<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM N/A
------------------------------------------------
COMMISSION FILE NUMBER 0-15680
--------------------------------------------------------
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2921566
- ------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
200 CLARENDON STREET, BOSTON, MA 02116
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(800) 722-5457
- --------------------------------------------------------------------------------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
N/A
- --------------------------------------------------------------------------------
(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> 2
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
INDEX
PART I: FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Balance Sheets at June 30, 1998 and
December 31, 1997 3
Statements of Operations for the Three and Six
for the Months Ended June 30, 1998 and 1997 4
Statements of Partners' Equity for the
Six Months Ended June 30, 1998 and
Year Ended December 31, 1997 5
Statements of Cash Flows for the Six
Months Ended June 30, 1998 and 1997 6
Notes to Financial Statements 7-12
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-18
PART II: OTHER INFORMATION 19
<PAGE> 3
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
---- ----
<S> <C> <C>
Cash and cash equivalents $ 2,406,906 $ 2,502,844
Restricted cash 59,400 58,400
Other assets 225,816 90,816
Deferred expenses, net of accumulated
amortization of $375,217 in 1998 and
$329,823 in 1997 384,683 360,166
Investment in property:
Land 6,198,330 6,198,330
Buildings and improvements 17,342,479 17,342,479
------------ ------------
23,540,809 23,540,809
Less: accumulated depreciation (5,102,522) (4,787,156)
------------ ------------
18,438,287 18,753,653
------------ ------------
Total assets $ 21,515,092 $ 21,765,879
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 368,381 $ 263,396
Accounts payable to affiliates 231,561 150,907
------------ ------------
Total liabilities 599,942 414,303
Partners' equity/(deficit):
General Partners' deficit (249,692) (245,328)
Limited Partners' equity 21,164,842 21,596,904
------------ ------------
Total partners' equity 20,915,150 21,351,576
------------ ------------
Total liabilities and partners' equity $ 21,515,092 $ 21,765,879
============ ============
</TABLE>
See Notes to Financial Statements
3
<PAGE> 4
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental income $ 637,264 $ 741,803 $ 1,273,319 $ 1,442,396
Interest income 23,693 21,276 49,760 43,802
--------- --------- ----------- -----------
Total income 660,957 763,079 1,323,079 1,486,198
Expenses:
Depreciation 157,901 164,929 315,366 338,012
General and administrative expenses 145,424 76,956 216,996 206,610
Property operating expenses 79,270 115,578 140,790 199,214
Amortization of deferred expenses 25,451 30,804 45,394 60,123
Management fee 15,705 18,869 33,768 37,772
--------- --------- ----------- -----------
Total expenses 423,751 407,136 752,314 841,731
--------- --------- ----------- -----------
Net income/(loss) $ 237,206 $ 355,943 $ 570,765 $ 644,467
========= ========= =========== ===========
Allocation of net income/(loss):
General Partner $ 2,373 $ 3,560 $ 5,708 $ 6,445
John Hancock Limited Partner (6,991) (12,291) (13,982) (24,582)
Investors 241,824 364,674 579,039 662,604
--------- --------- ----------- -----------
$ 237,206 $ 355,943 $ 570,765 $ 644,467
========= ========= =========== ===========
Net income/(loss) per Unit $ 2.64 $ 3.98 $ 6.32 $ 7.23
========= ========= =========== ===========
</TABLE>
See Notes to Financial Statements
4
<PAGE> 5
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1998 AND
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
------- -------- -----
<S> <C> <C> <C>
Partners' equity/(deficit) at January 1, 1997
(91,647 Units outstanding) ($230,844) $ 25,156,986 $ 24,926,142
Less: Cash distributions (20,848) (4,190,101) (4,210,949)
Add: Net income 6,364 630,019 636,383
--------- ------------ ------------
Partners' equity/(deficit) at December 31, 1997
(91,647 Units outstanding) (245,328) 21,596,904 21,351,576
Less: Cash distributions (10,072) (997,119) (1,007,191)
Add: Net income 5,708 565,057 570,765
--------- ------------ ------------
Partners' equity/(deficit) at June 30, 1998
(91,647 Units outstanding) ($249,692) $ 21,164,842 $ 20,915,150
========= ============ ============
</TABLE>
See Notes to Financial Statements
5
<PAGE> 6
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1998 1997
---- ----
<S> <C> <C>
Operating activities:
Net income/(loss) $ 570,765 $ 644,467
Adjustments to reconcile net income/(loss) to net
cash provided by operating activities:
Depreciation 315,366 338,012
Amortization of deferred expenses 45,394 60,123
----------- -----------
931,525 1,042,602
Changes in operating assets and liabilities:
Increase in restricted cash (1,000) (2,633)
(Increase) in other assets (135,000) (113,370)
Increase/(decrease) in accounts payable and accrued
expenses 104,985 (50,361)
Increase in accounts payable to affiliates 80,654 36,447
----------- -----------
Net cash provided by operating activities 981,164 912,685
Investing activities:
Increase in deferred expenses (69,911) (90,890)
----------- -----------
