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Item 1. Financial Statements

2023-05-30 compared with 2021-08-23 · 260 added, 249 removed, 487 unchanged (51% of the section changed)

Financial Statements

The accompanying unaudited consolidated balance sheets, statements of income, changes in partners’ capital, and cash flows and related notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”).

The accompanying unaudited consolidated balance sheets, statements of income, statements of comprehensive income, changes in partners’ capital, and cash flows and related notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”).

Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements.

2 unchanged sentences

generally accepted accounting principles for complete financial statements.

The aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in New England Realty Associates L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The results of operations for the three and six month period ended June 30, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

Form10-K for the fiscal year ended December 31, 2022.

The results of operations for the three month period ended March 31, 2023 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

4 unchanged sentences

Real Estate Tax Escrows

Investment in U.S.

Treasury Bills

Prepaid Expenses and Other Assets

2 unchanged sentences

Mortgage Notes Payable

Notes Payable

Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture

10 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Six Months Ended

Three Months Ended March 31,

Rental income

11 unchanged sentences

( 3,454,635 )

( 6,743,111 )

( 6,873,908 )

Income (Loss) from investments in unconsolidated joint ventures

( 3,617,341 )

( 2,979,418 )

Income from investments in unconsolidated joint ventures

( 2,696,990 )

4 unchanged sentences

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

Net income (loss)

Other comprehensive income (loss):

Net unrealized (loss) gain on derivative instruments for interest rate swaps

Comprehensive income (loss)

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER’S CAPITAL

Partners’s Capital

Partner’s Capital

Comprehensive Income

Balance January 1, 2022

5 unchanged sentences

( 1,106,016 )

( 5,821,134 )

Stock Buyback

Balance June 30, 2020

( 1,070,321 )

( 1,337,814 )

Balance March 31 , 2022

( 44,915,650 )

( 10,633,813 )

( 56,109,137 )

Balance January 1, 2023

5 unchanged sentences

( 1,083,833 )

( 5,704,385 )

Stock Buyback

Balance June 30, 2021

Net unrealized (loss) on derivative instruments for interest rate swaps

Balance March 31, 2023

( 52,076,136 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Three Months Ended March 31,

Cash Flows from Operating Activities

1 unchanged sentence

Depreciation and amortization

Amortization of deferred financing costs

Loss (Income) from investments in joint ventures

Allowance for doubtful accounts

Amortization of deferred finance costs

(Income) from investments in joint ventures

Change in operating assets and liabilities

Proceeds from unconsolidated joint ventures

(Increase) in rents receivable

(Increase) Decrease in rents receivable

(Decrease) Increase in accounts payable and accrued expense

( 2,176,919 )

Increase (Decrease) in accounts payable and accrued expense

(Increase) Decrease in real estate tax escrow

(Increase) Decrease in prepaid expenses and other assets

(Increase) in real estate tax escrow

(Increase) in interest receivable U.S.

Treasury bills

(Increase) in prepaid expenses and other assets

Increase (Decrease) in advance rental payments and security deposits

3 unchanged sentences

Distribution in excess of investment in unconsolidated joint ventures

(Investment) in unconsolidated joint ventures

Investment in U.S.

Treasury Bills

( 53,713,756 )

Proceeds from U.S.

Treasury Bills

Purchase of rental property

( 8,974,242 )

Improvement of rental properties

2 unchanged sentences

Net cash (used in) investing activities

Cash Flows from Financing Activities

Payment of financing costs

Proceeds of mortgage notes payable

Payment of note payable

( 20,024,862 )

Cash Flows from Financing Activities

Principal payments of mortgage notes payable

( 1,125,589 )

( 1,134,602 )

Stock buyback

( 1,337,814 )

Distributions to partners

1 unchanged sentence

( 5,821,134 )

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

( 7,260,766 )

( 7,759,138 )

Net Increase in Cash and Cash Equivalents

Net Increase (Decrease) in Cash and Cash Equivalents

( 24,906,098 )

( 3,818,042 )

Cash and Cash Equivalents, at beginning of period

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

March 31, 2023

SIGNIFICANT ACCOUNTING POLICIES

Line of Business :

New England Realty Associates Limited Partnership (“NERA” or the “Partnership”) was organized in Massachusetts in 1977.

