<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 SEPTEMBER 30, 2000
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM N/A
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COMMISSION FILE NUMBER 0-17664
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JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2969061
------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
200 CLARENDON STREET, BOSTON, MA 02116
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(800) 722-5457
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
N/A
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(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[ ]
1
<PAGE> 2
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
INDEX
PAGE
PART I: FINANCIAL INFORMATION
Item 1 - Financial Statements:
Balance Sheets at September 30, 2000 and
December 31, 1999 3
Statements of Operations for the Three and Nine
Months Ended September 30, 2000 and 1999 4
Statements of Partners' Equity for the
Nine Months Ended September 30, 2000 and
Year Ended December 31, 1999 5
Statements of Cash Flows for the Nine
Months Ended September 30, 2000 and 1999 6
Notes To Financial Statements 7-14
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 15-18
PART II: OTHER INFORMATION 19
2
<PAGE> 3
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALANCE SHEETS
(UNAUDITED)
ASSETS
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
Cash and cash equivalents $ 15,384,750 $ 2,951,442
Restricted cash 15,513 119,891
Other assets 1,735 7,921
Deferred expenses, net of accumulated
amortization of $1,108,354 in 2000 and
$1,224,279 in 1999 247,623 391,668
Investment in joint venture 130,000 6,695,633
Investment in property:
Land -- 2,410,000
Buildings and improvements -- 10,476,229
------------ ------------
-- 12,886,229
Less: accumulated depreciation -- 3,997,381
------------ ------------
-- 8,888,848
------------ ------------
Total assets $ 15,779,621 $ 19,055,403
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 59,943 $ 81,873
Accounts payable to affiliates 117,330 156,512
------------ ------------
Total liabilities 177,273 238,385
Partners' equity/(deficit):
General Partners' deficit (168,975) (145,091)
Limited Partners' equity 15,771,323 18,962,109
------------ ------------
Total partners' equity 15,602,348 18,817,018
------------ ------------
Total liabilities and partners' equity $ 15,779,621 $ 19,055,403
============ ============
See Notes to Financial Statements
3
<PAGE> 4
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental income $ 206,978 $ 387,299 $ 734,359 $ 1,538,088
Income/(loss) from joint venture (37,063) 212,302 446,124 637,905
Interest income 77,278 120,872 155,101 194,755
Gain/(loss) on sale of property (569,970) 5,286,379 (569,970) 5,286,379
----------- ----------- ----------- -----------
Total income (322,777) 6,006,852 765,614 7,657,127
Expenses:
Depreciation -- 87,306 87,302 293,090
Property operating expenses 25,425 145,213 82,259 370,242
General and administrative expenses 79,239 84,833 202,954 243,345
Property write-downs -- -- 2,017,976 --
Amortization of deferred expenses 31,527 36,562 100,002 130,405
----------- ----------- ----------- -----------
Total expenses 136,191 353,914 2,490,493 1,037,082
----------- ----------- ----------- -----------
Net income $ (458,968) $ 5,652,938 $(1,724,879) $ 6,620,045
=========== =========== =========== ===========
Allocation of net income:
General Partner $ (4,319) $ 56,529 $ (16,978) $ 66,200
John Hancock Limited Partner (187,799) 387,668 (187,799) 387,668
Investors (266,850) 5,208,741 (1,520,102) 6,166,177
----------- ----------- ----------- -----------
$ (458,968) $ 5,652,938 $(1,724,879) $ 6,620,045
=========== =========== =========== ===========
Net income per Unit $ (0.10) $ 2.00 $ (0.58) $ 2.37
=========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
4
<PAGE> 5
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
------- -------- -----
<S> <C> <C> <C>
Partners' equity/(deficit) at January 1, 1999
(2,601,552 Units outstanding) $(185,981) $25,382,287 $25,196,306
Less: Cash distributions (23,567) (13,278,322) (13,301,889)
Add: Net income 64,457 6,858,144 6,922,601
--------- ----------- -----------
Partner's equity/(deficit) at December 31, 1999 (145,091) 18,962,109 18,817,018
(2,601,552 Units outstanding)
Less: Cash distributions (6,906) (1,482,885) (1,489,791)
Add: Net loss (16,978) (1,707,901) (1,724,879)
--------- ---------- ----------
Partners' equity/(deficit) at September 30, 2000
(2,601,552 Units outstanding) $(168,975) $15,771,323 $15,602,348
========= =========== ===========
</TABLE>
See Notes to Financial Statements
5
<PAGE> 6
