UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                          to

Commission file number 001‑31568

New England Realty Associates Limited Partnership

(Exact name of registrant as specified in its charter)

Massachusetts (State or other jurisdiction of incorporation or organization)	04‑2619298 (I.R.S. employer identification no.)
39 Brighton Avenue, Allston, Massachusetts (Address of principal executive offices)	02134 (Zip Code)
Registrant’s telephone number, including area code: (617) 783‑0039
Securities registered pursuant to Section 12(b) of the Act:
Depositary Receipts (Title of each Class)	NYSE MKT (Name of each Exchange on which Registered)
Securities registered pursuant to Section 12(g) of the Act:
Class A Limited Partnership Units (Title of class)

Indicate by checkmark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐  No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐  No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendments to this Form 10-K ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☒ Non‑accelerated filer ☐
(Do not check if a smaller reporting company) Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐  No ☒

At June 30, 2015, the aggregate market value of the registrant’s securities held by non‑affiliates of the registrant was $113,014,650 based on the closing price of the registrant’s traded securities on the NYSE MKT Exchange on such date. For this computation, the Registrant has excluded the market value of all Depositary Receipts reported as beneficially owned by executive officers and directors of the General Partner of the Registrant; such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of the Registrant.

As of March 1, 2016, there were 100,009 of the registrant’s Class A units (3,000,274 Depositary Receipts) of limited partnership issued and outstanding and 23,821 Class B units issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP

TABLE OF CONTENTS

		PAGE
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	11
Item 2.	Properties	11
Item 3.	Legal Proceedings	18
Item 4.	Mine Safety Disclosure	18
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Selected Financial Data	21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8.	Consolidated Financial Statements and Supplementary Data	35
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	35
Item 9A.	Controls and Procedures	35
Item 9B.	Other Information	35
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	35
Item 11.	Executive Compensation	39
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	40
Item 13.	Certain Relationships and Related Transactions, and Director Independence	42
Item 14.	Principal Accounting Fees and Services	43
PART IV
Item 15.	Exhibits and Financial Statement Schedules	43
SIGNATURES		S-1
Exhibit Index		S-2

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP

PART I

ITEM 1.  BUSINESS

General

New England Realty Associates Limited Partnership (“NERA” or the “Partnership”), a Massachusetts Limited Partnership, was formed on August 12, 1977 as the successor to five real estate limited partnerships (collectively, the “Colonial Partnerships”), which filed for protection under Chapter XII of the Federal Bankruptcy Act in September 1974. The bankruptcy proceedings were terminated in late 1984. In July 2004, the General Partner extended the termination date of the Partnership until 2057, as allowed in the Partnership Agreement.

The authorized capital of the Partnership is represented by three classes of partnership units (“Units”). There are two categories of limited partnership interests (“Class A Units” and “Class B Units”) and one category of general partnership interests (the “General Partnership Units”). The Class A Units were initially issued to creditors and limited partners of the Colonial Partnerships and have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each Class A Unit is exchangeable for 30 publicly traded depositary receipts (“Receipts”), which are currently listed on the NYSE Amex Exchange and are registered under Section 12(b) of the Exchange Act. The Class B Units were issued to the original general partners of the Partnership. The General Partnership Units are held by the current general partner of the Partnership, NewReal, Inc. (the “General Partner”). The Class A Units represent an 80% ownership interest, the Class B Units represent a 19% ownership interest, and the General Partnership Units represent a 1% ownership interest.

The Partnership is engaged in the business of acquiring, developing, holding for investment, operating and selling real estate. The Partnership, directly or through 25 subsidiary limited partnerships or limited liability companies, owns and operates various residential apartment buildings, condominium units and commercial properties located in Massachusetts and New Hampshire. As used herein, the Partnership’s subsidiary limited partnerships and limited liabilities companies are each referred to as a “Subsidiary Partnership” and are collectively referred to as the “Subsidiary Partnerships.”

The Partnership owns between a 99.67% and 100% interest in each of the Subsidiary Partnerships, except in nine limited liability companies (the “Investment Properties” or “Joint Ventures”) in which the Partnership has between a 40% and 50% ownership interest. The majority shareholder of the General Partner indirectly owns between 43.2% and 57%, the President of Hamilton owns between 2.5 % and 4.5 %, and five other management employees of Hamilton own collectively between 0% and 2.3%, respectively of Joint Ventures. The Partnership’s interest in the Investment Properties is accounted for on the equity method in the Consolidated Financial Statements. See Note 1 to the Consolidated Financial Statements—“Principles of Consolidation.” See Note 14 to the Consolidated Financial Statements—“Investment in Unconsolidated Joint Ventures” for a description of the properties and their operations. Of those Subsidiary Partnerships not wholly owned by the Partnership, except for the Investment Properties, the remaining ownership interest is held by an unaffiliated third party. In each such case, the third party has entered into an agreement with the Partnership, pursuant to which any benefit derived from its ownership interest in the applicable Subsidiary Partnerships will be returned to the Partnership.

The long‑term goals of the Partnership are to manage, rent and improve its properties and to acquire additional properties with income and capital appreciation potential as suitable opportunities arise. When appropriate, the Partnership may sell or refinance selected properties. Proceeds from any such sales or refinancing will be used to reduce debt, reinvested in acquisitions of other properties, distributed to the partners, repurchase equity interests, or used for operating expenses or reserves, as determined by the General Partner.

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Operations of the Partnership

The Partnership is managed by the General Partner, NewReal, Inc., a Massachusetts corporation wholly owned by Harold Brown and Ronald Brown. The General Partner has engaged The Hamilton Company, Inc. (the “Hamilton Company” or “Hamilton”) to perform general management functions for the Partnership’s properties in exchange for management fees. The Hamilton Company is wholly owned by Harold Brown and employs Ronald Brown and Harold Brown. The Partnership, Subsidiary Partnerships, and the Investment Properties currently contract with the management company for 52 individuals at the Properties and 10  individuals at the Joint Ventures who are primarily involved in the supervision and maintenance of specific properties. The General Partner has no employees.

As of February 1, 2016, the Partnership and its Subsidiary Partnerships owned 2,506 residential apartment units in 21 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, the Condominium Units and the Investment Properties are located primarily in the metropolitan Boston area of Massachusetts.

As of February 1, 2016, the Subsidiary Partnerships also owned a commercial shopping center in Framingham, Massachusetts, one commercial building in Newton and one in Brookline, Massachusetts and commercial space in mixed‑ use buildings in Boston, Brockton and Newton, Massachusetts. These properties are referred to collectively as the “Commercial Properties.” See Note 2 to the Consolidated Financial Statements, included as a part of this Form 10‑K.

Additionally, as of February 1, 2016, the Partnership owned a 40‑50% interest in 9 residential and mixed use complexes, the Investment Properties, with a total of 788 residential units, one commercial unit, and a 50 car parking lot. See Note 14 to the Consolidated Financial Statements for additional information on these investments.

The Apartment Complexes, Investment Properties, Condominium Units and Commercial Properties are referred to collectively as the “Properties.”

Harold Brown and, in certain cases, Ronald Brown, and officers and employees of the Hamilton Company own or have owned interests in certain of the Properties, Subsidiary Partnerships and Joint Ventures. See “Item 13. Certain Relationships, Related Transactions and Director Independence.”

The leasing of real estate in the metropolitan Boston area of Massachusetts is highly competitive. The Apartment Complexes, Condominium Units and the Investment Properties must compete for tenants with other residential apartments and condominium units in the areas in which they are located. The Commercial Properties must compete for commercial tenants with other shopping malls and office buildings in the areas in which they are located. Thus, the level of competition at each Property depends on how many other similarly situated properties are in its vicinity. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors that May Affect Future Results.”

The Second Amended and Restated Contract of Limited Partnership of the Partnership (the “Partnership Agreement”) authorizes the General Partner to acquire real estate and real estate related investments from or in participation with either or both of Harold Brown and Ronald Brown, or their affiliates, upon the satisfaction of certain terms and conditions, including the approval of the Partnership’s Advisory Committee and limitations on the price paid by the Partnership for such investments. The Partnership Agreement also permits the Partnership’s limited partners and the General Partner to make loans to the Partnership, subject to certain limitations on the rate of interest that may be charged to the Partnership. Except for the foregoing, the Partnership does not have any policies prohibiting any limited partner, General Partner or any other person from having any direct or indirect pecuniary interest in any investment to be acquired or disposed of by the Partnership or in any transaction to which the Partnership is a party or has an interest in or from engaging, for their own account, in business activities of the types conducted or to be conducted by the Partnership. The General Partner is not limited in the number or amount of mortgages which may be placed on any Property, nor is there a policy limiting the percentage of Partnership assets which may be invested in any specific Property.

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Industry Segments

The Partnership operates in only one industry segment—real estate. The Partnership does not have any foreign operations, and its business is not seasonal. See the Consolidated Financial Statements attached hereto and incorporated by reference herein for financial information relating to our industry segment.

Unit Distributions

In February 2016, the Partnership approved a quarterly distribution of $7.50 per Unit ($0.25 per Receipt), payable on March 31, 2016. In 2015 the Partnership paid four quarterly distributions of an aggregate $30.00 per Unit ($1.00 per Receipt) for a total payment of $3,785,883in 2015. In 2014, the Partnership paid four quarterly distributions of an aggregate of $30.00 per Unit ($1.00 per Receipt) for a total payment of $3,858,386.

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”) under which the Partnership was permitted to purchase, over a period of twelve months, up to 300,000 Depositary Receipts (each of which is one‑tenth of a Class A Unit). On January 15, 2008, the General Partner authorized an increase in the Repurchase Program from 300,000 to 600,000 Depositary Receipts. On January 30, 2008 the General Partner authorized an increase in the Repurchase Program from 600,000 to 900,000 Depositary Receipts. On March 6, 2008, the General Partner authorized the increase in the total number of Depositary Receipts that could be repurchased pursuant to the Repurchase Program from 900,000 to 1,500,000. On August 8, 2008, the General Partner reauthorized and renewed the Repurchase Program for an additional 12‑month period ended August 19, 2009. On March 22, 2010, the General Partner re‑authorized and renewed the Repurchase Program that expired on August 19, 2009. Under the terms of the renewed Repurchase Program, the Partnership may purchase up to 1,500,000 Depositary Receipts from the start of the program in 2007 through March 31, 2015. On March 10, 2015, the General Partner authorized an increase in the Repurchase Program from 1,500,000 to 2,000,000 Depository Receipts and extended the Program for an additional five years from March 31, 2015 until March 31, 2020. The Repurchase Program 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’s Second Amended and Restate Contract of Limited Partnership. 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 December 31, 2015, the Partnership has repurchased 1,341,598 Depositary Receipts at an average price of $26.63 per receipt (or $798.90per underlying Class A Unit), 2,885Class B Units and 152 General Partnership Units, both at an average price of $ 877.14per Unit, totaling approximately $38,596,000 including brokerage fees paid by the Partnership.

Property Transactions

In May 2013 the Partnership sold the Nashoba Apartments located in Acton, Massachusetts. The sale price was $4,300,000; the net proceeds of approximately $2,100,000 were transferred to Investment Property Exchange Services, Inc. a Qualified Intermediary. These funds were held by the intermediary in order to maintain the Partnership’s ability to structure a tax free exchange in accordance with the Internal Revenue Service’s rules under Sec. 1031. The gain on the sale in accordance with GAAP is approximately $3,679,000. The proceeds were subsequently used in the acquisition of the Hamilton Green apartments described below.

On July 15, 2013, Hamilton Green Apartments, LLC, a newly formed subsidiary of the Partnership, purchased Windsor Green at Andover, a 193 unit apartment complex located at 311 and 319 Lowell Street, Andover, Massachusetts. The purchase price was $62,500,000. From the purchase price, the Partnership allocated approximately $1,656,000 to the value of the in‑place leases and approximately $96,000 to the value of the tenant relationships. These amounts are  amortized over 12 and 36 months respectively. To fund this purchase, the Partnership obtained short term financing of approximately $40,000,000, used the funds of approximately $2,100,000 from the like kind exchange of the Nashoba Apartments, and the balance from the Partnership’s cash reserves. The closing costs associated with this short term financing were approximately $38,000. The original mortgage matured in November 2013. On December 20, 2013, the Partnership refinanced the mortgage on Hamilton Green. The current mortgage is $38,500,000; interest is fixed at

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4.67% for 15 years, interest only for 2 years and is amortized on a 30 year schedule for the balance of the term. This refinancing required an additional $1,846,000 in capital from the Partnership. The closing costs associated with this refinancing were approximately $346,000.

On September 18, 2015, Residences at Captain Parkers LLC, a newly formed subsidiary of the Partnership, purchased the Residence at Captain Parkers, a 94 unit apartment complex located at 125 Worthen Road and Ryder Lane in Lexington, Massachusetts. The purchase price was $31,600,000 and the closing costs were approximately $49,000. From the purchase price, the Partnership allocated approximately $474,000 for in-place leases, and approximately $31,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively. To fund the purchase, the Partnership utilized the available line of credit of $25,000,000, and the balance from the Partnership’s cash reserves.

During 2015, the Partnership and its Subsidiary Partnerships completed improvements to certain of the Properties at a total cost of approximately $6,694,000. 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  Westgate Apartments, 62 Boylston Street, Westside Colonial, Executive Apartments, River Drive Apartments, and Hamilton Oaks at a cost of approximately $1,349,000, $697,000, $647,000, $632,000, $603,000 and $592,000 respectively. The Partnership plans to invest approximately $3,517,000 in capital improvements in 2016.

Line of Credit

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% to 3.5%. The costs associated with the line of credit were approximately $125,000.As of December 31, 2015,the credit line had a balance of $25,000,000. The interest rate on the line of credit at December 31,2015 is 3.875%.

On September 15, 2015, the Partnership, in connection with the purchase of the Residence at Captain Parker Apartments, used the entire line of credit, along with cash reserves, to purchase the property. (See Note 2: Rental Properties, for the details of the transaction.) In January, 2016, the Partnership obtained a mortgage on the Residences at Captain Parker. The Partnership used the proceeds from the loan and cash reserves to pay down the line of credit balance to zero. See Note 18, SUBSEQUENT EVENTS, for the details of the repayment.

The line of credit may be used for acquisition, refinancing, improvements, working capital and other needs of the Partnership. The line may not be used to pay distributions, make distributions or acquire equity interests of the Partnership.

The line of credit is collateralized by varying percentages of the Partnership’s ownership interest in 23 of its subsidiary properties and joint ventures. Pledged interests range from 49% to 100% of the Partnership’s ownership interest in the respective entities.

The Partnership paid fees to secure the line of credit. Any unused balance of the line of credit is subject to a fee ranging from 15 to 20 basis points per annum. The Partnership paid approximately $36,000 for the twelve months ended December 31, 2015.

The line of credit agreement has several covenants, such as providing cash flow projections and compliance certificates, as well as other financial information. The covenants include, but are not limited to the following: maintain a leverage ratio that does not exceed 65%; aggregate increase in indebtedness of the subsidiaries and joint ventures should not exceed $15,000,000; maintain a tangible net worth (as defined in the agreement) of a minimum of $150,000,000; a minimum ratio of net operating income to total indebtedness of at least 9.5%; debt service coverage ratio of at least 1.6 to 1, as well as other items.

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The Partnership is in compliance with these covenants as of December 31, 2015.

Advisory Committee

The Advisory Committee members are Gregory Dube, Robert Nahigian, and Edward Sarkesian. These Advisory Committee members are not affiliated with the General Partner. The Advisory Committee meets with the General Partner to review the progress of the Partnership, assist the General Partner with policy formation, review the appropriateness, timing and amount of proposed distributions, approve or reject proposed acquisitions and investments with affiliates, and advise the General Partner on various other Partnership affairs. Per the Partnership Agreement, the Advisory Committee has no binding power except that it must approve certain investments and acquisitions or sales by the Partnership from or with affiliates of the Partnership.

Available Information

The Partnership’s website is www.thehamiltoncompany.com. On its website, the Partnership makes available, free of charge, its annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended. These forms are made available as soon as reasonably practical after the Partnership electronically files or furnishes such materials to the Securities and Exchange Commission. Any shareholder may obtain copies of these documents, free of charge, by sending a request in writing to: Director of Investor Relations, New England Realty Associates Limited Partnership, 39 Brighton Avenue, Allston, MA 02134.

ITEM 1A.  RISK FACTORS

We are subject to certain risks and uncertainties as described below. These risks and uncertainties may not be the only ones we face; there may be additional risks that we do not presently know of or that we currently consider immaterial. All of these risks could adversely affect our business, financial condition, results of operations and cash flows. Our ability to pay distributions on, and the market price of, our equity securities may be adversely affected if any of such risks are realized. All investors should consider the following risk factors before deciding to purchase or sell securities of the Partnership.

We are subject to risks inherent in the ownership of real estate.  We own and manage multifamily apartment complexes and commercial properties that are subject to varying degrees of risk generally incident to the ownership of real estate. Our financial condition, the value of our properties and our ability to make distributions to our shareholders will be dependent upon our ability to operate our properties in a manner sufficient to generate income in excess of operating expenses and debt service charges, which may be affected by the following risks, some of which are discussed in more detail below:

· changes in the economic climate in the markets in which we own and manage properties, including interest rates, the overall level of economic activity, the availability of consumer credit and mortgage financing, unemployment rates and other factors;

· a lessening of demand for the multifamily and commercial units that we own;

· competition from other available multifamily residential and commercial units and changes in market rental rates;

· development by competitors of competing multi‑family communities;

· increases in property and liability insurance costs;

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· changes in real estate taxes and other operating expenses (e.g., cleaning, utilities, repair and maintenance costs, insurance and administrative costs, security, landscaping, pest control, staffing, snow removal and other general costs);

· changes in laws and regulations affecting properties (including tax, environmental, zoning and building codes, and housing laws and regulations);

· weather and other conditions that might adversely affect operating expenses;

· expenditures that cannot be anticipated, such as utility rate and usage increases, unanticipated repairs and real estate tax valuation reassessments or mileage rate increases;

· our inability to control operating expenses or achieve increases in revenues;

· the results of litigation filed or to be filed against us;

· risks related to our joint ventures;

· risks of personal injury claims and property damage related to mold claims because of diminished insurance coverage;

· catastrophic property damage losses that are not covered by our insurance;

· risks associated with property acquisitions such as environmental liabilities, among others;

· changes in market conditions that may limit or prevent us from acquiring or selling properties;

· the perception of tenants and prospective tenants as to the attractiveness, convenience and safety of our properties or the neighborhoods in which they are located; and

· the Partnership does not carry directors and officers insurance.

We are dependent on rental income from our multifamily apartment complexes and commercial properties.  If we are unable to attract and retain tenants or if our tenants are unable to pay their rental obligations, our financial condition and funds available for distribution to our shareholders will be adversely affected.

Our multifamily apartment complexes and commercial properties are subject to competition.  Our properties and joint venture investments are located in developed areas that include other properties. The properties also compete with other rental alternatives, such as condominiums, single and multifamily rental homes, owner occupied single and multifamily homes, and commercial properties in attracting tenants. This competition may affect our ability to attract and retain residents and to increase or maintain rental rates.

The properties we own are concentrated in Eastern Massachusetts and Southern New Hampshire.  Our performance, therefore, is linked to economic conditions and the market for available rental housing and commercial space in these states. A decline in the market for apartment housing and/or commercial properties may adversely affect our financial condition, results of operations and ability to make distributions to our shareholders.

Our insurance may not be adequate to cover certain risks.  There are certain types of risks, generally of a catastrophic nature, such as earthquakes, floods, windstorms, act of war and terrorist attacks that may be uninsurable, or are not economically insurable, or are not fully covered by insurance. Moreover, certain risks, such as mold and environmental exposures, generally are not covered by our insurance. Should an uninsured loss or a loss in excess of insured limits occur, we could lose our equity in the affected property as well as the anticipated future cash flow from

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that property. Any such loss could have a material adverse effect on our business, financial condition and results of operations.

Debt financing could adversely affect our performance.  The vast majority of our assets are encumbered by project specific, non‑recourse, non‑ cross‑collateralized mortgage debt. There is a risk that these properties will not have sufficient cash flow from operations for payments of required principal and interest. We may not be able to refinance these loans at an amount equal to the loan balance and the terms of any refinancing may not be as favorable as the terms of existing indebtedness. If we are unable to make required payments on indebtedness that is secured by a mortgage, the Partnership will either invest additional money in the property or the property securing the mortgage may be foreclosed with a consequent loss of income and value to us.

We are obligated to comply with financial covenants in our indebtedness that could restrict our range of operating activities. The mortgages on our properties contain customary negative covenants, including limitations on our ability, without prior consent of the lender and other items. Failure to comply with these covenants could cause a default under the agreements and, in certain circumstances; our lenders may be entitled to accelerate our debt obligations. Defaults under our debt agreements could materially and adversely affect our financial condition and results of operations.

Real estate investments are generally illiquid, and we may not be able to sell our properties when it is economically or strategically advantageous to do so.  Real estate investments generally cannot be sold quickly, and our ability to sell properties may be affected by market conditions. We may not be able to diversify or vary our portfolio promptly in accordance with our strategies or in response to economic or other conditions.

Our access to public debt markets is limited.  Substantially all of our debt financings are secured by mortgages on our properties because of our limited access to public debt markets.

Litigation may result in unfavorable outcomes.  Like many real estate operators, we may be involved in lawsuits involving premises liability claims, housing discrimination claims and alleged violations of landlord‑tenant laws, which may give rise to class action litigation or governmental investigations. Any material litigation not covered by insurance, such as a class action, could result in substantial costs being incurred. The Partnership does not carry directors and officer’s liability insurance.

Our financial results may be adversely impacted if we are unable to sell properties and employ the proceeds in accordance with our strategic plan.  Our ability to pay down debt, reduce our interest costs, repurchase Depositary Receipts and acquire properties is dependent upon our ability to sell the properties we have selected for disposition at the prices and within the deadlines we have established for each respective property.

The costs of complying with laws and regulations could adversely affect our cash flow and ability to make distributions to our shareholders.  Our properties must comply with Title III of the Americans with Disabilities Act (the “ADA”) to the extent that they are “public accommodations” or “commercial facilities” as defined in the ADA. The ADA does not consider apartment complexes to be public accommodations or commercial facilities, except for portions of such properties that are open to the public. In addition, the Fair Housing Amendments Act of 1988 (the “FHAA”) requires apartment complexes first occupied after March 13, 1990, to be accessible to the handicapped. Other laws also require apartment communities to be handicap accessible. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants. We may be subject to lawsuits alleging violations of handicap design laws in connection with certain of our developments. If compliance with these laws involves substantial expenditures or must be made on an accelerated basis, our ability to make distributions to our shareholders could be adversely affected.

Under various federal, state and local laws, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on, under or in the property. This liability may be imposed without regard to whether the owner or operator knew of, or was responsible for, the presence of the substances. Other law imposes on owners and operators certain requirements regarding conditions and activities that may affect human health or the environment. Failure to comply with applicable requirements could complicate our ability to lease or sell an affected property and could subject us to monetary penalties, costs required to achieve compliance and potential

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liability to third parties. We are not aware of any material noncompliance, liability or claim relating to hazardous or toxic substances or other environmental matters in connection with any of our properties. Nonetheless, it is possible that material environmental contamination or conditions exist, or could arise in the future, in the apartment communities or on the land upon which they are located.

We are subject to the risks associated with investments through joint ventures.  Nine of our properties are owned by joint ventures in which we do not have a direct controlling interest. We may enter into joint ventures, including joint ventures that we do not control, in the future. Any joint venture investment involves risks such as the possibility that the co‑ venturer may seek relief under federal or state insolvency laws, or have economic or business interests or goals that are inconsistent with our business interests or goals. While the bankruptcy or insolvency of our co‑venturer generally should not disrupt the operations of the joint venture, we could be forced to purchase the co‑venturer’s interest in the joint venture or the interest could be sold to a third party. We also may guarantee the indebtedness of our joint ventures. If we do not have control over a joint venture, the value of our investment may be affected adversely by a third party that may have different goals and capabilities than ours.

We are subject to risks associated with development, acquisition and expansion of multifamily apartment complexes and commercial properties.  Development projects and acquisitions and expansions of apartment complexes are subject to a number of risks, including:

· availability of acceptable financing;

· competition with other entities for investment opportunities;

· failure by our properties to achieve anticipated operating results;

· construction costs of a property exceeding original estimates;

· delays in construction; and

· expenditure of funds on, and the devotion of management time to, transactions that may not come to fruition.

We are subject to control by our directors and officers.  The directors and executive officers of the General Partner and members of their families and related entities owned approximately 35% of our depositary receipts as of December 31, 2015. Additionally, management decisions rest with our General Partner without limited partner approval.

Competition for skilled personnel could increase our labor costs.  We and our management company compete with various other companies in attracting and retaining qualified and skilled personnel who are responsible for the day‑ to‑day operations of our properties. Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel. We may not be able to offset such added costs by increasing the rates we charge our tenants. If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be harmed.

We depend on our key personnel.  Our success depends to a significant degree upon the continued contribution of key members of the management company, who may be difficult to replace. The loss of services of these executives could have a material adverse effect on us. There can be no assurance that the services of such personnel will continue to be available to us. We do not hold key‑man life insurance on any of our key personnel.

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Changes in market conditions could adversely affect the market price of our Depositary Receipts.  As with other publicly traded equity securities, the value of our depositary receipts depends on various market conditions, which may change from time to time. Among the market conditions that may affect the value of our depositary receipts are the following:

· the extent of investor interest in us;

· the general reputation of real estate companies and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate companies;

· our financial performance; and

· general stock and bond market conditions.

The market value of our depositary is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash distributions. Consequently, our depositary receipts may trade at prices that are higher or lower than our net asset value per depositary receipt.

We face possible risks associated with the physical effects of climate change.  We cannot predict with the certainty whether climate change is occurring and, if so at what rate. However, the physical effects of climate change could have a material effect on our properties, operations, and business. To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity and rising sea levels. Over time, these conditions could result in declining demand for our buildings or the inability of us to operate the buildings at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy and increasing the cost of snow removal at our properties. Proposed federal legislation to address climate change could increase utility and other costs of operating our properties which, if not offset by rising rental income, would reduce our net income. There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer  In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our tenants and business partners, including personally identifiable information of our tenants and employees, in our data centers and on our networks. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, which could adversely affect our business.

Risk of changes in the tax law applicable to real estate partnerships.  Since the Internal Revenue Service, the United States Treasury Department and Congress frequently review federal income legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any such legislative action may prospectively or retroactively modify our tax treatment and therefore, may adversely affect taxation to us, and/or our partners.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.  PROPERTIES

The Partnership and its Subsidiary Partnerships own the Apartment Complexes, the Condominium Units, the Commercial Properties and a 40‑50% interest in nine Investment Properties.See also “Item 13. Certain Relationships and Related Transactions and Director Independence” for information concerning affiliated transactions.

11

Apartment Complexes

The table below lists the location of the 2,506 Apartment Units, the number and type of units in each complex, the range of rents and vacancies as of February 1, 2016, the principal amount outstanding under any mortgages as of December 31, 2015, the fixed interest rates applicable to such mortgages, and the maturity dates of such mortgages.

							Mortgage Balance
							and Interest Rate			Maturity
	Number and Type						As of			Date of
Apartment Complex	of Units	Rent Range				Vacancies	December 31, 2015			Mortgage
Battle Green LLC	48 units					—	$	4,649,132		2026
34–42 Worthen Road	0 three bedroom				N/A			4.95	%
Lexington, MA	24 two bedroom	$	2,050	–	2,350
	24 one bedroom	$	1,650	–	1,900
	0 studios				N/A
Boylston Downtown L.P.	269 units					3	$	40,000,000		2028
62 Boylston Street	0 three bedroom				N/A			3.97	%
Boston, MA	0 two bedroom				N/A
	53 one bedroom	$	1,875	–	2,750
	216 studios	$	1,325	–	2,200
Brookside Associates, LLC	44 units					—	$	2,598,337		2020
5–7–10–12 Totman Road	0 three bedroom				N/A			5.81	%
Woburn, MA	34 two bedroom	$	1,325	–	1,650
	10 one bedroom	$	1,250	–	1,400
	0 studios				N/A
Clovelly Apartments L.P.	103 units					2	$	4,160,000		2023
160–170 Concord Street	0 three bedroom				N/A			5.62	%
Nashua, NH	53 two bedroom	$	1,000	–	1,375
	50 one bedroom	$	925	–	1,050
	0 studios				N/A
Commonwealth 1137 L.P.	35 units					—	$	3,750,000		2023
1131–1137 Commonwealth Ave.	29 three bedroom	$	2,250	–	2,950			5.65	%
Allston, MA	4 two bedroom	$	2,150	–	2,200
	1 one bedroom	$	1,000	–	1,000
	1 studio	$	1,200	–	1,200
Commonwealth 1144 L.P.	261 units					1	$	14,780,000		2023
1144–1160 Commonwealth Ave.	0 three bedroom				N/A			5.61	%
Allston, MA	11 two bedroom	$	1,075	–	1,850
	109 one bedroom	$	1,250	–	1,775
	141 studios	$	950	–	1,500
Nera Dean Street Associates, LLC	69 units					2	$	5,687,000		2024
38–48 Dean Street	0 three bedroom				N/A			4.22	%
Norwood, MA	66 two bedroom	$	1,325	–	1,550
	3 one bedroom	$	1,225	–	1,250
	0 studios				N/A
Executive Apartments L.P	72 units					3	$	2,415,000		2023
545–561 Worcester Road	1 three bedroom	$	1,700	–	1,700			5.59	%
Framingham, MA	47 two bedroom	$	1,175	–	1,525
	24 one bedroom	$	1,025	–	1,350
	0 studios				N/A
Hamilton Green Apartments LLC	193 units					10	$	38,500,000		2029
311–319 Lowell Street	10 three bedroom	$	1,069	–	2,800			4.67	%
Andover, MA	168 two bedroom	$	931	–	4,607
	15 one bedroom	$	1,161	–	1,875
Hamilton Oaks Associates, LLC	268 units					3	$	11,925,000		2023
30–50 Oak Street Extension	0 three bedroom				N/A			5.59	%
40–60 Reservoir Street	96 two bedroom	$	1,375	–	1,515
Brockton, MA	159 one bedroom	$	1,000	–	1,200
	13 studios	$	865	–	990

12

							Mortgage Balance
							and Interest Rate			Maturity
	Number and Type						As of			Date of
Apartment Complex	of Units	Rent Range				Vacancies	December 31, 2015			Mortgage
Highland Street Apartments L.P.	36 units					1	$	1,050,000		2023
38–40 Highland Street	0 three bedroom				N/A			5.59	%
Lowell, MA	24 two bedroom	$	1,005	–	1,200
	10 one bedroom	$	920	–	1,100
	2 studios	$	950	–	950
Linhart L.P	9 units					—	$	0(1)
4–34 Lincoln Street	0 three bedroom				N/A			—	%
Newton, MA	0 two bedroom				N/A
	5 one bedroom	$	950	–	1,435
	4 studios	$	1,050	–	1,100
North Beacon 140 L.P.	65 units					—	$	6,937,000		2023
140–154 North Beacon Street	10 three bedroom	$	2,450	–	2,750			5.59	%
Brighton, MA	54 two bedroom	$	1,850	–	2,400
	1 one bedroom	$	850	–	850
	0 studios				N/A
Olde English Apartments L.P.	84 units					—	$	3,080,000		2023
703–718 Chelmsford Street	0 three bedroom				N/A			5.63	%
Lowell, MA	47 two bedroom	$	1,125	–	1,400
	30 one bedroom	$	1,035	–	1,275
	7 studios	$	975	–	1,100
Redwood Hills L.P.	180 units					2	$	6,743,000		2023
376-382 Sunderland road	0 three bedroom				N/A			5.59	%
Worcester, MA	89 two bedroom	$	1,150	–	1,400
	91 one bedroom	$	950	–	1,125
	0 studios				N/A
Residences at Captain Parkers LLC	94 units					4	$	—
125 Worthen Road and Ryder Lane	8 three bedroom	$	2,685	–	3,187			—	%
Lexington, MA	48 two bedroom	$	1,867	–	2,963
	38 one bedroom	$	1,720	–	2,335
	0 studios				N/A
River Drive L.P.	72 units					1	$	3,465,000		2023
3–17 River Drive	0 three bedroom				N/A			5.62	%
Danvers, MA	60 two bedroom	$	1,175	–	1,550
	5 one bedroom	$	1,105	–	1,250
	7 studios	$	965	–	1,200
School Street 9, LLC	184 units					6	$	15,000,000		2023
9 School Street	0 three bedroom				N/A			3.76	%
Framingham, MA	96 two bedroom	$	1,195	–	1,700
	88 one bedroom	$	950	–	1,400
	0 studios				N/A
WCB Associates, LLC	180 units					2	$	7,000,000		2023
10–70 Westland Street	1 three bedroom	$	1,345	–	1,345			5.66	%
985–997 Pleasant Street	94 two bedroom	$	1,130	–	1,425
Brockton, MA	85 one bedroom	$	875	–	1,105
	0 studios				N/A
Westgate Apartments, LLC	220 units					—	$	15,700,000		2023
2–20 Westgate Drive	0 three bedroom				N/A			4.65	%
Woburn, MA	110 two bedroom	$	1,400	–	1,750
	110 one bedroom	$	935	–	1,600
	0 studios				N/A
Westgate Apartments Burlington, LLC	20 units					—	$	2,500,000		2024
105–107 Westgate Drive	0 three bedroom				N/A			4.31	%
Burlington, MA	12 two bedroom	$	1,685	–	2,100
	8 one bedroom	$	1,325	–	1,600
	0 studios				N/A

13

(1) The loan for Linhart LP was paid off in February 2014.

Current free rent concessions would result in an average reduction in unit rents of less than $7 per month per unit. Free rent expense amortized in 2015 was approximately $209,000 compared to approximately $169,000 in 2014.

On July 15, 2013, Hamilton Green Apartments, LLC, a newly formed subsidiary of the Partnership, purchased Windsor Green at Andover, a 193 unit apartment complex located at 311 and 319 Lowell Street, Andover, Massachusetts. The purchase price was $62,500,000. From the purchase price, the Partnership allocated approximately $1,656,000 to the value of the in‑place leases and approximately $96,000 to the value of the tenant relationships. These amounts are amortized over 12 and 36 months respectively. To fund this purchase, the Partnership obtained short term financing of approximately $40,000,000, used the funds of approximately $2,100,000 from the like kind exchange of the Nashoba Apartments, and the balance from the Partnership’s cash reserves. The closing costs associated with this short term financing were approximately $38,000. The original mortgage matured in November 2013. On December 20, 2013, the Partnership refinanced the mortgage on Hamilton Green. The current mortgage is $38,500,000; interest is fixed at 4.67% for 15 years, interest only for 2 years and is amortized on a 30 year schedule for the balance of the term. This refinancing required an additional $1,846,000 in capital from the Partnership. The closing costs associated with this refinancing were approximately $346,000.

On September 18, 2015, Residences at Captain Parkers LLC, a newly formed subsidiary of the Partnership, purchased the Residence at Captain Parkers, a 94 unit apartment complex located at 125 Worthen Road and Ryder Lane in Lexington, Massachusetts. The purchase price was $31,600,000 and the closing costs were approximately $49,000. From the purchase price, the Partnership allocated approximately $474,000 for in-place leases, and approximately $31,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively. To fund the purchase, the Partnership utilized the available line of credit of $25,000,000, and the balance from the Partnership’s cash reserves..) In January, 2016, the Partnership obtained a mortgage on the Residences at Captain Parker. The Partnership used the proceeds from the loan and cash reserves to pay down the line of credit balance to zero. See Note 18, SUBSEQUENT EVENTS, for the details of the repayment.

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

Condominium Units

The Partnership owns and leases to residential tenants 19 Condominium Units in the metropolitan Boston area of Massachusetts.

The table below lists the location of the 19 Condominium Units, the type of units, the range of rents received by the Partnership for such units, and the number of vacancies as of February 1, 2016.

							Mortgage Balance
	Number and Type						and Interest Rate	Maturity
	of Units Owned						As of	Date of
Condominiums	by Partnership	Rent Range				Vacancies	December 31, 2015	Mortgage
Riverside Apartments	19 units					1	—	—
8–20 Riverside Street	0 three bedroom				N/A
Watertown, MA	12 two bedroom	$	1,475	–	1,850
	5 one bedroom	$	1,525	–	1,700
	2 studios	$	1,225	–	1,275

Commercial Properties

BOYLSTON DOWNTOWN LP.  In 1995, this Subsidiary Partnership acquired the Boylston Downtown property in Boston, Massachusetts (“Boylston”). This mixed‑use property includes 17,218 square feet of rentable commercial space. As of February 1, 2016, the commercial space was fully occupied, and the average rent per square foot was $25.89. For mortgage balance, interest rate and maturity date information see “Apartment Complexes,” above.

14

HAMILTON OAKS ASSOCIATES, LLC.  The Hamilton Oaks Apartment complex, acquired by the Partnership in December 1999 through Hamilton Oaks Associates, LLC, includes 6,075 square feet of rentable commercial space, occupied by a daycare center. As of February 1, 2016, the commercial space was fully occupied, and the average rent per square foot was $14.00. The Partnership also rents roof space for a cellular phone antenna at an average rent of approximately $40,000 per year through November 2020. For mortgage balance, interest rate and maturity date information see “Apartment Complexes” above.

LINHART LP.  In 1995, the Partnership acquired the Linhart property in Newton, Massachusetts (“Linhart”). This mixed‑use property includes 21,548 square feet of rentable commercial space. As of February 1, 2016, the commercial space was fully occupied, and the average rent per square foot was $24.86. The mortgage balance was paid off in February 2014.

NORTH BEACON 140 LP.  In 1995, this Subsidiary Partnership acquired the North Beacon property in Boston, Massachusetts (“North Beacon”). This mixed‑use property includes 1,050 square feet of rentable commercial space. The property was fully rented as of February 1, 2016, and the average rent per square foot as of that date was $34.75. For mortgage balance, interest rate and maturity date information see “Apartment Complexes” above.

STAPLES PLAZA.  In 1999, the Partnership acquired the Staples Plaza shopping center in Framingham, Massachusetts (“Staples Plaza”). The shopping center consists of 38,695 square feet of rentable commercial space. As of December 31, 2015, the mortgage had an outstanding balance $6,000,000 with interest rate of 5.97%, matures in 2018. As of February 1, 2016 Staples Plaza was fully occupied, and the average net rent per square foot was $25.10.

HAMILTON LINEWT ASSOCIATES, LLC.  In 2007, the Partnership acquired a retail block in Newton, Massachusetts. The property consists of 5,850 square feet of rentable commercial space. The property was fully rented as of February 1, 2016 at an average rent of $36.22per square foot. The Partnership obtained a mortgage in January 2008 of $1,700,000 on this property. This loan was paid off in February 2014.

HAMILTON CYPRESS LLC.  In 2008, the Partnership acquired a medical office building in Brookline, Massachusetts. The property consists of 17,607 square feet of rentable commercial space. As of February 1, 2016, the property was 100% occupied at an average rent of $35.43per square foot. The Partnership assumed a mortgage of approximately $4,011,000. This mortgage was paid off on February 25, 2013.

The following information is provided for commercial leases:

			Total square	Total number	Percentage of
	Annual base rent		feet for	of leases	annual base rent
Through December 31,	for expiring leases		expiring leases	expiring	for expiring leases
2016	$	219,570	12,586	10	8	%
2017		596,631	17,646	9	21	%
2018		333,911	9,557	7	11	%
2019		747,914	25,500	10	26	%
2020		204,730	6,709	5	7	%
2021		647,765	31,274	3	22	%
2022		—	—	—	—	%
2023		157,442	4,771	1	5	%
2024		—	—	—	—	%
2025		—	—	—	—	%
Totals	$	2,907,963	108,043	45	100	%

Commercial rental income is accounted for using the straight line method. Thirty six percent of our commercial leases contain rent escalations which range from $0.50– $1.50 per square foot per year.

Investment Properties

See Note 14 to the Financial Statements and Exhibit 99.1 for additional information regarding the Investment Properties.

15

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

							Mortgage Balance
							and Interest Rate			Maturity
	Number and Type						As of			Date of
Investment Properties	of Units	Range				Vacancies	December 31, 2015			Mortgage
345 Franklin, LLC	40 Units					—	$	10,000,000		2028
345 Franklin Street	0 three bedroom				N/A			3.87	%
Cambridge, MA	39 two bedroom	$	2,475	–	3,300
	1 one bedroom	$	2,500	–	2,500
	0 studios				N/A
Hamilton on Main Apartments, LLC	148 Units					3	$	16,900,000		2024
223 Main Street	0 three bedroom				N/A			4.34	%
Watertown, MA	93 two bedroom	$	1,450	–	2,150
	31 one bedroom	$	1,300	–	1,950
	24 studios	$	1,275	–	1,600
Hamilton Minuteman, LLC	42 Units					—	$	5,212,864		2017
1 April Lane	0 three bedroom				N/A			5.67	%
Lexington, MA	40 two bedroom	$	1,625	–	2,100
	2 one bedroom	$	1,750	–	1,800
	0 studios				N/A
Hamilton Essex 81 LLC	49 Units					—	$	10,000,000		2025
Residential	0 three bedroom				N/A			2.18	%
81–83 Essex Street	11 two bedroom	$	1,925	–	2,600
Boston, Massachusetts	38 one bedroom	$	1,595	–	1,950
	0 studios				N/A
Hamilton Essex Development LLC	Parking Lot						$
Commercial								—		(1)
81–83 Essex Street
Boston, Massachusetts
Hamilton 1025, LLC	48 Units					—	$	4,733,318		2016
Units to be retained	0 three bedroom				N/A			5.67	%
1025 Hancock Street	32 two bedroom	$	1,550	–	1,800
Quincy, Massachusetts	16 one bedroom	$	1,375	–	1,625
	0 studios				N/A
Hamilton Bay, LLC(A)	5 Units					2
Units held for sale	0 three bedroom				N/A
165–185 Quincy Shore Drive	0 two bedroom				N/A
Quincy, Massachusetts	7 one bedroom	$	1,520	–	1,550
	0 studios				N/A
Hamilton Bay Apartments, LLC	48 Units					—	$	4,504,340		2017
165–185 Quincy Shore Drive	0 three bedroom				N/A			5.57	%
Quincy, Massachusetts	24 two bedroom	$	1,650	–	2,100
	24 one bedroom	$	1,425	–	1,675
	0 studios				N/A
The Partnership has a 40% ownership interest in the property summarized below:
Hamilton Park Towers, LLC	409 Units					1	$	84,902,925		2019
175–185 Freeman Street,	71 three bedroom	$	3,250	–	5,000			5.57	%
Brookline,	227 two bedroom	$	2,150	–	3,450
Massachusetts	111 one bedroom	$	1,850	–	2,650
	0 studios

Current free rent concessions would result in an average reduction in unit rents of less than $8.53per month per unit. Free rent amortized in 2015 was approximately $81,000, compared to $115,000 in 2014.

(A) Represents unsold units at February 1, 2016.

(1)    The loan of Essex Development was paid off in September, 2015.

16

345 FRANKLIN, LLC.  In November 2001, the Partnership invested approximately $1,533,000 for a 50% ownership interest in a 40‑unit apartment building in Cambridge, Massachusetts. In June 2013, the property was refinanced with a 15 year mortgage in the amount of $10,000,000 at 3.87%, interest only for 3 years and is amortized on a 30‑year schedule for the balance of the term. The Partnership paid off the prior mortgage of approximately $6,776,000 with the proceeds of the new mortgage. After the refinancing, the property made a distribution of $1,610,000 to the Partnership. As a result of the distribution, the carrying value of the investment fell below zero. 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 December 31, 2015, the balance of this mortgage is approximately $10,000,000. This investment is referred to as 345 Franklin, LLC.

HAMILTON ON MAIN, LLC.  In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280‑unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. The Partnership sold 137 units as condominiums. The assets were combined with Hamilton on Main Apartments. Hamilton on Main, LLC is known as Hamilton Place.

In 2005, Hamilton on Main Apartments, LLC obtained a ten year mortgage on the three buildings to be retained. The mortgage was $16,825,000, with interest only of 5.18% for three years and amortizing on a 30 year schedule for the remaining seven years when the balance is due. The net proceeds after funding escrow accounts and closing costs on the mortgage were approximately $16,700,000, which were used to reduce the existing mortgage. In August 2014, the property was refinanced with a 10 year mortgage in the amount of $16,900,000 at 4.34% interest only. The Joint Venture Partnership paid off the prior mortgage of approximately $15,205,000 with the proceeds of the new mortgage and distributed $850,000 to the Partnership. The costs associated with the refinancing were approximately $161,000.

HAMILTON MINUTEMAN, LLC.  In September 2004, the Partnership invested approximately $5,075,000 for a 50% ownership interest in a 42‑unit apartment complex located in Lexington, Massachusetts. The purchase price was $10,100,000. In October 2004, the Partnership obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Partnership obtained a new 10‑year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan was 5.67% fixed for the ten year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan. This loan required a cash contribution by the Partnership of $1,250,000 in December 2006. At December 31, 2015, the balance on this mortgage is approximately $5,213,000. This investment is referred to as Hamilton Minuteman, LLC.

HAMILTON ESSEX 81, LLC.  On March 7, 2005, the Partnership invested $2,000,000 for a 50% ownership interest in a building comprising 48 apartments, one commercial space and a 50‑car surface parking lot located in Boston, Massachusetts. The purchase price was $14,300,000, with a $10,750,000 mortgage. The Partnership planned to operate the building and initiate development of the parking lot. In June 2007, the Partnership separated the parcels, formed an additional limited liability company for the residential apartments and obtained a mortgage on the property. The new limited liability company formed for the residential apartments and commercial space is referred to as Hamilton Essex 81, LLC. In August 2008, the Partnership restructured the mortgages on both parcels at Essex 81 and transferred the residential apartments to Hamilton Essex 81, LLC. On September 28, 2015, Hamilton Essex Development, LLC paid off the outstanding mortgage balance of $1,952,286.  The Partnership made a capital contribution of $978,193 to Hamilton Essex Development LLC for its share of the funds required for the transaction.  Additionally, the Partnership made a capital contribution of $100,000 to Hamilton Essex 81, LLC.  On September 30, 2015, Hamilton Essex 81, LLC obtained a new 10 year mortgage in the amount of $10,000,000, interest only at 2.18% plus the one month Libor rate.  The proceeds of the note were used to pay off the existing mortgage of $8,040,719 and the Partnership received a distribution of $978,193 for its share of the excess proceeds. As a result of the distribution, the carrying value of the investment fell below zero. 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. The investment in the parking lot is referred to as Hamilton Essex Development, LLC; the investment in the apartments is referred to as Hamilton Essex 81, LLC.

HAMILTON 1025, LLC.  On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176‑unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Partnership sold 127 of the units as condominiums and retained 49 units for long‑term investment. The Partnership obtained a new 10‑year mortgage in the amount of $5,000,000 on the units to be

17

retained by the Partnership. 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. At December 31, 2015, the mortgage balance is approximately $4,733,000. This investment is referred to as Hamilton 1025, LLC.

HAMILTON BAY, LLC.  On October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168‑unit apartment complex in Quincy, Massachusetts. The purchase price was $30,875,000. The Partnership planned to sell 120 units as condominiums and retained 48 units for long‑term investment. In February 2007, the Partnership refinanced the 48 units with a new 10 year mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. The loan is amortized over 30 years thereafter and matures in March 2017. As of December 31, 2015, the balance of the mortgage is approximately $4,504,000. This investment is referred to as Hamilton Bay Apartments, LLC. In April 2008, the Partnership refinanced the remaining 20 units held for sale and obtained a new mortgage in the amount of $2,368,000 with interest at 5.75%, interest only, which matured in 2013. On October 18, 2013, the Partnership and its joint venture partner each made capital contributions to the entity of $660,000. The capital was used to pay off the outstanding mortgage. During 2015, 2 units were sold resulting in a gain of approximately $169,000. As of February 1, 2016,  5 units are still owned by the Partnership. This investment is referred to as Hamilton Bay, LLC.

HAMILTON PARK TOWERS, LLC.  On October 28, 2009 the Partnership invested approximately $15,925,000 in a joint venture to acquire a 40% interest in a residential property located in Brookline, Massachusetts. The property, Hamilton Park Towers LLC, referred to as Dexter Park, is a 409 unit residential complex. The purchase price was $129,500,000. The total mortgage was $89,914,000 with an interest rate of 5.57% and it matures in 2019. The mortgage calls for interest only payments for the first two years of the loan and amortized over 30 years thereafter. The balance of this mortgage is approximately $84,903,000 at December 31, 2015. In order to fund this investment, the Partnership used approximately $8,757,000 of its cash reserves and borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brown and his affiliates (“HBC”). The term of the loan was four years with a provision requiring payment in whole or in part upon demand by HBC with six months notice. The loan was paid in full in April 2012. This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

ITEM 3.  LEGAL PROCEEDINGS

The Partnership, the Subsidiary Partnerships, and the Investment Properties and their properties are not presently subject to any material litigation, and, to management’s knowledge, there is not any material litigation presently threatened against them. The properties are occasionally subject to ordinary routine legal and administrative proceedings incident to the ownership of residential and commercial real estate. Some of the legal and other expenses related to these proceedings are covered by insurance and none of these costs and expenses are expected to have a material adverse effect on the Consolidated Financial Statements of the Partnership.

ITEM 4.  MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Each Class A Unit is exchangeable, through Computershare Trust Company (“Computershare”) (formerly Equiserve LP), the Partnership’s Depositary Agent, for 30 Depositary Receipts (“Receipts”). The Receipts are listed and publicly traded on the NYSE MKT Exchange under the symbol “NEN.” There has never been an established trading market for the Class B Units or General Partnership Units.

In 2015, the high and low bid quotations for the Receipts were $51.75and $46.00 respectively. The table below sets forth the high, low and closing price for each quarter of 2015 and 2014 and the distributions paid on the Partnership’s Depositary Receipts:

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

All references to Depositary Receipts in the report are reflective of the 3‑for‑1 forward split.

	2015								2014
	Low Bid		High Bid		Close		Distributions		Low Bid		High Bid		Close		Distributions
First Quarter	$	46.61	$	49.90	$	49.40	$	0.25	$	43.12	$	46.45	$	45.50	$	0.25
Second Quarter	$	47.42	$	50.24	$	50.00	$	0.25	$	44.26	$	51.88	$	49.14	$	0.25
Third Quarter	$	46.00	$	50.24	$	47.55	$	0.25	$	46.50	$	50.00	$	47.30	$	0.25
Fourth Quarter	$	47.98	$	51.75	$	50.75	$	0.25	$	45.02	$	50.24	$	48.75	$	0.25

Distribution to Limited & General Partners were:

	2015		2014
Class A—Limited Partners (80%)	$	3,028,706	$	3,086,709
Class B—Limited Partners (19%)		719,318		733,093
Class C—General Partner (1%)		37,859		38,584
Total	$	3,785,883	$	3,858,386

On March 10, 2016, the closing price on the NYSE MKT Exchange for a Depositary Receipt was $54.05. There were2,888,151Depositary Receipts outstanding and 3,667 Units (representing 110,010 receipts) held by approximately 1,852 record holders.

Any portion of the Partnership’s cash, which the General Partner deems not necessary for cash reserves, is distributed to the Partners, and distributions are made on a quarterly basis. The Partnership has made annual distributions to its Partners since 1978. The Partnership made distributions of $30.00 per Unit ($1.00 per Receipt) in 2015 and 2014, respectively. The total distribution was $3,785,883in 2015 and $3,858,386in 2014. In February 2016, the Partnership declared a quarterly distribution of $7.50 per Unit ($0.25 per Receipt) payable on March 31, 2016.

See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for certain information relating to the number of holders of each class of Units.

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”) under which the Partnership was permitted to purchase, over a period of twelve months, up to 300,000 Depositary Receipts (each of which is one‑tenth of a Class A Unit). On January 15, 2008, the General Partner authorized an increase in the Repurchase Program from 300,000 to 600,000 Depositary Receipts. On January 30, 2008 the General Partner authorized an increase the Repurchase Program from 600,000 to 900,000 Depositary Receipts. On March 6, 2008, the General Partner authorized the increase in the total number of Depositary Receipts that could be repurchased pursuant to the Repurchase Program from 900,000 to 1,500,000. On August 8, 2008, the General Partner reauthorized and renewed the Repurchase Program for an additional 12‑month period ended August 19, 2009. On March 22, 2010, the General Partner re‑authorized and renewed the Repurchase Program that expired on August 19, 2009. Under the terms of the renewed Repurchase Program, the Partnership may purchase up to 1,500,000 Depositary Receipts from the start of the program in 2007 through March 31, 2015. On March 10, 2015, the General Partner authorized an increase in the Repurchase Program from 1,500,000 to 2,000,000 Depository Receipts and extended the Program for an additional five years from March 31, 2015 until March 31, 2020. The Repurchase Program 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’s Second Amended and Restate Contract of Limited Partnership. 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 December 31, 2015, the Partnership has repurchased 1,341,598 Depositary Receipts at an average price of $26.63 per receipt (or $798.90 per underlying Class A Unit), 2,885 Class B Units and 

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152 General Partnership Units, both at an average price of $ 877.14 per Unit, totaling approximately $38,596,000 including brokerage fees paid by the Partnership.

Issuer Purchase of Equity Securities during the fourth quarter of 2015:

				Remaining number
			Depositary Receipts	of Depositary Receipts
			Purchased as Part	that may be purchased
	Average		of Publicly	Under the Plan
Period	Price Paid		Announced Plan	(as Amended)
October 1–31, 2015	$	49.49	9,916	662,931
November 1–30, 2015	$	50.29	3,333	659,598
December 1–31, 2015	$	50.96	1,196	658,402
Total			14,445

See Note 8 to the Consolidated Financial Statements for information concerning this repurchase program.

The Partnership does not have any securities authorized for issuance under any equity compensation plans that are subject to disclosure under Item 201(d) of Regulation S‑K.

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ITEM 6.  SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA

	Year Ended December 31,
	2015		2014		2013		2012		2011
INCOME STATEMENT INFORMATION(a)
Revenues	$	45,480,714	$	42,632,319	$	38,364,552	$	35,169,170	$	33,584,787
Expenses		32,769,026		31,729,726		27,233,135		22,389,427		22,339,029
Income before other income and discontinued operations		12,711,688		10,902,593		11,131,417		12,779,743		11,245,758
Other (Loss)		(8,939,123)		(9,877,743)		(9,173,918)		(9,179,293)		(9,767,889)
Income  before discontinued operations		3,772,565		1,024,850		1,957,499		3,600,450		1,477,869
Discontinued operations		—		—		3,697,886		33,348		7,720,459
Net  Income	$	3,772,565	$	1,024,850	$	5,655,385	$	3,633,798	$	9,291,281
Income  before discontinued operations per Unit	$	29.86	$	7.96	$	15.07	$	27.44	$	11.24
Discontinued operations per Unit		—		—		28.48		0.25		59.42
Net income  per Unit	$	29.86	$	7.96	$	43.55	$	27.69	$	70.66
Distributions to Partners per Unit	$	30.00	$	30.00	$	30.00	$	30.00	$	28.00
Net income  per Depositary Receipt	$	1.00	$	0.27	$	1.45	$	0.92	$	2.36
Distributions to Partners per Depositary Receipt	$	1.00	$	1.00	$	1.00	$	1.00	$	0.93
BALANCE SHEET INFORMATION
Real Estate, gross		261,276,898		225,021,946		221,454,286		158,624,893		159,123,799
Real Estate, net		176,697,314		149,116,084		152,904,661		94,973,600		98,924,534
Total Assets		202,166,216		177,777,073		185,345,157		121,538,490		125,376,764
Total Debt Outstanding		220,939,469		196,071,540		198,520,478		138,055,522		140,830,212
Partners’ Capital		(30,810,953)		(27,367,782)		(21,848,563)		(22,515,678)		(21,310,852)

The Partnership may purchase and/or sell properties at any time.

The table below reflects the totals of property available for rental at each December 31,

	Year Ended December 31,
	2015		2014		2013		2012		2011
Residential
Units	2,525		2,431		2,431		2,270		2,270
Vacancies	41		53		39		39		32
Vacancy rate	1.6	%	2.2	%	1.6	%	1.7	%	1.4	%
Commercial
Total square feet	108,043		108,043		108,043		108,043		108,043
Vacancy (in square feet)	—		—		1,062		5,500		—
Vacancy rate	—	%	—	%	1.0	%	5.1	%	—	%

See Items 1A and 7 for factors that may affect future operations. The above tables may not be indicative of future results.

(a) Certain reclassifications have been made to prior period amounts in order to conform to current period presentation.

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Certain information contained herein includes forward looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Liquidation Reform Act of 1995 (the “Act”). Forward looking statements in this report, or which management may make orally or in written form from time to time, reflect management’s good faith belief when those statements are made, and are based on information currently available to management. Caution should be exercised in interpreting and relying on such forward looking statements, the realization of which may be impacted by known and unknown risks and uncertainties, events that may occur subsequent to the forward looking statements, and other factors which may be beyond the Partnership’s control and which can materially affect the Partnership’s actual results, performance or achievements for 2016 and beyond. Should one or more of the risks or uncertainties mentioned below materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We expressly disclaim any responsibility to update our forward looking statements, whether as a result of new information, future events or otherwise. 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.

Along with risks detailed in Item 1A and from time to time in the Partnership’s filings with the Securities and Exchange Commission, some factors that could cause the Partnership’s actual results, performance or achievements to differ materially from those expressed or implied by forward looking statements include but are not limited to the following:

· The Partnership depends on the real estate markets where its properties are located, primarily in Eastern Massachusetts, and these markets may be adversely affected by local economic market conditions, which are beyond the Partnership’s control.

· The Partnership is subject to the general economic risks affecting the real estate industry, such as dependence on tenants’ financial condition, the need to enter into new leases or renew leases on terms favorable to tenants in order to generate rental revenues and our ability to collect rents from our tenants.

· The Partnership is also impacted by changing economic conditions making alternative housing arrangements more or less attractive to the Partnership’s tenants, such as the interest rates on single family home mortgages and the availability and purchase price of single family homes in the Greater Boston metropolitan area.

· 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.

· 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.

· Civil disturbances, earthquakes and other natural disasters may result in uninsured or underinsured losses.

· Actual or threatened terrorist attacks may adversely affect our ability to generate revenues and the value of our properties.

· Financing or refinancing of Partnership properties may not be available to the extent necessary or desirable, or may not be available on favorable terms.

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· The Partnership properties face competition from similar properties in the same market. This competition may affect the Partnership’s ability to attract and retain tenants and may reduce the rents that can be charged.

· Given the nature of the real estate business, the Partnership is subject to potential environmental liabilities. These include environmental contamination in the soil at the Partnership’s or neighboring real estate, whether caused by the Partnership, previous owners of the subject property or neighbors of the subject property, and the presence of hazardous materials in the Partnership’s buildings, such as asbestos, lead, mold and radon gas. Management is not aware of any material environmental liabilities at this time.

· Insurance coverage for and relating to commercial properties is increasingly costly and difficult to obtain. In addition, insurance carriers have excluded certain specific items from standard insurance policies, which have resulted in increased risk exposure for the Partnership. These include insurance coverage for acts of terrorism and war, and coverage for mold and other environmental conditions. Coverage for these items is either unavailable or prohibitively expensive.

· Market interest rates could adversely affect market prices for Class A Partnership Units and Depositary Receipts as well as performance and cash flow.

· Changes in income tax laws and regulations may affect the income taxable to owners of the Partnership. These changes may affect the after‑tax value of future distributions.

· The Partnership may fail to identify, acquire, construct or develop additional properties; may develop or acquire properties that do not produce a desired or expected yield on invested capital; may be unable to sell poorly‑ performing or otherwise undesirable properties quickly; or may fail to effectively integrate acquisitions of properties or portfolios of properties.

· Risk associated with the use of debt to fund acquisitions and developments.

· Competition for acquisitions may result in increased prices for properties.

· Any weakness identified in the Partnership’s internal controls as part of the evaluation being undertaken could have an adverse effect on the Partnership’s business.

· Ongoing compliance with Sarbanes‑Oxley Act of 2002 may require additional personnel or systems changes.

The foregoing factors should not be construed as exhaustive or as an admission regarding the adequacy of disclosures made by the Partnership prior to the date hereof or the effectiveness of said Act. The Partnership expressly disclaims any obligation to publicly update or revise any forward‑looking statement, whether as a result of new information, future events or otherwise.

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 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.

For the year ended December 31, 2015, the Partnership’s Core Portfolio and Joint Ventures experienced high occupancy and revenue gains as anticipated. The year ended with a 5.1% increase in same store revenue and an occupancy rate of greater than 98%. Management had anticipated some downward pressure on rental rates.However,the  fourth quarter same store revenue increases of 6.9% and higher occupancy than the same time last year puts the rental rate headwinds furtherinto 2016. With Same Store revenue growing at over 5% for 2015 and Operating Expenses

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(excluding depreciation and amortization) growing at less than 3.0%, despite the anomaly of a record winter season, Management believes similar results will continue throughout all of 2016. Management anticipates both the urban and suburban portfolio’s occupancy level to pace  last year’s occupancy levels throughout the year.  Based upon current renewal trends andfourth quarter leasing activity and operating expense trends, the Partnership and Joint Ventures will outperform 2015.  While the distributions for 2015 were tax advantaged, it is unclear at the present time if the current distributions to partners will be tax advantaged for 2016.  

On September 18, 2015, Residences at Captain Parkers LLC, a newly formed subsidiary of the Partnership, purchased the Residence at Captain Parkers, a 94 unit apartment complex located at 125 Worthen Road and Ryder Lane in Lexington, Massachusetts. The purchase price was $31,600,000 and the closing costs were approximately $49,000. From the purchase price, the Partnership allocated approximately $474,000 for in-place leases, and approximately $31,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively.

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% to 3.5%. The costs associated with the line of credit were approximately $125,000. See Note 5 – Mortgage Notes Payable-for additional information.

On September 18, 2015, the Partnership, in connection with the purchase of the Residence at Captain Parker Apartments, used the entire line of credit, along with cash reserve, to purchase the property. (See Note 2: Rental Properties, for the details of the transaction.) In January, 2016, the Partnership obtained a mortgage loan on the property at Captain Parker and used the proceeds of the loan and cash reserves to paydown the line of credit to zero. See Note 18 – SUBSEQUENT EVENTS.

For 2015, Management has used existing cash reserves to purchase 54,682Depository Receipts for a cost of $2,752,393.  In March of 2015,the Board of Advisors and Board of Directors unanimously approved an extension of the Repurchase Program from 2015 to 2020 and increased the depositary receipt buy‑back allocation from 1.5 million to 2 million receipts. 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. Management will continue to repurchase shares per its trading plan. As always, Management continues to weigh investment alternatives of stock repurchase, new property acquisitions and dispositions when considering its cash balances and performance of the portfolio.

The Stock Repurchase Program that was initiated in 2007 has purchased 1,352,427 Depositary Receipts through March 10, 2016 representing 31% of the outstanding class A Depositary Receipts. The Partnership has retained The Hamilton Company (“Hamilton”) to manage and administer the Partnership’s and Joint Ventures’ Properties. Hamilton is a full‑service real estate management company, which has legal, construction, maintenance, architectural, accounting and administrative departments. The Partnership’s properties represent approximately 37% of the total properties and 38% of the residential properties managed by Hamilton. Substantially all of the other properties managed by Hamilton are owned, wholly or partially, directly or indirectly, by Harold Brown. The Partnership’s Second Amended and Restated Contract of Limited Partnership (the “Partnership Agreement”) expressly provides that the general partner may employ a management company to manage the properties, and that such management company may be paid a fee of up to 4% of rental receipts for administrative and management services (the “Management Fee”). The Partnership pays Hamilton the full annual Management Fee, in monthly installments.

At March 10, 2016, Harold Brown, his brother Ronald Brown and the President of Hamilton, Carl Valeri, collectively own approximately 42% 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 also controls 75% of the Partnership’s Class B Units, 75% of the capital stock of NewReal, Inc. (“NewReal”), the Partnership’s sole general partner, and all of the outstanding stock of Hamilton. 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 Harold Brown is NewReal’s Treasurer and a director. The 75% of the issued and outstanding Class B units of the Partnership, controlled by Harold Brown, are owned by HBC Holdings LLC, an entity of which he is the manager.

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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. Additionally, from time to time, the Partnership pays Hamilton for repairs and maintenance services, legal services, construction services and accounting services. The costs charged by Hamilton for these services are at the same hourly rate charged to all entities managed by Hamilton, and management believes such rates are competitive in the marketplace.

Residential tenants sign a one year lease. In 2015, tenant renewals were approximately 65% with an average rental increase of approximately 4.5 %, new leases accounted for approximately 35% with rental rate increases of approximately 5.5%. In 2015, leasing commissions were approximately $249,000 compared to approximately $236,000 in 2014, an increase of approximately $13,000 (5.5%) from 2014. Tenant concessions were approximately $65,000 in 2015compared to approximately $51,000 in 2014, an increase of approximately $14,000(27.5%). Tenant improvements were approximately $3,617,000 in 2015 compared to approximately $3,198,000 in 2014, an increase of approximately $419,000 (13.1%).

Hamilton accounted for approximately 6.3% of the repair and maintenance expense paid for by the Partnership in the year ended December 31, 2015 and 5.6% in the year ended December 31, 2014. 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. Several of the larger Partnership properties have their own maintenance staff. Those properties that do not have their own maintenance staff and are located more than a reasonable distance from Hamilton’s headquarters in Allston, Massachusetts are generally serviced by local, independent companies.

Hamilton’s legal department handles most of the Partnership’s eviction and collection matters. Additionally, it prepares most long‑term commercial lease agreements and represents the Partnership in selected purchase and sale transactions. Overall, Hamilton provided approximately 74.9% and 72.4% of the legal services paid for by the Partnership during the years ended December 31, 2015 and 2014, respectively.

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

The Partnership requires that three bids be obtained for construction contracts in excess of $15,000. Hamilton may be one of the three bidders on a particular project and may be awarded the contract if its bid and its ability to successfully complete the project are deemed appropriate. For contracts that are not awarded to Hamilton, Hamilton charges the Partnership a construction supervision fee equal to 5% of the contract amount. Hamilton’s architectural department also provides services to the Partnership on an as‑needed basis. In 2015, Hamilton provided the Partnership approximately $202,000 in construction and architectural services, compared to $151,000 for the year ended December 31, 2014.

Prior to 1991, the Partnership employed an outside, unaffiliated company to perform its bookkeeping and accounting functions. Since that time, such services have been provided by Hamilton’s accounting staff, which consists of approximately 14 people. In 2015, Hamilton charged the Partnership $125,000 per year ($31,250 per quarter) for bookkeeping and accounting services. For more information on related party transactions, see Note 3 to the Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the consolidated financial statements, in accordance with accounting principles generally accepted in the United States of America, requires the Partnership to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The Partnership regularly and continually evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate properties and its investments in and advances to joint ventures. The Partnership bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. The Partnership’s critical accounting policies are those which require assumptions to be made about such matters that are highly uncertain. Different estimates could have a material effect on the Partnership’s financial results. Judgments and uncertainties

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affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances. See Note 1 to the Consolidated Financial Statements, Principles of Consolidation.

Revenue Recognition:  Rental income from residential and commercial properties is recognized over the term of the related lease. For residential tenants, amounts 60 days in arrears are charged against income. The commercial tenants are evaluated on a case by case basis. 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. Concessions made on residential leases are also accounted for on the straight‑line basis.

Discontinued Operations and Rental Property Held for Sale:  In April 2014, the FASB issued guidance related to the reporting of discontinued operation and disclosures of disposals of components of an entity. This guidance defines a discontinued operation as a component or group of components disposed or classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and final result; the guidance states that a strategic shift could include a disposal of a major geographical area of operations, a major line of business, a major equity method investment or other major parts of an entity. The guidance also provides for additional disclosure requirements in connection with both discontinued operations and other dispositions not qualifying as discontinued operations. The guidance will be effective for all companies for annual and interim periods beginning on or after December 15, 2014. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. All entities may early adopt the guidance for new disposals (or new classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Partnership has elected to early adopt this standard effective with the interim period beginning January 1, 2014. Prior to January 1, 2014, properties identified as held for sale and/or disposed of were presented in discontinued operations for all periods presented.

Rental Properties:  Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions are capitalized. When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such disposition is included in income. Fully depreciated assets are removed from the accounts. Rental properties are depreciated by both straight‑line and accelerated methods over their estimated useful lives. Upon acquisition of rental property, the Partnership estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in‑place leases and (iii) tenant relationships. The Partnership allocated the purchase price to the assets acquired and liabilities assumed based on their fair values. The Partnership records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Intangible assets acquired include amounts for in‑place lease values above and below market leases and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in‑place lease values include an estimate of carrying costs during hypothetical expected lease‑up periods considering current market conditions, and costs to execute similar leases at market rates during the expected lease‑up periods, depending on local market conditions. 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. 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.

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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. The estimated future undiscounted cash flows are compared to the asset’s carrying value to determine if a write‑down to fair value is required.

Impairment:  On an annual basis management assesses whether there are any indicators that the value of the Partnership’s rental properties may be impaired. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. The Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved. The Partnership has not recognized an impairment loss for the years ended December 31, 2015, 2014, and 2013.

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 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. Under the equity method of accounting, our net equity is reflected on the consolidated balance sheets, and our share of net income or loss from the Partnership is included on the consolidated statements of income. Generally, the Partnership would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Partnership only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses.

With respect to investments in and advances to the Investment Properties, the Partnership looks to the underlying properties to assess performance and the recoverability of carrying amounts for those investments in a manner similar to direct investments in real estate properties. An impairment charge is recorded if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property.

Legal Proceedings:  The Partnership is subject to various legal proceedings and claims that arise, from time to time, in the ordinary course of business. These matters are frequently covered by insurance. If it is determined that a loss is likely to occur, the estimated amount of the loss is recorded in the financial statements. Both the amount of the loss and the point at which its occurrence is considered likely can be difficult to determine.

RESULTS OF OPERATIONS

Years Ended December 31, 2015 and December 31, 2014

The Partnership and its Subsidiary Partnerships earned income before interest expense, loss from investments in unconsolidated joint ventures and other income and loss of approximately$12,712,000  during the year ended December 31, 2015, compared to approximately$10,903,000  for the year ended December 31, 2014, an increase of approximately $1,809,000 (16.6%).

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The rental activity is summarized as follows:

	Occupancy Date
	February 1, 2016		February 1, 2015
Residential
Units	2,525		2,431
Vacancies	41		53
Vacancy rate	1.6	%	2.2	%
Commercial
Total square feet	108,043		108,043
Vacancy	0		0
Vacancy rate	0.0	%	0.0	%

	Rental Income (in thousands)
	Year Ended December 31,
	2015						2014
	Total			Continuing			Total			Continuing
	Operations			Operations			Operations			Operations
Total rents	$	45,075		$	45,075		$	42,206		$	42,206
Residential percentage		92	%		92	%		92	%		92	%
Commercial percentage		8	%		8	%		8	%		8	%
Contingent rentals	$	683		$	683		$	658		$	658

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014:

	Year Ended December 31,				Dollar		Percent
	2015		2014		Change		Change
Revenues
Rental income	$	45,074,655	$	42,205,644	$	2,869,011	6.8	%
Laundry and sundry income		406,059		426,675		(20,616)	(4.8)	%
		45,480,714		42,632,319		2,848,395	6.7	%
Expenses
Administrative		2,096,290		2,206,483		(110,193)	(5.0)	%
Depreciation and amortization		10,733,773		10,551,527		182,246	1.7	%
Management fee		1,869,977		1,744,849		125,128	7.2	%
Operating		4,939,662		4,668,196		271,466	5.8	%
Renting		487,225		430,949		56,276	13.1	%
Repairs and maintenance		6,998,592		6,608,290		390,302	5.9	%
Taxes and insurance		5,643,507		5,519,432		124,075	2.2	%
		32,769,026		31,729,726		1,039,300	3.3	%
Income Before Other Income  (Expense)		12,711,688		10,902,593		1,809,095	16.6	%
Other Income (Expense)
Interest income		1,596		754		842	111.7	%
Interest expense		(9,809,293)		(9,553,200)		(256,093)	2.7	%
Income (Loss) from investments in unconsolidated joint ventures		868,574		(325,297)		1,193,871	(367.0)	%
		(8,939,123)		(9,877,743)		938,620	(9.5)	%
Net Income	$	3,772,565	$	1,024,850	$	2,747,715	268.1	%

Rental income from continuing operations for the year ended December 31, 2015 was approximately $45,075,000, compared to approximately $42,206,000 for the year ended December 31, 2014, an increase of

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approximately $2,869,000 (6.8%). The two main factors which can be attributed to this increase are as follows; rental income in 2015 atCaptain Parker is for approximately three and one half months versus no rental income  in 2014, resulting in an increase of approximately $677,000 and rental rate increases of approximately 5.2% in 2015. The Partnership Properties with the most significant increases in rental income, excludingCaptain Parker, include 62 Boylston Street, 1144 Commonwealth Street, Westgate Apartments,  Hamilton Oaks, 9 School Street and Westside Colonial with increases of approximately $286,000, $263,000, $216,000, $162,000, $137,000 and $124,000 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 from continuing operations for the year ended December 31, 2015 were approximately $32,769,000 compared to approximately $31,730,000 for the year ended December 31, 2014, an increase of approximately $1,039,000 (3.3%). The most significant factor contributing to this increase was the  operating expenses for Captain Parker for three and one half months in 2015 versus no operating expenses in 2014, an increase of approximately $752,000. Excluding Captain Parker, factors which contributed to the increase in operating expenses were an increase in repairs and maintenance expenses of approximately $345,000 (5.2%) due to repairs at the properties to maintain occupancy; an increase in operating expenses of approximately $219,000 (4.7%) due primarily to an increase in snow removal costs; and an increase inmanagement fees of approximately $99,000 (5.7%) due to an increase in rental income ,  partially offset by a decrease in depreciation and amortization expense of approximately $343,000 (3.2%) primarilydue to the full amortization ofin-place leases at Hamilton Green in 2014,  and a decrease in administrative expense of approximately $122,000 (5.5%) due to a decrease in professional fees.

Interest expense for the year ended December 31, 2015 was approximately $9,809,000 compared to approximately $9,553,000 for the year ended December 31, 2014, an increase of approximately $256,000 (2.7%). This was primarily due to the Partnership utilizing the line of credit to fund the purchase of the Residence at Captain Parker apartments, partially offset by paying off two mortgages of Linhart and Linewt during 2014.

At December 31, 2015, the Partnership has between a 40% and 50% ownership interests in nine different Investment Properties. See a description of these properties included in the section titled Investment Properties as well as Note 14 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $869,000 for the year ended December 31, 2015, compared to a net loss of approximately $325,000 for the year ended December 31, 2014, an increase in income of approximately $1,194,000 (367.0%). This increase is consistent with the continued strength in the rental real estate market including an approximate 3.9% increase in revenue. The increase is also due to the decrease in depreciation and amortization expense resulting from a portion of the fixed assets of Hamilton Park Tower becoming fully depreciated in 2014. Included in the income for the year ended December 31, 2015 is depreciation and amortization expense of approximately $2,676,000. The allocable income for the year ended December 31, 2015 associated with the October 2009 investment in Dexter Park is approximately $673,000 of which approximately $1,311,000 is depreciation and amortization.

Interest income for the year ended December 31, 2015 was approximately $1,600 compared to approximately $800for the year ended December 31, 2014, anincrease of approximately $800.

As a result of the changes discussed above, net income for the year ended December 31, 2015 was approximately $3,773,000 compared to income of approximately $1,025,000 for the year ended December 31, 2014, anincrease in income of approximately $2,748,000.

Years Ended December 31, 2014 and December 31, 2013

The Partnership and its Subsidiary Partnerships earned income before interest expense, loss from investments in unconsolidated joint ventures and other income and loss of approximately $10,903,000 during the year ended December 31, 2014, compared to approximately $11,131,000 for the year ended December 31, 2013, a decrease of approximately $228,000.

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The rental activity is summarized as follows:

	Occupancy Date
	February 1, 2015		February 1, 2014
Residential
Units	2,431		2,431
Vacancies	53		39
Vacancy rate	2.2	%	1.6	%
Commercial
Total square feet	108,043		108,043
Vacancy	0		1,062
Vacancy rate	0.0	%	1.0	%

	Rental Income (in thousands)
	Year Ended December 31,
	2014						2013
	Total			Continuing			Total			Continuing
	Operations			Operations			Operations			Operations
Total rents	$	42,206		$	42,206		$	38,156		$	37,962
Residential percentage		92	%		92	%		92	%		92	%
Commercial percentage		8	%		8	%		8	%		8	%
Contingent rentals	$	658		$	658		$	670		$	670

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Year Ended December 31, 2014 Compared to Year Ended December 31, 2013:

	Year Ended December 31,				Dollar		Percent
	2014		2013		Change		Change
Revenues
Rental income	$	42,205,644	$	37,961,599	$	4,244,045	11.2	%
Laundry and sundry income		426,675		402,953		23,722	5.9	%
		42,632,319		38,364,552		4,267,767	11.1	%
Expenses
Administrative		2,206,483		2,116,527		89,956	4.3	%
Depreciation and amortization		10,551,527		8,377,902		2,173,625	25.9	%
Management fee		1,744,849		1,570,158		174,691	11.1	%
Operating		4,668,196		4,201,928		466,268	11.1	%
Renting		430,949		202,787		228,162	112.5	%
Repairs and maintenance		6,608,290		5,815,264		793,026	13.6	%
Taxes and insurance		5,519,432		4,948,569		570,863	11.5	%
		31,729,726		27,233,135		4,496,591	16.5	%
Income Before Other Income ( Expense) and Discontinued Operations		10,902,593		11,131,417		(228,824)	(2.1)	%
Other Income (Expense)
Interest income		754		1,118		(364)	(32.6)	%
Interest (expense)		(9,553,200)		(8,013,109)		(1,540,091)	19.2	%
Other Income		—		4,950		(4,950)	(100.0)
(Loss) from investments in unconsolidated joint ventures		(325,297)		(1,166,877)		841,580	(72.1)	%
		(9,877,743)		(9,173,918)		(703,825)	7.7	%
Income From Continuing Operations		1,024,850		1,957,499		(932,649)	(47.6)	%
Discontinued Operations
Income from discontinued operations		—		19,047		(19,047)	(100.0)	%
Gain on sale of real estate from discontinued operations		—		3,678,839		(3,678,839)	(100.0)
		—		3,697,886		(3,697,886)	(100.0)	%
Net Income	$	1,024,850	$	5,655,385	$	(4,630,535)	(81.9)	%

Rental income from continuing operations for the year ended December 31, 2014 was approximately $42,206,000, compared to approximately $37,962,000 for the year ended December 31, 2013, an increase of approximately $4,244,000 (11.2%). The two main factors which can be attributed to this increase are as follows; rental income in 2014 at Hamilton Green is for twelve months versus rental income for only six months in 2013, resulting in an increase of approximately $2,156,000 and rental rate increases of approximately 4.8% in 2014. The Partnership Properties with the most significant increases in rental income, excluding Hamilton Green, include 62 Boylston Street, 1144 Commonwealth Street, Westgate Apartments, Hamilton Cypress, Hamilton Oaks and 9 School Street with increases of approximately $343,000, $327,000, $200,000, $183,000, $175,000 and $133,000 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 from continuing operations for the year ended December 31, 2014 were approximately $31,730,000 compared to approximately $27,233,000 for the year ended December 31, 2013, an increase of

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approximately $4,497,000 (16.5%). The most significant factor contributing to this increase was the 12 months of operating expenses for Hamilton Green in 2014 versus 6 months of operating expenses in 2013, an increase of approximately $3,168,000. Excluding Hamilton Green, factors which contributed to the increase in operating expenses were an increase in repairs and maintenance expenses of approximately $395,000 (7.1%) due to repairs at the properties to maintain occupancy; an increase in operating expenses of approximately $271,000 (6.6%) due to increases in utility costs; an increase in taxes and insurance of approximately $221,000 (4.7%) due to increases in real estate taxes and insurance premiums; an increase in depreciation and amortization expense of approximately $167,000 (2.8%) due to capital improvements; and an increase in renting expense of approximately $151,000 (81.2%) due to an increase in the use of outside rental agents to rent apartments.

Interest expense for the year ended December 31, 2014 was approximately $9,553,000 compared to approximately $8,013,000 for the year ended December 31, 2013, an increase of approximately $1,540,000 (19.2%). This increase is primarily due to interest paid on the mortgage for Hamilton Green for twelve months versus six months of interest in 2013.

At December 31, 2014, the Partnership has between a 40% and 50% ownership interests in nine different Investment Properties. See a description of these properties included in the section titled Investment Properties as well as Note 14 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net loss from the Investment Properties was approximately $325,000 for the year ended December 31, 2014, compared to a net loss of approximately $1,167,000 for the year ended December 31, 2013, a decrease in the loss of approximately $842,000 (72.2%). This decrease in loss is consistent with the continued strength in the rental real estate market including an approximate 5.5% increase in revenue. Included in the loss for the year ended December 31, 2014 is depreciation and amortization expense of approximately $3,516,000. The allocable loss for the year ended December 31, 2014 associated with the October 2009 investment in Dexter Park is approximately $468,000 of which approximately $2,162,000 is depreciation and amortization.

Interest income for the year ended December 31, 2014 was approximately $800 compared to approximately $1,100 for the year ended December 31, 2013, a decrease of approximately $300.

In May 2013 the Partnership sold the Nashoba Apartments located in Acton, Massachusetts. The gain on the sale was approximately $3,679,000 and is included in income from discontinued operations.

As a result of the changes discussed above, net income for the year ended December 31, 2014 was approximately $1,025,000 compared to income of approximately $5,655,000 for the year ended December 31, 2013, a decrease in income of approximately $4,630,000.

LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s principal source of cash during 2015 and 2014 was the collection of rents and proceeds on the sale and refinancing of real estate. The majority of cash and cash equivalents of $10,298,186at December 31, 2015 and $14,015,898 at December 31, 2014 were held in interest bearing accounts at creditworthy financial institutions.

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This decrease in cash of $ 3,717,712 at December 31, 2015 is summarized as follows:

	Year Ended December 31,
	2015		2014
Cash provided by operating activities	$	13,806,121	$	11,840,634
Cash (used in) investing activities		(10,175,926)		(2,539,791)
Cash  (used in) financing activities		(132,071)		(2,754,356)
Repurchase of Depositary Receipts, Class B and General Partner Units		(3,429,953)		(2,685,583)
Distributions paid		(3,785,883)		(3,858,386)
Net (decrease) increase in cash and cash equivalents	$	(3,717,712)	$	2,518

The cash provided by operating activities is primarily due to the collection of rents less cash operating expenses. The increase in cash used in investing activities is due to an increase in the improvements to rental properties in 2015 compared to the same period in 2014, and the purchase of the Residence at Captain Parker.The change in cash used in financing activities is primarily due to the paid off of two mortgage notes payable in 2014.In 2015, the Partnership purchased a total of 54,682Class A Depositary Receipts, 433Class B Units and 23 General Partnership Units for a total cost of $3,429,953.

During 2015, the Partnership and its Subsidiary Partnerships completed improvements to certain of the Properties at a total cost of approximately $6,694,000. 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  Westgate Apartments, 62 Boylston Street, Westside Colonial, Executive Apartments, River Drive Apartments, and Hamilton Oaks  at a cost of approximately $1,349,000, $697,000, $647,000, $632,000, $603,000 and $592,000 respectively. The Partnership plans to invest approximately $3,517,000 in capital improvements in 2016.

During the year ended December 31, 2015, the Partnership received distributions of approximately $3,863,000 from the investment properties of which $1,450,000 was from Dexter Park.

In 2015 the Partnership paid four quarterly distributions of $7.50 per Unit ($0.25 per receipt) for a total payment of $3,785,883 in 2015. In 2014, the Partnership paid four quarterly distributions of an aggregate of $7.50 per Unit ($0.25 per receipt) for a total payment of $3,858,386. In 2016, the Partnership approved a quarterly distribution of $7.50 per Unit ($0.25 per Receipt) payable on March 31, 2016.

On September 28, 2015, Hamilton Essex Development, LLC paid off the outstanding mortgage balance of $1,952,286.  The Partnership made a capital contribution of $978,193 to Essex Development for its share of the funds required for the transaction.  Additionally, the Partnership made a capital contribution of $100,000 to Hamilton Essex 81, LLC.  On September 30, 2015, Hamilton Essex 81, LLC obtained a new 10 year mortgage in the amount of $10,000,000, interest only at 2.18% plus the one month Libor rate.  The proceeds of the note were used to pay off the existing mortgage of $8,040,719 and the Partnership received a distribution of $978,193 for its share of the excess proceeds.

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% to 3.5%. The costs associated with the line of credit were approximately $125,000. The line of credit may be used for acquisition, refinancing, improvements, working capital and other needs of the Partnership. The line may not be used to pay dividends, make distributions or acquire equity interests of the Partnership.To fund the purchase of Captain Parker Apartments, the Partnership utilized the available line of credit of $25,000,000, and the balance from the Partnership’s cash reserves. In January 2016, the Partnership paid back the line of credit. See Note 18, SUBSEQUENT EVENTS, for the details.

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On June 11, 2014, the Partnership refinanced the property owned by NERA Dean Street Associates, LLC.  The new mortgage was  $5,687,000; the interest rate  was 4.22%, interest only, payable in 10 years. Approximately $5,077,000 of the loan proceeds were used to pay off the existing mortgage.  The mortgage matures in June 2024. The costs associated with the refinancing were approximately $99,000. Approximately $610,000 in cash was received from this refinancing.

In February 2014, the Partnership paid off the mortgages on Linewt in the amount of approximately $1,466,000 and Linhart in the amount of approximately $1,926,000.

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. 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, increases or decreases in rental income or expenses, or the loss of significant tenants.

Off‑Balance Sheet Arrangements—Joint Venture Indebtedness

As of December 31, 2015, the Partnership had a 40%‑50% ownership interest in nine Joint Ventures, all of which have mortgage indebtedness except Hamilton Bay Sales and Hamilton Essex Development. We do not have control of these partnerships and therefore we account for them using the equity method of consolidation. At December 31, 2015, our proportionate share of the non‑recourse debt related to these investments was approximately $59,636,000. See Note 14 to the Consolidated Financial Statements.

Contractual Obligations

See Notes 5 and 14 to the Consolidated Financial Statements for a description of mortgage notes payable. The Partnership has no other material contractual obligations to be disclosed.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to loss resulting from changes in interest rates and equity prices. In pursuing its business plan, the primary market risk to which the Partnership is exposed is interest rate risk. Changes in the general level of interest rates prevailing in the financial markets may affect the spread between the Partnership’s yield on invested assets and cost of funds and, in turn, its ability to make distributions or payments to its investors.

As of December 31, 2015, the Partnership, its Subsidiary Partnerships and the Investment Properties collectively have approximately $332,193,000 in long-term debt, substantially all of which require payment of interest at fixed rates. Accordingly, the fair value of these debt instruments is affected by changes in market interest rates. This long term debt matures through 2029. Including the line of credit, the Partnership, its Subsidiary Partnerships and the Investment Properties collectively have variable rate debt of $35,000,000 as of December 31, 2015 ranged from LIBOR plus 218 basis points to LIBOR plus 350 basis points. Assuming interest- rate caps are not in effect, if market rates of interest on the Partnership’s variable rate debt increased or decreased by 100 basis points, then the increase or decrease in interest costs on the Partnership’s variable rate debt would be approximately $300,000 annually and the increase or decrease in the fair value of the Partnership’s fixed rate debt as of December 31, 2015 would be approximately $19 million. For information regarding the fair value and maturity dates of these debt obligations,  See Note 5 to the Consolidated Financial Statements — “Mortgage Notes Payable,” Note 12 to the Consolidated Financial Statements — “Fair Value Measurements” and Note 14 to the Consolidated Financial Statements — “Investment in Unconsolidated Joint Ventures.”

For additional disclosure about market risk, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors That May Affect Future Results”.

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ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Partnership appear on pages F‑1 through F‑3 of this Form 10‑K and are indexed herein under Item 15(a)(1).

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.  We have evaluated the design and operation of our disclosure controls and procedures to determine whether they are effective in ensuring that the disclosure of required information is timely made in accordance with the Securities Exchange Act of 1934 (“Exchange Act”) and the rules and forms of the Securities and Exchange Commission. This evaluation was made under the supervision and with the participation of management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of our General Partner as of the end of the period covered by this annual report on Form 10‑K. The CEO and CFO have concluded, based on their reviews, that our disclosure controls and procedures, as defined in Exchange Act Rules 13a‑15(e), are effective to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Management’s Report on Internal Control over Financial Reporting.  We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a‑15(f) and 15‑15(f) under the Exchange Act. We assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control—Integrated Framework (2013)”. Based on that assessment and those criteria, our management, with the participation of the CEO and CFO of the General Partner concluded that our internal control over financial reporting is effective as of December 31, 2015.

We believe that because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The effectiveness of the Partnership’s internal control over financial reporting as of December 31, 2015 has been audited by Miller Wachman LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Changes in Internal Control over Financial Reporting.  There were no changes in our internal control over financial reporting during the fourth quarter of 2015 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION

Not applicable

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, AND COPORATE GOVERNANCE

Our General Partner, New Real, Inc. is a Massachusetts corporation wholly owned by Harold Brown and Ronald Brown, who are brothers. Harold Brown and Ronald Brown were individual general partners of the Partnership until May 1984, when NewReal, Inc. replaced them as the sole General Partner of the Partnership. The General Partner is responsible for making all decisions and taking all action deemed by it necessary or appropriate to conduct the business of the Partnership.

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The General Partner engages The Hamilton Company, Inc. to manage the properties of the Partnership and its Subsidiary Partnerships. The Hamilton Company, Inc. is wholly owned by Harold Brown. See “Item 11. Executive Compensation” for information concerning fees paid by the Partnership to The Hamilton Company during 2015.

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

The directors of the General Partner are Ronald Brown, Harold Brown, Guilliaem Aertsen, David Aloise, and Eunice Harps. The directors of the General Partner hold office until their successors are duly elected and qualified.

Ronald Brown and Harold Brown hold all of the executive officer positions of the General Partner. The executive officers of the General Partner serve at the pleasure of the Board of Directors.

On June 14, 2001, the Board of Directors of the General Partner created an Audit Committee, in accordance with Section 3(a)(58)(A) of the Exchange Act, consisting of three members, and approved the charter of the Audit Committee. As of July 1, 2014, the Audit Committee consisted of Guilliaem Aertsen, David Aloise, and Eunice Harps. The Board of Directors of the General Partner has determined that Guilliaem Aertsen is an audit committee financial expert, as that term is defined in Item 407 of Securities and Exchange Commission Regulation S‑K.

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

Name and Position	Age	Other Position
Ronald Brown, President and Director (since 1984)	80	Co‑General Partner since the Partnerships formation in 1977. Associate, Hamilton Realty Company (since 1967); President, Treasurer, Clerk and Director of R. Brown Partners Inc. (since 1985), a real estate management company; Member, Greater Boston Real Estate Board (since 1981); Director, Brookline Chamber of Commerce (since 1978); Trustee of Reservations (since 1988); Director, Brookline Music School (1997‑2004); President, Brookline Chamber of Commerce (1990‑1992); Director, Coolidge Corner Theater Foundation (1990‑1993); President, Brookline Property Owner’s Association (1981‑1990); Trustee, Brookline Hospital (1982‑1989); Director, Brookline Symphony Orchestra (1996‑2002); Director and Treasurer, Brookline Greenspace Alliance (since 1999). Mr. Brown is a graduate of Northeastern University earning a B.A. degree in Mechanical Engineering and an M.S. degree in Engineering Management. Based on Mr. Brown’s ownership interest in the Partnership, ownership interest in the Partnership’s General Partner, years of experience in the real estate industry and as a long standing member of the Board of Directors of the General Partner, the Board of Directors concluded that Mr. Brown has the requisite experience, qualifications, attributes and skills necessary to serve as a member of the Board of Directors.

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Name and Position	Age	Other Position
Harold Brown, Treasurer and Director (since 1984)	91	Co‑General Partner since the Partnerships formation in 1977. Sole proprietor, The Hamilton Company, Inc., manager and developer of residential and commercial real estate (since 1954); Trustee, Treasurer and Director of Wedgestone Realty Investors Trust (1982‑1985); Chairman of the Board and principal stockholder of the Wedgestone Advisory Corporation (1980‑1985); Director of AFC Financial Corp. (1983‑1985); Director, Coolidge Bank and Trust (1980‑1983). Mr. Brown is a graduate of the Massachusetts Institute of Technology. Based on Mr. Brown’s ownership interest in the Partnership, ownership interest in the Partnership’s General Partner, years of experience in the real estate industry and as a long standing member of the Board of Directors of the General Partner, the Board of Directors concluded that Mr. Brown has the requisite experience, qualifications, attributes and skills necessary to serve as a member of the Board of Directors.
Guilliaem Aertsen, IV, Director (since 2002)	68	Director and Chairman of the Partnership’s Audit Committee. Chief Executive Officer, Aertsen Ventures LLC (since 1999) a private venture capital firm focused on early stage companies engaged in technology, real estate and distressed financial assets; Director and CFO of CineCast LLC (2000‑2012); Member of Premier Capital LLC (since 2000); Chairman of the Board of Directors of the Massachusetts Housing Investment Corporation (since 1997) a partnership of corporate investors, housing sponsors and public agencies engaged in the financing of affordable housing and community development projects in Massachusetts and New England; Chairman of the Board of Trustees of the Old South Church (1992‑2002); Executive Vice President and member of the senior management group of BankBoston Corporation (1996‑ 1998); Executive and management assignments including corporate lending, real estate, capital markets, venture capital and asset management Bank Boston Corporation (1973‑1998). Mr. Aertsen is a graduate of Harvard University. Based on Mr. Aertsen’s familiarity with the Partnership as a member of the Board of Directors and as Chairman of the Audit Committee, his experience as a director with several other companies and his banking, management and financial expertise, the Board of Directors concluded that Mr. Aertsen has the requisite experience, qualifications, attributes and skills necessary to serve as a member of the Board of Directors.
David Aloise, Director (since 2007)	61	Director and member of the Partnership’s Audit Committee. Founder and principal of Aloise & Associates, LLC (since 2000) a consulting firm that provides advisory, training and credit risk management services; BankBoston Corporation (1979‑2000) Director of Commercial Loan Workout, Managing Director Small Business Banking, Vice President Restructured Real Estate, Vice President C & I Loan Workout; Board of Trustees New England Banking Institute; Advisory Board Member Wells Fargo Retail Finance, LLC; Senior Advisor to Eaton Vance Bank Loan Mutual Fund Group; Member of the Turnaround Management Association. Mr. Aloise is a graduate of Boston College and the National Commercial Lending Graduate School, University of Oklahoma. Based on Mr. Aloise’s experience in banking, credit markets, small business management and business turnarounds, the Board of Directors concluded that Mr. Aloise has the requisite experience, qualifications, attributes and skills necessary to serve as a member of the Board of Directors.

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Name and Position	Age	Other Position
Eunice Harps, Director (since 2014)	66	Director and member of the Partnership’s Audit Committee. Director of Credit Massachusetts Housing Investment Corporation (since 1999) a private financier of affordable housing and community development throughout Massachusetts; BankBoston Corporation (1984‑1998) Vice President Senior Manager, Capital Markets Credit, Vice President, Troubled Debt Restructuring Team; Steering Committee NEWIRE (1993‑1995), Board of Directors Chair YW Boston; Board Member of Nuestra Comunidad Development Corporation (Since 2015). Ms. Harps is a graduate of Boston University earning a B.A. and M.B.A. degrees. Based on Ms. Harps’ experience in banking, credit review and affordable housing, the Board of Directors concluded that Ms. Harps has the requisite experience, qualifications, attributes and skills necessary to serve as a member of the Board of Directors.

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

Section 16(a) of the Securities Exchange Act of 1934 requires the Partnership’s directors, executive officers, and persons who own more than 10% of a registered class of the Partnership’s equity securities to file with the Securities and Exchange Commission reports of ownership changes and changes in ownership of the Partnership. Officers, directors and greater‑than‑10% shareholders are required by SEC regulations to furnish the Partnership with copies of all Section 16(a) forms they file.

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

CODE OF ETHICS

The Partnership, its General Partner and Hamilton, the Partnership’s management company, have adopted a Code of Business Conduct and Ethics, which constitutes a “Code of Ethics” as defined by the SEC and applies to executive officers as well as to all other employees. A copy of the Code of Business Conduct and Ethics is available in the “NERA” section of the management company’s website at www.thehamiltoncompany.com. To the extent required by the rules of the SEC, the Partnership and its related entities will disclose amendments to and waivers from the Code of Business Conduct and Ethics in the same place on the aforementioned website.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of NewReal Inc. (NewReal), which is the General Partner of New England Realty Associates Limited Partnership (“NERA” or the “Partnership”), is currently comprised of Guilliaem Aertsen, IV, David Aloise, and Eunice Harps, each of whom is an independent director of NewReal. The Audit Committee operates under a written charter.

The Partnership’s management, which consists of NERA’s General Partner, is responsible for the preparation of the Partnership’s financial statements and for maintaining an adequate system of internal controls and processes for that purpose. Miller Wachman LLP (“Miller Wachman”) acts as the Partnership’s independent auditor and is responsible for conducting an independent audit of the Partnership’s annual financial statements and the effectiveness of the Partnership’s internal control over financial reporting as of December 31, 2015 in accordance with the standards of the Public Company Accounting Oversight Board (United States), and issuing a report on the results of their audit. The Audit Committee is responsible for providing independent, objective oversight of both of these processes.

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The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2015 with management of the Partnership and with representatives of Miller Wachman. As a result of these discussions, the Audit Committee believes that NERA maintains an effective system of accounting controls that allow it to prepare financial statements that fairly present the Partnership’s financial position and results of its operations. Discussions with Miller Wachman also included the matters required by Statement on Auditing Standard No. 16 (Communications with Audit Committee).

In addition, the Audit Committee reviewed the independence of Miller Wachman. We received written disclosures and a letter from Miller Wachman regarding its independence as required by Independent Standards Board Standards No. 1 and discussed this information with Miller Wachman.

Based on the foregoing, the Audit Committee has recommended that the audited financial statements of the Partnership for the year ended December 31, 2015 be included in the Partnership’s annual report on form 10‑K to be filed with the Securities and Exchange Commission.

Guilliaem Aertsen, IV
David Aloise
Eunice Harps

ITEM 11.  EXECUTIVE COMPENSATION

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

The Partnership is not required to and did not pay any compensation to its officers or the officers and directors of the General Partner in 2015. As more fully described below, the Partnership employs a management company which is solely responsible for performing all management and policy making functions for the Partnership. The only compensation paid by the Partnership to any person or entity is in the form of management fees and administrative fees paid to the General Partner, or any management entity employed by the General Partner, in accordance with the Partnership Agreement.

Specifically, the Partnership Agreement provides that the General Partner, or any management entity employed by the General Partner, is entitled to a management fee equal to 4% (2% at Dexter Park and 3% at Linewt) of the rental and other operating income from the Partnership Properties and a mortgage servicing fee equal to 0.5% of the unpaid principal balance of any debt instruments received, held and serviced by the Partnership (the “Management Fee”). The Partnership Agreement also authorizes the General Partner to charge to the Partnership its cost for employing professionals to assist with the administration of the Partnership Properties (the “Administrative Fees”). The Administrative Fee is not charged against the Management Fee. In addition, upon the sale or disposition of any Partnership Properties, the General Partner, or any management entity which is the effective cause of such sale, is entitled to a commission equal to 3% of the gross sale price (the “Commission”), provided that should any other broker be entitled to a commission in connection with the sale, the commission shall be the difference between 3% of the gross sale price and the amount to be paid to such broker.

The General Partner has engaged The Hamilton Company (“Hamilton”) to operate and manage the Partnership, and in accordance with the Partnership Agreement, the Management Fee, the Administrative Fees and the Commission are paid to Hamilton. See “Item 10. Directors and Executive Officers of the Registrant.” The total Management Fee paid to Hamilton during 2015 was approximately $1,870,000. The management services provided by Hamilton include but are not limited to: collecting rents and other income; approving, ordering and supervising all repairs and other decorations; terminating leases, evicting tenants, purchasing supplies and equipment, financing and refinancing properties, settling insurance claims, maintaining administrative offices and employing personnel. In addition, the Partnership engages the president of Hamilton as a consultant to provide asset management services to the Partnership, for which the Partnership paid $75,000 in 2015. The Partnership does not have a written agreement with this individual.

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In 2015, the Partnership and its Subsidiary Partnerships paid administrative fees to Hamilton of approximately $994,000 inclusive of construction supervision and architectural fees of approximately $202,000, repairs and maintenance service fees of approximately $443,000, legal fees of approximately $224,000 and $125,000 for accounting services. The administrative fees included $24,000 that was paid by the Partnership to Ronald Brown for construction supervision services.

Additionally, the Hamilton Company received approximately $840,000 from the 40‑50% owned Investment Properties of which approximately $677,000 was the management fee, approximately $23,000 was for construction supervision and architectural fees, approximately $95,000 was for maintenance services, and  $45,000 for legal services. The Advisory Committee held five meetings during 2015, and a total of $26,000 was paid for attendance and participation in such meetings. Additionally, the Audit Committee held four meetings in 2015 and a total of $12,000 was paid for attendance and participation in such meetings.

Compensation Committee Interlocks and Insider Participation

The Board of Directors of our General Partner does not have a compensation committee. No member of the Board of Directors of the General Partner was at any time in 2015 or at any other time an officer or employee of the General Partner, and no member had any relationship with the Partnership requiring disclosure as a related‑person transaction under Item 404 of Regulation S‑K. No officer of the General Partner has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of the Board of Directors of the General Partner at any time in 2015.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As of March 1, 2016, except as listed below, the General Partner was not aware of any beneficial owner of more than 5% of the outstanding Class A Units or the Depositary Receipts, other than Computershare, which, under the Deposit Agreement, as Depositary, is the record holder of the Class A Units exchanged for Depositary Receipts. As of March 1, 2016, pursuant to the Deposit Agreement, Computershare was serving as the record holder of the Class A Units with respect to which 2,890,264 Depositary Receipts had been issued to approximately 1,852 holders. As of March 1, 2016, there were issued and outstanding 3,673 Class A Units (not including the Depositary Receipts) held by 174 unit holders, 23,821 Class B Units and 1,254 General Partnership Units held by the persons listed below. During 2015,  168 Class A Units were exchanged for Depositary Receipts.

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The following table sets forth certain information regarding each class of Partnership Units beneficially owned as of December 31, 2015 by (i) each person known by the Partnership to beneficially own more than 5% of any class of Partnership Units, (ii) each director and officer of the General Partner and (iii) all directors and officers of the General Partner as a group. For purposes of this table, all Depositary Receipts are included as if they were converted back into Class A Units. The inclusion in the table below of any Units deemed beneficially owned does not constitute an admission that the named persons are direct or indirect beneficial owners of such Units. Unless otherwise indicated, each person listed below has sole voting and investment power with respect to the Units listed.

	Class A				Class B				General Partnership
			% Of				% Of				% Of
	Number of		Outstanding		Number of		Outstanding		Number of		Outstanding
	Units		Units		Units		Units		Units		Units
	Beneficially		Beneficially		Beneficially		Beneficially		Beneficially		Beneficially
Directors and Officers	Owned		Owned		Owned		Owned		Owned		Owned
Harold Brown		(1)(2)		(1)(2)	17,866	(3)	75	%(3)		(4)	100	%(4)
c/o New England Realty Associates
Limited Partnership
39 Brighton Avenue
Allston, MA 02134
Harold Brown 2013 Revocable Trust		(2)		(2)	—		—		—		—
c/o Saul Ewing LLP
131 Dartmouth Street
Boston, MA 02116
HBC Holdings, LLC		(1)		(1)		(3)		(3)	—		—
39 Brighton Avenue
Allston, MA 02134
Ronald Brown	2,929	(5)	2.92	%(5)	5,955		25	%		(4)	100	%(4)
c/o New England Realty Associates
Limited Partnership
39 Brighton Avenue
Allston, MA 02134
Guilliaem Aertsen	—		—		—		—		—		—
175 West Brookline Street
Boston, MA 02118
David Aloise	—		—		—		—		—		—
241 Cottage Park Road
Winthrop, MA 02152
Eunice Harps	—		—		—		—		—		—
5 Holyoke Street #1
Boston, MA 02116
NewReal, Inc.	333		0.33	%	—		—		1,254		100	%
39 Brighton Avenue
Allston, MA 02134
All directors and officers as a group	25,777	(6)	25.70	%(6)	23,821	(7)	100	%(7)		(4)	100	%(4)
5% Owners that are not Directors and Officers
Carl Valeri	6,635	(8)	6.61	%(8)	—		—		—		—
50 Udine Street
Arlington, MA 02476
Harold Brown 2009 Irrevocable Trust	9,417	(9)	9.39	%(9)	—		—		—		—
39 Brighton Avenue
Alston, MA 02134

(1) As of December 31, 2015,   507,849Depositary Receipts are held of record by the HBC Holdings, LLC (HBC). Harold Brown is the sole manager of HBC with sole voting and dispositive control over the Depositary Receipts. Accordingly, Mr. Brown may be deemed to beneficially own the Depositary Receipts held by HBC. Because a Depositary Receipt represents beneficial ownership of one‑thirtieth of a Class A Unit, Harold Brown may be deemed to beneficially own approximately 16,928  Class A Units (approximately 16.88% of the outstanding Class A Units).

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(2) As of December 31, 2015, Harold Brown directly owns 167,600 Depositary Receipts beneficially owned by his spouse. Because a Depositary Receipt represents beneficial ownership of one‑thirtieth of a Class A Unit, Harold Brown may be deemed to directly beneficially own approximately 5,587 Class A Units (approximately 5.57 % of the outstanding Class A Units).

(3) Consists of Class B Units held by HBC Holdings, LLC. See Note (1) above. Harold Brown, as Manager, has voting and investment power over the Class B Units held by the LLC, subject to the provisions of the LLC, and thus may be deemed to beneficially own the  Class B Units held by the LLC.

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

(5) Consists of 87,860Depositary Receipts held of record jointly by Ronald Brown and his wife. Because a Depositary Receipt represents beneficial ownership of one‑thirtieth of a Class A Unit, Ronald Brown may be deemed to beneficially own approximately 2,929Class A Units.

(6) Consists of the Class A Units described in Notes (1), (2) and (4) above, plus New Real, Inc. and Ronald Brown, as indicated in the table.

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

(8) Consists of 199,040 Depositary Receipts held by Carl Valeri and his immediate family members. Because a Depositary Receipt represents beneficial ownership of one thirtieth of a Class A Unit, Carl Valeri may be deemed to beneficially own approximately 6,635 Class A Units.

(9) Consists of 282,500 Depositary Receipts held by the Harold Brown 2009 Irrevocable Trust. Harold Brown is not a beneficiary of the Trust and he does not have a pecuniary interest. Because a Depositary Receipt represents beneficial ownership of one thirtieth of a Class A Unit, the Trust may be deemed to beneficially own approximately  9,417 Class A Units

On November 13, 2000, the Partnership adopted a Policy for Establishment of Rule 10b5‑1 Trading Plans. Pursuant to this Policy, the Partnership authorized its officers, directors and certain employees, shareholders and affiliates who are deemed “insiders” of the Partnership to adopt individual plans for trading the Partnership’s securities (“Trading Plans”), and established certain procedural requirements relating to the establishment, modification and termination of such Trading Plans. On May 14, 2001, the Partnership approved a Trading Plan of Harold Brown.The trading plan has been amended and restated several times, the most recent being on November 14, 2012. Mr. Brown amended and restated the Trading Plan extending the date through which Depositary Receipts may be purchased through September 30, 2016 for up to 600,000 Depositary Receipts at prices up to $45.00.

The Partnership does not have any securities authorized for issuance pursuant to any equity compensation plans.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Harold Brown and Ronald Brown are brothers.

There are no other family relationships among any of our directors. Messrs. Aertsen, Aloise and Ms. Harps representing a majority of our directors are determined to be independent under the rules of the NYSE Amex Exchange and the SEC. The board holds regularly scheduled meetings.

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

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

The Partnership invested approximately $34,049,000 in nine limited liability companies formed to acquire Investment Properties. The Partnership has a 40%‑ 50% ownership interest in each of these limited liability companies accounted for on the equity method of consolidation. The majority stockholder of the General Partner owns between 43.2% and 57% and the President and five employees of the management company own between 0% and 6.8% in each of the Investment Properties. See Note 14 of the consolidated financial statements for a description of the Investment Properties.

See also “Item 2. Properties,” “Item 10. Directors and Executive Officers of the Registrant” and “Item 11. Executive Compensation” for information regarding the fees paid to The Hamilton Company, an affiliate of the General Partner.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

Miller Wachman LLP served as the Partnership’s independent accountants for the fiscal year ended December 31, 2015 and has reported on the 2015 Consolidated Financial Statements. Aggregate fees rendered to Miller Wachman LLP for the years ended December 31, 2015 and 2014 were as follows:

	2015		2014
Audit Fees
Recurring annual audits and quarterly reviews	$	276,000	$	276,000
Subtotal		276,000		276,000
Other Audit Related Fees		—		—
Tax Fees
Recurring tax compliance for the Partnership, 19 subsidiary Partnerships and 18 General Partnerships		92,000		84,000
Subtotal		92,000		84,000
Other Fees		—		—
Total Fees	$	368,000	$	360,000

The Audit Committee’s charter provides that it has the sole authority to review in advance and grant any pre‑approvals of (i) all auditing services to be provided by the independent auditor, (ii) all significant non‑audit services to be provided by the independent auditors as permitted by Section 10A of the Securities Exchange Act of 1934, and (iii) all fees and the terms of engagement with respect to such services. All audit and non‑audit services performed by Miller Wachman during fiscal 2015 and 2014 were pre‑approved pursuant to the procedures outlined above.

PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)1. Financial Statements:

The following Financial Statements are included in this Form 10‑ K:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2015 and 2014

Consolidated Statements of Income for the Years ended December 31, 2015, 2014 and 2013

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Consolidated Statements of Changes in Partners’ Capital for the Years ended December 31, 2015, 2014 and 2013

Consolidated Statements of Cash Flows for the Years ended December 31, 2015, 2014 and 2013

Notes to Consolidated Financial Statements

2. Consolidated Financial Statement Schedules:

Financial statement schedules are omitted because they are not applicable or not required, or because the required information is included in the financial statements or notes thereto.

(b)Exhibits:

The exhibits filed as part of this Annual Report on Form 10‑K are listed in the Exhibit Index included herewith.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of

New England Realty Associates Limited Partnership

We have audited the accompanying consolidated balance sheets of New England Realty Associates Limited Partnership (“the Partnership”) as of December 31, 2015 and 2014, and the related consolidated statements of income, changes in partners’ capital and cash flows for each of the years in the three‑year period ended December 31, 2015. We also have audited New England Realty Associates Limited Partnership’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Partnership’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Partnership’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of New England Realty Associates Limited Partnership as of December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, New England Realty Associates Limited Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ Miller Wachman LLP

Boston, Massachusetts
March 11, 2016

F-1

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2015		2014
ASSETS
Rental Properties	$	176,697,314	$	149,116,084
Cash and Cash Equivalents		10,298,186		14,015,898
Rents Receivable		433,744		474,225
Insurance Recovery Receivable		345,645		—
Real Estate Tax Escrows		370,981		340,341
Prepaid Expenses and Other Assets		4,685,339		3,287,005
Investments in Unconsolidated Joint Ventures		7,819,162		8,807,868
Financing Fees		1,515,845		1,735,652
Total Assets	$	202,166,216	$	177,777,073
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable		195,939,469		196,071,540
Notes Payable		25,000,000		—
Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture		2,288,090		1,425,369
Accounts Payable and Accrued Expenses		4,640,767		3,099,117
Advance Rental Payments and Security Deposits		5,108,843		4,548,729
Total Liabilities		232,977,169		205,144,755
Commitments and Contingent Liabilities (Notes 3 and 9)		—		—
Partners’ Capital 125,374 and 127,653 units outstanding in 2015 and 2014 respectively		(30,810,953)		(27,367,682)
Total Liabilities and Partners’ Capital	$	202,166,216	$	177,777,073

See notes to consolidated financial statements

F-2

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended December 31,
	2015		2014		2013
Revenues
Rental income	$	45,074,655	$	42,205,644	$	37,961,599
Laundry and sundry income		406,059		426,675		402,953
		45,480,714		42,632,319		38,364,552
Expenses
Administrative		2,096,290		2,206,483		2,116,527
Depreciation and amortization		10,733,773		10,551,527		8,377,902
Management fee		1,869,977		1,744,849		1,570,158
Operating		4,939,662		4,668,196		4,201,928
Renting		487,225		430,949		202,787
Repairs and maintenance		6,998,592		6,608,290		5,815,264
Taxes and insurance		5,643,507		5,519,432		4,948,569
		32,769,026		31,729,726		27,233,135
Income Before Other Income (Expense) and Discontinued Operations		12,711,688		10,902,593		11,131,417
Other Income (Expense)
Interest income		1,596		754		1,118
Interest expense		(9,809,293)		(9,553,200)		(8,013,109)
Income (Loss) from investments in unconsolidated joint ventures		868,574		(325,297)		(1,166,877)
Other Income		—		—		4,950
		(8,939,123)		(9,877,743)		(9,173,918)
Income from Continuing Operations		3,772,565		1,024,850		1,957,499
Discontinued Operations
Income from discontinued operations		—		—		19,047
Gain on the sale of real estate		—		—		3,678,839
		—		—		3,697,886
Net Income	$	3,772,565	$	1,024,850	$	5,655,385
Income per Unit
Income before discontinued operations	$	29.86	$	7.96	$	15.07
Income from discontinued operations		—		—		28.48
Net Income per Unit	$	29.86	$	7.96	$	43.55
Weighted Average Number of Units Outstanding		126,361		128,735		129,868

See notes to consolidated financial statements.

F-3

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTSOF CHANGES IN PARTNERS’ CAPITAL

	Units						Partners’ Capital
	Limited		General		Treasury		Limited				General
	Class A	Class B	Partnership	Subtotal	Units	Total	Class A		Class B		Partnership		Total
Balance January 1, 2013	144,180	34,243	1,802	180,225	49,781	130,444	$	(18,017,082)	$	(4,273,666)	$	(224,929)	$	(22,515,677)
Distribution to Partners	—	—	—	—	—	—		(3,114,930)		(739,796)		(38,936)		(3,893,662)
Stock Buyback	—	—	—	—	957	(957)		(877,623)		(206,137)		(10,849)		(1,094,609)
Net Income	—	—	—	—	—	—		4,524,308		1,074,523		56,554		5,655,385
Balance December 31 , 2013	144,180	34,243	1,802	180,225	50,738	129,487	$	(17,485,327)	$	(4,145,076)	$	(218,160)	$	(21,848,563)
Distribution to Partners	—	—	—	—	—	—		(3,086,709)		(733,093)		(38,584)		(3,858,386)
Stock Buyback	—	—	—	—	1,834	(1,834)		(2,158,332)		(500,888)		(26,363)		(2,685,583)
Net Income	—	—	—	—	—	—		819,880		194,722		10,248		1,024,850
Balance December 31 , 2014	144,180	34,243	1,802	180,225	52,572	127,653	$	(21,910,488)	$	(5,184,335)	$	(272,859)	$	(27,367,682)
Distribution to Partners	—	—	—	—	—	—		(3,028,706)		(719,318)		(37,859)		(3,785,883)
Stock Buyback	—	—	—	—	2,279	(2,279)		(2,752,393)		(643,682)		(33,878)		(3,429,953)
Net Income	—	—	—	—	—	—		3,018,052		716,787		37,726		3,772,565
Balance December 31, 2015	144,180	34,243	1,802	180,225	54,851	125,374	$	(24,673,535)	$	(5,830,548)	$	(306,870)	$	(30,810,953)

See notes to consolidated financial statements.

F-4

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2015		2014		2013
Cash Flows from Operating Activities
Net income	$	3,772,565	$	1,024,850	$	5,655,385
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		10,733,773		10,551,527		8,377,902
(Income) Loss from investments in joint ventures		(868,574)		325,297		1,166,877
Gain on sale of equipment		—		—		(3,500)
Depreciation and amortization - discontinued operations		—		—		2,111
Gain on sale of rental property		—		—		(3,678,839)
Change in operating assets and liabilities
Decrease (Increase)  in rents receivable		40,481		21,924		(21,064)
Increase (Decrease) in accounts payable and accrued expense		1,541,650		(79,378)		816,553
(Increase)  in insurance recovery receivable		(345,645)		—		—
(Increase) Decrease in real estate tax escrow		(30,640)		35,219		74,093
(Increase)  in prepaid expenses and other assets		(1,597,603)		(345,132)		443,925
Increase in advance rental payments and security deposits		560,114		306,327		605,696
Total Adjustments		10,033,556		10,815,784		7,783,754
Net cash provided by operating activities		13,806,121		11,840,634		13,439,139
Cash Flows From Investing Activities
Proceeds from unconsolidated joint ventures		2,872,378		3,071,902		1,288,077
Distribution in excess of investment in unconsolidated joint ventures		990,262		272,500		1,687,750
(Investment)  in unconsolidated joint ventures		(1,142,640)		(279,402)		(929,327)
Improvement of rental properties		(6,693,996)		(5,604,791)		(4,499,924)
Proceeds from the sale of equipment		—		—		3,500
Purchase of rental properties		(6,201,930)		—		(22,601,774)
Net proceeds from the sale of rental property		—		—		2,138,978
Net cash (used in) investing activities		(10,175,926)		(2,539,791)		(22,912,720)
Cash Flows from Financing Activities
Payment of financing costs		—		(305,418)		(971,630)
Proceeds of mortgage notes payable		—		1,109,555		28,268,115
Principal payments of mortgage notes payable		(132,071)		(3,558,493)		(5,803,159)
Stock buyback		(3,429,953)		(2,685,583)		(1,094,609)
Distributions to partners		(3,785,883)		(3,858,386)		(3,893,662)
Net cash (used in) financing activities		(7,347,907)		(9,298,325)		16,505,055
Net (Decrease) in Cash and Cash Equivalents		(3,717,712)		2,518		7,031,474
Cash and Cash Equivalents, at beginning of period		14,015,898		14,013,380		6,981,906
Cash and Cash Equivalents, at end of period	$	10,298,186	$	14,015,898	$	14,013,380

See notes to consolidated financial statements

F-5

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2015

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

Line of Business:  New England Realty Associates Limited Partnership (“NERA” or the “Partnership”) was organized in Massachusetts in 1977. NERA and its subsidiaries own 25 properties which include 17 residential buildings; 4 mixed use residential, retail and office buildings; 3 commercial buildings and individual units at one condominium complex. These properties total 2,506 apartment units, 19 condominium units and 108,043 square feet of commercial space. Additionally, the Partnership also owns a 40‑50% interest in 9 residential and mixed use properties consisting of 788 apartment units, 12,500 square feet of commercial space and a 50 car parking lot. The properties are located in Eastern Massachusetts and Southern New Hampshire.

Basis of Presentation:The financial statements have been prepared in conformity with GAAP. The preparation  of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. These estimates and assumptions are based on management’s historical experience that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgement. The Partnership’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Partnership’s financial results. Judgements and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances.

Principles of Consolidation:  The consolidated financial statements include the accounts of NERA and its subsidiaries. NERA has a 99.67% to 100% ownership interest in each subsidiary except for the nine limited liability companies (the “Investment Properties” or “Joint Ventures”) in which the Partnership has a 40‑ 50% ownership interest. The consolidated group is referred to as the “Partnership.” Minority interests are not recorded, since they are insignificant. All significant intercompany accounts and transactions are eliminated in consolidation. The Partnership accounts for its investment in the above‑mentioned Investment Properties using the equity method of consolidation. (See Note 14: Investments in Unconsolidated Joint Ventures).

The Partnership accounts for its investments in joint ventures using the equity method of accounting. These investments are recorded initially at cost, as Investments in Unconsolidated Joint Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions. Generally, the Partnership would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Partnership only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses. In 2013 and beyond, the carrying values of certain investments fell below zero. We intend to fund our share of the investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. (See Note 14: Investment in Unconsolidated Joint Ventures.)

The authoritative guidance on consolidation provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIE (the “primary beneficiary”). Generally, the consideration of whether an entity is a VIE applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that equity’s activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the

F-6

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

variable interest entity’s performance; and (2) the obligation to absorb losses and rights to receive the returns from VIE that would be significant to the VIE.

Impairment:  On an annual basis management assesses whether there are any indicators that the value of the Partnership’s rental properties or investments in unconsolidated subsidiaries may be impaired. In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment. The criteria considered by management include reviewing low leased percentages, significant near term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near term mortgage debt maturities or other factors that might impact the Partnership’s intent and ability to hold property. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. The Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Revenue Recognition:  Rental income from residential and commercial properties is recognized over the term of the related lease. For residential tenants, amounts 60 days in arrears are charged against income. The commercial tenants are evaluated on a case by case basis. 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. Contingent rent for commercial properties are received from tenants for certain costs as provided in the lease agreement. The costs generally include real estate taxes, utilities, insurance, common area maintenance and recoverable costs. Rental concessions are also accounted for on the straight‑line basis.

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. The capitalized above‑market lease values for acquired properties are amortized 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.

Rental Properties:  Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions which improve or extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such disposition is included in income. Fully depreciated assets are removed from the accounts. Rental properties are depreciated by both straight‑line and accelerated methods over their estimated useful lives. Upon acquisition of rental property, the Partnership estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in‑place leases and (iii) tenant relationships. The Partnership allocates the purchase price to the assets acquired and liabilities assumed based on their fair values. The Partnership records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the

F-7

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Other intangible assets acquired include amounts for in‑place lease values and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in‑place lease values include an estimate of carrying costs during hypothetical expected lease‑up periods considering current market conditions, and costs to execute similar leases at market rates during the expected lease‑up periods, depending on local market conditions. 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. 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.

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. The estimated future undiscounted cash flows are compared to the asset’s carrying value to determine if a write‑down to fair value is required.

Financing and Leasing Fees:  Financing fees are capitalized and amortized, using the interest method, over the life of the related mortgages. Leasing fees are capitalized and amortized on a straight‑line basis over the life of the related lease. Unamortized balances are expensed when the corresponding fee is no longer applicable.

Income Taxes:  The financial statements have been prepared on the basis that NERA and its subsidiaries are entitled to tax treatment as partnerships. Accordingly, no provision for income taxes have been recorded (See Note 13).

Cash Equivalents:  The Partnership considers cash equivalents to be all highly liquid instruments purchased with a maturity of three months or less.

Segment Reporting:  Operating segments are revenue producing components of the Partnership for which separate financial information is produced internally for management. Under the definition, NERA operated, for all periods presented, as one segment.

Comprehensive Income:  Comprehensive income is defined as changes in partners’ equity, exclusive of transactions with owners (such as capital contributions and dividends). NERA did not have any comprehensive income items in 2015, 2014, or 2013 other than net income as reported.

Income (Loss) Per Depositary Receipt:  Effective January 3, 2012, the Partnership authorized a 3‑for‑1 forward split of its Depositary Receipts listed on the NYSE Amex and a concurrent adjustment of the exchange ratio of Depositary Receipts for Class A Units of the Partnership from 10‑to‑1 to 30‑to‑1, such that each Depositary Receipt represents one‑thirtieth (1/₃₀) of a Class A Unit of the Partnership. All references to Depositary Receipts in the report are reflective of the 3‑ for‑1 forward split.

Income Per Unit:  Net income per unit has been calculated based upon the weighted average number of units outstanding during each period presented. The Partnership has no dilutive units and, therefore, basic net income is the same as diluted net income per unit (see Note 7).

F-8

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Concentration of Credit Risks and Financial Instruments:  The Partnership’s properties are located in New England, and the Partnership is subject to the general economic risks related thereto. No single tenant accounted for more than 5% of the Partnership’s revenues in 2015, 2014, or 2013. The Partnership makes its temporary cash investments with high‑credit quality financial institutions. At December 31, 2015, 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 0.35%. At December 31, 2015 and 2014, respectively approximately $11,592,000 and $15,118,000 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 $165,070,  $119,015 and $41,285 in 2015, 2014 and 2013, respectively.

Discontinued Operations and Rental Property Held for Sale:  In April 2014, the FASB issued guidance related to the reporting of discontinued operation and disclosures of disposals of components of an entity. This guidance defines a discontinued operation as a component or group of components disposed or classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and final result; the guidance states that a strategic shift could include a disposal of a major geographical area of operations, a major line of business, a major equity method investment or other major parts of an entity.  The guidance also provides for additional disclosure requirements in connection with both discontinued operations and other dispositions not qualifying as discontinued operations.  The guidance will be effective for all companies for annual and interim periods beginning on or after December 15, 2014.  The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date.  All entities may early adopt the guidance for new disposals (or new classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance.  The Partnership has elected to early adopt this standard effective with the interim period beginning January 1, 2014.  Prior to January 1, 2014, properties identified as held for sale and/or disposed of were presented in discontinued operations for all periods presented.

Interest Capitalized:  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 years ended December 31, 2015,  2014 and 2013 there was no capitalized interest.

Extinguishment of Debt:  When existing mortgages are refinanced with the same lender and it is determined that the refinancing is substantially different then they are recorded as an extinguishment of debt. However if it is determined that the refinancing is substantially the same then they are recorded as an exchange of debt. All refinancing qualify as extinguishment of debt.

Reclassifications:  Certain reclassifications have been made to prior period amounts in order to conform to current period presentation.

NOTE 2. RENTAL PROPERTIES

As of December 31, 2015, the Partnership and its Subsidiary Partnerships owned 2,506 residential apartment units in 21 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 December 31, 2015, the Partnership and Subsidiary Partnerships owned a commercial shopping center in Framingham, commercial buildings in Newton and Brookline and mixed‑use properties in Boston, Brockton and Newton, all in Massachusetts. These properties are referred to collectively as the “Commercial Properties.”

F-9

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

The Partnership also owned a 40% to 50% ownership interest in nine residential and mixed use complexes (the “Investment Properties”) at December 31, 2015 with a total of 788  units, accounted for using the equity method of consolidation. See Note 14 for summary information on these investments.

Rental properties consist of the following:

	December 31, 2015		December 31, 2014		Useful Life
Land, improvements and parking lots	$	52,852,877	$	44,541,471	15	-	40	years
Buildings and improvements		172,277,299		153,059,430	15	-	40	years
Kitchen cabinets		8,493,696		6,865,348	5	-	10	years
Carpets		7,361,966		6,341,227	5	-	10	years
Air conditioning		718,531		705,116	5	-	10	years
Laundry equipment		244,771		147,721	5	-	7	years
Elevators		1,139,296		1,139,296	20	-	40	years
Swimming pools		444,629		444,629	10	-	30	years
Equipment		9,502,977		5,491,992	5	-	7	years
Motor vehicles		130,563		130,563			5	years
Fences		38,115		24,670	5	-	15	years
Furniture and fixtures		7,855,351		5,910,046	5	-	7	years
Smoke alarms		216,827		220,437	5	-	7	years
Total fixed assets		261,276,898		225,021,946
Less: Accumulated depreciation		(84,579,584)		(75,905,862)
	$	176,697,314	$	149,116,084

F-10

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Real estate and accumulated depreciation as of December 31, 2015 is:

							Cost
			Initial Cost to				Capitalized		Gross Amount at Which
	Encumbrances		Partnerships(1)				Subsequent to		Carried at Close of Period
	(First				Buildings		Acquisition(2)				Buildings				Accumulated
	Mortgages)		Land		Improvements		Improvements		Land		Improvements		Totals		Depreciation(3)		Date Acquired
Boylston Downtown L.P.
Residential Apartments
Boston, Massachusetts	$	40,000,000	$	2,112,000	$	8,593,109	$	8,192,079	$	2,112,000	$	16,785,188	$	18,897,188	$	10,755,089	July 1995
Brookside Associates LLC
Residential Apartments
Woburn, Massachusetts	$	2,598,337	$	684,000	$	3,116,000	$	432,302	$	684,000	$	3,548,302	$	4,232,302	$	1,945,022	Oct. 2000
Clovelly Apartments L.P.
Residential Apartments
Nashua, New Hampshire	$	4,160,000	$	177,610	$	1,478,359	$	1,689,128	$	177,610	$	3,167,487	$	3,345,097	$	2,154,856	Sept. 1977
Commonwealth 1137 L.P.
Residential Apartments
Boston, Massachusetts	$	3,750,000	$	342,000	$	1,367,669	$	1,196,696	$	342,000	$	2,564,365	$	2,906,365	$	1,532,004	July 1995
Commonwealth 1144 L.P.
Residential Apartments
Boston, Massachusetts	$	14,780,000	$	1,410,000	$	5,664,816	$	2,207,782	$	1,410,000	$	7,872,598	$	9,282,598	$	5,199,814	July 1995
Executive Apartments L.P.
Residential Apartments
Framingham, Massachusetts	$	2,415,000	$	91,400	$	740,360	$	1,226,670	$	91,400	$	1,967,030	$	2,058,430	$	1,062,137	Sept. 1977
Hamilton Battle Green LLC
Residential Apartments
Lexington, Massachusetts	$	4,649,132	$	1,341,737	$	8,457,497	$	170,445	$	1,341,737	$	8,627,942	$	9,969,679	$	1,823,135	Jun. 2011
Hamilton Cypress LLC
Commercial—
1031Exchange Brookline,
Massachusetts	$	—	$	2,362,596	$	4,613,985	$	259,375	$	2,362,596	$	4,873,360	$	7,235,956	$	1,085,242	Oct. 2008
Hamilton Green
Apartments, LLC
Residential Apartments
Andover, Massachusetts	$	38,500,000	$	16,054,336	$	44,794,438	$	748,572	$	16,054,336	$	45,543,010	$	61,597,346	$	8,395,786	Jul. 2013
Hamilton Linewt LLC
Commercial—
1031Exchange Newton,
Massachusetts	$	—	$	884,042	$	2,652,127	$	62,608	$	884,042	$	2,714,735	$	3,598,777	$	564,048	Nov. 2007
Hamilton Oaks
Associates LLC
Residential Apartments
Brockton, Massachusetts	$	11,925,000	$	2,175,000	$	12,325,000	$	2,574,848	$	2,175,000	$	14,899,848	$	17,074,848	$	8,580,806	Dec. 1999
Highland Street
Apartments, L.P.
Residential Apartments
Lowell, Massachusetts	$	1,050,000	$	156,000	$	634,085	$	338,724	$	156,000	$	972,809	$	1,128,809	$	635,675	Dec. 1996

F-11

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

							Cost
			Initial Cost to				Capitalized		Gross Amount at Which
	Encumbrances		Partnerships(1)				Subsequent to		Carried at Close of Period
	(First				Buildings		Acquisition(2)				Buildings				Accumulated
	Mortgages)		Land		Improvements		Improvements		Land		Improvements		Totals		Depreciation(3)		Date Acquired
Linhart L.P.
Residential/Commercial
Newton, Massachusetts	$	—	$	385,000	$	1,540,000	$	1,331,870	$	385,000	$	2,871,870	$	3,256,870	$	2,047,890	Jan. 1995
NERA Dean
St. Associates LLC
Residential Apartments
Norwood, Massachusetts	$	5,687,000	$	1,512,000	$	5,701,480	$	961,065	$	1,512,000	$	6,662,545	$	8,174,545	$	3,143,032	Jun. 2002
North Beacon 140 L.P.
Residential Apartments
Boston, Massachusetts	$	6,937,000	$	936,000	$	3,762,013	$	2,158,122	$	936,000	$	5,920,135	$	6,856,135	$	3,743,872	July 1995
Olde English
Apartments L.P.
Residential Apartments
Lowell, Massachusetts	$	3,080,000	$	46,181	$	878,323	$	1,262,126	$	46,181	$	2,140,449	$	2,186,630	$	1,386,246	Sept. 1977
Redwood Hills L.P.
Residential Apartments
Worcester, Massachusetts	$	6,743,000	$	1,200,000	$	4,810,604	$	3,171,266	$	1,200,000	$	7,981,870	$	9,181,870	$	4,753,632	July 1995
Residences at Captain Parkers LLC
Residential Apartments
Lexington, Massachusetts	$	—	$	6,247,153	$	24,954,777	$	31,201,930	$	6,247,153	$	24,954,777	$	31,201,930	$	385,301	Sept. 2015
River Drive L.P. Residential
Apartments Danvers,
Massachusetts	$	3,465,000	$	72,525	$	587,777	$	1,130,773	$	72,525	$	1,718,550	$	1,791,075	$	847,593	Sept. 1977
Riverside Apartments
Condominium Units
Massachusetts	$	—	$	23,346	$	190,807	$	54,973	$	23,346	$	245,780	$	269,126	$	205,387	Sept. 1977
School St Assoc LLC
Residential Apartments
Framingham,
Massachusetts	$	15,000,000	$	4,686,728	$	18,746,911	$	(1,254,212)	$	4,686,728	$	17,492,699	$	22,179,427	$	7,958,005	Apr. 2003
WRF Associates LLC Strip
Mall Framingham,
Massachusetts	$	6,000,000	$	3,280,000	$	4,920,000	$	86,445	$	3,280,000	$	5,006,445	$	8,286,445	$	2,737,573	May 1999
WCB Associates LLC
Residential Apartments
Brockton, Massachusetts	$	7,000,000	$	1,335,000	$	7,565,501	$	1,722,213	$	1,335,000	$	9,287,714	$	10,622,714	$	5,303,172	Dec. 1999
Westate Apartments
Burlington LLC
Residential Apartments
Burlington, Massachusetts	$	2,500,000	$	44,965	$	4,478,687	$	244,281	$	44,965	$	4,722,968	$	4,767,933	$	1,984,655	Sept. 2004
Westgate Apartments LLC
Residential Apartments
Woburn, Massachusetts	$	15,700,000	$	461,300	$	2,424,636	$	8,333,060	$	417,107	$	10,757,696	$	11,174,803	$	6,349,611	Sept. 1977
	$	195,939,469	$	48,020,919	$	174,998,961	$	69,503,141	$	47,976,726	$	213,300,172	$	261,276,898	$	84,579,584

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

Net of retirements.

(2)

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

(3) In 2015, rental properties were depreciated over the following estimated useful lives:

Assets	Life
Buildings and Improvements	10	-	39	years
Other Categories of Assets	5	-	15	years

A reconciliation of rental properties and accumulated depreciation is as follows:

	December 31,
	2015		2014		2013
Rental Properties
Balance, Beginning	$	225,021,946	$	221,454,286	$	158,624,893
Additions:
Buildings, improvements and other assets		37,895,926		5,604,791		65,349,698
		262,917,872		227,059,077		223,974,591
Deduct:
Write-offs of retired or disposed assets		1,640,974		2,037,131		2,505,787
Rental properties held for sale and/or sold		—		—		14,518
Balance, Ending	$	261,276,898	$	225,021,946	$	221,454,286
Accumulated Depreciation
Balance, Beginning	$	75,905,862	$	68,549,625	$	63,651,293
Add:
Depreciation for the year		10,314,696		9,393,368		7,404,120
		86,220,558		77,942,993		71,055,413
Deduct
Accumulated depreciation of retired or disposed assets		1,640,974		2,037,131		2,505,788
Balance, Ending	$	84,579,584	$	75,905,862	$	68,549,625

In May 2013 the Partnership sold the Nashoba Apartments located in Acton, Massachusetts. The sale price was $4,300,000; the net proceeds of approximately $2,100,000 were transferred to Investment Property Exchange Services, Inc. a Qualified Intermediary. These funds were held by the intermediary in order to maintain the Partnership’s ability to structure a tax free exchange in accordance with the Internal Revenue Service’s rules under Sec. 1031. The gain on the sale in accordance with GAAP is approximately $3,679,000. The proceeds were subsequently used in the acquisition of the Hamilton Green Apartments described below.

On July 15, 2013, Hamilton Green Apartments, LLC, (“Hamilton Green”) a newly formed subsidiary of the Partnership, purchased Windsor Green at Andover, a 193 unit apartment complex located at 311 and 319 Lowell Street, Andover, Massachusetts. The purchase price was $62,500,000. From the purchase price, the Partnership has allocated approximately $1,656,000 to the value of the in‑place leases and approximately $96,000 to the value of the tenant relationships. These amounts will be amortized over 12 and 36 months respectively. To fund this purchase, the Partnership obtained short term financing of approximately $40,000,000, used the funds of approximately $2,100,000 from the sale of the Nashoba Apartments, and the balance from the Partnership’s cash reserves. The closing costs associated with this short term financing were approximately $38,000. The original mortgage matured in November 2013. On December 20, 2013, the Partnership refinanced the mortgage on Hamilton Green. The new 15 year mortgage is $38,500,000; the interest rate is 4.67%; interest only for 2 years.  After the first two years, principal is amortized on a 30 year amortization schedule through January 2029. This refinancing required additional capital of approximately $1,846,000 from the Partnership. The closing costs associated with this refinancing were approximately $346,000.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

On September 18, 2015, Residences at Captain Parkers LLC, a newly formed subsidiary of the Partnership, purchased the Residence at Captain Parkers, a 94 unit apartment complex located at 125 Worthen Road and Ryder Lane in Lexington, Massachusetts. The purchase price was $31,600,000 and the closing costs were approximately $49,000. From the purchase price, the Partnership allocated approximately $474,000 for in-place leases, and approximately $31,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively. To fund the purchase, the Partnership utilized the available line of credit of $25,000,000, and the balance from the Partnership’s cash reserves.

NOTE 3. RELATED PARTY TRANSACTIONS

The Partnership’s properties are managed by an entity that is owned by the majority shareholder of 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 $1,870,000,  $1,745,000 and $1,570,000 in 2015, 2014 and 2013, respectively.

The Partnership Agreement permits the General Partner or Management Company to charge the costs of professional services (such as counsel, accountants and contractors) to NERA. In 2015, 2014 and 2013, approximately $994,000,  $925,000 and $1,431,000, was charged to NERA for legal, accounting, construction, maintenance, rental and architectural services and supervision of capital improvements. Of the 2015 expenses referred to above, approximately $443,000 consisted of repairs and maintenance, and $349,000 of administrative expense. Approximately $202,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties. Additionally in 2015, the Hamilton Company received approximately $840,000 from the Investment Properties of which approximately $677,000 was the management fee, approximately $23,000 was for construction, architectural services and supervision of capital projects, approximately $95,000 was for maintenance services, and approximately $45,000 was for administrative services. The management fee is equal to 4% of gross receipts rental income on the majority of investment properties and 2% on Dexter Park.

The Partnership reimburses the management company for the payroll and related expenses of the employees who work at the properties. Total reimbursement was approximately $2,958,000,  $3,230,000 and $2,926,000 for the years ended December 31, 2015, 2014 and 2013, 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. There were no employer contributions during 2015, 2014 or 2013.

Bookkeeping and accounting functions are provided by the Management Company’s accounting staff, which consists of approximately 14 people. During the years ended December 31, 2015, 2014 and 2013 the Management Company charged the Partnership $125,000 per year for bookkeeping and accounting services included in administrative expenses above.

The President of the Management Company performs asset management consulting services and receives an asset management fee from the Partnership. The Partnership does not have a written agreement with this individual. During the years ended December 31, 2015, 2014 and 2013 this individual received a quarterly fee of $18,750 for a total annual fee of $75,000.

The Partnership has invested in nine limited partnerships, which have invested in mixed use residential apartment complexes. The Partnership has a 40% to 50% ownership interest in each investment property. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management

F-14

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Company. Harold Brown’s ownership interest is between 43.2% and 57%. See Note 14 for a description of the properties and their operations.

The Advisory Committee held 5meetings during 2015, and a total of $26,000was paid for attendance and participation in such meetings. Additionally, the Audit Committee held 4meetings in 2015 and a total of $12,000was paid for attendance and participation in such meetings.

See Note 8 for information regarding the repurchase of Class B and General Partnership Units.

NOTE 4. OTHER ASSETS

Approximately $2,257,000 and $2,090,000 of security deposits are included in prepaid expenses and other assets at December 31,2015 and 2014, respectively. The security deposits and escrow accounts are restricted cash.

Included in prepaid expenses and other assets at December 31, 2015 and 2014 is approximately $801,000 and $253,000, respectively, held in escrow to fund future capital improvements.

Intangible assets on the acquisitions of Hamilton Green and the Residence at Captain Parkers are included in prepaid expenses and other assets. Intangible assets are approximately $382,000 net of accumulated amortization of approximately $1,875,000 and approximately $49,000 net of accumulated amortization of approximately $1,703,000 at December 31,2015 and 2014, respectively.

Financing fees of approximately $1,516,000 and $1,736,000 are net of accumulated amortization of approximately $833,000 and $613,000 at December 31, 2015 and 2014, respectively.

NOTE 5. MORTGAGE NOTES PAYABLE

Mortgages Payable

At December 31, 2015 and 2014, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2. At December 31, 2015, the interest rates on these loans ranged from 3.76%to5.97%, payable in monthly installments aggregating approximately $808,000, including principal, to various dates through 2029. The majority of the mortgages are subject to prepayment penalties. At December 31, 2015, the weighted average interest rate on the above mortgages was 4.81%. The effective rate of 4.92% includes the amortization expense of deferred financing costs. See Note 12 for fair value information. 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.

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

F-15

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Approximate annual maturities at December 31, 2015 are as follows:

2016—current maturities	$	1,183,000
2017		1,782,000
2018		7,860,000
2019		1,942,000
2020		4,343,000
Thereafter		178,829,000
	$	195,939,000

On February 25, 2013, the Partnership paid off the mortgage of approximately $3,967,000 on Hamilton Cypress LLC. There was no penalty on the early payoff. The funds used to pay off the mortgage were from the Partnerships cash reserves.

On March 11, 2013, the Partnership refinanced the property owned by School Street 9 LLC. The new loan is $15,000,000 with an interest rate of 3.76% due in 2023. The loan calls for interest only for three years followed by principal and interest payments over the remainder of the loan term. Principal payments will be on a 30 year amortization schedule. The Partnership paid off the prior mortgage in the amount of approximately $15,284,000 with the proceeds of the new mortgage and the Partnership’s cash reserves. The costs associated with this refinancing were approximately $159,000.

On July 7, 2013, the Partnership refinanced the property owned by Boylston Downtown LP. The new 15 year $40,000,000 mortgage has an interest rate of 3.97%. The terms of the loan are interest only for the first three years, with a 30 year amortization thereafter until maturity in August 2028. Approximately $19,500,000 of loan proceeds was used to pay off the existing mortgage. The balance of the funds, approximately $20,000,000, after closing costs, was used in connection with the purchase of Hamilton Green Apartments. The costs associated with this refinancing are approximately $279,000.

On October 1, 2013, the Partnership refinanced the property owned by Westgate Apartments LLC. The new mortgage is $15,700,000; the interest rate is 4.65%, interest only payable in 10 years. Approximately $7,616,000 of the loan proceeds was used to pay off the existing mortgage. The mortgage matures in September 2023. The costs associated with the refinancing were approximately $190,000.

On December 20, 2013, the Partnership refinanced the property owned by Hamilton Green Apartments LLP. The new mortgage is $38,500,000; the interest rate is 4.67%; interest only for 2 years. After the first two years, principal is amortized on a 30‑year amortization schedule through January 2029. The proceeds of the new mortgage as well as the Partnership’s cash reserves of approximately $1,846,000 were used to pay off the prior mortgage of $40,000,000 and cover the cost of this refinancing. The costs associated with the refinancing were approximately $346,000.

In February 2014, the Partnership paid off the mortgages on Linewt in the amount of approximately $1,466,000 and Linhart in the amount of approximately $1,926,000. There were no prepayment penalties. The Partnership’s cash reserves were used to pay off these mortgages.

On June 11, 2014, the Partnership refinanced the property owned by NERA Dean Street Associates, LLC.  The new mortgage is $5,687,000; the interest rate is 4.22%, interest only payable in 10 years. Approximately $5,077,000 of the loan proceeds were used to pay off the existing mortgage.  The mortgage matures in June 2024. The costs associated with the refinancing were approximately $89,000.

On July 11, 2014, the Partnership refinanced the property owned by Westgate Apartments Burlington, LLC.  The new mortgage is $2,500,000; the interest rate is 4.31%; interest only, payable in 10 years.  Approximately

F-16

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

$2,010,000 of loan proceeds were used to pay off the existing mortgage.  The mortgage matures in August, 2024.  The costs associated with the refinancing were approximately $75,000.

Line of Credit

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 the  applicable margin of 2.5% . The costs associated with the line of credit were approximately $125,000. As of December 31, 2015, the credit line had a balance of $25,000,000. The interest rate on the line of credit at December 31, 2015 is 3.875%.

On September 15, 2015, the Partnership, in connection with the purchase of the Residence at Captain Parker Apartments, used the entire line of credit, along with cash reserve, to purchase the property. (See Note 2: Rental Properties, for the details of the transaction.)

The line of credit may be used for acquisition, refinancing, improvements, working capital and other needs of the Partnership. The line may not be used to pay dividends, make distributions or acquire equity interests of the Partnership.

The line of credit is collateralized by varying percentages of the Partnership’s ownership interest in 23 of its subsidiary properties and joint ventures. Pledged interests range from 49% to 100% of the Partnership’s ownership interest in the respective entities.

The Partnership paid fees to secure the line of credit. Any unused balance of the line of credit is subject to a fee ranging from 15 to 20 basis points per annum. The Partnership paid approximately $36,000 during the year ended December 31, 2015.

The line of credit agreement has several covenants, such as providing cash flow projections and compliance certificates, as well as other financial information. The covenants include, but are not limited to the following: maintain a leverage ratio that does not exceed 65%; aggregate increase in indebtedness of the subsidiaries and joint ventures should not exceed $15,000,000; maintain a tangible net worth (as defined in the agreement) of a minimum of $150,000,000; a minimum ratio of net operating income to total indebtedness of at least 9.5%; debt service coverage ratio of at least 1.6 to 1, as well as other items.

The Partnership is in compliance with these covenants as of December 31, 2015.

NOTE 6. ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

The Partnership’s residential lease agreements may require tenants to maintain a one‑month advance rental payment and/or a security deposit. Prepaid rents are approximately $2,389,000and $1,568,000 at December 31, 2015 and 2014, respectively. Security deposits are approximately 2,489,000 and $2,332,000 at December 31, 2015 and 2014, respectively.

NOTE 7. PARTNERS’ CAPITAL

The Partnership has two classes of Limited Partners (Class A and B) and one category of General Partner. Under the terms of the Partnership Agreement, distributions to holders of Class B Units and General Partnership Units must represent 19% and 1%, respectively, of the total units outstanding. All classes have equal profit sharing and distribution rights, in proportion to their ownership interests.

F-17

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

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

In 2016, the Partnership announced the approval of a quarterly distribution of its Class A Limited Partners and holders of Depositary Receipts of record as of March 15, 2016 and payable on March 31, 2016,  $7.50 per unit and $0.25 per receipt.

In 2015 and 2014, the Partnership paid quarterly distributions of $7.50 per unit ($0.25 per receipt) in March, June, September, and December for a total distribution of $30.00 per unit ($1.00 per receipt) each year.

The Partnership has entered into a deposit agreement with an agent to facilitate public trading of limited partners’ interests in Class A Units. Under the terms of this agreement, the holders of Class A Units have the right to exchange each Class A Unit for 30 Depositary Receipts. The following is information per Depositary Receipt:

	Year Ended
	December 31,
	2015		2014
Net Income per Depositary Receipt	$	1.00	$	0.27
Distributions per Depositary Receipt	$	1.00	$	1.00

NOTE 8. TREASURY UNITS

Treasury Units at December 31, 2015 are as follows:

Class A	43,880
Class B	10,422
General Partnership	549
	54,851

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”) under which the Partnership was permitted to purchase, over a period of twelve months, up to 300,000 Depositary Receipts (each of which is one‑tenth of a Class A Unit). On January 15, 2008, the General Partner authorized an increase in the Repurchase Program from 300,000 to 600,000 Depositary Receipts. On January 30, 2008 the General Partner authorized an increase the Repurchase Program from 600,000 to 900,000 Depositary Receipts. On March 6, 2008, the General Partner authorized the increase in the total number of Depositary Receipts that could be repurchased pursuant to the Repurchase Program from 900,000 to 1,500,000. On August 8, 2008, the General Partner re‑ authorized and renewed the Repurchase Program for an additional 12‑month period ended August 19, 2009. On March 22, 2010, the General Partner re‑authorized and renewed the Repurchase Program that expired on August 19, 2009. Under the terms of the renewed Repurchase Program, the Partnership may purchase up to 1,500,000 Depositary Receipts from the start of the program in 2007 through March 31, 2015. On March 10, 2015, the General Partner authorized an increase in the Repurchase Program from 1,500,000 to 2,000,000 Depository Receipts and extended the Program for an additional five years from March 31, 2015 until March 31, 2020. The Repurchase Program 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’s Second Amended and Restate Contract of Limited

F-18

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Partnership. 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 December 31, 2015, the Partnership has repurchased 1,341,598 Depositary Receipts at an average price of $26.63 per receipt (or $798.90 per underlying Class A Unit), 2,885 Class B Units and 152General Partnership Units, both at an average price of $ 877.14 per Unit, totaling approximately $38,596,000 including brokerage fees paid by the Partnership.

From January 1, 2016 through March10, 2016, the Partnership purchased a total of 10,829 Depositary Receipts. The average price was $50.11 per receipt or $1,503.26 per unit. The total cost including commission was $558,722. The Partnership is required to repurchase 86Class B Units and 5 General Partnership Units at a cost of $128,874and $6,783 respectively.

During the year ended December 31, 2015, the Partnership purchased a total of 54,682 Depositary Receipts. The average price was $49.55 per receipt or $1,486.50 per unit. The total cost including commission was $2,752,393. The Partnership was required to repurchase 433 Class B Units and23 General Partnership units at a cost of $643,682 and $33,878 respectively.

During the year ended December 31, 2014, the Partnership purchased a total of 44,025 Depositary Receipts.  The average price was $47.90 per receipt or $1,437per unit. The total cost including commissions was $2,158,332. The Partnership was required to repurchase 349Class B Units for a cost of $500,888 and 18 General Partnership Units for a cost of $26,363.

NOTE 9. COMMITMENTS AND CONTINGENCIES

From time to time, the Partnership is involved in various ordinary routine litigation incidental to their business. The Partnership either has insurance coverage or provides for any uninsured claims when appropriate. The Partnership is not involved in any material pending legal proceedings.

On June 9, 2015, a fire broke out at 12 Westgate Drive apartment complex in Woburn, MA, resulting in approximately 10 apartments being damaged which will remain unoccupied for an extended period. The Partnership has insurance coverage on both repairs and rental loss for the extended period until the apartments are available for rent, and has received approximately $606,000 from the insurance company to date, leaving an estimated insurance recovery receivable of approximately $346,000 at December 31, 2015, which is included in the insurance recovery receivable  on the balance sheet.

NOTE 10. RENTAL INCOME

During the year ended December 31, 2015, approximately 92% 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

F-19

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

August. Approximately 8% was related to commercial properties, which have minimum future annual rental income on non‑cancellable operating leases at December 31, 2015 as follows:

	Commercial
	Property Leases
2016	$	2,826,000
2017		2,205,000
2018		1,922,000
2019		1,442,000
2020		869,000
Thereafter		796,000
	$	10,060,000

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 $683,000,  $638,000 and $670,000 for the years ended December 31, 2015, 2014 and 2013 respectively. Staples and Trader Joes, tenants at Staples Plaza are approximately 31% of the total commercial rental income.

The following information is provided for commercial leases:

	Annual base				Percentage of
	rent for		Total square feet	Total number of	annual base rent for
Through December 31,	expiring leases		for expiring leases	leases expiring	expiring leases
2016	$	219,570	12,586	10	8	%
2017		596,631	17,646	9	21	%
2018		333,911	9,557	7	11	%
2019		747,914	25,500	10	26	%
2020		204,730	6,709	5	7	%
2021		647,765	31,274	3	22	%
2022		—	—	—	—	%
2023		157,442	4,771	1	5	%
2024		—	—	—	—	%
2025		—	—	—	—	%
Totals	$	2,907,963	108,043	45	100	%

Rents receivable are net of an allowance for doubtful accounts of approximately $373,000 and $366,000 at December 31, 2015 and 2014. Included in rents receivable at December 31, 2015 is approximately $135,000 resulting from recognizing rental income from non‑cancelable commercial leases with future rental increases on a straight‑line basis. The majority of this amount is for long‑term leases with Staples and Trader Joe’s at Staples Plaza in Framingham, Massachusetts.

Rents receivable at December 31, 2015 also includes approximately $119,000 representing the deferral of rental concession primarily related to the residential properties.

For the year ended December 31, 2015 rent at the commercial properties includes approximately$2,200, of amortization of deferred rents arising from the fair values assigned to in‑place leases upon the purchase of Cypress Street in Brookline, Massachusetts.

F-20

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

NOTE 11. CASH FLOW INFORMATION

During the years ended December 31, 2015, 2014 and 2013, cash paid for interest was approximately $9,838,000,  $8,791,000 and $8,062,000 respectively. Cash paid for state income taxes was approximately $32,000,  $51,000 and $60,000 during the years ended December 31, 2015, 2014 and 2013 respectively. In 2013, the Partnership was involved in non‑cash refinancing activities of $38,500,000 in connection with the purchase of Hamilton Green. In 2014, the Partnership was involved in non-cash refinancing activities of approximately $7,077,000 for NERA Dean Street Associates, LLC and Westgate Apartments Burlington, LLC. In 2015, the Partnership was involved in a non-cash financing activity of $25,000,000 in connection with the purchase of the residence at Captain Parker.

NOTE 12. FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At December 31, 2015 and 2014, 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 December 31, 2015 and 2014 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and notes 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 December 31, 2015 and 2014, we estimated the fair value of our mortgages payable 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 December 31, 2015 and 2014, 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 December 31,2015, the Partnership has a line of credit outstanding in the amount of $25,000,000, which represents its fair market value.

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

· For cash and cash equivalents, accounts receivable, other assets, investment in partnerships, accounts payable, advance rents and security deposits: fair value approximates the carrying value of such assets and liabilities.

· For mortgages and notes payable: 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. Refer to the table below for the carrying amount and estimated fair value of such instruments.

F-21

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

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

	Carrying Amount		Estimated Fair Value
Mortgage Notes Payable
Partnership Properties
At December 31, 2015	$	195,939,469	$	206,679,642
At December 31, 2014	$	196,071,540	$	210,691,170
Investment Properties
At December 31, 2015	$	136,253,447	$	143,107,731
At December 31, 2014	$	137,910,870	$	147,843,221

Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2015 and 2014. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since December 31, 2015 and current estimates of fair value may differ significantly from the amounts presented herein.

NOTE 13. TAXABLE INCOME AND TAX BASIS

Taxable income reportable by the Partnership and includable in its partners’ tax returns is different than financial statement income because of tax free exchanges, accelerated depreciation, different tax lives, and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions. Taxable income of approximately $2,106,000 was approximately $1,667,000less than statement income for the year ended December 31, 2015. The primary reason for the decrease is due to accelerated depreciation, tax free exchange and other differences in the treatment of certain expenditures. The cumulative tax basis of the Partnership’s real estate at December 31, 2015 is approximately $7,000,000 less than the statement basis. The primary reasons for the lower tax basis are tax free exchanges, and accelerated depreciation. The Partnership’s tax basis in its joint venture investments is approximately $1,500,000 less than statement basis because of accelerated depreciation.

Certain entities included in the Partnership’s consolidated financial statements are subject to certain state taxes. These taxes are not significant and are recorded as operating expenses in the accompanying consolidates financial statements.

The following reconciles GAAP net income to taxable income:

	For the year ended
	December 31,
	2015		2014		2013
	(in thousands)
Financial statement (“book”) net income	$	3,773	$	1,025	$	5,655
Book/Tax differences from depreciation and amortization		(2,513)		(2,884)		(300)
Book/Tax differences on tax free exchanges		501		(827)		(4,670)
Book/Tax differences from Investment Properties		(74)		307		400
Increase (Decrease) in prepaid rent and allowances		413		269		175
Other		6		2		50
Taxable income (loss)	$	2,106	$	(2,108)	$	1,310

Allowable accelerated depreciation deductions were extended through 2015.  Future tax law changes may significantly affect taxable income.

F-22

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

The Partnership adopted the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes. As a result of the implementation of the guidance, the Partnership recognized no material adjustments regarding its tax accounting treatment. The Partnership expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which would be included in general and administrative expense.

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 December 31, 2015, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2012 forward.

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

Since November 2001, the Partnership has invested in nine limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with threeJoint Ventures investing in commercial property. The Partnership has between a 40%‑50% ownership interests in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and57%, with the balance owned by the others. A description of each investment is as follows:

On October 28, 2009 the Partnership invested approximately $15,925,000 in a joint venture to acquire a 40% interest in a residential property located in Brookline, Massachusetts. The property, Hamilton Park Towers LLC, referred to as Dexter Park, is a 409 unit residential complex. The purchase price was $129,500,000. The total mortgage was $89,914,000 with an interest rate of 5.57% and it matures in 2019. The mortgage calls for interest only payments for the first two years of the loan and amortized over 30 years thereafter. The balance of this mortgage is approximately $84,903,000 at December 31, 2015.  This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

On October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168‑unit apartment complex in Quincy, Massachusetts. The purchase price was $30,875,000. The Joint Venture sold 120 units as condominiums and retained 48 units for long‑term investment. In February 2007, the Joint Venture refinanced the 48 units with a new10 year mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. The loan is amortized over 30 years thereafter and matures in March 2017. As of December 31, 2015, the balance of the mortgage is approximately $4,504,000. This investment is referred to as Hamilton Bay Apartments, LLC. In April 2008, the Joint Venture refinanced an additional 20 units and obtained a new mortgage in the amount of $2,368,000 with interest at 5.75%, interest only, which matured in 2013. On October 18, 2013, the Partnership and its joint venture partner each made capital contributions to the entity of $660,000. The capital was used to pay off the outstanding mortgage. During 2015,  2 units were sold resulting in a gain of approximately $169,000. As of February 1, 2016,  fiveunits are still owned by theJoint Venture. This investment is referred to as Hamilton Bay, LLC.

On March 7, 2005, the Partnership invested $2,000,000 for a 50% ownership interest in a building comprising 48 apartments, one commercial space and a 50‑car surface parking lot located in Boston, Massachusetts. The purchase price was $14,300,000, with a $10,750,000 mortgage. The Joint Venture planned to operate the building and initiate development of the parking lot. In June 2007, the Joint Venture separated the parcels, formed an additional limited liability company for the residential apartments and obtained a mortgage on the property. The new limited liability company formed for the residential apartments and commercial space is referred to as Hamilton Essex 81, LLC. In August 2008, the Joint Venture restructured the mortgages on both parcels at Essex 81 and transferred the residential apartments to Hamilton Essex 81, LLC.On September 28, 2015, Hamilton Essex Development, LLC paid off the outstanding mortgage balance of $1,952,286.  The Partnership made a capital contribution of $978,193 to Hamilton Essex Development LLC for its share of the funds required for the transaction.  Additionally, the Partnership made a

F-23

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

capital contribution of $100,000 to Hamilton Essex 81, LLC.  On September 30, 2015, Hamilton Essex 81, LLC obtained a new 10 year mortgage in the amount of $10,000,000, interest only at 2.18% plus the one month Libor rate.  The proceeds of the note were used to pay off the existing mortgage of $8,040,719 and the Partnership received a distribution of $978,193 for its share of the excess proceeds. As a result of the distribution, the carrying value of the investment fell below zero. 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. The investment in the parking lot is referred to as Hamilton Essex Development, LLC; the investment in the apartments is referred to as Hamilton Essex 81, LLC.

On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176‑unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Joint Venture sold 127 of the units as condominiums and retained 49 units for long‑term investment. 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 balance of this mortgage is approximately $4,733,000 at December 31, 2015. This investment is referred to as Hamilton 1025, LLC.

In September 2004, the Partnership invested approximately $5,075,000 for a 50% ownership interest in a 42‑unit apartment complex located in Lexington, Massachusetts. The purchase price was $10,100,000. In October 2004, theJoint Venture obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Joint Venture obtained a new 10‑ year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan was 5.67% fixed for the ten year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan. This loan required a cash contribution by the Partnership of $1,250,000 in December 2006. At December 31, 2015, the balance of this mortgage is approximately $5,213,000. This investment is referred to as Hamilton Minuteman, LLC.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280‑unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. The Joint Venture sold 137 units as condominiums. The assets were combined with Hamilton on Main Apartments. Hamilton on Main, LLC is known as Hamilton Place.

In 2005, Hamilton on Main Apartments, LLC obtained a ten year mortgage on the three buildings to be retained. The mortgage was $16,825,000, with interest only of 5.18% for three years and amortizing on a 30 year schedule for the remaining seven years when the balance is due. The net proceeds after funding escrow accounts and closing costs on the mortgage were approximately $16,700,000, which were used to reduce the existing mortgage. In August 2014, the property was refinanced with a 10 year mortgage in the amount of $16,900,000 at 4.34% interest only.  The Joint Venture  paid off the prior mortgage of approximately $15,205,000 with the proceeds of the new mortgage and distributed $850,000to the Partnership. The costs associated with the refinancing were approximately $161,000.

In November 2001, the Partnership invested approximately $1,533,000 for a 50% ownership interest in a 40-unit apartment building in Cambridge, Massachusetts. In June 2013, the property was refinanced with a 15 year mortgage in the amount of $10,000,000 at 3.87%, interest only for 3 years and is amortized on a 30‑year schedule for the balance of the term. The Joint Venture paid off the prior mortgage of approximately $6,776,000 with the proceeds of the new mortgage. After the refinancing, the Joint Venture made a distribution of $1,610,000 to the Partnership. As a result of the distribution, the carrying value of the investment fell below zero. 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 December 31, 2015, the balance of this mortgage is approximately $10,000,000. This investment is referred to as 345 Franklin, LLC.

F-24

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Summary financial information as of December 31, 2015

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	8,419,054		$	2,618,666		$	6,780,019		$	4,939,620		$	573,138		$	6,174,512		$	6,352,363		$	18,574,474		$	94,250,027		$	148,681,873
Cash & Cash Equivalents		200,185			16,036			160,086			27,721			7,728			545			39,184			235,748			1,186,144			1,873,377
Rent Receivable		9,058			—			3,738			4,164			0			241			668			11,684			66,818			96,371
Real Estate Tax Escrow		33,643			—			15,322			80,196			—			51,218			40,499			81,815			210,446			513,139
Prepaid Expenses & Other Assets		104,975			565			37,087			56,047			12,879			63,345			41,201			67,497			1,898,655			2,282,251
Financing & Leasing Fees		134,443			—			83,231			4,567			—			7,157			4,044			139,111			222,906			595,459
Total Assets	$	8,901,358		$	2,635,267		$	7,079,483		$	5,112,315		$	593,745		$	6,297,018		$	6,477,959		$	19,110,329		$	97,834,996		$	154,042,470
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	10,000,000		$	—		$	10,000,000		$	4,733,318		$	—		$	4,504,340		$	5,212,864		$	16,900,000		$	84,902,925		$	136,253,447
Accounts Payable & Accrued Expense		69,413			1,700			63,267			28,735			12,605			14,594			55,116			216,091			792,707			1,254,228
Advance Rental Pmts & Security Deposits		202,470			—			221,871			91,649			5,799			95,552			113,084			328,676			2,482,080			3,541,181
Total Liabilities		10,271,883			1,700			10,285,138			4,853,702			18,404			4,614,486			5,381,064			17,444,767			88,177,712			141,048,856
Partners’ Capital		(1,370,525)			2,633,567			(3,205,655)			258,613			575,341			1,682,532			1,096,895			1,665,562			9,657,284			12,993,614
Total Liabilities and Capital	$	8,901,358		$	2,635,267		$	7,079,483		$	5,112,315		$	593,745		$	6,297,018		$	6,477,959		$	19,110,329		$	97,834,996		$	154,042,470
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,316,782		$	—		$	129,305		$	287,670		$	841,265		$	548,446		$	832,780		$	3,862,914			7,819,162
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(685,263)		$	—		$	(1,602,828)		$	—		$	—		$	—		$	—		$	—		$	—			(2,288,090)
Total Investment in Unconsolidated Joint Ventures (Net)																												$	5,531,072
Total units/condominiums
Apartments		48			—			40			175			120			48			42			148			409			1,030
Commercial		1			1			—			1			—			—			—			—			—			3
Total		49			1			40			176			120			48			42			148			409			1,033
Units to be retained		49			1			40			48			—			48			42			148			409			786
Units to be sold		—			—			—			127			120			—			—			—			—			247
Units sold through February 1, 2016		—			—			—			127			115			—			—			—			—			242
Unsold units		—			—			—			—			5			—			—			—			—			5
Unsold units with deposits for future sale as of  February 1, 2016		—			—			—			—			2			—			—			—			—			2

F-25

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Summary financial information for the year ended December 31, 2015

			Hamilton										Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Apts		Apts		Park		Total
Revenues
Rental Income	$	1,464,871	$	277,568	$	1,396,428	$	962,511	$	99,413	$	973,559	$	942,539	$	3,093,045	$	14,316,846	$	23,526,780
Laundry and Sundry Income		13,319		—		656		—		—		—		—		44,911		93,064		151,950
		1,478,190		277,568		1,397,084		962,511		99,413		973,559		942,539		3,137,956		14,409,910		23,678,730
Expenses
Administrative		28,849		2,000		35,071		6,262		8,105		8,592		5,402		48,818		225,509		368,608
Depreciation and Amortization		472,602		8,468		375,433		241,539		25,418		301,538		333,119		971,320		3,277,656		6,007,093
Management Fees		63,226		11,114		57,604		37,736		3,987		38,640		38,683		122,405		304,868		678,263
Operating		102,872		—		80,873		1,050		911		1,173		93,492		432,352		1,234,505		1,947,228
Renting		11,246		—		15,815		270		—		2,986		8,807		9,765		122,378		171,267
Repairs and Maintenance		153,329		200		61,183		314,409		43,559		362,861		82,769		393,665		1,134,751		2,546,726
Taxes and Insurance		216,602		52,846		124,266		166,842		20,461		154,348		124,393		341,990		1,548,439		2,750,187
		1,048,726		74,628		750,245		768,108		102,441		870,138		686,665		2,320,315		7,848,106		14,469,372
Income Before Other Income		429,464		202,940		646,839		194,403		(3,028)		103,421		255,874		817,641		6,561,804		9,209,358
Other Income (Loss)
Interest Expense		(399,176)		(40,644)		(391,756)		(276,066)		(322)		(259,274)		(304,757)		(753,528)		(4,879,409)		(7,304,932)
Interest Income		—		—		—		14		—		—		—		—		—		14
Other Income		—		—		—		—		—		—		—		96		—		96
Gain on Sale of Real Estate		—		—		—		—		169,093		—		—		—		—		169,093
		(399,176)		(40,644)		(391,756)		(276,052)		168,771		(259,274)		(304,757)		(753,432)		(4,879,408)		(7,135,729)
Net Income (Loss)	$	30,288	$	162,296	$	255,083	$	(81,649)	$	165,743	$	(155,853)	$	(48,883)	$	64,209	$	1,682,396	$	2,073,629
Net Income (Loss)—NERA 50%	$	15,144	$	81,148	$	127,542	$	(40,825)	$	82,871	$	(77,927)	$	(24,442)	$	32,105				195,616
Net Income —NERA 40%																	$	672,958		672,958
																			$	868,574

F-26

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Future annual mortgage maturities at December 31, 2015 are as follows:

	Hamilon		345		Hamilton		Hamilton		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		1025		Bay Apts		Minuteman		Main Apts		Park		Total
12/31/2016	$	—	$	86,413	$	4,733,318	$	77,805	$	83,493	$	—	$	1,507,291	$	6,488,320
12/13/2017		—		183,627		—		4,426,535		5,129,371		—		1,593,424		11,332,957
12/31/2018		—		190,861		—		—		—		—		1,684,479		1,875,340
12/31/2019		—		198,380		—		—		—		—		80,117,731		80,316,111
12/31/2020		—		206,195		—		—		—		—		—		206,195
Thereafter		10,000,000		9,134,524		—		—		—		16,900,000		—		36,034,524
	$	10,000,000	$	10,000,000	$	4,733,318	$	4,504,340	$	5,212,864	$	16,900,000	$	84,902,925	$	136,253,447

F-27

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

At December 31, 2015 the weighted average interest rate on the above mortgages was 5.07%. The effective rate was 5.16% including the amortization expense of deferred financing costs.

Summary financial information as of December 31, 2014

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	8,732,134		$	2,621,495		$	7,132,916		$	5,156,752		$	811,043		$	6,416,511		$	6,551,038		$	19,408,575		$	97,142,777		$	153,973,241
Cash & Cash Equivalents		759			4,216			111,875			23,008			28,636			32,379			66,705			158,515			1,128,780			1,554,873
Rent Receivable		44,399			—			2,116			2,111			1,770			945			—			7,495			94,857			153,693
Real Estate Tax Escrow		105,474			—			17,731			75,027			—			46,978			40,532			62,290			294,748			642,780
Prepaid Expenses & Other Assets		83,881			559			36,911			45,704			198,603			46,290			44,736			71,703			1,917,136			2,445,523
Financing & Leasing Fees		30,109			5,639			89,890			9,594			—			13,519			8,012			155,162			281,222			593,147
Total Assets	$	8,996,756		$	2,631,909		$	7,391,439		$	5,312,196		$	1,040,052		$	6,556,622		$	6,711,023		$	19,863,740		$	100,859,520		$	159,363,257
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,109,676		$	1,987,830		$	10,000,000		$	4,806,039		$	—		$	4,574,002		$	5,292,511		$	16,900,000		$	86,240,813		$	137,910,871
Accounts Payable & Accrued Expense		49,426			6,088			51,122			28,751			21,454			10,193			52,095			156,578			793,995			1,169,702
Advance Rental Pmts& Security Deposits		174,186			—			191,054			96,142			10,999			99,043			95,642			305,809			2,224,824			3,197,699
Total Liabilities		8,333,288			1,993,918			10,242,176			4,930,932			32,453			4,683,238			5,440,248			17,362,387			89,259,632			142,278,272
Partners’ Capital		663,468			637,991			(2,850,737)			381,264			1,007,599			1,873,384			1,270,775			2,501,353			11,599,888			17,084,985
Total Liabilities and Capital	$	8,996,756		$	2,631,909		$	7,391,439		$	5,312,196		$	1,040,052		$	6,556,622		$	6,711,023		$	19,863,740		$	100,859,520		$	159,363,257
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	331,734		$	318,995		$	—		$	190,632		$	503,800		$	936,692		$	635,388		$	1,250,676		$	4,639,953		$	8,807,868
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	—		$	—		$	(1,425,369)		$	—		$	—		$	—		$	—		$	—		$	—			(1,425,369)
Total Investment in Unconsolidated Joint Ventures (Net)																												$	7,382,500
Total units/condominiums
Apartments		48			—			40			175			120			48			42			148			409			1,030
Commercial		1			1			—			1			—			—			—			—			—			3
Total		49			1			40			176			120			48			42			148			409			1,033
Units to be retained		49			1			40			49			0			48			42			148			409			786
Units to be sold		—			—			—			127			120			—			—			—			—			247
Units sold through February 1, 2015		—			—			—			127			113			—			—			—			—			240
Unsold units		—			—			—			—			7			—			—			—			—			7
Unsold units with deposits for future sale as of February 1, 2015		—			—			—			—			—			—			—			—			—			—

F-28

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Summary financial information for the year ended December 31, 2014

													Hamilton		Hamilton
	Hamilton		Hamilton Essex		345		Hamilton		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Apts		Apts		Park		Total
Revenues
Rental Income	$	1,409,443	$	291,517	$	1,347,653	$	933,315	$	187,228	$	943,525	$	919,874	$	2,931,793	$	13,658,064	$	22,622,412
Laundry and Sundry Income		17,634				1,547		—		—		—		1,731		38,668		100,935		160,515
		1,427,077		291,517		1,349,200		933,315		187,228		943,525		921,605		2,970,461		13,758,999		22,782,927
Expenses
Administrative		32,908		1,530		41,319		8,550		4,361		18,053		8,823		54,694		226,551		396,789
Depreciation and Amortization		434,834		11,287		401,813		240,808		36,183		300,634		322,642		958,081		5,406,157		8,112,439
Management Fees		57,914		11,661		55,776		37,388		7,545		38,392		37,869		116,157		289,170		651,872
Operating		121,354		—		60,695		1,023		1,058		1,801		81,659		399,600		1,233,796		1,900,986
Renting		11,900		—		13,870		9,701		1,238		6,563		8,475		23,311		177,251		252,309
Repairs and Maintenance		156,321		3,810		67,219		326,111		84,460		294,811		79,215		395,608		1,181,497		2,589,052
Taxes and Insurance		228,556		53,556		118,103		158,129		36,624		158,858		119,406		367,278		1,462,398		2,702,908
		1,043,787		81,844		758,795		781,710		171,469		819,112		658,089		2,314,729		9,976,820		16,606,355
Income Before Other Income		383,290		209,673		590,405		151,605		15,759		124,413		263,516		655,732		3,782,179		6,176,572
Other Income (Loss)
Interest Expense		(483,197)		(55,877)		(391,451)		(280,385)		(596)		(263,656)		(308,646)		(800,881)		(4,952,328)		(7,537,017)
Interest Income		—		—		—		21		468		—		—		—		—		489
Gain on sale of real estate		—		—		—		—		475,335		—		—		—		—		475,335
		(483,197)		(55,877)		(391,451)		(280,364)		475,207		(263,656)		(308,646)		(800,881)		(4,952,328)		(7,061,193)
Net Income (Loss)	$	(99,907)	$	153,796	$	198,954	$	(128,759)	$	490,966	$	(139,243)	$	(45,130)	$	(145,149)	$	(1,170,149)	$	(884,621)
Net Income (Loss)—NERA 50%	$	(49,954)	$	76,898	$	99,477	$	(64,380)	$	245,483	$	(69,622)	$	(22,565)	$	(72,575)				142,764
Net Income (Loss)—NERA 40%																	$	(468,061)		(468,061)
																			$	(325,297)

F-29

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Summary financial information as of December 31, 2013

				Hamilton															Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			Hamilton on			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Main Apts			Park			Total
ASSETS
Rental Properties	$	8,764,215		$	2,624,325		$	7,494,954		$	5,389,763		$	1,766,132		$	6,680,834		$	6,778,029		$	20,253,587		$	102,120,964		$	161,872,803
Cash & Cash Equivalents		30,360			35,644			78,691			9,085			36,423			17,861			33,921			189,004			961,622			1,392,611
Rent Receivable		31,426			—			1,512			7,970			1,251			2,766			—			5,697			91,701			142,323
Real Estate Tax Escrow		101,395			—			16,970			80,767			—			45,679			41,268			72,308			427,084			785,471
Prepaid Expenses & Other Assets		77,141			555			36,979			44,737			101,507			31,435			50,721			322,667			1,529,591			2,195,333
Financing & Leasing Fees		46,630			14,097			96,548			14,619			—			19,881			11,981			7,716			340,362			551,834
Total Assets	$	9,051,167		$	2,674,621		$	7,725,654		$	5,546,941		$	1,905,314		$	6,798,456		$	6,915,919		$	20,850,980		$	105,471,324		$	166,940,376
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,234,548		$	2,041,146		$	10,000,000		$	4,869,583		$	—		$	4,639,848		$	5,362,109		$	15,317,643		$	87,410,638		$	137,875,515
Accounts Payable & Accrued Expense		44,299			6,084			60,638			50,279			16,993			7,570			73,289			290,008			944,140			1,493,300
Advance Rental Pmts & Security Deposits		167,143			—			169,709			92,057			24,687			85,413			74,615			291,825			2,121,509			3,026,958
Total Liabilities		8,445,990			2,047,230			10,230,347			5,011,919			41,680			4,732,831			5,510,013			15,899,476			90,476,287			142,395,773
Partners’ Capital		605,177			627,391			(2,504,692)			535,022			1,863,634			2,065,625			1,405,906			4,951,504			14,995,037			24,544,604
Total Liabilities and Capital	$	9,051,167		$	2,674,621		$	7,725,654		$	5,546,941		$	1,905,314		$	6,798,456		$	6,915,919		$	20,850,980		$	105,471,324		$	166,940,376
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	302,589		$	313,695		$	—		$	267,511		$	931,817		$	1,032,812		$	702,953		$	2,475,752		$	5,998,015			12,025,144
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	—		$	—		$	(1,252,346)		$	—		$	—		$	—		$	—		$	—		$	—			(1,252,346)
Total Investment in Unconsolidated Joint Ventures (Net)																												$	10,772,798
Total units/condominiums
Apartments		48			—			40			175			120			48			42			148			409			1,030
Commercial		1			1			—			1			—			—			—			—			—			3
Total		49			1			40			176			120			48			42			148			409			1,033
Units to be retained		49			1			40			49			—			48			42			148			409			786
Units to be sold		—			—			—			127			120			—			—			—			—			247
Units sold through February 1, 2014		—			—			—			127			105			—			—			—			—			232
Unsold units		—			—			—			—			15			—			—			—			—			15
Unsold units with deposits for future sale as of February 1, 2014		—			—			—			—			—			—			—			—			—			—

F-30

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

Summary financial information for the year ended December 31, 2013

			Hamilton						Hamilton				Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Bay		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Sales		Bay Apts		Apts		Apts		Park		Total
Revenues
Rental Income	$	1,362,012	$	287,410	$	1,258,313	$	896,256	$	261,949	$	911,845	$	858,492	$	2,753,120	$	12,851,259	$	21,440,656
Laundry and Sundry Income		17,549		—		2,683		—		—		—		675		37,192		94,715		152,814
		1,379,561		287,410		1,260,996		896,256		261,949		911,845		859,167		2,790,312		12,945,974		21,593,470
Expenses
Administrative		18,330		1,370		23,813		9,552		10,134		16,291		6,206		38,144		245,444		369,284
Depreciation and Amortization		428,609		9,803		428,003		240,658		80,697		307,546		318,095		948,478		5,778,427		8,540,316
Management Fees		55,813		11,496		51,706		36,066		10,538		35,831		34,129		112,749		271,505		619,833
Operating		114,778		—		68,364		1,150		2,234		1,343		83,143		347,382		1,056,919		1,675,313
Renting		11,106		—		3,788		5,378		1,425		10,986		6,350		6,273		105,593		150,899
Repairs and Maintenance		123,702		4,950		86,844		320,348		94,640		295,144		69,057		389,671		1,051,832		2,436,188
Taxes and Insurance		216,560		49,192		114,669		151,971		42,765		146,870		121,442		342,995		1,529,605		2,716,069
		968,898		76,811		777,187		765,123		242,433		814,011		638,422		2,185,692		10,039,325		16,507,902
Income Before Other Income		410,663		210,599		483,809		131,133		19,516		97,834		220,745		604,620		2,906,649		5,085,568
Other Income (Loss)
Interest Expense		(488,369)		(58,093)		(453,197)		(284,257)		(73,819)		(267,228)		(312,507)		(822,109)		(5,016,659)		(7,776,238)
Interest Income		—		—		26		8		159		—		—		—		57		250
Interest Income from Note		—		—		—		—		3,258		—		—		—		—		3,258
Other Income ( Expense)		—		—		(68,588)		—				—		—		—		—		(68,588)
		(488,369)		(58,093)		(521,759)		(284,249)		(70,402)		(267,228)		(312,507)		(822,109)		(5,016,602)		(7,841,318)
Net Income (Loss)	$	(77,706)	$	152,506	$	(37,950)	$	(153,116)	$	(50,886)	$	(169,394)	$	(91,762)	$	(217,489)	$	(2,109,953)	$	(2,755,750)
Net Income (Loss)—NERA 50%	$	(38,853)	$	76,253	$	(18,975)	$	(76,558)	$	(25,443)	$	(84,697)	$	(45,881)	$	(108,745)				(322,897)
Net Income (Loss)—NERA 40%																	$	(843,981)		(843,981)
																			$	(1,166,878)

F-31

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

NOTE 15. IMPACT OF RECENTLY‑ISSUED ACCOUNTING STANDARDS – review for relativity for 2015

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. ASU 2015-02 is effective for us beginning January 1, 2016.  We do not expect its adoption to have a significant impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, we will apply the new guidance on a retrospective basis and adjust the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance is effective for us beginning January 1, 2016. The adoption of ASU 2015-03 will result in debt issuance costs, currently included in Deferred Finance Costs, being presented in the balance sheet as a direct deduction from the carrying value of the related debt liabilities. We do not expect its adoption to have a significant  impact on our consolidated financial statements.

NOTE 16. DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

The following tables summarize income from discontinued operations and the related realized gain on sale of rental property for the years ended December 31, 2015, 2014 and 2013:

	Year Ended December 31,
	2015		2014		2013
Total Revenues	$	—	$	—	$	193,480
Operating and other expenses		—		—		172,322
Depreciation and amortization		—		—		2,111
		—		—		174,433
Income from discontinued operations	$	—	$	—	$	19,047

Gain on the Sale of Nashoba in the second quarter of 2013:
Sale price	$	4,300,000
Net book value		(476,766)
Expense of sale		(144,395)
Gain on the sale of real estate	$	3,678,839

F-32

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

NOTE 17. QUARTERLY FINANCIAL DATA (UNAUDITED)

	Three Months Ended
	March 31, 2015		June 30, 2015		September 30, 2015		December 31, 2015		Total
Revenue	$	11,075,520	$	11,061,418	$	11,209,974	$	12,133,802	$	45,480,714
Expenses		8,430,376		7,810,234		7,874,926		8,653,490		32,769,026
Income Before Other Income and Discontinued Operations		2,645,144		3,251,184		3,335,048		3,480,312		12,711,688
Other Income (Loss)		(2,235,486)		(2,154,727)		(2,261,302)		(2,287,608)		(8,939,123)
Net Income	$	409,658	$	1,096,457	$	1,073,746	$	1,192,704	$	3,772,565
Net Income per Unit before Discontinued Operations	$	3.22	$	8.66	$	8.51	$	9.47	$	29.86
Net Income Per Unit	$	3.22	$	8.66	$	8.51	$	9.47	$	29.86
Income Per Depositary Receipt Before Discontinued Operations	$	0.11	$	0.29	$	0.28	$	0.32	$	1.00
Net Income Per Depositary Receipt	$	0.11	$	0.29	$	0.28	$	0.32	$	1.00

	Three Months Ended
	March 31, 2014		June 30, 2014		September 30, 2014		December 31, 2014		Total
Revenue	$	10,617,928	$	10,560,535	$	10,643,029	$	10,810,827	$	42,632,319
Expenses		8,053,306		7,835,735		7,916,421		7,924,264		31,729,726
Income Before Other Income and Discontinued Operations		2,564,622		2,724,800		2,726,608		2,886,563		10,902,593
Other Income (Loss)		(2,594,236)		(2,443,079)		(2,545,121)		(2,295,307)		(9,877,743)
Net Income (Loss)	$	(29,614)	$	281,721	$	181,487	$	591,256	$	1,024,850
Net Income (Loss) per Unit before Discontinued Operations	$	(0.23)	$	2.18	$	1.41	$	4.60	$	7.96
Net Income (Loss) Per Unit	$	(0.23)	$	2.18	$	1.41	$	4.60	$	7.96
Income Per Depositary Receipt Before Discontinued Operations	$	(0.01)	$	0.07	$	0.05	$	0.15	$	0.27
Net Income (Loss) Per Depositary Receipt	$	(0.01)	$	0.07	$	0.05	$	0.15	$	0.27

NOTE 18—SUBSEQUENT EVENTS

From January 1, 2016 through March 10, 2016, the Partnership purchased a total of 10,829Depositary Receipts. The average price was $50.11 per receipt or $1,503.26 per unit. The total cost was $558,722. The Partnership is required to repurchase86Class BUnits and 5General Partnership Units at a cost of $128,874 and $6,783respectively.

On January 7, 2016, Residences at Captain Parker, LLC, a Massachusetts limited liability company (“Captain Parker”) entered into a Multifamily Loan and Security Agreement (the “Loan Agreement”) with KeyBank National Association (the “Lender”). The manager of Captain Parker is NewReal, Inc. (“New Real”), the general partner of New England Realty Associates Limited Partnership (the “Partnership”).  The Partnership is the sole member of Captain Parker. The Loan Agreement provides for a term loan (the “Loan”) in the principal amount of $20,071,000.  The Loan is due on February 1, 2026 (the “Due Date”), unless the due date is accelerated in accordance with the Loan’s terms.  The proceeds of the Loan are being used to refinance existing indebtedness. The Partnership is a limited guarantor of certain

F-33

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2015

of the Captain Parker obligations under the Loan Agreement.

Borrowings under the Loan will bear interest at rates equal to (i) the one month LIBOR rate for United States Dollar Deposits, determined monthly, plus 201 basis points. The interest rate increases upon an event of default. 

Captain Parker is required to repay the aggregate principal amount of the Loan by the Due Date. Interest payments on the Loans are payable monthly in arrears on specified dates set forth in the Loan Agreement. Principal payments on the Loan are also payable monthly commencing on March 1, 2021.  The note issued by Captain Parker in connection with the Loan Agreement (the “Note”) also contains provisions for optional prepayment with a penalty under certain circumstances.

The Loan is secured by, among other things, the Captain Parker Arms, a 94 unit apartment complex located at 7 Captain Parker Arms, Lexington, Massachusetts, previously acquired by Captain Parker and the rents that Captain Parker receives for the property.

The Loan Agreement contains customary representations, warranties and covenants applicable to special purpose entities. The covenants include, but are not limited to, limitations on:   (i) liens, (ii) dispositions of assets and (iii) mergers and consolidations.

The Loan Agreement and Note contain customary events of default, including a limited cross default provision and change of control provisions.

As a result of securing the financing, the Partnership used the proceeds of the loan and cash reserves of the Partnership to paydown the Line of Credit to zero.  A payment was made on January 7, 2016 for $23,000,000, and another payment for $2,000,000was made on January 15, 2016.

NOTE 19—QUALIFYING ACCOUNTS

New England Realty Associates Limited Partnership

Valuation and Qualifying Accounts

		Additions
	Balance at	Charged to	Charged to		Balance
	Beginning	Costs and	other account	Deductions	at end
Description	of Period	Expenses	describe	Describe(a)	of Period
Year Ended December 31, 2015:
Deducted from asset accounts:
Allowance for doubtful accounts	366,105	201,622		194,899	372,828
Year Ended December 31, 2014:
Deducted from asset accounts:
Allowance for doubtful accounts	343,805	308,401		286,101	366,105
Year Ended December 31, 2013:
Deducted from asset accounts:
Allowance for doubtful accounts	380,708	189,946		226,849	343,805

(a) Uncollectible accounts written off

F-34

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

New England Realty Associates Limited Partnership
By:	/s/ NewReal, Inc.
	Its General Partner
By:	/s/ Ronald Brown
	Ronald Brown, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Ronald Brown	President and Director of the General Partner (Principal	March 11, 2016
Ronald Brown	Executive Officer)
/s/ Harold Brown	Treasurer and Director of the General Partner (Principal	March 11, 2016
Harold Brown	Financial Officer and Principal Accounting Officer)
/s/ Guilliaem Aertsen	Director of the General Partner	March 11, 2016
Guilliaem Aertsen
/s/ David Aloise	Director of the General Partner	March 11, 2016
David Aloise
/s/ Eunice Harps	Director of the General Partner	March 11, 2016
Eunice Harps

S-1

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
(3)	Second Amended and Restated Contract of Limited Partnership.(1)
(4)	(a)	Specimen certificate representing Depositary Receipts.(2)
	(b)	Description of rights of holders of Partnership securities.(2)
	(c)	Deposit Agreement, dated August 12, 1987, between the General Partner and the First National Bank of Boston.(3)
(10.1)	Purchase and Sale Agreement by and between Sally A. Starr and Lisa Brown, Trustees of Omnibus Realty Trust, a nominee trust.(5)
(10.2)	Commitment letter from Wachovia Multifamily Capital, Inc. to The Hamilton Company dated January 11, 2008.(6)
(10.3)	Amendment dated February 27, 2008 to Commitment letter from Wachovia Multifamily Capital, Inc. to The Hamilton Company dated January 11, 2008.(7)
(10.4)	Purchase and Sale and Escrow Agreement dated September 1, 2009 by and between 175 Free Street Investors LLC, as Seller, The Hamilton Company, as Purchaser, and First American Title Insurance Company, as Escrow Agent.(8)
(10.5)	Limited Liability Company Operating Agreement of HBC Holdings, LLC.(9)
(10.6)	Limited Liability Company Agreement of Hamilton Park Towers, LLC.(10)
(10.7)	Pledge Agreement dated October 28, 2009 by and between New England Realty Associates Limited Partnership and HBC Holdings, LLC.(11)
(10.8)	Promissory Note dated October 28, 2009 of New England Realty Associates Limited Partnership in favor of HBC Holdings, LLC.(12)
(10.9)	MultiFamily Note—CME of Hamilton Park Towers, LLC, as Borrower, in favor of Wachovia Multifamily Capital, Inc., as Lender, in the principal amount of $89,914,000 dated October 28, 2009.(13)
(10.10)	Purchase and sale agreement by and between Avon Street Apartments and 503‑509 Pleasant Street, LLC.(20)
(10.11)	Purchase and Sale Agreement dated May 20, 2011 by and between Battlegreen Apartments Trust and Hamilton Battle Green LLC(14).
(10.12)	Promissory Note dated June 1, 2011 by and between Avon Street Apartments Limited Partnership, as Maker, and Harold Brown, as Lender(15).
(10.13)	Pledge Agreement dated June 1, 2011 by and between Avon Street Apartments Limited Partnership, as Pledgor, and Harold Brown, as Pledgee(16).
(10.14)	Hamilton Green Purchase Agreement dated June 14, 2013(17)
(10.15)	Loan Agreement dated July 15, 2013 complete description(18)
(10.16)	Revolving Line of Credit dated July 31, 2014(19)
(10.17)	Purchase and Sale Agreement dated August 27, 2015, between Avalon II Massachusetts Value I, L.P., and the Residences at Captain Parker, LLC
(10.18)	Multifamily  Loan and Security Agreement dated January 7, 2016 between Residences at Captain Parker, LLC (“Captain Parker”) and KeyBank National Association (“KeyBank”)(21)
(10.19)	Multifamily Note Floating Rate dated January 7, 2016,in the principal amount of $20,071,000 made by Captain Parker(22)
(10.20)	Multifamily Mortgage, Assignment of Rents, Security agreement and Fixture filing Massachusetts dated January 7, 2016 between Captain Parker and Keybank (23)
(10.21)	Guaranty  dated January 7, 2016, made by New England realty associates Limited Partnership as a limited guarantor (24)
(21)	Subsidiaries of the Partnership.(4)
(31.1)	Certification pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 of Ronald Brown, Principal Executive Officer of the Partnership (President and a Director of NewReal, Inc., sole General Partner of the Partnership)

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(31.2)	Certification pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 of Harold Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership)
(32.1)	Certification Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, of Ronald Brown, Principal Executive Officer of the Partnership (President and a Director of NewReal, Inc., sole General Partner of the Partnership) and Harold Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership).
(99.1)	Combined Financial Statements of Significant Subsidiaries
(101.1)	The following financial statements from New England Realty Associates Limited Partnership Quarterly Report on Form 10‑K for the year ended December 31, 2015 formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Changes in Partners’ Capital, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.

(1) Incorporated by reference to Exhibit A to the Partnership’s Statement Furnished in Connection with the Solicitation of Consents filed under the Securities Exchange Act of 1934 on October 14, 1986.

(2) Incorporated herein by reference to Exhibit A to Exhibit 2(b) to the Partnership’s Registration Statement on Form 8‑A, filed under the Securities Exchange Act of 1934 on August 17, 1987.

(3) Incorporated herein by reference to Exhibit 2(b) to the Partnership’s Registration Statement on Form 8‑A, filed under the Securities Exchange Act of 1934 on August 17, 1987.

(4) Incorporated by reference to Notes 2 and 14 to Financial Statements included as part of this Form 10‑K.

(5) Incorporated by reference to Exhibit 2.1 to the Partnership’s Current Report on Form 8‑K dated June 30, 1995.

(6) Incorporated herein by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8‑K dated January 11, 2008 and filed with the Securities and Exchange Commission on February 6, 2008.

(7) Incorporated herein by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8‑K dated February 27, 2008 and filed with the Securities and Exchange Commission on March 4, 2008.

(8) Incorporated herein by reference to Exhibit 10.1 to the Partnership’s Quarterly Report on Form 10‑Q for the fiscal quarter ended September 30, 2009.

(9) Incorporated herein by reference to Exhibit 10.2 to the Partnership’s Quarterly Report on Form 10‑Q for the fiscal quarter ended September 30, 2009.

(10) Incorporated herein by reference to Exhibit 10.3 to the Partnership’s Quarterly Report on Form 10‑Q for the fiscal quarter ended September 30, 2009.

(11) Incorporated herein by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on November 3, 2009.

(12) Incorporated herein by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on November 3, 2009.

(13) Incorporated herein by reference to Exhibit 10.3 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on November 3, 2009.

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(14) Incorporated herein by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on May 26, 2011

(15) Incorporated herein by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on June 7, 2011.

(16) Incorporated herein by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on June 7, 2011.

(17) Incorporated by reference to Exhibit 10.1 to the Partnership’s Quarterly Report on Form 10‑Q as filed with the Securities and Exchange Commission on August 12, 2013.

(18) Incorporated by reference to Exhibit 10.2 to the Partnership’s Quarterly Report on Form 10‑Q as filed with the Securities and Exchange Commission on August 12, 2013.

(19) Incorporated herein by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on August 6, 2014.

(20) Incorporated herein by reference to Exhibit 10.10 to the Partnership’s Form 10K as filed with the Securities and Exchange Commission on March 11, 2011.

(21) Incorporated herein by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on January 14, 2016.

(22) Incorporated herein by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on January 14, 2016.

(23) Incorporated herein by reference to Exhibit 10.3 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on January 14, 2016.

(24) Incorporated herein by reference to Exhibit 10.4 to the Partnership’s Current Report on Form 8‑K as filed with the Securities and Exchange Commission on January 14, 2016.

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