Net cash used in investing activities (69,911) (90,890)
Financing activities:
Cash distributed to Partners (1,007,191) (1,042,369)
----------- -----------
Net cash used in financing activities (1,007,191) (1,042,369)
----------- -----------
Net decrease in cash and cash
equivalents (95,938) (220,574)
Cash and cash equivalents at
beginning of year 2,502,844 2,197,847
----------- -----------
Cash and cash equivalents at
end of period $ 2,406,906 $ 1,977,273
=========== ===========
</TABLE>
See Notes to Financial Statements
6
<PAGE> 7
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION OF PARTNERSHIP
John Hancock Realty Income Fund Limited Partnership (the
"Partnership") was formed under the Massachusetts Uniform Limited
Partnership Act on June 12, 1986. As of June 30, 1998, the
Partnership consisted of John Hancock Realty Equities, Inc. (the
"General Partner"), a wholly-owned, indirect subsidiary of John
Hancock Mutual Life Insurance Company; John Hancock Realty Funding,
Inc. (the "John Hancock Limited Partner"); and 3,818 Investor Limited
Partners (the "Investors"), owning 91,647 Units of Investor Limited
Partnership Interests (the "Units"). The John Hancock Limited Partner
and the Investors are collectively referred to as the Limited
Partners. The initial capital of the Partnership was $2,000,
representing capital contributions of $1,000 from the General Partner
and $1,000 from the John Hancock Limited Partner. The Amended
Agreement of Limited Partnership of the Partnership (the "Partnership
Agreement") authorized the issuance of up to 100,000 Units of Limited
Partnership Interests at $500 per unit. During the offering period,
which terminated on September 9, 1987, 91,647 Units were sold and the
John Hancock Limited Partner made additional capital contributions of
$7,330,760. There have been no changes in the number of Units
outstanding subsequent to the termination of the offering period.
The Partnership is engaged in the business of acquiring, improving,
holding for investment and disposing of existing, income-producing,
commercial and industrial properties on an all-cash basis, free and
clear of mortgage indebtedness. Although the Partnership's properties
were acquired and are held free and clear of mortgage indebtedness,
the Partnership may incur mortgage indebtedness on its properties
under certain circumstances, as specified in the Partnership
Agreement.
The latest date on which the Partnership is due to terminate is
December 31, 2016, unless it is sooner terminated 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, 2016.
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 ended June 30, 1998 are
not necessarily indicative of the results that may be expected for
the year ending December 31, 1998. 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, 1997.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results may
differ from those estimates.
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 and other escrows.
7
<PAGE> 8
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investments in property are recorded at cost less any property
write-downs for permanent impairment in values. Cost includes the
initial purchase price of the property plus acquisition and legal
fees, other miscellaneous acquisition costs, and the cost of
significant improvements.
The Partnership measures impairment in value in accordance with
Financial Accounting Standards Board Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets to Be Disposed Of"
("Statement 121"). Statement 121 requires impairment losses to be
recorded on long-lived assets used in operations where indicators of
impairment are present and the undiscounted cash flows estimated to
be generated by those assets are less than the assets' carrying
amounts.
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.
Deferred expenses relating to tenant improvements and lease
commissions are amortized on a straight-line basis over the terms of
the leases to which they relate. During 1993, the Partnership reduced
the period over which its remaining deferred acquisition fees are
amortized from thirty years, the estimated useful life of the
buildings owned by the Partnership, to four and one-half years, the
then estimated remaining life of the Partnership.
The net income per Unit for the periods hereof are computed by
dividing the Investors' share of net income by the number of Units
outstanding at the end of such periods.
No provision for income taxes has been made in the financial
statements as such taxes are the responsibility of the individual
partners and not of the Partnership.
3. THE PARTNERSHIP AGREEMENT
Distributable Cash from Operations (defined in 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 (defined in the Partnership
Agreement); second, to the John Hancock Limited Partner until it
receives a 7% non-cumulative, non-compounded annual cash return on
its Invested Capital; and third, to the Investors and the John
Hancock Limited Partner in proportion to their respective Capital
Contributions (defined in the Partnership Agreement). However, any
Distributable Cash from Operations which is available as a result of
the reduction of working capital reserves funded by Capital
Contributions of the Investors will be distributed 100% to the
Investors.
Cash from Sales or Financings (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 Financings 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
(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 (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.
8
<PAGE> 9
JOHN HANCOCK REALTY INCOME FUND 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 to
be distributed in the same manner as Cash from Sales or Financings,
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 Financings, 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.
Profits and Losses from Sales or Financings 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.
Neither the General Partner nor any Affiliate (as defined in the
Partnership Agreement) of the General Partner shall be liable,
responsible or accountable in damages to any of the Partners or the
Partnership for any act or omission of the General Partner in good
faith on behalf of the Partnership within the scope of the authority
granted to the General Partner by the Partnership Agreement and in
the best interest of the Partnership, except for acts or omissions
constituting fraud, negligence, misconduct or breach of fiduciary
duty. The General Partner and its Affiliates performing services on
behalf of the Partnership shall be entitled to indemnity from the
Partnership for any loss, damage, or claim by reason of any act
performed or omitted to be performed by the General Partner in good
faith on behalf of the Partnership and in a manner within the scope
of the authority granted to the General Partner by the Partnership
Agreement and in the best interest of the Partnership, except that
they shall not be entitled to be indemnified in respect of any loss,
damage, or claim incurred by reason of fraud, negligence, misconduct,
or breach of fiduciary duty. Any indemnity shall be provided out of
and to the extent of Partnership assets only. The Partnership shall
not advance any funds to the General Partner or its Affiliates for
legal expenses and other costs incurred as a result of any legal
action initiated against the General Partner or its Affiliates by a
Limited Partner in the Partnership, except under certain specified
circumstances.
9
<PAGE> 10
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. INVESTMENT IN PROPERTY
Investment in property at cost and reduced by write-downs consists of
managed, fully-operating, commercial real estate as follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Marlboro Square Shopping Center $ 1,000,000 $ 1,000,000
Crossroads Square Shopping Center 12,266,920 12,266,920
Carnegie Center Office/Warehouse 3,800,000 3,800,000
Warner Plaza Shopping Center 6,473,889 6,473,889
----------- -----------
Total $23,540,809 $23,540,809
=========== ===========
</TABLE>
The real estate market is cyclical in nature and is materially
affected by general economic trends and economic conditions in the
market where a property is located. As a result, determination of
real estate values involves subjective judgments. These judgments are
based on current market conditions and assumptions related to future
market conditions. These assumptions involve, among other things, the
availability of capital, occupancy rates, rental rates, interest
rates and inflation rates. Amounts ultimately realized from each
property may vary significantly from the values presented and the
differences could be material. Actual market values of real estate
can be determined only by negotiation between the parties in a sales
transaction.
5. DEFERRED EXPENSES
Deferred expenses consist of the following:
<TABLE>
<CAPTION>
Unamortized Unamortized
Balance at Balance at
Description June 30, 1998 December 31, 1997
----------- ------------- -----------------
<S> <C> <C>
$496,449 of tenant improvements. These amounts
are amortized over the terms of the leases to which
they relate 243,845 221,699
$263,451 of lease commissions. These amounts
are amortized over the terms of the leases to which
they relate 140,838 138,467
-------- --------
$384,683 $360,166
======== ========
</TABLE>
10
<PAGE> 11
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
6. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
Fees and expenses incurred or paid by the General Partner or its
Affiliates on behalf of the Partnership and to which the General
Partner or its Affiliates are entitled to reimbursement from the
Partnership were as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
---- ----
<S> <C> <C>
Reimbursement for operating expenses $60,812 $162,973
Partnership management fee expense 34,258 37,772
------- --------
$95,070 $200,745
======= ========
</TABLE>
These expenses are included in expenses on the Statements of
Operations.
The Partnership provides indemnification to the General Partner and
its Affiliates for any acts or omissions of the General Partner in
good faith on behalf of the Partnership, except for acts or omissions
constituting fraud, negligence, misconduct or breach of fiduciary
duty. The General Partner believes that this indemnification applies
to the class action complaint described in Note 8. Accordingly,
included in the Statements of Operations for the six months ended
June 30, 1998 and 1997 is $58,302 and $38,173, respectively,
representing the Partnership's share of costs incurred by the General
Partner and its Affiliates relating to the class action complaint.
Through June 30, 1998, the Partnership has accrued a total of
$135,463 as its share of the costs incurred by the General Partner
and its Affiliates resulting from this matter.
Accounts payable to affiliates represents amounts due to the General
Partner or its Affiliates for various services provided to the
Partnership, including amounts to indemnify the General Partner or
its Affiliates for claims incurred by them in connection with their
actions as General Partner of the Partnership. All amounts accrued by
the Partnership to indemnify the General Partner or its Affiliates
for legal fees incurred by them shall not be paid unless or until all
conditions set forth in the Partnership Agreement for such payment
have been fulfilled.
The General Partner serves in a similar capacity for two other
affiliated real estate limited partnerships.
7. FEDERAL INCOME TAXES
A reconciliation of the net income reported on the Statements of
Operations to the net income reported for federal income tax purposes
is as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
---- ----
<S> <C> <C>
Net income per Statements of Operations $583,779 $644,467
Add/(deduct): Excess of tax depreciation
over book depreciation (49,078) (94,766)
Excess of book amortization
over tax amortization 20,044 8,093
-------- --------
Net income for federal income tax purposes $554,745 $557,794
======== ========
</TABLE>
11
<PAGE> 12
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
8. CONTINGENCIES
In February 1996, a putative class action complaint was filed in the
Superior Court in Essex County, New Jersey by a single investor in a
limited partnership affiliated with the Partnership. The complaint
named as defendants the Partnership, the General Partner, certain
other Affiliates of the General Partner, and certain unnamed
officers, directors, employees and agents of the named defendants.
The plaintiff sought unspecified damages stemming from alleged
misrepresentations and omissions in the marketing and offering
materials associated with the Partnership and two limited
partnerships affiliated with the Partnership. On March 18, 1997, the
court certified a class of investors who were original purchasers in
the Partnership.
The Partnership provides indemnification to the General Partner and
its Affiliates for acts or omissions of the General Partner in good
faith on behalf of the Partnership, except for acts or omissions
constituting fraud, negligence, misconduct or breach of fiduciary
duty. The General Partner believes that this indemnification applies
to the class action complaint described above.
The Partnership has incurred an aggregate of approximately $338,000
in legal expenses in connection with the class action lawsuit (see
Part l, Item 3 of this Report). Of this amount, approximately
$203,000 relates to the Partnership's own defense and approximately
$135,000 relates to the indemnification of the General Partner and
its Affiliates for their defense. These expenses are funded from the
operations of the Partnership.
At the present time, the General Partner can not estimate the
aggregate amount of legal expenses and indemnification claims to be
incurred and their impact on the Partnership's Financial Statements,
taken as a whole. Accordingly, no provision for any liability which
could result from the eventual outcome of these matters has been made
in the accompanying financial statements. However, while it is still
too early the estimate potential damages, they could possible be
material.
12
<PAGE> 13
JOHN HANCOCK REALTY INCOME FUND 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 9, 1986 to September 9, 1987, the
Partnership sold 91,647 Units representing gross proceeds (exclusive of the John
Hancock Limited Partner's contribution which was used to pay sales commissions,
acquisition fees and organizational and offering expenses) of $45,823,500. The
proceeds of the offering were used to acquire investment properties and fund
reserves. The Partnership's properties are described more fully in Note 4 to the
Financial Statements included in Item 1 of this Report.
IMPACT OF YEAR 2000
The General Partner and John Hancock Mutual Life Insurance Company, the General
Partner's ultimate parent (together, John Hancock) along with the Partnership,
have developed a plan to modify or replace significant portions of the
Partnership's computer information and automated technologies so that its
systems will function properly with respect to the dates in the year 2000 and
thereafter. The Partnership presently believes that with modifications to
existing systems and conversions to new technologies, the year 2000 will not
pose significant operational problems for its computer systems. However, if
certain modifications and conversions are not made, or are not completed timely,
the year 2000 issue could have an adverse impact on the operations of the
Partnership.
John Hancock as early as 1994 had begun assessing, modifying and converting the
software related to its significant systems and has initiated formal
communications with its significant business partners and customers to determine
the extent to which John Hancock's interface systems are vulnerable to those
third parties' failure to remediate their own year 2000 issues. While John
Hancock is developing alternative third party processing arrangements as it
deems appropriate, there is no guarantee that the systems of other companies on
which the Partnership's systems rely will be converted timely or will not have
an adverse effect on the Partnership's systems.
The Partnership expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors. However,
there can be no guarantee that this completion target will be achieved.
