FORM 10-K
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

(Mark One)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [Fee Required]
For the Fiscal Year Ended    December 31, 1997

                                    OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [No Fee Required]

For the transition period from      N/A

Commission file number            0-15680

            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
           (Exact name of registrant as specified in its charter)

          Massachusetts                             04-2921566
 (State or other jurisdiction of       (I.R.S. Employer Identification No.)
  incorporation or organization)

 200 Clarendon Street, Boston, MA                     02116
(Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code:  (800) 722-5457
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to section 12(g) of the Act: Units of
Investor Limited Partnership Interest

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

State the aggregate market value of the voting stock held by non-affiliates
of the registrant.  The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to
the date of filing.  (See definition of affiliate in Rule 405.)  Not
applicable, since the securities are non-voting

NOTE:  If a determination as to whether a particular person or entity is an
affiliate cannot be made without involving unreasonable effort and expense,
the aggregate market value of the common stock held by non-affiliates may
be calculated on the basis of assumptions reasonable under the
circumstances, provided that the assumptions are set forth in this Form.
                      Exhibit Index on Pages 32 - 36
                               Page 1 of 36
<PAGE>
                            TABLE OF CONTENTS




                                  PART I


 Item 1     Business                                                    3
 Item 2     Properties                                                  7
 Item 3     Legal Proceedings                                           8
 Item 4     Submission of Matters to a Vote
              of Security Holders                                       9


                                 PART II


 Item 5    Market for the Partnership's Securities and Related
             Security Holder Matters                                    9
 Item 6    Selected Financial Data                                     11
 Item 7    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                       12
 Item 8    Financial Statements and Supplementary Data                 25
 Item 9    Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosure                    25


                                 PART III


 Item 10    Directors and Executive Officers of the Registrant         25
 Item 11    Executive Compensation                                     28
 Item 12    Security Ownership of Certain Beneficial Owners
              and Management                                           29
 Item 13    Certain Relationships and Related Transactions             29


                                 PART IV


 Item 14    Exhibits, Financial Statement Schedules and
              Reports on Form 8-K                                      32

            Signatures                                                 37











                                    2
<PAGE>

                                  Part I
Item 1 - Business

The Registrant, John Hancock Realty Income Fund Limited Partnership (the
"Partnership"), is a limited partnership organized on June 12, 1986 under
the Massachusetts Uniform Limited Partnership Act.  As of December 31,
1997, the partners in the Partnership consisted of John Hancock Realty
Equities, Inc. (the "General Partner"), John Hancock Realty Funding, Inc.
(the "John Hancock Limited Partner"), and 3,995 Investor Limited Partners
(the "Investors") owning 91,647 Units of Investor Limited Partnership
Interests (the "Units").  The John Hancock Limited Partner and the
Investors are collectively referred to as the Limited Partners.  The
initial capital of the Partnership was $2,000 representing capital
contributions of $1,000 from the General Partner and $1,000 from the John
Hancock Limited Partner.  During the offering period, the John Hancock
Limited Partner made additional capital contributions of $7,330,760.  There
have been no changes in the number of Units outstanding subsequent to the
termination of the offering period.  The Amended Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement") authorized the
sale of up to 100,000 Units of Investor Limited Partnership Interests.

The Units were offered and sold to the public during the period from
September 9, 1986 to September 9, 1987, pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933.  The Partnership
sold the Units for $500 per Unit.  No established public market exists on
which the Units may be traded.

The Partnership is engaged in the business of acquiring, improving, holding
for investment and disposing of existing, income-producing, commercial and
industrial properties on an all-cash basis, free and clear of mortgage
indebtedness.  Although the Partnership's properties were acquired and are
held free and clear of mortgage indebtedness, the Partnership may incur
mortgage indebtedness on its properties under certain circumstances, as
specified in the Partnership Agreement.

The latest date on which the Partnership is due to terminate is December
31, 2016, unless it is sooner terminated in accordance with the terms of
the Partnership Agreement.  It is expected that in the ordinary course of
the Partnership's business, the properties of the Partnership will be
disposed of, and the Partnership terminated, before December 31, 2016.















                                    3
<PAGE>
Item 1 - Business (continued)

The Partnership's equity real estate investments are subject to various
risk factors.  Although the risks of equity investing are reduced when
properties are acquired on an unleveraged basis, the major risk of owning
income-producing properties is the possibility that the properties will not
generate income sufficient to meet operating expenses and to fund adequate
reserves for repairs, replacements, contingencies and anticipated
obligations.  The income received from properties may be affected by many
factors, including:  i) adverse changes in general economic conditions and
local conditions, such as competitive over-building, a decrease in
employment, or adverse changes in real estate zoning laws, which may reduce
the desirability of real estate in the area or ii) other circumstances over
which the Partnership may have little or no control, such as fires,
earthquakes and floods.  To the extent that the Partnership's properties
are leased in any substantial portion to a specific retail, industrial or
office tenant, the financial failure of any such major tenant, resulting in
the termination of the tenant's lease or non-payment of rental amounts due,
would likely cause at least a temporary reduction in cash flow from any
such property and might result in a decrease in the market value of that
property.

Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real property may become liable for the costs of
removal or remediation of certain hazardous substances released on or in
its property.  Such laws often impose such liability without regard to
whether the owner or operator knew of, or was responsible for, the release
of such hazardous substances.  If any such substances were found in or on
any property owned by the Partnership, the Partnership could be exposed to
liability and be required to incur substantial remediation costs.  The
presence of such substances or the failure to undertake proper remediation
could adversely affect the ability to finance, refinance or dispose of such
property.

On February 17, 1987, the Partnership acquired the Marlboro Square Shopping
Center, a neighborhood shopping center located in Marlboro, Massachusetts.
Market conditions in Marlboro have weakened since the Partnership acquired
the property and remain depressed.  An excess of supply over demand for
retail space has resulted in continued high vacancy rates and competitive
pricing for available space in the Marlboro area.  The General Partner
anticipates that vacancy rates for retail space in the Marlboro,
Massachusetts area will remain high during 1998 based upon both the lack of
demand and the amount of available retail space in the area.  The General
Partner will continue to offer competitive rental rates and concessions in
an effort to retain existing tenants as well as to lease the remaining
vacant space at the property.

On November 20, 1987, the Partnership acquired the Crossroads Square
Shopping Center, a neighborhood shopping center located in Jacksonville,
Florida.  During the second quarter of 1997, the anchor tenant at
Crossroads Square that occupies 49% of the property under a lease scheduled
to expire in August 2010 informed the General Partner of its intention to
vacate its space during the second half of 1998.  As a result, the General
Partner has commenced efforts to find a replacement tenant for the space.
The General Partner does not believe that this situation is likely to have
a materially adverse effect on the Partnership's liquidity.

                                    4
<PAGE>

Item 1 - Business (continued)

Although retail market conditions in the market in which the Crossroads
Square Shopping Center is located have declined since the Partnership
purchased the property, occupancy levels and rental rates have stabilized
over recent years.  As a result the General Partner anticipates relatively
favorable retail market conditions in Jacksonville during 1998.

On December 22, 1987, the Partnership acquired the Carnegie Center, a
multi-tenant office/industrial facility located in Cincinnati, Ohio.  Since
the Partnership acquired the Carnegie Center, the Cincinnati industrial
real estate market has experienced an oversupply of office/industrial
space, which has resulted in a decline in rental rates and an increase in
vacancy rates.  The General Partner anticipates that market conditions in
Cincinnati will remain competitive during 1998 and, therefore, will
continue to offer competitive rental rates and concessions in an effort to
increase occupancy at Carnegie Center.

On February 25, 1988, the Partnership acquired the Warner Plaza Shopping
Center, a neighborhood shopping center located in Chandler, Arizona.  The
Partnership acquired Warner Plaza exclusive of areas totaling 55,562
rentable square feet owned by a non-affiliate of the Partnership.  Real
estate market conditions have declined in the Chandler area since the
Partnership acquired the property.  However, steady population growth in
the Chandler area over the past few years has increased demand for
available retail space and stimulated the development of new retail space.
The Warner Plaza Shopping Center property was 98% leased at December 31,
1997.  The General Partner anticipates favorable retail market conditions
to continue in the Chandler area during 1998 and that the property should
provide the Partnership with stable income performance during 1998.

On October 24, 1986, the Partnership acquired the 1300 North Dutton Avenue
property, an office/industrial facility located in Santa Rosa, California.
The tenant that had leased all of the rentable space at the property
notified the Partnership during 1994 that it would not renew its lease,
which expired on January 31, 1995.  The property remained vacant after
January 31, 1995 until the General Partner secured a new tenant, Union Oil
Company of California, to occupy the entire property under a five year
lease which commenced in October 1996.  Due to this lease at the property
and the then existing favorable market conditions in the Santa Rosa,
California area, the General Partner listed the property for sale during
October 1996.  On September 29, 1997, the Partnership sold the property to
a non-affiliated buyer and received net sales proceeds of $2,673,278.
During November 1997, the Partnership distributed $2,126,210 of the net
sales proceeds, of which $1,832,940 was distributed to the Investors, and
$293,270 was distributed to the John Hancock Limited Partner.  The
Partnership retained $547,068 in working capital reserves.








                                    5
<PAGE>

Item 1 - Business (continued)

On September 13, 1988, the Partnership acquired the J.C. Penney Credit
Operations Center, an office/service center located in Albuquerque, New
Mexico and 100% occupied by J.C. Penney.  During the first quarter of 1995,
the General Partner negotiated an extension of J.C. Penney's lease through
June 2006 and listed the J.C. Penney Credit Operations Center for sale
during July 1995 based upon this lease extension and the then existing
favorable real estate market conditions in Albuquerque, New Mexico.  On
December 29, 1995, the Partnership sold the J.C. Penney Credit Operations
Center to a non-affiliated buyer and received net sales proceeds of
$5,392,032.  During February 1996, the Partnership distributed $5,315,526
of the net sales proceeds, of which $4,582,350 was distributed to the
Investors, and $733,176 was distributed to the John Hancock Limited
Partner.  The Partnership retained $76,506 in working capital reserves.

Within the power accorded to the General Partner under the terms of the
Partnership Agreement, the General Partner contracted, effective as of
January 1, 1992, with Hancock Realty Investors Incorporated ("HRI"), a
wholly-owned, indirect subsidiary of John Hancock Mutual Life Insurance
Company ("John Hancock"), to assist the General Partner in the performance
of its management duties as enumerated in the Partnership Agreement.
Effective May 28, 1993, HRI subcontracted with John Hancock to assist HRI
in the performance of its duties as enumerated in the January 1, 1992
contract.  The Partnership has not incurred any additional costs or
expenses as a result of these agreements.  The General Partner is further
described in Item 10 ("Directors and Executive Officers of the
Partnership") of this Report.

Industry segment information has not been provided since the Partnership is
engaged in only one industry segment.
























                                    6
<PAGE>

Item 2 - Properties

At December 31, 1997, the Partnership held four properties in its
portfolio.

Marlboro Square Shopping Center
-------------------------------
On February 17, 1987, the Partnership purchased the Marlboro Square
Shopping Center ("Marlboro Square"), located in Marlboro, Massachusetts,
from a non-affiliated seller.  The property consists of two buildings.  One
of the buildings contains 39,150 rentable square feet, and the other
building contains 3,000 rentable square feet, for a total of 42,150
rentable square feet of space.

For the year ended December 31, 1997, the average occupancy of Marlboro
Square was 65%.  At December 31, 1997 Marlboro Square's occupancy was 67%.

Crossroads Square Shopping Center
---------------------------------
On November 20, 1987, the Partnership purchased the Crossroads Square
Shopping Center ("Crossroads Square"), located in Jacksonville, Florida,
from a non-affiliated seller.  Crossroads Square contains 174,196 rentable
square feet of space with a total land area in excess of 18.5 acres.

For the year ended December 31, 1997, the average occupancy of Crossroads
Square was 95%.  At December 31, 1997, Crossroads Square's occupancy was
95%.

Carnegie Center Office/Warehouse
--------------------------------
On December 22, 1987, the Partnership purchased Carnegie Center, located in
Cincinnati, Ohio, from a non-affiliated seller.  The property consists of
two buildings containing an aggregate of 128,059 rentable square feet with
a total land area of approximately 7.8 acres.

For the year ended December 31, 1997, the average occupancy of Carnegie
Center was 68%.  At December 31, 1997, Carnegie Center's occupancy was 73%.

Warner Plaza Shopping Center
----------------------------
On February 25, 1988, the Partnership purchased 92,848 rentable square feet
of the Warner Plaza Shopping Center ("Warner Plaza") (which consists of a
total of 148,410 rentable square feet), located in Chandler, Arizona, from
a non-affiliated seller.

For the year ended December 31, 1997, average occupancy, for the portion of
Warner Plaza which is owned by the Partnership, was 99%.  At December 31,
1997 occupancy for such portion was 98%.

The foregoing properties are described more fully in Items 1, 2 and 7 and
Note 4 to the Financial Statements included in Item 8 of this Report.



                                    7
<PAGE>

Item 3 - Legal Proceedings

In February 1996, a putative class action complaint was filed in the
Superior Court in Essex County, New Jersey by a single investor in a
limited partnership affiliated with the Partnership.  The complaint named
as defendants the Partnership, the General Partner, certain other
affiliates of the General Partner, and certain unnamed officers, directors,
employees and agents of the named defendants.

The plaintiff sought unspecified damages stemming from alleged
misrepresentations and omissions in the marketing and offering materials
associated with the Partnership and two limited partnerships affiliated
with the Partnership.  The complaint alleged, among other things, that the
marketing materials for the Partnership and the affiliated limited
partnerships did not contain adequate risk disclosures.

On March 18, 1997, the court certified a class of investors who were
original purchasers in the Partnership.  The certification order should not
be construed as suggesting that any member of the class is entitled to
recover, or will recover, any amount in the action.

The General Partner believes the allegations are totally without merit and
will continue to vigorously contest the action.

