JMB INCOME PROPERTIES LTD XI, 10-K405, 2000-03-24

JMB INCOME PROPERTIES LTD XI
10-K405, 2000-03-24
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year
ended December 31, 1999 Commission file 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
AND ASSIGNEE INTERESTS THEREIN
(Title of class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]

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

Documents incorporated by reference: None

<PAGE>

TABLE OF CONTENTS

Page
----
PART I

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

Item 2. Properties . . . . . . . . . . . . . . . . . . . 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 Matters. . . . . . . . . 7

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

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

Item 7A. Quantitative and Qualitative
Disclosures about Market Risk. . . . . . . . . . 13

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . . . 14

Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . 35

PART III

Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . . . 35

Item 11. Executive Compensation . . . . . . . . . . . . . 38

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . 39

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . . . 40

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . . . 40

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 42

<PAGE>

PART I

ITEM 1. BUSINESS

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

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. 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 or have been held by fee title and/or through joint
venture partnership interests. The Partnership's real estate investments
have been located throughout the nation and it had 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 no later
than October 31, 2034. The Partnership is self-liquidating in nature. At
sale of a particular property, the net proceeds, if any, are generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties. As discussed further in Item 7, the
Partnership sold its remaining investment property, the Riverside Square
Mall, and intends to conduct an orderly liquidation as quickly as
practicable upon expiration of the representations and warranties to the
purchaser that was required in connection with the sale of the property.
Consequently, the Partnership currently expects to wind up its affairs in
2000. However, this will depend upon the Partnership's ability to resolve
pending litigation and a real estate tax appeal relating to the Riverside
Square Mall. Reference is made to Item 3. Legal Proceedings for a
discussion of the pending litigation.

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

<PAGE>

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1999,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Riverside Square
Mall
Hackensack,
New Jersey . . . . . 341,000 10-19-83 8-5-99 fee ownership of land
sq.ft. and improvements (b)
g.l.a.
2. Bank of Delaware
Office Building
Wilmington,
Delaware . . . . . . 314,000 12-14-84 11-15-94 fee ownership of land
sq.ft. and improvements
n.r.a.
3. Genesee Valley
Center
Flint, Michigan. . . 358,000 12-21-84 6-29-90 fee ownership of land
sq.ft. and improvements
g.l.a.
4. Park Center
Financial Plaza
San Jose,
California . . . . . 408,000 06-20-85 2-24-98 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(a)(b)
5. Royal Executive
Park-II
Rye Brook,
New York . . . . . . 270,000 02-12-87 12-19-97 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(a)(b)

<PAGE>

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

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

(b) Reference is made to the Notes for a description of the sale of
this investment property.

</TABLE>

<PAGE>

The Partnership's remaining real property investment was subject to
competition from similar types of properties in the respective vicinity in
which it was located. Such competition was generally for the retention of
existing tenants. Approximate occupancy levels for the property owned in
1999 are set forth in the table in Item 2 below to which reference is hereby
made. The Partnership maintained the suitability and competitiveness of its
property in its market primarily on the basis of tenant mix, property
aesthetics, effective rents, tenant allowances and service provided to
tenants.

On August 5, 1999, the Partnership sold the Riverside Square Mall
located in Hackensack, New Jersey. Reference is made to the Notes for a
further description of such transaction.

The Partnership has no employees.

The terms of transactions between the Partnership, the General Partners
and their affiliates 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 owned directly or through joint venture partnerships
the properties or interests in the properties referred to under Item 1 above
to which reference is hereby made for a description of said properties.

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

<PAGE>

<TABLE>
<CAPTION>
1998 1999
------------------------- -------------------------
Principal At At At At At At At At
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>

Riverside Square Mall
Hackensack, New Jersey (1) . . Retail 90% 90% 90% 90% 89% 89% N/A N/A

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

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

(1) Reference is made to the Notes for a description of the August 5, 1999 sale of this investment property.

</TABLE>

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

On December 23, 1996, plaintiff Eric Von Butler filed a complaint
against the Partnership, and others, entitled Eric Von Butler v.
SpectaGuard Inc., JMB Income Properties, Ltd. and Urban Retail Properties
Co. in the Superior Court of New Jersey Law Division, Bergen County, Case
No. BER-L-12161-96. In the three count complaint, plaintiff alleges that
his employment as a security guard at the Riverside Square Mall was
wrongfully terminated in September 1995 as a result of his race and that
the Partnership allegedly participated in various acts and practices which
discriminated against plaintiff on the basis of his race. At the time of
the events complained of, plaintiff was employed by SpectaGuard, Inc., a
contractor hired to provide security services to the mall. Plaintiff
seeks, among other things, compensatory damages, punitive damages,
reasonable attorneys' fees and costs. The Partnership believes it has
meritorious defenses and has filed an answer denying the substantive
allegations of the complaint and raising various affirmative defenses,
including the affirmative defense that plaintiff was not an employee of the
Partnership, but was employed and terminated by SpectaGuard, Inc. In
addition, the Partnership has filed cross-claims for indemnity and
contribution from SpectaGuard, Inc.

In a separate litigation, on April 6, 1999, other claimants filed a
suit entitled Bertha Atkinson, individually and as guardian ad litem for
the infant plaintiff Cortney Atkinson and Tiffany Atkinson v. Riverside
Square Mall et al., in the Superior Court of New Jersey Law Division,
Bergen County, Case No. L-2203-99. The complaint is filed against the
"Riverside Square Mall", as owner and operator of the mall, Federated
Department Stores, Inc. d/b/a/ Bloomingdale's, Inc., SpectaGuard, Inc., and
others. In the five count complaint, plaintiffs allege that on July 18,
1998, they were stopped outside the mall by several Hackensack Police
Department officers based on a complaint from Bloomingdale store personnel
that one or more of the plaintiffs had stolen merchandise from the store.
Plaintiffs allege that the police, mall security or employees of
SpectaGuard Inc., a security firm, further detained them while an attempt
was made to contact security at the Bloomingdale store. Plaintiffs claim
that they were detained for approximately thirty minutes and allowed to
proceed when no one from the Bloomingdale store appeared. Plaintiffs
allege that there was no rational basis to believe that any one of them had
stolen any property. Plaintiffs sue for false imprisonment, invasion of
their rights of privacy, slander, a violation of the New Jersey Law Against
Discrimination, and defendants' alleged failure to properly hire, train and
supervise its security personnel. Plaintiffs seek compensatory damages,
punitive damages, reasonable attorney's fees, costs, and such other relief
as the court may deem proper. The Partnership believes that it has
meritorious defenses.

