What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-08 · 99 added, 56 removed, 210 unchanged (42% of the section changed)

11 unchanged sentences

The Partnership will consider refinancing existing properties if the Partnership’s cash reserves are insufficient to repay existing mortgages or if the Partnership needs additional funds for future acquisitions.

The vacancy rate for the Partnership’s residential properties as of May 1, 2026 was 2.4% as compared with a vacancy rate of 1.6% as of May 1, 2025.

The vacancy rate for the Joint Venture properties as of May 1, 2026 was 1.3%, as compared to 2.0% for the same period last year.

The vacancy rate for the Partnership’s residential properties as of August 1, 2026 was 2.7% as compared with a vacancy rate of 2.4% as of August 1, 2025.

The vacancy rate for the Joint Venture properties as of August 1, 2026 was 3.9%, as compared to 1.9% for the same period last year.

The Boston area rental market is currently experiencing elevated vacancy rates, and NERA has responded aggressively to keep vacancy below the Boston area’s current availability rates.

1 unchanged sentence

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

During the first quarter of 2026, rents increased an average of 4.4% for renewals and decreased an average of 5.8% for new leases.

During the second quarter of 2026, rents increased an average of 2.9% for renewals and decreased an average of 1.2% for new leases.

For the balance of 2026, management expects a rental market with slowing rent growth.

For the first quarter of 2026, consolidated revenue, excluding Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed property), increased by 1.8%, operating expenses increased by 17.3%, and Income before Other Income (Expense) decreased by 33.9%, as compared to the first quarter of 2025.

For the second quarter of 2026, consolidated revenue, excluding Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed property), increased by 0.3%, operating expenses increased by 9.8%, and Income before Other Income (Expense) decreased by 17.3%, as compared to the second quarter of 2025.

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

4 unchanged sentences

This fee will be 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.

From the start of the Stock Repurchase Program in 2007 through March 31, 2026, the Partnership has purchased 1,561,062 Depositary Receipts.

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

As of June 30, 2026, the Partnership was in compliance with the financial covenants .

From the start of the Stock Repurchase Program in 2007 through June 30, 2026, the Partnership has purchased 1,575,610 Depositary Receipts.

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

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

8 unchanged sentences

Residential tenants sign a one year lease.

During the three months ended March 31, 2026, tenant renewals were approximately 72% with an average rental increase of approximately 4.4%, new leases accounted for approximately 28% with a rental rate decrease of approximately 5.8%.

During the three months ended March 31, 2026, leasing commissions were approximately $316,000 compared to approximately $145,000 for the three months ended March 31, 2025, an increase of approximately $171,000 (118.3%).

Tenant concessions were approximately $21,000 for the three months ended March 31, 2026, compared to approximately $16,000 for the three months ended March 31, 2025, an increase of approximately $5,000 (31.3%).

Tenant improvements were approximately $1,507,000 for the three months ended March 31, 2026, compared to approximately $871,000 for the three months ended March 31, 2025, an increase of approximately $636,000 (73.0%).

We are actively monitoring proposed rent control ballot initiative for the Commonwealth of Massachusetts, and are taking actions to mitigate the potential risks associated with the proposal, including limiting future capital expenditures and addressing expense increases to the extent possible.

Hamilton accounted for approximately 1.6% of the repair and maintenance expenses paid for by the Partnership during the three months ended March 31, 2026 and 1.2% during the three months ended March 31, 2025.

During the six months ended June 30, 2026, tenant renewals were approximately 75% with an average rental increase of approximately 3.4%, new leases accounted for approximately 25% with a rental rate decrease of approximately 3.1%.

During the six months ended June 30, 2026, leasing commissions were approximately $741,000 compared to approximately $316,000 for the six months ended June 30, 2025, an increase of approximately $425,000 (134.5%).

Tenant concessions were approximately $42,000 for the six months ended June 30, 2026, compared to approximately $30,000 for the six months ended June 30, 2025, an increase of approximately $12,000 (40.0%).

Tenant improvements were approximately $2,558,000 for the six months ended June 30, 2026, compared to approximately $1,779,000 for the six months ended June 30, 2025, an increase of approximately $779,000 (43.8%).

