SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994
Commission File Number 0-13473
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2830750
(State or other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
200 Berkeley Street, Boston, MA 02117
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (800) 722-5457
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of
Limited Partnership Interest
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 the 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, since securities are non-voting.
Documents incorporated by reference: None.
Exhibit Index on Pages 20-28
Page 1 of 51
TABLE OF CONTENTS
PART I
Item 1 Business 3
Item 2 Properties 6
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 Securities 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 8
Item 8 Financial Statements and Supplementary Data 14
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 14
PART III
Item 10 Directors and Executive Officers of the Partnership 15
Item 11 Executive Compensation 17
Item 12 Security Ownership of Certain Beneficial Owners
and Management 19
Item 13 Certain Relationships and Related Transactions 20
PART IV
Item 14 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 20
Signatures 29
2
Part I
Item 1 - Business
The Registrant, John Hancock Properties Limited Partnership (the
"Partnership"), is a Limited Partnership organized on May 17, 1984, under
the provisions of the Massachusetts Uniform Limited Partnership Act. As of
December 31, 1994, the partners in the Partnership consisted of a sole
Managing General Partner, John Hancock Realty Equities, Inc. (the "Managing
General Partner"), an Associate General Partner, JH Associates Limited
Partnership (the "Associate General Partner") and 2,048 Limited Partners
owning 21,954 Units of Limited Partnership Interests (the "Units"). The
Managing General Partner is the general partner of the Associate General
Partner. Two Broadway Associates III, an affiliate of Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), is the limited
partner of the Associate General Partner. The Managing General Partner and
the Associate General Partner are collectively referred to as the "General
Partners". The initial capital of the Partnership was $6,000, representing
capital contributions of $800 from the Managing General Partner, $200 from
the Associate General Partner and $5,000 from the initial Limited Partner
(a former director of the Managing General Partner). The Amended Agreement
of Limited Partnership of the Partnership (the "Partnership Agreement")
authorized the issuance of up to 35,000 Units at $1,000 per Unit. There
have been no changes in the number of Units outstanding subsequent to the
termination of the offering period.
The Units were offered and sold to the public during the period from
September 21, 1984 to August 31, 1985 pursuant to a Registration Statement
on Form S-11 under the Securities Act of 1933. The Partnership sold the
Units for $1,000 per Unit. No established public market exists on which
the Units may be traded.
The Partnership is engaged solely in the acquisition, operation and
disposition of investment real estate. The latest date on which the
Partnership is due to terminate is December 31, 2020, unless it is sooner
terminated in accordance with the terms of the Partnership Agreement. It
is expected that, in the ordinary course of the Partnership's business, the
properties of the Partnership will be disposed of, and the Partnership
terminated, before December 31, 2020. As initially stated in its
Prospectus, it was expected that the Partnership would be dissolved upon
the sale of its last remaining property, which at that time was expected to
be within five to eight years following the date such property was acquired
by the Partnership. As of December 31, 1994, and the date hereof, the
Partnership has two properties remaining in its portfolio; one of the
properties is currently listed for sale and the other property is expected
to be listed for sale in 1995. Upon the sale of the last remaining
property, the operations of the Partnership will terminate, and the
Partnership will be dissolved, in accordance with the terms of the
Partnership Agreement.
The Partnership's real estate investments have been subject to various risk
factors including the fact that certain of the investments in its portfolio
have not generated income sufficient to meet operating expenses and debt
service, and to fund adequate reserves for repair, replacements and
contingencies. The income received from the Partnership's properties have
been affected by many factors, including fluctuations in occupancy rates
and operating expenses and variations in rental rates, which in turn have
been adversely affected by general economic conditions and local
conditions, such as competitive over-building.
3
Item 1 - Business (continued)
Since its inception, the Partnership's liquidity has been adversely
affected by declining income and the level of expenditures required to fund
operating expenses. As a result, some of the properties in the
Partnership's portfolio were unable to generate sufficient cash flow to
meet both operating expenses and debt service obligations. Therefore, the
Partnership has had to utilize funds from other sources in order to protect
its investments and has had to dispose of certain properties at a loss.
The Partnership has not generated any Distributable Cash from Operations,
as defined in the Partnership Agreement, since its inception.
On February 28, 1985, the Partnership acquired the Delta Grove Apartments,
a 65-unit garden apartment complex located in Eugene, Oregon. Given the
cash flow constraints of the Partnership, the property's consistent and
favorable income performance and the relative strength of the Eugene real
estate market, the Partnership sold the Delta Grove Apartments on February
28, 1990 for a net sales price of $2,755,559 and retired the related
mortgage indebtedness of $1,472,218. The Partnership received net cash
proceeds of $1,283,341 from this sale. Of this amount, $852,913 was
distributed to the Limited Partners on June 27, 1990. The remaining funds
were used to retire outstanding debts and to pay operating expenses of the
Partnership.
On December 17, 1985, the Partnership acquired 300 Ramsey Place, an
office/warehouse complex located in San Antonio, Texas. Subsequently,
weakening market conditions in the San Antonio real estate market resulted
in the property's inability to generate sufficient cash to meet both
operating expenses and debt service obligations. In addition, the market
value of the property was estimated to be less than the outstanding balance
of the non-recourse mortgage. On November 7, 1990, the Partnership
conveyed the Ramsey Place office/warehouse to the mortgagee by a deed-in-
lieu of foreclosure in exchange for a release of the outstanding
indebtedness.
On August 9, 1984, the Partnership acquired the Waterford Apartments, a 256-
unit garden apartment complex located in Little Rock, Arkansas.
Subsequently, weakening market conditions in the Little Rock real estate
market resulted in the property's inability to generate sufficient cash to
meet both operating expenses and debt service requirements. During 1990,
the Partnership was unable to make the requisite mortgage payments on the
property, thereby placing the loan in default. In addition, the market
value of the property was estimated to be less than the outstanding balance
of the non-recourse mortgage. On August 9, 1991, the Partnership conveyed
the Waterford Apartments to the mortgagee by a deed-in-lieu of foreclosure
in exchange for a release of the outstanding indebtedness.
On September 24, 1984, the Partnership acquired the Huntington Park
Apartments, a 212-unit garden apartment complex located in Tucson, Arizona.
Subsequent to the Partnership's acquisition of the property, market
conditions weakened in the Tucson real estate market and resulted in the
property's inability to generate sufficient cash flow to meet both
operating expenses and debt service requirements. During 1990, the
Partnership was unable to make the requisite mortgage payments on the
property, thereby placing the loan in default. In March 1992, the
Partnership secured a reduced payoff amount from the mortgagee for the
related mortgage indebtedness and accrued interest thereon from $5,525,028
to $3,800,000. On March 31, 1992, the Partnership sold the Huntington Park
Apartments to a non-affiliated buyer for a net sales price of $4,072,442.
The Partnership received net cash proceeds of $272,442 from the sale and
extinguishment of the related mortgage indebtedness. These proceeds were
used in 1992 to pay operating expenses of the Partnership.
4
Item 1 - Business (continued)
On November 29, 1984, the Partnership acquired the Fisherman's Village
Apartments, a 280-unit garden apartment complex located in Orlando,
Florida. Real estate market conditions in the Orlando, Florida area have
recovered from the overbuilding of multi-family residential units which
occurred during the late 1980's and early 1990's. However, market
conditions remain competitive due to new construction of multi-family
housing units. Fisherman's Village Apartments was successful in increasing
occupancy levels during 1993 through the use of leasing incentives and
capital improvements made at the property. During 1994, Fisherman's
Village Apartments reduced the level of leasing incentives offered as
market conditions improved and occupancy stabilized. Due to current market
conditions and the stabilized operations of the property, the Managing
General Partner expects that the Fisherman's Village Apartments will be
listed for sale during 1995. The full amount of the mortgage loan on the
Fisherman's Village Apartments is due on November 1, 1995. At that time, a
balloon payment equal to the entire outstanding principal balance and
accrued but unpaid interest in the amount of $8,747,314 will be due. It is
anticipated that the Partnership will obtain the funds to pay off the
mortgage loan from the sale of the property. This property is also
discussed in Items 2 and 7 of this Report and Note 5 to the Financial
Statements included in Item 8 of this Report.
On February 28, 1985, the Partnership acquired the Northgreen Apartments, a
222-unit garden apartment complex located in Eugene, Oregon. Since early
1992, new apartment construction has declined in the Eugene, Oregon area,
where the Northgreen Apartments are located, and absorption of vacant units
has continued. With the gradual improvement in market conditions, the
property has sustained a stabilized occupancy rate and improved its income
and cash flow performance over recent years. Given these market conditions
and the current income performance of the property, the Managing General
Partner listed the Northgreen Apartments for sale during the second quarter
of 1994. Efforts to sell Northgreen are discussed in Item 7 of this
Report. This property is also discussed in Item 2 of this Report and Note
5 to the Financial Statements included in Item 8 of this Report.
As of December 31, 1993, the Partnership established a provision against
the entire outstanding balance of the note receivable relating to the
unconditional guaranty obligation for operating deficits granted by the
seller of the Waterford Apartments. The Managing General Partner believed,
based on information obtained with respect to the obligor's financial
condition, that it was probable that the Partnership would be unable to
collect all amounts due from the obligor according to the contractual terms
of the note. In June 1994, the obligor notified the Partnership that he
would be unable to pay both the outstanding balance of the note upon its
maturity on August 1, 1994 and the minimum monthly payments on the note.
As of December 31, 1994, and as of the date hereof, the obligor is in
default on the note for failure to pay the minimum required payments due
since June 1, 1994 and for failure to pay the outstanding balance of the
note, which was due on August 1, 1994. The Managing General Partner issued
a default notice to the obligor and demand for payment and filed a
complaint demanding full payment of the note. On December 7, 1994 the
Partnership received a summary judgment in response to the complaint filed
against the obligor in the amount of the note plus accrued interest thereon
in the aggregate amount of $305,489. As of the date hereof, the
Partnership has not received payment from the obligor and the Managing
General Partner continues to pursue collection of the judgment amount.
5
Item 1 - Business (continued)
Within the power accorded to the Managing General Partner under the terms
of the Partnership Agreement, the Managing General Partner contracted,
effective as of January 1, 1992, with Hancock Realty Investors Incorporated
("HRI"), a wholly-owned, indirect subsidiary of John Hancock Mutual Life
Insurance Company ("John Hancock"), to assist the Managing General Partner
in the performance of its management duties as enumerated in the
Partnership Agreement. Effective May 28, 1993, HRI subcontracted with John
Hancock to assist HRI in the performance of its duties as enumerated in the
January 1, 1992 contract. The Partnership has incurred no additional costs
or expenses as a result of these agreements. The Managing General Partner
is further described in Item 10 of this Report.
