SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1994
0-13473
Commission File
Number..........................................................................
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)
(800) 722-5457
................................................................................
(Registrant's telephone number, including area code)
Not Applicable
................................................................................
(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
INDEX
PART I: FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Balance Sheets at September 30, 1994 and December 31, 1993 3
Statements of Operations for the Three and Nine Months Ended
September 30, 1994 and 1993 4
Statements of Partners' Equity for the Nine Months Ended
September 30, 1994 and for the Year Ended December 31, 1993 5
Statements of Cash Flows for the Nine Months Ended
September 30, 1994 and 1993 6
Notes to Financial Statements 7-11
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 12-14
PART II: OTHER INFORMATION 15
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1994 1993
---- ----
Assets:
Cash and cash equivalents $ 667,543 $ 444,021
Restricted cash 576,935 452,431
Note receivable, net of allowance of
$284,155 in 1994 and $298,058 in 1993 - -
Prepaid expenses and other assets 10,785 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 (6,667,187) (6,197,321)
------------- -------------
14,126,887 14,596,753
------------ ------------
Total assets $15,382,150 $15,580,544
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 508,523 $ 325,448
Accounts payable to affiliates 351,972 562,555
Note payable to affiliate 1,000,000 1,000,000
Long-term debt 13,464,874 13,602,666
------------ ------------
Total liabilities 15,325,369 15,490,669
Partners' equity/(deficit):
General Partners' (707,887) (707,556)
Limited Partners' 764,668 797,431
-------------- --------------
Total partners' equity 56,781 89,875
-------------- --------------
Total liabilities and partners' equity $15,382,150 $15,580,544
============== ==============
See Notes to Financial Statements
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
Income:
Rental income $808,720 $783,337 $2,392,464 $2,243,209
Interest income 9,786 13,076 20,505 36,665
Other income - - 13,903 -
----------- --------- ------------- -------------
Total income 818,506 796,413 2,426,872 2,279,874
Expenses:
Property operating expenses 365,440 447,345 1,041,837 1,140,317
Interest 285,490 300,609 858,949 904,360
Depreciation 155,578 160,957 469,866 486,471
General and administrative 27,998 20,719 89,314 93,216
---------- ---------- ------------- -------------
Total expenses 834,506 929,630 2,459,966 2,624,364
--------- --------- ----------- -----------
Net income/(loss) ($16,000) ($133,217) ($33,094) ($344,490)
========= ======== ============ ===========
Allocation of net income/(loss):
General Partners' ($160) ($1,332) ($331) ($3,445)
Limited Partners' (15,840) (131,885) (32,763) (341,045)
---------- --------- ------------- ------------
($16,000) ($133,217) ($33,094) ($344,490)
========= ======== ============ ===========
Net income/(loss) per Limited Partnership
Unit outstanding ($0.72) ($6.01) ($1.49) ($15.53)
=========== =========== ============== =============
See Notes to Financial Statements
STATEMENTS OF PARTNERS' EQUITY
(Unaudited)
Nine Months Ended September 30, 1994
and Year Ended December 31, 1993
General Limited
Partners Partners Total
-------- -------- -----
Partners' equity/(deficit) at
January 1, 1993 (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 (331) (32,763) (33,094)
------------ ------------ ----------
Partners' equity/(deficit) at
September 30, 1994 (21,954 Limited
Partnership units outstanding) ($707,887) $764,668 $56,781
======== =========== =========
See Notes to Financial Statements
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
1994 1993
---- ----
Operating activities:
Net loss ($33,094) ($344,490)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 469,866 486,471
-------- ----------
436,772 141,981
Changes in operating assets and liabilities:
Decrease in prepaid expenses and
other assets 76,554 99,399
Increase in accounts payable and
accrued expenses 183,075 203,591
Increase in restricted cash (124,504) (157,702)
Increase/(decrease) in accounts
payable to affiliates (210,583) 36,537
-------- ----------
Net cash provided by operating
activities 361,314 323,806
Financing activities:
Principal payments on long-term debt (137,792) (122,115)
---------- ----------
Net cash used in financing activities (137,792) (122,115)
---------- ----------
Net increase in cash and cash equivalents 223,522 201,691
Cash and cash equivalents at beginning
of year 444,021 304,288
---------- ----------
Cash and cash equivalents at end of period $667,543 $505,979
========== ==========
See Notes to Financial Statements
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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 September 30, 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
2,036 Limited Partners. The Managing General Partner and Associate
General Partner are collectively referred to as the General 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. The Partnership is engaged in
the acquisition, operation and disposition of investment real estate.