Hamilton accounted for approximately 1.0% of the repair and maintenance expenses paid for by the Partnership during the six months ended June 30, 2026 and 1.2% during the six months ended June 30, 2025.

Of the funds paid to Hamilton for this purpose, the great majority was to cover the cost of services provided by the Hamilton maintenance department, including plumbing, electrical, carpentry services, and snow removal for those properties close to Hamilton’s headquarters.

3 unchanged sentences

Additionally, it prepares most long-term commercial lease agreements and represents the Partnership in selected purchase and sale transactions.

Overall, Hamilton provided approximately $59,000 (15.3%) and approximately $32,000 (82.8%) of the legal services paid for by the Partnership during the three months ended March 31, 2026 and 2025, respectively.

Overall, Hamilton provided approximately $97,000 (20.1%) and approximately $41,000 (100%) of the legal services paid for by the Partnership during the six months ended June 30, 2026 and 2025, respectively.

Additionally, as described in Note 3 to the consolidated financial statements, The Hamilton Company receives similar fees from the Investment Properties.

3 unchanged sentences

Hamilton’s architectural department also provides services to the Partnership on an as-needed basis.

During the three months ended March 31, 2026, Hamilton provided the Partnership approximately $255,000 in construction and architectural services, compared to approximately $96,000 for the three months ended March 31, 2025.

During the six months ended June 30, 2026, Hamilton provided the Partnership approximately $324,000 in construction and architectural services, compared to approximately $225,000 for the six months ended June 30, 2025.

Hamilton’s accounting staff perform bookkeeping and accounting functions for the Partnership.

During the three months ended March 31, 2026 and 2025, Hamilton charged the Partnership $31,250 for bookkeeping and accounting services.

During the six months ended June 30, 2026 and 2025, Hamilton charged the Partnership $62,500 for bookkeeping and accounting services.

For more information on related party transactions, see Note 3 to the Consolidated Financial Statements.

78 unchanged sentences

RESULTS OF OPERATIONS

Three Months Ended March 31, 2026 and March 31, 2025

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, and other expense of approximately $1,496,000 during the three months ended March 31, 2026, compared to approximately $6,233,000 for the three months ended March 31, 2025, a decrease of approximately $4,737,000 (76.0%).

Three Months Ended June 30, 2026 and June 30, 2025

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, and other expense of approximately $4,040,000 during the three months ended June 30, 2026, compared to approximately $7,063,000 for the three months ended June 30, 2025, a decrease of approximately $3,023,000 (42.8%).

The rental activity is summarized as follows:

Occupancy Date

August 1, 2026

August 1, 2025

Total square feet

Rental Income (in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Residential percentage

1 unchanged sentence

Contingent rentals

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Three Months Ended March 31,

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Three Months Ended June 30,

Rental income

10 unchanged sentences

Income from investments in unconsolidated joint ventures

(Loss) on Sale of Real Estate

Rental income for the three months ended March 31, 2026 was approximately $23,956,000, compared to approximately $20,496,000 for the three months ended March 31, 2025, an increase of approximately $3,460,000 (16.9%).

Excluding revenues from the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed), of approximately $3,085,000, revenue increased approximately $375,000 (1.8%).

The Partnership properties with the largest increases in rental income include 62 Boylston, Hamilton Oaks, WCB Associates, and River Drive, with increases of $246,000, $72,000, $66,000, and $52,000, respectively, partially offset by a decrease at 1144 Commonwealth Apartments of approximately $132,000.

Net (Loss) Income

Rental income for the three months ended June 30, 2026 was approximately $24,184,000, compared to approximately $21,038,000 for the three months ended June 30, 2025, an increase of approximately $3,146,000 (15.0%).

Excluding net rental income from the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed), of approximately $3,086,000, net rental income increased approximately $60,000 (0.3%).

The Partnership properties with the largest increases in rental income include Hamilton Oaks, Clovelly Apartments, and WCB Associates, with increases of $75,000, $57,000, and $54,000, respectively, partially offset by decreases at 62 Boylston, and Mill Street Gardens of approximately $63,000 and $62,000, 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.

Expenses for the three months ended March 31, 2026 were approximately $22,665,000 compared to approximately $14,455,000 for the three months ended March 31, 2025, an increase of approximately $8,210,000 (56.8%).