In addition, the Partnership has filed, in recent years, real estate
tax appeals on behalf of the Riverside Square Mall property for the tax
years 1994 through 1998. The Partnership is attempting to resolve this
matter with the taxing authority. Regardless of the outcome of such
appeals, the Partnership does not expect that any significant funds will be
available for distribution to the partners after issuing refunds to tenants
at the mall and payment of expenses associated with the litigation.
Although a trial date is scheduled for May 2000, such trial dates have been
extended several times previously and, as such, there can be no assurance
that this matter will be resolved in the year 2000.

The Partnership may be required to delay a final distribution of its
remaining funds and the winding up of the Partnership until its involvement
in the lawsuits discussed above has been resolved.

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

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

<PAGE>

PART II

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

As of December 31, 1999, there were 12,913 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. There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Managing General
Partner, which, may be granted or withheld in its sole and absolute
discretion. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests or have other
rights of a Limited Partner. No transfer will be effective until the first
day of the next succeeding calendar quarter after the requisite transfer
form, satisfactory to the Managing General Partner, has been received by
the Managing General Partner. The transferee, consequently, will not be
entitled to receive any cash distributions or any allocable share of
profits or losses for tax purposes until such succeeding calendar quarter.
Profits or losses from operations of the Partnership for a calendar year in
which a transfer occurs will be allocated between the transferor and the
transferee based upon the number of quarterly periods in which each was
recognized as the holder of Interests, without regard to the results of
Partnership's operations during particular quarterly periods and without
regard to whether cash distributions were made to the transferor or
transferee. Profits or losses arising from the sale or other disposition
of Partnership properties will be allocated to the recognized holder of the
Interests as of the last day of the quarter in which the Partnership
recognized such profits or losses. Cash distributions to a holder of
Interests arising from the sale or other disposition of Partnership
properties will be distributed to the recognized holder of the Interests as
of the last day of the quarterly period with respect to which distribution
is made.

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

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

<PAGE>

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA

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

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

<CAPTION>
1999 1998 1997 1996 1995
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total income, including
gain on sale of
investment property
in 1999. . . . . . . . . . $ 8,641,691 13,652,013 14,218,708 13,403,472 12,915,285
============ =========== =========== =========== ===========
Earnings (loss) before
extraordinary items. . . . $ (7,877,628) 23,857,962 19,099,978 3,222,749 1,856,294
Extraordinary items. . . . . (76,490) (1,496,923) -- -- --
------------ ------------ ----------- ----------- -----------
Net earnings (loss). . . . . $ (7,954,118) 22,361,039 19,099,978 3,222,749 1,856,294
============ ============ =========== =========== ===========
Net earnings (loss)
per Interest (b):
Earnings (loss)
before gain on
sale of investment
properties and
extraordinary items. . $ (45.23) 17.77 31.84 10.02 10.28
Gain on sale of
investment property
or Partnership's share
of gain on sale of
investment properties
of unconsolidated
ventures . . . . . . . 1.67 117.88 76.21 8.06 --
Extraordinary items. . . (.42) (8.50) -- -- --
------------ ------------ ----------- ----------- -----------
Net earnings (loss). . . . . $ (43.98) 127.15 108.05 18.08 10.28
============ ============ =========== =========== ===========

<PAGE>

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

Total assets . . . . . . . . $ 4,815,590 83,984,649 118,582,025 102,106,160 106,800,004
Long-term debt . . . . . . . $ -- -- 33,820,205 34,404,477 34,942,100
Cash distributions
per Interest (c) . . . . . $ 204.00 324.00 12.00 15.00 12.00
============ ============ =========== =========== ===========
<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 from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. 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. Accordingly, cash distributions to the Limited Partners
since the inception of the Partnership have not resulted in taxable income to such Limited Partners.

</TABLE>

<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

As a result of the public offering of interests as described in
Item 1, the Partnership had approximately $156,493,000 after deducting
selling expenses and other offering costs, 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.

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

During 1997, 1998 and 1999, some of the Limited Partners in the
Partnership received from unaffiliated third parties unsolicited tender
offers to purchase up to 4.9% of the Interests in the Partnership at
between $125 and $400 per Interest. The Partnership recommended against
acceptance of these offers on the basis that, among other things, the offer
prices were inadequate. All of such offers expired. As of the date of
this report, the Partnership is aware that 7.92% of the Interests have been
purchased by such unaffiliated third parties either pursuant to such tender
offers or through negotiated purchases. It is possible that other offers
for Interests may be made by unaffiliated third parties in the future,
although there is no assurance that any other third party will commence an
offer for Interests, the terms of any such offer or whether any such offer,
if made, will be consummated, amended or withdrawn.

At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $4,778,000. In February 2000, the Partnership made a cash
distribution of previously undistributed cash flow from operations of
$1,733,960 ($10 per Interest) to the Limited Partners and $192,679 to the
General Partners. Such remaining funds will be utilized for distributions
to partners and for working capital requirements of the Partnership. In
addition, in accordance with the Riverside Square Mall sale agreement,
$1,000,000 will be held in reserve for the purpose of paying any specified
liabilities (as defined) relating to the representations, warranties, and
covenants agreed to in the sale and arising during the survival period that
ends July 31, 2000. No further distributions of cash flow are anticipated
to be made until the final liquidation of the Partnership.

The Partnership made an annual operating distribution for 1999 of
$693,644 ($4 per Interest) in May 1999 to the Limited Partners. In
addition, in November 1999, the Partnership made a distribution of sale
proceeds related to the sale of the Riverside Square Mall of $23,757,307
($137 per Interest) and a distribution of previously undistributed cash
flow from operations of $10,924,893 ($63 per Interest) in November 1999 to
the Limited Partners. The General Partners had been deferring receipt of
their distributions of approximately $2,229,000 in accordance with the
subordination requirements of the Partnership Agreement as discussed in the
Notes. As a result of the distribution of sales proceeds to the Limited
Partners, the subordination requirements of the Partnership agreement were
satisfied to permit payment to the General Partners of current
distributions of cash from operations effective with the third quarter
1999. Consequently, the General Partners received a cash distribution of
previously undistributed cash flow from operations of $1,156,073 in
November 1999, which distribution was corrected in February 2000 by the
Partnership distributing another $57,804 to the General Partners. However,
the Partnership does not expect that the subordination requirements of the
Partnership Agreement will be satisfied to permit payment to the General
Partners of the $2,229,000 of previously deferred distributions of net cash
flow of the Partnership.

<PAGE>

RIVERSIDE SQUARE MALL

On August 5, 1999, the Partnership sold the Riverside Square Mall to
an unaffiliated third party for $59,500,000. Reference is made to the
notes for a further description of such event. In addition, in accordance
with the Riverside Square sale agreement, $1,000,000 will be held in
reserve for the purpose of paying any specified liabilities (as defined)
relating to the representations, warranties and covenants agreed to in the
sale and arising during the survival period that ends July 31, 2000.
Reference is made to the Notes for a further description of such sale.