New England Realty Associates Limited Partnership (“NERA”, the “Company” or the “Partnership”) was organized in Massachusetts in 1977.

NERA and its subsidiaries own 30 properties which include 21 residential buildings;

68 unchanged sentences

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.

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.

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.

13 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 $ 120,000 and $ 120,000 for the six months ended June 30, 2021 and 2020, respectively.

In all cases, amortization of such costs is included in interest expense and was approximately $ 95,000 and $ 90,000 for the three months ended March 31, 2023 and 2022, respectively.

Income Taxes:

2 unchanged sentences

Cash Equivalents:

The Partnership considers cash equivalents to be all highly liquid instruments purchased with a maturity of three months or less.

The Partnership considers cash equivalents to be all highly liquid instruments purchased with a maturity of three months or less at the time of purchase.

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.

Segment Reporting:

1 unchanged sentence

Under the definition, NERA operated, for all periods presented, as one segment.

Comprehensive Income:

Comprehensive income is defined as changes in partners’ equity, exclusive of transactions with owners (such as capital contributions and dividends).

NERA did not have any comprehensive income items in 2021 or 2020 other than net income as reported.

Other Comprehensive Income (Loss):

Other comprehensive income (loss) includes items that are recorded in equity, such as effective portions of derivatives designated as cash flow hedges or unrealized holding gains or losses on marketable securities available for sale.

NERA had a comprehensive loss of approximately $166,000 for the three months ended March 31, 2023, but had no comprehensive income or loss for the three months ended March 31, 2022.

Income (Loss) Per Depositary Receipt:

7 unchanged sentences

The Partnership’s properties are located in New England, and the Partnership is subject to the general economic risks related thereto.

No single tenant accounted for more

than 5 % of the Partnership’s revenues in 2021 or 2020.

No single tenant accounted for more than 5 % of the Partnership’s revenues in 2023 or 2022.

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

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

At June 30, 2021 and December 31, 2020, respectively approximately $ 23,473,000 , and $ 18,830,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

At March 31, 2023, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, and investments in U.S.

Treasury bills, earning interest at rates from 0.01 % to 4.75 %.

At March 31, 2023 and December 31, 2022, respectively approximately $ 25,063,000 , and $ 49,641,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

Of the $ 25,063,000 , approximately $ 9,885,000 is invested in U.S.

Treasury bills maturing in three months.

Advertising Expense:

Advertising is expensed as incurred.

Advertising expense was $ 154,569 and $ 145,803 for the six months ended June 30, 2021 and 2020, respectively.

Advertising expense was approximately $ 109,000 and $ 73,000 for the three months ended March 31, 2023, and 2022, respectively.

Rental Property Held f or Sale:

4 unchanged sentences

The Partnership follows the policy of capitalizing interest as a component of the cost of rental property when the time of construction exceeds one year .

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

During the three months ended March 31, 2023, and 2022 there was no capitalized interest.

Extinguishment of Debt:

1 unchanged sentence

However, if it is determined that the refinancing is substantially the same, then they are recorded as an exchange of debt.

All refinancing qualify as extinguishment of debt.

Reclassifications:

All refinancings qualify as extinguishment of debt.

Reclassification:

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

RENTAL PROPERTIES

As of June 30, 2021, the Partnership and its Subsidiary Partnerships owned 2,892 residential apartment units in 25 residential and mixed-use complexes (collectively, the “Apartment Complexes”).

As of March 31, 2023, 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 June 30, 2021, the Partnership and Subsidiary Partnerships owned a commercial shopping center in Framingham, commercial buildings in Newton and Brookline and mixed-use properties in Boston, Brockton and Newton, all in Massachusetts.

Additionally, as of March 31, 2023, the Partnership and Subsidiary Partnerships owned two commercial shopping centers 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 June 30, 2021 with a total of 688 apartment units, accounted for using the equity method of consolidation.

The Partnership also owned a 40 % to 50 % ownership interest in seven residential and mixed use complexes (the “Investment Properties”) at March 31, 2023 with a total of 688 apartment units, accounted for using the equity method of consolidation.

See Note 15 for summary information on these investments.

