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Item 1. Financial Statements

2026-08-07 compared with 2026-05-08 · 192 added, 120 removed, 637 unchanged (33% of the section changed)

6 unchanged sentences

The aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in New England Realty Associates L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

The results of operations for the three month period ended March 31, 2026 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

The results of operations for the three and six month periods ended June 30, 2026 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

17 unchanged sentences

( 74,215,581 )

Total Liabilities and Partners’ Capital

See notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Rental income

11 unchanged sentences

( 4,136,156 )

( 11,444,016 )

( 7,927,588 )

Income from investments in unconsolidated joint ventures

2 unchanged sentences

( 2,913,692 )

( 10,603,540 )

( 5,351,422 )

Net (Loss) Income

( 1,159,307 )

( 5,066,980 )

Net (Loss) Income per Unit

3 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Net (Loss) Income

( 1,159,307 )

Other comprehensive (loss) income :

( 5,066,980 )

Net unrealized gain (loss) on derivative instruments for interest rate swaps

1 unchanged sentence

( 1,100,943 )

( 4,983,910 )

See notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

Partners' Capital

Comprehensive

Partner’s Capital

Comprehensive Income

Balance January 1, 2025

8 unchanged sentences

Net unrealized (loss) on derivative instruments for interest rate swaps

Balance March 31 , 2025

Balance June 30 , 2025

( 55,381,970 )

11 unchanged sentences

( 4,053,584 )

( 5,066,980 )

Net unrealized gain on derivative instruments for interest rate swaps

Balance March 31, 2026

Balance June 30, 2026

( 66,845,266 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows from Operating Activities

Net (Loss) Income

( 5,066,980 )

Adjustments to reconcile net income to net cash provided by operating activities

Interest accrued on U.S.

Treasury Bills

Depreciation and amortization

4 unchanged sentences

Proceeds from unconsolidated joint ventures

(Increase) Decrease in rents receivable

(Increase) in rents receivable

(Decrease) in accounts payable and accrued expense

1 unchanged sentence

( 1,462,963 )

Decrease (Increase) in real estate tax escrow

Decrease in prepaid expenses and other assets

(Decrease) Increase in advance rental payments and security deposits

(Increase) Decrease in real estate tax escrow

(Increase) Decrease in prepaid expenses and other assets

( 1,523,072 )

Increase in advance rental payments and security deposits

Total Adjustments

9 unchanged sentences

( 10,247,195 )

Purchase of rental property

( 108,885,341 )

Improvement of rental properties

1 unchanged sentence

( 5,210,753 )

Sale of rental properties

Net cash (used in) provided by investing activities

Net proceeds from the sale of real estate

Net cash (used in) investing activities

( 3,835,598 )

( 40,919,964 )

Cash Flows from Financing Activities

Principal payments of mortgage notes payable

( 1,630,247 )

( 20,482,614 )

Proceeds from Mortgage Notes Payable

Stock buyback

Distributions to partners

( 1,240,748 )

Distributions to partners

( 2,782,441 )

Net cash (used in) provided by financing activities

( 13,999,902 )

Net cash provided by (used in) financing activities

( 5,653,436 )

Net (Decrease) Increase in Cash and Cash Equivalents

Net (Decrease) in Cash and Cash Equivalents

( 1,919,239 )

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

June 30, 2026

SIGNIFICANT ACCOUNTING POLICIES

91 unchanged sentences

Deferred financing costs are presented in the balance sheet as a direct deduction from the carrying value of the debt liability to which they relate, except deferred financing costs related to the revolving credit facility, which are presented in prepaid expenses and other assets.

In all cases, amortization of such costs is included in interest expense and was approximately $ 137,000 and $ 95,000 for the three months ended March 31, 2026 and 2025, respectively.

In all cases, amortization of such costs is included in interest expense and was approximately $ 278,000 and $ 211,000 for the six months ended June 30, 2026 and 2025, respectively.

Derivative Instruments:

14 unchanged sentences

marketable securities available for sale.

NERA had a comprehensive gain of approximately $ 25,000 and a comprehensive loss of approximately $ 130,000 for the three months ended March 31, 2026 and 2025, respectively.

NERA had a comprehensive gain of approximately $83,000 and a comprehensive loss of approximately $194,000 for the six months ended June 30, 2026 and 2025, respectively.

Income (Loss) Per Depositary Receipt:

9 unchanged sentences

The Partnership makes its temporary cash investments with high-credit quality financial institutions.

