Lease . . . . . . . . . . . . . . . . . . . . . . 19

16. Sidewalks, Municipal Charges . . . . . . . . . . . . . . 19

17. Assignment of Rents and Leases . . . . . . . . . . . . . 19

18. Future Leases. . . . . . . . . . . . . . . . . . . . . . 20

19. Trustor's Obligations as Lessor. . . . . . . . . . . . . 21

20. Leases; Foreclosure. . . . . . . . . . . . . . . . . . . 21

21. Operating Agreements . . . . . . . . . . . . . . . . . . 22

22. Events of Default. . . . . . . . . . . . . . . . . . . . 22

23. Remedies Upon Default. . . . . . . . . . . . . . . . . . 25

24. Acceleration Interest. . . . . . . . . . . . . . . . . . 29

25. Late Charge. . . . . . . . . . . . . . . . . . . . . . . 30

26. Waiver of Statutory Rights . . . . . . . . . . . . . . . 30

27. Security Interest. . . . . . . . . . . . . . . . . . . . 30

28. Right of Entry . . . . . . . . . . . . . . . . . . . . . 31

29. Estoppel Certificate . . . . . . . . . . . . . . . . . . 31

30. Annual Statements. . . . . . . . . . . . . . . . . . . . 31

31. Rights Cumulative. . . . . . . . . . . . . . . . . . . . 32

32. Subrogation. . . . . . . . . . . . . . . . . . . . . . . 32

33. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . 32

34. Deed of Trust Extension. . . . . . . . . . . . . . . . . 33

35. Indemnification. . . . . . . . . . . . . . . . . . . . . 33

36. Nonrecourse. . . . . . . . . . . . . . . . . . . . . . . 33

37. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . 35

38. Trustee's Costs and Expenses; Governmental Charges . . . 35

39. Protection of Security; Costs and Expenses . . . . . . . 35

40. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 36

41. Reconveyance . . . . . . . . . . . . . . . . . . . . . . 36

42. Applicable Law . . . . . . . . . . . . . . . . . . . . . 37

43. Substitution of Trustee. . . . . . . . . . . . . . . . . 37

44. Invalidity . . . . . . . . . . . . . . . . . . . . . . . 37

45. Captions . . . . . . . . . . . . . . . . . . . . . . . . 37

46. Modifications. . . . . . . . . . . . . . . . . . . . . . 37

47. Bind and Inure . . . . . . . . . . . . . . . . . . . . . 37

48. Replacement of Note. . . . . . . . . . . . . . . . . . . 37

49. Time of the Essence. . . . . . . . . . . . . . . . . . . 37

50. Amendment and Restatement. . . . . . . . . . . . . . . . 37

Exhibit A - Legal Description
Exhibit B - Estoppel Certificate Form
Exhibit C - Subordination, Non-Disturbance and Attornment
Agreemente Form

EXHIBIT A

Legal Description

EXHIBIT B

Estoppel Certificate Form

This form has been separately furnished
by Beneficiary to Trustor.

EXHIBIT C

Subordination, Non-Disturbance
and Attornment Agreement Form

This form has been separately furnished
by Beneficiary to Trustor.

EXHIBIT 21

LIST OF SUBSIDIARIES

The Partnership is a general partner in JMB/San Jose Associates, an
Illinois general partnership which holds title to Park Center Financial
Plaza. The Partnership is a general partner in Royal Executive Park-II, a
New York general partnership which holds title to Royal Executive Park II.
Reference is made to Note 3 of the Notes to Financial Statements filed with
this annual report for a summary description of the terms of such
partnership agreements. The Partnership's interest in the foregoing joint
venture partnerships, and the results of their operations are included in
the financial statements of the Partnership filed with this annual report.

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned
officers and directors of JMB Realty Corporation, the corporate
general partner of JMB Income Properties, Ltd. - 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,
1994, 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, 1995.

JUDD D. MALKIN
Judd D. Malkin Chairman and Director

NEIL G. BLUHM
Neil G. Bluhm President and Director

H. RIGEL BARBER
H. Rigel Barber Chief Executive Officer

JEFFREY R. ROSENTHAL
Jeffrey R. Rosenthal Chief Financial Officer

The undersigned hereby acknowledge and accept such power of
authority to sign, in the name and on behalf of the above named
officer and directors, a Report on Form 10-K of said partnership
for the fiscal year ended December 31, 1994, and any and all
amendments thereto, the 31st day of January, 1995.

GARY NICKELE
Gary Nickele

GAILEN J. HULL
Gailen J. Hull

DENNIS M. QUINN
Dennis M. Quinn

Exhibit 24

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned have executed this Power
of Attorney the 31st day of January, 1995.

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

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

GARY NICKELE
Gary Nickele

GAILEN J. HULL
Gailen J. Hull

DENNIS M. QUINN
Dennis M. Quinn

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
of JMB Realty Corporation, the corporate general partner of JMB
Income Properties, Ltd. - XI, does 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, a Report on Form 10-K of said partnership for the fiscal
year ended December 31, 1994, 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 20th day of February, 1995.

GLENN E. EMIG
Glenn E. Emig Chief Operating Officer

The undersigned hereby acknowledge and accept such power of
authority to sign, in the name and on behalf of the above named
officer, a Report on Form 10-K of said partnership for the fiscal
year ended December 31, 1994, and any and all amendments thereto,
the 20th day of February, 1995.

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, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>

<CIK> 0000744437
<NAME> JMB INCOME PROPERTIES, LTD. - XI

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994

<CASH> 7,200,333
<SECURITIES> 7,530,660
<RECEIVABLES> 13,572,809
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,303,802
<PP&E> 65,406,740
<DEPRECIATION> 12,951,168
<TOTAL-ASSETS> 106,201,665
<CURRENT-LIABILITIES> 5,037,340
<BONDS> 35,436,797
<COMMON> 0
0
0
<OTHER-SE> 65,647,646
<TOTAL-LIABILITY-AND-EQUITY>106,201,665
<SALES> 13,022,234
<TOTAL-REVENUES> 14,048,836
<CGS> 0
<TOTAL-COSTS> 10,591,544
<OTHER-EXPENSES> 618,548
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,803,351
<INCOME-PRETAX> 35,393
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,652,603
<DISCONTINUED> 447,650
<EXTRAORDINARY> (2,206,791)
<CHANGES> 0
<NET-INCOME> 893,462
<EPS-PRIMARY> 4.94
<EPS-DILUTED> 0

</TABLE>