GENERAL

The Partnership continues to conserve its working capital. In an
effort to reduce partnership operating expenses, the Partnership elected to
make annual rather than semi-annual distributions of available operating
cash flow commencing with the 1998 distribution. No further distributions
of cash flow are anticipated to be made until the final liquidation of the
Partnership.

In connection with the sale of the Riverside Square Mall, as is
customary in similar transactions, the Partnership agreed to certain
representations and warranties with a stipulated survival period which
expires in July 2000. The Partnership currently intends to wind up its
affairs during the year 2000. However, this will depend upon the
Partnership's ability to resolve the pending litigation and the real estate
tax appeal discussed above. Reference is made to Item 3. Legal Proceedings
of Part I in this report for a discussion of the pending litigation.

RESULTS OF OPERATIONS

Significant variances between periods reflected in the accompanying
financial statements not otherwise reported are primarily the result of the
sale of the Riverside Square Mall in August 1999.

The decrease in cash and cash equivalents at December 31, 1999 as
compared to December 31, 1998 is primarily due to the distribution in
November 1999 of previously undistributed cash flow from operations.

The restricted funds at December 31, 1999 represent the funds held in
reserve in accordance with the Riverside Square Mall sale agreement.

The increase in interest income for the twelve months ended
December 31, 1999 as compared to the twelve months ended December 31, 1998
is primarily due to a higher average cash balance during 1999 as well as
the temporary investment of sales proceeds from the August 1999 sale of
Riverside Square Mall, which proceeds were subsequently distributed to the
Limited Partners in November 1999. The increase in interest income for the
twelve months ended December 31, 1998 as compared to the twelve months
ended December 31, 1997 is primarily due to the temporary investment of
proceeds related to the December 1997 sale of the Royal Executive Park II
office complex and the February 1998 sale of the remaining assets of the
Park Center Financial Plaza office complex, which proceeds were
subsequently distributed to the Limited Partners in February and May 1998,
respectively.

<PAGE>

The gain on sale of investment property for the twelve months ended
December 31, 1999 is due to the gain recognized on the sale of the
Riverside Square Mall.

The decrease in depreciation expense for the twelve months ended
December 31, 1999 and 1998 as compared to the twelve months ended
December 31, 1997 is primarily due to the Riverside Square Mall investment
property being identified as held for sale or disposition as of
September 30, 1997, and therefore, no longer subject to depreciation beyond
such date.

The decrease in property operating expenses for the twelve months
ended December 31, 1998 as compared to the twelve months ended December 31,
1997 is primarily due to a decrease in tenant occupancies during 1998 as
well as a decrease in advertising expense due to the timing of promotional
campaigns and also to a decrease in snow removal and certain maintenance
and repair projects at the Riverside Square Mall investment property.

The decrease in professional services for the year ended December 31,
1999 as compared to the year ended December 31, 1998 is primarily due to
cost savings resulting from fewer properties owed by the Partnership during
1999.

The provision for value impairment for the twelve months ended
December 31, 1999 is due to the reduction in the net carrying value of the
Riverside Square Mall as of June 30, 1999.

The decrease in the Partnership's share of operations of
unconsolidated ventures for the twelve months ended December 31, 1999 and
1998 as compared to the twelve months ended December 31, 1997 is primarily
due to the sales of the Royal Executive Park II office complex and the
remaining assets of the Park Center Financial Plaza office complex in
December 1997 and February 1998, respectively.

The Partnership's share of gain on sale of investment properties of
unconsolidated venture of $20,648,190 in 1998 is due to the gain recognized
on the sale of the remaining assets of the Park Center Financial Plaza
investment property in February 1998. The Partnership's share of gain on
sale of investment properties of unconsolidated ventures of $13,349,139 in
1997 is due to the gain recognized on the sale of the Royal Executive Park
II office complex.

The Partnership's extraordinary item for the twelve months ended
December 31, 1999 is due to the write-off of the deferred mortgage balance
resulting from the sale of the Riverside Square Mall. The Partnership's
extraordinary items for the twelve months ended December 31, 1998 included
the write-off of $237,805 of deferred mortgage expense in conjunction with
the replacement mortgage loan put in place at the Riverside Square Mall
investment property in November 1998. The Partnership's share of
extraordinary item from unconsolidated venture of $1,259,118 in 1998
comprises loan prepayment premiums of $1,211,062 and the write-off of the
deferred mortgage expense balance of $48,056 resulting from the sale of the
remaining assets of the Park Center Financial Plaza investment property in
February 1998.

INFLATION

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

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

<PAGE>

YEAR 2000

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

INDEX

Independent Auditors' Report

Balance Sheets, December 31, 1999 and 1998

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

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

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

Notes to Financial Statements

SCHEDULES NOT FILED:

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

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Partners
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.
These financial statements are the responsibility of the General Partners
of the Partnership. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of JMB Income
Properties, Ltd. - XI at December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted
accounting principles.

KPMG LLP

Chicago, Illinois
March 12, 2000

<PAGE>

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

BALANCE SHEETS

DECEMBER 31, 1999 AND 1998

ASSETS
------
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . $ 3,778,146 15,863,283
Restricted funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 --
Rents and other receivables, net of allowance for
doubtful accounts of $0 in 1999 and $293,856 in 1998 . . . . . . . . . 37,444 1,601,179
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 97,040
------------ -----------

Total current assets . . . . . . . . . . . . . . . . . . . . . . . 4,815,590 17,561,502
------------ -----------

Investment property held for sale or disposition . . . . . . . . . . . . . -- 62,040,706
------------ -----------

Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 4,382,441
------------ -----------

$ 4,815,590 83,984,649
============ ===========

<PAGE>

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

BALANCE SHEETS - CONTINUED

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

1999 1998
------------ -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . $ -- 34,000,000
Accounts payable and other current liabilities . . . . . . . . . . . . . 62,112 475,107
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 181,029
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . 62,112 34,656,136
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . -- 89,000
------------ -----------
Commitments and contingencies

Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 62,112 34,745,136

Partners' capital accounts (deficit):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . 5,780,516 6,107,441
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . (7,787,502) (6,631,429)
------------ -----------
(2,005,986) (522,988)
------------ -----------
Limited partners (173,411 interests):
Capital contributions, net of offering costs . . . . . . . . . . . . 156,493,238 156,493,238
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . 63,716,584 71,343,777
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . (213,450,358) (178,074,514)
------------ -----------
6,759,464 49,762,501
------------ -----------
Total partners' capital accounts . . . . . . . . . . . . . . . . . 4,753,478 49,239,513
------------ -----------
$ 4,815,590 83,984,649
============ ===========