The Partnership purchased a commercial retail property of approximately 20,700 square feet, located at 653 Worcester Road in Framingham, Massachusetts for the sum of approximately $ 10,151,000 on January 18, 2023.

This acquisition was funded from the Partnership’s cash reserves and c losing costs were approximately $ 59,000 .

From the purchase price, the Partnership allocated approximately $ 585,000 to in- place leases, and approximately $ 378,000 to the value of tenant relationships.

The value assigned to in-place leases is being amortized over a twelve-month period.

value assigned to tenant relationships is being amortized over the individual tenant’s lease term, ranging from 20 months to 156 months .

Rental properties consist of the following:

June 30, 2021

March 31, 2023

December 31, 2022

12 unchanged sentences

RELATED PARTY TRANSACTIONS

The Partnership’s properties are managed by an entity that is owned by the majority shareholder of the General Partner.

The Partnership’s properties are managed by The Hamilton Company, Inc.

(the “Management Company”), an entity that is owned by the majority shareholder of NewReal, Inc., the general partner of the Partnership (the “General Partner”).

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 $ 1,222,000 and $ 1,265,000 for the six months ended June 30, 2021 and 2020, respectively.

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

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

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

Total fees paid were approximately $ 698,000 and $ 673,000 for the three months ended March 31, 2023 and 2022, respectively.

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

During the three months ended March 31, 2023 and 2022, approximately $ 493,000 and $ 195,000 was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

Of the 2023 expenses referred to above, approximately $ 48,000 consisted of repairs and maintenance, $ 99,000 of administrative expense, and approximately $ 57,000 for renting expense.

Approximately $ 289,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties.

Additionally in 2021, the Hamilton Company received approximately $ 289,000 from the Investment Properties of which approximately $ 257,000 was the management fee, approximately $ 19,000 was for maintenance services, approximately $ 12,000 was for administrative services and approximately $ 1,000 for architectural services and supervision of capital projects.

Additionally in 2023, the Hamilton Company received approximately $ 181,000 from the Investment Properties of which approximately $ 171,000 was the management fee, approximately $ 4,000 for construction, architectural services and supervision of capital projects, approximately $ 3,000 for repairs and maintenance, and approximately $ 3,000 for legal expense.

The management fee is equal to 4 % of gross receipts of rental income on the majority of investment properties and 2 % on Dexter Park.

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

Total reimbursement was approximately $ 1,782,000 and $ 1,738,000 for the six months ended June 30, 2021 and 2020, respectively.

Total reimbursement was approximately $ 1,114,000 and $ 1,039,000 for the three months ended March 31, 2023 and 2022, 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 six months ended June 30, 2021, the Partnership accrued $ 22,000 for the employer’s match portion to the plan.

For the six months ended june 30, 2020, the Partnership contributed $ 22,000 for the employer’s match portion to the plan.

For the three months ended March 31, 2023, the Partnership accrued $ 16,000 for the employer’s match portion to the plan.

For the three months ended March 31, 2022, the Partnership contributed $ 37,000 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 six months ended June 30, 2021 and 2020, the Management Company charged the Partnership $ 62,500 ($ 125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

During the nine months ended March 31, 2023 and 2022, the Management Company charged the Partnership $ 31,250 ($ 125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

Sally Michael is a Director of New Real, Inc., and she is a Partner at Saul Ewing Arnstein & Lear LLP.

Saul Ewing billed the Partnership for legal fees totaling approximately $ 37,000 and $ 0 for the three months ended March 31, 2023 and 2022 respectively.

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

Approximately $ 3,414,000 , and $ 3,406,000 of security deposits are included in prepaid expenses and other assets at March 31, 2023 and December 31, 2022, respectively.

The security deposits and escrow accounts are restricted cash.

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

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

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

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

Also, included in prepaid expenses and other assets at March 31, 2023 and December 31, 2022 is approximately $ 2,111,000 and $ 1,979,000 , respectively, held in escrow to fund future capital improvements, and approximately $ 831,000 and $ 573,000 respectively in interest receivable, U.S.

Treasury bills.

Intangible assets on the acquisition of 653 Worcester Road are included in prepaid expenses and other assets.

Intangible assets are approximately $ 834,000 and $ 0 net of accumulated amortization of approximately $ 129,000 and $ 1,418,000 at March 31, 2023, and at December 31, 2022 respectively.

Financing fees in association with the line of credit of approximately $ 95,000 and $ 109,000 are net of accumulated amortization of approximately $ 85,000 and $ 70,000 at March 31, 2023 and December 31, 2022 respectively.

MORTGAGE NOTES PAYABLE

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

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

At March 31, 2023 and December 31, 2022, 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, 2023, the interest rates on these loans ranged from 2.97 % to 4.95 %, payable in monthly installments aggregating approximately $ 1,523,000 including principal, to various dates through 2035.

The majority of the mortgages are subject to prepayment penalties.

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

At March 31, 2023, the weighted average interest rate on the above mortgages was 3.69 %.

The effective rate of 3.78 % includes the amortization expense of deferred financing costs.

1 unchanged sentence

The Partnership’s mortgage debt and the mortgage debt of its unconsolidated joint ventures generally is non-recourse except for customary exceptions pertaining to misuse of funds and material misrepresentations.

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

Financing fees of approximately $ 3,064,000 and $ 3,159,000 are net of accumulated amortization of approximately $ 1,068,000 and $ 973,000 at March 31, 2023 and December 31, 2022, 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 June 30, 2021 are as follows:

Approximate annual maturities at March 31, 2023 are as follows:

2024—current maturities

unamortized deferred financing costs

( 1,225,000 )

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 .

Interest only payments on the Note are payable on a monthly basis at a fixed interest rate of 3.53 % per annum, and the principal amount of the Note is due and payable on April 1, 2035.

The Note is secured by a mortgage on the Brookside apartment complex located at 5-12 Totman Drive, Woburn, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated March 31, 2020.

The Note is guaranteed by the Partnership pursuant to a Guaranty Agreement dated March 31, 2020.

Brookside Apartments used the proceeds of the loan to pay off an outstanding loan of approximately

$ 2,390,000 , with the remaining portion of the proceeds added to cash reserves.

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

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 $ 834,000 in prepayment penalties.

The remaining balance of approximately $ 42,404,000 will be used for general partnership purposes.

On November 30, 2021, New England Realty Associates Limited Partnership (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.

The Partnership used the proceeds to pay down approximately $ 65,305,000 of existing debt secured by 11 properties, along with approximately $ 2,700,000 in prepayment penalties.

The remaining balance of approximately $ 89,000,000 will be used for general partnership purposes.

On October 14, 2022, the Partnership entered into a loan agreement with Brookline Bank refinancing its loan on 659-665 Worcester Road, Framingham, MA.

The agreement pays down the loan on the existing debt of $ 5,954,546.14 , extends the maturity until October 14, 2032, at a variable interest rate of SOFR rate, plus 1.7 % interest only for 2 years and amortizing using a thirty-year schedule for the balance of the term.

At closing, the Partnership entered into an interest rate swap contract with Brookline Bank with a notional amount equivalent to the underlying loan principal amortization, resulting in a fixed rate of 4.60 % through the expiration of the interest rate swap contract.

The agreement also allows for an earn out of up to an additional $ 1,495,453.86 once the property performance reaches a 1.35 x debt service coverage ratio and the loan to value equates to at most 65 %.

Line of Credit

2 unchanged sentences

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 .

The costs associated with the line of credit extension 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.

On October 29, 2021, t he Partnership closed on the modification of its existing line of credit.

The agreement extends the credit line for three years until October 29, 2024.

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

The modification period phased out as of December 31, 2022.

During this period, the loan covenants were modified from a minimum consolidated debt service ratio of 1.60 to a ratio of 1.35 until September 30, 2022;

from a minimum tangible net worth requirement of $ 200 million to a net worth of $ 175 million until September 30, 2022;

from a maximum consolidated leverage ratio of 65 % to a ratio of 70 % until September 30, 2022 and from a minimum debt yield of 9.5 % to a yield of 8.5 % until September 30, 2022 and a yield of 9.0 % until December 31, 2022.

Once the financial performance of the Partnership meets the original covenant tests for the trailing 12-month period, the commitment amount will return to $ 25 million.

As of March 31,2023, the portfolio’s debt yield fell below the minimum of 9.5 % to 8.5 %, thus 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 was approximately $ 179,000 .

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

The line may not be used to pay distributions, make distributions or acquire equity interests of the Partnership.

The line may not be used to pay dividends, make distributions or acquire equity interests of the Partnership.

The line of credit is collateralized by varying percentages of the Partnership’s ownership interest in 23 of its subsidiary properties and joint ventures.

Pledged interests range from 49 % to 100 % of the Partnership’s ownership interest in the respective entities.

The Partnership paid fees to secure the line of credit.

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

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

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

On December 20, 2019, the Partnership paid down $ 2,000,000 .

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

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

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

The covenants include, but are not limited to the following:

maintain a leverage ratio that does not exceed 65 %;

aggregate increase in indebtedness of the subsidiaries and joint ventures should not exceed $ 15,000,000 ;

maintain a tangible net worth (as defined in the agreement) of a minimum of $ 150,000,000 ;

a minimum ratio of net operating income to total indebtedness of at least 9.5 %;

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

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

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

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

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

Subsequent Events for details.

ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

The Partnership’s residential lease agreements may require tenants to maintain a one-month advance rental payment and/or a security deposit.

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

At March 31, 2023, amounts received for prepaid rents of approximately $ 2,699,000 are included in cash and cash equivalents, and security deposits of approximately $ 3,414,000 are included in prepaid expenses and other assets and are restricted cash.

PARTNERS’ CAPITAL

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

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

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

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

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

In January 2023, the Partnership approved a quarterly distribution of $ 9.60 per Unit ($ 0.32 per Receipt), payable on March 31, 2023.

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

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

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, 2023.

In 2022 the Partnership paid a total distribution of an aggregate $ 76.80 per Unit ($ 2.56 per Receipt) for a total payment of $ 9,267,981 .

The Partnership has entered into a deposit agreement with an agent to facilitate public trading of limited partners’ interests in Class A Units.

1 unchanged sentence

The following is information per Depositary Receipt:

Six Months Ended

Net Income per Depositary Receipt

Three Months Ended

Net Income (Loss) per Depositary Receipt

Distributions per Depositary Receipt

TREASURY UNITS

Treasury Units at June 30, 2021 are as follows:

Treasury Units at March 31, 2023 are as follows:

General Partnership

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On March 9, 2020, the General Partner extended the program for an additional five years from March 31, 2020 to March 31, 2025.

The Repurchase Program requires the Partnership to repurchase a proportionate number of Class B Units and General Partner Units in connection with any repurchases of any Depositary Receipts by the Partnership based upon the 80 %, 19 % and 1 % fixed distribution percentages of the holders of the Class A, Class B and General Partner Units under the Partnership’s Second Amended and Restated Contract of Limited Partnership.

the Class A, Class B and General Partner Units under the Partnership’s Second Amended and Restated Contract of Limited Partnership.

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

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

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

From August 20, 2007 through March 31, 2023, the Partnership has repurchased 1,498,809 Depositary Receipts at an average price of $ 30.44 per receipt (or $ 913.09 per underlying Class A Unit), 4,129 Class B Units and 217 General Partnership Units, both at an average price of $ 1,203.00 per Unit, totaling approximately $ 51,440,000 including brokerage fees paid by the Partnership .

During the three months ended March 31, 2023, the Partnership purchased a total of 10,349 Depositary Receipts.

The average price was $ 72.99 per receipt, or $ 2,189.70 per unit.

The cost including commission was $ 755,666 .The Partnership was required to repurchase 81.93 Class B Units and 4.31 General Partnership units at a cost of $ 179,411 and $ 9,443 respectively.

COMMITMENTS AND CONTINGENCIES

From time to time, the Partnership is involved in various ordinary routine litigation incidental to its business.

The Partnership either has insurance coverage or provides for any uninsured claims when appropriate.

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

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

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

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

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

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

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

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

The Partnership, the Subsidiary Partnerships, and the Investment Properties and their properties are not presently subject to any material litigation, and, to management’s knowledge, there is not any material litigation presently threatened against them.

The properties are occasionally subject to ordinary routine legal and administrative proceedings incident to the ownership of residential and commercial real estate.

Some of the legal and other expenses related to these proceedings are covered by insurance and none of these costs and expenses are expected to have a material adverse effect on the Consolidated Financial Statements of the Partnership.

