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 June 30, 1995
Commission File Number 0-13473
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
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
INDEX
PART I: FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Balance Sheets at June 30, 1995 and
December 31, 1994 3
Statements of Operations for the Three and
Six Months Ended June 30, 1995 and 1994 4
Statements of Partners' Equity for the
Six Months Ended June 30, 1995 and
for the Year Ended December 31, 1994 5
Statements of Cash Flows for the Six
Months Ended June 30, 1995 and 1994 6
Notes to Financial Statements 7-11
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12-15
PART II: OTHER INFORMATION 16
2
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Assets:
Cash and cash equivalents $3,980,503 $578,996
Restricted cash 341,972 417,985
Note receivable, net of allowance of
$284,155 - -
Prepaid expenses and other assets 15,304 79,275
Investment in property:
Land 1,688,726 2,588,726
Buildings and improvements 11,773,887 18,205,348
---------- ----------
13,462,613 20,794,074
Less: accumulated depreciation (4,716,270) (6,821,682)
---------- ----------
8,746,343 13,972,392
---------- ----------
Total assets $13,084,122 $15,048,648
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $360,234 $318,178
Accounts payable to affiliates 26,618 268,538
Note payable to affiliate - 1,000,000
Long-term debt 8,723,448 13,416,019
---------- ----------
Total liabilities 9,110,300 15,002,735
Partners' equity/(deficit):
General Partners' (668,717) (707,996)
Limited Partners' 4,642,539 753,909
---------- ----------
Total partners' equity 3,973,822 45,913
---------- ----------
Total liabilities and partners' equity $13,084,122 $15,048,648
========== ==========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental income $655,084 $797,046 $1,419,532 $1,583,744
Interest income 26,687 6,494 35,361 10,719
Gain on sale of property 3,983,775 - 3,983,775 -
---------- ---------- ---------- ----------
Total income 4,665,546 803,540 5,438,668 1,594,463
Expenses:
Interest 242,715 286,405 527,261 573,459
Property operating expenses 312,072 342,679 631,546 676,397
Depreciation 132,837 156,363 286,202 314,288
General and administrative 28,701 19,044 65,750 61,316
Provision for/(recovery of)
uncollectible note receivable - (5,561) - (13,903)
---------- ---------- ---------- ----------
Total expenses 716,325 798,930 1,510,759 1,611,557
---------- ---------- ---------- ----------
Net income/(loss) $3,949,221 $4,610 $3,927,909 ($17,094)
========== ========= ========== ==========
Allocation of net income/(loss):
General Partners' $39,492 $46 $39,279 ($171)
Limited Partners' 3,909,729 4,564 3,888,630 (16,923)
---------- ---------- ---------- ----------
$3,949,221 $4,610 $3,927,909 ($17,094)
========== ========= ========== ==========
Net income/(loss) per Limited Partnership
Unit outstanding $178.09 $0.21 $177.13 ($0.77)
========== ========= ========== ==========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
(Unaudited)
Six Months Ended June 30, 1995
and Year Ended December 31, 1994
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Partners' equity/(deficit) at
January 1, 1994 (21,954 Limited
Partnership Units outstanding) ($707,556) $797,431 $89,875
Less: Net loss (440) (43,522) (43,962)
-------- ---------- ----------
Partners' equity/(deficit) at
December 31, 1994 (21,954 Limited
Partnership Units outstanding) (707,996) 753,909 45,913
Add: Net income 39,279 3,888,630 3,927,909
-------- ---------- ----------
Partners' equity/(deficit) at
June 30, 1995 (21,954 Limited
Partnership Units outstanding) ($668,717) $4,642,539 $3,973,822
======== ========== ==========
</TABLE>
See Notes to Financial Statements
5
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
Operating activities:
Net income/(loss) $3,927,909 ($17,094)
Adjustments to reconcile net income/(loss)
to net cash provided by operating activities:
Depreciation 286,202 314,288
Gain on sale of property (3,983,775) -
---------- ----------
230,336 297,194
Changes in operating assets and liabilities:
Decrease in prepaid expenses,
other assets, and receivables 63,971 67,192
Increase in accounts payable
and accrued expenses 42,056 93,180
Decrease/(increase) in restricted cash 76,013 (77,259)
Decrease in accounts payable to
affiliates (241,920) (91,283)
---------- ----------
Net cash provided by operating
activities 170,456 289,024
Investing activities:
Proceeds from sale of property 8,923,622 -
---------- ----------
Net cash provided by investing
activities 8,923,622 -
Financing activities:
Principal payments on note payable to affiliate (1,000,000) -
Principal payments on long-term debt (4,692,571) (91,034)
---------- ----------
Net cash used in financing activities (5,692,571) (91,034)
---------- ----------
Net increase in cash and cash
equivalents 3,401,507 197,990
Cash and cash equivalents at beginning
of year 578,996 444,021
---------- ----------
Cash and cash equivalents at end of
period $3,980,503 $642,011
========== ==========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
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 June 30, 1995, 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 2,055 Limited Partners. The Managing General Partner and