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

<PAGE>

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

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>

1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . $ 7,330,547 12,718,155 13,500,646
Interest income. . . . . . . . . . . . . . . . . . . . 1,019,142 933,858 718,062
Gain on sale of investment property. . . . . . . . . . 292,002 -- --
----------- ----------- -----------
8,641,691 13,652,013 14,218,708
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . 1,362,041 2,741,140 2,897,399
Depreciation . . . . . . . . . . . . . . . . . . . . . -- -- 1,892,003
Property operating expenses. . . . . . . . . . . . . . 4,477,479 7,189,436 7,851,075
Professional services. . . . . . . . . . . . . . . . . 133,367 214,735 190,646
Amortization of deferred expenses. . . . . . . . . . . 404,574 478,558 519,892
General and administrative . . . . . . . . . . . . . . 341,858 380,455 440,946
Provision for value impairment . . . . . . . . . . . . 9,800,000 -- --
----------- ----------- -----------
16,519,319 11,004,324 13,791,961
----------- ----------- -----------
(7,877,628) 2,647,689 426,747
Partnership's share of operations of
unconsolidated ventures. . . . . . . . . . . . . . . . -- 562,083 5,324,092
----------- ----------- -----------
Earnings (loss) before Partnership's
share of gains on sale of investment
properties of unconsolidated ventures. . . . . (7,877,628) 3,209,772 5,750,839

Partnership's share of gains on sale of investment
properties of unconsolidated ventures. . . . . . . . . -- 20,648,190 13,349,139
----------- ----------- -----------
Earnings (loss) before extraordinary items . . . (7,877,628) 23,857,962 19,099,978
Extraordinary items:
Deferred mortgage expense on retirement of
long-term debt . . . . . . . . . . . . . . . . . . . (76,490) (237,805) --
Partnership's share of deferred mortgage
expense and prepayment premium of
unconsolidated venture . . . . . . . . . . . . . . . -- (1,259,118) --
----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . . . . . $(7,954,118) 22,361,039 19,099,978
=========== =========== ===========

<PAGE>

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

STATEMENTS OF OPERATIONS - CONTINUED

1999 1998 1997
------------ ------------ ------------
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on sale
of investment properties and
extraordinary items. . . . . . . . . . . . . $ (45.23) 17.77 31.84
Gain on sale of investment property or
Partnership's share of gains on sale
of investment properties of
unconsolidated ventures. . . . . . . . . . . 1.67 117.88 76.21
Extraordinary items. . . . . . . . . . . . . . (.42) (8.50) --
----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . . . $ (43.98) 127.15 108.05
=========== =========== ===========

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

<PAGE>

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

STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT)

YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------------- --------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
at Decem-
ber 31,
1996. . . . . $1,000 5,431,146 (6,631,429) (1,199,283) 156,493,238 30,559,055 (119,808,418) 67,243,875

Cash distri-
butions
($12 per
limited
partnership
interest) . . -- -- -- -- -- -- (2,080,932) (2,080,932)
Net earnings
(loss). . . . -- 363,525 -- 363,525 -- 18,736,453 -- 18,736,453
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------

Balance
(deficit)
at Decem-
ber 31,
1997. . . . . 1,000 5,794,671 (6,631,429) (835,758) 156,493,238 49,295,508 (121,889,350) 83,899,396

Cash distri-
butions
($324 per
limited
partnership
interest) . . -- -- -- -- -- -- (56,185,164)(56,185,164)
Net earnings
(loss). . . . -- 312,770 -- 312,770 -- 22,048,269 -- 22,048,269
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------

<PAGE>

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

STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT) - CONTINUED

GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------------- --------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
Balance
(deficit)
at Decem-
ber 31,
1998. . . . . 1,000 6,107,441 (6,631,429) (522,988) 156,493,238 71,343,777 (178,074,514) 49,762,501

Cash distri-
butions
($204 per
limited
partnership
interest) . . -- -- (1,156,073) (1,156,073) -- -- (35,375,844)(35,375,844)
Net earnings
(loss). . . . -- (326,925) -- (326,925) -- (7,627,193) -- (7,627,193)
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------

Balance
(deficit)
at Decem-
ber 31,
1999. . . . . $1,000 5,780,516 (7,787,502) (2,005,986) 156,493,238 63,716,584 (213,450,358) 6,759,464
====== ========== ========== ========== =========== =========== ============ ===========

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

<PAGE>

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

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . $(7,954,118) 22,361,039 19,099,978
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . -- -- 1,892,003
Amortization of deferred expenses. . . . . . . . . . 404,574 478,558 519,892
Gain on sale of investment property. . . . . . . . . (292,002) -- --
Partnership's share of operations of uncon-
solidated ventures, net of distributions . . . . . -- (562,083) (5,324,092)
Partnership's share of gains on sale of invest-
ment properties of unconsolidated ventures . . . . -- (20,648,190) (13,349,139)
Provision for value impairment . . . . . . . . . . . 9,800,000 -- --
Extraordinary items. . . . . . . . . . . . . . . . . 76,490 1,496,923 --
Changes in:
Rents and other receivables. . . . . . . . . . . . . 249,828 951,052 (541,985)
Prepaid expenses . . . . . . . . . . . . . . . . . . 97,040 (8,092) 2,558
Escrow deposits. . . . . . . . . . . . . . . . . . . -- 320,236 (384,565)
Accounts payable . . . . . . . . . . . . . . . . . . (412,995) (307,167) 7,484
Accrued interest payable . . . . . . . . . . . . . . (181,029) (62,473) 363
Tenant security deposits . . . . . . . . . . . . . . (89,000) 867 (13,406)
----------- ----------- -----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . . 1,698,788 4,020,670 1,909,091
----------- ----------- -----------
Cash flows from investing activities:
Additions to investment properties . . . . . . . . . . (1,008,906) (1,111,370) (869,839)
Proceeds from sale of investment property,
net of selling expenses . . . . . . . . . . . . . . . 58,758,322 -- --
Partnership's distributions from
unconsolidated ventures. . . . . . . . . . . . . . . -- 26,662,317 32,329,371
Payment of deferred expenses . . . . . . . . . . . . . (1,424) (12,636) --
----------- ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . 57,747,992 25,538,311 31,459,532
----------- ----------- -----------

