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Item 9A. Controls and Procedures

2024-03-14 compared with 2023-03-13 · 212 added, 277 removed, 1393 unchanged (26% of the section changed)

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) have been evaluated as of the end of the period covered by this Annual Report.

Based on that evaluation, under the supervision and with the participation of the Hamilton Company, Inc.

(the “Management Company”), Management has concluded that IT control and related procedures that support financial reporting were not effective during the period ending December 31, 2022 due to material weaknesses described below that prevented the recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act.

On October 3, 2022, the Management Company was the target of a ransomware attack.

The Partnership did not incur any monetary damage nor any loss of financial data due to the incident.

After becoming aware of the incident, the Management Company conducted an internal investigation into their digital environment and discovered that all on premise computer systems were encrypted by an outside party.

The Partnership, along with the Management Company, worked with independent third-party cybersecurity specialists to help with the restoration of the environment and to return operations securely.

Off-site data backups, which were verified to have not been compromised by the ransomware attack, were utilized to restore the data that had been encrypted.

The Partnership, along with the Management Company, has successfully recovered the impacted files and rebuilt its computer systems.

However, Management determined that the inordinate amount of time to recover this data and rebuild the financial reporting system prevented the Partnership from filing the Quarterly Report as of September 30, 2022 on a timely basis.

Management identified control deficiencies in our Information Technology general controls that prevented a timely filing of the Quarterly Report as of September 30, 2022 and developed a remediation plan for each weakness.

The Partnership has been committed to remediating such control deficiencies in our Information Technology general controls in a timely manner.

With the assistance of cybersecurity specialists, the Partnership and the Management Company added additional security features designed to protect its systems and data from future attacks including multifactor authentication for domain sign-on, restricted server access, enhanced security awareness training, and updated multi-location secure backup with regular recovery testing.

Specifically, the Partnership and the Management Company worked with a third-party service provider to implement least privileged access and restricted Super User/Administrative access across the production environment and to implement a modern antivirus solution.

In addition to these steps already taken, remediation will also include the documentation and testing of the additional IT procedures implemented.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Our internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of our financial statements for external purposes in accordance with GAAP.

All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance that the objectives of the internal control system are met.

Changes in Internal Control

Except for the above noted material weaknesses and the remediation activities that have since been completed, there were no other changes in the Management Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 that occurred during the year ended December 31, 2022 that have materially affected or are reasonably likely to materially affect, the Management Company’s internal control over financial reporting.

The material weaknesses did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results.

The Partnership’s independent registered public accounting firm, Miller Wachman LLP, has issued an adverse opinion on the effectiveness of the Company’s internal control over financial reporting for the period ending December 31, 2022, which appears in Item 9A of this Form 10-K.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

New England Realty Associates Limited Partnership

Adverse Opinion on Internal Control over Financial Reporting

We have audited New England Realty Associates Limited Partnership’s (the Partnership’s) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, because of the effect of the material weakness described in the following paragraph on the achievement of the objectives of the control criteria, the Partnership has not maintained effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Partnership’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

● Management had identified material weaknesses in Information Technology general controls related to a ransomware attack of the Management Company which occurred on October 3, 2022, whereby on-premise computer systems were encrypted by an outside party.

● Management had identified material deficiencies in its Information Technology general controls that prevented a timely recovery from the ransomware attack resulting in a late filing of its Quarterly Report as of September 30, 2022.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 financial statements, and this report does not affect our report dated March 13, 2023, on those financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets and the related consolidated statements of income, comprehensive income, partners’ capital, and cash flows of the Partnership, and our report dated March 13, 2023, expressed an unqualified opinion.

Basis for Opinion

The Partnership’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management Report on Internal Control over Financial Reporting”.

Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Disclosure Controls and Procedures.

We have evaluated the design and operation of our disclosure controls and procedures to determine whether they are effective in ensuring that the disclosure of required information is timely made in accordance with the Securities Exchange Act of 1934 (“Exchange Act”) and the rules and forms of the Securities and Exchange Commission.

This evaluation was made under the supervision and with the participation of management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of our General Partner as of the end of the period covered by this annual report on Form 10-K.

The CEO and CFO have concluded, based on their reviews, that our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e), are effective to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Management’s Report on Internal Control over Financial Reporting.

We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15-15(f) under the Exchange Act.

We assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control—Integrated Framework (2013)”.

Based on that assessment and those criteria, our management, with the participation of the CEO and CFO of the General Partner concluded that our internal control over financial reporting is effective as of December 31, 2023.

We believe that because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Miller Wachman LLP

March 13, 2023

The effectiveness of the Partnership’s internal control over financial reporting as of December 31, 2023 has been audited by Miller Wachman LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting during the fourth quarter of 2023 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

OTHER INFORMATIO N

On December 5, 2022, Andrew Bloch , the Chief Financial Officer (“CFO”) of The Hamilton Company, Inc., which has been engaged by the Partnership to manage the properties of the Partnership, resigned as Chief Financial Officer.

Bloch remains as a director of NewReal, Inc., the general partner of the Partnership, and of Hamilton.

Effective as of December 5, 2022, the Board of Directors of Hamilton elected Karen N.

Zermani as CFO of Hamilton to fill the vacancy created by the resignation of Mr.

Bloch as CFO.

On February 24, 2019, Harold Brown, the owner of 75% of the outstanding voting securities of NewReal Inc., the general partner of New England Realty Associates Limited Partnership, died.

As a result, various Brown family related entities hold voting control over the NewReal shares.

Effective as of February 24, 2019, the Board of Directors of the Partnership’s general partner, NewReal Inc.

elected Jameson Brown as the Treasurer and Chief Financial Officer of NewReal to fill the vacancy created by the death of Harold Brown, who served as both the Treasurer and a director of NewReal.

Jameson Brown, the son of Harold Brown, has been appointed to the Board of Directors of NewReal, Inc.

the General Partner of the Partnership.

Jameson joined The Hamilton Company in 2009 after graduating from Tulane University with a Bachelor of Science in Management.

