<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 March 31, 1999
-------------------------------------------------
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
PAGE
PART I: FINANCIAL INFORMATION
Item 1 - Financial Statements:
Balance Sheets at March 31, 1999 and
December 31, 1998 3
Statements of Operations for the Three
Months Ended March 31, 1999 and 1998 4
Statements of Partners' Equity for the
Three Months Ended March 31, 1999 and
for the Year Ended December 31, 1998 5
Statements of Cash Flows for the Three
Months Ended March 31, 1999 and 1998 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
2
<PAGE> 3
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
MARCH 31, DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 9,121,445 $ 2,055,017
Restricted cash 36,777 63,879
Other assets 87,933 77,433
Property held for sale 9,083,771 18,829,684
----------- -----------
Total assets $18,329,926 $21,026,013
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 152,078 $ 309,631
Accounts payable to affiliates 423,791 316,299
----------- -----------
Total liabilities 575,869 625,930
Partners' equity/(deficit):
General Partner's deficit (234,619) (253,231)
Limited Partners' equity 17,988,676 20,653,314
----------- -----------
Total partners' equity 17,754,057 20,400,083
----------- -----------
Total liabilities and partners' equity $18,329,926 $21,026,013
=========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE> 4
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 1998
---------- --------
Income:
Rental income $ 526,533 $636,055
Interest income 40,857 26,067
Gain on sale 1,667,428 --
---------- --------
Total income 2,280,818 662,122
Expenses:
Depreciation -- 157,465
General and administrative expenses 254,690 71,572
Property operating expenses 75,791 61,520
Amortization of deferred expenses -- 19,943
Management fee 9,552 18,063
---------- --------
Total expenses 340,033 328,563
---------- --------
Net income $1,940,785 $333,559
========== ========
Allocation of net income:
General Partner $ 19,408 $ 3,335
John Hancock Limited Partner 229,056 (6,991)
Investors 1,692,321 337,215
---------- --------
$1,940,785 $333,559
========== ========
Net income per Unit $ 18.47 $ 3.68
========== ========
See Notes to Financial Statements
4
<PAGE> 5
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1999 AND
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
--------- ------------ ------------
<S> <C> <C> <C>
Partners' equity/(deficit) at January 1, 1998
(91,647 Units outstanding) $(245,328) $ 21,596,904 $ 21,351,576
Less: Cash distributions (18,405) (1,983,240) (2,001,645)
Add: Net income 10,502 1,039,650 1,050,152
--------- ------------ ------------
Partners' equity/(deficit) at December 31, 1998
(91,647 Units outstanding) ($253,231) $ 20,653,314 $ 20,400,083
Less: Cash distributions (796) (4,586,015) (4,586,811)
Add: Net income 19,408 1,921,377 1,940,785
--------- ------------ ------------
Partners' equity/(deficit) at March 31, 1999
(91,647 Units outstanding) $(234,619) $ 17,988,676 $ 17,754,057
========= ============ ============
</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>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
----------- ----------
<S> <C> <C>
Operating activities:
Net income $ 1,940,785 $ 333,559
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation -- 157,465
Amortization of deferred expenses -- 19,943
Gain on sale of property (1,677,428) --
----------- ----------
263,567 510,967
Changes in operating assets and liabilities:
Decrease/(increase) in restricted cash 27,102 (1,000)
Decrease/(increase) in other assets (10,500) (110,000)
Increase/(decrease) in accounts payable and accrued
expenses (157,553) 76,545
Increase in accounts payable to affiliates 107,492 (1,617)
----------- ----------
Net cash provided by operating activities 229,898 474,895
Investing activities:
Proceeds from sales of properties 11,436,275 --
Increase in deferred expenses (12,934) (33,417)
----------- ----------
Net cash used in investing activities 11,423,341 (33,417)
Financing activities:
Cash distributed to Partners (4,586,811) (509,151)
----------- ----------
Net cash used in financing activities (4,586,811) (509,151)
----------- ----------
Net increase (decrease) in cash and
cash equivalents 7,066,428 (67,673)
Cash and cash equivalents at
beginning of year 2,055,017 2,502,844
----------- ----------
Cash and cash equivalents at
end of period $ 9,121,445 $2,435,171
=========== ==========
</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 March 31, 1999, 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
3,673 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 three-month period ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1999. 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, 1998.