<PAGE>

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

STATEMENTS OF CASH FLOWS - CONTINUED

1999 1998 1997
----------- ----------- -----------
Cash flows from financing activities:
Release of escrow for payoff of old debt . . . . . . . -- 851,035 --
Net cost of refinancing of new long-term debt. . . . . -- (126,127) --
Principal payments on long-term debt . . . . . . . . . (34,000,000) (533,706) (537,622)
Distributions to limited partners. . . . . . . . . . . (35,375,844) (56,185,164) (2,080,932)
Distributions to general partners. . . . . . . . . . . (1,156,073) -- --
----------- ----------- -----------
Net cash provided by (used in)
financing activities . . . . . . . . . . . . (70,531,917) (55,993,962) (2,618,554)
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . (11,085,137) (26,434,981) 30,750,069
Cash and cash equivalents,
beginning of year. . . . . . . . . . . . . . 15,863,283 42,298,264 11,548,195
----------- ----------- -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . . . . . $ 4,778,146 15,863,283 42,298,264
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . $ 1,543,070 2,803,613 2,897,036
=========== =========== ===========
Non-cash investing and financing activities:
Refinancing of long-term debt:
Proceeds of new debt. . . . . . . . . . . . . . . . $ -- 34,000,000 --
Retirement of old debt. . . . . . . . . . . . . . . -- (33,870,772) --
Deferred mortgage costs . . . . . . . . . . . . . . -- (255,355) --
----------- ----------- -----------
Net cost of refinancing of long-term debt. . . $ -- (126,127) --
=========== =========== ===========

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

<PAGE>

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

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

OPERATIONS AND BASIS OF ACCOUNTING

GENERAL

The Partnership held (either directly or through joint ventures)
investments in United States real estate. Business activities consisted of
rentals to a variety of commercial and retail companies, and the ultimate
sale or disposition of such real estate. The Partnership currently intends
to conduct an orderly liquidation and wind up its affairs not later than
December 31, 2000. However, this will depend upon the Partnership's
ability to resolve pending litigation and a real estate tax appeal relating
to the Riverside Square Mall.

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") (which investment was sold in
December 1997) and JMB/San Jose Associates ("San Jose") (which investment
was sold in February 1998). 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
GAAP adjustments are not recorded on the records of the Partnership. The
net effect of these items for the years ended December 31, 1999 and 1998 is
summarized as follows:

<PAGE>

<TABLE>

1999 1998
------------------------------ ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . . $ 4,815,590 21,493,556 83,984,649 83,828,667

Partners' capital accounts
(deficit):
General partners . . . . . . . . . (2,005,986) 528,529 (522,988) --
Limited partners . . . . . . . . . 6,759,464 20,902,930 49,762,501 49,443,874

Net earnings (loss):
General partners . . . . . . . . . (326,925) 1,684,602 312,770 1,339,240
Limited partners . . . . . . . . . (7,627,193) 6,834,900 22,048,269 8,797,458

Net earnings (loss) per
limited partnership
interest . . . . . . . . . . . . . . (43.98) 39.42 127.15 50.73
=========== ============ =========== ===========

</TABLE>

<PAGE>

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.

The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
U.S. Government obligations at cost, which approximates market. For the
purposes of these statements, the Partnership's policy is to consider all
such amounts held with original maturities of three months or less
($4,815,021 and $16,123,277 at December 31, 1999 and 1998, respectively) as
cash equivalents, which includes investments in an institutional mutual
fund which holds U.S. Government obligations, with any remaining amounts
(generally with original maturities of one year or less) reflected as
short-term investments being held to maturity.

Deferred expenses consisted primarily of loan fees, lease commissions
and tenant allowances which were amortized over the terms stipulated in the
related agreements using the straight-line method.

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

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 or may in the future be required under applicable law to remit
directly to the tax authorities amounts representing withholding from
distributions paid to partners.

The Partnership had acquired, either directly or through joint
ventures, 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.
In March 1996, the San Jose venture sold its interest in the 190 San
Fernando Building and one of the parking structures at the Park Center
Financial Plaza investment property. In December 1997, the Royal Executive
venture sold the Royal Executive Park II office complex. In February 1998,
the San Jose venture sold its remaining interest in the Park Center
Financial Plaza office complex. In August 1999, the Partnership sold the
Riverside Square Mall investment property. The cost of the investment
properties represented 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
==

<PAGE>

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

Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
requires that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value cannot be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the property's carrying value and the
property's estimated fair value. The Partnership's policy is to consider a
property to be held for sale or disposition when the Partnership has
committed to a plan to sell or dispose of such property and active
marketing activity has commenced or is expected to commence in the near
term. In accordance with SFAS 121, any properties identified as "held for
sale or disposition" are no longer depreciated. Adjustments for impairment
loss for such properties (subsequent to the date of adoption of SFAS 121)
were made in each period as necessary to report these properties at the
lower of carrying value or fair value less costs to sell.

The results of operations for properties held for sale or disposition
as of December 31, 1999 or sold or disposed of during the past three years
were ($8,328,617), $2,172,556 and $443,271, respectively, for the years
ended December 31, 1999, 1998 and 1997. In addition, the accompanying
financial statements include $0, $562,084 and $5,324,092, respectively, of
the Partnership's share of total property operations of $0, $1,124,167 and
$6,901,490 of unconsolidated properties held for sale or disposition as of
December 31, 1999 or sold or disposed of in the past three years.

INVESTMENT PROPERTIES

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 with the balance of the purchase
price represented by a first mortgage loan. During the third quarter of
1994, the Partnership finalized a refinancing of the first mortgage loan
with a new loan in the amount of $36,000,000.

The mortgage loan on the property provided for rate adjustments every
four years, beginning November 1, 1998. In addition, the loan allowed the
Partnership to prepay the loan without penalty for a 60 day period every
four years starting October 1, 1998. On May 1, 1998, in accordance with
the loan documents, the lender notified the Partnership of the rate
adjustment effective November 1, 1998. Given that the Partnership was
actively marketing the property for sale and that the prepayment penalty
would be substantial if the property were sold outside of the 60 day window
provided in the loan documents, the Partnership elected not to accept the
lender's rate adjustment. The election accelerated the maturity date of
the loan to December 1, 1998, from December 1, 2006. On November 24, 1998,
the Partnership closed on the replacement mortgage loan in the amount of
$34,000,000, for a one-year term with no prepayment penalty, to replace the
current loan. The new mortgage loan had a maturity date of November 24,
1999, with an option for a six-month extension, and provided for interest
only payments based on the 30 day LIBOR rate (approximately 5.2% and 5.1%
at August 5, 1999 (the date of sale) and December 31, 1998, respectively)
plus 1.3%. The proceeds from the mortgage loan were used to pay the
outstanding balance of the old loan of approximately $33,871,000. The net
cost to the Partnership of the refinancing, including costs and fees of
approximately $255,000, was approximately $126,000.

<PAGE>

During 1998, the Partnership reached an agreement in principle with a
theater operator to open a multiscreen theater complex at the mall. This
expansion would have added approximately 20,000 square feet of space and
would have included new restaurants. The Partnership intended to fund the
estimated cost of approximately $7.6 million for the expansion from its
working capital reserves. The Partnership received planning and zoning
board approval from the City of Hackensack for such expansion in October
1998. However, this expansion, including the theater lease, was subject to
many contingencies, including final documentation and the possible sale of
the shopping center in 1999.

