What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-01-19 compared with 2022-08-05 · 83 added, 82 removed, 257 unchanged (39% of the section changed)

6 unchanged sentences

We expressly disclaim any responsibility to update our forward looking statements, whether as a result of new information, future events or otherwise.

Accordingly, investors should use caution in relying on past forward looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

Accordingly, investors should use caution in relying

on past forward looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

Over the last several months, the Partnership took advantage of the low interest rate environment and refinanced fifteen properties, increased their loan balances, and raised approximately $130,000,000.

With interest rates rising, and a

threat of an economic slowdown, the Partnership increased the debt level and built cash reserves to acquire additional properties when opportunities become available.

Currently, $90,000,000 of these reserves are invested in short-term US Treasuries maturing over 6 months.

With interest rates rising, and a threat of an economic slowdown, the Partnership increased the debt level and built cash reserves to acquire additional properties when opportunities become available.

Currently, $90,000,000 of these reserves are invested in short-term US Treasury bills maturing in 6 months or less with interest rates between 2.1% and 3.75%.

Since the Partnership’s long-term goals include the acquisition of additional properties, a portion of the proceeds from the refinancing and sale of properties is reserved for this purpose.

13 unchanged sentences

If there is a downturn in the economy and significant inflation to the cost of energy, goods and service, there may be material adverse effects to our business, results of operations, cash flows, and financial condition.

The vacancy rate for the Partnership’s residential properties as of August 1, 2022 was 2.0% as compared with a vacancy rate of 3.3% as of August 1, 2021.

The vacancy rate for the Joint Venture properties as of August 1, 2022 was 0.9%, as compared to 2.8% for the same period last year.

The vacancy rate for the Partnership’s residential properties as of November 1, 2022 was 1.8% as compared with a vacancy rate of 2.5% as of November 1, 2021.

The vacancy rate for the Joint Venture properties as of November 1, 2022 was 0.9%, as compared to 2.8% for the same period last year.

The current vacancy rates are in line with those experienced prior to the Pandemic.

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

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.

During the second quarter of 2022, rents increased on average of 5.9% for renewals and increased on average of 15.0% for new leases.

During the third quarter of 2022, rents increased on average of 6.7% for renewals and increased on average of 18.2% for new leases.

For the balance of 2022, management expects a strong rental market with continued rent growth.

For the second quarter of 2022, consolidated revenue increased by 9.7%, operating expenses increased by 9.4% and Income before Other Income (Expense) increased by 10.1%, as compared to the second quarter of 2021.

For the third quarter of 2022, consolidated revenue increased by 7.2%, operating expenses increased by 1.0 % and Income before Other Income (Expense) increased by 28.4%, as compared to the third quarter of 2021.

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

9 unchanged sentences

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 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.

1 unchanged sentence

The portfolio’s debt yield fell below the minimum of 8.5% to 8.05%.

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

As of September 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.

From the start of the Stock Repurchase Program in 2007 through June 30, 2022, the Partnership has purchased 1,471,962 Depositary Receipts.

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

At August 1, 2022, the Harold Brown related entities and Ronald Brown collectively own approximately 31.5% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members).

From the start of the Stock Repurchase Program in 2007 through September 30, 2022, the Partnership has purchased 1,486,802 Depositary Receipts.

During the nine months ended September 30, 2022, the Partnership purchased a total of 52,613 Depositary Receipts.

At November 1, 2022, the Harold Brown related entities and Ronald Brown collectively own approximately 31.7% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members).

Harold Brown related entities also control 75% of the Partnership’s Class B Units, and 75% of the capital stock of NewReal, Inc.

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Residential tenants sign a one year lease.

During the six months ended June 30, 2022, tenant renewals were approximately 69% with an average rental increase of approximately 5.6%, new leases accounted for approximately 31% with rental rate increases of approximately 13.7%.

During the six months ended June 30, 2022, leasing commissions were approximately $156,000 compared to approximately $308,000 for the six months ended June 30, 2021, a decrease of approximately $152,000 (49.4%).

Tenant concessions were approximately $24,000 for the six months ended June 30, 2022, compared to approximately $15,000 for the six months ended June 30, 2021, an increase of approximately $9,000 (60.0%).

Tenant improvements were approximately $1,089,000 for the six months ended June 30, 2022, compared to approximately $746,000 for the six months ended June 30, 2021, an increase of approximately $343,000 (46.0%).