At March 31, 2026, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates, respectively, from 0.35 % to 2.8 %.

At March 31, 2026 and December 31, 2025, respectively, approximately $ 25,183,000 , and $ 26,200,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

At June 30, 2026, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates, respectively, from 0.35 % to 2.8 %.

At June 30, 2026 and December 31, 2025, respectively, approximately $ 27,415,000 , and $ 26,200,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

Advertising Expense:

Advertising is expensed as incurred.

Advertising expense was approximately $ 99,000 and $ 98,000 for the three months ended March 31, 2026 and 2025, respectively .

Advertising expense was approximately $ 199,000 and $ 160,000 for the six months ended June 30, 2026 and 2025, respectively .

Rental Property Held f or Sale:

4 unchanged sentences

The Partnership follows the policy of capitalizing interest as a component of the cost of rental property when the time of construction exceeds one year .

During the three months ended March 31, 2026 there was no interest capitalized.

For the three months ended March 31, 2025,there was capitalized interest of approximately $ 149,000 .

During the six months ended June 30, 2026 there was no interest capitalized.

For the six months ended June 30, 2025, there was capitalized interest of approximately $ 360,000 .

Extinguishment of Debt:

The Partnership accounts for refinancings, modifications, and extinguishments of debt in accordance with ASC 470-50, Debt—Modifications and Extinguishments.

When existing mortgages or other borrowings are refinanced with the same lender, the Partnership evaluates whether the terms of the new debt are substantially different from those of the existing debt.

If the refinancing is determined to be substantially different, the transaction is accounted for as an extinguishment of debt, and any unamortized deferred financing costs, original issuance discounts or premiums related to the extinguished debt are written off and included in loss on extinguishment of debt.

If the refinancing is determined to be substantially the same, the transaction is accounted for as a modification (exchange) of debt, and no gain or loss is recognized.

The carrying amount of the existing debt is adjusted for any fees or costs incurred.

When existing mortgages are refinanced with the same lender, and it is determined that refinancing is substantially different, then they are recorded as extinguishement of debt.

However, if it is determined that the refinancing is substantially the same, then they are recorded as an exchange of debt.

All refinancings qualify as extinguishment of debt.

2 unchanged sentences

RENTAL PROPERTIES

As of March 31, 2026, the Partnership and its Subsidiary Partnerships owned 3,411 residential apartment units in 27 residential and mixed-use complexes (collectively, the “Apartment Complexes”).

As of June 30, 2026, the Partnership and its Subsidiary Partnerships owned 3,411 residential apartment units in 27 residential and mixed-use complexes (collectively, the “Apartment Complexes”).

The Partnership also owns 19 condominium units in a residential condominium complex, all of which are leased to residential tenants (collectively referred to as the “Condominium Units”).

The Apartment Complexes and Condominium Units are located primarily in the metropolitan Boston area of Massachusetts.

Additionally, as of March 31, 2026, the Partnership and Subsidiary Partnerships owned two commercial shopping centers in Framingham, commercial buildings in Newton and Brookline, commercial space in mixed-use properties in Boston, Brockton, Belmont and Newton, all in Massachusetts.

Additionally, as of June 30, 2026, the Partnership and Subsidiary Partnerships owned two commercial shopping centers in Framingham, commercial buildings in Newton and Brookline, commercial space in mixed-use properties in Boston, Brockton, Belmont and Newton, all in Massachusetts.

These properties are referred to collectively as the “Commercial Properties.”

The Partnership also owned a 40 % to 50 % ownership interest in seven residential and mixed use complexes (the “Investment Properties”) at March 31, 2026 with a total of 688 apartment units, accounted for using the equity method of consolidation.

The Partnership also owned a 40 % to 50 % ownership interest in seven residential and mixed use complexes (the “Investment Properties”) at June 30, 2026 with a total of 688 apartment units, accounted for using the equity method of consolidation.

See Note 15 for summary information on these investments.

6 unchanged sentences

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

On January 28, 2026, the Partnership sold the two commercial office buildings for the sales price of approximately $ 2,600,000 , with closing costs of approximately $ 142,000 , incurring a loss of approximately $ 151,000 .

The loan was refinanced on December 30, 2025.

The refinanced loan for $ 67,656,000 is interest only at a rate of 5.19 % and a maturity date of December 30, 2035.

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 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.

The Partnership demolished the existing building structures in order to start construction in 2024.The property was placed in service on January 1, 2026.Total investment was approximately $ 35 million.

The Partnership demolished the existing building structures in order to start construction in 2024.

The property was placed in service on January 1, 2026.

Total investment was approximately $ 35 million.

On December 23, 2025, the Partnership closed a $ 17,500,000 loan with Brookline Bank at an interest rate of 5.68 % interest only, with a two year term.

Rental properties consist of the following:

March 31, 2026

June 30, 2026

December 31, 2025

15 unchanged sentences

(the “Management Company”), an entity that is owned by the majority shareholders of NewReal, Inc., the general partner of the Partnership (the “General Partner”).

The management fee is equal to 4 % of gross receipts of rental revenue and laundry income on the majority of the Partnership’s properties and 3 % on Linewt and Hill Estates.

Total fees paid were approximately $ 916,000 and $ 818,000 for the three months ended March 31, 2026 and 2025, respectively.

The management fee is equal to 4 % of gross receipts of rental revenue and laundry income on the majority of the Partnership’s properties and 2 % on Linewt and 3% on Hill Estates.

Total fees paid were approximately $ 1,843,000 and $ 1,653,000 for the six months ended June 30, 2026 and 2025, respectively.

The Partnership Agreement permits the General Partner or the Management Company to charge the costs of professional services (such as counsel, accountants and contractors) to NERA.

During the three months ended March 31, 2026 and 2025, approximately $ 398,000 and $ 195,000 respectively, was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

Of the 2026 expenses referred to above, approximately $ 53,000 consisted of repairs and maintenance, and $ 90,000 for administrative expense.

During the six months ended June 30, 2026 and 2025, approximately $ 559,000 and $ 417,000 respectively, was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

the 2026 expenses referred to above, approximately $ 75,000 consisted of repairs and maintenance and $ 160,000 for administrative expense.

Approximately $ 324,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties.

2 unchanged sentences

The Partnership reimburses the Management Company for the payroll and related expenses of the employees who work at the properties.

Total reimbursement was approximately $ 1,264,000 and $ 1,074,000 for the three months ended March 31, 2026 and 2025, respectively.

Total reimbursement was approximately $ 2,570,000 and $ 2,255,000 for the six months ended June 30, 2026 and 2025, respectively.

The Management Company maintains a 401K plan for all eligible employees whereby the employees may contribute the maximum allowed by law.

The plan also provides for discretionary contributions by the employer.

For the three months ended March 31, 2026, the Partnership incurred $ 19,000 for the employer’s match portion to the plan.

For the three months ended March 31, 2025, the Partnership incurred $ 16,000 for the employer’s match portion to the plan.

Bookkeeping and accounting functions are provided by the Management Company’s accounting staff, which consists of approximately 16 people.

During the three months ended March 31, 2026 and 2025 the Management Company charged the Partnership $ 31,250 ($ 125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

Sally Michael is a Director of New Real, Inc., and she is a Partner at Saul Ewing Arnstein & Lear LLP.

Saul Ewing billed the Partnership for legal fees totaling approximately $ 41,000 and $ 9,000 for the three months ended March 31, 2026 and 2025 respectively.

David Reier is a Director of New Real, Inc., who billed the Partnership approximately $ 4,000 and $ 2,000 for legal fees for the three months ended March 31, 2026 and 2025 respectively.

For the six months ended June 30, 2026, the Partnership incurred $ 38,000 for the employer’s match portion to the plan.

For the six months ended June 30, 2025, the Partnership incurred $ 32,000 for the employer’s match portion to the plan.

Bookkeeping and accounting functions are provided by the Management Company’s accounting staff, which consists of 16 people.

During the six months ended June 30, 2026 and 2025 the Management Company charged the Partnership $ 62,500 ($ 125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

Sally Michael is a Director of New Real, Inc., and she is a Partner at Saul Ewing LLP.

Saul Ewing billed the Partnership for legal fees totaling approximately $ 111,000 and $ 275,000 for the six months ended June 30, 2026 and 2025, respectively.

David Reier is a Director of New Real, Inc., who billed the Partnership approximately $ 10,000 and $ 6,000 for legal fees for the six months ended June 30, 2026 and 2025, respectively.

The Partnership has invested in seven limited partnerships, which have invested in mixed use residential apartment complexes.

4 unchanged sentences

PREPAID EXPENSES and OTHER ASSETS

Approximately $ 3,598,000 , and $ 3,593,000 of security deposits are included in prepaid expenses and other assets at March 31, 2026 and December 31, 2025, respectively.