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
2000 1999
---- ----
<S> <C> <C>
Operating activities:
Net income/(loss) $ (1,724,879) $ 6,620,045
Adjustments to reconcile net income/(loss) to net cash provided by
operating activities:
Depreciation 87,302 293,090
Amortization of deferred expenses 100,002 130,405
Property write-downs 2,017,976 --
Cash distributions over equity in
income from joint venture 253,957 12,510
Gain/(loss) on sale of property interests 569,970 (5,286,379)
------------ ------------
1,304,328 1,769,671
Changes in operating assets and liabilities:
Decrease in restricted cash 104,378 513
Decrease/(increase) in other assets 6,186 (1,152)
Increase/(decrease) in accounts payable
and accrued expenses (21,930) 132,381
Increase/(decrease) in accounts payable to
affiliates (39,182) 71,878
------------ ------------
Net cash provided by operating activities 1,353,780 1,973,291
Investing activities:
Increase in deferred expenses (25,226) (67,594)
Proceeds from sale of property interests 12,594,545 10,694,903
------------ ------------
Net cash provided by investing activities 12,569,319 10,627,309
Financing activities:
Cash distributed to Partners (1,489,791) (1,963,604)
------------ ------------
Net cash used in financing activities (1,489,791) (1,963,604)
------------ ------------
Net increase in cash and cash
equivalents 12,433,308 10,636,996
Cash and cash equivalents at beginning
of year 2,951,442 3,261,458
------------ ------------
Cash and cash equivalents at end
of period $ 15,384,750 $ 13,898,454
============ ============
</TABLE>
See Notes to Financial Statements
6
<PAGE> 7
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION OF PARTNERSHIP
John Hancock Realty Income Fund-II Limited Partnership (the "Partnership")
was formed under the Massachusetts Uniform Limited Partnership Act on June
30, 1987. As of September 30, 2000, the partners in the Partnership
consisted of John Hancock Realty Equities, Inc. (the "General Partner"), a
wholly-owned, indirect subsidiary of John Hancock Life Insurance Company;
John Hancock Realty Funding, Inc. (the "John Hancock Limited Partner");
John Hancock Income Fund-II Assignor, Inc. (the "Assignor Limited
Partner"); and 4,012 Unitholders (the "Investors"). The Assignor Limited
Partner holds 2,601,552 Assignee Units (the "Units"), representing economic
and certain other rights attributable to Investor Limited Partnership
Interests in the Partnership, for the benefit of the Investors. The John
Hancock Limited Partner, the Assignor Limited Partner and the Investors are
collectively referred to as the Limited Partners. The General Partner and
the Limited Partners are collectively referred to as the Partners. The
initial capital of the Partnership was $2,000, representing capital
contributions of $1,000 by 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 5,000,000 Assignee Units at $20 per Unit. During the offering period,
which terminated on January 2, 1989, 2,601,552 Units were sold and the John
Hancock Limited Partner made additional capital contributions of
$4,161,483. There were no changes in the number of Units outstanding
subsequent to the termination of the offering period.
The Partnership is engaged solely in the business of (i) acquiring,
improving, holding for investment and disposing of existing
income-producing retail, industrial and office properties on an all-cash
basis, free and clear of mortgage indebtedness, and (ii) making mortgage
loans consisting of conventional first mortgage loans and participating
mortgage loans secured by income-producing retail, industrial and office
properties. 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, 2017, 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 investments of the Partnership will be
disposed of, and the Partnership terminated, before December 31, 2017.
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 September 30, 2000,
the Partnership has sold the two remaining properties in its portfolio, one
of which is held through a joint venture. The sale of these last two
properties results in the termination of the operations of the Partnership.
The Partnership will be dissolved in accordance with the terms of the
Partnership Agreement, as soon as reasonably practicable.
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 for 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 representation have been included. Operating results
for the nine-month period ended September 30, 2000 are not necessarily
indicative of the results that may be expected for the year ending December
31, 2000. 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, 1999.
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.
7
<PAGE> 8
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash equivalents are highly liquid investments with maturities of three
months or less when purchased. These investments are recorded at cost plus
accrued interest, which approximates market value. Restricted cash
represents funds restricted for tenant security deposits.
Property 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 costs, as described below,
less accumulated depreciation thereon and less any property write-downs for
impairment in value and plus any related unamortized deferred expenses.
Investments in property are recorded at cost less any property write-downs
for impairment in value. Cost includes the initial purchase price of the
property plus acquisition and legal fees, other miscellaneous acquisition
costs and the cost of significant improvements.
Depreciation has been provided on a straight-line basis over the estimated
useful lives of the various assets: thirty years for the buildings and five
years for related improvements. Maintenance and repairs are charged to
operations as incurred.
The 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.
Investment in joint venture is recorded using the equity method.
Fees paid to the General Partner for the acquisition of joint venture and
mortgage loan investments have been deferred and are being amortized over
the life of the investments to which they apply. 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 eight and one-half years, the
then estimated remaining life of the Partnership. Capitalized tenant
improvements and lease commissions are being amortized on a straight-line
basis over the terms of the leases to which they relate.
The net income per Unit for the periods hereof was calculated by dividing
the Investors' share of net income by the number of Units outstanding at
the end of such period.
No provision for income taxes has been made in the Financial Statements
since such taxes are the responsibility of the individual Partners and
Investors and not of the Partnership.
3. THE PARTNERSHIP AGREEMENT
Distributable Cash from Operations (defined in the Partnership Agreement)
is distributed 1% to the General Partner and the remaining 99% in the
following order of priority: 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 General
Partner to pay the Subordinated Allocation (defined in the Partnership
Agreement) equal to 3 1/2% of Distributable Cash from Operations for
managing the Partnership's activities; third, to the John Hancock Limited
Partner until it receives a 7% non-cumulative, non-compounded annual cash
return on its Invested Capital; fourth, to the Investors and the John
Hancock Limited Partner in proportion to their respective Capital
Contributions (defined in the Partnership Agreement), until they have
received a 10% non-cumulative, non-compounded annual cash return on their
Invested Capital; fifth, to the General Partner to pay the Incentive
Allocation (defined in the Partnership Agreement) equal to 2 1/2% of
Distributable Cash from Operations; and sixth, to the Investors and the
John Hancock Limited Partner in proportion to their respective Capital
Contributions. Any Distributable Cash from Operations which is available as
a result of a reduction of working capital reserves funded by Capital
Contributions of the Investors, will be distributed 100% to the Investors.
8
<PAGE> 9
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. THE PARTNERSHIP AGREEMENT (CONTINUED)
Cash from a Sale, Financing or Repayment (defined in the Partnership
Agreement) of a Partnership Investment, is first used to pay all debts and
liabilities of the Partnership then due and then to fund any reserves for
contingent liabilities. Cash from Sales, Financings or Repayments is then
distributed and paid in the following order of priority: first, to the
Investors and the John Hancock Limited Partner, with the distribution made
between the Investors and the John Hancock Limited Partner in proportion to
their respective Capital Contributions, until the Investors and the John
Hancock Limited Partner have received an amount equal to their Invested
Capital; second, to the Investors until they have received, after giving
effect to all previous distributions of Distributable Cash from Operations
and any previous distributions of Cash from Sales, Financings or Repayments
after the return of their Invested Capital, the Cumulative Return on
Investment (defined in the Partnership Agreement); third, to the John
Hancock Limited Partner until it has received, after giving effect to all
previous distributions of Distributable Cash from Operations and any
previous distributions of Cash from Sales, Financings or Repayments after
the return of its Invested Capital, the Cumulative Return on Investment;
fourth, to the General Partner to pay any Subordinated Disposition Fees
then payable pursuant to Section 6.4(c) of the Partnership Agreement; and
fifth, 99% to the Investors and the John Hancock Limited Partner and 1% to
the General Partner, with the distribution made between the Investors and
the John Hancock Limited Partner in proportion to their respective Capital
Contributions.
Cash from the sale or repayment of the last of the Partnership's properties
or mortgage loans is distributed in the same manner as Cash from Sales,
Financings or Repayments, 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, Financings or Repayments, as specified in the previous paragraph.
Profits for tax purposes from the normal operations of the Partnership for
each fiscal year are allocated to the Partners 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, then they are
allocated in proportion to the amounts of Distributable Cash from
Operations allocated for that year. If such profits are greater than
Distributable Cash from Operations for any year, they are allocated 1% to
the General Partner and 99% to the John Hancock Limited Partner and the
Investors, with the allocation made between the John Hancock Limited
Partner and the Investors in proportion to their respective Capital
Contributions. Losses for tax purposes from the normal operations of the
Partnership are allocated 1% to the General Partner and 99% to the John
Hancock Limited Partner and the Investors, with the allocation made between
the John Hancock Limited Partner and the Investors in proportion to their
respective Capital Contributions.
Profits and Losses from Sales, Financings or Repayments are generally
allocated 99% to the Limited Partners and 1% to the General Partners.
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 or such affiliate 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.
9
<PAGE> 10
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. THE PARTNERSHIP AGREEMENT (CONTINUED)
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 or such Affiliates 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.
4. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
Fees and expenses incurred and/or paid by the General Partner or its
Affiliates on behalf of the Partnership during the nine months ended
September 30, 2000 and 1999 and to which the General Partner or its
affiliates are entitled to reimbursement from the Partnership were $71,325
and $81,555, respectively. 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 or an Affiliate
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 9. Accordingly, included in the
Statements of Operations for the nine months ended September 30, 2000 and
1999 are $0 and $23,744, respectively, representing the Partnership's share
of costs incurred by the General Partner and its Affiliates relating to the
class action complaint. Through September 30, 2000, the Partnership has
accrued a total of $210,098 as its share of the costs incurred by the
General Partner and its Affiliates resulting from this matter.
The General Partner also believes that the indemnification applies to the
complaint filed in the Superior Court of the State of California for the
County of Los Angeles described in Note 9. Accordingly, the Partnership
incurred and paid $35,138 representing the Partnership's share of costs
incurred by the General Partner and its Affiliates relating to this
complaint.
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 with respect to
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.
10
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. INVESTMENT IN PROPERTY
Investment in property at cost consists of managed, fully-operating,
commercial real estate as follows:
September 30, December 31,
2000 1999
------------- ------------
Park Square Shopping Center $ -- $12,886,229
Accumulated Depreciation -- (3,997,381)
-------- -----------
$ -- $ 8,888,848
======== ===========
During March 2000, the Park Square Shopping Center was listed for sale.
Accordingly, this property has been classified as "Property held for sale"
on the Balance Sheet since March 31, 2000 at its carrying value. During the
second quarter of 2000, as a result of changes in the status of the
supermarket anchor at the property and, in general, the continued weakness
in local real estate market conditions, the General Partner wrote-down the
carrying amount of Park Square Shopping center by $2,017,976 to an amount
equal to the net proceeds projected to be received as a result of the sales
price that had been negotiated with the then prospective buyer. On August
30, 2000, the Partnership sold the Park Square Shopping Center for a net
sales price of $6,309,923, after deductions for commissions and selling
expenses incurred in connection with the sale of the property. This
transaction resulted in a non-recurring loss of $542,917, representing the
difference between the net sales price and the property's carrying value of
$6,852,840.
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.
6. INVESTMENT IN JOINT VENTURE
On December 28, 1988, the Partnership acquired a 99.5% interest in JH
Quince Orchard Partners (the "Affiliated Joint Venture"), a joint venture
between the Partnership and John Hancock Realty Income Fund-III Limited
Partnership ("Income Fund-III"). The Partnership had an initial 99.5%
interest and Income Fund-III had an initial 0.5% interest in the Affiliated
Joint Venture. Pursuant to the partnership agreement of the Affiliated
Joint Venture, Income Fund-III had the option, exercisable prior to
December 31, 1990, to increase its investment and interest in the
Affiliated Joint Venture to 50%. During the second quarter of 1989, Income
Fund-III exercised its option and the Partnership sold a 49.5% interest in
the Affiliated Joint Venture to Income Fund-III. The Partnership has held a
50% interest in the Affiliated Joint Venture since the second quarter of
1989.