In September 1997, a complaint for damages was filed in the Superior Court
of the State of California for the County of Los Angeles by an investor in
John Hancock Realty Income Fund-II Limited Partnership ("RIF-II"), a
limited partnership affiliated with the Partnership.  The complaint named
the General Partner as a defendant.

The plaintiff sought unspecified damages which allegedly arose from the
General Partner's refusal to provide, without reasonable precautions on
plaintiff's use of, a list of Investors in the Partnership and in RIF-II.
Plaintiff alleges that the General Partner's refusal unconditionally to
provide a list was a breach of contract and a breach of the General
Partner's fiduciary duty.

In 1998, the plaintiff amended the complaint to name the Partnership and
RIF-II as defendants.  The defendants have filed demurrer motions, asking
that the complaint be dismissed at law.  These motions are under
consideration.

There can be no assurances given as to the timing, costs or outcome of this
legal proceeding.

There are no other material pending legal proceedings, other than ordinary
routine litigation incidental to the business of the Partnership, to which
the Partnership is a party or to which any of its properties is subject.








                                    8
<PAGE>

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 fourth quarter of 1997.

                                 Part II

Item 5 - Market for the Partnership's Securities and Related Security
Holder Matters

(a)  Market Information

The Partnership's outstanding securities consist of 91,647 Units originally
sold for $500 per Unit.  The Units were offered and sold to the public
during the period from September 9, 1986 to September 9, 1987.  No
established public market exists on which the Units may be traded.
Consequently, holders of Units may not be able to liquidate their
investments in the event of an emergency, or for any other reason.
Additionally, the assignment or other transfer of Units would be subject to
compliance with the minimum investment and suitability standards imposed by
the Partnership or by applicable law, including state "Blue Sky" laws.

(b)  Number of Security Holders
                                 Number of             Number of Units
                            record holders as of      outstanding as of
   Title of Class            December 31, 1997        December 31, 1997
--------------               ------------------       ------------------
   Units of
   Investor Limited
   Partnership Interests             3,995                    91,647

(c)  Dividend History and Restrictions

During the fiscal year ended December 31, 1997, the Partnership distributed
cash in the aggregate amount of $4,210,949 to the Partners.  Of this
amount, $2,084,739 was generated from Distributable Cash from Operations
(defined in the Partnership Agreement), and $2,126,210 was generated from
Distributable Cash from Sales or Financings (defined in the Partnership
Agreement).  During the fiscal year ended December 31, 1996, the
Partnership distributed cash in the aggregate amount of $7,485,429 to the
Partners.  Of this amount, $2,169,903 was generated from Distributable Cash
from Operations, and $5,315,526 was generated from Distributable Cash from
Sales or Financings.  These amounts were distributed in accordance with the
Partnership Agreement.











                                     9
<PAGE>

Item 5 - Market for the Partnership's Securities and Related Security
Holder Matters (continued)

(c)  Dividend History and Restrictions (continued)

The following table reflects aggregate cash distributions with respect to
Distributable Cash from Operations and Distributable Cash from Sales or
Financings made during 1996 and 1997:
<TABLE>
<CAPTION>
                                                      Amount Paid to
      Date of          Amount of     Amount Paid to    John Hancock     Amount Paid     Distribution
    Distribution      Distribution  General Partner  Limited Partner    to Investors      Per Unit
    ------------      ------------   --------------   --------------    ------------      --------
        <S>               <C>             <C>              <C>              <C>             <C>
  February 15, 1996*     $5,894,105      $5,785       $733,176           $5,155,144         $56.25
  May 15, 1996              548,956       5,489              -              546,467           5.93
  August 15, 1996           521,184       5,212              -              515,972           5.63
  November 15, 1996         521,184       5,212              -              515,972           5.63
  February 14, 1997         521,185       5,212              -              515,973           5.63
  May 15, 1997              521,184       5,212              -              515,972           5.63
  August 15, 1997           521,185       5,212              -              515,973           5.63
  November 14,1997*       2,647,395       5,212        293,270            2,348,913          25.63

  * Includes Distributable Cash from Sales or Financings
</TABLE>

The source of future distributions from cash from operations is dependent
upon cash generated by the Partnership's investments and the use of working
capital reserves for leasing costs and capital expenditures.  Distributions
of Cash from Operations during the year ended 1997 represent a 5% return on
Investors' Invested Capital.  The General Partner anticipates that the
Partnership will make distributions of Cash from Operations in 1998
comparable to those made during both 1997 and 1996.  For further discussion
on the financial condition and results of operations of the Partnership see
Item 7 of this Report.



















                                    10
<PAGE>
Item 6 - Selected Financial Data

The following table sets forth selected financial information regarding the
Partnership's financial position and operating results for the five year
period ended December 31, 1997.  This information should be read in
conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Financial Statements and Notes
thereto, which are included in Items 7 and 8, respectively, of this Report.
<TABLE>
<CAPTION>
                                                           Years Ended December 31,
                                           1997         1996         1995        1994         1993
                                           ----         ----         ----        ----         ----
<S>                                        <C>          <C>          <C>         <C>          <C>

Rental income                           $2,861,166  $2,614,989   $3,065,751  $3,618,826   $3,519,445
Interest income                            107,469     171,767      173,286     110,982       71,557
(Loss)/gain on sale of property            (5,321)           -      128,539           -            -
Property write-downs                     (668,520) (1,907,093)            -   (512,000)
Net income/(loss)                          636,383   (851,115)    1,551,706   1,497,221    1,684,608
Net income/(loss) per Unit (b)               8.41        (5.60)      17.42        17.02       18.95
Ordinary tax income (a)                  1,167,990   1,130,346    1,480,158   2,128,148    1,826,365
Ordinary tax income per Unit (b)            13.33        12.74       16.80        23.61       20.35
Cash distribution per Unit from
  operations                                22.52        23.44       25.00        25.00       28.75
Distributable cash from sales
  or financings                          2,126,210           -    5,315,526           -            -
Cash distribution per Unit from sales or
  financings                                20.00        50.00        -            -           -
Cash and cash equivalents at
  December 31                            2,502,844   2,197,847    8,397,420   3,124,999    2,359,803
Total assets at December 31             21,765,879  25,375,190   33,605,444  34,325,239   35,150,707
</TABLE>

(a)  The ordinary tax income for the Partnership was allocated as follows:
<TABLE>
<CAPTION>
                                                           Years Ended December 31,
                                           1997         1996         1995        1994         1993
                                           ----         ----         ----        ----         ----
<S>                                        <C>          <C>          <C>         <C>          <C>
  General Partner                          $11,680     $11,303      $14,802     $21,281      $18,263
  John Hancock Limited Partner            (65,297)    (48,573)     (74,321)    (56,684)     (56,684)
  Investors                              1,221,607   1,167,586    1,539,677   2,163,551    1,864,786
                                       -----------  ----------   ----------  ----------   ----------
  Total                                 $1,167,990  $1,130,346   $1,480,158  $2,128,148   $1,826,365
                                        ==========  ==========   ==========  ==========   ==========
</TABLE>
(b)  The actual ordinary tax income/(loss) per Unit has not been presented
     because the actual ordinary tax income/(loss) is allocated between tax-
     exempt and tax-paying entities based upon the respective number of Units
     held by each group at December 31, 1997, 1996, 1995, 1994 and 1993.  The
     ordinary tax income per Unit as presented was computed by dividing the
     Investors' share of ordinary tax income by the number of Units outstanding
     at December 31, 1997, 1996, 1995, 1994 and 1993, respectively.
                                    11
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations

General
-------
During the offering period from September 9, 1986 to September 9, 1987, the
Partnership sold 91,647 Units representing gross proceeds (exclusive of the
John Hancock Limited Partner's contribution which was used to pay sales
commissions, acquisition fees and organizational and offering expenses) of
$45,823,500.  The proceeds of the offering were used to acquire investment
properties and fund reserves.  These properties are described more fully in
Item 2 and Note 4 to the Financial Statements included in Item 8 of this
Report.

Impact of Year 2000
-------------------
The General Partner and John Hancock Mutual Life Insurance Company, the
General Partner's ultimate parent (together, John Hancock) along with the
Partnership, have developed a plan to modify or replace significant
portions of the Partnership's computer information and automated
technologies so that its systems will function properly with respect to the
dates in the year 2000 and thereafter.  The Partnership presently believes
that with modifications to existing systems and conversions to new
technologies, the year 2000 will not pose significant operational problems
for its computer systems.  However, if certain modifications and
conversions are not made, or are not completed timely, the year 2000 issue
could have an adverse impact on the operations of the Partnership.

John Hancock as early as 1994 had begun assessing, modifying and converting
the software related to its significant systems and has initiated formal
communications with its significant business partners and customers to
determine the extent to which John Hancock's interface systems are
vulnerable to those third parties' failure to remediate their own year 2000
issues.  While John Hancock is developing alternative third party
processing arrangements as it deems appropriate, there is no guarantee that
the systems of other companies on which the Partnership's systems rely will
be converted timely or will not have an adverse effect on the Partnership's
systems.

The Partnership expects the project to be substantially complete by early
1999.  This completion target was derived utilizing numerous assumptions of
future events, including availability of certain resources and other
factors.  However, there can be no guarantee that this completion target
will be achieved.

Forward-looking Statements
--------------------------
In addition to historical information, certain statements contained herein
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.  Those statements appear in a number of
places in this Report and include statements regarding the intent, belief
or expectations of the General Partner with respect to, among other things,
the prospective sale of Partnership properties, actions that would be taken
in the event of lack of liquidity, unanticipated leasing costs, repair and
maintenance expenses, distributions to the General Partner and to
Investors, the possible effects of tenants vacating space at Partnership
properties, the absorption of existing retail space in certain geographical
areas, and the impact of inflation.
                                     12
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Forward-looking Statements (continued)
--------------------------------------
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
-------------------------------
At December 31, 1997, the Partnership had $2,502,844 in cash and cash
equivalents and $58,400 in restricted cash.  The Partnership's cash and
cash equivalents increased by $304,997 from December 31, 1996 to December
31, 1997.  This increase is due to retaining a portion of the net sales
proceeds from the 1300 North Dutton Avenue property and is partially offset
by the payment of leasing costs at its properties, as described below.

The Partnership has established a working capital reserve with a current
balance of approximately 4.5% of the offering proceeds.  The General
Partner anticipates that such amount should be sufficient to satisfy the
Partnership's general liquidity requirements.  Liquidity would, however, be
materially adversely affected by a significant reduction in revenues or
significant unanticipated operating costs or unanticipated capital
expenditures.  If any or all of these events were to occur, to the extent
that working capital reserves would be insufficient to satisfy the cash
requirements of the Partnership, it is anticipated that additional funds
would be obtained through a further reduction of cash distributions to
Investors, bank loans, short-term loans from the General Partner or its
affiliates or the sale or financing of Partnership properties.

During 1997, cash from working capital reserves in the aggregate amount of
$224,098 was used for the payment of leasing costs incurred at the Carnegie
Center, Marlboro Square, Crossroads Square, and Warner Plaza properties.
The General Partner estimates that the Partnership will incur approximately
$389,000 of leasing costs at its properties during 1998.  The General
Partner anticipates that the current balance in the working capital reserve
should be sufficient to pay such costs.

                                    13

<>PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Liquidity and Capital Resources (continued)
-------------------------------------------
During the years ended December 31, 1997 and 1996, approximately $115,000
and $75,000, respectively, of cash from operations was used to fund non-
recurring maintenance and repair expenses incurred at the Partnership's
properties.  The General Partner estimates that the Partnership will incur
approximately $250,000 of non-recurring maintenance and repair expenses at
its properties during 1998.  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 approximately $239,000 in legal expenses in
connection with the class action lawsuit (see Part II, Item 1 of this
Report).  Of this amount, approximately $143,000 relates to the
Partnership's own defense and approximately $96,000 relates to the
indemnification of the General Partner and its Affiliates for their
defense.  At the present time, the General Partner cannot estimate the
aggregate amount of legal expenses and indemnification claims to be
incurred and their impact on the Partnership's future operations.
Liquidity would, however, be materially adversely affected by a significant
increase in such legal expenses and related indemnification costs.  If such
increases were to occur, to the extent that cash from operations and the
working capital reserve would be insufficient to satisfy the cash
requirements of the Partnership, it is anticipated that additional funds
would be obtained through a reduction of cash distributions to Investors,
bank loans, short-term loans from the General Partner or its Affiliates, or
the sale or financing of Partnership properties.

Cash in the aggregate amount of $4,210,949 was distributed to the Partners
during 1997.  Of this amount, $2,084,739 was generated from Distributable
Cash from Operations, and $2,126,210 was generated from Distributable Cash
from Sales or Financings.  These amounts were distributed in accordance
with the Partnership Agreement and were allocated as follows:

                           From Distributable      From Distributable
                               Cash From               Cash From
                               Operations         Sales or Financings
                               ----------         -------------------
Investors                       $2,063,891             $1,832,940
John Hancock Limited Partner             -                293,270
General Partner                     20,848                      -
                                ----------            -----------
Total                           $2,084,739             $2,126,210
                                ==========             ==========

The amount distributed to Investors from Distributable Cash from Operations
during 1997 represented a 5% annualized return on Investors' Invested
Capital.






                                     14
<>PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Liquidity and Capital Resources (continued)
-------------------------------------------
The following table summarizes the leasing activity and occupancy status at
the Partnership's properties during 1997:
<TABLE>
<CAPTION>
                                          Marlboro Sq.  Crossroads Sq.    Carnegie      Warner Pl.
                                         Shopping Ctr.  Shopping Ctr.      Center     Shopping Ctr.
                                         -------------  -------------     -------     -------------
<S>                                           <C>            <C>            <C>            <C>

Square Feet                                    42,150       174,196        128,059         92,848

Occupancy at January 1, 1997                      70%           93%            64%           100%
                                                 ====          ====           ====           ====
New Leases                                         4%            2%            12%             0%

Lease Renewals                                     0%            7%            18%             3%

Leases Expired (1)                                 7%            0%             3%             2%

Occupancy at December 31, 1997                    67%           95%            73%            98%
                                                 ====          ====           ====           ====
Leases Scheduled to Expire During 1998            11%           11%            17%             7%
                                                 ====          ====           ====           ====
Leases Scheduled to
Commence During 1998                              16%            2%             0%             0%
                                                 ====          ====           ====           ====
</TABLE>

(1)  Includes leases terminated by the General Partner for non-payment of
  rent.

