INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

3 Months Ended

Mar. 31, 2023

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

NOTE 15. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

The Partnership has invested in seven limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three Joint Ventures investing in commercial property. The Partnership has between a 40%-50% ownership interests in each investment. The other investors are the Brown Family related entities and five current and former employees of the Management Company. The Brown Family’s ownership interest was between 47.6% and 59%, 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, or Hamilton Park, is a 409 unit residential complex. The purchase price was $129,500,000. The original mortgage was $89,914,000 with an interest rate of 5.57% and was to mature in 2019. The mortgage called for interest only payments for the first two years of the loan and amortized over 30 years thereafter.

On May 31, 2018, Hamilton Park Towers, LLC , entered into a Mortgage Note with John Hancock Life Insurance Company (U.S.A.) in the principal amount of $125,000,000. Interest only payments on the Note are payable on a monthly basis at a fixed interest rate of 3.99% per annum, and the principal amount of the Note is due and payable on June 1, 2028. The Note is secured by a mortgage on the Dexter Park apartment complex located at 175 Freeman Street, Brookline, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated May 31, 2018. The Note is guaranteed by the Partnership and HBC Holdings, LLC pursuant to a Guaranty Agreement dated May 31, 2018.

Hamilton Park used the proceeds of the loan to pay off an outstanding loan of approximately $82,000,000 and distributed approximately $41,200,000 to its owners. The Partnership’s share of the distribution was approximately $16,500,000. As a result of the distribution, the carrying value of the investment fell below zero. The Partnership will continue to account for the investment using the equity method of accounting, although the Partnership has no legal obligation to fund its’ share of any future operating deficiencies as needed. At March 31, 2023, the balance on this mortgage before unamortized deferred financing costs is $125,000,000. This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

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. 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. At March 31, 2023, the balance on this mortgage before unamortized deferred financing costs is $10,000,000. The investment in the parking lot is referred to as Hamilton Essex Development, LLC; 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. On July 8, 2016, Hamilton 1025 LLC paid off the outstanding balance of the mortgage balance. The Partnership made a capital contribution of $2,359,500 to Hamilton 1025, LLC for its share of the funds required for the transaction. After paying off the mortgage, the Partnership began to sell off the individual units. In 2019, all residential units were sold. The Partnership still owns the commercial building. 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. On September 12, 2016, the property was refinanced with a 15 year mortgage in the amount of $6,000,000, at 3.71%, interest only. The Joint Venture Partnership paid off the prior mortgage of approximately $5,158,000 with the proceeds of the new mortgage and made a distribution of $385,000 to the Partnership. The cost associated with the refinancing was approximately $123,000. In 2018, 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 to

fund its share of any future operating deficiencies, if needed. At March 31, 2023, the balance on this mortgage before unamortized deferred financing costs is $6,000,000. 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 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 $850,000 to the Partnership. The costs associated with the refinancing were approximately $161,000. In 2018, 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 to fund its share of any future operating deficiencies, if needed. At March 31, 2023, the balance of the mortgage before unamortized deferred finance is $16,900,000. The investment is referred to as Hamilton on Main 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 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 March 31, 2023, the balance of this mortgage before unamortized deferred financing costs is approximately $8,657,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information at March 31, 2023

				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	5,721,864		$	2,585,058		$	4,727,451		$	77,475		$	4,402,156		$	13,223,620		$	75,278,758		$	106,016,382
Cash & Cash Equivalents		1,032,885			132,374			553,282			28,558			377,286			1,201,715			3,827,354			7,153,454
Rent Receivable		209,427			79,310			—			4,923			—			21,329			71,071			386,060
Real Estate Tax Escrow		70,066			—			62,888			—			39,192			135,371			—			307,517
Prepaid Expenses & Other Assets		301,295			50,371			70,323			229			22,867			213,731			2,283,781			2,942,597
Total Assets	$	7,335,537		$	2,847,113		$	5,413,944		$	111,185		$	4,841,501		$	14,795,766		$	81,460,964		$	116,806,010
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,965,527		$	—		$	8,621,745		$	—		$	5,930,781		$	16,877,261			124,666,115		$	166,061,429
Accounts Payable & Accrued Expense		141,973			43,750			337,102			22,181			266,363			785,701			2,161,658			3,758,728
Advance Rental Pmts & Security Deposits		335,457			19,866			283,654			—			178,024			455,924			3,002,957			4,275,882
Total Liabilities		10,442,957			63,616			9,242,501			22,181			6,375,168			18,118,886			129,830,730			174,096,039
Partners’ Capital		(3,107,420)			2,783,497			(3,828,557)			89,004			(1,533,667)			(3,323,120)			(48,369,766)			(57,290,029)
Total Liabilities and Capital	$	7,335,537		$	2,847,113		$	5,413,944		$	111,185		$	4,841,501		$	14,795,766		$	81,460,964		$	116,806,010
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,391,749		$	—		$	44,502		$	—		$	—		$	—			1,436,252
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,553,710)		$	—		$	(1,914,279)		$	—		$	(766,834)		$	(1,661,560)		$	(19,347,906)			(25,244,289)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(23,808,037)
Total units/condominiums
Apartments		48			—			40			—			42			148			409			687
Commercial		1			1			—			1			—			—			—			3
Total		49			1			40			1			42			148			409			690
Units to be retained		49			1			40			1			42			148			409			690
Units to be sold		—			—			—			—			—			—			—			—
Units sold through May 1, 2023		—			—			—			—			—			—			—			—
Unsold units		—			—			—			—			—			—			—			—

Financial information for the three months ended March 31, 2023

			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	438,988	$	60,471	$	411,890	$	24,867	$	313,502	$	924,814	$	3,997,298	$	6,171,830
Laundry and Sundry Income		2,703		—		—		—		—		13,167		36,000		51,870
		441,691		60,471		411,890		24,867		313,502		937,981		4,033,298		6,223,700
Expenses
Administrative		4,740		750		3,469		921		3,875		12,705		48,007		74,467
Depreciation and Amortization		116,987		2,927		86,306		816		83,717		264,509		905,747		1,461,009
Management Fees		19,092		3,179		16,137		994		12,806		37,196		81,609		171,013
Operating		83,347		—		25,379		67		37,516		128,942		376,999		652,250
Renting		3,175		—		8,256		—		1,367		11,946		40,623		65,367
Repairs and Maintenance		54,468		—		24,210		—		20,934		153,454		317,975		571,041
Taxes and Insurance		70,934		15,457		47,175		4,500		35,358		132,372		623,574		929,370
		352,743		22,313		210,932		7,298		195,573		741,124		2,394,534		3,924,517
Income Before Other Income		88,948		38,158		200,958		17,569		117,929		196,857		1,638,764		2,299,183
Other Income (Loss)
Interest Expense		(172,313)		—		(86,958)		—		(58,750)		(187,378)		(1,263,273)		(1,768,672)
		(172,313)		—		(86,958)		—		(58,750)		(187,378)		(1,263,273)		(1,768,672)
Net (Loss) Income	$	(83,365)	$	38,158	$	114,000	$	17,569	$	59,179	$	9,479	$	375,491	$	530,511
Net (Loss) Income —NERA 50%	$	(41,683)	$	19,078	$	56,999	$	8,785	$	29,590	$	4,740				77,508
Net Income —NERA 40%													$	150,196		150,196
															$	227,704

Future annual mortgage maturities at March 31, 2023 are as follows:

	Hamilton		345		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		Minuteman		Main Apts		Park		Total
3/31/2024	$	—	$	233,032	$	—	$	—	$	—	$	233,032
3/31/2025		—		242,212		—		16,900,000		—		17,142,212
3/31/2026		10,000,000		251,753		—		—		—		10,251,753
3/31/2027		—		261,671		—		—		—		261,671
3/31/2028		—		271,979		—		—		—		271,979
Thereafter		—		7,396,055		6,000,000		—		125,000,000		138,396,055
		10,000,000		8,656,702		6,000,000		16,900,000		125,000,000		166,556,702
Less: unamortized deferred financing costs		(34,473)		(34,957)		(69,219)		(22,739)		(333,885)		(495,273)
	$	9,965,527	$	8,621,745	$	5,930,781	$	16,877,261	$	124,666,115	$	166,061,429

At March 31, 2023 the weighted average interest rate on the above mortgages was 4.18%. The effective rate was 4.25% including the amortization expense of deferred financing costs.

Summary financial information at March 31, 2022

				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	6,158,533		$	2,587,547		$	4,984,470		$	80,739		$	4,623,273		$	14,069,945		$	78,062,415		$	110,566,922
Cash & Cash Equivalents		579,073			112,861			150,018			9,501			202,934			676,290			2,360,219			4,090,896
Rent Receivable		218,440			71,993			5,694			6,525			18,702			24,636			97,827			443,817
Real Estate Tax Escrow		74,171			—			68,049			—			32,369			88,464			—			263,053
Prepaid Expenses & Other Assets		297,060			59,537			104,028			207			17,181			190,308			2,057,455			2,725,776
Total Assets	$	7,327,277		$	2,831,938		$	5,312,259		$	96,972		$	4,894,459		$	15,049,643		$	82,577,916		$	118,090,464
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,951,738		$	—		$	8,839,286		$	—		$	5,922,598		$	16,861,209		$	124,601,492		$	166,176,323
Accounts Payable & Accrued Expense		72,582			3,750			94,711			3,901			75,931			186,788			792,148			1,229,811
Advance Rental Pmts& Security Deposits		210,186			—			235,125			—			158,851			432,060			2,655,212			3,691,434
Total Liabilities		10,234,506			3,750			9,169,122			3,901			6,157,380			17,480,057			128,048,852			171,097,568
Partners’ Capital		(2,907,229)			2,828,188			(3,856,863)			93,071			(1,262,921)			(2,430,414)			(45,470,936)			(53,007,104)
Total Liabilities and Capital	$	7,327,277		$	2,831,938		$	5,312,259		$	96,972			4,894,459		$	15,049,643		$	82,577,916		$	118,090,464
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,414,094		$	—		$	46,536		$			$			$			$	1,460,630
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,453,616)		$	—		$	(1,928,433)		$	—		$	(631,462)		$	(1,215,208)		$	(18,188,375)			(23,417,093)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(21,956,463)
Total units/condominiums
Apartments		48			—			40			0			42			148			409			687
Commercial		1			1			—			1			—			—			—			3
Total		49			1			40			176			42			148			409			690
Units to be retained		49			1			40			1			42			148			409			690
Units to be sold		—			—			—			—			—			—			—			—
Units sold through May 1, 2022		—			—			—			175			—			—			—			175
Unsold units		—			—			—			—			—			—			—			—

Financial information for the three months ended March 31, 2022

			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	441,716	$	86,103	$	346,820	$	24,369	$	293,738	$	890,382	$	3,470,717	$	5,553,845
Laundry and Sundry Income		5,526		—		—		—		—		10,551		27,055		43,132
		447,242		86,103		346,820		24,369		293,738		900,933		3,497,772		5,596,977
Expenses
Administrative		4,774		750		11,524		651		2,350		24,520		55,517		100,086
Depreciation and Amortization		119,185		2,927		86,413		816		83,960		268,464		929,135		1,490,900
Management Fees		18,485		3,317		13,803		958		11,393		37,373		76,371		161,700
Operating		52,973		—		21,893		1,172		55,585		108,690		347,529		587,842
Renting		5,627		—		10,160		—		3,802		14,989		57,861		92,439
Repairs and Maintenance		34,929		—		54,531		—		16,213		133,918		354,789		594,380
Taxes and Insurance		66,461		15,990		43,724		4,408		37,727		130,669		609,866		908,845
		302,434		22,984		242,048		8,005		211,030		718,623		2,431,068		3,936,192
Income Before Other Income		144,808		63,119		104,772		16,364		82,708		182,310		1,066,704		1,660,785
Other Income (Loss)
Interest Expense		(62,230)		—		(88,437)		—		(58,739)		(187,378)		(1,263,146)		(1,659,930)
Interest income				—		—		—		—		—				—
		(62,230)		—		(88,437)		—		(58,739)		(187,378)		(1,263,146)		(1,659,930)
Net Income (Loss)	$	82,578	$	63,119	$	16,335	$	16,365	$	23,969	$	(5,068)	$	(196,442)	$	855
Net Income (Loss)—NERA 50%	$	41,289	$	31,559	$	8,168	$	8,183	$	11,985	$	(2,535)				98,647
Net Income —NERA 40%													$	(78,578)		(78,578)
															$	20,069