Since joining the company, Jameson has worked in various departments, including Leasing, Maintenance, and Property Management, Development and Acquisitions.

He is currently the Chief Executive Officer and the Chief Operating Officer of Hamilton.

Prior to joining the company,

Jameson worked as a third party real estate agent in Boston.

In addition to his current role of Chief Executive Officer and Chief Operating Officer of Hamilton, Jameson’s responsibilities include the analysis of investment and development opportunities, negotiating acquisitions, handling due diligence, and representing the owner through the construction and development process.

He also continues to hold direct property management responsibilities over several properties in the portfolio, while staying involved in companywide management and leasing decisions.

Director and Officer Trading Arrangements

During the three months ended December 31, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10 b 5 -1(c) or any “non-Rule 10 b 5 -1 trading arrangement”.

DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS

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DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANC E

Our General Partner, New Real, Inc.

is a Massachusetts corporation owned by the estate of Harold Brown and by Ronald Brown.

New Real, a Massachusetts corporation and our General Partner, was owned, as of December 31,2023, by the estate of Harold Brown and by Ronald Brown.

The estate was closed on January 2, 2024, whereupon the capital stock of NewReal previously owned by the estate of Harold Brown were transferred to JPB Real Estate LLC and Maisie Brown LLC, entities controlled by Jameson Brown and Harley Brown respectively, with each entity acquiring 37.5% of the voting control of NewReal at that time.

Harold Brown and his brother Ronald Brown were individual general partners of the Partnership until May 1984, when NewReal, Inc.

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to manage the properties of the Partnership and its Subsidiary Partnerships.

The Hamilton Company, Inc.

is wholly owned by JPB Real Estate LLC and Maisie Brown LLC, entities controlled by Jameson Brown and Harley Brown, respectively.

Hamilton is wholly owned by JPB Real Estate LLC and Maisie Brown LLC, entities controlled by Jameson Brown and Harley Brown, respectively.

See “Item 11.

Executive Compensation” for information concerning fees paid by the Partnership to The Hamilton Company during 2022.

Because the General Partner has engaged The Hamilton Company as the manager for the Properties, the General Partner has no employees.

Executive Compensation” for information concerning fees paid by the Partnership to Hamilton during 2023.

Because the General Partner has engaged Hamilton as the manager for the Properties, the General Partner has no employees.

The directors of the General Partner are Ronald Brown, Jameson Brown, Martina Alibrandi, David Aloise, Andrew Bloch, Sally Michael, and David Reier.

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The executive officers of the General Partner serve at the pleasure of the Board of Directors.

On June 14, 2001, the Board of Directors of the General Partner created an Audit Committee, in accordance with Section 3(a)(58)(A) of the Exchange Act, consisting of three members, and approved the charter of the Audit Committee.

On June 14, 2001, the Board of Directors created an Audit Committee, in accordance with Section 3(a)(58)(A) of the Exchange Act, consisting of three members, and approved the charter of the Audit Committee.

As of December 31, 2023, the Audit committee consisted of two members, Martina N.

Alibrandi and David Aloise.

The Board of Directors of the General Partner has determined that Ms.

The Board of Directors has determined that Ms.

Alibrandi and Mr.

Aloise are audit committee financial experts, as that term is defined in Item 407 of Securities and Exchange Commission Regulation S-K.

As reported on Form 8-K dated February 16, 2022, on February 14, 2022, Eunice M.

Harps, a director of NewReal Inc .(“NewReal”), the general partner of New England Realty Associates Limited Partnership (the “Partnership”), informed the Partnership of her intention to retire as a director of NewReal effective March 14, 2022.

Harps had served as a director of the Company since June, 2014.

On April 25, 2022, Martina N.

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

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

The following table sets forth the name and age of each director and officer of the General Partner and each such person’s principal occupation and affiliation during the preceding five years.

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degree in Engineering Management.

Brown’s ownership interest in the Partnership, ownership interest in the Partnership’s General Partner, years of experience in the real estate industry and as a long standing member of the Board of Directors of the General Partner, the Board of Directors concluded that Mr.

Brown has the requisite experience, qualifications, attributes and skills necessary to serve as a member of the Board of Directors.

Jameson Brown, Treasurer and Director (since 2019)

Co-Chief Executive Officer and Chief Operating Officer, The Hamilton Company, Inc.

Chief Executive Officer and Chief Operating Officer, The Hamilton Company, Inc.

Manager and developer of Residential and Commercial Real Estate (Since 2018);

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Co-Chief Executive Officer and Chief Financial Officer, The Hamilton Company, Inc.

Manager and developer of Residential and Commercial Real Estate ( Since 2018);

Manager and developer of Residential and Commercial Real Estate (2018- 2022);

Chief Financial Officer, The Hamilton Company, Inc.

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Director of the General Partner.

Managing Partner of the Boston office of the law firm Saul Ewing Arnstein & Lehr LLP.

Managing Partner of the Boston office of the law firm Saul Ewing LLP.

A member of the Board of Trustees of the Boston Home.

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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Partnership’s directors, executive officers, and persons who own more than 10% of a registered class of the Partnership’s equity securities to file with the Securities

and Exchange Commission reports of ownership changes and changes in ownership of the Partnership.

Officers, directors and greater-than-10% shareholders are required by SEC regulations to furnish the Partnership with copies of all Section 16(a) forms they file.

directors and greater-than-10% shareholders are required by SEC regulations to furnish the Partnership with copies of all Section 16(a) forms they file.

Based solely upon a review of Forms 3 and 4 furnished to the Partnership under Rule 16a-3(e) of the Securities Exchange Act during its most recent fiscal year, Forms 5 furnished to the Partnership with respect to its most recent fiscal year and any written representations received by the Partnership from persons required to file such forms, all of the following persons — either officers, directors or beneficial owners of more than ten percent of any class of equity of the company registered pursuant to Section 12 of the Securities Exchange Act — filed on a timely basis reports required by Section 16(a) of the Securities Exchange Act during the most recent fiscal year.