A tenant at the Marlboro Square property that had taken occupancy of the
property's 3,000 square foot outparcel in October 1996 did not make rental
payments due beginning in December 1996.  As a result, the General Partner
terminated the tenant's lease effective February 28, 1997.  On July 15,
1997, the General Partner reached a settlement agreement with the former
tenant whereby the Partnership agreed to release the former tenant from all
past due and future rental obligations in exchange for a one-time payment
of $16,000, which amount has been received.  The General Partner continues
to seek a replacement tenant for this space.

Effective November 1996, the amount of space occupied by the anchor tenant
at the Marlboro Square property declined from approximately 38% of the
property to approximately 28% of the property, in accordance with the terms
of its lease.  Also during 1996, an existing tenant at Marlboro Square
whose lease was scheduled to expire during November 1996, expanded the
space it occupies at the property from 8% to 15%.  However, due to
declining market conditions in the area where the property is located, the
current rental rate paid by the tenant per square foot is 53% lower than
its previous rental rate.

                                    15
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Liquidity and Capital Resources (continued)
-------------------------------------------
At December 31, 1997, Marlboro Square's occupancy was 67%.  Effective
January, 1998, a new tenant took occupancy of 6,600 square feet, or 16% of
the property under a lease that will expire in January 1999, at which time
the tenant will have the option to renew its lease for a five-year term.
Approximately $20,000 in leasing costs will be incurred in connection with
this new lease.

During 1998, a lease representing 3,000 square feet, or 7% of the property,
is scheduled to expire.  In addition, a tenant with a lease for
approximately 1,600 square feet, or 4% of the property, is delinquent in
rental payments due since February 1998 and the General Partner understands
that the tenant intends to vacate its space at the property.  The General
Partner will use all legal remedies to obtain collection from this tenant
of all obligations due under its lease agreement.

The General Partner anticipates that absorption of available retail space
in the Marlboro, Massachusetts area will remain sluggish during 1998 based
upon both the lack of demand and the amount of available retail space in
the area.  The General Partner will continue to offer competitive rental
rates and concessions in an effort to retain existing tenants as well as to
lease the remaining vacant space at the property.

During 1997, the General Partner secured leases with four new tenants to
occupy, in the aggregate, approximately 14,900 square feet, or 12%, of the
Carnegie Center property.  In addition, the General Partner secured lease
renewals/extensions with two existing tenants at the property.  The first
tenant, occupying approximately 19,500 square feet, or 15% of the property,
and whose lease was scheduled to expire in August 1998, extended the term
of its lease through July 2004.  The General Partner also secured a lease
renewal with a tenant occupying approximately 3,600 square feet, or 3% of
the property, and whose lease was scheduled to expire in June 1997, through
June 2000.  The Partnership incurred approximately $125,000 in leasing
costs in connection with these new and renewal lease transactions.  One
tenant at this property who occupied approximately 2,900 square feet of
space under a lease that was scheduled to expire in May 1999 was evicted
from the property for non-payment of rent.  The General Partner reached a
settlement agreement with this tenant whereby the tenant agreed to pay
approximately $2,800 in exchange for the General Partner terminating its
lease at the property.  The General Partner is seeking a replacement tenant
to occupy this space.

At December 31, 1997, the Carnegie Center was 73% occupied.  During 1998,
four leases representing approximately 19,500 square feet, or 17% of the
property are scheduled to expire.  The Cincinnati industrial real estate
market, where the Carnegie Center is located, has an oversupply of
office/industrial space, which has resulted in a decline in rental rates
and an increase in vacancy rates.  Because of these current market
conditions, rental rates and concessions will be priced aggressively in an
effort to retain existing tenants as well as secure new tenants at the
property.

                                    16
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Liquidity and Capital Resources (continued)
-------------------------------------------
During the second quarter of 1997, the anchor tenant at the Crossroads
Square property that occupies 49% of the property under a lease scheduled
to expire in August 2010 informed the General Partner of its intention to
vacate its space during the second half of 1998.  As a result, the General
Partner has commenced efforts to find a replacement tenant for the space.
The General Partner does not believe that this situation will have a
materially adverse effect on the Partnership's liquidity.

One tenant at the Crossroads Square property has a clause in its lease that
may be exercisable if the anchor tenant described above ceases to operate
at the property and a replacement tenant is not secured.  Such clause
provides that the tenant may  i) reduce rental payments to the lesser of
the fixed monthly rent or 2% of gross receipts if the anchor ceases to
operate for 180 days, and  ii) terminate lease obligations if the cessation
of operations continues for an additional six months and a substitute
tenant has not been provided.  This tenant occupies approximately 10,500
square feet, of 6% of the property, under a lease that is scheduled to
expire in July 2005.  The General Partner does not believe that any
reduction in rental payments or any possible lease termination that may
result from the anchor tenant vacating the property will have a materially
adverse affect on the Partnership's liquidity.

A tenant at the Crossroads Square property with a lease for approximately
12,500 square feet, or 7% of the property, filed for bankruptcy protection
under Chapter 11 of the U.S. Bankruptcy Code in March 1996.  Prior to
filing for protection, this tenant discontinued satisfying its rental
obligations and subsequently requested a reduction in its rental payments
through the end of its lease, which is scheduled to expire in October 2003.
Given the then existing favorable real estate market conditions in the area
where Crossroads Square is located at that time, the General Partner did
not agree to a reduced rental amount.  On March 11, 1997 the bankruptcy
court ordered that the tenant assume the lease at the property.  The tenant
is current on all its rental obligations as of the date hereof.

During August 1996, a tenant at the Warner Plaza property that occupied 14%
of the rentable space at the property vacated its space prior to its lease
expiration.  Under the terms of its lease agreement, the tenant is
obligated to pay both base rent and percentage rent, which is based on the
tenant's sales at the property.  The Partnership continues to receive the
minimum rental payments due but percentage rent payments have not been
received because the tenant, having vacated its space, has no sales at the
property.  Under the terms of its lease agreement, the tenant has an option
to terminate its lease obligations in April 1999.  The General Partner has
commenced efforts to find a replacement tenant for this space and negotiate
a lease buyout with former tenant.  In addition, one tenant at the property
that occupied approximately 1,600 square feet, or 2% of the property, had a
clause in its lease allowing it to terminate its lease if the tenant
described above were to vacate the property.  This tenant terminated its
lease, which had been scheduled to expire in August 2000, effective
February 24, 1997.
                                    17
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Liquidity and Capital Resources (continued)
-------------------------------------------
Another tenant at the Warner Plaza property, with a lease for approximately
6,150 square feet, or 7% of the property, filed for bankruptcy protection
under Chapter 11 of the U.S. Bankruptcy Code in June 1997.  During May
1997, this tenant discontinued satisfying its rental obligations.  On
September 16, 1997, the bankruptcy court ordered the tenant to assume the
lease at the property and to pay such amounts required to become current on
all rental obligations by November 24, 1997.  As of the date hereof, the
tenant is current on it rental obligations.

During the first quarter of 1997, the General Partner had the Warner Plaza
property independently appraised.  Based upon the appraiser's investigation
and analysis, the property's market value was estimated to be approximately
$5,600,000.  The carrying value of the Warner Plaza property at December
31, 1997 was evaluated in comparison to its estimated future undiscounted
cash flows and the independent appraisal.  Based upon such evaluation, the
General Partner determined that the property's estimated future
undiscounted cash flows were expected to exceed its carrying value and,
therefore, a write-down in value was not required at December 31, 1997.
The Partnership's cumulative investment in the property, before accumulated
depreciation and write-downs, is approximately $7,900,000.

The General Partner evaluated the carrying value of the Marlboro Square
property of approximately $1,669,000 at December 31, 1997 in comparison to
its estimated future undiscounted cash flows and a recent internal
appraisal.  Based upon such evaluation, the General Partner determined that
the property's estimated future undiscounted cash flows were not expected
to exceed its carrying value.  Therefore a write-down of $668,520,
representing the difference between the property's carrying value and its
estimated current market value (and not its estimated future undiscounted
cash flows) was required as of December 31, 1997.  The Partnership's
cumulative investment in the property, before accumulated depreciation and
write-downs, is approximately $5,254,000.

The General Partner also evaluated the carrying value of each of the
Partnership's other properties as of December 31, 1997 by comparing such
value to the respective property's future undiscounted cash flows and the
then most recent internal appraisal.  Based on such evaluations, the
General Partner determined that no impairment in values exist with respect
to these properties and no additional write-downs were recorded as of
December 31, 1997.  The General Partner will continue to conduct property
valuations, using internal or independent appraisals, in order to assist in
its evaluation of whether a permanent impairment in value exists on any of
the Partnership's properties.








                                    18
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of Operations
---------------------
Average occupancy for the Partnership's properties was as follows:
                                             Years ended December 31,
                                             1997      1996      1995
                                             ----      ----      ----
  1300 North Dutton Avenue Office Complex     N/A       25%        8%
  Marlboro Square Shopping Center             65%       81%       73%
  Crossroads Square Shopping Center           95%       93%       94%
  Carnegie Center Office/Industrial           68%       61%       47%
  Warner Plaza Shopping Center                99%      100%       99%

Results of Operations - 1997 compared with 1996

Net income for the year ended December 31, 1997 was $636,383 as compared to
a net loss of 851,115 in 1996.  The 1997 results include a $668,520 write-
down of the value of the Marlboro Square property and a $5,321 non-
recurring loss resulting from the sale of the 1300 North Dutton Avenue
property.  Included in the results for 1996 are write-downs in the values
of two of the Partnership's properties in the aggregate amount of
$1,907,093.  Excluding these amounts, net income increased by 23% in 1997
as compared to 1996 due to increases in the performance of the Carnegie
Center, Crossroads Square, and 1300 North Dutton Avenue properties.  These
increases were partially offset by declines in the performance of the
Marlboro Square and Warner Plaza properties, and by legal fees incurred in
connection with the class action lawsuit (described in Item 3 of Part l of
this Report).

Rental income for the year ended December 31, 1997 increased by $246,177,
or 9%, as compared to 1996. This increase is primarily due to an increase
in rental income at the 1300 North Dutton Avenue property (which property
was sold by the Partnership on September 29, 1997).  In addition, increases
in rental income at the Crossroads Square and Carnegie Center properties
were partially offset by decreases in rental income at the Marlboro Square
and Warner Plaza properties.  Rental income increased at the 1300 North
Dutton Avenue and Carnegie Center properties due to increases in average
occupancy at the properties.  Rental income increased at the Crossroads
Square property primarily because a tenant that was delinquent in making
some of its rental payments during 1996 satisfied its past due 1996 rental
payments during 1997 as well as made all of its scheduled 1997 rental
payments.

Rental income decreased by 9% at Warner Plaza primarily due to a decline in
percentage rent at the property which resulted from one of the tenants at
the property vacating its space, as described above.  Rental income at
Marlboro Square decreased by 8% between periods primarily due to a decline
in average occupancy.  Rental income also decreased at Marlboro Square
because rental rates on leases executed since 1996 are less than rental
rates contracted under prior leases.




                                    19

<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of Operations
---------------------
Interest income for the year ended December 31, 1997 decreased by $64,298,
or 37%, as compared to 1996.  This decrease was primarily due to the
interest earned during the first quarter of 1996 on the net sales proceeds
received from the sale of J.C. Penney, which was sold on December 29, 1995.
The Partnership distributed the majority of such net sales proceeds in
February 1996.  This decrease was partially offset by interest earned on
the net sales proceeds received from the sale of the 1300 North Dutton
Avenue property.  The Partnership distributed a substantial portion of such
net sales proceeds in November 1997.  Interest income declined further due
to a decrease in the interest earned on the Partnership's working capital
reserves as a result of a reduced amount of such reserves through most of
1997.

The Partnership's share of property operating expenses for the year ended
December 31, 1997 increased by $84,697, or 27%, as compared to 1996
primarily due to increases in the Partnership's share of property operating
expenses at the Crossroads Square, Marlboro Square and 1300 North Dutton
Avenue properties.  These increases were partially offset by decreases in
the Partnership's share of property operating expenses at the Carnegie
Center and Warner Plaza properties.

The Partnership's share of property operating expenses at the Crossroads
Square property increased in 1997 as compared to 1996, primarily due to
legal fees paid in connection with the collection of past due rent from a
tenant that had been in bankruptcy.  The property incurred approximately
$15,000 and $20,000 in non-recurring maintenance and repair expenses in
1997 and 1996, respectively.

The Partnership's share of property operating expenses at the Marlboro
Square property was consistent between 1997 and 1996.  However, non-
recurring maintenance and repair expenses of approximately $2,000 and
$9,000 were incurred at the property during 1997 and 1996, respectively.
Excluding these amounts, the Partnership's share of property operating
expenses at the property increased by 17% in 1997 as compared to 1996.
This increase is primarily due to a decrease in occupancy at the property,
and therefore, decreases in tenant reimbursements for such expenses.

The Partnership's share of property operating expenses at the Carnegie
Center property decreased during 1997 by 34% as compared to 1996.  The
property incurred approximately $4,000 and $25,000 of non-recurring
maintenance and repair expenses during 1997 and 1996, respectively.
Excluding these amounts, the Partnership's share of property operating
decreased by 19% between years.  This decrease is primarily due to a
successful appeal of the property's 1996 assessed value that resulted in a
refund of a portion that year's real estate taxes during 1997.  In
addition, an increase in occupancy at the property resulted in an increase
in tenant reimbursements for such expenses.



