<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, 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
--------------------------------------------
COMMISSION FILE NUMBER 0-17664
----------------------------------------------------
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(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-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
INDEX
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
<S> <C>
Item 1 - Financial Statements:
Balance Sheets at March 31, 2000 and
December 31, 1999 3
Statements of Operations for the Three
Months Ended March 31, 2000 and 1999 4
Statements of Partners' Equity for the
Three Months Ended March 31, 2000 and
for the Year Ended December 31, 1999 5
Statements of Cash Flows for the Three
Months Ended March 31, 2000 and 1999 6
Notes to Financial Statements 7-13
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 14-18
PART II: OTHER INFORMATION 19
</TABLE>
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)
<TABLE>
<CAPTION>
ASSETS
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Cash and cash equivalents $ 2,755,805 $ 2,951,442
Restricted cash 15,498 119,891
Other assets 67,921 7,921
Deferred expenses, net of accumulated
amortization of $1,261,227 in 2000 and
$1,224,279 in 1999 367,204 391,668
Investment in joint venture 6,844,146 6,695,633
Property held for sale 8,858,074 -
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 $18,852,120 $19,055,403
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 146,420 $ 81,873
Accounts payable to affiliates 112,128 156,512
----------- -----------
Total liabilities 258,548 238,385
Partners' equity/(deficit):
General Partner's deficit (148,699) (145,091)
Limited Partners' equity 18,742,271 18,962,109
----------- -----------
Total partners' equity 18,593,572 18,817,018
----------- -----------
Total liabilities and partners' equity $18,852,120 $19,055,403
=========== ===========
</TABLE>
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
MARCH 31,
2000 1999
---- ----
<S> <C> <C>
Income:
Rental income $257,832 $584,719
Income from joint venture 223,813 201,401
Interest income 38,974 38,379
-------- --------
Total income 520,619 824,499
Expenses:
Depreciation 87,302 118,482
General and administrative expenses 27,190 87,862
Property operating expenses 39,393 126,348
Amortization of deferred expenses 36,948 57,181
-------- --------
Total expenses 190,833 389,873
-------- --------
Net income $329,786 $434,626
======== ========
Allocation of net income:
General Partner $ 3,298 $ 4,346
John Hancock Limited Partner - -
Investors 326,488 430,280
-------- --------
$329,786 $434,626
======== ========
Net income per Unit $ 0.13 $ 0.17
======== ========
</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)
THREE MONTHS ENDED MARCH 31, 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) (546,326) (553,232)
Add: Net income 3,298 326,488 329,786
-------- ----------- -----------
Partners' equity/(deficit) at March 31, 2000
(2,601,552 Units outstanding) ($148,699) $18,742,271 $18,593,572
======== =========== ===========
</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>
THREE MONTHS ENDED
MARCH 31,
2000 1999
---- ----
<S> <C> <C>
Operating activities:
Net income $ 329,786 $ 434,626
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 87,302 118,482
Amortization of deferred expenses 36,948 57,181
Cash distributions over (under) equity in
income from joint venture (148,513) 52,230
---------- ----------
305,523 662,519
Changes in operating assets and liabilities:
Decrease/(increase) in restricted cash 104,393 (756)
Increase in other assets (60,000) (50,000)
Increase in accounts payable and accrued expenses 64,547 191,562
Increase (decrease) in accounts payable to Affiliates (44,384) 10,978
----------- ----------
Net cash provided by operating activities 370,079 814,303
Investing activities:
Increase in deferred expenses and other assets (12,484) -
---------- ----------
Net cash used in investing activities (12,484) -
Financing activities:
Cash distributed to Partners (553,232) (656,258)
---------- ----------
Net cash used in financing activities (553,232) (656,258)
---------- ----------
Net increase (decrease) in cash and cash
equivalents (195,637) 158,045
Cash and cash equivalents at beginning
of year 2,951,442 3,261,458
---------- ----------
Cash and cash equivalents at end
of period $2,755,805 $3,419,503
========== ==========
</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 March 31, 2000, the partners in
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"); John Hancock Income Fund-II Assignor,
Inc. (the "Assignor Limited Partner"); and 4,039 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 March 31, 2000, the Partnership has two properties remaining in
its portfolio. The Partnership listed one property for sale during
March 2000 and intends to list the other property for sale later in
2000. 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, 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 three-month period ended March 31, 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 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.
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. Property held for sale
is not depreciated.