Operating expenses for the three months ended June 30, 2026 were approximately $20,363,000 compared to approximately $14,177,000 for the three months ended June 30, 2025, an increase of approximately $6.186,000 (43.6%).

Excluding expenses from the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed) properties of approximately $4,861,000, operating expenses were approximately $14,801,000, an increase of approximately $1,325,000 (9.8%).

The factors contributing to the increase are an increase in operating expenses of approximately $1,318,000 (40.2%), which included an increase in snow removal costs of approximately $870,000 over the three months ended March 31,2025, an increase in administrative expenses of approximately $696,000 ( 112.1%), including an increase in legal costs related to a tenant complaint ($240,000), and a public policy contribution related to a residential housing regulatory matter in the Greater Boston area ($360,000) and an increase in taxes and insurance of approximately $175,000 (6.5%).

The factors contributing to the increase are an increase in operating expenses of approximately $357,000 (21.5%), which included an increase in snow removal of approximately $184,000 (490.1%) and an increase in utility expenses of approximately $81,000 (6.5%), an increase in repairs and maintenance expenses of approximately $310,000 ( 9.0%), which include an increase in plumbing expenses of approximately $176,000 (72.1%) and an increase in HVAC repairs of approximately $88,000 (95.9%), and an increase in taxes and insurance of approximately $188,000 (7.0%).

Depreciation and amortization expense increased approximately $3,627,000 (81.1%) of which approximately $3,495,000 of the expenses are associated with the recently purchased properties.

Interest expense for the three months ended March 31, 2026 was approximately $5,712,000 compared to approximately $3,791,000 for the three months ended March 31, 2025, an increase of approximately $1,921,000 (50.7%).

Interest expense for the three months ended June 30, 2026 was approximately $5,732,000 compared to approximately $4,136,000 for the three months ended June 30, 2025, an increase of approximately $1,596,000 (38.6%).

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, the mortgages incurred upon the acquisition of Hill Estates, and the newly constructed property at Mill Street Heights.

Interest and dividend income for the three months ended March 31, 2026 was approximately $116,000 compared to approximately $991,000 for the three months ended March 31, 2025, a decrease of approximately $875,000 (88.3%).

Interest and dividend income for the three months ended June 30, 2026 was approximately $105,000 compared to approximately $737,000 for the three months ended June 30, 2025, a decrease of approximately $632,000 (85.7%).

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

Treasury bills to acquire the Hill Estates property in June of 2025.

At March 31, 2026, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

At June 30, 2026, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

See a description of these properties included in the section titled Investment Properties as well as Note 15 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $343,000 for the three months ended March 31, 2026, compared to net income of approximately $362,000 for the three months ended March 31, 2025.

Included in the income for the three months ended March 31, 2026 is depreciation and amortization expense of approximately $675,000.

As a result of the changes discussed above, there was a net loss for the three months ended March 31, 2026 of approximately $3,907,000 compared to net income of approximately $3,796,000 for the three months ended March 31, 2025, a decrease in income of approximately $7,703,000 (202.9%).

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $427,000 for the three months ended June 30, 2026, compared to net income of approximately $485,000 for the three months ended June 30, 2025.

Included in the income for the three months ended June 30, 2026 is depreciation and amortization expense of approximately $679,000.

As a result of the changes discussed above, there was a net loss for the three months ended June 30, 2026 of approximately $1,159,000 compared to net income of approximately $4,150,000 for the three months ended June 30, 2025, a decrease in income of approximately $5,309,000 (127.9%).

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Six Months Ended June 30,

Rental income

Laundry and sundry income

Administrative

Depreciation and amortization

Management fee

Repairs and maintenance

Taxes and insurance

Income Before Other Income ( Expense)

Other Income (Expense)

Interest income

Interest (expense)

Income from investments in unconsolidated joint ventures

(Loss) on Sale of Real Estate

Net ( Loss) Income

Rental income for the six months ended June 30, 2026 was approximately $48,140,000, compared to approximately $41,534,000 for the six months ended June 30, 2025, an increase of approximately $6,606,000 (15.9%).

Excluding net rental income from the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed), of approximately $6,171,000, net rental income increased approximately $435,000 (1.1%).

