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): December 29, 1995
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in its Charter)
Massachusetts 0-15680 04-2921566
(State of (Commission (IRS Employer
Organization) File No.) Identification No.)
200 Berkeley Street
Boston, MA 02117 (800) 722-5457
(Address of principal executive (Registrant's telephone
offices, including zip code) number, including area
code)
Not Applicable
(Former name or former address, if changed since last report)
Page 1 of 19
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
ITEM 2 - Acquisition or Disposition of Assets
- ---------------------------------------------
Disposition of the J.C. Penney Credit Operations Center
- -------------------------------------------------------
On December 29, 1995, the Partnership sold the J.C. Penney Credit
Operations Center property in Albuquerque, New Mexico, for a net sales
price of approximately $5,392,000, 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 gain of approximately
$129,000, which represents the difference between the net sales price and
the property's net book value of approximately $5,263,000.
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 4580 Paradise Blvd.
Associates Limited Partnership (the "Buyer"). 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 November
20, 1995, which is included as Exhibit 1 of this report.
ITEM 7 - Financial Statements
- -----------------------------
(A) Financial Statements
Pro Forma Balance Sheet at September 30, 1995 4
Pro Forma Statement of Operations for the Nine Months Ended Sep
tember 30, 1995 5
Pro Forma Statement of Operations for the Year Ended December 31,
1994 6
Notes to Pro Forma Financial Statements 7
(B) Exhibits
1.Purchase and Sale Agreement between John Hancock Realty Income
Fund Limited Partnership and 4580 Paradise Blvd. Associates Li
mited Partnership dated November 20, 1995 11
2
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
On December 29, 1995, the Partnership sold the J.C. Penney Credit
Operations Center to the Buyer for a gross sales price of $5,600,000. The
Pro Forma Balance Sheet reflects the financial position of the Partnership
as if the J.C. Penney Credit Operations Center property had been sold on
September 30, 1995. The Pro Forma Statement of Operations for the nine
months ended September 30, 1995 reflects the continued operations of the
Partnership as if the J.C. Penney Credit Operations Center property had
been sold on December 31, 1994. In addition, the Pro Forma Statement of
Operations for the year ended December 31, 1994 reflects the continued
operations of the Partnership as if the J.C. Penney Credit Operations
Center property had been sold on December 31, 1993.
3
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1995
(Unaudited)
<CAPTION
Pro Forma
Historical Adjustment for
Summary the J.C Penney Pro Forma
September 30, Credit Operations September 30,
1995 Center 1995
---- ---- ----
Current assets:
Cash and cash equivalents $3,180,580 $5,392,238 $8,572,818
Restricted cash 6,778 - 6,778
Other current assets 195,646 - 195,646
---------- ---------- ----------
Total current assets 3,383,004 5,392,238 8,775,242
Investment in property:
Land 8,934,077 (1,422,910) 7,511,167
Buildings and improvements 29,174,904 (5,080,849) 24,094,055
---------- ---------- ----------
38,108,981 (6,503,759) 31,605,222
Less: accumulated depreciation (8,167,312) 1,240,266 (6,927,046)
---------- ---------- ----------
29,941,669 (5,263,493) 24,678,176
Long-term restricted cash 40,014 - 40,014
Deferred expenses, net of accumulated
amortization of $773,937 in 1995 479,081 - 479,081
---------- ---------- ----------
Total assets $33,843,768 $128,745 $33,972,513
=========== ========== ===========
Current liabilities:
Accounts payable and accrued expenses $388,874 $- $388,874
Accounts payable to affiliates 53,454 - 53,454
---------- ---------- ----------
Total current liabilities 442,328 - 442,328
Partners' equity/(deficit):
General Partner (199,247) 1,287 (197,960)
Limited Partners 33,600,687 127,458 33,728,145
---------- ---------- ----------
Total partners' equity 33,401,440 128,745 33,530,185
---------- ---------- ----------
Total liabilities and partners' equity $33,843,768 $128,745 $33,972,513
=========== ========== ===========
See Notes to Pro Forma Financial Statements
4
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(Unaudited)