                                    20
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of Operations (continued)
---------------------------------
The Partnership's share of property operating expenses increased at the
Warner Plaza property by 120% in 1997 as compared to 1996 due to non-
recurring maintenance and repair expenses.  The property incurred
approximately $75,000 and $21,000 of such expenses during 1997 and 1996,
respectively.  Excluding these amounts, the Partnership's share of property
operating expenses at the property was consistent between periods.

The Partnership's share of property operating expenses at the 1300 North
Dutton Avenue property increased by 33% in 1997 as compared to 1996.  The
property incurred approximately $20,000 of non-recurring maintenance and
repair expenses during 1997.  Excluding this amount, the Partnership's
share of property operating expenses was consistent between periods.

General and administrative expenses for the year ended December 31, 1997
increased by $24,031, or 7%, as compared to 1996.  The increase in 1997 as
compared to 1996 is primarily due to legal fees incurred by the Partnership
in connection with the class action complaint (See Item 3 Part l of this
Report).  Excluding such legal fees, general and administrative expenses
were consistent between years.

Amortization of deferred expenses for the year ended December 31, 1997
decreased by $75,223, or 36%, as compared to 1996.  This decrease is
primarily due to the write-down in carrying values of two of the
Partnership's properties during 1996.  The net book value of the properties
plus any unamortized deferred expenses relating to the properties at the
time the properties were written down were combined to arrive at each
property's carrying value (estimated market value) after its write-down.
Accordingly, some deferred expense amounts that were amortized during 1996
are now included in the property's carrying value and were depreciated
during 1997.  This decrease was partially offset by the amortization of
leasing costs incurred at the Crossroads Square property in 1996 and 1997,
and at the Carnegie Center property in 1997.  In addition, included in
amortization expense during the period in 1997 is a write-off of
approximately $9,000 of unamortized leasing costs relating to the tenant's
lease at Marlboro Square that was terminated in February 1997 (as described
above).

Depreciation expense for the year ended December 31, 1997 decreased by
$104,429, or 14%, as compared to 1996.  This decrease is primarily due to
the reclassification of the 1300 North Dutton Avenue property as "Property
Held for Sale" during the fourth quarter of 1996.  Accordingly, no
depreciation was recorded on this property during 1997.  In addition,
depreciation expense declined further between periods due the write-down of
two of the Partnership's properties during 1996.

As referred to above, during 1997, the General Partner determined that the
value of the Marlboro Square property had been impaired.  As a result, the
Partnership reduced the carrying amount of the property by $668,520 and
this amount was charged directly to operations.  During 1996, the General
Partner determined that the values of the Carnegie Center and Marlboro
Square properties had been impaired.  As a result, the Partnership reduced
the carrying amount of the Carnegie Center and Marlboro Square properties
by $1,247,093 and $660,000, respectively, and these amounts were charged
directly to operations.

The General Partner believes that inflation has had no significant impact
on the Partnership's operations during the last three fiscal years, and the
General Partner anticipates that inflation will not have a significant
impact during 1998.

                                    21
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of Operations (continued)
---------------------------------
Results of Operations - 1996 compared with 1995

The Partnership generated a net loss of $851,115 for the year ended
December 31, 1996 as compared to net income of $1,551,706 during the year
ended December 31, 1995.  Included in the results for 1996 are write-downs
in the value of two of the Partnership's properties in the aggregate amount
of $1,907,093.  Included in the results for 1995 is a non-recurring gain in
the amount of $128,539 resulting from the sale of the J.C. Penney Credit
Operations Center (J.C. "Penney") in December 1995 and approximately
$438,000 of net income generated at the J.C. Penney property during 1995.
Also, the Partnership's 1995 results reflect the collection of a one time
payment of approximately $82,000 made by the former tenant at the 1300
North Dutton Avenue property because of alterations it made to the property
without the consent of the General Partner, as required under the terms of
its lease agreement.  Excluding the amounts described above, the
Partnership's net income increased by 17% during 1996 as compared to 1995
as a result of increases in the performance of the Carnegie Center, Warner
Plaza and 1300 North Dutton Avenue properties.   Partially offsetting these
increases were a decrease in the performance of the Marlboro Square
property and increases in the Partnership's general and administrative
expenses and amortization of lease acquisition costs.

Rental income for the year ended December 31, 1996 decreased by $450,762,
or 15%, as compared to 1995.  This decrease was primarily due to the sale
of J.C. Penney.  Excluding the rental income generated by J.C. Penney
during 1995, rental income increased by 6% during 1996 as compared to 1995.
This increase is primarily due to increases in rental income at the 1300
North Dutton Avenue and Carnegie Center properties that were partially
offset by a decrease in rental income at the Marlboro Square property.
Rental income increased by 190% and 35% between periods at the 1300 North
Dutton Avenue and Carnegie Center properties, respectively, primarily due
to an increase in average occupancy at the properties.  Although average
occupancy increased between periods at Marlboro Square, rental income
decreased by 18% primarily due to a significant reduction in the rental
rate paid by the anchor tenant at the property.  Rental income also
decreased at Marlboro Square because rental rates on leases executed during
1995 and 1996 were less than the rates contracted and paid by previous
tenants at the property.  Rental income at the Crossroads Square and Warner
Plaza properties was consistent between periods.

Depreciation expense for the year ended December 31, 1996 decreased by
$179,535, or 19%, as compared to the same period in 1995.  This decrease is
primarily due to the sale of J.C. Penney.

The Partnership's share of property operating expenses for the year ended
December 31, 1996 decreased by $179,985, or 37%, as compared to the same
period in 1995.  This decrease is primarily due to decreases in the
Partnership's share of operating expenses at the Carnegie Center and Warner
Plaza properties partially offset by Partnership's share of property
operating expenses at the 1300 North Dutton Avenue property.

                                    22
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of Operations (continued)
---------------------------------
Property operating expenses at the Carnegie Center property decreased by
51% as compared to 1995.  The property incurred approximately $25,000 and
$87,000 of non-recurring maintenance and repair expenses during 1996 and
1995, respectively.  Excluding these amounts, the Partnership's share of
property operating expenses at Carnegie Center decreased by 39%, as a
result of an increase in average occupancy at the property and, therefore,
an increase in tenant reimbursements for such expenses.

The Partnership's share of property operating expenses decreased at the
Warner Plaza property by 57% in 1996 as compared to 1995.  The property
incurred approximately $21,000 and $54,000 of non-recurring maintenance and
repair expenses during 1996 and 1995, respectively.  Excluding these
amounts, the Partnership's share of property operating expenses at Warner
Plaza decreased by 53% in 1996 as compared to 1995.  This decrease
primarily resulted because the accrual of tenant reimbursements due for
1995 and payable in 1996 was understated.  Therefore, when the actual 1995
reimbursements were collected in 1996, it had the effect of reducing the
Partnership's share of property operating expenses in 1996.

The Partnership's share of property operating expenses at the Crossroads
Square property was consistent between periods.  The property incurred
approximately $20,000 and $22,000 of non-recurring maintenance and repair
expenses during 1996 and 1995, respectively.

The Partnership's share of property operating expenses at the 1300 North
Dutton Avenue property increased by 7% in 1996 as compared to 1995
primarily due to the fact that the property was unoccupied during 1995 and
only minor routine maintenance and repair expenses were incurred during
that time.  A new tenant took occupancy of the property in October 1996.

General and administrative expenses for the year ended December 31, 1996
increased by $123,770, or 52%, primarily due to legal fees incurred by the
Partnership in connection with the class action complaint filed against the
Partnership during February 1996.  (For further information regarding the
class action complaint, see Item 3-Legal Proceedings).  Excluding this
amount, general and administrative expenses increased by 6% between years.
This increase is primarily due an increase in the time required to be
expended by the General Partner in connection with its efforts to secure a
tenant at the 1300 North Dutton Avenue property and to secure new leases at
the Marlboro Square and Carnegie Center properties.

Amortization of deferred expenses for the year ended December 31, 1996
increased by $75,970, or 57%, as compared to 1995 primarily due to the
amortization of lease acquisition costs related to leasing activity which
occurred at the Partnership's properties during both 1996 and 1995.

Management fee expense, which is equal to 3.5% of Cash from Operations,
decreased by $7,320, or 9%, during 1996 as compared to 1995.  This decrease
was due to a decline in Cash from Operations between periods primarily
resulting from the sale of J.C. Penney.

                                    23
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of Operations (continued)
---------------------------------
As referred to above, during 1996, the General Partner determined that the
values of the Carnegie Center and Marlboro Square Shopping Center
properties had been impaired.  As a result, the Partnership reduced the
carrying amount of the Carnegie Center and Marlboro Square properties by
$1,247,093 and $660,000, respectively, and these amounts were charged
directly to operations.

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>
                                                          Years Ended December 31,
                                           1997         1996        1995         1994         1993
                                          --------    --------     --------    --------     --------
<S>                                        <C>          <C>         <C>          <C>          <C>
Net cash provided by
 operating activities (a)               $2,066,766  $2,239,462   $2,431,249  $3,118,434   $2,853,183
Net change in operating assets
 and liabilities (a)                        45,830   (201,460)       77,507       7,210       17,432
                                        ----------  ----------   ----------  ----------   ----------
Cash provided by operations (a)          2,112,596   2,038,002    2,508,756   3,125,644    2,870,615
Increase in working capital reserves      (39,893)           -    (194,438)   (811,326)    (324,865)
Add:    Accrual basis Partnership
       management fee                       75,176      76,619       83,939      83,939       89,101
                                        ----------  ----------   ----------  ----------   ----------
Cash from operations (b)                 2,147,879   2,114,621    2,398,257   2,398,257    2,634,851
Decrease in working capital reserves             -      74,507            -           -            -
Less:  Accrual basis Partnership
      management fee                      (75,176)    (76,619)     (83,939)    (83,939)     (89,101)
                                        ----------  ----------   ----------  ----------   ----------
Distributable cash from                 $2,072,703  $2,112,509   $2,314,318  $2,314,318   $2,545,750
  operations (b)                        ==========  ==========   ==========  ==========   ==========


Allocation to General Partner              $20,727     $21,125      $23,143     $23,143      $25,458
Allocation to John Hancock
 Limited Partner                                 -           -            -           -            -
Allocation to Investors                  2,051,976   2,091,384    2,291,175   2,291,175    2,520,292
                                         ---------   ---------    ---------   ---------    ---------
Distributable cash from operations (b)  $2,072,703  $2,112,509   $2,314,318  $2,314,318   $2,545,750
                                        ==========  ==========   ==========  ==========   ==========
</TABLE>





                                    24
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Cash Flow (continued)
----------
(a)  Net cash provided by operating activities, net change in operating
     assets and liabilities, and cash provided by operations are as
     calculated in the Statements of Cash Flows included in Item 8 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.

On February 13, 1998, the Partnership made a cash distribution from
Distributable Cash from Operations to the Investors in the amount of
$504,059.  This amount represents a 5% annualized return on Investors'
remaining Invested Capital.  The General Partner anticipates that the
Partnership's Cash from Operations will be sufficient to make cash
distributions in 1998 comparable to those made in 1997.

Item 8 - Financial Statements and Supplementary Data

The response to this Item appears beginning on page F-1 of this Report.

Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

No events requiring disclosure under this Item have occurred.

                                 Part III

Item 10 - Directors and Executive Officers of the Partnership

(a-b)  Identification of Directors and Executive Officers

By virtue of its organization as a limited partnership, the Partnership has
no directors or executive officers.  As indicated in Item 1 of this Report,
the General Partner of the Partnership is John Hancock Realty Equities,
Inc., a Delaware corporation.  Pursuant to the terms of the Partnership
Agreement, the General Partner is solely responsible for the management of
the Partnership's business.  The names and ages of the directors and
executive officers of the General Partner are as follows:

         Name                        Title                           Age
        -----                        -----                           ----
 William M. Fitzgerald     President and Director                       54
 Malcolm G. Pittman, III   Director                                     46
 Susan M. Shephard         Director                                     45
 Richard E. Frank          Treasurer (Chief Accounting Officer)         36

The term of office and other positions held by the persons listed above
appear in paragraph (e) below.


                                    25
<PAGE>
Item 10 - Directors and Executive Officers of the Partnership (continued)

(c)  Identification of certain significant persons

The General Partner is responsible for the identification, analysis,
purchase, operation, and disposal of specific Partnership real estate
investments.  The General Partner has established a Real Estate Investment
Committee utilizing senior real estate personnel of John Hancock and its
Affiliates (defined in the Partnership Agreement) to review each proposed
investment.  The members of the Real Estate Investment Committee are
designated each year at the annual meeting of the Board of Directors of
John Hancock Realty Equities, Inc.  The current members of the committee
are as follows:

         Name                        Title                           Age
        -----                        -----                           ----

 Edward P. Dowd            Senior Vice President of                      55
                           John Hancock's Real Estate
                           Investment Group

 Kevin McGuire             Vice President of John Hancock's              51
                           Real Estate Investment Group,
                           President of John Hancock Realty
                           Services Corp. and subsidiaries

 Stephen Kindl             Senior Investment Officer of                  40
                           John Hancock's Real Estate
                           Investment Group, Assistant Vice
                           President of John Hancock Realty
                           Equities, Inc.

(d)  Family relationships

There exist no family relationships among any of the foregoing directors or
officers of the General Partner.

(e)  Business experience

William M. Fitzgerald (age 54) joined John Hancock in 1968.  He has been
President and a Director of the General Partner, and a Senior Investment
Officer of John Hancock, since June 1993 and a Managing Director of Hancock
Realty Investors Incorporated since November 1991.  His term as a Director
of the General Partner expires in May 1998.  From 1987 to 1991, Mr.
Fitzgerald was a Senior Vice President of John Hancock Properties, Inc.
Prior to that time, he held a number of positions including Senior Real
Estate Management Officer and Real Estate Management Officer of John
Hancock.  He holds an M.B.A. from Boston University and an A.B. from Boston
College.







