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Item 7. Management’s Discussion and Analysis

2026-03-13 compared with 2025-03-14 · 82 added, 102 removed, 287 unchanged (39% of the section changed)

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Forward Looking Statements

Certain information contained herein includes forward looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Liquidation Reform Act of 1995.

Certain information contained herein includes forward looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward looking statements in this report, or which management may make orally or in written form from time to time, reflect management’s good faith belief when those statements are made, and are based on information currently available to management.

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The outstanding stock of The Hamilton Company is controlled by Jameson Brown and Harley Brown.

In the fiscal year ended December 31, 2022, the Partnership took advantage of the low interest rate environment and refinanced fifteen properties, increased their loan balances, and raised approximately $130,000,000.

With interest rates rising, and a threat of an economic slowdown, the Partnership increased the debt level and built cash reserves to acquire additional properties when opportunities became available.

Currently, approximately $84,000,000 of these reserves are invested in short-term US Treasury bills maturing in 6 months or less with interest rates between 4.19% and 5.02%.

Since the Partnership’s long-term goals include the acquisition of additional properties, a portion of the proceeds from the refinancing and sale of properties is reserved for this purpose.

Since the Partnership’s long-term goals include the acquisition of additional properties, a portion of the proceeds from the refinancing and sale of properties were reserved for this purpose.

If available acquisitions do not meet the Partnership’s investment criteria, the Partnership may purchase additional Depositary Receipts.

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The vacancy rate for the Joint Venture properties as of February 1, 2026 was 2.3%, as compared to 1.9% for the same period last year.

The current vacancy rates are in line with those experienced prior to the Covid-19 Pandemic.

Approximately half of the Partnership’s overall vacancy is attributable to Hill Estates, which has several units under renovation, and Mill Street Heights, a new property currently in lease-up.

Residential tenants generally have lease terms of 12 months.

The majority of these leases will mature during the second and third quarters of the year.

Rental activity continues to be strong as we move from 2024 into 2025 and all indications are that we will have low vacancy rates for the foreseeable future.

During the fourth quarter of 2024, rents increased on average 5.7% for renewals and increased on average 0.2% for new leases.

For all of 2024, renewal rents increased approximately 5.8% and increased approximately 4.8% for new leases.

For 2025, management expects the local real estate market to remain stable as we move from the winter into the spring rental season.

As we move from 2025 into 2026, management expects a rental market with slowing rent growth.

During the fourth quarter of 2025, rents increased on average 4.6% for renewals and decreased on average 4.2% for new leases.

For all of 2025, renewal rents increased approximately 5.3% and decreased approximately 0.5% for new leases.

The Partnership purchased a commercial retail property of approximately 20,700 square feet, located at 653 Worcester Road in Framingham, Massachusetts for approximately $10,151,000 on January 18, 2023.

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These amounts are being amortized over 12 and 36 months, respectively.

For the year ending December 31, 2024 consolidated revenue increased by 8.1%, operating expenses decreased by 0.9% and Income before Other Income (Expense) increased by 34.8%.

For the fourth quarter of 2024, consolidated revenue increased by 3.3%, operating expenses decreased by 8.2% and Income before Other Income (Expense) increased by 39.9%, as compared to the fourth quarter of 2023.

On May 30, 2025, the Partnership borrowed $18,664,000 at a fixed interest rate of 5.84%.

Proceeds were used to refinance the existing mortgage on Hamilton Highlands.

Also on May 30, 2025, the Partnership borrowed an additional $40,000,000 at a fixed rate of 5.99%.

Proceeds were subsequently used for the purchase of Hill Estates.

Both advances were made from the existing Master Credit Facility as amended with KeyBank.

On June 18, 2025, the Partnership, through its subsidiaries, purchased a mixed-use property comprising 396 residential units and 3 commercial units in Belmont, Massachusetts for $172,000,000.

Closing costs were approximately $218,000.

Additionally, the Partnership, through its subsidiaries, purchased two commercial properties for $3,000,000 in Belmont, Massachusetts.

The property acquisitions were financed through proceeds from the sale of U.S.

Treasury bills, additional borrowings on the Master Credit Facility of $40,000,000, and proceeds of an interim mortgage loan of $67,500,000.

From the purchase price, the Partnership allocated approximately $4,714,000 for in-place leases, approximately $305,000 to the value of tenant relationships and $1,165,000 to the value of below-market leases.

These amounts are being amortized over 12 and 36 months respectively.

For the year ending December 31, 2025 consolidated revenue increased by 10.8%, operating expenses increased by 22.3% and Income before Other Income (Expense) decreased by 14.3%.

For the fourth quarter of 2025, consolidated revenue increased by 15.7%, operating expenses increased by 44.3% and Income before Other Income (Expense)

decreased by 43.9%, as compared to the fourth quarter of 2024.

Excluding Hill Estates, consolidated revenue increased by 3.1%, operating expenses increased by 4.2% and Income before Other Income (Expense) increased by 0.5%.

On June 16, 2022, the Partnership entered into an amendment to the Facility Agreement.

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The remaining balance of approximately $42,384,000 will be used for general partnership purposes.

On October 14, 2022, the Partnership entered into a loan agreement with Brookline Bank refinancing its loan on 659-665 Worcester Road, Framingham, MA.

The agreement pays down the loan on the existing debt of $5,954,546, extends the maturity until October 14, 2032 at a variable interest rate of the SOFR rate plus 1.7%, interest only for 2 years and amortizing using a thirty-year schedule for the balance of the term.

On October 14, 2022, the Partnership refinanced its loan with Brookline Bank on 659-665 Worcester Road, Framingham, MA.

The loan extended the maturity until October 14, 2032, at a variable interest rate of SOFR rate, plus 1.7% interest only for two years and amortizing using a thirty-year schedule for the balance of the term.

At closing, the Partnership entered into an interest rate swap contract with Brookline Bank with a notional amount equivalent to the underlying loan principal amortization, resulting in a fixed rate of 4.60% through the expiration of the interest rate swap contract.

The agreement also allows for an earn out of up to an additional $1,495,453 once the property performance reaches a 1.35x debt service coverage ratio and the loan to value equates to at most 65%.

On July 31, 2014, the Partnership entered into an agreement for a $25,000,000 revolving line of credit.

The term of the line was for three years with a floating interest rate equal to a base rate of the greater of (a) the Prime Rate (b) the Federal Funds Rate plus one-half of one percent per annum, or (c) the LIBOR Rate for a period of one month plus 1% per annum, plus an applicable margin of 2.5%.

The agreement originally expired on July 31, 2017, and was subsequently extended until October 31, 2020.

The costs associated with the line of credit extension were approximately $128,000.

On October 29, 2021, t he Partnership closed on the modification of its existing line of credit.

The agreement extended the line of credit until October 29, 2024.

The commitment amount was for $25 million but was restricted to $17 million during the modification period.

The modification period was phased out by December 31, 2022.

During this period, the loan covenants were modified from a minimum consolidated debt service ratio of 1.60 to a ratio of 1.35 until September 30, 2022;

from a minimum tangible net worth requirement of $200 million to a net worth of $175 million until September 30, 2022;

from a maximum consolidated leverage ratio of 65% to a ratio of 70% until September 30, 2022 and from a minimum debt yield of 9.5% to a yield of 8.5% until September 30, 2022 and a yield of 9.0% until December 31, 2022.

Once the financial performance of the Partnership met the original covenant tests for the trailing 12-month period, the commitment amount would return to $25 million.

The portfolio’s debt yield fell below the minimum of 9.0% to 8.6%.

Consequently, as of December 31, 2023, the Partnership did not comply with the debt yield financial covenant.

As such, the Partnership was restricted from drawing down any amount from the line of credit until the Partnership met the required financial covenants.

As part of the underlying loan’s earnout provision, on July 10, 2025, the Partnership financed an additional $682,520 at an interest rate of 5.97% that will be conterminous with the existing loan.

On November 21, 2024, the Partnership entered into an agreement for a new $25,000,000 revolving line of credit.

The term of the line is for three years with a floating interest rate equal to a base rate of the SOFR Rate for a period of one month plus the applicable margin of 2.5%.

The loan covenants include a leverage ratio not to exceed 65%, a debt service coverage ratio of not less than 1.5 to 1.0, maximum usage of 1.5 times trailing 12 months EBITDA, minimum liquidity of $15 million, and a minimum debt yield of 8.5%.

The Partnership incurred a commitment fee of $125,000.

The Partnership will be charged annually an unused line fee, equal to seventy-five basis points (0.75%) between the difference of the maximum availability and the outstanding principal of the line of credit.

This fee will be waived for any period in which the Partnership maintains aggregate deposits of twenty million dollars with the Lender.

As of December 31, 2024, the Partnership was in compliance with the financial covenants and did not incur an unused line fee.

As of December 31, 2025, the Partnership was in compliance with the financial covenants.

The Repurchase Program that was initiated in 2007 has purchased 1,559,409 Depositary Receipts through December 31, 2025, or approximately 36% of the outstanding Depositary Receipts.

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In March of 2020, the Board of Advisors and Board of Directors unanimously approved an extension of the Repurchase Program until March 31, 2025.

On March 12, 2025, the Board of Directors unanimously approved a new extension to the Repurchase Program, authorizing the President and Treasurer to cause the Partnership to repurchase, on the open market or otherwise, including through individually negotiated purchases and through a written trading plan that complies with the requirements of Rule 10b5-1, Depository Receipts and Partnership Units such that (i) the aggregate cost of Depository Receipts and Partnership Units repurchased shall not exceed the lesser of $5 million or 10% of the Partnership’s balance of cash and investment in treasury bills, (ii) no Depository Receipts or Partnership Units

shall be repurchased after the date that is 12 months after the effective date of the plan, and (iii) no Depository Receipts or Partnership Units shall be repurchased in excess of $95 per Depository Receipt.

The Repurchase Plan requires the Partnership to repurchase a proportionate number of Class B Units and General Partner Units in connection with any repurchases of any Depositary Receipts by the Partnership based upon the 80%, 19% and 1% fixed distribution percentages of the holders of the Class A, Class B and General Partner Units under the Partnership Agreement.

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The Repurchase Plan shall be made in accordance with the terms of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall be made in accordance with all applicable laws and regulations in effect from time to time.

On March 11, 2026, the General Partner authorized the President and Treasurer to renew the Repurchase Plan for one year.

Management believes that the $25,000,000 line of credit, net cash flow from operations and cash on hand have put the Partnership in position to capitalize on investment opportunities should they reveal themselves in the near future.

As always, management continues to weigh investment alternatives of stock repurchase, new property acquisitions and dispositions when considering its cash balances and performance of the portfolio.

The Partnership has retained the Hamilton Company (“Hamilton”) to manage and administer the Partnership’s and Joint Ventures’ Properties.

The Partnership has retained the Hamilton Company, Inc.

(“Hamilton”) to manage and administer the Partnership’s and Joint Ventures’ Properties.

Hamilton is a full-service real estate management company, which has legal, construction, maintenance, architectural, accounting and administrative departments.

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In 2025, tenant renewals were approximately 73% with an average rental increase of approximately 5.3%.

New leases accounted for approximately 32% with rental rate increases of approximately 4.8%.

New leases accounted for approximately 27% with rental rate decreases of approximately 0.5%.

In 2025, leasing commissions were approximately $914,000 compared to approximately $616,000 in 2024, an increase of approximately $297,000 (48.2%) from 2024.

Tenant concessions were approximately $104,000 in 2024 compared to approximately $68,000 in 2023, an increase of approximately $36,000 (52.9%).

Tenant concessions were approximately $71,000 in 2025 compared to approximately $104,000 in 2024, a decrease of approximately $33,000 (31.7%).

Tenant improvements were approximately $3,901,000 in 2025 compared to approximately $3,579,000 in 2024, an increase of approximately $322,000 (9.0%).

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When assets are identified by management as held for sale, the Partnership discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets.

The Partnership

generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale.

The Partnership generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale.

If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance is established.

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improvements and additions are capitalized.

When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such disposition is included in income.

When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or

loss on such disposition is included in income.

Fully depreciated assets are removed from the accounts.

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The Partnership considers a construction project as substantially completed and held available for occupancy upon the substantial completion of improvements, but no later than one year from cessation of major construction activity.

Investments in Treasury Bills:

Investments in Treasury Bills are recorded at amortized cost and classified as held to maturity as the Partnership has the intent and the ability to hold them until they mature.

The carrying value of the Treasury Bills is adjusted for accretion of discounts over the remaining life of the investment.

Income related to the Treasury Bills is recognized in interest income in the Partnership’s consolidated statement of income.

Intangible assets acquired include amounts for in-place lease values above and below market leases and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant.

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The estimated future undiscounted cash flows are compared to the asset’s carrying value to determine if a write-down to fair value is required.

Investments in Treasury Bills:

Investments in Treasury Bills are recorded at amortized cost and classified as held to maturity as the Partnership has the intent and the ability to hold them until they mature.

The carrying value of the Treasury Bills is adjusted for accretion of discounts over the remaining life of the investment.

Income related to the Treasury Bills is recognized in interest income in the Partnership’s consolidated statement of income.

On an annual basis management assesses whether there are any indicators that the value of the Partnership’s rental properties may be impaired.

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These investments are recorded initially at cost, as Investments in Joint Ventures, and subsequently adjusted for the Partnership’s share in earnings, cash contributions and distributions.

Under the equity method of accounting, our net equity is reflected on the consolidated balance sheets, and our share of net income or loss from the Partnership is included on the consolidated statements of income.

Under the equity method of accounting, our net

equity is reflected on the consolidated balance sheets, and our share of net income or loss from the Partnership is included on the consolidated statements of income.

Generally, the Partnership would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee.

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Years Ended December 31, 2025 and December 31, 2024

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures and other income and loss of approximately $25,371,000 during the year ended December 31, 2024, compared to approximately $18,815,000 for the year ended December 31, 2023, an increase of approximately $6,556,000 (34.8%).

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures and other income and loss of approximately $21,349,000 during the year ended December 31, 2025, compared to approximately $25,371,000 for the year ended December 31, 2024, a decrease of approximately $4,022,000 (15.9%).

The rental activity is summarized as follows:

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Rental income from continuing operations for the year ended December 31, 2025 was approximately $88,401,000, compared to approximately $79,763,000 for the year ended December 31, 2024, an increase of approximately $8,638,000 (10.8%).

Excluding the net increase in revenue from Shawmut of approximately $1,270,000, there was an increase of approximately $4,601,000 (6.3%).

The Partnership Properties with the largest increases in rental income include Hamilton Oaks, 62 Boylston Street Apartments, Mill Street Gardens, 659 Worcester Road, and 1144 Commonwealth Apartments, with increases of approximately $522,000, $446,000, $393,000, $337,000 and $303,000, respectively.

Excluding revenues from the Hill Estates, 26 Brighton Avenue, and the 90 Concord properties of approximately $6,177,000, there was an increase of approximately $2,461,000 (3.1%).

The Partnership Properties with the largest increases in rental income include Westside Colonial, Hamilton Oaks, Westgate Apartments, Hamilton Green, and School Street, with increases of approximately $257,000, $246,000, $239,000, $207,000 and $198,000, respectively.

Included in rental income is contingent rentals collected on commercial properties.

Contingent rentals include such charges as bill backs of common area maintenance charges, real estate taxes, and utility charges.

Total expenses from continuing operations for the year ended December 31, 2024 were approximately $55,161,000 compared to approximately $55,666,000 for the year ended December 31, 2023, a decrease of approximately $505,000 (0.9%).

Excluding the net change in expenses from Shawmut’s of approximately $953,000, there was a decrease of approximately $1,458,000 (2.7%).

Factors which contributed to the decrease were a decrease of approximately $971,000, for the Impairment charge in 2023 for Mill Street Development, a decrease in Depreciation and Amortization expense of approximately $480,000 (0.9%), due to fully depreciated assets, and a decrease in Repairs and Maintenance expense of approximately $340,000 (0.6%), primarily due to a decrease in window, door, and glass repairs

Total expenses from continuing operations for the year ended December 31, 2025 were approximately $67,847,000 compared to approximately $55,161,000 for the year ended December 31, 2024, an increase of approximately $12,686,000 (23.0%).

Excluding expenses from the Hill Estates, 26 Brighton Avenue, and the 90 Concord properties of approximately $9,967,000, there was an increase of approximately $2,719,000 (4.9%).

Factors which contributed to the increase were an increase in Operating expenses of approximately $1,340,000 (17.2%), due to increases in snow removal costs and utility expenses, an increase in Repairs and Maintenance expense of approximately $949,000 (7.2%), an increase in Taxes and Insurance of approximately $651,000(6.5%), due to an increase in real estate taxes.

Interest income for the year ended December 31, 2025 was approximately $1,795,000 compared to approximately $4,465,000 for the year ended December 31, 2024, a decrease of approximately $2,670,000 (59.8%).

The decrease is due to a decrease in interest rates for investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 4.2% to 5.0%.

Interest expense for the year ended December 31, 2024 was approximately $15,457,000 compared to approximately $15,723,000 for the year ended December 31, 2023, a decrease of approximately $266,000 (1.7%).

The decrease is due to the greater amortization of principal for debt with level principal and interest payments.

The decrease in the interest income is due to the use of the Investment in U.S.

Treasury bills to acquire the Hill Estates, 26 Brighton Avenue, and 90 Concord properties.

Interest expense for the year ended December 31, 2025 was approximately $18,586,000 compared to approximately $15,457,000 for the year ended December 31, 2024, an increase of approximately $3,129,000 (20.2%).

Excluding interest expense for the Hill Estates of approximately $2,244,000, interest expense increased approximately $885,000 (5.7%).

The increase was due to the interest expense incurred when the Partnership borrowed an additional $40,000,000 in May, 2025 at an interest rate of 5.99% on the Master Credit Facility.

At December 31, 2025, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

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Included in the income for the year ended December 31, 2025 is depreciation and amortization expense of approximately $2,644,000.

As a result of the changes discussed above, net income for the year ended December 31, 2024 was approximately $15,662,000 compared to net income of approximately $8,454,000 for the year ended December 31, 2023, an increase in income of approximately $7,208,000 (85.3%).

As a result of the changes discussed above, net income for the year ended December 31, 2025 was approximately $6,031,000 compared to net income of approximately $15,661,000 for the year ended December 31, 2024, a decrease in income of approximately $9,630,000 (61.5%).

Years Ended December 31, 2024 and December 31, 2023

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Income from investments in unconsolidated joint ventures

Other (Expense)

Rental income from continuing operations for the year ended December 31, 2024 was approximately $79,763,000, compared to approximately $73,892,000 for the year ended December 31, 2023, an increase of approximately $5,871,000 (7.9%).

Excluding revenues from Walgreen’s and Shawmut’s of approximately $1,753,000, there was an increase of approximately $4,579,000 (6.8%).

The Partnership Properties with the largest increases in rental income include 62 Boylston Street Apartments, 1144 Commonwealth Apartments, Westgate Apartments, Woodland Park, and Hamilton Green, with increases of approximately $769,000, $747,000, $456,000, $339,000 and $294,000, respectively.

Excluding the net increase in revenue from Shawmut of approximately $1,270,000, there was an increase of approximately $4,601,000 (6.3%).

Included in rental income is contingent rentals collected on commercial properties.

Contingent rentals include such charges as bill backs of common area maintenance charges, real estate taxes, and utility charges.

Total expenses from continuing operations for the year ended December 31, 2023 were approximately $55,667,000 compared to approximately $50,205,000 for the year ended December 31, 2022, an increase of approximately $5,461,000 (10.9%).

Excluding expenses from Walgreen’s and Shawmut’s of approximately $2,388,000, there was an increase of approximately $3,073,000 (6.1%).

Factors which contributed to the increase were an increase in Repairs and Maintenance expense of approximately $2,020,000 (17.9%), primarily due to an increase in apartment units turnover costs, an increase in Taxes and Insurance costs of approximately $600,000 (6.6%), and an increase in Renting expense of approximately $359,000 (56.2%), partially due to an increase in commissions, offset in part by a decrease in Depreciation and Amortization expense of approximately $1,480,000 (9.0%), due to fully depreciated assets.