RENTAL INCOME

During the six months ended June 30, 2021, approximately 94 % of rental income was related to residential apartments and condominium units with leases of one year or less.

During the three months ended March 31, 2023, approximately 94 % of rental income was related to residential apartments and condominium units with leases of one year or less.

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

Approximately 6 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at June 30, 2021 as follows:

Approximately 6 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2023 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 $ 290,000 and $ 251,000 for the six months ended June 30, 2021 and 2020 respectively.

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

Aggregate contingent rentals from continuing operations were approximately $ 147,000 and $ 175,000 for the three months ended March 31, 2023 and 2022 respectively.

Trader Joe’s and Walgreen’s, tenants at Staples Plaza and 653 Worcester Road, Framingham, MA.

respectively, are approximately 23 % of the total commercial rental income.

The following information is provided for commercial leases:

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annual base rent for

Through June 30,

Through March 31,

expiring leases

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expiring leases

Rents receivable are net of an allowance for doubtful accounts of approximately $ 1,177,000 and $ 1,454,000 at June 30, 2021 and December 31, 2020.

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

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

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

Rents receivable are net of an allowance for doubtful accounts of approximately $ 1,188,000 and $ 1,007,000 at March 31, 2023 and December 31, 2022.

Included in rents receivable at March 31, 2023 is approximately $ 86,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

Rents receivable at March 31, 2023 also includes approximately $ 22,000 representing the deferral of rental concession primarily related to the residential properties.

CASH FLOW INFORMATION

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

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

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

During the three months ended March 31, 2023 and 2022, cash paid for interest was approximately $ 3,754,000 , and $ 3,370,000 respectively.

Cash paid for state income taxes was approximately $ 4,000 and $ 2,000 during the three months ended March 31, 2023 and 2022 respectively.

FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At June 30, 2021 and December 31, 2020, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements.

At March 31, 2023 and December 31, 2022, 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 June 30, 2021 and December 31, 2020 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and note payable, accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments or, the recent acquisition of these items.

At June 30, 2021 and December 31, 2020, we estimated the fair value of our mortgages payable and other notes based upon quoted market prices for the same (Level 1) or similar (Level 2) issues when current quoted market prices are available.

We estimated the fair value of our secured mortgage debt that does not have current quoted market prices available by discounting the future cash flows using rates currently available to us for debt with similar terms and maturities (Level 3).

The differences in the fair value of our debt from the carrying value are the result of differences in interest rates and/or borrowing spreads that were available to us at June 30, 2021 and December 31, 2020, as compared with those in effect when the debt was issued or acquired.

At March 31, 2023 and December 31, 2022 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.

The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents.

Cash, cash equivalents, and restricted cash include cash held in checking, U.S.

Treasury Bills, and money market accounts.

The Partnership has investments in Treasury Bills some of which mature over a period greater than 90 days and are classified as short-term investments.

The Treasury Bills are carried 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.

The Treasury Bills classified within Level I of the fair value hierarchy.

At March 31, 2023 and December 31, 2022 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.

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, 2023 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.

At March 31, 2023 and at December 31, 2022 the Partnership’s line of credit had an outstanding balance of zero .

The following methods and assumptions were used by the Partnership in estimating the fair value of its financial instruments:

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The following table reflects the carrying amounts and estimated fair value of our debt.

Carrying Amount

Estimated Fair Value

Mortgage Notes Payable

March 31, 2023

Carrying Value

Cash equivalents

Treasury bills

Mortgage payable *

- Partnership properties

At June 30, 2021

At December 31, 2020

- Investment properties

At June 30, 2021

At December 31, 2020

Total Liabilities

* Net of unamortized deferred financing costs

Disclosure about fair value of financial instruments is based on pertinent information available to management as of June 30, 2021 and December 31, 2020.

Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since June 30, 2021 and current estimates of fair value may differ significantly from the amounts presented herein.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of March 31, 2023 and December 31, 2022.

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, 2023 and current estimates of fair value may differ significantly from the amounts presented herein.

DERIVATIVE FINANCIAL INSTRUMENTS

Cash Flow Hedges of Interest Rate Risk

The Partnership’s objectives in using rate derivatives are to manage its exposure to interest rate movements.