On August 5, 1999, the Partnership sold the Riverside Square mall to
an unaffiliated third party for a sale price of $59,500,000 (before selling
expenses and prorations). The Partnership realized net sale proceeds of
approximately $24,758,000 after repayment of the mortgage loan securing the
property in the amount of $34,000,000 and payment of selling expenses of
approximately $750,000. The sale resulted in a gain for Federal income tax
reporting purposes in 1999 of approximately $8,376,000. As the sale value
of the property as indicated by the sales contract was expected to result
in a loss of approximately $9,800,000 for financial reporting purposes, as
a matter of prudent accounting practice the Partnership recognized this
amount as a provision for value impairment at June 30, 1999. The
Partnership recognized a gain of approximately $292,000 for financial
reporting purposes at December 31, 1999. In connection with the sale, the
Partnership recorded at December 31, 1999 an extraordinary loss for
financial reporting purposes of $76,490 as a result of the write-off of the
remaining deferred mortgage expense balance. In addition, in connection
with the sale of the property, as is customary in such transactions, the
Partnership agreed to certain representations, warranties and covenants
with a stipulated survival period that expires July 31, 2000. Although it
is not expected, the Partnership may ultimately have some liability under
such representations, warranties and covenants which are limited to actual
damages and in no event exceed $1,000,000 in the aggregate. Also, in
accordance with the purchase and sale agreement, the Partnership was
required to establish reserves of at least $1,000,000 in cash or reasonably
liquid investments as of the closing date for the purpose of paying any
specified liabilities (as defined) during the survival period which expires
July 31, 2000.

In November 1999, the Partnership made a distribution of sales
proceeds relating to the sale of Riverside Square Mall of $23,757,307 ($137
per Interest) to the Limited Partners.

As the Partnership had committed to a plan to sell the property, the
property was classified as held for sale or disposition as of September 30,
1997, and therefore, has not been subject to continued depreciation beyond
such date.

An affiliate of the General Partners of the Partnership managed the
shopping center 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.

VENTURE AGREEMENTS - GENERAL

The Partnership, at December 31, 1998, is no longer a party to any
operating venture agreements. The Partnership had made capital
contributions to the respective ventures as discussed below.

SAN JOSE

The Partnership acquired, through San Jose, an interest in an existing
office building complex in San Jose, California (Park Center Financial
Plaza) consisting of ten office buildings, a parking and retail building
(185 Park Avenue) and two parking garage structures.

<PAGE>

The property was managed by an unaffiliated third party for a fee
calculated as 3% of gross receipts.

The partners of San Jose were 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 provided that contributions, distributions,
cash flow, sale or refinancing proceeds and profits and losses would be
distributed or allocated to the Partnership and JMB-XII in their respective
50% ownership percentages.

As San Jose had committed to a plan to sell the remaining properties
of the complex, the San Jose Venture classified the remaining assets as
held for sale as of December 31, 1996 and therefore these assets were no
longer subject to continued depreciation beyond such date.

On February 24, 1998, San Jose sold the land, buildings, related
improvements and personal property of the remaining assets of the Park
Center Financial Plaza office complex to an unaffiliated third party for a
sale price of $76,195,000 (before selling costs and prorations). San Jose
received approximately $49,537,000 of net sale proceeds at closing (of
which the Partnership's share was approximately $24,768,500), after the
repayment by San Jose of the mortgage loans secured by the 170 Almaden, 150
Almaden and 185 Park Avenue buildings with a balance of approximately
$23,281,000, loan prepayment premiums of approximately $2,422,000 and
closing costs. The sale resulted in a gain in 1998 of approximately
$41,654,000 (before extraordinary items) and $22,500,000 for financial
reporting and Federal income tax purposes, respectively, of which
approximately $20,827,000 and $11,250,000 of gain was allocated to the
Partnership, respectively. The gain for financial reporting purposes
includes the effects of previously recorded provisions for value impairment
for all buildings in the complex of approximately $24,600,000, of which the
Partnership's share was approximately $12,300,000. In connection with the
sale, San Jose recorded in 1998 an extraordinary loss for financial
reporting purposes totaling approximately $2,518,000 as a result of loan
prepayment premiums of approximately $2,422,000 and the write-off of the
deferred mortgage balance of approximately $96,000, of which the
Partnership's share is approximately $1,211,000 and $48,000, respectively.
In addition, in connection with the sale of the property, as is customary
in such transactions, San Jose agreed to certain representations,
warranties and covenants with a stipulated survival period that expired
November 15, 1998 with no liability to the partnership.

In May and December of 1998, the San Jose venture made distributions
of $50,000,000 and $3,324,635, of which the Partnership's share was
$25,000,000 and $1,662,317, respectively. In May 1998, the Partnership
made a distribution of sales proceeds relating to the sale of the remaining
assets of the Park Center Financial Plaza office complex of $24,277,540
($140 per Interest) to the Limited Partners.

ROYAL EXECUTIVE PARK II

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 were attained, the Partnership was entitled to a
cumulative preferred annual return equal to $2,430,000 per year. The next

<PAGE>

$2,439,732 of annual cash flow was 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 was
subject to the actual operations of the property. The Partnership was
entitled to any deficiency in its preferred annual return plus interest at
9% on a cumulative basis as an annual priority distribution from future
available operating cash flow before any cash flow distributions were made
to the venture partner. The cumulative deficiency in the preferred annual
return was approximately $1,498,000 at the December 19, 1997 sale date. In
accordance with the Royal Executive venture agreement, the Partnership
received its priority level of distribution of sale and refinancing
proceeds of $27,000,000 plus the cumulative deficiency in its preferred
annual return, in the amount of $1,498,000 upon sale of the property, as
discussed below.

Net operating income (as defined) of the joint venture, in general,
was allocated in proportion to, and to the extent of, distributions and
then based on relative ownership percentages. Operating losses, in
general, were 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, were allocated
based upon relative ownership interests. Depreciation and amortization
were allocated based upon the relative ownership interests.

As there had been a commitment to sell this property, the Royal
Executive venture classified this property as held for sale or disposition
at December 31, 1996, and therefore, the property was not subject to
continued depreciation beyond such date.

On December 19, 1997, the Royal Executive venture sold the land,
buildings, related improvements and personal property of the Royal
Executive Park office complex to an unaffiliated third party for a sale
price of $36,000,000 (before selling expenses and prorations). The sale
resulted in a gain in 1997 of $13,905,818 (due to the provision for value
impairment recorded in 1994) and $18,927,388 for financial reporting and
Federal income tax purposes, respectively, of which $13,349,139 and
$10,701,810 of gain was allocated to the Partnership, respectively. In
addition, in connection with the sale of the property, as is customary in
such transactions, the joint venture agreed to certain representations,
warranties and covenants with a stipulated survival period that expired
November 15, 1998 with no liability to the Partnership.

