10-Q 1 nen-20200331x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-31568

New England Realty Associates Limited Partnership

(Exact name of registrant as specified in its charter)

Massachusetts |  | 04-2619298
(State or other jurisdiction of |  | (I.R.S. employer
incorporation or organization) |  | identification no.)
39 Brighton Avenue, Allston, Massachusetts |  | 02134
(Address of principal executive offices) |  | (Zip Code)

Registrant’s telephone number, including area code: (617) 783-0039

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ |  | Accelerated Filer ☒
Non-accelerated filer ☐ |  | Smaller reporting company ☒
(Do not check if a smaller reporting company) |  | Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class: |  | Trading Symbol |  | Name of each exchange on which registered:
Class A |  | NEN |  | NYSE MKT Exchange

As of May 6, 2020, there were 97,405 of the registrant’s Class A units (2,922,151 Depositary Receipts) of limited partnership issued and outstanding and 23,134 Class B units issued and outstanding.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP

INDEX

PART I—FINANCIAL INFORMATION
Item 1. | Financial Statements (Unaudited) | 3
| Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 | 4
| Consolidated Statements of Income for the Three Months Ended March 31, 2020 and 2019 | 5
| Consolidated Statements of Changes in Partners’ Capital for the Three Months Ended March 31, 2020 and 2019 | 6
| Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 | 7
| Notes to Consolidated Financial Statements | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 38
Item 4. | Controls and Procedures | 39
PART II—OTHER INFORMATION
Item 1. | Legal Proceedings | 40
Item 1A. | Risk Factors | 40
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 42
Item 3. | Defaults Upon Senior Securities | 43
Item 4. | Mine Safety Disclosure | 43
Item 5. | Other Information | 43
Item 6. | Exhibits | 43
SIGNATURES | 45

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NEW ENGLAND REALTY ASSOCIATES, L.P.

PART 1 -- FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited consolidated balance sheets, statements of income, changes in partners’ capital, and cash flows and related notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. The financial statements reflect all adjustments consisting only of normal, recurring adjustments, which are, in the opinion of management, necessary for a fair presentation for the interim periods.

The consolidated balance sheet as of December 31, 2019 has been derived from the audited consolidated balance sheet at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

The aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in New England Realty Associates L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

The results of operations for the three month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|  | March 31, |  | December 31, |
|  | 2020 |  | 2019 |
ASSETS |  |  | (Unaudited) |  |  |  |
Rental Properties |  | $ | 275,200,788 |  | $ | 278,363,988 |
Cash and Cash Equivalents |  |  | 11,246,765 |  |  | 7,546,324 |
Rents Receivable |  |  | 638,307 |  |  | 484,610 |
Real Estate Tax Escrows |  |  | 528,067 |  |  | 446,781 |
Prepaid Expenses and Other Assets |  |  | 5,607,352 |  |  | 6,021,544 |
Investments in Unconsolidated Joint Ventures |  |  | 1,460,406 |  |  | 1,430,402 |
Total Assets |  | $ | 294,681,685 |  | $ | 294,293,649 |
LIABILITIES AND PARTNERS’ CAPITAL |  |  |  |  |  |  |
Mortgage Notes Payable |  |  | 284,905,564 |  |  | 281,771,246 |
Notes Payable |  |  | 17,000,000 |  |  | 18,000,000 |
Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture |  |  | 19,525,528 |  |  | 19,970,089 |
Accounts Payable and Accrued Expenses |  |  | 3,394,099 |  |  | 4,274,266 |
Advance Rental Payments and Security Deposits |  |  | 7,870,618 |  |  | 8,101,835 |
Total Liabilities |  |  | 332,695,809 |  |  | 332,117,436 |
Commitments and Contingent Liabilities (Notes 3 and 9) |  |  | — |  |  | — |
Partners’ Capital 121,759 and 121,978 units outstanding in 2020 and 2019 respectively |  |  | (38,014,124) |  |  | (37,823,787) |
Total Liabilities and Partners’ Capital |  | $ | 294,681,685 |  | $ | 294,293,649 |

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  | 2019 |
Revenues |  |  |  |  |  |  |
Rental income |  | $ | 16,253,430 |  | $ | 14,768,475 |
Laundry and sundry income |  |  | 122,154 |  |  | 113,669 |
|  |  | 16,375,584 |  |  | 14,882,144 |
Expenses |  |  |  |  |  |  |
Administrative |  |  | 584,658 |  |  | 612,757 |
Depreciation and amortization |  |  | 4,565,467 |  |  | 3,682,678 |
Management fee |  |  | 648,993 |  |  | 590,610 |
Operating |  |  | 1,668,402 |  |  | 1,884,017 |
Renting |  |  | 196,871 |  |  | 182,058 |
Repairs and maintenance |  |  | 2,086,218 |  |  | 1,944,231 |
Taxes and insurance |  |  | 2,280,541 |  |  | 2,034,106 |
|  |  | 12,031,150 |  |  | 10,930,457 |
Income Before Other Income (Expense) |  |  | 4,344,434 |  |  | 3,951,687 |
Other Income (Expense) |  |  |  |  |  |  |
Interest income |  |  | 107 |  |  | 179 |
Interest expense |  |  | (3,450,325) |  |  | (3,000,289) |
Income from investments in unconsolidated joint ventures |  |  | 474,567 |  |  | 548,939 |
|  |  | (2,975,651) |  |  | (2,451,171) |
Net Income |  | $ | 1,368,783 |  | $ | 1,500,516 |
Net Income per Unit |  | $ | 11.23 |  | $ | 12.21 |
Weighted Average Number of Units Outstanding |  |  | 121,877 |  |  | 122,941 |

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER’S CAPITAL

(Unaudited)

|  | Units |  | Partners’ Capital |
|  | Limited |  | General |  |  |  | Treasury |  |  |  | Limited |  | General |  |  |  |
|  | Class A |  | Class B |  | Partnership |  | Subtotal |  | Units |  | Total |  | Class A |  | Class B |  | Partnership |  | Total |
Balance January 1, 2019 |  | 144,180 |  | 34,243 |  | 1,802 |  | 180,225 |  | 55,839 |  | 124,386 |  | $ | (28,527,352) |  | $ | (6,741,825) |  | $ | (354,833) |  | $ | (35,624,010) |
Distribution to Partners |  | — |  | — |  | — |  | — |  | — |  | — |  |  | (941,882) |  |  | (223,697) |  |  | (11,774) |  |  | (1,177,353) |
Stock Buyback |  | — |  | — |  | — |  | — |  | 1,795 |  | (1,795) |  |  | (2,344,601) |  |  | (556,828) |  |  | (29,307) |  |  | (2,930,736) |
Net Income |  | — |  | — |  | — |  | — |  | — |  | — |  |  | 1,200,413 |  |  | 285,098 |  |  | 15,005 |  |  | 1,500,516 |
Balance March 31, 2019 |  | 144,180 |  | 34,243 |  | 1,802 |  | 180,225 |  | 57,634 |  | 122,591 |  | $ | (30,613,422) |  |  | (7,237,252) |  |  | (380,909) |  |  | (38,231,583) |
Balance January 1 , 2020 |  | 144,180 |  | 34,243 |  | 1,802 |  | 180,225 |  | 58,247 |  | 121,978 |  | $ | (30,287,245) |  | $ | (7,159,715) |  | $ | (376,827) |  | $ | (37,823,787) |
Distribution to Partners |  | — |  | — |  | — |  | — |  | — |  | — |  |  | (935,338) |  |  | (222,143) |  |  | (11,692) |  |  | (1,169,173) |
Stock Buyback |  | — |  | — |  | — |  | — |  | 219 |  | (219) |  |  | (74,095) |  |  | (3,900) |  |  | (311,952) |  |  | (389,947) |
Net Income |  | — |  | — |  | — |  | — |  | — |  | — |  |  | 1,095,026 |  |  | 260,069 |  |  | 13,688 |  |  | 1,368,783 |
Balance March 31, 2020 |  | 144,180 |  | 34,243 |  | 1,802 |  | 180,225 |  | 58,466 |  | 121,759 |  | $ | (30,201,652) |  | $ | (7,125,689) |  | $ | (686,783) |  | $ | (38,014,124) |

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

|  | Three Months Ended March 31, |
|  | 2020 |  | 2019 |
Cash Flows from Operating Activities |  |  |  |  |  |  |
Net income |  | $ | 1,368,783 |  | $ | 1,500,516 |
Adjustments to reconcile net income to net cash provided by operating activities |  |  |  |  |  |  |
Depreciation and amortization |  |  | 4,565,467 |  |  | 3,682,678 |
Amortization of deferred financing costs |  |  | 59,876 |  |  | 54,843 |
(Income) from investments in joint ventures |  |  | (474,567) |  |  | (548,939) |
Change in operating assets and liabilities |  |  |  |  |  |  |
Proceeds from unconsolidated joint ventures |  |  | — |  |  | 425,000 |
(Increase) in rents receivable |  |  | (153,697) |  |  | (16,236) |
(Decrease) Increase in accounts payable and accrued expense |  |  | (880,166) |  |  | 198,628 |
(Increase) Decrease in real estate tax escrow |  |  | (81,286) |  |  | 23,911 |
Decrease (Increase) in prepaid expenses and other assets |  |  | 59,110 |  |  | (746,891) |
(Decrease) Increase in advance rental payments and security deposits |  |  | (231,217) |  |  | 459,025 |
Total Adjustments |  |  | 2,863,520 |  |  | 3,532,019 |
Net cash provided by operating activities |  |  | 4,232,303 |  |  | 5,032,535 |
Cash Flows From Investing Activities |  |  |  |  |  |  |
Distribution in excess of investment in unconsolidated joint ventures |  |  | 9,062 |  |  | 823,490 |
(Investment) in unconsolidated joint ventures |  |  | (9,062) |  |  | (8,490) |
Improvement of rental properties |  |  | (1,047,185) |  |  | (676,844) |
Net cash provided by (used in) investing activities |  |  | (1,047,185) |  |  | 138,156 |
Cash Flows from Financing Activities |  |  |  |  |  |  |
Payment of financing costs |  |  | (132,306) |  |  | — |
Proceeds of mortgage notes payable |  |  | 3,781,877 |  |  | — |
Payment of note payable |  |  | (1,000,000) |  |  | (2,000,000) |
Principal payments of mortgage notes payable |  |  | (575,128) |  |  | (472,621) |
Stock buyback |  |  | (389,947) |  |  | (2,930,736) |
Distributions to partners |  |  | (1,169,173) |  |  | (1,177,353) |
Net cash provided by (used in) financing activities |  |  | 515,323 |  |  | (6,580,710) |
Net Increase (Decrease) in Cash and Cash Equivalents |  |  | 3,700,441 |  |  | (1,410,019) |
Cash and Cash Equivalents, at beginning of period |  |  | 7,546,324 |  |  | 9,059,901 |
Cash and Cash Equivalents, at end of period |  | $ | 11,246,765 |  | $ | 7,649,882 |

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

(Unaudited)

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

Line of Business: New England Realty Associates Limited Partnership (“NERA” or the “Partnership”) was organized in Massachusetts in 1977. NERA and its subsidiaries own 29 properties which include 21 residential buildings; 4 mixed use residential, retail and office buildings; 3 commercial buildings and individual units at one condominium complex. These properties total 2,892 apartment units, 19 condominium units and 108,043 square feet of commercial space. Additionally, the Partnership also owns a 40 - 50% interest in 7 residential and mixed use properties consisting of 688 apartment units, 12,500 square feet of commercial space and a 50 car parking lot. The properties are located in Eastern Massachusetts and Southern New Hampshire.

Basis of Presentation: The financial statements have been prepared in conformity with GAAP. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. These estimates and assumptions are based on management’s historical experience that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgement. The Partnership’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Partnership’s financial results. Judgements and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances.

Principles of Consolidation: The consolidated financial statements include the accounts of NERA and its subsidiaries. NERA has a 99.67% to 100% ownership interest in each subsidiary except for the seven limited liability companies (the “Investment Properties” or “Joint Ventures”) in which the Partnership has a 40 - 50% ownership interest. The consolidated group is referred to as the “Partnership”. Minority interests are not recorded, since they are insignificant. All significant intercompany accounts and transactions are eliminated in consolidation. The Partnership accounts for its investment in the above-mentioned Investment Properties using the equity method of consolidation. (See Note 14: Investment in Unconsolidated Joint Ventures.)

The Partnership accounts for its investments in joint ventures using the equity method of accounting. These investments are recorded initially at cost, as Investments in Unconsolidated Joint Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions. Generally, the Partnership would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Partnership only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses. In 2013 and beyond, the carrying values of some investments fell below zero. We intend to fund our share of the investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. (See Note 14: Investment in Unconsolidated Joint Ventures.)

The authoritative guidance on consolidation provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIE (the “primary beneficiary”). Generally, the consideration of whether an entity is a VIE applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that equity’s activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the

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variable interest entity’s performance; and (2) the obligation to absorb losses and rights to receive the returns from VIE that would be significant to the VIE.

Impairment: On an annual basis management assesses whether there are any indicators that the value of the Partnership’s rental properties or investments in unconsolidated subsidiaries may be impaired. In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment. The criteria considered by management include reviewing low leased percentages, significant near term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near term mortgage debt maturities or other factors that might impact the Partnership’s intent and ability to hold property. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. The Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Revenue Recognition: Rental income from residential and commercial properties is recognized over the term of the related lease. For residential tenants, amounts 60 days in arrears are charged against income. The commercial tenants are evaluated on a case by case basis. Certain leases of the commercial properties provide for increasing stepped minimum rents, which are accounted for on a straight-line basis over the term of the lease. Revenue from commercial leases also include reimbursements and recoveries received from tenants for certain costs as provided in the lease agreement. The costs generally include real estate taxes, utilities, insurance, common area maintenance and recoverable costs. Rental concessions are also accounted for on the straight-line basis.

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

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 modifies the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract: the lessee and the lessor. ASU 2016-02 provides new guidelines that change the accounting for leasing arrangements for lessees, whereby their rights and obligations under substantially all leases, existing and new, are capitalized and recorded on the balance sheet. For lessors, however, the new standard remains generally consistent with existing guidance, but has been updated to align with certain changes to the lessee model and ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”).

Under this standard, the Partnership evaluates the non-lease components (lease arrangements that include common area maintenance services) with related lease components (lease revenues). If both the timing and pattern of transfer are the same for the non-lease component and related lease component, the lease component is the predominant component. The Partnership elected an allowed practical expedient. For (i) operating lease arrangements involving real estate that include common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance costs, we present these amounts within lease revenues in our consolidated statements of income. We record amounts reimbursed by the lessee in the period in which the applicable expenses are incurred.