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.
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)
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. 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 three months ended
March 31, 2000 and 1999 and to which the General Partner or its
affiliates are entitled to reimbursement from the Partnership were
$20,371 and $32,119, 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 three months ended
March 31, 2000 and 1999 are $0 and $12,191, respectively, representing
the Partnership's share of costs incurred by the General Partner and
its Affiliates relating to the class action complaint. Through March
31, 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 this indemnification applies to
the complaint filed in the Superior Court of the State of California
for the County of Los Angeles described in Note 10. 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
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
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:
March 31, December 31,
2000 1999
--------- ------------
Park Square Shopping Center $12,886,229 $12,886,229
=========== ===========
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.
The Partnership leases its property to non-affiliated tenants primarily
under long-term operating leases.
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 March 31, 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.
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.
11
<PAGE> 12
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. DEFERRED EXPENSES
Deferred expenses consist of the following:
<TABLE>
<CAPTION>
Unamortized Unamortized
Balance at Balance at
Description March 31, 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. $ 98,482 $ 99,695
$1,203,097 acquisition fees paid to the
General Partner. Prior to June 30, 1993, this
amount was amortized over a period of 30 years.
Subsequent to June 30, 1993, the unamortized
balance is amortized over a period of 8.5 years. 212,194 242,508
Tenant improvements were amortized over the terms
of the leases to which they relate. As of March 31, 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. As of March 31, 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
--------- ---------
$ 310,676 $ 391,668
========= =========
</TABLE>
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:
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
---- ----
<S> <C> <C>
Net income per Statements of Operations $329,786 $434,626
Add/(deduct): Excess of book depreciation
over tax depreciation (73,265) 19,351
Excess of book amortization
over tax amortization 3,057 16,772
Other income and expense - -
-------- --------
Net income for federal income tax purposes $259,578 $470,749
======== ========
</TABLE>
12
<PAGE> 13
JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
(A MASSACHUSETTS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 the terms of the settlement, the defendants have guaranteed
certain minimum 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 $528,668 in legal expenses
in connection with the class action lawsuit (see Part II, Item 1 of
this Report). Of this amount, approximately $318,570 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.
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.
13
<PAGE> 14
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.
IMPACT OF YEAR 2000
The Partnership participated in the Year 2000 remediation project of its parent,
John Hancock Life Insurance Company (John Hancock). By late 1999, John Hancock
and the Partnership completed their Year 2000 readiness plan to address issues
that could result from computer programs written using two digits to define the
applicable year rather than four to define the applicable year and century. As a
result, John Hancock and the Partnership were prepared for the transition to the
Year 2000 and did not experience any significant Year 2000 problems with respect
to mission critical information technology ("IT") or non-IT systems,
applications or infrastructure. During the date rollover to the year 2000, John
Hancock and the Partnership implemented and monitored their millennium rollover
plan and conducted business as usual on Monday, January 3, 2000.
Since January 3, 2000, the information systems, including mission critical
systems, which in the event of a Year 2000 failure would have the greatest
impact on operations, have functioned properly. In addition, neither John
Hancock nor the Partnership experienced any significant Year 2000 issues related
to interactions with material business partners. No disruptions have occurred
which impact John Hancock or the Partnership's ability to process claims, update
customer accounts, process financial transactions, report accurate data to
management and no business interruptions due to Year 2000 issues have been
experienced. While John Hancock and the Partnership continue to monitor their
systems, and those of material business partners, closely to ensure that no
unexpected Year 2000 issues develop, as of the date of this report neither John
Hancock nor the Partnership have reason to expect any such issues.
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, repayment of mortgage loans, actions that would be taken
in the event of lack of liquidity, unanticipated leasing costs, repair and
maintenance expenses, distributions to the General Partner and to Investors, the
possible effects of tenants vacating space at Partnership properties, the
absorption of existing retail space in certain geographical areas, and the
impact of inflation.
Forward-looking statements involve numerous known and unknown risks and
uncertainties, and they are not guarantees of future performance. The following
factors, among others, could cause actual results or performance of the
Partnership and future events to differ materially from those expressed or
implied in the forward-looking statements: general economic and business
conditions; any and all general risks of real estate ownership, including
without limitation adverse changes in general economic conditions and adverse
local conditions, the fluctuation of rental income from properties, changes in
property taxes, utility costs or maintenance costs and insurance, fluctuations
of real estate values, competition for tenants, uncertainties about whether real
estate sales under contract will close; the ability of the Partnership to sell
its properties; and other factors detailed from time to time in the filings with
the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on forward-looking statements,
which reflect the General Partner's analysis only as of the date hereof. The
Partnership assumes no obligation to update forward-looking statements. See also
the Partnership's reports to be filed from time to time with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
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 (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000 the Partnership had $2,755,805 in cash and cash equivalents
and $15,498 in restricted cash.
The Partnership has a working capital reserve with a current balance of
approximately $2,100,000, which represents approximately 4% of the Investors'
Invested Capital (as defined in the Partnership Agreement). The General Partner
anticipates that such amount should be sufficient to satisfy the Partnership's
general liquidity requirements. The Partnership's liquidity would, however, be
materially adversely affected if there were 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 investments.
The Partnership incurred $12,484 of leasing costs at the Park Square Shopping
Center during the three months ended March 31, 2000. The General Partner
anticipates that the Partnership will incur approximately $74,000 of leasing
costs at the Park Square Shopping Center during the remainder of 2000. The
current balance in the working capital reserve should be sufficient to pay such
costs.
The General Partner anticipates that the Partnership will incur approximately
$11,000 of non-recurring repair and maintenance expenses at the Park Square
Shopping Center during the remainder of 2000. These expenses will be funded from
the operations of the Partnership's properties and are not expected to have a
significant impact on the Partnership's liquidity.
The Partnership has incurred a total of approximately $528,668 in legal expenses
in connection with the class action lawsuit (see Part II, Item 1 of this
Report). Of this amount, approximately $318,570 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 aggregate amount of $553,232 generated from the Partnership's
operations, was distributed to the General Partner and the Investors during the
first quarter of 2000. The amount distributed to the Investors from
Distributable Cash from Operations during the three months ended March 31, 2000
represented an annualized return on Investors' Invested Capital of approximately
6%. The General Partner anticipates that the Partnership will be able to make
comparable cash distributions from Distributable Cash from Operations during the
remaining three quarters of 2000. Distributions of Distributable Cash from
Sales, Financings or Repayments in 2000 will be dependent upon the occurrence of
sales of Partnership real properties. There can be no assurances that any
properties will be sold or how much cash from such sales will be distributable
to the Limited Partners, if any.
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 following table summarizes the leasing activity and occupancy status at the
Partnership's remaining equity investments during the three months ended March
31, 2000 and scheduled leasing activity for each investment during the remainder
of 2000:
PARK SQUARE QUINCE ORCHARD
SHOPPING CTR. CORPORATE CTR.
------------- --------------
Square Footage 137,108 99,782
Occupancy January 1, 2000 88% 100%
New Leases 0% 0%
Lease Renewals 0% 0%
Leases Expired 0% 0%
Occupancy March 31, 2000 88% 100%
Leases Scheduled to Expire,
Balance of 2000 3% 100%
Leases Scheduled to Commence,
Balance of 2000 0% 0%
The Brooklyn Park, Minnesota real estate market, where the Park Square Shopping
Center is located, continues to experience increasing demand for tenants as the
development of more retail space continues. The General Partner expects market
conditions in Brooklyn Park to remain competitive during the remainder 2000 and,
therefore, no increase in market rental rates is anticipated.
The Quince Orchard Corporate Center is leased to Boehringer Mannheim
Pharmaceuticals, Inc. under a ten-year lease which expires in February 2004. The
tenant has two options under the lease agreement, one, to terminate the lease at
the end of its seventy-sixth month of the lease, or June 2000, and, two, to
extend the term of the lease for an additional five- year period. During the
first quarter of 1998, Hoffman-LaRoche, Inc. received approval from the Federal
Trade Commission to acquire Boehringer Mannheim Pharmaceuticals, Inc.
Subsequently, Hoffman-LaRoche vacated and subleased the space. Hoffman-LaRoche
has informed the General Partner that it intends to exercise its right to
terminate the lease in June 2000.
Real estate market conditions in the Washington D.C. area for office space
similar to the Quince Orchard Corporate Center continue to improve. The supply
of such office space has been unable to keep pace with the demand, resulting in
a slight increase in market rents. Further, this condition has given rise to new
real estate development in the area. The General Partner does not anticipate
that this new development will negatively impact the market and therefore
expects market conditions to remain favorable through 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.
