SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 29, 1995
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in its Charter)
Massachusetts 0-15680 04-2921566
(State of (Commission (IRS Employer
Organization) File No.) Identification No.)
200 Berkeley Street
Boston, MA 02117 (800) 722-5457
(Address of principal executive (Registrant's telephone
offices, including zip code) number, including area
code)
Not Applicable
(Former name or former address, if changed since last report)
Page 1 of 19
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
ITEM 2 - Acquisition or Disposition of Assets
- ---------------------------------------------
Disposition of the J.C. Penney Credit Operations Center
- -------------------------------------------------------
On December 29, 1995, the Partnership sold the J.C. Penney Credit
Operations Center property in Albuquerque, New Mexico, for a net sales
price of approximately $5,392,000, after deductions for commissions and
selling expenses incurred in connection with the sale of the property. The
sale of the property resulted in a non-recurring gain of approximately
$129,000, which represents the difference between the net sales price and
the property's net book value of approximately $5,263,000.
Based upon the General Partner's analysis of comparable sales transactions
and its review of the offers received during the property's marketing
period, the General Partner accepted the offer from 4580 Paradise Blvd.
Associates Limited Partnership (the "Buyer"). There is no relationship
between the Buyer and the Partnership or any associate, director or officer
of the General Partner.
The sale was made pursuant to a Purchase and Sale Agreement dated November
20, 1995, which is included as Exhibit 1 of this report.
ITEM 7 - Financial Statements
- -----------------------------
(A) Financial Statements
Pro Forma Balance Sheet at September 30, 1995 4
Pro Forma Statement of Operations for the Nine Months Ended Sep
tember 30, 1995 5
Pro Forma Statement of Operations for the Year Ended December 31,
1994 6
Notes to Pro Forma Financial Statements 7
(B) Exhibits
1.Purchase and Sale Agreement between John Hancock Realty Income
Fund Limited Partnership and 4580 Paradise Blvd. Associates Li
mited Partnership dated November 20, 1995 11
2
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
On December 29, 1995, the Partnership sold the J.C. Penney Credit
Operations Center to the Buyer for a gross sales price of $5,600,000. The
Pro Forma Balance Sheet reflects the financial position of the Partnership
as if the J.C. Penney Credit Operations Center property had been sold on
September 30, 1995. The Pro Forma Statement of Operations for the nine
months ended September 30, 1995 reflects the continued operations of the
Partnership as if the J.C. Penney Credit Operations Center property had
been sold on December 31, 1994. In addition, the Pro Forma Statement of
Operations for the year ended December 31, 1994 reflects the continued
operations of the Partnership as if the J.C. Penney Credit Operations
Center property had been sold on December 31, 1993.
3
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1995
(Unaudited)
<TABLE>
<CAPTION
Pro Forma
Historical Adjustment for
Summary the J.C Penney Pro Forma
September 30, Credit Operations September 30,
1995 Center 1995
---- ---- ----
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $3,180,580 $5,392,238 $8,572,818
Restricted cash 6,778 - 6,778
Other current assets 195,646 - 195,646
---------- ---------- ----------
Total current assets 3,383,004 5,392,238 8,775,242
Investment in property:
Land 8,934,077 (1,422,910) 7,511,167
Buildings and improvements 29,174,904 (5,080,849) 24,094,055
---------- ---------- ----------
38,108,981 (6,503,759) 31,605,222
Less: accumulated depreciation (8,167,312) 1,240,266 (6,927,046)
---------- ---------- ----------
29,941,669 (5,263,493) 24,678,176
Long-term restricted cash 40,014 - 40,014
Deferred expenses, net of accumulated
amortization of $773,937 in 1995 479,081 - 479,081
---------- ---------- ----------
Total assets $33,843,768 $128,745 $33,972,513
=========== ========== ===========
Current liabilities:
Accounts payable and accrued expenses $388,874 $- $388,874
Accounts payable to affiliates 53,454 - 53,454
---------- ---------- ----------
Total current liabilities 442,328 - 442,328
Partners' equity/(deficit):
General Partner (199,247) 1,287 (197,960)