CODE OF ETHICS

The Partnership, its General Partner and Hamilton, the Partnership’s management company, have adopted a Code of Business Conduct and Ethics, which constitutes a “Code of Ethics” as defined by the SEC and applies to executive officers as well as to all other employees.

A copy of the Code of Business Conduct and Ethics is available in the “NERA” section of the management company’s website at www.thehamiltoncompany.com.

The Partnership, its General Partner and Hamilton, the Partnership’s management company, have adopted a Code of Business Conduct and Ethics, which constitutes a “Code of Ethics” as defined by the Securities and Exchange Commission and applies to executive officers as well as to all other employees.

A copy of the Code of Business Conduct and Ethics is available in the “NERA” section of Hamilton’s website at www.thehamiltoncompany.com.

To the extent required by the rules of the SEC, the Partnership and its related entities will disclose amendments to and waivers from the Code of Business Conduct and Ethics in the same place on the aforementioned website.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of NewReal Inc., which is the General Partner of New England Realty Associates Limited Partnership, is currently comprised of David Aloise, and Martina Alibrandi, each of whom is an independent director of NewReal.

The Audit Committee of NewReal Inc., the General Partner, is currently comprised of David Aloise, and Martina Alibrandi, each of whom is an independent director of NewReal.

The Audit Committee operates under a written charter.

In March 2022 that charter was amended to clarify that the Audit Committee may consist of two members if a two member committee is permitted under applicable securities laws and the listing standards of the exchange on which the Partnership’s securities are listed.

In March 2022, the Audit Committee charter was amended to clarify that the Audit Committee may consist of two members if a two member committee is permitted under applicable securities laws and the listing standards of the exchange on which the Partnership’s securities are listed.

The listing rules of the NYSE MKT Exchange permit smaller reporting companies such as the Partnership to maintain an audit committee with two members.

The Partnership’s management, which consists of NERA’s General Partner, is responsible for the preparation of the Partnership’s financial statements and for maintaining an adequate system of internal controls and processes for that purpose.

The Partnership’s management, which consists of the General Partner, is responsible for the preparation of the Partnership’s financial statements and for maintaining an adequate system of internal controls and processes for that purpose.

Miller Wachman LLP (“Miller Wachman”) acts as the Partnership’s independent auditor and is responsible for conducting an independent audit of the Partnership’s annual financial statements and the effectiveness of the Partnership’s internal control over financial reporting as of December 31, 2023 in accordance with the standards of the Public Company Accounting Oversight Board (United States), and issuing a report on the results of their audit.

The Audit Committee is responsible for providing independent, objective oversight of both of these processes.

The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2022 with management of the Partnership and with representatives of Miller Wachman, including the potential impact, if any, of the material weaknesses in Information Technology general controls described by Miller Wachman in its Report of Independent Registered Accounting Firm included in Section 9A of this Annual Report.

As a result of these discussions, the Audit Committee believes that NERA maintains an effective system of accounting controls that allow it to prepare financial statements that fairly present the Partnership’s financial position and results of its operations.

The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2023 with management of the Partnership and with representatives of Miller Wachman.

As a result of these discussions, the Audit Committee believes that the Partnership maintains an effective system of accounting controls that allow it to prepare financial statements that fairly present the Partnership’s financial position and results of its operations.

Discussions with Miller Wachman also included the matters required by Statement on Auditing Standard No.

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EXECUTIVE COMPENSATIO N

The Partnership does not have “Executive Compensation.” As more fully described below, the Partnership employs a management company to which it pays management fees and administrative fees.

The Partnership does not have “Executive Compensation.” As more fully described below, the Partnership employs Hamilton, a management company, to which it pays management fees and administrative fees.

The Partnership is not required to and did not pay any compensation to its officers or the officers and directors of the General Partner in 2023.

As more fully described below, the Partnership employs a management company which is solely responsible for performing all management and policy making functions for the Partnership.

As more fully described below, the Partnership employs Hamilton, which is solely responsible for performing all management and policy making functions for the Partnership.

The only compensation paid by the Partnership to any person or entity is in the form of management fees and administrative fees paid to the General Partner, or any management entity employed by the General Partner, in accordance with the Partnership Agreement.

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In addition, upon the sale or disposition of any Partnership Properties, the General Partner, or any management entity which is the effective cause of such sale, is entitled to a commission equal to 3% of the gross sale price (the “Commission”), provided that should any other broker be entitled to a commission in connection with the sale, the commission shall be the difference between 3% of the gross sale price and the amount to be paid to such broker.

The General Partner has engaged The Hamilton Company to operate and manage the Partnership, and in accordance with the Partnership Agreement, the Management Fee, the Administrative Fees and the Commission are paid to Hamilton.

The General Partner has engaged The Hamilton Company, Inc.

to operate and manage the Partnership, and in accordance with the Partnership Agreement, the Management Fee, the Administrative Fees and the Commission are paid to Hamilton.

See “Item 10.

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In addition, the Partnership paid $28,000 to Ronald Brown for construction supervision services.

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

Saul Ewing billed the Partnership for legal fees totaling $84,000, $168,000, and $25,000 for 2022, 2021, and 2020 respectively.

Additionally, the Hamilton Company received approximately $758,000 from the 40-50% owned Investment Properties of which approximately $661,000 was the management fee, approximately $30,000 was for construction supervision and architectural fees, approximately $41,000 was for maintenance services, and $26,000 for legal services.

Sally Michael is a Director of NewReal, Inc., and she is a partner of Saul Ewing Arnstein LLP.

Saul Ewing LLP billed the Partnership for legal fees totaling $91,000, $84,000, and $168,000 for 2023, 2022, and 2021 respectively.

Additionally, the Hamilton Company received approximately $797,000 from the 40-50% owned Investment Properties of which approximately $699,000 was the management fee, approximately $9,000 was for construction supervision and architectural fees, approximately $57,000 was for maintenance services, approximately $31,000 for legal services and approximately $1,000 for renting expenses.

The Advisory Committee held 4 meetings during 2023, and a total of $16,000 was paid for attendance and participation in such meetings.

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The Board of Directors of our General Partner does not have a compensation committee.

No member of the Board of Directors of the General Partner was at any time in 2022 or at any other time an officer or employee of the General Partner, and no member had any relationship with the Partnership requiring disclosure as a related-person transaction under Item 404 of Regulation S-K.

No member of the Board of Directors was at any time in 2023 or at any other time an officer or employee of the General Partner, and no member had any relationship with the Partnership requiring disclosure as a related-person transaction under Item 404 of Regulation S-K.

No officer of the General Partner has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of the Board of Directors of the General Partner at any time in 2023.

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As of March 12, 2024, pursuant to the Deposit Agreement, Computershare was serving as the record holder of the Class A Units with respect to which 2,771,321 Depositary Receipts had been issued to approximately 2,300 holders.

As of March 1, 2023, there were issued and outstanding 1,715 Class A Units (not including the Depositary Receipts) held by 129 unit holders, 22,658 Class B Units and 1,193 General Partnership Units held by the persons listed below.

As of March 12, 2024, there were issued and outstanding 1,476 Class A Units (not including the Depositary Receipts) held by 116 registered unit holders, 22,290 Class B Units and 1,176 General Partnership Units held by the persons listed below.

During 2023, zero (0) Class A Units were exchanged for Depositary Receipts.

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(3) Since The Harold Brown 2013 Revocable Trust and Ronald Brown are the controlling stockholders, executive officers and directors of NewReal, Inc., they may be deemed to beneficially own all of the General Partnership Units held of record by NewReal, Inc.

Sally Michael and David Reier are the trustees of the Harold Brown 2013 Revocable Trust.

Sally Michael and David Reier were the trustees of the Harold Brown 2013 Revocable Trust as of December 31, 2023.

The estate was settled on January 2, 2024, giving Jameson Brown and Harley Brown each ownership of 37.5% of NewReal.

(4) Consists of 92,600 Depositary Receipts held of record jointly by Ronald Brown and his wife.

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(Approximately 3.30% of the outstanding Class A Units).

(5) Consists of 287,500 Depositary Receipts held by the HJB 2009 Holdings, LLC.

The HJB 2009 Holdings LLC is owned 33.33% by JPB Real Estate LLC, an entity owned by Jameson Brown, 16.67% by the Harold Brown 2009 Irrevocable Trust FBO Harley Oliver Brown and 16.67% by the Harold Brown 2009 Irrevocable Trust FBO Jameson Pruitt Brown.

Sally Michael and David Reier are the trustees of the trusts with joint voting and dispositive control over the Depositary Receipts.

Accordingly, Mr.

Michael and Mr.

Reier may be deemed to beneficially own the Depositary Receipts held by the LLC.

(5) Consists of 287,500 Depositary Receipts held by HJB 2009 Holdings, LLC.

HJB 2009 Holdings LLC is owned 50% by JPB Real Estate LLC, an entity owned by Jameson Brown, and 50% owned Maisie Brown LLC, an entity owned by Harley Brown.

Sally Michael is the Manager.

Accordingly Jameson.

Michael and Harley Brown may be deemed to beneficially own the Depositary Receipts held by the LLC.

Because a Depositary Receipt represents beneficial ownership of one thirtieth of a Class A Unit, the Trusts collectively may be deemed to beneficially own approximately 9,583 Class A Units.

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(Approximately 2.20% of the outstanding Class A Units).

(7) Consists of the Class A Units described in Notes (1) (5) above, plus New Real, Inc., Jameson Brown and Ronald Brown, as indicated in the table.

(7) Consists of the Class A Units described in Notes (1) (5) above, plus NewReal, Inc., Jameson Brown and Ronald Brown, as indicated in the table.

(8) Includes the Class B Units described in Note (2) above.

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Jameson Brown and Ronald Brown are Trustees of the Hamilton Company Charitable Foundation, which owns 2,073 Class A units of the Partnership.

David Aloise and Martina Alibrandi are determined to be independent under the rules of the NYSE Amex Exchange and the SEC.

David Aloise and Martina Alibrandi are determined to be independent under the rules of the NYSE Amex Exchange and the Securities and Exchange Commission.

The board holds regularly scheduled meetings.

The Partnership’s written policy with respect to the review and approval of related party transactions is governed by the Partnership Agreement which assigns the Advisory Committee with the responsibility to approve or reject all proposed acquisitions and investments with or from the General Partner or an affiliate.

Related Parties are

identified by the Officers of the management company and material transactions are reported to and reviewed by the Audit Committee on a quarterly basis.

Related parties are identified by the officers of Hamilton and material transactions are reported to and reviewed by the Audit Committee on a quarterly basis.

The Partnership invested approximately $34,885,000 in seven limited liability companies formed to acquire Investment Properties.

The Partnership has a 40% - 50% ownership interest in each of these limited liability companies accounted for on the equity method of consolidation.

The majority stockholder of the General Partner owns between 47.6% and 59% and five current and former employees of the management company own between 0% and 2.4% in each of the Investment Properties.

The majority stockholder of the General Partner owns between 47.6% and 59% and five current and former employees of Hamilton own between 0% and 2.4% in each of the Investment Properties.

See Note 15 of the consolidated financial statements for a description of the Investment Properties .

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We have audited the accompanying consolidated balance sheets of New England Realty Associates Limited Partnership (the Partnership) as of December 31, 2023, and 2022, and the related consolidated statements of income, comprehensive income, partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the financial statements).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 13, 2023, expressed an adverse opinion.

Also, in our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

Basis for Opinion

These financial statements are the responsibility of the Partnership’s management.

Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

The Partnership’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express an opinion on the Partnership’s consolidated financial statements and an opinion on the Partnership’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Partnership Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A Partnership’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A Partnership’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in

reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Partnership;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Partnership are being made only in accordance with authorizations of management and directors of the Partnership;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Partnership’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Critical Audit Matters

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Impairment of Investment Properties

As described in footnote 1, the Partnership reviews the carrying value of investment properties on an annual basis or whenever events or changes in circumstances indicate a possible impairment.

As described in Notes 1 and 2 to the consolidated financial statements, the Partnership recognized an other than temporary impairment related to one investment property under development.

The Partnership reviews the carrying value of investment properties on an annual basis or whenever events or changes in circumstances indicate a possible impairment.

Events or circumstances that may prompt a review of the carrying value of investment properties may include a significant decrease in the anticipated market price of the investment property, an adverse change to the extent or manner in which an asset may be used, or a significant change in its physical condition or damage due to catastrophic event.

1 unchanged sentence

In the event that any impairment indicators are present, the Partnership undertakes additional analyses utilizing expected undiscounted future cash flows, expected disposition proceeds for a given asset and anticipated rates of return for its recent acquisitions.

Forecasting of cash flows requires management to make estimates and assumptions about such variables as the anticipated holding period, rental revenues and operating expenses during the holding period, capital expenditures and

rates of return.

In 2022, the Partnership’s net operating income analysis resulted in two properties requiring additional analysis.

No impairments were identified in 2022 as a result of the Partnership’s analysis.

The principal consideration for our determination that the impairment of investment properties is a critical audit matter is that it involves a high degree of subjectivity in evaluating management's estimates used in determining the undiscounted cash flow estimates.

1 unchanged sentence

We tested management’s internal controls over the identification of potential investment property impairments, such as controls over the Partnership’s annually analysis of net operating income, as well management review controls to identify potential events which could indicate impairment.

We examined and evaluated the Partnership’s net operating income trend analysis and its assessment of other events, and if additional analysis was necessary, we evaluated the significant assumptions and methods used in developing the undiscounted cash flow estimates.

We examined and evaluated (i) the Partnership’s net operating income trend analysis;

(ii) the completeness and accuracy of the underlying data used in management’s assessment of indicators of impairment;

and (iii) reasonableness of significant assumptions and methods used in developing the undiscounted cash flow estimates.

When the net operating income analysis indicated that additional analysis was required, we assessed whether the significant assumptions, including estimated holding period, rental revenues and operating expenses during the holding period, capital expenditures and rates of return used in determining the future undiscounted cash flows were reasonable.

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Taxes and insurance

Property impairment

Income Before Other Income (Expense)

6 unchanged sentences

Income (loss) from investments in unconsolidated joint ventures

Other (expenses)

( 2,745,979 )

2 unchanged sentences

( 16,942,663 )

Net (Loss) Income

Net Income (Loss)

( 2,700,163 )

Net (Loss) Income per Unit

Net Income (Loss) per Unit

Weighted Average Number of Units Outstanding

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Other comprehensive income (loss):

Net unrealized gain on derivative instruments for interest rate swaps

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

Comprehensive income (loss)

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Partner’s Capital

Comprehensive Income

Comprehensive

Balance January 1, 2021

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Stock Buyback

( 2,160,131 )

Balance December 31 , 2021

5 unchanged sentences

( 1,760,916 )

( 9,267,981 )

Stock Buyback

1 unchanged sentence

( 1,011,403 )

( 5,326,973 )

Net unrealized gain on derivative instruments for interest rate swaps

Balance December 31, 2022

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( 3,925,535 )

( 5,326,973 )

Net unrealized gain on derivative instruments for interest rate swaps

Net unrealized loss on derivative instruments for interest rate swaps

Balance December 31, 2023

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Cash Flows from Operating Activities

Net (Loss) Income

Net Income (Loss)

( 2,700,163 )

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Allowance for doubtful accounts

Interest Accrued on Treasury Bills

Change in operating assets and liabilities

Proceeds from unconsolidated joint ventures

Decrease (Increase) in rents receivable

(Increase) Decrease in rents receivable

(Decrease) Increase in accounts payable and accrued expense

( 1,551,636 )

Increase (Decrease) in accounts payable and accrued expense

(Increase) Decrease in real estate tax escrow

( 1,081,983 )

(Increase) in interest receivable U.S.

Treasury bills

(Increase) in prepaid expenses and other assets

Increase (Decrease) in advance rental payments and security deposits

Decrease (Increase) in prepaid expenses and other assets

Increase in advance rental payments and security deposits

Total Adjustments

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( 176,450,397 )

( 177,852,043 )

Proceeds from U.S.

Treasury Bills

TreasuryBills

Improvement of rental properties

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( 3,317,446 )

Purchase of rental property

( 38,032,293 )

Net cash (used in) investing activities

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( 17,000,000 )

( 1,000,000 )

Principal payments of mortgage notes payable

4 unchanged sentences

( 3,925,535 )

( 5,326,973 )

Distributions to partners

4 unchanged sentences

( 16,569,114 )

Net Increase (Decrease) in Cash and Cash Equivalents

Net (Decrease) Increase in Cash and Cash Equivalents

( 31,330,260 )

( 46,522,785 )

Cash and Cash Equivalents, at beginning of period

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DECEMBER 31, 2023

SIGNIFICANT ACCOUNTING POLICIES

SIGN IFICANT ACCOUNTING POLICIES

Line of Business:

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4 commercial properties, and individual units at one condominium complex.

These properties total 2,892 apartment units, 19 condominium units and 108,043 square feet of commercial space.

These properties total 2,943 apartment units, 19 condominium units and approximately 130,000 square feet of commercial space.

Additionally, the Partnership also owns a 40 - 50 % interest in 7 residential and mixed use properties consisting of 688 apartment units, 12,500 square feet of commercial space and a 50 car parking lot.

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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 comprehensive income of approximately $295,000 in 2022, but had no comprehensive income or loss for either 2021, or 2020.

NERA had a comprehensive loss of approximately $ 59,000 in 2023,and comprehensive income of approximately $ 295,000 in 2022, but had no comprehensive income or loss for 2021.

Income (Loss) Per Depositary Receipt:

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The Apartment Complexes and Condominium Units are located primarily in the metropolitan Boston area of Massachusetts.

Additionally, as of December 31, 2022, the Partnership and Subsidiary Partnerships owned a commercial shopping center in Framingham, commercial buildings in Newton and Brookline and mixed-use properties in Boston, Brockton and Newton, all in Massachusetts.

Additionally, as of December 31, 2023, the Partnership and Subsidiary Partnerships owned two commercial shopping center in Framingham, commercial buildings in Newton and Brookline and commercial space in mixed-use properties in Boston, Brockton and Newton, all in Massachusetts.

These properties are referred to collectively as the “Commercial Properties.”

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See Note 15 for summary information on these investments.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2023

Rental properties consist of the following:

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Hamilton Highlands, LLC Residential Apartments Needham,Massachsetts

( 2,215,754 )

Hamilton Linewt LLC Commercial 1031 Exchange Newton,Massachusetts

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School St Assoc LLC Residential Apartments Framingham, Massachusetts

WRF Associates LLC

Strip Mall Framingham, Massachusetts

WRF Associates LLC Strip Mall Framingham, Massachusetts

WCB Associates LLC Residential Apartments Brockton, Massachusetts

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( 1,161,715 )

653 Worcester Rd Commercial Framingham, Massachusetts

Shawmut Place LLC, Residential Apartments Boston, Massachusetts

(1) The initial cost to the Partnerships represents both the balance of mortgages assumed in September 1977, including subsequent adjustments to such amounts, and subsequent acquisitions at cost.

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Write-offs of retired or disposed assets

Rental properties held for sale and/or sold

Balance, Ending

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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, which was included in Other Loss in the Consolidated Statements of Income.

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.

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

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

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DECEMBER 31, 2023

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

partnership purposes.

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

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

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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 %.

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 .

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 closing costs were approximately $ 59,000 .

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

These amounts are being amortized over 12 and 156 months respectively.

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 approximately 3,400 square feet of commercial space for a purchase price of approximately $ 27,500,000 .

This acquisition was funded from the Partnership’s cash reserves and closing costs were approximately $ 81,000 .

From the purchase price, the Partnership allocated approximately $ 525,000 for in-place leases, approximately $ 61,000 to the value of tenant relationships and $ 241,000 to the value of below-market leases.

These amounts are being amortized over 12 and 36 months respectively.

In December, 2023, the Partnership received approval from MassHousing to construct a 72 unit apartment building in accordance with Chapter 40B to include 17 affordable units on the Mill Street Development site.

In order to initiate construction, the Partnership expects to demolish the current building structures and start construction in 2024.

No tenants are now occupying the property and with the resulting loss of future cash, Management has recorded an impairment charge of approximately $ 971,000 , the net book value of the building for the Mill Street Development property.

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.

RELATED PARTY TRANSACTIONS

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Total fees paid were approximately $ 2,948,000 , $ 2,717,000 and $ 2,524,000 in 2023, 2022 and 2021, respectively.

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

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

In 2023, 2022 and 2021, approximately $ 1,289,000 , $ 747,000 and $ 1,086,000 , was charged to NERA for legal, accounting, construction, maintenance, rental and architectural services supervision of capital improvements and brokerage commissions.

Of the 2023 expenses referred to above, approximately $ 261,000 consisted of repairs and maintenance, $ 356,000 of administrative expense and approximately $ 66,000 for renting expenses.

Approximately $ 114,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties.

Additionally in 2022, the Hamilton Company received approximately $ 758,000 from the Investment Properties of which approximately $ 661,000 was the management fee, approximately $ 30,000 was for construction, architectural services and supervision of capital projects, approximately $ 41,000 was for maintenance services, and approximately $ 26,000 was for administrative services.

The management fee is equal to 4 % of gross receipts 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 $ 3,875,000 , $ 3,640,000 and $ 3,535,000 for the years ended December 31, 2022, 2021 and 2020, 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.

In 2022, 2021, and 2020, the Partnership recognized approximately $ 85,000 , $ 45,000 and $ 45,000 respectively for the employer’s match contribution to the plan.

Approximately $ 606,000 of expenses for construction, architectural

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

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DECEMBER 31, 2023

Bookkeeping and accounting functions are provided by the Management Company’s accounting staff, which consists of approximately 15 people.

During the years ended December 31, 2022, 2021 and 2020 the Management Company charged the Partnership $ 125,000 per year for bookkeeping and accounting services included in administrative expenses above.

services and supervision of capital projects were capitalized in rental properties.

Additionally in 2023, the Hamilton Company received approximately $ 797,000 from the Investment Properties of which approximately $ 699,000 was the management fee, approximately $ 9,000 was for construction, architectural services and supervision of capital projects, approximately $ 57,000 was for maintenance services, approximately $ 31,000 was for administrative services, and approximately $ 1,000 for renting expenses The management fee is equal to 4 % of gross receipts rental income on the majority of investment properties and 2 % on Dexter Park.

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

Total reimbursement was approximately $ 4,180,000 , $ 3,875,000 and $ 3,640,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

The Hamilton 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.

In 2023, 2022, and 2021, the Partnership recognized approximately $ 64,000 , $ 85,000 and $ 45,000 respectively for the employer’s match contribution to the plan.

Bookkeeping and accounting functions are provided by the Hamilton Company’s accounting staff, which consists of approximately 14 people.

During the years ended December 31, 2023, 2022 and 2021 the Hamilton Company charged the Partnership $ 125,000 per year for bookkeeping and accounting services included in administrative expenses above.

The Partnership has invested in seven limited partnerships, which have invested in mixed use residential apartment complexes.

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

The other investors, as of December 31, 2022, are various related entities of the Brown family, and five current and previous employees of the Management Company.

The other investors, as of December 31, 2023, are various related entities of the Brown family, and five current and previous employees of the Hamilton Company.

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

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Additionally, the Audit Committee held 4 meetings in 2023 and a total of $ 80,000 was paid for attendance and participation in such meetings.

Sally Michael is a Director of NewReal,Inc., and she is a partner at Saul Ewing Arnstein & Lear LLP.

Sally Michael is a Director of NewReal,Inc., and she is a partner at Saul Ewing LLP.

