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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): January 7, 1999
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)
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
ITEM 2 - Acquisition or Disposition of Assets
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Disposition of the Carnegie Center
- ----------------------------------
During July 1998 the General Partner listed the Carnegie Center for sale because
of the current status of the property, the projected future capital requirements
necessary for the property to maintain its competitive position within the
market and the current conditions in the Cincinnati real estate market,
On January 7, 1999 for a net sales price of approximately $4,090,000 to a
non-affiliated buyer 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 $362,000, which represents the
difference between the net sales price and the property's carrying value of
approximately $3,728,000.
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 Kiesland Partnership IX (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 September 30,
1998, which is included as Exhibit 1 of this report.
ITEM 7 - Financial Statements
- -----------------------------
(A) Financial Statements
Pro Forma Balance Sheet at September 30, 1998.........................3
Pro Forma Statement of Operations for the Nine Months
Ended September 30, 1998...........................................4
Pro Forma Statement of Operations for the Year Ended
December 31, 1997..................................................5
Notes to Pro Forma Financial Statements...............................6
(B) Exhibits
1. Purchase and Sale Agreement (excluding exhibits) between
John Hancock Realty Income Fund Limited Partnership and
Kiesland Partnersip IX dated ......................................9
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
On January 7, 1999, the Partnership sold the Carnegie Center property (the
"Property") to the Buyer for a net sales price of approximately $4,090,000. The
Pro Forma Balance Sheet reflects the financial position of the Partnership as if
the Property had been sold on September 30, 1998. The Pro Forma Statement of
Operations for the nine months ended September 30, 1998 reflects the continued
operations of the Partnership as if the Property had been sold on December 31,
1997. In addition, the Pro Forma Statement of Operations for the year ended
December 31, 1997 reflects the continued operations of the Partnership as if the
Property had been sold on December 31, 1996.
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA BALANCE SHEET
September 30, 1998
(Unaudited)
Historical Pro Forma
Summary Adjustment for Pro Forma
September 30, the Carnegie September 30,
1998 Center 1998
---- ------ ----
Cash and cash equivalents $ 2,290,075 $ 4,023,262 $ 6,313,337
Restricted cash 59,400 (26,520) 32,880
Other assets 254,921 - 254,921
Property held for sale 18,780,091 (3,728,036) 15,052,055
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Total assets $ 21,384,487 $ 268,706 $ 21,653,193
============ =========== ============
Liabilities:
Accounts payable and accrued expenses $ 428,458 $ (93,258) $ 335,200
Accounts payable to affiliates 214,969 - 214,969
------------ ----------- ------------
Total liabilities 643,427 (93,258) 550,169
Partners' equity/(deficit):
General Partner (250,795) 3,620 (247,175)
Limited Partners 20,991,855 358,344 21,350,199
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Total partners' equity 20,741,060 361,964 21,103,024
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Total liabilities and partners' equity $ 21,384,487 $ 268,706 $ 21,653,193
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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 NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
Historical
Summary Pro Forma Pro Forma
For the Nine Adjustment for For the Nine
Months Ended the Stone Months Ended
September 30, Container September 30,
1998 Building 1998
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Income:
Rental income $ 1,908,452 $(372,241) $ 1,536,211
Interest income 72,475 - 72,475
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Total income 1,908,927 (372,241) 1,608,686
Expenses:
Depreciation 372,850 (83,141) 289,709
General and administrative 349,854 - 349,854
Property operating expenses 251,488 (87,502) 163,986
Amortization of deferred expenses 64,380 (19,467) 44,913
Management fee 48,285 - 48,285
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Total expenses 1,086,587 (190,110) 896,747
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Net income $ 894,070 $(182,131) $ 711,939
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Allocation of net income:
General Partner $ 8,941 $ (1,821) $ 7,120
John Hancock Limited Partner (16,927) - (16,927)
Investors 902,056 (180,310) 721,746
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$ 894,070 $(182,131) $ 711,939
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Net income per Unit $ 9.84 $ (1.97) $ 7.87
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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, 1997
Historical Pro Forma
Summary Adjustment for Pro Forma
For the Year Ended the Stone For the Year Ended
December 31, Container December 31,
1997 Building 1997
---- -------- ----
(Audited) (Unaudited) (Unaudited)
Income:
Rental income $ 2,861,166 $ (473,627) $ 2,387,539
Interest income 107,469 - 107,469
Loss on Sale of property (5,321) - (5,321)
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Total income 2,963,314 (473,627) 2,489,687
Expenses:
Depreciation 667,869 (166,282) 501,587
General and administrative 384,727 - 384,727
Property operating expenses 396,136 (74,378) 321,758
Management fee 75,176 - 75,176
Property write-down 668,520 - 668,520
Amortization of deferred expenses 134,503 (19,467) 115,036
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Total expenses 2,326,931 (260,127) 2,066,804
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Net income $ 636,383 $ 213,500 $ 422,883
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Allocation of net income:
General Partner $ 6,364 $ (2,135) $ 4,229
John Hancock Limited Partner (141,179) - (141,179)
Investors 771,198 (211,365) 559,833
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$ 636,383 $ (213,500) $ 422,883
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Net income per Unit $ 8.41 $ (2.30) $ (6.11)
=========== =========== ===========
See Notes to Pro Forma Financial Statements
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements
(Unaudited)
NOTE 1 - CARNEGIE CENTER
On January 8, 1999, the Partnership sold the Carnegie Center property (the
"Property") to the Buyer for a net sales price of approximately $4,090,000,
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 $362,000 which represents the difference
between the net sales price and the property's carrying value of approximately
$3,728,000.
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 September 30, 1998 reflects the financial position of the
Partnership as if the Property had been sold on September 30, 1998. The Pro
Forma Statement of Operations for the nine months ended September 30, 1998
reflects the continued operations of the Partnership as if the Property had been
sold on December 31, 1997. In addition, the Pro Forma Statement of Operations
for the year ended December 31, 1997 reflects the continued operations of the
Partnership as if the Property had been sold on December 31, 1996.
NOTE 2 - DISTRIBUTIONS AND ALLOCATIONS
Distributable Cash from Operations (defined in the Partnership Agreement) is
distributed 5% to the General Partner and the remaining 95% 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 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 (defined
in the Partnership Agreement). However, any Distributable Cash from Operations
which is available as a result of a reduction in working capital reserves funded
by Capital Contributions of the Investors will be distributed 100% to the
Investors.
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, after giving effect all previous
distributions of Distributable Cash from Operations and any previous
distributions of Cash from Sales or Financings after the return of their
Invested Capital, their Cumulative Return on Investment, as defined in the
Partnership Agreement; third, to the John Hancock Limited Partner until it has
received, after giving effect all previous distributions of Distributable Cash
from Operations and any previous distributions of Cash from Sales or Financings
after the return of their Invested Capital, their Cumulative Return on
Investment, 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.
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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 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, 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
5% to the General Partner and 95% 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. However,
all tax aspects of the Partnership's payment of the sales commissions from the
Capital Contributions made by the John Hancock Limited Partner are allocated 1%
to the General Partner and 99% to the John Hancock Limited Partner, and not to
the Investors. Depreciation deductions are allocated 1% to the General Partner
and 99% to the Investors, and not to the John Hancock Limited Partner.
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 3rd day of February, 1999.
John Hancock Realty Income Fund Limited
Partnership
By: John Hancock Realty Equities, Inc.,
General Partner
By: /s/ William M. Fitzgerald
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William M. Fitzgerald, President
By: /s/ Richard E. Frank
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Richard E. Frank, Treasurer
(Chief Accounting Officer)
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