The initial capital of the Partnership was $6,000, representing
capital contributions of $800 by the Managing General Partner, $200
by 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
"Amended Agreement of Limited Partnership") 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 (the "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 Amended Agreement of Limited Partnership. 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.
2. Significant Accounting Policies
-------------------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the nine month period ending September 30, 1994
are not necessarily indicative of the results that may be expected
for the year ending December 31, 1994. 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, 1993.
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.
Investments in property are recorded at cost. 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 income/(loss) per Unit for the three and nine months ended
September 30, 1994 and 1993, is computed by dividing the Limited
Partners' share of net income/(loss) by the number of Units
outstanding at the end of such periods.
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.
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
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 Amended Agreement of Limited
Partnership, 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 that 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 of the Partnership 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 Amended Agreement of Limited Partnership. All distributions of
Distributable Cash from Operations deferred by the General Partners
shall accrue and be 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.
Cash from Sales or Refinancings, as defined in the Amended Agreement of
Limited Partnership, 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 Amended Agreement
of Limited Partnership, 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 shall then be 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.
Profits from Sales or Refinancings will generally be allocated in the
same manner as cash from that transaction. Losses from Sales or
Refinancings shall be 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 transaction would be distributed.
3. The Partnership Agreement (continued)
------------------------------------
Cash from the Sale of the last of the Partnership's properties shall be
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 Partners' 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 shall 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.
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:
Nine Months Ended
September 30,
1994 1993
-------- --------
Reimbursement for operating expenses $52,905 $48,043
Interest on note payable to affiliate 60,000 60,000
-------- --------
$112,905 $108,043
======== ========
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.
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, bearing
interest at 10% per annum. 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. The current short-term
note bears interest at 8% per annum, payable monthly, with the
principal due on November 30, 1994.
The Partnership paid $323,488 and $116,421 to the Managing General
Partner during the nine months ended September 30, 1994 and the year
ended December 31, 1993, respectively, as reimbursement for general
and administrative expenses and interest expense incurred on behalf
of the Partnership. Prior to 1993, such payments towards the
reimbursement of general and administrative expenses and the payment
of interest on such short-term loans had been deferred in order for
the Partnership to meet working capital needs. 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 September 30, 1994, the cumulative total due
on the short-term loan and such deferred amounts was $1,351,972.
The Managing General Partner serves in a similar capacity for four other
affiliated real estate limited partnerships.
5. Investment in Property
----------------------
Investment in property at cost consists of residential real estate as
follows:
September 30, 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
=========== ===========
6. Long-Term Debt
--------------
Long-term debt consists of the following:
September 30, December 31,
1994 1993
---- ----
Non-recourse first mortgage note collateralized
by the 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. $ 8,809,256 $ 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 lender 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. 4,655,618 4,712,054
------------- -------------
$13,464,874 $13,602,666
=========== ===========
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 lender by a deed-in-lieu of foreclosure on August 9,
1991.) The outstanding balance due 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 nine months ended September 30, 1994.
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 September 30, 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 has issued a default notice to the
obligor and demand for payment and has filed a complaint demanding
full collection of the note.
8. Federal Income Taxes
--------------------
A reconciliation of the net loss reported in the Statements of
Operations to the net loss reported for federal income tax purposes
is as follows:
Nine Months Ended
September 30,
1994 1993
---- ----
Net loss per Statements of Operations ($33,094) ($344,490)
Add/(deduct): Excess of tax depreciation
over book depreciation (225,039) (188,934)
--------- ---------
Net loss for federal income tax purposes ($258,133) ($533,424)
========= =========
JOHN HANCOCK PROPERTIES 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 September 21, 1984 to August 31, 1985) the
Partnership sold 21,954 Units of Limited Partnership Interests (the "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 Notes 5 and 6 to the
Financial Statements included in Item 1 of this Report.
Liquidity and Capital Resources
- - -------------------------------
As of September 30, 1994, the Partnership had $667,543 in cash and cash
equivalents, and $576,935 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 Amended Agreement of
Limited Partnership) 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 cash distributions
during 1994. 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 principal balance on the short-term
loan made by the Managing General Partner to the Partnership in the amount of
$1,000,000 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. In addition, from 1991 through the second quarter of 1993, payments
to the Managing General Partner towards reimbursement for general and
administrative expenses incurred on behalf of the Partnership and interest on
such short-term loans were not made in order for the Partnership to meet working
capital needs.
The Partnership paid an aggregate of $323,488 and $116,421 to the Managing
General Partner during the nine months ended September 30, 1994 and the year
ended December 31, 1993, respectively, as reimbursement for general and
administrative expenses and interest expense incurred on behalf of the
Partnership. Prior to 1993, payments towards the reimbursement of general and
administrative expenses and the payment of interest on such short-term loans had
been deferred in order for the Partnership to meet working capital needs. 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. The cumulative total
of such loan payments and deferred amounts due as of September 30, 1994 is
$1,351,972 and is described further in Note 4 to the Financial Statements
included in Item 1 of this Report. In the event that the Partnership is unable
to generate cash sufficient to satisfy its liquidity requirements, it is
anticipated that additional funds would be obtained through the sale or
refinancing of the Partnership's investments.
During the nine months ended September 30, 1994, the Partnership made $137,792
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 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 or refinancing
of the property.
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 been able to sustain a stabilized occupancy rate and consistent
income performance. Given these market conditions and the current status of the
property, the Managing General Partner listed the Northgreen Apartments for sale
during the second quarter of 1994.
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
rescind the 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 prospective buyer for the property.
Item 2: Management's Discussion and Analysis of Financial Condition and
- - ------------------------------------------------------------------------
Results of Operations (continued)
- - --------------------------------
Liquidity and Capital Resources (continued)
- - ------------------------------------------
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. 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 Second Agreement. If this potential transaction does not
result in the sale of the property, then the General Partner will seek another
buyer for the Northgreen Apartments.
No capital expenditures have been made during the first nine months of 1994, and
the Partnership does not anticipate incurring any significant capital
expenditures during the remainder of 1994.
During the second quarter of 1994, the Managing General Partner had the
Fisherman's Village 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 property in the amount of $9,034,163 at September 30, 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 existed and that a
write-down in value was not required.
Results of Operations
- - ---------------------
The net loss for the nine months ended September 30, 1994 was $33,094 as
compared to a net loss of $344,490 for the nine months ended September 30, 1993,
representing a decline in the Partnership's net loss of $311,396, or 90%. The
decline in the Partnership's net loss is primarily due to an increase in rental
income at the Partnership's properties and a decrease in operating expenses at
the Fisherman's Village Apartments property.
Average occupancy for the Partnership's properties for the nine months ended
September 30, 1994 was as follows:
Fisherman's Village Apartments 95%
Northgreen Apartments 95%
Rental income from the Partnership's properties for the nine months ended
September 30, 1994 increased by $149,255, or 7%, as compared to the same period
in 1993. Rental income at the Fisherman's Village Apartments increased by 7%
between periods due to increases in average occupancy and rental rates as well
as to a decrease in rental concessions. Rental income at the Northgreen
Apartments increased by 6% between periods due to increases in average occupancy
and rental rates.