Also, included in prepaid expenses and other assets at March 31, 2026 and December 31, 2025 is approximately $ 2,299,000 and $ 2,158,000 , respectively, held in escrow to fund future capital improvements.

Approximately $ 3,669,000 , and $ 3,593,000 of security deposits are included in prepaid expenses and other assets at June 30, 2026 and December 31, 2025, respectively.

Also, included in prepaid expenses and other assets at June 30, 2026 and December 31, 2025 is approximately $ 2,450,000 and $ 2,158,000 , respectively, held in escrow to fund future capital improvements.

Intangible assets on the acquisition of rental properties are included in prepaid expenses and other assets.

Intangible assets are approximately $ 1,474,000 and $ 2,692,000 net of accumulated amortization of approximately $ 5,094,000 and $ 3,876,000 at March 31, 2026, and at December 31, 2025, respectively.

Financing fees in association with the line of credit of approximately $ 123,000 and $ 142,000 are net of accumulated amortization of approximately $ 102,000 and $ 83,000 at March 31, 2026, and December 31, 2025 respectively.

Intangible assets are approximately $ 260,000 and $ 2,692,000 net of accumulated amortization of approximately $ 6,308,000 and $ 3,876,000 at June 30, 2026, and at December 31, 2025, respectively.

Financing fees in association with the line of credit of approximately $ 105,000 and $ 142,000 are net of accumulated amortization of approximately $ 121,000 and $ 83,000 at June 30, 2026, and December 31, 2025, respectively.

MORTGAGE NOTES PAYABLE

At March 31, 2026 and December 31, 2025, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2,with interest rates ranging from 2.97 % to 5.99 %, payable in monthly installments aggregating approximately $ 2,148,000 including principal, to various dates through 2035.

At June 30, 2026 and December 31, 2025, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2,with interest rates ranging from 2.97 % to 5.99 %, payable in monthly installments aggregating approximately $ 2,148,000 including principal, to various dates through 2035.

The majority of the mortgages are subject to prepayment penalties.

At March 31, 2026, the weighted average interest rate on the above mortgages was 4.19 %.

At June 30, 2026, the weighted average interest rate on the above mortgages was 4.2 %.

The effective rate of 4.3 % includes the amortization expense of deferred financing costs.

See Note 12 for fair value information.

The Partnership’s mortgage debt and the mortgage debt of its unconsolidated joint ventures generally is non-recourse except for customary exceptions pertaining to misuse of funds and material misrepresentations.

Financing fees of approximately $ 3,297,000 and $ 3,434,000 are net of accumulated amortization of approximately $ 2,225,000 and $ 2,088,000 at March 31, 2026 and December 31, 2025, respectively, which offset the total mortgage notes payable.

The Partnership’s mortgage debt and the mortgage debt of its unconsolidated

joint ventures generally is non-recourse except for customary exceptions pertaining to misuse of funds and material misrepresentations.

Financing fees of approximately $ 3,156,000 and $ 3,434,000 are net of accumulated amortization of approximately $ 2,366,000 and $ 2,088,000 at June 30, 2026 and December 31, 2025, respectively, which offset the total mortgage notes payable.

The Partnership has pledged tenant leases as additional collateral for certain of these loans.

6 unchanged sentences

Proceeds of the loan were used for the purchase of Hill Estates.

The loan was secured by a mortgage on the property and is limited guaranteed by the Partnership.

The loan was refinanced on December 30, 2025.

The loan is interest only, at 5.19 %, and a maturity date of December 30, 2035.

The refinanced loan for $ 67,656,000 is interest only at a rate of 5.19 %, and a maturity date of December 30, 2035.

On July 10, 2025, the Partnership borrowed an additional $ 682,520 from Brookline Bank as an earnout in connection with the loan at Staples Plaza.

The earnout tranche bears an interest rate of 5.97 %, is coterminous with the original underlying loan, and amortizes on a 30-year schedule.

Approximate annual maturities at March 31, 2026 are as follows:

Approximate annual maturities at June 30, 2026 are as follows:

2027—current maturities

7 unchanged sentences

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

As of March 31, 2026, the Partnership was in compliance with the financial covenants.

As of June 30, 2026, 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.

The line may not be used to pay dividends, make distributions or acquire equity interests of the Partnership.

The line of credit is collateralized by varying percentages of the Partnership’s ownership interest in 29 of its Subsidiary Partnerships and Joint Ventures.

The line of credit is collateralized by percentages of the Partnership’s ownership interest in 29 of its Subsidiary Partnerships.

Pledged interests are 49 % of the Partnership’s ownership interest in the respective entities.

1 unchanged sentence

The Partnership’s residential lease agreements may require tenants to maintain a one-month advance rental payment and/or a security deposit.

At March 31, 2026, amounts received for prepaid rents of approximately $ 4,473,000 are included in cash and cash equivalents, and security deposits of approximately $ 3,598,000 are included in prepaid expenses and other assets and are restricted cash.

At June 30, 2026, amounts received for prepaid rents of approximately $ 4,750,000 are included in cash and cash equivalents, and security deposits of approximately $ 3,669,000 are included in prepaid expenses and other assets and are restricted cash.

PARTNERS’ CAPITAL

3 unchanged sentences

In March 2026, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), for a total payment of $ 1,394,763 , on March 31, 2026.

In 2025, the Partnership paid an aggregate distribution of $ 144.00 per Unit ($ 4.80 per Receipt) for a total payment of $ 16,793,527 in 2025.

On May 7, 2026, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), for a total payment of $ 1,387,678 on June 30, 2026.

Total distributions to date through June 30, 2026 total $ 2,782,441 .

In 2025, the Partnership paid an aggregate distribution of $ 144.00 per Unit ($ 4.80 per Receipt) for a total payment of $ 16,793,527 .

The Partnership has entered into a deposit agreement with an agent to facilitate public trading of limited partners’ interests in Class A Units.

1 unchanged sentence

The following is information per Depositary Receipt:

Three Months Ended

Six Months Ended

Net (Loss) Income per Depositary Receipt

1 unchanged sentence

TREASURY UNITS

Treasury Units at March 31, 2026 are as follows:

Treasury Units at June 30, 2026 are as follows:

General Partnership

4 unchanged sentences

On March 12, 2025, the Board of Directors authorized 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, Depositary Receipts and Partnership Units in such quantities, at such prices, in such manner and on such terms and conditions as the Authorized Persons determine are in the best interests of the Partnership;

provided, however, that (i) the aggregate cost of Depositary Receipts and Partnership Units repurchased shall not exceed $ 5 million, (ii) no Depositary Receipts or Partnership Units shall be repurchased after the date that is 12 months after the effective date of the plan, (iii) no Depositary Receipt shall be repurchased in excess of $ 95 per depositary receipt ( the “Repurchase Plan”).

provided, however, that (i) the aggregate cost of Depositary Receipts and

Partnership Units repurchased shall not exceed $ 5 million, (ii) no Depositary Receipts or Partnership Units shall be repurchased after the date that is 12 months after the effective date of the plan, (iii) no Depositary Receipt shall be repurchased in excess of $ 95 per depositary receipt ( the “Repurchase Plan”).

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.

1 unchanged sentence

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

From August 20, 2007 through March 31, 2026, the Partnership has repurchased 1,561,062 Depositary Receipts at an average price of $ 32.09 per receipt (or $ 962.70 ) per underlying Class A Unit), 4,622 Class B Units and 243 General Partnership Units, both at an average price of $ 1,304 per Unit, totaling approximately $ 57,045,000 including brokerage fees paid by the Partnership .

During the three months ended March 31, 2026, the Partnership purchased a total of 1,653 Depositary Receipts.

From August 20, 2007 through June 30, 2026, the Partnership has repurchased 1,575,610 Depositary Receipts at an average price of $ 32.36 per receipt (or $ 970.8 0) per underlying Class A Unit), 4,737 Class B Units and 249 General Partnership Units, both at an average price of $ 1,317 per Unit, totaling approximately $ 58,152,000 including brokerage fees paid by the Partnership .

During the six months ended June 30, 2026, the Partnership purchased a total of 16,201 Depositary Receipts.

The average price was $ 61.29 per receipt, or $ 1,838.70 per unit.

6 unchanged sentences

RENTAL INCOME

During the three months ended March 31, 2026, approximately 95 % of rental income was related to residential apartments and condominium units with leases of one year or less.

During the six months ended June 30, 2026, approximately 95 % of rental income was related to residential apartments and condominium units with leases of one year or less.

The majority of these leases expire in June, July and August.

Approximately 5 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2026 as follows:

Approximately 5 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at June 30, 2026 as follows:

Property Leases

The aggregate minimum future rental income does not include contingent rentals that may be received under various leases in connection with common area charges and real estate taxes.

Aggregate contingent rentals from continuing operations were approximately $ 239,000 and $ 184,000 for the three months ended March 31, 2026 and 2025 respectively.