Limited Partners 33,600,687 127,458 33,728,145
---------- ---------- ----------
Total partners' equity 33,401,440 128,745 33,530,185
---------- ---------- ----------
Total liabilities and partners' equity $33,843,768 $128,745 $33,972,513
=========== ========== ===========
</TABLE>
See Notes to Pro Forma Financial Statements
4
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JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Historical
Summary Pro Forma Pro Forma
For the Nine Adjustment for For the Nine
Months Ended the J.C. Penney Months Ended
September 30, Credit Operations September 30,
1995 Center 1995
---- ---- ----
<S> <C> <C> <C>
Income:
Rental income $2,300,071 ($459,375) $1,840,696
Interest income 128,748 - 128,748
Other income 82,008 - 82,008
---------- ---------- ----------
Total income 2,510,827 (459,375) 2,051,452
Expenses:
Depreciation 713,853 (126,845) 587,008
Property operating expenses 361,319 - 361,319
General and administrative 160,816 - 160,816
Amortization of deferred expenses 100,005 - 100,005
Management fee 62,955 - 62,955
---------- ---------- ----------
Total expenses 1,398,948 (126,845) 1,272,103
---------- ---------- ----------
Net income $1,111,879 ($332,530) $779,349
========== ========== ==========
Allocation of net income:
General Partner $11,119 ($3,325) $7,794
John Hancock Limited Partner (58,431) 6,386 (52,045)
Investors 1,159,191 (335,591) 823,600
---------- ---------- ----------
$1,111,879 ($332,530) $779,349
========== ========== ==========
Net income per Unit $12.65 ($3.66) $8.99
====== ====== =====
</TABLE>
See Notes to Pro Forma Financial Statements
5
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Historical Pro Forma
Summary Adjustment for Pro Forma
For the Year Ended the J.C. Penney For the Year Ended
December 31, Credit Operations December 31,
1994 Center 1994
---- ------ ----
(Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
Income:
Rental income $3,618,826 ($612,500) $3,006,326
Interest income 110,982 - 110,982
---------- --------- ----------
Total income 3,729,808 (612,500) 3,117,308
Expenses:
Depreciation 967,493 (169,127) 798,366
Property operating expenses 317,961 (937) 317,024
General and administrative 202,264 - 202,264
Amortization of deferred expenses 148,930 - 148,930
Property write-down 512,000 - 512,000
Management fee 83,939 - 83,939
---------- --------- ----------
Total expenses 2,232,587 (170,064) 2,062,523
---------- --------- ----------
Net income $1,497,221 ($442,436) $1,054,785
========== ========= ==========
Allocation of net income:
General Partner $14,972 ($4,424) $10,548
John Hancock Limited Partner (77,909) 8,516 (69,393)
Investors 1,560,158 (446,528) 1,113,630
---------- --------- ----------
$1,497,221 ($442,436) $1,054,785
========== ========= ==========
Net income per Unit $17.02 ($4.87) $12.15
====== ===== ======
</TABLE>
See Notes to Pro Forma Financial Statements
6
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements
(Unaudited)
Note 1 - J.C. Penney Credit Operations Center
- ---------------------------------------------
On December 29, 1995, the Partnership sold the J.C. Penney Credit
Operations Center property in Albuquerque, New Mexico, for a net sales
price of approximately $5,392,000, after deductions for commissions and
selling expenses incurred in connection with the sale of the property. The
sale of the property resulted in a non-recurring gain of approximately
$129,000, which represents the difference between the net sales price and
the property's net book value of approximately $5,263,000.
The historical financial statements are adjusted to show the effects
resulting from the sale of the J.C. Penney Credit Operations Center
property on the Partnership's operations, assets and liabilities. The Pro
Forma Balance Sheet at September 30, 1995 reflects the financial position
of the Partnership as if the J.C. Penney Credit Operations Center property
had been sold on September 30, 1995. The Pro Forma Statement of Operations
for the nine months ended September 30, 1995 reflects the continued
operations of the Partnership as if the J.C. Penney Credit Operations
Center property had been sold on December 31, 1994. In addition, the Pro
Forma Statement of Operations for the year ended December 31, 1994 reflects
the continued operations of the Partnership as if the J.C. Penney Credit
Operations Center property had been sold on December 31, 1993.