To accomplish this objective, the Partnership uses interest rate swaps as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Partnership making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Partnership’s variable rate debt.

During the next 12 months, the Partnership estimates $ 114,000 will be reclassified as a decrease to interest expense.

As of March 31, 2023, the Partnership had one interest rate swap outstanding with a notional amount of approximately $ 129,000 designated as cash flow hedges of interest rate risk.

As of March 31,2023, the Partnership did not have any interest rate derivatives in a net liability position.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2023 and 2022.

Asset Derivatives designated

as hedging instruments

Balance sheet location

Interest rate swaps

Prepaid Expenses and Other Assets

The table below presents the effect the Company’s derivative financial instruments on the consolidated statements of income for the quarters ended March 31, 2023 and 2022.

Derivatives in Cash Flow Hedging Relationships

Amount of Gain

or (Loss) Recognized

in OCI on Derivative

Location of Gain

OCI Into Income

Amount of Gain

from Accumulated

OCI into Income

Location of Gain

or (Loss) Recognized

Total Amount of

Interest Expense

presented in the

consolidated statements

of operations

Quarter Ended March 31,

Interest rate swaps

Interest expense

Interest and other investment income (loss)

( 3,899,240 )

( 3,454,635 )

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 and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions.

Federal taxable income of approximately $ 8,578,000 was approximately $ 7,153,000 more than statement income for the year ended December 31, 2020.The Federal cumulative tax basis of the Partnership’s real estate at December 31, 2020 is approximately $ 7,332,000 more than the statement 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.

Federal taxable income of approximately $ 10,968,000 was approximately $ 7,245,000 more than statement income for the year ended December 31, 2022.

The Federal cumulative tax basis of the Partnership’s real estate at December 31, 2022 is approximately $ 14,000,000 more than the statement basis.

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

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Certain entities included in the Partnership’s consolidated financial statements are subject to certain state taxes.

These taxes are not significant and are recorded as operating expenses in the accompanying consolidates financial statements.

These taxes are not significant and are recorded as operating expenses in the accompanying consolidated financial statements.

The Partnership adopted the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes.

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

As of March 31, 2023, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2019 forward.

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

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

At March 31, 2023, 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.

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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.

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

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

At March 31, 2023, the balance on this mortgage before unamortized deferred financing costs is $ 10,000,000 .

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

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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.

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

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

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

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.

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, 2023, the balance on this mortgage before unamortized deferred financing costs is $ 6,000,000 .

This investment is referred to as Hamilton Minuteman, LLC.

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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.

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

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

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

At March 31, 2023, the balance of the mortgage before unamortized deferred finance is $ 16,900,000 .

The investment is referred to as Hamilton on Main LLC.

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

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

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

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

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

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

At March 31, 2023, the balance of this mortgage before unamortized deferred financing costs is approximately $ 8,657,000 .

This investment is referred to as 345 Franklin, LLC.

Summary financial information at June 30, 2021

Summary financial information at March 31, 2023

Rental Properties

23 unchanged sentences

( 19,347,906 )

( 25,244,289 )

Total Investment in Unconsolidated Joint Ventures (Net)

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Units to be sold

Units sold through August 1, 2021

Financial information for the six 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

( 2,529,233 )

( 3,327,363 )

Interest Income

( 2,528,011 )

( 3,326,141 )

Net Income (Loss)

( 1,146,490 )

( 1,356,488 )

Net Income (Loss)—NERA 50 %

Net Income (Loss) —NERA 40 %

Financial information for the three months ended June 30, 2021

Hamilton Essex

Units sold through May 1, 2023

Financial information for the three months ended March 31, 2023

Rental Income

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( 1,768,672 )

Net Income (Loss)

Net Income (Loss)—NERA 50%

Net Income (Loss)—NERA 40 %

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

Net (Loss) Income

Net (Loss) Income —NERA 50 %

Net Income —NERA 40 %

Future annual mortgage maturities at March 31, 2023 are as follows:

unamortized deferred financing costs

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

At March 31, 2023 the weighted average interest rate on the above mortgages was 4.18 %.

The effective rate was 4.25 % including the amortization expense of deferred financing costs.

Summary financial information at June 30, 2020

Summary financial information at March 31, 2022

Rental Properties

14 unchanged sentences

( 45,470,936 )

( 53,007,104 )

Total Liabilities and Capital

6 unchanged sentences

( 18,188,375 )

( 23,417,093 )

Total Investment in Unconsolidated Joint Ventures (Net)

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Units to be sold

Units sold through August1, 2020

Financial information for the six months ended June 30, 2020

Rental Income

Laundry and Sundry Income

Administrative

Depreciation and Amortization

Management Fees

Repairs and Maintenance

Taxes and Insurance

Income Before Other Income

Other Income (Loss)

Interest Expense

( 2,536,786 )

( 3,396,574 )

Interest Income

Gain on sale of Real Estate

( 2,536,786 )

( 3,396,574 )

Net Income (Loss)

Net Income (Loss)—NERA 50 %

Net Income (Loss)—NERA 40 %

Financial information for the three months ended June 30, 2020

Units sold through May 1, 2022

Financial information for the three months ended March 31, 2022

Rental Income

11 unchanged sentences

Interest income

Gain on sale of Real Estate

( 1,263,146 )

2 unchanged sentences

Net Income (Loss)—NERA 50 %

Net Income (Loss)—NERA 40%

Net Income —NERA 40 %

EMPLOYEE BENEFIT 401(k) PLANS

Effective January 1, 2019, employees of the Partnership, who meet certain minimum age and service requirements, are eligible to participate in the Management Company’s 401(k) Plan (the “401(k) Plan”).

Employees of the Partnership, who meet certain minimum age and service requirements, are eligible to participate in the Management Company’s 401(k) Plan (the “401(k) Plan”).

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

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

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

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

The Partnership matches 50 % up to 6 % of compensation deferred by each employee in the 401(k) plan.

The Partnership may make discretionary matching or profit-sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year.

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 six months ended June 30, 2021 was $ 22,000 .

Total expense recognized by the Partnership for the 401(k) Plan for the three months ended March 31, 2023 was $ 16,000 .

IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

In April 2020, the FASB issued a Staff Question & Answer (“Q&A”) which was intended to reduce the challenges of evaluating the enforceable rights and obligations of leases for concessions granted to lessees in response to the novel coronavirus disease (“COVID-19”), which was characterized on March 11, 2020 by the World Health Organization as a pandemic.

Prior to this guidance, the Partnership was required to determine, on a lease by lease basis, if a lease concession should be accounted for as a lease modification, potentially resulting in any lease concessions granted being recorded as a reduction to revenue on a straight-line basis over the remaining terms of the leases.

The Q&A allows both lessors and lessees to bypass this analysis and elect not to evaluate whether concessions provided in response to the COVID-19 pandemic are lease modifications.

This relief is subject to certain conditions being met, including ensuring the total remaining lease payments are substantially the same or less as compared to the original lease payments prior to the concession being granted.

The Partnership has elected to apply such relief and will therefore not evaluate if lease concessions that were granted in response to the COVID-19 pandemic meet the definition of a lease modification.

Accordingly, the Partnership accounted for qualifying rent concessions as negative variable lease payments, which reduced revenue from such leases in the period the concessions were granted.

There have been no new accounting pronouncements applicable to the Partnership that would have a material impact on the Partnership’s consolidated financial statements.

SUBSEQUENT EVENTS

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

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

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

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

During this period, the loan covenants are modified from a minimum consolidated debt service ratio of 1.60 to a ratio of 1.35 until September 30, 2022;

from a minimum tangible net worth requirement of $ 200 million to a net worth of $ 175 million until September 30, 2022;

Once the financial performance of the Partnership meets the original covenant tests for the trailing 12-month period, the commitment amount will return to $ 25 million.The interest rate for the new term has been reduced from LIBOR plus 350 basis points to LIBOR plus 300 basis points.

Additionally, the unused fee has been eliminated.

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

From April 1, 2023, through May 8, 2023, the Partnership has purchased 525 Depository Receipts .

The average price was $ 71.67 per receipt, or $ 2,150.10 per unit.

The total cost was $ 37,876 .

The Partnership is required to purchase 4 Class B units and 1 General Partnership units at a cost of $ 9,931 and $ 523 , respectively.

On May 8, 2023, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), payable on June30, 2023.

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/A

Item 1. Financial Statements