On December 28, 1988, the Affiliated Joint Venture contributed 98% of the
invested capital of, and acquired a 75% interest in, QOCC-1 Associates, an
existing partnership which owns and operates the Quince Orchard Corporate
Center, a three-story office building and related land and improvements
located in Gaithersburg, Maryland. The partnership agreement of QOCC-1
Associates provides that the Affiliated Joint Venture shall contribute 95%
of any required additional capital contributions. Of the cumulative total
invested capital in QOCC-1 Associates at September 30, 2000, 97.55% has
been contributed by the Affiliated Joint Venture. The Affiliated Joint
Venture continues to hold a 75% interest in QOCC-1 Associates.
11
<PAGE> 12
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
6. INVESTMENT IN JOINT VENTURE (CONTINUED)
Net cash flow from QOCC-1 Associates is distributed in the following order
of priority: first, to the payment of all debts and liabilities of QOCC-1
Associates and to fund reserves deemed reasonably necessary; second, to the
partners in proportion to their respective invested capital until each has
received a 9% return on invested capital; third, the balance, if any, to
the partners in proportion to their interests. Prior to 1996, QOCC-1
Associates had not provided the partners with a return in excess of 9% on
their invested capital. During 1999, 1998, 1997 and 1996, the partners
received returns on invested capital of approximately 12%.
Income and gains of QOCC-1 Associates, other than the gains allocated
arising from a sale other similar event with respect to the Quince Orchard
Corporate Center, are allocated in the following order of priority: i) to
the partners who are entitled to receive a distribution of net cash flow,
pro rata in the same order and amounts as such distributions are made and
ii) the balance, if any, to the partners, pro rata in accordance with their
interests.
On September 29, 2000, QOCC-1 Associates sold the Quince Orchard Corporate
Center to a non-affiliated buyer for a total net sales price of $12,569,246
after deductions for commissions and selling expenses incurred in
connection with the sale of the property. $6,284,623, representing fifty
percent of the net proceeds of the sale, was distributed to the Partnership
and fifty percent was distributed to Income Fund-III. This transaction
resulted in a non-recurring loss of $27,053 to the Partnership,
representing the difference between the net sales price and the carrying
value of the investment of $6,311,676.
7. DEFERRED EXPENSES
Deferred expenses consist of the following:
<TABLE>
<CAPTION>
UNAMORTIZED UNAMORTIZED
BALANCE AT BALANCE AT
DESCRIPTION SEPTEMBER 30, 2000 DECEMBER 31, 1999
----------- ------------------ -----------------
<S> <C> <C>
$152,880 acquisition fee for investment in
the Affiliated Joint Venture. This amount
is amortized over a period of 31.5 years. $ 96,056 $ 99,695
$1,203,097 acquisition fees paid to the
General Partner. Prior to September 30, 1993, this
amount was amortized over a period of 30 years.
Subsequent to September 30, 1993, the unamortized
balance is amortized over a period of 8.5 years. 151,567 242,508
Tenant improvements were amortized over the terms
of the leases to which they relate. During March,
2000 the General Partner listed its last investment
property for sale. Accordingly, the unamortized
balance is included in carrying cost of "Property
held for sale." -- 5,224
Lease commissions were amortized over the terms of
the leases to which they relate. During March, 2000,
the General Partner listed its last investment property
for sale. Accordingly, the unamortized balance is
included in carrying cost of "Property held for sale." -- 44,241
-------- --------
$247,623 $391,668
======== ========
</TABLE>
12
<PAGE> 13
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
8. FEDERAL INCOME TAXES
A reconciliation of the net income reported in the Statements of Operations
to the net income reported for federal income tax purposes is as follows:
Nine Months Ended September 30,
2000 1999
---- ----
Net income per Statements of Operations $(1,724,879) $6,620,045
Add/(deduct): Excess of book gain over tax
gain on disposition of assets (667,318) (154,926)
Excess of book depreciation
over tax depreciation (105,312) 19,452
Excess of book amortization
over tax amortization 9,173 62,495
----------- ----------
Net income for federal income tax purposes $(2,488,336) $6,547,066
=========== ==========
9. 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 the
Partnership. The complaint named as defendants the Partnership, the General
Partner, certain other Affiliates of the General Partner, two limited
partnerships affiliated with the Partnership, 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.
A settlement agreement was approved by the Court on December 22, 1999.
Under terms of the settlement, the defendants have guaranteed certain
returns to class members on their investments and paid fees and expenses to
class counsel in an amount determined by the court to be $1.5 million.
These terms of the settlement will have no financial impact on 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 approximately $532,173 in legal expenses in
connection with the class action lawsuit (see Part II, Item 1 of this
Report). Of this amount, approximately $322,075 relates to the
Partnership's own defense and approximately $210,098 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 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
the Partnership. The complaint named the General Partner as a defendant.
13
<PAGE> 14
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
9. CONTINGENCIES (CONTINUED)
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 John
Hancock Realty Income Fund Limited Partnership ("RIF"), a limited
partnership affiliated with the Partnership. 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.
A settlement agreement was reached on February 18, 2000 terminating all
litigation between the parties. The settlement will not have a material
adverse impact on the Partnership's financial position.
The Partnership has incurred approximately $105,000 in legal expenses in
connection with the above described lawsuit (see Part II, Item 1 of this
Report). Of this amount, approximately $70,000 relates to the Partnership's
own defense and approximately $35,000 relates to the indemnification of the
General Partner and its Affiliates for their defense. These expenses were
funded from the operations of the Partnership.
14
<PAGE> 15
JOHN HANCOCK REALTY INCOME FUND-II 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 October 2, 1987 to January 2, 1989, the
Partnership sold 2,601,552 Units representing gross proceeds (exclusive of the
John Hancock Limited Partners' contribution, which was used to pay sales
commissions) of $52,031,040. The proceeds of the offering were used to acquire
investments, fund reserves, and pay acquisition fees and organizational and
offering expenses. These investments are described more fully in Notes 5, 6 and
7 to the Financial Statements included in Item 1 of this Report.
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,
litigation and indemnification claims, 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.
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. The Partnership sold Park Square
Shopping Center on August 30, 2000 and QOCC-1 sold the Quince Orchard Corporate
Center on September 29, 2000. The sale of the Partnership's last remaining
investments resulted in the termination of the operations of the Partnership,
and the Partnership will be dissolved, in accordance with the terms of the
Partnership Agreement, as soon as reasonably practicable. At such time as all
liabilities with respect to the Partnership are resolved, the General Partner
will make a final distribution of net assets to the Limited Partners, as soon as
practicable. No assurances can be given as to whether any distribution can be
made after all liabilities of the Partnership are resolved. Such final
distribution, if any, will result in the liquidation and termination of the
Partnership. At such time of such final distribution, the outstanding Units will
be cancelled, and, in accordance with federal securities laws, they will be
de-registered with the Securities and Exchange Commission, after which time the
Partnership will no longer be required to file periodic reports with the
Commission.
At September 30, 2000 the Partnership had $15,384,750 in cash and cash
equivalents, $15,513 in restricted cash.
15
<PAGE> 16
JOHN HANCOCK REALTY INCOME FUND-II 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 Partnership has a working capital reserve with a current balance of
approximately $2.7 million. The General Partner anticipates that such amount
should be sufficient to satisfy the Partnership's general liquidity requirements
as the Partnership's business is wound down. Liquidity would, however, be
materially adversely affected if there were significant unanticipated operating
and liquidation costs (including but not limited to litigation expenses). 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, or short-term loans
from the General Partner or its Affiliates.
The Partnership incurred $25,226 of leasing costs at the Park Square Shopping
Center during the nine months ended September 30, 2000. The current balance in
the working capital reserve was sufficient to pay such costs.
The Partnership has incurred approximately $532,173 in legal expenses in
connection with the class action lawsuit (see Part II, Item 1 of this Report).
Of this amount, approximately $322,075 relates to the Partnership's own defense
and approximately $210,098 relates to the indemnification of the General Partner
and its Affiliates for their defense. In addition, the Partnership incurred
approximately $105,000 in legal expenses in connection with the lawsuit filed in
the Superior Court of the State of California for the County of Los Angeles by
an investor in the Partnership (see Part II, Item 1 of this Report). Of this
amount, approximately $70,000 relates to the Partnership's own defense and
approximately $35,000 relates to the indemnification of the General Partner and
its Affiliates for their defense. These expenses are funded from the operations
of the Partnership.
Cash in the amount of $1,489,791 generated from the Partnership's operations,
was distributed to the Partners during the nine months ended September 30, 2000.