Concurrently with the sale of Royal Executive Park-II, two other
office parks, Royal Executive Park I ("Royal I") and Royal Executive Park
III ("Royal III") were sold. Royal I was owned by a joint venture between
JMB Income Properties-X (a partnership sponsored by the Partnership's
General Partner) and the Partnership's unaffiliated venture partner in
Royal Executive Park-II. Royal III was owned entirely by the unaffiliated
venture partner in Royal Executive Park-II and Royal I. The purchase price
for each office park was separately negotiated with the buyer.

In February 1998, the Partnership made a distribution of sale proceeds
related to the sale of the Royal Executive Park II office complex of
$28,439,404 ($164 per Interest).

<PAGE>

LONG-TERM DEBT

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

30 day LIBOR Rate (approximately 5.2% and 5.1%
at August 5, 1999 (the date of sale) and
December 31, 1998, respectively) plus 1.3%
mortgage note, secured by the Riverside
Square Mall, payable in monthly installments
of interest only until November 24, 1999
(with an option for a six month extension)
when the outstanding principal and accrued
and unpaid interest thereon was due, repaid
in conjunction with the Partnership's
August 1999 sale of the property . . . . . . . $ -- 34,000,000
Less current portion of long-term debt . . . . . -- 34,000,000
----------- ----------
Total long-term debt . . . . . . . . . $ -- --
=========== ==========

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 was
subordinated to the Limited Partners' receipt of a stipulated return on
capital. As a result of the November 1999 distribution of sales proceeds
to the Limited Partners of $137 per Interest, the subordination
requirements of the Partnership agreement were satisfied to permit payment
to the General Partners of current distributions of cash from operations
effective with the third quarter 1999.

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, notwithstanding such allocations, 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

<PAGE>

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. As the 10% level of
return is not expected to be achieved, the General Partners have waived
their right to receive any portion of the proceeds from the sales of
property by the Partnership.

TRANSACTIONS WITH AFFILIATES

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Managing General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of December 31, 1999 and for the years ended
December 31, 1999, 1998 and 1997 are as follows:
UNPAID AT
DECEMBER 31,
1999 1998 1997 1999
-------- ------- ------- ------------
Property management
and leasing fees. . . . . . $188,831 246,957 244,256 --
Insurance commissions. . . . 7,799 34,614 44,126 --
Reimbursement (at cost)
for accounting services . . 1,880 15,306 22,452 40
Reimbursement (at cost)
for portfolio manage-
ment services . . . . . . . 45,204 56,590 35,743 10,743
Reimbursement (at cost)
for legal services. . . . . 10,155 7,646 7,442 4,509
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses. . . 5,117 7,035 208 --
-------- ------- ------- -------
$258,986 368,148 354,227 15,292
======== ======= ======= =======

During 1994, certain officers and directors of the Managing General
Partners acquired interests in a company which provided certain property
management services to a property that was owned by the Partnership. The
fees earned by such company from the Partnership for the years ended
December 31, 1999, 1998 and 1997 were approximately $0, $5,400 and $32,500,
respectively, all of which has been paid. As such property has been sold,
no further fees are expected to be paid by such venture to such company.

The General Partners have deferred receipt of certain of their
distributions of net cash flow of the Partnership. The amount of such
deferred distributions aggregated $2,229,000 as of December 31, 1999. The
amount was being deferred in accordance with the subordination requirements
of the Partnership Agreement as discussed above. As a result of the
distribution of sales proceeds to the Limited Partners, the subordination
requirements of the Partnership agreement were satisfied to permit payment

<PAGE>

to the General Partners of distributions of cash flow from operations
effective with the third quarter of 1999. Consequently, the General
Partners received a cash distribution of previously undistributed cash flow
from operations of $1,156,074 in November 1999. However, the Partnership
does not expect that the subordination requirements of the Partnership
agreement will be satisfied to permit payment of the $2,229,000 of
previously deferred distributions of net cash flow.

An affiliate of the General Partners of the Partnership managed the
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. Such fees and commissions were subject to deferral to the
extent they were in excess of an aggregate annual maximum amount of 6% of
the gross receipts of the property. In this regard, an affiliate of the
General Partner in 1994 deferred $300,000 of leasing fees at the Riverside
Square Mall pursuant to the management agreement, of which the final
$33,000 was paid in February 1997.

INVESTMENT IN UNCONSOLIDATED VENTURES

Summary combined financial information for San Jose and Royal
Executive for the year ended December 31, 1998 are as follows:

1998
-----------

Current assets . . . . . . . . . . . . . . . . . . . $ --
Current liabilities. . . . . . . . . . . . . . . . . --
------------
Working capital. . . . . . . . . . . . . . . . . --
------------
Investment property, net . . . . . . . . . . . . . . --
Other assets, net. . . . . . . . . . . . . . . . . . --
Long-term debt . . . . . . . . . . . . . . . . . . . --
Other liabilities. . . . . . . . . . . . . . . . . . --
Venture partners' equity . . . . . . . . . . . . . . --
------------
Partnership's capital. . . . . . . . . . . . . . $ --
============

Represented by:
Invested capital . . . . . . . . . . . . . . . . . $ 77,738,617
Cumulative distributions . . . . . . . . . . . . . (108,493,454)
Cumulative gains . . . . . . . . . . . . . . . . . 30,754,837
------------
$ --
============

Total income . . . . . . . . . . . . . . . . . . . . $ 2,482,154
============

Expenses applicable to operating earnings. . . . . . $ 1,357,987
============

Gain on disposition of investment property . . . . . $ 39,135,624
============

Net earnings (loss). . . . . . . . . . . . . . . . . $ 40,259,791
============

The total income, expenses related to operating earnings, gain on
disposition of investment property and net earnings for the above-mentioned
ventures for the year ended December 31, 1997 were $16,288,755, $9,387,265,
$13,905,818 and $20,807,308, respectively.

<PAGE>

CONTINGENCIES

SUBSEQUENT EVENT

In February 2000, the Partnership made a cash distribution of
previously undistributed cash flow from operations of $1,733,960 ($10 per
Interest) to the Limited Partners and $192,679 to the General Partners.

<PAGE>

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

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

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. Substantially all of the
outstanding shares of JMB are owned, directly or indirectly, by certain of
its officers, directors, members of their families and their affiliates.
JMB, as the Managing General Partner, has responsibility for all aspects of
the Partnership's operations. The Associate General Partner of the
Partnership is Income Associates-XI, L.P., an Illinois limited partnership
with JMB as its sole general partner. The limited partners of Income
Associates-XI, L.P. are generally current or former officers and directors
of JMB or their affiliates and an affiliate of Merrill Lynch, Pierce,
Fenner & Smith Incorporated.