Trader Joe’s and Blue Pearl, tenants at Staples Plaza and Walgreen’s, a tenant at 653 Worcester Road, Framingham, Massachusetts respectively, are approximately 33 % of the total commercial rental income.

Aggregate contingent rentals from continuing operations were approximately $ 556,000 and $ 466,000 for the six months ended June 30, 2026 and 2025 respectively.

Trader Joe’s and Blue Pearl, a tenant at 653 Worcester Road, Framingham, Massachusetts, are approximately 35 % of the total commercial rental income.

The following information is provided for commercial leases:

3 unchanged sentences

annual base rent for

Through March 31,

Through June 30,

expiring leases

2 unchanged sentences

expiring leases

Rents receivable are net of an allowance for doubtful accounts of approximately $ 979,000 and $ 879,000 at March 31, 2026 and December 31, 2025.

Included in rents receivable at March 31, 2026 is approximately $ 12,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

Rents receivable are net of an allowance for doubtful accounts of approximately $ 777,000 and $ 879,000 at June 30, 2026 and December 31, 2025.

Included in rents receivable at June 30, 2026 is approximately $ 22,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

CASH FLOW INFORMATION

During the three months ended March 31, 2026 and 2025, cash paid for interest was approximately $ 5,251,000 , and $ 3,696,000 , respectively.

Cash paid for state income taxes was approximately $ 18,000 and $ 82,000 during the three months ended March 31, 2026 and 2025, respectively.

During the six months ended June 30, 2026 and 2025, cash paid for interest was approximately $ 10,893,000 , and $ 7,323,000 , respectively.

Cash paid for state income taxes was approximately $ 47,000 and $ 127,000 during the six months ended June 30, 2026 and 2025, respectively.

In 2025, the Partnership acquired construction in progress through accounts payable and accruals, which represented a non-cash investing activity of approximately $ 2,309,000 .

Interest capitalized amounted to approximately $ 149,000 for the three months ended March 31, 2025.There was no interest expense capitalized for the three months ended March 31,2026.

Interest capitalized amounted to approximately $ 360,000 for the six months ended June 30, 2025.

There was no interest expense capitalized for the six months ended June 30, 2026.

FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At March 31, 2026 and December 31, 2025, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements.

At June 30, 2026 and December 31, 2025, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements.

Financial Assets and Liabilities not Measured at Fair Value

At March 31, 2026 and December 31, 2025 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, note payable, accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments or, the recent acquisition of these items.

At March 31, 2026 and December 31, 2025 we estimated the fair value of our mortgage payable, derivative financial instrument, and other notes based upon quoted market prices for the same (Level 1) or similar (Level 2) issues when current quoted market prices are available.

At June 30, 2026 and December 31, 2025 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, note payable, accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments or, the recent acquisition of these items.

At June 30, 2026 and December 31, 2025 we estimated the fair value of our mortgage payable, derivative financial instrument, and other notes based upon quoted market prices for the same (Level 1) or similar (Level 2) issues when current quoted market prices are available.

We estimated the fair value of our secured mortgage debt that does not have current quoted market prices available by discounting the future cash flows using rates currently available to us for debt with similar terms and maturities (Level 3).

The differences in the fair value of our debt from the carrying value are the result of differences in interest rates and/or borrowing spreads that were available to us at March 31, 2026 and December 31, 2025, as compared with those in effect when the debt was issued or acquired.

The differences in the fair value of our debt from the carrying value are the result of differences in interest rates and/or borrowing spreads that were available to us at June 30, 2026 and December 31, 2025, as compared with those in effect when the debt was issued or acquired.

The secured mortgage debt contain pre-payment penalties or yield maintenance provisions that could make the cost of refinancing the debt at lower rates exceed the benefit that would be derived from doing so.

At March 31, 2026 and at December 31, 2025, the Partnership’s line of credit had an outstanding balance of zero .

At June 30, 2026 and at December 31, 2025, the Partnership’s line of credit had an outstanding balance of zero .

The following methods and assumptions were used by the Partnership in estimating the fair value of its financial instruments:

1 unchanged sentence

fair value approximates the carrying value of such assets and liabilities.

● For mortgage notes payable and treasury bills:

● For mortgage notes payable:

fair value is generally based on estimated future cash flows, which are discounted using the quoted market rate from an independent source for similar obligations.

1 unchanged sentence

The following table reflects the carrying amounts and estimated fair value of our debt.