Note 2 - Distributions and Allocations
- --------------------------------------
Distributable Cash from Operations, as defined in the Amended Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), is
distributed 99% to the Limited Partners and 1% to the General Partner. The
Limited Partners' share of Distributable Cash from Operations is
distributed as follows: first, to the Investors until they receive a 7%
non-cumulative, non-compounded annual cash return on their Invested
Capital, as defined in the Partnership Agreement; second, to the John
Hancock Limited Partner until it receives a 7% non-cumulative, non-
compounded annual cash return on its Invested Capital; and third, to the
Investors and the John Hancock Limited Partner in proportion to their
respective Capital Contributions, as defined in the Partnership Agreement.
However, any Distributable Cash from Operations which is available as a
result of the reduction of working capital reserves funded by Capital
Contributions of the Investors is distributed 100% to the Investors.
7
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements (Continued)
(Unaudited)
Note 2 - Distributions and Allocations (continued)
- --------------------------------------
Cash from Sales or Refinancings, as defined in the Partnership Agreement,
is first used to pay all debts and liabilities of the Partnership then due
and is then used to fund any reserves for contingent liabilities. Cash
from Sales or Refinancings is then distributed as follows: first, to the
Limited Partners until they receive an amount equal to their Invested
Capital with the distribution being made between the Investors and the John
Hancock Limited Partner in proportion to their respective Capital
Contributions; second, to the Investors until they have received, with
respect to all previous distributions during the year, their Cumulative
Return on Investment, as defined in the Partnership Agreement; third, to
the John Hancock Limited Partner until it has received, with respect to all
previous distributions during the year, its Cumulative Return on
Investment; fourth, to the General Partner to pay any Subordinated
Disposition Fees, as defined in the Partnership Agreement; and fifth, 99%
to the Limited Partners and 1% to the General Partner, with the
distribution being made between the Investors and the John Hancock Limited
Partner in proportion to their respective Capital Contributions.
Cash from the Sale of the last of the Partnership's properties is
distributed in the same manner as Cash from Sales or Refinancings, except
that before any other distribution is made to the Partners, each Partner
shall first receive from such cash, an amount equal to the then positive
balance, if any, in such Partner's Capital Account after crediting or
charging to such account the profits or losses for tax purposes from such
sale. To the extent, if any, that a Partner is entitled to receive a
distribution of cash based upon a positive balance in its capital account
prior to such distribution, such distribution will be credited against the
amount of such cash the Partner would have been entitled to receive based
upon the manner of distribution of Cash from Sales or Refinancings, as
specified in the previous paragraph.
Profits from the normal operations of the Partnership for each fiscal year
are allocated to the Limited Partners and General Partner in the same
amounts as Distributable Cash from Operations for that year. If such
profits are less than Distributable Cash from Operations for any year, they
are allocated in proportion to the amounts of Distributable Cash from
Operations for that year. If such profits are greater than Distributable
Cash from Operations for any year, they are allocated 99% to the Limited
Partners and 1% to the General Partner, with the allocation made between
the John Hancock Limited Partner and the Investors in proportion to their
respective Capital Contributions. Losses from the normal operations of the
Partnership are allocated 99% to the Limited Partners and 1% to the General
Partner, with the allocation made between the John Hancock Limited Partner
and the Investors in proportion to their respective Capital Contributions.
Depreciation deductions are allocated 1% to the General Partner and 99% to
the Investors, and not to the John Hancock Limited Partner.
8
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements (Continued)
(Unaudited)
Note 2 - Distributions and Allocations (continued)
- --------------------------------------
Profits and Losses from Sales or Refinancings are generally allocated 99%
to the Limited Partners and 1% to the General Partners. In connection with
the sale of the last of the Partnership's properties, and therefore the
dissolution of the Partnership, profits will be allocated to any Partners
having a deficit balance in their Capital Account in an amount equal to the
deficit balance. Any remaining profits will be allocated in the same order
as cash from the sale would be distributed.
9
<PAGE>
JOHN HANCOCK REALTY INCOME FUND 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 on Form 8-K to be signed on its
behalf by the undersigned, hereunto duly authorized, on the 17th day of
January, 1996.