Historical
Summary Pro Forma Pro Forma
For the Nine Adjustment for For the Nine
Months Ended the J.C. Penney Months Ended
September 30, Credit Operations September 30,
1995 Center 1995
---- ---- ----
Income:
Rental income $2,300,071 ($459,375) $1,840,696
Interest income 128,748 - 128,748
Other income 82,008 - 82,008
---------- ---------- ----------
Total income 2,510,827 (459,375) 2,051,452
Expenses:
Depreciation 713,853 (126,845) 587,008
Property operating expenses 361,319 - 361,319
General and administrative 160,816 - 160,816
Amortization of deferred expenses 100,005 - 100,005
Management fee 62,955 - 62,955
---------- ---------- ----------
Total expenses 1,398,948 (126,845) 1,272,103
---------- ---------- ----------
Net income $1,111,879 ($332,530) $779,349
========== ========== ==========
Allocation of net income:
General Partner $11,119 ($3,325) $7,794
John Hancock Limited Partner (58,431) 6,386 (52,045)
Investors 1,159,191 (335,591) 823,600
---------- ---------- ----------
$1,111,879 ($332,530) $779,349
========== ========== ==========
Net income per Unit $12.65 ($3.66) $8.99
====== ====== =====
See Notes to Pro Forma Financial Statements
5
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
Historical Pro Forma
Summary Adjustment for Pro Forma
For the Year Ended the J.C. Penney For the Year Ended
December 31, Credit Operations December 31,
1994 Center 1994
---- ------ ----
(Audited) (Unaudited) (Unaudited)
Income:
Rental income $3,618,826 ($612,500) $3,006,326
Interest income 110,982 - 110,982
---------- --------- ----------
Total income 3,729,808 (612,500) 3,117,308
Expenses:
Depreciation 967,493 (169,127) 798,366
Property operating expenses 317,961 (937) 317,024
General and administrative 202,264 - 202,264
Amortization of deferred expenses 148,930 - 148,930
Property write-down 512,000 - 512,000
Management fee 83,939 - 83,939
---------- --------- ----------
Total expenses 2,232,587 (170,064) 2,062,523
---------- --------- ----------
Net income $1,497,221 ($442,436) $1,054,785
========== ========= ==========
Allocation of net income:
General Partner $14,972 ($4,424) $10,548
John Hancock Limited Partner (77,909) 8,516 (69,393)
Investors 1,560,158 (446,528) 1,113,630
---------- --------- ----------
$1,497,221 ($442,436) $1,054,785
========== ========= ==========
Net income per Unit $17.02 ($4.87) $12.15
====== ===== ======
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 - J.C. Penney Credit Operations Center
- ---------------------------------------------
On December 29, 1995, the Partnership sold the J.C. Penney Credit
Operations Center property in Albuquerque, New Mexico, for a net sales
price of approximately $5,392,000, 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 gain of approximately
$129,000, which represents the difference between the net sales price and
the property's net book value of approximately $5,263,000.
The historical financial statements are adjusted to show the effects
resulting from the sale of the J.C. Penney Credit Operations Center
property on the Partnership's operations, assets and liabilities. The Pro
Forma Balance Sheet at September 30, 1995 reflects the financial position
of the Partnership as if the J.C. Penney Credit Operations Center property
had been sold on September 30, 1995. The Pro Forma Statement of Operations
for the nine months ended September 30, 1995 reflects the continued
operations of the Partnership as if the J.C. Penney Credit Operations
Center property had been sold on December 31, 1994. In addition, the Pro
Forma Statement of Operations for the year ended December 31, 1994 reflects
the continued operations of the Partnership as if the J.C. Penney Credit
Operations Center property had been sold on December 31, 1993.
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.
7
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.
8
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.
9
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
SIGNATURES
----------
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 17th day of
January, 1996.
John Hancock Realty Income Fund Limited
Partnership
By: John Hancock Realty Equities, Inc.,
General Partner
By: WILLIAM M. FITZGERALD
-----------------------------
William M. Fitzgerald, President
By: RICHARD E. FRANK
-----------------------------
Richard E. Frank, Treasurer
(Chief Accounting Officer)