What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-14 compared with 2024-03-14 · 85 added, 84 removed, 304 unchanged (36% of the section changed)

48 unchanged sentences

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 outstanding stock of The Hamilton Company is controlled by Jameson Brown and Harley Brown.

In the fiscal year ended December 31, 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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Since the Partnership’s long-term goals include the acquisition of additional properties, a portion of the proceeds from the refinancing and sale of properties is reserved for this purpose.

If available acquisitions do not meet the Partnerhip’s investment criteria, the Partnership may purchase additional Depositary Receipts.

If available acquisitions do not meet the Partnership’s investment criteria, the Partnership may purchase additional Depositary Receipts.

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.

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For all of 2024, renewal rents increased approximately 5.8% and increased approximately 4.8% for new leases.

For 2023, management expects the local real estate market to remain strong as we move from the winter into the spring rental season.

For 2025, management expects the local real estate market to remain stable as we move from the winter into the spring rental season.

The Partnership purchased a commercial retail property of approximately 20,700 square feet, located at 653 Worcester Road in Framingham, Massachusetts for approximately $10,151,000 on January 18, 2023.

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

For the year ending December 31, 2023, excluding the increase in income and expense from 653 Worcester Road and the Shawmut Apartments, consolidated revenue increased by 6.8%, operating expenses increased by 6.1% (including impairment) and Income before Other Income (Expense) increased by 7.5%.

For the fourth quarter of 2023, excluding the increase in income and expense from 653 Worcester Road and the Shawmut Apartments, consolidated revenue increased by 8.6%, operating expenses increased by 11.9 % and Income before Other Income (Expense) decreased by 4.8 %, as compared to the fourth quarter of 2022.

On November 30, 2021, New England Realty Associates Limited Partnership (the “Partnership”), entered into a Master Credit Facility Agreement ( the “Facility Agreement”) with KeyBank National Association (“KeyBank”) dated as of November 30, 2021, with 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.

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

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

The Partnership used the proceeds to pay down approximately $65,300,000 of existing debt secured by 11 properties, along with approximately $2,700,000 in prepayment penalties.

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

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

For the year ending December 31, 2024 consolidated revenue increased by 8.1%, operating expenses decreased by 0.9% and Income before Other Income (Expense) increased by 34.8%.

For the fourth quarter of 2024, consolidated revenue increased by 3.3%, operating expenses decreased by 8.2% and Income before Other Income (Expense) increased by 39.9%, as compared to the fourth quarter of 2023.

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

8 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 is 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 an applicable margin of 2.5%.

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 an applicable margin of 2.5%.

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

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The agreement extended the line of credit until October 29, 2024.

The commitment amount is for $25 million but is restricted to $17 million during the modification period.

The commitment amount was for $25 million but was restricted to $17 million during the modification period.

The modification period was phased out by December 31, 2022.

2 unchanged sentences

from a maximum consolidated leverage ratio of 65% to a ratio of 70% until September 30, 2022 and from a minimum debt yield of 9.5% to a yield of 8.5% until September 30, 2022 and a yield of 9.0% until December 31, 2022.

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

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

The portfolio’s debt yield fell below the minimum of 9.0% to 8.6%.

Consequently, as of December 31, 2023, the Partnership did not comply with the debt yield financial covenant.

As such, the Partnership is restricted from drawing 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 of the line of credit.

See Note 19, Subsequent Events, for additional information.

As such, the Partnership was restricted from drawing down any amount from the line of credit until the Partnership met the required financial covenants.

On November 21, 2024, the Partnership entered into an agreement for a new $25,000,000 revolving line of credit.

The term of the line is for three years with a floating interest rate equal to a base rate of the SOFR Rate for a period of one month plus the applicable margin of 2.5%.

The loan covenants include a leverage ratio not to exceed 65%, a debt service coverage ratio of not less than 1.5 to 1.0, maximum usage of 1.5 times trailing 12 months EBITDA, minimum liquidity of $15 million, and a minimum debt yield of 8.5%.

The Partnership incurred a commitment fee of $125,000.

The Partnership will be charged annually an unused line fee, equal to seventy-five basis points (0.75%) between the difference of the maximum availability and the outstanding principal of the line of credit.

This fee will be waived for any period in which the Partnership maintains aggregate deposits of twenty million dollars with the Lender.

As of December 31, 2024, the Partnership was in compliance with the financial covenants and did not incur an unused line fee.

The Repurchase Program that was initiated in 2007 has purchased 1,550,358 Depositary Receipts through December 31, 2024, or approximately 36% of the outstanding Depositary Receipts.

1 unchanged sentence

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

On March 12, 2025, the Board of Directors unanimously approved a new extension to the Repurchase Program, authorizing the President and Treasurer to cause the Partnership to repurchase, on the open market or otherwise, including through individually negotiated purchases and through a written trading plan that complies with the requirements of Rule 10b5-1, Depository Receipts and Partnership Units such that (i) the aggregate cost of Depository Receipts and Partnership Units repurchased shall not exceed the lesser of $5 million or 10% of the Partnership’s balance of cash and investment in treasury bills, (ii) no Depository Receipts or Partnership Units

shall be repurchased after the date that is 12 months after the effective date of the plan, and (iii) no Depository Receipts or Partnership Units shall be repurchased in excess of $95 per Depository Receipt.

The Repurchase Plan requires the Partnership to repurchase a proportionate number of Class B Units and General Partner Units in connection with any repurchases of any Depositary Receipts by the Partnership based upon the 80%, 19% and 1% fixed distribution percentages of the holders of the Class A, Class B and General Partner Units under the Partnership Agreement.

This repurchase authorization replaces the Partnership’s previous repurchase program.

The Repurchase Plan shall be made in accordance with the terms of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall be made in accordance with all applicable laws and regulations in effect from time to time.

Management believes that the $25,000,000 line of credit, net cash flow from operations and cash on hand have put the Partnership in position to capitalize on investment opportunities should they reveal themselves in the near future.

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In 2024, tenant renewals were approximately 68% with an average rental increase of approximately 5.8%.

New leases accounted for approximately 29% with rental rate increases of approximately 8.9%.In 2023, leasing commissions were approximately $545,000 compared to approximately $334,000 in 2022, an increase of approximately $211,000 (63.2%) from 2022.Tenant concessions were approximately $68,000 in 2023 compared to approximately $50,000 in 2022, an increase of approximately $18,000 (36.0%).

Tenant improvements, excluding any improvements at 653 Worcester Road and the Shawmut Apartments, were approximately $3,471,000 in 2023 compared to approximately $2,333,000 in 2022, an increase of approximately $1,138,000 (48.8%).

New leases accounted for approximately 32% with rental rate increases of approximately 4.8%.

In 2024, leasing commissions were approximately $616,000 compared to approximately $545,000 in 2023, an increase of approximately $71,000 (13.0%) from 2023.

Tenant concessions were approximately $104,000 in 2024 compared to approximately $68,000 in 2023, an increase of approximately $36,000 (52.9%).

Tenant improvements were approximately $3,579,000 in 2024 compared to approximately $3,471,000 in 2023, an increase of approximately $108,000 (3.1%).

Hamilton accounted for approximately 1.3% of the repair and maintenance expense paid for by the Partnership in the year ended December 31, 2024 and 2.0% in the year ended December 31, 2023.

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When assets are identified by management as held for sale, the Partnership discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets.

The Partnership generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale.

The Partnership

generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale.

If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance is established.

If circumstances arise that previously were considered unlikely and, as a result, the Partnership decides not to sell a property previously classified as held for sale, the property is reclassified as held and used.

A property that is

reclassified is measured and recorded individually at the lower of (a) its carrying value before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

A property that is reclassified is measured and recorded individually at the lower of (a) its carrying value before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

Rental Properties:

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The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Costs directly related to the acquisition, development and construction of rental properties are capitalized.

Capitalized development and construction costs include pre-construction costs, development and construction costs, regulatory fees, interest, property taxes, insurance, construction oversight fees, and other project costs incurred during the period of development.

The Partnership considers a construction project as substantially completed and held available for occupancy upon the substantial completion of improvements, but no later than one year from cessation of major construction activity.

Investments in Treasury Bills:

Investments in Treasury Bills are recorded at amortized cost and classified as held to maturity as the Partnership has the intent and the ability to hold them until they mature.

The carrying value of the Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment.

The carrying value of the Treasury Bills is adjusted for accretion of discounts over the remaining life of the investment.

Income related to the Treasury Bills is recognized in interest income in the Partnership’s consolidated statement of income.

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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.

The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.

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

The value of tenant relationship intangibles is amortized to expense over the anticipated life of the relationships.

In the event that facts and circumstances indicate that the carrying value of a rental property may be impaired, an analysis of the value is prepared.

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Investments in Joint Ventures:

The Partnership accounts for its 40%-50% ownership in the Investment Properties under the equity method of accounting, as it exercises significant influence over, but does not control these

The Partnership accounts for its 40%-50% ownership in the Investment Properties under the equity method of accounting, as it exercises significant influence over, but does not control these entities.

These investments are recorded initially at cost, as Investments in Joint Ventures, and subsequently adjusted for the Partnership’s share in earnings, cash contributions and distributions.

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Income from investments in unconsolidated joint ventures

Other Income (Expense)

Rental income from continuing operations for the year ended December 31, 2024 was approximately $79,763,000, compared to approximately $73,892,000 for the year ended December 31, 2023, an increase of approximately $5,871,000 (7.9%).

Excluding revenues from Walgreen’s and Shawmut’s of approximately $1,753,000, there was an increase of approximately $4,579,000 (6.8%).

The Partnership Properties with the largest increases in rental income include 62 Boylston Street Apartments, 1144 Commonwealth Apartments, Westgate Apartments, Woodland Park, and Hamilton Green, with increases of approximately $769,000, $747,000, $456,000, $339,000 and $294,000, respectively.

Excluding the net increase in revenue from Shawmut of approximately $1,270,000, there was an increase of approximately $4,601,000 (6.3%).

The Partnership Properties with the largest increases in rental income include Hamilton Oaks, 62 Boylston Street Apartments, Mill Street Gardens, 659 Worcester Road, and 1144 Commonwealth Apartments, with increases of approximately $522,000, $446,000, $393,000, $337,000 and $303,000, 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.

Total expenses from continuing operations for the year ended December 31, 2023 were approximately $55,667,000 compared to approximately $50,205,000 for the year ended December 31, 2022, an increase of approximately $5,461,000 (10.9%).

Excluding expenses from Walgreen’s and Shawmut’s of approximately $2,388,000, there was an increase of approximately $3,073,000 (6.1%).

Factors which contributed to the increase were an increase in Repairs and Maintenance expense of approximately $2,020,000 (17.9%), primarily due to an increase in apartment units turnover costs, an increase in Taxes and Insurance costs of approximately $600,000 (6.6%), and an increase in Renting expense of approximately $359,000 (56.2%), partially due to an increase in commissions, offset in part by a decrease in Depreciation and Amortization expense of approximately $1,480,000 (9.0%), due to fully depreciated assets.

Interest income for the year ended December 31, 2023, was approximately $4,486,000 compared to approximately $1,055,000 for the year ended December 31, 2022, an increase of approximately $3,431,000.

The increase is due to investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 5.3% to 5.5%.

Interest expense for the year ended December 31, 2023 was approximately $15,723,000 compared to approximately $15,045,000 for the year ended December 31, 2022, an increase of approximately $678,000 (4.5%), The increase is due to the refinancing of properties, increasing the amount of debt, which increased the interest expense for the period.

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.

Total expenses from continuing operations for the year ended December 31, 2024 were approximately $55,161,000 compared to approximately $55,666,000 for the year ended December 31, 2023, a decrease of approximately $505,000 (0.9%).

Excluding the net change in expenses from Shawmut’s of approximately $953,000, there was a decrease of approximately $1,458,000 (2.7%).

Factors which contributed to the decrease were a decrease of approximately $971,000, for the Impairment charge in 2023 for Mill Street Development, a decrease in Depreciation and Amortization expense of approximately $480,000 (0.9%), due to fully depreciated assets, and a decrease in Repairs and Maintenance expense of approximately $340,000 (0.6%), primarily due to a decrease in window, door, and glass repairs

Interest income for the year ended December 31, 2024 was approximately $4,466,000 compared to approximately $4,487,000 for the year ended December 31, 2023, a decrease of approximately $21,000.

The decrease is due to a decrease in interest rates for investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 4.2% to 5.0%.

Interest expense for the year ended December 31, 2024 was approximately $15,457,000 compared to approximately $15,723,000 for the year ended December 31, 2023, a decrease of approximately $266,000 (1.7%).

The decrease is due to the greater amortization of principal for debt with level principal and interest payments.

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

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Taxes and insurance

Property impairment

Income Before Other Income ( Expense)

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Interest (expense)

Income (Loss) from investments in unconsolidated joint ventures

Income from investments in unconsolidated joint ventures

Other (Expense)

Net (Loss) Income

Rental income from continuing operations for the year ended December 31, 2023 was approximately $73,892,000, compared to approximately $67,560,000 for the year ended December 31, 2022, an increase of approximately $6,332,000 (9.4%).

The Partnership Properties with the largest increases in rental income include 62 Boylston Street Apartments, 1144 Commonwealth Apartments, Mill Street Gardens, Westgate Apartments, and Hamilton Green, with increases of approximately $1,891,000, $814,000, $402,000, $341,000 and $302,000, respectively.

Excluding revenues from Walgreen’s and Shawmut’s of approximately $1,753,000, there was an increase of approximately $4,579,000 (6.8%).

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

1 unchanged sentence

Factors which contributed to the increase were an increase in Repairs and Maintenance expense of approximately $1,201,000 (11.9%), primarily due to an increase in apartment units turnover costs, an increase in Operating expenses of approximately $853,000 (13.2%), primarily due to an increase in snow removal and utility expense, and an increase in Administrative expense of approximately $255,000 (10.3%), partially due to an increase in professional fees, offset in part by a decrease in Depreciation and Amortization expense of approximately $298,000 (1.8%), due to fully depreciated assets.

Excluding expenses from Walgreen’s and Shawmut’s of approximately $2,388,000, there was an increase of approximately $3,073,000 (6.1%).

Interest income for the year ended December 31, 2023, was approximately $4,486,000 compared to approximately $1,055,000 for the year ended December 31, 2022, an increase of approximately $3,431,000.

The increase is due to investments in Treasury Bills which mature over a period less than 180 days, with interest rates between 5.3% to 5.5%.

Interest expense for the year ended December 31, 2022 was approximately $15,045,000 compared to approximately $13,629,000 for the year ended December 31, 2021, an increase of approximately $1,416,000 (10.4%), The increase is due to the refinancing of properties, increasing the amount of debt, which increased the interest expense for the period.

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

In order to initiate construction, the Partnership demolished the current building structures and started construction in 2024.

With no tenants occupying the property as of December, 2023 and with the resulting loss of future cash, management recorded an impairment charge of approximately $971,000, the net book value of the building for the Mill Street Development property.

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.

At December 31, 2023, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties.

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

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $500,000 for the year ended December 31, 2022, compared to a net loss of approximately $567,000 for the year ended December 31, 2021, an increase in income of approximately $1,067,000 (188.1%).

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $876,000 for the year ended December 31, 2023, compared to net income of approximately $500,000 for the year ended December 31, 2022, an increase in income of approximately $376,000 (75.3%).

This increase is primarily due to rental revenue of approximately $11,132,000 for the year ended December 31, 2023 compared to approximately $10,261,000 for the year ended December 31, 2022, an increase of approximately $871,000 (8.50).%.

Included in the income for the year ended December 31, 2022 is depreciation and amortization expense of approximately $2,593,000.

As a result of the changes discussed above, net income for the year ended December 31, 2022 was approximately $3,723,000 compared to a net loss of approximately $2,700,000 for the year ended December 31, 2021, an increase in income of approximately $6,423,000 (237.9%).

As a result of the changes discussed above, net income for the year ended December 31, 2023 was approximately $8,454,000 compared to net income of approximately $3,723,000 for the year ended December 31, 2022, an increase in income of approximately $4,731,000 (127.1%).

LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s principal source of cash during 2024 was the collection of rents, and interest income generated from the purchase of Treasury Bills.

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

The Partnership’s principal use of cash during 2024 was the improvements to rental properties, the development of a rental property at Mill Street, and distributions to partners.

The Partnership’s principal source of cash during 2023 was the collection of rents, and interest income generated from the purchase of Treasury Bills.

The Partnership’s principal use of cash during 2023 was the improvements of rental properties, 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 approximately $27,500,000.

The Partnership’s principal sources of cash during 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 majority of cash and cash equivalents of $17,615,940 at December 31, 2024 and $18,230,463 at December 31, 2023 were held in interest bearing accounts at creditworthy financial institutions.

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Cash (used in) investing activities

Cash (used in) provided by financing activities

Cash (used in) financing activities

Repurchase of Depositary Receipts, Class B and General Partner Units

Distributions paid

Net increase in cash and cash equivalents

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

The decrease in cash used in investing activities is primarily due to improvements to rental properties, and the purchase of new properties.

Net decrease in cash and cash equivalents

The change in cash provided by operating activities is due to various factors, including a change in depreciation expense, a change in income, an increase in accounts payable and accrued expenses, and other factors.

The decrease in cash used in investing activities is primarily due to improvements to rental properties, and the development of the Mill Street rental property in 2024.

The change in cash used in financing activities is due to the pay down of mortgages, the repurchase of Depositary Receipts, and distributions to partners.

During 2023, the Partnership and its Subsidiary Partnerships completed improvements to certain of the Properties at a total cost of approximately $9,289,000.

During 2024, the Partnership and its Subsidiary Partnerships completed improvements to certain of the Properties at a total cost of approximately $25,254,000, which includes approximately $15,231,000 for the Mill Street Development.

These improvements were funded from cash reserves and, to some extent, escrow accounts established in connection with the financing or refinancing of the applicable Properties.

These sources have been adequate to fully fund improvements.

The most significant improvements were made at 1144 Commonwealth, Hamilton Oaks, School Street, Redwood Hills, Westgate Apartments, and Hamilton Green, at a cost of

$1,982,000, $1,687,000, $701,000, $468,000, $431,000, and $421,000 respectively.

The most significant improvements were made at Executive Apartments,1144 Commonwealth, Captain Parker, River Drive Apartments, Redwood Hills, and Hamilton Oaks, at a cost of $1,582,000, $1,061,000, $886,000, $880,000, $872,000, and $782,000 respectively.

The Partnership plans to invest approximately $41,203,000 in capital improvements in 2025.

1 unchanged sentence

On December 29, 2023, the Partnership signed a contract with a general contractor, NEI General Contracting, Inc., for the construction of the Mill Street Development project for approximately $29,700,000.

It is anticipated that approximately $10,100,000 will be incurred in 2024 with the balance of $19,600,000 to be incurred in 2025.

Project costs will initially be funded from Partnership reserves, but upon completion, the Partnership anticipates closing on a permanent loan, as required by MassHousing under the Chapter 40B program.

As of December 31, 2024, the property, located at 57 Mill Street in Woburn, MA, which includes 72 residential units comprising approximately 93,000 square feet, is estimated to be completed during the fourth quarter of 2025.

Total investment to date is approximately $15,231,000, and the total investment upon completion is anticipated to be approximately $30 million.

The partnership is using cash reserves to fund this construction but will finance a portion of construction costs upon completion of the project.

Project costs will initially be funded from Partnership reserves, but upon completion, the Partnership anticipates closing on a permanent loan, as was required by MassHousing, amended under current requirements under the Chapter 40B program.

In connection with these requirements, the Partnership received a term sheet from Brookline Bank for a $15,000,000 loan to be funded upon completion of the project, which is currently anticipated in the fourth quarter of 2025 .

Line of Credit

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

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

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

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

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

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

The agreement extended the line of credit until October 29, 2024.

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.

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;

from a minimum tangible net worth requirement of $200 million to a net worth of $175 million until September 30, 2022;

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

The portfolio’s debt yield fell below the minimum of 9.5% to 8.6%.

Consequently, as of December 31, 2022, 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.

See Note 19, Subsequent Events, for additional information.

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.

On November 21, 2024, the Partnership entered into an agreement for a new $25,000,000 revolving line of credit.

The term of the line is for three years with a floating interest rate equal to a base rate of the SOFR Rate for a period of one month plus the applicable margin of 2.5%.

The Partnership incurred a commitment fee of $125,000.

This fee will be waived for any period in which the Partnership maintains aggregate deposits of twenty million dollars with the Lender.

As of December 31, 2024, the Partnership was in compliance with the financial covenants and did not incur an unused line fee.

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

1 unchanged sentence

The line of credit is collateralized by varying percentages of the Partnership’s ownership interest in 27 of its subsidiary properties and joint ventures.

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

Pledged interests are 49% of the Partnership’s ownership interest in the respective entities.

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

13 unchanged sentences

Total Contractual Obligations

As of December 31, 2024, the Partnership has one property under construction located at 57 Mill Street in Woburn, MA.

The project includes 72 residential units comprising approximately 93,000 square feet and is estimated to be completed during the fourth quarter of 2025.

Total investment to date is approximately $15.2 million, and the total investment upon completion is anticipated to be approximately $30 million.

The partnership is using cash reserves to fund this construction but will finance a portion of construction costs upon completion of the project.

In connection with the Mill Street development project, the Partnership has entered into a contract with a general contractor with a current contract value of approximately $30 million.

We have various standing or renewable service contracts with vendors related to our property management.

4 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 7. Management’s Discussion and Analysis