John Hancock Realty Income Fund Limited
Partnership
By: John Hancock Realty Equities, Inc.,
General Partner
By: WILLIAM M. FITZGERALD
-----------------------------
William M. Fitzgerald, President
By: RICHARD E. FRANK
-----------------------------
Richard E. Frank, Treasurer
(Chief Accounting Officer)
PURCHASE AND SALE AGREEMENT
---------------------------
THIS AGREEMENT made and entered into as of the 20TH day of November, 1995
("the Execution Date"), by and between JOHN HANCOCK REALTY INCOME FUND
LIMITED PARTNERSHIP, a Massachusetts limited partnership, having its
principal address c/o The Real Estate Investment Group, John Hancock Place,
P.O. Box 111, Boston, Massachusetts 02117 (hereinafter "Seller"), and BGK
EQUITIES, INC., a New Mexico corporation, having an office address at 330
Garfield Street, #200, Santa Fe, New Mexico 87501 (hereinafter "Buyer");
WITNESSETH THAT:
WHEREAS, Seller is the owner of the premises known as the J.C. Penney
Credit Processing Center and located at 4580 Paradise Boulevard, NW,
Albuquerque, New Mexico, improved with a building containing approximately
69,300 square feet of space ("the Premises"), more particularly described
on EXHIBIT A attached hereto and made a part hereof;
WHEREAS, Buyer desires to purchase the Premises and acquire possession
thereof in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth the parties hereto mutually agree as follows:
1. PURCHASE PRICE. The Premises are to be sold to Buyer for the sum
of Five Million Six Hundred Thousand Dollars ($5,600,000.00) ("the
Purchase Price"), which Buyer shall pay to Seller on the Date of
Closing by wiring immediately available Federal funds to such bank
account as may be designated by Seller.
2. DEPOSIT. Buyer paid $100,000.00 into an escrow account with United
Title Company ("the Title Company"), pursuant to the Earlier Agreement,
as a good faith deposit (hereinafter, said deposit and such interest as
is earned thereon shall be referred to as "the Deposit"), which Deposit
shall be disposed of in the manner herein provided. If Buyer performs
all of its obligations under this Agreement, the Deposit shall either
be applied against the Purchase Price or returned by Seller to Buyer on
the Date of Closing, as hereinafter provided. If Seller shall be
unable to deliver title and possession, as hereinafter provided, or if
Buyer shall fail to perform any of its agreements hereunder, the
Deposit shall be disposed of in the manner hereinafter provided.
3. CLOSING. Subject to the provisions of this Agreement, the deed
shall be delivered at 1 o'clock P.M., Boston time, on December 20, 1995
("the Date of Closing" or "the Closing"), at the offices of the Title
Company in Albuquerque, New Mexico, unless otherwise agreed upon in
writing.
4. BUYER'S REVIEW. Buyer shall have until 5 o'clock P.M., Boston
time, on December 8, 1995 ("the Review Period") (a) to obtain and
review a commitment for title insurance and a survey; (b) to make or
have made such reasonable non-destructive inspections as it desires of
the Premises, including, without limitation, the interior, exterior,
<PAGE>
and structure of all improvements, and the condition of soils and
subsurfaces; and (c) to review all of Seller's financial records,
contracts, and leases relating to the Premises. All such items shall
be obtained and reviewed at Buyer's sole cost and expense, except as
otherwise expressly provided herein. If Buyer has any objection to any
of the matters set out in (a), (b), or (c) of this section 4, it may
either notify Seller in writing of such objection on or before the end
of the Review Period ("Notice of Objection"), provided that with such
notice Buyer shall provide Seller with copies of all written materials
which provide or evidence the basis of any such objection, or notify
Seller in writing that this Agreement is terminated ("Notice of
Termination"). Any matters not objected to in writing as herein
provided shall be deemed waived. Upon the expiration of the Review
Period without Notice of Objection or Notice of Termination, as
provided herein, or upon Seller's cure of Buyer's objections, as
provided in the following paragraph, or upon Buyer's actual or deemed
notification to Seller that Buyer will proceed notwithstanding Seller's
failure to cure Buyer's objections, as provided in the following
paragraph, the Deposit will become nonrefundable, except in the case of
Seller's default hereunder.
If Seller is unwilling or unable to correct to Buyer's satisfaction
all defects to which Buyer has objected within 30 days after receipt of
Notice of Objection (provided that correction of defects objected to in
the title commitment or survey may be accomplished either by removing
such defects or by arranging for the title insurance policy to insure
over such defects; and provided further that Seller may use the
Purchase Price or any portion thereof to cure any such defects which
may be cured by instruments recorded on the Date of Closing, or later
if arrangements are made which are satisfactory to Buyer and the Title
Company), Seller shall, at any time before the end of said 30-day
period, so notify Buyer, provided that if Seller fails to give such
notice, Seller shall be deemed to have notified Buyer on the 30th day
after receipt of Notice of Objection that Seller is unwilling or unable
to cure all defects to which Buyer has objected. Buyer shall, within
ten days after Seller has given or is deemed to have given said notice,
either (i) notify Seller that it shall waive said defect(s) and proceed
to closing, as set out in section 3 hereof, or (ii) give Notice of
Termination, provided that if Buyer fails to give such notice, Buyer
shall be deemed to have notified Seller that it shall waive all defects
and proceed to closing.
Upon receipt of Notice of Termination the Deposit shall be refunded
and this Agreement shall become null and void, and neither party shall
be liable to the other for damages or otherwise, except as otherwise
expressly provided herein.
5. CONDITION OF PREMISES. Buyer and Seller agree that Buyer is
acquiring the Premises and any related personal property in their "AS
IS" condition, WITH ALL FAULTS, IF ANY, AND WITHOUT ANY WARRANTY,
EXPRESS OR IMPLIED. Neither Seller nor any agents, representatives, or
employees of Seller have made any representations or warranties, direct
or indirect, oral or written, express or implied, to Buyer or any
agents, representatives, or employees of Buyer with respect to the
condition of the Premises or personal property, their fitness for any
particular purpose, or their compliance with any laws, and Buyer is not
2
<PAGE>
aware of and does not rely upon any such representation to any other
party. Buyer acknowledges that the Purchase Price might be higher if
Buyer were not acquiring the Premises and personal property in "as is"
condition. Buyer acknowledges that it either has had or will have
before the Date of Closing the opportunity to make such inspections (or
have such inspections made by consultants) as it desires of the
Premises and personal property and all factors relevant to their use,
including, without limitation, the interior, exterior, and structure of
all improvements, and the condition of soils and subsurfaces
(particularly with respect to the presence or absence of hazardous
substances).
After its inspections are completed, Buyer shall restore the
Premises and personal property to their condition prior to Buyer's
inspections. Buyer agrees to indemnify Seller for all claims or
damages arising out of Buyer's inspections, including, without
limitation, claims for personal injury or property damage, and
including all costs and attorneys' fees. The obligations in this
paragraph shall survive the Closing or the termination of this
Agreement for any reason, including without limitation pursuant to
section 4, 9, or 14 hereof.
Buyer hereby releases Seller and its agents, representatives, and
employees from any and all claims, demands, and causes of action, past,
present, and future, that Buyer may have relating to (i) the condition
of the Premises and the personal property at any time, before or after
the Date of Closing, including, without limitation, the presence of any
hazardous substance, or (ii) any other matter pertaining to the
Premises or the personal property. This release shall survive the
Closing or the termination of this Agreement for any reason.
Seller shall deliver possession to Buyer, subject to the matters
set forth in section 7(a)(1) hereof, not later than the Date of
Closing, provided that all the terms and conditions of this Agreement
have been complied with. Seller until the Date of Closing shall
maintain, repair (subject to section 9 hereof), manage, and operate the
Premises in a businesslike manner in accordance with Seller's prior
practices; shall comply with its contractual obligations as owner of
the Premises, including maintaining all service contracts that are in
force on the date of execution hereof; shall maintain the types and
amounts of insurance that are in force on the date of execution hereof;
and shall not dissipate the Premises or remove any material property
therefrom, except in the ordinary course of business.