Interest income for the year ended December 31, 2023, was approximately $4,486,000 compared to approximately $1,055,000 for the year ended December 31, 2022, an increase of approximately $3,431,000.

The increase is due to investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 5.3% to 5.5%.

Interest expense for the year ended December 31, 2023 was approximately $15,723,000 compared to approximately $15,045,000 for the year ended December 31, 2022, an increase of approximately $678,000 (4.5%).

The increase is due to the refinancing of properties, increasing the amount of debt, which increased the interest expense for the period.

In December, 2023, the Partnership received approval from MassHousing to construct a 72 unit apartment building in accordance with Chapter 40B to include 17 affordable units on the Mill Street Development site.

In order to initiate construction, the Partnership demolished the current building structures and started construction in 2024.

With no tenants occupying the property as of December, 2023 and with the resulting loss of future cash, management recorded an impairment charge of approximately $971,000, the net book value of the building for the Mill Street Development property.

In order to comply with the permanent financing requirements for a 40B project, Mill Street Development signed a term sheet for a loan of up to $15 million, to be funded upon completion of the development project.

In addition, Mill Street Development deposited $75,000 into escrow to comply with the 40B project requirement of a cost certification of total development costs upon completion of the project.

Excluding the net change in expenses from Shawmut’s of approximately $953,000, there was a decrease of approximately $1,458,000 (2.7%).

Interest income for the year ended December 31, 2024 was approximately $4,466,000 compared to approximately $4,487,000 for the year ended December 31, 2023, a decrease of approximately $21,000.

The decrease is due to a decrease in interest rates for investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 4.2% to 5.0%.

The decrease is due to the greater amortization of principal for debt with level principal and interest payments.

At December 31, 2024, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

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LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s principal source of cash during 2025 was the proceeds from the increase in mortgage notes payable, the liquidation of U.S Treasury bills, and the collection of rents.

The Partnership’s principal use of cash during 2025 was the purchase of a new property, construction of the Mill Street Development project, improvements to rental properties, mortgage principal payments, and distributions to partners.

The Partnership’s principal source of cash during 2024 was the collection of rents, and interest income generated from the purchase of Treasury Bills.

The Partnership’s principal use of cash during 2024 was the improvements to rental properties, the development of a rental property at Mill Street, and distributions to partners.

The Partnership’s principal source of cash during 2023 was the collection of rents, and interest income generated from the purchase of Treasury Bills.

The Partnership’s principal use of cash during 2023 was the improvements of rental properties, and the purchase of two properties:

the commercial property at 653 Worcester Road for approximately $10,000,000 and the purchase of a mixed use property in the South End neighborhood of Boston, MA for approximately $27,500,000.

The majority of cash and cash equivalents of $26,668,978 at December 31, 2025 and $17,615,940 at December 31, 2024 were held in interest bearing accounts at creditworthy financial institutions.

The decrease in cash of $614,523 at December 31, 2024 is summarized as follows:

The increase in cash of $9,053,038 at December 31, 2025 is summarized as follows:

Year Ended December 31,

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Cash (used in) investing activities

Cash (used in) financing activities

Cash provided by (used in) financing activities

Repurchase of Depositary Receipts, Class B and General Partner Units

Distributions paid

Net decrease in cash and cash equivalents

The change in cash provided by operating activities is due to various factors, including a change in depreciation expense, a change in income, an increase in accounts payable and accrued expenses, and other factors.

The decrease in cash used in investing activities is primarily due to improvements to rental properties, and the development of the Mill Street rental property in 2024.

The change in cash used in financing activities is due to the pay down of mortgages, the repurchase of Depositary Receipts, and distributions to partners.

During 2024, the Partnership and its Subsidiary Partnerships completed improvements to certain of the Properties at a total cost of approximately $25,254,000, which includes approximately $15,231,000 for the Mill Street Development.

These improvements were funded from cash reserves and, to some extent, escrow accounts established in connection with the financing or refinancing of the applicable Properties.

