What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-30 compared with 2021-08-23 · 92 added, 138 removed, 195 unchanged (54% of the section changed)

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

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

results, performance or achievements for 2021 and beyond.

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

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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 a period of time both in 2021 and 2022, 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, $108,000,000 of these reserves are invested in short-term US Treasury bills maturing in 6 months or less with interest rates between 4.45% and 4.75% .

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.

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The Partnership will consider refinancing existing properties if the Partnership’s cash reserves are insufficient to repay existing mortgages or if the Partnership needs additional funds for future acquisitions.

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

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

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

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

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

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

With the introduction and roll out of Covid-19 vaccines in the spring of 2021, the economy is opening back up.

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

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

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

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

The vacancy rate for the Partnership’s residential properties as of May 1, 2023 was 2.1% as compared with a vacancy rate of 2.0% as of May 1, 2022.

The vacancy rate for the Joint Venture properties as of May 1, 2023 was 2.5 %, as compared to 0.6% for the same period last year.

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

Residential tenants generally have lease terms of 12 months.

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

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

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

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

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

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

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

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

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

Leasing is limited to unoccupied units unless permission is granted by the current tenant and a web based video technology is being used to remotely show apartments.

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

During the first quarter of 2023, rents increased on average of 6.3% for renewals and increased on average of 10.4% for new leases.

For the balance of 2023, management expects a strong rental market with continued rent growth.

For the first quarter of 2023, consolidated revenue increased by 6.7%, operating expenses increased by 3.4 % and Income before Other Income (Expense) increased by 17.9%, as compared to the first quarter of 2022.

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

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

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

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

October 31, 2021.

The 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.

Subsequent Events for details.

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

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 March 31, 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 were added to cash reserves.

In connection with this refinancing, there were closing costs of approximately $132,000.

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 was phased out by December 31, 2022.

During the modification 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.

From the start of the Stock Repurchase Program in 2007 through March 31, 2023, the Partnership has purchased 1,498,809 Depositary Receipts.

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

In March of 2020, the Board of Advisors and Board of Directors unanimously approved an extension of the Repurchase Program until March 31, 2025.

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

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

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

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

At May 1, 2023, the Harold Brown related entities and Ronald Brown collectively own approximately 31.8% 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.

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

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In addition, Ronald Brown is the President and director of NewReal and Jameson Brown is NewReal’s Treasurer and a director.

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

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

The outstanding stock of The Hamilton Company, Inc.

is controlled by Jameson Brown and Harley Brown.

The 75% of the issued and outstanding capital stock of NewReal, is owned by the Harold Brown 2013 Revocable Trust (the “2013 Trust”), an entity of which Sally Michaels and David Reier are the trustees.

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

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Residential tenants sign a one year lease.

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

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

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

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

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

During the three months ended March 31, 2023, tenant renewals were approximately 85% with an average rental increase of approximately 6.3%, new leases accounted for approximately 15% with rental rate increases of approximately 10.4%.

During the three months ended March 31, 2023, leasing commissions were approximately $59,000 compared to approximately $81,000 for the three months ended March 31, 2022, a decrease of approximately $22,000 (27.9%).

Tenant concessions were approximately $20,000 for the three months ended March 31, 2023, compared to approximately $11,000 for the three months ended March 31, 2022, an increase of approximately $9,000 (81.8%).

Tenant improvements were approximately $650,000 for the three months ended March 31, 2023, compared to approximately $475,000 for the three months ended March 31, 2022, an increase of approximately $175,000 (36.8%).

Hamilton accounted for approximately 1.7% of the repair and maintenance expenses paid for by the Partnership during the three months ended March 31, 2023 and 3.2 % during the three months ended March 31, 2022.

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

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

Overall, Hamilton provided approximately $68,000 (82.6%) and approximately $54,000 (84.1%) of the legal services paid for by the Partnership during the three months ended March 31, 2023 and 2022 respectively.

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

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

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

During the three months ended March 31, 2023, Hamilton provided the Partnership approximately $288,000 in construction and architectural services, compared to approximately $37,000 for the three months ended March 31, 2022.

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

During the six months ended June 30, 2021 and 2020, Hamilton charged the Partnership $62,500 for bookkeeping and accounting services.

During the three months ended March 31, 2023 and 2022, Hamilton charged the Partnership $31,250 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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When assets are identified by management as held for sale, the Partnership discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets.

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.

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.

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

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

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

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

Investments in 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.

Investments in Joint Ventures:

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RESULTS OF OPERATIONS

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

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

Three Months Ended March 31, 2023 and March 31, 2022

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $4,451,000 during the three months ended March 31, 2023, compared to approximately $3,777,000 for the three months ended March 31, 2022, an increase of approximately $674,000 (17.9%).

The rental activity is summarized as follows:

Occupancy Date

August 1, 2021

August 1, 2020

Total square feet

Rental Income (in thousands)

Three Months Ended June 30,

Three Months Ended March 31,

Residential percentage

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Contingent rentals

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

Three Months Ended June 30,

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022:

Three Months Ended March 31,

Rental income

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Income from investments in unconsolidated joint ventures

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

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

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

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

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

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

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

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

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

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

See a description of these properties included in the section titled Investment Properties as well as Note 14 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

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

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

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

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

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

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

Six Months Ended June 30,

Rental income

Laundry and sundry income

Administrative

Depreciation and amortization

Management fee

Repairs and maintenance

Taxes and insurance

Income Before Other Income (Expense)

Other Income (Expense)

Interest income

Interest (expense)

(Loss) from investments in unconsolidated joint ventures

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

Although rental income has increased at a number of properties, due to the effect of the Pandemic, a number of properties incurred a decrease in their rental income.The Partnership properties with the largest increases in rental income include Hamilton Oaks, Hamilton Green and Dean Street Associates with increases of $92,000, $59,000, and $44,000 respectively.

Net Income (Loss)

Rental income for the three months ended March 31, 2023 was approximately $17,569,000, compared to approximately $16,460,000 for the three months ended March 31, 2022, an increase of approximately $1,109,000 (6.7%).

The Partnership properties with the largest increases in rental income include 62 Boylston, 1144 Commonwealth, 653 Worcester Road, Westgate Apartments, and Clovelly Apartments with increases of $362,000, $185,000, $147,000, $129,000 and $69,000 respectively.

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

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

Operating expenses for the six months ended June 30, 2021 were approximately $22,953,000 compared to approximately $23,345,000 for the six months ended June 30, 2020, a decrease of approximately $392,000 (1.7%).

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

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

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

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

Excluding the increase in expenses at 653 Worcester Road of approximately $311,000, operating expenses increased approximately $126,000 (1.0%).

Operating expenses for the three months ended March 31, 2023 were approximately $13,240,000 compared to approximately $12,803,000 for the three months ended March 30, 2022, an increase of approximately $437,000 (3.4%), The factors contributing to the increase are an increase in repairs and maintenance of approximately $483,000 (21.2%), an increase in taxes and insurance of approximately $194,000 (8.5%), partially offset by a decrease in depreciation and amortization expenses of approximately $175,000 (4.3%) due to fully depreciated assets, and a decrease in operating expenses of approximately $142,000 (5.3%).

Interest expense for the three months ended March 31, 2023 was approximately $3,899,000 compared to approximately $3,455,000 for the three months ended March 31, 2022, an increase of approximately $444,000 (12.9 %).

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

Interest income for the three months ended March 31, 2023 was approximately $975,000 compared to approximately $0 for the three months ended March 31, 2022, an increase of approximately $975,000.

The increase is due to investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 4.45% to 4.75%.

At March 31, 2023, 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 15 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

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

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

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

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

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

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $228,000 for the three months ended March 31, 2023, compared to net income of approximately $20,000 for the three months ended March 30, 2022, an increase in income of approximately $208,000 (1034.6%).

This increase is primarily due to an increase in rental revenue to approximately $2,686,000 from $2,430,000, an increase of approximately $256,000 (10.5 %) for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Included in the income for the three months ended March 31, 2023 is depreciation and amortization expense of approximately $640,000.

As a result of the changes discussed above, net income for the three months ended March 31, 2023 was approximately $1,754,000 compared to net income of approximately $342,000 for the three months ended March 31, 2022, an increase in income of approximately $1,412,000 (412.3%).

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

Six Months Ended June 30,

The Partnership’s principal source of cash during the first three months of 2023 was the collection of rents and for 2022 was the proceeds from the refinancing of 5 properties for approximately $43,000,000, interest income generated from the purchase of Treasury Bills, and the collection of rents.

The Partnership’s principal use of cash during the first three months of 2023 was the purchase of Treasury Bills and the purchase of the commercial property at 653 Worcester Road for approximately $10,000,000.

The majority of cash and cash equivalents of $24,654,625 at March 31, 2023 and $49,560,723 at December 31, 2022 were held in interest bearing accounts at creditworthy financial institutions.

The decrease in cash of $24,906,098 for the three months ended March 31, 2023 is summarized as follows:

Three Months Ended March 31,

Cash provided by operating activities

Cash (used in) investing activities

Cash (used in) provided by financing activities

Cash (used in) financing activities

Repurchase of Depositary Receipts, Class B and General Partner Units

Distributions paid

Net increase in cash and cash equivalents

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

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

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

Net (decrease) 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 as follows:

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.

This acquisition was funded from the Partnership’s cash reserves.

Closing 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;

improvements to rental properties, and the purchase of Treasury Bills.

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

During 2023, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $2,173,000.

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Cash reserves have been adequate to fully fund improvements.

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

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

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 March 31, 2035.

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.

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

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

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

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

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

The most significant improvements were made at Hamilton Oaks, Lincoln Street, School Street, Woodland Park, Westgate Woburn, and Mill Street Development at a cost of approximately $809,000, $198,000, $184,000, $143,000, $125,000 and $117,000 respectively.

During the three months ended March 31, 2023, the Partnership received distributions of approximately $580,000 from the investment properties.

For the three months ended March 31, 2022, the Partnership received $440,000 in distributions from the investment properties.

Included in these net distributions is the amount from Dexter Park of approximately $400,000 and $240,000 for the three months ended March 31, 2023 and 2022, respectively.

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

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.

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

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

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

Subsequent Events for details.

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

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

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

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

The Partnership agreed to terms with the lender on October 29, 2021, to extend the line of credit until October 29, 2024.

On December 3, 2021, the Partnership paid off the line.

The Partnership anticipates that cash from operations will be sufficient to fund its current operations, pay distributions, make required debt payments and finance current improvements to its properties.

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Off-Balance Sheet Arrangements—Joint Venture Indebtedness

As of June 30, 2021 the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness.

As of March 31, 2023, 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, 2021, our proportionate share of the non-recourse debt related to these investments was approximately $70,972,000.

At March 31, 2023, our proportionate share of the non-recourse debt related to these investments was approximately $70,778,000.

See Note 15 to the Consolidated Financial Statements.

Contractual Obligations

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

As of March 31, 2023, we are subject to contractual payment obligations as described in the table below.

Payments due by period

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Mortgage debt

Other obligations

Total Contractual Obligations

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Factors That May Affect Future Results

Along with risks detailed in Item 1A and from time to time in the Partnership’s filings with the Securities and Exchange Commission, some factors that could cause the Partnership’s actual results, performance or achievements to differ materially from those expressed or implied by forward looking statements include but are not limited to the following:

Along with risks detailed in Item 1A of the Partnership’s Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on March 13, 2023 and from time to time in the Partnership’s other filings with the Securities and Exchange Commission, some factors that could cause the Partnership’s actual results, performance or achievements to differ materially from those expressed or implied by forward looking statements include but are not limited to the following:

● The Partnership depends on the real estate markets where its properties are located, primarily in Eastern Massachusetts, and these markets may be adversely affected by local economic market conditions, which are beyond the Partnership’s control.

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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 2. Management’s Discussion and Analysis