HAMILTON PARK TOWERS LLC
HAMILTON ON MAIN LLC
HAMILTON ON MAIN APARTMENTS LLC
Combined Financial Statements—Significant Joint Ventures
As of December 31, 2009 and 2008
and for the years ended December 31, 2009, 2008 and 2007
Together With Report of Independent
Registered Public Accounting Firm

The Joint Venture Participants
Hamilton Park Towers LLC, Hamilton on Main LLC, Hamilton on Main Apartments LLC.

We have audited the accompanying combined balance sheets of Hamilton Park Towers LLC, Hamilton on Main LLC and Hamilton on Main Apartments LLC (the "Joint Ventures") as of December 31, 2009 and 2008, and the related combined statements of income, changes in members' capital and cash flows for each of the years in the three-year period ended December 31, 2009. The combined financial statements are the responsibility of the Joint Ventures' management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Hamilton Park Towers LLC, Hamilton on Main LLC and Hamilton on Main Apartments LLC at December 31, 2009 and 2008 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

		December 31,

		2009		2008
ASSETS
Rental Properties		$	147,471,713	$	25,212,271
Cash and Cash Equivalents			1,124,183		5,972
Rents Receivable			88,467		1,524
Real Estate Tax Escrows			435,974		94,937
Due from Joint Ventures			—		230,000
Intangible Assets			4,085,000		—
Prepaid Expenses and Other Assets			1,325,717		352,429
Financing and Leasing Fees			607,960		43,250

	Total Assets	$	155,139,014	$	25,940,383

LIABILITIES AND MEMBERS' CAPITAL
Mortgage Notes Payable		$	106,316,353	$	16,640,374
Accounts Payable and Accrued Expenses			989,744		171,783
Advance Rental Payments and Security Deposits			1,804,019		190,620

	Total Liabilities		109,110,115		17,002,777
Commitments (Note7)
Members' Capital			46,028,898		8,937,606

	Total Liabilities and Members' Capital	$	155,139,014	$	25,940,383

		Year Ended December 31,

		2009			2008			2007
Revenues
	Rental Income	$	4,327,579		$	2,355,539		$	2,550,882
	Laundry and Sundry Income		37,664			19,505			17,144

			4,365,243			2,375,044			2,568,026

Expenses
	Administrative		160,121			59,917			68,062
	Depreciation and Amortization		3,190,117			1,556,690			1,796,956
	Management Fees		153,555			97,578			103,401
	Operating		525,032			362,279			309,997
	Renting		27,562			30,794			13,250
	Repairs and Maintenance		391,069			414,654			496,255
	Taxes and Insurance		494,529			321,216			365,326

			4,941,984			2,843,128			3,153,247

Income Before Other Income			(576,741	)		(468,084	)		(585,221	)

Other Income (Loss)
	Interest Income		9,459			4,124			22,178
	Interest Expense		(1,778,115	)		(887,640	)		(938,035	)
	Gain on Sale of Real Estate		—			348,049			1,193,968
	Other Income (Expenses)		(309	)		—			—

			(1,768,965	)		(535,467	)		278,111

Net Income (Loss)		$	(2,345,707	)	$	(1,003,551	)	$	(307,110	)

Hamilton Park Towers LLC, Hamilton on Main Apartments LLC, and Hamilton on Main LLC

	Hamilton Park Towers LLC			Hamilton on Main Apartments LLC			Hamilton on Main LLC			Total

Balance, January 1, 2007	$	—		$	10,574,967		$	6,298,294		$	16,873,261
Distribution to members		—			(600,000	)		(3,600,000	)		(4,200,000	)
Net Income (Loss)		—			(1,209,113	)		902,004			(307,109	)

Balance, December 31, 2007		—			8,765,854			3,600,298			12,366,152
Transfer of equity		—			1,797,991			(1,797,991	)		—
Distribution to members		—			(305,000	)		(2,120,000	)		(2,425,000	)
Net Income (Loss)		—			(1,321,242	)		317,693			(1,003,549	)

Balance, December 31, 2008		—			8,937,603			—			8,937,603
Investment by members		39,814,000			—			—			39,814,000
Distribution to members		—			(377,000	)		—			(377,000	)
Net Income (Loss)		(1,295,695	)		(1,050,010	)		—			(2,345,705	)

Balance, December 31, 2009	$	38,518,305		$	7,510,593		$	—		$	46,028,898

Hamilton Park Towers LLC, Hamilton on Main Apartments LLC, and Hamilton on Main LLC

			Year Ended December 31,

			2009			2008			2007
Cash Flows from Operating Activities
	Net Income (loss)		$	(2,345,707	)	$	(1,003,549	)	$	(307,109	)
Adjustments to reconcile net income to net cash provided
	(used) by operating activities:
	Gain on sale of condominiums			—			(348,049	)		(1,193,968	)
	Depreciation and amortization			3,190,117			1,556,690			1,796,956
	Amortization of above market lease			60,346			—			—
Changes in operating assets and liabilities:
	(Increase) Decrease in rents receivable			(86,943	)		8,526			(10,050	)
	(Decrease) Increase in accounts payable and accrued exp			817,961			34,148			(46,957	)
	(Increase) Decrease in real estate tax escrow			(341,037	)		321,776			(73,557	)
	(Increase) Decrease in due from joint venture			230,000			470,000			(700,000	)
	(Increase) Decrease in financing and leasing fees			—			3,690			10,039
	(Increase) Decrease in prepaid expenses and other assets			(1,045,424	)		(31,918	)		34,866
	(Decrease) Increase in advance rental payments and
		security deposits		1,613,399			36,353			(6,812	)

	Total adjustments			4,438,419			2,051,216			(189,483	)

	Net cash provided by (used in)operating activities			2,092,712			1,047,667			(496,592	)

Cash flows provided by (used in) investing activities
	Proceeds from sales of condominiums			—			2,413,148			8,029,768
	Purchase and improvement of rental properties			(129,504,313	)		(1,258,490	)		(579,370	)

Net cash provided by (used in) investing activities				(129,504,313	)		1,154,658			7,450,398

Cash flows provided by (used in) investing activities
	Payment of financing cost			(583,166	)		—			—
	Proceeds of mortgage payable			89,914,000			—			—
	Principal payments of mortgage payable			(238,022	)		(184,626	)		(2,380,745	)
	(Distributions to) investment by members			39,437,000			(2,425,000	)		(4,200,000	)

	Net cash provided by(used in)financing activities			128,529,812			(2,609,626	)		(6,580,745	)

Net increase (decrease) in cash and cash equivalents				1,118,211			(407,301	)		373,061
Cash and cash equivalents, at beginning of year				5,972			413,273			40,212

Cash and cash equivalents, at end of year			$	1,124,183		$	5,972		$	413,273

Principles of Combination: The combined financial statements include the accounts of Hamilton Park Towers LLC ("Dexter Park" or "Hamilton Park"), Hamilton on Main LLC ("Hamilton Place") and Hamilton on Main Apartments LLC ("Hamilton Place Apartments") (the "Joint Ventures"). Hamilton Place and Hamilton Place Apartments are owned 50% and Hamilton Park is owned 40% by New England Realty Associates, Limited Partnership ("NERA") and are "significant subsidiaries" under Rule 3-09 of Regulation S-X requiring separate financial statements. All significant intercompany accounts and transactions are eliminated in the combined statements between these three entities. Hamilton 1025 LLC, previously included, is no longer a significant subsidiary and it has been eliminated in the 2008 and 2007 statements.

Line of Business: The Joint Ventures own and operate various residential apartment buildings located in Greater Boston. Hamilton Place completed the sale of its residential units in 2008 and completed its liquidation and, accordingly, there are no subsequent transactions or balances.

Accounting Standards: On July 1, 2009, the Financial Accounting Standards Board ("FASB") issued the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, also known as FASB Accounting Standards Codification ("ASC 105-10"), General Accepted Accounting Principles ("ASC 105-10"). ASC 105-10 established the FASB Accounting Standards Codification ("Codification") as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification supersedes all existing non-SEC accounting and reporting standards. All other non -grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates, which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification. GAAP was not intended to be changed as a result of the FASB's Codification project, but it will change the way the guidance is organized and presented. As a result, these changes will have a significant impact on how companies reference GAAP in their financial statements and in their accounting policies for financial statements issued for interim and annual periods ending after September 15, 2009. The Partnership has implemented the Codification in this report by providing references to the Codification topics, as appropriate.

Accounting Estimates: The preparation of the financial statements, in conformity with accounting principles generally accepted in the United State of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates.

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

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the differences between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed—rate renewal options for below-market leases. The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.

Rental Properties: Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions 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. Significant acquisitions with long term leases are evaluated to determine if a portion of the purchase price is allocable to intangibles such as non market rate rents.

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.

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. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Partnership's existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals. The value of in-place leases are

amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.

In the event that facts and circumstances indicate that the carrying value of a rental property may be impaired, an analysis of the value is prepared. The estimated future undiscounted cash flows are compared to the asset's carrying value to determine if a write-down to fair value is required.

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

Income Taxes: The financial statements have been prepared on the basis that the joint ventures are entitled to tax treatment as partnerships. Accordingly, no provision for income taxes has been recorded.

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

Segment Reporting: Operating segments are revenue-producing components of the joint venture for which separate financial information is produced internally for management.

Comprehensive Income: Comprehensive income is defined as changes in members' equity, exclusive of transactions with members (such as capital contributions and dividends). The Joint Ventures did not have any comprehensive income items in 2009, 2008, or 2007 other than net income as reported.

Concentration of Credit Risks and Financial Instruments: The Joint Venture's properties are located in Greater Boston, and are subject to the general economic risks related thereto. No single tenant accounted for more than 5% of the revenues in 2009, 2008 or 2007. The Joint Ventures make their temporary cash investments with high-credit-quality financial institutions.

Advertising Expense: Advertising is expensed as incurred. Advertising expense was insignificant in 2009, 2008 and 2007.

Discontinued Operations and 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. If, in management's opinion, the net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

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 amount 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.

Interest Capitalized: The Partnership follows the policy of capitalizing interest as a component of the cost of rental property when the time of construction exceeds one year. During the year ended December 31, 2009, 2008 and 2007 there was no capitalized interest.

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

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

	Year Ended December 31,

	2009			2008			Useful Life
Land, improvements and parking lots	$	35,235,224		$	5,002,243		15–40 years
Buildings and improvements		95,797,503			23,113,876		15–40 years
Kitchen cabinets		408,241			380,289		5–10 years
Carpets		1,592,972			222,349		5–10 years
Air conditioning		49,294			44,491		7–10 years
Laundry equipment		—			—		5–7 years
Elevator		1,705,708			—		20 years
Equipment		7,223,284			102,267		5–7 years
Motor vehicles		—			—		5 years
Fences		990			990		5–10 years
Furniture and fixtures		14,291,755			2,761,659		5–7 years
Smoke alarms		2,943			2,943		5–7 years

		156,307,913			31,631,107
Less accumulated depreciation		(8,836,200	)		(6,418,836	)

	$	147,471,713		$	25,212,271

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

		Hamilton Park Towers		Hamilton Place Sales			Hamilton on Main Apts			Total

Rental Properties at Cost:
Balance, January 1, 2007		$	—	$	9,238,927		$	30,199,304		$	39,438,231
	Purchase of and addition to Property		—		467,245			111,503			578,748
	Condominium sale		—		(7,427,329	)		—			(7,427,329	)

Balance, December 31, 2007			—		2,278,843			30,310,807			32,589,650
	Purchase of and addition to Property		—		—			1,348,889			1,348,889
	Condominium sale		—		(2,278,843	)		(28,588	)		(2,307,431	)

Balance, December 31, 2008			—		(2,278,843	)		31,631,108			31,631,108
	Purchase of and addition to Property		124,628,719		—			48,086			124,676,805

Balance, December 31, 2009			124,628,719		—			31,679,194			156,307,913

Accumulated Depreciation:
Balance, January 1, 2007			—		594,495			3,241,546			3,836,041
	Depreciation for year		—		207,116			1,571,145			1,778,261
	Depreciation of disposition		—		(592,147	)		—			(592,147	)

Balance, December 31, 2007			—		209,464			4,812,691			5,022,155
	Depreciation for year		—		—			1,632,658			1,632,658
	Depreciation of disposition		—		(209,464	)		(26,513	)		(235,977	)

Balance, December 31, 2008			—		—			6,418,836			6,418,836
	Depreciation for year		926,330		—			1,491,034			2,417,364

Balance, December 31, 2009			926,330		—			7,909,870			8,836,200

Book Value		$	123,702,389	$	—		$	23,769,324		$	147,471,713

The Joint Ventures' properties are managed by an entity that is owned by the majority shareholder of the General Partner. The management fee is equal to 4% at Hamilton on Main Apartments and 2% at Hamilton Park Towers of rental revenue and laundry income. Total fees paid were approximately $154,000, $98,000 and $95,000 in 2009, 2008 and 2007, respectively.

In 2009, the Management Company also received approximately $10,000 for maintenance services and $8,000 for administrative services.

In 2008, the Management Company also received approximately $6,000 for construction supervision and architectural fees, $10,000 for maintenance services and $12,000 for administrative services. The Hamilton Company legal department acts as closing attorney on certain condo sales receiving approximately $5,950 during the year ended December 31, 2008. An entity partially owned by the majority shareholder of the General Partner is the sales agent for certain condominium sales receiving approximately $43,000 of commissions in 2008.

In 2007, the Management Company also received approximately $1,700 for construction supervision and architectural fees, $13,000 for maintenance services and $10,000 for administrative services. The Hamilton Company legal department acts as closing attorney on certain condo sales receiving approximately $31,000 during the year ended December 31, 2007. An entity partially owned by the majority shareholder of the General Partner is the sales agent for certain condominium sales receiving approximately $252,000 of commissions in 2007.

Financing and leasing fees of approximately $608,000 and $43,000 are net of accumulated amortization of approximately $44,000 and $34,000 at December 31, 2009 and, 2008, respectively.

At December 31, 2009 and 2008, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2. At December 31, 2009, the interest rates on these loans ranged from 5.18% to5.57%, payable in monthly installments aggregating approximately $523,000, including interest, to various dates through 2019. The majority of the mortgages are subject to prepayment penalties. At December 31, 2009, the weighted average interest rate on the above mortgages was 5.51%.

The Joint Ventures have pledged tenant leases as additional collateral for certain of these loans.

The Joint Ventures' residential lease agreements may require tenants to maintain a one-month advance rental payment and/or a security deposit. At December 31, 2009, amounts received for prepaid rents of approximately $857,000 are included in cash and cash equivalents; security deposits of approximately $871,000 are included with other assets and is restricted cash.

From time to time, the Joint Ventures may be involved in various ordinary routine litigation incidental to their business. The Joint Ventures either have insurance coverage or provide for any uninsured claims when appropriate. The Joint Ventures are not involved in any material pending legal proceedings.

Substantially all rental income was related to residential apartments and condominium units with leases of one year or less.

Rents receivable are net of allowances for doubtful accounts of approximately $88,000, $1,500 and $10,000 at December 31, 2009, 2008 and 2007, respectively.

During the years ended December 31, 2009, 2008 and 2007, cash paid for interest was approximately $1,772,000, $882,000 and $933,000 respectively.

At December 31, 2009 and 2008, 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.

At December 31, 2009 and 2008 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and 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.

At December 31, 2009 and 2008, we estimated the fair value of our mortgages payable and other notes based upon quoted market prices for the same (Level 1) or similar (Level 2) issues when current quoted market prices are available. We estimated the fair value of our secured mortgage debt that does not have current quoted market prices available by discounting the future cash flows using rates currently available to us for debt with similar terms and maturities (Level 3). The differences in the fair value of our debt from the carrying value are the result of differences in interest rates and/or borrowing spreads that were available to us at December 31, 2009 and 2008, 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.

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

Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2009 and 2008. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since December 31, 2009 and current estimates of fair value may differ significantly from the amounts presented herein.

The Joint Ventures are not subject to income taxes as they file partnership tax returns whereby their income or loss is reportable by the owners.

Taxable income is different than financial statement income because of intangible assets, accelerated depreciation, different tax lives, and timing differences related to prepaid rents and allowances. Gains from sale of condominiums are taxable at ordinary rates. Taxable loss is approximately $240,000 less than statement loss for the year ended December 31, 2009. The cumulative tax basis of the Joint Ventures real estate at December 31, 2009 is approximately $255,000 greater than the statement basis primarily due to the purchase price allocation to intangible assets at Hamilton Park Towers.

The Partnership estimates the fair value of intangible assets acquired at significant acquisitions as described in Note 1 including above market leases, in place leases and tenant relationships as though the acquisition is acquired "as if vacant". Hamilton Park Towers, a 409 unit residential complex, was acquired on October 28, 2009. Substantially all of the property's leases are for one year and there is substantial "turnover" of the existing tenants each year. Our analysis of the above mentioned factors resulted in approximately $4,900,000 of the $129,500,000 purchase price allocated to intangible assets amortizable over a twelve month period as follows:

Approximate in-place leases and tenant relationships are amortized in operating expenses and amortization of over-market leases are a reduction of rental income as follows:



ASSETS
Rental Properties		123,702,389	23,769,324	—	147,471,713
Cash and Cash Equivalents		985,842	138,342	—	1,124,183
Rent Receivable		82,950	5,517	—	88,467
Real Estate Tax Escrow		338,390	97,584	—	435,974
Intangible Assets		4,085,000	—		4,085,000
Prepaid Expenses and Other Assets		996,245	329,472	—	1,325,717
Financing and Leasing Fees		572,795	35,165	—	607,960

	Total Assets	130,763,610	24,375,403	—	155,139,014

LIABILITIES AND MEMBERS' CAPITAL
Mortgage Notes Payable		89,914,000	16,402,353	—	106,316,353
Accounts Payable and Accrued Expense		753,668	236,076	—	989,744
Advance Rental Payments and Security Deposits		1,577,637	226,382	—	1,804,019

	Total Liabilities	92,245,305	16,864,810	—	109,110,115
Members' Capital		38,518,305	7,510,593	—	46,028,898

	Total Liabilities and Members' Capital	130,763,610	24,375,403	—	155,139,014

Members' Capital—NERA 50%		—	3,755,297	—	3,755,297
Members' Capital—NERA 40%		15,407,322	—	—	15,407,322

		15,407,322	3,755,297	—	19,162,619



Revenues
	Rental Income	1,912,267		2,415,312		—	4,327,579
	Laundry and Sundry Income	15,846		21,818		—	37,664

		1,928,113		2,437,130		—	4,365,243

Expenses
	Administrative	122,516		37,605		—	160,121
	Depreciation and Amortization	1,690,998		1,499,119		—	3,190,117
	Management Fees	54,257		99,298		—	153,555
	Operating	173,464		351,567		—	525,032
	Renting	13,458		14,104		—	27,562
	Repairs and Maintenance	81,615		309,454		—	391,069
	Taxes and Insurance	192,386		302,142		—	494,529

		2,328,694		2,613,290		—	4,941,984

Income Before Other Income		(400,582	)	(176,160	)	—	(576,741	)

Other Income (Loss)
	Interest Income	9,455		3		—	9,459
	Interest Expense	(904,260	)	(873,855	)	—	(1,778,115	)
	Other Income (Expenses)	(309	)	—		—	(309	)

		(895,113	)	(873,852	)	—	(1,768,965	)

Net Income (Loss)		(1,295,695	)	(1,050,012	)	—	(2,345,707	)

NERA 50%		—		(525,006	)	—	(525,006	)
NERA 40%		(518,278	)	—		—	(518,278	)

		(518,278	)	(525,006	)	—	(1,043,284	)



Cash Flows from Operating Activities
	Net Income (loss)	(1,295,695	)	(1,050,012	)	—	(2,345,707	)
Adjustments to reconcile net income to net cash provided (used) by operating activities:
	Depreciation and amortization	1,690,998		1,499,119		—	3,190,117
	Amortization of above market lease	60,346		—		—	60,346
Changes in operating assets and liabilities:							0
	(Increase) Decrease in rents receivable	(82,950	)	(3,993	)	—	(86,943	)
	(Decrease) Increase in accounts payable and accrued exp	753,668		64,293		—	817,961
	(Increase) Decrease in real estate tax escrow	(338,390	)	(2,647	)	—	(341,037	)
	(Increase) Decrease in due from joint venture	—		230,000		—	230,000
	(Increase) decrease in financing and leasing fees	—		—		—	0
	(Increase) decrease in prepaid expenses and other assets	(1,068,381	)	22,957		—	(1,045,424	)
	(Decrease) increase in advance rental payments and security deposits	1,577,637		35,762		—	1,613,399

	Total adjustments	2,592,928		1,845,491		—	4,438,419

	Net cash provided by (used in)operating activities	1,297,233		795,479		—	2,092,712

Cash flows provided by (used in) investing activities
	Purchase and improvement of rental properties*	(129,456,226	)	(48,087	)	—	(129,504,313	)

	Net cash provided by (used in) investing activities	(129,456,226	)	(48,087	)	—	(129,504,313	)

Cash flows provided by (used in) investing activities
	Payment of financing cost	(583,166	)	—		—	(583,166	)
	Proceeds of mortgage payable	89,914,000		—		—	89,914,000
	Principal payments of mortgage payable	—		(238,022	)	—	(238,022	)
	(Distributions) to/investment by members	39,814,000		(377,000	)	—	39,437,000

	Net cash provided by(used in)financing activities	129,144,834		(615,022	)	—	128,529,812

Net increase (decrease) in cash and cash equivalents		985,841		132,370		—	1,118,211
Cash and cash equivalents, at beginning of year		—		5,972		—	5,972

Cash and cash equivalents, at end of year		985,841		138,342		—	1,124,183

Supplementary cash flow statement information:
Cash paid for interest		904,260		868,140		—	1,772,400



ASSETS
Rental Properties		—	25,212,271	—	25,212,271
Cash and Cash Equivalents		—	5,972	—	5,972
Rent Receivable		—	1,524	—	1,524
Real Estate Tax Escrow		—	94,937	—	94,937
Due From Joint Venture			230,000		230,000
Prepaid Expenses and Other Assets		—	352,429	—	352,429
Financing & Leasing Fees		—	43,250	—	43,250

	Total Assets	—	25,940,383	—	25,940,383

LIABILITIES AND MEMBERS' CAPITAL
Mortgage Notes Payable		—	16,640,374	—	16,640,374
Accounts Payable and Accrued Expense		—	171,783	—	171,783
Advance Rental Payments and Security Deposits		—	190,620	—	190,620

	Total Liabilities	—	17,002,777	—	17,002,777
Members' Capital		—	8,937,606	—	8,937,606

	Total Liabilities and Members' Capital	—	25,940,383	—	25,940,383

Members' Capital—NERA 50%		—	4,468,803	—	4,468,803
Members' Capital—NERA 40%		—	—	—	—

		—	4,468,803	—	4,468,803



Revenues
	Rental Income	—	2,353,792		1,747		2,355,539
	Laundry and Sundry Income	—	19,505		—		19,505

		—	2,373,297		1,747		2,375,044

Expenses
	Administrative	—	56,078		3,839		59,917
	Depreciation and Amortization	—	1,549,671		7,019		1,556,690
	Management Fees	—	97,527		51		97,578
	Operating	—	362,065		214		362,279
	Renting	—	30,794		—		30,794
	Repairs and Maintenance	—	408,826		5,828		414,654
	Taxes and Insurance	—	316,355		4,861		321,216

		—	2,821,316		21,812		2,843,128

Income Before Other Income		—	(448,019	)	(20,065	)	(468,084	)

Other Income (Loss)
	Interest Income	—	1,484		2,640		4,124
	Interest Expense	—	(887,633	)	(7	)	(887,640	)
	Other Income (Expenses)	—	12,925		335,124		348,049

		—	(873,224	)	337,757		(535,467	)

Net Income (Loss)		—	(1,321,243	)	317,692		(1,003,551	)

NERA 50%		—	(660,622	)	158,846		(501,776	)
NERA 40%		—	—		—		—

		—	(660,622	)	158,846		(501,776	)



Cash Flows from Operating Activities
	Net Income (loss)	—	(1,321,242	)	317,693		(1,003,549	)
Adjustments to reconcile net income to net cash provided (used) by operating activities:
	Gain on sale of condominiums	—	(12,925	)	(335,124	)	(348,049	)
	Depreciation and amortization	—	1,549,671		7,019		1,556,690
Changes in operating assets and liabilities:							—
	(Increase) Decrease in rents receivable	—	8,424		102		8,526
	(Decrease) Increase in accounts payable and accrued exp	—	45,962		(11,814	)	34,148
	(Increase) Decrease in real estate tax escrow	—	321,776		—		321,776
	(Increase) Decrease in due from joint venture	—	(660,591	)	1,130,591		470,000
	(Increase) decrease in financing and leasing fees	—	—		3,690		3,690
	(Increase) decrease in prepaid expenses and other assets	—	(32,624	)	706		(31,918	)
	(Decrease) increase in advance rental payments and security deposits	—	37,671		(1,318	)	— 36,353

	Total adjustments	—	1,257,364		793,852		2,051,216

	Net cash provided by (used in) operating activities	—	(63,878	)	1,111,545		1,047,667

Cash flows provided by (used in) investing activities
	Proceeds from sales of condominiums	—	15,000		2,398,148		2,413,148
	Purchase and improvement of rental properties*	—	(1,258,490	)	—		(1,258,490	)

	Net cash provided by (used in) investing activities	—	(1,243,490	)	2,398,148		1,154,658
Cash flows provided by (used in) investing activities
	Payment of financing cost	—			—		—
	Proceeds of mortgage and notes payable	—			—		—
	Principal payments of mortgage and notes payable	—	(184,626	)	—		(184,626	)
	(Distributions to) investment by members	—	1,494,276		(3,919,276	)	(2,425,000	)

	Net cash provided by(used in) financing activities	—	1,309,650		(3,919,276	)	(2,609,626	)

Net increase (decrease) in cash and cash equivalents		—	2,282		(409,583	)	(407,301	)
Cash and cash equivalents, at beginning of year		—	3,690		409,583		413,273

Cash and cash equivalents, at end of year		—	5,972		—		5,972

Supplementary cash flow statement information:
Cash paid for interest		—	882,432		—		882,432



ASSETS
Rental Properties		—	25,498,116		2,069,379	27,567,495
Cash and Cash Equivalents		—	3,690		409,583	413,273
Rent Receivable		—	9,948		102	10,050
Real Estate Tax Escrow		—	416,713		—	416,713
Due From Joint Venture			(430,591	)	1,130,591	700,000
Prepaid Expenses and Other Assets		—	319,805		706	320,511
Financing and Leasing Fees		—	51,946		3,068	55,014

	Total Assets	—	25,869,627		3,613,429	29,483,056

LIABILITIES AND MEMBERS' CAPITAL
Mortgage Notes Payable		—	16,825,000		—	16,825,000
Accounts Payable and Accrued Expense		—	125,825		11,813	137,638
Advance Rental Payments and Security Deposits		—	152,948		1,318	154,266

	Total Liabilities	—	17,103,773		13,131	17,116,904
Members' Capital		—	8,765,854		3,600,298	12,366,152

	Total Liabilities and Members' Capital	—	25,869,627		3,613,429	29,483,056

Members' Capital—NERA 50%		—	4,382,927		1,800,149	6,183,076
Members' Capital—NERA 40%		—	—		—	—

		—	4,382,927		1,800,149	6,183,076



Revenues
	Rental Income	—	2,345,736		205,146		2,550,882
	Laundry and Sundry Income	—	17,144		—		17,144

		—	2,362,880		205,146		2,568,026

Expenses
	Administrative	—	51,461		16,601		68,062
	Depreciation and Amortization	—	1,579,843		217,113		1,796,956
	Management Fees	—	95,218		8,183		103,401
	Operating	—	305,128		4,869		309,997
	Renting	—	13,250		—		13,250
	Repairs and Maintenance	—	351,000		145,255		496,255
	Taxes and Insurance	—	288,929		76,397		365,326

		—	2,684,829		468,418		3,153,247

Income Before Other Income		—	(321,949	)	(263,272	)	(585,221	)

Other Income (Loss)
	Interest Income	—	720		21,458		22,178
	Interest Expense	—	(887,884	)	(50,151	)	(938,035	)
	Gain on Sale of Real Estate	—	—		1,193,968		1,193,968
	Other Income (Expenses)	—	—		—		—

		—	(887,164	)	1,165,275		278,111

Net Income (Loss)		—	(1,209,113	)	902,003		(307,110	)

NERA 50%		—	(604,557	)	451,002		(153,555	)
NERA 40%		—	—		—		—

		—	(604,557	)	451,002		(153,555	)



Cash Flows from Operating Activities
	Net Income (loss)	—	(1,209,113	)	902,004		(307,109	)
Adjustments to reconcile net income to net cash provided (used) by operating activities:
	Gain on sale of condominiums	—	—		(1,193,968	)	(1,193,968	)
	Depreciation and amortization	—	1,579,843		217,113		1,796,956
Changes in operating assets and liabilities:							—
	(Increase) Decrease in rents receivable	—	(9,948	)	(102	)	(10,050	)
	(Decrease) Increase in accounts payable and accrued exp	—	(23,369	)	(23,588	)	(46,957	)
	(Increase) Decrease in real estate tax escrow	—	(73,557	)	—		(73,557	)
	(Increase) Decrease in due from joint venture	—	430,591		(1,130,591	)	(700,000	)
	(Increase) decrease in financing and leasing fees	—	—		10,039		10,039
	(Increase) decrease in prepaid expenses and other assets	—	3,145		31,721		34,866
	(Decrease) increase in advance rental payments and security deposits	—	10,912		(17,724	)	(6,812	)

	Total adjustments	—	1,917,617		(2,107,100	)	(189,483	)

	Net cash provided by (used in)operating activities	—	708,504		(1,205,096	)	(496,592	)

Cash flows provided by (used in) investing activities
	Proceeds from sales of condominiums	—	—		8,029,768		8,029,768
	Purchase and improvement of rental properties*	—	(111,503	)	(467,867	)	(579,370	)

	Net cash provided by (used in) investing activities	—	(111,503	)	7,561,901		7,450,398

Cash flows provided by (used in) investing activities
	Payment of financing cost	—	—		—		—
	Proceeds of mortgage and notes payable	—	—		—		—
	Principal payments of mortgage and notes payable	—	—		(2,380,745	)	(2,380,745	)
	(Distributions to) investment by members	—	(600,000	)	(3,600,000	)	(4,200,000	)

	Net cash provided by (used in) financing activities	—	(600,000	)	(5,980,745	)	(6,580,745	)

Net increase (decrease) in cash and cash equivalents		—	(2,999	)	376,060		373,061
Cash and cash equivalents, at beginning of year		—	6,689		33,520		40,209

Cash and cash equivalents, at end of year		—	3,690		409,580		413,270

Supplementary cash flow statement information:
Cash paid for interest		—	883,639		49,681		933,320

In June 2009, the FASB issued SFAS 167, "Amendments to FASB Interpretation No. 46(R) ("SFAS 167"), which (1) addresses the effects of eliminating the qualifying special-purpose entity concept from ASC 860, Transfers and Servicing (formerly SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"), and (2) responds to concerns about the application of certain key provisions of ASC 810, Consolidation (formerly FASB Interpretation No. 46(R), "Consolidation of Variable Interest Entities"), including concerns over the transparency of enterprises' involvement with variable interest entities ("VIEs"). SFAS 167 is effective beginning on January 1, 2010. The adoption of SFAS 167 is not expected to have a material impact on our financial statements.

In August 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-05, "Measuring Liabilities at Fair Value" ("ASU 2009-05"), which provides amendments to Topic 820. ASU 2009-05 provides additional guidance clarifying the measurement of liabilities at fair value. ASU 2009-05 is effective in the fourth quarter 2009 for a calendar year entity. The Partnership is currently evaluating the impact of ASU 2009-05 on its financial position, results of operations, cash flows and disclosures.

	Hamilton Park Towers		Hamilton On Main Apartments		Total

2010—Current Maturities	$	—	$	250,827	$	250,827
2011		194,705		261,897		456,602
2012		1,206,869		278,413		1,485,282
2013		1,275,835		293,392		1,569,227
2014		1,348,741		309,178		1,657,919
Thereafter		85,887,850		15,008,646		100,896,496

	$	89,914,000	$	16,402,353	$	106,316,353

	Carrying Amount		Estimated Fair Value

Mortgage Notes Payable
At December 31, 2009	$	106,316,353	$	104,882,698
At December 31, 2008	$	16,640,374	$	16,694,646

	Fair Value at Acquisition		Monthly Amortization

In-place leases	$	4,100,000	$	340,000
Tenant relationships		450,000		37,500

		4,550,000		377,500
Over-market leases		350,000		30,000

	$	4,900,000	$	407,500

	At Acquisition October 28, 2009		2009 Amortization		Book Value December 31, 2009

In-place leases and tenant relationships	$	4,550,000	$	755,000	$	3,795,000
Over-market leases		350,000		60,000		290,000

	$	4,900,000	$	815,000	$	4,085,000


/s/ MILLER WACHMAN LLP Boston, Massachusetts March 11, 2010