March 31, 2026

June 30, 2026

Carrying Value

6 unchanged sentences

* Net of unamortized deferred financing costs

Disclosure about fair value of financial instruments is based on pertinent information available to management as of March 31, 2026 and December 31, 2025.

Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since March 31, 2026 and current estimates of fair value may differ significantly from the amounts presented herein.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of June 30, 2026 and December 31, 2025.

Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since June 30, 2026 and current estimates of fair value may differ significantly from the amounts presented herein.

DERIVATIVE FINANCIAL INSTRUMENTS

6 unchanged sentences

During the next 12 months, the Partnership estimates approximately $ 57,000 will be reclassified as a decrease to interest expense .

As of March 31, 2026, the Partnership had one interest rate swap outstanding with a notional amount of approximately $ 235,000 designated as cash flow hedges of interest rate risk.

As of March 31, 2026, the Partnership did not have any interest rate derivatives in a net liability position.

The table below presents the fair value of the Partnership’s derivative financial instruments, as well as their classification on the consolidated balance sheets as of March 31, 2026 and December 31, 2025.

As of June 30, 2026, the Partnership had one interest rate swap outstanding with a notional amount of approximately $ 294,000 designated as cash flow hedges of interest rate risk.

As of June 30, 2026, the Partnership did not have any interest rate derivatives in a net liability position.

The table below presents the fair value of the Partnership’s derivative financial instruments, as well as their classification on the consolidated balance sheets as of June 30, 2026 and December 31, 2025.

Asset Derivatives designated

3 unchanged sentences

Prepaid Expenses and Other Assets

The table below presents the effect the Partnership’s derivative financial instruments on the consolidated statements of income for the quarters ended March 31, 2026 and 2025.

Derivatives in Cash Flow Hedging Relationships

Amount of Gain

or (Loss) Recognized

in OCI on Derivative

The table below presents the effect the Partnership’s derivative financial instruments on the consolidated statements of income for the quarters ended June 30, 2026 and 2025.

Location of Gain

OCI Into Income

Amount of Gain

OCI into Income

Location of Gain

or (Loss) Recognized

Total Amount of

Location of Gain

Interest Expense

Amount of Gain

or (Loss) Recognized

presented in the

Derivatives in Cash Flow

or (Loss) Recognized

from Accumulated

consolidated statements

Hedging Relationships

in OCI on Derivative

OCI Into Income

OCI into Income

of operations

Quarter Ended March 31,

Three Months Ended June 30,

Interest rate swaps

3 unchanged sentences

( 4,136,156 )

Six Months Ended June 30,

Interest rate swaps

Interest expense

Interest and other investment income (loss)

( 11,444,016 )

( 7,927,588 )

TAXABLE INCOME AND TAX BASIS

12 unchanged sentences

In the normal course of business the Partnership or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable.

As of March 31, 2026, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2022 forward.

As of June 30, 2026, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2022 forward.

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

2 unchanged sentences

The other investors are the Brown Family related entities and five current and former employees of the Management Company.

The Brown Family’s ownership interest was between 47.6 % and 59 % , with the balance owned by the others.

The Brown Family’s ownership

interest was between 47.6 % and 59 % , with the balance owned by the others.

A description of each investment is as follows:

12 unchanged sentences

The Partnership will continue to account for the investment using the equity method of accounting, although the Partnership has no legal obligation to fund its’ share of any future operating deficiencies as needed.

At March 31, 2026, the balance on this mortgage before unamortized deferred financing costs is $ 125,000,000 .

At June 30, 2026, the balance on this mortgage before unamortized deferred financing costs is $ 125,000,000 .

On March 7, 2005, the Partnership invested $ 2,000,000 for a 50 % ownership interest in a building comprising 48 apartments, one commercial space and a 50 -car surface parking lot located in Boston, Massachusetts.

12 unchanged sentences

Although the Partnership has no legal obligation, the Partnership intends to fund its share of any future operating deficits if needed.

At March 31, 2026, the balance on this mortgage before unamortized deferred financing costs is $ 12,214,000 .

At June 30, 2026, the balance on this mortgage before unamortized deferred financing costs is $ 12,214,000 .

The investment in the parking lot is referred to as Hamilton Essex Development, LLC;

13 unchanged sentences

The purchase price was $ 10,100,000 .

On September 12, 2016, the property was refinanced with a 15 year mortgage in the amount of $ 6,000,000 , at 3.71 %, interest only.