Saul Ewing billed the Partnership for legal fees totaling $ 91,000 , $ 84,000 ,and $ 168,000 for 2023, 2022, and 2021, respectively.

3 unchanged sentences

The security deposits and escrow accounts are restricted cash.

Included in prepaid expenses and other assets at December 31, 2022 and 2021 is approximately $ 1,979,000 and $ 1,819,000 , respectively, held in escrow to fund future capital improvements.

Included in prepaid expenses and other assets at December 31, 2022, the Partnership recorded $ 573,000 and $ 580,000 of Treasury bill interest receivable and distributions receivable from the Joint Ventures , respectively.

No such transactions occurred in 2021.

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

Intangible assets are $ 0 net of accumulated amortization of approximately $ 1,418,000 and approximately $ 26,000 net of accumulated amortization of approximately $ 1,392,000 at December 31, 2022 and 2021, respectively.

Included in prepaid expenses and other assets at December 31, 2023 and 2022, respectively, is approximately $ 1,784,000 and $ 1,979,000 , held in escrow to fund future capital improvements.

Intangible assets on the acquisition of rental properties are included in prepaid expenses and other assets.

Intangible assets are approximately $ 1,549,000 net of accumulated amortization of approximately $ 872,000 at December 31, 2023.

Financing fees in association with the refinancing and the line of credit of approximately $ 52,000 and $ 109,000 are net of accumulated amortization of approximately $ 130,000 , and $ 70,000 at December 31, 2023 and 2022 respectively.

45 unchanged sentences

On March 31, 2020, Nera Brookside Associates, LLC (“Brookside Apartments”), entered into a Mortgage Note

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

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 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 .

Line of Credit

5 unchanged sentences

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

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2023

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

1 unchanged sentence

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 phased out on December 31, 2022.

The modification period covered the current period and phased out on 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;

5 unchanged sentences

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

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

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

The Partnership is currently in discussions with a Lender for a replacement line of credit.

See Note 19, SUBSEQUENT EVENTS, for additional information.

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

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

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

After June 30, 2023, the remaining tenors of U.S.-dollar LIBOR ceased publication, prompting the need for an alternative benchmark rate.

On April 14, 2023, the partnership amended the line of credit to convert its base rate of interest from LIBOR to the Secured Overnight Financing Rate (SOFR) plus 10 basis points.

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

2 unchanged sentences

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

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

The Partnership paid fees to secure the line of credit.

Any unused balance of the line of credit, prior to the extension on October 29, 2021,was subject to a fee ranging from 15 to 20 basis points per annum.

The Partnership under the current modification, is no longer subject to this fee.

ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

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

Effective January 3, 2012, the Partnership authorized a 3-for-1 forward split of its Depositary Receipts listed on the NYSE Amex and a concurrent adjustment of the exchange ratio of Depositary Receipts for Class A Units of the Partnership from 10-to-1 to 30-to-1 , such that each Depositary Receipt represents one-thirtieth ( 1 / 30 ) of a Class A Unit of the Partnership.

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

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2023

Partnership from 10-to-1 to 30-to-1 , such that each Depositary Receipt represents one-thirtieth ( 1 / 30 ) of a Class A Unit of the Partnership.

In March 2024, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), payable on March 31, 2024.

In addition to the quarterly distribution, there will be a special distribution of $ 48.00 per Class A unit ($ 1.60 per Receipt) payable on March 28, 2024.

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The following is information per Depositary Receipt:

Net Income (Loss) per Depositary Receipt

Net Income per Depositary Receipt

Distributions per Depositary Receipt

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

TREASURY UNITS

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During the year ended December 31, 2023, the Partnership purchased a total of 43,774 Depositary Receipts.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2023

The average price was $ 71.71 per receipt or $ 2,151.25 per unit.

5 unchanged sentences

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.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

RENTAL INCOME

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Aggregate contingent rentals from continuing operations were approximately $ 683,000 , $ 541,000 and $ 563,000 for the years ended December 31, 2023, 2022 and 2021 respectively.

Staples and Trader Joes, tenants at Staples Plaza, are approximately 20 % of the total commercial rental income.

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

respectively, are approximately 22 % of the total commercial rental income.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2023

The following information is provided for commercial leases:

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Included in rents receivable at December 31, 2023 is approximately $ 417,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

Rents receivable at December 31, 2022 and 2021 also includes approximately $ 4,000 and $ 266,000 respectively representing the deferral of rental concession primarily related to the residential properties.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

CASH FLOW INFORMATION

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In 2022, 5 properties were involved in a non-cash financing activity of approximately $ 43,000,000 In 2021, 11 properties were involved in a non-cash financing activity of approximately $ 65,000,000 .

In 2020, the Partnership was involved in a non-cash financing activity of approximately $ 2,393,000 in connection with the refinancing of Brookside Apartments.

FAIR VALUE MEASUREMENTS

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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 Partnership has investments in Treasury Bills some of which mature over a period greater than 90 days and are

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2023

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.

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

● For cash and cash equivalents, accounts receivable, other assets, investment in partnerships, accounts payable, advance rents and security deposits:

● For cash and cash equivalents, treasury bills, accounts receivable, other assets, investment in partnerships, accounts payable, advance rents and security deposits:

fair value approximates the carrying value of such assets and liabilities.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

● For mortgages and notes payable:

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Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2023 and 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 December 31, 2022 and current estimates of fair value may differ significantly from the amounts presented herein.

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

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

1 unchanged sentence

DECEMBER 31, 2023

since December 31, 2023 and current estimates of fair value may differ significantly from the amounts presented herein.

DERIVATIVE FINANCIAL INSTRUMENTS

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As of December 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 December 31, 2022 and 2021.

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

Asset Derivatives designated

3 unchanged sentences

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 years ended December 31, 2022 and 2021

The table below presents the effect the Partnership’s derivative financial instruments on the consolidated statements of income for the years ended December 31, 2023 and 2022

Derivatives in Cash Flow Hedging Relationships

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Location of Gain

OCI Into Income

Amount of Gain

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OCI into Income

Location of Gain

or (Loss) Recognized

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Taxable income reportable by the Partnership and includable in its partners’ tax returns is different than financial statement income because of 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 accelerated depreciation, bonus depreciation and other timing differences.

The Partnership’s Federal tax basis in its joint venture investments is approximately $ 3,000,000 more than statement basis.

State taxable income may be significantly different due to different tax treatments for certain items.

Federal taxable income of approximately $ 9,989,000 was approximately $ 1,535,000 more than statement

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

1 unchanged sentence

DECEMBER 31, 2023

income for the year ended December 31, 2023.

The Federal cumulative tax basis of the Partnership’s real estate at December 31, 2023 is approximately $ 8,000,000 less than the statement basis.

The primary reasons for the difference in tax basis are accelerated depreciation, bonus depreciation and other timing differences.

The Partnership’s Federal tax basis in its joint venture investments is approximately $ 6,000,000 more than statement basis.

State taxable income may be significantly different due to different tax treatments for certain items.

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

19 unchanged sentences

The Partnership has between a 40 %- 50 % ownership interests in each investment.

The other investors are the Brown Family related entities and five current and former employees of the Management Company.

The other investors are the Brown Family related entities and five current and former employees of the Hamilton Company.

The Brown Family related entities ownership interest was between 47.6 % and 59 %, with the balance owned by the others.

43 unchanged sentences

After paying off the mortgage, the Partnership began to sell off the individual units.

2 units were sold in 2019, resulting in a gain of approximately $ 306,000 .

As of December 31, 2022, all residential units were sold.

All residential units have been sold.

The Partnership still owns the commercial building.

31 unchanged sentences

DECEMBER 31, 2023

On August 23, 2023, Hamilton on Main Apartments, LLC (the “Borrower”), a 50 % owned joint venture of the Partnership, received notice from KeyBank, as servicer for the lender of a $ 16,900,000 loan, indicating that the Borrower failed to comply with certain terms of the loan documents pertaining to the transfer of interests in the Borrower that occurred on the occasion of Harold Brown’s death, and that such transfer constitutes an event of default under the loan documents.

While the Borrower has disputed that any events of default actually exist, it is working diligently with KeyBank to obtain KeyBank’s consent to the transfer.

On March 8, 2024, the Borrower received notice from KeyBank that it was providing ex-post facto consent to the transfer of interest subject to certain conditions being met by the Borrower.

The Partnership’s share of costs associated with the transfer of interests in the Borrower is approximately $ 107,000 .

In November 2001, the Partnership invested approximately $ 1,533,000 for a 50 % ownership interest in a 40 -unit apartment building in Cambridge, Massachusetts.

60 unchanged sentences

Other(Expense)

Interest income

( 5,014,215 )

62 unchanged sentences

( 6,842,685 )

Interest income

Other Expenses

( 5,081,626 )

1 unchanged sentence

Net Income (Loss)

( 2,036,964 )

( 1,542,005 )

Net Income (Loss)—NERA 50 %

20 unchanged sentences

( 44,674,493 )

( 52,007,955 )

Total Liabilities and Capital

7 unchanged sentences

( 22,992,420 )

( 21,536,532 )

Total units/condominiums

2 unchanged sentences

Units sold through February 1, 2022

Unsold units with deposits for future sale as of February 1, 2021

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

14 unchanged sentences

( 6,658,595 )

Gain on sale of real estate

Interest Income

( 5,054,455 )

1 unchanged sentence

Net Income (Loss)

( 2,036,964 )

( 1,542,005 )

Net Income (Loss)—NERA 50 %

Net Income —NERA 40 %

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

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”).

Effective January 1, 2019, employees of the Partnership, who meet certain minimum age and service requirements, are eligible to participate in the Hamilton 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.

5 unchanged sentences

IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

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

In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures ("ASU 2023-07").

The guidance requires incremental disclosures related to a public entity’s reportable segments.

ASU 2023-07 is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024, with early adoption permitted.

The Partnership is currently evaluating the impact of adopting ASU 2023-07 will have on the Partnership's consolidated financial statements.

QUARTERLY FINANCIAL DATA (UNAUDITED)

25 unchanged sentences

( 14,364,873 )

Net (Loss) Income

( 2,900,489 )

( 2,700,163 )

Net (Loss) Income Per Unit

Net (Loss) Income Per Depositary Receipt

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

NOTE 19—SUBSEQUENT EVENTS WILL UPDATE FOR SEVERAL EVENTS

From January 1, 2023 through March 13, 2023, the Partnership has no t purchased any Depository Receipts .

Net Income Per Unit

Net Income Per Depositary Receipt

NOTE 19—SUBSEQUENT EVENTS

From January 1, 2024 through March 14, 2024, the Partnership has purchased 2,753 Depository Receipts .

In March 2024, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), payable on March 28, 2024.

In addition to the quarterly distribution, there will be a special distribution of $ 48.00 per Class A unit ($ 1.60 per Receipt) payable on March 28, 2024.

On December 12, 2022, the Partnership signed a purchase and sale agreement to purchase a commercial retail property of approximately 20,700 square feet, located at 659 Worcester Road in Framingham, Massachusetts for the sum of approximately $ 10,151,000 .

The Partnership made a deposit of $ 500,000 to secure the transaction.

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

The Partnership closed on the transaction on January 18, 2023.

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.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2022

The Partnership is currently in negotiations with a lender or a replacement line of credit.

NOTE 20—QUALIFYING ACCOUNTS

68 unchanged sentences

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Ronald Brown, Principal Executive Officer of the Partnership (President and a Director of NewReal, Inc., sole General Partner of the Partnership) and Jameson Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership).

New England Realty Associates Limited Partnership Clawback Policy

Combined Financial Statements of Significant Subsidiaries

66 unchanged sentences

March 14, 2024

/s / Andrew Bloch

Director of the General Partner

March 13, 2023

/s / Martina Alibrandi

2 unchanged sentences

Martina Alibrandi

/s/ Andrew Bloch

Director of the General Partner

March 14, 2024

/s/ Sally Michael

6 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 9A. Controls and Procedures