XML 29 R20.htm IDEA: XBRL DOCUMENT

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

9 Months Ended

Sep. 30, 2022

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

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. The Brown Family’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 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 September 30, 2022, 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 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 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 September 30, 2022, the balance on this mortgage before unamortized deferred financing costs is $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. In 2019, all residential units were sold. The Partnership still owns the commercial building. This investment is referred to as Hamilton 1025, LLC.

In September 2004, the Partnership invested approximately $5,075,000 for a 50% ownership interest in a 42-unit apartment complex located in Lexington, Massachusetts. The purchase price was $10,100,000. 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. 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. At September 30, 2022, the balance on this mortgage before unamortized deferred financing costs is $6,000,000. This investment is referred to as Hamilton Minuteman, LLC.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280-unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. 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 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. 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. At September 30, 2022, the balance of the mortgage before unamortized deferred finance is $16,900,000. The investment is referred to as Hamilton on Main LLC.

In November 2001, the Partnership invested approximately $1,533,000 for a 50% ownership interest in a 40-unit apartment building in Cambridge, Massachusetts. In June 2013, the property was refinanced with a 15 year mortgage in the amount of $10,000,000 at 3.87%, interest only for 3 years and is amortized on a 30-year schedule for the balance of the term. The Joint Venture paid off the prior mortgage of approximately $6,776,000 with the proceeds of the new mortgage. After the refinancing, the Joint Venture made a distribution of $1,610,000 to the Partnership. As a result of the distribution, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting. Although the Partnership has no legal obligation, the Partnership intends to fund its share of any future operating deficits if needed. At September 30, 2022, the balance of this mortgage before unamortized deferred financing costs is approximately $8,770,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information at September 30, 2022


				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	5,935,095		$	2,586,302		$	4,852,841		$	79,107		$	4,551,023		$	13,688,356		$	76,657,705		$	108,350,429
Cash & Cash Equivalents		883,219			88,190			265,808			9,882			175,451			910,242			2,220,183			4,552,975
Rent Receivable		198,014			77,561			1,240			4,906			5,299			18,832			44,830			350,682
Real Estate Tax Escrow		74,625			—			69,748			—			32,497			105,494			—			282,364
Prepaid Expenses & Other Assets		321,917			56,261			117,224			757			28,665			224,845			2,298,375			3,048,044
Total Assets	$	7,412,870		$	2,808,314		$	5,306,861		$	94,652		$	4,792,935		$	14,947,769		$	81,221,093		$	116,584,494
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,958,633		$	—		$	8,731,598		$	—		$	5,926,689		$	16,869,235		$	124,633,803		$	166,119,958
Accounts Payable & Accrued Expense		120,784			2,250			92,492			2,553			59,237			163,200			756,960			1,197,476
Advance Rental Pmts & Security Deposits		332,572			19,865			280,818			—			161,741			430,923			2,837,995			4,063,914
Total Liabilities		10,411,989			22,115			9,104,908			2,553			6,147,667			17,463,358			128,228,758			171,381,348
Partners’ Capital		(2,999,119)			2,786,199			(3,798,047)			92,099			(1,354,732)			(2,515,589)			(47,007,665)			(54,796,854)
Total Liabilities and Capital	$	7,412,870		$	2,808,314		$	5,306,861		$	94,652		$	4,792,935		$	14,947,769		$	81,221,093		$	116,584,494
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,393,100		$	—		$	46,050		$	—		$	—		$	—			1,439,150
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,499,560)		$	—		$	(1,899,023)		$	—		$	(677,366)		$	(1,257,794)		$	(18,803,066)			(24,136,809)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(22,697,659)
Total units/condominiums
Apartments		48			—			40			175			42			148			409			687
Commercial		1			1			—			1			—			—			—			3
Total		49			1			40			176			42			148			409			690
Units to be retained		49			1			40			1			42			148			409			690
Units to be sold		—			—			—			—			—			—			—			—
Units sold through November 1, 2022		—			—			—			175			—			—			—			175
Unsold units		—			—			—			—			—			—			—			—

