What changed in this filing

/stocks — the workspaceLOADING

Item 1B. Unresolved Staff Comments

2024-03-14 compared with 2023-03-13 · 60 added, 57 removed, 327 unchanged (26% of the section changed)

UNRESOLVED STAFF COMMENT S

CYBERSECURITY

The Partnership’s information technology, communication networks, system applications, accounting and financial reporting platforms and related systems, and those that are offered to residents and tenants, are integral to the operation of the business.

The Partnership utilizes these systems, among others, for financial analysis, management, and reporting, for facilitation of operations, including for the initiation, generation, and completion of resident leasing, for internal communications, and for various other aspects of the business.

The Partnership’s cybersecurity strategy is focused on detection, protection, incident response, security risk management and mitigation, and resiliency of the cybersecurity infrastructure.

The Partnership has implemented or is in the process of continuously evaluating, testing and updating various information security processes and policies designed to identify, assess and manage material risks from cybersecurity threats to the Partnership’s critical computer networks, third-party hosted services, communications systems, hardware and software, and critical data, including confidential information that is proprietary, strategic or competitive in nature, as well as any personally identifiable information related to the Partnership’s residents’ and employees’ personal data.

To operate its business, the Partnership engages certain third-party vendors to perform a variety of functions.

The Partnership seeks to engage reliable, reputable service providers.

Depending upon the nature of the services and the sensitivity of the data that a third-party service provider processes, the Partnership’s vendor management procedures include reviewing the cybersecurity procedures, imposing contractual requirements, and conducting as needed periodic reassessments.

The Partnership seeks to further enhance this review to expand the scope and depth of this analysis.

Cybersecurity is a critical component of our risk management process.

We recognize that no single technology, process, or business control can effectively prevent or mitigate all risks, thus we use a variety of tools including multi-factor authentication and antivirus and firewall protection, to help identify, protect, detect, respond to, and recover from cyber threats.

These individual technologies work together as part of our strategy to minimize risk.

This strategy is tested through audits and independent program assessments, as well as through additional exercises with our Managed Service Provider, designed to assess effectiveness.

The Managed Service Provider actively manages our firewalls, multi-factor authentication, antivirus, and Azure environment.

Our Managed Service Provider also reviews our cybersecurity program on a quarterly basis and provides recommendations toward best industry practice.

Our cybersecurity program is continually evolving to align with NIST standards, and we regularly monitor our progression toward these standards.

Our Audit Committee is responsible for overseeing our cybersecurity and data privacy risks.

Our cybersecurity program is led by the Hamilton Company’s Chief Financial Officer, who, along with the Hamilton Company’s Director of Information Technology who has been with Hamilton for 38 years, provide regular updates each quarter to the Audit Committee regarding this program, including information about the cybersecurity threat landscape, investments in infrastructure and opportunities to protect and enhance the Company’s systems and security of products and operations.

The also Board receives periodic briefings from management regarding cybersecurity activities and initiatives.

The Partnership’s cybersecurity program is designed to safeguard the confidentiality, integrity and availability of data and systems within the Company’s environment to effectively support our business objectives and customer needs.

Our commitment to cybersecurity focuses on enhancing our prevention, monitoring, and detection response capabilities to identify and respond to evolving threats.

We believe cybersecurity is the responsibility of every employee of the Hamilton Company, and it is prioritized each year.

We regularly test, educate, and share best practices with employees of the Hamilton Company to raise awareness of cyber threats through a comprehensive security awareness training program.

Our Managed Service Provider is responsible for testing our ability to restore our critical infrastructure on a quarterly basis.

Additionally, our incident response and disaster recovery plans are reviewed and updated annually.

During 2023, we have not encountered cybersecurity challenges that have materially impaired our operations, business strategy or financial condition.

The Partnership and its Subsidiary Partnerships own the Apartment Complexes, the Condominium Units, the Commercial Properties and a 40-50% interest in seven Investment Properties.

120 unchanged sentences

88 one bedroom

Shawmut Place LLC

105-117 West Concord St, 473-477 Shawmut Ave,

12 four bedroom

and 26-30 Rutland St

4 three bedroom

13 two bedroom

23 one bedroom

WCB Associates, LLC

21 unchanged sentences

(1) The mortgage balance is stated before unamortized deferred financing costs.

(2) Mill Street Development, LLC, partially held for development, consisting of 4 homes, one used as an office for the apartment complex.

(2) Mill Street Development, LLC, was held for development.

In December of 2023, the Partnership received 40B approval to construct a 72 unit apartment complex.

Management expects to start the construction project in 2024.

In order to comply with the permanent financing requirements for a 40B project, Mill Street Development signed a term sheet for a loan of up to $15 million, to be funded upon completion of the development project.

In addition, Mill Street Development deposited $75,000 into escrow to comply with the 40B project requirement of a cost certification of total development costs upon completion of the project.

Current free rent concessions would result in an average reduction in unit rents of approximately $2.13 per month per unit.

Free rent expense amortized in 2023 was approximately $76,000 compared to approximately $344,000 in 2022.

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 the initial advance in the amount of $156,000,000, at a fixed interest rate of 2.97%.

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 (“Mortgages ”).

The Partnership used the proceeds to pay down approximately $65,300,000 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.

See schedule in Note 5, Mortgage Notes Payable, for the details of the transaction as it relates to the specific properties.

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 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 the 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 1.35x debt service coverage ratio and the loan to value equates to at most 65%.

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.

See Note 5 to the Consolidated Financial Statements, included as part of this Form 10-K, for information relating to the mortgages payable of the Partnership and its Subsidiary Partnerships.

See Note 5 to the Consolidated Financial Statements for information relating to the mortgages payable of the Partnership and Subsidiary Partnerships.

Condominium Units

17 unchanged sentences

This mixed-use property includes 15,908 square feet of rentable commercial space.

As of February 1, 2023, the commercial space was fully occupied, and the average rent per square foot was $28.84.

For mortgage balance, interest rate and maturity date information see “Apartment Complexes” above.

As of February 1, 2024, the commercial space was fully occupied, and the average rent per square foot was $32.80 For mortgage balance, interest rate and maturity date information see “Apartment Complexes” above.

HAMILTON OAKS ASSOCIATES, LLC.

The Hamilton Oaks Apartment complex in Brockton, Massachusetts was acquired by the Partnership in December 1999 through Hamilton Oaks Associates, LLC, and includes 6,075 square feet of rentable commercial space, occupied by a daycare center.

As of February 1, 2023, the commercial space was fully occupied, and the average rent per square foot was $15.41.

The Partnership also rents roof space for a cellular phone antenna at an average rent of approximately $61,000 per year through November 2035.

As of February 1, 2024, the commercial space was fully occupied, and the average rent per square foot was $15.00.The Partnership also rents roof space for a cellular phone antenna at an average rent of approximately $63,000 per year through November 2040.

For mortgage balance, interest rate and maturity date information see “Apartment Complexes” above.

1 unchanged sentence

This mixed-use property includes 22,200 square feet of rentable commercial space.

As of February 1, 2023, the commercial space was fully occupied, and the average rent per square foot was $26.31.

As of February 1, 2024, the commercial space had vacant square footage of 1,273 square feet, and the average rent per square foot was $27.10.

NORTH BEACON 140 LP.

In 1995, this Subsidiary Partnership acquired the North Beacon property in Boston, Massachusetts (“North Beacon”).

In 1995, this Subsidiary Partnership acquired the North Beacon property in Boston, Massachusetts.

This mixed-use property includes 1,050 square feet of rentable commercial space.

1 unchanged sentence

For mortgage balance, interest rate and maturity date information see “Apartment Complexes” above.

STAPLES PLAZA.

In 1999, the Partnership acquired the Staples Plaza shopping center in Framingham, Massachusetts (“Staples Plaza”).

In 1999, the Partnership acquired the Staples Plaza shopping center in Framingham, Massachusetts.

The shopping center consists of 38,268 square feet of rentable commercial space.

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

At loan 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 1.35x debt service coverage ratio and the loan to value equates to at most 65%.

As of February 1, 2023 Staples Plaza was fully occupied, and the average net rent per square foot was $13.23.

As of February 1, 2024, this property was fully occupied, and the average net rent per square foot was $13.23.

A new tenant, Blue Pearl Operations LLC, signed a lease on January 9, 2023 that includes a tenant fit up period of the earlier of 12 months from lease signing or such time as the tenant receives a certificate of occupancy.

No rent is due from the tenant during the fit up period.

As of December 31, 2023, no rent is due from this tenant.

HAMILTON LINEWT ASSOCIATES, LLC.

6 unchanged sentences

As of February 1, 2024, the space was fully occupied, and the average rent per square foot was $40.38

653 WORCESTER Road LLC.

On January 18, 2023, the Partnership purchased a commercial retail property of 20,693 square feet of rentable commercial space located at 653 Worcester Road in Framingham, Massachusetts for the sum of approximately $10,151,000.

As of February 1, 2024, the space was fully occupied, and the average rent per square foot was $28.25.

SHAWMUT PLACE, LLC.

On July 14, 2023, the Partnership purchased a 52 unit mixed use property in the South End neighborhood of Boston, MA comprised of three buildings at 26-30 Rutland Street, 105-117 West Concord Street and 475 Shawmut Avenue, and 3,397 square feet of commercial space for a purchase price of approximately $27,500,000.

The commercial space was fully rented as of February 1, 2024, and the average rent per square foot as of that date was $44.09.

The following information is provided for commercial leases :

7 unchanged sentences

Commercial rental income is accounted for using the straight-line method.

Approximately 36 percent of our commercial leases contain rent escalations which range from $0.25– $1.00 per square foot per year.

Approximately 36% of our commercial leases contain rent escalations which range from $0.18 to $2.42 per square foot per year.

Investment Properties

See Note 14 to the Financial Statements for additional information regarding the Investment Properties.

See Note 15 to the Consolidated Financial Statements for additional information regarding the Investment Properties.

The Partnership has a 50% ownership interest in the properties summarized below:

35 unchanged sentences

71 three bedroom

Brookline, MA

227 two bedroom

77 unchanged sentences

The purchase price was $129,500,000.

In order to fund this investment, the Partnership used approximately $8,757,000 of its cash reserves and borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brown and his affiliates (“HBC”).

The term of the loan was four years with a provision requiring payment in whole or in part upon demand by HBC with six months’ notice.

1 unchanged sentence

The original mortgage was $89,914,000 with an interest rate of 5.57% and was to mature in 2019.

On May 31, 2018, Hamilton Park, entered into a Mortgage Note with John Hancock Life Insurance Company (U.S.A.) in the principal amount of $125,000,000.

On May 31, 2018, Hamilton Park Towers, LLC, entered into a Mortgage Note with John Hancock Life Insurance Company (U.S.A.) in the principal amount of $125,000,000.

Interest only payments on the Note are payable on a monthly basis at a fixed interest rate of 3.99% per annum, and the principal amount of the Note is due and payable on June 1, 2028.

The Note is secured by a mortgage on the Dexter Park apartment complex located at 175 Freeman Street, Brookline, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated May 31, 2018.

The Note is guaranteed by the Partnership and HBC Holdings, LLC pursuant to a Guaranty Agreement dated May 31, 2018.

Hamilton Park used the proceeds of the loan to pay off an outstanding loan of approximately $82,000,000 and distributed approximately $41,200,000 to its owners.

The Note is guaranteed by the Partnership and HBC pursuant to a Guaranty Agreement dated May 31, 2018.

Hamilton Park Towers, LLC used the proceeds of the loan to pay off an outstanding loan of approximately $82,000,000 and distributed approximately $41,200,000 to its owners.

The Partnership’s share of the distribution was approximately $16,500,000.

4 unchanged sentences

LEGAL PROCEEDING S

On December 19, 2022, a class action was commenced in the United States District Court for the District of Massachusetts against a number of parties, including the Company:

Billie Jo White v.

RealPage, Inc., et al, Case No.

1:22-cv-12134, United States District Court, District of Massachusetts (“RealPage Litigation”).

The first named defendant, RealPage, Inc., is allegedly the developer of a certain software platform known as “AI Revenue Management” (previously known as “YieldStar”).

In addition to RealPage, the Complaint names as

defendants several companies, including the Partnership, allegedly owning, operating and/or managing residential real estate in the Greater Boston Metro Area (collectively, “Defendant Property Managers”).

The Complaint alleged that through the combined use of RealPage’s revenue management services, which allegedly included collecting non-public data regarding various factors influencing rents and generating a suggested rental price for each of the units controlled by a Defendant Property Manager using its services, the Defendant Property Managers constitute a rental “price-fixing cartel” in violation of federal and state anti-trust laws.

The Complaint seeks class certification and unspecified damages, trebled, together with attorney’s fees and other injunctive relief.

No class has yet been certified.

The Company disputed the allegations made against it, as it had not utilized the software, and intended to vigorously defend the lawsuit.

The plaintiffs’ attorney requested that the Partnership submit an affidavit attesting to that fact.

The Partnership submitted the affidavit, and subsequently, on March 8, 2023, was dismissed from the lawsuit.

With the exception of the above mentioned litigation, 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 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.

3 unchanged sentences

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-K

Item 1B. Unresolved Staff Comments