Associate General Partner are collectively referred to as the
"General Partners" and the General Partners and the Limited
Partners are collectively referred to as the "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 from the Managing
General Partner, $200 from 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 "Partnership Agreement") 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 Partnership Agreement. 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. 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 five to eight years
following the date such property was acquired by the Partnership.
As of June 30, 1995 and the date hereof, the Partnership has one
property remaining in its portfolio. This property is currently
listed for sale. Upon the sale of this last remaining property,
the operations of the Partnership will terminate and the
Partnership will be dissolved, in accordance with the terms of the
Partnership Agreement.
7
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
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 six month period
ending June 30, 1995 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1995. 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, 1994.
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.
Investments in property are recorded at cost less any property
write-downs for permanent impairment of values. 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 six months ended
June 30, 1995 and 1994 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.
Certain 1994 amounts have been reclassified to be consistent with
the 1995 presentation.
8
<PAGE>
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 Partnership
Agreement, 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
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 Partnership Agreement. All
distributions of Distributable Cash from Operations deferred by the
General Partners accrue and are 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 Partnership
Agreement, is 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 Partnership Agreement, 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 are then 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.
9
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
3. The Partnership Agreement (continued)
-------------------------------------
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 Sales or Refinancings are generally allocated in the
same manner as cash from the related transaction; however, in no
event shall the General Partners be allocated less than 1% of any
such profits from the transaction. Losses from Sales or
Refinancings are 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.
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
expense on borrowings from the Managing General Partner were as
follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
Operating expenses $48,348 $35,359
Interest on note payable to affiliate 35,417 40,000
------- -------
$83,765 $75,359
======= =======
</TABLE>
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.
10
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Transactions with the General Partners and Affiliates (continued)
-----------------------------------------------------------------
Note payable to affiliate represented 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. Due to the
cash flow constraints of the Partnership, the Managing General
Partner each year made a new short-term loan to the Partnership for
the outstanding principal amount of $1,000,000. During the second
quarter of 1995, the Partnership utilized net proceeds from the
sale of the Northgreen Apartments to pay the Managing General
Partner the entire outstanding principal balance of the Note in the
amount of $1,000,000.
Interest expense with respect to the current Note accrued monthly
at a rate of 8.5% per annum.
From 1991 through the second quarter of 1993, payments to the
Managing General Partner towards the reimbursement of general and
administrative expenses incurred on behalf of the Partnership by
the Managing General Partner and the payment of interest on the
short-term loans referred to above were deferred in order for the
Partnership to meet its working capital needs. The Managing
General Partner also made short-term advances to the Partnership in
order to cover operating expenses that could not be paid from the
operating cash flow of the Partnership. Since the third quarter of
1993, the Partnership no longer deferred the reimbursement of such
expenses and during the year ended December 31, 1994 and the six
months ended June 30, 1995, the Partnership made payments towards
the short-term advances and towards the outstanding balance of the
deferred general and administrative expenses and interest described
above. During the year ended December 31, 1994, the Partnership
paid $453,853 to the Managing General Partner as reimbursement for
the short-term advances and towards the then outstanding balance of
such deferred amounts. During the six months ended June 30, 1995,
the Partnership utilized net proceeds from the sale of the
Northgreen Apartments, along with approximately $83,000 of cash, to
pay the Managing General Partner $126,834 as reimbursement for the
entire outstanding balance of such deferred amounts.