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.
Property held for sale is recorded at the lower of its carrying amount,
at the time the property is listed for sale, or its fair value, less cost
to sell. Carrying amount includes the property's cost as described below,
less accumulated depreciation thereon and less any property write-downs
for impairment in value and plus any related unamortized deferred
expenses.
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. PROPERTY HELD FOR SALE
During 1998, the Marlboro Square Shopping Center, Crossroads Square
Shopping Center, Carnegie Center Office/Warehouse and Warner Plaza
Shopping Center were listed for sale. Accordingly, these properties are
classified as "Property Held for Sale" on the Balance Sheets at March 31,
1999 and December 31, 1998 at their carrying values, which are not in
excess of their estimated fair values, which are not in excess of their
estimated fair values, less selling costs. Property held for sale
consists of commercial real estate as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------- -----------
<S> <C> <C>
Marlboro Square Shopping Center $ -- $ 989,981
Crossroads Square Shopping Center 9,083,771 9,070,837
Carnegie Center Office/Warehouse -- 3,763,285
Warner Plaza Shopping Center -- 5,005,581
---------- -----------
Total $9,083,771 $18,829,684
========== ===========
</TABLE>
On January 7, 1999, the Partnership sold the Carnegie Center to a
non-affiliated buyer for a net sales price of $4,096,441, after
deductions for commissions and selling expenses incurred in connection
with the sale of the property. This transaction resulted in a
non-recurring gain of $333,156, representing the difference between the
net sales price and the property's carrying value of $3,763,285.
On March 17, 1999, the Partnership sold the Marlboro Square Shopping
Center to a non-affiliated buyer for net sales price of $1,131,999, after
deductions for commissions and selling expenses incurred in connection
with the sale of the property. This transaction resulted in a
non-recurring gain of $142,018, representing the difference between the
net sales price and the property's carrying value of $989,981.
On March 18, 1999, the Partnership sold the Warner Plaza Shopping Center
to a non-affiliated buyer for a net sales price of $6,207,835, after
deductions for commissions and selling expenses incurred in connection
with the sale of the property. This transaction resulted in a
non-recurring gain of $1,202,254, representing the difference between the
net sales price and the property's carrying value of $5,005,581.
5. 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>
Three Months Ended
March 31,
------------------
1999 1998
------- -------
<S> <C> <C>
Reimbursement for operating expenses $48,628 $35,480
Partnership management fee expense 9,552 18,063
------- -------
$58,180 $53,543
======= =======
</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 legal
proceedings described in Note 7. Accordingly, included in the Statements
of Operations for the three months ended March 31, 1999 and 1998 is
$101,396 and $3,462, respectively, representing the Partnership's share
of costs incurred by the General Partner and its Affiliates relating to
such legal proceedings. Through March 31, 1999, the Partnership has
accrued a total of $365,612 as its share of the costs incurred by the
General Partner and its Affiliates resulting from this matter.
10
<PAGE> 11
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (CONTINUED)
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.
6. 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>
Three Months Ended
March 31,
----------------------
1999 1998
------- --------
<S> <C> <C>
Net income per Statements of Operations $1,940,785 $333,559
Add/(deduct): Excess of tax depreciation
over book depreciation (96,401) (24,539)
Excess of tax amortization
over book amortization (2,507) 10,022
---------- --------
Net income for federal income tax purposes $1,841,877 $319,042
========== ========
</TABLE>
7. 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 and the other defendants have answered the complaint,
denying the material allegations and raising numerous affirmative
defenses. Discovery has commenced, and the Partnership and other
defendants have produced documents relating to the plaintiff's claims. No
depositions are scheduled. The court has heard the defendants' motion to
dismiss certain claims on grounds of the expiration of the statues of
limitations and has stated it intends to hold a further hearing on that
matter to determine whether the case can be resolved by the disposition
of certain claims. The Partnership and the other defendants intend to
move to decertify the class and for summary judgment dismissing the
breach of contract claims.
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 that allegedly arose from the General Partner's
refusal to provide, without reasonable precautions on plaintiffs 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.
