What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 159 added, 104 removed, 577 unchanged (31% 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, 2020.

The results of operations for the three month period ended March 31, 2021 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 period ended June 30, 2021 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

22 unchanged sentences

Three Months Ended

Six Months Ended

Rental income

11 unchanged sentences

( 3,423,583 )

( 6,743,111 )

( 6,873,908 )

Income (Loss) from investments in unconsolidated joint ventures

1 unchanged sentence

( 2,979,418 )

Net Income (Loss)

Net Income (Loss) per Unit

( 7,306,660 )

( 5,955,069 )

Net Income per Unit

Weighted Average Number of Units Outstanding

9 unchanged sentences

( 1,870,428 )

( 2,338,034 )

Stock Buyback

Balance March 31, 2020

Balance June 30, 2020

( 30,205,825 )

7 unchanged sentences

( 1,870,177 )

( 2,337,721 )

Stock Buyback

Balance March 31, 2021

Balance June 30, 2021

( 34,853,055 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows from Operating Activities

Net income (loss)

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

8 unchanged sentences

Increase (Decrease) in accounts payable and accrued expense

(Increase) in real estate tax escrow

Decrease in prepaid expenses and other assets

(Decrease) in advance rental payments and security deposits

(Increase) Decrease in real estate tax escrow

(Increase) Decrease in prepaid expenses and other assets

Increase (Decrease) in advance rental payments and security deposits

Total Adjustments

5 unchanged sentences

( 1,385,258 )

Net cash provided by (used in) investing activities

( 1,504,059 )

Net cash (used in) investing activities

Cash Flows from Financing Activities

4 unchanged sentences

Principal payments of mortgage notes payable

( 1,125,589 )

( 1,134,602 )

Stock buyback

4 unchanged sentences

( 3,463,310 )

( 1,221,115 )

Net Increase in Cash and Cash Equivalents

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

June 30, 2021

SIGNIFICANT ACCOUNTING POLICIES

88 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 $ 60,000 and $ 60,000 for the three months ended March 31, 2021 and 2020, respectively.

In all cases, amortization of such costs is included in interest expense and was approximately $ 120,000 and $ 120,000 for the six months ended June 30, 2021 and 2020, respectively.

Income Taxes:

21 unchanged sentences

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

At March 31, 2021, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.01 % to 0.03 %.

At March 31, 2021 and December 31, 2020, respectively approximately $ 21,116,000 , and $ 18,830,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

At June 30, 2021, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.01 % to 0.03 %.

At June 30, 2021 and December 31, 2020, respectively approximately $ 23,473,000 , and $ 18,830,000 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 $ 89,350 and $ 69,056 for the three months ended March 31, 2021 and 2020, respectively.

Advertising expense was $ 154,569 and $ 145,803 for the six months ended June 30, 2021 and 2020, 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, 2021 and 2020 there was no capitalized interest.

During the six months ended June 30, 2021 and 2020 there was no capitalized interest.

Extinguishment of Debt:

5 unchanged sentences

RENTAL PROPERTIES

As of March 31, 2021, the Partnership and its Subsidiary Partnerships owned 2,892 residential apartment units in 25 residential and mixed-use complexes (collectively, the “Apartment Complexes”).

As of June 30, 2021, the Partnership and its Subsidiary Partnerships owned 2,892 residential apartment units in 25 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, 2021, the Partnership and Subsidiary Partnerships owned a commercial shopping center in Framingham, commercial buildings in Newton and Brookline and mixed-use properties in Boston, Brockton and Newton, all in Massachusetts.

Additionally, as of June 30, 2021, the Partnership and Subsidiary Partnerships owned a commercial shopping center in Framingham, commercial buildings in Newton and Brookline and mixed-use properties in Boston, Brockton 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, 2021 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, 2021 with a total of 688 apartment units, accounted for using the equity method of consolidation.

See Note 14 for summary information on these investments.

Rental properties consist of the following:

March 31, 2021

June 30, 2021

December 31, 2020

14 unchanged sentences

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.

Total fees paid were approximately $ 605,000 and $ 649,000 for the three months ended March 31, 2021 and 2020, respectively.

Total fees paid were approximately $ 1,222,000 and $ 1,265,000 for the six months ended June 30, 2021 and 2020, respectively.

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

During the three months ended March 31, 2021 and 2020, approximately $ 256,000 and $ 346,000 , was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

During the six months ended June 30, 2021 and 2020, approximately $ 529,000 and $ 533,000 , was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

Of the 2021 expenses referred to above, approximately $ 105,000 consisted of repairs and maintenance, and $ 122,000 of administrative expense.

3 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 $ 843,000 and $ 822,000 for the three months ended March 31, 2021 and 2020, respectively.

Total reimbursement was approximately $ 1,782,000 and $ 1,738,000 for the six months ended June 30, 2021 and 2020, 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, 2021, the Partnership accrued $ 11,000 for the employer’s match portion to the plan.

For the three months ended March 31, 2020, the Partnership contributed $ 11,000 for the employer’s match portion to the plan.

For the six months ended June 30, 2021, the Partnership accrued $ 22,000 for the employer’s match portion to the plan.

For the six months ended june 30, 2020, the Partnership contributed $ 22,000 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 14 people.

During the three months ended March 31, 2021 and 2020, the Management Company charged the Partnership $ 31,250 ($ 125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

During the six months ended June 30, 2021 and 2020, the Management Company charged the Partnership $ 62,500 ($ 125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

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 $ 2,790,000 , and $ 2,830,000 of security deposits are included in prepaid expenses and other assets at March 31, 2021 and December 31, 2020, respectively.

Approximately $ 2,907,000 , and $ 2,830,000 of security deposits are included in prepaid expenses and other assets at June 30, 2021 and December 31, 2020, respectively.

The security deposits and escrow accounts are restricted cash.

Also, included in prepaid expenses and other assets at March 31, 2021 and December 31, 2020 is approximately $ 1,225,000 and $ 1,073,000 , respectively, held in escrow to fund future capital improvements.

Also, included in prepaid expenses and other assets at June 30, 2021 and December 31, 2020 is approximately $ 1,378,000 and $ 1,073,000 , respectively, held in escrow to fund future capital improvements.

Intangible assets on the acquisition of Mill Street Apartments are included in prepaid expenses and other assets.

Intangible assets are approximately $ 45,000 net of accumulated amortization of approximately $ 1,373,000 and approximately $ 51,000 net of accumulated amortization of approximately $ 1,367,000 at March 31, 2021 and December 31, 2020, respectively.

Financing fees in association with the line of credit of approximately $ 9,000 and $ 42,000 are net of accumulated amortization of approximately $ 16,000 and $ 6,000 at March 31, 2021 and December 31, 2020 respectively.

Intangible assets are approximately $ 38,000 net of accumulated amortization of approximately $ 1,379,000 and approximately $ 51,000 net of accumulated amortization of approximately $ 1,367,000 at June 30, 2021 and December 31, 2020, respectively.

Financing fees in association with the line of credit of approximately $ 19,000 and $ 42,000 are net of accumulated amortization of approximately $ 25,000 and $ 6,000 at June 30, 2021 and December 31, 2020 respectively.

MORTGAGE NOTES PAYABLE

At March 31, 2021 and December 31, 2020, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2.

At March 31, 2021, the interest rates on these loans ranged from 3.53 % to 5.66 %, payable in monthly installments aggregating approximately $ 1,257,000 including principal, to various dates through 2035.

At June 30, 2021 and December 31, 2020, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2.

At June 30, 2021, the interest rates on these loans ranged from 3.53 % to 5.66 %, payable in monthly installments aggregating approximately $ 1,257,000 including principal, to various dates through 2035.

The majority of the mortgages are subject to prepayment penalties.

At March 31, 2021, the weighted average interest rate on the above mortgages was 4.43 %.

At June 30, 2021, the weighted average interest rate on the above mortgages was 4.43 %.

The effective rate of 4.51 % includes the amortization expense of deferred financing costs.

1 unchanged sentence

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 $ 1,285,000 and $ 1,345,000 are net of accumulated amortization of approximately $ 1,624,000 and $ 1,564,000 at March 31, 2021 and December 31, 2020, respectively, which offset the total mortgage notes payable.

Financing fees of approximately $ 1,225,000 and $ 1,345,000 are net of accumulated amortization of approximately $ 1,684,000 and $ 1,564,000 at June 30, 2021 and December 31, 2020, respectively, which offset the total mortgage notes payable.

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

Approximate annual maturities at March 31, 2021 are as follows:

Approximate annual maturities at June 30, 2021 are as follows:

2022—current maturities

13 unchanged sentences

The costs associated with the line of credit extension in 2017 were approximately $ 128,000 .

Management is currently working with the lender on a three year renewal of the line of credit.

As of April 30, 2021, the Partnership had not completed the renewal and exercised a one year extension.

Prior to the line’s expiration in 2020, the Partnership exercised its option for a one-year extension until October 31, 2021.

The Partnership paid an extension fee of approximately $37,500 in association with the extension.

Management has a signed term sheet with the lender and is working to close on a three year extension and modification of the line of credit in August 2021.

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

4 unchanged sentences

Any unused balance of the line of credit is subject to a fee ranging from 15 to 20 basis points per annum.

The Partnership paid approximately $ 3,000 in fees for the three months ended March 31, 2021.

The Partnership paid approximately $ 6,000 in fees for the six months ended June 30, 2021.

On December 19, 2019, the Partnership drew down on the line of credit in the amount of $ 20,000,000 , used in conjunction with the purchase of Mill Street Apartments.

1 unchanged sentence

On January 22, 2020, the Partnership paid down $ 1,000,000 .

As of March 31, 2021, the line of credit had an outstanding balance of $ 17,000,000 .

As of June 30, 2021, the line of credit had an outstanding balance of $ 17,000,000 .

The line of credit agreement has several covenants, such as providing cash flow projections and compliance certificates, as well as other financial information.

5 unchanged sentences

debt service coverage ratio of at least 1.6 to 1, as well as other items.

The Partnership is in compliance with these covenants as of March 31, 2021.

As of June 30, 2021, the Partnership is not in compliance with the loan covenants required by the terms of the line of credit, eliminating any additional advances.

In anticipation of this, Management has been working with the lender to extend and modify the terms of the credit line.

On July 30, 2021, the Partnership signed a term sheet to modify the covenant terms and extend the maturity of the credit line.

The Partnership will be in compliance with the loan covenants under the terms of loan extension and modification.

Subsequent Events for details.

ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

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, 2021, amounts received for prepaid rents of approximately $ 1,999,000 are included in cash and cash equivalents, and security deposits of approximately $ 2,790,000 are included in prepaid expenses and other assets and are restricted cash.

At June 30, 2021, amounts received for prepaid rents of approximately $ 2,097,000 are included in cash and cash equivalents, and security deposits of approximately $ 2,907,000 are included in prepaid expenses and other assets and are restricted cash.

PARTNERS’ CAPITAL

The Partnership has two classes of Limited Partners (Class A and B) and one category of General Partner.

Under the terms of the Partnership Agreement, distributions to holders of Class B Units and General Partnership Units must represent 19 % and 1 %, respectively, of the total units outstanding.

Under the terms of the Partnership Agreement, distributions to holders of Class B Units and General Partnership Units

must represent 19 % and 1 %, respectively, of the total units outstanding.

All classes have equal profit sharing and distribution rights, in proportion to their ownership interests.

In January 2021, the Partnership approved a quarterly distribution of $ 9.60 per Unit ($ 0.32 per Receipt), payable on March 31, 2021.

In April 2021, the Partnership approved a quarterly distribution of $ 9.60 per Unit ($ 0.32 per Receipt), payable on June 30, 2021.

In 2020, regular quarterly distributions of $ 9.60 per unit ($ 0.32 per receipt), were paid in March, June, September and December.

2 unchanged sentences

The following is information per Depositary Receipt:

Three Months Ended

Net Income (Loss) per Depositary Receipt

Six Months Ended

Net Income per Depositary Receipt

Distributions per Depositary Receipt

TREASURY UNITS

Treasury Units at March 31, 2021 are as follows:

Treasury Units at June 30, 2021 are as follows:

General Partnership

5 unchanged sentences

Repurchases of Depositary Receipts or Partnership Units pursuant to the Repurchase Program may be made by the Partnership from time to time in its sole discretion in open market transactions or in privately negotiated transactions.

From August 20, 2007 through March 31, 2021, the Partnership has repurchased 1,428,437 Depositary Receipts at an average price of $ 28.43 per receipt (or $ 852.90 per underlying Class A Unit), 3,572 Class B Units and 188 General Partnership Units, both at an average price of $ 1,033.00 per Unit, totaling approximately $ 44,718,000 including brokerage fees paid by the Partnership.

During the three months ended March 31, 2021, the Partnership did not purchase any Depositary Receipts.

From August 20, 2007 through June 30, 2021, the Partnership has repurchased 1,428,437 Depositary Receipts at an average price of $ 28.43 per receipt (or $ 852.90 per underlying Class A Unit), 3,572 Class B Units and 188 General Partnership Units, both at an average price of $ 1,033.00 per Unit, totaling approximately $ 44,718,000 including brokerage fees paid by the Partnership.

During the six months ended June 30, 2021, the Partnership did not purchase any Depositary Receipts.

Given the economic uncertainty caused by the coronavirus issue, as of April 15, 2020, the Partnership has elected to temporarily suspend the repurchase program.

3 unchanged sentences

The Partnership is not involved in any material pending legal proceedings.

The Massachusetts economy has opened significantly since the spring of 2021 with the lifting of COVID-19 restrictions and the state of emergency.

Colleges and universities are scheduled to resume on-campus learning in the fall.

Vacancy rates at the Partnership’s properties are back in line with pre-COVID levels.

However, the COVID-19 pandemic continues to spread as new variants emerge even as the percentage of the population who have been vaccinated increases.

There is considerable uncertainty as to when the pandemic will end and what effects it will have on the economy as it continues.

The COVID-19 pandemic may cause financial hardships to our residential and commercial tenants leading to their inability to pay rent.

The pandemic may also cause reduced demand for our commercial space and residential units which would have a negative impact on the Partnership’s financial performance.

RENTAL INCOME

During the three months ended March 31, 2021, approximately 94 % 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, 2021, approximately 94 % 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 6 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2021 as follows:

Approximately 6 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at June 30, 2021 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 $ 150,000 and $ 121,000 for the three months ended March 31, 2021 and 2020 respectively.

Aggregate contingent rentals from continuing operations were approximately $ 290,000 and $ 251,000 for the six months ended June 30, 2021 and 2020 respectively.

Staples and Trader Joe’s, tenants at Staples Plaza, are approximately 30 % of the total commercial rental income.

4 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 $ 1,271,000 and $ 1,454,000 at March 31, 2021 and December 31, 2020.

Included in rents receivable at March 31, 2021 is approximately $ 84,000 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 $ 1,177,000 and $ 1,454,000 at June 30, 2021 and December 31, 2020.

Included in rents receivable at June 30, 2021 is approximately $ 285,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

The majority of this amount is for long-term leases at 62 Boylston Street, Cypress Street, and Staples Plaza in Massachusetts.

Rents receivable at March 31, 2021 also includes approximately $ 427,000 representing the deferral of rental concession primarily related to the residential properties.

Rents receivable at June 30, 2021 also includes approximately $ 227,000 representing the deferral of rental concession primarily related to the residential properties.

CASH FLOW INFORMATION

During the three months ended March 31, 2021 and 2020, cash paid for interest was approximately $ 3,306,000 , and $ 3,229,000 respectively.

Cash paid for state income taxes was approximately $ 56,000 and $ 76,000 during the three months ended March 31, 2021 and 2020 respectively.

Additionally, during the three months ended March 31, 2020, the Partnership was involved in a non-cash financing activity of approximately $ 2,393,000 in connection with the refinancing of Brookside Apartments.

During the six months ended June 30, 2021 and 2020, cash paid for interest was approximately $ 6,650,000 , and $ 6,611,000 respectively.

Cash paid for state income taxes was approximately $ 60,000 and $ 81,000 during the six months ended June 30, 2021 and 2020 respectively.

Additionally, during the six months ended June 30, 2020, the Partnership was involved in a non-cash financing activity of approximately $ 2,393,000 in connection with the refinancing of Brookside Apartments.

FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At March 31, 2021 and December 31, 2020, 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, 2021 and December 31, 2020, 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, 2021 and December 31, 2020 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and 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, 2021 and December 31, 2020, we estimated the fair value of our mortgages payable 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, 2021 and December 31, 2020 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and 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, 2021 and December 31, 2020, we estimated the fair value of our mortgages payable 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, 2021 and December 31, 2020, 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, 2021 and December 31, 2020, 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.

10 unchanged sentences

Partnership Properties

At March 31, 2021

At June 30, 2021

At December 31, 2020

Investment Properties

At March 31, 2021

At June 30, 2021

At December 31, 2020

* 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, 2021 and December 31, 2020.

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, 2021 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, 2021 and December 31, 2020.

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, 2021 and current estimates of fair value may differ significantly from the amounts presented herein.

TAXABLE INCOME AND TAX BASIS

10 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, 2021, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2017 forward.

As of June 30, 2021, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2017 forward.

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

19 unchanged sentences

Based on its’ ownership in the property, the Partnership incurred 40 % of this charge, an expense of approximately $ 1,532,000 .

At March 31, 2021, the balance on this mortgage before unamortized deferred financing costs is $125,000,000 .

At June 30, 2021, the balance on this mortgage before unamortized deferred financing costs is $125,000,000 .

This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

13 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, 2021, the balance on this mortgage before unamortized deferred financing costs is approximately $ 10,000,000 .

At June 30, 2021, the balance on this mortgage before unamortized deferred financing costs is approximately $ 10,000,000 .

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

20 unchanged sentences

The cost associated with the refinancing was approximately $ 123,000 .

At March 31, 2021, the balance on this mortgage before unamortized deferred financing costs is approximately $ 6,000,000 .

At June 30, 2021, the balance on this mortgage before unamortized deferred financing costs is approximately $ 6,000,000 .

In 2018, the carrying value of the investment fell below zero.

10 unchanged sentences

In August 2014, the property was refinanced with a 10 year mortgage in the amount of $ 16,900,000 at 4.34 % interest only.

The Joint Venture paid off the prior mortgage of approximately $ 15,205,000 with the proceeds of the new mortgage and

distributed $ 850,000 to the Partnership.

The Joint Venture paid off the prior mortgage of approximately $ 15,205,000 with the proceeds of the new mortgage and distributed $ 850,000 to the Partnership.

The costs associated with the refinancing were approximately $ 161,000 .

At March 31, 2021, the balance of the mortgage before unamortized deferred finance is $ 16,900,000 .

At June 30, 2021, the balance of the mortgage before unamortized deferred finance is $ 16,900,000 .

In 2018, the carrying value of the investment fell below zero.

5 unchanged sentences

After the refinancing, the Joint Venture made a distribution of $ 1,610,000 to the Partnership.

As a result of the distribution, the carrying value of the investment fell below zero.

The Partnership will continue to account for this investment using the equity method of accounting.

As a result of the distribution, the carrying value of the investment fell below zero.The Partnership will continue to account for this investment using the equity method of accounting.

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

At March 31, 2021, the balance of this mortgage before unamortized deferred financing costs is approximately $ 9,097,000 .

At June 30, 2021, the balance of this mortgage before unamortized deferred financing costs is approximately $ 9,043,000 .

This investment is referred to as 345 Franklin, LLC.

Summary financial information March 31, 2021

Summary financial information at June 30, 2021

Rental Properties

28 unchanged sentences

Units to be sold

Units sold through May 1, 2021

Unsold units with deposits for future sale as of May 1, 2021

Financial information for the three months ended March 31, 2021

Units sold through August 1, 2021

Financial information for the six months ended June 30, 2021

Rental Income

10 unchanged sentences

( 3,327,363 )

Gain on Sale of Real Estate

Interest Income

( 2,528,011 )

1 unchanged sentence

Net Income (Loss)

( 1,146,490 )

( 1,356,488 )

Net Income (Loss)—NERA 50 %

Net Income (Loss) —NERA 40 %

Future annual mortgage maturities at March 31, 2021 are as follows:

Financial information for the three months ended June 30, 2021

Hamilton Essex

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

( 1,264,525 )

( 1,664,696 )

( 1,263,303 )

( 1,663,474 )

Net Income (Loss)

Net Income (Loss)—NERA 50%

Net Income (Loss)—NERA 40 %

Future annual mortgage maturities at June 30, 2021 are as follows:

unamortized deferred financing costs

At March 31, 2021 the weighted average interest rate on the above mortgages was 3.91 %.

At June 30, 2021 the weighted average interest rate on the above mortgages was 3.91 %.

The effective rate was 3.97 % including the amortization expense of deferred financing costs.

Summary financial information at March 31, 2020

Summary financial information at June 30, 2020

Rental Properties

13 unchanged sentences

( 40,570,361 )

( 45,466,090 )

Total Liabilities and Capital

11 unchanged sentences

Units to be sold

Units sold through May1, 2020

Unsold units with deposits for future sale as of May 1, 2020

Financial information for three months ended March 31, 2020

Hamilton Essex

Units sold through August1, 2020

Financial information for the six months ended June 30, 2020

Rental Income

11 unchanged sentences

Interest Income

Gain on sale of Real Estate

( 2,536,786 )

3 unchanged sentences

Net Income (Loss)—NERA 40 %

Financial information for the three months ended June 30, 2020

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

( 1,268,682 )

( 1,682,669 )

Interest Income

Gain on sale of Real Estate

( 1,268,682 )

( 1,682,669 )

Net Income (Loss)

Net Income (Loss)—NERA 50%

Net Income (Loss)—NERA 40%

EMPLOYEE BENEFIT 401(k) PLANS

1 unchanged sentence

Eligible employees may elect to defer up to 90 percent of their eligible compensation on a pre-tax basis to the 401(k) Plan, subject to certain limitations imposed by federal law.

The amounts contributed by employees are immediately vested and non-forfeitable.

The amounts cxontributed by employees are immediately vested and non-forfeitable.

Beginning January 1, 2019, the Partnership matched 50 % up to 6 % of compensation deferred by each employee in the 401(k) plan.

1 unchanged sentence

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, 2021 was $ 11,000 .

Total expense recognized by the Partnership for the 401(k) Plan for the six months ended June 30, 2021 was $ 22,000 .

IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

6 unchanged sentences

SUBSEQUENT EVENTS

The current outbreak of the COVID-19 virus, which was characterized on March 11, 2020 by the World Health Organization as a pandemic, has currently resulted in a worldwide health crisis, which is adversely affecting international, national and local economies and financial markets generally, and continues to have an unprecedented effect on the rental housing and commercial property markets.

Given the continuous evolution of the COVID-19 pandemic and the global response to curb its spread, the Partnership is not able to estimate the resulting effects on its results of operations, cash flows, financial condition, or liquidity for the year ending December 31, 2021 or beyond.

The Government’s measures put into place to combat the spread of the virus have caused significant disruptions to life and business operations in Massachusetts, the country and the world.

The length and severity of the current recession and the effects on the Partnership’s business are unknown at this time.

During the current state of emergency, The Hamilton Company, the Partnership’s property manager, has taken steps to maintain the safety of its employees and tenants.

Hamilton is providing essential services to ensure all properties are kept open, fully functioning and safe.

Hamilton has implemented a work from home policy with a skeleton staff present at all site offices to provide for property management, maintenance, leasing and construction services.

Leasing is limited to unoccupied units and a web based video technology is being used to remotely show apartments.

Hamilton and the Partnership will continue to adjust their business practices to comply with Federal and State mandates for workplace and rental property operations.

Past due rents receivable have increased and the Partnership is currently experiencing significantly higher vacancies for the upcoming rental season.

Both State and Federal governments have taken steps to protect tenants during the covid - 19 Pandemic.

These steps include extending the time required for a landlord to evict tenants who are not current with their rents.

Although the eviction process has been significantly complicated and lengthened from approximately 4 weeks to a new estimated minimum of 3 months, the Management company is moving forward with evictions in compliance with applicable law.

The pandemic has resulted in a significant reduction in the occupancy and rental rate for certain buildings located near Boston’s colleges and universities.

On July 30, 2021, t he Partnership signed a term sheet for the renewal and modification of its existing line of credit.

The agreement extends the credit line for three years with one 12-month extension.

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

The modification period covers the current period and phases out by December 31, 2022.

During this period, the loan covenants are 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 meets the original covenant tests for the trailing 12-month period, the commitment amount will return to $ 25 million.The interest rate for the new term has been reduced from LIBOR plus 350 basis points to LIBOR plus 300 basis points.

Additionally, the unused fee has been eliminated.

There is a fee $ 125,000 to modify and extend the credit line.

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