Financial information for the nine months ended September 30, 2022


			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	1,194,570	$	235,842	$	1,107,677	$	77,935	$	899,186	$	2,725,431	$	11,014,528	$	17,255,169
Laundry and Sundry Income		9,839		—		120		—		472		25,402		73,452		109,285
		1,204,409		235,842		1,107,797		77,935		899,658		2,750,833		11,087,980		17,364,454
Expenses
Administrative		14,512		5,798		26,052		2,142		9,297		52,028		163,891		273,720
Depreciation and Amortization		358,568		8,782		259,967		2,448		253,369		808,116		2,813,436		4,504,686
Management Fees		58,716		9,879		43,719		3,166		35,967		108,615		230,937		490,999
Operating		169,086		—		54,901		1,219		95,538		282,757		853,728		1,457,229
Renting		23,823		—		27,857		—		8,988		39,844		85,229		185,741
Repairs and Maintenance		132,026		3,180		125,323		—		82,989		494,223		1,393,350		2,231,091
Taxes and Insurance		199,415		47,074		131,736		13,567		114,224		387,242		1,862,717		2,755,975
		956,146		74,713		669,555		22,542		600,372		2,172,825		7,403,288		11,899,441
Income Before Other Income		248,263		161,129		438,242		55,393		299,286		578,008		3,684,692		5,465,013
Other Income (Loss)
Interest Expense		(257,574)		—		(263,093)		—		(177,129)		(568,251)		(3,817,865)		(5,083,912)
		(257,574)		—		(263,093)		—		(177,129)		(568,251)		(3,817,865)		(5,083,912)
Net (Loss) Income	$	(9,311)	$	161,129	$	175,149	$	55,393	$	122,157	$	9,757	$	(133,173)	$	381,101
Net (Loss) Income —NERA 50%	$	(4,656)	$	80,565	$	87,575	$	27,697	$	61,078	$	4,879				257,136
Net Income —NERA 40%													$	(53,269)		(53,269)
															$	203,867

Financial information for the three months ended September 30, 2022


			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	433,819	$	60,471	$	392,851	$	27,813	$	300,345	$	919,313	$	3,894,398	$	6,029,010
Laundry and Sundry Income		4,445		—		—		—		—		8,252		23,860		36,557
		438,264		60,471		392,851		27,813		300,345		927,565		3,918,258		6,065,567
Expenses
Administrative		5,640		4,250		6,060		793		3,542		16,448		54,159		90,892
Depreciation and Amortization		119,789		2,927		86,776		816		84,966		270,802		947,553		1,513,629
Management Fees		21,620		2,353		15,610		1,112		12,438		36,098		78,267		167,498
Operating		49,866		—		18,186		54		20,336		90,931		271,977		451,350
Renting		9,759		—		10,650		—		1,974		14,264		12,555		49,202
Repairs and Maintenance		62,158		—		41,565		—		37,999		188,269		595,679		925,670
Taxes and Insurance		66,313		15,566		44,269		4,448		38,546		125,879		642,107		937,128
		335,145		25,096		223,116		7,223		199,801		742,691		2,602,297		4,135,369
Income Before Other Income		103,119		35,375		169,735		20,590		100,544		184,874		1,315,961		1,930,198
Other Income (Loss)
Interest Expense		(116,185)		—		(86,694)		—		(59,000)		(191,453)		(1,283,295)		(1,736,627)
		(116,185)		—		(86,694)		—		(59,000)		(191,453)		(1,283,295)		(1,736,627)
Net Income (Loss)	$	(13,066)	$	35,375	$	83,041	$	20,590	$	41,544	$	(6,579)	$	32,666	$	193,571
Net Income (Loss)—NERA 50%	$	(6,534)	$	17,688	$	41,520	$	10,295	$	20,771	$	(3,289)				80,451
Net Income —NERA 40%													$	13,065		13,065
															$	93,516

Future annual mortgage maturities at September 30, 2022 are as follows:


	Hamilton		345		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		Minuteman		Main Apts		Park		Total
9/30/2023	$	—	$	228,573	$	—	$	—	$	—	$	228,573
9/30/2024		—		237,577		—		16,900,000		—		17,137,577
9/30/2025		10,000,000		246,936		—		—		—		10,246,936
9/30/2026		—		256,664		—		—		—		256,664
9/30/2027		—		266,775		—		—		—		266,775
Thereafter		—		7,533,358		6,000,000		—		125,000,000		138,533,358
		10,000,000		8,769,883		6,000,000		16,900,000		125,000,000		166,669,883
Less: unamortized deferred financing costs		(41,367)		(38,286)		(73,311)		(30,765)		(366,196)		(549,925)
	$	9,958,633	$	8,731,597	$	5,926,689	$	16,869,235	$	124,633,804	$	166,119,958

At September 30, 2022 the weighted average interest rate on the above mortgages was 4.05%. The effective rate was 4.12% including the amortization expense of deferred financing costs.

Summary financial information at September 30, 2021


				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	6,376,891		$	2,588,792		$	5,139,866		$	82,371		$	4,766,334		$	14,522,033		$	79,175,187		$	112,651,474
Cash & Cash Equivalents		230,394			73,049			154,633			9,776			231,357			602,344			2,135,096			3,436,649
Rent Receivable		65,313			13,744			23,113			7,081			7,285			38,832			236,721			392,089
Real Estate Tax Escrow		77,685			—			62,506			—			40,025			117,318			—			297,534
Prepaid Expenses & Other Assets		311,513			67,410			123,115			685			30,592			195,099			1,956,585			2,684,999
Total Assets	$	7,061,796		$	2,742,995		$	5,503,233		$	99,913		$	5,075,593		$	15,475,626		$	83,503,589		$	119,462,745
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,944,844		$	—		$	8,944,849		$	—		$	5,918,506		$	16,853,184		$	124,569,180		$	166,230,563
Accounts Payable & Accrued Expense		82,137			2,250			99,583			2,711			67,629			169,515			804,862			1,228,687
Advance Rental Pmts& Security Deposits		189,746			—			247,951			—			154,400			474,463			2,427,394			3,493,954
Total Liabilities		10,216,727			2,250			9,292,383			2,711			6,140,535			17,497,162			127,801,436			170,953,204
Partners’ Capital		(3,154,931)			2,740,745			(3,789,150)			97,202			(1,064,942)			(2,021,536)			(44,297,847)			(51,490,459)
Total Liabilities and Capital	$	7,061,796		$	2,742,995		$	5,503,233		$	99,913			5,075,593		$	15,475,626		$	83,503,589		$	119,462,745
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,370,373		$	—		$	48,601		$			$			$			$	1,418,974
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,577,467)		$	—		$	(1,894,576)		$	—		$	(532,472)		$	(1,010,769)		$	(17,719,140)			(22,734,423)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(21,315,449)
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			1			42			148			409			690
Units sold through November 1, 2021		—			—			—			175			—			—			—			175
Unsold units		—			—			—			—			—			—			—			—

Financial information for the nine months ended September 30, 2021


			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	856,569	$	168,431	$	1,019,465	$	75,148	$	865,196	$	2,491,414	$	9,513,069	$	14,989,292
Laundry and Sundry Income		9,194		—		112		—		4,548		27,837		73,067		114,758
		865,763		168,431		1,019,577		75,148		869,744		2,519,251		9,586,136		15,104,050
Expenses
Administrative		70,445		2,103		22,651		2,140		11,485		49,372		160,336		318,532
Depreciation and Amortization		358,788		15,223		257,314		2,448		253,180		813,435		2,795,700		4,496,088
Management Fees		29,181		6,187		40,288		2,843		34,592		97,262		202,975		413,328
Operating		129,400		—		42,137		231		78,038		315,638		761,854		1,327,298
Renting		81,149		—		46,108		—		1,095		71,772		415,221		615,345
Repairs and Maintenance		123,467		520		100,182		—		86,566		446,677		1,506,426		2,263,838
Taxes and Insurance		195,974		45,037		131,574		14,535		107,198		336,333		1,812,549		2,643,200
		988,404		69,070		640,254		22,197		572,154		2,130,489		7,655,061		12,077,629
Income Before Other Income		(122,641)		99,361		379,323		52,951		297,590		388,762		1,931,075		3,026,421
Other Income (Loss)
Interest Expense		(184,542)		—		(269,993)		—		(177,757)		(568,246)		(3,792,615)		(4,993,153)
Other (Loss)
Other Income		—		—		—				—		—		1,222		1,222
		(184,542)		—		(269,993)		—		(177,757)		(568,246)		(3,791,393)		(4,991,931)
Net Income (Loss)	$	(307,183)	$	99,361	$	109,330	$	52,951	$	119,833	$	(179,484)	$	(1,860,318)	$	(1,965,510)
Net Income (Loss)—NERA 50%	$	(153,593)	$	49,681	$	54,665	$	26,476	$	59,917	$	(89,742)				(52,597)
Net Income —NERA 40%													$	(744,128)		(744,128)
															$	(796,725)

Financial information for the three months ended September 30, 2021


			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	414,497	$	111,191	$	343,674	$	26,410	$	293,988	$	827,140	$	3,300,261	$	5,317,161
Laundry and Sundry Income		2,986		—		—		—		1,243		9,796		23,706		37,731
		417,483		111,191		343,674		26,410		295,231		836,936		3,323,967		5,354,892
Expenses
Administrative		16,576		750		7,129		651		3,824		14,592		65,606		109,128
Depreciation and Amortization		120,266		5,074		86,449		816		84,827		272,874		938,058		1,508,364
Management Fees		17,335		6,187		13,943		1,272		11,716		32,831		73,512		156,796
Operating		60,232		—		16,060		55		23,542		101,948		260,794		462,631
Renting		26,272		—		12,174		—		375		20,213		222,664		281,698
Repairs and Maintenance		41,335		—		35,687		—		30,184		177,652		599,156		884,014
Taxes and Insurance		64,799		15,228		44,194		4,634		36,986		115,028		614,622		895,491
		346,815		27,239		215,636		7,428		191,454		735,138		2,774,412		4,298,122
Income Before Other Income		70,668		83,952		128,038		18,982		103,777		101,798		549,555		1,056,770
Other Income (Loss)
Interest Expense		(61,827)		—		(89,248)		—		(59,880)		(191,453)		(1,263,383)		(1,665,791)
Other Income		—		—		—		—		—		—				—
		(61,827)		—		(89,248)		—		(59,880)		(191,453)		(1,263,383)		(1,665,791)
Net Income (Loss)	$	8,841	$	83,952	$	38,790	$	18,982	$	43,897	$	(89,655)	$	(713,828)	$	(609,021)
Net Income (Loss)—NERA 50%	$	4,421	$	41,976	$	19,395	$	9,491	$	21,949	$	(44,829)				52,403
Net Income —NERA 40%													$	(285,533)		(285,533)
															$	(233,130)