11
<PAGE> 12
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. CONTINGENCIES (CONTINUED)
In 1998, the plaintiff amended the complaint to name the Partnership and
RIF-II as defendants. As a result of the defendants' demurrer (motion to
dismiss), in May 1998 plaintiff's additional claims for tortuous
interference with prospective economic advantage and intentional
interference with contract, were dismissed. In addition, as a result of a
motion for summary judgment, in August 1998, the court dismissed all
claims involving RIF-II, leaving only the breach of contract and breach
of fiduciary duty claims involving the Partnership. On the eve of trial,
plaintiffs dismissed without prejudice those claims not previously
dismissed by the court and subsequently filed a notice of appeal from the
dismissal of the claims that the court had dismissed on motion.
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 $865,000 in
legal expenses in connection with these legal proceedings. Of this
amount, approximately $499,000 relates to the Partnership's own defense
and approximately $366,000 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 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 to estimate
potential damages, they could possibly be material.
During August 1998, the General Partner became aware that the Crossroads
Square Shopping Center was environmentally contaminated with certain
hazardous materials. The General Partner then sought to determine the
scope of the contamination and to determine the impact on the future
operating costs, repair and maintenance expenses and market value of the
property. The General Partner currently estimates that to remediate the
contamination will cost approximately $450,000. The General Partner has
listed the property for sale and continues to seek a buyer for the
property. The presence of these hazardous materials could adversely
affect the Partnership's ability to dispose of the property and the
Partnership could be exposed to liability and be required to incur
substantial remediation costs.
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, possible liability for the costs of
remediation of hazardous substances, 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
As initially stated in its Prospectus, it was expected that the Partnership
would be dissolved upon the sale of its last remaining property, which at that
time was expected to be within seven to ten years following the date such
property was acquired by the Partnership. As of March 31, 1999, the Partnership
had only one property remaining in its portfolio, Crossroads Square Shopping
Center, which has been listed for sale. The General Partner currently
anticipates that the Partnership will likely be able to sell this last remaining
property during 1999. Upon the sale of the last remaining property, the
operations of the Partnership will terminate, and the Partnership will be
dissolved, in accordance with the terms of the Partnership Agreement.
At March 31, 1999, the Partnership had $9,121,445 in cash and cash equivalents
and $36,777 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 three months ended March 31, 1999, cash from working capital reserves
was used for the payment of leasing costs in the amount of $15,634 incurred at
the Crossroads Square property. The General Partner estimates that the
Partnership will incur approximately $24,000 of additional leasing costs during
the remainder of 1999. The General Partner anticipates that the current balance
in the working capital reserve will be sufficient to pay such costs.
During the three months ended March 31, 1999, approximately $6,100 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 not incur additional non-recurring repair and maintenance
expenses during the remainder of 1999. Any additional expenses that may be
incurred will be funded from the operations of the Partnership's remaining
property, Crossroads Square Shopping Center, and are not expected to have a
significant impact on the Partnership's liquidity.
Cash in the amount of $4,586,811 was distributed to the General Partner and
Investors during the three months ended March 31, 1999. This amount was $756
less than expected due to an adjustment for the third quarter of 1998. Of this
amount, $494,613 was from Distributable Cash from Operations for the quarter
ended December 31, 1998 and $4,092,956 was from Distributable Cash from Sales
during the first quarter of 1999. Because the Partnership now holds only a
single property, which is listed for sale, the General Partner has determined
that it will be in the best interests of the Partnership to retain, rather than
distribute to Investors, net cash provided by the Partnership's normal
operations in order to fund cash reserves for contingencies, as is permitted by
the Partnership Agreement. Accordingly, for at least the three remaining
quarters of 1999, no cash distributions with respect to Distributable Cash from
Operations will be made to Investors.
The Partnership has incurred approximately $447,000 in legal expenses in
connection with the class action lawsuit (see Part II, Item 1 of this Report).
Of this amount, approximately $268,000 relates to the Partnership's own defense
and approximately $179,000 relates to the indemnification of the General Partner
and its Affiliates for their defense. These expenses are funded from the
operations of the Partnership. In addition, the Partnership incurred
approximately $418,000 in legal expenses in connection with the lawsuit filed in
the Superior Court of the State of California for the Count of Los Angeles by an
investor in the Partnership. Of this amount, approximately $231,000 relates to
the Partnership's own defense and approximately $187,000 relates to the
indemnification of the General Partner and its Affiliates for their defense.