These sources have been adequate to fully fund improvements.

The most significant improvements were made at Executive Apartments,1144 Commonwealth, Captain Parker, River Drive Apartments, Redwood Hills, and Hamilton Oaks, at a cost of $1,582,000, $1,061,000, $886,000, $880,000, $872,000, and $782,000 respectively.

The Partnership plans to invest approximately $41,203,000 in capital improvements in 2025.

This amount includes approximately $15,000,000 toward the development of a 72 unit apartment complex at Mill Street Development.

On December 29, 2023, the Partnership signed a contract with a general contractor, NEI General Contracting, Inc., for the construction of the Mill Street Development project for approximately $29,700,000.

As of December 31, 2024, the property, located at 57 Mill Street in Woburn, MA, which includes 72 residential units comprising approximately 93,000 square feet, is estimated to be completed during the fourth quarter of 2025.

Total investment to date is approximately $15,231,000, and the total investment upon completion is anticipated to be approximately $30 million.

The partnership is using cash reserves to fund this construction but will finance a portion of construction costs upon completion of the project.

Project costs will initially be funded from Partnership reserves, but upon completion, the Partnership anticipates closing on a permanent loan, as was required by MassHousing, amended under current requirements under the Chapter 40B program.

In connection with these requirements, the Partnership received a term sheet from Brookline Bank for a $15,000,000 loan to be funded upon completion of the project, which is currently anticipated in the fourth quarter of 2025 .

Net increase (decrease) in cash and cash equivalents

The net increase in cash provided by operating activities is due to various factors, including a change in depreciation expense, a change in income and distribution from joint ventures, and other factors.

The net decrease in cash used in investing activities is primarily for the purchase of the Hill Estates, 26 Brighton Avenue and 90 Concord properties, improvement of rental properties, including the Mill Street Development project, offset by the proceeds of U.S.

Treasury bills.

Financing activities include proceeds from the mortgage notes payable, mortgage principal payments and distributions to partners, and repurchase of depositary receipts.

During 2025, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $30,691,000.

These improvements were funded from cash reserves.

Cash reserves have been adequate to fully fund improvements.

Cash reserves used for the Mill Street Development Project were approximately $17,599,000 for the year ended December 31, 2025.

Beyond the Mill Street Development Project, the most significant improvements were made at 62 Boylston, 1137 Commonwealth, Executive Apartments, Clovelly Apartments, Hamilton Oaks, and Captain Parker, at a cost of $2,065,000, $1,980,000, $903,000, $879,000, $799,000, and $733,000, respectively.

The Partnership plans to invest approximately $17,069,000 in capital improvements for all properties in 2026.

On December 23, 2025, the Partnership closed a $17,500,000 loan in association with the project, with Brookline Bank at an interest rate of 5.67% interest only with a two year term.

As of December 31,2025, the Partnership has invested approximately $35 million in the Mill Street Development project.

Line of Credit

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The term of the line is for three years with a floating interest rate equal to a base rate of the SOFR Rate for a period of one month plus the applicable margin of 2.5%.

The Partnership incurred a commitment fee of $125,000.

This fee will be waived for any period in which the Partnership maintains aggregate deposits of twenty million dollars with the Lender.

As of December 31, 2024, the Partnership was in compliance with the financial covenants and did not incur an unused line fee.

As of December 31, 2025, the Partnership was in compliance with the financial covenants.

The line of credit may be used for acquisition, refinancing, improvements, working capital and other needs of the Partnership.

17 unchanged sentences

Total Contractual Obligations

As of December 31, 2024, the Partnership has one property under construction located at 57 Mill Street in Woburn, MA.

The project includes 72 residential units comprising approximately 93,000 square feet and is estimated to be completed during the fourth quarter of 2025.

Total investment to date is approximately $15.2 million, and the total investment upon completion is anticipated to be approximately $30 million.

The partnership is using cash reserves to fund this construction but will finance a portion of construction costs upon completion of the project.

In connection with the Mill Street development project, the Partnership has entered into a contract with a general contractor with a current contract value of approximately $30 million.

We have various standing or renewable service contracts with vendors related to our property management.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis