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 March 31, 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 March 31, 1995 and
December 31, 1994 3
Statements of Operations for the Three
Months Ended March 31, 1995 and 1994 4
Statements of Partners' Equity for the
Three Months Ended March 31, 1995 and
for the Year Ended December 31, 1994 5
Statements of Cash Flows for the Three
Months Ended March 31, 1995 and 1994 6
Notes to Financial Statements 7-14
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 15-19
PART II: OTHER INFORMATION 20
2
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1995 1994
---- ----
Assets:
Cash and cash equivalents $607,802 $578,996
Restricted cash 448,026 417,985
Note receivable, net of allowance of
$284,155 - -
Prepaid expenses and other assets 59,799 79,275
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 (6,975,047) (6,821,682)
----------- -----------
13,819,027 13,972,392
----------- -----------
Total assets $14,934,654 $15,048,648
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $373,171 $318,178
Accounts payable to affiliates 169,813 268,538
Note payable to affiliate 1,000,000 1,000,000
Long-term debt 13,367,069 13,416,019
----------- -----------
Total liabilities 14,910,053 15,002,735
Partners' equity/(deficit):
General Partners' (708,209) (707,996)
Limited Partners' 732,810 753,909
----------- -----------
Total partners' equity 24,601 45,913
----------- -----------
Total liabilities and partners' equity $14,934,654 $15,048,648
=========== ===========
See Notes to Financial Statements
3
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1995 1994
---- ----
Income:
Rental income $764,448 $786,698
Interest income 8,674 4,225
-------- --------
Total income 773,122 790,923
Expenses:
Interest 284,546 287,054
Property operating expenses 319,474 333,718
Depreciation 153,365 157,925
General and administrative 37,049 42,272
Provision for/(recovery of)
uncollectible note receivable - (8,342)
-------- --------
Total expenses 794,434 812,627
-------- --------
Net loss ($21,312) ($21,704)
======== ========
Allocation of net loss:
General Partners' ($213) ($217)
Limited Partners' (21,099) (21,487)
-------- --------
($21,312) ($21,704)
======== ========
Net loss per Limited Partnership
Unit outstanding ($0.96) ($0.98)
======== ========
See Notes to Financial Statements
4
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
(Unaudited)
Three Months Ended March 31, 1995
and Year Ended December 31, 1994
General Limited
Partners Partners Total
-------- -------- -----
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
Less: Net loss (213) (21,099) (21,312)
--------- --------- ---------
Partners' equity/(deficit) at
March 31, 1995 (21,954 Limited
Partnership Units outstanding) ($708,209) $732,810 $24,601
========= ========= =========
See Notes to Financial Statements
5
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1995 1994
---- ----
Operating activities:
Net loss ($21,312) ($21,704)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation 153,365 157,925
--------- ---------
132,053 136,221
Changes in operating assets and liabilities:
Decrease in prepaid expenses,
other assets, and receivables 19,476 14,763
Increase in accounts payable
and accrued expenses 54,993 62,899
Increase in restricted cash (30,041) (33,774)
Decrease in accounts payable to
affiliates (98,725) (8,324)
--------- ---------
Net cash provided by operating
activities 77,756 171,785
Financing activities:
Principal payments on long-term debt (48,950) (45,193)
--------- ---------
Net cash used in financing activities (48,950) (45,193)
--------- ---------
Net increase in cash and cash
equivalents 28,806 126,592
Cash and cash equivalents at beginning
of year 578,996 444,021
--------- ---------
Cash and cash equivalents at end of
year $607,802 $570,613
========= =========
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 March 31, 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 2,020 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 March 31, 1995 and the date hereof, the Partnership has two
properties remaining in its portfolio, both of which are currently
for sale. Upon the sale of the 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 three month period
ending March 31, 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, property tax escrows and other escrows.
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 loss per Unit for the three months ended March 31, 1995 and
1994 is computed by dividing the Limited Partners' share of net
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 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, 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 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. 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
payable on borrowings from the Managing General Partner were as
follows:
Three Months Ended
March 31,
1995 1994
---- ----
Operating expenses $21,729 $13,645
Interest on note payable to affiliate 21,250 20,000
------- -------
$42,979 $33,645
======= =======
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, including deferred amounts.
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 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. 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. Interest on the current short-term note accrues
monthly at a rate of 8.5%. Interest is payable monthly and the
entire outstanding principal amount is due on November 30, 1995.
From 1991 through the second quarter of 1993, payments towards the
reimbursement of general and administrative expenses and the
payment of interest on the short-term loans referred to above were
deferred in order for the Partnership to meet working capital
needs. The Managing General Partner also made short-term advances
to the Partnership in order to cover operating expenses which could
not be paid from the operating cash flow of the Partnership. Since
the third quarter of 1993, the Partnership has made payments to the
Managing General Partner towards reimbursement for such general and
administrative expenses and interest expense. During the three
months ended March 31, 1995 and the year ended December 31, 1994,
the Partnership paid $141,704 and $453,853, respectively, to the
Managing General Partner as reimbursement for the short-term
advances and towards the then outstanding balance of general and
administrative expenses and interest expense incurred on behalf of
the Partnership. 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 March 31, 1995, the cumulative total due on the short-term
loan and such deferred amounts was $1,169,813.
The Managing General Partner serves in a similar capacity for three
other affiliated real estate limited partnerships.
5. Investment in Property
----------------------
Investment in property at cost consists of residential real estate
as follows:
March 31, December 31,
1995 1994
---- ----
Fisherman's Village Apartments $13,462,613 $13,462,613
Northgreen Apartments 7,331,461 7,331,461
----------- -----------
$20,794,074 $20,794,074
=========== ===========
Both the Fisherman's Village Apartments and the Northgreen
Apartments are currently for sale.
11
<PAGE>
JOHN HANCOCK PROPERTIES LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
6. Long-Term Debt
---------------
<TABLE>
<CAPTION>
March 31, 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. $8,752,579 $8,781,178
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
mortgagee 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. 4,614,490 4,634,841
----------- -----------
$13,367,069 $13,416,019
=========== ===========
</TABLE>
12
<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 both the outstanding balance of the note upon its
maturity on August 1, 1994 and the minimum monthly payments on the
note. As of March 31, 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.
The Managing General Partner issued a default notice to the Obligor
and demand for payment 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 the note plus accrued interest thereon in the
aggregate amount of $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.
13
<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 loss reported in the Statements of
Operations to the net loss reported for federal income tax purposes
is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
Net loss per Statements of Operations ($21,312) ($21,704)
Add/(deduct): Excess of tax depreciation
over book depreciation (62,480) (73,800)
------- -------
Net loss for federal income tax
purposes ($83,792) ($95,504)
======= =======
14
<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
- -------------------------------
As of March 31, 1995, the Partnership had $607,802 in cash and cash
equivalents and $448,026 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
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 has 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. The Managing General Partner
also made short-term advances to the Partnership in order to cover
operating expenses which could not be paid from the operating cash flow of
the Partnership. In addition, during 1991 and 1992, payments to the
Managing General Partner towards reimbursement for general and
administrative expenses incurred on behalf of the Partnership and interest
on the annual short-term loans were not made in order for the Partnership
to meet its working capital needs. Commencing with the year ended December
31, 1993 the Partnership reimbursed the Managing General Partner for the
amount of such expenses and interest incurred during each of the periods
since that date and during 1994 and 1995 made payments towards the deferred
amounts.
The Partnership paid an aggregate of $141,704 and $453,853 to the Managing
General Partner during the three months ended March 31, 1995 and the year
ended December 31, 1994, respectively, as reimbursement for the short-term
advances and towards the outstanding balance of interest expense and
general and administrative expenses incurred on behalf of the Partnership.
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 interest expense and general and administrative expenses as well as
the outstanding principal balance of the short-term loan. At March 31,
1995, the cumulative total of the principal balance of the short-term loan
and deferred amounts due was $1,169,813. These amounts are 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, additional funds would be
obtained through the sale or refinancing of the Partnership's properties.
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 (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 both the
outstanding balance of the Note upon its maturity on August 1, 1994 and the
minimum monthly payments on the Note. As of March 31, 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. The
Managing General Partner issued a default notice to the Obligor and demand
for payment and filed a complaint 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. 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 three months ended March 31, 1995, the Partnership made $48,950
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 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.
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. Due to
current market conditions and the stabilized operations of the property,
the Managing General Partner listed the Fisherman's Village Apartments for
sale during April 1995.
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 has sustained a stabilized
occupancy rate and improved its income and cash flow performance over
recent years. Given these market conditions and income performance of the
property, the Managing General Partner listed the Northgreen Apartments for
sale during the second quarter of 1994.
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 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.
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 for a gross sales price of $9,200,000. On May 1, 1995
the board of directors of the Managing General Partner approved the sale of
the Northgreen Apartments pursuant to the terms of the Third Agreement.
Except for a mortgage assumption contingency relating to the buyer's
assumption of the Partnership's mortgage on the property, all conditions
precedent to the sale have been satisfied and the buyer has deposited
$200,000 into an escrow account. If the mortgagee approves the assumption
of the mortgage by the buyer, this transaction is expected to close on or
before May 30, 1995. After deductions for commissions and selling expenses
incurred in connection with the sale of the property, this transaction is
expected to generate net sales proceeds of approximately $8,910,000 and a
non-recurring gain of approximately $3,970,000, representing the difference
between the net sales price and the property's net book value of
approximately $4,940,000. The Partnership is expected to receive net cash
proceeds of approximately $4,300,000 from the sale of the property,
representing the excess of the net sales proceeds over the mortgage
indebtedness on the property, which indebtedness is to be assumed by the
buyer. If this potential transaction does not result in the sale of the
property, then the Managing General Partner will resume its efforts to
locate another buyer for the Northgreen Apartments.
Upon the sale of the Partnership's 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.
No capital expenditures have been made during the three months ended March
31, 1995, and the Partnership does not anticipate incurring any significant
capital expenditures during the remainder of 1995.
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)
Results of Operations
- ---------------------
The net loss for the three months ended March 31, 1995 was $21,312 as
compared to a net loss of $21,704 for the same period in 1994. An increase
in the performance of the Northgreen Apartments property between these
periods was offset by a decline in the performance of the Fisherman's
Village Apartments property.
Average occupancy for the Partnership's properties for the three months
ended March 31, 1995 was as follows:
Fisherman's Village Apartments 89%
Northgreen Apartments 96%
Rental income for the three months ended March 31, 1995 decreased by
$22,250, or 3%, as compared to the same period in 1994. This decrease was
primarily due to a 9% decline in rental income at the Fisherman's Village
Apartments between periods as a result of a 5% decline in average occupancy
at the property. In addition, rental concessions were offered at the
property during the first quarter of 1995 in an effort to increase
occupancy. This decrease in rental income was partially offset by a 5%
increase in rental income at the Northgreen Apartments between periods due
to an increase in rental rates.
Interest income for the three months ended March 31, 1995 increased by
$4,449, or 105%, as compared to the same period in 1994. This increase was
primarily due to an increase in the Partnership's cash and cash equivalents
and the interest earned on such amounts.
Property operating expenses for the three months ended March 31, 1995
decreased by $14,244, or 4%, as compared to the same period in 1994. Due
to a successful appeal of the assessed valuation of the Northgreen
Apartments, included in the results during 1995 is a refund of prior year
real estate taxes. This decrease was partially offset by an 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 quarter of 1995.
General and administrative expenses decreased by $5,223, or 12%, for the
three months ended March 31, 1995 as compared to the same period in 1994.
This decrease between periods was primarily due to a decrease in legal fees
associated with complying with the Securities and Exchange Commissions'
reporting requirements.
During 1993 the Managing General Partner established an allowance against
the then entire outstanding balance of the note receivable of $298,058 as
of December 31, 1993, relating to the unconditional guaranty obligation
granted by the seller of the Waterford Apartments. Based on the obligor's
financial condition at December 31, 1993, the Managing General Partner
believed that it was probable that the Partnership would not collect all
amounts due according to the contractual terms of the note. 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 included in Item 1 of this
report).
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)
Results of Operations (continued)
- --------------------------------
The Managing General Partner believes that inflation has had no significant
impact on the Partnership during the three months ended March 31, 1995 and
the Managing General Partner anticipates that inflation will not have a
significant impact during the remainder of 1995.
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:
Three Months Ended
March 31,
1995 1994
---- ----
Net cash provided by
operating activities (a) $77,756 $171,785
Net change in operating assets
and liabilities (a) 54,297 (35,564)
-------- --------
Cash provided by operations (a) 132,053 136,221
Principal payments on long-term debt
(exclusive of payments for
retirement of debt) (48,950) (45,193)
-------- --------
Cash provided by operations,
as adjusted 83,103 91,028
Increase in working capital reserves (83,103) (91,028)
-------- --------
Adjusted Cash from Operations (b) - -
Decrease in working capital reserves - -
-------- --------
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 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.
19
<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 first quarter of
1995.
Item 3. Defaults Upon Senior Securities
There were no defaults upon senior securities during the first
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 first 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) No reports on Form 8-K were filed during the first quarter of
1995.
20
<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 12th day of May, 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>
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<ARTICLE> 5
<CIK> 0000746262
<NAME> JOHN HANCOCK PROPERTIES, LP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,055,828
<SECURITIES> 0
<RECEIVABLES> 284,155
<ALLOWANCES> 284,155
<INVENTORY> 0
<CURRENT-ASSETS> 1,115,627
<PP&E> 20,794,074
<DEPRECIATION> 6,975,047
<TOTAL-ASSETS> 14,934,654
<CURRENT-LIABILITIES> 1,542,984
<BONDS> 13,367,069
<COMMON> 0
0
0
<OTHER-SE> 24,601
<TOTAL-LIABILITY-AND-EQUITY> 14,934,654
<SALES> 0
<TOTAL-REVENUES> 773,122
<CGS> 0
<TOTAL-COSTS> 319,474
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 284,546
<INCOME-PRETAX> (21,312)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21,312)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,312)
<EPS-PRIMARY> (.96)
<EPS-DILUTED> (.96)
</TABLE>