Hamilton accounted for approximately 2.8% of the repair and maintenance expenses paid for by the Partnership during the six months ended June 30, 2022 and 2.5 % during the six months ended June 30, 2021.

During the nine months ended September 30, 2022, tenant renewals were approximately 68% with an average rental increase of approximately 6.2%, new leases accounted for approximately 32% with rental rate increases of approximately 16.1%.

During the nine months ended September 30, 2022, leasing commissions were approximately $264,000 compared to approximately $642,000 for the nine months ended September 30, 2021, a decrease of approximately $378,000 (59.0%).

Tenant concessions were approximately $39,000 for the nine months ended September 30, 2022, compared to approximately $34,000 for the nine months ended September 30, 2021, an increase of approximately $5,000 (14.7%).

Tenant improvements were approximately $1,723,000 for the nine months ended September 30, 2022, compared to approximately $1,282,000 for the nine months ended September 30, 2021, an increase of approximately $441,000 (34.4%).

Hamilton accounted for approximately 2.6% of the repair and maintenance expenses paid for by the Partnership during the nine months ended September 30, 2022 and 2.4 % during the nine months ended September 30, 2021.

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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Hamilton’s legal department handles most of the Partnership’s eviction and collection matters.

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

Overall, Hamilton provided approximately $107,000 (81.6%) and approximately $59,000 (67.5%) of the legal services paid for by the Partnership during the six months ended June 30, 2022 and 2021 respectively.

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

transactions.

Overall, Hamilton provided approximately $162,000 (72.0%) and approximately $83,000 (60.5%) of the legal services paid for by the Partnership during the nine months ended September 30, 2022 and 2021 respectively.

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

The Partnership requires that three bids be obtained for construction contracts in excess of $15,000.

Hamilton may be one of the three bidders on a particular project and may be awarded the contract if its bid and its ability to

successfully complete the project are deemed appropriate.

Hamilton may be one of the three bidders on a particular project and may be awarded the contract if its bid and its ability to successfully complete the project are deemed appropriate.

For contracts that are not awarded to Hamilton, Hamilton charges the Partnership a construction supervision fee equal to 5% of the contract amount.

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

During the six months ended June 30, 2022, Hamilton provided the Partnership approximately $42,000 in construction and architectural services, compared to approximately $302,000 for the six months ended June 30, 2021.

During the nine months ended September 30, 2022, Hamilton provided the Partnership approximately $89,000 in construction and architectural services, compared to approximately $413,000 for the nine months ended September 30, 2021.

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

During the six months ended June 30, 2022 and 2021, Hamilton charged the Partnership $62,500 for bookkeeping and accounting services.

During the nine months ended September 30, 2022 and 2021, Hamilton charged the Partnership $93,750 for bookkeeping and accounting services.

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

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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 generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale.

If, in management’s opinion, the estimated net sales price, net of

selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance is established.

If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance is established.

If circumstances arise that previously were considered unlikely and, as a result, the Partnership decides not to sell a property previously classified as held for sale, the property is reclassified as held and used.

12 unchanged sentences

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

Investments in Treasury Bills:

Investments in Treasury Bills are recorded at amortized cost and classified as held to maturity as the Partnership has the intent and the ability to hold them until they mature.

The carrying value of the Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment.

Income related to the Treasury Bills is recognized in interest income in the Partnership’s consolidated statement of income.

Intangible assets acquired include amounts for in-place lease values above and below market leases and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant.

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To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property.

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.

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.

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Under the equity method of accounting, our net equity is reflected on the consolidated balance sheets, and our share of net income or loss from the Partnership is included on the consolidated statements of income.

Generally, the Partnership would discontinue applying the equity

method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee.

Generally, the Partnership would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee.

If the venture subsequently generates income, the Partnership only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses.

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RESULTS OF OPERATIONS

Three Months Ended June 30, 2022 and June 30, 2021

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $4,611,000 during the three months ended June 30, 2022, compared to approximately $4,187,000 for the three months ended June 30, 2021, an increase of approximately $424,000 (10.1%).

Three Months Ended September 30, 2022 and September 30, 2021

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $4,561,000 during the three months ended September 30, 2022, compared to approximately $3,551,000 for the three months ended September 30, 2021, an increase of approximately $1,010,000 (28.4%).

The rental activity is summarized as follows:

Occupancy Date

August 1, 2022

August 1, 2021

November 1, 2022

November 1, 2021

Total square feet

Rental Income (in thousands)

Three Months Ended June 30,

Three Months Ended September 30,

Residential percentage

1 unchanged sentence

Contingent rentals

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021:

Three Months Ended June 30,

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021:

Three Months Ended September 30,

Rental income

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Other Income (Expense)

Rental income for the three months ended June 30, 2022 was approximately $16,826,000, compared to approximately $15,333,000 for the three months ended June 30, 2021, an increase of approximately $1,493,000 (9.7%).

Rental income for the three months ended September 30, 2022 was approximately $16,974,000, compared to approximately $15,832,000 for the three months ended September 30, 2021, an increase of approximately $1,142,000 (7.2%).

The Partnership properties with the largest increases in rental income include 62 Boylston, 1144 Commonwealth, Westgate Apartments, Hamilton Green, and Mill Street Gardens with increases of $455,000, $213,000, $101,000, $89,000 and $84,000 respectively.

1 unchanged sentence

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 June 30, 2022 were approximately $12,321,000 compared to approximately $11,260,000 for the three months ended June 30, 2021, an increase of approximately $1,061,000 (9.4%), The factors contributing to the increase are an increase in repairs and maintenance of approximately $640,000 (27.4%), primarily due to an increase in the renovation of apartments, an increase in depreciation and amortization of approximately $133,000 (3.4%), and an increase in taxes and insurance of approximately $123,000 (5.7%).

Interest expense for the three months ended June 30, 2022 was approximately $3,624,000 compared to approximately $3,379,000 for the three months ended June 30, 2021, an increase of approximately $245,000 (7.2 %).

Operating expenses for the three months ended September 30, 2022 were approximately $12,517,000 compared to approximately $12,395,000 for the three months ended September 30, 2021, an increase of approximately $122,000 (1.0%), The factors contributing to the increase are an increase in depreciation and amortization of approximately $158,000 (4.0%), an increase in administrative expenses of approximately $89,000 (14.7%), and an increase in operating costs of approximately $72,000 (5.4%), partially offset by a decrease in renting expenses of approximately $276,000 (60.4%).

Interest expense for the three months ended September 30, 2022 was approximately $3,982,000 compared to approximately $3,393,000 for the three months ended September 30, 2021, an increase of approximately $589,000 (17.4 %).

The increase is due to the refinancing of properties, increasing the amount of the debt, which increased the interest expense for the period.

At June 30, 2022, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

Interest income for the three months ended September 30, 2022 was approximately $363,000 compared to approximately $0 for the three months ended September 30, 2021, an increase of approximately $363,000.

The increase is due to investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 2.1% to 3.9%.

At September 30, 2022, 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 income from the Investment Properties was approximately $90,000 for the three months ended June 30, 2022, compared to a net loss of approximately $238,000 for the three months ended June 30, 2021, an increase in income of approximately $329,000 (137.9%).

This increase is primarily due to an increase in rental revenue to approximately $2,471,000 from $2,142,000, an increase of approximately $329,000 (15.4 %) for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Included in the income for the three months ended June 30, 2022 is depreciation and amortization expense of approximately $656,000.

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 four properties, along with approximately $854,000 in prepayment penalties, which are included in other expenses.

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

As a result of the changes discussed above, net income for the three months ended June 30, 2022 was approximately $243,000 compared to net income of approximately $570,000 for the three months ended June 30, 2021, a decrease in income of approximately $327,000 (57.4%).

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021:

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, and other expense of approximately $8,388,000 during the six months ended June 30, 2022, compared to approximately $7,582,000 for the six months ended June 30, 2021, an increase of approximately $806,000 (10.6%).

Six Months Ended June 30,

As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $93,000 for the three months ended September 30, 2022, compared to a net loss of approximately $233,000 for the three months ended September 30, 2021, an increase in income of approximately $326,000 (140.1%).

This increase is primarily due to an increase in rental revenue to approximately $2,625,000 from $2,329,000, an increase of approximately $296,000 (12.7 %) for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

Included in the income for the three months ended September 30, 2022 is depreciation and amortization expense of approximately $662,000.

As a result of the changes discussed above, net income for the three months ended September 30, 2022 was approximately $995,000 compared to a net loss of approximately $75,000 for the three months ended September 30, 2021, an increase in income of approximately $1,070,000 (1,420.3%).

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021:

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, and other expense of approximately $12,949,000 during the nine months ended September 30, 2022, compared to approximately $11,134,000 for the nine months ended September 30, 2021, an increase of approximately $1,815,000 (16.3%).

Nine Months Ended September 30,

Rental income

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Other (Expense) Income

Rental income for the six months ended June 30, 2022 was approximately $33,285,000, compared to approximately $30,313,000 for the six months ended June 30, 2021, an increase of approximately $2,972,000 (9.8%).

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

Rental income for the nine months ended September 30, 2022 was approximately $50,260,000, compared to approximately $46,146,000 for the nine months ended September 30, 2021, an increase of approximately $4,114,000 (8.9%).

The Partnership properties with the largest increases in rental income include 62 Boylston, 1144 Commonwealth, Westgate Apartments, Hamilton Green, and Mill Street Gardens, with increases of $1,524,000, $494,000, $282,000, 249,000 and $238,000 respectively.

1 unchanged sentence

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, 2022 were approximately $25,124,000 compared to approximately $22,954,000 for the six months ended June 30, 2021, an increase of approximately $2,170,000 (9.5%), primarily due to an increase in the refurbishment of apartments, and an increase in snow removal expense during the winter.

The factors contributing to this net increase are an increase in repairs and maintenance expenses of approximately $950,000 (22.1%), an increase in operating expense of approximately $745,000 (21.6%), and an increase in depreciation and amortization of approximately $248,000 (3.2%).

Interest expense for the six months ended June 30, 2022 was approximately $7,078,000 compared to approximately $6,743,000 for the six months ended June 30, 2021, an increase of approximately $335,000 (5.0%).

Operating expenses for the nine months ended September 30, 2022 were approximately $37,642,000 compared to approximately $35,349,000 for the nine months ended September 30, 2021, an increase of approximately $2,293,000 (6.5%), primarily due to an increase in the refurbishment of apartments, and an increase in snow removal expense during the winter.

The factors contributing to this net increase are an increase in repairs and maintenance expenses of approximately $948,000 (12.8%), an increase in operating expense of approximately $817,000 (17.0%), and an increase in depreciation and amortization of approximately $406,000 (3.4%), partially offset by a decrease in renting expense of approximately $439,000 (46.7%).

Interest income for the nine months ended September 30, 2022 was approximately $363,000 compared to approximately $0 for the three months ended September 30, 2021, an increase of approximately $363,000.

The increase is due to investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 2.1% to 3.9%.

Interest expense for the nine months ended September 30, 2022 was approximately $11,061,000 compared to approximately $10,137,000 for the nine months ended September 30, 2021, an increase of approximately $924,000 (9.1%).

The increase is due to the refinancing of properties, increasing the amount of debt, which increased the interest expense for the period.

At June 30, 2022, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

At September 30, 2022, 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 income from the Investment Properties was approximately $110,000 for the six months ended June 30, 2022, compared to a net loss of approximately $564,000 for the six months ended June 30, 2021, an increase in income of approximately $674,000 (119.6%).

This increase is primarily due to an increase in rental revenue of approximately $ 4,901,000 for the six months ended June 30, 2022 from approximately $4,215,000 for the six months ended June 30, 2021, an increase of approximately $686,000 (16.3 %).

Included in the income for the six months ended June 30, 2022 is depreciation and amortization expense of approximately $1,309,000.

As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $204,000 for the nine months ended September 30, 2022, compared to a net loss of approximately $797,000 for the nine months ended September 30, 2021, an increase in income of approximately $1,001,000 (125.6%).

This increase is primarily due to an increase in rental revenue of approximately $ 7,526,000 for the nine months ended September 30, 2022 from approximately $6,543,000 for the nine months ended September 30, 2021, an increase of approximately $983,000 (15.0 %).

Included in the income for the nine months ended September 30, 2022 is depreciation and amortization expense of approximately $1,971,000.

3 unchanged sentences

The Partnership used the proceeds from the June, 2022 refinancing to pay down approximately $37,065,000 of existing debt secured by four properties, along with approximately $894,000 in prepayment penalties, which are included in other expenses.

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

As a result of the changes discussed above, net income for the six months ended June 30, 2022 was approximately $585,000 compared to income of approximately $276,000 for the six months ended June 30, 2021, an increase in net income of approximately $309,000 (112.3%).