The Managing General Partner serves in a similar capacity for three
other affiliated real estate limited partnerships.
11
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
5. Investment in Property
----------------------
Investment in property at cost consists of residential real estate
as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Fisherman's Village Apartments $13,462,613 $13,462,613
Northgreen Apartments - 7,331,461
----------- -----------
$13,462,613 $20,794,074
=========== ===========
</TABLE>
On June 1, 1995, the Partnership sold the Northgreen Apartments to
a non-affiliated buyer for a gross sales price of $9,200,000 and a
net sales price of $8,923,622, after deductions for commissions and
selling expenses incurred in connection with the sale of the
property. This transaction resulted in a non-recurring gain of
$3,983,775, representing the difference between the net sales price
and the property's net book value of $4,939,847. The Partnership
received net cash proceeds of $4,319,911 from the sale,
representing the excess of the net sales proceeds over the
outstanding mortgage indebtedness on the property of $4,603,711,
which indebtedness was assumed by the buyer.
The Fisherman's Village Apartments property is currently listed for
sale.
12
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
6. Long-Term Debt
---------------
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Long-term debt consists of the following:
Non-recourse first mortgage note
collateralized by 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. $8,723,448 $8,781,178
Non-recourse first mortgage note
collateralized by the Northgreen
Apartments. On June 1, 1995,
the property was sold and the
mortgage indebtedness was
assumed by the buyer of the
property. - 4,634,841
---------- -----------
$8,723,448 $13,416,019
========== ===========
</TABLE>
13
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Note Receivable
---------------
Effective August 9, 1987, the unconditional guaranty obligation
granted by the seller of the Waterford Apartments (the "Obligor")
to the Partnership for operating deficits (including debt service)
was extended until August 1, 1994. (The Waterford Apartments was
conveyed to the property's mortgagee by a deed-in-lieu of
foreclosure on August 9, 1991.) The outstanding balance due in the
amount 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%. As of December 31, 1993 the
Managing General Partner believed, 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 1994.
In June 1994, the Obligor notified the Partnership that he would be
unable to pay either the outstanding balance of the note upon its
maturity on August 1, 1994 or the minimum monthly payments on the
note. As of June 30, 1995, 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.
Once the Obligor ceased making the requisite payments on the note,
the Managing General Partner issued a default notice and demand for
payment to the Obligor and filed a complaint with the court
demanding full payment of all amounts owing under the note.
On December 7, 1994 the court granted the Partnership a summary
judgment in response to the complaint filed against the Obligor in
the amount of $305,489, representing the aggregate balance of the
note plus accrued interest thereon. As of the date hereof, the
Partnership has not received payment from the Obligor, and the
Managing General Partner continues to pursue collection of the
judgment amount.
14
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
8. Federal Income Taxes
--------------------
A reconciliation of the net income/(loss) reported in the
Statements of Operations to the net income/(loss) reported for
federal income tax purposes is as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
Net income/(loss) per Statements of
Operations $3,927,909 ($17,094)
Add/(deduct): Excess tax gain over book gain
on disposition of assets 1,897,508 -
Excess of tax depreciation over
book depreciation (137,651) (148,949)
----------- ----------
Net income/(loss) for federal income
tax purposes $5,687,766 ($166,043)
=========== ==========
</TABLE>
15
<PAGE>
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
-------------------------------
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 Partnership Agreement. 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. 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 five to eight years following the date
such property was acquired by the Partnership. As of June 30, 1995 and the
date hereof, the Partnership has one property remaining in its portfolio.
This property is currently listed for sale. Upon the sale of this last
remaining property, the operations of the Partnership will terminate and
the Partnership will be dissolved, in accordance with the terms of the
Partnership Agreement.
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 in Eugene Oregon, the property sustained a stabilized occupancy
rate and improved its income and cash flow performance over recent years.
Given these market conditions and the income performance 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 terminate the First 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 buyer for
the property.
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. However, the
prospective buyer exercised its right to terminate the Second 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 buyer for the property.
16
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources (continued)
-------------------------------
On March 13, 1995, the Managing General Partner entered into a third
Purchase and Sale Agreement on behalf of the Partnership (the "Third
Agreement") for the sale of the Northgreen Apartments property to another
non-affiliated buyer (the "Buyer") for a gross sales price of $9,200,000.
On June 1, 1995, the Partnership sold the Northgreen Apartments to the
Buyer for a net sales price of $8,923,622, after deductions for commissions
and selling expenses incurred in connection with the sale of the property.
This transaction generated a non-recurring gain of $3,983,775, representing
the difference between the net sales price and the property's net book
value of $4,939,847. The Partnership received net cash proceeds of
$4,319,911 from the sale of the property, representing the excess of the
net sales proceeds over the outstanding mortgage indebtedness on the
property of $4,603,711, which indebtedness was assumed by the Buyer. The
Partnership retained $1,465,891 of the net sales proceeds to satisfy
liabilities of the Partnership and to fund working capital reserves for any
contingent liabilities. The remaining net sales proceeds in the amount of
$2,854,020, or $130 per Unit, will be distributed to the Limited Partners
during the third quarter of 1995.
Real estate market conditions in the Orlando, Florida area, where the
Fisherman's Village Apartments are located, have recovered from the
overbuilding of multi-family residential units which occurred during the
late 1980's and early 1990's. However, real estate market conditions
remain competitive due to the construction of new multi-family housing
units. Fisherman's Village Apartments was successful in increasing
occupancy levels during 1993 through the use of leasing incentives and
capital improvements made during that year at the property. During 1994,
Fisherman's Village Apartments reduced the level of leasing incentives
offered as market conditions improved and occupancy stabilized. The
Managing General Partner listed the Fisherman's Village Apartments for sale
during April 1995 based upon such market conditions and the operations of
the property. Although market conditions have declined during the first
six months of 1995, the Managing General Partner believes that, based upon
projected market conditions, the property's age and future capital
expenditure requirements, and the property's mortgage loan coming due on
November 1, 1995, a sale of the property remains in the best interest of
the Partnership.
During the second quarter of 1995, the Managing General Partner had the
June 30, 1994 independent appraisal of the Fisherman's Village Apartments
updated by such independent appraiser. Based upon the appraiser's
investigation and analysis, the property's market value is estimated to be
approximately $9,750,000 as of June 30, 1995, 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
$8,746,343 at June 30, 1995 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
impairment in value existed and that a write-down in value was not required
as of June 30, 1995.
As of June 30, 1995, the Partnership had $3,980,503 in cash and cash
equivalents and $341,972 in restricted cash, which represents tenants'
security deposits.
17
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources (continued)
-------------------------------
Since the Partnership's inception, Adjusted Cash from Operations (as
defined in the Partnership Agreement) 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 any cash distributions during 1995. 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 had
been unable to repay the $1,000,000 principal balance on the short-term
loan made by the Managing General Partner to the Partnership 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 the reimbursement of general and
administrative expenses incurred on behalf of the Partnership by the
Managing General Partner and the payment of interest on the short-term
loans referred to above were deferred in order for the Partnership to meet
its working capital needs. The Managing General Partner also made short-
term advances to the Partnership in order to cover operating expenses that
could not be paid from the operating cash flow of the Partnership.
Commencing with the year ended December 31, 1993, the Partnership no longer
deferred the reimbursement of such expenses and during the year ended
December 31, 1994 and the six months ended June 30, 1995, the Partnership
made payments towards the short-term advances and towards the outstanding
balance of the deferred amounts. During the year ended December 31, 1994,
the Partnership paid $453,853 to the Managing General Partner as
reimbursement for the short-term advances and towards the then outstanding
balance of the deferred amounts. During June 1995, the Partnership
utilized a portion of the net proceeds from the sale of the Northgreen
Apartments property, along with approximately $83,000 of cash, to pay
$126,834 to the Managing General Partner as reimbursement for the entire
outstanding balance of the deferred amounts and for the $1,000,000
outstanding principal balance of the short-term loan.