Interest income decreased by $16,160, or 44%, for the nine months ended
September 30, 1994 as compared to the same period in 1993. This decrease was
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 nine months ended September 30, 1994 have been included in other income to
reflect a recovery on the provision against the note. This decrease was
partially offset by an increase in the Partnership's cash and cash equivalents
and the interest earned on such amounts.
Other income of $13,903 for the nine months ended September 30, 1994 resulted
from the establishment of the provision against the entire outstanding balance
of the note receivable as of December 31, 1993. As such, payments of principal
and interest received subsequent to December 31, 1993 reflect a recovery on the
provision against the note and are included in other income.
Item 2: Management's Discussion and Analysis of Financial Condition and
- - ------------------------------------------------------------------------
Results of Operations (continued)
- - --------------------------------
Results of Operations (continued)
- - --------------------------------
Interest expense decreased by $45,411, or 5%, for the nine months ended
September 30, 1994 as compared to the same period in 1993. This decrease is
primarily due to a reduction in interest expense at the Northgreen Apartments as
a result of the interest rate adjustment on the mortgage loan from 9.75% to
8.75% effective October 1993. Interest expense at the Fisherman's Village
Apartments remained consistent between periods.
Property operating expenses decreased by $98,480, or 9%, for the nine months
ended September 30, 1994 as compared to the same period in 1993. This decrease
is primarily due to a decline in maintenance and repair expenses at the
Fisherman's Village Apartments. During the nine months ended September 30, 1993,
Fisherman's Village incurred significant maintenance and repair expenses in
order to maintain the property's occupancy rate and its competitive position
within the Orlando market. Property operating expenses decreased at the
Northgreen Apartments between periods primarily due to a decrease in repair and
maintenance expenses. In addition, the local government changed its method of
assessing water and sewer charges resulting in a decrease in such expenses at
the property.
The Managing General Partner believes that inflation has had no significant
impact on the Partnership during the nine months ended September 30, 1994 and
the Managing General Partner anticipates that inflation will not have a
significant impact during the remainder of 1994.
Cash Flow
- - ---------
The following table provides the calculations of Adjusted Cash from Operations
and Distributable Cash from Operations, which are calculated in accordance with
Section 17 of the Amended Agreement of Limited Partnership:
Nine Months Ended
September 30,
1994 1993
---- ----
Net cash provided by
operating activities (a) $361,314 $323,806
Net change in operating
assets and liabilities (a) 75,458 (181,825)
---------- ---------
Cash provided by operations (a) 436,772 141,981
Increase in working capital reserves (298,980) -
Principal payments on
long-term debt (exclusive of
payments for retirement of debt) (137,792) (122,115)
--------- ---------
Adjusted Cash from Operations (b) - 19,866
Decrease in working capital reserves - (19,866)
--------- ---------
Distributable Cash from Operations (b) $ - $ -
========= =========
(a) Net cash provided by operating activities, net change in operating assets
and liabilities, and 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 Amended Agreement of Limited Partnership. 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.
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PART II: OTHER INFORMATION
Item 1. 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 2. Changes in Securities
There were no changes in securities during the third quarter of 1994.
Item 3. Defaults Upon Senior Securities
There were no defaults upon senior securities during the third quarter
of 1994.
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 third quarter of 1994.
Item 5. Other information
Item 6. Exhibits and Reports on Form 8-K
(a) There are no exhibits to this report.
(b) No reports on Form 8-K were filed during the third quarter of 1994.
JOHN HANCOCK PROPERTIES 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 November, 1994.
John Hancock Properties Limited Partnership
By:John Hancock Realty Equities, Inc.,
Its Managing General Partner
By:----------------------------------
William M. Fitzgerald, President
By:-----------------------------------
Richard E. Frank, Treasurer
(Chief Accounting Officer)