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 three partnerships investing in commercial property. The Partnership has between a 40%-50% ownership interest 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% and 57%, 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, 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 $84,345,000 at March 31, 2016. 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 Partnership sold 120 units as condominiums and retained 48 units for long-term investment. In February 2007, the Partnership refinanced the 48 units with a new 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 March 31, 2016, the balance of the mortgage is approximately $4,481,000. This investment is referred to as Hamilton Bay Apartments, LLC. In April 2008, the Partnership 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. Two units were sold in the quarter ended March 31, 2016, with a gain on the sales of approximately $168,000. As of May 1, 2016, 3 units are still owned by the Partnership. 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 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. As of March 31, 2016, the balance of the mortgage is approximately $9,869,000. 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 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 retained by the Partnership. The interest on the new loan is 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 $4,711,000 at March 31, 2016. 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, 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 is 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 March 31, 2016, the balance of this mortgage is approximately $5,189,000. 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 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. As of March 31, 2016, the balance of the mortgage is approximately $16,765,000.

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 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. As of March 31, 2016, the balance of the mortgage is approximately $9,918,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information as of March 31, 2016


				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	$	8,334,464		$	2,617,959		$	6,693,104		$	4,882,565		$	357,803		$	6,095,119		$	6,273,766		$	18,357,260		$	93,796,573		$	147,408,613
Cash & Cash Equivalents		99,760			49,336			125,764			14,124			126,576			11,116			60,710			129,070			970,021			1,586,477
Rent Receivable		64,319			—			2,253			4,274			1,520			3,612			75			14,814			37,681			128,548
Real Estate Tax Escrow		33,350			—			40,392			81,742			—			44,499			43,381			37,745			216,139			497,248
Prepaid Expenses & Other Assets		154,594			226			31,233			58,033			18,370			66,580			39,366			96,529			1,998,839			2,463,770
Total Assets	$	8,686,487		$	2,667,521		$	6,892,746		$	5,040,738		$	504,269		$	6,220,926		$	6,417,298		$	18,635,418		$	97,019,253		$	152,084,656
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,869,004		$	—		$	9,918,433		$	4,710,990		$	—		$	4,480,571		$	5,189,002		$	16,764,902		$	84,345,096		$	135,277,998
Accounts Payable & Accrued Expense		56,759			426			77,758			24,052			13,187			9,900			63,090			151,830			673,458			1,070,460
Advance Rental Pmts & Security Deposits		210,924			—			215,976			102,088			2,362			99,093			117,749			335,850			2,675,818			3,759,860
Total Liabilities		10,136,687			426			10,212,167			4,837,130			15,549			4,589,564			5,369,841			17,252,582			87,694,372			140,108,318
Partners’ Capital		(1,450,200)			2,667,095			(3,319,421)			203,608			488,720			1,631,362			1,047,457			1,382,836			9,324,881			11,976,338
Total Liabilities and Capital	$	8,686,487		$	2,667,521		$	6,892,746		$	5,040,738		$	504,269		$	6,220,926		$	6,417,298		$	18,635,418		$	97,019,253		$	152,084,656
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,333,547		$	—		$	101,803		$	244,359		$	815,680		$	523,728		$	691,418		$	3,729,952			7,440,487
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(725,100)		$	—		$	(1,659,711)		$	—		$	—		$	—		$	—		$	—		$	—			(2,384,811)
Total Investment in Unconsolidated Joint Ventures (Net)																												$	5,055,676
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 May 1, 2016		—			—			—			127			117			—			—			—			—			244
Unsold units		—			—			—			—			3			—			—			—			—			3
Unsold units with deposits for future sale as of May 1, 2016		—			—			—			—			—			—			—			—			—			—

Financial information for the three months ended March 31, 2016


			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	$	398,797	$	60,000	$	366,918	$	235,321	$	16,665	$	248,827	$	248,561	$	798,328	$	3,717,306	$	6,090,723
Laundry and Sundry Income		3,982		—		1,590		—		—		—		245		10,583		25,533		41,933
		402,779		60,000		368,508		235,321		16,665		248,827		248,806		808,911		3,742,839		6,132,656
Expenses
Administrative		15,552		425		9,987		1,427		1,899		1,980		1,307		11,508		49,271		93,356
Depreciation and Amortization		111,964		707		86,915		59,065		6,292		79,392		84,684		237,896		805,006		1,471,921
Management Fees		14,685		2,400		14,837		9,525		670		10,241		10,335		31,925		81,096		175,714
Operating		30,503		—		20,123		365		152		294		23,663		69,090		359,869		504,059
Renting		540		—		185		—		—		477		3,855		5,503		28,489		39,049
Repairs and Maintenance		33,934		—		16,708		77,481		8,017		99,792		53,661		96,020		263,631		649,244
Taxes and Insurance		57,435		15,172		34,016		42,949		4,217		41,909		29,424		127,811		368,159		721,092
		264,613		18,704		182,771		190,812		21,247		234,085		206,929		579,753		1,955,521		3,654,435
Income Before Other Income		138,166		41,296		185,737		44,509		(4,582)		14,742		41,877		229,158		1,787,318		2,478,221
Other Income (Loss)
Interest Expense		(70,608)		—		(99,504)		(69,516)		(47)		(65,912)		(76,316)		(191,883)		(1,219,720)		(1,793,506)
Interest Income		—		—		—		3		—		—		—		—		—		3
Other Income		—		—		—		—		—		—		—				—		—
Gain on Sale of Real Estate		—		—		—		—		168,008		—		—		—		—		168,008
		(70,608)		—		(99,504)		(69,513)		167,961		(65,912)		(76,316)		(191,883)		(1,219,720)		(1,625,495)
Net Income (Loss)	$	67,558	$	41,296	$	86,233	$	(25,004)	$	163,379	$	(51,170)	$	(34,439)	$	37,275	$	567,598	$	852,726
Net Income (Loss)—NERA 50%	$	33,779	$	20,648	$	43,117	$	(12,502)	$	81,690	$	(25,585)	$	(17,220)	$	18,638				142,564
Net Income —NERA 40%																	$	227,040		227,040
																			$	369,604

Future annual mortgage maturities at March 31, 2016 are as follows:


	Hamilton		345		Hamilton		Hamilton		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		1025		Bay Apts		Minuteman		Main Apts		Park		Total
3/31/2017	$	—	$	131,657	$	4,714,301	$	4,486,138	$	5,192,035	$	—	$	1,521,316	$	16,045,447
3/31/2018		—		185,410		—		—		—		—		1,608,251		1,793,661
3/31/2019		—		192,714		—		—		—		—		1,700,153		1,892,867
3/31/2020		—		200,305		—		—		—		—		79,723,703		79,924,008
3/31/2021		—		208,196		—		—		—		—		—		208,196
Thereafter		10,000,000		9,081,718		—		—		—		16,900,000		—		35,981,718
		10,000,000		10,000,000		4,714,301		4,486,138		5,192,035		16,900,000		84,553,423		135,845,897
Less: unamortized deferred financing costs		(130,996)		(81,567)		(3,311)		(5,567)		(3,033)		(135,098)		(208,327)		(567,899)
	$	9,869,004	$	9,918,433	$	4,710,990	$	4,480,571	$	5,189,002	$	16,764,902	$	84,345,096	$	135,277,998

At March 31, 2016 the weighted average interest rate on the above mortgages was 5.08%. The effective rate was 5.16% including the amortization expense of deferred financing costs.

Summary financial information as of March 31, 2015

Financial information has been restated to conform to the current period reporting.


				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	$	8,636,396		$	2,620,789		$	7,040,787		$	5,097,980		$	802,055		$	6,344,523		$	6,483,432		$	19,225,373		$	96,374,735		$	152,626,070
Cash & Cash Equivalents		53,122			49,826			107,441			36,196			15,110			30,261			51,370			191,526			985,394			1,520,246
Rent Receivable		30,694			—			5,470			3,077			0			8,531			287			8,901			71,152			128,112
Real Estate Tax Escrow		114,280			—			41,532			73,919			—			51,749			39,769			78,483			260,698			660,430
Prepaid Expenses & Other Assets		76,589			224			26,198			47,558			20,197			49,482			42,326			92,912			1,800,526			2,156,012
Total Assets	$	8,911,081		$	2,670,839		$	7,221,428		$	5,258,730		$	837,362		$	6,484,546		$	6,617,184		$	19,597,195		$	99,492,505		$	157,090,870
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,049,703		$	1,970,977		$	9,911,775		$	4,778,978		$	—		$	4,544,146		$	5,264,978		$	16,748,850		$	85,630,280		$	136,899,687
Accounts Payable & Accrued Expense		44,904			4,941			81,557			21,772			20,019			13,657			52,119			142,669			626,221			1,007,859
Advance Rental Pmts& Security Deposits		174,416			—			203,975			95,932			11,114			93,589			96,246			316,025			2,480,438			3,471,735
Total Liabilities		8,269,023			1,975,918			10,197,307			4,896,682			31,133			4,651,392			5,413,343			17,207,544			88,736,939			141,379,281
Partners’ Capital		642,058			694,921			(2,975,879)			362,048			806,229			1,833,154			1,203,841			2,389,651			10,755,566			15,711,589
Total Liabilities and Capital	$	8,911,081		$	2,670,839		$	7,221,428		$	5,258,730		$	837,362		$	6,484,546		$	6,617,184		$	19,597,195		$	99,492,505		$	157,090,870
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	321,028		$	347,460		$	—		$	181,023		$	403,114		$	916,577		$	601,920		$	1,194,825		$	4,302,225		$	8,268,172
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	—		$	—		$	(1,487,939)		$	—		$	—		$	—		$	—		$	—		$	—			(1,487,939)
Total Investment in Unconsolidated Joint Ventures (Net)																												$	6,780,233
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 May 1, 2015		—			—			—			127			113			—			—			—			—			240
Unsold units		—			—			—			—			7			—			—			—			—			7
Unsold units with deposits for future sale as of May 1, 2015		—			—			—			—			—			—			—			—			—			—

Financial information for the three months ended March 31, 2015

Financial information has been restated to conform to the current period reporting.


													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	$	358,551	$	72,523	$	335,475	$	240,400	$	29,295	$	250,573	$	233,897	$	761,273	$	3,488,805	$	5,770,792
Laundry and Sundry Income		3,842		—		323		—		—		—		—		10,641		19,245		34,051
		362,393		72,523		335,798		240,400		29,295		250,573		233,897		771,914		3,508,050		5,804,843
Expenses
Administrative		3,936		583		7,761		1,992		2,779		1,814		1,624		9,276		52,330		82,095
Depreciation and Amortization		107,339		708		92,128		58,772		8,987		77,737		80,526		236,749		800,390		1,463,336
Management Fees		15,345		2,901		14,108		9,439		1,274		9,495		9,825		30,080		74,951		167,418
Operating		37,532		—		40,071		125		24		665		32,547		138,255		455,656		704,875
Renting		500		—		6,345		—		(459)		2,350		3,742		1,766		16,293		30,537
Repairs and Maintenance		25,683		—		5,988		76,497		11,944		84,858		15,124		84,161		216,618		520,873
Taxes and Insurance		53,418		13,421		29,937		43,051		5,881		37,830		30,958		83,506		361,255		659,257
		243,753		17,613		196,338		189,876		30,430		214,749		174,346		583,793		1,977,493		3,628,391
Income Before Other Income		118,640		54,910		139,460		50,524		(1,135)		35,824		59,551		188,121		1,530,557		2,176,452
Other Income (Loss)
Interest Expense		(122,363)		(15,667)		(99,601)		(69,744)		(110)		(66,054)		(76,483)		(189,823)		(1,224,879)		(1,864,724)
Interest Income		—		—		—		6				—		—		—		—		6
Gain on sale of real estate		—		—		—		—		(125)		—		—		—		—		(125)
		(122,363)		(15,667)		(99,601)		(69,738)		(235)		(66,054)		(76,483)		(189,823)		(1,224,879)		(1,864,843)
Net Income (Loss)	$	(3,723)	$	39,243	$	39,859	$	(19,214)	$	(1,370)	$	(30,230)	$	(16,932)	$	(1,702)	$	305,678	$	311,609
Net Income (Loss)—NERA 50%	$	(1,862)	$	19,622	$	19,929	$	(9,608)	$	(685)	$	(15,116)	$	(8,466)	$	(851)				2,963
Net Income (Loss)—NERA 40%																	$	122,271		122,271
																			$	125,234