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

The Partnership properties with the largest increases in rental income include 62 Boylston, Hamilton Oaks, WCB Associates, and River Drive, with increases of $182,000, $147,000, $121,000, and $81,000 respectively, partially offset by decreases at Commonwealth 1144 and Mill Street Gardens, of approximately $189,000 and $59,000, 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.

Operating expenses for the six months ended June 30, 2026 were approximately $43,028,000 compared to approximately $28.632,000 for the six months ended June 30, 2025, an increase of approximately $14,396,000 (50.3%), Excluding operating costs for the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed) properties of approximately $10,568,000, net operating expenses increased approximately $3,828,000 (13.7%).

The factors contributing to the increase are an increase in operating expenses of approximately $1,656,000, which include an increase in snow removal costs of approximately $1,054,000, (107.6%) and an increase in utility expenses of approximately $444,000 (13.8%), an increase in administrative expenses of approximately $872,000 (68.3%), including an increase in legal costs related to a tenant complaint ($200,000) and public policy contributions related to a residential housing regulatory matter in the Greater Boston area ($420,000), and an increase in repairs and maintenance expense of approximately $462,000 (7.4%).

Depreciation and amortization expense increased approximately $7,687,000 (91.7%) of which approximately $7,439,000 of the expenses are associated with the recently purchased properties.

Interest expense for the six months ended June 30, 2026 was approximately $11,444,000 compared to approximately $7,928,000 for the six months ended June 30, 2025, an increase of approximately $3,516,000 (44.4%).

Estates, the additional loan for Hill Estates of approximately $68,000,000, and the newly constructed property at Mill Street Heights of approximately $17,500,000.

Interest and dividend income for the six months ended June 30, 2026 was approximately $221,000 compared to approximately $1,728,000 for the six months ended June 30, 2025, a decrease of approximately $1,507,000 (87.2%).

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

Treasury bills to acquire the Hill Estates property in June of 2025.

At June 30, 2026, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $770,000 for the six months ended June 30, 2026, compared to net income of approximately $847,000 for the six months ended June 30, 2025, a decrease in income of approximately $77,000 (9.2%).

Included in the income for the six months ended June 30, 2026 is depreciation and amortization expense of approximately $1,354,000.

As a result of the changes discussed above, the net loss for the six months ended June 30, 2026 was approximately $5,067,000 compared to income of approximately $7,945,000 for the six months ended June 30, 2025, a decrease in net income of approximately $13,012,000 (163.8%).

LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s principal source of cash during the first three months of 2026 and 2025 was the collection of rents.

The Partnership’s principal use of cash during the first three months of 2026 was improvements to rental properties, mortgage principal payments, and distributions to partners.

The majority of cash and cash equivalents of $25,559,751 at March 31, 2026 and $26,668,978 at December 31, 2025 was held in interest bearing accounts at creditworthy financial institutions.

The decrease in cash of $1,109,227 for the three months ended March 31, 2026 is summarized as follows:

Three Months Ended March 31,

The Partnership’s principal source of cash during the first six months of 2026 was the collection of rents.

The Partnership’s principal source of cash during the first six months of 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 the first six months of 2026 was improvements to rental properties, mortgage principal payments, the repurchase of depositary receipts, and distributions to partners.

The Partnership’s principal use of cash during the first six months of 2025 was the purchase of a new property, construction of the Mill Street Development property, improvements to rental properties, mortgage principal payments, purchases of U.S.

Treasury bills, and distributions to partners.

The majority of cash and cash equivalents of $24,749,739 at June 30, 2026 and $26,668,978 at December 31, 2025 was held in interest bearing accounts at creditworthy financial institutions.

The decrease in cash of $1,919,239 for the six months ended June 30, 2026 is summarized as follows:

Six Months Ended June 30,

Cash provided by operating activities

Cash (used in) provided by investing activities

Cash (used in) investing activities

Proceeds from mortgage notes payable

Principal payments of mortgage notes payable

1 unchanged sentence

Distributions paid

Net (decrease) increase 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 improvement of rental properties, offset by the sale of two commercial properties.

Financing activities include mortgage principal payments and distributions to partners, and repurchase of depositary receipts.

Net (decrease) in cash and cash equivalents

The cash provided by operating activities is approximately $7,570,000.

The cash used in investing activities is primarily for the improvement of rental properties, offset by the sale of two commercial properties.

The cash used in financing activities include mortgage principal payments and distributions to partners, and repurchase of depositary receipts.

During 2026, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $6,944,000.

These improvements were funded from cash reserves.

Cash reserves have been adequate to fully fund improvements.

The most significant improvements were made at Hill Estates, Hamilton Green, Hamilton Battlegreen, Hamilton Oaks, Mill Street Heights, and Executive Apartments, at a cost of approximately $1,219,000, $791,000, $309,000, $236,000, $218,000 and $217,000, respectively.

During the three months ended March 31, 2026, the Partnership received distributions of approximately $345,000 from the investment properties.

For the three months ended March 31, 2025, the Partnership received $482,000 in distributions from the investment properties.

Included in these net distributions is the amount from Dexter Park of approximately $100,000 and $200,000 for the three months ended March 31, 2026 and 2025 , respectively.

In March 2026, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on March 31, 2026.

reserves have been adequate to fully fund improvements.

The most significant improvements were made at Hill Estates, Hamilton Green, 62 Boylston, Hamilton Oaks, and Hamilton Battlegreen, at a cost of approximately $2,282,000, $937,000, $739,000, $457,000, and $404,000, respectively.

During the six months ended June 30, 2026, the Partnership received distributions of approximately $720,000 from the investment properties.

For the six months ended June 30, 2025, the Partnership received $838,000 in distributions from the investment properties.

Included in these net distributions is the amount from Dexter Park of approximately $200,000 and $400,000, and 345 Franklin of approximately $245,000 and $200,000, respectively, for the six months ended June 30, 2026 and 2025 .

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

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

The Partnership anticipates that cash from operations will be sufficient to fund its current operations, pay distributions, and make required debt payments.

In March 2026, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on March 31, 2026.

The Partnership anticipates that cash from operations, proceeds from loan refinancings, and availability under the line of credit should be sufficient to fund its current operations, pay distributions, and make required debt payments.

Off-Balance Sheet Arrangements—Joint Venture Indebtedness

As of March 31, 2026, the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness.

As of June 30, 2026, the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness.

We do not have control of these partnerships and therefore we account for them using the equity method of consolidation.

As of March 31, 2026, our proportionate share of the non-recourse debt related to these investments was approximately $74,867,000.

As of June 30, 2026, our proportionate share of the non-recourse debt related to these investments was approximately $74,834,000.

See Note 15 to the Consolidated Financial Statements.

Contractual Obligations

As of March 31, 2026, we are subject to debt obligations as described in the table below.

As of June 30, 2026, we are subject to debt obligations as described in the table below.

Payments due by period

40 unchanged sentences

● Ongoing compliance with Sarbanes-Oxley Act of 2002 may require additional personnel or systems changes.

● Revenue associated with residential properties may be limited in the future if current rent restriction proposals are adopted by the Commonwealth of Massachusetts.

● Revenue associated with residential properties may be limited in the future if rent restriction proposals are adopted by the Commonwealth of Massachusetts.

On August 6, 2025, a citizen’s petition was filed by a coalition of housing advocacy organizations with the Massachusetts’ State’s Attorney General, to put a ballot initiative in front of voters in November 2026.

If approved, the petition would limit annual rent increases in Massachusetts to cost of living increases, with a 5% annual cap.

If such a ballot measure were to be passed by voters, our financial condition, results of operations, and cash flows, as well as our ability to pay dividends, could be adversely affected over time.

If approved, the petition would have limited annual rent increases in Massachusetts to cost of living increases, with a 5% annual cap.

On June 23, 2026, the Massachusetts Supreme Judicial Court held that the petition was constitutionally barred from the November 2026 ballot because the exemption for facilities operated for solely religious purposes made religion a factor in the petition application.

If a future ballot measure were to be passed by voters, our financial condition, results of operations, and cash flows, as well as our ability to pay dividends, could be adversely affected over time.

● On August 1, 2025, a new Massachusetts state law became effective that prohibits real estate professionals, such as brokers, from charging tenants broker fees for services primarily provided to the landlord.

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-Q

Item 2. Management’s Discussion and Analysis