Industry segment information has not been provided since the Partnership is
engaged in only one industry segment.
Item 2 - Properties
As of December 31, 1994, the Partnership held the following two properties
in its portfolio:
The Fisherman's Village Apartments
----------------------------------
On November 29, 1984, the Partnership purchased the Fisherman's Village
Apartments, located in Orlando, Florida, from a non-affiliated seller. The
property, completed in 1984, is located on approximately 24.4 acres of land
and consists of 26 two-story stucco buildings containing 280 rental units,
a clubhouse and an office. The average occupancy rate at the Fisherman's
Village Apartments for the year ended December 31, 1994 was 94%. See Note
6 to the Financial Statements for a discussion of the status of the non-
recourse mortgage indebtedness relating to this property.
The Northgreen Apartments
-------------------------
On February 28, 1985, the Partnership purchased the Northgreen Apartments,
located in Eugene, Oregon, from a non-affiliated seller. The property,
completed in 1978, is located on 12.5 acres of land and consists of 22
two-story wood frame buildings containing a total of 222 rental units. The
average occupancy rate at the Northgreen Apartments for the year ended
December 31, 1994 was 96%. See Note 6 to the Financial Statements included
in Item 8 of this Report for a discussion of the status of the non-recourse
mortgage indebtedness relating to this property.
Both of these properties are further described in Item 7 of this Report.
Item 3 - Legal Proceedings
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business of the Partnership, to which
the Partnership is a party or to which any of its properties is subject.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders of the Partnership
during the fourth quarter of 1994.
6
Part II
Item 5 - Market for the Partnership's Securities and Related Security
Holder Matters
(a) Market Information
The Partnership's outstanding securities consist of 21,954 Units originally
sold for $1,000 per Unit. The Units were offered and sold to the public
during the period from September 21, 1984 to August 31, 1985. No
established public market exists on which the Units may be traded.
Consequently, holders of Units may not be able to liquidate their
investments in the event of an emergency, or for any other reason.
Additionally, the assignment or other transfer of Units would be subject to
compliance with the minimum investment and suitability standards imposed by
the Partnership or by applicable law, including state "Blue Sky" laws.
(b) Number of Security Holders
Number of
Record holders Number of Units
as of outstanding as of
Title of Class December 31, 1994 December 31, 1994
-------------- ----------------- -----------------
Units of Limited
Partnership Interests 2,048 21,954
(c) Dividend History and Restrictions
Since its inception, the Partnership has not generated any Distributable
Cash from Operations, as defined in the Partnership Agreement. Unfavorable
economic conditions, caused by excess supply and weak absorption in the
real estate markets in which the Partnership has invested, have adversely
affected the Partnership's income and cash flows. Based on current
information, it is not anticipated that the Partnership will generate any
Distributable Cash from Operations during 1995 and, accordingly, it is not
anticipated that the Partnership will make any cash distributions from
operations during that period. For a further discussion on the financial
condition and results of operations of the Partnership, see Item 7 of this
Report.
7
Item 6 - Selected Financial Data
The following table sets forth selected financial information regarding the
Partnership's financial position and operating results during the five year
period ended December 31, 1994. This information should be read in
conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations, and the related Financial Statements
and Notes thereto, which are included in Items 7 and 8, respectively, of
this Report.
Years Ended December 31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Rental income $3,190,235 $3,037,508 $3,123,523 $4,395,970 $5,201,731
Interest income 30,141 48,383 50,168 49,463 90,105
Net loss before
extraordinary items (43,962) (667,686) (2,559,497) (1,464,817) (988,779)
Net loss before
extraordinary items per
Limited Partnership Unit (1.98) (30.11) (115.42) (66.05) (44.59)
Extraordinary gain/(loss) - - 1,725,028 1,408,255 (1,392,125)
Extraordinary gain/(loss) per
Limited Partnership Unit - - 77.79 63.50 (62.78)
Net loss (43,962) (667,686) (834,469) (56,562) (2,380,904)
Net loss per Limited
Partnership Unit (1.98) (30.11) (37.63) (2.55) (107.37)
Ordinary tax income/(loss) (234,211) (491,166) 788,045 1,689,069 (3,055,711)
Ordinary tax income/(loss) per
Limited Partnership Unit (10.56) (22.15) 35.54 76.17 (137.80)
Cash and cash equivalents 578,996 444,021 304,288 169,822 193,408
Total assets 15,048,648 15,580,544 16,374,987 22,731,022 31,597,544
Long-term debt 13,416,019 13,602,666 13,768,955 19,043,513 27,767,290
Distributable Cash from
Operations - - - - -
Distributable Cash from
Sales or Refinancings - - - - 852,913
Cash distribution per Unit from
Distributable Cash from Sales
or Refinancings - - - - 38.85
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
-------
During the offering period (from September 21, 1984 to August 31, 1985),
the Partnership sold 21,954 Units representing gross proceeds of
$21,954,000. The proceeds of the offering were used to acquire investment
properties, fund reserves, and pay acquisition fees, management fees, and
organizational and offering expenses. The Partnership's investment
properties are described in greater detail in Items 1 and 2, and Notes 5
and 6 to the Financial Statements included in Item 8 of this Report.
8
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources
-------------------------------
As of December 31, 1994, the Partnership had $578,996 in cash and cash
equivalents and $417,985 in restricted cash, which represents tenants'
security deposits, property tax escrows and other escrows. Since the
Partnership's inception, Adjusted Cash from Operations (as defined in the
Partnership Agreement) has been insufficient to provide the Limited
Partners with cash distributions from the Partnership. Based on current
information, the Managing General Partner does not anticipate that Adjusted
Cash from Operations will be sufficient to provide the Limited Partners
with any cash distributions during 1995. The Partnership's liquidity has
been adversely affected by declining income and the level of expenditures
needed to restore and maintain its properties. These factors have had a
significant impact on the Partnership's ability to generate cash. Due to
these cash flow constraints, since 1989 the Partnership has been unable to
repay the $1,000,000 principal balance on the short-term loan made by the
Managing General Partner to the Partnership without the Managing General
Partner each year making a new short-term loan to the Partnership in the
outstanding principal amount of $1,000,000. The Managing General Partner
also made short-term advances to the Partnership in order to cover
operating expenses which could not be paid from the operating cash flow of
the Partnership. In addition, during 1991 and 1992, payments to the
Managing General Partner towards reimbursement for general and
administrative expenses incurred on behalf of the Partnership and interest
on these annual short-term loans were not made in order for the Partnership
to meet its working capital needs. During the years ended December 31,
1993 and 1994 the Partnership no longer deferred the reimbursement of such
expenses and during the year ended December 31, 1994 the Partnership began
making payments towards the deferred amounts.
The Partnership paid an aggregate of $453,853 and $116,421 to the Managing
General Partner during the years ended December 31, 1994 and 1993,
respectively, as reimbursement for the full amount of the short-term
advances and towards the outstanding balance of interest expense and
general and administrative expenses incurred on behalf of the Partnership.
To the extent that the Partnership generates sufficient funds from
operations and sales of investment real estate in future periods, the
Partnership will continue to make payments to the Managing General Partner
towards interest expense and general and administrative expenses as well as
the outstanding principal balance of the short-term loan. As of December
31, 1994, the cumulative total of the short-term loan and deferred amounts
due is $1,268,538 and is described further in Note 4 to the Financial
Statements included in Item 8 of this Report. In the event that the
Partnership is unable to generate cash sufficient to satisfy its liquidity
requirements, additional funds will be obtained through the sale or
refinancing of the Partnership's investments.
9
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources (continued)
-------------------------------
As of December 31, 1993, the Partnership established a reserve against the
entire outstanding balance of the note receivable relating to the
unconditional guaranty obligation for operating deficits granted by the
seller of the Waterford Apartments. The Managing General Partner believed,
based on information obtained with respect to the obligor's financial
condition, that it was probable that the Partnership would be unable to
collect all amounts due from the obligor according to the contractual terms
of the note. Accordingly, the Partnership established a provision against
the entire outstanding balance of the note in the amount of $298,058. The
provision has since been reduced by $13,903 as a result of payments made by
the obligor. In June 1994, the obligor notified the Partnership that he
would be unable to pay both the outstanding balance of the note upon its
maturity on August 1, 1994 and the minimum monthly payments on the note.
As of December 31, 1994, and as of the date hereof, the obligor is in
default on the note for failure to pay the minimum required payments due
since June 1, 1994 and for failure to pay the outstanding balance of the
note, which was due on August 1, 1994. The Managing General Partner issued
a default notice to the obligor and demand for payment and filed a
complaint demanding full payment of the note. On December 7, 1994 the
Partnership received a summary judgment in response to the complaint filed
against the obligor in the amount of the note plus accrued interest
thereon. As of the date hereof, the Partnership has not received payment
from the obligor and the Managing General Partner continues to pursue
collection of the judgment amount.
During 1994, the Partnership made $186,647 of principal payments on its
long-term mortgage debt. A balloon payment equal to the entire outstanding
principal balance and all accrued but unpaid interest on the Fisherman's
Village Apartments' mortgage loan in the amount of $8,747,314 will be due
on November 1, 1995. It is anticipated that the Partnership will obtain
the funds necessary to repay such amount at maturity through either a sale
of the property or through short-term loans.
Real estate market conditions in the Orlando, Florida area, where the
Fisherman's Village Apartments are located, have recovered from the
overbuilding of multi-family residential units which occurred during the
late 1980's and early 1990's. However, real estate market conditions
remain competitive due to the construction of new multi-family housing
units. Fisherman's Village Apartments was successful in increasing
occupancy levels during 1993 through the use of leasing incentives and
capital improvements made during that year at the property. During 1994,
Fisherman's Village Apartments reduced the level of leasing incentives
offered as market conditions improved and occupancy stabilized. Due to
current market conditions and the stabilized operations of the property,
the Managing General Partner expects that the Fisherman's Village
Apartments will be listed for sale during 1995.
Since early 1992, new apartment construction has declined in the Eugene,
Oregon area, where the Northgreen Apartments are located, and absorption of
vacant units has continued. With the gradual improvement in market
conditions in Eugene Oregon, the property has sustained a stabilized
occupancy rate and improved its income performance over recent years.
Given these market conditions and the current income performance of the
property, the Managing General Partner listed the Northgreen Apartments for
sale during the second quarter of 1994.