We adopted this guidance for our interim and annual periods beginning January 1, 2019 using the modified retrospective method, applying the transition provisions at the beginning of the period of adoption rather than at the

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beginning of the earliest comparative period presented. We elected the allowable practical expedients as permitted under the transition guidance, which allowed us to not reassess whether arrangements contain leases, lease classification, and initial direct costs. The adoption of the lease standard did not result in a cumulative effect adjustment recognized in the opening balance of retained earnings as of January 1, 2019. The adoption of this standard does not have a material impact to the Partnership’s financial statements.

Rental Properties: Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions which improve or extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such disposition is included in income. Fully depreciated assets are removed from the accounts. Rental properties are depreciated by both straight-line and accelerated methods over their estimated useful lives. Upon acquisition of rental property, the Partnership estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Partnership allocated the purchase price to the assets acquired and liabilities assumed based on their fair values. The Partnership records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing 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 at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Partnership’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.

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

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

Deferred Financing Costs: Costs incurred in obtaining financing are capitalized and amortized over the term of the related indebtedness. Deferred financing costs are presented in the balance sheet as a direct deduction from the carrying value of the debt liability to which they relate, except deferred financing costs related to the revolving credit facility, which are presented in prepaid expenses and other assets. In all cases, amortization of such costs is included in interest expense and was approximately $60,000 and $55,000 for the three months ended March 31, 2020 and 2019, respectively.

Income Taxes: The financial statements have been prepared on the basis that NERA and its subsidiaries are entitled to tax treatment as partnerships. Accordingly, no provision for income taxes have been recorded (See Note 13).

Cash Equivalents: The Partnership 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 Partnership for which separate financial information is produced internally for management. Under the definition, NERA operated, for all periods presented, as one segment.

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Comprehensive Income: Comprehensive income is defined as changes in partners’ equity, exclusive of transactions with owners (such as capital contributions and dividends). NERA did not have any comprehensive income items in 2020 or 2019 other than net income as reported.

Income (Loss) Per Depositary Receipt: Effective January 3, 2012, the Partnership authorized a 3-for-1 forward split of its Depositary Receipts listed on the NYSE Amex and a concurrent adjustment of the exchange ratio of Depositary Receipts for Class A Units of the Partnership from 10-to-1 to 30-to-1, such that each Depositary Receipt represents one-thirtieth (1/30) of a Class A Unit of the Partnership. All references to Depositary Receipts in the report are reflective of the 3- for-1 forward split.

Income Per Unit: Net income per unit has been calculated based upon the weighted average number of units outstanding during each period presented. The Partnership has no dilutive units and, therefore, basic net income is the same as diluted net income per unit (see Note 7: Partner’s Capital).

Concentration of Credit Risks and Financial Instruments: The Partnership’s properties are located in New England, and the Partnership is subject to the general economic risks related thereto. No single tenant accounted for more than 5% of the Partnership’s revenues in 2020 or 2019. The Partnership makes its temporary cash investments with high-credit quality financial institutions. At March 31, 2020, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.01% to 0.22%. At March 31, 2020 and December 31, 2019, respectively approximately $12,421,000, and $7,407,000 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 $69,056 and $62,969 for the three months ended March 31, 2020 and 2019, respectively.

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 three months ended March 31, 2020 and 2019 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 are recorded as an extinguishment of debt. However if it is determined that the refinancing is substantially the same, then they are recorded as an exchange of debt. All refinancing qualify as extinguishment of debt.

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

NOTE 2. RENTAL PROPERTIES

As of March 31, 2020, the Partnership and its Subsidiary Partnerships owned 2,892 residential apartment units in 25 residential and mixed-use complexes (collectively, the “Apartment Complexes”). The Partnership also owns 19 condominium units in a residential condominium complex, all of which are leased to residential tenants (collectively referred to as the “Condominium Units”). The Apartment Complexes and Condominium Units are located primarily in the metropolitan Boston area of Massachusetts.

Additionally, as of March 31, 2020, the Partnership and Subsidiary Partnerships owned a commercial shopping center in Framingham, commercial buildings in Newton and Brookline and mixed-use properties in Boston, Brockton and Newton, all in Massachusetts. These properties are referred to collectively as the “Commercial Properties.”

The Partnership also owned a 40% to 50% ownership interest in seven residential and mixed use complexes (the “Investment Properties”) at March 31, 2020 with a total of 688 apartment units, accounted for using the equity method of consolidation. See Note 14 for summary information on these investments.

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Rental properties consist of the following:

|  | March 31, 2020 |  | December 31, 2019 |  | Useful Life |
Land, improvements and parking lots |  | $ | 86,864,867 |  | $ | 86,693,759 |  | 15 | - | 40 | years |
Buildings and improvements |  |  | 253,026,910 |  |  | 252,896,183 |  | 15 | - | 40 | years |
Kitchen cabinets |  |  | 17,564,272 |  |  | 17,376,841 |  | 5 | - | 10 | years |
Carpets |  |  | 11,184,505 |  |  | 10,976,972 |  | 5 | - | 10 | years |
Air conditioning |  |  | 573,389 |  |  | 573,389 |  | 5 | - | 10 | years |
Laundry equipment |  |  | 709,210 |  |  | 709,210 |  | 5 | - | 7 | years |
Elevators |  |  | 1,885,265 |  |  | 1,885,265 |  | 20 | - | 40 | years |
Swimming pools |  |  | 1,092,194 |  |  | 1,092,194 |  | 10 | - | 30 | years |
Equipment |  |  | 17,473,920 |  |  | 17,391,731 |  | 5 | - | 30 | years |
Motor vehicles |  |  | 211,660 |  |  | 178,847 |  |  |  | 5 | years |
Fences |  |  | 38,482 |  |  | 38,482 |  | 5 | - | 15 | years |
Furniture and fixtures |  |  | 8,461,379 |  |  | 8,235,292 |  | 5 | - | 7 | years |
Smoke alarms |  |  | 505,835 |  |  | 505,835 |  | 5 | - | 7 | years |
Total fixed assets |  |  | 399,591,888 |  |  | 398,554,000 |  |  |  |  |  |
Less: Accumulated depreciation |  |  | (124,391,100) |  |  | (120,190,012) |  |  |  |  |  |
|  | $ | 275,200,788 |  | $ | 278,363,988 |  |  |  |  |  |

On December 20, 2019, Mill Street Gardens, LLC and Mill Street Development, LLC, collectively referred to as Mill Street, a wholly-owned subsidiary of New England Realty Associates Limited Partnership closed on a Purchase Agreement dated as of September 27, 2019 with Ninety-Three Realty Limited Partnership pursuant to which Mill Street acquired Country Club Garden Apartments, a 181 unit apartment complex located at 57 Mill Street, Woburn, Massachusetts for an aggregate purchase price of $59,550,000 in cash. Mill Street funded $18,000,000 of the purchase price out of an existing line of credit, $10,550,000 of the cash portion of the purchase price out of cash reserves and the remaining $31,000,000 from the proceeds of the Loan. The closing costs were approximately $237,000. From the purchase price, the Partnership allocated approximately $1,282,000 for in- place leases, and approximately $136,000 to the value of tenant relationships. These amounts are being amortized over 12 and 36 months respectively.

On December 20, 2019, Mill Street entered into a Loan Agreement with Insurance Strategy Funding Corp. LLC providing for a loan in the maximum principal amount of $35,000,000, consisting of the initial advance of $31,000,000 and a subsequent advance of up to $4,000,000 if certain financial conditions are met. Interest on the Note is payable on a monthly basis at a fixed interest rate of: (i) 3.586% per annum with respect to the initial advance and (ii) the greater of (A) the sum of the market spread rate and the interpolated (based on the remaining term of the Loan) US Treasury rate at the time of the advance and (B) 3.500% with respect to any subsequent advance. The principal amount of the Note is due and payable on January 1, 2035. The Note is secured by a mortgage on the Property and is guaranteed by the Partnership pursuant to a Guaranty Agreement dated December 20, 2019.

NOTE 3. RELATED PARTY TRANSACTIONS

The Partnership’s properties are managed by an entity that is owned by the majority shareholder of the General Partner. The management fee is equal to 4% of gross receipts of rental revenue and laundry income on the majority of the Partnership’s properties and 3% on Linewt. Total fees paid were approximately $649,000 and $591,000 for the three months ended March 31, 2020 and 2019, respectively.

The Partnership Agreement permits the General Partner or Management Company to charge the costs of professional services (such as counsel, accountants and contractors) to NERA. During the three months ended March 31, 2020 and 2019, approximately $346,000 and $349,000, was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements. Of the 2020 expenses referred to above, approximately $67,000 consisted of repairs and maintenance, and $83,000 of administrative expense. Approximately $196,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties. Additionally in 2020, the Hamilton Company received approximately $314,000 from the Investment Properties of which approximately $171,000 was the management fee, approximately $6,000 was for maintenance services, approximately $9,000 was for administrative services and approximately $128,000 for

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architectural services and supervision of capital projects. The management fee is equal to 4% of gross receipts of rental income on the majority of investment properties and 2% on Dexter Park.

The Partnership reimburses the management company for the payroll and related expenses of the employees who work at the properties. Total reimbursement was approximately $822,000 and $789,000 for the three months ended March 31, 2020 and 2019, respectively. The Management Company maintains a 401K plan for all eligible employees whereby the employees may contribute the maximum allowed by law. The plan also provides for discretionary contributions by the employer. For the three months ended March 31, 2020, the Partnership accrued $11,000 for the employer’s match portion to the plan. For the three months ended March 31, 2019, the Partnership contributed $12,000 for the employer’s match portion to the plan.

Bookkeeping and accounting functions are provided by the Management Company’s accounting staff, which consists of approximately 14 people. During the three months ended March 31, 2020 and 2019, the Management Company charged the Partnership $31,250 ($125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

The Partnership has invested in seven limited partnerships, which have invested in mixed use residential apartment complexes. The Partnership has a 40% to 50% ownership interest in each investment property. The other investors are the Estate of Harold Brown, and five current and previous employees of the Management Company. The Brown Family related entities’ ownership interest was between 47.6% and 59%. See Note 14 for a description of the properties and their operations.

NOTE 4. PREPAID EXPENSES and OTHER ASSETS

Approximately $3,016,000, and $2,936,000 of security deposits are included in prepaid expenses and other assets at March 31, 2020 and December 31, 2019, respectively. The security deposits and escrow accounts are restricted cash.

Also, included in prepaid expenses and other assets at March 31, 2020 and December 31, 2019 is approximately $538,000 and $501,000, respectively, held in escrow to fund future capital improvements.

Intangible assets on the acquisitions of Mill Street Apartments and Webster Green Apartments are included in prepaid expenses and other assets. Intangible assets are approximately $1,047,000 net of accumulated amortization of approximately $513,000 and approximately $1,382,000 net of accumulated amortization of approximately $178,000 at March 31, 2020 and December 31, 2019, respectively.

Financing fees in association with the line of credit of approximately $25,000 and $36,000 are net of accumulated amortization of approximately $103,000 and $93,000 at March 31, 2020 and December 31, 2019 respectively.

NOTE 5. MORTGAGE NOTES PAYABLE

At March 31, 2020 and December 31, 2019, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2. At March 31, 2020, the interest rates on these loans ranged from 3.53% to 5.66%, payable in monthly installments aggregating approximately $1,268,000 including principal, to various dates through 2035. The majority of the mortgages are subject to prepayment penalties. At March 31, 2020, the weighted average interest rate on the above mortgages was 4.42%. The effective rate of 4.51% includes the amortization expense of deferred financing costs. See Note 12 for fair value information. The Partnership’s mortgage debt and the mortgage debt of its unconsolidated joint ventures generally is non-recourse except for customary exceptions pertaining to misuse of funds and material misrepresentations.

Financing fees of approximately $1,521,000 and $1,449,000 are net of accumulated amortization of approximately $1,384,000 and $1,411,000 at March 31, 2020 and December 31, 2019, respectively offset the total mortgage notes payable.

The Partnership has pledged tenant leases as additional collateral for certain of these loans.

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Approximate annual maturities at March 31, 2020 are as follows:

2021—current maturities |  | $ | 2,303,000 |
2022 |  |  | 2,515,000 |
2023 |  |  | 67,012,000 |
2024 |  |  | 38,289,000 |
2025 |  |  | 10,997,000 |
Thereafter |  |  | 165,311,000 |
|  |  | 286,427,000 |
Less: unamortized deferred financing costs |  |  | (1,521,000) |
|  | $ | 284,906,000 |

On March 31, 2020, Nera Brookside Associates, LLC (“Brookside Apartments”), entered into a Mortgage Note with KeyBank National Associates ( KeyBank) in the principal amount of $6,175,000. Interest only payments on the Note are payable on a monthly basis at a fixed interest rate of 3.53% per annum, and the principal amount of the Note is due and payable on April 1, 2035. The Note is secured by a mortgage on the Brookside apartment complex located at 5-12 Totman Drive, Woburn, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated March 31, 2020. The Note is guaranteed by the Partnership pursuant to a Guaranty Agreement dated March 31, 2020. Brookside Apartments used the proceeds of the loan to pay off an outstanding loan of approximately $2,390,000, with the remaining portion of the proceeds added to cash reserves. In connection with this refinancing, there were closing costs of approximately $132,000.

On December 20, 2019, Mill Street Gardens, LLC and Mill Street Development LLC, collectively referred to as Mill Street, wholly-owned subsidiaries of New England Realty Associates Limited Partnership closed on a Purchase Agreement dated as of September 27, 2019 with Ninety-Three Realty Limited Partnership pursuant to which Mill Street acquired Country Club Garden Apartments, a 181 unit apartment complex located at 57 Mill Street, Woburn, Massachusetts for an aggregate purchase price of $59,550,000 . Mill Street funded $18,000,000 of the purchase price out of an existing line of credit, $10,550,000 of the cash portion of the purchase price out of cash reserves and the remaining $31,000,000 from the proceeds of the Loan. The closing costs were approximately $237,000. From the purchase price, the Partnership allocated approximately $1,282,000 for in- place leases, and approximately $136,000 to the value of tenant relationships. These amounts are being amortized over 12 and 36 months respectively.

On December 20, 2019, Mill Street entered into a Loan Agreement with Insurance Strategy Funding Corp. LLC providing for a loan in the maximum principal amount of $35,000,000, consisting of an initial advance of $31,000,000 and a subsequent advance of up to $4,000,000 if certain conditions are met. Interest on the Note is payable on a monthly basis at a fixed interest rate of: (i) 3.586% per annum with respect to the initial advance and (ii) the greater of (A) the sum of the market spread rate and the interpolated (based on the remaining term of the Loan) US Treasury rate at the time of the advance and (B) 3.500% with respect to any subsequent advance. The principal amount of the Note is due and payable on January 1, 2035. The Note is secured by a mortgage on the Property and is guaranteed by the Partnership pursuant to a Guaranty Agreement dated December 20, 2019.

