HAMILTON PARK TOWERS LLC
HAMILTON ON MAIN APARTMENTS LLC
Combined Financial Statements—Unconsolidated Significant Joint Ventures
As of December 31, 2011 and 2010
and for the years ended December 31, 2011, 2010 and 2009
Together With Report of Independent
Registered Public Accounting Firm

To the Joint Venture Members of
Hamilton Park Towers LLC and Hamilton on Main Apartments LLC.

We have audited the accompanying combined balance sheets of Hamilton Park Towers LLC and Hamilton on Main Apartments LLC (the "Joint Ventures") as of December 31, 2011 and 2010, 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, 2011. 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 and Hamilton on Main Apartments LLC at December 31, 2011 and 2010 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

Hamilton Park Towers LLC
Hamilton on Main Apartments LLC

(Unconsolidated Significant Joint Ventures)

Combined Balance Sheets

	December 31,

	2011		2010
ASSETS
Rental Properties	$	134,861,736	$	141,291,032
Cash and Cash Equivalents		927,287		773,390
Rents Receivable		95,315		136,162
Real Estate Tax Escrows		686,534		582,603
Prepaid Expenses and Other Assets		1,397,113		1,508,187
Financing and Leasing Fees		480,437		546,699

Total Assets	$	138,448,422	$	144,838,073

LIABILITIES AND MEMBERS' CAPITAL
Mortgage Notes Payable	$	105,620,395	$	106,065,526
Accounts Payable and Accrued Expenses		1,032,827		994,582
Advance Rental Payments and Security Deposits		2,057,893		1,911,533

Total Liabilities		108,711,115		108,971,641
Commitments and Contingent Liabilities (Note7)
Members' Capital		29,737,307		35,866,432

Total Liabilities and Members' Capital	$	138,448,422	$	144,838,073

Hamilton Park Towers, LLC
Hamilton on Main Apartments, LLC

(Unconsolidated Significant Joint Ventures)

Combined Statements of Income

Years Ended December 31, 2011, 2010 and 2009

	Year Ended December 31,

	2011			2010			2009
Revenues
Rental Income	$	14,051,371		$	13,475,084		$	4,327,579
Laundry and Sundry Income		117,875			117,681			37,664

		14,169,246			13,592,765			4,365,243

Expenses
Administrative		199,666			187,387			160,121
Depreciation and Amortization		6,663,981			10,410,164			3,190,117
Management Fees		351,652			341,417			153,555
Operating		1,301,230			1,319,155			525,032
Renting		159,289			296,906			27,562
Repairs and Maintenance		1,306,948			1,201,399			391,069
Taxes and Insurance		1,626,863			1,769,166			494,529

		11,609,629			15,525,593			4,941,984

Income (Loss) Before Other Income		2,559,617			(1,932,829	)		(576,741	)

Other Income (Loss)
Interest Income		3,219			13			9,459
Interest Expense		(5,962,309	)		(5,977,098	)		(1,778,115	)
Other Expenses		(4,652	)		(15,552	)		(309	)

		(5,963,742	)		(5,992,636	)		(1,768,965	)

Net (Loss)	$	(3,404,125	)	$	(7,925,465	)	$	(2,345,707	)

Hamilton Park Towers LLC and Hamilton on Main Apartments LLC

(Unconsolidated Significant Joint Ventures)

Combined Statements of Changes in Members' Capital

	Hamilton Park Towers LLC			Hamilton on Main Apartments LLC			Total

Balance, January 1, 2009		—			8,937,603			8,937,603
Investment by members		39,814,000			—			39,814,000
Distribution to members		—			(377,000	)		(377,000	)
Net Loss		(1,295,695	)		(1,050,012	)		(2,345,707	)

Balance, December 31, 2009		38,518,305			7,510,591			46,028,896
Distribution to members		(2,075,000	)		(162,000	)		(2,237,000	)
Net Loss		(7,389,086	)		(536,378	)		(7,925,465	)

Balance, December 31, 2010	$	29,054,219		$	6,812,213		$	35,866,432
Distribution to members		(2,425,000	)		(300,000	)		(2,725,000	)
Net Loss		(2,880,880	)		(523,245	)		(3,404,125	)

Balance, December 31, 2011	$	23,748,339		$	5,988,968		$	29,737,307

Allocation to New England Realty Associations Limited Partnership for 2011:
Percentage Ownership		40	%		50	%		Total

Distributions Received		970,000			150,000			1,120,000

Net Loss		(1,152,352	)		(261,623	)		(1,413,975	)

Member Capital		9,499,336			2,994,484			12,493,820

HAMILTON PARK TOWERS LLC
HAMILTON ON MAIN APARTMENTS LLC

(Unconsolidated Significant Joint Ventures)

Combined Statements of Cash Flow

	Year Ended December 31,

	2011			2010			2009
Cash Flows from Operating Activites
Net (Loss)		(3,404,125	)		(7,925,465	)		(2,345,707	)

Adjustments to reconcile net income to net cash provided by (used in) operating activites:
Depreciation and amortization		6,663,981			10,410,165			3,190,117
Amortization of above market lease		—			301,729			60,346
Changes in operating assets and liabilities:
(Increase) Decrease in rents receivable		40,846			(47,694	)		(86,943	)
Increase in accounts payable and accrued exp		38,246			4,837			817,961
(Increase) in real estate tax escrow		(103,931	)		(146,628	)		(341,037	)
Decrease in due from joint venture		—			—			230,000
(Increase) Decrease in prepaid expsenses and other assets		111,073			(170,680	)		(1,045,424	)
Increase in advance rental payments and security deposit		146,361			107,511			1,613,399

Total adjustments		6,896,576			10,459,240			4,438,419

Net cash provided by operating activites		3,492,451			2,533,775			2,092,712

Cash flows from investing activites
Purchase and improvement of rental properties		(168,424	)		(391,741	)		(129,504,313	)

Net cash from (used in) investing activites		(168,424	)		(391,741	)		(129,504,313	)

Cash flows from financing activites
Payment of financing cost		—			(5,000	)		(583,166	)
Proceeds of mortgage payable		—			—			89,914,000
Principal payments of mortgage payable		(445,131	)		(250,827	)		(238,022	)
(Distributions to) members		(2,725,000	)		(2,237,000	)		39,437,000

Net cash from (used in) financing activities		(3,170,131	)		(2,492,827	)		128,529,812

Net increase (decrease) in cash and cash equivalents		153,896			(350,793	)		1,118,211
Cash and cash equivalents, at beginning of year		773,391			1,124,184			5,972

Cash and cash equivalents, at end of year		927,287			773,391			1,124,183

Supplementary cash flow statement information:
Cash paid for interest		5,919,142			5,933,103			1,772,400

Cash paid for state income taxes		6,146			4,458			3,626

HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC

(Unconsolidated Significant Joint Ventures)

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2011

Principles of Combination: The combined financial statements include the accounts of Hamilton Park Towers LLC ("Dexter Park" or "Hamilton Park") and Hamilton on Main Apartments LLC ("Hamilton Place Apartments") collectively (the "Joint Ventures"). Hamilton Place Apartments is owned 50% and Hamilton Park is owned 40% by New England Realty Associates, Limited Partnership ("NERA") and are "significant unconsolidated 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 two entities.

Line of Business: The Joint Ventures own and operate various residential apartment buildings located in Greater Boston.

Basis of Preparation: 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 properties is recognized over the term of the related lease. For residential tenants, amounts 60 days in arrears are charged against income. Concessions made on residential leases are accounted for on the straight-line basis.

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

Rental Properties: Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions, which improve or extend the life of 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. 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 Joint Ventures estimate 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 Joint Ventures allocated the purchase price to the assets acquired

and liabilities assumed based on their fair values. The Joint Ventures record 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 Joint Ventures consider 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 Joint Ventures' 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 Joint Ventures' 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. See note 11.

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

Comprehensive Income: Comprehensive income is defined as changes in members' equity, exclusive of transactions with owners (such as capital contributions and dividends). The Joint Ventures did not have any comprehensive income items in 2011, 2010, or 2009 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 2011, 2010 or 2009. The Joint Ventures make their temporary cash investments with high-credit-quality financial institutions. At December 31, 2011 and December 31, 2010, respectively approximately $1,430,000 and $1,326,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

Advertising Expense: Advertising is expensed as incurred. Advertising expense was $32,000 in 2011, $59,000 in 2010 and was insignificant in 2009.

Interest Capitalized: The Joint Ventures follow the policy of capitalizing interest as a component of the cost of rental property when the time of construction exceeds one year. During the years ended December 31, 2011, 2010 and 2009 there was no capitalized interest.

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

Subsequent Events: The Joint Ventures have evaluated subsequent events through March 12, 2012, the date the financial statements were issued.

	Year Ended December 31,

	2011			2010			Useful Life
Land, Improvements and Parking Lots	$	35,246,904		$	35,235,809		15–40 years
Buildings and Improvements		95,814,901			95,814,901		15–40 years
Kitchen Cabinets		259,617			295,473		5–10 years
Carpets		1,665,573			1,663,422		5–10 years
Air Conditioning		34,231			24,089		7–10 years
Elevators		1,705,708			1,705,708		20 years
Equipment		7,237,647			7,205,351		5–7 years
Furniture and Fixtures		11,697,856			11,750,244		5–7 years
Smoke Alarms		943			2,423		5–7 years

		153,663,381			153,697,421
Less Accumulated Depreciation		(18,801,644	)		(12,406,389	)

	$	134,861,736		$	141,291,032

	Hamilton Park Towers LLC		Hamilton on Main Apts LLC			Total

Rental Properties at Cost:
Balance, January 1, 2009		—		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
Purchase of and addition to Property		363,261		28,480			391,741
Fully Depreciated Properties		—		(3,002,233	)		(3,002,233	)

Balance, December 31, 2010		124,991,980		28,705,441			153,697,421
Purchase of and addition to Property		92,950		75,474			168,424
Fully Depreciated Properties		—		(202,464	)		(202,464	)

Balance, December 31, 2011		125,084,930		28,578,451			153,663,381

Accumulated Depreciation:
Balance, January 1, 2009		—		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
Depreciation for year		5,597,403		975,019			6,572,422
Fully Deprciation written off		—		(3,002,233	)		(3,002,233	)

Balance, December 31, 2010		6,523,733		5,882,656			12,406,389
Depreciation for year		5,639,257		958,463			6,597,720
Fully Deprciation written off		—		(202,464	)		(202,464	)

Balance, December 31, 2011		12,162,990		6,638,655			18,801,644

Book Value	$	112,921,940	$	21,939,796		$	134,861,736

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 Place Apartments and 2% at Hamilton Park Towers of rental revenue and laundry income. Total fees paid were approximately $352,000, $341,000 and $154,000 in 2011, 2010 and 2009, respectively.

In 2011, the Management Company also received approximately $1,000 for construction supervision and architectural fees, $24,000 for maintenance service and $31,000 for administrative services.

In 2010, the Management Company also received approximately $4,000 for construction supervision and architectural fees, $28,000 for maintenance services and $17,000 for administrative services.

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

Financing and leasing fees of approximately $480,000 and $547,000 are net of accumulated amortization of approximately $176,000 and $110,000 at December 31, 2011 and 2010, respectively.

At December 31, 2011 and 2010, 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, 2011, the interest rates on these loans ranged from 5.18% to 5.57%, payable in monthly installments aggregating approximately $607,000, including interest, to various dates through 2019. The majority of the mortgages are subject to prepayment penalties. At December 31, 2011, 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.

	Hamilton Park Towers LLC		Hamilton on Main Apartments LLC		Total

2012 Current Maturities		1,220,766		275,988	$	1,496,754
2013		1,275,835		293,392		1,569,227
2014		1,348,741		309,178		1,657,919
2015		1,425,814		15,008,646		16,434,460
2016		1,507,291		—		1,507,291
Thereafter		82,954,745		—		82,954,745

	$	89,733,192	$	15,887,203	$	105,620,395

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, 2011, security deposits of approximately $891,000 are included with other assets and it 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 of less.

Rents receivable are approximately $92,000, $136,000 and $88,000 net of allowances for doubtful accounts at December 31, 2011, 2010 and 2009, respectively.

During the years ended December 31, 2011, 2010 and 2009, cash paid for interest was approximately $5,919,000, $5,933,000 and $1,722,000 respectively.

At December 31, 2011 and 2010, 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, 2011 and 2010 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, 2011 and 2010, 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, 2011 and 2010, 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, 2011 and 2010. 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, 2011 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 members.

Taxable income or loss is different than financial statement income because of intangible assets, accelerated depreciation, different tax lives, and timing differences related to prepaid rents and allowances. The partnerships share of the taxable loss is approximately $300,000 less than statement loss for the year ended December 31, 2011. The cumulative tax basis of the Joint Ventures real estate allocated to the partnership at December 31, 2011 is approximately $1,000,000 less than the statement basis primarily due to the purchase price allocation to intangible assets at Hamilton Park Towers.

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

In the normal course of business the Partnership or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable. As of December 31, 2011, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2004 forward.

The Joint Ventures estimate 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. The 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	112,921,940	21,939,796	134,861,736
Cash & Cash Equivalents	836,347	90,940	927,287
Rent Receivable	86,722	8,593	95,315
Real Estate Tax Escrow	582,028	104,505	686,534
Prepaid Expenses & Other Assets	1,216,214	180,899	1,397,113
Financing & Leasing Fees	458,995	21,442	480,437

Total Assets	116,102,247	22,346,175	138,448,422

LIABILITIES AND MEMBERS' CAPITAL
Mortgage Notes Payable	89,733,192	15,887,203	105,620,395
Accounts Payable& Accrued Expense	820,603	212,224	1,032,827
Advance Rental Payments&Security Deposits	1,800,113	257,780	2,057,893

Total Liabilities	92,353,908	16,357,207	108,711,115

Members' Capital	23,748,339	5,988,968	29,737,307

Total Liabilities and Members' Capital	116,102,247	22,346,175	138,448,422

Members' Capital—NERA 50%	—	2,994,484	2,994,484
Members' Capital—NERA 40%	9,499,335	—	9,499,335

	9,499,335	2,994,484	12,493,820



Revenues
Rental Income	11,559,414		2,491,957		14,051,371
Laundry and Sundry Income	97,275		20,599		117,875

	11,656,690		2,512,556		14,169,246

Expenses
Administrative	163,511		36,155		199,666
Depreciation and Amortization	5,698,657		965,324		6,663,981
Management Fees	251,071		100,581		351,652
Operating	929,543		371,687		1,301,230
Renting	144,149		15,140		159,289
Repairs and Maintenance	935,839		371,109		1,306,948
Taxes and Insurance	1,300,995		325,868		1,626,863

	9,423,765		2,185,864		11,609,629

Income (Loss) Before Other Income	2,232,924		326,693		2,559,617

Other Income (Loss)
Interest Income	3,219		—		3,219
Interest Expense	(5,113,523	)	(848,786	)	(5,962,309	)
Other Income (Expenses)	(3,500	)	(1,152	)	(4,652	)

	(5,113,804	)	(849,938	)	(5,963,742	)

Net (Loss)	(2,880,880	)	(523,245	)	(3,404,125	)

NERA 50%	—		(261,622	)	(261,622	)
NERA 40%	(1,152,352	)	—		(1,152,352	)

	(1,152,352	)	(261,622	)	(1,413,975	)



Cash Flows from Operating Activites
Net (Loss)	(2,880,880	)	(523,245	)	(3,404,125	)

Adjustments to reconcile net income to net cash provided by (used in) operating activites:
Depreciation and amortization	5,698,657		965,324		6,663,981
Changes in operating assets and liabilities:
Decrease in rent receivable	38,753		2,093		40,846
Increase in accounts payable and accrued exp	33,019		5,227		38,246
(Increase) in real estate tax escrow	(97,462	)	(6,469	)	(103,931	)
(Increase)Decrease in prepaid expsenses and other assets	(126,318	)	237,391		111,073
Increase in advance rental payments and security deposits	115,270		31,091		146,361

Total adjustments	5,661,919		1,234,657		6,896,576

Net cash provided by operating activites	2,781,039		711,412		3,492,451

Cash flows from investing activites
Purchase and improvement of rental properties	(92,950	)	(75,474	)	(168,424	)

Net cash used in investing activites	(92,950	)	(75,474	)	(168,424	)

Cash flows from financing activites
Payment of financing cost	—		—		—
Principal payments of mortgage & notes payable	(180,808	)	(264,323	)	(445,131	)
Distributions to members	(2,425,000	)	(300,000	)	(2,725,000	)

Net cash used in financing activities	(2,605,808	)	(564,323	)	(3,170,131	)

Net increase in cash and cash equivalents	82,281		71,615		153,896
Cash and cash equivalents, at beginning of year	754,066		19,325		773,391

Cash and cash equivalents, at end of year	836,347		90,940		927,287

Supplementary cash flow statement information:
Cash paid for interest	5,077,302		841,839		5,919,142

Cash paid for state income taxes	2,751		3,395		6,146

	Hamilton Park Towers LLC		Hamilton on Main Apartments LLC		Total

ASSETS
Rental Properties	$	118,468,247	$	22,822,785	$	141,291,032
Cash and Cash Equivalents		754,066		19,325		773,390
Rent Receivable		125,475		10,686		136,162
Real Estate Tax Escrow		484,566		98,036		582,603
Prepaid Expenses and Other Assets		1,089,897		418,289		1,508,187
Financing and Leasing Fees		518,395		28,304		546,699

Total Assets	$	121,440,647	$	23,397,425	$	144,838,072

LIABILITIES AND MEMBERS' CAPITAL
Mortgage Notes Payable	$	89,914,000	$	16,151,526	$	106.065,526
Accounts Payable and Accrued Expense		787,584		206,997		994,582
Advance Rental Payments and Security Deposits		1,684,843		226,689		1,911,533

Total Liabilities		92,386,428		16,585,212		108,971,640
Members' Capital		29,054,219		6,812,213		35,866,432

Total Liabilities and Members' Capital	$	121,440,647	$	23,397,425	$	144,838,072

Members' Capital—NERA 50%		—		3,406,107		3,406,107
Members' Capital—NERA 40%		11,621,688		—		11,621,688

	$	11,621,688	$	3,406,107	$	15,027,794

	Hamilton Park Towers LLC			Hamilton on Main Apartments LLC			Total

Revenues
Rental Income	$	11,019,862		$	2,455,222		$	13,475,084
Laundry and Sundry Income		97,902			19,780			117,681

		11,117,763			2,475,001			13,592,765

Expenses
Administrative		148,097			39,289			187,387
Depreciation and Amortization		9,428,284			981,881			10,410,164
Management Fees		244,178			97,239			341,417
Operating		960,328			358,827			1,319,155
Renting		281,545			15,361			296,906
Repairs and Maintenance		859,088			342,310			1,201,399
Taxes and Insurance		1,451,016			318,150			1,769,166

		13,372,537			2,153,057			15,525,593

Income Before Other Income		(2,254,773	)		321,944			(1,932,829	)

Other Income (Loss)
Interest Income		5			8			13
Interest Expense		(5,116,598	)		(860,500	)		(5,977,098	)
Other Income (Expenses)		(17,720	)		2,168			(15,552	)

		(5,134,313	)		(858,323	)		(5,992,636	)

Net Income (Loss)	$	(7,389,086	)	$	(536,379	)	$	(7,925,465	)

NERA 50%		—			(268,189	)		(268,189	)
NERA 40%		(2,955,635	)		—			(2,955,635	)

	$	(2,955,635	)	$	(268,189	)	$	(3,223,824	)

	Hamilton Park Towers LLC			Hamilton on Main Apartments LLC			Total

Cash Flows from Operating Activities
Net Income (loss)	$	(7,389,086	)	$	(536,379	)	$	(7,925,465	)

Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization		9,428,284			981,881			10,410,165
Amortization of above market lease		301,729			—			301,729
Changes in operating assets and liabilities:
(Increase) Decrease in rents receivable		(42,525	)		(5,169	)		(47,694	)
(Decrease) Increase in accounts payable and accrued exp		33,916			(29,079	)		4,837
(Increase) Decrease in real estate tax escrow		(146,176	)		(452	)		(146,628	)
(Increase) decrease in prepaid expenses and other assets		(81,863	)		(88,817	)		(170,680	)
(Decrease) increase in advance rental payments and security deposits		107,206			305			107,511

Total adjustments		9,600,571			858,669			10,459,240

Net cash provided by (used in)operating activities		2,211,485			322,290			2,533,775

Cash flows provided by (used in) investing activities
Purchase and improvement of rental properties		(363,261	)		(28,480	)		(391,741	)

Net cash provided by (used in) investing activities		(363,261	)		(28,480	)		(391,741	)

Cash flows provided by (used in) investing activities
Payment of financing cost		(5,000	)		—			(5,000	)
Proceeds of mortgage payable		—			—			—
Principal payments of mortgage payable		—			(250,827	)		(250,827	)
(Distributions) to/investment by members		(2,075,000	)		(162,000	)		(2,237,000	)

Net cash provided by (used in) financing activities		(2,080,000	)		(412,827	)		(2,492,827	)

Net increase (decrease) in cash and cash equivalents		(231,776	)		(119,017	)		(350,793	)
Cash and cash equivalents, at beginning of year		985,842			138,342			1,124,184

Cash and cash equivalents, at end of year	$	754,066		$	19,325		$	773,391

Supplementary cash flow statement information:
Cash paid for interest	$	5,077,768		$	855,334		$	5,933,103

Cash paid for state income taxes	$	3,350		$	1,108		$	4,458

	Hamilton Park Towers LLC			Hamilton on Main Apartments LLC			Total

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 (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	)

	Hamilton Park Towers LLC			Hamilton on Main Apartments LLC			Total

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 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

Cash paid for state income taxes		—		$	3,626		$	3,626

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs"("ASU 2011-04). The objective of ASU 2011-04 is to provide common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the amendments do not result in a change in the application of the requirements in ASC Topic 820 "Fair Value Measurement". ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011. The Joint Ventures are currently evaluating the impact of this guidance, however it is not expected to have a material impact on the Joint Ventures' consolidated financial statements.

	Carrying Amount		Estimated Fair Value

Mortgage Notes Payable
At December 31, 2011	$	105,620,395	$	121,777,340
At December 31, 2010	$	106,065,526	$	107,107,052

	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		2010 Amortization		2011 Amortization		Book Value December 31, 2011

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 12, 2012