[10-Q] NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP Quarterly Earnings Report
New England Realty Associates (NEN) reported Q3 2025 results, reflecting higher property scale and debt costs after recent acquisitions. Revenue rose to $23.7 million from $20.2 million, but the quarter showed a net loss of $0.5 million versus prior-year income, as depreciation and interest expense increased. For the first nine months, net income was $7.4 million, down from $11.4 million.
On June 18, NEN acquired a mixed-use property in Belmont, MA with 396 residential units and 3 commercial units for $172.0 million, plus two commercial properties for $3.0 million. Funding came from U.S. Treasury bill proceeds, a $40.0 million master credit facility advance, and a $67.5 million interim mortgage (SOFR + 150 bps). Mortgage notes payable increased to $511.2 million from $406.2 million at year-end.
Operating cash flow was $20.4 million; investing used $44.9 million and financing provided $20.3 million. The partnership disclosed it was in compliance with its revolving credit covenants except for the liquidity covenant. Construction of the 72‑unit Mill Street Development remains slated for completion in Q4 2025.
- None.
- None.
Insights
Scale up lifted revenue, but leverage and interest costs pressured earnings.
NEN expanded with a
The interim loan of
Key items to follow include refinancing of the interim loan by
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | | (I.R.S. employer |
incorporation or organization) | | identification no.) |
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(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (
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.
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ | | |
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Non-accelerated filer ☐ | | Smaller reporting company |
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| | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
| Trading Symbol |
| Name of each exchange on which registered: |
| | NYSE MKT Exchange |
As of November 7, 2025, there were
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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP
INDEX
| ||
PART I—FINANCIAL INFORMATION | ||
Item 1. | Financial Statements (Unaudited) | 3 |
| Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 | 4 |
| Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 2025 and 2024 | 5 |
| Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 | 6 |
| Consolidated Statements of Changes in Partners’ Capital for the Nine Months Ended September 30, 2025 and 2024 | 7 |
| Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 | 8 |
| Notes to Consolidated Financial Statements | 9 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 42 |
Item 4. | Controls and Procedures | 42 |
PART II—OTHER INFORMATION | ||
Item 1. | Legal Proceedings | 43 |
Item 1A. | Risk Factors | 43 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 43 |
Item 3. | Defaults Upon Senior Securities | 44 |
Item 4. | Mine Safety Disclosure | 44 |
Item 5. | Other Information | 44 |
Item 6. | Exhibits | 44 |
SIGNATURES | 45 | |
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NEW ENGLAND REALTY ASSOCIATES, L.P.
PART 1 -- FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited consolidated balance sheets, statements of income, statements of comprehensive income, changes in partners’ capital, and cash flows and related notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. The financial statements reflect all adjustments consisting only of normal, recurring adjustments, which are, in the opinion of management, necessary for a fair presentation for the interim periods.
The consolidated balance sheet as of December 31, 2024, has been derived from the audited consolidated balance sheet at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.
The aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in New England Realty Associates L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
The results of operations for the three and nine month periods ended September 30, 2025 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.
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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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| | September 30, | | December 31, | | | ||
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| 2025 |
| 2024 |
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ASSETS | | | (Unaudited) | | | | | |
Rental Properties | | $ | | | $ | | | |
Real Estate Assets Held for Sale | | | | | | — | | |
Cash and Cash Equivalents | |
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Rents Receivable | |
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Real Estate Tax Escrows | |
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Investment in U.S. Treasury Bills | | | — | | | | | |
Prepaid Expenses and Other Assets | |
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Investments in Unconsolidated Joint Ventures | |
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Total Assets | | $ | | | $ | | | |
LIABILITIES AND PARTNERS’ CAPITAL | | | | | | | | |
Mortgage Notes Payable | | | | | | | | |
Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture | |
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Accounts Payable and Accrued Expenses | |
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Advance Rental Payments and Security Deposits | |
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Total Liabilities | |
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Commitments and Contingent Liabilities (Notes 3 and 9) | |
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Partners’ Capital | |
| ( | |
| ( | | |
Total Liabilities and Partners’ Capital | | $ | | | $ | | | |
See notes to consolidated financial statements.
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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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| | Three Months Ended | | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | |||||||||
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| 2025 |
| 2024 |
| 2025 |
| 2024 |
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Revenues | | | | | | | | | | | | | | |
Rental income | | $ | | | $ | |
| $ | |
| $ | |
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Laundry and sundry income | |
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Expenses | | | | | | | | | | | | | | |
Administrative | |
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Depreciation and amortization | |
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Management fee | |
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Operating | |
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Renting | |
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Repairs and maintenance | |
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Taxes and insurance | |
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Income Before Other Income (Expense) | |
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Other Income (Expense) | | | | | | | | | | | | | | |
Interest income | | | | | | | |
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Interest expense | | | ( | | | ( | |
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| ( | | |
Income from investments in unconsolidated joint ventures | | | | | | | |
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| ( | |
| ( | |
| ( | |
| ( | | |
Net (Loss) Income | | $ | ( | | $ | | | $ | | | $ | | | |
| | | | | | | | | | | | | | |
Net (loss) Income per Unit | | $ | ( | | $ | | | $ | | $ | | | ||
Weighted Average Number of Units Outstanding | |
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See notes to consolidated financial statements.
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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
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| | Three Months Ended |
| Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
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| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Net (loss) income | | $ | ( | | $ | | | $ | | | $ | |
Net unrealized (loss) on derivative instruments for interest rate swaps | |
| ( | |
| ( | |
| ( | |
| ( |
Comprehensive (Loss) income | | $ | ( | | $ | | | $ | | | $ | |
See notes to consolidated financial statements.
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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL
(Unaudited)
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| | Units | | Partner’s Capital |
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| | Limited | | General | | | | Treasury | | | | Limited | | General | Accumulated | | | |
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| Class A |
| Class B |
| Partnership |
| Subtotal |
| Units |
| Total |
| Class A |
| Class B |
| Partnership | Comprehensive Income |
| Total |
| ||||
Balance January 1, 2024 |
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| | | $ | ( | | | ( | | | ( | | | $ | ( | |
Distribution to Partners |
| — |
| — |
| — |
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| — |
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| ( | | | ( | | | ( | — | |
| ( | |
Stock Buyback | | — |
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| — | | — |
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| ( | |
| ( | | | ( | | | ( | — | |
| ( | |
Net Income |
| — |
| — |
| — |
| — |
| — |
| — | |
| | | | | | | | — | |
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Net unrealized (loss) on derivative instruments for interest rate swaps | | — | | — | | — | | — | | — | | — | | | — | | | — | | | — | ( | | | ( | |
Balance September 30 , 2024 |
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| | | $ | ( | | $ | ( | | $ | ( | | | $ | ( | |
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Balance January 1, 2025 |
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| | | | | $ | ( | | | ( | | | ( | | | | ( | |
Distribution to Partners |
| — |
| — |
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| — |
| — |
| — | | | ( | | | ( | | | ( | — | |
| ( | |
Stock Buyback |
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|
| ( | | | ( | | | ( | | | ( | — | |
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Net Income |
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| — |
| — |
| — |
| — | | | | | | | | | | — | |
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Net unrealized (loss) on derivative instruments for interest rate swaps | | — | | — | | — | | — | | — | | — | | | — | | | — | | | — | ( | | | ( | |
Balance September 30, 2025 |
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| | | $ | ( | | | ( | | | ( | | | | ( | |
See notes to consolidated financial statements.
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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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| | Nine Months Ended September 30, | | |||||
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| 2025 |
| 2024 |
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Cash Flows from Operating Activities | | | | | | | | |
Net Income |
| $ | |
| $ | |
| |
Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | | |
Interest accrued on U.S. Treasury bills | | | — | | | ( | | |
Depreciation and amortization | |
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Amortization of deferred finance costs | | | | | | | | |
(Income) from investments in joint ventures | |
| ( | |
| ( | | |
Change in operating assets and liabilities | | | | | | | | |
Proceeds from unconsolidated joint ventures | |
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(Increase) in rents receivable | |
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(Decrease) Increase in accounts payable and accrued expense | |
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(Increase) in real estate tax escrow | |
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(Increase) in prepaid expenses and other assets | |
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Increase (Decrease) in advance rental payments and security deposits | |
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Total Adjustments | |
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Net cash provided by operating activities | |
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Cash Flows From Investing Activities | | | | | | | | |
Distribution in excess of investment in unconsolidated joint ventures | |
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Investment in U.S. Treasury bills | | | ( | | | ( | | |
Proceeds from U.S. Treasury bills | | | | | | | | |
Developing of rental property and other related costs | | | ( | | | ( | | |
Purchase of rental property | | | ( | | | — | | |
Improvement of rental properties | |
| ( | |
| ( | | |
Net cash (used in) provided by investing activities | |
| ( | |
| ( | | |
Cash Flows from Financing Activities | | | | | | | | |
Principal payments of mortgage notes payable | |
| ( | |
| ( | | |
Proceeds from Mortgage Notes Payable | | | | | | | | |
Stock buyback | |
| ( | |
| ( | | |
Distributions to partners | |
| ( | |
| ( | | |
Net cash provided by (used in) financing activities | |
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| ( | | |
Net (Decrease) Increase in Cash and Cash Equivalents | |
| ( | |
| ( | | |
Cash and Cash Equivalents, at beginning of period | |
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Cash and Cash Equivalents, at end of period | | $ | | | $ | | | |
See notes to consolidated financial statements.