These expenses are funded from the operations of the Partnership.
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)
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 investments.
The following table summarizes the leasing activity and occupancy status at the
Partnership's remaining property during the three months ended March 31, 1999:
<TABLE>
<CAPTION>
CROSSROADS SQ.
SHOPPING CTR.
--------------
<S> <C>
Square Feet 174,196
Occupancy at January 1, 1999 95%
New Leases 0%
Lease Renewals 0%
Leases Expired 0%
Occupancy at March 31, 1999 95%
Leases Scheduled to Expire, Balance of 1999 4%
Leases Scheduled to Commence, Balance of 1999 0%
</TABLE>
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.
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)
The General Partner listed the Crossroads Square for sale during August 1998
based upon the existing real estate market conditions in the Jacksonville,
Florida area, where the Crossroads Square is located and the property's
projected income performance. Subsequent to listing Crossroads Square for sale,
the General Partner became aware that the property was environmentally
contaminated with certain hazardous materials. The General Partner then sought
to determine the scope of the contamination and to determine the impact on the
future operating costs, repair and maintenance expenses and market value of the
property. The General Partner currently estimates that to remediate the
contamination would cost approximately $450,000. The General Partner continues
to seek a buyer for the property.
The General Partner evaluated the carrying value of each of the Partnership's
properties as of December 31, 1998 by comparing such value to the respective
property's future undiscounted cash flows and the then most recent independent
or internal appraisal. No permanent impairment in values existed with respect to
the Partnership's properties as of December 31, 1998 and, therefore, no
write-downs were recorded.
The General Partner will continue to conduct property valuations, using internal
or independent appraisals, in order to assist in the evaluation of whether a
permanent impairment in value exists on any of the Partnership's properties.
RESULTS OF OPERATIONS
The Partnership generated net income of $273,357 for the three months ended
March 31, 1999 as compared to net income of $333,559 for the same period in
1998.
Average occupancy for the Partnership's remaining property was as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
------- --------
<S> <C> <C>
Crossroads Square Shopping Center 95% 95%
</TABLE>
Rental income for the three months ended March 31, 1999 decreased by $75,522, or
12%, as compared to the same period in 1998. This decrease is primarily due to
the sales of the Marlboro Square, Carnegie Center and Warner Plaza properties.
Rental income at the Crossroads Square property was consistent between periods.
Interest income for the three months ended March 31, 1999 increased by $14,789,
or 57%, as compared to the same period in 1998. 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
received the net sales proceeds from the sales of the Carnegie Center, Marlboro
Square and Warner Plaza properties.
Depreciation expense for the three months ended March 31, 1999 decreased by
$157,465, or 100%, as compared to the same period in 1998. This decrease is due
to the reclassification of the Crossroads Square, Warner Plaza, Carnegie Center
and Marlboro Square properties as "Property Held for Sale" during the third
quarter of 1998. Accordingly no depreciation has been recorded on these
properties since that time that they were listed for sale.
General and administrative expenses for the quarter ended March 31, 1999
increased by $183,118, or 255%, primarily due to an increase in legal fees
incurred by the Partnership in connection with the legal proceedings described
in Item I of Part II of this report. Excluding such legal fees, general and
administrative expenses were consistent between periods.
16
<PAGE> 17
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)
RESULTS OF OPERATIONS (CONTINUED)
The Partnership's share of property operating expenses for the three months
ended March 31, 1999 increased by $14,272, or 23%, as compared to the same
period in 1998. This increase is primarily due to lower tenant reimbursements
received at the Warner Plaza and Marlboro Square properties.
Property operating expenses at the Crossroads Square property were consistent
between periods.
Amortization of deferred expenses for the three months ended March 31, 1999
decreased by $19,943, or 100%, as compared to the same period in 1998. This
decrease is due to reclassifying deferred expenses to "Property Held for Sale"
and accordingly, no longer amortizing such amounts.
The General Partner believes that inflation has had no significant impact on the
Partnership's operations during the three months ended March 31, 1999, and the
General Partner anticipates that inflation will not have a significant impact
during the remainder of 1999.
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>
Three Months Ended
March 31,
---------------------
1999 1998
--------- --------
<S> <C> <C>
Net cash provided by operating activities (a) $ 229,898 $474,895
Net change in operating assets and liabilities (a) 33,669 36,072
--------- --------
Cash provided by operations (a) 263,567 510,967
Increase in working capital reserves (263,567) (12,926)
Add: Accrual basis Partnership management fee 9,552 18,063
--------- --------
Cash from operations (b) 9,552 516,104
Decrease in working capital reserves
Less: Accrual basis Partnership management fee (9,552) (18,063)
--------- --------
Distributable cash from operations (b) $ 0 $498,041
========= ========
Allocation to General Partner $ $ 4,980
Allocation to John Hancock Limited Partner --
Allocation to Investors -- 493,061
--------- --------
Distributable cash from operations (b) $ -- $498,041
========= ========
</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.
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 (CONTINUED)
During the second quarter of 1999, the Partnership expects to make a cash
distribution in the aggregate amount of $6,484,942, to all Investors of record
at March 31, 1999 representing a portion of the cash from sales of the Marlboro
Square and Warner Plaza properties during the first quarter of 1999. The
remainder has been retained to increase working capital reserves. These amounts
were distributed in accordance with the Partnership Agreement and were allocated
as follows:
<TABLE>
<CAPTION>
Distributable Cash
From Sales or Financings
------------------------
<S> <C>
Investors $5,590,467
John Hancock Limited Partner 894,475
General Partner --
----------
Total $6,484,942
==========
</TABLE>
The source of future cash distributions is dependent upon cash generated by the
Partnership's properties and the use of working capital reserves. As of March
31, 1999, one property, Crossroads Square Shopping Center, remains in the
Partnership. In order to adequately provide for all future contingencies, the
General Partner has determined (as permitted by the Partnership Agreement) to
retain, rather than distribute to Investors, net cash provided by the
Partnership's normal operations in order to fund cash reserves for
contingencies. Accordingly, for at least the remaining quarters of 1999, no cash
distributions with respect to Distributable Cash from Operations will be made to
Investors.
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 Partnership and the other defendants have answered the complaint,
denying the material allegations and raising numerous affirmative defenses.
Discovery has commenced, and the Partnership and other defendants have
produced documents relating to the plaintiff's claims. No depositions are
scheduled. The court has heard the defendants' motion to dismiss certain
claims on grounds of the expiration of the statutes of limitations and has
stated it intends to hold a further hearing on that matter to determine
whether the case can be resolved by the disposition of certain claims. The
Partnership and the other defendants intend to move to decertify the class
and for summary judgment dismissing the breach of contract claims.
The General Partner believes the allegations are totally without merit and
will continue to vigorously contest the action.
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 that 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. As a result of the defendants' demurrer (motion to
dismiss), in May 1998 plaintiff's additional claims for tortuous
interference with prospective economic advantage and intentional
interference with contract, were dismissed. In addition, as a result of a
motion for summary judgment, in August 1998, the court dismissed all claims
involving RIF-II, leaving only the breach of contract and breach of
fiduciary duty claims involving the Partnership. On the eve of trial,
plaintiffs dismissed without prejudice those claims not previously
dismissed by the court, and subsequently filed a notice of appeal from the
dismissal of the claims that the court had dismissed on motion.
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.
19
<PAGE> 20
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
PART II: OTHER INFORMATION
(CONTINUED)
ITEM 2. CHANGES IN SECURITIES
There were no changes in securities during the first quarter of 1999.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the first quarter
of 1999.
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 first quarter of 1999.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits to this report.
(b) Reports on Form 8-K were filed on January 7, 1999, March 17,
1999 and March 18, 1999.
20
<PAGE> 21
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 May, 1999.
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/ Virginia H. Lomasney
------------------------------------
Virginia H. Lomasney, Treasurer
(Chief Accounting Officer)
21
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000795196
<NAME> JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 9,158,222
<SECURITIES> 0
<RECEIVABLES> 87,933
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,246,155
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,329,926
<CURRENT-LIABILITIES> 575,869
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 17,754,057
<TOTAL-LIABILITY-AND-EQUITY> 18,329,926
<SALES> 0
<TOTAL-REVENUES> 2,280,818
<CGS> 0
<TOTAL-COSTS> 340,033
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,940,785
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,940,785
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,940,785
<EPS-PRIMARY> 18.47
<EPS-DILUTED> 18.47
</TABLE>