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

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

<PAGE>

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The 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. Reference is also made to the Notes for a description of such
transactions, distributions and allocations. In 1999, the General Partners
received cash distributions of $1,156,073. In 1998 and 1997, no cash
distributions were paid to the General Partners.

Affiliates of the Managing General Partner provided property
management services to the Partnership 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. In 1999, such
affiliates earned property management and leasing fees amounting to
$188,831 which was paid as of December 31, 1999. 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 1999
aggregating $5,625 in connection with the provision of insurance coverage
for certain of the real property investments of the Partnership and its
venture. Such commissions were at rates set by insurance companies for the
classes of coverage provided. In addition, JMB Insurance Agency, Inc.
earned and received insurance brokerage commissions in 1999 of $2,174 in
connection with insurance coverage for professional liability for the
Partnership.

The General Partners of the Partnership may be reimbursed for their
salaries, salary-related and direct expenses relating to the administration
of the Partnership and the operation of the Partnership's real property
investments. In 1999, an affiliate of the General Partners earned
reimbursement for such expenses in the amount of $62,356, of which $15,292
was unpaid at December 31, 1999.

The Partnership is permitted to engage in various transactions
involving affiliates of the Managing General Partner of the Partnership.
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.

<PAGE>

<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, its executive officers and directors and the Associate General Partner
beneficially own the following Interests of the Partnership:

NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership JMB Realty Corporation 5 Interests (1) Less than 1%
Interests and Assignee indirectly
Interests Therein

Limited Partnership Managing General 5 Interests (1) Less than 1%
Interests and Assignee Partner, its indirectly
Interests Therein executive officers
and directors and
the Associate
General Partner
as a group

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

(1) Includes 5 Interests owned by the Initial Limited Partner of the Partnership for which JMB Realty
Corporation, as its indirect majority shareholder, is deemed to have shared voting and investment power.

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

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

(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.

</TABLE>

<PAGE>

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. Certain pages of the prospectus 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. Loan agreement and mortgage note between JMB
Income Properties, Ltd. - XI and Dresdner Bank AG, New York Branch and
Grand Cayman Branch relating to Riverside Square Mall dated November 24,
1998 are hereby incorporated by reference to the Partnership's report on
Form 10-K for December 31, 1998 (File No. 0-15966) dated March 22, 1999.

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. Purchase - Sale Agreement with exhibits dated
December 5, 1997 relating to the sale by the Partnership, through its joint
venture, of the Royal Executive Park office complex in Rye Brook, New York
between Royal Executive Park I, Royal Executive Park II, Royal Executive
III and Reckson Operating Partnership, L.P. are hereby incorporated herein
by reference to the Partnership's Report on Form 10-K for December 31, 1997
(File No. 0-15966) dated March 25, 1998.

<PAGE>

10-C. First Amendment to the Purchase - Sale Agreement
dated February 10, 1998 relating to the sale by San Jose of the Park Center
Financial Plaza office complex in San Jose, California between JMB/San Jose
Associates and Divco West Properties, LLC are hereby incorporated herein by
reference to the Partnership's Report on Form 10-K for December 31, 1997
(File No. 0-15966) dated March 25, 1998.

10-D. Purchase - Sale Agreement with exhibits dated
December 3, 1997 relating to the sale by San Jose of the Park Center
Financial Plaza office complex in San Jose, California between JMB/San Jose
Associates and Divco West Properties, LLC are hereby incorporated herein by
reference to the Partnership's Report on Form 10-K for December 31, 1997
(File No. 0-15966) dated March 25, 1998.

10-E. Purchase Agreement relating to the sale of
Riverside Square Mall between JMB Income Properties, Ltd. - XI and Shopco
Advisory Corp., dated July 22, 1999 is hereby incorporated by reference to
the Partnership's Report for August 6, 1999 on Form 8-K (File No. 0-15966)
dated August 20, 1999.

21. List of Subsidiaries

24. Powers of Attorney

27. Financial Data Schedule

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

(b) No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.

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

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
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 24, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

By: JMB Realty Corporation
Managing General Partner

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

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

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

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

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

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

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

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

<PAGE>

JMB INCOME PROPERTIES, LTD. - XI

EXHIBIT INDEX

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

3-A. Certain pages of the Prospectus
dated July 11, 1984 Yes --

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

4-A. 1998 Mortgage Loan agreement
related to Riverside Square Yes

10-A. Acquisition documents
related to Riverside Square Yes --

10-B. Purchase and Sale Agreement related to
the Royal Executive Park office complex Yes --

10-C. First Amendment to the Purchase
and Sale Agreement related
to San Jose Yes --

10-D. Purchase and Sale Agreement with
exhibits related to San Jose Yes --

10-E. Purchase Agreement related to the
sale of Riverside Square Mall Yes --

21. List of Subsidiaries No

24. Powers of Attorney No

27. Financial Data Schedule No

EXHIBIT 21

LIST OF SUBSIDIARIES

The Partnership was a general partner in JMB/San Jose Associates, an
Illinois general partnership which held title to Park Center Financial
Plaza prior to its sale in February 1998. The Partnership was a general
partner in Royal Executive Park-II, a New York general partnership which
held title to Royal Executive Park II prior to its sale in December 1997.
Reference is made to 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 of JMB
Realty Corporation, the managing 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 officers a Report on Form 10-K of said partnership for
the fiscal year ended December 31, 1999, and any and all amendments
thereto, hereby ratifying and confirming all that said attorneys and agents
and any of them may do by virtue hereof.

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

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

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

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

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

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

<PAGE>

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and/or
directors of JMB Realty Corporation, the managing 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, 1999, and any
and all amendments thereto, hereby ratifying and confirming all that said
attorneys and agents and any of them may do by virtue hereof.

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

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

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

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

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

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

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

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

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

<ARTICLE> 5

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

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

<CASH> 4,778,146
<SECURITIES> 0
<RECEIVABLES> 37,444
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,815,590
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,815,590
<CURRENT-LIABILITIES> 62,112
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 4,753,478
<TOTAL-LIABILITY-AND-EQUITY> 4,815,590
<SALES> 7,330,547
<TOTAL-REVENUES> 8,641,691
<CGS> 0
<TOTAL-COSTS> 4,882,053
<OTHER-EXPENSES> 475,225
<LOSS-PROVISION> 9,800,000
<INTEREST-EXPENSE> 1,362,041
<INCOME-PRETAX> (7,877,628)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,877,628)
<DISCONTINUED> 0
<EXTRAORDINARY> (76,490)
<CHANGES> 0
<NET-INCOME> (7,954,118)
<EPS-BASIC> (43.98)
<EPS-DILUTED> (43.98)

</TABLE>