10
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources (continued)
-------------------------------
On September 6, 1994, the Managing General Partner entered into a Purchase
and Sale Agreement on behalf of the Partnership (the "First Agreement") for
the sale of the Northgreen Apartments property to a non-affiliated buyer
for a gross sales price of $8,950,000. However, the prospective buyer
exercised its right to terminate the First Agreement and to terminate the
proposed transaction prior to the scheduled date of sale. Accordingly, the
Managing General Partner resumed its efforts to locate another buyer for
the property.
On November 4, 1994, the Managing General Partner entered into a second
Purchase and Sale Agreement on behalf of the Partnership (the "Second
Agreement") for the sale of the Northgreen Apartments property to another
non-affiliated buyer for a gross sales price of $8,950,000. However, the
prospective buyer exercised its right to terminate the Second Agreement and
to terminate the proposed transaction prior to the scheduled date of sale.
Accordingly, the Managing General Partner resumed its efforts to locate
another buyer for the property.
Effective March 13, 1995, the Managing General Partner entered into a third
Purchase and Sale Agreement on behalf of the Partnership (the "Third
Agreement") for the sale of the Northgreen Apartments property to another
non-affiliated buyer for a gross sales price of $9,200,000. The sale is
subject to certain conditions which, if not satisfied prior to the
scheduled date of sale, may result in the termination of the Third
Agreement. If this potential transaction does not result in the sale of
the property, then the Managing General Partner will resume its efforts to
locate another buyer for the Northgreen Apartments.
Upon the sale of the Partnership's last remaining property, the operations
of the Partnership will terminate, and the Partnership will be dissolved,
in accordance with the terms of the Partnership Agreement.
During the second quarter of 1994, the Managing General Partner had the
Fisherman's Village Apartments property independently appraised. Based
upon the appraiser's investigation and analysis, the property's market
value was estimated to be approximately $10,750,000, compared to the
Partnership's cumulative investment in the property of approximately
$13,463,000. The net book value of the Fisherman's Village Apartments
property in the amount of $8,937,371 at December 31, 1994 was evaluated in
comparison to the estimated future undiscounted cash flows and the
independent appraisal and, based upon such evaluation, the Managing General
Partner determined that no permanent impairment in value exists and that a
write-down in value is not required as of December 31, 1994.
The Managing General Partner also evaluated the carrying value of the
Northgreen Apartments as of December 31, 1994 by comparing it to the future
undiscounted cash flows and a recent internal appraisal. Based on such
evaluation, the Managing General Partner determined that no permanent
impairment in value exists and that no write-down in value is required.
The Managing General Partner will continue to conduct property valuations
on an on-going basis, using internal or independent appraisals, in order to
determine whether future write-downs, if any, are required.
No capital expenditures were made during 1994, and the Partnership does not
anticipate incurring any significant capital expenditures during 1995.
11
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations
---------------------
The net loss for the year ended December 31, 1994 was $43,962 as compared
to a net loss of $667,686 in 1993 and a net loss of $834,469 in 1992.
Included in the 1993 results is an allowance for the doubtful collection of
the note receivable relating to the unconditional guaranty obligation
granted by the seller of the Waterford Apartments in the amount of
$298,058. Included in the 1992 results is a loss on the sale of the
Huntington Park Apartments of $1,721,075 and an extraordinary gain on the
extinguishment of the related mortgage indebtedness in the amount of
$1,725,028.
Average occupancy for the Partnership's properties was as follows:
Years ended December 31,
1994 1993 1992
---- ---- ----
Fisherman's Village Apartments 94% 94% 89%
Northgreen Apartments 96% 94% 95%
Rental income for the year ended December 31, 1994 increased by $152,727,
or 5%, as compared to 1993 and $66,712, or 2%, as compared to 1992. Rental
income at the Fisherman's Village Apartments increased by approximately 5%
and 14% during 1994 as compared to 1993 and 1992, respectively, primarily
due to an increase in rental rates and a decrease in rental concessions
offered at the property. In addition, an increase in average occupancy at
Fisherman's Village from 89% in 1992 to 94% in 1994 also contributed to the
increase in rental income between periods. Rental income at the Northgreen
Apartments increased by approximately 5% and 7% during 1994 as compared to
1993 and 1992, respectively, primarily due to increases in rental rates.
Included in rental income for 1992 is approximately $235,000 from the
Huntington Park Apartments, which were sold on March 31, 1992.
Interest income for the year ended December 31, 1994 decreased by $18,242,
or 38%, as compared to 1993, and by $20,027, or 40%, as compared to 1992.
These decreases were primarily due to the fact that as of December 31,
1993, the Partnership established a provision, reflected in the
Partnership's Balance Sheets, against the entire outstanding balance of the
note receivable from the seller of the Waterford Apartments. As such, the
interest payments received on the note during the year ended December 31,
1994 have been included as a recovery against the loss recorded in 1993.
The decreases in interest income were partially offset by an increase in
the Partnership's cash and cash equivalents and the interest earned on such
amounts.
Interest expense decreased in 1994 by $50,901, or 4%, as compared to 1993,
and by $531,721, or 32%, as compared to 1992. Interest expense at the
Fisherman's Village Apartments for the year ended December 31, 1994 was
consistent with that incurred during 1993 and decreased by approximately
33% as compared to 1992 due to a reduction in the interest rate on the
mortgage loan from 11.5% to 7.39%, effective November 1992. Interest
expense at the Northgreen Apartments decreased by approximately 10% and 13%
during 1994 as compared to 1993 and 1992, respectively, as a result of the
interest rate reduction on the mortgage loan from 9.75% to 8.75%, effective
October 1993. Included in interest expense in 1992 is approximately
$130,000 relating to interest payments made with respect to the mortgage
loan on the Huntington Park Apartments, which were sold during that year.
12
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations (continued)
---------------------
Property operating expenses in 1994 decreased by $105,077, or 7%, as
compared to 1993 and by $105,599, or 7%, as compared to 1992. Property
operating expenses at the Fisherman's Village Apartments decreased in 1994
by approximately 6% as compared to 1993 due to a decrease in maintenance
and repair expenses incurred at the property. During the year ended
December 31, 1993, a significant amount of maintenance and repair costs
were incurred at the Fisherman's Village Apartments in order to maintain
the property's occupancy rate and its competitive position within the
Orlando market. Fisherman's Village continued to incur such maintenance
and repair costs during 1994, although at a reduced level as compared to
1993. Property operating expenses at the Fisherman's Village Apartments
increased by approximately 11% in 1994 as compared to 1992 due to an
increase in maintenance and repair expenses as described above. This
increase from 1992 was partially offset by a decrease in real estate taxes.
Property operating expenses at the Northgreen Apartments decreased in 1994
by approximately 9% and 12% as compared to 1993 and 1992, respectively.
These decreases were due to decreases in maintenance and repair expenses
and real estate taxes incurred at the property. In addition, the local
governmental authorities changed their method of assessing water and sewer
charges in 1994 resulting in a decrease in such expenses at the Northgreen
Apartments. Included in property operating expenses for 1992 is
approximately $116,000 of expenses incurred at the Huntington Park
Apartments, which were sold during that year.
Depreciation decreased in 1994 by $21,447, or 3%, as compared to 1993 and
$94,888, or 13%, as compared to 1992. This decrease in 1994 as compared to
1992 is primarily due to the disposition of the Huntington Park Apartments.
The provision for/(recovery of) uncollectible note receivable during 1993
reflects the Managing General Partner's decision to establish an allowance
against the then entire outstanding balance of the note receivable of
$298,058 as of December 31, 1993, relating to the unconditional guaranty
obligation granted by the seller of the Waterford Apartments. Based on the
obligor's financial condition at December 31, 1993, the Managing General
Partner believed that it was probable that the Partnership would not
collect all amounts due according to the contractual terms of the note.
During 1994, the Partnership received payments on the note totaling
$13,903. However, the obligor is in default on the note for failure to
make the minimum required payments due since June 1, 1994 and for failure
to pay the outstanding balance of the note, which was due on August 1,
1994. (This note receivable is also discussed in Note 7 to the Financial
Statements included in Item 8 of this Report.)
The Managing General Partner believes that inflation has had no significant
impact on the Partnership during the last three fiscal years and the
Managing General Partner anticipates that inflation will not have a
significant impact during 1995.
13
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Cash Flow
---------
The following table provides the calculations of Adjusted Cash from
Operations and Distributable Cash from Operations for the five year period
ended December 31, 1994, which are calculated in accordance with Section 17
of the Partnership Agreement:
Years Ended December 31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Net cash provided by/(used in)
operating activities (a) $321,622 $306,022 ($32,208) ($249,570) ($29,998)
Net change in operating assets
and liabilities (a) 258,777 (29,842) (86,965) (604,908) (317,052)
-------- -------- ------- -------- --------
Cash provided by/(used in)
operations (a) 580,399 276,180 (119,173) (355,338) (347,050)
Principal payments on long-term debt
(exclusive of payments for
retirement of debt) (186,647) (166,289) (105,768) (80,619) (251,877)
-------- -------- ------- -------- --------
Cash provided by/(used in) operations,
as adjusted 393,752 109,891 (224,941) (435,957) (598,927)
Increase in working capital reserves (393,752) (109,891) - - -
-------- -------- ------- -------- --------
Adjusted Cash from Operations (b) - - (224,941) (435,957) (598,927)
Decrease in working capital reserves - - 224,941 435,957 598,927
-------- -------- ------- -------- --------
Distributable Cash from Operations (b) $- $- $- $- $-
======== ======== ======= ======== ========
(a) Net cash provided by/(used in) operating activities, net change in
operating assets and liabilities, and cash provided by/(used in)
operations are as calculated in the Statements of Cash Flows included
in Item 8 of this Report.
(b) As defined in the Partnership Agreement. Distributable Cash from
Operations should not be considered as an alternative to net income
(i.e. not an indicator of performance) or to reflect cash flows or
availability of discretionary funds.
Item 8 - Financial Statements and Supplementary Data
The response to this Item appears beginning on page F-1 of this Report.
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
No events requiring disclosure under this Item have occurred.