18
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources (continued)
-------------------------------
As of December 31, 1993, the Partnership established a reserve against the
entire outstanding balance of the note receivable (the "Note") relating to
the unconditional guaranty obligation for operating deficits granted by the
seller of the Waterford Apartments (the "Obligor"). The Managing General
Partner believed, 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, the Partnership
established a provision against the then entire outstanding balance of the
Note in the amount of $298,058. The provision has since been reduced by
$13,903 as a result of payments made by the Obligor. In June 1994, the
Obligor notified the Partnership that he would be unable to pay either the
outstanding balance of the Note upon its maturity on August 1, 1994 or the
minimum monthly payments on the Note. As of June 30, 1995, and as of the
date hereof, the Obligor is in default on the 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. Once the
Obligor ceased making the requisite payments on the Note, the Managing
General Partner issued a default notice and demand for payment to the
Obligor and filed a complaint with the court demanding full payment of the
Note. On December 7, 1994 the Partnership was granted a summary judgment
in response to the complaint filed against the Obligor in the amount of the
Note plus accrued interest thereon totaling $305,489. As of the date
hereof, the Partnership has not received payment from the Obligor and the
Managing General Partner continues to pursue collection of the judgment
amount.
During the six months ended June 30, 1995, the Partnership made $4,692,571
of principal payments on its long-term mortgage debt. Of this amount,
$88,860 was generated from the Partnership's operations and $4,603,711 was
assumed by the buyer of the Northgreen Apartments. A balloon payment equal
to the entire outstanding principal balance and all accrued but unpaid
interest on the Fisherman's Village Apartments' mortgage loan in the
aggregate 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 of the property or through
short-term loans.
No capital expenditures have been made during the six months ended June 30,
1995, and the Partnership does not anticipate incurring any significant
capital expenditures during the remainder of 1995.
Results of Operations
---------------------
The net income for the six months ended June 30, 1995 was $3,927,909 as
compared to a net loss of $17,094 for the same period in 1994. Included in
net income for the six months ended June 30, 1995 is a non-recurring gain
of $3,983,775 from the sale of the Northgreen Apartments. Excluding this
gain, the Partnership generated a net loss of $55,866 primarily resulting
from a decline in net operating income at the Fisherman's Village
Apartments between periods.
19
<PAGE>
JOHN HANCOCK PROPERTIES 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)
---------------------
Average occupancy for the Fisherman's Village Apartments for the six months
ended June 30, 1995 was 90%
Rental income for the six months ended June 30, 1995 decreased by $164,212,
or 10%, as compared to the same period in 1994. This decrease was
primarily due to a 7% decline in rental income at the Fisherman's Village
Apartments between periods, resulting from a decline in average occupancy
at the property from 94% during the first six months of 1994 to 90% during
the same period in 1995. In addition, rental concessions were offered at
the property during the first two quarters of 1995 in an effort to increase
occupancy. Rental income further declined due to the sale of the
Northgreen Apartments on June 1, 1995.
Interest income for the six months ended June 30, 1995 increased by
$24,642, or 230%, as compared to the same period in 1994. This increase
was primarily due to an increase in the Partnership's cash and cash
equivalents between periods and the interest earned on such amounts. Cash
and cash equivalents increased significantly between the periods due to the
sale of the Northgreen Apartments on June 1, 1995.
Interest expense for the six months ended June 30, 1995 decreased by
$46,198, or 8%, as compared to the same period in 1994. This decrease was
primarily due to a 19% decline in interest expense at the Northgreen
Apartments resulting from its sale in June 1995. In addition, during June
1995 interest expense decreased because the Partnership paid the entire
outstanding balance of the short-term loan made by the Managing General
Partner to the Partnership.
Property operating expenses for the six months ended June 30, 1995
decreased by $44,851, or 7%, as compared to the same period in 1994. This
decrease was primarily due to the sale of the Northgreen Apartments on June
1, 1995. This decrease was partially offset by a 9% increase in property
operating expenses at the Fisherman's Village Apartments between periods.
