10-Q 1 if11-jun02.txt CNL INCOME FUND XI, LTD. FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT of 1934 For the quarterly period ended June 30, 2002 -------------------------------------------------------------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from ____________________ to ______________________ Commission file number 0-21560 --------------------------------------- CNL Income Fund XI, Ltd. ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Florida 59-3078854 --------------------------------- ------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 450 South Orange Avenue Orlando, Florida 32801 ---------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number (including area code) (407) 540-2000 ----------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 _________ CONTENTS Page Part I. Item 1. Financial Statements: Condensed Balance Sheets 1 Condensed Statements of Income 2 Condensed Statements of Partners' Capital 3 Condensed Statements of Cash Flows 4 Notes to Condensed Financial Statements 5-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 11 Part II. Other Information 12 CNL INCOME FUND XI, LTD. (A Florida Limited Partnership) CONDENSED BALANCE SHEETS

See accompanying notes to condensed financial statements. CNL INCOME FUND XI, LTD. (A Florida Limited Partnership) CONDENSED STATEMENTS OF INCOME

See accompanying notes to condensed financial statements. CNL INCOME FUND XI, LTD. (A Florida Limited Partnership) CONDENSED STATEMENTS OF PARTNERS' CAPITAL

See accompanying notes to condensed financial statements. CNL INCOME FUND XI, LTD. (A Florida Limited Partnership) CONDENSED STATEMENTS OF CASH FLOWS

See accompanying notes to condensed financial statements. CNL INCOME FUND XI, LTD. (A Florida Limited Partnership) NOTES TO CONDENSED FINANCIAL STATEMENTS Quarters and Six Months Ended June 30, 2002 and 2001 1. Basis of Presentation: The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. The financial statements reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Operating results for the quarter and six months ended June 30, 2002 may not be indicative of the results that may be expected for the year ending December 31, 2002. Amounts as of December 31, 2001, included in the financial statements, have been derived from audited financial statements as of that date. These unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in Form 10-K of CNL Income Fund XI, Ltd. (the "Partnership") for the year ended December 31, 2001. The Partnership accounts for its 85% interest in Denver Joint Venture and its 77.33% interest in CNL/Airport Joint Venture using the consolidation method. Minority interests represent the minority joint venture partners' proportionate share of the equity in the Partnership's consolidated joint ventures. All significant intercompany accounts and transactions have been eliminated. Effective January 1, 2002, the Partnership adopted Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement requires that a long-lived asset be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The assessment is based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value. If an impairment is recognized, the adjusted carrying amount of a long-lived asset is its new cost basis. The statement also requires that the results of operations of a component of an entity that either has been disposed of or is classified as held for sale be reported as a discontinued operation if the disposal activity was initiated subsequent to the adoption of the Standard. 2. Reclassification: Certain items in the prior year's financial statements have been reclassified to conform to 2002 presentation. These reclassifications had no effect on total partners' capital or net income. 3. Investment in Joint Ventures: In June 2002, the Partnership invested in two properties in Universal City and Schertz, Texas, as two separate tenants-in-common arrangements with CNL Income Fund VI, Ltd., a Florida limited partnership and affiliate of the general partners. The Partnership acquired both properties from CNL Funding 2001-A, LP, an affiliate of the general partners (see Note 5). The Partnership and CNL Income Fund VI, Ltd. entered into agreements whereby each co-tenant will share in the profits and losses of each property in proportion to its applicable percentage interest. As of June 30, 2002, the Partnership contributed approximately $897,200 and $942,500 for an 85.8% and a 90.5% interest, respectively, in these properties. CNL INCOME FUND XI, LTD. (A Florida Limited Partnership) NOTES TO CONDENSED FINANCIAL STATEMENTS Quarters and Six Months Ended June 30, 2002 and 2001 3. Investment in Joint Ventures - Continued: In June 2002, Ashland Joint Venture, in which the Partnership has a 62.16% interest, sold its Burger King property in Ashland, New Hampshire to the tenant and received net sales proceeds of approximately $1,472,900, resulting in a gain of approximately $500,900. The financial results relating to this property are reflected as Discontinued Operations below. The Joint Venture reinvested in June 2002 the majority of the net sales proceeds from the sale of this property in a property in San Antonio, Texas. The Joint Venture acquired the property from CNL Funding 2001-A, LP an affiliate of the general partners for an approximate cost of $1,343,000 (see Note 5). Ashland Joint Venture, Des Moines Real Estate Joint Venture, Portsmouth Joint Venture, each owned and leased one property to an operator of national fast-food restaurants. In addition, the Partnership and affiliates, as tenants-in-common in three separate tenants-in-common arrangements, each owned and leased one property to an operator of national fast-food restaurants. The following presents the combined, condensed financial information for the unconsolidated joint ventures and the properties held as tenants-in-common with affiliates at:

CNL INCOME FUND XI, LTD. (A Florida Limited Partnership) NOTES TO CONDENSED FINANCIAL STATEMENTS Quarters and Six Months Ended June 30, 2002 and 2001 3. Investment in Joint Ventures - Continued: The Partnership recognized income of $641,858 and a loss of $44,215 during the six months ended June 30, 2002 and 2001, respectively, from these joint ventures, of which income of $584,639 and a loss of $50,171 were recorded during the quarters ended June 30, 2002 and 2001, respectively. 4. Discontinued Operations: In June 2002, the Partnership sold its Burger King properties in Columbus, Ohio and East Detroit, Michigan to the tenant and received net sales proceeds of approximately $1,734,400, resulting in a gain of approximately $442,100. In addition, as of June 30, 2002, the Partnership was negotiating two separate agreements to sell the properties in Highlands, California and Kent, Ohio. As a result, the Partnership reclassified the assets relating to these properties from direct financing leases, and from land and building on operating leases, to real estate held for sale. The properties were recorded at the lower of their carrying amounts or fair value less cost to sell. The Partnership stopped recording depreciation and accrued rental income once the properties were placed up for sale. The financial results for these properties are reflected as Discontinued Operations in the accompanying financial statements. The operating results of discontinued operations are as follows:

5. Related Party Transactions: In June 2002, the Partnership and CNL Income Fund VI, Ltd. acquired two properties in Universal City and Schertz, Texas, each Property as a separate tenants-in-common arrangement, from CNL Funding 2001-A, LP, for a total purchase price of approximately $2,087,200 (see Note 3). In addition, in June 2002, Ashland Joint Venture acquired a property in San Antonio, Texas, from CNL Funding 2001-A, LP, for a purchase price of approximately $1,343,000 (see Note 3). CNL Funding 2001-A, LP is an affiliate of the general partners. CNL Funding 2001-A, LP had purchased and temporarily held title to the properties in order to facilitate the acquisition of the properties by the Partnership. The purchase price paid by the Partnership and the joint venture represented the costs incurred by CNL Funding 2001-A, LP to acquire and carry the properties, including closing costs. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CNL Income Fund XI, Ltd. (the "Partnership") is a Florida limited partnership that was organized on August 20, 1991 to acquire for cash, either directly or through joint venture arrangements, both newly constructed and existing restaurants, as well as properties upon which restaurants were to be constructed (the "Properties"), which are leased primarily to operators of national and regional fast-food and family-style restaurant chains. The leases are, in general, triple-net leases, with the lessees responsible for all repairs and maintenance, property taxes, insurance, and utilities. As of June 30, 2001, the Partnership owned 34 Properties directly and seven Properties indirectly, through joint venture or tenancy in common arrangements. As of June 30, 2002, the Partnership owned 32 Properties directly and eight Properties indirectly, through joint venture or tenancy in common arrangements. Capital Resources The Partnership's primary source of capital for the six months ended June 30, 2002 and 2001 was cash from operating activities (which includes cash received from tenants, distributions from joint ventures, and interest and other income received, less cash paid for expenses). Cash from operating activities was $2,162,728 and $1,597,124 for the six months ended June 30, 2002 and 2001, respectively. The increase in cash from operating activities for the six months ended June 30, 2002 was primarily a result of changes in working capital and changes in income and expenses as described in "Results of Operations" below. Other sources and uses of capital included the following during the six months ended June 30, 2002. In June 2002, the Partnership sold its Burger King properties in Columbus, Ohio and East Detroit, Michigan, to the tenant and received net sales proceeds of approximately $1,734,400, resulting in a gain of approximately $442,100. The Partnership reinvested in June 2002 the majority of the net sales proceeds from the sale of these Properties in two Properties in Universal City and Schertz, Texas, each Property as a separate tenants-in-common arrangement with CNL Income Fund VI, Ltd., a Florida limited partnership and affiliate of the general partners. The Partnership and CNL Income Fund VI, Ltd. entered into agreements whereby each co-tenant will share in the profits and losses of