14
Part III
Item 10 - Directors and Executive Officers of the Partnership
(a-b) Identification of Directors and Executive Officers
By virtue of its organization as a Limited Partnership, the Partnership has
no directors and executive officers. As indicated in Item 1 of this
Report, the Managing General Partner of the Partnership is John Hancock
Realty Equities, Inc., a Delaware corporation. Pursuant to terms of the
Partnership Agreement, the Managing General Partner is solely responsible
for the management of the Partnership's business. The names and ages of
the directors and executive officers of the Managing General Partner are as
follows:
Name Title Age
---- ----- ---
William M. Fitzgerald President and Director 51
Malcolm G. Pittman, III Director 43
Susan M. Shephard Director 42
Richard E. Frank Treasurer (Chief Accounting
Officer) 33
(c) Identification of certain significant persons
The Managing General Partner is responsible for the identification,
analysis, purchase, operation, and disposal of specific Partnership real
estate investments. The Managing General Partner has established a Real
Estate Investment Committee utilizing senior real estate personnel of John
Hancock and its Affiliates to review each proposed investment. The members
of the Real Estate Investment Committee are designated each year at the
annual meeting of the Board of Directors of John Hancock Realty Equities,
Inc. and are as follows:
Name Title Age
---- ----- ---
Edward P. Dowd Senior Vice President of 52
John Hancock's Real Estate
Investment Group
Kevin McGuire Vice President of John Hancock's 48
Real Estate Investment Group,
President of John Hancock Realty
Services Corp. and subsidiaries
(d) Family relationships
There exist no family relationships among any of the foregoing directors or
officers of the Managing General Partner.
15
Item 10 - Directors and Executive Officers of the Partnership (continued)
(e) Business experience
William M. Fitzgerald (age 51), joined John Hancock in 1968. He has been
President and a Director of the Managing General Partner, and a Senior
Investment Officer of John Hancock, since June 1993 and a Managing Director
of Hancock Realty Investors Incorporated since November 1991. His term as
a Director of the Managing General Partner expires in May 1995. From 1987
to 1991, Mr. Fitzgerald was a Senior Vice President of John Hancock
Properties, Inc. Prior to that time, he held a number of positions
including Senior Real Estate Management Officer and Real Estate Management
Officer of John Hancock. He holds an M.B.A. from Boston University and a
B.A. from Boston College.
Malcolm G. Pittman (age 43), joined John Hancock in 1986 as an Assistant
Counsel. He has been a Director of the Managing General Partner since
November 1991. His term as a Director of the Managing General Partner
expires in May 1995. Mr. Pittman has been Counsel of John Hancock's
Mortgage and Real Estate Law Division since 1993. From 1989 to 1993, he
was an Associate Counsel of John Hancock. He holds a J.D. from Yale Law
School and a B.A. from Oberlin College.
Susan M. Shephard (age 42), joined John Hancock in 1985 as an Attorney.
She has been a Director of the Managing General Partner since November
1991. Her term as a Director of the Managing General Partner expires in
May 1995. Ms. Shephard has been a Mortgage Investment Officer of John
Hancock since 1991. From 1988 to 1991, she was an Associate Counsel of
John Hancock and from 1987 to 1988, she was an Assistant Counsel of John
Hancock. She holds a J.D. from Georgetown University Law Center and a B.A.
from the University of Rhode Island.
Richard E. Frank (age 33), joined John Hancock in 1983. He has been
Treasurer of the Managing General Partner and a Senior Financial
Administrator of John Hancock since June 1993. From 1991 to 1993, Mr.
Frank was an Associate of Hancock Realty Investors Incorporated; from 1990
to 1991, he held the position of Assistant Treasurer of John Hancock Realty
Services Corp.; and from 1987 to 1990, he was a Senior Accountant of John
Hancock Realty Services Corp.. He holds a B.S. from Stonehill College.
Edward P. Dowd (age 52), joined John Hancock in 1970. He has been a
Director of Hancock Realty Investors, Incorporated since 1991, and a
Director of John Hancock Realty Services Corp. and subsidiaries and John
Hancock Property Investors Corp. since 1987. Mr. Dowd has been a Senior
Vice President of John Hancock since 1991. From 1989 to 1990, he was a
Vice President of John Hancock and from 1986 to 1989, he was a Second Vice
President of John Hancock. Prior to that time, he held a number of
positions including Senior Real Estate Investment Officer and Real Estate
Investment Officer of John Hancock. From July 1982 to May 1986, Mr. Dowd
was President of the Managing General Partner. He holds an A.B. from
Boston College.
Kevin McGuire (age 48), joined John Hancock in 1968. He has been a Vice
President of John Hancock since June 1993 and President of John Hancock
Realty Services Corp. and subsidiaries since July 1993. He has been a
Managing Director and a Director of Hancock Realty Investors Incorporated
since 1991, and a Director of John Hancock Property Investors Corp. since
1987. Mr. McGuire served as an interim basis President of the Managing
General Partner from May 1991 to November 1991 and was President of John
Hancock Properties, Inc. from 1987 to 1991. Prior to that time, he held a
number of positions including Second Vice President, Senior Real Estate
Investment Officer and Real Estate Investment Officer of John Hancock. He
holds an M.B.A. from Babson College and a B.A. from Boston College.
16
Item 10 - Directors and Executive Officers of the Partnership (continued)
(f) Involvement in certain legal proceedings
None
Compliance with Section 16(a) of the Exchange Act
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Managing General Partner's directors and executive officers, as well as any
person holding more than ten percent of the Units, are required to report
their initial ownership of Units and any subsequent change in such
ownership to the Securities and Exchange Commission and the Partnership
(such requirements hereinafter referred to as "Section 16(a) filing
requirements"). Specific time deadlines for Section 16(a) filing
requirements have been established.
To the Partnership's knowledge, no officer or director of the Managing
General Partner has an ownership interest in the Partnership and no person
holds more than 10% of the Units.
Item 11 - Executive Compensation
None of the officers or directors of the Managing General Partner or any of
the Real Estate Investment Committee members referred to in Item 10(c)
receives any current direct remuneration in their capacities as officers,
directors or Real Estate Investment Committee members, pursuant to any
standard arrangements or otherwise, from the Partnership nor is any such
remuneration currently proposed. In addition, the Partnership has not
given and does not propose to give any options, warrants or rights,
including stock appreciation rights, to any such person. No long-term
incentive plan exists with such persons and no remuneration plan or
arrangement exists with such persons resulting from his/her resignation,
retirement or any other termination. Therefore, tables relating to these
topics have been omitted.
For its activities occurring during the offering period, which terminated
on August 31, 1985, the General Partners and/or their Affiliates, as
defined in the Partnership Agreement, received reimbursement for certain
organizational, offering, and acquisition expenses, and received certain
acquisition and initial management fees, in accordance with the terms of
the Partnership Agreement.
In accordance with the terms of the Partnership Agreement, the General
Partners and/or their Affiliates, as defined in the Partnership Agreement,
are entitled to the following types of compensation, fees,
profits/(losses), expense reimbursements and distributions:
An Affiliate of the Managing General Partner is entitled to receive a
Property Management Fee for providing property management services for
Partnership properties. The Partnership is obligated to pay a fee equal to
the amount customarily charged in arm's-length transactions by third
parties rendering comparable services for comparable properties in the
localities where such properties are located but in no event may such fee
exceed 6% of the gross receipts of the property under management. No
Affiliate of the Managing General Partner is providing, nor has provided,
property management services to the Partnership. Therefore, the
Partnership did not pay any such fees during 1994, 1993 and 1992.
17
Item 11 - Executive Compensation (continued)
The General Partners and their Affiliates are also entitled to
Reimbursement for Expenses relating to the administrative services
necessary to the prudent operation of the Partnership, such as legal,
accounting, computer, transfer agent and other services. The amounts
charged to the Partnership for such administrative services may not exceed
the lesser of the General Partners' or such Affiliates' costs or 90% of
those which the Partnership would be required to pay to independent parties
for comparable services in the same geographic area. The Partnership
incurred $79,420, $78,390 and $86,826 of such expenses during the years
ended December 31, 1994, 1993 and 1992, respectively. For the years ended
December 31, 1992 and 1991, no such reimbursements were paid by the
Partnership in order to enable it to meet its working capital needs.
Upon the disposition of any property, the General Partners are entitled to
a Subordinated Real Estate Commission (as defined in the Partnership
Agreement) for rendering substantial services in connection with the sale
of such property in the amount of 3% of the sales price of such property.
However, no such Subordinated Real Estate Commission may be paid until all
Limited Partners first have received a return of their total Invested
Capital plus any previously unpaid cumulative return on investment of 7%
per annum as defined in Section 8.2 of the Partnership Agreement. The
Partnership has never paid any such Subordinated Real Estate Commission.
A Share of the Partnership's Distributable Cash from Operations (as defined
in the Partnership Agreement) is distributable to the General Partners.
Distributable Cash from Operations is distributable in accordance with
Section 8 of the Partnership Agreement (as described more fully in Note 3
to the Financial Statements included in Item 8 of this Report) . The
Partnership has not generated any Distributable Cash from Operations since
its inception and, as such, the General Partners have not received any such
distributions.
A Share of Cash from Sales or Refinancings (as defined in the Partnership
Agreement) may be distributed to the General Partners. Cash from Sales or
Refinancings is distributable in accordance with Section 8 of the
Partnership Agreement (as described more fully in Note 3 to the Financial
Statements included in Item 8 of this Report). In accordance with the
Partnership Agreement, the General Partners were not entitled to receive
any such distributions during 1994, 1993 and 1992.
A Share of the Partnership's Profits or Losses for Tax Purposes (as defined
in the Partnership Agreement) is allocable to the General Partners. Such
allocation generally approximates, insofar as practicable, their percentage
share of Distributable Cash from Operations and of Cash from Sales or
Refinancings. The General Partners are generally allocated 1% of
Partnership Losses for tax purposes. The General Partners' Share of such
Profits and Losses were losses in the amount of $2,342, $4,912 and $7,880
during the years ended December 31, 1994, 1993 and 1992, respectively.
18
Item 11 - Executive Compensation (continued)
This table reflects all compensation, fees, profits/(losses), expense
reimbursements and distributions from the Partnership to the General
Partners and their Affiliates:
1994 1993 1992
---- ---- ----
Operating Expenses (a) $79,420 $78,390 $86,826
General Partners' Share of Losses (2,342) (4,912) (7,880)
(a) Represents amounts incurred for the years ending December 31,
1994, 1993 and 1992. During the years ended December 31, 1992 and
1991 the Partnership deferred the payment of expense reimbursements
in order to meet its working capital needs. During the years ended
December 31, 1993 and 1994, the Partnership no longer deferred such
payments and during the year ended December 31, 1994 the Partnership
began to make payments towards these deferred amounts. As a result,
amounts paid to the General Partners and their Affiliates during the
years ended December 31, 1994, 1993 and 1992 do not reflect the
amounts incurred during each period.
Compensation Committee Interlocks and Insider Participation:
The Partnership did not have a Compensation Committee in 1994 and does not
currently have such a committee. No current or former officer or employee
of the Managing General Partner or its Affiliates participated during the
1994 fiscal year in deliberations regarding the Managing General Partner's
compensation as it relates to the Partnership.
Item 12 - Security Ownership of Certain Beneficial Owners and Management
By virtue of its organization as a limited partnership, the Partnership has
no outstanding securities with traditional voting rights. However, as
provided in Section 13.1 of the Partnership Agreement, 10% or more in
interest of the Limited Partners may request that the Managing General
Partner call a meeting of the Limited Partners, or request a vote by
written consent without a meeting, as to any matter set forth in Section
13.2, which section provides that a majority in interest of the Limited
Partners, without the concurrence of the General Partners and subject to
certain conditions set forth in Section 13.3 of the Partnership Agreement,
may:
(1) Amend the Partnership Agreement;
(2) Dissolve the Partnership;
(3) Remove any General Partner and elect a replacement therefor; and
(4) Approve or disapprove the sale of all or substantially all the assets
of the Partnership.
a) Security ownership of certain beneficial owners
No person or group, including the General Partners, is known to own
beneficially more than 5% of the Partnership's 21,954 outstanding Units
as of December 31, 1994.
19
Item 12 - Security Ownership of Certain Beneficial Owners and Management
(continued)
b) Security ownership of management
By virtue of its organization as a limited partnership, the Partnership
has no officers or directors. Neither the Managing General Partner nor
any officer or director of the Managing General Partner possesses the
right to acquire a beneficial ownership of Units.
c) Changes in control
The Partnership does not know of any arrangements the operations of
which may at a subsequent date result in a change in control of the
Partnership.
Item 13 - Certain Relationships and Related Transactions
See Note 4 of the Notes to Financial Statements included in Item 8 of this
Report for a description of certain transactions and related amounts paid
by the Partnership to the General Partners and their Affiliates during
1994, 1993 and 1992.
Part IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) and (2) - Listed on Index to Financial Statements and
Financial Statement Schedules.
(3) - Listing of Exhibits
Exhibit Number Page Number or
Under Incorporation by
Regulation S-K Description Reference
--------------- ----------- ---------
4 Instruments defining the rights
of security holders
4.1 Amended Agreement of Limited Exhibit A to final
Partnership* Prospectus dated
September 21, 1984,
filed under the
Partnership's
Form S-11
Registration
Statement
(File 2-91210)
20
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(a) Amendment to the Amended Agreement Exhibit 4.1(a) to Post-
of Limited Partnership dated as of Effective Amendment No. 1
December 1, 1984* No. 1 to the
Partnership's
Form S-11
Registration
Statement
(File 2-91210)
4.2 The Subscription Agreement and Exhibit D to final
Limited Partner Signature Page Prospectus dated
and Power of Attorney whereby a September 21, 1984,
subscriber agrees to purchase filed under the
Units and adopts the provisions Partnership's
of the Partnership Agreement* Form S-11
Registration
Statement
(File 2-91210)
4.3 Copy of Tenth Amendment and Exhibit 4.3 to
Restatement of Certificate of Item 14 to the
Limited Partnership filed with Partnership's
the Massachusetts Secretary of Report on Form 10-K
State on August 30, 1985* dated December 31, 1986
(File 0-13473)
10 Material contracts and other
documents
10.1 Form of Consulting Agreement Exhibit 10.2 to the
between the Managing General Partnership's
Partner and Merrill Lynch, Form S-11
Hubbard Inc.* Registration
Statement
(File 2-91210)
10.2 Copy of revised letter from Exhibit 10.5(a) to
John Hancock Subsidiaries, Inc. Post-Effective
containing undertaking as to Amendment No. 1 to
the net worth of the Managing the Partnership's
General Partner* Form S-11
Registration Statement
(File 2-91210)
10.3 Documents relating to Waterford
Apartments
(a) Developer Note dated Exhibit 10.6(b) to
April 18, 1983, from Waterford Amendment No. 1 to
Partners to Savers Federal the Partnership's
Savings and Loan Association* Form S-11
Registration
Statement
(File 2-91210)
21
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(b) Allonge to Note dated Exhibit 10.3(b)
January 25, 1988, between to Item 14 to the
Savers Federal Savings and Partnership's
Loan Association and Report on Form 10-K
Waterford Partners* dated December 31, 1987
(File 0-13473)
(c) Limited Guaranty dated Exhibit 10.3(c)
January 25, 1988, between to Item 14 to the
John Hancock Properties Partnership's
Limited Partnership and Report on Form 10-K
Savers Federal Savings dated December 31, 1987
and Loan Association (File 0-13473)
and Waterford Partners*
(d) Deed of Trust and Security Exhibit 10.6(c) to
Agreement dated April 18, 1983, Amendment No.1 to
by Waterford Associates to the Partnership's
John Kooistra, Jr., Trustee* Form S-11
Registration
Statement
(File 2-91210)
(e) Amendment to Deed of Trust Exhibit 10.3(e)
and Security Agreement dated to Item 14 to the
January 25, 1988, between Partnership's
Savers Federal Savings and Report on Form 10-K
Loan Association and dated December 31, 1987
John Hancock Properties (File 0-13473)
Limited Partnership*
(f) Regulatory Agreement and Exhibit 10.6(d) to
Declaration of Restrictive Amendment No. 1 to
Covenants dated April 18, 1983, the Partnership's
by and among Residential Housing Form S-11
Facilities Board of Pulaski Registration
County, Arkansas, United States Statement
Trust Company of New York, as (File 2-91210)
Trustee, and Waterford Partners*
(g) Assumption Agreement dated Exhibit 10.6(f) to
August 9, 1984, by and among Amendment No. 1 to
Residential Housing Facilities the Partnership's
Board of Pulaski County, Form S-11
United States Trust Company of Registration
New York and First Commercial Statement
Bank, N.A., as Trustees, (File 2-91210)
Waterford Partners,
John Hancock Properties
Limited Partnership, and Savers
Federal Savings and Loan
Association*
22
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(h) Repurchase Agreement dated Exhibit 10.6(g) to
August 9, 1984, between Amendment No. 1 to
Waterford Partners and the Partnership's
John Hancock Properties Limited Form S-11
Partnership* Registration
Statement
(File 2-91210)
(i) Escrow Agreement among Exhibit 10.6(i) to
Little Rock Abstract Company, Amendment No.1 to
John Hancock Properties Limited the Partnership's
Partnership and Waterford Form S-11
Partners* Registration
Statement
(File 2-91210)
(j) Unconditional Guaranty Agreement Exhibit 10.6(j) to
dated July 2, 1984, as amended Amendment No. 1 to
by letter dated August 15, 1984, the Partnership's
executed by Mike Henderson* Form S-11
Registration
Statement
(File 2-91210)
(k) Promissory Note dated Exhibit 10.3(k)
December 23, 1987, between to Item 14 to the
John M. Henderson and Partnership's
John Hancock Properties Report on Form 10-K
Limited Partnership* dated December 31, 1987
(File 0-13473)
(l) Deed-in-Lieu of Foreclosure Exhibit 10.2(e) to the
between Resolution Trust Corporation Amendment No. 1 to
as Conservator for Savers Federal the Partnership's
Savings and Loan Association and Report on Form 10-K
John Hancock Properties Limited dated December 31, 1991
Partnership* (File 0-13473)
10.4 Documents relating to
Huntington Park Apartments
(a) Promissory Note dated May 4, Exhibit 10.7(b) to
1983, from VSP Housing Amendment No. 1 to
Associates 101 to Western the Partnership's
Savings and Loan Association* Form S-11
Registration
Statement
(File 2-91210)
23
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(b) Deed of Trust dated May 4, 1983, Exhibit 10.7(c) to
between VSP Housing Amendment No. 1 to
Associates 101 and Western the Partnership's
Savings and Loan Association* Form S-11
Registration
Statement
(File 2-91210)
(c) Deed and Deed Restrictions dated Exhibit 10.7(d) to
as of March 1, 1983, from Amendment No. 1 to
The Industrial Development the Partnership's
Authority of the City of Tucson, Form S-11
Arizona to VSP Housing Registration
Associates 101* Statement
(File 2-91210)
(d) Rental Escrow Agreement dated Exhibit 10.7(f) to
September 24, 1984, between VSP Post-Effective
Housing Associates 101, Amendment No. 1 to
John Hancock Properties Limited the Partnership's
Partnership and Ticor Title Form S-11
Insurance Company of California* Registration
Statement
(File 2-91210)
(e) Deed of Trust and Security Exhibit 10.7(i) to
Agreement dated December 14, Post-Effective
1984, between John Hancock Amendment No. 1 to
Properties Limited Partnership, the Partnership's
Ticor Title Insurance Company of Form S-11
California and John Hancock Registration
Realty Services Corp.* Statement
(File 2-91210)
(f) Purchase and Sale Agreement Exhibit 1 to the
between John Hancock Properties Partnership's Report
Limited Partnership and on Form 8-K dated
Pacific Institutional Advisors March 31, 1992
dated February 14, 1992 * (File 0-13473)
(g) Loan Payoff Agreement between Exhibit 2 to the
Resolution Trust Corporation and Partnership's Report
John Hancock Properties Limited on Form 8-K dated
Partnership dated March 19, 1992 * March 31, 1992
(File 0-13473)
24
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
10.5 Documents relating to
Fisherman's Village Apartments
(a) Promissory Note dated Exhibit 10.11(a) to
October 17, 1985, from Item 14 of the
John Hancock Properties Partnership's Report
Limited Partnership to on Form 10-K dated
Pacific Mutual Life December 31, 1985
Insurance Company* (File 0-13473)
(b) Mortgage and Security Exhibit 10.11(b) to
Agreement dated Item 14 of the
October 16, 1985, between Partnership's Report
John Hancock Properties on Form 10-K dated
Limited Partnership and December 31, 1985
Pacific Mutual Life (File 0-13473)
Insurance Company*
(c) Pledge and Assignment of Account Exhibit 10.11(e) to
dated October 16, 1985, between Item 14 of the
John Hancock Properties Limited Partnership's Report
Partnership and Pacific Mutual on Form 10-K dated
Life Insurance Company* December 31,1985
(File 0-13473)
(d) Hold Harmless and Escrow Exhibit 10.11(f) to
Agreement dated October, 1985, Item 14 of the
between John Hancock Properties Partnership's Report
Limited Partnership and on Form 10-K dated
Ticor Title Insurance* December 31,1985
(File 0-13473)
(e) Promissory Note and Mortgage Exhibit 10.5(e) to
Renewal and Modification Agreement Item 14 of the
between Pacific Mutual Life Insurance Partnership's Report
Company and John Hancock Properties on Form 10-K dated
Limited Partnership* December 31, 1992
(File 0-13473)
10.6 Documents relating to Northgreen
Apartments
(a) Promissory note dated Exhibit 10.6(a)
September 12, 1988 from to Item 14 of the
John Hancock Properties Limited Partnership's Report
Partnership to Great West Life on Form 10-K dated
Assurance Company* December 31, 1988
(File 0-13473)
25
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(b) Trust Deed with Security Agreement Exhibit 10.6(b)
dated September 12, 1988 between to Item 14 of the
John Hancock Properties Limited Partnership's Report
Partnership and Great West Life on Form 10-K dated
Assurance Company* December 31, 1988
(File 0-13473)
(c) Absolute Assignment of Leases Exhibit 10.6(c)
dated September 12, 1988 from to Item 14 of the
John Hancock Properties Limited Partnership's Report
Partnership to Great West Life on Form 10-K dated
Assurance Company* December 31, 1988
(File 0-13473)
(d) Promissory Note and Mortgage Exhibit 10.6(d)
Renewal and Modification to Item 14 of the
Agreement between John Hancock Partnership's Report
Properties Limited Partnership and on Form 10-K dated
Great West Life Assurance Company* December 31, 1993
(File 0-13473)
10.7 Documents relating to
Delta Grove Apartments
(a) Promissory Note dated Exhibit 10.9(a) to
February 28, 1985, the Partnership's
from John Hancock Report on Form 10-K
Properties Limited dated December 31, 1984
Partnership to Delta Grove (File 2-91210)
Development Company*
(b) Deed of Trust dated Exhibit 10.9(b) to
February 25, 1985, by the Partnership's
Delta Grove Development Company Report on Form 10-K
to John Hancock Properties dated December 31, 1984
Limited Partnership* (File 2-91210)
(c) Security Agreement dated Exhibit 10.9(c) to
February 28, 1985, between the Partnership's
John Hancock Properties Limited Report on Form 10-K
Partnership and Delta Grove dated December 31, 1984
Development Company* (File 2-91210)
(d) Memorandum of Understanding Exhibit 10.9(e) to
dated February 28, 1985, the Partnership's
between Delta Grove Development Report on Form 10-K
Company and John Hancock dated December 31, 1984
Properties Limited Partnership* (File 2-91210)
26
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(e) Assignment of Residential Exhibit 10.9(g) to the
Property Management Agreement Partnership's Report
dated February 28, 1985, on Form 10-K dated
between Beam & James and December 31, 1984
Bennett Management Company* (File 2-91210)
(f) Purchase and Sale Agreement Exhibit 10.7(e) to
between John Hancock Properties Amendment No. 1 to
Limited Partnership and Whittaker the Partnership's Report
Realty Group, Inc.* on Form 10-K dated
December 31, 1991
(File 0-13473)
10.8 Documents relating to
Ramsey Place
(a) Deed of Trust Note dated Exhibit 10.12(a) to the
December 17, 1985, from Partnership's Report
John Hancock Properties of Form 10-K dated
Limited Partnership to December 31, 1985
National Life Insurance (File 0-13473)
Company*
(b) Deed of Trust and Security Exhibit 10.12(b) to the
Agreement dated December 17, Partnership's Report
1985, between John Hancock of Form 10-K dated
Properties Limited Partnership December 31, 1985
and National Life Insurance (File 0-13473)
Company*
(c) Rent Escrow Agreement dated Exhibit 10.12(d) to the
December 17, 1985, between Partnership's Report
John Hancock Properties of Form 10-K dated
Limited Partnership and December 31, 1985
Alamo Title Co. and Ramsey (File 0-13473)
Place, Ltd.*
(d) Escrow Agreement regarding funds Exhibit 10.12(e) to the
for improvement of Ramsey Road Partnership's Report
dated December 17, 1985, between of Form 10-K dated
John Hancock Properties Limited December 31, 1985
Partnership and Ramsey Place, Ltd.* (File 0-13473)
(e) Escrow Agreement regarding completion Exhibit 10.12(f) to the
of work dated December 17, 1985, Partnership's Report
between John Hancock Properties of Form 10-K dated
Limited Partnership and Ramsey December 31, 1985
Place, Ltd. and Alamo Title Co.* (File 0-13473)
27
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(f) Special Warranty Deed between Exhibit 10.8(g) to
John Hancock Properties Limited Amendment No. 1 to
Partnership and National Life the Partnership's Report
Insurance Company * on Form 10-K dated
December 31, 1990
(File 0-13473)
10.9 Promissory Note dated Page 50
December 1, 1994 between
John Hancock Realty Equities, Inc.
and John Hancock Properties
Limited Partnership+
10.10 Documents relating to Management
Agreement
(a) Management Agreement dated Exhibit 10.10 (a) to the
January 1, 1992 between Hancock Partnership's Report on
Realty Investors Incorporated and Form 10-K dated
John Hancock Realty Equities* December 31, 1992
(File 0-13473)
(b) Agreement dated May 28, 1993 Exhibit 10.10(b) to the
Concerning Subcontracting of Partnership's Report on
Management Services Pertaining to Form 10-K dated
John Hancock Properties Limited December 31, 1993
Partnership between John Hancock (File 0-13473)
Realty Equities, Inc., Hancock Realty
Investors, Incorporated and John
Hancock Mutual Life Insurance
Company*
10.11 Documents relating to Executive
Compensation Plans and Arrangements
(a) Partnership Agreement* Exhibit 4.1(a) to Post-
Effective Amendment No. 1
to the Partnership's
Form S-11 Registration
Statement
(File 2-91210)
(b) There were no reports on Form 8-K filed during the quarter ended
December 31, 1994.
(c) Exhibits - See Item 14 (a) (3) of this Report.
(d) Financial Statement Schedules - The response to this portion of Item
14 is submitted as a separate section of this Report commencing on Page
F-17.
----------------------------------
+Filed herewith
*Incorporated by reference
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the
29th day of March, 1995.
John Hancock Properties Limited Partnership
By: John Hancock Realty Equities, Inc.,
Managing General Partner
By: WILLIAM M. FITZGERALD
-------------------------------
William M. Fitzgerald, President
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 indicated on the 29th day of March, 1995.
Signatures Title
---------- -----
President (Principal Executive Officer) and
Director of John Hancock Realty Equities,
Inc. (Managing General Partner of
WILLIAM M. FITZGERALD Registrant)
-----------------------
William M. Fitzgerald
Treasurer (Chief Accounting Officer)
of John Hancock Realty Equities, Inc.
RICHARD E.FRANK (Managing General Partner of Registrant)
-----------------------
Richard E. Frank
Director of John Hancock Realty Equities,
Inc. (Managing General Partner of
MALCOLM G. PITTMAN, III Registrant)
-----------------------
Malcolm G. Pittman, III
Director of John Hancock Realty Equities,
Inc. (Managing General Partner of
SUSAN M. SHEPHARD Registrant)
-----------------------
Susan M. Shephard
29
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14 (a) (1) AND (2), (c) AND (d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1994
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
BOSTON, MASSACHUSETTS
F-1
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(ITEMS 8 AND 14(a) (1) AND (2))
1. Financial Statements Page
Report of Independent Auditors F-3
Balance Sheets at December 31, 1994 and 1993 F-4
Statements of Operations for the Years Ended
December 31, 1994, 1993 and 1992 F-5
Statements of Partners' Equity for the Years Ended
December 31, 1994, 1993 and 1992 F-6
Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 F-7
Notes to Financial Statements F-9
2. Financial Statement Schedules
Schedule II: Valuation and Qualifying Accounts F-17
Schedule III: Real Estate and Accumulated
Depreciation F-18
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore,
have been omitted.
F-2
Report of Independent Auditors
To the Partners
John Hancock Properties Limited Partnership
We have audited the accompanying balance sheets of John Hancock Properties
Limited Partnership as of December 31, 1994 and 1993, and the related
statements of operations, partners' equity and cash flows for each of the
three years in the period ended December 31, 1994. Our audits also
included the financial statement schedules listed in the index at Item
14(a). These financial statements and schedules are the responsibility of
the Partnership's management. Our responsibility is to express an opinion
on these financial statements and schedules 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 management, 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 John Hancock Properties
Limited Partnership at December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the information
set forth therein.