This increase was primarily due to an increase in maintenance and repair
expenses which were incurred as a result of unusually high turnover of
rental units during the first six months of 1995. In addition, the
Fisherman's Village Apartments incurred maintenance and repair expenses
related to plumbing repairs required at the property.
Depreciation expense for the six months ended June 30, 1995 decreased by
$28,086, or 9%, as compared to the same period in 1994. This decrease was
primarily due to the sale of the Northgreen Apartments on June 1, 1995.
General and administrative expenses for the six months ended June 30, 1995
increased by $4,434, or 7%, as compared to the same period in 1994. This
increase between periods was primarily due to an increase in the Managing
General Partner's costs relating to the Partnership's sale of the
Northgreen Apartments, which resulted in an increased expense allocation to
the Partnership in accordance with the terms of the Partnership Agreement.
20
<PAGE>
JOHN HANCOCK PROPERTIES 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)
---------------------
As of December 31, 1993 the Managing General Partner established an
allowance against the $298,058 outstanding balance of the note receivable
relating to the unconditional guaranty obligation granted by the seller of
the Waterford Apartments. During 1994, the Partnership received payments
on the note totaling $13,903. However, the obligor is in default on the
note for failure to make 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. (This note receivable is also discussed in Note 7
to the Financial Statements included in Item 1 of this Report).
The Managing General Partner believes that inflation has had no significant
impact on the Partnership during the six months ended June 30, 1995 and the
Managing General Partner anticipates that inflation will not have a
significant impact during the remainder of 1995.
21
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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 Partnership Agreement:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
Net cash provided by
operating activities (a) $170,456 $289,024
Net change in operating assets
and liabilities (a) 59,880 8,170
-------- --------
Cash provided by operations (a) 230,336 297,194
Principal payments on long-term debt
(exclusive of payments for
retirement of debt) (88,860) (91,034)
-------- --------
Cash provided by operations,
as adjusted 141,476 206,160
Increase in working capital reserves (141,476) (206,160)
-------- --------
Adjusted Cash from Operations (b) - -
Decrease in working capital reserves - -
-------- --------
Distributable Cash from Operations (b) $- $-
======== ========
</TABLE>
(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 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.
22
<PAGE>
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 second quarter of
1995.
Item 3. Defaults Upon Senior Securities
There were no defaults upon senior securities during the second
quarter of 1995.
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 1995.
Item 5. Other information
Item 6. Exhibits and Reports on Form 8-K
(a) There are no exhibits to this report.
(b) During the quarter ended June 30, 1995, the Partnership
filed a current report on Form 8-K on June 15, 1995. The
report described the disposition of the Northgreen
Apartments, which was sold on June 1, 1995, and included a
Pro Forma Balance Sheet at March 31, 1995 and Pro Forma
Statements of Operations for the three months ended March 31,
1995 and the year ended December 31, 1994.
23
<PAGE>
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 August, 1995.
John Hancock Properties Limited Partnership
By: John Hancock Realty Equities, Inc.,
Managing General Partner
By: WILLIAM M. FITZGERALD
-------------------------------
William M. Fitzgerald, President
By: RICHARD E. FRANK
-------------------------------
Richard E. Frank, Treasurer
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000746262
<NAME> JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,322,475
<SECURITIES> 0
<RECEIVABLES> 284,155
<ALLOWANCES> 284,155
<INVENTORY> 0
<CURRENT-ASSETS> 4,337,779
<PP&E> 13,462,613
<DEPRECIATION> 4,716,270
<TOTAL-ASSETS> 13,084,122
<CURRENT-LIABILITIES> 386,852
<BONDS> 8,723,448
<COMMON> 0
0
0
<OTHER-SE> 3,973,822
<TOTAL-LIABILITY-AND-EQUITY> 13,084,122
<SALES> 0
<TOTAL-REVENUES> 5,438,668
<CGS> 0
<TOTAL-COSTS> 631,546
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 527,261
<INCOME-PRETAX> 3,927,909
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,927,909
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,927,909
<EPS-PRIMARY> 177.13
<EPS-DILUTED> 177.13
</TABLE>
