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Item 1. Financial Statements

2022-08-05 compared with 2022-05-06 · 151 added, 119 removed, 547 unchanged (33% of the section changed)

7 unchanged sentences

Form10-K for the fiscal year ended December 31, 2021.

The results of operations for the three month period ended March 31, 2022 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, 2022 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

20 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Rental income

11 unchanged sentences

( 3,378,942 )

( 7,078,349 )

( 6,743,111 )

Income (loss) from investments in unconsolidated joint ventures

Other (expenses)

( 4,367,937 )

( 3,617,341 )

Net Income (Loss)

Net Income (Loss) per Unit

( 7,802,470 )

( 7,306,660 )

Net Income per Unit

Weighted Average Number of Units Outstanding

9 unchanged sentences

( 1,870,177 )

Balance March 31 , 2021

( 2,337,721 )

Balance June 30 , 2021

( 34,853,055 )

( 8,244,100 )

( 43,531,055 )

Balance January 1, 2022

9 unchanged sentences

( 3,688,961 )

Balance March 31, 2022

Balance June 30, 2022

( 47,526,881 )

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

6 unchanged sentences

Decrease (Increase) in rents receivable

( 1,083,925 )

Increase in accounts payable and accrued expense

(Decrease) Increase in accounts payable and accrued expense

(Increase) in real estate tax escrow

(Increase) Decrease in prepaid expenses and other assets

(Decrease) in advance rental payments and security deposits

(Increase) in prepaid expenses and other assets

( 1,282,943 )

Increase in advance rental payments and security deposits

Total Adjustments

4 unchanged sentences

( 2,113,339 )

( 1,385,258 )

Net cash (used in) investing activities

1 unchanged sentence

Principal payments of mortgage notes payable

Stock buyback

( 1,198,209 )

Distributions to partners

( 1,125,589 )

Proceeds from Mortgage Notes Payable

Stock buyback

( 3,688,961 )

Net cash (used in) provided by financing activities

Distributions to partners

( 6,976,595 )

( 2,337,721 )

Net (Decrease) Increase in Cash and Cash Equivalents

Net cash provided by (used in) financing activities

( 3,463,310 )

Net Increase in Cash and Cash Equivalents

Cash and Cash Equivalents, at beginning of period

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

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 $ 90,000 and $ 60,000 for the three months ended March 31, 2022 and 2021, respectively.

In all cases, amortization of such costs is included in interest expense and was approximately $ 253,000 and $ 120,000 for the six months ended June 30, 2022 and 2021, respectively.

Income Taxes:

21 unchanged sentences

credit quality financial institutions.

At March 31, 2022, 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 0.02 %.

At March 31, 2022 and December 31, 2021, respectively approximately $ 92,421,000 , and $ 96,166,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

At June 30, 2022, 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 0.02 %.

At June 30, 2022 and December 31, 2021, respectively approximately $ 132,102,000 , and $ 96,166,000 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 $ 73,291 and $ 89,350 for the three months ended March 31, 2022 and 2021, respectively.

Advertising expense was $ 134,922 and $ 154,569 for the six months ended June 30, 2022, and 2021, respectively.

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

3 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, 2022 and 2021 there was no capitalized interest.

During the six months ended June 30, 2022, and 2021 there was no capitalized interest.

Extinguishment of Debt:

2 unchanged sentences

All refinancing qualify as extinguishment of debt.

Reclassifications Certain reclassifications have been made to prior period amounts in order to conform to current period presentation.

Reclassification:

Certain reclassifications have been made to prior period amounts in order to conform to current period presentation.

RENTAL PROPERTIES

As of March 31, 2022, 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, 2022, 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, 2022, 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, 2022, 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, 2022 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, 2022 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, 2022

June 30, 2022

December 31, 2021

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 $ 673,000 and $ 605,000 for the three months ended March 31, 2022 and 2021, respectively.

