SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 29, 1997
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
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(Exact Name of Registrant as Specified in its Charter)
Massachusetts 0-15680 04-2921566
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(State of (Commission (IRS Employer
Organization) File No.) Identification No.)
200 Clarendon Street
Boston, MA 02116 (800) 722-5457
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(Address of principal executive (Registrant's telephone
offices, including zip code) number, including area
code)
Not Applicable
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(Former name or former address, if changed since last report)
Page 1 of 10
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
ITEM 2 - Acquisition or Disposition of Assets
Disposition of 1300 North Dutton Avenue
- ---------------------------------------
Due to a five-year lease for the entire property that commenced in October
1996 and the present favorable conditions of the Santa Rosa, California
real estate market, the 1300 North Dutton Avenue property, a 24,120 square
foot office facility located in Santa Rosa, California, was listed for sale
during October 1996. Pursuant to a Purchase and Sale Agreement dated June
18, 1997, on September 29, 1997, John Hancock Realty Income Fund Limited
Partnership (the "Partnership") sold the 1300 North Dutton Avenue property
for a net sales price of approximately $2,673,000, after deductions for
commissions and selling expenses incurred in connection with the sale of
the property. The sale of the property resulted in a non-recurring loss of
approximately $5,000, which represents the difference between the net sales
price and the property's carrying value of approximately $2,678,000.
Based upon the General Partner's analysis of comparable sales transactions
and its review of the offers received during the property's marketing
period, the General Partner accepted the offer from GHB Holdings, Inc. (the
"Buyer") as the most favorable. There is no relationship between the Buyer
and the Partnership or any associate, director or officer of the General
Partner.
The sale was made pursuant to a Purchase and Sale Agreement dated June 18,
1997, which is included as Exhibit 1 of this report.
ITEM 7 - Financial Statements
- -----------------------------
(A) Financial Statements
Pro Forma Balance Sheet at June 30, 1997 4
Pro Forma Statement of Operations for the Six Months
Ended June 30, 1997 5
Pro Forma Statement of Operations for the Year Ended
December 31, 1996 6
Notes to Pro Forma Financial Statements 7
(B) Exhibits
1. Purchase and Sale Agreement (excluding exhibits) between
John Hancock Realty Income Fund Limited Partnership and
GHB Holdings, Inc. dated June 18, 1997 11
2
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
On September 29, 1997, the Partnership sold the 1300 North Dutton Avenue
property (the "Property") to the Buyer for a net sales price of
approximately $2,673,000. The Pro Forma Balance Sheet reflects the
financial position of the Partnership as if the Property had been sold on
June 30, 1997. The Pro Forma Statement of Operations for the six months
ended June 30, 1997 reflects the continued operations of the Partnership as
if the Property had been sold on December 31, 1996. In addition, the Pro
Forma Statement of Operations for the year ended December 31, 1996 reflects
the continued operations of the Partnership as if the Property had been
sold on December 31, 1995.
3
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA BALANCE SHEET
JUNE 30, 1997
(Unaudited)
Pro Forma
Historical Adjustment for
Summary the 1300 Pro Forma
June 30, North Dutton June 30,
1997 Avenue 1997
---- ------ ----
Cash and cash equivalents $1,977,273 $2,673,278 $4,650,551
Restricted cash 61,765 - 61,765
Other assets 192,369 - 192,369
Property held for sale 2,678,599 (2,678,599) -
Deferred expenses, net of accumulated
amortization of $421,255 415,575 - 415,575
Investment in property:
Land 6,198,330 - 6,198,330
Buildings and improvements 17,991,609 - 17,991,609
------------ ----------- ------------
24,189,939 - 24,189,939
Less: accumulated depreciation (4,552,146) - (4,552,146)
------------ ----------- ------------
19,637,793 - 19,637,793
------------ ----------- ------------
Total assets $24,963,374 ($5,321) $24,958,053
============ =========== ============
Liabilities:
Accounts payable and accrued expenses $289,726 $- $289,726
Accounts payable to affiliates 145,408 - 145,408
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Total liabilities 435,134 - 435,134
Partners' equity/(deficit):
General Partner (234,823) (53) (234,876)
Limited Partners 24,763,063 (5,268) 24,757,795
------------ ----------- ------------
Total partners' equity 24,528,240 (5,321) 24,522,919
------------ ----------- ------------
Total liabilities and
partners' equity $24,963,374 ($5,321) $24,958,053
============ =========== ============
See Notes to Pro Forma Financial Statements
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
Historical
Summary Pro Forma Pro Forma
For the Six Adjustment for For the Six
Months Ended the 1300 Months Ended
June 30, North Dutton June 30,
1997 Avenue 1997
---- ------ ----
Income:
Rental income $1,442,396 ($188,325) $1,254,071
Interest income 43,802 - 43,802
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Total income 1,486,198 (188,325) 1,297,873
Expenses:
Depreciation 338,012 - 338,012
General and administrative 206,610 - 206,610
Property operating expenses 199,214 (67,018) 132,196
Amortization of deferred expenses 60,123 - 60,123
Management fee 37,772 - 37,772
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Total expenses 841,731 (67,018) 774,713
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Net income $644,467 ($121,307) $523,160
========== ========== ==========
Allocation of net income:
General Partner $6,445 ($1,213) $5,232
John Hancock Limited Partner (24,582) - (24,582)
Investors 662,604 (120,094) 542,510
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$644,467 ($121,307) $523,160
========== ========== ==========
Net income per Unit $7.23 ($1.31) $5.92
========== ========== ==========
See Notes to Pro Forma Financial Statements
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
Historical Pro Forma Pro Forma
Summary for Adjustment for For the
the Year Ended the 1300 Year Ended
December 31, North Dutton December 31,
1996 Avenue 1996
---- ------ ----
(Audited) (Unaudited) (Unaudited)
Income:
Rental income $2,614,989 ($94,162) $2,520,827
Interest income 171,767 - 171,767
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Total income 2,786,756 (94,162) 2,692,594
Expenses:
Depreciation 772,298 (73,819) 698,479
General and administrative 360,696 - 360,696
Property operating expenses 311,439 (63,269) 248,170
Amortization of deferred expenses 209,726 (32,799) 176,927
Management fee 76,619 - 76,619
Property write-downs 1,907,093 - 1,907,093
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Total expenses 3,637,871 (169,887) 3,467,984
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Net income ($851,115) $75,725 ($775,390)
=========== ======== ===========
Allocation of net income:
General Partner ($8,511) $757 ($7,754)
John Hancock Limited Partner (329,810) 4,196 (325,614)
Investors (512,794) 70,772 (442,022)
----------- -------- -----------
($851,115) $75,725 ($775,390)
=========== ======== ===========
Net income per Unit ($5.60) $0.77 ($4.83)
=========== ======== ===========
See Notes to Pro Forma Financial Statements
6
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements
(Unaudited)
Note 1 - 1300 North Dutton Avenue
- ---------------------------------
On September 29, 1997, the Partnership sold the 1300 North Dutton Avenue
office property (the "Property") in Santa Rosa, California, for a net sales
price of approximately $2,673,000, after deductions for commissions and
selling expenses incurred in connection with the sale of the property. The
sale of the property resulted in a non-recurring loss of approximately
$5,000 which represents the difference between the net sales price and the
property's carrying value of approximately $2,678,000 (including
unamortized leasing costs of approximately $652,000).
The historical financial statements are adjusted to show the effects of the
sale of the Property on the Partnership's operations, assets and
liabilities. The Pro Forma Balance Sheet at June 30, 1997 reflects the
financial position of the Partnership as if the Property had been sold on
June 30, 1997. The Pro Forma Statement of Operations for the six months
ended June 30, 1997 reflects the continued operations of the Partnership as
if the Property had been sold on December 31, 1996. In addition, the Pro
Forma Statement of Operations for the year ended December 31, 1996 reflects
the continued operations of the Partnership as if the Property had been
sold on December 31, 1995.
Note 2 - Distributions and Allocations
- --------------------------------------
Distributable Cash from Operations, as defined in the Amended Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), is
distributed 99% to the Limited Partners and 1% to the General Partner. The
Limited Partners' share of Distributable Cash from Operations is
distributed as follows: first, to the Investors until they receive a 7%
non-cumulative, non-compounded annual cash return on their Invested
Capital, as defined in the Partnership Agreement; second, to the John
Hancock Limited Partner until it receives a 7% non-cumulative, non-
compounded annual cash return on its Invested Capital; and third, to the
Investors and the John Hancock Limited Partner in proportion to their
respective Capital Contributions, as defined in the Partnership Agreement.
However, any Distributable Cash from Operations which is available as a
result of the reduction of working capital reserves funded by Capital
Contributions of the Investors is distributed 100% to the Investors.
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements (continued)
(Unaudited)
Note 2 - Distributions and Allocations (continued)
- --------------------------------------
Cash from Sales or Refinancings, as defined in the Partnership Agreement,
is first used to pay all debts and liabilities of the Partnership then due
and is then used to fund any reserves for contingent liabilities. Cash
from Sales or Refinancings is then distributed as follows: first, to the
Limited Partners until they receive an amount equal to their Invested
Capital with the distribution being made between the Investors and the John
Hancock Limited Partner in proportion to their respective Capital
Contributions; second, to the Investors until they have received, with
respect to all previous distributions during the year, their Cumulative
Return on Investment, as defined in the Partnership Agreement; third, to
the John Hancock Limited Partner until it has received, with respect to all
previous distributions during the year, its Cumulative Return on
Investment; fourth, to the General Partner to pay any Subordinated
Disposition Fees, as defined in the Partnership Agreement; and fifth, 99%
to the Limited Partners and 1% to the General Partner, with the
distribution being made between the Investors and the John Hancock Limited
Partner in proportion to their respective Capital Contributions.
Cash from the Sale of the last of the Partnership's properties is
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 the normal operations of the Partnership for each fiscal year
are allocated to the Limited Partners and General Partner in the same
amounts as Distributable Cash from Operations for that year. If such
profits are less than Distributable Cash from Operations for any year, they
are allocated in proportion to the amounts of Distributable Cash from
Operations for that year. If such profits are greater than Distributable
Cash from Operations for any year, they are allocated 99% to the Limited
Partners and 1% to the General Partner, with the allocation made between
the John Hancock Limited Partner and the Investors in proportion to their
respective Capital Contributions. Losses from the normal operations of the
Partnership are allocated 99% to the Limited Partners and 1% to the General
Partner, with the allocation made between the John Hancock Limited Partner
and the Investors in proportion to their respective Capital Contributions.
Depreciation deductions are allocated 1% to the General Partner and 99% to
the Investors, and not to the John Hancock Limited Partner.
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements (continued)
(Unaudited)
Note 2 - Distributions and Allocations (continued)
- --------------------------------------
Profits and Losses from Sales or Refinancings are generally 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.
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report on Form 8-K to be signed on its
behalf by the undersigned, hereunto duly authorized, on the 14th day of
October, 1997.
John Hancock Realty Income Fund Limited
Partnership
By: John Hancock Realty Equities, Inc.,
General Partner
By: WILLIAM M. FITZGERALD
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William M. Fitzgerald, President
By: RICHARD E. FRANK
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Richard E. Frank, Treasurer
(Chief Accounting Officer)
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