What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-09 · 86 added, 129 removed, 204 unchanged (51% of the section changed)

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

For an additional discussion of factors that may affect the Partnership’s business and results of operations, see Item1A-Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended December31,2023.

Over a period of time both in 2021 and 2022, the Partnership took advantage of the low interest rate environment and refinanced fifteen properties, increased their loan balances, and raised approximately $130,000,000.

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

On July 14, 2023, the partnership purchased a 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 $27,500,000 with Partnership cash reserves.

The vacancy rate for the Partnership’s residential properties as of November 1, 2023 was 0.9% as compared with a vacancy rate of 1.8% as of November 1, 2022.

The vacancy rate for the Joint Venture properties as of November 1, 2023 was 0.7 %, as compared to 0.9% for the same period last year.

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

On July 14, 2023, the Partnership purchased a mixed use property in the South End neighborhood of Boston, Massachusetts 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 $27,500,000 with Partnership cash reserves.

The vacancy rate for the Partnership’s residential properties as of May 2, 2024 was 1.2% as compared with a vacancy rate of 2.1% as of May 2, 2023.

The vacancy rate for the Joint Venture properties as of May 2, 2024 was 1.3 %, as compared to 2.5% for the same period last year.

Residential tenants generally have lease terms of 12 months.

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

During the third quarter of 2023, rents increased an average of 6.4% for renewals and increased an average of 9.9% for new leases.

During the first quarter of 2024, rents increased an average of 5.8% for renewals and increased an average of 5.4% for new leases.

For the balance of 2024, management expects a strong rental market with continued rent growth.

For the third quarter of 2023, excluding the increase in income and expense from 653 Worcester Road and the Shawmut Apartments, consolidated revenue increased by 7.3%, operating expenses increased by 5.7% and Income before Other Income (Expense) increased by 11.9%, as compared to the third quarter of 2022.

For the first quarter of 2024, excluding the increase in income and expense from 653 Worcester Road and the Shawmut Apartments, consolidated revenue increased by 8.7%, operating expenses increased by 3.2% and Income before Other Income (Expense) increased by 25.0%, as compared to the first quarter of 2023.

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

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

Prior to the line’s expiration in 2020, the Partnership exercised its option for a one-year extension until October 31, 2021.

line’s expiration in 2020, the Partnership exercised its option for a one-year extension until October 31, 2021.

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

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

As of September 30, 2023, the portfolio’s debt yield fell below the minimum of 9.5% to 8.5%, thus the Partnership did not comply with the debt yield financial covenant.

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

From the start of the Stock Repurchase Program in 2007 through September 30, 2023, the Partnership has purchased 1,517,690 Depositary Receipts.

During the nine months ended September 30, 2023, the Partnership purchased a total of 29,230 Depositary Receipts.

As of March 31, 2024, the portfolio’s debt yield fell below the minimum of 9.5% to 9.0%, thus the Partnership did not comply with the debt yield financial covenant.

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

From the start of the Stock Repurchase Program in 2007 through March 31, 2024, the Partnership has purchased 1,535,092 Depositary Receipts.

During the three months ended March 31, 2024, the Partnership purchased a total of 2,858 Depositary Receipts.

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.

At November 1, 2023, the Harold Brown related entities and Ronald Brown collectively own approximately 31.8% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members).

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

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

Ronald Brown also owns 25% of the Partnership’s Class B Units and 25% of NewReal’s capital stock.

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

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

While the Borrower has disputed that any events of default actually exist, it worked 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 was approximately $107,000.

On April 18, 2024 the Borrower and KeyBank executed amended loan documents reflecting the transfer of interest in the Borrower.

In conjunction with the execution of the amended loan documents, KeyBank provided a courtesy reduction equal to 50% of the transfer fee.

On February 24, 2019, Harold Brown, the owner of 75% of the outstanding voting securities of NewReal, Inc.

(“NewReal”), the general partner of New England Realty Associates Limited Partnership, passed away.

As a result, the estate of Harold Brown held voting control over the capital stock of NewReal.

On January 2, 2024, the estate was settled, with Jameson Brown and Harley Brown each assuming 37.5% ownership in NewReal.

As of May 1, 2024, the Brown family related entities and Ronald Brown collectively own approximately 32.4% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members).

Brown family related entities also control 75% of the Partnership’s Class B Units, and 75% of the capital stock of NewReal, the Partnership’s sole general partner.

Ronald Brown also owns 25% of the Partnership’s Class B Units and 25% of the capital stock of NewReal.

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

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

The outstanding stock of The Hamilton Company, Inc.

is controlled by Jameson Brown and Harley Brown.

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

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

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Residential tenants sign a one year lease.

During the nine months ended September 30, 2023, tenant renewals were approximately 72% with an average rental increase of approximately 6.4%, new leases accounted for approximately 28% with rental rate increases of approximately 9.5%.

During the nine months ended September 30, 2023, leasing commissions were approximately $459,000 compared to approximately $264,000 for the nine months ended September 30, 2022, an increase of approximately $195,000 (74.0%).

Tenant concessions were approximately $66,000 for the nine months ended September 30, 2023, compared to approximately $39,000 for the nine months ended September 30, 2022, an increase of approximately $27,000 (69.2%).

Tenant improvements were approximately $2,641,000 for the nine months ended September 30, 2023, compared to approximately $1,723,000 for the nine months ended September 30, 2022, an increase of approximately $918,000 (53.3%).

Hamilton accounted for approximately 1.8% of the repair and maintenance expenses paid for by the Partnership during the nine months ended September 30, 2023 and 2.6% during the nine months ended September 30, 2022.

During the three months ended March 31, 2024, tenant renewals were approximately 65% with an average rental increase of approximately 5.8%, new leases accounted for approximately 35% with rental rate increases of approximately 5.4%.

During the three months ended March 31, 2024, leasing commissions were approximately $118,000 compared to approximately $59,000 for the three months ended March 31, 2023, an

increase of approximately $59,000 (100.0%).

Tenant concessions were approximately $76,000 for the three months ended March 31, 2024, compared to approximately $20,000 for the three months ended March 31, 2023, an increase of approximately $56,000 (280.0%).

Tenant improvements were approximately $765,000 for the three months ended March 31, 2024, compared to approximately $650,000 for the three months ended March 31, 2023, an increase of approximately $115,000 (17.7%).

Hamilton accounted for approximately 0.8% of the repair and maintenance expenses paid for by the Partnership during the three months ended March 31, 2024 and 1.7% during the three months ended March 31, 2023.

Of the funds paid to Hamilton for this purpose, the great majority was to cover the cost of services provided by the Hamilton maintenance department, including plumbing, electrical, carpentry services, and snow removal for those properties close to Hamilton’s headquarters.

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

Overall, Hamilton provided approximately $199,000 (71.9%) and approximately $162,000 (72.0%) of the legal services paid for by the Partnership during the nine months ended September 30, 2023 and 2022 respectively.

Overall, Hamilton provided approximately $50,000 (61.6%) and approximately $68,000 (82.6%) of the legal services paid for by the Partnership during the three months ended March 31, 2024 and 2023 respectively.

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

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

During the nine months ended September 30, 2023, Hamilton provided the Partnership approximately $563,000 in construction and architectural services, compared to approximately $89,000 for the nine months ended September 30, 2022.

During the three months ended March 31, 2024, Hamilton provided the Partnership approximately $105,000 in construction and architectural services, compared to approximately $288,000 for the three months ended March 31, 2023.

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

During the nine months ended September 30, 2023 and 2022, Hamilton charged the Partnership $93,750 for bookkeeping and accounting services.

During the three months ended March 31, 2024 and 2023, Hamilton charged the Partnership $31,250 for bookkeeping and accounting services.

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

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Certain leases of the commercial properties provide for increasing stepped minimum rents, which are accounted for on a straight-line basis over the term of the lease.

Revenue from commercial leases also include reimbursements and recoveries received from tenants for certain costs as provided in the lease agreement.

Revenue from commercial leases also include reimbursements and recoveries received from tenants for certain costs as provided in the lease

The costs generally include real estate taxes, utilities, insurance, common area maintenance and recoverable costs.

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Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the differences between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed-rate renewal options for below-market leases .

capitalized above-market lease amounts are accounted for as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.

The capitalized above-market lease amounts are accounted for as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.

The Partnership evaluates the non-lease components (lease arrangements that include common area maintenance services) with related lease components (lease revenues).

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In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses.

Characteristics considered by management in valuing tenant relationships include the nature and extent of the Partnership’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals.

Characteristics considered by management in valuing tenant

relationships include the nature and extent of the Partnership’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals.

The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases.

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2023 and September 30, 2022

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $4,899,000 during the three months ended September 30, 2023, compared to approximately $4,561,000 for the three months ended September30, 2022, an increase of approximately $338,000 (7.4%).

Three Months Ended March 31, 2024 and March 31, 2023

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $5,751,000 during the three months ended March 31, 2024, compared to approximately $4,451,000 for the three months ended March 31, 2023, an increase of approximately $1,300,000 (29.2%).

The rental activity is summarized as follows:

Occupancy Date

November 1, 2023

November 1, 2022

Total square feet

Rental Income (in thousands)

Three Months Ended September 30,

Three Months Ended March 31,

Residential percentage

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Contingent rentals

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022:

Three Months Ended September 30,

Rental income

Laundry and sundry income

Administrative

Depreciation and amortization

Management fee

Repairs and maintenance

Taxes and insurance

Income Before Other Income (Expense)

Other Income (Expense)

Interest income

Interest expense

Income from investments in unconsolidated joint ventures

Other Income (Expense)

Rental income for the three months ended September 30, 2023 was approximately $18,804,000, compared to approximately $16,974,000 for the three months ended September 30, 2022, an increase of approximately $1,830,000 (10.8%).

Excluding revenues from Walgreen’s and Shawmut’s of approximately $632,000, there was an increase of approximately $1,198,000 (7.1%).

The Partnership properties with the largest increases in rental income include 1144 Commonwealth, 62 Boylston Street, 659 Worcester Road, Westgate Apartments, Woodland Park, and Redwood Hills with increases of $188,000, $161,000, $116,000, $89,000, $82,000 and $82,000 respectively.

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

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

Operating expenses for the three months ended September 30, 2023 were approximately $14,062,000 compared to approximately $12,517,000 for the three months ended September 30, 2022, an increase of approximately $1,545,000 (12.3%).

Excluding 653 Worcester Road and Shawmut Apartments, operating expenses were approximately $13,225,000, an increase of approximately $707,000 (5.6%).

The factors contributing to the increase are an increase in repairs and maintenance of approximately $457,000 (14.6%), a decrease in depreciation and amortization expense of approximately $353,000 (8.6%), an increase in taxes and insurance of approximately $197,000 (8.6%), and an increase in renting expense of approximately $205,000 (112.7%).

Interest expense for the three months ended September 30, 2023 was approximately $3,956,000 compared to approximately $3,982,000 for the three months ended September 30, 2022, a decrease of approximately $26,000 (0.7%).

Interest income for the three months ended September 30, 2023 was approximately $1,083,000 compared to approximately $363,000 for the three months ended September 30, 2022, an increase of approximately $720,000 (198.2%).

The increase is due to investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 4.8% to 5.4%.

At September 30, 2023, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

See a description of these properties included in the section titled Investment Properties as well as Note 15 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $149,000 for the three months ended September 30, 2023, compared to net income of approximately $94,000 for the three months ended September 30, 2022, an increase in income of approximately $55,000 (59%).

This increase is primarily due to an increase in rental revenue to approximately $2,775,000 from $2,625,000, an increase of approximately $150,000 (5.7%) for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

Included in the income for the three months ended September 30, 2023 is depreciation and amortization expense of approximately $651,000.

As a result of the changes discussed above, net income for the three months ended September 30, 2023 was approximately $2,175,000 compared to net income of approximately $995,000 for the three months ended September 30, 2022, an increase in income of approximately $1,180,000 (118.6%).