FORWARD-LOOKING STATEMENTS
In addition to historical information, certain statements contained herein
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Those statements appear in a number of places in this
Report and include statements regarding the intent, belief or expectations of
the General Partner with respect to, among other things, the prospective sale of
Partnership properties, actions that would be taken in the event of lack of
liquidity, unanticipated leasing costs, repair and maintenance expenses,
distributions to the General Partner and to Investors, the possible effects of
tenants vacating space at Partnership properties, the absorption of existing
retail space in certain geographical areas, and the impact of inflation.
Forward-looking statements involve numerous known and unknown risks and
uncertainties, and they are not guarantees of future performance. The following
factors, among others, could cause actual results or performance of the
Partnership and future events to differ materially from those expressed or
implied in the forward-looking statements: general economic and business
conditions; any and all general risks of real estate ownership, including
without limitation adverse changes in general economic conditions and adverse
local conditions, the fluctuation of rental income from properties, changes in
property taxes, utility costs or maintenance costs and insurance, fluctuations
of real estate values, competition for tenants, uncertainties about whether real
estate sales under contract will close; the ability of the Partnership to sell
its properties; and other factors detailed from time to time in the filings with
the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on forward-looking statements,
which reflect the General Partner's analysis only as of the date hereof. The
Partnership assumes no obligation to update forward-looking statements. See also
the Partnership's reports to be filed from time to time with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
13
<PAGE> 14
JOHN HANCOCK REALTY INCOME FUND 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
At June 30, 1998, the Partnership had $2,406,906 in cash and cash equivalents
and $59,400 in restricted cash.
The Partnership has established a working capital reserve with a current balance
of approximately 3% of the Investors' Invested Capital (defined in the
Partnership Agreement). The General Partner anticipates that such amount should
be sufficient to satisfy the Partnership's general liquidity requirements.
Liquidity would, however, be materially adversely affected by a significant
reduction in revenues or significant unanticipated operating costs (including
but not limited to litigation expenses), unanticipated leasing costs or
unanticipated capital expenditures. If any or all of these events were to occur,
to the extent that the working capital reserve would be insufficient to satisfy
the cash requirements of the Partnership, it is anticipated that additional
funds would be obtained through a reduction of cash distributions to Investors,
bank loans, short-term loans from the General Partner or its Affiliates, or the
sale or financing of Partnership properties.
During the six months ended June 30, 1998, cash from working capital reserves
was used for the payment of leasing costs in the amount of $69,911 incurred at
the Carnegie Center and Marlboro Square properties. The General Partner
estimates that the Partnership will incur approximately $320,000 of additional
leasing costs at its properties during the remainder of 1998. The General
Partner anticipates that the current balance in the working capital reserve will
be sufficient to pay such costs.
During the six months ended June 30, 1998, approximately $41,000 of cash from
operations was used to fund non-recurring maintenance and repair expenses
incurred at the Partnership's properties. The General Partner estimates that the
Partnership will incur additional non-recurring repair and maintenance expenses
of approximately $209,000 at the properties during the remainder of 1998. These
additional expenses will be funded from the operations of the Partnership's
properties and are not expected to have a significant impact on the
Partnership's liquidity.
Cash in the amount of $1,007,191 generated from the Partnership's operations was
distributed to the General Partner and Investors during the six months ended
June 30, 1998. The General Partner currently anticipates that the Partnership
will be able to make comparable distributions during each of the two remaining
quarters of 1998.
The Partnership has incurred approximately $338,000 in legal expenses in
connection with the class action lawsuit (see Part II, Item 1 of this Report).
Of this amount, approximately $203,000 relates to the Partnership's own defense
and approximately $135,000 relates to the indemnification of the General Partner
and its Affiliates for their defense. These expenses are funded from the
operations of the Partnership. At the present time, the General Partner cannot
estimate the aggregate amount of legal expenses and indemnification claims to be
incurred and their impact on the Partnership's future operations. Liquidity
would, however, be materially adversely affected by a significant increase in
such legal expenses and related indemnification costs. If such increases were to
occur, to the extent that cash from operations and the working capital reserve
would be insufficient to satisfy the cash requirements of the Partnership, it is
anticipated that additional funds would be obtained through a reduction of cash
distributions to investors, bank loans, short-term loans from the General
Partner or its affiliates, or the sale or financing of Partnership properties.
14
<PAGE> 15
JOHN HANCOCK REALTY INCOME FUND 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)
The following table summarizes the leasing activity and occupancy status at the
Partnership's properties during the six months ended June 30, 1998:
<TABLE>
<CAPTION>
MARLBORO SQ. CROSSROADS SQ. CARNEGIE WARNER PL.
SHOPPING CTR. SHOPPING CTR. CENTER SHOPPING CTR.
------------- ------------- ------ -------------
<S> <C> <C> <C> <C>
Square Feet 42,150 174,196 128,059 92,848
Occupancy at January 1, 1998 67% 95% 73% 98%
New Leases 16% 1% 2% 0%
Lease Renewals 0% 0% 5% 2%
Leases Expired (1) 11% 0% 0% 7%
Occupancy at June 30, 1998 72% 96% 75% 91%
Leases Scheduled to
Expire, Balance of 1998 0% 11% 12% 5%
Leases Scheduled to
Commence, Balance of 1998 0% 0% 0% 0%
</TABLE>
(1) Includes leases terminated by the General Partner for non-payment of rent.
At June 30, 1998, Marlboro Square's occupancy was 72%. During the first six
months of 1998, a new tenant took occupancy of 6,600 square feet, or 16% of the
property, under a lease that will expire in January 1999, at which time the
tenant will have the option to renew its lease for a five-year term.
Approximately $20,000 in leasing costs was incurred in connection with this new
lease. However, a lease representing 3,000 square feet, or 7% of the property,
expired. In addition, a tenant with a lease for approximately 1,600 square feet,
or 4% of the property, that was scheduled to expire in January 2001, was
delinquent in rental payments due since February 1998. As a result the General
Partner terminated the tenant's lease effective May 12, 1998. The General
Partner has reached a settlement agreement with the former tenant whereby the
Partnership agreed to release the former tenant from all past due and future
rental obligations in exchange for $2,000.
The General Partner anticipates that absorption of available retail space in the
Marlboro, Massachusetts area will remain sluggish during 1998 based upon both
the lack of demand and the oversupply of available retail space in the area. The
General Partner will continue to offer competitive rental rates and concessions
in an effort to retain existing tenants as well as to lease the remaining vacant
space at the property.
The Carnegie Center's occupancy at June 30, 1998 was 75%. During the remainder
of 1998, three leases representing approximately 15,000 square feet, or 12% of
the property are scheduled to expire. The Cincinnati industrial real estate
market, where the Carnegie Center is located, has an oversupply of
office/industrial space, which has resulted in a decline in rental rates and an
increase in vacancy rates. Because of these market conditions, rental rates and
concessions will be priced aggressively in an effort to retain existing tenants
as well as secure new tenants at the property.
Since late 1994, when the Carnegie Center's occupancy declined to 35%, the
General Partner has gradually improved the property's occupancy to its current
level of 75%. Given the current status of the property, the projected future
capital requirements necessary for the property to maintain its competitive
position within the market and the current conditions in the Cincinnati real
estate market, the General Partner listed the Carnegie Center for sale during
July 1998.
15
<PAGE> 16
JOHN HANCOCK REALTY INCOME FUND 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)
A tenant at the Warner Plaza property with a lease for approximately 6,200
square feet, or 7% of the property, vacated the property and filed for
bankruptcy under Chapter 7 of the U.S Bankruptcy Code. The General Partner is
seeking to find a replacement tenant for this space.
Over the past few years steady population growth in the Chandler, Arizona area,
where the Warner Plaza property is located, has increased demand for available
retail space and stimulated the development of new retail space. Given these
market conditions as well as the current status of the property, the General
Partner listed the Warner Plaza for sale during the second quarter of 1998.
During the second quarter of 1997, the anchor tenant at the Crossroads Square
property that occupies 49% of the property under a lease scheduled to expire in
August 2010 informed the General Partner of its intention to vacate its space
during the second half of 1998. As a result, the General Partner has commenced
efforts to find a replacement tenant for the space. The General Partner does not
believe that this situation is likely to have a materially adverse effect on the
Partnership's liquidity.
One tenant at the Crossroads Square property has a clause in its lease that may
be exercisable if the anchor tenant described above ceases to operate at the
property and a replacement tenant is not secured. Such clause provides that the
tenant may: i) reduce rental payments to the lesser of the fixed monthly rent or
2% of gross receipts if the anchor ceases to operate for 180 days, and, ii)
terminate lease obligations if the cessation of operations continues for an
additional six months and a substitute tenant has not been provided. This tenant
occupies approximately 10,500 square feet, or 6% of the property, under a lease
that is scheduled to expire in July 2005. The General Partner does not believe
that any reduction in rental payments or any possible lease termination that may
result from the anchor tenant vacating the property is likely to have a
materially adverse affect on the Partnership's liquidity.