This amount was distributed in accordance with the Partnership Agreement. The
amount distributed to the Investors from Distributable Cash from Operations
during the nine months ended September 30, 2000 represented an annualized return
of 6% on remaining Investors' Invested Capital. The General Partner anticipates
that the Partnership's Distributable Cash from Operations during the fourth
quarter of 2000 will be reduced as an effect of the sales of the Park Square
Shopping Center and the Quince Orchard Corporate Center during the third quarter
of 2000.
The General Partner evaluated the carrying value of each of the Partnership's
properties and its joint venture investment as of December 31, 1999 by comparing
each such carrying value to the related property's future undiscounted cash
flows and the then most recent internal appraisal in order to determine whether
an impairment in values existed. Based upon such evaluations, the General
Partner determined that no impairment in values existed and, therefore, no
write-downs were recorded.
As a result of changes in the status of the supermarket anchor tenant at Park
Square Shopping Center and, in general, the continued weakness in the local real
estate market conditions for properties similar to Park Square, during the
second quarter the General Partner wrote down the carrying amount of Park Square
by $2,017,976 to an amount equal to the net proceeds projected to be received as
a result of the sales price that was being negotiated with a prospective buyer.
On August 30, 2000, the Partnership sold the Park Square Shopping Center for a
gross sales price of $6,500,000 to an unaffiliated buyer. After deductions for
commissions and selling expenses, the sale generated net proceeds of $6,309,923
resulting in a non-recurring net loss of $542,917, representing the difference
between the net sales price and the property's carrying value of $6,852,840.
During the second quarter of 2000, the General Partner received unsolicited
offers to purchase the Quince Orchard Corporate Center. On September 29, 2000,
QOCC-1 Associates sold the Quince Orchard Corporate Center to a non-affiliated
buyer for a total net sales price of $12,569,246 after deductions for
commissions and selling expenses incurred in connection with the sale of the
property. $6,284,623, representing fifty percent of the net proceeds of the
sale, was distributed to the Partnership and fifty percent was distributed to
Income Fund-III. This transaction resulted in a non-recurring loss of $27,053 to
the Partnership, representing the difference between the net sales price and the
carrying value of the investment of $6,311,676.
16
<PAGE> 17
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
The Partnership generated a net loss the nine months ended September 30, 2000 of
$1,724,879 , as compared to net income of $6,620,045 for the same period in
1999. The prior period results include a non-recurring gain of $5,286,379 from
the sale of the Miami International Distribution Center on August 9, 1999. The
current period results include a $2,107,976 write-down of the value of Park
Square Shopping Center, a non-recurring loss of $542,917 on the sale of Park
Square Shopping Center and a non-recurring loss of $27,053 as a result of
QOCC-1's sale of Quince Orchard Corporate Center. Excluding these results, net
income for the nine months ended September 30, 2000 decreased by $470,599, or
35%, as compared to the prior year. This decrease is primarily due to a decrease
in rental income and income from joint venture and was somewhat offset by
decreases in depreciation and property operating expenses.
Average occupancy for the Partnership's equity real estate investments was as
follows:
Nine Months Ended September 30,
2000 1999
---- ----
Park Square Shopping Center 88% 88%
Quince Orchard Corporate Center
(Affiliated Joint Venture) 67% 100%
Rental income for the nine months ended September 30, 2000 decreased by
$803,729, or 52%, as compared to the same period during 1999 primarily due to
the sale of the Miami International Distribution Center on August 9, 1999 and
the sale of the Park Square Shopping Center on August 30, 2000.
Depreciation expense for the nine months ended September 30, 2000 decreased by
$205,788 or 70%, as compared to the same period in 1999. This decrease is due to
the sale of the Miami International Distribution Center and to the
reclassification of the Park Square Shopping Center as "Property Held for Sale"
during the first quarter of 2000. Accordingly, no depreciation expense has been
recorded since these properties were listed for sale.
Property operating expenses for the nine months ended September 30, 2000
decreased by $287,983, or 78%, as compared to the same period in 1999 primarily
due to the sale of the Miami International Distribution Center on August 9,
1999.
General and administrative expenses for the nine months ended September 30, 2000
decreased by $40,391, or 17%, as compared to the same period in 1999. This
decrease was primarily due to lower legal fees incurred by the Partnership in
connection with the legal proceedings described in Item 1 of Part II of this
Report and to a decrease in time required by the General Partner in managing the
activities of the Partnership resulting from the sale of the Miami International
Distribution Center in 1999.
Amortization of deferred expenses for the nine months ended September 30, 2000
decreased by $30,403, or 23%, as compared to the same period in 1999 due to the
sale of the Miami International Distribution Center and to the reclassifying of
deferred expenses for Park Square Shopping Center to "Property Held for Sale"
and, accordingly, no longer amortizing such amounts for this property.
The General Partner believes that inflation has had no significant impact on the
Partnership's operations during the nine months ended September 30, 2000, and
the General Partner anticipates that inflation will not have a significant
impact during the remainder of 2000.
17
<PAGE> 18
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:
NINE MONTHS ENDED
SEPTEMBER 30,
2000 1999
---- ----
Net cash provided by operating activities (a) $ 1,353,780 $ 1,973,291
Net change in operating assets and liabilities (a) (49,452) (203,620)
----------- -----------
Net cash provided by operations (a) 1,304,328 1,769,671
Increase in working capital reserves (358,309) --
----------- -----------
Cash from operations (b) 946,019 1,769,671
Decrease in working capital reserves -- 199,190
----------- -----------
Distributable cash from operations (b) $ 946,019 $ 1,968,861
=========== ===========
Allocation to General Partner $ 9,460 $ 17,697
Allocation to Investors 936,559 1,951,164
Allocation to John Hancock Limited Partner -- --
----------- -----------
$ 946,019 $ 1,968,861
=========== ===========
(a) Net cash provided by operating activities, net change in operating assets
and liabilities, and net 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 fourth quarter of 2000, the Partnership will make a cash distribution
in the amount of $12,017,089 to the General Partner and Limited Partners
generated from Distributable Cash from Sales or Financings as a result of the
sale of the Park Square Shopping Center and QOCC-1's sale of the Quince Orchard
Corporate Center. This amount is allocated as follows:
DIST. CASH FROM
SALES OR FINANCINGS
-------------------
Investors $11,550,891
John Hancock Limited Partner 466,198
General Partner --
-----------
Total $12,017,089
===========
The amount of future cash distributions will be dependent upon the need to draw
down working capital reserves. As of the date of this report, all of the
property interests of the Partnership have been sold. 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 the
Limited Partners, net cash provided by the Partnership's normal operations in
order to fund cash reserves for contingencies. Accordingly, no cash
distributions with respect to Distributable Cash from Operations will be made to
Limited Partners at least for the last quarter of 2000. At such time as all
liabilities with respect to the Partnership are resolved, the General Partner
will make a final distribution of net assets to the Limited Partners, in
accordance with the terms of the Partnership Agreement. No assurances can be
given as to whether any distribution can be made after all liabilities of the
Partnership are resolved. Such final distribution, if any, will result in the
liquidation and termination of the Partnership.
<PAGE> 19
JOHN HANCOCK REALTY INCOME FUND-II 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 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.
A settlement agreement was approved by the Court on December 22, 1999.
Under terms of the settlement, the defendants have guaranteed certain
returns to class members on their investments and paid fees and
expenses to class counsel in an amount determined by the court to be
$1.5 million. These terms of the settlement will have no financial
impact on the Partnership.
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 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 John Hancock Realty Income Fund Limited Partnership
("RIF"), a limited partnership affiliated with the Partnership.
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.
A settlement agreement was reached on February 18, 2000 terminating
all litigation between the parties. The settlement will not have a
material adverse impact on the Partnership's financial position.
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 third quarter of 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the third quarter
of 2000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the
Partnership during the third quarter of 2000.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits to this report
(b) A Report on Form 8-K was filed during the third quarter of 2000.
19
<PAGE> 20
JOHN HANCOCK REALTY INCOME FUND-II 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 November, 2000.
John Hancock Realty Income Fund-II
Limited Partnership
By: John Hancock Realty Equities, Inc.,
General Partner
By: /s/ John M. Garrison
---------------------------------
John M. Garrison, President
By: /s/ Virginia H. Lomasney
----------------------------------
Virginia H. Lomasney, Treasurer
(Chief Accounting Officer)
20
