What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-06 compared with 2021-05-07 · 113 added, 89 removed, 220 unchanged (48% of the section changed)

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

Caution should be exercised in interpreting and relying on such forward looking statements, the realization of which may be impacted by known and unknown risks and uncertainties, events that may occur subsequent to the forward looking statements, and other factors which may be beyond the Partnership’s control and which can materially affect the Partnership’s actual results, performance or achievements for 2021 and beyond.

results, performance or achievements for 2021 and beyond.

Should one or more of the risks or uncertainties mentioned below materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.

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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.

Approximately one year has passed since we became aware of the current outbreak of COVID- 19, a novel strain of coronavirus.

More than one year has passed since we became aware of the current outbreak of COVID- 19, a novel strain of coronavirus.

The World Health Organization declared a global pandemic on March 11, 2020.

On March 10, 2020 the governor of Massachusetts, Charlie Baker, declared a state of emergency and ordered all non-essential businesses closed and prohibited the gathering of 10 or more people.

Over time, the Governor’s order has been modified, but restrictions are currently in place for the foreseeable future.

Additionally, March of 2020 saw the closure of local colleges and universities for the balance of the academic year.

Colleges in the City of Boston and the surrounding communities are conducting classes for the 2020/2021 academic year remotely, or using a hybrid model of remote and limited in class learning.

These educational models caused a large decrease in the student population in need of local housing and have resulted in significant vacancies in the Partnership’s apartment portfolio.

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.

Rental collections for the first quarter for the Partnership’s wholly owned properties were approximately 98% of rents due.

Residential tenants paid approximately 98% of their rent and commercial tenants paid approximately 99% of theirs.

Historically, commercial rents represent 5% of the Partnership’s revenue.

The rent collections for the Joint Ventures were approximately 74%.

The first quarters’ collections are not necessarily an indicator of future cash receipts.

Vacancy rates for the Partnership’s residential properties as of May 1, 2021 were 6.2% as compared with a vacancy rate of 3.8% as of May 1, 2020.

The majority of the vacancies in the wholly owned properties are at 62 Boylston Street, which has 93 vacant units, or 34.6% vacancy.

The vacancy rate for the Joint Venture properties as of May 1, 2021 is 9.2%, as compared to 2.5% for the same period last year.

The majority of the vacancies in the Joint Ventures are at Dexter Park, which has 33 vacant units, or 8.1 % vacancy.

With the uncertainties with the economy and the re-opening of Colleges and Universities in the fall, this year’s rental season started off slowly and has just recently started to improve.

However, the inventory of unrented units is significantly higher than in past years.

It is likely that the Partnership will have a high number of vacancies for the balance of 2021, and the first half of 2022.

In order to rent as many of these units as possible, management has reduced rent significantly and is offering up to two months free rent.

Colleges in the City of Boston and the surrounding communities conducted classes in the 2020/2021 academic year remotely, or using a hybrid model of remote and limited in class learning.

These educational models caused a large decrease in the student population and resulted in significant vacancies in the Partnership’s apartment portfolio.

With the introduction and roll out of Covid vaccines in the spring of 2021, the economy is opening back up.

The Governor of Massachusetts rescinded the State’s Covid-19 restrictions on May 29 th and terminated the State of Emergency on June 15 th .

The local colleges and universities announced a return to campus in the fall of 2021 and the rental market improved significantly as students prepare to return to the area.

Vacancy rates for the Partnership’s residential properties as of August 1, 2021 were 3.3% as compared with a vacancy rate of 6.3% as of August 1, 2020.

The vacancy rate for the Joint Venture properties as of August 1, 2021 is 2.8%, as compared to 3.9% for the same period last year.

Residential tenants generally have lease terms of 12 months.

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

Given the current economic environment, it is not possible to estimate the amount of lease turnover we will experience or the amount of increases to or decreases from the current rental rates we will realize with lease renewals or new leases.

However, we are currently offering reduced rental rates and significant rent concessions at certain properties.

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.

Rental activity has been strong as we moved from spring to summer and all indications are that we will have low vacancy rates for the balance of the year.

However, with the uncertainty that exists with the new variants of the Covid-19 virus, we are unable to project the financial performance of the portfolio.

During the second quarter of 2021, rents increased on average of 1.2% for renewals and decreased on average of 4.0% for new leases.

For the balance of 2021, due to the ongoing global coronavirus pandemic, management expects a significant softening of the local real estate market and is experiencing a decrease in rent and continuing rent concessions.

For the second quarter of 2021, consolidated revenue decreased by 2.0%, operating expenses decreased by 0.5% and Income before Other Income (Expense) decreased by 5.8%.

For the same reporting period, vacancy was 3.3% in 2021 vs 6.3% in 2020.

During the covid crisis, 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.

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

During the first quarter of 2021, rents increased on average of 0.3% for renewals and decreased on average of 5.0% for new leases.

For the first quarter of 2021, consolidated revenue decreased by 7.8%, operating expenses decreased by 2.8% and Income before Other Income (Expense) decreased by 21.9%.

For the same reporting period, vacancy was 6.2% in 2021 vs 3.8% in 2020.

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

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

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

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

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

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 has exercised a one year extension.

The agreement originally expired on July 31, 2017, and was

extended until October 31, 2020.

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

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.

Subsequent Events for details.

On March 31, 2020, Nera Brookside Associates, LLC (“Brookside Apartments”), entered into a Mortgage Note with KeyBank National Associates ( KeyBank) in the principal amount of $6,175,000.

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From the start of the Stock Repurchase Program in 2007 through March 31, 2021, the Partnership has purchased 1,428,437 Depositary Receipts.

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

During the three months ended June 30, 2021, the Partnership did not purchase any 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.

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

At May 1, 2021, the Harold Brown related entities and Ronald Brown collectively own approximately 30.9% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members).

The Estate of Harold Brown also controls 75% of the Partnership’s Class B Units, 75% of the capital stock of NewReal, Inc.

(“NewReal”), the Partnership’s sole general partner, and all of the outstanding stock of Hamilton.

At August 1, 2021, the Harold Brown related entities and Ronald Brown collectively own approximately 30.9% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members).

The Estate of Harold Brown also controls 75% of the Partnership’s Class B Units, and 75% of the capital stock of NewReal, Inc.

(“NewReal”), the Partnership’s sole general partner.

Ronald Brown also owns 25% of the Partnership’s Class B Units and 25% of NewReal’s capital stock.

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The 75% of the issued and outstanding Class B units of the Partnership, controlled by the Estate of Harold Brown, are owned by HBC Holdings LLC, an entity of which Jameson Brown is the manager.

The outstanding stock of The Hamilton Company, Inc.

is controlled by Jameson Brown and Harley Brown.

In addition to the Management Fee, the Partnership Agreement further provides for the employment of outside professionals to provide services to the Partnership and allows NewReal to charge the Partnership for the cost of employing professionals to assist with the administration of the Partnership’s properties.

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Residential tenants sign a one year lease.

During the three months ended March 31, 2021, tenant renewals were approximately 60% with an average rental increase of approximately 0.3%, new leases accounted for approximately 40% with rental rate decreases of approximately 5.0%.

During the three months ended March 31, 2021, leasing commissions were approximately $168,000 compared to approximately $114,000 for the three months ended March 31, 2020, an increase of approximately $54,000 (47.2%).

Tenant concessions were approximately $5,000 for the three months ended March 31, 2021, compared to approximately $12,000 for the three months ended March 31, 2020, a decrease of approximately $7,000 (58.3%).

Tenant improvements were approximately $320,000 for the three months ended March 31, 2021, compared to approximately $621,000 for the three months ended March 31, 2020, a decrease of approximately $301,000 (48.5%).

Hamilton accounted for approximately 2.3% of the repair and maintenance expenses paid for by the Partnership during the three months ended March 31, 2021 and 3.2 % during the three months ended March 31, 2020.

During the six months ended June 30, 2021, tenant renewals were approximately 67% with an average rental increase of approximately 1.0%, new leases accounted for approximately 33% with rental rate decreases of approximately 4.4%.

During the six months ended June 30, 2021, leasing commissions were approximately $308,000 compared to approximately $159,000 for the six months ended June 30, 2020, an increase of approximately $149,000 (94.2%).

Tenant concessions were approximately $15,000 for the six months ended June 30, 2021, compared to approximately $18,000 for the six months ended June 30, 2020, a decrease of approximately $3,000 (15.7%).

Tenant improvements were approximately $746,000 for the six months ended June 30, 2021, compared to approximately $897,000 for the six months ended June 30, 2020, a decrease of approximately $151,000 (16.8%).

Hamilton accounted for approximately 2.5% of the repair and maintenance expenses paid for by the Partnership during the six months ended June 30, 2021 and 2.5 % during the six months ended June 30, 2020.

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.

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

Overall, Hamilton provided approximately $24,000 (52.9%) and approximately $52,000 (86.3%) of the legal services paid for by the Partnership during the three months ended March 31, 2021 and 2020 respectively.

Overall, Hamilton provided approximately $59,000 (67.5%) and approximately $64,000 (65.9%) of the legal services paid for by the Partnership during the six months ended June 30, 2021 and 2020 respectively.

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

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

During the three months ended March 31, 2021, Hamilton provided the Partnership approximately $155,000 in construction and architectural services, compared to approximately $196,000 for the three months ended March 31, 2020.

During the six months ended June 30, 2021, Hamilton provided the Partnership approximately $302,000 in construction and architectural services, compared to approximately $305,000 for the six months ended June 30, 2020.

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

During the three months ended March 31, 2021 and 2020, Hamilton charged the Partnership $31,250 for bookkeeping and accounting services.

During the six months ended June 30, 2021 and 2020, 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.

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However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment.

The Partnership’s critical

accounting policies are those which require assumptions to be made about such matters that are highly uncertain.

The Partnership’s critical accounting policies are those which require assumptions to be made about such matters that are highly uncertain.

Different estimates could have a material effect on the Partnership’s financial results.

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The Partnership elected an allowed practical expedient.

For (i) operating lease arrangements involving real estate that include common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance costs, we present these amounts within lease revenues in our consolidated statements of income.

For (i) operating lease arrangements involving real estate that include

common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance costs, we present these amounts within lease revenues in our consolidated statements of income.

We record amounts reimbursed by the lessee in the period in which the applicable expenses are incurred.

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The Partnership records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction.

methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information.

In estimating the fair value of the tangible and intangible assets acquired, the Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information.

The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

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The Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property.

As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

As these factors are difficult to predict and are subject to future events that may alter

management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Investments in Joint Ventures:

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and (2) the obligation to absorb losses and rights to receive the returns from VIE that would be significant to the VIE.

With respect to investments in and advances to the Investment Properties, the Partnership looks to the underlying properties to assess performance and the recoverability of carrying amounts for those investments in a

manner similar to direct investments in real estate properties.

An impairment charge is recorded if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property.

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RESULTS OF OPERATIONS

Three Months Ended March 31, 2021 and March 31, 2020

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $3,395,000 during the three months ended March 31, 2021, compared to approximately $4,344,000 for the three months ended March 31, 2020, a decrease of approximately $949,000 (21.9%).

Three Months Ended June 30, 2021 and June 30, 2020

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $4,187,000 during the three months ended June 30, 2021, compared to approximately $4,444,000 for the three months ended June 30, 2020, a decrease of approximately $257,000 (5.8%).

The rental activity is summarized as follows:

Occupancy Date

August 1, 2021

August 1, 2020

Total square feet

Rental Income (in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Residential percentage

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Contingent rentals

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020:

Three Months Ended March 31,

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020:

Three Months Ended June 30,

Rental income

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Income from investments in unconsolidated joint ventures

Net Income (Loss)

Rental income for the three months ended March 31, 2021 was approximately $14,980,000, compared to approximately $16,253,000 for the three months ended March 31, 2020, a decrease of approximately $1,273,000 (7.8%).

Rental income for the three months ended June 30, 2021 was approximately $15,333,000, compared to approximately $15,647,000 for the three months ended June 30, 2020, a decrease of approximately $314,000 (2.0%).

Although rental income has increased at a number of properties, due to the effect of the Pandemic, a number of properties incurred a decrease in their rental income.

The Partnership properties with the largest increases in rental income include Hamilton Oaks, Westside Colonial, and Hamilton Green with increases of $60,000, $28,000, and $27,000 respectively.

The Partnership properties with the largest increases in rental income include Hamilton Oaks, Hamilton Green and Hamilton Cypress with increases of $33,000, $32,000, and $24,000 respectively.

These are offset by certain properties with the largest decreases in rental income, which include 62 Boylston, 1144 Commonwealth, and Lincoln Street, with decreases of approximately $610,000, 168,000, and $60,000, respectively.

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

Operating expenses for the three months ended March 31, 2021 were approximately $11,694,000 compared to approximately $12,031,000 for the three months ended March 31, 2020, a decrease of approximately $337,000 (2.8%).

The factors contributing to the decrease are a decrease in depreciation and amortization of approximately $660,000, (14.4%), and a decrease in repairs and maintenance expenses of approximately $116,000 (5.6%), partially offset by an increase in operating costs of approximately $378,000 (22.6%), due to an increase in snow removal expense of approximately $270,000.

Interest expense for the three months ended March 31, 2021 was approximately $3,364,000 compared to approximately $3,450,000 for the three months ended March 31, 2020, a decrease of approximately $86,000 (2.5%).

The decrease in interest expense is primarily due to a decrease in interest expense on the line of credit of approximately $65,000.

At March 31, 2021, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

Operating expenses for the three months ended June 30, 2021 were approximately $11,260,000 compared to approximately $11,315,000 for the three months ended June 30, 2020, a decrease of approximately $55,000 (0.5%).

The factors contributing to the decrease are a decrease in depreciation and amortization of approximately $658,000 (14.3%), partially offset by an increase in repairs and maintenance of approximately $285,000 (13.9%), an increase in operating costs of approximately $116,000 ( 9.0%) and an increase in renting expense of approximately $93,000 (72.1%).

Interest expense for the three months ended June 30, 2021 was approximately $3,379,000 compared to approximately $3,424,000 for the three months ended June 30, 2020, a decrease of approximately $45,000 (1.3%).

At June 30, 2021, 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 14 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net loss from the Investment Properties was approximately $325,000 for the three months ended March 31, 2021, compared to net income of approximately $475,000 for the three months ended March 31, 2020, a decrease in income of approximately $800,000 (168.5%).

This decrease is primarily due to the reduction in rental revenue from approximately $ 2,755,000 to

$2,073,000, a decrease of approximately $682,000 (24.8 %) for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Included in the income for the three months ended March 31, 2021 is depreciation and amortization expense of approximately $652,000.

As a result of the changes discussed above, the net loss for the three months ended March 31, 2021 was approximately $294,000 compared to net income of approximately $1,369,000 for the three months ended March 31, 2020, a decrease in income of approximately $1,663,000 (121.5 %).

As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net loss from the Investment Properties was approximately $238,000 for the three months ended June 30, 2021, compared to the net income of approximately $444,000 for the three months ended June 30, 2020, a decrease in income of approximately $682,000 (153.7%).

This decrease is primarily due to the reduction in rental revenue from approximately $ 2,617,000 to $2,142,000, a decrease of approximately $475,000 (18.2 %) for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

Included in the income for the three months ended June 30, 2021 is depreciation and amortization expense of approximately $656,000.

As a result of the changes discussed above, the net income for the three months ended June 30, 2021 was approximately $570,000 compared to net income of approximately $1,465,000 for the three months ended June 30, 2020, a decrease in income of approximately $895,000 (61.1 %).

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020:

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, and other expense of approximately $7,582,000 during the six months ended June 30, 2021, compared to approximately $8,789,000 for the six months ended June 30, 2020, a decrease of approximately $1,207,000 (13.7%).

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)

(Loss) from investments in unconsolidated joint ventures

Rental income for the six months ended June 30, 2021 was approximately $30,313,000, compared to approximately $31,900,000 for the six months ended June 30, 2020, a decrease of approximately $1,587,000 (5.0%).

Although rental income has increased at a number of properties, due to the effect of the Pandemic, a number of properties incurred a decrease in their rental income.The Partnership properties with the largest increases in rental income include Hamilton Oaks, Hamilton Green and Dean Street Associates with increases of $92,000, $59,000, and $44,000 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, 2021 were approximately $22,953,000 compared to approximately $23,345,000 for the six months ended June 30, 2020, a decrease of approximately $392,000 (1.7%).

The factors contributing to this net decrease are a decrease in depreciation and amortization of approximately $ 1,318,000 (14.4%) due to fully depreciated assets, partially offset by an increase in operating costs of approximately $493,000 (16.7%), an increase in repairs and maintenance expenses of approximately $169,000 (4.1%), and an increase in renting expense of approximately $158,000 (48.5%).

Interest expense for the six months ended June 30, 2021 was approximately $6,743,000 compared to approximately $6,874,000 for the six months ended June 30, 2020, a decrease of approximately $131,000 (1.9%).

The decrease is primarily due to a decrease in interest expense on the line of credit of approximately $82,000.

At June 30, 2021, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net loss from the Investment Properties was approximately $564,000 for the six months ended June 30, 2021, compared to net income of approximately $919,000 for the six months ended June 30, 2020, a decrease in income of approximately $1,482,000 (161.4%).

This decrease is primarily due to the reduction in rental revenue from approximately $ 5,372,000 for the six months ended June 30, 2020 to approximately $4,215,000 for the six months ended June 30, 2021, a decrease of approximately $1,157,000 (21.5 %).

Included in the income for the six months ended June 30, 2021 is depreciation and amortization expense of approximately $1,308,000.

The proportional loss for the six months ended June 30, 2021 from the investment in Dexter Park is approximately $459,000.

As a result of the changes discussed above, net income for the six months ended June 30, 2021 was approximately $276,000 compared to income of approximately $2,834,000 for the six months ended June 30, 2020, a decrease in net income of approximately $2,558,000 (90.3%).

LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s principal source of cash during the first three months of 2021 was the collection of rents.

The Partnership’s principal source of cash in 2020 was the collection of rents.

The majority of cash and cash equivalents of $20,822,344 at March 31, 2021 and $18,646,972 at December 31, 2020 were held in interest bearing accounts at creditworthy financial institutions.

The increase in cash of $2,175,372 for the three months ended March 31, 2021 is summarized as follows:

Three Months Ended March 31,

The Partnership’s principal source of cash during the first six months of 2021 was the collection of rents.

The Partnership’s principal source of cash during the first six months of 2020 was the collection of rents and the proceeds from the refinancing of Brookside Apartments.

The majority of cash and cash equivalents of $23,367,387 at June 30, 2021 and $18,646,972 at December 31, 2020 were held in interest bearing accounts at creditworthy financial institutions.

The increase in cash of $4,720,415 for the six months ended June 30, 2021 is summarized as follows:

Six Months Ended June 30,

Cash provided by operating activities

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Distributions paid

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

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

The decrease in cash used in investing activities is primarily due to improvements to rental properties.

The increase in cash used in investing activities is primarily due to improvements to rental properties.

The change in cash used in financing activities is due to the pay down of mortgages,

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Cash reserves have been adequate to fully fund improvements.

The most significant improvements were made at 62 Boylston Street, Redwood Hills, 1144 Commonwealth, Hamilton Oaks, Dean Street Associates, and Hamilton Green, at a cost of approximately $137,000, $69,000, $59,000, $52,000, $42,000 and $40,000 respectively.

The most significant improvements were made at 62 Boylston Street, Hamilton Oaks, Redwood Hills, Dean Street Associates, Hamilton Green and 1144 Commonwealth, at a cost of approximately $355,000, 145,000, $123,000, $95,000, $95,000 and $84,000 respectively.

On March 31, 2020, Nera Brookside Associates, LLC (“Brookside Apartments”), entered into a Mortgage Note with KeyBank National Associates ( KeyBank) in the principal amount of $6,175,000.

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In connection with this refinancing, there were closing costs of approximately $136,000.

During the three months ended March 30, 2021, the Partnership received distributions of approximately $196,000 from the investment properties.

For the three months ended March 31, 2020, the Partnership did not receive any distributions from the investment properties.

During the six months ended June 30, 2021, the Partnership received distributions of approximately $419,000 from the investment properties.

For the six months ended June 30, 2020, the Partnership received $1,066,000 in distributions from the investment properties.

Included in these net distributions is the amount from Dexter Park of approximately $80,000 and $700,000 for the six months ended June 30, 2021 and 2020, respectively.

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

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

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

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

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

The Partnership is currently in negotiations to extend the line of credit.

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 had exercised a one year extension.

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

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.

Subsequent Events for details.

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.

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On January 22, 2020, the Partnership paid down the line by $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 Partnership anticipates that cash from operations will be sufficient to fund its current operations, pay distributions, make required debt payments and finance current improvements to its properties.

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Off-Balance Sheet Arrangements—Joint Venture Indebtedness

As of March 31, 2021 the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness.

As of June 30, 2021 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.

At March 31, 2021, our proportionate share of the non-recourse debt related to these investments was approximately $70,998,000.

At June 30, 2021, our proportionate share of the non-recourse debt related to these investments was approximately $70,972,000.

See Note 14 to the Consolidated Financial Statements.

Contractual Obligations

As of March 31, 2021, we are subject to contractual payment obligations as described in the table below.

As of June 30, 2021, we are subject to contractual payment obligations as described in the table below.

Payments due by period

43 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis