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 interest 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 56%, with the balance owned by the others. A description of each investment is as follows:

On October 28, 2009 the Partnership invested approximately $15,925,000 in a joint venture to acquire a 40% interest in a residential property located in Brookline, Massachusetts. The property, Hamilton Park Towers LLC, referred to as Dexter Park, or Hamilton Park is a 409 unit residential complex. The purchase price was $129,500,000. The 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 before unamortized deferred financing costs is approximately $81,601,000 at March 31, 2018. This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

On March 22, 2018, Hamilton Park Towers, LLC entered into a Rate Lock Confirmation with John Hancock Life Insurance Company (U.S.A.) and paid the requisite deposit of $1,290,000. The Confirmation calls for a loan of $125,000,000 at a fixed interest rate of 3.99% per annum. Hamilton Park intends to use the proceeds of the loan, when closed, to pay off an outstanding loan of approximately $82,000,000 currently secured by, among other collateral, the property owned by Hamilton Park. In connection with this refinancing, we expect a defeasance charge of approximately $3,750,000, based on current interest rates. Based on its’ ownership in the property, the Partnership will incur 40% of this charge, an expense of approximately $1,500,000. This charge will have a material effect on the 2018 second quarter net income.

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 Joint Venture sold 120 units as condominiums and retained 48 units for long-term investment. In February 2007, the Joint Venture 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 was to be amortized over 30 years thereafter and matured in March, 2017. On March 1, 2017, the mortgage balance was paid in full, with the Partnership contributing its share of the mortgage balance of approximately $2,222,000. As of December 31, 2017, 29 units had been sold with a gain on the sales of approximately $3,628,000. As of March 31, 2018, 5 additional units were under purchase and sale agreements, and the Partnership owned 13 units. Six units were sold in the first quarter of 2018, resulting in a gain of approximately $828,000. This investment is referred to as Hamilton Bay Apartments, LLC.

On March 7, 2005, the Partnership invested $2,000,000 for a 50% ownership interest in a building comprising 48 apartments, one commercial space and a 50-car surface parking lot located in Boston, Massachusetts. The purchase price was $14,300,000, with a $10,750,000 mortgage. The Joint Venture planned to operate the building and initiate development of the parking lot. In June 2007, the Joint Venture separated the parcels, formed an additional limited liability company for the residential apartments and obtained a mortgage on the property. The new limited liability company formed for the residential apartments and commercial space is referred to as Hamilton Essex 81, LLC. In August 2008, the Joint Venture restructured the mortgages on both parcels at Essex 81. On September 28, 2015, Hamilton Essex Development, LLC paid off the outstanding mortgage balance of $1,952,286. The Partnership made a capital contribution of $978,193 to Hamilton Essex Development LLC for its share of the funds required for the transaction. Additionally, the Partnership made a capital contribution of $100,000 to Hamilton Essex 81, LLC. On September 30, 2015, Hamilton Essex 81, LLC obtained a new 10 year mortgage in the amount of $10,000,000, interest only at 2.18% plus the one month Libor rate. The proceeds of the note were used to pay off the existing mortgage of $8,040,719 and the Partnership received a distribution of $978,193 for its share of the excess proceeds. As a result of the distribution, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting. Although the Partnership has no legal obligation, the Partnership intends to fund its share of any future operating deficits if needed. 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. At March 31, 2018, the balance on this mortgage before unamortized deferred financing costs is approximately $10,000,000.

On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176‑unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Joint Venture sold 127 of the units as condominiums and retained 49 units for long‑term investment. The Joint Venture obtained a new 10‑year mortgage in the amount of $5,000,000 on the units to be retained by the Joint Venture. The interest on the new loan was 5.67% fixed for the 10 year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan term. On July 8, 2016, Hamilton 1025 LLC paid off the outstanding balance of the mortgage balance. The Partnership made a capital contribution of $2,359,500 to Hamilton 1025, LLC for its share of the funds required for the transaction. 20 units were sold in the year ended December 31, 2017 with a gain on the sales of approximately $2,380,000. As of March 31, 2018, 3 units were under purchase and sales agreements and the Partnership owned 10 units. Eight units were sold in the first quarter ending March 31, 2018, resulting in a gain of approximately $817,000. 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 Joint Venture obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Joint Venture obtained a new 10- year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan was 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. On September 12, 2016, the property was refinanced with a 15 year mortgage in the amount of $6,000,000, at 3.71%, interest only. The Joint Venture Partnership paid off the prior mortgage of approximately $5,158,000 with the proceeds of the new mortgage and made a distribution of $385,000 to the Partnership. The cost associated with the refinancing was approximately $123,000. This investment is referred to as Hamilton Minuteman, LLC. At March 31, 2018, the balance on this mortgage before unamortized deferred financing costs is approximately $6,000,000.This investment is referred to as Hamilton Minuteman, LLC. In the first quarter of 2018, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting, although the Partnership has no legal obligation to fund its share of any future operating deficiencies, if needed.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280‑unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. The Joint Venture sold 137 units as condominiums. The assets were combined with Hamilton on Main Apartments. Hamilton on Main, LLC is known as Hamilton Place. In 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. In August 2014, the property was refinanced with a 10 year mortgage in the amount of $16,900,000 at 4.34% interest only. The Joint Venture paid off the prior mortgage of approximately $15,205,000 with the proceeds of the new mortgage and distributed $850,000 to the Partnership. The costs associated with the refinancing were approximately $161,000. At March 30, 2018, the balance of the mortgage before unamortized deferred financing costs is approximately $16,900,000.The investment is referred to as Hamilton On Main LLC.

In November 2001, the Partnership invested approximately $1,533,000 for a 50% ownership interest in a 40-unit apartment building in Cambridge, Massachusetts. In June 2013, the property was refinanced with a 15 year mortgage in the amount of $10,000,000 at 3.87%, interest only for 3 years and is amortized on a 30-year schedule for the balance of the term. The Joint Venture paid off the prior mortgage of approximately $6,776,000 with the proceeds of the new mortgage. After the refinancing, the Joint Venture made a distribution of $1,610,000 to the Partnership. As a result of the distribution, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting. Although the Partnership has no legal obligation, the Partnership intends to fund its share of any future operating deficits if needed. At March 31, 2018, the balance of this mortgage before unamortized deferred financing costs is approximately $9,696,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information as of March 31, 2018


				Hamilton												Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Apts			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	7,515,492		$	2,597,633		$	6,242,990		$	887,890		$	1,583,448		$	5,854,350		$	17,359,777		$	89,284,170		$	131,325,750
Cash & Cash Equivalents		148,701			50,004			123,091			136,822			122,350			107,268			102,710			861,790			1,652,736
Rent Receivable		133,580			—			19,937			6,902			2,463			5,206			21,196			221,175			410,459
Real Estate Tax Escrow		83,760			—			46,751			—			0			32,229			152,782			349,904			665,426
Prepaid Expenses & Other Assets		80,429			279			50,269			586,555			693,936			17,475			95,705			2,668,635			4,193,283
Total Assets	$	7,961,962		$	2,647,916		$	6,483,038		$	1,618,169		$	2,402,197		$	6,016,528		$	17,732,170		$	93,385,674		$	138,247,654
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,896,582		$	—		$	9,627,636		$	—		$	—		$	5,889,863		$	16,797,004		$	81,509,648		$	123,720,733
Accounts Payable & Accrued Expense		74,966			2,188			87,137			8,434			9,554			55,333			169,932			634,933			1,042,477
Advance Rental Pmts & Security Deposits		341,039			—			245,550			12,555			10,975			112,103			321,274			2,608,580			3,652,076
Total Liabilities		10,312,587			2,188			9,960,323			20,989			20,529			6,057,299			17,288,210			84,753,161			128,415,286
Partners’ Capital		(2,349,625)			2,645,728			(3,477,285)			1,597,180			2,381,668			(40,771)			443,960			8,630,513			9,831,368
Total Liabilities and Capital	$	7,962,962		$	2,647,916		$	6,483,038		$	1,618,169		$	2,402,197		$	6,016,528		$	17,732,170		$	93,383,674		$	138,246,654
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$			$	1,322,863		$	—		$	798,589		$	1,190,833		$			$	221,979		$	3,452,204			6,986,470
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,174,814)		$	—		$	(1,738,644)		$	—		$	—		$	(20,387)		$	—		$	—			(2,933,844)
Total Investment in Unconsolidated Joint Ventures (Net)																									$	4,052,626
Total units/condominiums
Apartments		48			—			40			175			48			42			148			409			1,030
Commercial		1			1			—			1			—			—			—			—			3
Total		49			1			40			176			48			42			148			409			1,033
Units to be retained		49			1			40			—			—			42			148			409			690
Units to be sold		—			—			—			175			48			—			—			—			343
Units sold through May 1, 2018		—			—			—			167			38			—			—			—			205
Unsold units		—			—			—			8			10			—			—			—			18
Unsold units with deposits for future sale as of May 1, 2018		—			—			—			3			3			—			—			—			6

Financial information for the three months ended March 31, 2018


			Hamilton								Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Apts		Apts		Apts		Park		Total
Revenues
Rental Income	$	411,222	$	53,928	$	403,837	$	38,221	$	22,203	$	263,051	$	858,213		3,894,603	$	5,945,278
Laundry and Sundry Income		3,005		—		1,217						675		9,126		24,688		38,711
		414,227		53,928		405,054		38,221		22,203		263,726		867,339		3,919,291		5,983,989
Expenses
Administrative		9,680		488		6,455		1,499		3,066		1,824		13,127		65,429		101,568
Depreciation and Amortization		114,285		665		86,251		—		10,000		87,722		255,506		874,142		1,428,571
Management Fees		13,204		2,157		16,126		1,508		1,022		10,368		32,443		83,012		159,840
Operating		24,131		—		20,580		156		825		33,850		120,393		379,875		579,810
Renting		3,291		—		497		—		—		3,378		8,652		29,782		45,600
Repairs and Maintenance		54,501		4,163		21,497		40,207		34,224		19,617		182,374		318,666		675,249
Taxes and Insurance		62,527		16,723		41,631		18,171		16,459		31,046		104,551		419,289		710,397
		281,619		24,196		193,037		61,541		65,596		187,805		717,046		2,170,195		3,701,035
Income Before Other Income		132,608		29,732		212,017		(23,320)		(43,393)		75,921		150,293		1,749,096		2,282,954
Other Income (Loss)
Interest Expense		(99,313)		—		(96,961)		(26)		(49)		(58,519)		(188,239)		(1,166,238)		(1,609,345)
Gain on Sale of Real Estate		—		—		—		817,006		827,757								1,644,763
		(99,313)		—		(96,961)		816,980		827,708		(58,519)		(188,239)		(1,166,238)		35,418
Net Income (Loss)	$	33,295	$	29,732	$	115,056	$	793,660	$	784,315	$	17,402	$	(37,946)	$	582,858	$	2,318,372
Net Income (Loss)—NERA 50%	$	16,648	$	14,866	$	57,528	$	396,830	$	392,158	$	8,701	$	(18,973)				867,757
Net Income —NERA 40%															$	233,143		233,143
																	$	1,100,900

Future annual mortgage maturities at March 31, 2018 are as follows:


	Hamilton		345		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		Minuteman		Main Apts		Park		Total
3//31/2019	$	—	$	192,094	$		$	—	$	1,700,153	$	1,892,247
3/31/2020		—		199,661				—		79,901,188		80,100,849
3/31/2021		—		207,527		—		—				207,527
3/31/2022		—		215,702		—		—				215,702
3/31/2023		—		224,199		—		—				224,199
Thereafter		10,000,000		8,656,703		6,000,000		16,900,000		—		41,556,703
		10,000,000		9,695,886		6,000,000		16,900,000		81,601,341		124,197,227
Less: unamortized deferred financing costs		(103,418)		(68,250)		(110,137)		(102,996)		(91,693)		(476,494)
	$	9,896,582	$	9,627,636	$	5,889,863	$	16,797,004	$	81,509,648	$	123,720,733

At March 31, 2018 the weighted average interest rate on the above mortgages was 3.87%. The effective rate was 3.95% including the amortization expense of deferred financing costs.

Summary financial information as of March 31, 2017


				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	$	7,907,838		$	2,622,729		$	6,542,738		$	3,029,735		$	145,134		$	5,848,498			$	6,095,634			$	17,593,862		$	91,280,303		$	141,066,471
Cash & Cash Equivalents		158,945			50,621			70,277			490,522			88			17,718				60,393				214,895			1,359,961			2,423,420
Rent Receivable		17,373			—			3,496			12,438			225			5,844				1,152				11,479			151,499			203,506
Real Estate Tax Escrow		119,722			—			45,948			—			—			17,849				19,048				213,815			240,494			656,876
Prepaid Expenses & Other Assets		96,193			246			45,250			131,148			16,480			103,595				31,844				107,642			1,558,399			2,090,797
Total Assets	$	8,300,071		$	2,673,596		$	6,707,709		$	3,663,843		$	161,927		$	5,993,504			$	6,208,071			$	18,141,693		$	94,590,656		$	146,441,070
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,882,793		$	—		$	9,805,791		$	—		$	—		$	—			$	5,881,680			$	16,780,953		$	82,968,942		$	125,320,159
Accounts Payable & Accrued Expense		48,972			623			84,711			15,600			2,330			5,782				61,455				153,499			607,357			980,329
Advance Rental Pmts& Security Deposits		232,421			—			225,911			49,544			101			75,660				124,719				380,586			2,764,112			3,853,054
Total Liabilities		10,164,186			623			10,116,413			65,144			2,431			81,442				6,067,854				17,315,038			86,340,411			130,153,542
Partners’ Capital		(1,864,115)			2,672,973			(3,408,704)			3,598,699			159,496			5,912,062				140,217				826,655			8,250,245			16,287,528
Total Liabilities and Capital	$	8,300,071		$	2,673,596		$	6,707,709		$	3,663,843		$	161,927		$	5,993,504			$	6,208,071			$	18,141,693		$	94,590,656		$	146,441,070
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%			50	%			50	%		40	%
Investment in Unconsolidated Joint Ventures	$			$	1,336,486		$	—		$	1,799,349		$	79,747		$	2,956,030			$	70,108			$	413,328		$	3,300,098		$	9,955,145
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(932,058)		$	—		$	(1,704,352)		$	—		$	—		$	—			$	—			$	—		$	—			(2,636,410)
Total Investment in Unconsolidated Joint Ventures (Net)																														$	7,318,735
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			0			—			0				42				148			409			690
Units to be sold		—			—			—			176			120			46				—				—			—			343
Units sold through May 1, 2017		—			—			—			143			120			1				—				—			—			264
Unsold units		—			—			—			32			0			47				—				—			—			79
Unsold units with deposits for future sale as of May 1, 2017		—			—			—			4			—			10				—				—			—			14

Financial information for the three months ended March 31, 2017


													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	$	401,194	$	60,000	$	372,417	$	130,398	$	2,867	$	222,036	$	256,788	$	826,303	$	3,810,796	$	6,082,799
Laundry and Sundry Income		3,531		—		945		—		—		—		675		8,947		24,333		38,431
		404,725		60,000		373,362		130,398		2,867		222,036		257,463		835,250		3,835,129		6,121,230
Expenses
Administrative		5,201		425		6,390		964		824		3,065		1,205		11,018		50,187		79,279
Depreciation and Amortization		113,299		707		86,422		45,626		1,230		81,252		86,675		242,316		831,687		1,489,214
Management Fees		17,380		2,400		15,958		4,763		135		8,650		11,141		34,103		84,552		179,082
Operating		23,637		—		23,145		(37)		19		652		27,875		104,159		352,854		532,304
Renting		3,722		—		2,136		62		62		62		1,321		10,026		21,327		38,718
Repairs and Maintenance		20,731		—		19,300		55,502		1,980		106,605		20,854		164,126		231,633		620,731
Taxes and Insurance		60,469		14,532		36,718		29,378		863		46,095		31,445		109,815		431,459		760,774
		244,439		18,064		190,069		136,258		5,113		246,381		180,516		675,563		2,003,699		3,700,102
Income Before Other Income		160,286		41,936		183,293		(5,860)		(2,246)		(24,345)		76,947		159,687		1,831,430		2,421,128
Other Income (Loss)
Interest Expense		(78,991)		—		(99,404)		(503)		(2)		(41,525)		(59,091)		(190,684)		(1,187,172)		(1,657,372)
		(78,991)		—		(99,404)		710,256		(2)		(41,525)		(59,091)		(190,684)		(1,187,172)		(946,613)
Net Income (Loss)	$	81,295	$	41,936	$	83,889	$	704,396	$	(2,248)	$	(65,870)	$	17,856	$	(30,997)	$	644,258	$	1,474,515
Net Income (Loss)—NERA 50%	$	40,648	$	20,968	$	41,945	$	352,199	$	(1,124)	$	(32,935)	$	8,929	$	(15,498)				415,132
Net Income (Loss)—NERA 40%																	$	257,705		257,705
																			$	672,837