                                    26

<PAGE>
Item 10 - Directors and Executive Officers of the Partnership (continued)

e)   Business experience (continued)

Malcolm G. Pittman III (age 46) joined John Hancock in 1986 as an Assistant
Counsel.  He has been a Director of the General Partner since November
1991.  His term as a Director of the General Partner expires in May 1998.
Mr. Pittman has been a Counsel of John Hancock's Real Estate Law Division
since 1993.  From 1989 to 1993, he was an Associate Counsel of John
Hancock.  He holds a J.D. from Yale Law School and a B.A. from Oberlin
College.

Susan M. Shephard (age 45) joined John Hancock in 1985 as an Attorney.  She
has been a Director of the General Partner since November 1991.  Her term
as a Director of the General Partner expires in May 1998.  Ms. Shephard has
been a Mortgage Investment Officer of John Hancock since 1991.  From 1988
to 1991, she was an Associate Counsel of John Hancock and from 1987 to
1988, she was an Assistant Counsel of John Hancock.  She holds a J.D. from
Georgetown University Law Center and a B.A. from the University of Rhode
Island.

Richard E. Frank (age 36) joined John Hancock in 1983.  He has been
Treasurer of the General Partner since June 1993.  Mr. Frank has been an
Associate Investment Officer of John Hancock since January 1995.  From 1993
to 1995, he was a Senior Financial Administrator of John Hancock; from 1991
to 1993, he was an Associate of Hancock Realty Investors, Incorporated;
from 1990 to 1991 he held the position of Assistant Treasurer of John
Hancock Realty Services Corp.  He holds a B.S. from Stonehill College.

Edward P. Dowd (age 55) joined John Hancock in 1970.  He has been a
Director of Hancock Realty Investors, Incorporated since 1991, and a
Director of John Hancock Realty Services Corp. and subsidiaries and John
Hancock Property Investors Corp. since 1987.  Mr. Dowd has been a Senior
Vice President of John Hancock since 1991.  From 1989 to 1990, he was a
Vice President of John Hancock and from 1986 to 1989, he was a Second Vice
President of John Hancock.  Prior to that time, he held a number of
positions including Senior Real Estate Investment Officer and Real Estate
Investment Officer of John Hancock.  From July 1982 to May 1986, Mr. Dowd
was President of the General Partner.  He holds an A.B. from Boston
College.

Kevin McGuire (age 51) joined John Hancock in 1968.  He has been a Vice
President of John Hancock since June 1993 and President of John Hancock
Realty Services Corp. and subsidiaries since July 1993.  He has been a
Managing Director and a Director of Hancock Realty Investors Incorporated
since 1991, and a Director of John Hancock Property Investors Corp. since
1987.  Mr. McGuire served as an interim basis President of the General
Partner from May 1991 to November 1991 and was President of John Hancock
Properties, Inc. from 1987 to 1991.  Prior to that time, he held a number
of positions including Second Vice President, Senior Real Estate Investment
Officer and Real Estate Investment Officer of John Hancock.  He holds an
M.B.A. from Babson College and an A.B. from Boston College.

Stephen Kindl (age 40), joined John Hancock in 1995 as a Senior Real Estate
Investment Officer.  Prior to joining John Hancock, he held a number of
positions with Aetna Real Estate Investment, Inc., including Managing
Director and Director.  He holds an M.B.A. from the University of Hartford
and a B.S. from the University of Connecticut.

                                     27
<PAGE>
Item 10 - Directors and Executive Officers of the Partnership (continued)

(f)  Involvement in certain legal proceedings

None

Compliance with Section 16(a) of the Exchange Act

Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
General Partner's directors and executive officers, as well as any person
holding more than ten percent of the Units, are required to report their
initial ownership of Units and any subsequent change in such ownership to
the Securities and Exchange Commission and the Partnership (such
requirements hereinafter referred to as "Section 16(a) filing
requirements").  Specific time deadlines for Section 16(a) filing
requirements have been established.

To the Partnership's knowledge, no officer or director of the General
Partner has or had an ownership interest in the Partnership at any time
during the 1996 fiscal year or as of the date hereof.  In addition, to the
Partnership's knowledge, the Commonwealth of Massachusetts Pension Reserve
Investment Trust Fund, the greater than ten percent holder of the Units,
was not required to file any reports relating to Section 16(a) filing
requirements during the 1997 fiscal year.

Item 11 - Executive Compensation

None of the officers or directors of the General Partner or any of the Real
Estate Investment Committee members referred to in Item 10(c) receive any
current or proposed direct remuneration from the Partnership in their
capacities as officers, directors or Real Estate Investment Committee
members, pursuant to any standard arrangements or otherwise, nor is any
such remuneration currently proposed.  In addition, the Partnership has not
given and does not propose to give any options, warrants or rights,
including stock appreciation rights, to any such persons in such
capacities.  No long-term incentive plan exists with any such persons in
such capacities and no remuneration plan or arrangement exists with any
such persons resulting from resignation, retirement or any other
termination.  Therefore, tables relating to these topics have been omitted.

Compensation Committee Interlocks and Insider Participation:

The Partnership did not have a Compensation Committee in 1997 and does not
currently have such a committee.  During the 1997 fiscal year, no current
or former officer or employee of the General Partner or its Affiliates
participated in deliberations regarding the General Partner's or its
Affiliates' compensation as it relates to the Partnership.









                                    28
<PAGE>
Item 12 - Security Ownership of Certain Beneficial Owners and Management

(a)  Security ownership of certain beneficial owners

   No person or group, including the General Partner, is known by the
   General Partner to own beneficially more than 5% of the Partnership's
   91,647 outstanding Units as of December 31, 1997, except as follows:

    Title                                       Amount and          Percent
      of              Name and Address          Nature of              of
    Class           of Beneficial Owner    Beneficial Ownership      Class
    ------          ------------------     --------------------      ------
     Units of         The Commonwealth of      10,000 Units          10.91%
     Investor         Massachusetts Pension    owned directly
     Limited          Reserve Investment
     Partnership      Trust Fund
     Interests        125 Summer Street,
                      10th Floor
                      Boston, MA

(b)  Security ownership of management

     By virtue of its organization as a Limited Partnership, the
     Partnership has no officers or directors.  Neither the General Partner
     nor any officer or director of the General Partner possesses the right
     to acquire a beneficial ownership of Units.

(c)  Changes in control

     The Partnership does not know of any arrangements the operations of
     which may at a subsequent date result in a change of control of the
     Partnership.

Item 13 - Certain Relationships and Related Transactions

See Note 6 of the Notes to the Financial Statements included in Item 8 of
this Report for a description of certain transactions and related amounts
paid by the Partnership to the General Partner and its Affiliates (as
defined in the Partnership Agreement) during the years ended 1997, 1996 and
1995.

In accordance with the terms of the Partnership Agreement, the General
Partner and/or its Affiliates are entitled to the following types of
compensation, fees, profits/(losses), expense reimbursements and
distributions:

The General Partner shall receive a Partnership Management Fee (defined in
the Partnership Agreement) for managing the normal operations of the
Partnership in an amount equal to 3.5% of cash flow from operations.  The
General Partner was paid a Partnership Management Fee totaling $75,176,
$76,619 and $83,939 during the years ended December 31, 1997, 1996 and
1995, respectively.





                                    29

<PAGE>
Item 13 - Certain Relationships and Related Transactions (continued)

An Affiliate of the General Partner is entitled to receive a Property
Management Fee (defined in the Partnership Agreement) for providing
property management services to the Partnership's properties.  The
Partnership is obligated to pay a fee equal to the amount customarily
charged in arms-length transactions by other entities rendering services in
an area where the Partnership's properties are located, but in no event may
such fees exceed 6% of the gross receipts of any property under management.
To date, no Affiliate of the General Partner has provided property
management services to the Partnership's properties; therefore, the
Partnership did not pay any such fees during the years ended December 31,
1997, 1996 or 1995.

The General Partner and its Affiliates are entitled to receive
reimbursement for expenses relating to the administrative services
necessary to the prudent operation of the Partnership, such as legal,
accounting, computer, transfer agent and other services.  The amounts
charged to the Partnership for such administrative services may not exceed
the lesser of the General Partner's or such Affiliates' costs or 90% of
those which the Partnership would be required to pay to independent parties
for comparable services in the same or comparable geographic locations.
The Partnership reimbursed the General Partner for $252,103, $171,710 and
$151,675 of such expenses during the years ended December 31, 1997, 1996
and 1995, respectively.

Upon disposition of any property, the General Partner is entitled to a
Subordinated Disposition Fee (defined in the Partnership Agreement) in the
amount of 3% of the sales price of each property sold.  However, no such
Subordinated Disposition Fees may be paid to the General Partner unless and
until the Investors and the John Hancock Limited Partner have received a
return of their total Invested Capital (defined in the Partnership
Agreement) plus the Cumulative Return on Investment (defined in the
Partnership Agreement) of 12% per annum for all fiscal years ended prior to
the date of payment.  Such Subordinated Disposition Fees may not exceed 50%
of the competitive real estate commission in the area where the property is
located or, together with any other brokerage commission payable to or by
any other person, exceed 6% of the contract sales price of such property.
The Partnership did not pay any such fees to the General Partner during the
years ended December 31, 1997, 1996 or 1995.

A share of the Partnership's Distributable Cash from Operations (defined in
the Partnership Agreement) may be distributed to the General Partner and
the John Hancock Limited Partner.  Distributable Cash from Operations is
distributable 1% to the General Partner and the remaining 99% among the
Investors, the General Partner and the John Hancock Limited Partner, in
accordance with Section 8 of the Partnership Agreement (described more
fully in Note 3 to the Financial Statements included in Item 8 of this
Report).  The General Partner's Share of Distributable Cash from Operations
was $20,727, $21,125 and $23,143 for the years ended December 31, 1997,
1996 and 1995, respectively.  In accordance with the Partnership Agreement,
the John Hancock Limited Partner was not entitled to receive any such
distributions during the 1997, 1996 and 1995 fiscal years.



                                    30
<PAGE>
Item 13 - Certain Relationships and Related Transactions (continued)

A share of Cash from Sales or Financings (defined in the Partnership
Agreement) may be distributable to the General Partner and the John Hancock
Limited Partner.  Cash from Sales or Financings are distributable in
accordance with Section 8 of the Partnership Agreement (described more
fully in Note 3 to the Financial Statements included in Item 8 of this
Report).  The John Hancock Limited Partner's share of Cash from Sales or
Financings was $293,270, $0 and $733,176 during the years ended December
31, 1997, 1996 and 1995, respectively.  In accordance with the Partnership
Agreement, the General Partner was not entitled to receive any such
distributions during the years ended 1997, 1996 or 1995.

A share of the Partnership's profits or losses for tax purposes (defined in
the Partnership Agreement) is allocable to the General Partner and the John
Hancock Limited Partner.  Such allocation generally approximates, insofar
as practicable, their percentage share of Distributable Cash from
Operations and of Cash from Sales or Financings.  The General Partner is
generally allocated 1% of the Partnership's losses for tax purposes, while
the John Hancock Limited Partner is allocated tax losses associated with
the Partnership's sales commissions funded by the John Hancock Limited
Partner's Capital Contributions.  The General Partner's share of such
profits or losses were profits of $11,680, $11,303 and $14,802 during the
years ended December 31, 1997, 1996 and 1995, respectively.  The John
Hancock Limited Partner's share of such profits or losses were losses of
$65,297, $48,573 and $74,321 during the years ended December 31, 1997, 1996
and 1995 respectively.

The following table reflects compensation, fees, profits/(losses), expense
reimbursements or distributions from the Partnership to the General Partner
and/or its Affiliates:

                                              Years Ended December 31,
                                             1997       1996        1995
                                            -----      -----       -----
  Partnership management
    fee expense                            $75,176    $76,619    $83,939
  Reimbursement for operating
    expenses                               252,103    171,710    151,675
  General Partner's share of
    Distributable Cash from Operations      20,727     21,125     23,143
  John Hancock Limited Partner's share
    of Cash from Sales or Financings       293,270          -    733,176
  General Partner's share of profits
    for tax purposes                        11,680     11,303     14,802
  John Hancock Limited Partner's share
    of losses for tax purposes            (65,297)   (48,573)   (74,321)


The Partnership provides indemnification to the General Partner and its
Affiliates for acts or omissions of the General Partner or its Affiliates
performed in good faith on behalf of the Partnership, subject to certain
specified exceptions, as described in the following paragraph.



                                    31
<PAGE>
Item 13 - Certain Relationships and Related Transactions (continued)

The Partnership Agreement provides that General Partner and its Affiliates
performing services on behalf of the Partnership shall be entitled to
indemnity from the Partnership for any loss, damage, or claim by reason of
any act performed or omitted to be performed by the General Partner in good
faith on behalf of the Partnership and in a manner within the scope of the
authority granted to the General Partner by the Partnership Agreement and
in the best interest of the Partnership, except that they shall not be
entitled to be indemnified in respect of any loss, damage, or claim
incurred by reason of fraud, negligence, misconduct, or breach of fiduciary
duty.  Any indemnity shall be provided out of and to the extent of
Partnership assets only.  The Partnership shall not advance any funds to
the General Partner or its Affiliates for legal expenses and other costs
incurred as a result of any legal action initiated against the General
Partner or its Affiliates by a Limited Partner in the Partnership, except
under certain specified circumstances.

The General Partner believes that this indemnification applies to costs
incurred in the class action complaint described in Item 3 of Part I of
this Report.  Accordingly, the Partnership indemnified the General Partner
and its Affiliates for costs of $54,092, $41,475, and $0 relating to the
class action complaint in the years ended December 31, 1997, 1996 and 1995,
respectively.