each property in proportion to its applicable percentage interest. As of June 30, 2002, the Partnership contributed approximately $897,200 and $942,500 for an 85.8% and a 90.5% interest, respectively, in these properties. In addition, in June 2002, Ashland Joint Venture, in which the Partnership has a 62.16% interest, sold its Burger King property in Ashland, New Hampshire to the tenant and received net sales proceeds of approximately $1,472,900, resulting in a gain of approximately $500,900. The Joint Venture reinvested in June 2002 the majority of the net sales proceeds from the sale of this Property in a Property in San Antonio, Texas. The Partnership acquired these properties from CNL Funding 2001-A, LP, a Delaware limited partnership and an affiliate of the general partners. CNL Funding 2001-A, LP had purchased and temporarily held title to the Properties in order to facilitate the acquisition of the Properties by the Partnership. The purchase prices paid by the Partnership represented the costs incurred by CNL Funding 2001-A, LP to acquire the Properties, including closing costs. The general partners believe that the transactions, or a portion thereof, relating to the sales of the Properties and the reinvestment of the proceeds will qualify as like-kind exchange transactions for federal income tax purposes. The Partnership anticipates that its distributions will be sufficient to enable the limited partners to pay federal and state income taxes, if any (at a level reasonably assumed by the general partners), resulting from the transactions. Currently, rental income from the Partnership's Properties and net sales proceeds held by the Partnership are invested in money market accounts or other short-term, highly liquid investments such as demand deposit accounts at commercial banks, money market accounts and certificates of deposit with less than a 90-day maturity date, pending the Partnership's use of such funds to pay Partnership expenses or to make distributions to the partners. At June 30, 2002, the Partnership had $1,478,518 invested in such short-term investments, as compared to $993,402 at December 31, 2001. The increase in cash and cash equivalents at June 30, 2002, as compared to December 31, 2001 was primarily attributable to the fact that the Partnership received payment of past due rents as described below in "Results of Operations." The funds remaining at June 30, 2002, after payment of distributions and other liabilities, will be used to meet the Partnership's working capital and other needs. Short-Term Liquidity The Partnership's short-term liquidity requirements consist primarily of the operating expenses of the Partnership. The Partnership's investment strategy of acquiring Properties for cash and leasing them under triple-net leases to operators who generally meet specified financial standards minimizes the Partnership's operating expenses. The general partners believe that the leases will continue to generate cash flow in excess of operating expenses. The general partners have the right, but not the obligation, to make additional capital contributions if they deem it appropriate in connection with the operations of the Partnership. The Partnership generally distributes cash from operations remaining after the payment of operating expenses of the Partnership, to the extent that the general partners determine that such funds are available for distribution. Based on current and anticipated future cash from operations, the Partnership declared distributions to limited partners of $1,750,012 for each of the six months ended June 30, 2002 and 2001 ($875,006 for each of the quarters ended June 30, 2002 and 2001). This represents distributions of $0.44 per unit for each of the six months ended June 30, 2002 and 2001 ($0.22 per unit for each applicable quarter). No distributions were made to the general partners for the six months ended June 30, 2002 and 2001. No amounts distributed to the limited partners for the six months ended June 30, 2002 and 2001 are required to be or have been treated by the Partnership as a return of capital for purposes of calculating the limited partners' return on their adjusted capital contributions. The Partnership intends to continue to make distributions of cash available for distribution to the limited partners on a quarterly basis. Total liabilities of the Partnership, including distributions payable, decreased to $990,540 at June 30, 2002 from $1,021,258 at December 31, 2001, primarily as a result of a decrease in real estate taxes payable at June 30, 2002, as compared to December 31, 2001. The general partners believe that the Partnership has sufficient cash on hand to meet its current working capital needs. Long-Term Liquidity The Partnership has no long-term debt or other long-term liquidity requirements. Results of Operations Total rental revenues were $1,734,848 for the six months ended June 30, 2002, as compared to $1,522,869 for the six months ended June 30, 2001, of which $935,261 and $776,349 were earned during the second quarter of 2002 and 2001, respectively. Rental revenues were lower during the quarter and six months ended June 30, 2001, as compared to the same period in 2002, due to the fact that Phoenix Restaurant Group, Inc. and its Subsidiaries (collectively referred to as "PRG"), the tenant of two Denny's Properties, experienced financial difficulties and ceased paying rent in 2001. As a result, the Partnership stopped recognizing rental revenues from the Properties in Avon, Colorado and Abilene, Texas, in accordance with the Partnership's revenue recognition policy. In October 2001, PRG filed for Chapter 11 bankruptcy protection. Since the bankruptcy filing, the tenant resumed paying rent. The Partnership received from PRG the rent payments relating to these Properties from the bankruptcy date through May, 2002. During May 2002, PRG assigned its leases to two new tenants. All other lease terms remained unchanged and are substantially the same as the Partnership's other leases. As a result of the assignment relating to the Property in Abilene, Texas, the Partnership collected from one of the new tenants $158,000 in past due rents which were reserved in 2001. The increase in rental revenues during the quarter and six months ended June 30, 2002, as compared to the same periods in 2001, was partially due to the acquisition of a Property in Houston, Texas in December 2001 with the majority of the net sales proceeds received from the sale of the Property in Sebring, Florida. The increase in rental revenues during the six months ended June 30, 2002, as compared to the same period in 2001, was partially offset by the fact that the Partnership provided a rent reduction of $16,500 to the tenant of the Property in Yelm, Washington. The Partnership does not anticipate that the rent reduction will have an adverse effect on the financial position of the Partnership. The increase in rental revenues during the quarter and six months ended June 30, 2002, was also partially offset by the fact that the tenant for the Properties in Oklahoma City, Oklahoma and McAllen, Texas exercised its lease option for a contingent rent reduction to be applied towards Property renovations. During the six months ended June 30, 2002 and 2001, the Partnership recognized income of $641,858 and a loss of $44,215, respectively, attributable to net operating results reported by unconsolidated joint ventures, of which income of $584,639 and a loss of $50,171 were reported during the quarters ended June 30, 2002 and 2001, respectively. Net operating results reported by joint ventures were lower during the six months ended June 30, 2001, as compared to the same period in 2002, due to the fact that PRG, the tenant of Corpus Christi, Texas, experienced financial difficulties and ceased paying rent in 2001. As a result, the Partnership and an affiliate of the general partners, as tenants-in-common, in which the Partnership owns an approximate 73% interest, stopped recording rental revenues in accordance with the Partnership's revenue recognition policy. Net operating results reported by joint ventures were also lower during the quarter and six months ended June 30, 2001, as compared to the same periods in 2002, due to the fact that the Partnership incurred Property related expenses such as, legal fees, insurance and real estate taxes relating this Property. In October 2001, PRG filed for Chapter 11 bankruptcy protection, as described above. Since the bankruptcy filing, the tenant resumed paying rent. The Partnership and the affiliate, as tenants-in-common, received from PRG the rent payments relating to this Property from the bankruptcy date through April, 2002. During April 2002, PRG assigned its lease to a new tenant, an affiliate of the general partners. All other lease terms remained unchanged and are substantially the same as the Partnership's other leases. As a result of the assignment relating to this Property, the Partnership collected from the new tenant $309,700 in past due rents which were reserved in 2002 and 2001. The Partnership and the affiliate, as tenants-in-common of this Property, recorded during the six months ended June 30, 2001 a provision for write-down of assets of approximately $55,700 in previously accrued rental income relating to this Property. The accrued rental income was the accumulated amount of non-cash accounting adjustments previously recorded in order to recognize future scheduled rent increases as income evenly over the term of the lease. The provision represented the difference between the carrying value of the Property and its fair value. The increase in net income earned by unconsolidated joint ventures during the quarter and six months ended June 30, 2002, as compared to the same period in 2001, was partially due to the fact that in June 2002, Ashland Joint Venture, in which the Partnership owns a 62.16% interest, sold its Property in Ashland, New Hampshire, to the tenant and recognized a gain of approximately $500,900, as described below. The increase in net income earned by unconsolidated joint ventures during the quarter and six months ended June 30, 2002 was also partially due to the fact that in June 2002, the Partnership invested in two Properties in Universal City and Schertz, Texas, each Property as a separate tenants-in-common arrangement with CNL Income Fund VI, Ltd., a Florida limited partnership and affiliate of the general partners. During the six months ended June 30, 2002 and 2001, the Partnership and its consolidated joint ventures earned $49,249 and $40,729, respectively, in interest and other income, of which $49,159 and $12,412 were earned during the quarters ended June 30, 2002 and 2001, respectively. The increase in interest and other income during the quarter and six months ended June 30, 2002 was due to the fact that the Partnership collected $29,800 in previously reserved reimbursable charges relating to the Property in Abilene, Texas, as described above. The increase in interest and other income during the six months ended June 30, 2002 was offset by a decrease in interest income attributable to the redemption of certificates of deposit held by the Partnership. Operating expenses, including depreciation and amortization expense and provision for write-down of assets, were $432,320 and $701,307 for the six months ended June 30, 2002 and 2001, respectively, of which $212,312 and $348,608 were incurred during the quarters ended June 30, 2002 and 2001, respectively. Operating expenses were higher during the quarter and six months ended June 30, 2001, as compared to the same period in 2002, due to the fact that the Partnership recorded provisions for write-down of assets in the amount of $61,588 in the quarter and six months ended June 30, 2001, relating to previously accrued rental income, for the Properties in Abilene, Texas and Avon, Colorado as a result of the financial difficulties PRG experienced, as described above. During the six months ended June 30, 2001, the Partnership also recorded a provision for write-down of assets of $43,949 in previously accrued rental income relating to the Property located in Sebring, Florida. The accrued rental income was the accumulated amount of non-cash accounting adjustments previously recorded in order to recognize future scheduled rent increases as income evenly over the term of the lease. The provisions represented the difference between the carrying value of the Properties and their fair value at June 30, 2001. The Partnership sold the Property in Sebring, Florida in November 2001, and PRG assigned the leases relating to the two Properties in May 2002. Operating expenses were also higher during the six months ended June 30, 2001, as compared to the same period in 2002, due to real estate taxes incurred in 2001 relating to the Property in Avon, Colorado. The tenant, PRG, experienced financial difficulties, as described above. During the six months ended June 30, 2002, the Partnership incurred lower administrative expenses for servicing the Partnership and its Properties. Effective January 1, 2002, the Partnership adopted Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement requires that a long-lived asset be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The assessment is based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value. If an impairment is recognized, the adjusted carrying amount of a long-lived asset is its new cost basis. The statement also requires that the results of operations of a component of an entity that either has been disposed of or is classified as held for sale be reported as a discontinued operation if the disposal activity was initiated subsequent to the adoption of the Standard. In June 2002, the Partnership sold its Burger King properties in Columbus, Ohio and East Detroit, Michigan, to the tenant resulting in a gain of approximately $442,100, as described above in "Capital Resources." In addition, the Partnership is negotiating two separate agreements to sell the properties in Highlands, California and Kent, Ohio. The Partnership expects to use the proceeds from the anticipated sales to reinvest in additional income producing Properties. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Partnership reclassified the assets relating to these Properties from land and building on operating leases, direct financing leases and accrued rental income to real estate held for sale. The Properties were recorded at the lower of their carrying amounts or fair value less cost to sell. The Partnership stopped recording depreciation and accrued rental income upon placing the Properties up for sale. The Partnership recognized net rental income (rental income relating to the Properties less Property related expenses) of $146,401 and $145,838 during the six months ended June 30, 2002 and 2001, respectively, of which $77,278 and $74,925 were earned during the quarters ended June 30, 2002 and 2001, respectively. The amounts were reported as Discontinued Operations in the financial statements. In June 2002, Ashland Joint Venture, in which the Partnership has a 62.16% interest, sold its Burger King property in Ashland, New Hampshire to the tenant and received net sales proceeds of approximately $1,472,900, resulting in a gain of approximately $500,900, as discussed above in "Capital Resources." Ashland Joint Venture recognized net rental income (rental revenues less Property related expenses) of $26,927 and $36,240 during the six months ended June 30, 2002 and 2001, respectively, of which $9,534 and $16,017 were earned during the quarters ended June 30, 2002 and 2001, respectively. The Partnership's pro-rata share of these amounts are included in equity in earnings of unconsolidated joint ventures in the accompanying financial statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. PART II. OTHER INFORMATION Item 1. Legal Proceedings. Inapplicable. Item 2. Changes in Securities. Inapplicable. Item 3. Defaults upon Senior Securities. Inapplicable. Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable. Item 5. Other Information. Inapplicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 3.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund XI, Ltd. (Included as Exhibit 3.2 to Registration Statement No. 33-43278 on Form S-11 and incorporated herein by reference.) 4.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund XI, Ltd. (Included Exhibit 3.2 to Registration Statement 33-43278 on Form S-11 and incorporated herein by reference.) 4.2 Amended and Restated Agreement of Limited Partnership of CNL Income Fund XI, Ltd. (Included as Exhibit 4.2 to Form 10-K filed with the Securities and Exchange Commission on April 15, 1993, and incorporated herein by reference.) 10.1 Management Agreement between CNL Income Fund XI, Ltd. and CNL Investment Company (Included as Exhibit 10.1 to Form 10-K filed with the Securities and Exchange Commission on April 15, 1993, and incorporated herein by reference.) 10.2 Assignment of Management Agreement from CNL Investment Company to CNL Fund Advisors, Inc. (Included as Exhibit 10.2 to Form 10-K filed with the Securities and Exchange Commission on March 30, 1995, and incorporated herein by reference.) 10.3 Assignment of Management Agreement from CNL Income Fund Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit 10.3 to Form 10-K filed with the Securities and Exchange Commission on April 1, 1996, and incorporated herein by reference.) 10.4 Assignment of Management Agreement from CNL Fund Advisors, Inc. to CNL APF Partners, LP (Included as Exhibit 10.4 to Form 10-Q filed with the Securities and Exchange Commission on August 14, 2001, and incorporated herein by reference.) 10.5 Assignment of Management Agreement from CNL APF Partners, LP to CNL Restaurants XVIII, Inc. (Filed herewith.) (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATED this 12th day of August, 2002. CNL INCOME FUND XI, LTD. By:CNL REALTY CORPORATION General Partner By:/s/ James M. Seneff, Jr. ------------------------------ JAMES M. SENEFF, JR. Chief Executive Officer (Principal Executive Officer) By:/s/ Robert A. Bourne ------------------------------ ROBERT A. BOURNE President and Treasurer (Principal Financial and Accounting Officer) CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF CORPORATE GENERAL PARTNER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, James M. Seneff, Jr., the Chief Executive Officer of CNL Realty Corporation, the corporate general partner of CNL Income Fund XI, Ltd. (the "Partnership"), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Partnership's Quarterly Report on Form 10-Q for the period ending June 30, 2002 (the "Report"). The undersigned hereby certifies that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. Date: August 12, 2002 /s/ James M. Seneff, Jr. ---------------------------- Name: James M. Seneff, Jr. Title: Chief Executive Officer CERTIFICATION OF CHIEF FINANCIAL OFFICER OF CORPORATE GENERAL PARTNER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, Robert A. Bourne, the President and Treasurer of CNL Realty Corporation, the corporate general partner of CNL Income Fund XI, Ltd. (the "Partnership"), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Partnership's Quarterly Report on Form 10-Q for the period ending June 30, 2002 (the "Report"). The undersigned hereby certifies that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. Date: August 12, 2002 /s/ Robert A. Bourne ------------------------------ Name: Robert A. Bourne Title: President and Treasurer EXHIBIT INDEX Exhibit Number 3.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund XI, Ltd. (Included as Exhibit 3.2 to Registration Statement No. 33-43278 on Form S-11 and incorporated herein by reference.) 4.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund XI, Ltd. (Included Exhibit 3.2 to Registration Statement 33-43278 on Form S-11 and incorporated herein by reference.) 4.2 Amended and Restated Agreement of Limited Partnership of CNL Income Fund XI, Ltd. (Included as Exhibit 4.2 to Form 10-K filed with the Securities and Exchange Commission on April 15, 1993, and incorporated herein by reference.) 10.1 Management Agreement between CNL Income Fund XI, Ltd. and CNL Investment Company (Included as Exhibit 10.1 to Form 10-K filed with the Securities and Exchange Commission on April 15, 1993, and incorporated herein by reference.) 10.2 Assignment of Management Agreement from CNL Investment Company to CNL Fund Advisors, Inc. (Included as Exhibit 10.2 to Form 10-K filed with the Securities and Exchange Commission on March 30, 1995, and incorporated herein by reference.) 10.3 Assignment of Management Agreement from CNL Income Fund Advisors, Inc. to CNL Fund Advisors, Inc. (Included as Exhibit 10.3 to Form 10-K filed with the Securities and Exchange Commission on April 1, 1996, and incorporated herein by reference.) 10.4 Assignment of Management Agreement from CNL Fund Advisors, Inc. to CNL APF Partners, LP (Included as Exhibit 10.4 to Form 10-Q filed with the Securities and Exchange Commission on August 14, 2001, and incorporated herein by reference.) 10.5 Assignment of Management Agreement from CNL APF Partners, LP to CNL Restaurants XVIII, Inc. (Filed herewith.) EXHIBIT 10.5

CNL INCOME FUND XI LTD 10-Q