ERNST & YOUNG LLP
February 3, 1995
F-3
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS
ASSETS
December 31,
1994 1993
---- ----
Assets:
Cash and cash equivalents $578,996 $444,021
Restricted cash 417,985 452,431
Note receivable, net of allowance of
$284,155 in 1994 and $298,058 in 1993 - -
Prepaid expenses and other assets 79,275 87,339
Investment in property:
Land 2,588,726 2,588,726
Buildings and improvements 18,205,348 18,205,348
----------- -----------
20,794,074 20,794,074
Less: accumulated depreciation (6,821,682) (6,197,321)
----------- -----------
13,972,392 14,596,753
----------- -----------
Total assets $15,048,648 $15,580,544
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $318,178 $325,448
Accounts payable to affiliates 268,538 562,555
Note payable to affiliate 1,000,000 1,000,000
Long-term debt 13,416,019 13,602,666
----------- -----------
Total liabilities 15,002,735 15,490,669
Partners' equity/(deficit):
General Partners' (707,996) (707,556)
Limited Partners' 753,909 797,431
----------- -----------
Total partners' equity 45,913 89,875
----------- -----------
Total liabilities and partners' equity $15,048,648 $15,580,544
=========== ===========
See Notes to Financial Statements
F-4
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended December 31,
1994 1993 1992
---- ---- ----
Income:
Rental income $3,190,235 $3,037,508 $3,123,523
Interest income 30,141 48,383 50,168
---------- ---------- ----------
Total income 3,220,376 3,085,891 3,173,691
Expenses:
Interest 1,141,871 1,192,772 1,673,592
Property operating expenses 1,373,439 1,478,516 1,479,038
Depreciation 624,361 645,808 719,249
General and administrative 138,570 138,423 140,234
Provision for/(recovery of)
uncollectible note receivable (13,903) 298,058 -
Loss on sale of property - - 1,721,075
---------- ---------- ----------
Total expenses 3,264,338 3,753,577 5,733,188
---------- ---------- ----------
Net loss before extraordinary gain (43,962) (667,686) (2,559,497)
Extraordinary gain on debt
extinguishment - - 1,725,028
---------- ---------- ----------
Net loss ($43,962) ($667,686) ($834,469)
========== ========== ==========
Allocation of net loss:
General Partners ($440) ($6,677) ($8,345)
Limited Partners (43,522) (661,009) (826,124)
---------- ---------- ----------
($43,962) ($667,686) ($834,469)
========== ========== ==========
Net loss before extraordinary gain
per Limited Partnership Unit
outstanding ($1.98) ($30.11) ($115.42)
Extraordinary gain on debt
extinguishment per Limited
Partnership Unit outstanding - - 7.79
---------- ---------- ----------
Net loss per Limited Partnership
Unit outstanding ($1.98) ($30.11) ($37.63)
========== ========== ==========
See Notes to Financial Statements
F-5
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended December 31, 1994, 1993 and 1992
General Limited
Partners Partners Total
-------- -------- -----
Partners' equity/(deficit) at
January 1, 1992 (21,954 Limited
Partnership Units outstanding) ($692,534) $2,284,564 $1,592,030
Less: Net loss (8,345) (826,124) (834,469)
-------- ---------- ----------
Partners' equity/(deficit) at
December 31, 1992 (21,954 Limited
Partnership Units outstanding) (700,879) 1,458,440 757,561
Less: Net loss (6,677) (661,009) (667,686)
-------- ---------- ----------
Partners' equity/(deficit) at
December 31, 1993 (21,954 Limited
Partnership Units outstanding) (707,556) 797,431 89,875
Less: Net loss (440) (43,522) (43,962)
-------- ---------- ----------
Partners' equity/(deficit) at
December 31, 1994 (21,954 Limited
Partnership Units outstanding) ($707,996) $753,909 $45,913
======== ======== =======
See Notes to Financial Statements
F-6
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31,
1994 1993 1992
---- ---- ----
Operating activities:
Net loss ($43,962) ($667,686) ($834,469)
Adjustments to reconcile net loss
to net cash provided by/(used in)
operating activities:
Depreciation 624,361 645,808 719,249
Provision for uncollectible
note receivable - 298,058 -
Loss on sale of property - - 1,721,075
Extraordinary gain on debt
extinguishment - - (1,725,028)
--------- ---------- ----------
580,399 276,180 (119,173)
Changes in operating assets and liabilities:
Decrease in prepaid expenses,
other assets, and receivables 8,064 22,255 13,593
Decrease in accounts payable
and accrued expenses (7,270) (2,437) (75,929)
Decrease/(increase) in restricted cash 34,446 (31,945) (35,858)
Increase/(decrease) in accounts payable to
affiliates (294,017) 41,969 185,159
--------- ---------- ----------
Net cash provided by/(used in)
operating activities 321,622 306,022 (32,208)
Investing activities:
Proceeds from sale of property - - 4,072,442
-------- -------- ----------
Net cash provided by investing
activities - - 4,072,442
Continued on Next Page
F-7
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS (continued)
Years Ended December 31,
1994 1993 1992
---- ---- ----
Financing activities:
Principal payments on long-term debt (186,647) (166,289) (3,905,768)
-------- -------- ----------
Net cash used in financing activities (186,647) (166,289) (3,905,768)
-------- -------- ----------
Net increase in cash and cash
equivalents 134,975 139,733 134,466
Cash and cash equivalents at beginning
of year 444,021 304,288 169,822
-------- -------- ----------
Cash and cash equivalents at end of
year $578,996 $444,021 $304,288
========== ======== ==========
See Notes to Financial Statements
F-8
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Organization of Partnership
---------------------------
John Hancock Properties Limited Partnership (the "Partnership") was
formed under the Massachusetts Uniform Limited Partnership Act on
May 17, 1984. As of December 31, 1994, the Partnership consisted of
a sole Managing General Partner, John Hancock Realty Equities, Inc.
(the "Managing General Partner"), an Associate General Partner, JH
Associates Limited Partnership (the "Associate General Partner"),
and 2,048 Limited Partners. The Managing General Partner and
Associate General Partner are collectively referred to as the
"General Partners" and the General Partners and the Limited Partners
are collectively referred to as the "Partners". The Managing
General Partner is the general partner of the Associate General
Partner and is a wholly-owned, indirect subsidiary of John Hancock
Mutual Life Insurance Company ("John Hancock"). The Partnership is
engaged solely in the acquisition, operation, and disposition of
investment real estate. The initial capital of the Partnership was
$6,000, representing capital contributions of $800 from the Managing
General Partner, $200 from the Associate General Partner and $5,000
from the initial Limited Partner (a former director of the Managing
General Partner). The Amended Agreement of Limited Partnership of
the Partnership (the "Partnership Agreement") authorized the
issuance of up to 35,000 Units of Limited Partnership Interests at
$1,000 per Unit. During the offering period, which terminated on
August 31, 1985, 21,954 Units of Limited Partnership Interests
("Units) were sold. There have been no changes in the number of
Units outstanding subsequent to the termination of the offering
period.
The latest date on which the Partnership is due to terminate is
December 31, 2020, unless it is terminated sooner in accordance with
the terms of the Partnership Agreement. It is expected that in the
ordinary course of the Partnership's business, the properties of the
Partnership will be disposed of, and the Partnership terminated,
before December 31, 2020. As of December 31, 1994 and the date
hereof, the Partnership has two properties remaining in its
portfolio. Of the two remaining properties, one property is
currently listed for sale and the other property is expected to be
listed for sale during 1995. Upon the sale of the last remaining
property, the operations of the Partnership will terminate, and the
Partnership will be dissolved, in accordance with the terms of the
Partnership Agreement.
2. Significant Accounting Policies
-------------------------------
The Partnership maintains its accounting records and recognizes
rental income on the accrual basis.
Cash equivalents are highly liquid investments with maturities of
three months or less when purchased. These investments are recorded
at cost plus accrued interest, which approximates market value.
Restricted cash represents funds restricted for tenant security
deposits, property tax escrows and other escrows.
F-9
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
-------------------------------
Investments in property are recorded at cost less any property write-
downs for permanent impairment of values. Cost includes the initial
purchase price of the property plus the cost of significant
improvements, acquisition and legal fees, and other miscellaneous
acquisition costs.
Depreciation has been provided on a straight-line basis over the
estimated useful lives of the various assets: thirty years for the
buildings and five years for related improvements. Maintenance and
repairs are charged to operations as incurred.
The net loss per Unit for each year is computed by dividing the
Limited Partners' share of net loss by the number of Units
outstanding at the end of each year.
No provision for income taxes has been made in the Financial
Statements since such taxes are the responsibility of the individual
Partners rather than that of the Partnership.
3. The Partnership Agreement
-------------------------
Profits from the normal operations of the Partnership for each
fiscal year, or portion thereof, are allocated between the Limited
Partners and the General Partners in the same proportion as
Distributable Cash from Operations, as defined in the Partnership
Agreement, provided that (i) in no event shall the General Partners
be allocated less than 1% of any such profits from normal
operations, and (ii) if there is any fiscal year which produces no
Distributable Cash from Operations but which produces profits for
tax purposes from normal operations, such profits are allocated 90%
to the Limited Partners and 10% to the General Partners.
Losses from the normal operations of the Partnership for each fiscal
year or portion thereof are allocated 99% to the Limited Partners
and 1% to the General Partners, except any such profits or losses
which were based upon the Partnership's operations prior to the
initial closing under the Partnership's offering of Units were
allocated 99% to the General Partners and 1% to the initial Limited
Partner. Distributable Cash from Operations is distributed 90% to
the Limited Partners and 10% to the General Partners; provided,
however, that in each fiscal year the General Partners will defer
their receipt of any Distributable Cash from Operations to the
extent necessary to provide the Limited Partners a non-cumulative
return in such year equal to 4% of their Invested Capital, as
defined in the Partnership Agreement. All distributions of
Distributable Cash from Operations deferred by the General Partners
accrue and are payable to them, to the extent possible, out of
subsequent years' Distributable Cash from Operations remaining after
the receipt by the Limited Partners of the aforesaid 4% return, or
out of cash from sales and refinancings as specified below.
F-10
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
3. The Partnership Agreement (continued)
-------------------------
Cash from Sales or Refinancings, as defined in the Partnership
Agreement, are distributed to the Limited Partners until the Limited
Partners have received, first, a return of their total Invested
Capital, and, second, such additional amount as may be necessary,
after giving effect to all previous distributions of Distributable
Cash from Operations and of Cash from Sales or Refinancings to the
extent required to satisfy any deficiency in the Cumulative Return
on Investment, as defined in the Partnership Agreement, to produce
in the aggregate a Cumulative Return on Investment of 7% per annum
for all fiscal quarters commencing on or after January 1, 1986, and
ending prior to the date of such distribution. The General Partners
are then entitled to receive an amount of Cash from Sales or
Refinancings equal to any portion of the General Partners' share of
Distributable Cash from Operations which was previously deferred in
order to permit the payment to the Limited Partners of a
non-cumulative return in each year equal to 4% of their Invested
Capital. Any Cash from Sales or Refinancings remaining after the
Limited Partners have received a return of their total Invested
Capital plus the Cumulative Return on Investment of 7% per annum for
all fiscal quarters commencing on or after January 1, 1986, and
ended prior to the date of such distribution, and after the General
Partners have received an amount of such cash equal to any such
deferred payment of Distributable Cash from Operations, will be
distributed 85% to the Limited Partners and 15% to the General
Partners.
Cash from the Sale of the last of the Partnership's properties are
distributed in the same manner as Cash from Sales or Refinancings,
except that before any other distribution is made to the Partners,
each Partner shall first receive from such cash, an amount equal to
the then positive balance, if any, in such Partner's capital account
after crediting or charging to such account the profits or losses
for tax purposes from such sale. To the extent, if any, that a
Partner is entitled to receive a distribution of cash based upon a
positive balance in its capital account prior to such distribution,
such distribution will be credited against the amount of such cash
the Partner would have been entitled to receive based upon the
manner of distribution of Cash from Sales or Refinancings as
specified in the previous paragraph.
Profits from Sales or Refinancings are generally allocated in the
same manner as cash from that transaction. Losses from Sales or
Refinancings are allocated 99% to the Limited Partners and 1% to the
General Partners. In connection with the sale of the last of the
Partnership's properties, and therefore the dissolution of the
Partnership, profits will be allocated to any Partners having a
deficit balance in their capital account in an amount equal to the
deficit balance. Any remaining profits will be allocated in the
same order as cash from the sale would be distributed.
F-11
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
4. Transactions with the General Partners and Affiliates
-----------------------------------------------------
Expenses incurred or paid by the General Partners or their
Affiliates and to which the General Partners and their Affiliates
are entitled to reimbursement from the Partnership, and interest
payable on borrowings from the Managing General Partner were as
follows:
Years Ended December 31,
1994 1993 1992
---- ---- ----
Operating expenses $79,420 $78,390 $86,826
Interest on note payable
to affiliate 80,416 80,000 98,333
-------- -------- --------
$159,836 $158,390 $185,159
======== ======== ========
The expenses above are included in expenses on the Statements of
Operations.
Accounts payable to affiliates represents amounts due to the General
Partners and their Affiliates for various services provided to the
Partnership, including deferred amounts.
Note payable to affiliate represents a short-term borrowing in the
principal amount of $1,000,000 from the Managing General Partner,
initially made to the Partnership on December 1, 1988. Due to the
cash flow constraints of the Partnership, the Managing General
Partner has each year made a new short-term loan to the Partnership
for the outstanding principal amount of $1,000,000 and, during 1991,
began deferring payment of all accrued but unpaid interest on such
loans. Interest on the current short-term note accrues monthly at a
rate of 8.5%. Interest is payable monthly and the principal amount
is due on November 30, 1995. The Partnership commenced making
payments towards such accrued but unpaid interest during the third
quarter of 1993.
From 1991 through the second quarter of 1993, payments towards the
reimbursement of general and administrative expenses and the payment
of interest on such short-term loans were deferred in order for the
Partnership to meet working capital needs. The Managing General
Partner also made short-term advances to the Partnership in order to
cover operating expenses which could not be paid from the operating
cash flow of the Partnership. Since the third quarter of 1993, the
Partnership has made payments to the Managing General Partner
towards reimbursement for such general and administrative expenses
and interest expense. During the years ended December 31, 1994 and
1993, the Partnership paid $453,853 and $116,421, respectively, to
the Managing General Partner as reimbursement for the full amount of
the short-term advances and towards the then outstanding balance of
general and administrative expenses and interest expense incurred on
behalf of the Partnership. To the extent that the Partnership
generates sufficient funds from operations and sales of investment
real estate in future periods, the Partnership will continue to make
payments to the Managing General Partner towards the outstanding
principal balance of the short-term loan and such deferred amounts.
As of December 31, 1994, the cumulative total due on the short-term
loan and such deferred amounts was $1,268,538.
F-12
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
4. Transactions with the General Partners and Affiliates (continued)
-----------------------------------------------------
The Managing General Partner serves in a similar capacity for three
other affiliated real estate limited partnerships.
5. Investment in Property
----------------------
Investment in property at cost consists of residential real estate as
follows:
December 31,
1994 1993
---- ----
Fisherman's Village Apartments $13,462,613 $13,462,613
Northgreen Apartments 7,331,461 7,331,461
----------- -----------
$20,794,074 $20,794,074
=========== ===========
On March 31, 1992, the Huntington Park Apartments property was sold
to a non-affiliated buyer for a net sales price of $4,072,442. In
connection with the sale, the Partnership secured a reduced payoff
amount from the property's lender for the related mortgage
indebtedness and accrued interest thereon from $5,525,028 to
$3,800,000. As such the Partnership realized an extraordinary gain
for financial statement purposes of $1,725,028 related to the
forgiveness of debt. The gain was offset by a loss of $1,721,075 on
the transaction, which represents the difference between the net
sales price of $4,072,442 and the net book value of $5,793,517.
Northgreen Apartments has been listed for sale since the second
quarter of 1994. Revenues and net income for this property totaled
$1,440,582 and $263,884, respectively, in 1994.
F-13
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
6. Long-Term Debt
--------------
December 31,
1994 1993
---- ----
Long-term debt consists of the following:
Non-recourse first mortgage note
collateralized by Fisherman's Village
Apartments. The mortgage note is due
November 1, 1995. Prior to November
1, 1992 the note carried an interest
rate of 11.5% amortized over a 30-year
term. Commencing November 1, 1992
the note carries an interest rate of 7.39%
amortized over a 28-year term. A balloon
payment equal to the entire outstanding
principal balance and all accrued but unpaid
interest is due upon maturity of the mortgage. $8,781,178 $8,890,612
Non-recourse first mortgage note collateralized
by the Northgreen Apartments. The mortgage
note is due October 1, 2003. The
note had an initial adjustable interest
rate of 9.75% amortized over a 27-year term.
Commencing October 1, 1993, the note carries
an interest rate of 8.75% amortized over a
22-year term. Effective October 1, 1998, the
mortgagee may adjust the interest rate to the then
prevailing interest rate. A balloon payment equal
to the entire outstanding principal balance and all
accrued but unpaid interest is due upon
maturity of the mortgage. 4,634,841 4,712,054
----------- -----------
$13,416,019 $13,602,666
=========== ===========
F-14
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
6. Long-Term Debt (continued)
--------------
The aggregate annual maturities of long-term debt for the five years
after December 31, 1994 are as follows:
Year Amount
---- ------
1995 $8,865,311
1996 91,797
1997 100,159
1998 109,283
1999 119,238
Interest paid for the three years ended December 31, 1994 was as
follows:
Year Amount
---- ------
1994 $1,062,340
1993 1,172,433
1992 1,577,488
7. Note Receivable
---------------
Effective August 9, 1987, the unconditional guaranty obligation
granted by the seller of the Waterford Apartments to the Partnership
for operating deficits (including debt service) was extended until
August 1, 1994. (The Waterford Apartments was conveyed to the
property's mortgagee by a deed-in-lieu of foreclosure on August 9,
1991.) The outstanding balance due in the amount of $258,950 was
restructured as a 10.5% Promissory Note due on or before August 1,
1994. In accordance with the terms of the Promissory Note, monthly
installments of interest only were payable at a rate of 5.5% through
July 31, 1990. The Promissory Note provided for monthly payments
commencing on August 1, 1990 in the amount of $2,781 to amortize the
then outstanding principal and deferred interest balance of $303,985
in accordance with a 30-year amortization at a rate of 10.5%. The
Managing General Partner believed, as of December 31, 1993, based on
information obtained with respect to the obligor's financial
condition, that it was probable that the Partnership would be unable
to collect all amounts due from the obligor according to the
contractual terms of the note. Accordingly, as of December 31,
1993, the Partnership established a provision, reflected in the
accompanying Balance Sheets, against the then entire outstanding
balance of the note in the amount of $298,058. The provision has
since been reduced to $284,155 as a result of payments received on
the note during the year ended December 31, 1994.
F-15
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
7. Note Receivable (continued)
---------------
In June 1994, the obligor notified the Partnership that he would be
unable to pay both the outstanding balance of the note upon its
maturity on August 1, 1994 and the minimum monthly payments on the
note. As of December 31, 1994, and as of the date hereof, the
obligor is in default on the Promissory Note for failure to pay the
minimum required payments due since June 1, 1994 and for failure to
pay the outstanding balance of the note, which was due on August 1,
1994. The Managing General Partner issued a default notice to the
obligor and demand for payment and filed a complaint with the court
demanding full payment of the note.
On December 7, 1994 the court granted the Partnership a summary
judgment in response to the complaint filed against the obligor in
the amount of the note plus accrued interest thereon in the
aggregate amount of $305,489. As of the date hereof, the
Partnership has not received payment from the obligor, and the
Managing General Partner continues to pursue collection of the
judgment amount.
8. Federal Income Taxes
A reconciliation of the net loss reported in the Statements of
Operations to the net income/(loss) reported for federal income tax
purposes is as follows:
Years Ended December 31,
1994 1993 1992
---- ---- ----
Net loss per Statements of Operations ($43,962) ($667,686) ($834,469)
Add/(deduct): Excess tax gain over book gain
on disposition of assets - - 1,905,566
Excess of tax depreciation
over book depreciation (313,090) (274,953) (283,052)
Provision for/(recovery of)
uncollectible note receivable (13,903) 298,058 -
Other income 9,666 - -
Other expenses 127,078 153,415 -
-------- -------- --------
Net income/(loss) for federal income tax
purposes ($234,211) ($491,166) $788,045
======== ======== ========
F-16
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Year Ended December 31, 1994
Column A Column B Column D Column E
Deductions
---------------------------
Allowance
Balance at Payments Reflected in Balance at
Beginning of to Reduce Income/ End of
Description Year the Note (Expense) Year
----------- ---- -------- --------- ----
Assets:
Note receivable, net of allowance $0 ($13,903) $13,903 $0
F-17
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Year Ended December 31, 1994
Costs
Capitalized
Initial Costs to Subsequent to Gross Amount
Partnership Acquisition At Which Carried at Close of Period
--------------------- ----------- ------------------------------------
Buildings Buildings
and and
Description Encumbrances Land Improvements Improvements Land Improvements Total (1)
----------- ------------ ---- ----------- ------------ ---- ------------ ---------
Fisherman's Village Apartments
Orlando, Florida $8,781,178 $1,680,000 $11,406,718 $375,895 $1,688,726 $11,773,887 $13,462,613
Northgreen Apartments
Eugene, Oregon 4,634,841 900,000 6,121,884 309,577 900,000 6,431,461 7,331,461
---------- ---------- ----------- --------- ---------- ----------- -----------
Total $13,416,019 $2,580,000 $17,528,602 $685,472 $2,588,726 $18,205,348 $20,794,074
=========== ========== =========== ======== ========== =========== ===========
Life on Which
Depreciation in
Latest Statement
Accumulated Date of Date of Operations
Description Depreciation (4) Construction Acquired is Computed
----------- ---------------- ------------ -------- -----------
Fisherman's Village Apartments
Orlando, Florida $4,525,242 1984 11/29/84 30 Years (2)
5 Years (3)
Northgreen Apartments
Eugene, Oregon 2,296,440 1978 2/28/85 30 Years (2)
---------- 5 Years (3)
Total $6,821,682
==========
F-18
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
SCHEDULE III (continued)
REAL ESTATE AND ACCUMULATED DEPRECIATION
Year Ended December 31, 1994
(1) The Partnership's properties' aggregate cost for federal income tax
purposes at December 31, 1994 are as follows:
Property Amount
-------- ------
Fisherman's Village Apartments $13,630,486
Northgreen Apartments 7,444,831
-----------
$21,075,317
===========
(2) Estimated useful life for buildings
(3) Estimated useful life for improvements
(4) Reconciliation of Real Estate and Accumulated Depreciation
Years Ended December 31,
1994 1993 1992
---- ---- ----
Investment in Real Estate:
Balance at beginning of year $20,794,074 $20,794,074 $28,538,560
Cost of real estate disposed - - 7,744,486
----------- ----------- -----------
Balance at end of year $20,794,074 $20,794,074 $20,794,074
=========== =========== ===========
Accumulated Depreciation:
Balance at beginning of year $6,197,321 $5,551,513 $6,783,233
Additions charged to costs and expenses 624,361 645,808 719,246
Disposal - - (1,950,966)
----------- ----------- -----------
Balance at end of year $6,821,682 $6,197,321 $5,551,513
=========== =========== ===========
F-19