The General Partner will continue to conduct periodic property and investment
valuations, using internal or independent appraisals, in order to assist in its
evaluation of whether an impairment in value exists on any of the Partnership's
investments.
16
<PAGE> 17
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)
RESULTS OF OPERATIONS
Net income for the period ended March 31, 2000 was $329,786, as compared to net
income of $434,626 for the same period in 1999, representing a decrease of
$104,840, or 24%. This decrease is primarily due to a decrease in rental income
resulting from the sale of Miami International Distribution Center during 1999.
Average occupancy for the Partnership's equity real estate investments was as
follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
---- ----
<S> <C> <C>
Miami International Distribution Center N/A 100%
Park Square Shopping Center 88% 88%
Quince Orchard Corporate Center (Affiliated Joint Venture) 100% 100%
</TABLE>
Rental income for the period ended March 31, 2000 decreased by $326,887, or 56%,
as compared to the same period during 1999 primarily due to the sale of the
Miami International Distribution Center. Rental income at the Partnership's
other properties was consistent between periods.
General and administrative expenses for the period ended March 31, 2000
decreased by $60,672, or 69%, 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 class action complaint (see Part II, Item 1 of this Report)
and to a decrease in the time required by the General Partner in managing the
activities of the Partnership resulting from the sale of the Miami International
Distribution Center.
Property operating expenses for the period ended March 31, 2000 decreased by
$86,955, or 69%, as compared to the same period during 1999 primarily due to the
sale of the Miami International Distribution Center. Property operating expenses
at the Partnership's other properties were consistent between periods.
Depreciation expense for the period ended March 31, 2000 decreased by $31,180,
or 26%, as compared to the same period during 1999 primarily due to the sale of
the Miami International Distribution Center.
Amortization of deferred expenses for the period ended March 31, 2000 decreased
by $20,233, or 35%, as compared to the same period during 1999 primarily due to
the sale of the Miami International Distribution Center.
The General Partner believes that inflation has had no significant impact on the
Partnership's operations during the three months ended March 31, 2000, and the
General Partner anticipates that inflation will not have a significant impact
during the remainder of 2000.
17
<PAGE> 18
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)
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,
2000 1999
---- ----
<S> <C> <C>
Net cash provided by operating activities (a) $370,079 $814,303
Net change in operating assets and liabilities (a) (64,556) (151,784)
-------- --------
Net cash provided by operations (a) 305,523 662,519
Increase in working capital reserves - (5,561)
-------- --------
Cash from operations (b) 305,523 656,958
Decrease in working capital reserves 167,486 -
-------- --------
Distributable cash from operations (b) $473,009 $656,958
======== ========
Allocation to General Partner $ 4,730 $ 6,570
Allocation to Investors 468,279 650,388
Allocation to John Hancock Limited Partner - -
-------- --------
$473,009 $656,958
======== ========
</TABLE>
(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 second quarter of 2000, the Partnership will make a distribution of
Distributable Cash from Operations to the General Partner and Investors in the
amount of $473,009. This amount represents a 6% annualized return on the
remaining Investors' Invested Capital (as defined in the Partnership Agreement).
This amount is allocated 1% to the General Partner and a 99% to the Investors,
in accordance with the Partnership Agreement:
The source of future cash distributions from operations is dependent upon cash
generated by the Partnership's properties and the use of working capital
reserves. The General Partner currently anticipates that the Partnership's
Distributable Cash from Operations during each of the remaining three quarters
of 2000 may be impacted by the possible sale of both of the remaining properties
in the Partnership.
18
<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 the terms of the settlement, the defendants have
guaranteed certain minimum 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 first quarter of 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the first
quarter of 2000.
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 2000.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits to this report
(b) There were no Reports on Form 8-K filed during the first 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 15th day of May, 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)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000818257
<NAME> JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,771,303
<SECURITIES> 0
<RECEIVABLES> 67,921
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,839,224
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,852,120
<CURRENT-LIABILITIES> 258,548
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,593,572
<TOTAL-LIABILITY-AND-EQUITY> 18,852,120
<SALES> 0
<TOTAL-REVENUES> 520,619
<CGS> 0
<TOTAL-COSTS> 66,583
<OTHER-EXPENSES> 124,250
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 329,786
<INCOME-TAX> 0
<INCOME-CONTINUING> 329,786
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 329,786
<EPS-BASIC> 0.13
<EPS-DILUTED> 0.13
</TABLE>