Total fees paid were approximately $ 1,345,000 and $ 1,222,000 for the six months ended June 30, 2022 and 2021, 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, 2022 and 2021, approximately $ 195,000 and $ 256,000 , was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

Of the 2022 expenses referred to above, approximately $ 73,000 consisted of repairs and maintenance, and $ 85,000 of administrative expense.

During the six months ended June 30, 2022 and 2021, approximately $ 383,000 and $ 529,000 , was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

Of the 2022 expenses referred to above, approximately $ 147,000 consisted of repairs and maintenance, $ 170,000 of administrative expense, and approximately $ 24,000 for renting expense.

Approximately $ 42,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties.

2 unchanged sentences

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

Total reimbursement was approximately $ 1,039,000 and $ 843,000 for the three months ended March 31, 2022 and 2021, respectively.

Total reimbursement was approximately $ 1,913,000 and $ 1,782,000 for the six months ended June 30, 2022 and 2021, 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, 2022, the Partnership accrued $ 37,000 for the employer’s match portion to the plan.

For the three months ended March 31, 2021, the Partnership contributed $ 11,000 for the employer’s match portion to the plan.

For the six months ended June 30, 2022, the Partnership accrued $ 28,000 for the employer’s match portion to the plan.

For the six months ended June 30, 2021, 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, 2022 and 2021, 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, 2022 and 2021, 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.

The Partnership has a 40% to 50% ownership interest in each investment property.

investors are the Brown family related entities, and five current and previous employees of the Management Company.

The other investors are the Brown family related entities, and five current and previous employees of the Management Company.

The Brown Family related entities’ ownership interest was between 47.6% and 59%.

1 unchanged sentence

PREPAID EXPENSES and OTHER ASSETS

Approximately $ 3,091,000 , and $ 3,067,000 of security deposits are included in prepaid expenses and other assets at March 31, 2022 and December 31, 2021, respectively.

Approximately $ 3,359,000 , and $ 3,067,000 of security deposits are included in prepaid expenses and other assets at June 30, 2022 and December 31, 2021, respectively.

The security deposits and escrow accounts are restricted cash.

Also, included in prepaid expenses and other assets at March 31, 2022 and December 31, 2021 is approximately $ 1,971,000 and $ 1,819,000 , respectively, held in escrow to fund future capital improvements.

Also, included in prepaid expenses and other assets at June 30, 2022 and December 31, 2021 is approximately $ 2,331,000 and $ 1,819,000 , 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 $ 19,000 net of accumulated amortization of approximately $ 1,399,000 and approximately $ 26,000 net of accumulated amortization of approximately $ 1,392,000 at March 31, 2022 and December 31, 2021, respectively.

Financing fees in association with the line of credit of approximately $ 154,000 and $ 169,000 are net of accumulated amortization of approximately $ 25,000 and $ 10,000 at March 31, 2022 and December 31, 2021 respectively.

Intangible assets are approximately $ 13,000 net of accumulated amortization of approximately $ 1,405,000 and approximately $ 26,000 net of accumulated amortization of approximately $ 1,392,000 at June 30, 2022 and December 31, 2021, respectively.

Financing fees in association with the line of credit of approximately $ 139,000 and $ 169,000 are net of accumulated amortization of approximately $ 40,000 and $ 10,000 at June 30, 2022 and December 31, 2021 respectively.

MORTGAGE NOTES PAYABLE

At March 31, 2022 and December 31, 2021, 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, 2022, the interest rates on these loans ranged from 2.97 % to 4.95 %, payable in monthly installments aggregating approximately $ 1,431,000 including principal, to various dates through 2035.The majority of the mortgages are subject to prepayment penalties.

At March 31, 2022, the weighted average interest rate on the above mortgages was 3.61 %.

At June 30, 2022 and December 31, 2021, 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, 2022, the interest rates on these loans ranged from 2.97 % to 4.95 %, payable in monthly installments aggregating approximately $ 1,471,000 including principal, to various dates through 2035.The majority of the mortgages are subject to prepayment penalties.

At June 30, 2022, the weighted average interest rate on the above mortgages was 3.69 %.

The effective rate of 3.80 % 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 $ 2,619,000 and $ 2,709,000 are net of accumulated amortization of approximately $ 1,229,000 and $ 1,139,000 at March 31, 2022 and December 31, 2021, respectively, which offset the total mortgage notes payable.

Financing fees of approximately $ 3,310,000 and $ 2,709,000 are net of accumulated amortization of approximately $ 850,000 and $ 1,139,000 at June 30, 2022 and December 31, 2021, 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, 2022 are as follows:

Approximate annual maturities at June 30, 2022 are as follows:

2023—current maturities

1 unchanged sentence

( 3,310,000 )

On November 30, 2021, the Partnership entered into a Master Credit Facility Agreement (the “Facility Agreement”) with KeyBank National Association (“KeyBank”) dated as of November 30, 2021, with an initial advance in the amount of $ 156,000,000 .

Interest only on the debt at a fixed interest rate of 2.97 % is payable on a monthly basis through December 31, 2031.

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

The additional advance under the Amended Agreement is in the amount of $ 80,284,000 , at a fixed interest rate of 4.33 %.

The Partnership’s obligations under the Facility Agreement are secured by mortgages on certain properties pursuant to certain Mortgage, Assignment of Leases and Rents, and Security Agreement and Fixture Filings.

The Partnership used the proceeds to pay down approximately $ 37,065,000 of existing debt secured by 4 properties, along with approximately $ 854,000 in prepayment penalties.

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

Line of Credit

14 unchanged sentences

The portfolio’s debt yield fell below the minimum of 8.5 % to 7.7 %.

As of March 31, 2022, the Partnership did not comply with the debt yield financial covenant.

As of June 30, 2022, the Partnership did not comply with the debt yield financial covenant.

As such, the Partnership is unable to draw down any amount from the line of credit until the Partnership meets the required financial covenants.

The interest rate for the new term is LIBOR plus 300 basis points.

The costs associated with the modification and renewal of the line of credit is approximately $ 179,000 .

The costs associated with the modification and renewal of the line of credit was approximately $ 179,000 .

On December 3, 2021, the Partnership paid off the outstanding balance of $ 17,000,000 on the Line of Credit.

5 unchanged sentences

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, 2022, amounts received for prepaid rents of approximately $ 2,287,000 are included in cash and cash equivalents, and security deposits of approximately $ 3,091,000 are included in prepaid expenses and other assets and are restricted cash.

At June 30, 2022, amounts received for prepaid rents of approximately $ 2,516,000 are included in cash and cash equivalents, and security deposits of approximately $ 3,359,000 are included in prepaid expenses and other assets and are restricted cash.

PARTNERS’ CAPITAL

4 unchanged sentences

In addition to the quarterly distribution, there was a special distribution of $ 38.40 per Class A unit ($ 1.28 per Receipt) payable on March 31, 2022.

In April 2022, the Partnership approved a quarterly distribution of $ 9.60 per Unit ($ 0.32 per Receipt), payable on June 30, 2022.

In 2021, 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, 2022 are as follows:

Treasury Units at June 30, 2022 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, 2022, the Partnership has repurchased 1,448,321 Depositary Receipts at an average price of $ 29.189 per receipt (or $ 875.4 per underlying Class A Unit), 3,729 Class B Units and 196 General Partnership Units, both at an average price of $ 1,080.00 per Unit, totaling approximately $ 46,506,000 including brokerage fees paid by the Partnership .

During the three months ended March 31, 2022, the Partnership purchased a total of 14,132 Depositary Receipts.

From August 20, 2007 through June 30, 2022, the Partnership has repurchased 1,471,962 Depositary Receipts at an average price of $ 29.59 per receipt (or $ 887.70 per underlying Class A Unit), 3,917 Class B Units and 206 General Partnership Units, both at an average price of $ 1,143.00 per Unit, totaling approximately $ 48,857,000 including brokerage fees paid by the Partnership .

During the six months ended June 30, 2022, the Partnership purchased a total of 37,773 Depositary Receipts.

The average price was $ 78.09 per receipt or $ 2,342.70 per unit.

The cost including commission was $ 2,951,569 .

The Partnership was required to repurchase 111.88 Class B Units and 5.89 General Partnership units at a cost of $ 254,118 and $ 13,375 respectively.

The Partnership was required to repurchase 299.04 Class B Units an15.74 General Partnership units at a cost of $ 700,523 and $ 36,870 respectively.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

RENTAL INCOME

During the three months ended March 31, 2022, approximately 95 % of rental income was related to residential apartments and condominium units with leases of one year or less.

During the six months ended June 30, 2022, approximately 95 % of rental income was related to residential apartments and condominium units with leases of one year or less.

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

Approximately 5 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2022 as follows:

Approximately 5 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at June 30, 2022 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 $ 175,000 and $ 150,000 for the three months ended March 31, 2022 and 2021 respectively.

Aggregate contingent rentals from continuing operations were approximately $ 437,000 and $ 290,000 for the six months ended June 30, 2022 and 2021 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 $ 805,000 and $ 832,000 at March 31, 2022 and December 31, 2021.

Included in rents receivable at March 31, 2022 is approximately $ 44,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

Rents receivable at March 31, 2022 also includes approximately $ 183,000 representing the deferral of rental concession primarily related to the residential properties.

Rents receivable are net of an allowance for doubtful accounts of approximately $ 733,000 and $ 832,000 at June 30, 2022 and December 31, 2021.

Included in rents receivable at June 30, 2022 is approximately $ 79,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

Rents receivable at June 30, 2022 also includes approximately $ 49,000 representing the deferral of rental concession primarily related to the residential properties.

CASH FLOW INFORMATION

During the three months ended March 31, 2022 and 2021, cash paid for interest was approximately $ 3,370,000 , and $ 3,306,000 respectively.

Cash paid for state income taxes was approximately $ 2,000 and $ 56,000 during the three months ended March 31, 2022 and 2021 respectively.

During the six months ended June 30, 2022 and 2021, cash paid for interest was approximately $ 6,987,000 , and $ 6,650,000 respectively.

Cash paid for state income taxes was approximately $ 49,000 and $ 60,000 during the six months ended June 30, 2022 and 2021 respectively.

During the six months ended June 30, 2022, four properties were involved in a non-cash financing activity of approximately $ 37,000,000 .

FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At March 31, 2022 and December 31, 2021, 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.

A June 30, 2022 and December 31, 2021, 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, 2022 and December 31, 2021 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, 2022 and December 31, 2021 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, 2022 and December 31, 2021 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, 2022 and December 31, 2021 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, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, 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, 2022

At June 30, 2022

At December 31, 2021

Investment Properties

At March 31, 2022

At June 30, 2022

At December 31, 2021

* 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, 2022 and December 31, 2021.

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, 2022 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, 2022 and December 31, 2021.

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, 2022 and current estimates of fair value may differ significantly from the amounts presented herein.

TAXABLE INCOME AND TAX BASIS

Taxable income reportable by the Partnership and includable in its partners’ tax returns is different than financial statement income because of tax free exchanges, different depreciation methods, different tax lives, other items with limited tax deductibility carryovers and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions.

estate at December 31, 2021 is approximately $ 10,946,000 more than the statement basis.

Federal taxable income of approximately $ 4,056,000 was approximately $ 6,756,000 more than statement income for the year ended December 31, 2021.The Federal cumulative tax basis of the Partnership’s real estate at December 31, 2021 is approximately $ 10,946,000 more than the statement basis.

The primary reasons for the difference in tax basis are tax free exchanges, accelerated depreciation and bonus depreciation.

7 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, 2022, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2018 forward.

As of June 30, 2022, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2018 forward.

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

16 unchanged sentences

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

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

The Partnership will

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

In connection with this refinancing, the property incurred a defeasance charge of approximately $ 3,830,000 .

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

At March 31, 2022, the balance on this mortgage before unamortized deferred financing costs is $125,000,000 .

At June 30, 2022, 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.

2 unchanged sentences

The Joint Venture planned to operate the building and initiate development of the parking lot.

In June 2007, the Joint Venture separated the parcels, formed an additional limited

liability company for the residential apartments and obtained a mortgage on the property.

In June 2007, the Joint Venture separated the parcels, formed an additional limited liability company for the residential apartments and obtained a mortgage on the property.

The new limited liability company formed for the residential apartments and commercial space is referred to as Hamilton Essex 81, LLC.

In August 2008, the Joint Venture restructured the mortgages on both parcels at Essex 81.

On September 28, 2015, Hamilton Essex Development, LLC paid off the outstanding mortgage balance of $ 1,952,286 .

The Partnership made a capital contribution of $ 978,193 to Hamilton Essex Development LLC for its share of the funds required for the transaction.

Additionally, the Partnership made a capital contribution of $ 100,000 to Hamilton Essex 81, LLC.

On September 30, 2015, Hamilton Essex 81, LLC obtained a new 10 year mortgage in the amount of $ 10,000,000 , interest only at 2.18 % plus the one month Libor rate.

3 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, 2022, the balance on this mortgage before unamortized deferred financing costs is approximately $ 10,000,000 .

At June 30, 2022, 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;

13 unchanged sentences

The purchase price was $ 10,100,000 .

In October 2004, the Joint Venture obtained a mortgage on the property in the amount of $ 8,025,000 and returned $ 3,775,000 to the Partnership.

The Joint Venture obtained a new 10-year mortgage in the amount of $ 5,500,000 in January 2007.

The interest on the new loan was 5.67 % fixed for the ten year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan.

This loan required a cash contribution by the Partnership of $ 1,250,000 in December 2006.

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

3 unchanged sentences

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

At March 31, 2022, the balance on this mortgage before unamortized deferred financing costs is approximately $ 6,000,000 .

At June 30, 2022, the balance on this mortgage before unamortized deferred financing costs is approximately $ 6,000,000 .

This investment is referred to as Hamilton Minuteman, LLC.

4 unchanged sentences

Hamilton on Main, LLC is known as Hamilton Place.

In 2005, Hamilton on Main Apartments, LLC obtained a ten year mortgage on the three buildings to be retained.

The mortgage was $ 16,825,000 , with interest only of 5.18 % for three years and amortizing on a 30 year schedule for the remaining seven years when the balance is due.

The net proceeds after funding escrow accounts and closing costs on the mortgage were approximately $ 16,700,000 , which were used to reduce the existing mortgage.

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

3 unchanged sentences

At March 31, 2022, the balance of the mortgage before unamortized deferred finance is $ 16,900,000 .

At June 30, 2022, the balance of the mortgage before unamortized deferred finance is $ 16,900,000 .

The investment is referred to as Hamilton on Main LLC.

6 unchanged sentences

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

At March 31, 2022, the balance of this mortgage before unamortized deferred financing costs is approximately $ 8,881,000 .

At June 30, 2022, the balance of this mortgage before unamortized deferred financing costs is approximately $ 8,826,000 .

This investment is referred to as 345 Franklin, LLC.

Summary financial information at March 31, 2022

Summary financial information at June 30, 2022

Rental Properties

Assets Held for Sale

Cash & Cash Equivalents

2 unchanged sentences

Prepaid Expenses & Other Assets

Financing & Leasing Fees

LIABILITIES AND PARTNERS’ CAPITAL

14 unchanged sentences

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

( 1,453,616 )

( 1,928,433 )

( 1,215,208 )

( 18,188,375 )

( 23,417,093 )

Total Investment in Unconsolidated Joint Ventures (Net)

4 unchanged sentences

Units sold through May 1, 2022

Financial information for the three months ended March 31, 2022

Financial information for the six months ended June 30, 2022

Rental Income

10 unchanged sentences

( 3,347,285 )

Interest Income

( 2,534,570 )

3 unchanged sentences

Net Income —NERA 40%

Future annual mortgage maturities at March 31, 2022 are as follows:

Financial information for the three months ended June 30, 2022

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

( 1,271,425 )

( 1,687,357 )

( 1,271,425 )

( 1,687,357 )

Net Income (Loss)

Net Income (Loss)—NERA 50%

Net Income —NERA 40%

Future annual mortgage maturities at June 30, 2022 are as follows:

unamortized deferred financing costs

At March 31, 2022 the weighted average interest rate on the above mortgages was 3.91 %.

At June 30, 2022 the weighted average interest rate on the above mortgages was 3.97 %.

The effective rate was 4.03 % including the amortization expense of deferred financing costs.

Summary financial information at March 31, 2021

Summary financial information at June 30, 2021

Rental Properties

Assets Held for Sale

Cash & Cash Equivalents

27 unchanged sentences

Units to be sold

Units sold through February 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

13 unchanged sentences

Net Income (Loss)

( 1,146,490 )

( 1,356,488 )

Net Income (Loss)—NERA 50%

Net Income —NERA 40%

Financial information for the three months ended June 30, 2021

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 —NERA 40%

EMPLOYEE BENEFIT 401(k) PLANS

5 unchanged sentences

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

Total expense recognized by the Partnership for the 401(k) Plan for the three months ended March 31, 2022 was $ 37,000 .

Total expense recognized by the Partnership for the 401(k) Plan for the six months ended June 30, 2022 was $ 28,000 .

IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

1 unchanged sentence

SUBSEQUENT EVENTS

From April 1, 2022 through May 5, 2022, the Partnership has purchased 9,276 Depository Receipts .

From July 1, 2022 through August 5, 2022, the Partnership has purchased 3,430 Depository Receipts .

The average price was $ 78.18 per receipt, or $ 2,345.40 per unit.

The total cost was $ 762,172 .The Partnership is required to purchase 73 Class B units and 4 General Partnership units at a cost of $ 180,838 and $ 9,518 respectively.

In May 2022, the Partnership approved a quarterly distribution of $ 9.60 per Unit ($ 0.32 per Receipt), payable on June 30, 2022.

In addition to the quarterly distribution, there was a special distribution of $ 38.40 per Class A unit ($ 1.28 per Receipt) payable on March 31,2022.

On April 25, 2022, Martina N.

Alibrandi was appointed to the Board of Directors of NewReal, Inc.

and as a member of the Audit Committee of the NewReal, Inc.

On April 25, 2022, New England Realty Associates Limited Partnership (the “Partnership”) and certain affiliates of the Partnership entered into an addition to the Rate Lock Authorization Agreement (the “Agreement”) with KeyBank National Associates (“KeyBank”) dated as of November 10, 2021, and paid the requisite deposit of $ 1,599,100 .

The agreement calls for a loan of approximately $ 79,955,000 at a fixed interest rate of 4.33 %.

The Partnership intends to use the proceeds to pay down approximately $ 37,147,000 of existing debt secured by 4 properties, along with approximately $ 1,895,000 in prepayment penalties.

The remaining balance of the loan proceeds of approximately $ 40,913,000 will be used for general partnership purposes.

The total cost was $ 268,607 .

The Partnership is required to purchase 27 Class B units and 1 General Partnership units at a cost of $ 63,687 and $ 3,352 respectively.

In August 2022, the Partnership approved a quarterly distribution of $ 9.60 per Unit ($ 0.32 per Receipt), payable on September 30, 2022.

The Partnership is currently in negotiations to refinance a commercial property located at 659 Worcester Road in Framingham, Massachusetts.

Subsequent to June 30, 2022, the partnership invested approximately $ 90,000,000 in short term U.S.

Treasury bills, maturing at various dates over the next six months.

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