As a result of the changes discussed above, net income for the nine months ended September 30, 2022 was approximately $1,580,000 compared to income of approximately $200,000 for the nine months ended September 30, 2021, an increase in net income of approximately $1,380,000 (689.0%).

LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s principal source of cash during the first six months of 2022 and 2021 was the proceeds from the refinancing of 4 properties for approximately $41,000,000 and the collection of rents.

The majority of cash and cash equivalents of $132,631,027 at June 30, 2022 and $96,083,508 at December 31, 2021 were held in interest bearing accounts at creditworthy financial institutions.

The increase in cash of $36,547,519 for the six months ended June 30, 2022 is summarized as follows:

Six Months Ended June 30,

The Partnership’s principal source of cash during the first nine months of 2022 and 2021 was the proceeds from the refinancing of 4 properties for approximately $42,000,000 and the collection of rents.

The Partnership’s principal use of cash during the first nine months of 2022 was the purchase of Treasury Bills.

The majority of cash and cash equivalents of $59,473,939 at September 30, 2022 and $96,083,508 at December 31, 2021 were held in interest bearing accounts at creditworthy financial institutions.

The decrease in cash of $36,609,569 for the nine months ended September 30, 2022 is summarized as follows:

Nine Months Ended September 30,

Cash provided by operating activities

3 unchanged sentences

Distributions paid

Net increase in cash and cash equivalents

Net (decrease) 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, 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 decrease in cash used in investing activities is primarily due to improvements to rental properties, and the purchase of Treasury Bills.

The change in cash used in financing activities is due to the refinancing of 4 properties, the pay down of mortgages, the repurchase of depositary receipts, and distributions paid.

2 unchanged sentences

Cash reserves have been adequate to fully fund improvements.

The most significant improvements were made at Westside Colonial, Hamilton Green, Hamilton Oaks, Old English Village, 62 Boylston, and Redwood Hills at a cost of approximately $250,000, $243,000, $187,000, $184,000, $180,000 and $180,000 respectively.

During the six months ended June 30, 2022, the Partnership received distributions of approximately $1,208,000 from the investment properties.

For the six months ended June 30, 2021, the Partnership received $419,000 in distributions from the investment properties.

Included in these net distributions is the amount from Dexter Park of approximately $840,000 and $80,000 for the six months ended June 30, 2022 and 2021, respectively.

The most significant improvements were made at Hamilton Oaks, Captain Parker, Hamilton Green, Westside Colonial, River Drive Apartments, and Redwood Hills at a cost of approximately $747,000, $313,000, $299,000, $292,000, $282,000 and $246,000 respectively.

During the nine months ended September 30, 2022, the Partnership received distributions of approximately $1,207,500 from the investment properties.

For the nine months ended September 30, 2021, the Partnership received $590,000 in distributions from the investment properties.

Included in these net distributions is the amount from Dexter Park of approximately $840,000 and $80,000 for the nine months ended September 30, 2022 and 2021, respectively.

In January 2022, the Partnership approved a quarterly distribution of $9.60 per Unit ($0.32 per Receipt), which was paid on March 31, 2022.

1 unchanged sentence

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

In July 2022, the Partnership approved a quarterly distribution of $9.60 per Unit ($0.32 per Receipt), which was paid on September 30, 2022.

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

9 unchanged sentences

The Partnership may also sell or refinance properties.

The Partnership’s net income and cash flow may fluctuate dramatically from year to year as a result of the sale or refinancing of properties, property improvements, increases or decreases in rental income or expenses, or the loss of significant tenants.

The Partnership’s net income and cash flow may fluctuate dramatically from year to year as

a result of the sale or refinancing of properties, property improvements, increases or decreases in rental income or expenses, or the loss of significant tenants.

Off-Balance Sheet Arrangements—Joint Venture Indebtedness

As of June 30, 2022, the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness.

As of September 30, 2022, 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 June 30, 2022, our proportionate share of the non-recourse debt related to these investments was approximately $70,863,000.

At September 30, 2022, our proportionate share of the non-recourse debt related to these investments was approximately $70,835,000.

See Note 14 to the Consolidated Financial Statements.

Contractual Obligations

As of June 30, 2022, we are subject to contractual payment obligations as described in the table below.

As of September 30, 2022, we are subject to contractual payment obligations as described in the table below.

Payments due by period

42 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis