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Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 172 added, 112 removed, 641 unchanged (31% of the section changed)

6 unchanged sentences

The aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in New England Realty Associates L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

The results of operations for the three month period ended March 31, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

The results of operations for the three and six month periods ended June 30, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

18 unchanged sentences

( 65,354,384 )

Total Liabilities and Partners’ Capital

See notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Rental income

11 unchanged sentences

( 3,925,863 )

( 7,806,711 )

( 7,825,103 )

Income from investments in unconsolidated joint ventures

1 unchanged sentence

( 2,513,746 )

( 4,753,615 )

( 5,210,735 )

Net Income per Unit

3 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

Other comprehensive income (loss):

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

Three Months Ended

Six Months Ended

Net unrealized gain on derivative instruments for interest rate swaps

Comprehensive income

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

Partners' Capital

Comprehensive

Partner’s Capital

Comprehensive Income

Balance January 1, 2023

7 unchanged sentences

Stock Buyback

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

Balance March 31 , 2023

( 1,031,739 )

( 1,289,374 )

Net unrealized gain on derivative instruments for interest rate swaps

Balance June 30 , 2023

( 51,711,734 )

( 12,246,777 )

( 64,306,033 )

Balance January 1, 2024

1 unchanged sentence

( 12,433,251 )

( 65,354,384 )

Distribution to Partners

4 unchanged sentences

Net unrealized gain on derivative instruments for interest rate swaps

Balance March 31, 2024

Balance June 30, 2024

( 53,949,836 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows from Operating Activities

3 unchanged sentences

( 2,259,599 )

( 2,051,676 )

Depreciation and amortization

3 unchanged sentences

Proceeds from unconsolidated joint ventures

Decrease (Increase) in rents receivable

(Increase) in rents receivable

(Decrease) in accounts payable and accrued expense

1 unchanged sentence

(Increase) in real estate tax escrow

Decrease (Increase) in prepaid expenses and other assets

(Decrease) Increase in advance rental payments and security deposits

(Increase) in prepaid expenses and other assets

( 1,349,617 )

( 1,958,461 )

Increase in advance rental payments and security deposits

Total Adjustments

15 unchanged sentences

( 4,865,294 )

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

( 5,517,101 )

1 unchanged sentence

Principal payments of mortgage notes payable

( 1,392,912 )

( 1,321,579 )

Stock buyback

( 1,289,374 )

Distributions to partners

1 unchanged sentence

( 7,128,758 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

( 10,737,170 )

( 9,739,711 )

Net Increase (Decrease) in Cash and Cash Equivalents

Net (Decrease) Increase in Cash and Cash Equivalents

( 4,767,169 )

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

SIGNIFICANT ACCOUNTING POLICIES

91 unchanged sentences

Deferred financing costs are presented in the balance sheet as a direct deduction from the carrying value of the debt liability to which they relate, except deferred financing costs related to the revolving credit facility, which are presented in prepaid expenses and other assets.

In all cases, amortization of such costs is included in interest expense and was approximately $ 95,000 and $ 95,000 for the three months ended March 31, 2024 and 2023, respectively.

In all cases, amortization of such costs is included in interest expense and was approximately $ 190,000 and $ 190,000 for the six months ended June 30, 2024 and 2023, respectively.

Derivative Instruments:

18 unchanged sentences

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 $142,000 and a comprehensive loss of approximately $166,000 for the three months ended March 31, 2024 and 2023, respectively.

NERA had comprehensive income of approximately $175,000 and a comprehensive income of approximately $2,000 for the six months ended June 30, 2024 and 2023, respectively.

Income (Loss) Per Depositary Receipt:

4 unchanged sentences

The Partnership has no dilutive units and, therefore, basic net income is the same as diluted net income per unit (see Note 7:

Partner’s Capital).

Partners’ Capital).

Concentration of Credit Risks and Financial Instruments:

2 unchanged sentences

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

At March 31, 2024, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.01 % to 4.07 %.

At March 31, 2024 and December 31, 2023, respectively approximately $ 29,025,000 , and $ 18,711,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

At June 30, 2024, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.01 % to 4.07 %.

At June 30, 2024 and December 31, 2023, respectively, approximately $ 14,809,000 , and $ 18,711,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

Advertising Expense:

Advertising is expensed as incurred.

Advertising expense was approximately $ 152,000 and $ 109,000 for the three months ended March 31, 2024, and 2023, respectively.

Advertising expense was approximately $ 177,000 and $ 193,000 for the six months ended June 30, 2024, and 2023, respectively.

Rental Property Held f or Sale:

4 unchanged sentences

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

During the three months ended March 31, 2024, and 2023 there was no capitalized interest.

During the six months ended June 30, 2023 there was no capitalized interest.

Extinguishment of Debt:

5 unchanged sentences

RENTAL PROPERTIES

As of March 31, 2024, the Partnership and its Subsidiary Partnerships owned 2,943 residential apartment units in 27 residential and mixed-use complexes (collectively, the “Apartment Complexes”).

As of June 30, 2024, the Partnership and its Subsidiary Partnerships owned 2,943 residential apartment units in 27 residential and mixed-use complexes (collectively, the “Apartment Complexes”).

The Partnership also owns 19 condominium units in a residential condominium complex, all of which are leased to residential tenants (collectively referred to as the “Condominium Units”).

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

Additionally, as of March 31, 2024, the Partnership and Subsidiary Partnerships owned two commercial shopping centers in Framingham, commercial buildings in Newton and Brookline and commercial space in mixed-use properties in Boston, Brockton and Newton, all in Massachusetts.

Additionally, as of June 30, 2024, the Partnership and Subsidiary Partnerships owned two commercial shopping centers 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.”

The Partnership also owned a 40 % to 50 % ownership interest in seven residential and mixed use complexes (the “Investment Properties”) at March 31, 2024 with a total of 688 apartment units, accounted for using the equity method of consolidation.

The Partnership also owned a 40 % to 50 % ownership interest in seven residential and mixed use complexes (the “Investment Properties”) at June 30, 2024 with a total of 688 apartment units, accounted for using the equity method of consolidation.

See Note 15 for summary information on these investments.

13 unchanged sentences

Rental properties consist of the following:

March 31, 2024

June 30, 2024

December 31, 2023

14 unchanged sentences

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

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

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

The management fee is equal to 4 % of gross receipts of rental revenue and laundry income on the majority of the Partnership’s properties and 3 % on Linewt.

Total fees paid were approximately $ 789,000 and $ 698,000 for the three months ended March 31, 2024 and 2023, respectively.

Total fees paid were approximately $ 1,571,000 and $ 1,363,000 for the six months ended June 30, 2024 and 2023, respectively.

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

During the three months ended March 31, 2024 and 2023, approximately $ 206,000 and $ 493,000 was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

Of the 2024 expenses referred to above, approximately $ 22,000 consisted of repairs and maintenance, and $ 79,000 of administrative expense.

During the six months ended June 30, 2024 and 2023, approximately $ 568,000 and $ 914,000 was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements.

Of the 2024 expenses referred to above, approximately $ 29,000 consisted of repairs and maintenance, $ 152,000 of administrative expense, and approximately $ 57,000 for renting expense.

Approximately $ 330,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties.

Additionally in 2024, the Hamilton Company received approximately $ 213,000 from the Investment Properties of which approximately $ 188,000 was the management fee, approximately $ 18,000 for construction, architectural services, and supervision of capital projects, and approximately $ 2,000 for repairs and maintenance, and approximately $ 5,000 for legal expense.

Additionally in 2024, the Hamilton Company received approximately $ 431,000 from the Investment Properties of which approximately $ 369,000 was the management fee, approximately $ 46,000 for construction, architectural services, and supervision of capital projects, approximately $ 11,000 for repairs and maintenance, and approximately $ 5,000 for legal expense.

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

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

Total reimbursement was approximately $ 1,100,000 and $ 1,114,000 for the three months ended March 31, 2024 and 2023, respectively.

Total reimbursement was approximately $ 2,086,000 and $ 2,050,000 for the six months ended June 30, 2024 and 2023, respectively.

The Management Company maintains a 401K plan for all eligible employees whereby the employees may contribute the maximum allowed by law.

The plan also provides for discretionary contributions by the employer.

For the three months ended March 31, 2024, the Partnership accrued $ 16,000 for the employer’s match portion to the plan.

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

For the six months ended June 30, 2024, the Partnership accrued $ 32,000 for the employer’s match portion to the plan.

For the six months ended June 30, 2023, the Partnership contributed $ 32,000 for the employer’s match portion to the plan .

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

During the three months ended March 31, 2024 and 2023, the Management Company charged the Partnership $ 31,250 ($ 125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

During the six months ended June 30, 2024 and 2023, the Management Company charged the Partnership $ 62,500 ($ 125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

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

Saul Ewing billed the Partnership for legal fees totaling approximately $ 46,000 and $ 37,000 for the three months ended March 31, 2024 and 2023, respectively.

Saul Ewing billed the Partnership for legal fees totaling approximately $ 70,000 and $ 39,000 for the six months ended June

30, 2024 and 2023, respectively.

David Reier is a Director of New Real, Inc., who billed the Partnership approximately $ 7,000 for legal fees for the period ending June 30,2024.

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

4 unchanged sentences

PREPAID EXPENSES and OTHER ASSETS

Approximately $ 3,582,000 , and $ 3,601,000 of security deposits are included in prepaid expenses and other assets at March 31, 2024 and December 31, 2023, respectively.

Approximately $ 3,665,000 , and $ 3,601,000 of security deposits are included in prepaid expenses and other assets at June 30, 2024 and December 31, 2023, respectively.

The security deposits and escrow accounts are restricted cash.

Also, included in prepaid expenses and other assets at March 31, 2024 and December 31, 2023 is approximately $ 1,903,000 and $ 1,784,000 , respectively, held in escrow to fund future capital improvements.

Also, included in prepaid expenses and other assets at June 30, 2024 and December 31, 2023 is approximately $ 2,022,000 and $ 1,784,000 , respectively, 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 $ 530,000 and $ 677,000 net of accumulated amortization of approximately $ 1,019,000 and $ 872,000 at March 31, 2024, and at December 31, 2023, respectively.

Financing fees in association with the line of credit of approximately $ 36,000 and $ 52,000 are net of accumulated amortization of approximately $ 146,000 and $ 130,000 at March 31, 2024 and December 31, 2023 respectively.

Intangible assets are approximately $ 383,000 and $ 677,000 net of accumulated amortization of approximately $ 1,166,000 and $ 872,000 at June 30, 2024, and at December 31, 2023, respectively.

Financing fees in association with the line of credit of approximately $ 20,000 and $ 52,000 are net of accumulated amortization of approximately $ 162,000 and $ 130,000 at June 30, 2024 and December 31, 2023 respectively.

MORTGAGE NOTES PAYABLE

At March 31, 2024 and December 31, 2023, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2.

At March 31, 2024, the interest rates on these loans ranged from 2.97 % to 4.95 %, payable in monthly installments aggregating approximately $ 1,523,000 including principal, to various dates through 2035.

At June 30, 2024 and December 31, 2023, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2.

At June 30, 2024, the interest rates on these loans ranged from 2.97 % to 4.95 %, payable in monthly installments aggregating approximately $ 1,523,000 including principal, to various dates through 2035.

The majority of the mortgages are subject to prepayment penalties.

At March 31, 2024, the weighted average interest rate on the above mortgages was 3.68 %.

At June 30, 2024, the weighted average interest rate on the above mortgages was 3.68 %.

The effective rate of 3.77 % includes the amortization expense of deferred financing costs.

1 unchanged sentence

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

Financing fees of approximately $ 2,684,000 and $ 2,779,000 are net of accumulated amortization of approximately $ 1,448,000 and $ 1,353,000 at March 31, 2024 and December 31, 2023, respectively, which offset the total mortgage notes payable.

Financing fees of approximately $ 2,589,000 and $ 2,779,000 are net of accumulated amortization of approximately $ 1,543,000 and $ 1,353,000 at June 30, 2024 and December 31, 2023, respectively, which offset the total mortgage notes payable.

The Partnership has pledged tenant leases as additional collateral for certain of these loans.

Approximate annual maturities at March 31, 2024 are as follows:

Approximate annual maturities at June 30, 2024 are as follows:

2025—current maturities

2 unchanged sentences

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.

10 unchanged sentences

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

As of March 31, 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 of June 30, 2024, the portfolio’s debt yield fell below the minimum of 9.5 % to 9.3 %, 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.

10 unchanged sentences

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

At March 31, 2024, amounts received for prepaid rents of approximately $ 3,158,000 are included in cash and cash equivalents, and security deposits of approximately $ 3,582,000 are included in prepaid expenses and other assets and are restricted cash.

At June 30, 2024, amounts received for prepaid rents of approximately $ 3,374,000 are included in cash and cash equivalents, and security deposits of approximately $ 3,665,000 are included in prepaid expenses and other assets and are restricted cash.

PARTNERS’ CAPITAL

4 unchanged sentences

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.

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

In 2023 the Partnership paid a total distribution of an aggregate $ 84.00 per Unit ($ 2.80 per Receipt) for a total payment of $ 9,954,888 .

2 unchanged sentences

The following is information per Depositary Receipt:

Three Months Ended

Six Months Ended

Net Income per Depositary Receipt

1 unchanged sentence

TREASURY UNITS

Treasury Units at March 31, 2024 are as follows:

Treasury Units at June 30, 2024 are as follows:

General Partnership

5 unchanged sentences

Repurchases of Depositary Receipts or Partnership Units pursuant to the Repurchase Program may be made by the Partnership from time to time in its sole discretion in open market transactions or in privately negotiated transactions.

From August 20, 2007 through March 31, 2024, the Partnership has repurchased 1,535,092 Depositary Receipts at an average price of $ 31.40 per receipt (or $ 942.04 per underlying Class A Unit), 4,416 Class B Units and 233 General Partnership Units, both at an average price of $ 1,263.00 per Unit, totaling approximately $ 54,674,000 including brokerage fees paid by the Partnership .

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

From August 20, 2007 through June 30, 2024, the Partnership has repurchased 1,542,344 Depositary Receipts at an average price of $ 31.59 per receipt (or $ 947.70 per underlying Class A Unit), 4,474 Class B Units and 236 General Partnership Units, both at an average price of $ 1,274.00 per Unit, totaling approximately $ 55,322,000 including brokerage fees paid by the Partnership .

During the six months ended June 30, 2024, the Partnership purchased a total of 10,110 Depositary Receipts.

The average price was $ 71.16 per receipt, or $ 2,134.80 per unit.

6 unchanged sentences

RENTAL INCOME

During the three months ended March 31, 2024, approximately 94 % of rental income was related to residential apartments and condominium units with leases of one year or less.

During the six months ended June 30, 2024, approximately 94 % of rental income was related to residential apartments and condominium units with leases of one year or less.

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

Approximately 6 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2024 as follows:

Approximately 6 % was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at June 30, 2024 as follows:

Property Leases

The aggregate minimum future rental income does not include contingent rentals that may be received under various leases in connection with common area charges and real estate taxes.

Aggregate contingent rentals from continuing operations were approximately $ 211,000 and $ 147,000 for the three months ended March 31, 2024 and 2023 respectively.

Aggregate contingent rentals from continuing operations were approximately $ 398,000 and $ 328,000 for the six months ended June 30, 2024 and 2023 respectively.

Trader Joe’s and Walgreen’s, tenants at Staples Plaza and 653 Worcester Road, Framingham, Massachusetts respectively, are approximately 18 % of the total commercial rental income.

4 unchanged sentences

annual base rent for

Through March 31,

Through June 30,

expiring leases

2 unchanged sentences

expiring leases

Rents receivable are net of an allowance for doubtful accounts of approximately $ 1,043,000 and $ 1,195,000 at March 31, 2024 and December 31, 2023.

Included in rents receivable at March 31, 2024 is approximately $ 538,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

Rents receivable are net of an allowance for doubtful accounts of approximately $ 981,000 and $ 1,195,000 at June 30, 2024 and December 31, 2023.

Included in rents receivable at June 30, 2024 is approximately $ 551,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

CASH FLOW INFORMATION

During the three months ended March 31, 2024 and 2023, cash paid for interest was approximately $ 3,814,000 , and $ 3,754,000 respectively.

Cash paid for state income taxes was approximately $ 53,000 and $ 4,000 during the three months ended March 31, 2024 and 2023, respectively.

During the six months ended June 30, 2024 and 2023, cash paid for interest was approximately $ 7,649,000 , and $ 7,678,000 respectively.

Cash paid for state income taxes was approximately $ 100,000 and $ 25,000 during the six months ended June 30, 2024 and 2023, respectively.

FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At March 31, 2024 and December 31, 2023, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements.

At June 30, 2024 and December 31, 2023, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements.

Financial Assets and Liabilities not Measured at Fair Value

At March 31, 2024 and December 31, 2023 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and note payable, accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments or, the recent acquisition of these items.

At June 30, 2024 and December 31, 2023 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and note payable, accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments or, the recent acquisition of these items.

The Partnership has investments in U.S.

6 unchanged sentences

Treasury bills classified within Level I of the fair value hierarchy.

At March 31, 2024 and December 31, 2023 we estimated the fair value of our mortgage payable, derivative financial instrument, and other notes based upon quoted market prices for the same (Level 1) or similar (Level 2) issues when current quoted market prices are available.

At June 30, 2024 and December 31, 2023 we estimated the fair value of our mortgage payable, derivative financial instrument, and other notes based upon quoted market prices for the same (Level 1) or similar (Level 2) issues when current quoted market prices are available.

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

The differences in the fair value of our debt from the carrying value are the result of differences in interest rates and/or borrowing spreads that were available to us at March 31, 2024 and December 31, 2023, as compared with those in effect when the debt was issued or acquired.

The differences in the fair value of our debt from the carrying value are the result of differences in interest rates and/or borrowing spreads that were available to us at June 30, 2024 and December 31, 2023, as compared with those in effect when the debt was issued or acquired.

The secured mortgage debt contain pre-payment penalties or yield maintenance provisions that could make the cost of refinancing the debt at lower rates exceed the benefit that would be derived from doing so.

At March 31, 2024 and at December 31, 2023, the Partnership’s line of credit had an outstanding balance of zero .

At June 30, 2024 and at December 31, 2023, the Partnership’s line of credit had an outstanding balance of zero .

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

1 unchanged sentence

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

● For mortgage notes payable:

● For mortgage notes payable and treasury bills:

fair value is generally based on estimated future cash flows, which are discounted using the quoted market rate from an independent source for similar obligations.

1 unchanged sentence

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

March 31, 2024

June 30, 2024

Carrying Value

7 unchanged sentences

* Net of unamortized deferred financing costs

Disclosure about fair value of financial instruments is based on pertinent information available to management as of March 31, 2024 and December 31, 2023.

Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since March 31, 2024 and current estimates of fair value may differ significantly from the amounts presented herein.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of June 30, 2024 and December 31, 2023.

Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial

statements since June 30, 2024 and current estimates of fair value may differ significantly from the amounts presented herein.

DERIVATIVE FINANCIAL INSTRUMENTS

3 unchanged sentences

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

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

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

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

During the next 12 months, the Partnership estimates $ 122,000 will be reclassified as a decrease to interest expense .

As of March 31, 2024, the Partnership had one interest rate swap outstanding with a notional amount of approximately $ 378,000 designated as cash flow hedges of interest rate risk.

As of March 31, 2024, the Partnership did not have any interest rate derivatives in a net liability position.

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 March 31, 2024 and December 31, 2023.

As of June 30, 2024, the Partnership had one interest rate swap outstanding with a notional amount of approximately $ 411,000 designated as cash flow hedges of interest rate risk.

As of June 30, 2024, the Partnership did not have any interest rate derivatives in a net liability position.

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 June 30, 2024 and December 31, 2023.

Asset Derivatives designated

3 unchanged sentences

Prepaid Expenses and Other Assets

The table below presents the effect the Partnership’s derivative financial instruments on the consolidated statements of income for the quarters ended March 31, 2024 and 2023.

Derivatives in Cash Flow Hedging Relationships

Amount of Gain

or (Loss) Recognized

in OCI on Derivative

The table below presents the effect the Partnership’s derivative financial instruments on the consolidated statements of income for the quarters ended June 30, 2024 and 2023.

Location of Gain

OCI Into Income

Amount of Gain

OCI into Income

Location of Gain

or (Loss) Recognized

Total Amount of

Location of Gain

Interest Expense

Amount of Gain

or (Loss) Recognized

presented in the

Derivatives in Cash Flow

or (Loss) Recognized

from Accumulated

consolidated statements

Hedging Relationships

in OCI on Derivative

OCI Into Income

OCI into Income

of operations

Quarter Ended March 31,

Three Months Ended June 30,

Interest rate swaps

3 unchanged sentences

( 3,925,863 )

Six Months Ended June 30,

Interest rate swaps

Interest expense

Interest and other investment income (loss)

( 7,806,711 )

( 7,825,103 )

TAXABLE INCOME AND TAX BASIS

11 unchanged sentences

In the normal course of business the Partnership or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable.

As of March 31, 2024, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2020 forward.

As of June 30, 2024, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2020 forward.

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

17 unchanged sentences

The Partnership will continue to account for the investment using the equity method of accounting, although the Partnership has no legal obligation to fund its’ share of any future operating deficiencies as needed.

At March 31, 2024, the balance on this mortgage before unamortized deferred financing costs is $125,000,000 .

At June 30, 2024, the balance on this mortgage before unamortized deferred financing costs is $ 125,000,000 .

This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

9 unchanged sentences

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

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

At March 31, 2024, the balance on this mortgage before unamortized deferred financing costs is $ 10,000,000 .

Although the Partnership has no legal obligation, the Partnership intends to fund its share

of any future operating deficits if needed.

At June 30, 2024, the balance on this mortgage before unamortized deferred financing costs is $ 10,000,000 .

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

4 unchanged sentences

The Joint Venture obtained a new 10 -year mortgage in the amount of $ 5,000,000 on the units to be retained by the Joint Venture.

The interest on the new loan was 5.67 % fixed for the 10 year term with interest only payments for five years

and amortized over a 30 year period for the balance of the loan term.

The interest on the new loan was 5.67 % fixed for the 10 year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan term.

On July 8, 2016, Hamilton 1025 LLC paid off the outstanding balance of the mortgage balance.

11 unchanged sentences

The Partnership will continue to account for this investment using the equity method of accounting, although the Partnership has no legal obligation to fund its share of any future operating deficiencies, if needed.

At March 31 2024, the balance on this mortgage before unamortized deferred financing costs is $ 6,000,000 .

At June 30 2024, the balance on this mortgage before unamortized deferred financing costs is $ 6,000,000 .

This investment is referred to as Hamilton Minuteman, LLC.

9 unchanged sentences

At March 31, 2024, the balance of the mortgage before unamortized deferred finance is $ 16,900,000 .

At June 30, 2024, the balance of the mortgage before unamortized deferred finance is $ 16,900,000 .

The investment is referred to as Hamilton on Main LLC.

This mortgage is currently in the process of a refinancing which is to be completed prior to the maturity date of the loan.

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.

10 unchanged sentences

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

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

At March 31, 2024, the balance of this mortgage before unamortized deferred financing costs is approximately $ 8,424,000 .

Although the Partnership has no legal obligation, the Partnership

intends to fund its share of any future operating deficits if needed.

At June 30, 2024, the balance of this mortgage before unamortized deferred financing costs is approximately $ 8,364,000 .

This investment is referred to as 345 Franklin, LLC.

Summary financial information at March 31,2024

Summary financial information at June 30, 2024

Rental Properties

27 unchanged sentences

Total units/condominiums

Financial information for the three months ended March 31, 2024

Financial information for the six months ended June 30, 2024

Rental Income

11 unchanged sentences

Interest Income

Other income (Expense)

( 2,521,159 )

3 unchanged sentences

Net Income —NERA 40 %

Future annual mortgage maturities at March 31, 2024 are as follows:

Financial information for the three months ended June 30, 2024

Rental Income

Laundry and Sundry Income

Administrative

Depreciation and Amortization

Management Fees

Repairs and Maintenance

Taxes and Insurance

Income Before Other Income

Other Income (Loss)

Interest Expense

( 1,269,641 )

( 1,802,252 )

Interest Income

( 1,245,025 )

( 1,750,921 )

Net Income (Loss)

Net Income (Loss)—NERA 50 %

Net Income —NERA 40 %

Future annual mortgage maturities at June 30, 2024 are as follows:

unamortized deferred financing costs

At March 31, 2024, the weighted average interest rate on the above mortgages was 4.23 %.

At June 30, 2024, the weighted average interest rate on the above mortgages was 4.23 %.

The effective rate was 4.29 % including the amortization expense of deferred financing costs.

Summary financial information at March 31, 2023

Summary financial information at June 30, 2023

Rental Properties

27 unchanged sentences

Total units/condominiums

Financial information for the three months ended March 31, 2023

Financial information for the six months ended June 30, 2023

Rental Income

15 unchanged sentences

Net Income —NERA 40 %

Financial information for the three months ended June 30, 2023

Rental Income

Laundry and Sundry Income

Administrative

Depreciation and Amortization

Management Fees

Repairs and Maintenance

Taxes and Insurance

Income Before Other Income

Other Income (Loss)

Interest Expense

( 1,258,781 )

( 1,804,559 )

( 1,258,781 )

( 1,804,559 )

Net Income (Loss)

Net Income (Loss)—NERA 50 %

Net Income —NERA 40 %

EMPLOYEE BENEFIT 401(k) PLANS

5 unchanged sentences

Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit-sharing contributions made on their behalf after two years of service with the Partnership at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Partnership.

Total expense recognized by the Partnership for the 401(k) Plan for the three months ended March 31, 2024 was $ 16,000 .

Total expense recognized by the Partnership for the 401(k) Plan for the six months ended June 30, 2024 was $ 32,000 .

IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

4 unchanged sentences

SUBSEQUENT EVENTS

From April 1, 2024, through May 8, 2024, the Partnership has purchased 1,764 Depository Receipts .

From July 1, 2024, through August 8, 2024, the Partnership has purchased 654 Depository Receipts .

The average price was $ 70.86 per receipt, or $ 2,125.80 per unit.

1 unchanged sentence

The Partnership is required to purchase 5.2 Class B units and 0.3 General Partnership units at a cost of $ 11,077 and $ 579 , respectively.

On May 8, 2024, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), payable on June 28, 2024.

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 August 7, 2024, the Partnership approved a quarterly distribution of $ 12.00 per Unit ($ 0.40 per Receipt), payable on September 30, 2024.

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 1. Financial Statements