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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Line of Business: New England Realty Associates Limited Partnership (“NERA”, the “Company” or the “Partnership”) was organized in Massachusetts in 1977. NERA and its subsidiaries own
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. Judgments 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
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
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
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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
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 amounts are accounted for 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.
Under this standard, the Partnership evaluates the non-lease components (lease arrangements that include common area maintenance services) with related lease components (lease revenues). If both the timing and pattern of transfer are the same for the non-lease component and related lease component, the lease component is the predominant component. The Partnership elected an allowed practical expedient. For (i) operating lease arrangements involving real estate that include common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance costs, we present these amounts within lease revenues in our consolidated statements of income. We record amounts reimbursed by the lessee in the period in which the applicable expenses are incurred.
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 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
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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. Costs directly related to the acquisition, development and construction of rental properties are capitalized. Capitalized development and construction costs include pre-construction costs, development and construction costs, regulatory fees, interest, property taxes, insurance, construction oversight fees, and other project costs incurred during the period of development. The Partnership considers a construction project as substantially completed and held available for occupancy upon the substantial completion of improvements, but no later than one year from cessation of major construction activity.
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.
Leasing Fees: 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.
Deferred Financing Costs: Costs incurred in obtaining financing are capitalized and amortized over the term of the related indebtedness. Deferred financing costs are presented in the balance sheet as a direct deduction from the carrying value of the debt liability to which they relate, except deferred financing costs related to the revolving credit facility, which are presented in prepaid expenses and other assets. In all cases, amortization of such costs is included in interest expense and was approximately $
Derivative Instruments: The Partnership measures derivative instruments, including certain derivative instruments embedded in other contracts, at fair value and records them as an asset or liability, depending upon the Partnership’s rights or obligations under the applicable derivative contract. For derivatives designated and qualifying as fair value hedges, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of the derivative are reported in other comprehensive income (“OCI”) and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging and ineffective portions of hedges are recognized in earnings in the affected period.
Income Taxes: The financial statements have been prepared on the basis that NERA and its subsidiaries are entitled to tax treatment as partnerships. Accordingly,
Cash Equivalents: The Partnership considers cash equivalents to be all highly liquid instruments purchased with a maturity of three months or less.
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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
Other Comprehensive Income (Loss): Other comprehensive income (loss) includes items that are recorded in equity, such as effective portions of derivatives designated as cash flow hedges or unrealized holding gains or losses on marketable securities available for sale. NERA had a comprehensive loss of approximately $220,000 and a comprehensive loss of approximately $94,000 for the nine months ended September 30, 2025 and 2024, respectively.
Income (Loss) Per Depositary Receipt: Effective January 3, 2012, the Partnership authorized a
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
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.
Advertising Expense: Advertising is expensed as incurred. Advertising expense was approximately $
Rental Property Held for Sale: When assets are identified by management as held for sale, the Partnership discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. The Partnership generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale. If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance is established.
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
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 refinancings qualify as extinguishment of debt.
Reclassification: Certain reclassifications have been made to prior period amounts in order to conform to current period presentation.
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NOTE 2. RENTAL PROPERTIES
As of September 30, 2025, the Partnership and its Subsidiary Partnerships owned
Additionally, as of September 30, 2025, the Partnership and Subsidiary Partnerships owned
The Partnership also owned a
On June 18, 2025, the Partnership, through its subsidiaries, purchased a mixed-use property comprising
From the purchase price, the Partnership allocated approximately $
In December, 2023, the Partnership received approval from MassHousing to construct a
On December 29, 2023, the Partnership signed a contract with a general contractor, NEI General Contracting, Inc., for the construction of the Mill Street Development project for approximately $
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Rental properties consist of the following:
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| September 30, 2025 |
| December 31, 2024 |
| Useful Life |
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Land, improvements and parking lots | | $ | | $ | | - | years | | ||||
Buildings and improvements | |
| |
| | - | years | | ||||
Construction in Progress | | | | | | | | N/A | | | | |
Kitchen cabinets | |
| |
| | - | years | | ||||
Carpets | |
| |
| | - | years | | ||||
Air conditioning | |
| |
| | - | years | | ||||
Laundry equipment | |
| |
| | - | years | | ||||
Elevators | |
| |
| | - | years | | ||||
Swimming pools | |
| |
| | - | years | | ||||
Equipment | |
| |
| | - | years | | ||||
Motor vehicles | |
| |
| | | | years | | |||
Fences | |
| |
| | - | years | | ||||
Furniture and fixtures | |
| |
| | - | years | | ||||
Smoke alarms | | | | | | - | years | | ||||
Total fixed assets * | |
| |
| | | | | | | ||
Less: Accumulated depreciation | |
| ( | |
| ( | | | | | | |
* Includes Real Estate Assets held for sale | | $ | | $ | | | | | | | ||
NOTE 3. RELATED PARTY TRANSACTIONS
The Partnership’s properties are managed by The Hamilton Company, Inc. (the “Management Company”), an entity that is owned by the majority shareholders of NewReal, Inc., the general partner of the Partnership (the “General Partner”). The management fee is equal to
The Partnership Agreement permits the General Partner or the Management Company to charge the costs of professional services (such as counsel, accountants and contractors) to NERA. During the nine months ended September 30, 2025 and 2024, approximately $
The Partnership reimburses the Management Company for the payroll and related expenses of the employees who work at the properties. Total reimbursement was approximately $
Bookkeeping and accounting functions are provided by the Management Company’s accounting staff, which consists of approximately
Sally Michael is a Director of New Real, Inc., and she is a Partner at Saul Ewing Arnstein & Lear LLP. Saul Ewing billed the Partnership for legal fees totaling approximately $
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September 30, 2025 and 2024, respectively. David Reier is a Director of New Real, Inc., who billed the Partnership approximately $
The Partnership has invested in
NOTE 4. PREPAID EXPENSES and OTHER ASSETS
Approximately $
Also, included in prepaid expenses and other assets at September 30, 2025 and December 31, 2024 is approximately $
Intangible assets on the acquisition of rental properties are included in prepaid expenses and other assets. Intangible assets are approximately $
Financing fees in association with the line of credit of approximately $
NOTE 5. MORTGAGE NOTES PAYABLE
At September 30, 2025 and December 31, 2024, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2. At September 30, 2025, the interest rates on these loans ranged from
Financing fees of approximately $
The Partnership has pledged tenant leases as additional collateral for certain of these loans.
On May 30, 2025, the Partnership borrowed $
On June 18, 2025, the Partnership entered into an interim loan agreement with KeyBank for $
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On July 10, 2025, the Partnership borrowed an additional $
Approximate annual maturities at September 30, 2025 are as follows:
| | | | |
2026—current maturities |
| $ | |
|
2027 | |
| | |
2028 | |
| | |
2029 | |
| | |
2030 | |
| | |
Thereafter | |
| | |
| | | | |
Less: unamortized deferred financing costs | | | | |
| | $ | 511,247,000 | |
Line of Credit
On November 21, 2024, the Partnership entered into an agreement with Brookline Bank for a new $
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
16
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NOTE 6. ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS
The Partnership’s residential lease agreements may require tenants to maintain a
NOTE 7. PARTNERS’ CAPITAL
The Partnership has
In March 2025, the Partnership approved a quarterly distribution of $
In 2024, the Partnership paid a total distribution of an aggregate $
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
| | | | | | | |
| | Nine Months Ended |
| ||||
| | September 30, |
| ||||
|
| 2025 |
| 2024 |
| ||
Net Income per Depositary Receipt |
| $ | |
| $ | | |
Distributions per Depositary Receipt | | $ | | | $ | | |
NOTE 8. TREASURY UNITS
Treasury Units at September 30, 2025 are as follows:
| | | |
Class A |
| |
|
Class B |
| | |
General Partnership |
| | |
|
| | |
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
17
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On March 12, 2025, the Board of Directors authorized the President and Treasurer to cause the Partnership to repurchase, on the open market or otherwise, including through individually negotiated purchases and through a written trading plan that complies with the requirements of Rule 10b5-1, Depositary Receipts and Partnership Units in such quantities, at such prices, in such manner and on such terms and conditions as the Authorized Persons determine are in the best interests of the Partnership; provided, however, that (i) the aggregate cost of Depositary Receipts and Partnership Units repurchased shall not exceed $
From August 20, 2007 through September 30, 2025, the Partnership has repurchased
During the nine months ended September 30, 2025, the Partnership purchased a total of
NOTE 9. COMMITMENTS AND CONTINGENCIES
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. In addition, the Partnership has a contractual commitment of approximately $
NOTE 10. RENTAL INCOME
During the nine months ended September 30, 2025, approximately
| | | | |
|
| Commercial |
| |
| | Property Leases |
| |
2026 | | $ | | |
2027 | |
| | |
2028 | |
| | |
2029 | |
| | |
2030 | |
| | |
Thereafter | |
| | |
| | $ | | |
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 $
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2024 respectively. Trader Joe’s and Blue Pearl, tenants at Staples Plaza and Walgreen’s, a tenant at 653 Worcester Road, Framingham, Massachusetts respectively, are approximately
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 September 30, | | expiring leases | | for expiring leases | | leases expiring | | expiring leases |
| |
2026 | | $ | | | | | | | % | |
2027 | |
| | | | | | | % | |
2028 | |
| | | | | | | % | |
2029 | |
| | | | | | | % | |
2030 | |
| | | | | | | % | |
2031 | |
| — | | — | | — | | — | % |
2032 | |
| | | | | | | | % |
2033 | |
| — | | — | | — | | — | % |
2034 | | | | | | | | | | % |
2035 | | | — | | — | | — | | — | % |
Thereafter | | | | | | | | | | % |
Totals | | $ | |
| |
| |
| % | |
Rents receivable are net of an allowance for doubtful accounts of approximately $
NOTE 11. CASH FLOW INFORMATION
During the nine months ended September 30, 2025 and 2024, cash paid for interest was approximately $
NOTE 12. FAIR VALUE MEASUREMENTS
Fair Value Measurements on a Recurring Basis
At September 30, 2025 and December 31, 2024, 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 September 30, 2025 and December 31, 2024 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, note payable, accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments or, the recent acquisition of these items.
The Partnership had investments in U.S. Treasury bills, some of which matured over a period greater than 90 days and were classified as short-term investments. The U.S. Treasury bills were carried at amortized cost and classified as held to maturity as the Partnership has the intent and the ability to hold them until they mature. The carrying value of the U.S. Treasury bills were adjusted for accretion of discounts over the remaining life of the investment. Income related to the U.S. Treasury bills is recognized in interest income in the Partnership’s consolidated statement of income. The U.S. Treasury bills classified within Level I of the fair value hierarchy.
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At September 30, 2025 and December 31, 2024 we estimated the fair value of our mortgage payable, derivative financial instrument, and other notes based upon quoted market prices for the same (Level 1) or similar (Level 2) issues when current quoted market prices are available. We estimated the fair value of our secured mortgage debt that does not have current quoted market prices available by discounting the future cash flows using rates currently available to us for debt with similar terms and maturities (Level 3). The differences in the fair value of our debt from the carrying value are the result of differences in interest rates and/or borrowing spreads that were available to us at September 30, 2025 and December 31, 2024, 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 September 30, 2025 and at December 31, 2024, the Partnership’s line of credit had an outstanding balance of
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 mortgage notes payable and treasury bills: fair value is generally based on estimated future cash flows, which are discounted using the quoted market rate from an independent source for similar obligations. Refer to the table below for the carrying amount and estimated fair value of such instruments. |
The following table reflects the carrying amounts and estimated fair value of our debt.
| | | | | | | |
| | | | | | | |
|
| September 30, 2025 |
| Dec 31, 2024 | |||
| | Carrying Value | Fair Value | | Carrying Value |
| Fair Value |
Assets | | | | | | | |
Cash equivalents | | | | | | | |
Treasury bills | | — | — | | | | |
Total Assets | | | | | | | |
| | | | | | | |
Liabilities | | | | | | | |
Mortgage payable * | | | | | | | |
- Partnership properties | | | | | | | |
- Investment properties | | | | | | | |
Total Liabilities | | | | | | | |
* Net of unamortized deferred financing costs
Disclosure about fair value of financial instruments is based on pertinent information available to management as of September 30, 2025 and December 31, 2024. 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 September 30, 2025 and current estimates of fair value may differ significantly from the amounts presented herein.
NOTE 13. DERIVATIVE FINANCIAL INSTRUMENTS
Cash Flow Hedges of Interest Rate Risk
The Partnership’s objectives in using rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Partnership uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Partnership making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged
20
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forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Partnership’s variable rate debt. During the next 12 months, the Partnership estimates approximately $
As of September 30, 2025, the Partnership had
The table below presents the fair value of the Partnership’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2025 and December 31, 2024.
| | | | | | | | |
| | Fair Value | ||||||
Asset Derivatives designated | | September 30, | | December 31, | |
| ||
as hedging instruments |
| 2025 |
| 2024 |
| Balance sheet location | ||
Interest rate swaps | | $ | | | $ | |
| Prepaid Expenses and Other Assets |
The table below presents the effect the Partnership’s derivative financial instruments on the consolidated statements of income for the quarters ended September 30, 2025 and 2024.
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Location of Gain | | | | | | | | | | | | | | |
| | | | | | | | or (Loss) | | Amount of Gain | | | | Total Amount of | ||||||||
| | | | | | | | Reclassified | | or (Loss) | | Location of Gain | | Interest Expense | ||||||||
| | Amount of Gain | | from | | Reclassified | | or (Loss) Recognized | | presented in the | ||||||||||||
Derivatives in Cash Flow | | or (Loss) Recognized | | Accumulated | | from Accumulated | | in Income on | | consolidated statements | ||||||||||||
Hedging Relationships | | in OCI on Derivative | | OCI Into Income | | OCI into Income | | Derivative | | of operations | ||||||||||||
Three Months Ended September 30, |
| 2025 |
| 2024 |
| |
| 2025 |
| 2024 |
| |
| 2025 |
| 2024 | ||||||
| | | | | | | | | | | | | | | | | | | | | | |
Interest rate swaps | | $ | ( | | $ | ( |
| Interest expense | | $ | — | | $ | — |
| Interest and other investment income (loss) | | $ | ( | | $ | ( |
| | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Interest rate swaps | | $ | ( | | $ | ( | | Interest expense | | $ | — | | $ | — | | Interest and other investment income (loss) | | $ | ( | | $ | ( |
NOTE 14. 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, different depreciation methods, different tax lives, other items with limited tax deductibility carryovers and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions. Federal taxable income of approximately $
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 consolidated financial statements.
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 adjustment 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 September 30, 2025, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2021 forward.
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NOTE 15. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
The Partnership has invested in
On October 28, 2009 the Partnership invested approximately $
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 $
Hamilton Park used the proceeds of the loan to pay off an outstanding loan of approximately $
On March 7, 2005, the Partnership invested $
On March 2, 2005, the Partnership invested $
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and amortized over a
In September 2004, the Partnership invested approximately $
In August 2004, the Partnership invested $
In November 2001, the Partnership invested approximately $
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Summary financial information at September 30, 2025
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| Hamilton |
| | |
| | |
| Hamilton |
| Hamilton |
| | |
| | | |||
| | Hamilton | | Essex | | 345 | | Hamilton | | Minuteman | | on Main | | Dexter | | | | |||||||
|
| Essex 81 |
| Development |
| Franklin |
| 1025 |
| Apts |
| Apts |
| Park |
| Total | ||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | |
Rental Properties | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Cash & Cash Equivalents | |
| | | | | | | | | | | | | | | | | | | | |
| |
Rent Receivable | |
| | | | | | | | | | | | | | | | | | | | |
| |
Real Estate Tax Escrow | |
| | | | — | | | | | | — | | | | | | — | | | — | |
| |
Prepaid Expenses & Other Assets | |
| | | | | | | | | | | | | | | | | | | | |
| |
Total Assets | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
LIABILITIES AND PARTNERS’ CAPITAL | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage Notes Payable | | $ | | | $ | — | | $ | | | $ | — | | $ | | | $ | | | $ | | | $ | |
Accounts Payable & Accrued Expense | |
| | | | | | | | | | | | | | | | | | | | |
| |
Advance Rental Pmts & Security Deposits | |
| | | | — | | | | | | — | | | | | | | | | | |
| |
Total Liabilities | |
| | | | | | | | | | | | | | | ||||||||
Partners’ Capital | |
| ( | | | | | | ( | | | | | | ( | | | ( | | | ( | |
| ( |
Total Liabilities and Capital | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Partners’ Capital %—NERA | |
| | % |
| | % |
| | % |
| | % |
| | % |
| | % |
| | % | | |
Investment in Unconsolidated Joint Ventures | | $ | — | | $ | | | $ | — | | $ | | | $ | — | | $ | — | | $ | — | | | |
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures | | $ | ( | | $ | — | | $ | ( | | $ | — | | $ | ( | | $ | ( | | $ | ( | | | ( |
Total Investment in Unconsolidated Joint Ventures (Net) | | | | | | | | | | | | | | | | | | | | | | | $ | ( |
Total units/condominiums | | | | | | | | | | | | | | | | | | | | | | | | |
Apartments | |
| | |
| — | |
| | |
| — | |
| | |
| | |
| | |
| |
Commercial | |
| | |
| | |
| — | |
| | |
| — | |
| — | |
| — | |
| |
Total | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Financial information for the nine months ended September 30, 2025
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| Hamilton |
| | |
| | |
| Hamilton |
| Hamilton |
| | |
| | | |||
| | Hamilton | | Essex | | 345 | | Hamilton | | Minuteman | | on Main | | Dexter | | | | |||||||
| | Essex 81 | | Development | | Franklin | | 1025 | | Apts | | Apts | | Park | | Total | ||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | |
Rental Income | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Laundry and Sundry Income | |
| | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
Administrative | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and Amortization | | | | | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | | | | | |
Operating | | | | | | — | | | | | | | | | | | | | | | | | | |
Renting | | | | | | — | | | | | | | | | | | | | | | | | | |
Repairs and Maintenance | | | | | | — | | | | | | — | | | | | | | | | | | | |
Taxes and Insurance | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | | | | | | | | | | | | |
Income Before Other Income | |
| | | | | | | | | | | | | | | | | | | | | | |
Other Income (Loss) | | | | | | | | | | | | | | | | | | | | | | | | |
Interest Expense | |
| ( | | | — | | | ( | | | — | | | ( | | | ( | | | ( | | | ( |
Interest Income | |
| | | | | | | | | | | | | | | | | | | | | | |
| |
| ( | | | | | | ( | | | | | | ( | | | ( | | | ( | | | ( |
Net (Loss) Income | | $ | ( | | $ | | | $ | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Net (Loss) Income —NERA |
| $ | ( | | $ | | | $ | | | $ | | | $ | | | $ | ( | | | | | | |
Net Income —NERA |
| | | | | | | | | | | | | | | | | | | $ | | | | |
| | | | | | | | | | | | | | | | | | | | | | | $ | |
Financial information for the three months ended September 30, 2025
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| Hamilton |
| | |
| | | | Hamilton |
| Hamilton |
| | |
| | | |||
| | Hamilton | | Essex | | 345 | | Hamilton | | Minuteman | | on Main | | Dexter | | | | |||||||
|
| Essex 81 | | Development | | Franklin | | 1025 | | Apts | | Apts | | Park | | Total | ||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | |
Rental Income | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Laundry and Sundry Income | |
| | | | — | | | — | | | — | | | — | | | | | | | | | |
| |
| | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
Administrative | |
| | | | | | | | | | | | | | | | | | | | | | |
Depreciation and Amortization | |
| | | | | | | | | | | | | | | | | | | | | | |
Management Fees | |
| | | | | | | | | | | | | | | | | | | | | | |
Operating | |
| | | | — | | | | | | | | | | | | | | | | | | |
Renting | |
| | | | — | | | | | | | | | | | | | | | | | | |
Repairs and Maintenance | |
| | | | — | | | | | | — | | | | | | | | | | | | |
Taxes and Insurance | |
| | | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | | | | | | | | | | | | |
Income Before Other Income | |
| | | | | | | | | | | | | | | | | | | | | | |
Other Income (Loss) | | | | | | | | | | | | | | | | | | | | | | | | |
Interest Expense | |
| ( | | | — | | | ( | | | — | | | ( | | | ( | | | ( | | | ( |
Interest Income | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| ( | | | | | | ( | | | | | | ( | | | ( | | | ( | | | ( |
Net (Loss) Income | | $ | ( | | $ | | | $ | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Net (Loss) Income —NERA |
| $ | ( | | $ | | | $ | | | $ | | | $ | | | $ | ( | | | | | | |
Net Income —NERA |
| | | | | | | | | | | | | | | | | | | $ | | | | |
| | | | | | | | | | | | | | | | | | | | | | | $ | |
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Future annual mortgage maturities at September 30, 2025 are as follows:
| | | | | | | | | | | | | | | | | | | |
| | Hamilton | | 345 | | Hamilton | | Hamilton on | | Dexter | | | |
| |||||
Period End |
| Essex 81 |
| Franklin |
| Minuteman |
| Main Apts |
| Park |
| Total |
| ||||||
9/30/2026 | | $ | | | $ | | | $ | — | | $ | | | $ | — | | $ | | |
9/30/2027 | |
| — | | | | | | — | | | — | | | — | | | | |
9/30/2028 | |
| — | | | | | | — | | | — | | | | | | | |
9/30/2029 | | | — | | | — | | | — | | | — | | | — | | | — | |
9/30/2030 | | | — | | | — | | | — | | | — | | | — | | | — | |
Thereafter | | | | | | — | | | | | | | | | — | | | | |
| | | | | | | | | | | | | | | | | | | |
Less: unamortized deferred financing costs | | | ( | | | ( | | | ( | | | ( | | | ( | | | ( | |
| | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | |
At September 30, 2025, the weighted average interest rate on the above mortgages was
Summary financial information at September 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| Hamilton |
| | |
| | |
| Hamilton |
| Hamilton |
| | |
| | | |||
| | Hamilton | | Essex | | 345 | | Hamilton | | Minuteman | | on Main | | Dexter | | | | |||||||
|
| Essex 81 |
| Development |
| Franklin |
| 1025 |
| Apts |
| Apts |
| Park |
| Total | ||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | |
Rental Properties | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Cash & Cash Equivalents | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Rent Receivable | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Real Estate Tax Escrow | |
| | |
| — | |
| | |
| — | |
| | |
| — | |
| — | |
| |
Prepaid Expenses & Other Assets | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Total Assets | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | ||||||||
LIABILITIES AND PARTNERS’ CAPITAL | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage Notes Payable | | $ | | | $ | — | | $ | | | $ | — | | $ | | | $ | | | $ | | | $ | |
Accounts Payable & Accrued Expense | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Advance Rental Pmts& Security Deposits | |
| | |
| — | |
| | |
| — | |
| | |
| | |
| | |
| |
Total Liabilities | |
| | | | | | | | | | | | | | | ||||||||
Partners’ Capital | |
| ( | |
| | |
| ( | |
| | |
| ( | |
| ( | |
| ( | |
| ( |
Total Liabilities and Capital | | $ | | $ | | $ | | $ | | | | $ | | $ | | $ | ||||||||
Partners’ Capital %—NERA | |
| % | | % |
| % |
| % |
| % |
| % |
| % | | | |||||||
Investment in Unconsolidated Joint Ventures | | $ | — | | $ | | $ | — | | $ | | $ | | | $ | | | $ | | | $ | |||
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures | | $ | ( | | $ | — | | $ | ( | | $ | — | | $ | ( | | $ | ( | | $ | ( | |
| ( |
Total Investment in Unconsolidated Joint Ventures (Net) | | | | | | | | | | | | | | | | | | | | | | | $ | ( |
Total units/condominiums | | | | | | | | | | | | | | | | | | | | | | | | |
Apartments | | | | | — | | | | | | | | | | | | | |||||||
Commercial | | | | | | | — | | | | | — | | | — | | | — | | | ||||
Total | | | | | | | | | | | | | | | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
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Financial information for the nine months ended September 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| Hamilton |
| | |
| | |
| Hamilton |
| Hamilton |
| | |
| | | |||
| | Hamilton | | Essex | | 345 | | Hamilton | | Minuteman | | on Main | | Dexter | | | | |||||||
| | Essex 81 | | Development | | Franklin | | 1025 | | Apts | | Apts | | Park | | Total | ||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | |
Rental Income | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Laundry and Sundry Income | |
| | |
| — | |
| ( | |
| — | |
| — | |
| | |
| | |
| |
| |
| | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
Administrative | |
| | |
| | | | | | | | | | | | | | | | | |
| |
Depreciation and Amortization | |
| | |
| | | | | | | | | | | | | | | | | |
| |
Management Fees | |
| | |
| | | | | | | | | | | | | | | | | |
| |
Operating | |
| | |
| — | | | | | | | | | | | | | | | | |
| |
Renting | |
| | |
| — | | | | | | | | | | | | | | | | |
| |
Repairs and Maintenance | |
| | |
| — | | | | | | | | | | | | | | | | |
| |
Taxes and Insurance | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Income Before Other Income | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Other Income (Loss) | | | | | | | | | | | | | | | | | | | | | | | | |
Interest Expense | |
| ( | | | — | | | ( | | | — | | | ( | | | ( | | | ( | | | ( |
Interest Income | |
| | | | | | | | | | | | | | | | | | | | | | |
Other income (Expense) | | | — | | | — | | | | | | — | | | — | | | | | | — | | | |
| |
| ( | | | | | | ( | | | | | | ( | | | ( | | | ( | | | ( |
Net (Loss) Income | | $ | ( | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net (Loss) Income —NERA |
| $ | ( | | $ | | | $ | | | $ | | | $ | | | $ | | | | | |
| |
Net Income —NERA |
| | | | | | | | | | | | | | | | | | | $ | | |
| |
| | | | | | | | | | | | | | | | | | | | | | | $ | |
Financial information for the three months ended September 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| Hamilton |
| | |
| | |
| Hamilton |
| Hamilton |
| | |
| | | |||
| | Hamilton | | Essex | | 345 | | Hamilton | | Minuteman | | on Main | | Dexter | | | | |||||||
| | Essex 81 | | Development | | Franklin | | 1025 | | Apts | | Apts | | Park | | Total | ||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | |
Rental Income | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Laundry and Sundry Income | |
| | |
| — | |
| — | |
| — | |
| — | |
| | |
| | |
| |
| |
| | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
Administrative | |
| | | | | | | | | | | | | | | | | | | | | | |
Depreciation and Amortization | |
| | | | | | | | | | | | | | | | | | | | | | |
Management Fees | |
| | | | | | | | | | | | | | | | | | | | | | |
Operating | |
| | | | — | | | | | | | | | | | | | | | | | | |
Renting | |
| | | | — | | | | | | | | | | | | | | | | | | |
Repairs and Maintenance | |
| | | | — | | | | | | — | | | | | | | | | | | | |
Taxes and Insurance | |
| | | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | | | | | | | | | | | | |
Income Before Other Income | |
| | | | | | | | | | | | | | | | | | | | | | |
Other Income (Loss) | | | | | | | | | | | | | | | | | | | | | | | | |
Interest Expense | |
| ( | | | — | | | ( | | | — | | | ( | | | ( | | | ( | | | ( |
Interest Income | |
| | | | | | | | | | | | | | | | | | | | | | |
Other income (Expense) | |
| — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
| | | ( | | | | | | ( | | | | | | ( | | | ( | | | ( | | | ( |
Net (Loss) Income | | $ | ( | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net (Loss) Income —NERA |
| $ | ( | | $ | | | $ | | | $ | | | $ | | | $ | | | | | | | |
Net Income —NERA |
| | | | | | | | | | | | | | | | | | | $ | | |
| |
| | | | | | | | | | | | | | | | | | | | | | | $ | |
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NOTE 16. EMPLOYEE BENEFIT 401(k) PLANS
Employees of the Partnership, who meet certain minimum age and service requirements, are eligible to participate in the Management Company’s 401(k) Plan (the “401(k) Plan”). Eligible employees may elect to defer up to
The amounts contributed by employees are immediately vested and non-forfeitable. The Partnership matches
NOTE 17. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
In November 2024, the Financial Accounting Standards Board (“FASB”) issued a new standard on disaggregation of income statement expenses, which requires an entity to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in a tabular format in the notes to the financial statements. The standard will be effective for annual reporting periods beginning after December 15, 2026 and for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Partnership is currently evaluating the impact of the new rules on its disclosures.
In March 2024, the Securities and Exchange Commission ("SEC") adopted final rules that will require certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. The new rules include a requirement to disclose material climate-related risks, descriptions of board and management oversight and risk management activities, the material impacts of these risks on a registrant’s strategy, business model and outlook, and any material climate-related targets or goals, as well as material effects and costs of severe weather events and other natural conditions and greenhouse gas emissions. Prior to the stay of the new rules, they would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosures, which would have been effective for annual periods beginning January 1, 2026. The Partnership is currently evaluating the impact of the new rules on its disclosures.
NOTE 18. SEGMENT REPORTING
Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”). The CODM determines how resources should be allocated and assesses performance on a regular basis. The Partnership’s CODM is the Partnership’s Treasurer and Director.
The Partnership operates as a single business segment, focusing on the ownership, operation and development of its multifamily and commercial real estate portfolio located in the city of Boston, surrounding suburbs, and southern New Hampshire. For a description of the types of products and services from which this single reportable segment derives its revenues, see Notes 1 and 2. The CODM is regularly provided with financial reporting packages which include the financial statements presented herein.
The CODM evaluates the performance of the Partnership on a consolidated basis, based upon consolidated Income Before Other Income (Expense), to make decisions about the Partnership’s operations and resource allocation. Consolidated Income Before Other Income (Expense) is used to monitor budget versus actual results. The significant expenses of the Partnership are presented within the Consolidated Statements of Income.
The CODM manages our portfolio as a whole and decisions regarding investments are made collectively based on the inputs above. Accordingly, the Partnership consists of a single operating and reportable segment and the consolidated financial statements and notes thereto are presented as a single reportable segment. Since the Partnership operates in a single segment, the segment information is consistent with the consolidated statements of operations and comprehensive income (loss). Therefore, no reconciliation is necessary.
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NOTE 19. SUBSEQUENT EVENTS
On November 6, 2025, the Partnership approved a quarterly distribution of $
From October 1, 2025 through November 7, 2025, the Partnership has purchased
On October 10, 2025, the Partnership signed an updated term sheet from Brookline Bank to provide a two-year Bridge Loan in the amount of $
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ITEM 2. 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 Litigation 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 2025 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. For an additional discussion of factors that may affect the Partnership’s business and results of operations, see Item1A-Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Overview
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 may be 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.
The vacancy rate for the Partnership’s residential properties as of November 1, 2025 was 3.25% as compared with a vacancy rate of 1.7% as of November 1, 2024. The vacancy rate for the Joint Venture properties as of November 1, 2025 was 0.7%, as compared to 2.8% for the same period last year.
Residential tenants generally have lease terms of 12 months. The majority of these leases will mature during the second and third quarters of the year.
During the third quarter of 2025, rents increased an average of 5.7% for renewals and decreased an average of 0.1% for new leases. For the balance of 2025, management expects a rental market with slowing rent growth.
For the third quarter of 2025, consolidated revenue, excluding Hill Estates, increased by 2.6%, operating expenses increased by 5.1%, and Income before Other Income (Expense) decreased by 2.7%, as compared to the third quarter of 2024.
On November 21, 2024, the Partnership entered into an agreement with Brookline Bank for a new $25,000,000 revolving line of credit. The term of the line is for three years with a floating interest rate equal to a base rate of the SOFR Rate for a period of one month plus the applicable margin of 2.5%. The loan covenants include a leverage ratio not to exceed 65%, a debt service coverage ratio of not less than 1.5 to 1.0, maximum usage of 1.5 times trailing 12 months EBITDA, minimum liquidity of $15 million, and a minimum debt yield of 8.5%. The Partnership incurred a commitment fee of $125,000. The Partnership will be charged annually an unused line fee, equal to seventy-five basis points (0.75%) between the difference of the maximum availability and the outstanding principal of the line of credit. This fee will be waived for any period in which the Partnership maintains aggregate deposits of twenty million dollars with the Lender. As of September 30, 2025, the Partnership was in compliance with the financial covenants except for the liquidity covenant, and did not incur an unused line fee.
From the start of the Stock Repurchase Program in 2007 through September 30, 2025, the Partnership has purchased 1,554,701 Depositary Receipts. During the nine months ended September 30, 2025, the Partnership purchased a total of 4,343 Depositary Receipts.
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In March of 2020, the Board of Advisors and Board of Directors unanimously approved an extension of the Repurchase Program until March 31, 2025. On March 12, 2025, the Board of Directors unanimously approved a new extension to the Repurchase Program, authorizing the President and Treasurer to cause the Partnership to repurchase, on the open market or otherwise, including through individually negotiated purchases and through a written trading plan that complies with the requirements of Rule 10b5-1, Depository Receipts and Partnership Units such that (i) the aggregate cost of Depository Receipts and Partnership Units repurchased shall not exceed the lesser of $5 million or 10% of the Partnership’s balance of cash and investment in treasury bills, (ii) no Depository Receipts or Partnership Units shall be repurchased after the date that is 12 months after the effective date of the plan, and (iii) no Depository Receipts or Partnership Units shall be repurchased in excess of $95 per Depository Receipt. The Repurchase Plan requires the Partnership to repurchase a proportionate number of Class B Units and General Partner Units in connection with any repurchases of any Depositary Receipts by the Partnership based upon the 80%, 19% and 1% fixed distribution percentages of the holders of the Class A, Class B and General Partner Units under the Partnership Agreement. This repurchase authorization replaces the Partnership’s previous repurchase program. The Repurchase Plan shall be made in accordance with the terms of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall be made in accordance with all applicable laws and regulations in effect from time to time.
On February 24, 2019, Harold Brown, the owner of 75% of the outstanding voting securities of NewReal, Inc. (“NewReal”), the general partner of New England Realty Associates Limited Partnership, passed away. As a result, the estate of Harold Brown held voting control over the capital stock of NewReal. On January 2, 2024, the estate was settled, with Jameson Brown and Harley Brown each assuming 37.5% ownership in NewReal. As of November 1, 2025, the Brown family related entities and Ronald Brown collectively own approximately 34.7% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members). Brown family related entities also control 75% of the Partnership’s Class B Units, and 75% of the capital stock of NewReal, the Partnership’s sole general partner. Ronald Brown also owns 25% of the Partnership’s Class B Units and 25% of the capital stock of NewReal. In addition, Ronald Brown is the President and a director of NewReal and Jameson Brown is Treasurer and a director of NewReal. Moreover, 75% of the issued and outstanding Class B units of the Partnership are owned by HBC Holdings LLC, an entity of which Jameson Brown is the manager. The outstanding stock of The Hamilton Company is controlled by Jameson Brown and Harley Brown.
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. During the nine months ended September 30, 2025, tenant renewals were approximately 73% with an average rental increase of approximately 5.4%, new leases accounted for approximately 23% with a rental rate increase of approximately 0.2%. During the nine months ended September 30, 2025, leasing commissions were approximately $686,000 compared to approximately $522,000 for the nine months ended September 30, 2024, an increase of approximately $164,000 (31.4%). Tenant concessions were approximately $52,000 for the nine months ended September 30, 2025, compared to approximately $92,000 for the nine months ended September 30, 2024, a decrease of approximately $40,000 (43.5%). Tenant improvements were approximately $2,675,000 for the nine months ended September 30, 2025, compared to approximately $2,503,000 for the nine months ended September 30, 2024, an increase of approximately $172,000 (6.9%).
Hamilton accounted for approximately 1.5% of the repair and maintenance expenses paid for by the Partnership during the nine months ended September 30, 2025 and 1.0% during the nine months ended September 30, 2024. 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
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transactions. Overall, Hamilton provided approximately $85,000 (91.7%) and approximately $138,000 (46.4%) of the legal services paid for by the Partnership during the nine months ended September 30, 2025 and 2024, 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. During the nine months ended September 30, 2025, Hamilton provided the Partnership approximately $1,075,000 in construction and architectural services, compared to approximately $420,000 for the nine months ended September 30, 2024.
Hamilton’s accounting staff perform bookkeeping and accounting functions for the Partnership. During the nine months ended September 30, 2025 and 2024, Hamilton charged the Partnership $93,750 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 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. Revenue from commercial leases also include reimbursements and recoveries 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 amounts are accounted for 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.
The Partnership evaluates the non-lease components (lease arrangements that include common area maintenance services) with related lease components (lease revenues). If both the timing and pattern of transfer are the same for the non-lease component and related lease component, the lease component is the predominant component. The Partnership elected an allowed practical expedient. For (i) operating lease arrangements involving real estate that include common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance costs,
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we present these amounts within lease revenues in our consolidated statements of income. We record amounts reimbursed by the lessee in the period in which the applicable expenses are incurred.
Rental Property Held for Sale: When assets are identified by management as held for sale, the Partnership discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. The Partnership generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale. If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance is established.
If circumstances arise that previously were considered unlikely and, as a result, the Partnership decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying value before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.
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. Costs directly related to the acquisition, development and construction of rental properties are capitalized. Capitalized development and construction costs include pre-construction costs, development and construction costs, regulatory fees, interest, property taxes, insurance, construction oversight fees, and other project costs incurred during the period of development. The Partnership considers a construction project as substantially completed and held available for occupancy upon the substantial completion of improvements, but no later than one year from cessation of major construction activity.
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.
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
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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.
Investments in Treasury Bills: Investments in U.S. Treasury bills had been recorded at amortized cost and classified as held to maturity as the Partnership had the intent and the ability to hold them until they mature. The carrying value of the Treasury bills were adjusted for accretion of discounts over the remaining life of the investment. Income related to the Treasury bills is recognized in interest income in the Partnership’s consolidated statement of income.
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. 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.
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 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.
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.
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RESULTS OF OPERATIONS
Three Months Ended September 30, 2025 and September 30, 2024
The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $4,744,000 during the three months ended September 30, 2025, compared to approximately $6,470,000 for the three months ended September 30, 2024, a decrease of approximately $1,726,000 (26.7%).
The rental activity is summarized as follows:
| | | | | |
| | Occupancy Date |
| ||
|
| November 1, 2025 |
| November 1, 2024 |
|
Residential | | | | | |
Units |
| 3,358 | | 2,962 | |
Vacancies |
| 109 | | 51 | |
Vacancy rate |
| 3.2 | % | 1.7 | % |
Commercial | | | | | |
Total square feet |
| 159,266 | | 131,159 | |
Vacancy |
| 10,767 | | 1,581 | |
Vacancy rate |
| 6.80 | % | 1.20 | % |
| | | | | | | | | | | | | |
|
| Rental Income (in thousands) |
| ||||||||||
| | Three Months Ended September 30, | | ||||||||||
| | 2025 | | 2024 | | ||||||||
| | Total | | Continuing | | Total | | Continuing | | ||||
| | Operations | | Operations | | Operations | | Operations | | ||||
Total rents |
| $ | 23,491 |
| $ | 23,491 |
| $ | 20,021 |
| $ | 20,021 |
|
Residential percentage | |
| 94 | % |
| 94 | % |
| 94 | % |
| 94 | % |
Commercial percentage | |
| 6 | % |
| 6 | % |
| 6 | % |
| 6 | % |
Contingent rentals | | $ | 213 | | $ | 213 | | $ | 181 | | $ | 181 | |
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Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024:
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Dollar | | Percent |
| |||||
|
| 2025 |
| 2024 |
| Change |
| Change |
| |||
Revenues | | | | | | | | | | | |
|
Rental income |
| $ | 23,491,296 |
| $ | 20,021,133 |
| $ | 3,470,163 |
| 17.3% |
|
Laundry and sundry income | | | 195,375 | | | 187,902 | | | 7,473 | | 4.0% | |
| | | 23,686,671 | | | 20,209,035 | | | 3,477,636 | | 17.2% | |
Expenses | | | | | | | | | | | | |
Administrative | | | 871,135 | | | 679,674 | | | 191,461 | | 28.2% | |
Depreciation and amortization | | | 7,374,701 | | | 4,224,211 | | | 3,150,490 | | 74.6% | |
Management fee | | | 908,425 | | | 802,908 | | | 105,517 | | 13.1% | |
Operating | | | 1,601,327 | | | 1,509,909 | | | 91,418 | | 6.1% | |
Renting | | | 488,217 | | | 407,911 | | | 80,306 | | 19.7% | |
Repairs and maintenance | | | 4,587,034 | | | 3,618,610 | | | 968,424 | | 26.8% | |
Taxes and insurance | | | 3,111,531 | | | 2,495,136 | | | 616,395 | | 24.7% | |
| | | 18,942,370 | | | 13,738,359 | | | 5,204,011 | | 37.9% | |
Income Before Other Income (Expense) | | | 4,744,301 | | | 6,470,676 | | | (1,726,375) | | (26.7%) | |
Other Income (Expense) | | | | | | | | | | | | |
Interest income | | | 36,981 | | | 1,123,084 | | | (1,086,103) | | (96.7%) | |
Interest expense | | | (5,449,905) | | | (3,831,009) | | | (1,618,896) | | 42.3% | |
Income from investments in unconsolidated joint ventures | | | 146,795 | | | 146,647 | | | 148 | | 0.1% | |
| | | (5,266,129) | | | (2,561,278) | | | (2,704,851) | | 105.6% | |
Net (Loss) Income | | $ | (521,828) | | $ | 3,909,398 | | $ | (4,431,226) | | (113.3%) | |
Rental income for the three months ended September 30, 2025 was approximately $23,491,000, compared to approximately $20,021,000 for the three months ended September 30 2024, an increase of approximately $3,470,000 (17.3%). Excluding revenues from the Hill Estates, 26 Brighton Avenue, and 90 Concord properties rental income of approximately $2,944,000, revenue increased approximately $526,000 (2.6%). The Partnership properties with the largest increases in rental income include 62 Boylston, Hamilton Oaks, Residence at Captain Parker, WCB Associates, Redwood Hills, and School Street, with increases of $76,000, $66,000, $51,000, $49,000, $43,000 and $43,000 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.
Expenses for the three months ended September 30, 2025 were approximately $18,942,000 compared to approximately $13,738,000 for the three months ended September 30, 2024, an increase of approximately $5,204,000 (37.9%). Excluding expenses from the Hill Estates, 26 Brighton Avenue, and 90 Concord properties of approximately $4,506,000, operating expenses were approximately $14,436,000, an increase of approximately $698,000 (5.1%).The factors contributing to the increase other than from Hill Estates, 26 Brighton Avenue, and 90 Concord, are an increase in repairs and maintenance of approximately $633,000 (17.5%), an increase in taxes and insurance of approximately $146,000 (5.9%), offset by a decrease in depreciation and amortization expense of approximately $204,000 (4.8%). Approximately $2,149,000 of the expenses associated with the recently purchased properties is attributable to depreciation expense.
Interest expense for the three months ended September 30, 2025 was approximately $5,450,000 compared to approximately $3,831,000 for the three months ended September 30, 2024, an increase of approximately $1,619,000 (42.3%). Excluding interest expense for the Hill Estates of approximately $1,079,000, interest expense increased approximately $540,000 (14.1%). The increase was due to the interest expense incurred when the Partnership borrowed an additional $40,000,000 in June, 2025 at an interest rate of 5.99% on the Master Credit Facility.
Interest and dividend income for the three months ended September 30, 2025 was approximately $37,000 compared to approximately $1,123,000 for the three months ended September 30, 2024, a decrease of approximately $1,086,000 (96.7%). The decrease in the interest income is due to the use of the Investment in U.S. Treasury bills to acquire the Hill Estates, 26 Brighton Avenue, and 90 Concord properties.
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At September 30 2025, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties. See a description of these properties included in the section titled Investment Properties as well as Note 15 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.
As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $147,000 for the three months ended September 30, 2025, compared to net income of approximately $147,000 for the three months ended September 30, 2024, Included in the income for the three months ended September 30, 2025 is depreciation and amortization expense of approximately $665,000.
As a result of the changes discussed above, there was a net loss for the three months ended September 30, 2025 of approximately $522,000 compared to net income of approximately $3,909,000 for the three months ended September 30, 2024, a decrease in income of approximately $4,431,000 (113.3%).
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Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024:
The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $18,041,000 during the nine months ended September 30, 2025, compared to approximately $18,760,000 for the nine months ended September 30, 2024, a decrease of approximately $719,000 (3.8%).
| | | | | | | | | | | | |
| | Nine Months Ended September 30, | | Dollar | | Percent |
| |||||
|
| 2025 |
| 2024 |
| Change |
| Change |
| |||
Revenues | | | | | | | | | | | |
|
Rental income | | $ | 65,025,406 | | $ | 59,573,125 | | $ | 5,452,281 |
| 9.2% |
|
Laundry and sundry income | | | 590,267 | | | 579,876 | | | 10,391 |
| 1.8% | |
| | | 65,615,673 | | | 60,153,001 | | | 5,462,672 | | 9.1% | |
Expenses | | | | | | | | | | | | |
Administrative | | | 2,160,314 | | | 2,093,671 | | | 66,643 |
| 3.2% | |
Depreciation and amortization | | | 15,754,431 | | | 12,729,275 | | | 3,025,156 |
| 23.8% | |
Management fee | | | 2,561,266 | | | 2,374,371 | | | 186,895 |
| 7.9% | |
Operating | | | 6,583,851 | | | 5,794,220 | | | 789,631 |
| 13.6% | |
Renting | | | 1,022,744 | | | 946,282 | | | 76,462 |
| 8.1% | |
Repairs and maintenance | | | 10,927,118 | | | 9,967,034 | | | 960,084 |
| 9.6% | |
Taxes and insurance | | | 8,564,628 | | | 7,487,535 | | | 1,077,093 |
| 14.4% | |
| | | 47,574,352 | | | 41,392,388 | | | 6,181,964 |
| 14.9% | |
Income Before Other Income ( Expense) | | | 18,041,321 | | | 18,760,613 | | | (719,292) |
| (3.8)% | |
Other Income (Expense) | | | | | | | | | | | | |
Interest income | | | 1,765,468 | | | 3,413,620 | | | (1,648,152) |
| (48.3%) | |
Interest (expense) | | | (13,377,493) | | | (11,637,720) | | | (1,739,773) |
| 14.9% | |
Income from investments in unconsolidated joint ventures | | | 994,475 | | | 909,207 | | | 85,268 |
| 9.4% | |
| | | (10,617,550) | | | (7,314,893) | | | (3,302,657) |
| 45.1% | |
Net Income | | $ | 7,423,771 | | $ | 11,445,720 | | $ | (4,021,949) |
| (35.1%) | |
Rental income for the nine months ended September 30, 2025 was approximately $65,025,000, compared to approximately $59,573,000 for the nine months ended September 30, 2024, an increase of approximately $5,452,000 (9.2%). Excluding revenues from the Hill Estates, 26 Brighton Avenue, and 90 Concord properties of approximately $3,365,000, revenue increased approximately $2,087,000 (3.5%). Included in rental income is contingent rentals collected on commercial properties. The Partnership properties with the largest increases in rental income include Westgate Apartments, Hamilton Oaks, WCB Associates, Hamilton Green Apartments, School Street, and Redwood Hills, with increases of $226,000, $200,000, $195,000, $183,000, $173,000 and $160,000 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 for the nine months ended September 30, 2025 were approximately $47,574,000 compared to approximately $41,392,000 for the nine months ended September 30, 2024, an increase of approximately $6,182,000 (14.9%), Excluding operating costs for the Hill Estates, 26 Brighton Avenue and 90 Concord properties of approximately $5,208,000, operating expenses increased approximately $974,000 (2.4%). The factors contributing to the increase are an increase in taxes and insurance expense of approximately $540,000 (7.2%), an increase in snow removal costs of approximately $432,000 (77.6%), partially offset by a decrease in depreciation and amortization expense of approximately $840,000 (6.6%). Approximately $2,459,000 of the expenses associated with the recently purchased properties is attributable to depreciation expense.
Interest expense for the nine months ended September 30, 2025 was approximately $13,377,000 compared to approximately $11,638,000 for the nine months ended September 30, 2024, an increase of approximately $1,740,000 (14.9%). Excluding interest expense for Hill Estates, 26 Brighton Avenue and 90 Concord properties of approximately
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$1,228,000, interest expense increased approximately $512,000 (4.4%). The increase was due to the interest expense incurred when the Partnership borrowed an additional $40,000,000 in May, 2025 at an interest rate of 5.99% on the Master Credit Facility.
Interest and dividend income for the nine months ended September 30, 2025 was approximately $1,765,000 compared to approximately $3,413,000 for the nine months ended September 30, 2024, a decrease of approximately $1,648,000 (48.3%). The decrease in the interest income is due to the use of Investment in U.S. Treasury bills to acquire the Hill Estates, 26 Brighton Avenue, and 90 Concord properties.
At September 30, 2025, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties. See a description of these properties included in the section titled Investment Properties as well as Note 15 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.
As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $994,000 for the nine months ended September 30, 2025, compared to net income of approximately $909,000 for the nine months ended September 30, 2024, an increase in income of approximately $85,000 (9.4%). Included in the income for the nine months ended September 30, 2025 is depreciation and amortization expense of approximately $1,973,000.
As a result of the changes discussed above, net income for the nine months ended September 30, 2025 was approximately $7,424,000 compared to income of approximately $11,446,000 for the nine months ended September 30, 2024, a decrease in net income of approximately $4,022,000 (35.1%).
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LIQUIDITY AND CAPITAL RESOURCES
The Partnership’s principal source of cash during the first nine months of 2025 and 2024 was the proceeds from the increased in mortgage notes payable, the liquidation of U.S Treasury bills, and the collection of rents. The Partnership’s principal use of cash during the first nine months of 2025 was the purchase of a new property, construction of the Mill Street Development, improvements to rental properties, mortgage principal payments, purchases of U.S. Treasury bills, and distributions to partners.
The majority of cash and cash equivalents of $13,374,205 at September 30, 2025 and $17,615,940 at December 31, 2024 were held in interest bearing accounts at creditworthy financial institutions.
The decrease in cash of $4,241,735 for the nine months ended September 30, 2025 is summarized as follows:
| | | | | | | |
| | Nine Months Ended September 30, |
| ||||
|
| 2025 |
| 2024 |
| ||
Cash provided by operating activities | | $ | 20,355,501 | | $ | 19,965,878 | |
Cash (used in) investing activities | | | (44,941,261) | | | (9,570,177) | |
Proceeds from mortgage notes payable | | | 57,429,410 | | | — | |
Principal payments of mortgage notes payable | | | (21,274,632) | | | (2,098,252) | |
Repurchase of Depositary Receipts, Class B and General Partner Units | | | (398,471) | | | (1,613,829) | |
Distributions paid | | | (15,412,282) | | | (9,844,390) | |
Net (decrease) increase in cash and cash equivalents | | $ | (4,241,735) | | $ | (3,160,770) | |
The net increase in cash provided by operating activities is due to various factors, including a change in depreciation expense, a change in income and distribution from joint ventures, and other factors. The net decrease in cash used in investing activities is primarily for the purchase of the Hill Estates, 26 Brighton Avenue and 90 Concord properties, improvement of rental properties, including the Mill Street Development project, offset by the proceeds of U.S. Treasury bills. Financing activities include proceeds from the mortgage notes payable, mortgage principal payments and distributions to partners, and repurchase of depositary receipts.
During 2025, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $9,323,000. These improvements were funded from cash reserves. Cash reserves have been adequate to fully fund improvements. Cash reserves used for the Mill Street Development Project were approximately $16,053,000 for the nine months ended September 30, 2025. Beyond the Mill Street Development Project, the most significant improvements were made at Commonwealth 1137, Boylston Street, Residences at Captain Parker, Executive Apartments, Staples Plaza, and Hamilton Oaks, at a cost of approximately $1,299,000, $1,163,000, $748,000, $663,000, $655,000 and $616,000, respectively.
During the nine months ended September 30, 2025, the Partnership received distributions of approximately $1,078,000 from the investment properties. For the nine months ended September 30, 2024, the Partnership received $3,972,000 in distributions from the investment properties. Included in these net distributions is the amount from Dexter Park of approximately $600,000 and $1,340,000 for the nine months ended September 30, 2025 and 2024, respectively.
In March 2025, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on March 31, 2025. In addition to the quarterly distribution, there was a special distribution of $96.00 per Class A unit ($3.20 per Receipt) payable on March 31, 2025. In May 2025, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on May 30, 2025. On August 7, 2025, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on September 30, 2025.
The Partnership anticipates that cash from operations will be sufficient to fund its current operations, pay distributions, and make required debt payments. The Partnership anticipates that the Mill Street Development project will require approximately $30 million to be spent over the two year period, with approximately $15 million spent in 2024 and approximately $15 million to be spent in 2025. The Partnership is using cash reserves to fund this construction but will finance a portion of construction costs upon completion of the project. Construction is expected to be completed during the fourth quarter of 2025.
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Off-Balance Sheet Arrangements—Joint Venture Indebtedness
As of September 30, 2025, the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness. We do not have control of these partnerships and therefore we account for them using the equity method of consolidation. As of September 30, 2025, our proportionate share of the non-recourse debt related to these investments was approximately $74,930,000. See Note 15 to the Consolidated Financial Statements.
Contractual Obligations
As of September 30, 2025, we are subject to debt obligations as described in the table below.
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Payments due by period | | | | | | | | | | | | | |||
| | | | | | | | | | | | | | | | | | | | | |
| | | 2026 | | | 2027 | | | 2028 | | | 2029 | | | 2030 | | | Thereafter | | | Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual Obligations | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Long -term debt | | | | | | | | | | | | | | | | | | | | | |
Mortgage debt | | $ | 74,119,932 | | | 3,226,253 | | | 52,320,205 | | | 28,566,331 | | | 21,589,558 | | | 334,354,984 | | $ | 514,177,263 |
Total Contractual Obligations | | $ | 74,119,932 | | $ | 3,226,253 | | $ | 52,320,205 | | $ | 28,566,331 | | $ | 21,589,558 | | $ | 334,354,984 | | $ | 514,177,263 |
*Excluding unamortized deferred financing costs
As of September 30, 2025, the Partnership has one property under construction located at 57 Mill Street in Woburn, MA. The project includes 72 residential units comprising approximately 93,000 square feet, and is estimated to be completed during the fourth quarter of 2025. Total investment to date is approximately $31 million, and the total investment upon completion is anticipated to be approximately $33 million. The partnership is using cash reserves to fund this construction, but will finance a portion of construction costs upon completion of the project. In connection with the Mill Street development project, the Partnership has entered into a contract with a general contractor with a current contract value of approximately $30.9 million.
We have various standing or renewable service contracts with vendors related to our property management. In addition, we have certain other contracts we enter into in the ordinary course of business that may extend beyond one year. These contracts are not included as part of our contractual obligations because they include terms that provide for cancellation with insignificant or no cancellation penalties.
See Notes 5 and 15 to the Consolidated Financial Statements for a description of mortgage notes payable. The Partnerships has no other material contractual obligations to be disclosed.
Factors That May Affect Future Results
Along with risks detailed in Item 1A of the Partnership’s Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission on March 14, 2025 and from time to time in the Partnership’s other 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. |
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| ● | 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. |
| ● | Our actual costs to develop properties may exceed our budgeted costs. |
| ● | 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. |
| ● | 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. |
| ● | Revenue associated with residential properties may be limited in the future if current rent restriction proposals are adopted by the State of Massachusetts. On August 6, 2025, a citizen’s petition was filed by a coalition of housing advocacy organizations with the Massachusetts’ State’s Attorney General, to put a ballot initiative in front of voters. If approved, the petition would limit annual rent increases in |
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| Massachusetts to cost of living increases, with a 5% annual cap. If such a ballot measure were to be passed by voters, our financial condition, results of operations, and cash flows, as well as our ability to pay dividends, could be adversely affected over time. |
| ● | On August 1, 2025, a new Massachusetts state law became effective that prohibits real estate professionals, such as brokers, from charging tenants broker fees for services primarily provided to the landlord. Tenants may still choose to hire and pay for their own broker who will represent their interests in securing rental housing. This change may result in an increase in our rental expense. |
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.
ITEM 3. 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 September 30, 2025, the Partnership, its Subsidiary Partnerships and the Investment Properties collectively have approximately $689,037,000 in long-term debt, approximately 90% 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 2035. The Partnership, its Subsidiary Partnerships and the Investment Properties collectively have variable rate debt of $67,500,000 (without taking out unamortized deferred financing costs) as of September 30, 2025. Interest rates ranged from SOFR plus 150 basis points to SOFR plus 250 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 $675,000 annually and the increase or decrease in the fair value of the Partnership’s fixed rate debt as of September 30, 2025 would be approximately $23,300,000. 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 15 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”
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures. The Partnership’s management, with the participation of the Partnership’s principal executive officer and principal financial officer, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Partnership’s principal executive officer and principal financial officer have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act.
Changes in Internal Control over Financial Reporting. There were no other changes in the Management Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 that occurred during the quarter ended September 30, 2025 that have materially affected or are reasonably likely to materially affect, the Management Company’s internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings, other than ordinary routine litigation incidental to its business, to which the Partnership is a party to or to which any of the Properties is subject.
Item 1A. Risk Factors
There have been no material changes to the Risk Factors in Item 1A, “Risk Factors” in our annual report on Form 10K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) | None |
(b) | None |
(c) | Issuer Purchase of Equity Securities during the third quarter of 2025: |
| | | | | | | | |
|
| | |
| |
| 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) |
| |
July 1-31, 2025 | | $ | 73.37 | | 432 | | 446,201 | |
August 1-31, 2025 | | $ | 71.55 | | 734 | | 445,467 | |
September 1-30, 2025 | | $ | 71.96 | | 170 | | 445,297 | |
Total | | | | | 1,336 | | | |
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). Over time, the General Partner has authorized increases in the equity repurchase program. 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. On March 9, 2020, the General Partner extended the program for an additional five years from March 31, 2020 to March 31, 2025. 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 Restated 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.
On March 12, 2025, the Board of Directors authorized the President and Treasurer to cause the Partnership to repurchase, on the open market or otherwise, including through individually negotiated purchases and through a written trading plan that complies with the requirements of Rule 10b5-1, Depositary Receipts and Partnership Units in such quantities, at such prices, in such manner and on such terms and conditions as the Authorized Persons determine are in the best interests of the Partnership; provided, however, that (i) the aggregate cost of Depositary Receipts and Partnership Units repurchased shall not exceed $5 million, (ii) no Depositary Receipts or Partnership Units shall be repurchased after the date that is 12 months after the effective date hereof, (iii) no Depositary Receipt shall be repurchased( the “Repurchase Plan”); The Repurchase Plan requires the Partnership to repurchase a proportionate number of Class B Units and General Partner Units in connection with any repurchases of any Depositary Receipts by the Partnership based upon the 80%, 19% and 1% fixed distribution percentages of the holders of the Class A, Class B and General Partner Units under the Partnership Agreement. The Repurchase Plan shall be made in accordance with the terms of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall be made in accordance with all applicable laws and regulations in effect from time to time.
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From August 20, 2007 through September 30, 2025, the Partnership has repurchased 1,554,701 Depositary Receipts at an average price of $33.09 per receipt (or $992.70 per underlying Class A Unit), 4,572 Class B Units and 241 General Partnership Units, both at an average price of $1,296 per Unit, totaling approximately $56.503,000 including brokerage fees paid by the Partnership.
During the nine months ended September 30, 2025, the Partnership purchased a total of 4,343 Depositary Receipts. The average price was $75.61 per receipt, or $2,268.30 per unit. The cost including commission was approximately $330,666. The Partnership was required to repurchase 34.4 Class B Units and 1.8 General Partnership units at a cost of $77,987 and $4,021 respectively
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not applicable.
Item 5. Other Information
Item 6. Exhibits
See the exhibit index below.
EXHIBIT INDEX
| ||
Exhibit No. |
| Description of Exhibit |
| | |
(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). |
| | |
(31.2) | | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Jameson 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 Jameson Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership). |
| | |
(101.1) | | The following financial statements from New England Realty Associates Limited Partnership Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, formatted in Inline XBRL (eXtensible Business Property Language: (i) Consolidated Balance Sheets, (unaudited) (ii) Consolidated Statements of Income, (unaudited) (iii) Consolidated Statements of Changes in Partners’ Capital, (unaudited) (iv) Consolidated Statements of Cash Flows, (unaudited) and (v) Notes to Consolidated Financial Statements, (unaudited) (filed herewith). |
| | |
(104) | | Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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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 |
| Dated: November 7, 2025 | |
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 | | November 7, 2025 |
Ronald Brown | | (Principal Executive Officer) | | |
| | | | |
/s/ JAMESON BROWN | | Treasurer and Director of the General Partner | | November 7, 2025 |
Jameson Brown | | (Principal Financial Officer and Principal Accounting Officer) | | |
| | | | |
/s/ MARTINA ALIBRANDI | | Director of the General Partner | | November 7, 2025 |
Martina Alibrandi | | | | |
| | | | |
/s/ DAVID ALOISE | | Director of the General Partner | | November 7, 2025 |
David Aloise | | | | |
| | | | |
/s/ ANDREW BLOCH | | Director of the General Partner | | November 7, 2025 |
Andrew Bloch | | | | |
| | | | |
/s/ SALLY MICHAEL | | Director of the General Partner | | November 7, 2025 |
Sally Michael | | | | |
| | | | |
/s/ DAVID REIER | | Director of the General Partner | | November 7, 2025 |
David Reier | | | | |
45
FAQ
How did NEN (New England Realty Associates) perform in Q3 2025?
What major acquisition did NEN complete in 2025?
How did NEN finance the Belmont acquisition?
What is NEN’s current debt position?
Was NEN in compliance with its line of credit covenants?
What were NEN’s cash flows for the nine months ended September 30, 2025?
What is the status of the Mill Street Development?
