1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2001
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM N/A
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COMMISSION FILE NUMBER 0-17664
----------------------------------------------------------
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Massachusetts 04-2969061
- --------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
200 Clarendon Street, Boston, Ma 02116
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(800) 722-5457
- --------------------------------------------------------------------------------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
N/A
- --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF
CHANGED SINCE LAST REPORT)
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
---- ----
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2
INDEX
PART I: FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Balance Sheets at June 30, 2001 and
December 31, 2000 3
Statements of Operations for the Three and Six
Months Ended June 30, 2001 and 2000 4
Statements of Partners' Equity for the
Six Months Ended June 30, 2001 and
Year Ended December 31, 2000 5
Statements of Cash Flows for the Six
Months Ended June 30, 2001 and 2000 6
Notes To Financial Statements 7-9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
PART II: OTHER INFORMATION 13
2
3
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALANCE SHEETS
(UNAUDITED)
ASSETS
JUNE 30, DECEMBER 31,
2001 2000
---------- ----------
Cash and cash equivalents $3,535,363 $3,589,634
---------- ----------
Total assets $3,535,363 $3,589,634
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 45,200 $ 76,691
Accounts payable to affiliates 94,601 105,664
---------- ----------
Total liabilities 139,801 182,355
Partners' equity/(deficit):
General Partners' deficit (180,508) (180,391)
Limited Partners' equity 3,576,070 3,587,670
---------- ----------
Total partners' equity 3,395,562 3,407,279
---------- ----------
Total liabilities and partners' equity $3,535,363 $3,589,634
========== ==========
See Notes to Financial Statements
3
4
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- -----------------------------
2001 2000 2001 2000
-------- ---------- --------- -----------
Income:
Rental income $ 4,385 $ 269,549 $ 40,293 $ 527,381
Income from joint venture -- 259,374 -- 483,187
Interest income 38,128 38,849 87,812 77,823
-------- ---------- --------- ----------
Total income 42,513 567,772 128,105 1,088,391
Expenses:
Depreciation -- -- -- 87,302
Property operating expenses -- 17,441 -- 56,834
General and administrative expenses 57,358 96,525 139,822 123,715
Property write-downs -- 2,017,976 -- 2,017,976
Amortization of deferred expenses -- 31,527 -- 68,475
-------- ----------- --------- -----------
Total expenses 57,358 2,163,469 139,822 2,354,302
-------- ----------- --------- -----------
Net income/(loss) $(14,845) $(1,595,697) $ (11,717) $(1,265,911)
======== =========== ========= ===========
Allocation of net income/(loss):
General Partner $ (148) $ (15,957) $ (117) $ (12,659)
John Hancock Limited Partner -- -- -- --
Investors (14,697) (1,579,740) (11,600) (1,253,252)
--------- ----------- --------- -----------
$(14,845) $(1,595,697) $( 11,717) $(1,265,911)
======== =========== ========= ===========
Net income/(loss) per Unit $ (0.01) $ (0.61) $ (0.00) $ (0.48)
======== =========== ========= ===========
See Notes to Financial Statements
4
5
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2001 AND
YEAR ENDED DECEMBER 31, 2000
GENERAL LIMITED
PARTNER PARTNERS TOTAL
---------- ----------- -----------
Partners' equity/(deficit) at January 1, 2000
(2,601,552 Units outstanding) ($145,091) $18,962,109 $18,817,018
Less: Cash distributions (16,366) (13,499,974) (13,516,340)
Add: Net loss (18,934) (1,874,465) (1,893,399)
--------- ------------ -----------
Partner's equity/(deficit) at December 31, 2000 (180,391) 3,587,670 3,407,279
(2,601,552 Units outstanding)
Less: Cash distributions -- -- --
Add: Net loss (117) (11,600) (11,717)
--------- ----------- -----------
Partners' equity/(deficit) at June 30, 2001
(2,601,552 Units outstanding) $(180,508) $ 3,576,070 $ 3,395,562
========= =========== ===========
See Notes to Financial Statements
5
6
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
----------------------------------
2001 2000
--------- -----------
Operating activities:
Net income/(loss) $ (11,717) ($1,265,911)
Adjustments to reconcile net income/(loss)
to net cash provided by/(used in) operating
activities:
Depreciation -- 87,302
Amortization of deferred expenses -- 68,475
Property write-downs -- 2,017,976
Cash distributions over (under) equity in
income from joint venture -- (105,581)
---------- ----------
(11,717) 802,261
Changes in operating assets and liabilities:
Decrease/(increase) in restricted cash -- 104,378
Decrease/(increase) in other assets -- ( 2,399)
Increase/(decrease) in accounts payable
and accrued expenses (31,491) (24,219)
Increase/(decrease) in accounts payable to
affiliates (11,063) (20,179)
---------- ----------
Net cash provided by/(used in) operating activities (54,271) 859,842
Investing activities:
Increase in deferred expenses -- (21,762)
---------- ----------
Net cash used in investing activities -- (21,762)
Financing activities:
Cash distributed to Partners -- (1,021,511)
---------- ----------
Net cash used in financing activities -- (1,021,511)
---------- ----------
Net decrease in cash and cash
equivalents (54,271) (183,431)
Cash and cash equivalents at beginning
of year 3,589,634 2,951,442
---------- ----------
Cash and cash equivalents at end
of period $3,535,363 $2,768,011
========== ==========
See Notes to Financial Statements
6
7
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION OF PARTNERSHIP
John Hancock Realty Income Fund-II Limited Partnership (the
"Partnership") was formed under the Massachusetts Uniform Limited
Partnership Act on June 30, 1987. As of June 30, 2001, the partners in
the Partnership consisted of John Hancock Realty Equities, Inc. (the
"General Partner"), a wholly-owned, indirect subsidiary of John Hancock
Life Insurance Company; John Hancock Realty Funding, Inc. (the "John
Hancock Limited Partner"); John Hancock Income Fund-II Assignor, Inc.
(the "Assignor Limited Partner"); and 3,981 Unitholders (the
"Investors"). The Assignor Limited Partner holds 2,601,552 Assignee
Units (the "Units"), representing economic and certain other rights
attributable to Investor Limited Partnership Interests in the
Partnership, for the benefit of the Investors. The John Hancock Limited
Partner, the Assignor Limited Partner and the Investors are
collectively referred to as the Limited Partners. The General Partner
and the Limited Partners are collectively referred to as the Partners.
The initial capital of the Partnership was $2,000, representing capital
contributions of $1,000 by the General Partner and $1,000 from the John
Hancock Limited Partner. The Amended Agreement of Limited Partnership
of the Partnership (the "Partnership Agreement") authorized the
issuance of up to 5,000,000 Assignee Units at $20 per Unit. During the
offering period, which terminated on January 2, 1989, 2,601,552 Units
were sold and the John Hancock Limited Partner made additional capital
contributions of $4,161,483. There were no changes in the number of
Units outstanding subsequent to the termination of the offering period.
The Partnership was engaged solely in the business of (i) acquiring,
improving, holding for investment and disposing of existing
income-producing retail, industrial and office properties on an
all-cash basis, free and clear of mortgage indebtedness, and (ii)
making mortgage loans consisting of conventional first mortgage loans
and participating mortgage loans secured by income-producing retail,
industrial and office properties. Although the Partnership's properties
were acquired and held free and clear of mortgage indebtedness, the
Partnership was able to incur mortgage indebtedness on its properties
under certain circumstances as specified in the Partnership Agreement.
The latest date on which the Partnership is due to terminate is
December 31, 2017, 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, as is described in the
following paragraph, the investments of the Partnership will be
disposed of, and the Partnership terminated, before December 31, 2017.
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 seven to ten
years following the date such property was acquired by the Partnership.
During 2000, the Partnership sold the last two properties in its
portfolio, one of which is held through a joint venture, resulting in
the termination of the operations of the Partnership. The Partnership
will be dissolved in accordance with the terms of the Partnership
Agreement, as soon as reasonably practicable.
2. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States for interim financial information and with the instructions for
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair representation have been included. Operating results for the
six-month period ended June 30, 2001 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2001.
For further information, refer to the financial statements and
footnotes thereto included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 2000.
The net income/(loss) per Unit for the periods hereof was calculated by
dividing the Investors' share of net income/(loss) by the number of
Units outstanding at the end of such period.
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8
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. THE PARTNERSHIP AGREEMENT
Distributable Cash from Operations (defined in the Partnership
Agreement) is distributed 1% to the General Partner and the remaining
99% in the following order of priority: first, to the Investors until
they receive a 7% non-cumulative, non-compounded annual cash return on
their Invested Capital (defined in the Partnership Agreement); second,
to the General Partner to pay the Subordinated Allocation (defined in
the Partnership Agreement) equal to 3 1/2% of Distributable Cash from
Operations for managing the Partnership's activities; third, to the
John Hancock Limited Partner until it receives a 7% non-cumulative,
non-compounded annual cash return on its Invested Capital; fourth, to
the Investors and the John Hancock Limited Partner in proportion to
their respective Capital Contributions (defined in the Partnership
Agreement), until they have received a 10% non-cumulative,
non-compounded annual cash return on their Invested Capital; fifth, to
the General Partner to pay the Incentive Allocation (defined in the
Partnership Agreement) equal to 2 1/2% of Distributable Cash from
Operations; and sixth, to the Investors and the John Hancock Limited
Partner in proportion to their respective Capital Contributions. Any
Distributable Cash from Operations which is available as a result of a
reduction of working capital reserves funded by Capital Contributions
of the Investors, will be distributed 100% to the Investors.
Cash from a Sale, Financing or Repayment (defined in the Partnership
Agreement) of a Partnership Investment, is first used to pay all debts
and liabilities of the Partnership then due and then to fund any
reserves for contingent liabilities. Cash from Sales, Financings or
Repayments is then distributed and paid in the following order of
priority: first, to the Investors and the John Hancock Limited Partner,
with the distribution made between the Investors and the John Hancock
Limited Partner in proportion to their respective Capital
Contributions, until the Investors and the John Hancock Limited Partner
have received an amount equal to their Invested Capital; second, to the
Investors until they have received, after giving effect to all previous
distributions of Distributable Cash from Operations and any previous
distributions of Cash from Sales, Financings or Repayments after the
return of their Invested Capital, the Cumulative Return on Investment
(defined in the Partnership Agreement); third, to the John Hancock
Limited Partner until it has received, after giving effect to all
previous distributions of Distributable Cash from Operations and any
previous distributions of Cash from Sales, Financings or Repayments
after the return of its Invested Capital, the Cumulative Return on
Investment; fourth, to the General Partner to pay any Subordinated
Disposition Fees then payable pursuant to Section 6.4(c) of the
Partnership Agreement; and fifth, 99% to the Investors and the John
Hancock Limited Partner and 1% to the General Partner, with the
distribution made between the Investors and the John Hancock Limited
Partner in proportion to their respective Capital Contributions.
Cash from the sale or repayment of the last of the Partnership's
properties or mortgage loans is distributed in the same manner as Cash
from Sales, Financings or Repayments, 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, Financings or
Repayments, as specified in the previous paragraph.
Profits for tax purposes from the normal operations of the Partnership
for each fiscal year are allocated to the Partners 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, then
they are allocated in proportion to the amounts of Distributable Cash
from Operations allocated for that year. If such profits are greater
than Distributable Cash from Operations for any year, they are
allocated 1% to the General Partner and 99% to the John Hancock Limited
Partner and the Investors, with the allocation made between the John
Hancock Limited Partner and the Investors in proportion to their
respective Capital Contributions. Losses for tax purposes from the
normal operations of the Partnership are allocated 1% to the General
Partner and 99% to the John Hancock Limited Partner and the Investors,
with the allocation made between the John Hancock Limited Partner and
the Investors in proportion to their respective Capital Contributions.
8
9
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. THE PARTNERSHIP AGREEMENT (CONTINUED)
Profits and Losses from Sales, Financings or Repayments are generally
allocated 99% to the Limited Partners and 1% to the General Partners.
Neither the General Partner nor any Affiliate (as defined in the
Partnership Agreement) of the General Partner shall be liable,
responsible or accountable in damages to any of the Partners or the
Partnership for any act or omission of the General Partner or such
affiliate in good faith on behalf of the Partnership within the scope
of the authority granted to the General Partner by the Partnership
Agreement and in the best interest of the Partnership, except for acts
or omissions constituting fraud, negligence, misconduct or breach of
fiduciary duty. The General Partner and its Affiliates performing
services on behalf of the Partnership shall be entitled to indemnity
from the Partnership for any loss, damage, or claim by reason of any
act performed or omitted to be performed by the General Partner or such
Affiliates in good faith on behalf of the Partnership and in a manner
within the scope of the authority granted to the General Partner by the
Partnership Agreement and in the best interest of the Partnership,
except that they shall not be entitled to be indemnified in respect of
any loss, damage, or claim incurred by reason of fraud, negligence,
misconduct, or breach of fiduciary duty. Any indemnity shall be
provided out of and to the extent of Partnership assets only. The
Partnership shall not advance any funds to the General Partner or its
Affiliates for legal expenses and other costs incurred as a result of
any legal action initiated against the General Partner or its
Affiliates by a Limited Partner in the Partnership, except under
certain specified circumstances.
The General Partner will fund any deficit balance in its capital
account prior to the dissolution of the Partnership.
4. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
Fees and expenses incurred and/or paid by the General Partner or its
Affiliates on behalf of the Partnership during the six months ended
June 30, 2001 and 2000 and to which the General Partner or its
affiliates are entitled to reimbursement from the Partnership were
$37,114 and $44,577, respectively. These expenses are included in
expenses on the Statements of Operations.
Accounts payable to affiliates represents amounts due to the General
Partner or its Affiliates for various services provided to the
Partnership, including amounts to indemnify the General Partner or its
Affiliates for claims incurred by them in connection with their actions
with respect to the Partnership. All amounts accrued by the Partnership
to indemnify the General Partner or its Affiliates for legal fees
incurred by them, shall not be paid unless or until all conditions set
forth in the Partnership Agreement for such payment have been
fulfilled.
The General Partner serves in a similar capacity for one other
affiliated real estate limited partnership.
9
10
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
During the offering period, from October 2, 1987 to January 2, 1989, the
Partnership sold 2,601,552 Units representing gross proceeds (exclusive of the
John Hancock Limited Partners' contribution, which was used to pay sales
commissions) of $52,031,040. The proceeds of the offering were used to acquire
investments, fund reserves, and pay acquisition fees and organizational and
offering expenses.
FORWARD-LOOKING STATEMENTS
In addition to historical information, certain statements contained herein
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Those statements appear in a number of places in this
Report and include statements regarding the intent, belief or expectations of
the General Partner with respect to, among other things, the prospective sale of
Partnership properties, repayment of mortgage loans, actions that would be taken
in the event of lack of liquidity, unanticipated leasing costs, repair and
maintenance expenses, litigation expenses and indemnification claims,
distributions to the General Partner and to Investors, the possible effects of
tenants vacating space at Partnership properties, the absorption of existing
retail space in certain geographical areas, and the impact of inflation.
Forward-looking statements involve numerous known and unknown risks and
uncertainties, and they are not guarantees of future performance. The following
factors, among others, could cause actual results or performance of the
Partnership and future events to differ materially from those expressed or
implied in the forward-looking statements: general economic and business
conditions; any and all general risks of real estate ownership, including
without limitation adverse changes in general economic conditions and adverse
local conditions, the fluctuation of rental income from properties, changes in
property taxes, utility costs or maintenance costs and insurance, fluctuations
of real estate values, competition for tenants, uncertainties about whether real
estate sales under contract will close; the ability of the Partnership to sell
its properties; and other factors detailed from time to time in the filings with
the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on forward-looking statements,
which reflect the General Partner's analysis only as of the date hereof. The
Partnership assumes no obligation to update forward-looking statements. See also
the Partnership's reports to be filed from time to time with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
LIQUIDITY AND CAPITAL RESOURCES
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 seven to ten years following the date such
property was acquired by the Partnership. The Partnership disposed of the last
investment in its portfolio when QOCC-1 Associates sold the Quince Orchard
Corporate Center on September 29, 2000. QOCC-1 Associates was subsequently
liquidated in December 2000. The sale of this last remaining investment resulted
in the termination of the operations of the Partnership, and the Partnership
will be dissolved, in accordance with the terms of the Partnership Agreement as
soon as reasonably practicable. At such time as all liabilities with respect to
the Partnership are resolved, the General Partner will make a final distribution
of net assets to the Limited Partners, as soon as practicable. No assurances can
be given as to whether any distribution can be made after all liabilities of the
Partnership are resolved. Such final distribution, if any, will result in the
liquidation and termination of the Partnership. At such time of such final
distribution, the outstanding Units will be canceled and, in accordance with
federal securities laws, they will be de-registered with the Securities and
Exchange Commission, after which time the Partnership will no longer be required
to file periodic reports with the Commission.
10
11
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
At June 30, 2001 the Partnership had $3,535,363 in cash and cash equivalents.
The Partnership has a working capital reserve with a current balance of
approximately $3.4 million. The General Partner anticipates that such amount
should be sufficient to satisfy the Partnership's general liquidity requirements
as the Partnership's business is wound down. Liquidity would, however, be
materially adversely affected by significant operating and liquidation costs
(including but not limited to litigation expenses). If any or all of these
events were to occur, to the extent that the working capital reserve would be
insufficient to satisfy the cash requirements of the Partnership, it is
anticipated that additional funds would be obtained through a reduction of cash
distributions to Investors, bank loans, short-term loans from the General
Partner or its Affiliates.