The General Partner evaluated the carrying value of each of the Partnership's
properties as of December 31, 1997 by comparing such value to the respective
property's future undiscounted cash flows and the then most recent independent
or internal appraisal. Based on such evaluations, the General Partner determined
that the Marlboro Square property's estimated future undiscounted cash flows
were not expected to exceed its carrying value. Therefore, a write-down in value
of $668,520, representing the difference between the property's carrying value
and its then estimated market value (and not its estimated future undiscounted
cash flows) was required as of December 31, 1997. No permanent impairment in
values existed with respect to the Partnerships other properties as of December
31, 1997 and, therefore, no additional write-downs were recorded.
The General Partner will continue to conduct property valuations, using internal
or independent appraisals, in order to determine whether a permanent impairment
in value exists on any of the Partnership's properties.
RESULTS OF OPERATIONS
The Partnership generated net income of $583,779 for the six months ended June
30, 1998 as compared to net income of $644,467 for the same period in 1997.
Average occupancy for the Partnership's investments was as follows:
Six Months Ended
June 30,
1998 1997
---- ----
Marlboro Square Shopping Center 72% 66%
Crossroads Square Shopping Center 95% 94%
Carnegie Center Office/Warehouse 74% 67%
Warner Plaza Shopping Center 94% 99%
16
<PAGE> 17
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
Rental income for the six months ended June 30, 1998, decreased by $169,077, or
12%, as compared to the same period in 1997. This decrease is primarily due to
the sale of the 1300 North Dutton Avenue property on September 29, 1997.
Excluding rental income generated by the 1300 North Dutton Avenue property,
rental income increased slightly due to increases in rental income at the
Marlboro Square, Carnegie Center and Crossroads Square properties. Rental income
increased at each of these properties primarily due to increases in average
occupancy. Rental income at the Warner Plaza property was consistent between
periods.
Interest income for the six months ended June 30, 1998 increased by $5,958, or
14%, as compared to the same period in 1997. This increase was primarily due to
an increase in the balance of the Partnership's working capital reserves. The
Partnership's working capital reserves increased because the Partnership
retained a portion of the net sales proceeds from the sale of the 1300 North
Dutton Avenue property.
Depreciation expense for the six months ended June 30, 1998 decreased by
$22,646, or 7%, as compared to the same period in 1997. This decrease is
primarily due to the write-down in value of Marlboro Square's carrying value at
December 31, 1997.
The Partnership's share of property operating expenses for the six months ended
June 30, 1998 decreased by $58,424, or 29%, as compared to the same period in
1997. This decrease is primarily due to the sale of the 1300 North Dutton Avenue
property. Excluding amounts attributable to the 1300 North Dutton Avenue
property, the Partnership's share of property operating expenses increased by 7%
primarily due to non-recurring maintenance and repair expenses incurred at the
Carnegie Center, Marlboro Square and Warner Plaza properties. Property operating
expenses at the Crossroads Square property was consistent between periods.
General and administrative expenses for the six months ended June 30, 1998
increased by $10,386, or 5%, as compared to the same period during 1997. This
increase is primarily due to an increase in legal fees incurred by the
Partnership in connection with the class action compliant (see Part II, Item 1
of this Report).
Amortization of deferred expenses for the six months ended June 30, 1998
decreased by $14,729, or 25%, as compared to the same period in 1997. This
decrease is primarily due to the write-down in carrying value of the Marlboro
Square property at December 31, 1997. The net book value of the Marlboro Square
plus any unamortized deferred expenses relating to the property at the time the
property was written-down were combined to arrive at the property's carrying
value (current market value) after its write-down. Accordingly, some deferred
expense amounts that were amortized during 1997 are included in the property's
carrying value, and depreciated, during 1998.
Management fee expense, which is equal to 3.5% of Cash from Operations,
decreased by $4,004, or 11%, as compared to the same period in 1997. This
decrease was due to a decline in Cash from Operations between periods primarily
resulting from the sale of the 1300 North Dutton Avenue property.
The General Partner believes that inflation has had no significant impact on the
Partnership's operations during the six months ended June 30, 1998, and the
General Partner anticipates that inflation will not have a significant impact
during the remainder of 1998.
17
<PAGE> 18
JOHN HANCOCK REALTY INCOME FUND 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 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,
1998 1997
---- ----
<S> <C> <C>
Net cash provided by operating activities (a) $ 981,164 $ 912,685
Net change in operating assets and liabilities (a) (49,639) 129,917
--------- -----------
Cash provided by operations (a) 931,525 1,042,602
Increase in working capital reserves (1,159)
Add: Accrual basis Partnership
management fee 33,768 37,772
--------- -----------
Cash from operations (b) 965,293 1,079,215
Decrease in working capital reserves 63,912 --
Less: Accrual basis Partnership
management fee (33,768) (37,772)
--------- -----------
Distributable cash from operations (b) $ 995,437 $ 1,041,443
========= ===========
Allocation to General Partner $ 9,315 $ 10,414
Allocation to John Hancock Limited Partner -- --
Allocation to Investors 986,122 1,031,029
--------- -----------
Distributable cash from operations (b) $ 995,437 $ 1,041,443
========= ===========
</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.
During the third quarter of 1998, the Partnership will to make a cash
distribution to the Investors of $493,061, representing a 5% annualized return,
to all Investors of record at June 30, 1998, based on Distributable Cash from
Operations for the quarter then ended.
The source of future cash distributions is dependent upon cash generated by the
Partnership's properties and the use of working capital reserves. The General
Partner currently anticipates that the Partnership's Distributable Cash from
Operations during each of the remaining two quarters of 1998 will be comparable
to that generated during the first two quarters of 1998.
18
<PAGE> 19
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In February 1996, a putative class action complaint was filed in the
Superior Court in Essex County, New Jersey by a single investor in a
limited partnership affiliated with the Partnership. The complaint
named as defendants the Partnership, the General Partner, certain
other affiliates of the General Partner, and certain unnamed
officers, directors, employees and agents of the named defendants.
The plaintiff sought unspecified damages stemming from alleged
misrepresentations and omissions in the marketing and offering
materials associated with the Partnership and two limited
partnerships affiliated with the Partnership. The complaint alleged,
among other things, that the marketing materials for the Partnership
and the affiliated limited partnerships did not contain adequate
risk disclosures.
On March 18, 1997, the court certified a class of investors who were
original purchasers in the Partnership. The certification order
should not be construed as suggesting that any member of the class
is entitled to recover, or will recover, any amount in the action.
The General Partner believes the allegations are totally without
merit and intends to vigorously contest the action.
There are no other 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.
In September 1997, a complaint for damages was filed in the Superior
Court of the State of California for the County of Los Angeles by an
investor in John Hancock Realty Income Fund-II Limited Partnership
("RIF-II"), a limited partnership affiliated with the Partnership.
The complaint named the General Partner as a defendant.
The plaintiff sought unspecified damages which allegedly arose from
the General Partner's refusal to provide, without reasonable
precautions on plaintiff's use of, a list of investors in the
Partnership and in RIF-II. Plaintiff alleges that the General
Partner's refusal unconditionally to provide a list was a breach of
contract and a breach of the General Partner's fiduciary duty.
In 1998, the plaintiff amended the complaint to name the Partnership
and RIF-II as defendants. The defendants filed demurrer motions,
asking that the complaint be dismissed at law. These motions were
under consideration during the first quarter of 1998.
Although the court dismissed the complaint against RIF-II during the
second quarter of 1998, the plaintiff subsequently amended its
complaint, again naming RIF-II as a defendant. On August 12, 1998,
the court granted RIF-II's motion for summary adjudication of the
issues against the plaintiff. The court ruled that the plaintiff
could not prevail upon its claims since it was not an Investor in
RIF-II. RIF-II intends to move for a judgment dismissing it from the
case.
There can be no assurances given as to the timing, costs or outcome
of this legal proceeding.
There are no other 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
1998.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the second
quarter of 1998.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders of the
Partnership during the second quarter of 1998.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits to this report.
(b) There were no Reports on Form 8-K filed during the second
quarter of 1998.
19
<PAGE> 20
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 to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 14th day of August, 1998.
John Hancock Realty Income Fund
Limited Partnership
By: John Hancock Realty Equities, Inc.,
General Partner
By: /s/William M. Fitzgerald
-----------------------------------
William M. Fitzgerald, President
By: /s/Richard E. Frank
-----------------------------------
Richard E. Frank, Treasurer
(Chief Accounting Officer)
20
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000795196
<NAME> JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,466,306
<SECURITIES> 0
<RECEIVABLES> 225,816
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,692,122
<PP&E> 23,540,809
<DEPRECIATION> 5,102,522
<TOTAL-ASSETS> 21,515,092
<CURRENT-LIABILITIES> 599,942
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,915,150
<TOTAL-LIABILITY-AND-EQUITY> 21,515,092
<SALES> 0
<TOTAL-REVENUES> 1,323,079
<CGS> 0
<TOTAL-COSTS> 391,554
<OTHER-EXPENSES> 360,760
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 570,765
<INCOME-TAX> 0
<INCOME-CONTINUING> 570,765
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 570,765
<EPS-PRIMARY> 6.32
<EPS-DILUTED> 6.32
</TABLE>
