NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

Since November 2001, the Partnership has invested in nine limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three partnerships investing in commercial property. The Partnership has between a 40%-50% ownership interests in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 57%, with the balance owned by the others. A description of each investment is as follows:

On October 28, 2009 the Partnership invested approximately $15,925,000 in a joint venture to acquire a 40% interest in a residential property located in Brookline, Massachusetts. The property, referred to as Dexter Park, is a 409 unit residential complex. The purchase price was $129,500,000. The total mortgage was $89,914,000 with an interest rate of 5.57% and it matures in 2019. The mortgage calls for interest only payments for the first two years of the loan and amortized over 30 years thereafter. The balance of this mortgage is approximately $88,301,000 at March 31, 2013. In order to fund this investment, the Partnership used approximately $8,757,000 of its cash reserves and borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brown and his affiliates (“HBC”). The term of the loan was four years with a provision requiring payment in whole or in part upon demand by HBC with six months notice. On August 17, 2010, HBC gave six months written notice to the Partnership requesting a principal pay down of $2,500,000. During the fourth quarter of 2010, the Partnership paid HBC $2,500,000 as requested. During 2011, the Partnership elected to make principal payments of $1,000,000 on August 1, 2011, $1,000,000 on October 1, 2011, and an additional $1,000,000 on December 15, 2011 reducing the loan balance to $1,668,600 at December 31, 2011. In February 2012, the Partnership elected to make an additional principal payment of $750,000 to HBC Holdings and the balance of $918,600 was paid in April 2012. The interest paid during the three months ended March 31, 2012 was $18,807. There was no interest paid on this loan in 2013. A majority of the apartments were leased at the time of the acquisition. As a result, the Partnership amortized the intangible assets associated with the “in place” leases over a 12 month period which began in November 2009. This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

On October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168-unit apartment complex in Quincy, Massachusetts. The purchase price was $30,875,000. The Partnership plans to sell the majority of units as condominium and retain 48 units for long-term investment. Gains from the sales of units were taxed at ordinary income rates. In February 2007, the Partnership refinanced the 48 units with a new mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. The loan will be amortized over 30 years thereafter and matures in March 2017. As of March 31, 2013, the balance of the mortgage is approximately $ 4,686,000. This investment is referred to as Hamilton Bay Apartments, LLC. In April 2008, the Partnership refinanced an additional 20 units and obtained a new mortgage in the amount of $2,368,000 with interest at 5.75%, interest only, which matures in 2013. At March 31, 2013, 15 of the 20 units are still owned by the Partnership. As of May 1, 2013, 105 units have been sold, the proceeds of which went to pay down the mortgage on the property. No unit was sold during the three months ended March 31, 2013. The balance on the new mortgage is approximately $1,668,000 at March 31, 2013. Hamilton Bay is in the process of refinancing the mortgage on this property. This investment is referred to as Hamilton Bay, LLC.

On March 7, 2005, the Partnership invested $2,000,000 for a 50% ownership interest in a building comprising 49 apartments, one commercial space and a 50-car surface parking lot located in Boston, Massachusetts. The purchase price was $14,300,000, with a $10,750,000 mortgage. The Partnership plans to operate the building and initiate development of the parking lot. In June 2007, the Partnership separated the parcels, formed an additional limited liability company for the residential apartments and obtained a mortgage on the property. The new limited liability company formed for the residential apartments and commercial space is referred to as Hamilton Essex 81, LLC. In August 2008, the Partnership restructured the mortgages on both parcels at Essex 81 and transferred the residential apartments to Hamilton Essex 81, LLC. The mortgage balance on Hamilton Essex 81, LLC on March 31, 2013 is approximately $8,322,000 amortizing over 30 years at 5.79% due in August 2016. The mortgage balance on Essex Development, LLC, at March 31, 31, 2013 or the parking lot is approximately $2,080,000 with a variable interest rate of 2.25% over the daily Libor rate (0.2037% at March 31, 2013). This loan was extended to August 2014 with the same conditions except for the addition of fixed principal payments in the amount of $4,301 per month. The cost associated with the extension was approximately $6,000. Harold Brown has issued a personal guaranty up to $1,000,000 of this mortgage. In the event that he is obligated to make payments to the lender as a result of this guaranty, the Partnership and other investors have, in turn, agreed to indemnify him for their proportionate share of any such payments. The investment in the parking lot is referred to as Hamilton Essex Development, LLC; the investment in the apartments is referred to as Hamilton Essex 81, LLC.

On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176-unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Partnership sold 127 of the units as condominiums and retained 49 units for long-term investment. The Partnership obtained a new 10-year mortgage in the amount of $5,000,000 on the units to be retained by the Partnership. The interest on the new loan is 5.67% fixed for the 10 year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan term. The balance of this mortgage is approximately $4,918,000 at March 31, 2013. This investment is referred to as Hamilton 1025, LLC.

In September 2004, the Partnership invested approximately $5,075,000 for a 50% ownership interest in a 42-unit apartment complex located in Lexington, Massachusetts. The purchase price was $10,100,000. In October 2004, the Partnership obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Partnership obtained a new 10-year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan is 5.67% fixed for the ten year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan. This loan required a cash contribution by the Partnership of $1,250,000 in December 2006. At March 31, 2013, the balance of this mortgage is approximately $5,415,000. This investment is referred to as Hamilton Minuteman, LLC.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280-unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. As of May 2008, the Partnership sold 137 units as condominiums. Gains from these sales were taxed as ordinary income. The majority of the sales proceeds were applied to reduce the mortgage with the final payment made during the second quarter of 2007. With the sale of the units and the payments of the liabilities, the assets were combined with Hamilton on Main Apartments, LLC. An entity partially owned by the majority shareholder of the General Partner and the President of the management company, 31% and 5%, respectively, was the sales agent and received a variable commission on each sale of 3% to 5%. Hamilton on Main, LLC is known as Hamilton Place.

In 2005, Hamilton on Main Apartments, LLC obtained a ten year mortgage on the three buildings to be retained. The mortgage was $16,825,000, with interest only of 5.18% for three years and amortizing on a 30 year schedule for the remaining seven years when the balance is due. The net proceeds after funding escrow accounts and closing costs on the mortgage were approximately $16,700,000, which were used to reduce the existing mortgage. Hamilton on Main LLC paid a fee of approximately $400,000 in connection with this early extinguishment of debt. At March 31, 2013, the remaining balance on the mortgage is approximately $15,536,000.

In November 2001, the Partnership invested approximately $1,533,000 for a 50% ownership interest in a 40-unit apartment building in Cambridge, Massachusetts. This property has a 12-year mortgage, with a remaining balance at March 31, 2013 of approximately $6,806,000 at 6.9% which is amortized on a 30-year schedule, with a final payment of approximately $6,000,000 in 2014. The Partnership plans to refinance the mortgage on Franklin Street in June 2013. The new mortgage will be $10,000,000; the interest rate is 3.87% and the note will be amortized over 30years. This investment is referred to as 345 Franklin, LLC.

Summary financial information as of March 31, 2013

			Hamilton										Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Apts		Apts		Park		Total

ASSETS
Rental Properties	$	9,015,547	$	2,609,952	$	7,788,886	$	5,563,140	$	1,824,421	$	6,900,646	$	6,965,331	$	20,884,885	$	106,099,815	$	167,652,622
Cash & Cash Equivalents	11,201		19,577		25,807		7,151		16,776		20,043		20,106		125,776		998,232		1,244,669
Rent Receivable	39,722		—		251		5,179		4,816		958		4,444		2,510		26,486		84,365
Real Estate Tax Escrow	49,793		—		45,617		74,350		—		47,332		39,197		72,665		392,816		721,770
Prepaid Expenses & Other Assets	70,830		202		102,039		36,541		135,511		16,689		48,597		202,059		1,429,338		2,041,805
Financing & Leasing Fees	59,745		2,703		21,122		18,389		4,239		24,652		14,958		12,865		384,849		543,522
Total Assets	$	9,246,838	$	2,632,434	$	7,983,722	$	5,704,750	$	1,985,762	$	7,010,321	$	7,092,631	$	21,300,760	$	109,331,535	$	172,288,753
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,321,852	$	2,080,281	$	6,806,096	$	4,917,835	$	1,668,000	$	4,685,952	$	5,414,951	$	15,536,345	$	88,300,726	$	137,732,039
Accounts Payable & Accrued Expense	39,583		6,605		139,062		50,520		24,837		25,610		70,985		200,054		868,482		1,425,738
Advance Rental Pmts& Security Deposits	160,144		—		162,681		83,076		25,592		81,290		69,598		275,348		1,977,679		2,835,409
Total Liabilities	8,521,579		2,086,886		7,107,839		5,051,431		1,718,430		4,792,851		5,555,535		16,011,748		91,146,887		141,993,186
Partners’ Capital	725,259		545,549		875,883		653,319		267,333		2,217,470		1,537,096		5,289,012		18,184,648		30,295,567
Total Liabilities and Capital	$	9,246,838	$	2,632,434	$	7,983,722	$	5,704,750	$	1,985,762	$	7,010,321	$	7,092,631	$	21,300,760	$	109,331,535	$	172,288,753
Partners’ Capital - NERA 50%	$	362,629	$	272,774	$	437,941	$	326,659	$	133,666	$	1,108,735	$	768,548	$	2,644,506			6,055,460
Partners’ Capital - NERA 40%																	$	7,273,859	7,273,859
																			$	13,329,319

Total units/condominiums
Apartments	48		—		40		175		120		48		42		148		409		1,030
Commercial	1		1		—		1		—		—		—		—		—		3
Total	49		1		40		176		120		48		42		148		409		1,033
Units to be retained	49		1		40		49		—		48		42		148		409		786
Units to be sold	—		—		—		127		120		—		—		—		—		247
Units sold through April 30, 2013	—		—		—		127		105		—		—		—		—		232
Unsold units	—		—		—		—		15		—		—		—		—		15
Unsold units with deposits for future sale as of April 30, 2013	—		—		—		—		—		—		—		—		—		—

Three Months Ended March 31, 2013

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total

Revenues
Rental Income	$	328,455		$	71,896		$	304,290		$	220,217		$	59,608		$	219,281		$	215,857		$	676,946		$	3,160,009		$	5,256,558
Laundry and Sundry Income	3,846			—			645			—			—			—			211			9,771			21,432			35,906
	332,301			71,896			304,935			220,217			59,608			219,281			216,068			686,717			3,181,441			5,292,464
Expenses
Administrative	3,854			317			5,732			1,681			773			3,881			423			8,639			46,878			72,180
Depreciation and Amortization	105,572			2,244			105,684			60,087			21,063			76,798			78,708			244,534			1,438,457			2,133,146
Management Fees	12,252			2,876			13,075			8,959			2,338			8,464			8,537			29,041			65,010			150,552
Operating	35,066			—			25,853			260			1,579			422			23,211			113,996			328,825			529,212
Renting	9,350			—			1,766			705			—			405			2,338			1,312			11,555			27,431
Repairs and Maintenance	22,243			550			13,586			76,109			22,770			74,913			10,096			85,905			181,585			487,758
Taxes and Insurance	55,882			12,199			28,186			38,750			10,230			35,679			30,866			84,817			396,213			692,822
	244,219			18,186			193,881			186,552			58,754			200,564			154,179			568,243			2,468,523			4,093,100
Income Before Other Income	88,082			53,710			111,054			33,666			854			18,717			61,889			118,474			712,917			1,199,364
Other Income (Loss)
Interest Expense	(121,155		)	(14,598		)	(118,942		)	(70,483		)	(24,182		)	(66,267		)	(77,462		)	(203,954		)	(1,243,258		)	(1,940,300		)
Interest Income	—			—			12			1			45			—			—			—			—			58
Interest Income from Note	—			—			—			—			1,096			—			—			—			—			1,096
	(121,155		)	(14,598		)	(118,929		)	(70,482		)	(23,041		)	(66,267		)	(77,462		)	(203,954		)	(1,243,258		)	(1,939,146		)
Net Income (Loss)	$	(33,073	)	$	39,112		$	(7,876	)	$	(36,816	)	$	(22,187	)	$	(47,549	)	$	(15,573	)	$	(85,480	)	$	(530,341	)	$	(739,782	)
Net Income (Loss) - NERA 50%	$	(16,536	)	$	19,556		$	(3,938	)	$	(18,408	)	$	(11,093	)	$	(23,775	)	$	(7,786	)	$	(42,740	)				(104,721		)
Net Income (Loss) - NERA 40%																									$	(212,136	)	(212,136		)
																												$	(316,857	)

Future annual mortgage maturities at March 31, 2013 are as follows:

			Hamilton
	Hamilon		Essex 81		345		Hamilton		Hamilton		Hamilton		Hamilton		Hamilton on		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Minuteman		Main Apts		Park
	March		March		November		March		October		October		August		August		October
Period End	2005		2005		2001		2005		2005		2005		2004		2004		2009		Total
3/31/2014	127,488		2,080,281		6,806,096		66,085		1,668,000		67,089		72,379		297,036		1,293,683		13,736,369
3/31/2015	135,069						69,986				70,922		76,651		15,239,310		1,367,610		18,289,681
3/31/2016	143,100						73,370				74,975		80,353				1,445,761		3,223,701
3/31/2017	7,916,196						4,708,394				4,472,965		5,185,568				1,528,378		25,297,996
3/31/2018																	1,615,716		3,187,156
Thereafter																	81,049,579		162,888,262
	$	8,321,852	$	2,080,281	$	6,806,096	$	4,917,835	$	1,668,000	$	4,685,952	$	5,414,951	$	15,536,345	$	88,300,726	$	137,732,039

At March 31, 2013 the weighted average interest rate on the above mortgages was 5.57%. The effective rate was 5.66% including the amortization expense of deferred financing costs.

Summary financial information as of March 31, 2012

	Hamilton Essex 81	Hamilton Essex Development	345 Franklin	Hamilton 1025	Hamilton Bay Sales	Hamilton Bay Apts	Hamilton Minuteman	Hamilton on Main Apts	Dexter Park	Total

ASSETS
Rental Properties	9,356,056	2,612,441	8,130,633	5,803,255	1,900,710	7,187,774	7,226,200	21,732,865	111,614,723	175,564,657
Cash & Cash Equivalents	728	10,310	18	36	14,195	6,335	53,389	27,052	925,695	1,037,758
Rent Receivable	38,562		4,214	12,710	662	9,517	802	8,519	71,771	146,757
Real Estate Tax Escrow	97,575		37,805	66,735	—	91,144	42,984	104,274	532,983	973,500
Prepaid Expenses & Other Assets	79,815	197	85,712	91,752	168,599	98,145	74,321	256,429	1,240,741	2,095,713
Financing & Leasing Fees	68,301	4,367	14,288	23,415	5,303	31,014	18,926	19,727	444,166	629,507
Total Assets	9,641,037	2,627,315	8,272,669	5,997,904	2,089,470	7,423,929	7,416,622	22,148,866	114,830,078	180,447,892
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	8,434,538	2,131,893	6,977,967	4,980,237	1,668,000	4,745,604	5,483,296	15,818,388	89,451,858	139,691,783
Accounts Payable & Accrued Expense	48,138	5,459	74,832	49,511	23,664	31,671	138,907	210,546	935,504	1,518,234
Advance Rental Pmts & Security Deposits	144,534	—	127,574	76,067	18,342	88,727	65,361	249,290	1,855,441	2,625,336
Total Liabilities	8,627,211	2,137,352	7,180,373	5,105,816	1,710,006	4,866,003	5,687,565	16,278,224	92,242,803	143,835,352
Partners’ Capital	1,013,827	489,963	1,092,296	892,089	379,464	2,557,926	1,729,057	5.870,642	22,587,275	36,612,540
Total Liabilities & Capital	9,641,037	2,627,315	8,272,669	5,997,904	2,089,470	7,423,929	7,416,622	22,148,866	114,830,078	180,447,892
Partners’ Capital — NERA 50%	506,913	244,982	546,148	446,044	189,732	1,278,963	864,529	2,935,321		7,012,632
NERA 40%									9,034,910	9,034,910
										16,047,542
Total units/ condominiums
Apartments	48	—	40	175	120	48	42	148	409	1,030
Commercial	1	1	—	1	—	—	—	—	—	3
Total	49	1	40	176	120	48	42	148	409	1,033
Units to be retained	49	1	40	49	—	48	42	148	409	786
Units to be sold	—	—	—	127	120	—	—	—	—	247
Units sold through May 1, 2012	—	—	—	127	105	—	—	—	0	232
Unsold units	—	—	—	—	15	—	—	—	—	15
Unsold units with deposits for future sale as of May 1, 2012	—	—	—	—	0	—	—	—	—	—

Summary financial information for the three months ended March 31, 2012

	Hamilton Essex 81		Hamilton Essex Development		345 Franklin		Hamilton 1025		Hamilton Bay Sales		Hamilton Bay Apts		Hamilton Minuteman		Hamilton on Main Apts		Dexter Park		Total
Revenues
Rental Income	292,493		72,046		291,651		210,028		51,478		219,663		196,703		647,884		3,011,578		4,993,524
Laundry and Sundry Income	3,533		—		588		—		—		—		408		5,363		22,500		32,392
	296,026		72,046		292,239		210,028		51,478		219,663		197,111		653,246		3,034,078		5,025,915
Expenses
Administrative	3,275		567		6,505		291		2,207		8,360		950		13,795		42,862		78,811
Depreciation and Amortization	103,123		3,242		109,982		63,117		19,736		74,364		78,933		236,657		1,432,044		2,121,198
Management Fees	12,818		2,882		12,002		8,552		2,050		8,393		8,038		25,509		63,261		143,505
Operating	30,322				15,144		66		671		688		24,707		104,387		303,347		479,331
Renting	1,940				139		1,669		915		894		910		2,024		30,991		39,483
Repairs and Maintenance	22,552		375		15,845		69,794		16,767		64,381		11,976		94,359		144,769		440,817
Taxes and Insurance	50,186		12,342		25,265		36,921		11,642		40,775		25,410		85,124		380,130		667,794
	224,216		19,408		184,879		180,410		53,988		197,856		150,925		561,854		2,397,403		3,970,939
Income Before Other Income	71,810		52,638		107,360		29,618		(2,510	)	21,807		46,186		91,392		636,675		1,054,976
Other Income (Loss)
Interest Expense	(124,483	)	(15,293	)	(124,599	)	(72,020	)	(24,426	)	(67,690	)	(79,357	)	(209,719	)	(1,272,739	)	(1,990,325	)
Interest Income	—		—		12		20		61		—		—		—		—		92
Interest Income from Note	—		—		—		—		1,808		—		—		—		—		1,808
	(124,483	)	(15,293	)	(124,587	)	(72,000	)	(22,557	)	(67,690	)	(79,357	)	(209,719	)	(1,272,739	)	(1,988,425	)
Net Income (loss)	(52,672	)	37,345		(17,228	)	(42,382	)	(25,068	)	(45,882	)	(33,171	)	(118,326	)	(636,064	)	(933,448	)
Net Income (loss) - NERA 50%	(26,336	)	18,672		(8,614	)	(21,191	)	(12,534	)	(22,941	)	(16,586	)	(59,163	)			(148,692	)
NERA 40%																	(254,425	)	(254,425	)
																			(403,118	)