There was no cash distribution to the Investors during the six months ended June
30, 2001. As a result of the disposition by the Partnership of all of its
remaining properties during 2000, the General Partner has determined that it is
in the best interests of the Partnership to retain rather than distribute to
Investors, net cash provided by the Partnership's normal operations in order to
fund cash reserves for contingencies, as is permitted by the Partnership
Agreement. Accordingly, no cash distributions will be made to the Investors
until the final distribution, if any, as discussed above.
RESULTS OF OPERATIONS
The Partnership generated a net loss for the six months ended June 30, 2001 of
$11,717, as compared to net loss of $1,265,911 for the same period in 2000. The
prior period results include a $2,017,976 write-down of the value of Park Square
Shopping Center. Excluding this amount, net income for the six months ended June
30, 2001 decreased by $763,782, or 102%. This decrease is primarily due to a
decrease in rental income resulting from the sale of Park Square Shopping Center
in August 2000 and a decrease in income from joint venture resulting from the
sale of the Partnership's joint venture investment in Quince Orchard Corporate
Center in September 2000.
Average occupancy for the Partnership's investments was as follows:
Six Months Ended June 30,
2001 2000
---- ----
Park Square Shopping Center N/A 88%
Quince Orchard Corporate Center
(Affiliated Joint Venture) N/A 100%
Rental income for the six months ended June 30, 2001 decreased by $487,088 or
92%, as compared to the same period during 2000 primarily due to the sale of the
Park Square Shopping Center on August 30, 2000. Included in the results for the
current period are real estate tax reimbursements of approximately $31,000 that
were received by the Partnership from a tenant that were calculated subsequent
to the sale of the property.
Income from joint venture for the period ended June 30, 2001 decreased by
$483,187, or 100%, as compared to the same period during 2000 due to the sale of
the Partnership's joint venture interest in Quince Orchard Corporate Center in
September 2000.
Depreciation expense for the six months ended June 30, 2001 decreased by
$87,302, or 100%, as compared to the same period in 2000 due to the sale of the
of the Park Square Shopping Center in August 2000.
Property operating expenses for the six months ended June 30, 2001 decreased by
$56,834, or 100%, as compared to the same period in 2000 due to the sale of the
Park Square Shopping Center in August 2000.
11
12
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
General and administrative expenses for the six months ended June 30, 2001
increased by $16,107, or 13%, as compared to the same period in 2000 primarily
due to a payment during the current period of final legal expenses in connection
with the previously resolved class action.
Amortization of deferred expenses for the six months ended June 30, 2001
decreased by $68,475, or 100%, as compared to the same period during 2000
primarily due to the fact that acquisition fees paid to the General Partner were
fully amortized during 2000 when the last two properties were sold.
The General Partner believes that inflation has had no significant impact on the
Partnership's operations during the six months ended June 30, 2001, and the
General Partner anticipates that inflation will not have a significant impact
during the remainder of 2001.
CASH FLOW
The following table provides the calculations of Cash from Operations and
Distributable Cash from Operations which are calculated in accordance with
Section 17 of the Partnership Agreement:
Six Months Ended June 30,
2001 2000
------- --------
Net cash provided by/(used in) operating
activities (a) ($54,271) $859,842
Net change in operating assets and
liabilities (a) 42,554 (57,581)
-------- --------
Net cash provided by/(used in) operations (a) (11,717) 802,261
Increase in working capital reserves -- --
-------- --------
Cash from operations (b) (11,717) 802,261
Decrease in working capital reserves 11,717 143,758
-------- --------
Distributable cash from operations (b) $ 0 $946,019
======== ========
Allocation to General Partner $ -- $ 9,460
Allocation to Investors -- 936,559
Allocation to John Hancock Limited Partner -- --
-------- --------
$ -- $946,019
======== ========
(a) Net cash provided by operating activities, net change in operating
assets and liabilities, and net cash provided by operations are as
calculated in the Statements of Cash Flows included in Item 1 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.
12
13
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
There were no changes in securities during the second quarter of
2001.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the second
quarter of 2001.
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 second quarter of 2001.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits to this report
(b) There were no Reports on Form 8-K filed during the second quarter
of 2001.
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JOHN HANCOCK REALTY INCOME FUND-II 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 to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 14th day of August, 2001.
John Hancock Realty Income Fund-II
Limited Partnership
By: John Hancock Realty Equities, Inc.,
General Partner
By: /s/ Paul F. Hahesy
--------------------------------
Paul F. Hahesy, President
By: /s/ Janis L. Largesse
-------------------------------
Janis L. Largesse, Treasurer
(Chief Accounting Officer)
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