On May 31, 2019, Residences at Captain Parker, LLC (“Captain Parker”), entered into a Mortgage Note with Strategy Funding Corp., LLC in the principal amount of $20,750,000. Interest only payments on the Note are payable on a monthly basis at a fixed interest rate of 4.05% per annum, and the principal amount of the Note is due and payable on June 1, 2029. The Note is secured by a mortgage on the Captain Parker apartment complex located at 125 Worthen Road and Ryder Lane, Lexington, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated May 31, 2019. The Note is guaranteed by the Partnership pursuant to a Guaranty Agreement dated May 31, 2019. Captain Parker used the proceeds of the loan to pay off an outstanding loan of approximately $20,071,000. In connection with this refinancing, the property incurred a prepayment penalty of approximately $202,000. This expense is included in other expense on the consolidated statement of income.

Line of Credit

On July 31, 2014, the Partnership entered into an agreement for a $25,000,000 revolving line of credit. The term of the line was for three years with a floating interest rate equal to a base rate of the greater of (a) the Prime Rate (b) the Federal Funds Rate plus one-half of one percent per annum, or (c) the LIBOR Rate for a period of one month plus

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1% per annum, plus the applicable margin of 2.5%. The agreement originally expired on July 31, 2017, and was extended until October 31, 2020. The costs associated with the line of credit extension were approximately $128,000.

On December 19, 2019, the Partnership drew down on the line of credit in the amount of $20,000,000, used in conjunction with the purchase of Mill Street Apartments. On December 20, 2019, the Partnership paid down $2,000,000. On January 22, 2020, the Partnership paid down $1,000,000. As of March 31, 2020, the line of credit had an outstanding balance of $17,000,000.

The line of credit may be used for acquisition, refinancing, improvements, working capital and other needs of the Partnership. The line may not be used to pay distributions, make distributions or acquire equity interests of the Partnership.

The line of credit is collateralized by varying percentages of the Partnership’s ownership interest in 23 of its subsidiary properties and joint ventures. Pledged interests range from 49% to 100% of the Partnership’s ownership interest in the respective entities.

The Partnership paid fees to secure the line of credit. Any unused balance of the line of credit is subject to a fee ranging from 15 to 20 basis points per annum. The Partnership paid approximately $3,000 in fees for the three months ended March 31, 2020.

The line of credit agreement has several covenants, such as providing cash flow projections and compliance certificates, as well as other financial information. The covenants include, but are not limited to the following: maintain a leverage ratio that does not exceed 65%; aggregate increase in indebtedness of the subsidiaries and joint ventures should not exceed $15,000,000; maintain a tangible net worth (as defined in the agreement) of a minimum of $150,000,000; a minimum ratio of net operating income to total indebtedness of at least 9.5%; debt service coverage ratio of at least 1.6 to 1, as well as other items. The Partnership is in compliance with these covenants as of March 31, 2020.

NOTE 6. ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

The Partnership’s residential lease agreements may require tenants to maintain a one-month advance rental payment and/or a security deposit. At March 31, 2020, amounts received for prepaid rents of approximately $2,193,000 are included in cash and cash equivalents, and security deposits of approximately $3,016,000 are included in prepaid expenses and other assets and are restricted cash.

NOTE 7. PARTNERS’ CAPITAL

The Partnership has two classes of Limited Partners (Class A and B) and one category of General Partner. Under the terms of the Partnership Agreement, distributions to holders of Class B Units and General Partnership Units must represent 19% and 1%, respectively, of the total units outstanding. All classes have equal profit sharing and distribution rights, in proportion to their ownership interests.

In January 2020, the Partnership approved a quarterly distribution to its Class A Limited Partners and holders of Depositary Receipts of record as of March 15, 2020 and payable on March 31, 2020, of $9.60 per unit ($0.32 per receipt).

In 2019, regular quarterly distributions of $9.60 per unit ($0.32 per receipt), were paid in March, June, September and December.

The Partnership has entered into a deposit agreement with an agent to facilitate public trading of limited partners’ interests in Class A Units. Under the terms of this agreement, the holders of Class A Units have the right to exchange each Class A Unit for 30 Depositary Receipts. The following is information per Depositary Receipt:

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  | 2019 |
Net Income per Depositary Receipt |  | $ | 0.37 |  | $ | 0.41 |
Distributions per Depositary Receipt |  | $ | 0.32 |  | $ | 0.32 |

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NOTE 8. TREASURY UNITS

Treasury Units at March 31, 2020 are as follows:

Class A |  | 46,772 |
Class B |  | 11,109 |
General Partnership |  | 585 |
|  | 58,466 |

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”) under which the Partnership was permitted to purchase, over a period of twelve months, up to 300,000 Depositary Receipts (each of which is one-tenth of a Class A Unit). Over time, the General Partner has authorized increases in the equity repurchase program. On March 10, 2015, the General Partner authorized an increase in the Repurchase Program from 1,500,000 to 2,000,000 Depository Receipts and extended the Program for an additional five years from March 31, 2015 until March 31, 2020. On March 9, 2020, the General Partner extended the program for an additional five years from March 31, 2020 to March 31, 2025 The Repurchase Program requires the Partnership to repurchase a proportionate number of Class B Units and General Partner Units in connection with any repurchases of any Depositary Receipts by the Partnership based upon the 80%, 19% and 1% fixed distribution percentages of the holders of the Class A, Class B and General Partner Units under the Partnership’s Second Amended and Restated Contract of Limited Partnership. Repurchases of Depositary Receipts or Partnership Units pursuant to the Repurchase Program may be made by the Partnership from time to time in its sole discretion in open market transactions or in privately negotiated transactions. From August 20, 2007 through March 31, 2020, the Partnership has repurchased 1,428,361 Depositary Receipts at an average price of $28.42 per receipt (or $852.60 per underlying Class A Unit), 3,571 Class B Units and 188 General Partnership Units, both at an average price of $1,032.98 per Unit, totaling approximately $44,714,000 including brokerage fees paid by the Partnership.

During the three months ended March 31, 2020, the Partnership purchased a total of 5,252 Depositary Receipts. The average price was $59.38 per receipt or $1,781.40 per unit. The total cost including commission was $311,951. The Partnership was required to repurchase 41.6 Class B Units and 2.2 General Partnership units at a cost of $74,063 and $3,898 respectively.

Given the economic uncertainty caused by the coronavirus issue, as of April 15, 2020, the Partnership has elected to temporarily suspend the repurchase program.

NOTE 9. COMMITMENTS AND CONTINGENCIES

From time to time, the Partnership is involved in various ordinary routine litigation incidental to its business. The Partnership either has insurance coverage or provides for any uninsured claims when appropriate. The Partnership is not involved in any material pending legal proceedings.

NOTE 10. RENTAL INCOME

During the three months ended March 31, 2020, approximately 95% of rental income was related to residential apartments and condominium units with leases of one year or less. The majority of these leases expire in June, July and

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August. Approximately 5% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2020 as follows:

|  | Commercial |
|  | Property Leases |
2021 |  | $ | 2,762,000 |
2022 |  |  | 2,063,000 |
2023 |  |  | 1,401,000 |
2024 |  |  | 970,000 |
2025 |  |  | 341,000 |
Thereafter |  |  | 631,000 |
|  | $ | 8,168,000 |

The aggregate minimum future rental income does not include contingent rentals that may be received under various leases in connection with common area charges and real estate taxes. Aggregate contingent rentals from continuing operations were approximately $121,000 and $129,000 for the three months ended March 31, 2020 and 2019 respectively. Staples and Trader Joes, tenants at Staples Plaza, are approximately 30% of the total commercial rental income.

The following information is provided for commercial leases:

|  | Annual base |  |  |  |  |  | Percentage of |
|  | rent for |  | Total square feet |  | Total number of |  | annual base rent for |
Through March 31, |  | expiring leases |  | for expiring leases |  | leases expiring |  | expiring leases |
2021 |  | $ | 201,568 |  | 12,982 |  | 14 |  | 7 | %
2022 |  |  | 1,143,868 |  | 47,854 |  | 10 |  | 40 | %
2023 |  |  | 273,081 |  | 8,062 |  | 6 |  | 9 | %
2024 |  |  | 672,213 |  | 19,432 |  | 9 |  | 23 | %
2025 |  |  | 395,806 |  | 14,868 |  | 8 |  | 14 | %
2026 |  |  | 64,657 |  | 1,106 |  | 1 |  | 2 | %
2027 |  |  | — |  | — |  | — |  | — | %
2028 |  |  | — |  | — |  | — |  | — | %
2029 |  |  | — |  | — |  | — |  | — | %
2030 |  |  | 142,450 |  | 3,850 |  | 1 |  | 5 | %
Totals |  | $ | 2,893,643 |  | 108,154 |  | 49 |  | 100 | %

Rents receivable are net of an allowance for doubtful accounts of approximately $198,000 and $240,000 at March 31, 2020 and December 31, 2019. Included in rents receivable at March 31, 2020 is approximately $105,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis. The majority of this amount is for long-term leases at 62 Boylston Street, Cypress Street, and Staples Plaza in Massachusetts.

Rents receivable at March 31, 2020 also includes approximately $120,000 representing the deferral of rental concession primarily related to the residential properties.

NOTE 11. CASH FLOW INFORMATION

During the three months ended March 31, 2020 and 2019, cash paid for interest was approximately $3,229,000, and $2,944,000 respectively. Cash paid for state income taxes was approximately $76,000 and $48,000 during the three months ended March 31, 2020 and 2019 respectively. Additionally, during the three months ended March 31, 2020, the Partnership was involved in a non-cash financing activity of approximately $2,393,000 in connection with the purchase of Brookside Apartments.

NOTE 12. FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

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At March 31, 2020 and December 31, 2019, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements.

Financial Assets and Liabilities not Measured at Fair Value

At March 31, 2020 and December 31, 2019 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 March 31, 2020 and December 31, 2019, 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 March 31, 2020 and December 31, 2019, 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 methods and assumptions were used by the Partnership in estimating the fair value of its financial instruments:

| · |  | For cash and cash equivalents, accounts receivable, other assets, investment in partnerships, accounts payable, advance rents and security deposits: fair value approximates the carrying value of such assets and liabilities.

| · |  | For mortgage notes payable: fair value is generally based on estimated future cash flows, which are discounted using the quoted market rate from an independent source for similar obligations. Refer to the table below for the carrying amount and estimated fair value of such instruments.

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

|  | Carrying Amount |  | Estimated Fair Value |
Mortgage Notes Payable |  |  |  |  |  |  |
Partnership Properties |  |  |  |  |  |  |
At March 31, 2020 | * | $ | 284,905,564 |  | $ | 297,585,801 |
At December 31, 2019 | * | $ | 281,771,246 |  | $ | 290,892,652 |
Investment Properties |  |  |  |  |  |  |
At March 31, 2020 | * | $ | 166,380,940 |  | $ | 176,109,904 |
At December 31, 2019 | * | $ | 166,404,255 |  | $ | 169,988,236 |

* Net of unamortized deferred financing costs

Disclosure about fair value of financial instruments is based on pertinent information available to management as of March 31, 2020 and December 31, 2019. 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 March 31, 2020 and current estimates of fair value may differ significantly from the amounts presented herein.

NOTE 13. TAXABLE INCOME AND TAX BASIS

Taxable income reportable by the Partnership and includable in its partners’ tax returns is different than financial statement income because of tax free exchanges, different depreciation methods, different tax lives, other items with limited tax deductibility and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions. Federal taxable income of approximately $2,039,000 was approximately $4,508,000 less than statement income for the year ended December 31, 2019. The Federal cumulative tax basis of the Partnership’s real

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estate at December 31, 2019 is approximately $5,311,000 less than the statement basis. The primary reasons for the difference in tax basis are tax free exchanges, accelerated depreciation and bonus depreciation. The Partnership’s Federal tax basis in its joint venture investments is approximately $1,688,000 more than statement basis. State taxable income may be significantly different due to different tax treatments for certain items.

Certain entities included in the Partnership’s consolidated financial statements are subject to certain state taxes. These taxes are not significant and are recorded as operating expenses in the accompanying consolidates financial statements.

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

In the normal course of business the Partnership or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable. As of March 31, 2020, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2016 forward.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to the COVID-19 pandemic. The act, among other changes, increases the business interest expense limitation to 50% of adjusted taxable income for tax years beginning in 2020 for partnerships. These changes may have an impact on the Partnership’s taxable income for the year ended December 31, 2020.

For partnerships, the CARES Act increases the business interest expense limitation to 50% only for taxable years beginning in 2020. For partnership taxable years beginning in 2019, the ATI limitation remains at 30%. However, half of a partnership’s EBIE allocated to a partner for a 2019 taxable year can automatically be treated as deductible interest expense in the partner’s first taxable year beginning in 2020. The other half of the EBIE allocated to the partner is treated as it normally would be. Partners can elect out of treating half of 2019 EBIE as automatically deductible in 2020. On the other hand, partnerships, rather than their partners, are entitled to elect out of the increase in the ATI limitation for 2020.

Whether a partner will be better off or worse off as a result of this special rule for partnerships will depend on the facts and circumstances. For example, suppose a partnership with pro rata allocations and a calendar taxable year has $100 million of ATI in each of 2019 and 2020 (or has less ATI in 2020, but elects to substitute 2019 ATI for 2020 ATI) and no business interest income or floor plan financing interest in each year.

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

The Partnership has invested in seven limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three Joint Ventures investing in commercial property. The Partnership has between a 40%‑50% ownership interests in each investment. The other investors are the Brown Family related entities and five current and former employees of the Management Company. Harold Brown’s ownership interest was between 47.6% and 59%, 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 original mortgage was $89,914,000 with an interest rate of 5.57% and was to mature in 2019. The mortgage called for interest only payments for the first two years of the loan and amortized over 30 years thereafter.

On May 31, 2018, Hamilton Park Towers, LLC , entered into a Mortgage Note with John Hancock Life Insurance Company (U.S.A.) in the principal amount of $125,000,000. Interest only payments on the Note are payable on a monthly basis at a fixed interest rate of 3.99% per annum, and the principal amount of the Note is due and payable on June 1, 2028. The Note is secured by a mortgage on the Dexter Park apartment complex located at 175 Freeman Street, Brookline, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated

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May 31, 2018. The Note is guaranteed by the Partnership and HBC Holdings, LLC pursuant to a Guaranty Agreement dated May 31, 2018.

Hamilton Park used the proceeds of the loan to pay off an outstanding loan of approximately $82,000,000 and distributed approximately $41,200,000 to its’ owners. The Partnership’s share of the distribution was approximately $16,500,000. As a result of the distribution, the carrying value of the investment fell below zero. The Partnership will continue to account for the investment using the equity method of accounting, although the Partnership has no legal obligation to fund its’ share of any future operating deficiencies as needed. In connection with this refinancing, the property incurred a defeasance charge of approximately $3,830,000. Based on its’ ownership in the property, the Partnership incurred 40% of this charge, an expense of approximately $1,532,000.

At March 31, 2020, the balance on this mortgage before unamortized deferred financing costs is $125,000,000. 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 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 10 year mortgage in the original 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 with a maturity date of 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. After paying off the mortgage, the Partnership sold the individual units. 3 units were sold in 2019, resulting in a gain of approximately $429,000. In 2019, all units were sold by this Joint Venture. 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. At March 31, 2020, the balance on this mortgage before unamortized deferred financing costs is approximately $10,000,000. 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 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. After paying off the mortgage, the Partnership began to sell off the individual units. 2 units were sold in 2019, resulting in a gain of approximately $306,000. In 2019, all residential units were sold. The Partnership still owns the commercial building. This investment is referred to as Hamilton 1025, LLC.

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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. At March 31, 2020, the balance on this mortgage before unamortized deferred financing costs is approximately $6,000,000. In 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. 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. 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 31, 2020, the balance of the mortgage before unamortized deferred finance $16,900,000. In 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. 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, 2020, the balance of this mortgage before unamortized deferred financing costs is approximately $9,304,000. This investment is referred to as 345 Franklin, LLC.

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Summary financial information as of March 31, 2020

|  |  |  |  | Hamilton |  |  |  |  |  |  |  | Hamilton |  | Hamilton |  |  |  |  |  |  |
|  | Hamilton |  | Essex |  | 345 |  | Hamilton |  | Minuteman |  | on Main |  | Dexter |  |  |  |
|  | Essex 81 |  | Development |  | Franklin |  | 1025 |  | Apts |  | Apts |  | Park |  | Total |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental Properties |  | $ | 6,977,869 |  | $ | 2,592,526 |  | $ | 5,597,090 |  | $ | 87,267 |  | $ | 5,240,627 |  | $ | 15,722,824 |  | $ | 83,230,537 |  | $ | 119,448,740 |
Cash & Cash Equivalents |  |  | 336,900 |  |  | 105,620 |  |  | 387,085 |  |  | 11,568 |  |  | 234,919 |  |  | 514,145 |  |  | 3,510,840 |  |  | 5,101,077 |
Rent Receivable |  |  | 215,143 |  |  | 38,463 |  |  | — |  |  | — |  |  | 205 |  |  | 12,553 |  |  | 27,015 |  |  | 293,379 |
Real Estate Tax Escrow |  |  | 62,924 |  |  | — |  |  | 52,215 |  |  | — |  |  | 27,345 |  |  | 77,969 |  |  | — |  |  | 220,453 |
Prepaid Expenses & Other Assets |  |  | 311,711 |  |  | 92,886 |  |  | 76,295 |  |  | 1,682 |  |  | 19,098 |  |  | 185,332 |  |  | 1,559,233 |  |  | 2,246,237 |
Total Assets |  | $ | 7,904,547 |  | $ | 2,829,495 |  | $ | 6,112,685 |  | $ | 100,517 |  | $ | 5,522,194 |  | $ | 16,512,823 |  | $ | 88,327,625 |  | $ | 127,309,886 |
LIABILITIES AND PARTNERS’ CAPITAL |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage Notes Payable |  | $ | 9,924,160 |  | $ | — |  | $ | 9,249,198 |  | $ | — |  | $ | 5,906,230 |  | $ | 16,829,107 |  | $ | 124,472,246 |  | $ | 166,380,941 |
Accounts Payable & Accrued Expense |  |  | 82,063 |  |  | 3,250 |  |  | 103,274 |  |  | 5,948 |  |  | 50,102 |  |  | 152,433 |  |  | 639,480 |  |  | 1,036,550 |
Advance Rental Pmts & Security Deposits |  |  | 294,765 |  |  | — |  |  | 312,134 |  |  | — |  |  | 137,848 |  |  | 439,382 |  |  | 2,744,163 |  |  | 3,928,292 |
Total Liabilities |  |  | 10,300,988 |  |  | 3,250 |  |  | 9,664,606 |  |  | 5,948 |  |  | 6,094,180 |  |  | 17,420,922 |  |  | 127,855,889 |  |  | 171,345,783 |
Partners’ Capital |  |  | (2,396,441) |  |  | 2,826,245 |  |  | (3,551,921) |  |  | 94,569 |  |  | (571,986) |  |  | (908,099) |  |  | (39,528,264) |  |  | (44,035,897) |
Total Liabilities and Capital |  | $ | 7,904,547 |  | $ | 2,829,495 |  | $ | 6,112,685 |  | $ | 100,517 |  | $ | 5,522,194 |  | $ | 16,512,823 |  | $ | 88,327,625 |  | $ | 127,309,886 |
Partners’ Capital %—NERA |  |  | 50 | % |  | 50 | % |  | 50 | % |  | 50 | % |  | 50 | % |  | 50 | % |  | 40 | % |  |  |
Investment in Unconsolidated Joint Ventures |  | $ |  |  | $ | 1,413,123 |  | $ |  |  | $ | 47,284 |  | $ |  |  | $ |  |  | $ |  |  |  | 1,460,406 |
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures |  | $ | (1,198,220) |  | $ | — |  | $ | (1,775,961) |  | $ | — |  | $ | (285,993) |  | $ | (454,050) |  | $ | (15,811,306) |  |  | (19,525,528) |
Total Investment in Unconsolidated Joint Ventures (Net) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (18,065,122) |
Total units/condominiums |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Apartments |  |  | 48 |  |  | — |  |  | 40 |  |  | 175 |  |  | 42 |  |  | 148 |  |  | 409 |  |  | 862 |
Commercial |  |  | 1 |  |  | 1 |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 3 |
Total |  |  | 49 |  |  | 1 |  |  | 40 |  |  | 176 |  |  | 42 |  |  | 148 |  |  | 409 |  |  | 865 |
Units to be retained |  |  | 49 |  |  | 1 |  |  | 40 |  |  | — |  |  | 42 |  |  | 148 |  |  | 409 |  |  | 689 |
Units to be sold |  |  | — |  |  | — |  |  | — |  |  | 175 |  |  | — |  |  | — |  |  | — |  |  | 175 |
Units sold through May 1, 2020 |  |  | — |  |  | — |  |  | — |  |  | 175 |  |  | — |  |  | — |  |  | — |  |  | 175 |
Unsold units |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Unsold units with deposits for future sale as of May 1, 2020 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |

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Financial information for the three months ended March 31, 2020

|  |  |  |  | Hamilton |  |  |  |  |  |  |  | Hamilton |  | Hamilton |  |  |  |  |  |  |
|  | Hamilton |  | Essex |  | 345 |  | Hamilton |  | Minuteman |  | on Main |  | Dexter |  |  |  |
|  | Essex 81 |  | Development |  | Franklin |  | 1025 |  | Apts |  | Apts |  | Park |  | Total |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental Income |  | $ | 439,380 |  | $ | 60,471 |  | $ | 428,150 |  | $ | 20,558 |  | $ | 290,693 |  | $ | 905,700 |  |  | 4,206,503 |  | $ | 6,351,455 |
Laundry and Sundry Income |  |  | 3,385 |  |  | — |  |  | 454 |  |  | — |  |  | — |  |  | 8,749 |  |  | 25,742 |  |  | 38,330 |
|  |  | 442,765 |  |  | 60,471 |  |  | 428,604 |  |  | 20,558 |  |  | 290,693 |  |  | 914,449 |  |  | 4,232,245 |  |  | 6,389,785 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Administrative |  |  | 6,188 |  |  | 650 |  |  | 7,757 |  |  | 10,125 |  |  | 2,481 |  |  | 15,848 |  |  | 47,052 |  |  | 90,101 |
Depreciation and Amortization |  |  | 121,642 |  |  | 5,074 |  |  | 84,494 |  |  | 816 |  |  | 86,826 |  |  | 261,047 |  |  | 916,987 |  |  | 1,476,886 |
Management Fees |  |  | 17,736 |  |  | 2,203 |  |  | 16,466 |  |  | 822 |  |  | 11,532 |  |  | 34,984 |  |  | 87,082 |  |  | 170,825 |
Operating |  |  | 25,524 |  |  | — |  |  | 12,988 |  |  | 45 |  |  | 22,226 |  |  | 93,845 |  |  | 310,381 |  |  | 465,009 |
Renting |  |  | 2,775 |  |  | — |  |  | 8,753 |  |  | — |  |  | 3,000 |  |  | 7,720 |  |  | 16,804 |  |  | 39,052 |
Repairs and Maintenance |  |  | 27,009 |  |  | — |  |  | 21,578 |  |  | — |  |  | 10,895 |  |  | 134,837 |  |  | 287,012 |  |  | 481,331 |
Taxes and Insurance |  |  | 64,677 |  |  | 15,218 |  |  | 39,906 |  |  | 4,189 |  |  | 36,051 |  |  | 122,762 |  |  | 576,221 |  |  | 859,024 |
|  |  | 265,551 |  |  | 23,145 |  |  | 191,942 |  |  | 15,997 |  |  | 173,011 |  |  | 671,043 |  |  | 2,241,539 |  |  | 3,582,228 |
Income Before Other Income |  |  | 177,214 |  |  | 37,326 |  |  | 236,662 |  |  | 4,561 |  |  | 117,682 |  |  | 243,406 |  |  | 1,990,706 |  |  | 2,807,557 |
Other Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest Expense |  |  | (100,733) |  |  | — |  |  | (93,426) |  |  |  |  |  | (59,259) |  |  | (192,382) |  |  | (1,268,104) |  |  | (1,713,904) |
Gain on Sale of Real Estate |  |  |  |  |  | — |  |  | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  | #REF! |
|  |  | (100,733) |  |  | — |  |  | (93,426) |  |  | — |  |  | (59,259) |  |  | (192,382) |  |  | (1,268,104) |  |  | #REF! |
Net Income (Loss) |  | $ | 76,481 |  | $ | 37,326 |  | $ | 143,236 |  | $ | 4,561 |  | $ | 58,423 |  | $ | 51,024 |  | $ | 722,602 |  | $ | #REF! |
Net Income (Loss)—NERA 50% |  | $ | 38,241 |  | $ | 18,663 |  | $ | 71,618 |  | $ | 2,281 |  | $ | 29,211 |  | $ | 25,512 |  |  |  |  |  | 185,525 |
Net Income —NERA 40% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 289,042 |  |  | 289,042 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 474,567 |

Future annual mortgage maturities at March 31, 2020 are as follows:

|  | Hamilton |  | 345 |  | Hamilton |  | Hamilton on |  | Dexter |  |  |  |
Period End |  | Essex 81 |  | Franklin |  | Minuteman |  | Main Apts |  | Park |  | Total |
3//31/2021 |  | $ | — |  | $ | 207,527 |  | $ |  |  | $ | — |  | $ |  |  | $ | 207,527 |
3/31/2022 |  |  | — |  |  | 215,702 |  |  |  |  |  | — |  |  |  |  |  | 215,702 |
3/31/2023 |  |  | — |  |  | 224,199 |  |  | — |  |  | — |  |  |  |  |  | 224,199 |
3/31/2024 |  |  | — |  |  | 233,032 |  |  | — |  |  | — |  |  |  |  |  | 233,032 |
3/31/2025 |  |  | — |  |  | 242,212 |  |  | — |  |  | — |  |  |  |  |  | 242,212 |
Thereafter |  |  | 10,000,000 |  |  | 8,181,458 |  |  | 6,000,000 |  |  | 16,900,000 |  |  | 125,000,000 |  |  | 166,081,458 |
|  |  | 10,000,000 |  |  | 9,304,130 |  |  | 6,000,000 |  |  | 16,900,000 |  |  | 125,000,000 |  |  | 167,204,130 |
Less: unamortized deferred financing costs |  |  | (75,840) |  |  | (54,932) |  |  | (93,770) |  |  | (70,893) |  |  | (527,754) |  |  | (823,189) |
|  | $ | 9,924,160 |  | $ | 9,249,198 |  | $ | 5,906,230 |  | $ | 16,829,107 |  | $ | 124,472,246 |  | $ | 166,380,941 |

At March 31, 2020 the weighted average interest rate on the above mortgages was 3.99%. The effective rate was 4.06% including the amortization expense of deferred financing costs.

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Summary financial information at March 31, 2019

|  |  |  |  | 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 |  | $ | 7,117,613 |  | $ | 2,595,015 |  | $ | 5,919,727 |  | $ | 103,238 |  | $ | — |  | $ | 5,556,929 |  | $ | 16,490,749 |  | $ | 86,186,211 |  | $ | 123,969,482
Rental property held for sale |  |  | — |  |  | — |  |  | — |  |  | 159,188 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 159,188
Cash & Cash Equivalents |  |  | 192,441 |  |  | 169,930 |  |  | 213,656 |  |  | 51,285 |  |  | 359,291 |  |  | 132,903 |  |  | 163,789 |  |  | 1,853,435 |  |  | 3,136,730
Rent Receivable |  |  | 222,191 |  |  | 49,619 |  |  | 4,437 |  |  | 2,441 |  |  | — |  |  | 1,487 |  |  | 17,049 |  |  | 136,962 |  |  | 434,186
Real Estate Tax Escrow |  |  | 72,624 |  |  | — |  |  | 50,334 |  |  | — |  |  | — |  |  | 28,960 |  |  | 95,525 |  |  | — |  |  | 247,443
Prepaid Expenses & Other Assets |  |  | 274,111 |  |  | 110,681 |  |  | 61,989 |  |  | 30,377 |  |  | 3,595 |  |  | 16,287 |  |  | 105,663 |  |  | 1,022,670 |  |  | 1,625,373
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0
Total Assets |  | $ | 7,878,980 |  | $ | 2,925,245 |  | $ | 6,250,143 |  | $ | 346,529 |  | $ | 362,886 |  | $ | 5,736,566 |  | $ | 16,872,775 |  | $ | 89,199,278 |  | $ | 129,572,402
LIABILITIES AND PARTNERS’ CAPITAL |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage Notes Payable |  | $ | 9,910,371 |  | $ | — |  | $ | 9,442,200 |  | $ | — |  | $ | — |  | $ | 5,898,047 |  | $ | 16,813,056 |  | $ | 124,407,623 |  | $ | 166,471,297
Accounts Payable & Accrued Expense |  |  | 84,485 |  |  | 2,187 |  |  | 121,342 |  |  | 10,844 |  |  | 10,951 |  |  | 61,051 |  |  | 205,044 |  |  | 701,699 |  |  | 1,197,603
Advance Rental Pmts& Security Deposits |  |  | 297,683 |  |  | — |  |  | 283,486 |  |  | 7,174 |  |  | 101 |  |  | 123,167 |  |  | 391,075 |  |  | 2,620,890 |  |  | 3,723,576
Total Liabilities |  |  | 10,292,539 |  |  | 2,187 |  |  | 9,847,028 |  |  | 18,018 |  |  | 11,052 |  |  | 6,082,265 |  |  | 17,409,175 |  |  | 127,730,212 |  |  | 171,392,476
Partners’ Capital |  |  | (2,413,559) |  |  | 2,923,058 |  |  | (3,596,885) |  |  | 328,511 |  |  | 351,834 |  |  | (345,699) |  |  | (536,400) |  |  | (38,530,934) |  |  | (41,820,074)
Total Liabilities and Capital |  | $ | 7,878,980 |  | $ | 2,925,245 |  | $ | 6,250,143 |  | $ | 346,529 |  | $ | 362,886 |  | $ | 5,736,566 |  | $ | 16,872,775 |  | $ | 89,199,278 |  | $ | 129,572,402
Partners’ Capital %—NERA |  |  | 50 | % |  | 50 | % |  | 50 | % |  | 50 | % |  | 50 | % |  | 50 | % |  | 50 | % |  | 40 | % |  |
Investment in Unconsolidated Joint Ventures |  | $ | — |  | $ | 1,461,529 |  | $ | — |  | $ | 164,256 |  | $ | 175,917 |  | $ | — |  | $ | — |  | $ | — |  | $ | 1,801,702
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures |  | $ | (1,206,780) |  | $ | — |  | $ | (1,798,443) |  | $ | — |  | $ | — |  | $ | (172,850) |  | $ | (268,200) |  | $ | (15,412,374) |  |  | (18,858,645)
Total Investment in Unconsolidated Joint Ventures (Net) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (17,056,944)
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 |  |  | 1 |  |  | 0 |  |  | 42 |  |  | 148 |  |  | 409 |  |  | 690
Units to be sold |  |  | — |  |  | — |  |  | — |  |  | 175 |  |  | 48 |  |  | — |  |  | — |  |  | — |  |  | 223
Units sold through May1, 2018 |  |  | — |  |  | — |  |  | — |  |  | 173 |  |  | 48 |  |  | — |  |  | — |  |  | — |  |  | 221
Unsold units |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3
Unsold units with deposits for future sale as of May 1, 2018 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1
Units sold through February 1, 2014 |  |  | — |  |  | — |  |  | — |  |  | 127 |  |  | — |  |  | — |  |  | — |  |  | 232 |  |  |
Unsold units |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Unsold units with deposits for future sale as of February 1, 2014 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |

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Financial information for the three months ended March 31, 2019

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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 |  | $ | 459,573 |  | $ | 75,290 |  | $ | 385,243 |  | $ | 23,594 |  | $ | 3,629 |  | $ | 274,837 |  | $ | 822,668 |  | $ | 4,028,259 |  | $ | 6,073,093 |
Laundry and Sundry Income |  |  | 3,005 |  |  | — |  |  | 1,389 |  |  | — |  |  | — |  |  | 1,907 |  |  | 10,062 |  |  | 24,025 |  |  | 40,388 |
|  |  | 462,578 |  |  | 75,290 |  |  | 386,632 |  |  | 23,594 |  |  | 3,629 |  |  | 276,744 |  |  | 832,730 |  |  | 4,052,284 |  |  | 6,113,481 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Administrative |  |  | 5,379 |  |  | 2,092 |  |  | 5,390 |  |  | 1,694 |  |  | 3,445 |  |  | 3,716 |  |  | 17,847 |  |  | 55,532 |  |  | 95,095 |
Depreciation and Amortization |  |  | 119,544 |  |  | 5,074 |  |  | 86,226 |  |  | 3,196 |  |  | 5,420 |  |  | 88,595 |  |  | 258,438 |  |  | 900,101 |  |  | 1,466,594 |
Management Fees |  |  | 17,206 |  |  | 2,160 |  |  | 14,056 |  |  | 965 |  |  | 145 |  |  | 11,067 |  |  | 31,868 |  |  | 86,149 |  |  | 163,616 |
Operating |  |  | 21,450 |  |  | 8 |  |  | 22,603 |  |  | 775 |  |  | (109) |  |  | 23,755 |  |  | 107,289 |  |  | 381,644 |  |  | 557,415 |
Renting |  |  | 3,330 |  |  | — |  |  | 3,520 |  |  |  |  |  |  |  |  | 2,032 |  |  | 16,112 |  |  | 19,663 |  |  | 44,657 |
Repairs and Maintenance |  |  | 37,884 |  |  | — |  |  | 18,467 |  |  | 8,040 |  |  | 10,266 |  |  | 36,672 |  |  | 124,192 |  |  | 256,585 |  |  | 492,106 |
Taxes and Insurance |  |  | 61,830 |  |  | 15,677 |  |  | 40,241 |  |  | 7,349 |  |  | 4,906 |  |  | 32,251 |  |  | 104,431 |  |  | 518,726 |  |  | 785,411 |
|  |  | 266,623 |  |  | 25,011 |  |  | 190,503 |  |  | 22,019 |  |  | 24,073 |  |  | 198,088 |  |  | 660,177 |  |  | 2,218,400 |  |  | 3,604,894 |
Income Before Other Income |  |  | 195,955 |  |  | 50,279 |  |  | 196,129 |  |  | 1,575 |  |  | (20,444) |  |  | 78,656 |  |  | 172,553 |  |  | 1,833,884 |  |  | 2,508,587 |
Other Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest Expense |  |  | (121,005) |  |  | — |  |  | (94,247) |  |  |  |  |  | (6) |  |  | (57,991) |  |  | (188,268) |  |  | (1,270,103) |  |  | (1,731,620) |
Gain on sale of real estate |  |  |  |  |  | — |  |  | — |  |  | 754 |  |  | 432,908 |  |  | — |  |  | — |  |  | — |  |  | 433,662 |
|  |  | (121,005) |  |  | — |  |  | (94,247) |  |  | 754 |  |  | 432,902 |  |  | (57,991) |  |  | (188,268) |  |  | (1,270,103) |  |  | (1,297,958) |
Net Income (Loss) |  | $ | 74,950 |  | $ | 50,279 |  | $ | 101,882 |  | $ | 2,329 |  | $ | 412,458 |  | $ | 20,665 |  | $ | (15,715) |  | $ | 563,781 |  | $ | 1,210,629 |
Net Income (Loss)—NERA 50% |  | $ | 37,475 |  | $ | 25,140 |  | $ | 50,941 |  | $ | 1,165 |  | $ | 206,229 |  | $ | 10,333 |  | $ | (7,858) |  |  |  |  |  | 323,424 |
Net Income (Loss)—NERA 40% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 225,515 |  |  | 225,515 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 548,939 |

NOTE 15. EMPLOYEE BENEFIT 401(k) PLANS

Effective January 1, 2019, employees of the Partnership, who meet certain minimum age and service requirements, are eligible to participate in the Management Company’s 401(k) Plan (the “401(k) Plan”). Eligible employees may elect to defer up to 90 percent of their eligible compensation on a pre-tax basis to the 401(k) Plan, subject to certain limitations imposed by federal law.

The amounts contributed by employees are immediately vested and non-forfeitable. Beginning January 1, 2019, the Partnership matched 50% up to 6% of compensation deferred by each employee in the 401(k) plan. The Partnership may make discretionary matching or profit-sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year. Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit-sharing contributions made on their behalf after two years of service with the Partnership at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Partnership. Total expense recognized by the Partnership for the 401(k) Plan for the three months ended March 31, 2020 was $11,000.

NOTE 16. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

There have been no new accounting pronouncements applicable to the Partnership that would have a material impact on the Partnership’s consolidated financial statements.

NOTE 17—SUBSEQUENT EVENTS

From April 1, 2020 through May 8, 2020, the Partnership purchased a total of 76 Depository Receipts. The average price was $42.95 per receipt or $1,288.50 per unit. The total cost was $3,265.

The Partnership is required to purchase 0.6 Class B units and 0.03 General Partnership units at a cost of $775 and $41 respectively.

Given the economic uncertainty caused by the coronavirus issue, as of April 15, 2020, the Partnership has elected to temporarily suspend the repurchase program.

The current outbreak of the COVID- 19, a novel strain of coronavirus, has resulted in the World Health Organization declaring a global pandemic on March 11, 2020. On March 10, 2020, the governor of Massachusetts, Charlie Baker, declared a state of emergency and ordered all non-essential businesses closed and prohibited the gathering of 10 or more people. The Governor’s order is currently in place until May 18, 2020. Additionally, March saw the

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closure of local colleges and universities for the balance of the academic year. On-campus summer programs have been cancelled and discussions are underway as to how and if colleges and universities are to re-open in September.

The Government’s measures put into place to combat the spread of the virus have caused significant disruptions to life and business operations in Massachusetts, the country and the world. The length and severity of the current recession and the effects on the Partnership’s business are unknown at this time.

During the current state of emergency, The Hamilton Company, the Partnership’s property manager, has taken steps to maintain the safety of its employees and tenants. Hamilton is providing essential services to ensure all properties are kept open, fully functioning and safe. Hamilton has implemented a work from home policy with a skeleton staff present at all site offices to provide for property management, maintenance, leasing and construction services. Leasing is limited to unoccupied units and a web based video technology is being used to remotely show apartments. Hamilton and the Partnership will continue to adjust their business practices to comply with Federal and State mandates for workplace and rental property operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Certain information contained herein includes forward looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Liquidation Reform Act of 1995 (the “Act”). Forward looking statements in this report, or which management may make orally or in written form from time to time, reflect management’s good faith belief when those statements are made, and are based on information currently available to management. Caution should be exercised in interpreting and relying on such forward looking statements, the realization of which may be impacted by known and unknown risks and uncertainties, events that may occur subsequent to the forward looking statements, and other factors which may be beyond the Partnership’s control and which can materially affect the Partnership’s actual results, performance or achievements for 2020 and beyond. Should one or more of the risks or uncertainties mentioned below materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We expressly disclaim any responsibility to update our forward looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

Since the Partnership’s long-term goals include the acquisition of additional properties, a portion of the proceeds from the refinancing and sale of properties is reserved for this purpose. If available acquisitions do not meet the Partnership’s investment criteria, the Partnership may purchase additional depositary receipts. The Partnership will consider refinancing existing properties if the Partnership’s cash reserves are insufficient to repay existing mortgages or if the Partnership needs additional funds for future acquisitions.

The current outbreak of the COVID- 19, a novel strain of coronavirus, has resulted in the World Health Organization declaring a global pandemic on March 11, 2020. On March 10 th, the governor of Massachusetts, Charlie Baker, declared a state of emergency and ordered all non-essential businesses closed and prohibited the gathering of 10 or more people. The Governor’s order is currently in place until May 18, 2020. Additionally, March saw the closure of local colleges and universities for the balance of the academic year. On-campus summer programs have been cancelled and discussions are underway as to how and if colleges and universities are to re-open in September.

The government’s measures put into place to combat the spread of the virus have caused significant disruptions to life and business operations in Massachusetts, the country and the world. The length and severity of the current recession and the effects on the Partnership’s business are unknown at this time.

Rental collections in the month of April were better than expected as the Partnership’s wholly owned properties were able to collect 94% of April’s rent. Residential tenants paid approximately 96% of their rent and commercial tenants paid approximately 57% of theirs. Historically, commercial rents represent 5% of the Partnership’s revenues. The rent collections in the Joint Ventures were approximately 90%. April’s collections are not an indicator of how receipts will be in May or beyond.

Residential tenants generally have lease terms of 12 months. The majority of these leases will mature during the second and third quarters of the year. Given the current economic environment, it is not possible to estimate the amount of lease turnover we will experience or the amount of increases to or decreases from the current rental rates we will realize with lease renewals or new leases.

The Partnership currently leases approximately 15% of its apartment units and 57% of the Joint Venture apartment units to Students. If colleges and universities do not open in September, there is likely to be a significant effect on the occupancy rates and rental income of the Partnership.

During the current state of emergency, The Hamilton Company, the Partnership’s property manager, has taken steps to maintain the safety of its employees and tenants. Hamilton is providing essential services to ensure all properties are kept open, fully functioning and safe. Hamilton has implemented a work from home policy with a skeleton staff present at all site offices to provide for property management, maintenance, leasing and construction services. Leasing is limited to unoccupied units and a web based video technology is being used to remotely show apartments. Hamilton and

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the Partnership will continue to adjust their s business practices to comply with Federal and State mandates for workplace and rental property operations.

During the first quarter of 2020, rents continued to increase with average increases of 4.1% for renewals and 0.4% for new leases. For the balance of 2020, due to the ongoing global coronavirus pandemic, management expects a significant softening of the local real estate market and is unable to forecast future increases or decreases in renewal and new lease rents at this time.

For the first quarter of 2020, including the purchase of Mill Street, consolidated revenue increased by 10.0%, operating expenses increased by 10.1% and Income before Other Income (Expense) grew by 9.9%. Excluding the Mill Street acquisition, same store revenue grew by 3.4%, operating expenses decreased by 2.2% and Income before Other Income (Expense) grew by 19.0%. For the same reporting period, vacancy was 3.8% vs 2.8%. Excluding Depreciation and Amortization, same store revenues (excluding Mill Street) grew by 3.4%, operating expenses decreased by 1.0% and Net Operating Income increased by 7.6%.

The Joint Ventures of 1025 Hancock and Hamilton Bay in 2019 sold out all remaining residential condominium units. 1025 Hancock sold 2 remaining units for a gain of approximately $306,000, and Hamilton Bay sold its 3 remaining units at a gain of approximately $429,000. The estimated profit to the Partnership for the sale of these units from 2014 through 2019 is approximately $7,168,000.

On July 31, 2014, the Partnership entered into an agreement for a $25,000,000 revolving line of credit. The term of the line was for three years with a floating interest rate equal to a base rate of the greater of (a) the Prime Rate (b) the Federal Funds Rate plus one‑half of one percent per annum, or (c) the LIBOR Rate for a period of one month plus 1% per annum, plus an applicable margin of 2.5%. The agreement originally expired on July 31, 2017, and was subsequently extended until October 31, 2020. The costs associated with the line of credit extension were approximately $128,000. As of March 31,2020, the credit line had an outstanding balance of $17,000,000.

On March 31, 2020, Nera Brookside Associates, LLC (“Brookside Apartments”), entered into a Mortgage Note with KeyBank National Associates ( KeyBank) in the principal amount of $6,175,000. Interest only payments on the Note are payable on a monthly basis at a fixed interest rate of 3.53% per annum, and the principal amount of the Note is due and payable on March 31, 2035. The Note is secured by a mortgage on the Brookside apartment complex located at 5-12 Totman Drive, Woburn, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated March 31, 2020. The Note is guaranteed by the Partnership pursuant to a Guaranty Agreement dated March 31, 2020. Brookside Apartments used the proceeds of the loan to pay off an outstanding loan of approximately $2,390,000, with the remaining portion of the proceeds were added to cash reserves. In connection with this refinancing, there were closing costs of approximately $132,000.

On December 20, 2019, Mill Street Gardens, LLC and Mill Street Development, LLC, collectively referred to as Mill Street, wholly-owned subsidiaries of New England Realty Associates Limited Partnership closed on a Purchase Agreement dated as of September 27, 2019 with Ninety-Three Realty Limited Partnership pursuant to which Mill Street acquired Country Club Garden Apartments, a 181 unit apartment complex located at 57 Mill Street, Woburn, Massachusetts for an aggregate purchase price of $59,550,000 . Mill Street funded $18,000,000 of the purchase price out of an existing line of credit, $10,550,000 of the cash portion of the purchase price out of cash reserves and the remaining $31,000,000 from the proceeds of the Loan. The closing costs were approximately $237,000. From the purchase price, the Partnership allocated approximately $1,282,000 for in- place leases, and approximately $136,000 to the value of tenant relationships. These amounts are being amortized over 12 and 36 months respectively.

On December 20, 2019, Mill Street entered into a Loan Agreement with Insurance Strategy Funding Corp. LLC providing for a loan (the “Loan”) in the maximum principal amount of $35,000,000, consisting of an initial advance of $31,000,000 and a subsequent advance of up to $4,000,000 if certain conditions are met. Interest on the Note is payable on a monthly basis at a fixed interest rate of: (i) 3.586% per annum with respect to the initial advance and (ii) the greater of (A) the sum of the market spread rate and the interpolated (based on the remaining term of the Loan) US Treasury rate at the time of the advance and (B) 3.500% with respect to any subsequent advance. The principal amount of the Note is due and payable on January 1, 2035. The Note is secured by a mortgage on the Property and is guaranteed by the Partnership pursuant to a Guaranty Agreement dated December 20, 2019.

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In May, 2019, the Partnership refinanced the Residences at Captain Parker. The prior mortgage of $20,071,000 had, at that time, a variable interest rate of 4.5%, which matured in February 2026, and had interest only payments until March 2021, with a thirty year amortization schedule thereafter. The new mortgage is for $20,750,000, with a fixed rate of 4.05%, maturing in 10 years, with interest only payments for the term of the loan. In connection with the refinancing, the partnership incurred a prepayment penalty of approximately $202,000.

From the start of the Stock Repurchase Program in 2007 through March 31, 2020, the Partnership has purchased 1,428,361 Depositary Receipts. During the three months ended March 31, 2020, the Partnership purchased a total of 5,252 Depositary Receipts. The average price was $59.38 per receipt or $1,781.40 per unit. The total cost including commission was $311,951. The Partnership was required to repurchase 41.6 Class B Units and 2.2 General Partnership units at a cost of $74,093 and $3,898 respectively. In January 2019, the Partnership purchased 40,000 Depository Receipts from the former president of the management company. In March of 2020, the Board of Advisors and Board of Directors unanimously approved an extension of the Repurchase Program until March 31, 2025. Given the economic uncertainty caused by the coronavirus issue, as of April 15, 2020, the Partnership has elected to temporarily suspend the repurchase program.

At May 1, 2020, the Estate of Harold Brown and his brother Ronald Brown collectively own approximately 30.7% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members). The Estate of Harold Brown also controls 75% of the Partnership’s Class B Units, 75% of the capital stock of NewReal, Inc.(“NewReal”), the Partnership’s sole general partner, and all of the outstanding stock of Hamilton. Ronald Brown also owns 25% of the Partnership’s Class B Units and 25% of NewReal’s capital stock. In addition, Ronald Brown is the President and director of NewReal and Jameson Brown is NewReal’s Treasurer and a director. The 75% of the issued and outstanding Class B units of the Partnership, controlled by the Estate of Harold Brown, are owned by HBC Holdings LLC, an entity of which Jameson Brown is the manager.

In addition to the Management Fee, the Partnership Agreement further provides for the employment of outside professionals to provide services to the Partnership and allows NewReal to charge the Partnership for the cost of employing professionals to assist with the administration of the Partnership’s properties. Additionally, from time to time, the Partnership pays Hamilton for repairs and maintenance services, legal services, construction services and accounting services. The costs charged by Hamilton for these services are at the same hourly rate charged to all entities managed by Hamilton, and management believes such rates are competitive in the marketplace.

Residential tenants sign a one year lease. During the three months ended March 31, 2020, tenant renewals were approximately 62% with an average rental increase of approximately 4.1%, new leases accounted for approximately 38% with rental rate increases of approximately 0.4 %. During the three months ended March 31, 2020, leasing commissions were approximately $114,000 compared to approximately $86,000 for the three months ended March 31, 2019, an increase of approximately $28,000 (32.6%) . Tenant concessions were approximately $12,000 for the three months ended March 31, 2020, compared to approximately $22,000 for the three months ended, March 31 2019, a decrease of approximately $10,000 (45.5%). Tenant improvements were approximately $621,000 for the three months ended March 31, 2020, compared to approximately $385,000 for the three months ended March 31, 2019, an increase of approximately $236,000 (61.3%).

Hamilton accounted for approximately 3.2% of the repair and maintenance expenses paid for by the Partnership during the three months ended March 31, 2020 and 5.6 % during the three months ended March 31, 2019. Of the funds paid to Hamilton for this purpose, the great majority was to cover the cost of services provided by the Hamilton maintenance department, including plumbing, electrical, carpentry services, and snow removal for those properties close to Hamilton’s headquarters. Several of the larger Partnership properties have their own maintenance staff. Those properties that do not have their own maintenance staff and are located more than a reasonable distance from Hamilton’s headquarters in Allston, Massachusetts are generally serviced by local, independent companies.

Hamilton’s legal department handles most of the Partnership’s eviction and collection matters. Additionally, it prepares most long-term commercial lease agreements and represents the Partnership in selected purchase and sale transactions. Overall, Hamilton provided approximately $52,000 (86.3%) and approximately $59,000 (66.3%) of the legal services paid for by the Partnership during the three months ended March 31, 2020 and 2019 respectively.

Additionally, as described in Note 3 to the consolidated financial statements, The Hamilton Company receives similar fees from the Investment Properties.

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The Partnership requires that three bids be obtained for construction contracts in excess of $15,000. Hamilton may be one of the three bidders on a particular project and may be awarded the contract if its bid and its ability to successfully complete the project are deemed appropriate. For contracts that are not awarded to Hamilton, Hamilton charges the Partnership a construction supervision fee equal to 5% of the contract amount. Hamilton’s architectural department also provides services to the Partnership on an as-needed basis. During the three months ended March 31, 2020, Hamilton provided the Partnership approximately $196,000 in construction and architectural services, compared to approximately $150,000 for the three months ended March 31, 2019.

Hamilton’s accounting staff perform bookkeeping and accounting functions for the Partnership. During the three months ended March 31, 2020 and 2019, Hamilton charged the Partnership $31,250 for bookkeeping and accounting services. For more information on related party transactions, see Note 3 to the Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the consolidated financial statements, in accordance with accounting principles generally accepted in the United States of America, requires the Partnership to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The Partnership regularly and continually evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate properties and its investments in and advances to joint ventures. The Partnership bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. The Partnership’s critical accounting policies are those which require assumptions to be made about such matters that are highly uncertain. Different estimates could have a material effect on the Partnership’s financial results. Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances. See Note 1 to the Consolidated Financial Statements, Principles of Consolidation.

Revenue Recognition: Rental income from residential and commercial properties is recognized over the term of the related lease. For residential tenants, amounts 60 days in arrears are charged against income. The commercial tenants are evaluated on a case by case basis. Certain leases of the commercial properties provide for increasing stepped minimum rents, which are accounted for on a straight-line basis over the term of the lease. Revenue from commercial leases also include reimbursements and recoveries received from tenants for certain costs as provided in the lease agreement. The costs generally include real estate taxes, utilities, insurance, common area maintenance and recoverable costs. Rental concessions are also accounted for on the straight-line basis.

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

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 modifies the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract: the lessee and the lessor. ASU 2016-02 provides new guidelines that change the accounting for leasing arrangements for lessees, whereby their rights and obligations under substantially all leases, existing and new, are capitalized and recorded on the balance sheet. For lessors, however, the new standard remains generally consistent with existing guidance, but has been updated to align with certain changes to the lessee model and ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”).

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Under this standard, the Partnership evaluates the non-lease components (lease arrangements that include common area maintenance services) with related lease components (lease revenues). If both the timing and pattern of transfer are the same for the non-lease component and related lease component, the lease component is the predominant component. The Partnership elected an allowed practical expedient. For (i) operating lease arrangements involving real estate that include common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance costs, we present these amounts within lease revenues in our consolidated statements of income. We record amounts reimbursed by the lessee in the period in which the applicable expenses are incurred.

We adopted this guidance for our interim and annual periods beginning January 1, 2019 using the modified retrospective method, applying the transition provisions at the beginning of the period of adoption rather than at the beginning of the earliest comparative period presented. We elected the allowable practical expedients as permitted under the transition guidance, which allowed us to not reassess whether arrangements contain leases, lease classification, and initial direct costs. The adoption of the lease standard did not result in a cumulative effect adjustment recognized in the opening balance of retained earnings as of January 1, 2019. The adoption of this standard does not have a material impact to the Partnership’s financial statements.

Rental Property Held f or Sale: When assets are identified by management as held for sale, the Partnership discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. The Partnership generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale. If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance is established.

If circumstances arise that previously were considered unlikely and, as a result, the Partnership decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying value before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

Rental Properties: Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions are capitalized. When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such disposition is included in income. Fully depreciated assets are removed from the accounts. Rental properties are depreciated by both straight-line and accelerated methods over their estimated useful lives. Upon acquisition of rental property, the Partnership estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Partnership allocated the purchase price to the assets acquired and liabilities assumed based on their fair values. The Partnership records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Intangible assets acquired include amounts for in-place lease values above and below market leases and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Partnership’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals. The

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

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

Impairment On an annual basis management assesses whether there are any indicators that the value of the Partnership’s rental properties may be impaired. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. The Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Investments in Joint Ventures: The Partnership accounts for its 40%‑50% ownership in the Investment Properties under the equity method of accounting, as it exercises significant influence over, but does not control these entities. These investments are recorded initially at cost, as Investments in Joint Ventures, and subsequently adjusted for the Partnership’s share in earnings, cash contributions and distributions. Under the equity method of accounting, our net equity is reflected on the consolidated balance sheets, and our share of net income or loss from the Partnership is included on the consolidated statements of income. Generally, the Partnership would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Partnership only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses. We intend to fund our share of the investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits.

The authoritative guidance on consolidation provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIE (the “primary beneficiary”). Generally, the consideration of whether an entity is a VIE applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that equity’s activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the variable interest entity’s performance; and (2) the obligation to absorb losses and rights to receive the returns from VIE that would be significant to the VIE.

With respect to investments in and advances to the Investment Properties, the Partnership looks to the underlying properties to assess performance and the recoverability of carrying amounts for those investments in a manner similar to direct investments in real estate properties. An impairment charge is recorded if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property.

Legal Proceedings: The Partnership is subject to various legal proceedings and claims that arise, from time to time, in the ordinary course of business. These matters are frequently covered by insurance. If it is determined that a loss is likely to occur, the estimated amount of the loss is recorded in the financial statements. Both the amount of the loss and the point at which its occurrence is considered likely can be difficult to determine.

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RESULTS OF OPERATIONS

Three Months Ended March 31, 2020 and March 31, 2019

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, other expense of approximately $4,344,000 during the three months ended March 31, 2020, compared to approximately $3,952,000 for the three months ended March 31, 2019, an increase of approximately $392,000 (9.9%).

The rental activity is summarized as follows:

|  | Occupancy Date |
|  | May 1, 2020 |  | May 1, 2019 |
Residential |  |  |  |  |
Units |  | 2,911 |  | 2,730 |
Vacancies |  | 110 |  | 76 |
Vacancy rate |  | 3.8 | % | 2.8 | %
Commercial |  |  |  |  |
Total square feet |  | 108,154 |  | 108,043 |
Vacancy |  | 3,900 |  | 1,360 |
Vacancy rate |  | 3.6 | % | 1.3 | %

|  | Rental Income (in thousands) |
|  | Three Months Ended March 31, |
|  | 2020 |  | 2019 |
|  | Total |  | Continuing |  | Total |  | Continuing |
|  | Operations |  | Operations |  | Operations |  | Operations |
Total rents |  | $ | 16,253 |  | $ | 16,253 |  | $ | 14,768 |  | $ | 14,768 |
Residential percentage |  |  | 95 | % |  | 95 | % |  | 94 | % |  | 94 | %
Commercial percentage |  |  | 5 | % |  | 5 | % |  | 6 | % |  | 6 | %
Contingent rentals |  | $ | 121 |  | $ | 121 |  | $ | 129 |  | $ | 129 |

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Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019:

|  | Three Months Ended March 31, |  | Dollar |  | Percent |
|  | 2020 |  | 2019 |  | Change |  | Change |
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 16,253,430 |  | $ | 14,768,475 |  | $ | 1,484,955 |  | 10.1 | %
Laundry and sundry income |  |  | 122,154 |  |  | 113,669 |  |  | 8,485 |  | 7.5 | %
|  |  | 16,375,584 |  |  | 14,882,144 |  |  | 1,493,440 |  | 10.0 | %
Expenses |  |  |  |  |  |  |  |  |  |  |  |
Administrative |  |  | 584,658 |  |  | 612,757 |  |  | (28,099) |  | (4.6) | %
Depreciation and amortization |  |  | 4,565,467 |  |  | 3,682,678 |  |  | 882,789 |  | 24.0 | %
Management fee |  |  | 648,993 |  |  | 590,610 |  |  | 58,383 |  | 9.9 | %
Operating |  |  | 1,668,402 |  |  | 1,884,017 |  |  | (215,615) |  | (11.4) | %
Renting |  |  | 196,871 |  |  | 182,058 |  |  | 14,813 |  | 8.1 | %
Repairs and maintenance |  |  | 2,086,218 |  |  | 1,944,231 |  |  | 141,987 |  | 7.3 | %
Taxes and insurance |  |  | 2,280,541 |  |  | 2,034,106 |  |  | 246,435 |  | 12.1 | %
|  |  | 12,031,150 |  |  | 10,930,457 |  |  | 1,100,693 |  | 10.1 | %
Income Before Other Income (Expense) |  |  | 4,344,434 |  |  | 3,951,687 |  |  | 392,747 |  | 9.9 | %
Other Income (Expense) |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  | 107 |  |  | 179 |  |  | (72) |  | (40.2) | %
Interest expense |  |  | (3,450,325) |  |  | (3,000,289) |  |  | (450,036) |  | 15.0 | %
Income from investments in unconsolidated joint ventures |  |  | 474,567 |  |  | 548,939 |  |  | (74,372) |  | (13.5) | %
|  |  | (2,975,651) |  |  | (2,451,171) |  |  | (524,480) |  | 21.4 | %
Net Income |  | $ | 1,368,783 |  | $ | 1,500,516 |  | $ | (131,733) |  | (8.8) | %

Rental income for the three months ended March 31, 2020 was approximately $16,253,000, compared to approximately $14,768,000 for the three months ended March 31, 2019, an increase of approximately $1,485,000 (10.1%). The factors that can be attributed to this increase are as follows: the acquisition of Mill Street resulted in an increase in rental income of approximately $974,000. In addition, rental income has increased at a number of properties due to increased demand and increases in rental rates. The Partnership Properties with the most significant increases in rental income include 62 Boylston, Hamilton Oaks, Westside Colonial, 1144 Commonwealth, Redwood Hills, and Woodland Park, with increases of approximately $93,000, $62,000, $52,000, $49,000, $31,000, and $31,000, respectively. Included in rental income is contingent rentals collected on commercial properties. Contingent rentals include such charges as bill backs of common area maintenance charges, real estate taxes, and utility charges.

Operating expenses for the three months ended March 31, 2020 were approximately $12,031,000 compared to approximately $10,930,000 for the three months ended March 31, 2019, an increase of approximately $1,101,000 (10.1%). Excluding the increase in expenses at Mill Street of approximately $1,346,000, Operating expenses decreased approximately $245,000. (2.2%).The factors contributing to the decrease are a decrease in operating expenses of approximately $306,000 (16.2%), due to the warm winter with less snow removal and utility expense, a decrease in depreciation and amortization of approximately $ 173,000 (4.7%) due to fully depreciated assets, partially offset by an increase taxes and insurance of approximately $161,000 (7.9%), and an increase in repairs and maintenance of approximately $82,000 (4.2%).

Interest expense for the three months ended March 31, 2020 was approximately $3,450,000 compared to approximately $3,000,000 for the three months ended March 31, 2019, an increase of approximately 450,000 (15.0%). Excluding the increase in interest expense attributable to Mill Street of approximately $281,000, there was an increase in interest expense of approximately $169,000, primarily due to the borrowing on the line of credit used in the purchase of Mill Street.

At March 31, 2020, the Partnership has between a 40% and 50% ownership interests in seven different Investment Properties. See a description of these properties included in the section titled Investment Properties as well as Note 14 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

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As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $475,000 for the three months ended March 31, 2020, compared to net income of approximately $549,000 for the three months ended March 31, 2019, a decrease in income of approximately $74,000 (13.5%). This decrease is primarily due to the reduction in the gain realized from the sales of condominium units of approximately $434,000 with the Partnership’s share amounting to 50%, on the sale of 2 units at Hamilton Bay Apartments LLC for the quarter ended March 31, 2019, compared to no units sold in the quarter ended March 31, 2020. Included in the income for the three months ended March 31, 2020 is depreciation and amortization expense of approximately $647,000. The proportional income for the three months ended March 31, 2020 from the investment in Dexter Park is approximately $289,000.

As a result of the changes discussed above, net income for the three months ended March 31, 2020 was approximately $1,369,000 compared to income of approximately $1,501,000 for the three months ended March 31, 2019, a decrease in income of approximately $132,000 (8.8 %).

LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s principal source of cash during the first three months of 2020 was the collection of rents and the proceeds from the refinancing of Brookside Apartments. The Partnership’s principal source of cash in 2019 was the collection of rents. The majority of cash and cash equivalents of $11,246,765 at March 31, 2020 and $7,546,324 at December 31, 2019 were held in interest bearing accounts at creditworthy financial institutions.

The increase in cash of $3,700,441 for the three months ended March 31, 2020 is summarized as follows:

|  | Three Months Ended March 31, |
|  | 2020 |  | 2019 |
Cash provided by operating activities |  | $ | 4,232,303 |  | $ | 5,032,535 |
Cash provided by (used in) investing activities |  |  | (1,047,185) |  |  | 138,156 |
Cash (used in) provided by financing activities |  |  | 2,074,443 |  |  | (2,472,621) |
Repurchase of Depositary Receipts, Class B and General Partner Units |  |  | (389,947) |  |  | (2,930,736) |
Distributions paid |  |  | (1,169,173) |  |  | (1,177,353) |
Net increase (decrease) in cash and cash equivalents |  | $ | 3,700,441 |  | $ | (1,410,019) |

The change in cash provided by operating activities is due to various factors, including a change in depreciation expense due to recent acquisitions, a change in income and distribution from joint ventures, and other factors. The decrease in cash provided by investing activities is primarily due to improvements to rental properties. The change in cash used in financing activities is primarily due to the refinancing of the mortgage at Brookside Apartments, partially offset by paydown of mortgages, and the pay down of the line of credit originally used for the purchase of Mill Street.

During 2020, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $1,047,000. These improvements were funded from cash reserves. Cash reserves have been adequate to fully fund improvements. The most significant improvements were made at 62 Boylston Street, Captain Parker, Hamilton Oaks, Redwood Hills, Hamilton Green, and Hamilton Highland at a cost of approximately $275,000, $196,000, $192,000, $77,000, $54,000 and $48,000 respectively.

On March 31, 2020, Nera Brookside Associates, LLC (“Brookside Apartments”), entered into a Mortgage Note with KeyBank National Associates ( KeyBank) in the principal amount of $6,175,000. Interest only payments on the Note are payable on a monthly basis at a fixed interest rate of 3.53% per annum, and the principal amount of the Note is due and payable on March 31, 2035. The Note is secured by a mortgage on the Brookside apartment complex located at 5-12 Totman Drive, Woburn, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated March 31, 2020. The Note is guaranteed by the Partnership pursuant to a Guaranty Agreement dated March 31, 2020. Brookside Apartments used the proceeds of the loan to pay off an outstanding loan of approximately $2,390,000, with the remaining portion of the proceeds added to cash reserves. In connection with this refinancing, there were closing costs of approximately $132,000.

On December 20, 2019, Mill Street Gardens, LLC and Mill Street Development, LLC, collectively referred to as Mill Street, wholly-owned subsidiaries of New England Realty Associates Limited Partnership closed on a Purchase

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Agreement dated as of September 27, 2019 with Ninety-Three Realty Limited Partnership pursuant to which Mill Street acquired Country Club Garden Apartments, a 181 unit apartment complex located at 57 Mill Street, Woburn, Massachusetts for an aggregate purchase price of $59,550,000 . Mill Street funded $18,000,000 of the purchase price out of an existing line of credit, $10,550,000 of the cash portion of the purchase price out of cash reserves and the remaining $31,000,000 from the proceeds of the Loan. The closing costs were approximately $237,000. From the purchase price, the Partnership allocated approximately $1,282,000 for in- place leases, and approximately $136,000 to the value of tenant relationships. These amounts are being amortized over 12 and 36 months respectively.

On December 20, 2019, Mill Street Gardens entered into a Loan Agreement with Insurance Strategy Funding Corp. LLC providing for a loan (the “Loan”) in the maximum principal amount of $35,000,000, consisting of an initial advance of $31,000,000 and a subsequent advance of up to $4,000,000 if certain conditions are met. Interest on the Note is payable on a monthly basis at a fixed interest rate of: (i) 3.586% per annum with respect to the initial advance and (ii) the greater of (A) the sum of the market spread rate and the interpolated (based on the remaining term of the Loan) US Treasury rate at the time of the advance and (B) 3.500% with respect to any subsequent advance. The principal amount of the Note is due and payable on January 1, 2035. The Note is secured by a mortgage on the Property and is guaranteed by the Partnership pursuant to a Guaranty Agreement dated December 20, 2019.

On May 31, 2019, Residences at Captain Parker, LLC (“Captain Parker”), entered into a Mortgage Note with Strategy Funding Corp., LLC in the principal amount of $20,750,000. Interest only payments on the Note is payable on a monthly basis at a fixed interest rate of 4.05% per annum, and the principal amount of the Note is due and payable on June 1, 2029. The Note is secured by a mortgage on the Captain Parker apartment complex located at 125 Worthen Road and Ryder Lane, Lexington, Massachusetts pursuant to a Mortgage, Assignment of Leases and Rents and Security Agreement dated May 31, 2019. The Note is guaranteed by the Partnership pursuant to a Guaranty Agreement dated May 31, 2019. Captain Parker used the proceeds of the loan to pay off an outstanding loan of approximately $20,071,000. In connection with this refinancing, the property incurred a prepayment penalty of approximately $202,000.

During the three months ended March 31, 2020 the Partnership did not receive distributions from the investment properties. For the three months ended, March 31, 2019, the Partnership received distributions of approximately $1,240,000 from the investment properties. Included in these net distributions is the amount from Dexter Park of approximately $0 and $620,000 for the three months ended March 31, 2020 and 2019, respectively. In January 2020, the Partnership approved a quarterly distribution of $9.60 per Unit ($0.32 per Receipt), which was paid on March 31, 2020.

On July 31, 2014, the Partnership entered into an agreement for a $25,000,000 revolving line of credit. The term of the line was for three years with a floating interest rate equal to a base rate of the greater of (a) the Prime Rate (b) the Federal Funds Rate plus one-half of one percent per annum, or (c) the LIBOR Rate for a period of one month plus 1% per annum, plus the applicable margin of 2.5%. The agreement originally expired on July 31, 2017, and was extended until October 31, 2020. The costs associated with the line of credit extension were approximately $128,000.

On December 19, 2019, the Partnership drew down on the line of credit in the amount of $20,000,000, used in conjunction with the purchase of Mill Street Apartments. On December 20, 2019, the Partnership paid down $2,000,000. On January 22, 2020, the Partnership paid down the line by $1,000,000. As of March 31, 2020, the line of credit had an outstanding balance of $17,000,000.

The Partnership anticipates that cash from operations and interest bearing accounts will be sufficient to fund its current operations, pay distributions, make required debt payments and finance current improvements to its properties. The Partnership may also sell or refinance properties. The Partnership’s net income and cash flow may fluctuate dramatically from year to year as a result of the sale or refinancing of properties, increases or decreases in rental income or expenses, or the loss of significant tenants.

Off-Balance Sheet Arrangements—Joint Venture Indebtedness

As of March 31, 2020 the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five of which have mortgage indebtedness. We do not have control of these partnerships and therefore we account for them using the equity method of consolidation. At March 31, 2020, our proportionate share of the non-recourse debt related to these investments was approximately $71,102,000. See Note 14 to the Consolidated Financial Statements.

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Contractual Obligations

As of March 31, 2020, we are subject to contractual payment obligations as described in the table below.

|  |  |  |  |  | Payments due by period |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | Thereafter |  | Total
Contractual Obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long -term debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage debt |  | $ | 2,302,965 |  | $ | 2,514,411 |  | $ | 67,011,788 |  | $ | 38,288,845 |  | $ | 10,997,192 |  | $ | 165,311,402 |  | $ | 286,426,603
Other obligations |  |  | 17,000,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 17,000,000
Total Contractual Obligations |  | $ | 19,302,965 |  | $ | 2,514,411 |  | $ | 67,011,788 |  | $ | 38,288,845 |  | $ | 10,997,192 |  | $ | 165,311,402 |  | $ | 303,426,603

* Excluding unamortized deferred financing costs

We have various standing or renewable service contracts with vendors related to our property management. In addition, we have certain other contracts we enter into in the ordinary course of business that may extend beyond one year. These contracts are not included as part of our contractual obligations because they include terms that provide for cancellation with insignificant or no cancellation penalties.

See Notes 5 and 14 to the Consolidated Financial Statements for a description of mortgage notes payable. The Partnerships has no other material contractual obligations to be disclosed.

Factors That May Affect Future Results

Along with risks detailed in Item 1A and from time to time in the Partnership’s filings with the Securities and Exchange Commission, some factors that could cause the Partnership’s actual results, performance or achievements to differ materially from those expressed or implied by forward looking statements include but are not limited to the following:

| · |  | The Partnership depends on the real estate markets where its properties are located, primarily in Eastern Massachusetts, and these markets may be adversely affected by local economic market conditions, which are beyond the Partnership’s control.

| · |  | The Partnership is subject to the general economic risks affecting the real estate industry, such as dependence on tenants’ financial condition, the need to enter into new leases or renew leases on terms favorable to tenants in order to generate rental revenues and our ability to collect rents from our tenants.

| · |  | The Partnership is also impacted by changing economic conditions making alternative housing arrangements more or less attractive to the Partnership’s tenants, such as the interest rates on single family home mortgages and the availability and purchase price of single family homes in the Greater Boston metropolitan area.

| · |  | The Partnership is subject to significant expenditures associated with each investment, such as debt service payments, real estate taxes, insurance and maintenance costs, which are generally not reduced when circumstances cause a reduction in revenues from a property.

| · |  | The Partnership is subject to increases in heating and utility costs that may arise as a result of economic and market conditions and fluctuations in seasonal weather conditions.

| · |  | Civil disturbances, earthquakes and other natural disasters may result in uninsured or underinsured losses.

| · |  | Actual or threatened terrorist attacks may adversely affect our ability to generate revenues and the value of our properties.

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| · |  | Financing or refinancing of Partnership properties may not be available to the extent necessary or desirable, or may not be available on favorable terms.

| · |  | The Partnership properties face competition from similar properties in the same market. This competition may affect the Partnership’s ability to attract and retain tenants and may reduce the rents that can be charged.

| · |  | Given the nature of the real estate business, the Partnership is subject to potential environmental liabilities. These include environmental contamination in the soil at the Partnership’s or neighboring real estate, whether caused by the Partnership, previous owners of the subject property or neighbors of the subject property, and the presence of hazardous materials in the Partnership’s buildings, such as asbestos, lead, mold and radon gas. Management is not aware of any material environmental liabilities at this time.

| · |  | Insurance coverage for and relating to commercial properties is increasingly costly and difficult to obtain. In addition, insurance carriers have excluded certain specific items from standard insurance policies, which have resulted in increased risk exposure for the Partnership. These include insurance coverage for acts of terrorism and war, and coverage for mold and other environmental conditions. Coverage for these items is either unavailable or prohibitively expensive.

| · |  | Market interest rates could adversely affect market prices for Class A Partnership Units and Depositary Receipts as well as performance and cash flow.

| · |  | Changes in income tax laws and regulations may affect the income taxable to owners of the Partnership. These changes may affect the after-tax value of future distributions.

| · |  | The Partnership may fail to identify, acquire, construct or develop additional properties; may develop or acquire properties that do not produce a desired or expected yield on invested capital; may be unable to sell poorly- performing or otherwise undesirable properties quickly; or may fail to effectively integrate acquisitions of properties or portfolios of properties.

| · |  | Risk associated with the use of debt to fund acquisitions and developments.

| · |  | Competition for acquisitions may result in increased prices for properties.

| · |  | Any weakness identified in the Partnership’s internal controls as part of the evaluation being undertaken could have an adverse effect on the Partnership’s business.

| · |  | Ongoing compliance with Sarbanes-Oxley Act of 2002 may require additional personnel or systems changes.

The foregoing factors should not be construed as exhaustive or as an admission regarding the adequacy of disclosures made by the Partnership prior to the date hereof or the effectiveness of said Act. The Partnership expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to loss resulting from changes in interest rates and equity prices. In pursuing its business plan, the primary market risk to which the Partnership is exposed is interest rate risk. Changes in the general level of interest rates prevailing in the financial markets may affect the spread between the Partnership’s yield on invested assets and cost of funds and, in turn, its ability to make distributions or payments to its investors.

As of March 31, 2020, the Partnership, its Subsidiary Partnerships and the Investment Properties collectively have approximately $453,631,000 in long-term debt, substantially all of which require payment of interest at fixed rates. Accordingly, the fair value of these debt instruments is affected by changes in market interest rates. This long term debt matures through 2035. The Partnership, its Subsidiary Partnerships and the Investment Properties collectively have

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variable rate debt of $27,000,000 (without taking out unamortized deferred financing costs) as of March 31, 2020. Interest rates ranged from LIBOR plus 195 basis points to LIBOR plus 350 basis points. Assuming interest-rate caps are not in effect, if market rates of interest on the Partnership’s variable rate debt increased or decreased by 100 basis points, then the increase or decrease in interest costs on the Partnership’s variable rate debt would be approximately $220,000 annually and the increase or decrease in the fair value of the Partnership’s fixed rate debt as of March 31, 2020 would be approximately $15 million. For information regarding the fair value and maturity dates of these debt obligations, See Note 5 to the Consolidated Financial Statements — “Mortgage Notes Payable,” Note 12 to the Consolidated Financial Statements — “Fair Value Measurements” and Note 14 to the Consolidated Financial Statements — “Investment in Unconsolidated Joint Ventures.”

For additional disclosure about market risk, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors That May Affect Future Results”.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. The Partnership’s management, with the participation of the Partnership’s principal executive officer and principal financial officer, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Partnership’s principal executive officer and principal financial officer have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the first quarter of 2020 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There are no material legal proceedings, other than ordinary routine litigation incidental to its business, to which the Partnership is a party to or to which any of the Properties is subject.

Item 1A. Risk Factors

There have been a material changes to the risk factors disclosed in Part 1, Item 1A, of our annual report on Form 10K for the fiscal year ended December 31, 2019. The additional risk factor is as follows:

The COVID-19 pandemic has caused severe disruptions in the United States and global economies and we expect it will continue to adversely affect our financial condition, results of operations, cash flows, liquidity and performance and that of our tenants.

Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.

The global impact of the COVID-19 pandemic is continually evolving and public health officials and governmental authorities, including those in Massachusetts and New Hampshire, the markets in which we operate, have reacted by taking measures such as prohibiting people from congregating in heavily populated areas, instituting quarantines, restricting travel, issuing “stay-at-home” orders, restricting the types of businesses that may continue to operate (including the types of construction projects that may proceed) and closing schools, among many others. Most of these restrictions began in earnest in March 2020 and they quickly had a material adverse impact on economic and market conditions around the world, including the United States and the markets in which our properties are located, and on us. It is possible that public health officials and governmental authorities in the markets in which we operate may impose additional restrictions in an effort to slow the spread of COVID-19 or may relax or revoke existing restrictions too quickly, which could, in either case, exacerbate the severity of these adverse impacts on the economy. There is great uncertainty regarding the duration and breadth of the COVID-19 pandemic, as well as possible future responses, which makes it impossible for us to predict with certainty the impact that COVID-19 will have on us and our tenants at this time. Factors related to COVID-19 that have had, or could have, a material adverse effect on our results of operations and financial condition, include:

| · |  | a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action, which could adversely affect our operations and those of our tenants;

| · |  | reduced economic activity impacting the businesses, financial condition and liquidity of our tenants has caused, and is expected to continue to cause, one or more of our tenants to be unable to meet their obligations to us, including their ability to make rental payments, in full or at all, or to otherwise seek modifications of such obligations, including rent concessions, deferrals or abatements, or to declare bankruptcy;

| · |  | the impact of new or continued complete or partial shutdowns of the operations of one or more of our commercial tenants’ businesses, including retail tenants, and parking operators, temporary or long-term disruptions in our commercial tenants’ supply chains from local, national and international suppliers or delays in the delivery of products, services or other materials necessary for our commercial tenants’ operations, could force these tenants to reduce, delay or eliminate offerings of their products and services, which could result in less revenue, income and cash flow, and possibly their bankruptcy or insolvency, which in turn could:

| o |  | reduce our cash flows,

| o |  | adversely impact our ability to finance, refinance or sell a property,

| o |  | adversely impact our ability to continue paying dividends to our stockholders at current levels, or at all, and

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| o |  | result in additional legal and other costs to enforce our rights, collect rent and/or re-lease the space occupied by the distressed tenant;

| · |  | the duration and scope of the mandatory business closures and “stay-at-home” orders have had, and are expected to continue to have, a severe negative impact on our commercial retail tenants that depend on in-person interactions with their customers to generate revenues and have resulted, and are expected to continue to result, in most retail tenants being unable to make timely rental payments in full or at all;

| · |  | the extent to which COVID-19 decreases customers’ willingness to frequent, or prevents customers from frequenting, our tenants’ businesses in the future, may result in our retail tenants’ continued inability to make timely rental payments to us under their leases;

| · |  | some of our residential and commercial tenants have approached us seeking either rent concessions, deferrals or abatements, and the extent to which we grant these requests or instead seek to enforce our legal remedies could have a material adverse effect on our results of operations, liquidity and cash flows;

| · |  | the degree to which our commercial tenants’ businesses have been and continue to be negatively impacted may require us to write-off a tenant’s accrued rent balance and this could have a material adverse effect on our results of operations and liquidity;

| · |  | if new or existing actions or measures implemented to prevent the spread of COVID-19 continue to result in increasing unemployment, it may negatively affect the ability of our residential tenants to generate sufficient income to pay, or make them unwilling to pay rent, in full or at all, in a timely manner;

| · |  | the impact of COVID-19 could result in an event or change in circumstances that results in an impairment in the value of our properties or our investments in unconsolidated joint ventures, and any such impairment could have a material adverse effect on our results of operations in the periods in which the charge is taken;

| o |  | we may be unable to restructure or amend leases with certain of our tenants on terms favorable to us or at all;

| · |  | the impact and validity of interpretations of lease provisions and related claims by tenants regarding their obligations to pay rent as a result of COVID-19, and any court rulings or decisions interpreting these provisions, could have a material adverse effect on our results of operations and liquidity;

| · |  | restrictions intended to prevent the spread of COVID-19 have limited, and are expected to continue to limit, our leasing activities, such as property tours, and may have a material adverse effect on our ability to renew leases, lease vacant space or re-lease available space as leases expire in our properties on favorable terms, or at all;

| · |  | COVID -19 has caused a material decline in general business activity and demand for real estate transactions, and if this persists, it would adversely affect our ability or desire to make strategic acquisitions or dispositions;

| · |  | the impact of recent and future efforts by state, local, federal and industry groups to enact laws and regulations have restricted, and may further restrict, the ability of landlords, such as us, to collect rent, enforce remedies for the failure to pay rent, or otherwise enforce the terms of the lease agreements, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions;

| · |  | we may be unable to access debt and equity capital on attractive terms, or at all, and a further disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our tenants’ and our access to capital and other sources of funding necessary to fund our respective operations or address maturing liabilities on a timely basis;

| · |  | the financial effects of the COVID-19 pandemic on our future financial results, cash flows and financial condition could adversely impact our compliance with the financial covenants of our credit facility and

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other debt agreements and could result in an event of default and the acceleration of indebtedness, which could negatively impact our financial condition, results of operations and our ability to make additional borrowings and pay dividends;

| · |  | increased vulnerability to cyber-security threats and potential breaches, including phishing attacks, malware and impersonation tactics, resulting from the increase in numbers of individuals working from home;

| · |  | the potential that business interruption, loss of rental income and/or other associated expenses related to our operations will not be covered in whole or in part by our insurance policies, which may increase unreimbursed liabilities;

| · |  | if the health of our employees, particularly our key personnel and property management teams, are negatively impacted, we may be unable to ensure business continuity and be exposed to lawsuits from tenants;

| · |  | if we choose not to pay dividends, our holders of depositary receipts may have to pay income taxes on the Partnership’s income without receiving a corresponding amount of cash;

| · |  | uncertainly as to what conditions must be satisfied before government authorities lift “stay-at-home” orders and public health officials begin the process of gradually returning Americans to work and whether government authorities will impose (or suggest) requirements on landlords, such as us, to protect the health and safety of tenants and visitors to our buildings could result in increased operating costs and demands on our property management teams to ensure compliance with any such requirements, as well as increased costs associated with protecting against potential liability arising from these measures, such as claims by tenants that the measures violate their leases and claims by visitors that the measures caused them damages; and

| · |  | limited access to our facilities, management, tenants, support staff and professional advisors could decrease the effectiveness of our disclosure controls and procedures, internal controls over financial reporting and other risk mitigation strategies, increase our susceptibility to security breaches, hamper our ability to comply with regulatory obligations and prevent us from conducting our business as efficiently and effectively as we otherwise would have.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)None

(b)None

(c)Issuer Purchase of Equity Securities during the first quarter of 2020:

|  |  |  |  |  |  | Remaining number of Depositary |
|  |  |  |  | Depositary Receipts |  | Receipts that may be purchased |
Period |  | Average Price Paid |  | Purchased as Part of Publicly Announced Plan |  | Under the Plan (as Amended) |
January 1-31, 2020 |  | $ | 63.37 |  | 1,817 |  | 575,074 |
February 1-28, 2020 |  | $ | 61.33 |  | 716 |  | 574,358 |
March 1-31, 2020 |  | $ | 56.20 |  | 2,719 |  | 571,639 |
Total |  |  |  |  | 5,252 |  |  |

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”) under which the Partnership was permitted to purchase, over a period of twelve months, up to 300,000 Depositary Receipts (each of which is one-tenth of a Class A Unit). Over time, the General Partner has authorized increases in the equity repurchase program. On March 10, 2015, the General Partner authorized an increase in the Repurchase Program from 1,500,000 to 2,000,000 Depository Receipts and extended the Program for an additional five years from March 31, 2015 until March 31, 2020. On March 9, 2020, the General Partner extended the program for an

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additional five years from March 31, 2020 to March 31, 2025.The Repurchase Program requires the Partnership to repurchase a proportionate number of Class B Units and General Partner Units in connection with any repurchases of any Depositary Receipts by the Partnership based upon the 80%, 19% and 1% fixed distribution percentages of the holders of the Class A, Class B and General Partner Units under the Partnership’s Second Amended and Restated Contract of Limited Partnership. Repurchases of Depositary Receipts or Partnership Units pursuant to the Repurchase Program may be made by the Partnership from time to time in its sole discretion in open market transactions or in privately negotiated transactions. From August 20, 2007 through March 31, 2020, the Partnership has repurchased 1,428,361 Depositary Receipts at an average price of $28.42 per receipt (or $852.60 per underlying Class A Unit), 3,571 Class B Units and 188 General Partnership Units, both at an average price of $1,032.98 per Unit, totaling approximately $44,714,000 including brokerage fees paid by the Partnership.

During the three months ended March 31, 2020, the Partnership purchased a total of 5,252 Depositary Receipts. The average price was $59.38 per receipt or $1,781.40 per unit. The total cost including commission was $311,951. The Partnership was required to repurchase 41.6 Class B Units and 2.2 General Partnership units at a cost of $74,063 and $3,898 respectively. Given the economic uncertainty caused by the coronavirus issue, as of April 15, 2020, the Partnership has elected to temporarily suspend the repurchase program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

See the exhibit index below.

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EXHIBIT INDEX

Exhibit No. |  | Description of Exhibit
(31.1) |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald Brown, Principal Executive Officer of the Partnership (President and a Director of NewReal, Inc., sole General Partner of the Partnership).
(31.2) |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Jameson Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership).
(32.1) |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Ronald Brown, Principal Executive Officer of the Partnership (President and a Director of NewReal, Inc., sole General Partner of the Partnership) and Jameson Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership).
(101.1) |  | The following financial statements from New England Realty Associates Limited Partnership Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL: (i) Consolidated Balance Sheets, (unaudited) (ii) Consolidated Statements of Income, (unaudited) (iii) Consolidated Statements of Changes in Partners’ Capital, (unaudited) (iv) Consolidated Statements of Cash Flows, (unaudited) and (v) Notes to Consolidated Financial Statements, (unaudited).

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP
| By: | /s/ NEWREAL, INC.
|  | Its General Partner
| By: | /s/ RONALD BROWN
|  | Ronald Brown, President
| Dated: May 8, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature |  | Title |  | Date
/s/ RONALD BROWN |  | President and Director of the General Partner |  | May 8, 2020
Ronald Brown |  | (Principal Executive Officer) |  |
/s/ JAMESON BROWN |  | Treasurer and Director of the General Partner |  | May 8, 2020
Jameson Brown |  | (Principal Financial Officer and Principal Accounting Officer) |  |
/s/ GUILLIAEM AERTSEN |  | Director of the General Partner |  | May 8, 2020
Guilliaem Aertsen |  |  |  |
/s/ DAVID ALOISE |  | Director of the General Partner |  | May 8, 2020
David Aloise |  |  |  |
/s/ ANDREW BLOCH |  | Director of the General Partner |  | May 8, 2020
Andrew Bloch |  |  |  |
/s/ EUNICE HARPS |  | Director of the General Partner |  | May 8, 2020
Eunice Harps |  |  |  |
/s/ SALLY MICHAEL |  | Director of the General Partner |  | May 8, 2020
Sally Michael |  |  |  |
/s/ ROBERT SOMMA |  | Director of the General Partner |  | May 8, 2020
Robert Somma |  |  |  |

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