6. ADJUSTMENTS AND PRORATIONS. All taxes, including, without
limitation, real estate taxes and personal property taxes, collected
rents, charges for utilities, including water, sewer, and fuel oil, and
for utility services, maintenance services, maintenance and service
contracts, all salaries and wages, all operating costs and expenses,
and all other income, costs, and charges of every kind which in any
manner relate to the operation of the Premises (but not including
insurance premiums) shall be prorated to the Date of Closing, except
that if Seller does not receive the Purchase Price (by receipt of wired
funds or by receipt in hand of an official bank cashier's check) by 1
o'clock P.M., Boston time, on the Date of Closing, all prorations shall
be made as of the following business day. Seller shall be entitled to
3
<PAGE>
all delinquent rents, without adjustment or appointment, irrespective
of which party collects the same in the first instance, and Buyer shall
pay any such delinquent rents to Seller forthwith upon receipt. If the
amount of said taxes, assessments, or rents is not known on the Date of
Closing, they shall be apportioned on the basis of the amounts for the
preceding year, with a reapportionment as soon as the new amounts can
be ascertained. If such taxes and assessments shall thereafter be
reduced by abatement, the amount of such abatement, less the reasonable
cost of obtaining the same, shall be apportioned between the parties,
provided that neither party shall be obligated to institute or
prosecute proceedings for an abatement unless otherwise agreed. Buyer
shall be responsible for the payment of any assessments or notice of
assessments made after the date of execution hereof for any public
improvement, provided Buyer takes title hereunder. With respect to
security deposits, if any, made by tenants on the Premises and actually
received in hand by Seller, Buyer shall receive credit therefor in the
proration of rents. Any deposits on utilities paid by Seller shall be
returned to Seller. The foregoing provisions of this section shall not
apply to any taxes, assessments, or other payments which are directly
payable by tenants under their leases or reimbursable by such tenants
to the owner of the Premises, as landlord, under their leases. On the
Date of Closing, Seller shall deliver to Buyer all inventories of
supplies on hand at the Premises owned by Seller, if any, at no
additional cost to Buyer.
7. CLOSING DOCUMENTS. (a) SELLER'S DELIVERIES. Conditioned upon
performance by Buyer hereunder, Seller shall execute and deliver to
Buyer at the Closing the following documents ("Seller's Closing
Documents"):
(1) DEED. A special warranty deed conveying marketable title to the
Premises subject to the following:
(A) All easements, conditions, restrictions, and reservations of
record and all private and public rights in highways and rights-of-
way;
(B) All building and zoning laws, ordinances, and State and
Federal regulations;
(C) Encroachments and all other matters that an accurate survey
might show, provided that the same do not unreasonably interfere
with the use of the Premises as an office and industrial building;
(D) All possible objections waived by Buyer pursuant to section 4
hereof, either by Buyer's failure to object to such matters before
the expiration of the Review Period or by Buyer's response (or
failure to respond) to Seller's notice (or failure to give notice)
that it will not cure such matters;
(E) Rights of tenants in possession as tenants only; and
(F) Real estate taxes and all installments of special assessments
or levies not yet due and payable on the Date of Closing.
4
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(2) BILL OF SALE. A bill of sale, assigning and transferring to
Buyer all of the right, title, and interest of Seller in and to all
tangible personal property, if any, owned by Seller and located upon
the Premises.
(3) ASSIGNMENT OF LEASES. An assignment of leases, tenancies, and
security deposits, which will include an indemnification by Seller of
Buyer for all landlord obligations arising prior to the Date of
Closing.
(4) ASSIGNMENT OF SERVICE CONTRACTS. An assignment of maintenance and
service contracts, which will include an indemnification by Seller of
Buyer for all owner obligations arising prior to the Date of Closing.
(5) NON-FOREIGN CERTIFICATE. A certification that Seller is not a non-
resident alien (a foreign corporation, partnership, trust, or estate as
defined in the Internal Revenue Code and Treasury Regulations
promulgated thereunder).
(6) ESTOPPEL CERTIFICATE. A written certificate from the tenant of
the Premises regarding whether: (a) the lease is in full force and
effect; (b) the lease has been amended; (c) the rent and other charges
have been paid more than 30 days in advance of the due date; and (d)
there are any uncured defaults.
(b) BUYER'S DELIVERIES. Conditioned upon performance by Seller
hereunder, Buyer shall execute and deliver to Seller at the Closing the
following documents:
(1) ASSUMPTION OF LEASES. An assumption of leases, tenancies, and
security deposits, which will include an indemnification by Buyer of
Seller for all landlord obligations arising on or after the Date of
Closing.
(2) ASSUMPTION OF SERVICE CONTRACTS. An assumption of maintenance and
service contracts, which will include an indemnification by Buyer of
Seller for all owner obligations arising on or after the Date of
Closing.
(c) OTHER CLOSING DOCUMENTS. Each party shall deliver to the
other party or the title insurance company such duly executed and
acknowledged or verified certificates, affidavits, and other usual
closing documents respecting the power and authority to perform the
obligations hereunder and as to the due authorization thereof by the
appropriate corporate, partnership, or other representatives acting for
it, as counsel for the other party or the Title Company may reasonably
request.
8. COSTS. Buyer shall pay all settlement expenses, except as set
forth in the following sentence, in connection with the transfer of the
Premises, including, but not limited to, (1) personal property sales
taxes, if any; (2) recording fees; (3) Buyer's attorneys' fees; (4)
half the cost of the Title Company's escrow fees; (5) the cost of any
lender's policy; (6) the premium for any endorsements or affirmative
coverages for Buyer's title insurance policy; (7) the cost of any
update to the survey desired by Buyer or, if no survey is available,
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half the cost of obtaining a survey; and all other costs and expenses
incidental to or in connection with closing this transaction. Seller
shall pay : (1) the attorneys' fees, if any, incurred by Seller in
connection with this transaction; (2) for a standard owner's title
policy; (3) half the Title Company's escrow fees; (4) half the cost of
obtaining a survey if no survey is available; and (5) the Broker's
commission, but only if, as, and when the transaction contemplated
hereby is fully consummated and the deed is recorded and the full
consideration therefor has been received by Seller.
9. CASUALTY OR CONDEMNATION. In the event that prior to the Date of
Closing either the improvements on the Premises are damaged or
destroyed, in whole or in part, by fire or other cause, or any portion
of the Premises becomes the subject of a condemnation proceeding by a
public or quasi-public authority having the power of eminent domain,
then either (a) the parties shall proceed with the transaction
contemplated herein, in which event Buyer shall be entitled to receive
any insurance or condemnation proceeds, or (b) in the event such
damage, destruction, or condemnation involves, in the reasonable
estimation of Seller, a loss in an amount in excess of ten per cent
(10%) of the Purchase Price, or loss of all or a material portion of
access to the Premises, either party, at its option, may terminate this
Agreement by notice to the other within ten (10) days of Buyer's
receipt of Seller's notice of such damage or proceeding, in which case
the Deposit shall be refunded, and thereafter neither party shall have
any further obligation or liability to the other by virtue of this
Agreement, except as otherwise expressly provided herein.
10. INSURANCE. Seller shall not be obligated to assign to Buyer any
fire, hazard, or liability insurance policies which it holds respecting
the Premises, and Seller shall have the right to any and all refunds or
rebates resulting from the termination of such policies.
11. BROKER'S COMMISSION. Buyer and Seller each hereby warrants and
represents to the other that it has dealt with no broker or finder in
connection with this transaction except Jack Dailey of CB Commercial,
Inc. ("the Broker"), and that it is not affiliated with the Broker in
any way. Buyer and Seller each hereby agrees to indemnify and hold the
other harmless from and against any and all claims for brokerage or
finder's fees or other similar commissions or compensation made by any
and all other brokers or finders claiming to have dealt with it in
connection with this Agreement or the consummation of the transaction
contemplated hereby. The obligations in this section shall survive the
Closing or the termination of this Agreement for any reason, including
without limitation pursuant to section 4, 9, or 14 hereof.
12. SELLER'S PERFORMANCE. The acceptance of Seller's Closing
Documents by Buyer shall be deemed to be a full performance and
discharge of every agreement and obligation of Seller herein contained
and expressed, except such as are, by the terms hereof, to be performed
after the delivery of said instruments.
13. RECORDING PROHIBITED. This Agreement shall not be recorded with
Bernalillo County Records or in any other office or place of public
record. If Buyer shall record this Agreement or cause or permit the
same to be recorded, Seller may, at its option, elect to treat such act
as a default by Buyer under this Agreement.
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14. REMEDIES. If Seller defaults under this Agreement, Buyer's sole
remedy, at law or in equity, shall be one of either (a) the return of
the Deposit to Buyer, whereupon the obligations of Seller under this
Agreement shall terminate; or (b) the right to obtain specific
performance of Seller's obligation to convey the Premises pursuant to
this Agreement, provided that in no event shall Seller be obliged to
(i) cure defects objected to by Buyer pursuant to section 4 hereof;
(ii) expend money or post a bond to remove or insure over a title
defect or encumbrance or to correct any matter shown on a survey of the
Premises; or (iii) secure any permit, approval, or consent with respect
to the Premises. In no event shall any officer, director, employee,
agent, or representative of Seller have any personal liability in
connection with this Agreement or transaction.
If Buyer defaults under this Agreement, the sole remedy of Seller
shall be to retain the Deposit, which sum the parties fix and settle as
liquidated damages for such default of Buyer. Nothing in this
paragraph shall limit the express provisions of this Agreement
obligating one party hereto to indemnify the other or to restore the
Premises, including without limitation sections 5 and 12 hereof.
15. ASSIGNMENT. This Agreement may not be assigned by Buyer without
the express written consent of Seller, which consent Seller may in its
sole discretion withhold, except that Buyer may, without Seller's
consent, assign this Agreement to a limited partnership of which Buyer
(or a principal of Buyer) or any parent or any wholly owned subsidiary
of Buyer are the sole general partners. No such assignment shall
operate to relieve Buyer from any obligation hereunder.
16. WAIVER. No waiver of any breach of any agreement or provision
contained herein shall be deemed a waiver of any preceding or
succeeding breach of any other agreement or provision herein contained.
No extension of time for the performance of any obligation or act shall
be deemed an extension of time for the performance of any other
obligation or act.
17. TIME. It is agreed that time is of the essence of this Agreement.
18. GOVERNING LAW. This Agreement shall be construed under the laws
of the state in which the Premises are located.
19. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and sent by overnight delivery service (such as
Federal Express), in which case notice shall be deemed given on the day
after the date sent, or by personal delivery, in which case notice
shall be deemed given on the date received, or by certified mail, in
which case notice shall be deemed given three (3) days after the date
sent, or by fax (with copy by overnight delivery service), in which
case notice shall be deemed given on the date sent, to the appropriate
address indicated below or at such other place or places as either
Buyer or Seller may, from time to time, respectively, designate in a
written notice given to the other in the manner described above.
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To Seller: c/o The Real Estate Investment Group
John Hancock Place
P.O. Box 111
Boston, MA 02117
Re: File No. LP-80506
Attention: John Garrison, Investment Officer
Fax No.: (617) 572-3860 or 3866
With Copy To: John Hancock Mutual Life Insurance Company
Law Department (T-50)
John Hancock Place, P. O. Box 111
Boston, MA 02117
Re: Matter No. 8483
Attention: Roslyn Poznansky, Esq.
Fax No.: (617) 572-9268 or 9269
To Buyer: BGK EQUITIES, INC.
330 Garfield Street #200
Santa Fe, New Mexico 87501
Attention: Edward Gilbert, President
Fax No.:(505) 982-2515
With Copy To: BGK EQUITIES, INC.
330 Garfield Street #200
Santa Fe, New Mexico 87501
Attention: Sam Konigsberg, Esq.
Fax No.:(505) 982-2515
20. CONFIDENTIALITY. Buyer shall not disclose the financial and
economic terms and conditions of the transaction contemplated herein
except as may be necessary in the ordinary course of its business. All
press releases or other dissemination of information to the media, or
responses to requests from the media, for information relating to the
transaction contemplated herein shall be subject, up to and including
the Date of Closing, to the prior written approval of Seller. The
obligations in this section shall survive the Closing or termination of
this Agreement for any reason.
21. SELLER'S APPROVALS. Seller's obligation to close hereunder shall
be conditioned upon the approval of this transaction by Seller's
internal committees. If on or before the last day of the Review Period
Seller has not notified Buyer that such approval has been granted, such
approval shall be deemed not to have been granted; if approval is not
granted, the Deposit shall be refunded and this Agreement shall
terminate, and neither party shall be liable to the other for damages
or otherwise except as otherwise expressly provided herein.
22. ENTIRE AGREEMENT. This instrument, executed in duplicate, sets
forth the entire agreement between the parties and may not be canceled,
modified, or amended except by a written instrument executed by both
Seller and Buyer.
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IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed the day and year first above written.
SELLER:
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
BY: JOHN HANCOCK REALTY EQUITIES, INC., its General
Partner
BY: STEPHEN KINDL
-------------
Stephen Kindl, Senior Investment Officer
-------------, -------------------------
(name) (title)
BUYER:
BGK EQUITIES, INC.
BY: EDWARD M. GILBERT
-----------------
Edward M. Gilbert, President
-----------------, ----------------------
(name) (title)
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