On September 12,

2016, the property was refinanced with a 15 year mortgage in the amount of $ 6,000,000 , at 3.71 %, interest only.

The Joint Venture Partnership paid off the prior mortgage of approximately $ 5,158,000 with the proceeds of the new mortgage and made a distribution of $ 385,000 to the Partnership.

2 unchanged sentences

The Partnership will continue to account for this investment using the equity method of accounting, although the Partnership has no legal obligation to fund its share of any future operating deficiencies, if needed.

At March 31, 2026, the balance on this mortgage before unamortized deferred financing costs is $ 6,000,000 .

At June 30, 2026, the balance on this mortgage before unamortized deferred financing costs is $ 6,000,000 .

This investment is referred to as Hamilton Minuteman, LLC.

14 unchanged sentences

At March 31, 2026, the balance of the mortgage before unamortized deferred finance is $ 23,589,000 .

At June 30, 2026, the balance of the mortgage before unamortized deferred finance is $ 23,589,000 .

The investment is referred to as Hamilton on Main LLC.

6 unchanged sentences

Although the Partnership has no legal obligation, the Partnership intends to fund its share of any future operating deficits if needed.

At March 31, 2026, the balance of this mortgage before unamortized deferred financing costs is approximately $ 7,930,000 .

At June 30, 2026, the balance of this mortgage before unamortized deferred financing costs is approximately $ 7,865,000 .

This investment is referred to as 345 Franklin, LLC.

Summary financial information at March 31, 2026

Summary financial information at June 30, 2026

Rental Properties

27 unchanged sentences

Total units/condominiums

Financial information for the three months ended March 31, 2026

Financial information for the six months ended June 30, 2026

Rental Income

16 unchanged sentences

Net Income —NERA 40 %

Future annual mortgage maturities at March 31, 2026 are as follows:

At March 31, 2026, the weighted average interest rate on the above mortgages was 4.28 %.

Financial information for the three months ended June 30, 2026

Rental Income

Laundry and Sundry Income

Administrative

Depreciation and Amortization

Management Fees

Repairs and Maintenance

Taxes and Insurance

Income Before Other Income

Other Income (Loss)

Interest Expense

( 1,259,376 )

( 1,903,192 )

Interest Income

( 1,203,933 )

( 1,825,973 )

Net Income (Loss)

Net Income (Loss)—NERA 50 %

Net Income —NERA 40 %

Future annual mortgage maturities at June 30, 2026 are as follows:

At June 30, 2026, the weighted average interest rate on the above mortgages was 4.3 %.

The effective rate was 4.4 % including the amortization expense of deferred financing costs

unamortized deferred financing costs

Summary financial information at March 31, 2025

Summary financial information at June 30, 2025

Rental Properties

27 unchanged sentences

Total units/condominiums

Financial information for the three months ended March 31, 2025

Financial information for the six months ended June 30, 2025

Rental Income

11 unchanged sentences

Interest Income

Other income (Expense)

( 2,464,567 )

3 unchanged sentences

Net Income —NERA 40 %

Financial information for the three months ended June 30, 2025

Rental Income

Laundry and Sundry Income

Administrative

Depreciation and Amortization

Management Fees

Repairs and Maintenance

Taxes and Insurance

Income Before Other Income

Other Income (Loss)

Interest Expense

( 1,273,633 )

( 1,920,230 )

Interest Income

( 1,230,296 )

( 1,858,464 )

Net Income (Loss)

Net Income (Loss)—NERA 50 %

Net Income —NERA 40 %

EMPLOYEE BENEFIT 401(k) PLANS

5 unchanged sentences

Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit-sharing contributions made on their behalf after two years of service with the Partnership at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Partnership.

Total expense recognized by the Partnership for the 401(k) Plan for the three months ended March 31, 2026 was $ 19,000 .

Total expense recognized by the Partnership for the 401(k) Plan for the six months ended June 30, 2026 was $ 38,000 .

IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

17 unchanged sentences

SUBSEQUENT EVENTS

On May 7, 2026, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), payable on June 30, 2026.

From April 1, 2026 through May 8, 2026, the Partnership has purchased 813 Depository Receipts .

On July 31, 2026, the Partnership paid down the outstanding loan balance of Hamilton Battlegreen of approximately $ 3.4 million.

The Partnership is currently in the process of refinancing the loan.

On August 6, 2026, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), payable on September 30, 2026.

From July 1, 2026 through August 6, 2026, the Partnership has purchased 724 Depository Receipts .

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-Q

Item 1. Financial Statements