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022:

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, and other expense of approximately $14,089,000 during the nine months ended September 30, 2023, compared to approximately $12,949,000 for the nine months ended September 30, 2022, an increase of approximately $1,140,000 (8.8%).

Nine Months Ended September 30,

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023:

Three Months Ended March 31,

Rental income

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Income from investments in unconsolidated joint ventures

Other (Expense) Income

Rental income for the nine months ended September 30, 2023 was approximately $54,338,000, compared to approximately $50,260,000 for the nine months ended September 30, 2022, an increase of approximately $4,078,000 (8.1%).

Excluding revenues from 653 Worcester Road and Shawmut Apartments of approximately $981,000, revenue increased approximately $3,097,000 (6.2%).

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

The Partnership properties with the largest increases in rental income include 1144 Commonwealth, 62 Boylston, Westgate Apartments, Woodland Park, Hamilton Green, and 140 North Beacon Street with increases of $591,000, $574,000, $326,000, $242,000, $213,000 and $212,000 respectively.

Rental income for the three months ended March 31, 2024 was approximately $19,710,000, compared to approximately $17,568,000 for the three months ended March 31, 2023, an increase of approximately $2,142,000 (12.2%).

Excluding revenue increases from Walgreen’s and Shawmut’s of approximately $624,000, there was an increase of approximately $1,518,000 (8.7%).

The Partnership properties with the largest increases in rental income include 1144 Commonwealth, Hamilton Oaks, Mill Street Gardens, 659 Worcester Road, Hamilton Green, and 62 Boylston Street, with increases of $182,000, $169,000, $130,000, $106,000, $96,000 and $88,000 respectively.

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

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

Operating expenses for the nine months ended September 30, 2023 were approximately $40,665,000 compared to approximately $37,642,000 for the nine months ended September 30, 2022, an increase of approximately $3,023,000 (8.0%).

Excluding 653 Worcester Road and Shawmut Apartments, operating expenses were approximately $39,217,000, an increase of approximately $1,575,000 (4.2%).The factors contributing to this net increase are an increase in repairs and maintenance expenses of approximately $1,426,000 (17.0%), an increase in taxes and insurance of approximately $454,000 (6.6%), an increase in renting expense of approximately $320,000 (63.8%), and an increase in operating costs of approximately $194,000 (3.5%).

Interest income for the nine months ended September 30, 2023 was approximately $3,350,000 compared to approximately $363,000 for the three months ended September 30, 2022, an increase of approximately $2,987,000 (821.9%).

The increase is due to investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 4.8% to 5.4%.

Interest expense for the nine months ended September 30, 2023 was approximately $11,781,000 compared to approximately $11,061,000 for the nine months ended September 30, 2022, an increase of approximately $720,000 (6.5%).

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

At June 30, 2023, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

Operating expenses for the three months ended March 31, 2024 were approximately $14,141,000 compared to approximately $13,240,000 for the three months ended March 31, 2023, an increase of approximately $901,000 (6.8%).

Excluding 653 Worcester Road and Shawmut Apartments for the comparable period, operating expenses were approximately $13,375,000, an increase of approximately $445,000 (3.4%).

The factors contributing to the increase are an increase in renting expense of approximately $196,000 (102.3%), due to tenant concessions for disruptions associated with construction projects, an increase in operating costs of approximately $68,000 (2.7%), and an increase in repairs and maintenance of approximately $61,000 (2.2%).

Interest expense for the three months ended March 31, 2024 was approximately $3,907,000 compared to approximately $3,899,000 for the three months ended March 31, 2023, an increase of approximately $8,000 (0.2%).

Interest income for the three months ended March 31, 2024 was approximately $1,165,000 compared to approximately $974,000 for the three months ended March 31, 2023, an increase of approximately $191,000 (19.6%).

Interest income is from investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 5.08% to 5.45%.

At March 31, 2024, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $496,000 for the nine months ended September 30, 2023, compared to net income of approximately $204,000 for the nine months ended September 30, 2022, an increase in income of approximately $292,000 (143.3%).

This increase is primarily due to an increase in rental revenue of approximately $ 8,176,000 for the nine months ended September 30, 2023 from approximately $7,526,000 for the nine months ended September 30, 2022, an increase of approximately $650,000 (8.6%).

Included in the income for the nine months ended September 30, 2023 is depreciation and amortization expense of approximately $1,936,000.

On November 30, 2021, the Partnership entered into a Master Credit Facility Agreement (the “Facility Agreement”) with KeyBank National Association (“KeyBank”) dated as of November 30, 2021, with an initial advance in the amount of $156,000,000.

Interest only on the debt at a fixed interest rate of 2.97% is payable on a monthly basis through December 31, 2031.

On June 16, 2022, the Partnership entered into an amendment to the Facility Agreement.

The additional advance under the Amended Agreement is in the amount of $80,284,000, at a fixed interest rate of 4.33%.

The Partnership’s obligations under the Facility Agreement are secured by mortgages on certain properties pursuant to certain Mortgage, Assignment of Leases and Rents, and Security Agreement and Fixture Filings.

The Partnership used the proceeds to pay down approximately $37,065,000 of existing debt secured by four properties, along with approximately $854,000 in prepayment penalties, which are included in other expenses.

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

As a result of the changes discussed above, net income for the nine months ended September 30, 2023 was approximately $6,154,000 compared to income of approximately $1,580,000 for the nine months ended September 30, 2022, an increase in net income of approximately $4,574,000 (289.4%).

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $441,000 for the three months ended March 31, 2024, compared to net income of approximately $228,000 for the three months ended March 31, 2023, an increase in income of approximately $213,000 (93.8%).

This increase is primarily due to an increase in rental revenue to approximately $2,919,000 from $2,686,000, an increase of approximately $233,000 (8.7%) for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Included in the income for the three months ended March 31, 2023 is depreciation and amortization expense of approximately $646,000.

As a result of the changes discussed above, net income for the three months ended March 31, 2024 was approximately $3,463,000 compared to net income of approximately $1,754,000 for the three months ended March 31, 2023, an increase in income of approximately $1,709,000 (97.4%).

LIQUIDITY AND CAPITAL RESOURCES

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

The Partnership’s principal use of cash during the first nine months of 2023 was the purchase of Treasury Bills and the purchase of two properties:

the commercial property at 653 Worcester Road for approximately $10,000,000, and the purchase of a mixed use property in the South End neighborhood of Boston, MA, for a purchase price of approximately $27,500,000.

The majority of cash and cash equivalents of $16,141,398 at September 30, 2023 and $49,560,723 at December 31, 2022 were held in interest bearing accounts at creditworthy financial institutions.

The decrease in cash of $33,419,325 for the nine months ended September 30, 2023 is summarized as follows:

Nine Months Ended September 30,

The Partnership’s principal source of cash during the first three months of 2024 and 2023 was the collection of rents and a reduction in U.S.

Treasury bills.

The Partnership’s principal use of cash during the first three months of 2024 was the construction of the Mill Street Development, improvements to rental properties, mortgage principal payments, and distributions to partners.

The Partnership’s principal use of cash during the first three months of 2023 was the purchase of U.S.Treasury bills, and the purchase of two properties:

a commercial property at 653 Worcester Road for approximately $10,000,000, and the purchase of a mixed use property in the South End neighborhood of Boston, Massachusetts for a purchase price of approximately $27,500,000.

The majority of cash and cash equivalents of $28,801,744 at March 31, 2024 and $18,230,463 at December 31, 2023 were held in interest bearing accounts at creditworthy financial institutions.

The increase in cash of $10,571,281 for the three months ended March 31, 2024 is summarized as follows:

Three Months Ended March 31,

Cash provided by operating activities

Cash (used in) investing activities

Cash (used in) provided by financing activities

Cash provided by (used in) investing activities

Principal payments of mortgage notes payable

Repurchase of Depositary Receipts, Class B and General Partner Units

Distributions paid

Net (decrease) increase in cash and cash equivalents

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

The decrease in cash used in investing activities is as follows:

the Partnership purchased a commercial retail property of approximately 20,700 square feet, located at 653 Worcester Road in Framingham, Massachusetts for the sum of approximately $10,151,000, and the Partnership purchased a mixed use property in the South End neighborhood of Boston, MA, for a purchase price of approximately $27,500,000.

These acquisitions were funded from the Partnership’s cash reserves.

Closing costs were approximately $140,000.

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

Net increase (decrease) in cash and cash equivalents

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

The net increase in cash provided by investing activities is primarily due to cash proceeds from the sale of Treasury bills held in a money market account for the improvement of rental properties, including the Mill Street Development project.

Financing activities include mortgage principal payments and distributions to partners, and repurchase of depositary receipts.

During 2024, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $2,395,000.

1 unchanged sentence

Cash reserves have been adequate to fully fund improvements.

The most significant improvements were made at Hamilton Oaks, 1144 Commonwealth, School Street, 659 Worcester Road, Redwood Hills, and 62 Boylston Street at a cost of approximately $1,411,000, $1,335,000, $539,000, $404,000, $305,000 and $293,000 respectively.

During the nine months ended September 30, 2023, the Partnership received distributions of approximately $3,033,500 from the investment properties.

For the nine months ended September 30, 2022, the Partnership received $1,208,000 in distributions from the investment properties.

Included in these net distributions is the amount from Dexter Park of approximately $1,492,000 and $840,000 for the nine months ended September 30, 2023 and 2022, respectively.

In August 2023, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), which was paid on September 30, 2023.

In May 2023, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), which was paid on June 30, 2023.

The most significant improvements were made at 1144 Commonwealth, Executive Apartments, River Drive Apartments, Hamilton Oaks, Westside Colonial, and Dean Street Associates, at a cost of approximately $583,000, $499,000, $288,000, $219,000, $115,000 and $87,000 respectively.

During the three months ended March 31, 2024, the Partnership received distributions of approximately $577,000 from the investment properties.

For the three months ended March 31, 2023, the Partnership received $580,000 in distributions from the investment properties.

Included in these net distributions is the amount from Dexter Park of approximately $400,000 for the three months ended March 31, 2024 and 2023, respectively.

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

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

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

The term of the line was for three years with a floating interest rate equal to a base rate of the greater of (a) the Prime Rate (b) the Federal Funds Rate plus one-half of one percent per annum, or (c) the LIBOR Rate for a period of one month plus 1% per annum, plus the applicable margin of 2.5%.

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

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

Prior to the line’s expiration in 2020, the Partnership exercised its option for a one-year extension until October 31, 2021.

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

The Partnership

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

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

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

The Partnership may also sell or refinance properties.

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

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

In addition to the quarterly distribution, there was a special distribution of $38.40 per Class A unit ($1.28 per Receipt) payable on March 31, 2023.

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

The Partnership anticipates that the Mill Street Development project will require approximately $30 million in spending over the next two years, with approximately $10 million to be spent in 2024 and approximately $20 million to be spent in 2025.

Construction is expected to be completed during the fourth quarter of 2025.

Off-Balance Sheet Arrangements—Joint Venture Indebtedness

As of September 30, 2023, the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness.

As of March 31, 2024, the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness.

We do not have control of these partnerships and therefore we account for them using the equity method of consolidation.

At September 30, 2023, our proportionate share of the non-recourse debt related to these investments was approximately $70,721,000.

At March 31, 2024, our proportionate share of the non-recourse debt related to these investments was approximately $70,662,000.

See Note 15 to the Consolidated Financial Statements.

Contractual Obligations

As of September 30, 2023, we are subject to contractual payment obligations as described in the table below.

As of March 31, 2024, we are subject to contractual payment obligations as described in the table below.

Payments due by period

16 unchanged sentences

● The Partnership is subject to significant expenditures associated with each investment, such as debt service payments, real estate taxes, insurance and maintenance costs, which are generally not reduced when circumstances cause a reduction in revenues from a property.

● Our actual costs to develop properties may exceed our budgeted costs.

● The Partnership is subject to increases in heating and utility costs that may arise as a result of economic and market conditions and fluctuations in seasonal weather conditions.

25 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-Q

Item 2. Management’s Discussion and Analysis