                                 Part IV

Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  (1) and (2) -  Listed on Index to Financial Statements and Financial
Statement Schedules.
     (3)       - Listing of Exhibits

Exhibit Number                                  Page Number or
   Under                                       Incorporation by
Regulation S-K     Description                    Reference
--------------     -----------                    ---------
  4         Instruments defining the rights
            of security holders

     4.1    Amended Agreement of Limited          Exhibit A to the
            Partnership*                          final Prospectus
                                                  dated September 4, 1986
                                                  filed under the
                                                  Partnership's Form S-11
                                                  Registration Statement
                                                  (File 33-6451)

     4.2    The Seventeenth Amendment and         Exhibit 4.2 to the
            Restatement of Certificate of         Partnership's Report
            Limited Partnership filed with        on Form 10-K dated
            the Massachusetts Secretary of        December 31, 1987
            State on September 15, 1987*          (File 0-15680)



                                    32

<PAGE>
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)

10          Material contracts and other documents

     10.1   Form of Escrow Agreement*             Exhibit 10.1 to
                                                  the Partnership's
                                                  Form S-11
                                                  Registration Statement
                                                  (File 33-6451)

     10.2   Letter from John Hancock              Exhibit 10.1 to
            Subsidiaries, Inc. containing         the Partnership's
            undertaking as to the net             Form S-11
            worth of the General Partner*         Registration Statement
                                                  (File 33-6451)

     10.3   Documents relating to
            1300 North Dutton Avenue

       (a)  Agreement of Purchase and Sale        Exhibit 10.3(a) to
            dated September 30, 1986, and         the Post-Effective
            First Amendment to Agreement of       Amendment No. 1 to
            Purchase and Sale dated               the Partnership's
            October 22, 1986, between             Form S-11
            Park Campus Associates and            Registration Statement
            John Hancock Realty Income Fund       (File 33-6451)
            Limited Partnership*

       (b)  Lease dated June 12, 1986, and        Exhibit 10.3(b) to
            First Amendment to Lease dated        the Post-Effective
            June 12, 1986, between                Amendment No. 1 to
            Park Campus Associates and            the Partnership's
            Mag Media Ltd.*                       Form S-11
                                                  Registration Statement
                                                  (File 33-6451)

       (c)  Amended and Restated Statements       Exhibit 10.3(c) to
            of Development Policy and             the Post-Effective
            Declarations of Restrictions of       Amendment No. 1 to
            Santa Rosa Business Park dated        the Partnership's
            June 5, 1986*                         Form S-11
                                                  Registration Statement
                                                  (File 33-6451)

       (d)  Declaration of Covenants,             Exhibit 10.3(d) to
            Conditions and Restrictions of        the Post-Effective
            Park Campus dated October 2,          Amendment No. 1 to
            1986*                                 the Partnership's
                                                  Form S-11
                                                  Registration Statement
                                                  (File 33-6451)




                                    33
<PAGE>
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
       (e)  Purchase and Sale Agreement           Exhibit 1 to the
            between John Hancock Realty           Partnership's Report
            Income Fund Limited Partnership       on Form 8-K dated
            and GHB Holdings, Inc. dated          September 29, 1997
            June 18, 1997                         (File 0-15680)

     10.4   Documents relating to
            Marlboro Square Shopping Center

       (a)  Agreement of Purchase and Sale        Exhibit 10.4(a) to
            dated January 17, 1987, between       the Post-Effective
            Marlborough GLR Realty Trust          Amendment No. 2 to the
            and John Hancock Realty Equities,     Partnership's Form S-11
            Inc.*                                 Registration Statement
                                                  (File 33-6451)

     10.5   Documents relating to
            Crossroads Square Shopping Center

       (a)  Agreement of Purchase and Sale        Exhibit 1 to the
            dated November 20, 1987, between      Partnership's
            Crossroads Square Limited             Report on
            Partnership and John Hancock          Form 8-K dated
            Realty Income Fund Limited            December 8, 1987
            Partnership*                          (File 0-15680)

       (b)  Limited Warranty Deed dated           Exhibit 2 to the
            November 20, 1987, relating           Partnership's
            to Crossroads Square Shopping         Report on
            Center*                               Form 8-K dated
                                                  December 8, 1987
                                                  (File 0-15680)

       (c)  Master Lease Agreement                Exhibit 3 to the
            dated November 18, 1987,              Partnership's
            relating to Crossroads Square         Report on
            Shopping Center*                      Form 8-K dated
                                                  December 8, 1987
                                                  (File 0-15680)

     10.6   Documents relating to Carnegie
            Center Office/Warehouse

       (a)  Agreement of Purchase and Sale        Exhibit 1 to the
            between Carnegie Properties           Partnership's
            Partnership, Carnegie Properties      Report on
            Partnership II and John Hancock       Form 8-K dated
            Realty Income Fund Limited            January 22, 1988
            Partnership*                          (File 0-15680)

       (b)  General Warranty Deed dated           Exhibit 2 to the
            December 22, 1987, between            Partnership's
            Carnegie Properties Partnership       Report on
            and John Hancock Realty Income        Form 8-K dated
            Fund Limited Partnership*             January 22, 1988
                                                  (File 0-15680)
                                    34
<PAGE>
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)

       (c)  General Warranty Deed dated           Exhibit 3 to the
            December 22, 1987, between            Partnership's
            Carnegie Properties Partnership       Report on
            II and John Hancock Realty Income     Form 8-K dated
            Fund Limited Partnership*             January 22, 1988
                                                  (File 0-15680)

     10.7   Documents relating to Warner
            Plaza Shopping Center


       (a)  Agreement of Purchase and Sale        Exhibit 1 to the
            between First Republic bank           Partnership's
            Dallas, N.A., and John Hancock        Report on
            Realty Income Fund Limited            Form 8-K dated
            Partnership*                          March 17, 1988
                                                  (File 0-15680)

       (b)  Special Warranty Deed dated           Exhibit 2 to the
            February 24, 1988, between            Partnership's
            First Republic bank, Dallas,          Report on
            N.A., and John Hancock                Form 8-K dated
            Realty Income Fund Limited            March 17, 1988
            Partnership*                          (File 0-15680)

     10.8   Documents relating to
            J.C. Penney Credit Operations
            Center

       (a)  Agreement of Purchase and Sale        Exhibit 1 to the
            between Noro-Rocky Mountains          Partnership's
            B.V., a Netherlands Corporation,      Report on
            and John Hancock Realty Income        Form 8-K dated
            Fund Limited Partnership*             November 17, 1988
                                                  (File 0-15680)

       (b)  Warranty and Guaranty dated           Exhibit 2 to the
            August 18, 1988, between              Partnership's
            Noro-Rocky Mountains                  Report on
            B.V., a Netherlands Corporation,      Form 8-K dated
            and John Hancock Realty Income        November 17, 1988
            Fund Limited Partnership*             (File 0-15680)

       (c)  Purchase and Sale Agreement           Exhibit 1 to the
            between John Hancock Realty           Partnership's Report
            Income Fund Limited Partnership       on Form 8-K dated
            and 4580 Paradise Blvd.               December 29, 1995
            Associates Limited Partnership        (File 0-15680)
            dated November 20, 1995*




                                    35
<PAGE>
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)

10.9        Documents relating to
            Management Agreement

       (a)  Management Agreement dated            Exhibit 10.9(a) to the
            January 1, 1992, between              Partnership's Report on
            Hancock Realty Investors              Form 10-K dated
            Incorporated and John Hancock         December 31, 1992
            Realty Equities, Inc.*                (File 0-15680)

       (b)  Agreement Concerning Subcontracting    Exhibit 10.9(b) to the
            of Management Services Pertaining to   Partnership's Report on
            John Hancock Realty Income Fund        Form 10-K dated
            Limited Partnership dated May 28, 1993 December 31, 1993
            between John Hancock Realty Equities,  (File 0-15680)
            Inc., Hancock Realty Investors,
            Incorporated and John Hancock Mutual
            Life Insurance Company*


     10.10  Documents relating to Executive
            Compensation Plans and Arrangements

       (a)  Amended Agreement of                  Exhibit A to the Final
            Limited Partnership*                  Prospectus dated
                                                  September 4, 1986
                                                  filed under the
                                                  Partnership's Form S-11,
                                                  Registration Statement
                                                 (File 33-6451)

(b)   No reports on Form 8-K were filed during the quarter ended December
      31, 1997.

(c)   Exhibits - See Item 14 (a) (3) of this Report.

(d)   Financial Statement Schedules - The response to this portion of Item
      14 is submitted as a separate section of this     Report commencing
      on Page F-17.


  -----------------------
  +Filed herewith
  *Incorporated by reference



















36
<PAGE>

                                SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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
31st day of March, 1998.


                              JOHN HANCOCK REALTY INCOME FUND
                              LIMITED PARTNERSHIP

                              By:  John Hancock Realty Equities, Inc.
                                   General Partner

                              By:  WILLIAM M. FITZGERALD
                                   --------------------------------
                                   William M. Fitzgerald, President


Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 31st day of March, 1998.


   Signatures                         Title
  -----------                         ------

                               President (Principal Executive Officer) and
                               Director of John Hancock Realty Equities,
   WILLIAM M. FITZGERALD       Inc. (General Partner of Registrant)
   ---------------------
   William M. Fitzgerald


                               Treasurer (Chief Accounting Officer) of
                               John Hancock Realty Equities, Inc.
  RICHARD E. FRANK             (General Partner of Registrant)
   ---------------------
  Richard E. Frank



                               Director of John Hancock Realty Equities,
  MALCOLM G. PITTMAN           Inc. (General Partner of Registrant)
   ---------------------
  Malcolm G. Pittman, III



                               Director of John Hancock Realty Equities,
  SUSAN M. SHEPHARD            Inc. (General Partner of Registrant)
   ---------------------
  Susan M. Shephard


                                    37
<PAGE>














                        ANNUAL REPORT ON FORM 10-K



               ITEM 8, ITEM 14 (a) (1) AND (2), (c) AND (d)



               FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



     INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES



                      FINANCIAL STATEMENT SCHEDULES



                       YEAR ENDED DECEMBER 31, 1997



           JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP



                          BOSTON, MASSACHUSETTS





<PAGE>


     INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                      (ITEMS 8 AND 14(a)(1) AND (2))



1.   Financial Statements:                                        Page

     Report of Independent Auditors                                   F-3

     Balance Sheets at December 31, 1997 and 1996                     F-4

     Statements of Operations for the Years Ended
     December 31, 1997, 1996 and 1995                                 F-5

     Statements of Partners' Equity for the Years Ended
     December 31, 1997, 1996 and 1995                                 F-6

     Statements of Cash Flows for the Years Ended
     December 31, 1997, 1996 and 1995                                 F-7

     Notes to Financial Statements                                    F-8


2.   Financial Statement Schedules:

     Schedule III:    Real Estate and Accumulated Depreciation       F-17



All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore,
have been omitted.




















                                   F-2

<PAGE>




                      Report of Independent Auditors


To the Partners
John Hancock Realty Income Fund Limited Partnership


We have audited the accompanying balance sheets of John Hancock Realty
Income Fund Limited Partnership (the "Partnership") as of December 31, 1997
and 1996, and the related statements of operations, partners' equity and
cash flows for each of the three years in the period ended December 31,
1997.  Our audits also included the financial statement schedule listed in
the index at Item 14(a).  These financial statements and schedule are the
responsibility of the Partnership's management.  Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of John Hancock Realty
Income Fund Limited Partnership at December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.  Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.




                                   ERNST & YOUNG LLP

Boston, Massachusetts
February 13, 1998








                                   F-3

<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                              BALANCE SHEETS

                                  ASSETS

                                                    December 31,
                                                 1997           1996
                                                -----          -----
Cash and cash equivalents                    $2,502,844     $2,197,847
Restricted cash                                  58,400         59,132
Other assets                                     90,816         78,999

Property held for sale                                -      2,678,599

Deferred expenses, net of accumulated
 amortization of $444,317 in 1997 and
 $361,132 in 1996                               360,166        384,808

Investment in property:

 Land                                         6,198,330      6,198,330
 Buildings and improvements                  17,342,479     17,991,609
                                             ----------     ----------
                                             23,540,809     24,189,939
 Less: accumulated depreciation             (4,787,156)    (4,214,134)
                                             ----------     ----------
                                             18,753,653     19,975,805
                                             ----------     ----------

   Total assets                             $21,765,879    $25,375,190
                                            ===========    ===========


                     LIABILITIES AND PARTNERS' EQUITY

Liabilities:

Accounts payable and accrued expenses          $263,396       $340,087
Accounts payable to affiliates                  150,907        108,961
                                               --------       --------
   Total liabilities                            414,303        449,048

Partners' equity/(deficit):

 General Partner's deficit                    (245,328)      (230,844)
 Limited Partners' equity                    21,596,904     25,156,986
                                             ----------      ---------
   Total partners' equity                    21,351,576     24,926,142
                                             ----------     ----------
   Total liabilities and partners'
     equity                                 $21,765,879    $25,375,190
                                            ===========    ===========

                    See Notes to Financial Statements

                                   F-4
<PAGE>
    JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
          (A Massachusetts Limited Partnership)

                         STATEMENTS OF OPERATIONS


                                               Years Ended December 31,
                                            1997         1996        1995
                                           -----        -----       -----

Income:

  Rental income                         $2,861,166  $2,614,989   $3,065,751
  Interest income                          107,469     171,767      173,286
  Gain/(loss) on sale of property          (5,321)           -      128,539
  Other income                                   -           -       82,008
                                        ----------  ----------   ----------
   Total income                          2,963,314   2,786,756    3,449,584

Expenses:

  Depreciation                             667,869     772,298      951,833
  Property operating expenses              396,136     311,439      491,424
  General and administrative expenses      384,727     360,696      236,926
  Amortization of deferred expenses        134,503     209,726      133,756
  Management fee                            75,176      76,619       83,939
  Property write-downs                     668,520   1,907,093            -
                                         ---------   ---------    ---------
   Total expenses                        2,326,931   3,637,871    1,897,878
                                         ---------   ---------   ----------
   Net income/(loss)                      $636,383  ($851,115)   $1,551,706
                                         =========   =========   ==========

Allocation of net income/(loss):

  General Partner                           $6,364    ($8,511)      $15,517
  John Hancock Limited Partner           (141,179)   (329,810)     (60,357)
  Investors                                771,198   (512,794)    1,596,546
                                          --------   ---------   ----------
                                          $636,383  ($851,115)   $1,551,706
                                         =========   =========   ==========

Net income/(loss) per Unit                  $8.41       ($5.60)     $17.42
                                             =====      ======      =======










                    See Notes to Financial Statements

                                   F-5
<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                      STATEMENTS OF PARTNERS' EQUITY
               Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>

                                                           General      Limited
                                                           Partner      Partners        Total
                                                           --------     --------       -------
<S>                                                          <C>          <C>            <C>
Partners' equity/(deficit) at January 1, 1995
 (91,647 Units outstanding)                              ($193,008)    $34,218,306    $34,025,298


Less:     Cash distributions                               (23,143)    (2,291,175)    (2,314,318)

Add:      Net income                                         15,517      1,536,189      1,551,706
                                                            -------     ----------     ----------

Partners' equity/(deficit) at December 31, 1995
 (91,647 Units outstanding)                               (200,634)     33,463,320     33,262,686

Less:     Cash distributions                               (21,699)    (7,463,730)    (7,485,429)

Add:      Net loss                                          (8,511)      (842,604)      (851,115)
                                                             ------     ----------      ---------

Partners' equity/(deficit) at December 31, 1996
 (91,647 Units outstanding)                               (230,844)     25,156,986     24,926,142

Less:     Cash distributions                               (20,848)    (4,190,101)    (4,210,949)

Add:      Net income                                          6,364        630,019        636,383
                                                            -------     ----------      ---------

Partners' equity/(deficit) at December 31, 1997
 (91,647 Units outstanding)                              ($245,328)    $21,596,904    $21,351,576
                                                           ========    ===========    ===========
</TABLE>











                    See Notes to Financial Statements

                                   F-6
<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                         STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                               1997            1996          1995
                                                              -----           -----         -----
<S>                                                            <C>             <C>           <C>
Operating activities:

Net income/(loss)                                             $636,383     ($851,115)     $1,551,706
 Adjustments to reconcile net (loss)/income to
 Net cash provided by operating activities:

    Amortization of deferred expenses                          134,503        209,726        133,756
    Depreciation                                               667,869        772,298        951,833
    Property write-downs                                       668,520      1,907,093              -
    Loss/(gain) on sale of property                              5,321              -      (128,539)
                                                             ---------      ---------      ---------
                                                             2,112,596      2,038,002      2,508,756
 Changes in operating assets and liabilities:
    Decrease/(increase) in restricted cash                         732        (9,527)        (4,982)
    (Increase)/decrease in other assets                       (11,817)        104,697      (115,342)
    (Decrease)/increase in accounts payable and
      accrued expenses                                        (76,691)         57,689         30,422
    Increase in accounts payable
      to affiliates                                             41,946         48,601         12,395
                                                             ---------      ---------      ---------
    Net cash provided by operating activities                2,066,766      2,239,462      2,431,249

Investing activities:
 Proceeds from sale of property                              2,673,278              -      5,392,032
 Increase in deferred expenses                               (224,098)      (953,606)      (236,542)
                                                             ---------      ---------      ---------
    Net cash (used in)/provided by investing
     activities                                              2,449,180      (953,606)      5,155,490

Financing activities:
 Cash distributed to Partners                              (4,210,949)    (7,485,429)    (2,314,318)
                                                             ---------      ---------      ---------
    Net cash used in financing activities                  (4,210,949)    (7,485,429)    (2,314,318)
                                                             ---------      ---------      ---------
    Net increase/(decrease) in cash and
     cash equivalents                                          304,997    (6,199,573)      5,272,421

    Cash and cash equivalents at
     beginning of year                                       2,197,847      8,397,420      3,124,999
                                                             ---------      ---------      ---------
    Cash and cash equivalents at
     end of year                                            $2,502,844     $2,197,847     $8,397,420
                                                            ==========     ==========     ==========
</TABLE>
                         See Notes to Financial Statements

                                   F-7
<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                      NOTES TO FINANCIAL STATEMENTS

1.   Organization of Partnership
     ---------------------------
     John Hancock Realty Income Fund Limited Partnership (the
     "Partnership") was formed under the Massachusetts Uniform Limited
     Partnership Act on June 12, 1986.  As of December 31, 1997, the
     Partnership consisted of John Hancock Realty Equities, Inc. (the
     "General Partner"), a wholly-owned, indirect subsidiary of John
     Hancock Mutual Life Insurance Company; John Hancock Realty Funding,
     Inc. (the "John Hancock Limited Partner"); and 3,995 Investor Limited
     Partners (the "Investors"), owning 91,647 Units of Investor Limited
     Partnership Interests (the "Units").  The John Hancock Limited Partner
     and the Investors are collectively referred to as the Limited
     Partners.  The initial capital of the Partnership was $2,000,
     representing capital contributions of $1,000 from the General Partner
     and $1,000 from the John Hancock Limited Partner.  The Amended
     Agreement of Limited Partnership of the Partnership (the "Partnership
     Agreement") authorized the issuance of up to 100,000 Units of Limited
     Partnership Interests at $500 per unit.  During the offering period,
     which terminated on September 9, 1987, 91,647 Units were sold and the
     John Hancock Limited Partner made additional capital contributions of
     $7,330,760.  There have been no changes in the number of Units
     outstanding subsequent to the termination of the offering period.

     The Partnership is engaged in the business of acquiring, improving,
     holding for investment and disposing of existing, income-producing,
     commercial and industrial properties on an all-cash basis, free and
     clear of mortgage indebtedness.  Although the Partnership's properties
     were acquired and are held free and clear of mortgage indebtedness,
     the Partnership may incur mortgage indebtedness on its properties
     under certain circumstances, as specified in the Partnership
     Agreement.

     The latest date on which the Partnership is due to terminate is
     December 31, 2016, unless it is sooner terminated in accordance with
     the terms of the Partnership Agreement.  It is expected that in the
     ordinary course of the Partnership's business, the properties of the
     Partnership will be disposed of, and the Partnership terminated,
     before December 31, 2016.

2.   Significant Accounting Policies
     -------------------------------
     The Partnership maintains its accounting records and recognizes rental
     revenue on the accrual basis.

     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.

                                   F-8
<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                NOTES TO FINANCIAL STATEMENTS (continued)

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 and other escrows.

     Property held for sale is recorded at the lower of its carrying
     amount, at the time the property is listed for sale, or its fair
     value, less cost to sell.  Carrying amount includes the property's
     cost, as described below, less accumulated depreciation thereon and
     less any property write-downs for impairment in value and plus any
     related unamortized deferred expenses.

     Investments in property are recorded at cost less any property write-
     downs for permanent impairment in values.  Cost includes the initial
     purchase price of the property plus acquisition and legal fees, other
     miscellaneous acquisition costs, and the cost of significant
     improvements.

     The Partnership measures impairment in value in accordance with
     Financial Accounting Standards Board Statement No. 121, "Accounting
     for the Impairment of Long-Lived Assets to Be Disposed Of" ("Statement
     121").  Statement 121 requires impairment losses to be recorded on
     long-lived assets used in operations where indicators of impairment
     are present and the undiscounted cash flows estimated to be generated
     by those assets are less than the assets' carrying amounts.

     Depreciation has been provided on a straight-line basis over the
     estimated useful lives of the various assets:  thirty years for the
     buildings and five years for related improvements.  Maintenance and
     repairs are charged to operations as incurred.

     Deferred expenses relating to tenant improvements and lease
     commissions are amortized on a straight-line basis over the terms of
     the leases to which they relate.  During 1993, the Partnership reduced
     the period over which its remaining deferred acquisition fees are
     amortized from thirty years, the estimated useful life of the
     buildings owned by the Partnership, to four and one-half years, the
     then estimated remaining life of the Partnership.

     The net income/(loss) per Unit for each year is computed by dividing
     the Investors' share of net income/(loss) by the number of Units
     outstanding during each year.

     No provision for income taxes has been made in the financial
     statements as such taxes are the responsibility of the individual
     partners and not of the Partnership.

     Certain 1996 amounts have been reclassified to be consistent with the
     1997 presentation.

                                   F-9
<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                NOTES TO FINANCIAL STATEMENTS (continued)

3.   The Partnership Agreement
     -------------------------
     Distributable Cash from Operations (defined in the Partnership
     Agreement) is distributed 99% to the Limited Partners and 1% to the
     General Partner.  The Limited Partners' share of Distributable Cash
     from Operations is distributed as follows:  first, to the Investors
     until they receive a 7% non-cumulative, non-compounded annual cash
     return on their Invested Capital (defined in the Partnership
     Agreement); second, to the John Hancock Limited Partner until it
     receives a 7% non-cumulative, non-compounded annual cash return on its
     Invested Capital; and third, to the Investors and the John Hancock
     Limited Partner in proportion to their respective Capital
     Contributions (defined in the Partnership Agreement).  However, any
     Distributable Cash from Operations which is available as a result of
     the reduction of working capital reserves funded by Capital
     Contributions of the Investors will be distributed 100% to the
     Investors.

     Cash from Sales or Financings (defined in the Partnership Agreement)
     is first used to pay all debts and liabilities of the Partnership then
     due and is then used to fund any reserves for contingent liabilities.
     Cash from Sales or Financings is then distributed as follows:  first,
     to the Limited Partners until they receive an amount equal to their
     Invested Capital with the distribution being made between the
     Investors and the John Hancock Limited Partner in proportion to their
     respective Capital Contributions; second, to the Investors until they
     have received, with respect to all previous distributions during the
     year, their Cumulative Return on Investment (defined in the
     Partnership Agreement); third, to the John Hancock Limited Partner
     until it has received, with respect to all previous distributions
     during the year, its Cumulative Return on Investment; fourth, to the
     General Partner to pay any Subordinated Disposition Fees (defined in
     the Partnership Agreement); and fifth, 99% to the Limited Partners and
     1% to the General Partner, with the distribution being made between
     the Investors and the John Hancock Limited Partner in proportion to
     their respective Capital Contributions.

     Cash from the sale of the last of the Partnership's properties is to
     be distributed in the same manner as Cash from Sales or Financings,
     except that before any other distribution is made to the Partners,
     each Partner shall first receive from such cash, an amount equal to
     the then positive balance, if any, in such Partner's Capital Account
     after crediting or charging to such account the profits or losses for
     tax purposes from such sale.  To the extent, if any, that a Partner is
     entitled to receive a distribution of cash based upon a positive
     balance in its capital account prior to such distribution, such
     distribution will be credited against the amount of such cash the
     Partner would have been entitled to receive based upon the manner of
     distribution of Cash from Sales or Financings, as specified in the
     previous paragraph.

                                   F-10
<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                NOTES TO FINANCIAL STATEMENTS (continued)

3.   The Partnership Agreement (continued)
     -------------------------------------
     Profits from the normal operations of the Partnership for each fiscal
     year are allocated to the Limited Partners and General Partner in the
     same amounts as Distributable Cash from Operations for that year.  If
     such profits are less than Distributable Cash from Operations for any
     year, they are allocated in proportion to the amounts of Distributable
     Cash from Operations for that year.  If such profits are greater than
     Distributable Cash from Operations for any year, they are allocated
     99% to the Limited Partners and 1% to the General Partner, with the
     allocation made between the John Hancock Limited Partner and the
     Investors in proportion to their respective Capital Contributions.
     Losses from the normal operations of the Partnership are allocated 99%
     to the Limited Partners and 1% to the General Partner, with the
     allocation made between the John Hancock Limited Partner and the
     Investors in proportion to their respective Capital Contributions.
     Depreciation deductions are allocated 1% to the General Partner and
     99% to the Investors, and not to the John Hancock Limited Partner.

     Profits and Losses from Sales or Financings are generally allocated
     99% to the Limited Partners and 1% to the General Partners.  In
     connection with the sale of the last of the Partnership's properties,
     and therefore the dissolution of the Partnership, profits will be
     allocated to any Partners having a deficit balance in their Capital
     Account in an amount equal to the deficit balance.  Any remaining
     profits will be allocated in the same order as cash from the sale
     would be distributed.

     Neither the General Partner nor any Affiliate (as defined in the
     Partnership Agreement) of the General Partner shall be liable,
     responsible or accountable in damages to any of the Partners or the
     Partnership for any act or omission of the General Partner in good
     faith on behalf of the Partnership within the scope of the authority
     granted to the General Partner by the Partnership Agreement and in the
     best interest of the Partnership, except for acts or omissions
     constituting fraud, negligence, misconduct or breach of fiduciary
     duty.  The General Partner and its Affiliates performing services on
     behalf of the Partnership shall be entitled to indemnity from the
     Partnership for any loss, damage, or claim by reason of any act
     performed or omitted to be performed by the General Partner in good
     faith on behalf of the Partnership and in a manner within the scope of
     the authority granted to the General Partner by the Partnership
     Agreement and in the best interest of the Partnership, except that
     they shall not be entitled to be indemnified in respect of any loss,
     damage, or claim incurred by reason of fraud, negligence, misconduct,
     or breach of fiduciary duty.  Any indemnity shall be provided out of
     and to the extent of Partnership assets only.  The Partnership shall
     not advance any funds to the General Partner or its Affiliates for
     legal expenses and other costs incurred as a result of any legal
     action initiated against the General Partner or its Affiliates by a
     Limited Partner in the Partnership, except under certain specified
     circumstances.
                                   F-11

<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                NOTES TO FINANCIAL STATEMENTS (continued)

4.   Investment in Property
     ----------------------
     Investment in property at cost and reduced by write-downs consists of
     managed, fully-operating, commercial real estate as follows:
                                                       December 31,
                                                   1997           1996
                                                  -----          -----

      Marlboro Square Shopping Center          $1,000,000     $1,649,130
      Crossroads Square Shopping Center        12,266,920     12,266,920
      Carnegie Center Office/Warehouse          3,800,000      3,800,000
      Warner Plaza Shopping Center              6,473,889      6,473,889
                                              -----------    -----------
        Total                                 $23,540,809    $24,189,939
                                              ===========    ===========

     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.

     On September 29, 1997, the Partnership sold the 1300 North Dutton
     Avenue property to a non-affiliated buyer for a net sales price of
     $2,673,278, 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 $5,321, representing
     the difference between the net sales price and the property's carrying
     value of $2,678,599.

     During 1997, the General Partner determined that the estimated future
     undiscounted cash flows from the Marlboro Square Shopping Center
     property were less than the property's carrying value, due, in
     general, to weak real estate market conditions for similar properties
     in the areas where these properties are located.  Accordingly, the
     Partnership wrote-down the carrying amounts of the Marlboro Square
     Shopping Center by $668,520.  This write-downs represents the
     difference between the property's carrying value and its estimated
     fair market value.





                                   F-12
<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                NOTES TO FINANCIAL STATEMENTS (continued)

4.   Investment in Property (continued)
     ----------------------------------
     During 1996, the General Partner determined that the estimated future
     undiscounted cash flows from the Carnegie Center and Marlboro Square
     Shopping Center properties were less than their respective carrying
     amounts, due, in general, to weak real estate market conditions for
     similar properties in the areas where these properties are located.
     Accordingly, the Partnership wrote-down the carrying amounts of the
     Carnegie Center and Marlboro Square Shopping Center by $1,247,093 and
     $660,000, respectively.  These write-downs represent the difference
     between the property's carrying value and its estimated fair market
     value.

     The Partnership leases its properties to non-affiliated tenants under
     primarily long-term operating leases.

     At December 31, 1997, future minimum rentals on non-cancelable leases
     relating to the above properties were as follows:
                           1998       $  2,425,328
                           1999          2,042,549
                           2000          1,827,279
                           2001          1,733,213
                           2002          1,587,618
                           Thereafter    6,431,121
                                       -----------
                            Total      $16,047,108
                                       ===========

5.   Deferred Expenses
  -----------------
     Deferred expenses consist of the following:
<TABLE>
<CAPTION>
                                                                 Unamortized Balance at
                                                                      December 31,
      Description                                                 1997            1996
      -----------                                                 ----            ----
      <S>                                                          <C>             <C>
      $114,494 of acquisition fees paid to the General
      Partner.  This amount was amortized over a period
      of thirty years prior to June 30, 1993.  Subsequent
      to June 30, 1993, the unamortized balance is
      amortized over a period of fifty-four months.                   $0        $21,415

      $446,587 of tenant improvements.  These amounts
      are amortized over the terms of the leases to which
      they relate.                                               221,699        187,716

      $243,402 of lease commissions.  These amounts
      are amortized over the terms of the leases to
      which they relate.                                         138,467        175,677
                                                                --------       --------
                                                                $360,166       $384,808
                                                                ========       ========
</TABLE>
                                   F-13

<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                NOTES TO FINANCIAL STATEMENTS (continued)

6.   Transactions with the General Partner and Affiliates
     ----------------------------------------------------
     Fees and expenses incurred or paid by the General Partner or its
     affiliates on behalf of the Partnership and to which the General
     Partner or its affiliates are entitled to reimbursement from the
     Partnership were as follows:

                                              Years Ended December 31,
                                             1997       1996        1995
                                            -----      -----       -----
      Reimbursement for operating
        expenses                          $252,103   $171,710   $151,675
      Partnership management fee
        expense                             75,176     76,619     83,939
                                          --------   --------   --------
          Total                           $327,279   $248,329   $235,614
                                          ========   ========   ========

     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 good
     faith on behalf of the Partnership, except for acts or omissions
     constituting fraud, negligence, misconduct or breach of fiduciary
     duty.  The General Partner believes that this indemnification applies
     to the class action complaint described in Note 8.  Accordingly,
     included in the Statements of Operations for the years ended December
     31, 1997, 1996, and 1995 were $54,092, $41,475, and $0, respectively,
     representing the  Partnership's share of costs incurred by the General
     Partner and its Affiliates relating to the class action complaint.  As
     of December 31, 1997, the Partnership has incurred a total of $95,567
     as its share of the costs incurred by the General Partner and its
     Affiliates resulting from this matter.

     Accounts payable to affiliates represents amounts due to the General
     Partner or its affiliates for various services provided to the
     Partnership, including amounts to indemnify the General Partner or its
     affiliates for claims incurred by them in connection with their
     actions as General Partner of the Partnership.  All amounts accrued by
     the Partnership to indemnify the General Partner or its affiliates for
     legal fees incurred by them shall not be paid unless or until all
     conditions set forth in the Partnership Agreement for such payment
     have been fulfilled.

     The General Partner serves in a similar capacity for two other
     affiliated real estate limited partnerships.



                                   F-14

<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                NOTES TO FINANCIAL STATEMENTS (continued)

7.   Federal Income Taxes
     --------------------
     A reconciliation of the net (loss)/income reported in the Statements
     of Operations to the net income reported for federal income tax
     purposes is as follows:
<TABLE>
<CAPTION>
                                                                  Years Ended December 31,

                                                             1997           1996           1995
                                                             ----           ----           ----
        <S>                                                  <C>            <C>            <C>
     Net (loss)/income per Statements of
        Operations                                         $636,383     ($851,115)     $1,551,706

     Add/(deduct):  Excess of book gain over tax
                      gain on disposition of assets       (131,409)              -      (260,176)
                    Excess of tax depreciation
                      over book depreciation              (162,002)       (87,266)       (44,106)
                    Excess of book amortization
                      over tax amortization                  44,071         96,919         70,286
                    Other income/(loss)                       2,573              -          3,573
                    Reduction of property carrying
                      value                                 668,520      1,907,093              -
                    Other expenses                          109,854         64,715        158,875
                                                         ----------     ----------     ----------

     Net income for federal income tax purposes          $1,167,990     $1,130,346     $1,480,158
                                                         ==========     ==========     ==========
</TABLE>

     A reconciliation of the Partnership's properties' aggregate cost for
     book and federal income tax purposes is as follows:
<TABLE>
<CAPTION>
                                                                  Years Ended December 31,
                                                             1997           1996           1995
                                                             ----           ----           ----
        <S>                                                  <C>            <C>            <C>
     Aggregate cost, book purposes                      $23,540,809    $24,189,939    $31,605,222

     Add/(deduct):  Costs capitalized for federal income
                      tax purposes, cumulative              460,364        370,204        366,219
                    Book basis property write-downs,
                      cumulative                         11,536,627     10,887,497      6,849,823
                                                        -----------    -----------    -----------
     Aggregate cost, federal income tax purposes        $35,537,800    $35,447,640    $38,821,264
                                                        ===========    ===========    ===========
</TABLE>
                                   F-15

<PAGE>
            JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                   (A Massachusetts Limited Partnership)

                NOTES TO FINANCIAL STATEMENTS (continued)

8.   Contingencies
     -------------
     In February 1996, a putative class action complaint was filed in the
     Superior Court in Essex County, New Jersey by a single investor in a
     limited partnership affiliated with the Partnership.  The complaint
     named as defendants the Partnership, the General Partner, certain
     other Affiliates of the General Partner, and certain unnamed officers,
     directors, employees and agents of the named defendants.  The
     plaintiff sought unspecified damages stemming from alleged
     misrepresentations and omissions in the marketing and offering
     materials associated with the Partnership and two limited partnerships
     affiliated with the Partnership.  On March 18, 1997, the court
     certified a class of investors who were original purchasers in the
     Partnership.

     The Partnership provides indemnification to the General Partner and
     its Affiliates for acts or omissions of the General Partner in good
     faith on behalf of the Partnership, except for acts or omissions
     constituting fraud, negligence, misconduct or breach of fiduciary
     duty.  The General Partner believes that this indemnification applies
     to the class action complaint described above.

     The Partnership has incurred an aggregate of approximately $239,000 in
     legal expenses in connection with the class action lawsuit (see Part
     l, Item 3 of this Report).  Of this amount, approximately $143,000
     relates to the Partnership's own defense and approximately $96,000
     relates to the indemnification of the General Partner and its
     Affiliates for their defense.  These expenses are funded from the
     operations of the Partnership.

     At the present time, the General Partner cannot estimate the aggregate
     amount of legal expenses and indemnification claims to be incurred and
     their impact on the Partnership's Financial Statements, taken as a
     whole.  Accordingly, no provision for any liability which could result
     from the eventual outcome of these matters has been made in the
     accompanying financial statements.  However, while it is still too
     early to estimate potential damages, they could possibly be material.

9.   Subsequent Events
     -----------------
     On February 13, 1998, the Partnership made a cash distribution from
     Distributable Cash from Operations to the Investors in the amount of
     $504,059.









F-16

<PAGE>
<TABLE>
<CAPTION>
                                       JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                                             (A Massachusetts Limited Partnership)

                                                           SCHEDULE III

                                             REAL ESTATE AND ACCUMULATED DEPRECIATION
                                                   Year Ended December 31, 1997

                                                                    Costs
                                                                 Capitalized
                                       Initial Costs to         Subsequent to                   Gross Amount
                                         Partnership             Acquisition        At Which Carried at Close of Period
                                   ----------------------- -----------------------  -----------------------------------
                                               Buildings                                         Buildings
                                                  and                                               and
Description           Encumbrances    Land    Improvements ImprovementsWrite-down (1)    Land   Improvements  Total (2)
-----------           ------------    ----    ------------ --------------------------    ----   ------------  ---------
<S>                       <C>         <C>         <C>          <C>          <C>          <C>        <C>          <C>
Marlboro Square Shopping Center
Marlboro, MA                 -    $1,700,000 $  3,431,725   $121,775   ($4,253,500)    $345,000  $  655,000   $1,000,000

Crossroads Square Shopping Center
Jacksonville, FL             -     3,910,000   10,582,095     74,825    (2,300,000)   3,266,000   9,000,920   12,266,920

Carnegie Center Office/Warehouse
Cincinnati, OH               -       400,000    6,824,894    132,097    (3,556,991)     315,000   3,485,000    3,800,000

Warner Plaza Shopping Center
Chandler, AZ                 -     2,800,000    5,069,990     30,035    (1,426,136)   2,272,330   4,201,559    6,473,889
                            --    ----------  -----------  ---------     ----------  ---------- -----------  -----------
     Total                   -    $8,810,000  $25,908,704   $358,732  ($11,536,627)  $6,198,330 $17,342,479  $23,540,809
                            ==    ==========  ===========   ========     ==========  ========== ===========  ===========

</TABLE>

                                                               F-17
<PAGE>
<TABLE>
<CAPTION>
                                       JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                                             (A Massachusetts Limited Partnership)

                                                     SCHEDULE III (Continued)

                                             REAL ESTATE AND ACCUMULATED DEPRECIATION
                                                   Year Ended December 31, 1997

                                                                                   Life on Which
                                                                                  Depreciation in
                                                                                  Latest Statement
                                  Accumulated           Date of       Date         of Operations
   Description                  Depreciation (5)      Construction  Acquired        is Computed
   -----------                  ----------------      ------------  --------        -----------
<S>                                   <C>                 <C>         <C>               <C>
Marlboro Square Shopping Center
Marlboro, MA                     $        -              1986         2/17/87        30 Years  (3)
                                                                                     15 Years  (4)

Crossroads Square Shopping Center
Jacksonville, FL                  3,168,635              1986         11/20/87       30 Years  (3)

Carnegie Center Office/Warehouse
Cincinnati, OH                      166,282              1986         12/22/87       30 Years  (3)

Warner Plaza Shopping Center
Chandler, AZ                      1,452,239              1985         2/25/88        30 Years  (3)
                                -----------

     Total                       $4,787,156
                                ===========

(1)   These write-downs represent impairment in the values of the properties based upon the General
      Partner's estimates.
      For a further discussion relating to the determination of property write-downs, please see
      "Management's Discussion and Analysis of Financial Condition" included in Item 7 of this
      Report.
</TABLE>

                                                              F-18
<PAGE>
<TABLE>
<CAPTION>
                                        JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
                                               (A Massachusetts Limited Partnership)

                                                      SCHEDULE III (continued)

                                              REAL ESTATE AND ACCUMULATED DEPRECIATION
                                                    Year Ended December 31, 1997


(2)  The Partnership's properties' aggregate cost for federal income tax
     purposes at December 31, 1996 are as follows:

           Property                                  Amount
           --------                                 -------
       Marlboro Square Shopping Center          $5,269,490
       Crossroads Square Shopping Center        14,667,785
       Carnegie Center Office/Warehouse          7,488,123
       Warner Plaza Shopping Center              8,112,401
                                               -----------
          Total                                $35,537,800
                                               ===========

     The Partnership's aggregate cost for federal income tax purposes may
     differ from the aggregate cost for Financial Statement purposes.

(3)  Estimated useful life for buildings
(4)  Estimated useful life for land improvements
(5)  Reconciliation of real estate and accumulated depreciation:


                                                          Years Ended December 31,
                                                   1997             1996           1995
                                                   ----             ----           ----
<S>                                                <C>              <C>            <C>
     Investment in Real Estate
       Balance at beginning of year           $24,189,939       $31,605,222    $38,108,981
       Improvements                                     -                 -              -
       Sale of property                                 -                 -    (6,503,759)
       Property held for sale                           -       (2,835,779)              -
       Reduction of carrying value,
         including leasing costs                (649,130)       (4,579,504)              -
                                              -----------       -----------    -----------
       Balance at end of year                 $23,540,809       $24,189,939    $31,605,222
                                              ===========       ===========    ===========

     Accumulated Depreciation
       Balance at beginning of year            $4,214,134        $7,165,026     $7,453,459
       Sale of property                                 -                 -    (1,240,266)
       Additions charged to costs
         and expenses                             667,869           772,298        951,833
       Property held for sale                           -         (808,904)              -
       Reduction of carrying value               (94,847)       (2,914,286)              -
                                              -----------       -----------    -----------
       Balance at end of year                  $4,787,156        $4,214,134     $7,165,026
                                              ===========       ===========    ===========
</TABLE>
                                                               F-19