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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, 2018

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 ☒

 

As of May 5, 2018, there were 99,509 of the registrant’s Class A units (2,985,282 Depositary Receipts) of limited partnership issued and outstanding and 23,633 Class B units issued and outstanding.

 

 

 


 

Table of Contents

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP

 

INDEX

 

 

 

 

PART I—FINANCIAL INFORMATION 

Item 1. 

Financial Statements (Unaudited)

3

 

Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017

4

 

Consolidated Statements of Income for the Three Months Ended March 31, 2018 and 2017

5

 

Consolidated Statements of Changes in Partners’ Capital for the Three Months ended March 31, 2018 and 2017

6

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017

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

37

Item 4. 

Controls and Procedures

37

PART II—OTHER INFORMATION 

Item 1. 

Legal Proceedings

39

Item 1A. 

Risk Factors

39

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 3. 

Defaults Upon Senior Securities

39

Item 4. 

Mine Safety Disclosure

39

Item 5. 

Other Information

39

Item 6. 

Exhibits

39

SIGNATURES 

41

 

 

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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, 2017 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, 2017.

 

The results of operations for the three month period ended March 31, 2018 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,

 

 

    

2018

    

2017

 

ASSETS

 

 

  (Unaudited)

 

 

 

 

Rental Properties

 

$

238,720,755

 

$

207,153,794

 

Cash and Cash Equivalents

 

 

4,827,468

 

 

7,238,905

 

Rents Receivable

 

 

615,205

 

 

592,045

 

Real Estate Tax Escrows

 

 

486,756

 

 

488,396

 

Prepaid Expenses and Other Assets

 

 

4,482,605

 

 

4,122,052

 

Investments in Unconsolidated Joint Ventures

 

 

6,986,470

 

 

7,212,044

 

Total Assets

 

$

256,119,259

 

$

226,807,236

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

Mortgage Notes Payable

 

 

253,584,894

 

 

233,221,258

 

Line of Credit

 

 

25,000,000

 

 

17,000,000

 

Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture

 

 

2,933,844

 

 

2,806,319

 

Accounts Payable and Accrued Expenses

 

 

3,315,038

 

 

3,340,509

 

Advance Rental Payments and Security Deposits

 

 

5,841,583

 

 

5,754,327

 

Total Liabilities

 

 

290,675,359

 

 

262,122,413

 

Commitments and Contingent Liabilities (Notes 3 and 9)

 

 

 —

 

 

 —

 

Partners’ Capital 124,386 and 124,386 units outstanding in 2018 and 2017 respectively

 

 

(34,556,100)

 

 

(35,315,177)

 

Total Liabilities and Partners’ Capital

 

$

256,119,259

 

$

226,807,236

 

 

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,

 

 

    

2018

    

2017

 

Revenues

 

 

 

 

 

 

 

Rental income

 

$

13,942,645

 

$

12,631,445

 

Laundry and sundry income

 

 

116,355

 

 

112,162

 

 

 

 

14,059,000

 

 

12,743,607

 

Expenses

 

 

 

 

 

 

 

Administrative

 

 

539,145

 

 

525,736

 

Depreciation and amortization

 

 

3,507,091

 

 

2,973,056

 

Management fee

 

 

559,629

 

 

536,715

 

Operating

 

 

1,900,766

 

 

1,713,961

 

Renting

 

 

107,899

 

 

86,203

 

Repairs and maintenance

 

 

1,814,283

 

 

1,455,621

 

Taxes and insurance

 

 

1,868,483

 

 

1,710,404

 

 

 

 

10,297,296

 

 

9,001,696

 

Income Before Other Income (Expense)

 

 

3,761,704

 

 

3,741,911

 

Other Income (Expense)

 

 

 

 

 

 

 

Interest income

 

 

164

 

 

312

 

Interest expense

 

 

(2,984,210)

 

 

(2,520,826)

 

Income  from investments in unconsolidated joint ventures

 

 

1,100,900

 

 

672,837

 

 

 

 

(1,883,146)

 

 

(1,847,677)

 

Net Income

 

$

1,878,558

 

$

1,894,234

 

 

 

 

 

 

 

 

 

Net Income per Unit

 

$

15.10

 

$

15.23

 

 

 

 

 

 

 

 

 

Weighted Average Number of Units Outstanding

 

 

124,386

 

 

124,409

 

 

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

 

Partner’s Capital

 

 

 

Limited

 

General

 

 

 

Treasury

 

 

 

Limited

 

General

 

 

 

 

 

  

Class A

  

Class B

  

Partnership

  

Subtotal

  

Units

  

Total

  

Class A

  

Class B

  

Partnership

  

Total

 

Balance January 1, 2017

 

144,180

 

34,243

 

1,802

 

180,225

 

55,816

 

124,409

 

$

(27,407,924)

 

$

(6,475,961)

 

$

(340,840)

 

$

(34,224,726)

 

Distribution to Partners

 

 

 

 

 

 —

 

 

 

(895,749)

 

 

(212,741)

 

 

(11,197)

 

 

(1,119,687)

 

Stock Buyback

 

 

 

 

 

23

 

(23)

 

 

(34,038)

 

 

(8,084)

 

 

(426)

 

 

(42,548)

 

Net Income

 

 

 

 

 

 —

 

 

 

1,515,387

 

 

359,904

 

 

18,942

 

 

1,894,234

 

Balance March 31, 2017

 

144,180

 

34,243

 

1,802

 

180,225

 

55,839

 

124,386

 

$

(26,822,324)

 

 

(6,336,882)

 

 

(333,521)

 

 

(33,492,726)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 1 , 2018

 

144,180

 

34,243

 

1,802

 

180,225

 

55,839

 

124,386

 

$

(28,280,285)

 

$

(6,683,147)

 

$

(351,745)

 

$

(35,315,177)

 

Distribution to Partners

 

 

 

 

 

 —

 

 

 

(895,585)

 

 

(212,701)

 

 

(11,195)

 

 

(1,119,481)

 

Stock Buyback

 

 

 

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

Net Income

 

 

 

 

 

 —

 

 

 

1,502,846

 

 

356,926

 

 

18,786

 

 

1,878,558

 

Balance March 31, 2018

 

144,180

 

34,243

 

1,802

 

180,225

 

55,839

 

124,386

 

$

(27,673,024)

 

$

(6,538,922)

 

$

(344,154)

 

$

(34,556,100)

 

 

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,

 

 

    

2018

    

2017

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

Net income

 

$

1,878,558

 

$

1,894,234

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,507,091

 

 

2,973,056

 

Amortization of deferred financing costs

 

 

51,541

 

 

47,134

 

(Income)  from investments in joint ventures

 

 

(1,100,900)

 

 

(672,837)

 

Change in operating assets and liabilities

 

 

 

 

 

 

 

(Increase) Decrease in rents receivable

 

 

(23,160)

 

 

111,764

 

(Decrease) in accounts payable and accrued expense

 

 

(25,471)

 

 

(1,133,932)

 

Decrease  in insurance recovery receivable

 

 

 —

 

 

495,794

 

Decrease   in real estate tax escrow

 

 

1,640

 

 

8,703

 

(Increase) Decrease in prepaid expenses and other assets

 

 

(523,530)

 

 

61,835

 

Increase in advance rental payments and security deposits

 

 

87,257

 

 

191,521

 

Total Adjustments

 

 

1,974,468

 

 

2,083,038

 

Net cash provided by operating activities

 

 

3,853,026

 

 

3,977,272

 

Cash Flows From Investing Activities

 

 

 

 

 

 

 

Proceeds from unconsolidated joint ventures

 

 

1,770,000

 

 

1,204,248

 

Distribution in excess of investment in unconsolidated joint ventures

 

 

210,402

 

 

186,395

 

(Investment)  in unconsolidated joint ventures

 

 

(526,402)

 

 

(2,277,645)

 

Improvement of rental properties

 

 

(868,468)

 

 

(1,141,542)

 

Purchase of rental property

 

 

(13,213,294)

 

 

 —

 

Net cash (used in) investing activities

 

 

(12,627,762)

 

 

(2,028,544)

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Payment of financing costs

 

 

(148,004)

 

 

 —

 

Proceeds of mortgage notes payable

 

 

83,684

 

 

 —

 

Proceeds of notes payable

 

 

8,000,000

 

 

 —

 

Principal payments of mortgage notes payable

 

 

(452,900)

 

 

(434,018)

 

Stock buyback

 

 

 —

 

 

(42,548)

 

Distributions to partners

 

 

(1,119,481)

 

 

(1,119,687)

 

Net cash provided by (used in) financing activities

 

 

6,363,299

 

 

(1,596,253)

 

Net (Decrease) Increase in Cash and Cash Equivalents

 

 

(2,411,437)

 

 

352,475

 

Cash and Cash Equivalents, at beginning of period

 

 

7,238,905

 

 

7,463,697

 

Cash and Cash Equivalents, at end of period

 

$

4,827,468

 

$

7,816,172

 

 

 

 

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, 2017

 

(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 27 properties which include 19 residential buildings; 4 mixed use residential, retail and office buildings; 3 commercial buildings and individual units at one condominium complex. These properties total 2,711 apartment units, 19 condominium units and 108,043 square feet of commercial space. Additionally, the Partnership also owns a 40- 50% interest in 8 residential and mixed use properties consisting of 711 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 eight 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. Contingent rent for commercial properties are 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 values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.

 

Rental Properties:  Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions which improve or extend the life of 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

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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 $52,000 and $47,000 for the three months ended March 31, 2018 and 2017, 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.

 

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 2018 or 2017 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 2018 or 2017. The Partnership makes its temporary cash investments with high-credit quality financial institutions. At March 31, 2018, 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 0.20%. At March 31, 2018 and December 31, 2017, respectively approximately $6,637,000, and $8,898,000 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 $44,381 and $59,611 for the three months ended March 31, 2018 and 2017, respectively.

 

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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, 2018 and 2017 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, 2018, the Partnership and its Subsidiary Partnerships owned 2,711 residential apartment units in 23 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, 2018, 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 eight residential and mixed use complexes (the “Investment Properties”) at March 31, 2018 with a total of 711 units, accounted for using the equity method of consolidation. See Note 14 for summary information on these investments.

 

Rental properties consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

March 31,  2018

    

December 31, 2017

    

Useful Life

 

Land, improvements and parking lots

 

$

71,906,637

 

$

65,087,214

 

15

-

40

years

 

Buildings and improvements

 

 

229,245,305

 

 

201,844,565

 

15

-

40

years

 

Kitchen cabinets

 

 

12,576,357

 

 

12,338,627

 

 5

-

10

years

 

Carpets

 

 

8,954,788

 

 

8,802,831

 

 5

-

10

years

 

Air conditioning

 

 

641,079

 

 

641,079

 

 5

-

10

years

 

Laundry equipment

 

 

271,824

 

 

263,275

 

 5

-

 7

years

 

Elevators

 

 

1,139,296

 

 

1,139,296

 

20

-

40

years

 

Swimming pools

 

 

444,629

 

 

444,629

 

10

-

30

years

 

Equipment

 

 

11,329,576

 

 

11,163,864

 

 5

-

30

years

 

Motor vehicles

 

 

216,260

 

 

216,260

 

 

 

 5

years

 

Fences

 

 

37,465

 

 

37,465

 

 5

-

15

years

 

Furniture and fixtures

 

 

9,516,987

 

 

9,390,021

 

 5

-

 7

years

 

Smoke alarms

 

 

582,471

 

 

582,471

 

 5

-

 7

years

 

Total fixed assets

 

 

346,862,674

 

 

311,951,597

 

 

 

 

 

 

Less: Accumulated depreciation

 

 

(108,141,919)

 

 

(104,797,803)

 

 

 

 

 

 

 

 

$

238,720,755

 

$

207,153,794

 

 

 

 

 

 

 

 

On March 29, 2018, Hamilton Highlands, LLC (“Hamilton Highlands”), a wholly-owned subsidiary of New England Realty Associates Limited Partnership (the “Partnership”), purchased Webster Green Apartments, a 79 unit apartment complex located at 755-757 Highland Avenue, Needham, Massachusetts.  The sale was consummated pursuant to the terms of a Purchase and Sale Contract by and between Webster Green Apartments, LLC, the prior owner of the Property, and The Hamilton Companies, Inc., an affiliate of the Partnership, which agreement was subsequently assigned by Hamilton to Hamilton Highlands. 

 

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In connection with the purchase, the Hamilton Highlands entered into an Assumption and Modification Agreement dated as of March 29, 2018 with Brookline Bank pursuant to which the Hamilton Highlands assumed a note dated as of January 14, 2016 in the principal amount of $21,500,000  and various agreements relating to the Note including a Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing  dated as of January 14, 2016 .  The purchase price was $34,500,000, consisting of a payment of approximately $13,000,000 in cash and the assumption of the note and mortgage. Hamilton Highlands funded $5,000,000 of the cash portion of the purchase price out of cash reserves and the remaining $8,000,000 by drawing on an existing line of credit. The closing costs were approximately $141,000. From the purchase price, the Partnership allocated approximately $502,000 for in- place leases, and approximately $40,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively.

 

On July 6, 2017, Woodland Park Partners, LLC, a newly formed subsidiary of the Partnership, purchased the Woodland Park Apartments, a 126-unit apartment complex located at 264-290 Grove Street, Newton, Massachusetts (the “Property”), for a purchase price of $45,600,000. The closing costs were approximately $64,000. To fund the purchase price, the Partnership borrowed $25,000,000 under its outstanding line of credit with KeyBank, NA, and $16,000,000 from HBC Holdings, LLC, a Massachusetts limited liability company controlled by Harold Brown. The loan from HBC Holdings will mature on July 16, 2018, with interest only at 4.75%.  The balance of the purchase price was funded by the Partnership’s cash reserves. The line of credit was paid down to $17,000,000 and the loan payable to HBC Holdings was paid in full through the refinancing of Woodland Park and partnership cash reserves by December 31, 2017. From the purchase price, the Partnership allocated approximately $541,000 for in- place leases, and approximately $42,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively.

 

 

 

 

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 $560,000 and $537,000 for the three months ended March 31, 2018 and 2017, 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, 2018 and 2017, approximately $354,000 and $182,000, was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements. Of the 2018 expenses referred to above, approximately $82,000 consisted of repairs and maintenance, $84,000 of administrative expense and $20,000 for commercial brokerage fees. Approximately $168,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties. Additionally in 2018, the Hamilton Company received approximately $243,000 from the Investment Properties of which approximately $160,000 was the management fee, approximately $23,000 was for maintenance services, approximately $20,000 was for administrative services and approximately $40,000 for 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 $824,000 and $811,000 for the three months ended March 31, 2018 and 2017, 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. There were no employer contributions during 2018 and 2017.

 

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, 2018 and 2017, the Management Company charged the Partnership $31,250 ($125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

 

The President of the Management Company performs asset management consulting services and receives an asset management fee from the Partnership. The Partnership does not have a written agreement with this individual. During the three months ended March 31, 2018 and 2017 this individual received fees of $18,750.

 

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The Partnership has invested in eight 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 Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 56%. See Note 14 for a description of the properties and their operations.

 

NOTE 4. OTHER ASSETS

 

Approximately $2,564,000, and $2,420,000 of security deposits are included in prepaid expenses and other assets at March 31, 2018 and December 31, 2017, respectively. The security deposits and escrow accounts are restricted cash.

 

Included in prepaid expenses and other assets at March 31, 2018 and December 31, 2017 is approximately $387,000 and $357,000, respectively, held in escrow to fund future capital improvements.

 

Intangible assets on the acquisitions of Webster Green Apartments and Woodland Park Apartments are included in prepaid expenses and other assets.  Intangible assets are approximately $690,000 net of accumulated amortization of approximately $140,000 and approximately $302,000 net of accumulated amortization of approximately $280,000 at March 31, 2018 and December 31, 2017, respectively.

 

Financing fees in association with the line of credit of approximately $110,000 and $121,000 are net of accumulated amortization of approximately $18,000 and $7,000 at March 31, 2018 and December 31, 2017 respectively.

 

NOTE 5. MORTGAGE NOTES PAYABLE

 

At March 31, 2018 and December 31, 2017, 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, 2018, the interest rates on these loans ranged from 3.61% to 5.81%, payable in monthly installments aggregating approximately $1,116,000 including principal, to various dates through 2029. The majority of the mortgages are subject to prepayment penalties. At March 31, 2018, the weighted average interest rate on the above mortgages was 4.52%. The effective rate of 4.60% 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 $1,615,000 and $1,531,000 are net of accumulated amortization of approximately $1,101,000 and $1,149,000 at March 31, 2018 and December 31, 2017, respectively.

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

 

Approximate annual maturities at March 31, 2018 are as follows:

 

 

 

 

 

 

2019—current maturities

    

$

1,863,000

 

2020

 

 

1,944,000

 

2021

 

 

4,344,000

 

2022

 

 

2,566,000

 

2023

 

 

67,096,000

 

Thereafter

 

 

177,277,000

 

 

 

 

255,090,000

 

Less: unamortized deferred financing costs

 

 

(1,505,000)

 

 

 

$

253,585,000

 

 

On March 29, 2018, Hamilton Highlands, LLC (Hamilton Highlands), a wholly-owned subsidiary of New England Realty Associates Limited Partnership, purchased Webster Green Apartments, a 79 unit apartment complex located at 755-757 Highland Avenue, Needham, Massachusetts.  The sale was consummated pursuant to the terms of a Purchase and Sale Contract  by and between Webster Green Apartments, LLC, the prior owner of the Property, and The Hamilton Companies, Inc., an affiliate of the Partnership, which agreement was subsequently assigned to Hamilton Highlands.  

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In connection with the purchase, Hamilton Highlands entered into an Assumption and Modification Agreement dated as of March 29, 2018 with Brookline Bank pursuant to which Hamilton Highlands assumed a note dated as of January 14, 2016 in the principal amount of $21,500,000 and various agreements relating to the Note including a Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing dated as of January 14, 2016.  The purchase price was $34,500,000, consisting of a payment of   approximately $13,000,000 in cash and the assumption of the Note and Mortgage. Hamilton Highlands funded $5,000,000 of the cash portion of the purchase price out of cash reserves and the remaining $8,000,000 by drawing on an existing line of credit. The closing costs were approximately $141,000.

 

On March 12, 2018, the loan for 659 Worcester Road was refinanced with Brookline Bank in the amount of $6,083,683. The loan is due on March 12, 2023. Interest only until March 12, 2021. Commencing on the next payment, monthly payments of principal and interest in the amount of $32,427 will be made based on an assumed amortization period of thirty (30) years. The loan bears a fixed annual rate equal to 4.87%. The proceeds of the new loan were used to pay off the existing loan.

 

On September 29, 2017, Woodland Park Partners LLC, (“Woodland Park”), entered into a Multifamily Loan and Security Agreement with KeyBank National Association . The Loan Agreement provides for a term loan in the principal amount of $22,250,000.  The Loan is due on October 1, 2027, unless the due date is accelerated in accordance with the Loan’s terms, with interest only through October 1, 2022. Borrowings under the Loan will bear interest at the rate of 3.79%. The proceeds of the loan were used to pay off the loan from HBC Holdings, LLC and pay down the line of credit.

 

 

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 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. The Partnership borrowed $25,000,000 to partially fund the purchase of Woodland Park. It paid down $8,000,000 through the financing of the property and its’ cash reserve. As of December 31, 2017, the credit line had an outstanding balance of $17,000,000.

 On March 29, 2018, the Partnership drew down $8,000,000 in conjunction with the purchase of Webster Green Apartments. As of March 31, 2018, the credit line had an outstanding balance of $25,000,000.

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, 2018.

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, 2018.

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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, 2018, amounts received for prepaid rents of approximately $2,175,000 are included in cash and cash equivalents, and security deposits of approximately $2,564,000 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 2018, the Partnership approved a quarterly distribution to its Class A Limited Partners and holders of Depositary Receipts of record as of March 15, 2018 and payable on March 31, 2018, of $9.00 per unit ($0.30 per receipt).

In April 2018, the Partnership approved a quarterly distribution to its Class A Limited Partners and holders of Depositary Receipts of record as of June 15, 2018 and payable on June 29, 2018, of $9.00 per unit ($0.30 per receipt).

In 2017, regular quarterly distributions of $9.00 per unit ($0.30 per receipt) were paid in March, June, September and December. In December 2017, the Partnership paid a special distribution of $28.50 per unit ($0.95 per receipt).

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,  

 

 

    

2018

    

2017

 

Net Income per Depositary Receipt

 

$

0.50

 

$

0.51

 

Distributions per Depositary Receipt

 

$

0.30

 

$

0.30

 

 

 

NOTE 8. TREASURY UNITS

 

Treasury Units at March 31, 2018 are as follows:

 

 

 

 

 

Class A

    

44,671

 

Class B

 

10,609

 

General Partnership

 

559

 

 

 

55,839

 

 

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. 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 Restate 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

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transactions. From August 20, 2007 through March 31, 2018, the Partnership has repurchased 1,365,306 Depositary Receipts at an average price of $27.14 per receipt (or $814.20 per underlying Class A Unit), 3,072 Class B Units and 162 General Partnership Units, both at an average price of $926.26 per Unit, totaling approximately $40,274,000 including brokerage fees paid by the Partnership.

 

During the three months ended March 31, 2018, the Partnership did not purchase  any Depositary Receipts.

 

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, 2018, approximately 93% 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 August. Approximately 7% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2018 as follows:

 

 

 

 

 

 

 

    

Commercial

 

 

 

Property Leases

 

2019

 

$

2,662,000

 

2020

 

 

2,213,000

 

2021

 

 

1,943,000

 

2022

 

 

1,290,000

 

2023

 

 

646,000

 

Thereafter

 

 

1,105,000

 

 

 

$

9,859,000

 

 

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 $223,000 and $166,000  for the three months ended March 31, 2018 and 2017 respectively. Staples and Trader Joes, tenants at Staples Plaza, are approximately 31% 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

 

2019

 

$

431,751

 

16,542

 

12

 

14

%

2020

 

 

458,122

 

17,135

 

10

 

15

%

2021

 

 

193,519

 

4,170

 

 6

 

 6

%

2022

 

 

1,137,030

 

47,591

 

 9

 

39

%

2023

 

 

246,341

 

7,087

 

 4

 

 8

%

2024

 

 

379,670

 

11,668

 

 4

 

13

%

2025

 

 

 —

 

 —

 

 —

 

 —

%

2026

 

 

 —

 

 —

 

 —

 

 —

%

2027

 

 

 —

 

 —

 

 —

 

 —

%

2028

 

 

 —

 

 —

 

 —

 

 —

%

2029

 

 

142,450

 

3,850

 

 1

 

 5

%

Totals

 

$

2,988,883

 

108,043

 

46

 

100

%

 

Rents receivable are net of an allowance for doubtful accounts of approximately $605,000 and $644,000 at March 31, 2018 and December 31, 2017. Included in rents receivable at March 31, 2018 is approximately $114,000 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 in Boston, Massachusetts.

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Rents receivable at March 31, 2018 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, 2018 and 2017, cash paid for interest was approximately $3,010,000, and $2,472,000 respectively.  Cash paid for state income taxes was approximately $47,000 and $33,000 during the three months ended March 31, 2018 and 2017 respectively. At March 31, 2018, the Partnership was involved in a non-cash financing activity of approximately $21,000,000 in connection with the purchase of Webster Green Apartments.

 

NOTE 12. FAIR VALUE MEASUREMENTS

 

Fair Value Measurements on a Recurring Basis

 

At March 31, 2018 and December 31, 2017, 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, 2018 and December 31, 2017 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, 2018 and December 31, 2017, 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, 2018 and December 31, 2017, 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, 2018

*

$

253,584,894

 

$

233,103,625

 

At December 31, 2017

*

$

233,221,258

 

$

237,895,708

 

Investment Properties

 

 

 

 

 

 

 

At March 31, 2018

*

$

123,720,733

 

$

123,539,032

 

At December 31, 2017

*

$

124,145,012

 

$

125,519,974

 

 

* Net of unamortized deferred financing costs

 

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Disclosure about fair value of financial instruments is based on pertinent information available to management as of March 31, 2018 and December 31, 2017. 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, 2018 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, accelerated depreciation, different tax lives, timing differences related to prepaid rents, allowances and intangible assets related to significant acquisitions and the treatment of certain expenditures. Taxable income of approximately $5,438,000 was approximately $1,500,000 less than statement income for the year ended December 31, 2017. The primary reason for the difference was due to accelerated depreciation, tax free exchange and other differences in the treatment of certain expenditures. Substantial property acquisitions could also cause a significant difference between book and tax depreciation. The cumulative tax basis of the Partnership’s real estate at December 31, 2017 is approximately $1,532,000 less than the statement basis. The primary reasons for the lower tax basis were tax free exchanges, and accelerated depreciation. The Partnership’s tax basis in its joint venture investments is approximately $5,000,000 more than statement basis because of accelerated depreciation.

 

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.

 

While allowable accelerated depreciation deductions were extended, future tax law changes may significantly affect taxable income.

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, 2018, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are from the year 2014 forward.

 

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 

 

Since November 2001,the Partnership has invested in nine limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three partnerships investing in commercial property. The Partnership has between a 40%-50% ownership interest in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 56%, with the balance owned by the others. A description of each investment is as follows:

 

On October 28, 2009 the Partnership invested approximately $15,925,000 in a joint venture to acquire a 40% interest in a residential property located in Brookline, Massachusetts. The property, Hamilton Park Towers LLC, referred to as Dexter Park, or Hamilton Park is a 409 unit residential complex. The purchase price was $129,500,000. The total mortgage was $89,914,000 with an interest rate of 5.57% and it matures in 2019. The mortgage calls for interest only payments for the first two years of the loan and amortized over 30 years thereafter. The balance of this mortgage before unamortized deferred financing costs is approximately $81,601,000 at March 31, 2018.  This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

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

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this charge, an expense of  approximately $1,500,000. This charge will have a material effect on the 2018 second quarter net income.

On October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168-unit apartment complex in Quincy, Massachusetts. The purchase price was $30,875,000. The Joint Venture sold 120 units as condominiums and retained 48 units for long-term investment. In February 2007, the Joint Venture refinanced the 48 units with a new mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. The loan was to be amortized over 30 years thereafter and matured in March, 2017. On March 1, 2017, the mortgage balance was paid in full, with the Partnership contributing its share of the mortgage balance of approximately $2,222,000.  As of December 31, 2017, 29 units had been sold with a gain on the sales of approximately $3,628,000. As of March 31, 2018, 5 additional units were under purchase and sale agreements, and the Partnership owned 13 units. Six units were sold in the first quarter of 2018, resulting in a gain of approximately $828,000. This investment is referred to as Hamilton Bay Apartments, LLC.

 

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

 

On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176‑unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Joint Venture sold 127 of the units as condominiums and retained 49 units for long‑term investment. The Joint Venture obtained a new 10‑year mortgage in the amount of $5,000,000 on the units to be retained by the Joint Venture. The interest on the new loan was 5.67% fixed for the 10 year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan term. On July 8, 2016, Hamilton 1025 LLC paid off the outstanding balance of the mortgage balance. The Partnership made a capital contribution of $2,359,500 to Hamilton 1025, LLC for its share of the funds required for the transaction. 20 units were sold in the year ended December 31, 2017 with a gain on the sales of approximately $2,380,000. As of March 31, 2018, 3 units were under purchase and sales agreements and the Partnership owned 10 units. Eight units were sold in the first quarter ending March 31, 2018, resulting in a gain of approximately $817,000. This investment is referred to as Hamilton 1025, LLC.

 

In September 2004, the Partnership invested approximately $5,075,000 for a 50% ownership interest in a 42‑unit apartment complex located in Lexington, Massachusetts. The purchase price was $10,100,000. In October 2004, the Joint Venture obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Joint Venture obtained a new 10- year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan was 5.67% fixed for the ten year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan. This loan required a cash contribution by the Partnership of $1,250,000 in December 2006. On September 12, 2016, the property was refinanced with a 15 year mortgage in the amount of $6,000,000, at 3.71%, interest only. The Joint Venture Partnership paid off the prior mortgage of approximately $5,158,000 with the proceeds of the new mortgage and made a distribution of $385,000 to the Partnership. The cost associated with the refinancing was approximately $123,000. This investment is referred to as Hamilton

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Minuteman, LLC. At March 31, 2018, the balance on this mortgage before unamortized deferred financing costs is approximately $6,000,000.This investment is referred to as Hamilton Minuteman, LLC. In the first quarter of 2018, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting, although the Partnership has no legal obligation to fund its share of any future operating deficiencies, if needed.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280‑unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. The Joint Venture sold 137 units as condominiums. The assets were combined with Hamilton on Main Apartments. Hamilton on Main, LLC is known as Hamilton Place. In 2005, Hamilton on Main Apartments, LLC obtained a ten year mortgage on the three buildings to be retained. The mortgage was $16,825,000, with interest only of 5.18% for three years and amortizing on a 30 year schedule for the remaining seven years when the balance is due. The net proceeds after funding escrow accounts and closing costs on the mortgage were approximately $16,700,000, which were used to reduce the existing mortgage. In August 2014, the property was refinanced with a 10 year mortgage in the amount of $16,900,000 at 4.34% interest only.  The Joint Venture paid off the prior mortgage of approximately $15,205,000 with the proceeds of the new mortgage and distributed $850,000 to the Partnership. The costs associated with the refinancing were approximately $161,000. At March 30, 2018, the balance of the mortgage before unamortized deferred financing costs is approximately $16,900,000.The investment is referred to as Hamilton On Main LLC.

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

 

Summary financial information as of March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

  

$

7,515,492

  

$

2,597,633

  

$

6,242,990

  

$

887,890

  

$

1,583,448

  

$

5,854,350

  

$

17,359,777

  

$

89,284,170

  

$

131,325,750

 

Cash & Cash Equivalents

 

 

148,701

 

 

50,004

 

 

123,091

 

 

136,822

 

 

122,350

 

 

107,268

 

 

102,710

 

 

861,790

 

 

1,652,736

 

Rent Receivable

 

 

133,580

 

 

 —

 

 

19,937

 

 

6,902

 

 

2,463

 

 

5,206

 

 

21,196

 

 

221,175

 

 

410,459

 

Real Estate Tax Escrow

 

 

83,760

 

 

 —

 

 

46,751

 

 

 —

 

 

0

 

 

32,229

 

 

152,782

 

 

349,904

 

 

665,426

 

Prepaid Expenses & Other Assets

 

 

80,429

 

 

279

 

 

50,269

 

 

586,555

 

 

693,936

 

 

17,475

 

 

95,705

 

 

2,668,635

 

 

4,193,283

 

Total Assets

 

$

7,961,962

 

$

2,647,916

 

$

6,483,038

 

$

1,618,169

 

$

2,402,197

 

$

6,016,528

 

$

17,732,170

 

$

93,385,674

 

$

138,247,654

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,896,582

 

$

 —

 

$

9,627,636

 

$

 —

 

$

 —

 

$

5,889,863

 

$

16,797,004

 

$

81,509,648

 

$

123,720,733

 

Accounts Payable & Accrued Expense

 

 

74,966

 

 

2,188

 

 

87,137

 

 

8,434

 

 

9,554

 

 

55,333

 

 

169,932

 

 

634,933

 

 

1,042,477

 

Advance Rental Pmts & Security Deposits

 

 

341,039

 

 

 —

 

 

245,550

 

 

12,555

 

 

10,975

 

 

112,103

 

 

321,274

 

 

2,608,580

 

 

3,652,076

 

Total Liabilities

 

 

10,312,587

 

 

2,188

 

 

9,960,323

 

 

20,989

 

 

20,529

 

 

6,057,299

 

 

17,288,210

 

 

84,753,161

 

 

128,415,286

 

Partners’ Capital

 

 

(2,349,625)

 

 

2,645,728

 

 

(3,477,285)

 

 

1,597,180

 

 

2,381,668

 

 

(40,771)

 

 

443,960

 

 

8,630,513

 

 

9,831,368

 

Total Liabilities and Capital

 

$

7,962,962

 

$

2,647,916

 

$

6,483,038

 

$

1,618,169

 

$

2,402,197

 

$

6,016,528

 

$

17,732,170

 

$

93,383,674

 

$

138,246,654

 

Partners’ Capital %—NERA

 

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,322,863

 

$

 —

 

$

798,589

 

$

1,190,833

 

$

 

 

$

221,979

 

$

3,452,204

 

 

6,986,470

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(1,174,814)

 

$

 —

 

$

(1,738,644)

 

$

 —

 

$

 —

 

$

(20,387)

 

$

 —

 

$

 —

 

 

(2,933,844)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,052,626

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

 1

 

 

 1

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Total

 

 

49

 

 

 1

 

 

40

 

 

176

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

 1

 

 

40

 

 

 —

 

 

 —

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

175

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

167

 

 

38

 

 

 —

 

 

 —

 

 

 —

 

 

205

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

 8

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

18

 

Unsold units with deposits for future sale as of  May 1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

 

 3

 

 

 —

 

 

 —

 

 

 —

 

 

 6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Financial information for the three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Hamilton

    

 

 

    

 

 

    

 

 

    

Hamilton

    

Hamilton

    

 

 

    

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income

 

$

411,222

 

$

53,928

 

$

403,837

 

$

38,221

 

$

22,203

 

$

263,051

 

$

858,213

 

 

3,894,603

 

$

5,945,278

 

Laundry and Sundry Income

 

 

3,005

 

 

 —

 

 

1,217

 

 

 

 

 

 

 

 

675

 

 

9,126

 

 

24,688

 

 

38,711

 

 

 

 

414,227

 

 

53,928

 

 

405,054

 

 

38,221

 

 

22,203

 

 

263,726

 

 

867,339

 

 

3,919,291

 

 

5,983,989

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

9,680

 

 

488

 

 

6,455

 

 

1,499

 

 

3,066

 

 

1,824

 

 

13,127

 

 

65,429

 

 

101,568

 

Depreciation and Amortization

 

 

114,285

 

 

665

 

 

86,251

 

 

 —

 

 

10,000

 

 

87,722

 

 

255,506

 

 

874,142

 

 

1,428,571

 

Management Fees

 

 

13,204

 

 

2,157

 

 

16,126

 

 

1,508

 

 

1,022

 

 

10,368

 

 

32,443

 

 

83,012

 

 

159,840

 

Operating

 

 

24,131

 

 

 —

 

 

20,580

 

 

156

 

 

825

 

 

33,850

 

 

120,393

 

 

379,875

 

 

579,810

 

Renting

 

 

3,291

 

 

 —

 

 

497

 

 

 —

 

 

 —

 

 

3,378

 

 

8,652

 

 

29,782

 

 

45,600

 

Repairs and Maintenance

 

 

54,501

 

 

4,163

 

 

21,497

 

 

40,207

 

 

34,224

 

 

19,617

 

 

182,374

 

 

318,666

 

 

675,249

 

Taxes and Insurance

 

 

62,527

 

 

16,723

 

 

41,631

 

 

18,171

 

 

16,459

 

 

31,046

 

 

104,551

 

 

419,289

 

 

710,397

 

 

 

 

281,619

 

 

24,196

 

 

193,037

 

 

61,541

 

 

65,596

 

 

187,805

 

 

717,046

 

 

2,170,195

 

 

3,701,035

 

Income Before Other Income

 

 

132,608

 

 

29,732

 

 

212,017

 

 

(23,320)

 

 

(43,393)

 

 

75,921

 

 

150,293

 

 

1,749,096

 

 

2,282,954

 

Other Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

(99,313)

 

 

 —

 

 

(96,961)

 

 

(26)

 

 

(49)

 

 

(58,519)

 

 

(188,239)

 

 

(1,166,238)

 

 

(1,609,345)

 

Gain on Sale of Real Estate

 

 

 —

 

 

 —

 

 

 —

 

 

817,006

 

 

827,757

 

 

 

 

 

 

 

 

 

 

 

1,644,763

 

 

 

 

(99,313)

 

 

 —

 

 

(96,961)

 

 

816,980

 

 

827,708

 

 

(58,519)

 

 

(188,239)

 

 

(1,166,238)

 

 

35,418

 

Net Income (Loss)

 

$

33,295

 

$

29,732

 

$

115,056

 

$

793,660

 

$

784,315

 

$

17,402

 

$

(37,946)

 

$

582,858

 

$

2,318,372

 

Net Income (Loss)—NERA 50%

    

$

16,648

 

$

14,866

 

$

57,528

 

$

396,830

 

$

392,158

 

$

8,701

 

$

(18,973)

 

 

 

 

 

867,757

 

Net Income —NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

233,143

 

 

233,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,100,900

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton

 

345

 

Hamilton

 

Hamilton on

 

Dexter

 

 

 

 

Period End

    

Essex 81

    

Franklin

    

Minuteman

    

Main Apts

    

Park

    

Total

 

3//31/2019

 

$

 —

 

$

192,094

 

$

 

 

$

 —

 

$

1,700,153

 

$

1,892,247

 

3/31/2020

 

 

 —

 

 

199,661

 

 

 

 

 

 —

 

 

79,901,188

 

 

80,100,849

 

3/31/2021

 

 

 —

 

 

207,527

 

 

 —

 

 

 —

 

 

 

 

 

207,527

 

3/31/2022

 

 

 —

 

 

215,702

 

 

 —

 

 

 —

 

 

 

 

 

215,702

 

3/31/2023

 

 

 —

 

 

224,199

 

 

 —

 

 

 —

 

 

 

 

 

224,199

 

Thereafter

 

 

10,000,000

 

 

8,656,703

 

 

6,000,000

 

 

16,900,000

 

 

 —

 

 

41,556,703

 

 

 

 

10,000,000

 

 

9,695,886

 

 

6,000,000

 

 

16,900,000

 

 

81,601,341

 

 

124,197,227

 

Less: unamortized deferred financing costs

 

 

(103,418)

 

 

(68,250)

 

 

(110,137)

 

 

(102,996)

 

 

(91,693)

 

 

(476,494)

 

 

 

$

9,896,582

 

$

9,627,636

 

$

5,889,863

 

$

16,797,004

 

$

81,509,648

 

$

123,720,733

 

 

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

 

23


 

Table of Contents

 

 

Summary financial information as of March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Sales

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

 

$

7,907,838

 

$

2,622,729

 

$

6,542,738

 

$

3,029,735

 

$

145,134

 

$

5,848,498

 

$

6,095,634

 

$

17,593,862

 

$

91,280,303

 

$

141,066,471

 

Cash & Cash Equivalents

 

 

158,945

 

 

50,621

 

 

70,277

 

 

490,522

 

 

88

 

 

17,718

 

 

60,393

 

 

214,895

 

 

1,359,961

 

 

2,423,420

 

Rent Receivable

 

 

17,373

 

 

 —

 

 

3,496

 

 

12,438

 

 

225

 

 

5,844

 

 

1,152

 

 

11,479

 

 

151,499

 

 

203,506

 

Real Estate Tax Escrow

 

 

119,722

 

 

 —

 

 

45,948

 

 

 —

 

 

 —

 

 

17,849

 

 

19,048

 

 

213,815

 

 

240,494

 

 

656,876

 

Prepaid Expenses & Other Assets

 

 

96,193

 

 

246

 

 

45,250

 

 

131,148

 

 

16,480

 

 

103,595

 

 

31,844

 

 

107,642

 

 

1,558,399

 

 

2,090,797

 

Total Assets

 

$

8,300,071

 

$

2,673,596

 

$

6,707,709

 

$

3,663,843

 

$

161,927

 

$

5,993,504

 

$

6,208,071

 

$

18,141,693

 

$

94,590,656

 

$

146,441,070

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,882,793

 

$

 —

 

$

9,805,791

 

$

 —

 

$

 —

 

$

 —

 

$

5,881,680

 

$

16,780,953

 

$

82,968,942

 

$

125,320,159

 

Accounts Payable & Accrued Expense

 

 

48,972

 

 

623

 

 

84,711

 

 

15,600

 

 

2,330

 

 

5,782

 

 

61,455

 

 

153,499

 

 

607,357

 

 

980,329

 

Advance Rental Pmts& Security Deposits

 

 

232,421

 

 

 —

 

 

225,911

 

 

49,544

 

 

101

 

 

75,660

 

 

124,719

 

 

380,586

 

 

2,764,112

 

 

3,853,054

 

Total Liabilities

 

 

10,164,186

 

 

623

 

 

10,116,413

 

 

65,144

 

 

2,431

 

 

81,442

 

 

6,067,854

 

 

17,315,038

 

 

86,340,411

 

 

130,153,542

 

Partners’ Capital

 

 

(1,864,115)

 

 

2,672,973

 

 

(3,408,704)

 

 

3,598,699

 

 

159,496

 

 

5,912,062

 

 

140,217

 

 

826,655

 

 

8,250,245

 

 

16,287,528

 

Total Liabilities and Capital

 

$

8,300,071

 

$

2,673,596

 

$

6,707,709

 

$

3,663,843

 

$

161,927

 

$

5,993,504

 

$

6,208,071

 

$

18,141,693

 

$

94,590,656

 

$

146,441,070

 

Partners’ Capital %—NERA

 

 

50

%

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,336,486

 

$

 —

 

$

1,799,349

 

$

79,747

 

$

2,956,030

 

$

70,108

 

$

413,328

 

$

3,300,098

 

$

9,955,145

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(932,058)

 

$

 —

 

$

(1,704,352)

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

 

(2,636,410)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

7,318,735

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

120

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

1

 

 

1

 

 

 —

 

 

1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

3

 

Total

 

 

49

 

 

1

 

 

40

 

 

176

 

 

120

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

1

 

 

40

 

 

0

 

 

 —

 

 

0

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

176

 

 

120

 

 

46

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2017

 

 

 —

 

 

 —

 

 

 —

 

 

143

 

 

120

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

264

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

32

 

 

0

 

 

47

 

 

 —

 

 

 —

 

 

 —

 

 

79

 

Unsold units with deposits for future sale as of May 1, 2017

 

 

 —

 

 

 —

 

 

 —

 

 

 4

 

 

 —

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

14

 

 

24


 

Table of Contents

 

Financial information for the three months ended March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Hamilton

    

Hamilton

    

 

 

    

 

 

 

 

 

Hamilton

 

Hamilton Essex

 

345

 

Hamilton

 

Hamilton

 

Hamilton

 

 Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Sales

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income

 

$

401,194

 

$

60,000

 

$

372,417

 

$

130,398

 

$

2,867

 

$

222,036

 

$

256,788

 

$

826,303

 

$

3,810,796

 

$

6,082,799

 

Laundry and Sundry Income

 

 

3,531

 

 

 —

 

 

945

 

 

 —

 

 

 —

 

 

 —

 

 

675

 

 

8,947

 

 

24,333

 

 

38,431

 

 

 

 

404,725

 

 

60,000

 

 

373,362

 

 

130,398

 

 

2,867

 

 

222,036

 

 

257,463

 

 

835,250

 

 

3,835,129

 

 

6,121,230

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

5,201

 

 

425

 

 

6,390

 

 

964

 

 

824

 

 

3,065

 

 

1,205

 

 

11,018

 

 

50,187

 

 

79,279

 

Depreciation and Amortization

 

 

113,299

 

 

707

 

 

86,422

 

 

45,626

 

 

1,230

 

 

81,252

 

 

86,675

 

 

242,316

 

 

831,687

 

 

1,489,214

 

Management Fees

 

 

17,380

 

 

2,400

 

 

15,958

 

 

4,763

 

 

135

 

 

8,650

 

 

11,141

 

 

34,103

 

 

84,552

 

 

179,082

 

Operating

 

 

23,637

 

 

 —

 

 

23,145

 

 

(37)

 

 

19

 

 

652

 

 

27,875

 

 

104,159

 

 

352,854

 

 

532,304

 

Renting

 

 

3,722

 

 

 —

 

 

2,136

 

 

62

 

 

62

 

 

62

 

 

1,321

 

 

10,026

 

 

21,327

 

 

38,718

 

Repairs and Maintenance

 

 

20,731

 

 

 —

 

 

19,300

 

 

55,502

 

 

1,980

 

 

106,605

 

 

20,854

 

 

164,126

 

 

231,633

 

 

620,731

 

Taxes and Insurance

 

 

60,469

 

 

14,532

 

 

36,718

 

 

29,378

 

 

863

 

 

46,095

 

 

31,445

 

 

109,815

 

 

431,459

 

 

760,774

 

 

 

 

244,439

 

 

18,064

 

 

190,069

 

 

136,258

 

 

5,113

 

 

246,381

 

 

180,516

 

 

675,563

 

 

2,003,699

 

 

3,700,102

 

Income Before Other Income

 

 

160,286

 

 

41,936

 

 

183,293

 

 

(5,860)

 

 

(2,246)

 

 

(24,345)

 

 

76,947

 

 

159,687

 

 

1,831,430

 

 

2,421,128

 

Other Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

(78,991)

 

 

 —

 

 

(99,404)

 

 

(503)

 

 

(2)

 

 

(41,525)

 

 

(59,091)

 

 

(190,684)

 

 

(1,187,172)

 

 

(1,657,372)

 

 

 

 

(78,991)

 

 

 —

 

 

(99,404)

 

 

710,256

 

 

(2)

 

 

(41,525)

 

 

(59,091)

 

 

(190,684)

 

 

(1,187,172)

 

 

(946,613)

 

Net Income (Loss)

 

$

81,295

 

$

41,936

 

$

83,889

 

$

704,396

 

$

(2,248)

 

$

(65,870)

 

$

17,856

 

$

(30,997)

 

$

644,258

 

$

1,474,515

 

Net Income (Loss)—NERA 50%

    

$

40,648

 

$

20,968

 

$

41,945

 

$

352,199

 

$

(1,124)

 

$

(32,935)

 

$

8,929

 

$

(15,498)

 

 

 

 

 

415,132

 

Net Income (Loss)—NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

257,705

 

 

257,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

672,837

 

 

 

 

 

 

 

 

 

 

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Table of Contents

 

NOTE 15. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS 

 

In February 2016, the FASB issued ASU 2016-02, modifying the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.  This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively.  A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.  Leases with a term of 12 months or less will be accounted for in the same manner as operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The guidance supersedes previously issued guidance under ASC Topic 840 “Leases”. The guidance is effective on January 1, 2019, with early adoption permitted.  The Partnership has evaluated the impact the adoption of ASU 2016-02 will have on the Partnership’s consolidated financial statements. Management foresees no significant impact at this time.

 

In March 2016, the FASB issued ASU 2016-07, which eliminates a requirement for the retroactive adjustment on a step by step basis of the investment, results of operations, and retained earnings as if the equity method had been effective during all previous periods that the investment had been held when an investment qualifies for equity method accounting due to an increase in the level of ownership or degree of influence. The cost of acquiring the additional interest in the investee is to be added to the current basis of the investor’s previously held interest and the equity method of accounting should be adopted as of the date the investment becomes qualified for equity method accounting. This guidance is to be applied on a prospective basis and is effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The adoption of ASU 2016-07 will have no significant impact on the Partnership’s consolidated financial statements. 

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues and intends to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Partnership is currently in the process of evaluating the impact the adoption of ASU 2016-15 will have on the Partnership’s consolidated statement of cash flows.

 

 

NOTE 16. SUBSEQUENT EVENTS

 

On March 22, 2018, Hamilton Park Towers, LLC entered into a Rate Lock Confirmation with John Hancock Life Insurance Company (U.S.A.) and paid the requisite deposit of $1,290,000.   A subsequent deposit was made on April 11, 2018 for $1,250,000. The partnership contributed $1,016,000 of these payments. The confirmation calls for a loan of $125,000,000 at a fixed interest rate of 3.99% per annum.  Hamilton Park intends to use the proceeds of the loan, when closed, to pay off an outstanding mortgage of approximately $82,000,000. In association with this refinancing, there will be a defeasance cost of approximately $3,750,000. Based on  its’ ownership in the property, the Partnership will incur 40% of this charge, an expense of  approximately $1,500,000. This charge will have a material effect on the 2018 second quarter net income.

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Table of Contents

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 2018 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 Partnership year ended with strong revenue gains and continued high occupancy.  The core portfolio continued this experience during the first quarter of 2018.  As the majority of the Partnership’s assets are in the category of Rent by Necessity (RBN) or student related housing, the properties continue to enjoy in place revenue gains established in the third and fourth quarters of last year. The Partnership’s revenue increases continue to exceed national levels and Management expect these increases to be sustained through the balance of 2018.

 

Rent renewal increases are comparable to last year. Consolidated revenue gains, including the new acquisitions, were 10.4%. Same store residential revenue increased by 3.23% compared to last year.  On the surface, this would be below Management’s expectations.  The majority of the Partnership properties, excluding four outliers, demonstrate an average year over year increase of 4.6%. Management believes the second and third quarter same store results will improve over the first quarter and that the current lower revenue increase is not an indicator of the market overall, given its other management experience with multifamily properties outside of the Partnership. 

 

With regard to net operating income, Management expects  operating expenses to be consistent with expectations.  Operating expenses are in line with expectations with the exception of repairs and maintenance expenses related to snow removal costs and real estate taxes. 

 

Similar to the Woodland Park acquisition in 2017, the Webster Green acquisition has similar characteristics. The size and location of the asset is well suited for the Partnership, and will provide near term benefits to the Partnership’s taxable income while remaining an excellent asset long term.

 

As anticipated, the Joint Ventures of 1025 Hancock and Hamilton Bay are continuing to trend to a  third quarter 2018 sellout estimated at $25.6 million.  Management competitively bid the Dexter Park (Hamilton Park) refinancing loan during the first quarter and will shortly execute on a $125 million refinance.  The excess proceeds will be distributed to the owners in proportion to their percentage of ownership. It is estimated that the Partnership will receive approximately $16 million from the refinancing.  The proceeds from the refinancing will be used to pay down the Partnership’s existing Line of Credit.  At 3.99% interest only for 10 years, the new debt service will be $1.25 million per annum less than current debt service at Dexter Park (Hamilton Park). In association with this refinancing, there will be a defeasance cost of approximately $3,750,000.  Based on its’ ownership in the property, the Partnership will incur 40% of this charge, an expense of approximately $1,500,000. This charge will have a material effect on the 2018 second quarter net income.

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Table of Contents

 

The Stock Repurchase Program that was initiated in 2007 has purchased 1,365,306 Depositary Receipts through March 31, 2018 or approximately 32% of the outstanding Class A Depositary Receipts. 

 

At May 1, 2018, Harold Brown, his brother Ronald Brown and the President of Hamilton, Carl Valeri, collectively own approximately 33% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members). 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 Harold Brown is NewReal’s Treasurer and a director. The 75% of the issued and outstanding Class B units of the Partnership, controlled by Harold Brown, are owned by HBC Holdings LLC, an entity of which he 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, 2018, tenant renewals were approximately 63% with an average rental increase of approximately 3.8%, new leases accounted for approximately 37% with rental rate increases of approximately 4.6 %.  During the three months ended March 31, 2018, leasing commissions were approximately $38,000 compared to approximately $13,000 for the three months ended March 31, 2017, an increase of approximately $25,000 (192.3%) from 2017. Tenant concessions were approximately $16,000 for the three months ended March 31, 2018, compared to approximately $13,000 for the three months ended March 31, 2017,  an increase of approximately $3,000 (23.1%).  Tenant improvements were approximately $517,000 for the three  months ended March 31, 2018,  compared to approximately $322,000 for the three months ended March 31, 2017,  an increase of approximately $195,000 (60.6%).

 

Hamilton accounted for approximately 4.5% of the repair and maintenance expenses paid for by the Partnership during the three months ended March 31, 2018 and 3.0 % during the three months ended March 31, 2017. 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 $53,000 (84.4%) and approximately $59,000 (78.9%) of the legal services paid for by the Partnership during the three months ended March 31, 2018 and 2017 respectively.

 

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

 

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, 2018, Hamilton provided the Partnership approximately $168,000 in construction and architectural services, compared to approximately $40,000 for the three months ended March 31, 2017.

 

Hamilton’s accounting staff perform bookkeeping and accounting functions for the Partnership. During the three months ended March 31, 2018 and 2017, 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.

 

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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. Concessions made on residential leases are also accounted for on the straight-line basis.

 

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 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

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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. The Partnership has not recognized an impairment loss during the first three months of 2018.

 

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.

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,  2018 and March 31, 2017

 

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, gain on sale of real estate and other income and expense of approximately $3,762,000 during the three months ended March 31, 2018,  compared to approximately $3,742,000 for the three months ended March 31, 2017,  an increase of approximately $20,000 (0.5%).

 

The rental activity is summarized as follows:

 

 

 

 

 

 

 

 

 

Occupancy Date

 

 

    

May 1, 2018

    

May 1, 2017

 

Residential

 

 

 

 

 

Units

 

2,730

 

2,525

 

Vacancies

 

65

 

67

 

Vacancy rate

 

2.4

%  

2.7

%

Commercial

 

 

 

 

 

Total square feet

 

108,043

 

108,043

 

Vacancy

 

 —

 

 —

 

Vacancy rate

 

0.0

%  

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income (in thousands)

 

 

 

Three Months Ended  March 31, 

 

 

 

2018

 

2017

 

 

    

Total

    

Continuing

    

Total

    

Continuing

 

 

 

Operations

 

Operations

 

Operations

 

Operations

 

Total rents

 

$

13,943

 

$

13,943

 

$

12,631

 

$

12,631

 

Residential percentage

 

 

93

%  

 

93

%  

 

93

%  

 

93

%

Commercial percentage

 

 

 7

%  

 

 7

%  

 

 7

%  

 

 7

%

Contingent rentals

 

$

223

 

$

223

 

$

166

 

$

166

 

 

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Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Dollar

 

Percent

 

 

    

2018

    

2017

    

Change

    

Change

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

13,942,645

 

$

12,631,445

 

$

1,311,200

 

10.4

%

Laundry and sundry income

 

 

116,355

 

 

112,162

 

 

4,193

 

3.7

%

 

 

 

14,059,000

 

 

12,743,607

 

 

1,315,393

 

10.3

%

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

539,145

 

 

525,736

 

 

13,409

 

2.6

%

Depreciation and amortization

 

 

3,507,091

 

 

2,973,056

 

 

534,035

 

18.0

%

Management fee

 

 

559,629

 

 

536,715

 

 

22,914

 

4.3

%

Operating

 

 

1,900,766

 

 

1,713,961

 

 

186,805

 

10.9

%

Renting

 

 

107,899

 

 

86,203

 

 

21,696

 

25.2

%

Repairs and maintenance

 

 

1,814,283

 

 

1,455,621

 

 

358,662

 

24.6

%

Taxes and insurance

 

 

1,868,483

 

 

1,710,404

 

 

158,079

 

9.2

%

 

 

 

10,297,296

 

 

9,001,696

 

 

1,295,600

 

14.4

%

Income Before Other Income  (Expense)

 

 

3,761,704

 

 

3,741,911

 

 

19,793

 

0.5

%

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

164

 

 

312

 

 

(148)

 

(47.4)

%

Interest expense

 

 

(2,984,210)

 

 

(2,520,826)

 

 

(463,384)

 

18.4

%

Income  from investments in unconsolidated joint ventures

 

 

1,100,900

 

 

672,837

 

 

428,063

 

63.6

%

 

 

 

(1,883,146)

 

 

(1,847,677)

 

 

(35,469)

 

1.9

%

Net Income

 

$

1,878,558

 

$

1,894,234

 

$

(15,676)

 

(0.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income for the three months ended March 31, 2018 was approximately $13,943,000, compared to approximately $12,631,000 for the three months ended March 31, 2017,  an  increase of approximately $1,311,000 (10.4%). The factors that can be attributed to this increase are as follows: the acquisitions of Woodland Park and Hamilton Highland resulted in an increase in rental income of approximately $689,000. 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, Hamilton Cypress, 62 Boylston, 1144 Commonwealth Avenue, Westside Colonial, Hamilton Oaks, and Westgate Apartments, with increases of approximately $79,000, $67,000, $67,000, $57,000, $47,000, and $36,000 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, 2018 were approximately $10,297,000 compared to approximately $9,002,000 for the three months ended March 31, 2017,  an increase of approximately $1,295,000 (14.4%). Excluding the increase in operating expenses attributable to the acquisitions of Woodland Park and Hamilton Highland of approximately $1,020,000, operating expenses increased approximately $275,000 (3.1%). The factors contributing to this net increase are an increase in repairs and maintenance costs of approximately $ 302,000 (20.7%), an increase in operating expenses of approximately $58,000 (3.4%), which include an increase in snow removal costs of approximately $96,000, and an increase in taxes and insurance of approximately $40,000 (2.3%), partially offset by a decrease in depreciation and amortization of approximately $132,000 (4.4%).

 

Interest expense for the three months ended March 31, 2018 was approximately $2,984,000 compared to approximately $2,521,000 for the three months ended March 31, 2017,  an increase of approximately $463,000 (18.4%). Excluding the increase in interest expense attributable to Woodland Park and Hamilton Highland of approximately $222,000, there was  an increase in interest expense of approximately $241,000, primarily due to an increase in interest expense on the line of credit of approximately $223,000.

 

At March 31, 2018, the Partnership has between a 40% and 50% ownership interests in eight 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 $1,101,000 for  the three months ended March 31, 2018, compared to net income of approximately $673,000 for the three months ended March 31, 2017,  an increase in income of approximately $428,000 (63.6%). This increase is primarily due to a gain on the sale of real estate of approximately $1,645,000 on the sale of 6 units at Hamilton Bay Apartments LLC, and 8 units at Hamilton 1025 LLC, compared to a gain of approximately $711,000 on the sale of 6 units at Hamilton 1025 LLC for the three months ended March 31, 2017. Included in the income for the three months ended March 31, 2018 is depreciation and amortization expense of approximately $627,000. The proportional income for the three months ended March 31, 2018 from the investment in Dexter Park is approximately $233,000.

 

As a result of the changes discussed above, net income for the three months ended March 31, 2018 was approximately $1,878,000 compared to income of approximately $1,894,000 for the three months ended March 31, 2017, a decrease in income of approximately $16,000 (0.8 %).

 

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LIQUIDITY AND CAPITAL RESOURCES

 

The Partnership’s principal source of cash during the first three months of 2018 was the collection of rents and the proceeds from the line of credit.  The Partnership’s principal source of cash in 2017 was the collection of rents and the proceeds from the mortgage for Woodland Partners.  The majority of cash and cash equivalents of $4,827,468 at March 31, 2018 and $7,238,905 at December 31, 2017 were held in interest bearing accounts at creditworthy financial institutions.

 

The decrease in cash of $2,411,437 for the three months ended March 31, 2018 is summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

    

2018

    

2017

 

Cash provided by operating activities

 

$

3,853,026

 

$

3,977,272

 

Cash (used in) investing activities

 

 

(12,627,762)

 

 

(2,028,544)

 

Cash provided by  (used in) financing activities

 

 

7,482,780

 

 

(434,018)

 

Repurchase of Depositary Receipts, Class B and General Partner Units

 

 

 —

 

 

(42,548)

 

Distributions paid

 

 

(1,119,481)

 

 

(1,119,687)

 

Net (decrease) increase in cash and cash equivalents

 

$

(2,411,437)

 

$

352,475

 

           

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 from joint ventures due to the sale of units,  as well as other factors. The decrease in cash used in investing activities is primarily due to the acquisition of Hamilton Highlands, and a contribution to a joint venture. The change in cash provided by financing activities is primarily due to the proceeds from the line of credit for the purchase of Hamilton Highlands.

 

During 2018, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $868,000. These improvements were funded from cash reserves. Cash reserves have been adequate to fully fund improvements. The most significant improvements were made at Redwood Hills, Hamilton Oaks, Captain Parker,1144 Commonwealth, Woodland Park, and Hamilton Green  at a cost of approximately $183,000, $151,000, $115,000, $109,000, $75,000 and $62,000 respectively. The Partnership plans to invest approximately $2,384,000 in additional capital improvements in 2018.

 

On July 6, 2017, Woodland Park Partners, LLC, a newly formed subsidiary of the Partnership, purchased the Woodland Park Apartments, a 126-unit apartment complex located at 264-290 Grove Street, Newton, Massachusetts (the “Property”), for a purchase price of $45,600,000. 

 

To fund the purchase price, the Partnership borrowed $25,000,000 under its outstanding line of credit with KeyBank, NA, and $16,000,000 from HBC Holdings, LLC, a Massachusetts limited liability company controlled by Harold Brown. The loan from HBC Holdings will mature on July 16, 2018, with interest only at 4.75%.  The balance of the purchase price was funded by the Partnership’s cash reserves. The Partnership paid off the loan of HBC Holdings on September 29, 2017, and the total interest paid on the loan was approximately $182,000.

 

On September 29, 2017, Woodland Park Partners LLC, ( “Woodland Park”), entered into a Multifamily Loan and Security Agreement with KeyBank National Association . The manager of Woodland Park is NewReal, Inc. (“New Real”), the general partner of New England Realty Associates Limited Partnership.  The Partnership is the sole member of Woodland Park. The Loan Agreement provides for a term loan in the principal amount of $22,250,000.  The Loan is due on October 1, 2027 unless the due date is accelerated in accordance with the Loan’s terms, with interest only through October 1, 2022. Borrowings under the Loan will bear interest at the rate of 3.79%.

 

On March 29, 2018, Hamilton Highlands, LLC (Hamilton highlands”), a wholly-owned subsidiary of New England Realty Associates Limited Partnership, purchased Webster Green Apartments, a 79 unit apartment complex located at 755-757 Highland Avenue, Needham, Massachusetts.  The sale was consummated pursuant to the terms of a Purchase and Sale Contract by and between Webster Green Apartments, LLC, the prior owner of the Property, and The Hamilton Companies, Inc., an affiliate of the Partnership , which agreement was subsequently assigned by Hamilton to the Purchaser.  In connection with the purchase, Hamilton Highlands entered into an Assumption and Modification Agreement dated as of March 29, 2018 with Brookline Bank pursuant to which Hamilton Highlands assumed a note

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dated as of January 14, 2016 in the principal amount of $21,500,000 and various agreements relating to the note including a Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing dated as of January 14, 2016. The purchase price was $34,500,000, consisting of a payment of approximately $13,000,000 in cash and the assumption of the note and mortgage. Hamilton Highlands funded $5,000,000 of the cash portion of the purchase price out of cash reserves and the remaining $8,000,000 by drawing on an existing line of credit.

 

During the three months ended March 31, 2018 the Partnership received distributions of approximately $1,970,000 from the investment properties. For the three months ended March 31, 2017, the Partnership received distributions of approximately $1,391,000 from the investment properties. Included in these distributions is the amount from  Dexter Park of approximately $240,000 and $480,000 for the three months ended March 31, 2018 and 2017 respectively.

 

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. The Partnership borrowed $25,000,000 to partially fund the purchase of Woodland Park. It paid down $8,000,000 through the financing of the property and its’ cash reserve. As of December 31, 2017, the credit line had an outstanding balance of $17,000,000. An additional $$8,000,000 was drawn for the purchase of Hamilton Highlands on March 29, 2018.

As of March 31,  2018, the credit line had an outstanding balance of $25,000,000.

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, 2018, the Partnership had a 40%-50% ownership interest in nine Joint Ventures, all 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, 2018, our proportionate share of the non-recourse debt related to these investments was approximately $53,938,000. See Note 14 to the Consolidated Financial Statements.

 

Contractual Obligations

 

As of March 31, 2018, we are subject to contractual payment obligations as described in the table below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments due by period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2020

 

 

2021

 

 

2022

 

 

2023

 

 

Thereafter

 

 

Total

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual Obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long -term debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage debt

 

$

1,862,603

 

$

1,944,188

 

$

4,344,152

 

$

2,565,978

 

$

67,095,455

 

$

177,277,398

 

$

255,089,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other obligations

 

 

 —

 

 

25,000,000

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

25,000,000

Total Contractual Obligations

 

$

1,862,603

 

$

26,944,188

 

$

4,344,152

 

$

2,565,978

 

$

67,095,455

 

$

177,277,398

 

$

280,089,774

 

* Excluding unamortized deferred financing costs

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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.

 

·

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

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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, 2018, the Partnership, its Subsidiary Partnerships and the Investment Properties collectively have approximately $404,287,000 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 2029. The Partnership, its Subsidiary Partnerships and the Investment Properties collectively have variable rate debt of $75,900,000 (without taking out unamortized deferred financing costs) as of March 31, 2018. 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 $709,000 annually and the increase or decrease in the fair value of the Partnership’s fixed rate debt as of March 31, 2018 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

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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 2018 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

 

If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it may assess and collect any taxes  (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders might be reduced.

 

Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from the Partnership. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties and interest, our cash available for  distribution to our partners might be substantially reduced. These rules are not applicable to us for tax years beginning on or prior to December 31, 2017.

 

In addition, see the risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2017.

 

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

 

(a)None

 

(b)None

 

(c)None

 

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

(10.1)

 

Purchase and Sale Contract dated as of February_, 2018 by and between Webster Green Apartments, LLC as seller and The Hamilton Companies, Inc. as buyer. (1)

 

(10.2)

 

Assumption and Modification Agreement dated as of March 29, 2018 by and between Hamilton Highlands, LLC and Brookline Bank.(2)

 

(10.3) 

 

Amended and Restated Note dated as of March 29, 2018 in the principal amount of $21,500,000 payable to Brookline Bank, made by Hamilton Highlands, LLC. (3)

 

(10.4)

 

Limited Guaranty dated as of March 29, 2018 made by New England Realty Associates Limited Partnership in favor of Brookline Bank. (4)

 

(10.5)

 

Rate Lock Confirmation dated March 22, 2018 by and between Hamilton Park Towers, LLC and John Hancock Life Insurance Company (U.S.A.). (5)

 

(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 Harold 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 Harold 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, 2018, 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).

 

(1)

 

Incorporated herein by reference to Exhibit 10.1 to the partnership’s Current report on Form 8-K as filed with the securities and Exchange Commission on April 3, 2018.

 

(2)

 

Incorporated herein by reference to Exhibit 10.2 to the partnership’s Current report on Form 8-K as filed with the securities and Exchange Commission on April 3, 2018.

 

(3)

 

Incorporated herein by reference to Exhibit 10.3 to the partnership’s Current report on Form 8-K as filed with the securities and Exchange Commission on April 3, 2018.

 

(4)

 

Incorporated herein by reference to Exhibit 10.4 to the partnership’s Current report on Form 8-K as filed with the securities and Exchange Commission on April 3, 2018.

 

(5)

 

Incorporated herein by reference to Exhibit 10.1 to the partnership’s Current report on Form 8-K as filed with the Securities and Exchange Commission on March 27, 2018.

 

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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, 2018

 

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, 2018

Ronald Brown

 

(Principal Executive Officer)

 

 

 

 

 

 

 

/s/ HAROLD BROWN

 

Treasurer and Director of the General Partner

 

May 8, 2018

Harold Brown

 

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

 

 

 

/s/ GUILLIAEM AERTSEN

 

Director of the General Partner

 

May 8, 2018

Guilliaem Aertsen

 

 

 

 

 

 

 

 

 

/s/ DAVID ALOISE

 

Director of the General Partner

 

May 8, 2018

David Aloise

 

 

 

 

 

 

 

 

 

/s/ EUNICE HARPS

 

Director of the General Partner

 

May 8, 2018

Eunice Harps

 

 

 

 

 

 

 

 

 

 

 

1

41


nen_Ex31_1

Exhibit 31.1

 

New England Realty Associates Limited Partnership

 

CERTIFICATION

 

I, Ronald Brown, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of New England Realty Associates Limited Partnership;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

/s/ RONALD BROWN

 

 

 

Principal Executive Officer
(President and Director of the Partnership’s General Partner, NewReal, Inc.)

Date: May  8, 2018

 

 


nen_Ex31_2

Exhibit 31.2

 

New England Realty Associates Limited Partnership

 

CERTIFICATIONS

 

I, Harold Brown, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of New England Realty Associates Limited Partnership;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

/s/ HAROLD BROWN

 

 

 

Principal Financial Officer

 

(Treasurer and Director of the Partnership’s General Partner, NewReal, Inc.)

Date: May  8, 2018

 

 


nen_Ex32_1

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of New England Realty Associates Limited Partnership for the three months ended  March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ronald Brown, as President and  Director of the Partnership’s General Partner, NewReal, Inc., and Harold Brown, the President and a Director of the Partnership’s General Partner, NewReal, Inc., each hereby certifies, pursuant to 18.U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

 

 

 

 

/s/ RONALD BROWN

 

 

 

Ronald Brown

 

Principal Executive Officer

 

(President and Director of the Partnership’s General Partner, NewReal, Inc.)

Date: May  8, 2018

 

 

/s/ Harold Brown

 

 

 

Harold Brown

 

Principal Financial Officer

 

(Treasurer and Director of the Partnership’s General Partner, NewReal, Inc.)

Date: May  8, 2018

 

 

This certification accompanies each Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of §18 of the Security Exchange Act of 1934, as amended.

 

A signed original of this written statement required by §906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

 

 


v3.8.0.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2018
May 05, 2018
Entity Registrant Name NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP  
Entity Central Index Key 0000746514  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Class A    
Entity Common Stock, Shares Outstanding   99,509
Class B    
Entity Common Stock, Shares Outstanding   23,633
v3.8.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2018
Dec. 31, 2017
ASSETS    
Rental Properties $ 238,720,755 $ 207,153,794
Cash and Cash Equivalents 4,827,468 7,238,905
Rents Receivable 615,205 592,045
Real Estate Tax Escrows 486,756 488,396
Prepaid Expenses and Other Assets 4,482,605 4,122,052
Investments in Unconsolidated Joint Ventures 6,986,470 7,212,044
Total Assets 256,119,259 226,807,236
LIABILITIES AND PARTNERS' CAPITAL    
Mortgage Notes Payable 253,584,894 233,221,258
Line of credit 25,000,000 17,000,000
Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture 2,933,844 2,806,319
Accounts Payable and Accrued Expenses 3,315,038 3,340,509
Advance Rental Payments and Security Deposits 5,841,583 5,754,327
Total Liabilities 290,675,359 262,122,413
Partners’ Capital 124,386 and 124,409 units outstanding in 2017 and 2016 respectively (34,556,100) (35,315,177)
Total Liabilities and Partners' Capital $ 256,119,259 $ 226,807,236
v3.8.0.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
Mar. 31, 2018
Dec. 31, 2017
Mar. 31, 2017
Dec. 31, 2016
CONSOLIDATED BALANCE SHEETS        
Partners' Capital, units outstanding 124,386 124,386 124,386 124,409
v3.8.0.1
CONSOLIDATED STATEMENTS OF INCOME - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Revenues    
Rental income $ 13,942,645 $ 12,631,445
Laundry and sundry income 116,355 112,162
Total Revenues 14,059,000 12,743,607
Expenses    
Administrative 539,145 525,736
Depreciation and amortization 3,507,091 2,973,056
Management fee 559,629 536,715
Operating 1,900,766 1,713,961
Renting 107,899 86,203
Repairs and maintenance 1,814,283 1,455,621
Taxes and insurance 1,868,483 1,710,404
Total Expenses 10,297,296 9,001,696
Income Before Other Income (Expense) 3,761,704 3,741,911
Other Income (Expense)    
Interest income 164 312
Interest expense (2,984,210) (2,520,826)
Income from investments in unconsolidated joint ventures 1,100,900 672,837
Total Other Income (Expense) (1,883,146) (1,847,677)
Net Income $ 1,878,558 $ 1,894,234
Income per Unit    
Net Income per Unit (in dollars per unit) $ 15.10 $ 15.23
Weighted Average Number of Units Outstanding (in units) 124,386 124,409
v3.8.0.1
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER'S CAPITAL - USD ($)
3 Months Ended 115 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2017
Increase (Decrease) in Partners' Capital      
Balance $ (35,315,177) $ (34,224,726)  
Balance (in units) 124,386 124,409  
Distribution to Partners $ (1,119,481) $ (1,119,687)  
Stock Buyback   $ (42,548) $ (40,274,000)
Stock Buyback (in units)   (23)  
Net income 1,878,558 $ 1,894,234  
Balance $ (34,556,100) $ (33,492,726) $ (33,492,726)
Balance (in units) 124,386 124,386 124,386
Subtotal      
Increase (Decrease) in Partners' Capital      
Balance (in units) 180,225 180,225  
Balance (in units) 180,225 180,225 180,225
General Partnership      
Increase (Decrease) in Partners' Capital      
Balance $ (351,745) $ (340,840)  
Balance (in units) 1,802 1,802  
Distribution to Partners $ (11,195) $ (11,197)  
Stock Buyback   (426)  
Net income 18,786 18,942  
Balance $ (344,154) $ (333,521) $ (333,521)
Balance (in units) 1,802 1,802 1,802
Treasury Units      
Increase (Decrease) in Partners' Capital      
Balance (in units) (55,839) (55,816)  
Stock Buyback (in units)   (23)  
Balance (in units) (55,839) (55,839) (55,839)
Class A      
Increase (Decrease) in Partners' Capital      
Balance $ (28,280,285) $ (27,407,924)  
Balance (in units) 144,180 144,180  
Distribution to Partners $ (895,585) $ (895,749)  
Stock Buyback   (34,038)  
Net income 1,502,846 1,515,387  
Balance $ (27,673,024) $ (26,822,324) $ (26,822,324)
Balance (in units) 144,180 144,180 144,180
Class B      
Increase (Decrease) in Partners' Capital      
Balance $ (6,683,147) $ (6,475,961)  
Balance (in units) 34,243 34,243  
Distribution to Partners $ (212,701) $ (212,741)  
Stock Buyback   (8,084)  
Net income 356,926 359,904  
Balance $ (6,538,922) $ (6,336,882) $ (6,336,882)
Balance (in units) 34,243 34,243 34,243
v3.8.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash Flows from Operating Activities    
Net income $ 1,878,558 $ 1,894,234
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 3,507,091 2,973,056
Amortization of deferred finance costs 51,541 47,134
(Income) from investments in joint venture (1,100,900) (672,837)
Change in operating assets and liabilities    
Decrease in rents receivable (23,160) 111,764
(Decrease) in accounts payable and accrued expense (25,471) (1,133,932)
Decrease in insurance recovery receivable   495,794
Decrease (Increase) in real estate tax escrow 1,640 8,703
Decrease in prepaid expenses and other assets (523,530) 61,835
Increase in advance rental payments and security deposits 87,257 191,521
Total Adjustments 1,974,468 2,083,038
Net cash provided by operating activities 3,853,026 3,977,272
Cash Flows From Investing Activities    
Proceeds from unconsolidated joint ventures 1,770,000 1,204,248
Distribution in excess of investment in unconsolidated joint ventures 210,402 186,395
(Investment) in unconsolidated joint ventures (526,402) (2,277,645)
Improvement of rental properties (868,468) (1,141,542)
Purchase of rental property (13,213,294)  
Net cash (used in) investing activities (12,627,762) (2,028,544)
Cash Flows from Financing Activities    
Payment of financing costs (148,004)  
Proceeds of mortgage notes payable 83,684  
Proceeds of note payable 8,000,000  
Principal payments of mortgage notes payable (452,900) (434,018)
Stock buyback   (42,548)
Distributions to partners (1,119,481) (1,119,687)
Net cash (used in) financing activities 6,363,299 (1,596,253)
Net (Decrease) in Cash and Cash Equivalents (2,411,437) 352,475
Cash and Cash Equivalents, at beginning of period 7,238,905 7,463,697
Cash and Cash Equivalents, at end of period $ 4,827,468 $ 7,816,172
v3.8.0.1
SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2018
SIGNIFICANT ACCOUNTING POLICIES  
SIGNIFICANT ACCOUNTING POLICIES

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 27 properties which include 19 residential buildings; 4 mixed use residential, retail and office buildings; 3 commercial buildings and individual units at one condominium complex. These properties total 2,711 apartment units, 19 condominium units and 108,043 square feet of commercial space. Additionally, the Partnership also owns a 40- 50% interest in 8 residential and mixed use properties consisting of 711 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 eight 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 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. Contingent rent for commercial properties are 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 values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.

 

Rental Properties:  Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions which improve or extend the life of 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 $52,000 and $47,000 for the three months ended March 31, 2018 and 2017, 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.

 

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 2018 or 2017 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 2018 or 2017. The Partnership makes its temporary cash investments with high-credit quality financial institutions. At March 31, 2018, 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 0.20%. At March 31, 2018 and December 31, 2017, respectively approximately $6,637,000, and $8,898,000 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 $44,381 and $59,611 for the three months ended March 31, 2018 and 2017, 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, 2018 and 2017 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. 

v3.8.0.1
RENTAL PROPERTIES
3 Months Ended
Mar. 31, 2018
RENTAL PROPERTIES  
RENTAL PROPERTIES

NOTE 2. RENTAL PROPERTIES

 

As of March 31, 2018, the Partnership and its Subsidiary Partnerships owned 2,711 residential apartment units in 23 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, 2018, 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 eight residential and mixed use complexes (the “Investment Properties”) at March 31, 2018 with a total of 711 units, accounted for using the equity method of consolidation. See Note 14 for summary information on these investments.

 

Rental properties consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

March 31, 2018

    

December 31, 2017

    

Useful Life

 

Land, improvements and parking lots

 

$

71,906,637

 

$

65,087,214

 

15

-

40

years

 

Buildings and improvements

 

 

229,245,305

 

 

201,844,565

 

15

-

40

years

 

Kitchen cabinets

 

 

12,576,357

 

 

12,338,627

 

 5

-

10

years

 

Carpets

 

 

8,954,788

 

 

8,802,831

 

 5

-

10

years

 

Air conditioning

 

 

641,079

 

 

641,079

 

 5

-

10

years

 

Laundry equipment

 

 

271,824

 

 

263,275

 

 5

-

 7

years

 

Elevators

 

 

1,139,296

 

 

1,139,296

 

20

-

40

years

 

Swimming pools

 

 

444,629

 

 

444,629

 

10

-

30

years

 

Equipment

 

 

11,329,576

 

 

11,163,864

 

 5

-

30

years

 

Motor vehicles

 

 

216,260

 

 

216,260

 

 

 

 5

years

 

Fences

 

 

37,465

 

 

37,465

 

 5

-

15

years

 

Furniture and fixtures

 

 

9,516,987

 

 

9,390,021

 

 5

-

 7

years

 

Smoke alarms

 

 

582,471

 

 

582,471

 

 5

-

 7

years

 

Total fixed assets

 

 

346,862,674

 

 

311,951,597

 

 

 

 

 

 

Less: Accumulated depreciation

 

 

(108,141,919)

 

 

(104,797,803)

 

 

 

 

 

 

 

 

$

238,720,755

 

$

207,153,794

 

 

 

 

 

 

 

 

On March 29, 2018, Hamilton Highlands, LLC (“Hamilton Highlands”), a wholly-owned subsidiary of New England Realty Associates Limited Partnership (the “Partnership”), purchased Webster Green Apartments, a 79 unit apartment complex located at 755-757 Highland Avenue, Needham, Massachusetts.  The sale was consummated pursuant to the terms of a Purchase and Sale Contract by and between Webster Green Apartments, LLC, the prior owner of the Property, and The Hamilton Companies, Inc., an affiliate of the Partnership, which agreement was subsequently assigned by Hamilton to Hamilton Highlands.

 

In connection with the purchase, the Hamilton Highlands entered into an Assumption and Modification Agreement dated as of March 29, 2018 with Brookline Bank pursuant to which the Hamilton Highlands assumed a note dated as of January 14, 2016 in the principal amount of $21,500,000  and various agreements relating to the Note including a Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing  dated as of January 14, 2016 .  The purchase price was $34,500,000, consisting of a payment of approximately $13,000,000 in cash and the assumption of the note and mortgage. Hamilton Highlands funded $5,000,000 of the cash portion of the purchase price out of cash reserves and the remaining $8,000,000 by drawing on an existing line of credit. The closing costs were approximately $141,000. From the purchase price, the Partnership allocated approximately $502,000 for in- place leases, and approximately $40,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively.

 

On July 6, 2017, Woodland Park Partners, LLC, a newly formed subsidiary of the Partnership, purchased the Woodland Park Apartments, a 126-unit apartment complex located at 264-290 Grove Street, Newton, Massachusetts (the “Property”), for a purchase price of $45,600,000. The closing costs were approximately $64,000. To fund the purchase price, the Partnership borrowed $25,000,000 under its outstanding line of credit with KeyBank, NA, and $16,000,000 from HBC Holdings, LLC, a Massachusetts limited liability company controlled by Harold Brown. The loan from HBC Holdings will mature on July 16, 2018, with interest only at 4.75%.  The balance of the purchase price was funded by the Partnership’s cash reserves. The line of credit was paid down to $17,000,000 and the loan payable to HBC Holdings was paid in full through the refinancing of Woodland Park and partnership cash reserves by December 31, 2017. From the purchase price, the Partnership allocated approximately $541,000 for in- place leases, and approximately $42,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively.

 

v3.8.0.1
RELATED PARTY TRANSACTIONS
3 Months Ended
Mar. 31, 2018
RELATED PARTY TRANSACTIONS  
RELATED PARTY TRANSACTIONS

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 $560,000 and $537,000 for the three months ended March 31, 2018 and 2017, 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, 2018 and 2017, approximately $354,000 and $182,000, was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements. Of the 2018 expenses referred to above, approximately $82,000 consisted of repairs and maintenance, $84,000 of administrative expense and $20,000 for commercial brokerage fees. Approximately $168,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties. Additionally in 2018, the Hamilton Company received approximately $243,000 from the Investment Properties of which approximately $160,000 was the management fee, approximately $23,000 was for maintenance services, approximately $20,000 was for administrative services and approximately $40,000 for 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 $824,000 and $811,000 for the three months ended March 31, 2018 and 2017, 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. There were no employer contributions during 2018 and 2017.

 

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, 2018 and 2017, the Management Company charged the Partnership $31,250 ($125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

 

The President of the Management Company performs asset management consulting services and receives an asset management fee from the Partnership. The Partnership does not have a written agreement with this individual. During the three months ended March 31, 2018 and 2017 this individual received fees of $18,750.

 

The Partnership has invested in eight 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 Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 56%. See Note 14 for a description of the properties and their operations.

 

v3.8.0.1
OTHER ASSETS
3 Months Ended
Mar. 31, 2018
OTHER ASSETS  
OTHER ASSETS

NOTE 4. OTHER ASSETS

 

Approximately $2,564,000, and $2,420,000 of security deposits are included in prepaid expenses and other assets at March 31, 2018 and December 31, 2017, respectively. The security deposits and escrow accounts are restricted cash.

 

Included in prepaid expenses and other assets at March 31, 2018 and December 31, 2017 is approximately $387,000 and $357,000, respectively, held in escrow to fund future capital improvements.

 

Intangible assets on the acquisitions of Webster Green Apartments and Woodland Park Apartments are included in prepaid expenses and other assets.  Intangible assets are approximately $690,000 net of accumulated amortization of approximately $140,000 and approximately $302,000 net of accumulated amortization of approximately $280,000 at March 31, 2018 and December 31, 2017, respectively.

 

Financing fees in association with the line of credit of approximately $110,000 and $121,000 are net of accumulated amortization of approximately $18,000 and $7,000 at March 31, 2018 and December 31, 2017 respectively.

 

v3.8.0.1
MORTGAGE NOTES PAYABLE
3 Months Ended
Mar. 31, 2018
MORTGAGE NOTES PAYABLE  
MORTGAGE NOTES PAYABLE

NOTE 5. MORTGAGE NOTES PAYABLE

 

At March 31, 2018 and December 31, 2017, 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, 2018, the interest rates on these loans ranged from 3.61% to 5.81%, payable in monthly installments aggregating approximately $1,116,000 including principal, to various dates through 2029. The majority of the mortgages are subject to prepayment penalties. At March 31, 2018, the weighted average interest rate on the above mortgages was 4.52%. The effective rate of 4.60% 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 $1,615,000 and $1,531,000 are net of accumulated amortization of approximately $1,101,000 and $1,149,000 at March 31, 2018 and December 31, 2017, respectively.

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

 

Approximate annual maturities at March 31, 2018 are as follows:

 

 

 

 

 

 

2019—current maturities

    

$

1,863,000

 

2020

 

 

1,944,000

 

2021

 

 

4,344,000

 

2022

 

 

2,566,000

 

2023

 

 

67,096,000

 

Thereafter

 

 

177,277,000

 

 

 

 

255,090,000

 

Less: unamortized deferred financing costs

 

 

(1,505,000)

 

 

 

$

253,585,000

 

 

On March 29, 2018, Hamilton Highlands, LLC (Hamilton Highlands), a wholly-owned subsidiary of New England Realty Associates Limited Partnership, purchased Webster Green Apartments, a 79 unit apartment complex located at 755-757 Highland Avenue, Needham, Massachusetts.  The sale was consummated pursuant to the terms of a Purchase and Sale Contract  by and between Webster Green Apartments, LLC, the prior owner of the Property, and The Hamilton Companies, Inc., an affiliate of the Partnership, which agreement was subsequently assigned to Hamilton Highlands.

In connection with the purchase, Hamilton Highlands entered into an Assumption and Modification Agreement dated as of March 29, 2018 with Brookline Bank pursuant to which Hamilton Highlands assumed a note dated as of January 14, 2016 in the principal amount of $21,500,000 and various agreements relating to the Note including a Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing dated as of January 14, 2016.  The purchase price was $34,500,000, consisting of a payment of   approximately $13,000,000 in cash and the assumption of the Note and Mortgage. Hamilton Highlands funded $5,000,000 of the cash portion of the purchase price out of cash reserves and the remaining $8,000,000 by drawing on an existing line of credit. The closing costs were approximately $141,000.

 

On March 12, 2018, the loan for 659 Worcester Road was refinanced with Brookline Bank in the amount of $6,083,683. The loan is due on March 12, 2023. Interest only until March 12, 2021. Commencing on the next payment, monthly payments of principal and interest in the amount of $32,427 will be made based on an assumed amortization period of thirty (30) years. The loan bears a fixed annual rate equal to 4.87%. The proceeds of the new loan were used to pay off the existing loan.

 

On September 29, 2017, Woodland Park Partners LLC, (“Woodland Park”), entered into a Multifamily Loan and Security Agreement with KeyBank National Association . The Loan Agreement provides for a term loan in the principal amount of $22,250,000.  The Loan is due on October 1, 2027, unless the due date is accelerated in accordance with the Loan’s terms, with interest only through October 1, 2022. Borrowings under the Loan will bear interest at the rate of 3.79%. The proceeds of the loan were used to pay off the loan from HBC Holdings, LLC and pay down the line of credit.

 

 

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 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. The Partnership borrowed $25,000,000 to partially fund the purchase of Woodland Park. It paid down $8,000,000 through the financing of the property and its’ cash reserve. As of December 31, 2017, the credit line had an outstanding balance of $17,000,000.

 On March 29, 2018, the Partnership drew down $8,000,000 in conjunction with the purchase of Webster Green Apartments. As of March 31, 2018, the credit line had an outstanding balance of $25,000,000.

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, 2018.

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, 2018.

v3.8.0.1
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS
3 Months Ended
Mar. 31, 2018
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS  
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

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, 2018, amounts received for prepaid rents of approximately $2,175,000 are included in cash and cash equivalents, and security deposits of approximately $2,564,000 are included in prepaid expenses and other assets and are restricted cash.

v3.8.0.1
PARTNERS' CAPITAL
3 Months Ended
Mar. 31, 2018
PARTNERS' CAPITAL  
PARTNERS' CAPITAL

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 2018, the Partnership approved a quarterly distribution to its Class A Limited Partners and holders of Depositary Receipts of record as of March 15, 2018 and payable on March 31, 2018, of $9.00 per unit ($0.30 per receipt).

In April 2018, the Partnership approved a quarterly distribution to its Class A Limited Partners and holders of Depositary Receipts of record as of June 15, 2018 and payable on June 29, 2018, of $9.00 per unit ($0.30 per receipt).

In 2017, regular quarterly distributions of $9.00 per unit ($0.30 per receipt) were paid in March, June, September and December. In December 2017, the Partnership paid a special distribution of $28.50 per unit ($0.95 per receipt).

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,

 

 

    

2018

    

2017

 

Net Income per Depositary Receipt

 

$

0.50

 

$

0.51

 

Distributions per Depositary Receipt

 

$

0.30

 

$

0.30

 

 

v3.8.0.1
TREASURY UNITS
3 Months Ended
Mar. 31, 2018
TREASURY UNITS  
TREASURY UNITS

NOTE 8. TREASURY UNITS

 

Treasury Units at March 31, 2018 are as follows:

 

 

 

 

 

Class A

    

44,671

 

Class B

 

10,609

 

General Partnership

 

559

 

 

 

55,839

 

 

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. 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 Restate 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, 2018, the Partnership has repurchased 1,365,306 Depositary Receipts at an average price of $27.14 per receipt (or $814.20 per underlying Class A Unit), 3,072 Class B Units and 162 General Partnership Units, both at an average price of $926.26 per Unit, totaling approximately $40,274,000 including brokerage fees paid by the Partnership.

 

During the three months ended March 31, 2018, the Partnership did not purchase any Depositary Receipts.

v3.8.0.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2018
COMMITMENTS AND CONTINGENCIES  
COMMITMENTS AND CONTINGENCIES

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.

 

 

v3.8.0.1
RENTAL INCOME
3 Months Ended
Mar. 31, 2018
RENTAL INCOME  
RENTAL INCOME

NOTE 10. RENTAL INCOME

 

During the three months ended March 31, 2018, approximately 93% 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 August. Approximately 7% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2018 as follows:

 

 

 

 

 

 

 

    

Commercial

 

 

 

Property Leases

 

2019

 

$

2,662,000

 

2020

 

 

2,213,000

 

2021

 

 

1,943,000

 

2022

 

 

1,290,000

 

2023

 

 

646,000

 

Thereafter

 

 

1,105,000

 

 

 

$

9,859,000

 

 

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 $223,000 and $166,000 for the three months ended March 31, 2018 and 2017 respectively. Staples and Trader Joes, tenants at Staples Plaza, are approximately 31% 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

 

2019

 

$

431,751

 

16,542

 

12

 

14

%

2020

 

 

458,122

 

17,135

 

10

 

15

%

2021

 

 

193,519

 

4,170

 

 6

 

 6

%

2022

 

 

1,137,030

 

47,591

 

 9

 

39

%

2023

 

 

246,341

 

7,087

 

 4

 

 8

%

2024

 

 

379,670

 

11,668

 

 4

 

13

%

2025

 

 

 —

 

 —

 

 —

 

 —

%

2026

 

 

 —

 

 —

 

 —

 

 —

%

2027

 

 

 —

 

 —

 

 —

 

 —

%

2028

 

 

 —

 

 —

 

 —

 

 —

%

2029

 

 

142,450

 

3,850

 

 1

 

 5

%

Totals

 

$

2,988,883

 

108,043

 

46

 

100

%

 

Rents receivable are net of an allowance for doubtful accounts of approximately $605,000 and $644,000 at March 31, 2018 and December 31, 2017. Included in rents receivable at March 31, 2018 is approximately $114,000 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 in Boston, Massachusetts.

 

Rents receivable at March 31, 2018 also includes approximately $120,000 representing the deferral of rental concession primarily related to the residential properties.

v3.8.0.1
CASH FLOW INFORMATION
3 Months Ended
Mar. 31, 2018
CASH FLOW INFORMATION  
CASH FLOW INFORMATION

NOTE 11. CASH FLOW INFORMATION

 

During the three months ended March 31, 2018 and 2017, cash paid for interest was approximately $3,010,000, and $2,472,000 respectively.  Cash paid for state income taxes was approximately $47,000 and $33,000 during the three months ended March 31, 2018 and 2017 respectively. At March 31, 2018, the Partnership was involved in a non-cash financing activity of approximately $21,000,000 in connection with the purchase of

v3.8.0.1
FAIR VALUE MEASUREMENTS
3 Months Ended
Mar. 31, 2018
FAIR VALUE MEASUREMENTS  
FAIR VALUE MEASUREMENTS

NOTE 12. FAIR VALUE MEASUREMENTS

 

Fair Value Measurements on a Recurring Basis

 

At March 31, 2018 and December 31, 2017, 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, 2018 and December 31, 2017 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, 2018 and December 31, 2017, 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, 2018 and December 31, 2017, 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, 2018

*

$

253,584,894

 

$

233,103,625

 

At December 31, 2017

*

$

233,221,258

 

$

237,895,708

 

Investment Properties

 

 

 

 

 

 

 

At March 31, 2018

*

$

123,720,733

 

$

123,539,032

 

At December 31, 2017

*

$

124,145,012

 

$

125,519,974

 

 

* 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, 2018 and December 31, 2017. 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, 2018 and current estimates of fair value may differ significantly from the amounts presented herein.

v3.8.0.1
TAXABLE INCOME AND TAX BASIS
3 Months Ended
Mar. 31, 2018
TAXABLE INCOME AND TAX BASIS  
TAXABLE INCOME AND TAX BASIS

 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, accelerated depreciation, different tax lives, timing differences related to prepaid rents, allowances and intangible assets related to significant acquisitions and the treatment of certain expenditures. Taxable income of approximately $5,438,000 was approximately $1,500,000 less than statement income for the year ended December 31, 2017. The primary reason for the difference was due to accelerated depreciation, tax free exchange and other differences in the treatment of certain expenditures. Substantial property acquisitions could also cause a significant difference between book and tax depreciation. The cumulative tax basis of the Partnership’s real estate at December 31, 2017 is approximately $1,532,000 less than the statement basis. The primary reasons for the lower tax basis were tax free exchanges, and accelerated depreciation. The Partnership’s tax basis in its joint venture investments is approximately $5,000,000 more than statement basis because of accelerated depreciation.

 

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.

 

While allowable accelerated depreciation deductions were extended, future tax law changes may significantly affect taxable income.

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, 2018, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are from the year 2014 forward.

 

v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
3 Months Ended
Mar. 31, 2018
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 

 

Since November 2001,the Partnership has invested in nine limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three partnerships investing in commercial property. The Partnership has between a 40%-50% ownership interest in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 56%, with the balance owned by the others. A description of each investment is as follows:

 

On October 28, 2009 the Partnership invested approximately $15,925,000 in a joint venture to acquire a 40% interest in a residential property located in Brookline, Massachusetts. The property, Hamilton Park Towers LLC, referred to as Dexter Park, or Hamilton Park is a 409 unit residential complex. The purchase price was $129,500,000. The total mortgage was $89,914,000 with an interest rate of 5.57% and it matures in 2019. The mortgage calls for interest only payments for the first two years of the loan and amortized over 30 years thereafter. The balance of this mortgage before unamortized deferred financing costs is approximately $81,601,000 at March 31, 2018.  This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

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

On October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168-unit apartment complex in Quincy, Massachusetts. The purchase price was $30,875,000. The Joint Venture sold 120 units as condominiums and retained 48 units for long-term investment. In February 2007, the Joint Venture refinanced the 48 units with a new mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. The loan was to be amortized over 30 years thereafter and matured in March, 2017. On March 1, 2017, the mortgage balance was paid in full, with the Partnership contributing its share of the mortgage balance of approximately $2,222,000.  As of December 31, 2017, 29 units had been sold with a gain on the sales of approximately $3,628,000. As of March 31, 2018, 5 additional units were under purchase and sale agreements, and the Partnership owned 13 units. Six units were sold in the first quarter of 2018, resulting in a gain of approximately $828,000. This investment is referred to as Hamilton Bay Apartments, LLC.

 

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

 

On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176‑unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Joint Venture sold 127 of the units as condominiums and retained 49 units for long‑term investment. The Joint Venture obtained a new 10‑year mortgage in the amount of $5,000,000 on the units to be retained by the Joint Venture. The interest on the new loan was 5.67% fixed for the 10 year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan term. On July 8, 2016, Hamilton 1025 LLC paid off the outstanding balance of the mortgage balance. The Partnership made a capital contribution of $2,359,500 to Hamilton 1025, LLC for its share of the funds required for the transaction. 20 units were sold in the year ended December 31, 2017 with a gain on the sales of approximately $2,380,000. As of March 31, 2018, 3 units were under purchase and sales agreements and the Partnership owned 10 units. Eight units were sold in the first quarter ending March 31, 2018, resulting in a gain of approximately $817,000. This investment is referred to as Hamilton 1025, LLC.

 

In September 2004, the Partnership invested approximately $5,075,000 for a 50% ownership interest in a 42‑unit apartment complex located in Lexington, Massachusetts. The purchase price was $10,100,000. In October 2004, the Joint Venture obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Joint Venture obtained a new 10- year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan was 5.67% fixed for the ten year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan. This loan required a cash contribution by the Partnership of $1,250,000 in December 2006. On September 12, 2016, the property was refinanced with a 15 year mortgage in the amount of $6,000,000, at 3.71%, interest only. The Joint Venture Partnership paid off the prior mortgage of approximately $5,158,000 with the proceeds of the new mortgage and made a distribution of $385,000 to the Partnership. The cost associated with the refinancing was approximately $123,000. This investment is referred to as Hamilton Minuteman, LLC. At March 31, 2018, the balance on this mortgage before unamortized deferred financing costs is approximately $6,000,000.This investment is referred to as Hamilton Minuteman, LLC. In the first quarter of 2018, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting, although the Partnership has no legal obligation to fund its share of any future operating deficiencies, if needed.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280‑unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. The Joint Venture sold 137 units as condominiums. The assets were combined with Hamilton on Main Apartments. Hamilton on Main, LLC is known as Hamilton Place. In 2005, Hamilton on Main Apartments, LLC obtained a ten year mortgage on the three buildings to be retained. The mortgage was $16,825,000, with interest only of 5.18% for three years and amortizing on a 30 year schedule for the remaining seven years when the balance is due. The net proceeds after funding escrow accounts and closing costs on the mortgage were approximately $16,700,000, which were used to reduce the existing mortgage. In August 2014, the property was refinanced with a 10 year mortgage in the amount of $16,900,000 at 4.34% interest only.  The Joint Venture paid off the prior mortgage of approximately $15,205,000 with the proceeds of the new mortgage and distributed $850,000 to the Partnership. The costs associated with the refinancing were approximately $161,000. At March 30, 2018, the balance of the mortgage before unamortized deferred financing costs is approximately $16,900,000.The investment is referred to as Hamilton On Main LLC.

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

 

Summary financial information as of March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

  

$

7,515,492

  

$

2,597,633

  

$

6,242,990

  

$

887,890

  

$

1,583,448

  

$

5,854,350

  

$

17,359,777

  

$

89,284,170

  

$

131,325,750

 

Cash & Cash Equivalents

 

 

148,701

 

 

50,004

 

 

123,091

 

 

136,822

 

 

122,350

 

 

107,268

 

 

102,710

 

 

861,790

 

 

1,652,736

 

Rent Receivable

 

 

133,580

 

 

 —

 

 

19,937

 

 

6,902

 

 

2,463

 

 

5,206

 

 

21,196

 

 

221,175

 

 

410,459

 

Real Estate Tax Escrow

 

 

83,760

 

 

 —

 

 

46,751

 

 

 —

 

 

0

 

 

32,229

 

 

152,782

 

 

349,904

 

 

665,426

 

Prepaid Expenses & Other Assets

 

 

80,429

 

 

279

 

 

50,269

 

 

586,555

 

 

693,936

 

 

17,475

 

 

95,705

 

 

2,668,635

 

 

4,193,283

 

Total Assets

 

$

7,961,962

 

$

2,647,916

 

$

6,483,038

 

$

1,618,169

 

$

2,402,197

 

$

6,016,528

 

$

17,732,170

 

$

93,385,674

 

$

138,247,654

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,896,582

 

$

 —

 

$

9,627,636

 

$

 —

 

$

 —

 

$

5,889,863

 

$

16,797,004

 

$

81,509,648

 

$

123,720,733

 

Accounts Payable & Accrued Expense

 

 

74,966

 

 

2,188

 

 

87,137

 

 

8,434

 

 

9,554

 

 

55,333

 

 

169,932

 

 

634,933

 

 

1,042,477

 

Advance Rental Pmts & Security Deposits

 

 

341,039

 

 

 —

 

 

245,550

 

 

12,555

 

 

10,975

 

 

112,103

 

 

321,274

 

 

2,608,580

 

 

3,652,076

 

Total Liabilities

 

 

10,312,587

 

 

2,188

 

 

9,960,323

 

 

20,989

 

 

20,529

 

 

6,057,299

 

 

17,288,210

 

 

84,753,161

 

 

128,415,286

 

Partners’ Capital

 

 

(2,349,625)

 

 

2,645,728

 

 

(3,477,285)

 

 

1,597,180

 

 

2,381,668

 

 

(40,771)

 

 

443,960

 

 

8,630,513

 

 

9,831,368

 

Total Liabilities and Capital

 

$

7,962,962

 

$

2,647,916

 

$

6,483,038

 

$

1,618,169

 

$

2,402,197

 

$

6,016,528

 

$

17,732,170

 

$

93,383,674

 

$

138,246,654

 

Partners’ Capital %—NERA

 

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,322,863

 

$

 —

 

$

798,589

 

$

1,190,833

 

$

 

 

$

221,979

 

$

3,452,204

 

 

6,986,470

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(1,174,814)

 

$

 —

 

$

(1,738,644)

 

$

 —

 

$

 —

 

$

(20,387)

 

$

 —

 

$

 —

 

 

(2,933,844)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,052,626

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

 1

 

 

 1

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Total

 

 

49

 

 

 1

 

 

40

 

 

176

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

 1

 

 

40

 

 

 —

 

 

 —

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

175

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

167

 

 

38

 

 

 —

 

 

 —

 

 

 —

 

 

205

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

 8

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

18

 

Unsold units with deposits for future sale as of  May 1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

 

 3

 

 

 —

 

 

 —

 

 

 —

 

 

 6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial information for the three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Hamilton

    

 

 

    

 

 

    

 

 

    

Hamilton

    

Hamilton

    

 

 

    

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income

 

$

411,222

 

$

53,928

 

$

403,837

 

$

38,221

 

$

22,203

 

$

263,051

 

$

858,213

 

 

3,894,603

 

$

5,945,278

 

Laundry and Sundry Income

 

 

3,005

 

 

 —

 

 

1,217

 

 

 

 

 

 

 

 

675

 

 

9,126

 

 

24,688

 

 

38,711

 

 

 

 

414,227

 

 

53,928

 

 

405,054

 

 

38,221

 

 

22,203

 

 

263,726

 

 

867,339

 

 

3,919,291

 

 

5,983,989

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

9,680

 

 

488

 

 

6,455

 

 

1,499

 

 

3,066

 

 

1,824

 

 

13,127

 

 

65,429

 

 

101,568

 

Depreciation and Amortization

 

 

114,285

 

 

665

 

 

86,251

 

 

 —

 

 

10,000

 

 

87,722

 

 

255,506

 

 

874,142

 

 

1,428,571

 

Management Fees

 

 

13,204

 

 

2,157

 

 

16,126

 

 

1,508

 

 

1,022

 

 

10,368

 

 

32,443

 

 

83,012

 

 

159,840

 

Operating

 

 

24,131

 

 

 —

 

 

20,580

 

 

156

 

 

825

 

 

33,850

 

 

120,393

 

 

379,875

 

 

579,810

 

Renting

 

 

3,291

 

 

 —

 

 

497

 

 

 —

 

 

 —

 

 

3,378

 

 

8,652

 

 

29,782

 

 

45,600

 

Repairs and Maintenance

 

 

54,501

 

 

4,163

 

 

21,497

 

 

40,207

 

 

34,224

 

 

19,617

 

 

182,374

 

 

318,666

 

 

675,249

 

Taxes and Insurance

 

 

62,527

 

 

16,723

 

 

41,631

 

 

18,171

 

 

16,459

 

 

31,046

 

 

104,551

 

 

419,289

 

 

710,397

 

 

 

 

281,619

 

 

24,196

 

 

193,037

 

 

61,541

 

 

65,596

 

 

187,805

 

 

717,046

 

 

2,170,195

 

 

3,701,035

 

Income Before Other Income

 

 

132,608

 

 

29,732

 

 

212,017

 

 

(23,320)

 

 

(43,393)

 

 

75,921

 

 

150,293

 

 

1,749,096

 

 

2,282,954

 

Other Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

(99,313)

 

 

 —

 

 

(96,961)

 

 

(26)

 

 

(49)

 

 

(58,519)

 

 

(188,239)

 

 

(1,166,238)

 

 

(1,609,345)

 

Gain on Sale of Real Estate

 

 

 —

 

 

 —

 

 

 —

 

 

817,006

 

 

827,757

 

 

 

 

 

 

 

 

 

 

 

1,644,763

 

 

 

 

(99,313)

 

 

 —

 

 

(96,961)

 

 

816,980

 

 

827,708

 

 

(58,519)

 

 

(188,239)

 

 

(1,166,238)

 

 

35,418

 

Net Income (Loss)

 

$

33,295

 

$

29,732

 

$

115,056

 

$

793,660

 

$

784,315

 

$

17,402

 

$

(37,946)

 

$

582,858

 

$

2,318,372

 

Net Income (Loss)—NERA 50%

    

$

16,648

 

$

14,866

 

$

57,528

 

$

396,830

 

$

392,158

 

$

8,701

 

$

(18,973)

 

 

 

 

 

867,757

 

Net Income —NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

233,143

 

 

233,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,100,900

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton

 

345

 

Hamilton

 

Hamilton on

 

Dexter

 

 

 

 

Period End

    

Essex 81

    

Franklin

    

Minuteman

    

Main Apts

    

Park

    

Total

 

3//31/2019

 

$

 —

 

$

192,094

 

$

 

 

$

 —

 

$

1,700,153

 

$

1,892,247

 

3/31/2020

 

 

 —

 

 

199,661

 

 

 

 

 

 —

 

 

79,901,188

 

 

80,100,849

 

3/31/2021

 

 

 —

 

 

207,527

 

 

 —

 

 

 —

 

 

 

 

 

207,527

 

3/31/2022

 

 

 —

 

 

215,702

 

 

 —

 

 

 —

 

 

 

 

 

215,702

 

3/31/2023

 

 

 —

 

 

224,199

 

 

 —

 

 

 —

 

 

 

 

 

224,199

 

Thereafter

 

 

10,000,000

 

 

8,656,703

 

 

6,000,000

 

 

16,900,000

 

 

 —

 

 

41,556,703

 

 

 

 

10,000,000

 

 

9,695,886

 

 

6,000,000

 

 

16,900,000

 

 

81,601,341

 

 

124,197,227

 

Less: unamortized deferred financing costs

 

 

(103,418)

 

 

(68,250)

 

 

(110,137)

 

 

(102,996)

 

 

(91,693)

 

 

(476,494)

 

 

 

$

9,896,582

 

$

9,627,636

 

$

5,889,863

 

$

16,797,004

 

$

81,509,648

 

$

123,720,733

 

 

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

 

 

 

Summary financial information as of March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Sales

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

 

$

7,907,838

 

$

2,622,729

 

$

6,542,738

 

$

3,029,735

 

$

145,134

 

$

5,848,498

 

$

6,095,634

 

$

17,593,862

 

$

91,280,303

 

$

141,066,471

 

Cash & Cash Equivalents

 

 

158,945

 

 

50,621

 

 

70,277

 

 

490,522

 

 

88

 

 

17,718

 

 

60,393

 

 

214,895

 

 

1,359,961

 

 

2,423,420

 

Rent Receivable

 

 

17,373

 

 

 —

 

 

3,496

 

 

12,438

 

 

225

 

 

5,844

 

 

1,152

 

 

11,479

 

 

151,499

 

 

203,506

 

Real Estate Tax Escrow

 

 

119,722

 

 

 —

 

 

45,948

 

 

 —

 

 

 —

 

 

17,849

 

 

19,048

 

 

213,815

 

 

240,494

 

 

656,876

 

Prepaid Expenses & Other Assets

 

 

96,193

 

 

246

 

 

45,250

 

 

131,148

 

 

16,480

 

 

103,595

 

 

31,844

 

 

107,642

 

 

1,558,399

 

 

2,090,797

 

Total Assets

 

$

8,300,071

 

$

2,673,596

 

$

6,707,709

 

$

3,663,843

 

$

161,927

 

$

5,993,504

 

$

6,208,071

 

$

18,141,693

 

$

94,590,656

 

$

146,441,070

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,882,793

 

$

 —

 

$

9,805,791

 

$

 —

 

$

 —

 

$

 —

 

$

5,881,680

 

$

16,780,953

 

$

82,968,942

 

$

125,320,159

 

Accounts Payable & Accrued Expense

 

 

48,972

 

 

623

 

 

84,711

 

 

15,600

 

 

2,330

 

 

5,782

 

 

61,455

 

 

153,499

 

 

607,357

 

 

980,329

 

Advance Rental Pmts& Security Deposits

 

 

232,421

 

 

 —

 

 

225,911

 

 

49,544

 

 

101

 

 

75,660

 

 

124,719

 

 

380,586

 

 

2,764,112

 

 

3,853,054

 

Total Liabilities

 

 

10,164,186

 

 

623

 

 

10,116,413

 

 

65,144

 

 

2,431

 

 

81,442

 

 

6,067,854

 

 

17,315,038

 

 

86,340,411

 

 

130,153,542

 

Partners’ Capital

 

 

(1,864,115)

 

 

2,672,973

 

 

(3,408,704)

 

 

3,598,699

 

 

159,496

 

 

5,912,062

 

 

140,217

 

 

826,655

 

 

8,250,245

 

 

16,287,528

 

Total Liabilities and Capital

 

$

8,300,071

 

$

2,673,596

 

$

6,707,709

 

$

3,663,843

 

$

161,927

 

$

5,993,504

 

$

6,208,071

 

$

18,141,693

 

$

94,590,656

 

$

146,441,070

 

Partners’ Capital %—NERA

 

 

50

%

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,336,486

 

$

 —

 

$

1,799,349

 

$

79,747

 

$

2,956,030

 

$

70,108

 

$

413,328

 

$

3,300,098

 

$

9,955,145

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(932,058)

 

$

 —

 

$

(1,704,352)

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

 

(2,636,410)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

7,318,735

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

120

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

1

 

 

1

 

 

 —

 

 

1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

3

 

Total

 

 

49

 

 

1

 

 

40

 

 

176

 

 

120

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

1

 

 

40

 

 

0

 

 

 —

 

 

0

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

176

 

 

120

 

 

46

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2017

 

 

 —

 

 

 —

 

 

 —

 

 

143

 

 

120

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

264

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

32

 

 

0

 

 

47

 

 

 —

 

 

 —

 

 

 —

 

 

79

 

Unsold units with deposits for future sale as of May 1, 2017

 

 

 —

 

 

 —

 

 

 —

 

 

 4

 

 

 —

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

14

 

 

 

Financial information for the three months ended March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Hamilton

    

Hamilton

    

 

 

    

 

 

 

 

 

Hamilton

 

Hamilton Essex

 

345

 

Hamilton

 

Hamilton

 

Hamilton

 

 Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Sales

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income

 

$

401,194

 

$

60,000

 

$

372,417

 

$

130,398

 

$

2,867

 

$

222,036

 

$

256,788

 

$

826,303

 

$

3,810,796

 

$

6,082,799

 

Laundry and Sundry Income

 

 

3,531

 

 

 —

 

 

945

 

 

 —

 

 

 —

 

 

 —

 

 

675

 

 

8,947

 

 

24,333

 

 

38,431

 

 

 

 

404,725

 

 

60,000

 

 

373,362

 

 

130,398

 

 

2,867

 

 

222,036

 

 

257,463

 

 

835,250

 

 

3,835,129

 

 

6,121,230

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

5,201

 

 

425

 

 

6,390

 

 

964

 

 

824

 

 

3,065

 

 

1,205

 

 

11,018

 

 

50,187

 

 

79,279

 

Depreciation and Amortization

 

 

113,299

 

 

707

 

 

86,422

 

 

45,626

 

 

1,230

 

 

81,252

 

 

86,675

 

 

242,316

 

 

831,687

 

 

1,489,214

 

Management Fees

 

 

17,380

 

 

2,400

 

 

15,958

 

 

4,763

 

 

135

 

 

8,650

 

 

11,141

 

 

34,103

 

 

84,552

 

 

179,082

 

Operating

 

 

23,637

 

 

 —

 

 

23,145

 

 

(37)

 

 

19

 

 

652

 

 

27,875

 

 

104,159

 

 

352,854

 

 

532,304

 

Renting

 

 

3,722

 

 

 —

 

 

2,136

 

 

62

 

 

62

 

 

62

 

 

1,321

 

 

10,026

 

 

21,327

 

 

38,718

 

Repairs and Maintenance

 

 

20,731

 

 

 —

 

 

19,300

 

 

55,502

 

 

1,980

 

 

106,605

 

 

20,854

 

 

164,126

 

 

231,633

 

 

620,731

 

Taxes and Insurance

 

 

60,469

 

 

14,532

 

 

36,718

 

 

29,378

 

 

863

 

 

46,095

 

 

31,445

 

 

109,815

 

 

431,459

 

 

760,774

 

 

 

 

244,439

 

 

18,064

 

 

190,069

 

 

136,258

 

 

5,113

 

 

246,381

 

 

180,516

 

 

675,563

 

 

2,003,699

 

 

3,700,102

 

Income Before Other Income

 

 

160,286

 

 

41,936

 

 

183,293

 

 

(5,860)

 

 

(2,246)

 

 

(24,345)

 

 

76,947

 

 

159,687

 

 

1,831,430

 

 

2,421,128

 

Other Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

(78,991)

 

 

 —

 

 

(99,404)

 

 

(503)

 

 

(2)

 

 

(41,525)

 

 

(59,091)

 

 

(190,684)

 

 

(1,187,172)

 

 

(1,657,372)

 

 

 

 

(78,991)

 

 

 —

 

 

(99,404)

 

 

710,256

 

 

(2)

 

 

(41,525)

 

 

(59,091)

 

 

(190,684)

 

 

(1,187,172)

 

 

(946,613)

 

Net Income (Loss)

 

$

81,295

 

$

41,936

 

$

83,889

 

$

704,396

 

$

(2,248)

 

$

(65,870)

 

$

17,856

 

$

(30,997)

 

$

644,258

 

$

1,474,515

 

Net Income (Loss)—NERA 50%

    

$

40,648

 

$

20,968

 

$

41,945

 

$

352,199

 

$

(1,124)

 

$

(32,935)

 

$

8,929

 

$

(15,498)

 

 

 

 

 

415,132

 

Net Income (Loss)—NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

257,705

 

 

257,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

672,837

 

 

v3.8.0.1
IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
3 Months Ended
Mar. 31, 2018
IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS  
IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

NOTE 15. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

 

In February 2016, the FASB issued ASU 2016-02, modifying the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.  This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively.  A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.  Leases with a term of 12 months or less will be accounted for in the same manner as operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The guidance supersedes previously issued guidance under ASC Topic 840 “Leases”. The guidance is effective on January 1, 2019, with early adoption permitted.  The Partnership has evaluated the impact the adoption of ASU 2016-02 will have on the Partnership’s consolidated financial statements. Management foresees no significant impact at this time.

 

In March 2016, the FASB issued ASU 2016-07, which eliminates a requirement for the retroactive adjustment on a step by step basis of the investment, results of operations, and retained earnings as if the equity method had been effective during all previous periods that the investment had been held when an investment qualifies for equity method accounting due to an increase in the level of ownership or degree of influence. The cost of acquiring the additional interest in the investee is to be added to the current basis of the investor’s previously held interest and the equity method of accounting should be adopted as of the date the investment becomes qualified for equity method accounting. This guidance is to be applied on a prospective basis and is effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The adoption of ASU 2016-07 will have no significant impact on the Partnership’s consolidated financial statements. 

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues and intends to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Partnership is currently in the process of evaluating the impact the adoption of ASU 2016-15 will have on the Partnership’s consolidated statement of cash flows.

 

v3.8.0.1
SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2018
SUBSEQUENT EVENTS  
SUBSEQUENT EVENTS

NOTE 16. SUBSEQUENT EVENTS

 

On March 22, 2018, Hamilton Park Towers, LLC entered into a Rate Lock Confirmation with John Hancock Life Insurance Company (U.S.A.) and paid the requisite deposit of $1,290,000.  A subsequent deposit was made on April 11, 2018 for $1,250,000. The partnership contributed $1,016,000 of these payments. The confirmation calls for a loan of $125,000,000 at a fixed interest rate of 3.99% per annum.  Hamilton Park intends to use the proceeds of the loan, when closed, to pay off an outstanding mortgage of approximately $82,000,000. In association with this refinancing, there will be a defeasance cost of approximately $3,750,000. Based on  its’ ownership in the property, the Partnership will incur 40% of this charge, an expense of  approximately $1,500,000. This charge will have a material effect on the 2018 second quarter net income.

v3.8.0.1
SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2018
SIGNIFICANT ACCOUNTING POLICIES  
Line of Business

Line of Business:  New England Realty Associates Limited Partnership (“NERA” or the “Partnership”) was organized in Massachusetts in 1977. NERA and its subsidiaries own 27 properties which include 19 residential buildings; 4 mixed use residential, retail and office buildings; 3 commercial buildings and individual units at one condominium complex. These properties total 2,711 apartment units, 19 condominium units and 108,043 square feet of commercial space. Additionally, the Partnership also owns a 40- 50% interest in 8 residential and mixed use properties consisting of 711 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

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

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 eight 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 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

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

 

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. Contingent rent for commercial properties are 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 values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.

 

Rental Properties

Rental Properties:  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 and Deferred Financing Costs

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 $52,000 and $47,000 for the three months ended March 31, 2018 and 2017, respectively.

Income Taxes

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

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

Segment Reporting

 

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.

Comprehensive Income

 

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 2018 or 2017 other than net income as reported.

Income (Loss) Per Depositary Receipt

 

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

 

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

 

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 2018 or 2017. The Partnership makes its temporary cash investments with high-credit quality financial institutions. At March 31, 2018, 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 0.20%. At March 31, 2018 and December 31, 2017, respectively approximately $6,637,000, and $8,898,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.

Advertising Expense

 

Advertising Expense:  Advertising is expensed as incurred. Advertising expense was $44,381 and $59,611 for the three months ended March 31, 2018 and 2017, respectively.

Interest Capitalized

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, 2018 and 2017 there was no capitalized interest.

Extinguishment of Debt

 

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

 

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

v3.8.0.1
RENTAL PROPERTIES (Tables)
3 Months Ended
Mar. 31, 2018
RENTAL PROPERTIES  
Schedule of rental properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

March 31, 2018

    

December 31, 2017

    

Useful Life

 

Land, improvements and parking lots

 

$

71,906,637

 

$

65,087,214

 

15

-

40

years

 

Buildings and improvements

 

 

229,245,305

 

 

201,844,565

 

15

-

40

years

 

Kitchen cabinets

 

 

12,576,357

 

 

12,338,627

 

 5

-

10

years

 

Carpets

 

 

8,954,788

 

 

8,802,831

 

 5

-

10

years

 

Air conditioning

 

 

641,079

 

 

641,079

 

 5

-

10

years

 

Laundry equipment

 

 

271,824

 

 

263,275

 

 5

-

 7

years

 

Elevators

 

 

1,139,296

 

 

1,139,296

 

20

-

40

years

 

Swimming pools

 

 

444,629

 

 

444,629

 

10

-

30

years

 

Equipment

 

 

11,329,576

 

 

11,163,864

 

 5

-

30

years

 

Motor vehicles

 

 

216,260

 

 

216,260

 

 

 

 5

years

 

Fences

 

 

37,465

 

 

37,465

 

 5

-

15

years

 

Furniture and fixtures

 

 

9,516,987

 

 

9,390,021

 

 5

-

 7

years

 

Smoke alarms

 

 

582,471

 

 

582,471

 

 5

-

 7

years

 

Total fixed assets

 

 

346,862,674

 

 

311,951,597

 

 

 

 

 

 

Less: Accumulated depreciation

 

 

(108,141,919)

 

 

(104,797,803)

 

 

 

 

 

 

 

 

$

238,720,755

 

$

207,153,794

 

 

 

 

 

 

 

v3.8.0.1
MORTGAGE NOTES PAYABLE (Tables)
3 Months Ended
Mar. 31, 2018
MORTGAGE NOTES PAYABLE  
Schedule of approximate annual maturities

Approximate annual maturities at March 31, 2018 are as follows:

 

 

 

 

 

 

2019—current maturities

    

$

1,863,000

 

2020

 

 

1,944,000

 

2021

 

 

4,344,000

 

2022

 

 

2,566,000

 

2023

 

 

67,096,000

 

Thereafter

 

 

177,277,000

 

 

 

 

255,090,000

 

Less: unamortized deferred financing costs

 

 

(1,505,000)

 

 

 

$

253,585,000

 

 

v3.8.0.1
PARTNERS' CAPITAL (Tables)
3 Months Ended
Mar. 31, 2018
PARTNERS' CAPITAL  
Schedule of information per depositary receipt

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2018

    

2017

 

Net Income per Depositary Receipt

 

$

0.50

 

$

0.51

 

Distributions per Depositary Receipt

 

$

0.30

 

$

0.30

 

 

v3.8.0.1
TREASURY UNITS (Tables)
3 Months Ended
Mar. 31, 2018
TREASURY UNITS  
Schedule of treasury units

Treasury Units at March 31, 2018 are as follows:

 

 

 

 

 

Class A

    

44,671

 

Class B

 

10,609

 

General Partnership

 

559

 

 

 

55,839

 

 

v3.8.0.1
RENTAL INCOME (Tables)
3 Months Ended
Mar. 31, 2018
RENTAL INCOME  
Schedule of minimum future annual rental income on non-cancellable operating leases

Approximately 7% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2018 as follows:

 

 

 

 

 

 

 

    

Commercial

 

 

 

Property Leases

 

2019

 

$

2,662,000

 

2020

 

 

2,213,000

 

2021

 

 

1,943,000

 

2022

 

 

1,290,000

 

2023

 

 

646,000

 

Thereafter

 

 

1,105,000

 

 

 

$

9,859,000

 

 

Schedule of information 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

 

2019

 

$

431,751

 

16,542

 

12

 

14

%

2020

 

 

458,122

 

17,135

 

10

 

15

%

2021

 

 

193,519

 

4,170

 

 6

 

 6

%

2022

 

 

1,137,030

 

47,591

 

 9

 

39

%

2023

 

 

246,341

 

7,087

 

 4

 

 8

%

2024

 

 

379,670

 

11,668

 

 4

 

13

%

2025

 

 

 —

 

 —

 

 —

 

 —

%

2026

 

 

 —

 

 —

 

 —

 

 —

%

2027

 

 

 —

 

 —

 

 —

 

 —

%

2028

 

 

 —

 

 —

 

 —

 

 —

%

2029

 

 

142,450

 

3,850

 

 1

 

 5

%

Totals

 

$

2,988,883

 

108,043

 

46

 

100

%

 

v3.8.0.1
FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Mar. 31, 2018
FAIR VALUE MEASUREMENTS  
Schedule of carrying amounts and estimated fair value of debt

 

 

 

 

 

 

 

 

 

    

Carrying Amount

    

Estimated Fair Value

 

Mortgage Notes Payable

 

 

 

 

 

 

 

Partnership Properties

 

 

 

 

 

 

 

At March 31, 2018

*

$

253,584,894

 

$

233,103,625

 

At December 31, 2017

*

$

233,221,258

 

$

237,895,708

 

Investment Properties

 

 

 

 

 

 

 

At March 31, 2018

*

$

123,720,733

 

$

123,539,032

 

At December 31, 2017

*

$

124,145,012

 

$

125,519,974

 

 

* Net of unamortized deferred financing costs

 

v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Tables)
3 Months Ended
Mar. 31, 2018
2017  
Summary of financial position relating to investment in unconsolidated joint ventures

Summary financial information as of March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

  

$

7,515,492

  

$

2,597,633

  

$

6,242,990

  

$

887,890

  

$

1,583,448

  

$

5,854,350

  

$

17,359,777

  

$

89,284,170

  

$

131,325,750

 

Cash & Cash Equivalents

 

 

148,701

 

 

50,004

 

 

123,091

 

 

136,822

 

 

122,350

 

 

107,268

 

 

102,710

 

 

861,790

 

 

1,652,736

 

Rent Receivable

 

 

133,580

 

 

 —

 

 

19,937

 

 

6,902

 

 

2,463

 

 

5,206

 

 

21,196

 

 

221,175

 

 

410,459

 

Real Estate Tax Escrow

 

 

83,760

 

 

 —

 

 

46,751

 

 

 —

 

 

0

 

 

32,229

 

 

152,782

 

 

349,904

 

 

665,426

 

Prepaid Expenses & Other Assets

 

 

80,429

 

 

279

 

 

50,269

 

 

586,555

 

 

693,936

 

 

17,475

 

 

95,705

 

 

2,668,635

 

 

4,193,283

 

Total Assets

 

$

7,961,962

 

$

2,647,916

 

$

6,483,038

 

$

1,618,169

 

$

2,402,197

 

$

6,016,528

 

$

17,732,170

 

$

93,385,674

 

$

138,247,654

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,896,582

 

$

 —

 

$

9,627,636

 

$

 —

 

$

 —

 

$

5,889,863

 

$

16,797,004

 

$

81,509,648

 

$

123,720,733

 

Accounts Payable & Accrued Expense

 

 

74,966

 

 

2,188

 

 

87,137

 

 

8,434

 

 

9,554

 

 

55,333

 

 

169,932

 

 

634,933

 

 

1,042,477

 

Advance Rental Pmts & Security Deposits

 

 

341,039

 

 

 —

 

 

245,550

 

 

12,555

 

 

10,975

 

 

112,103

 

 

321,274

 

 

2,608,580

 

 

3,652,076

 

Total Liabilities

 

 

10,312,587

 

 

2,188

 

 

9,960,323

 

 

20,989

 

 

20,529

 

 

6,057,299

 

 

17,288,210

 

 

84,753,161

 

 

128,415,286

 

Partners’ Capital

 

 

(2,349,625)

 

 

2,645,728

 

 

(3,477,285)

 

 

1,597,180

 

 

2,381,668

 

 

(40,771)

 

 

443,960

 

 

8,630,513

 

 

9,831,368

 

Total Liabilities and Capital

 

$

7,962,962

 

$

2,647,916

 

$

6,483,038

 

$

1,618,169

 

$

2,402,197

 

$

6,016,528

 

$

17,732,170

 

$

93,383,674

 

$

138,246,654

 

Partners’ Capital %—NERA

 

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,322,863

 

$

 —

 

$

798,589

 

$

1,190,833

 

$

 

 

$

221,979

 

$

3,452,204

 

 

6,986,470

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(1,174,814)

 

$

 —

 

$

(1,738,644)

 

$

 —

 

$

 —

 

$

(20,387)

 

$

 —

 

$

 —

 

 

(2,933,844)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,052,626

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

 1

 

 

 1

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Total

 

 

49

 

 

 1

 

 

40

 

 

176

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

 1

 

 

40

 

 

 —

 

 

 —

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

175

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

167

 

 

38

 

 

 —

 

 

 —

 

 

 —

 

 

205

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

 8

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

18

 

Unsold units with deposits for future sale as of  May 1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

 

 3

 

 

 —

 

 

 —

 

 

 —

 

 

 6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule of future annual mortgage maturities

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton

 

345

 

Hamilton

 

Hamilton on

 

Dexter

 

 

 

 

Period End

    

Essex 81

    

Franklin

    

Minuteman

    

Main Apts

    

Park

    

Total

 

3//31/2019

 

$

 —

 

$

192,094

 

$

 

 

$

 —

 

$

1,700,153

 

$

1,892,247

 

3/31/2020

 

 

 —

 

 

199,661

 

 

 

 

 

 —

 

 

79,901,188

 

 

80,100,849

 

3/31/2021

 

 

 —

 

 

207,527

 

 

 —

 

 

 —

 

 

 

 

 

207,527

 

3/31/2022

 

 

 —

 

 

215,702

 

 

 —

 

 

 —

 

 

 

 

 

215,702

 

3/31/2023

 

 

 —

 

 

224,199

 

 

 —

 

 

 —

 

 

 

 

 

224,199

 

Thereafter

 

 

10,000,000

 

 

8,656,703

 

 

6,000,000

 

 

16,900,000

 

 

 —

 

 

41,556,703

 

 

 

 

10,000,000

 

 

9,695,886

 

 

6,000,000

 

 

16,900,000

 

 

81,601,341

 

 

124,197,227

 

Less: unamortized deferred financing costs

 

 

(103,418)

 

 

(68,250)

 

 

(110,137)

 

 

(102,996)

 

 

(91,693)

 

 

(476,494)

 

 

 

$

9,896,582

 

$

9,627,636

 

$

5,889,863

 

$

16,797,004

 

$

81,509,648

 

$

123,720,733

 

 

2016  
Summary of financial position relating to investment in unconsolidated joint ventures

Summary financial information as of March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Sales

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

 

$

7,907,838

 

$

2,622,729

 

$

6,542,738

 

$

3,029,735

 

$

145,134

 

$

5,848,498

 

$

6,095,634

 

$

17,593,862

 

$

91,280,303

 

$

141,066,471

 

Cash & Cash Equivalents

 

 

158,945

 

 

50,621

 

 

70,277

 

 

490,522

 

 

88

 

 

17,718

 

 

60,393

 

 

214,895

 

 

1,359,961

 

 

2,423,420

 

Rent Receivable

 

 

17,373

 

 

 —

 

 

3,496

 

 

12,438

 

 

225

 

 

5,844

 

 

1,152

 

 

11,479

 

 

151,499

 

 

203,506

 

Real Estate Tax Escrow

 

 

119,722

 

 

 —

 

 

45,948

 

 

 —

 

 

 —

 

 

17,849

 

 

19,048

 

 

213,815

 

 

240,494

 

 

656,876

 

Prepaid Expenses & Other Assets

 

 

96,193

 

 

246

 

 

45,250

 

 

131,148

 

 

16,480

 

 

103,595

 

 

31,844

 

 

107,642

 

 

1,558,399

 

 

2,090,797

 

Total Assets

 

$

8,300,071

 

$

2,673,596

 

$

6,707,709

 

$

3,663,843

 

$

161,927

 

$

5,993,504

 

$

6,208,071

 

$

18,141,693

 

$

94,590,656

 

$

146,441,070

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,882,793

 

$

 —

 

$

9,805,791

 

$

 —

 

$

 —

 

$

 —

 

$

5,881,680

 

$

16,780,953

 

$

82,968,942

 

$

125,320,159

 

Accounts Payable & Accrued Expense

 

 

48,972

 

 

623

 

 

84,711

 

 

15,600

 

 

2,330

 

 

5,782

 

 

61,455

 

 

153,499

 

 

607,357

 

 

980,329

 

Advance Rental Pmts& Security Deposits

 

 

232,421

 

 

 —

 

 

225,911

 

 

49,544

 

 

101

 

 

75,660

 

 

124,719

 

 

380,586

 

 

2,764,112

 

 

3,853,054

 

Total Liabilities

 

 

10,164,186

 

 

623

 

 

10,116,413

 

 

65,144

 

 

2,431

 

 

81,442

 

 

6,067,854

 

 

17,315,038

 

 

86,340,411

 

 

130,153,542

 

Partners’ Capital

 

 

(1,864,115)

 

 

2,672,973

 

 

(3,408,704)

 

 

3,598,699

 

 

159,496

 

 

5,912,062

 

 

140,217

 

 

826,655

 

 

8,250,245

 

 

16,287,528

 

Total Liabilities and Capital

 

$

8,300,071

 

$

2,673,596

 

$

6,707,709

 

$

3,663,843

 

$

161,927

 

$

5,993,504

 

$

6,208,071

 

$

18,141,693

 

$

94,590,656

 

$

146,441,070

 

Partners’ Capital %—NERA

 

 

50

%

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,336,486

 

$

 —

 

$

1,799,349

 

$

79,747

 

$

2,956,030

 

$

70,108

 

$

413,328

 

$

3,300,098

 

$

9,955,145

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(932,058)

 

$

 —

 

$

(1,704,352)

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

 

(2,636,410)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

7,318,735

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

120

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

1

 

 

1

 

 

 —

 

 

1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

3

 

Total

 

 

49

 

 

1

 

 

40

 

 

176

 

 

120

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

1

 

 

40

 

 

0

 

 

 —

 

 

0

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

176

 

 

120

 

 

46

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2017

 

 

 —

 

 

 —

 

 

 —

 

 

143

 

 

120

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

264

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

32

 

 

0

 

 

47

 

 

 —

 

 

 —

 

 

 —

 

 

79

 

Unsold units with deposits for future sale as of May 1, 2017

 

 

 —

 

 

 —

 

 

 —

 

 

 4

 

 

 —

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

14

 

 

v3.8.0.1
SIGNIFICANT ACCOUNTING POLICIES (Business) (Details)
Mar. 31, 2018
ft²
property
item
Mar. 31, 2017
item
Line of Business    
Number of units   1,033
Residential and mixed-use properties    
Line of Business    
Number of Real Estate Properties 23  
Number of units 2,711  
Residential buildings    
Line of Business    
Number of units   1,030
Commercial    
Line of Business    
Number of units   3
Condominium    
Line of Business    
Number of units 19  
Wholly owned properties    
Line of Business    
Number of Real Estate Properties 27  
Wholly owned properties | Residential buildings    
Line of Business    
Number of Real Estate Properties 19  
Number of units 2,711  
Wholly owned properties | Mixed use residential, retail and office buildings    
Line of Business    
Number of Real Estate Properties 4  
Wholly owned properties | Commercial    
Line of Business    
Number of Real Estate Properties 3  
Area of property (in square feet) | ft² 108,043  
Wholly owned properties | Condominium    
Line of Business    
Number of Real Estate Properties 1  
Number of units 19  
Partially owned properties | Residential and mixed-use properties    
Line of Business    
Number of Real Estate Properties 8  
Number of units 711  
Area of property (in square feet) | ft² 12,500  
Partially owned properties | Residential and mixed-use properties | Minimum    
Line of Business    
Ownership interest (as a percent) 40.00%  
Partially owned properties | Residential and mixed-use properties | Maximum    
Line of Business    
Ownership interest (as a percent) 50.00%  
Partially owned properties | Car parking lot    
Line of Business    
Capacity of real estate property (in cars per lot) 50  
Investment Properties    
Line of Business    
Number of units | property 1,033  
Investment Properties | Residential buildings    
Line of Business    
Number of units | property 1,030  
Investment Properties | Commercial    
Line of Business    
Number of units | property 3  
Investment Properties | Partially owned properties | Residential and mixed-use properties    
Line of Business    
Number of units | property 711  
v3.8.0.1
SIGNIFICANT ACCOUNTING POLICIES (Details)
3 Months Ended 6 Months Ended
Jan. 03, 2012
Mar. 31, 2018
USD ($)
item
shares
Mar. 31, 2017
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2016
USD ($)
Dec. 31, 2017
USD ($)
Aug. 20, 2007
Principles of Consolidation              
Value at which partnership investments discontinue use of equity method   $ 0          
Amount of legal obligations related to investments no longer classified as equity method   $ 0          
Revenue Recognition              
Period for which arrears are charged against income   60 days          
Deferred Financing Costs              
Amortization of deferred financing costs   $ 52,000 $ 47,000        
Income Taxes              
Provision for income taxes   $ 0          
Segment Reporting              
Number of segments | item   1          
Income Per Unit              
Dilutive units | shares   0          
Concentration of Credit Risks and Financial Instruments              
Federally uninsured amounts of cash and cash equivalents, and security deposits included in prepaid expenses and other assets   $ 6,637,000       $ 8,898,000  
Advertising Expense              
Advertising expense   $ 44,381 $ 59,611        
Interest Capitalized              
Capitalized interest       $ 0 $ 0    
Minimum              
Principles of Consolidation              
Ownership interest in each subsidiary (as a percent)   99.67%          
Interest Capitalized              
Criteria of capitalization of interest on property based on specified period of construction   1 year          
Minimum | Cash and cash equivalents              
Concentration of Credit Risks and Financial Instruments              
Interest rate on interest bearing accounts (as a percent)   0.01%          
Maximum              
Principles of Consolidation              
Ownership interest in each subsidiary (as a percent)   100.00%          
Maximum | Cash and cash equivalents              
Concentration of Credit Risks and Financial Instruments              
Interest rate on interest bearing accounts (as a percent)   0.20%          
Investment Properties              
Principles of Consolidation              
Number of limited liability companies/partnerships | item   8          
Investment Properties | Minimum              
Principles of Consolidation              
Percentage of ownership interest   40.00%          
Investment Properties | Maximum              
Principles of Consolidation              
Percentage of ownership interest   50.00%          
Class A              
Income (Loss) Per Depositary Receipt              
Forward split of depositary receipts 3            
Exchange ratio of depositary receipts for partnership units before adjustment 10            
Exchange ratio of depositary receipts for partnership units after adjustment 30            
Number of units in each depository receipt 0.03333           0.1
v3.8.0.1
RENTAL PROPERTIES (Details)
3 Months Ended
Mar. 31, 2018
USD ($)
property
item
Dec. 31, 2017
USD ($)
Mar. 31, 2017
item
RENTAL PROPERTIES      
Number of units | item     1,033
Rental properties      
Total fixed assets $ 346,862,674 $ 311,951,597  
Less: Accumulated depreciation (108,141,919) (104,797,803)  
Total fixed assets, net 238,720,755 207,153,794  
Land, improvements and parking lots      
Rental properties      
Total fixed assets $ 71,906,637 65,087,214  
Land, improvements and parking lots | Minimum      
Rental properties      
Useful Life 15 years    
Land, improvements and parking lots | Maximum      
Rental properties      
Useful Life 40 years    
Buildings and improvements      
Rental properties      
Total fixed assets $ 229,245,305 201,844,565  
Buildings and improvements | Minimum      
Rental properties      
Useful Life 15 years    
Buildings and improvements | Maximum      
Rental properties      
Useful Life 40 years    
Kitchen cabinets      
Rental properties      
Total fixed assets $ 12,576,357 12,338,627  
Kitchen cabinets | Minimum      
Rental properties      
Useful Life 5 years    
Kitchen cabinets | Maximum      
Rental properties      
Useful Life 10 years    
Carpets      
Rental properties      
Total fixed assets $ 8,954,788 8,802,831  
Carpets | Minimum      
Rental properties      
Useful Life 5 years    
Carpets | Maximum      
Rental properties      
Useful Life 10 years    
Air conditioning      
Rental properties      
Total fixed assets $ 641,079 641,079  
Air conditioning | Minimum      
Rental properties      
Useful Life 5 years    
Air conditioning | Maximum      
Rental properties      
Useful Life 10 years    
Laundry equipment      
Rental properties      
Total fixed assets $ 271,824 263,275  
Laundry equipment | Minimum      
Rental properties      
Useful Life 5 years    
Laundry equipment | Maximum      
Rental properties      
Useful Life 7 years    
Elevators      
Rental properties      
Total fixed assets $ 1,139,296 1,139,296  
Elevators | Minimum      
Rental properties      
Useful Life 20 years    
Elevators | Maximum      
Rental properties      
Useful Life 40 years    
Swimming pools      
Rental properties      
Total fixed assets $ 444,629 444,629  
Swimming pools | Minimum      
Rental properties      
Useful Life 10 years    
Swimming pools | Maximum      
Rental properties      
Useful Life 30 years    
Equipment      
Rental properties      
Total fixed assets $ 11,329,576 11,163,864  
Equipment | Minimum      
Rental properties      
Useful Life 5 years    
Equipment | Maximum      
Rental properties      
Useful Life 30 years    
Motor vehicles      
Rental properties      
Total fixed assets $ 216,260 216,260  
Motor vehicles | Maximum      
Rental properties      
Useful Life 5 years    
Fences      
Rental properties      
Total fixed assets $ 37,465 37,465  
Fences | Minimum      
Rental properties      
Useful Life 5 years    
Fences | Maximum      
Rental properties      
Useful Life 15 years    
Furniture and fixtures      
Rental properties      
Total fixed assets $ 9,516,987 9,390,021  
Furniture and fixtures | Minimum      
Rental properties      
Useful Life 5 years    
Furniture and fixtures | Maximum      
Rental properties      
Useful Life 7 years    
Smoke alarms      
Rental properties      
Total fixed assets $ 582,471 $ 582,471  
Smoke alarms | Minimum      
Rental properties      
Useful Life 5 years    
Smoke alarms | Maximum      
Rental properties      
Useful Life 7 years    
Wholly owned properties      
RENTAL PROPERTIES      
Number of properties | item 27    
Investment Properties      
RENTAL PROPERTIES      
Number of units | property 1,033    
Residential and mixed-use properties      
RENTAL PROPERTIES      
Number of units | item 2,711    
Number of properties | item 23    
Residential and mixed-use properties | Partially owned properties      
RENTAL PROPERTIES      
Number of units | item 711    
Number of properties | item 8    
Residential and mixed-use properties | Partially owned properties | Minimum      
RENTAL PROPERTIES      
Ownership interest (as a percent) 40.00%    
Residential and mixed-use properties | Partially owned properties | Maximum      
RENTAL PROPERTIES      
Ownership interest (as a percent) 50.00%    
Residential and mixed-use properties | Investment Properties | Partially owned properties      
RENTAL PROPERTIES      
Number of units | property 711    
Condominium      
RENTAL PROPERTIES      
Number of units | item 19    
Condominium | Wholly owned properties      
RENTAL PROPERTIES      
Number of units | item 19    
Number of properties | item 1    
v3.8.0.1
RENTAL PROPERTIES (Webster Green Apartments) (Details)
Mar. 29, 2018
USD ($)
item
Mar. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Mar. 31, 2017
item
RENTAL PROPERTIES        
Number of units | item       1,033
Line of credit   $ 25,000,000 $ 17,000,000  
Webster Green Apartments        
RENTAL PROPERTIES        
Number of units | item 79      
Loan amount $ 21,500,000      
Purchase price of real estate properties 34,500,000      
Cash payment 13,000,000      
Cash from reserves 5,000,000      
Line of credit 8,000,000      
Closing costs associated with financing 141,000      
Purchase price allocated to the value of the in-place leases 502,000      
Purchase price allocated to the value of the tenant relationships $ 40,000      
Amortization period of value of the in-place leases 12 months      
Amortization period of value of the tenant relationships 24 months      
v3.8.0.1
RENTAL PROPERTIES (Woodland Park Apartments) (Details)
Jul. 06, 2017
USD ($)
item
Mar. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Sep. 29, 2017
USD ($)
Mar. 31, 2017
item
RENTAL PROPERTIES          
Number of units | item         1,033
Line of credit   $ 25,000,000 $ 17,000,000    
Woodland Park Apartments LLC Newton Massachusetts          
RENTAL PROPERTIES          
Number of units | item 126        
Purchase price of real estate properties $ 45,600,000        
Closing costs associated with financing 64,000        
Line of credit 25,000,000   $ 17,000,000    
Loan amount $ 16,000,000     $ 22,250,000  
Interest rate (as a percent) 4.75%     3.79%  
Purchase price allocated to the value of the in-place leases $ 541,000        
Purchase price allocated to the value of the tenant relationships $ 42,000        
Amortization period of value of the in-place leases 12 months        
Amortization period of value of the tenant relationships 24 months        
v3.8.0.1
RELATED PARTY TRANSACTIONS (Details)
3 Months Ended 6 Months Ended 18 Months Ended
Mar. 31, 2018
USD ($)
item
Mar. 31, 2017
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2016
USD ($)
Jun. 30, 2017
USD ($)
Sep. 29, 2017
USD ($)
Jul. 06, 2017
USD ($)
RELATED PARTY TRANSACTIONS              
Management fee as percentage of gross receipts rental revenue 4.00%            
Management fee as a percentage of gross receipts rental revenue of Linewt, LLC 3.00%            
Management fees of related party $ 560,000 $ 537,000          
Management fee 559,629 536,715          
Repairs and maintenance 1,814,283 1,455,621          
Administrative expense $ 539,145 525,736          
Number of limited partnerships and limited liability companies in which the entity has invested | item 8            
Interest expense $ 2,984,210 2,520,826          
Woodland Park Apartments LLC Newton Massachusetts              
RELATED PARTY TRANSACTIONS              
Loan amount           $ 22,250,000 $ 16,000,000
Interest rate (as a percent)           3.79% 4.75%
Dexter Park              
RELATED PARTY TRANSACTIONS              
Management fee as percentage of gross receipts rental revenue 2.00%            
President of Management Company              
RELATED PARTY TRANSACTIONS              
Quarterly fee for asset management consulting services     $ 18,750 $ 18,750      
Harold Brown | Minimum              
RELATED PARTY TRANSACTIONS              
Ownership interest (as a percent) 43.20%            
Harold Brown | Maximum              
RELATED PARTY TRANSACTIONS              
Ownership interest (as a percent) 56.00%            
General Partner or Management Company [Member]              
RELATED PARTY TRANSACTIONS              
Repairs and maintenance $ 82,000            
Administrative expense 84,000            
Commercial brokerage fees 20,000            
Expenses for construction, architectural services and supervision of capital projects 168,000            
Costs related to professional services 354,000 182,000          
Management Company [Member]              
RELATED PARTY TRANSACTIONS              
Reimbursement to related party for payroll transfers $ 824,000 $ 811,000          
Employer contributions in 401K plan     0 0      
Number of accounting staff of related party providing bookkeeping and accounting functions | item 14            
Fees for accounting and bookkeeping services     $ 31,250 $ 31,250      
Number of employees having ownership interest in the investment properties | item 6            
Fees for accounting and bookkeeping services per year         $ 125,000    
Partially owned properties              
RELATED PARTY TRANSACTIONS              
Management fee as percentage of gross receipts rental revenue 4.00%            
Management fee $ 160,000            
Repairs and maintenance 23,000            
Administrative expense 20,000            
Construction, architectural services and supervision of capital projects 40,000            
Amount paid to related party $ 243,000            
Residential and mixed-use properties | Partially owned properties | Minimum              
RELATED PARTY TRANSACTIONS              
Ownership interest (as a percent) 40.00%            
Residential and mixed-use properties | Partially owned properties | Maximum              
RELATED PARTY TRANSACTIONS              
Ownership interest (as a percent) 50.00%            
v3.8.0.1
OTHER ASSETS (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
OTHER ASSETS    
Security deposits $ 2,564,000 $ 2,420,000
Escrow deposits to fund future capital improvements 387,000 357,000
Deposits and escrows held for acquisitions 486,756 488,396
Intangible assets, net of accumulated amortization 690,000 302,000
Financing fees, net 110,000 121,000
Accumulated amortization on intangible assets $ 140,000 $ 280,000
v3.8.0.1
MORTGAGE NOTES PAYABLE (Mortgages Payable) (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Dec. 31, 2017
MORTGAGE NOTES PAYABLE    
Effective interest rate (as a percent) 3.95%  
Financing fees, net $ 110,000 $ 121,000
Accumulated amortization on financing and leasing fees 18,000 7,000
Annual maturities of mortgage debt    
2019-current maturities 1,863,000  
2020 1,944,000  
2021 4,344,000  
2022 2,566,000  
2023 67,096,000  
Thereafter 177,277,000  
Total 255,090,000  
Less: unamortized deferred financing costs (1,505,000)  
Secured Debt 253,584,894 233,221,258
Mortgages payable    
MORTGAGE NOTES PAYABLE    
Amount of monthly installments including principal $ 1,116,000  
Weighted average interest rate (as a percent) 4.52%  
Effective interest rate (as a percent) 4.60%  
Financing fees, net $ 1,615,000 1,531,000
Accumulated amortization on financing and leasing fees $ 1,101,000 $ 1,149,000
Mortgages payable | Minimum    
MORTGAGE NOTES PAYABLE    
Interest rate (as a percent) 3.61%  
Mortgages payable | Maximum    
MORTGAGE NOTES PAYABLE    
Interest rate (as a percent) 5.81%  
v3.8.0.1
MORTGAGE NOTES PAYABLE (Mortgage by property) (Details)
12 Months Ended
Mar. 29, 2018
USD ($)
item
Mar. 12, 2018
USD ($)
Jul. 06, 2017
USD ($)
item
Dec. 31, 2005
Mar. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Sep. 29, 2017
USD ($)
Mar. 31, 2017
item
Aug. 31, 2014
Mar. 07, 2005
item
MORTGAGE NOTES PAYABLE                    
Number of units | item               1,033    
Line of credit         $ 25,000,000 $ 17,000,000        
Hamilton Essex 81                    
MORTGAGE NOTES PAYABLE                    
Number of units | item               49   48
Webster Green Apartments                    
MORTGAGE NOTES PAYABLE                    
Number of units | item 79                  
Loan amount $ 21,500,000                  
Purchase price of real estate properties 34,500,000                  
Cash payment 13,000,000                  
Cash from reserves 5,000,000                  
Line of credit 8,000,000                  
Closing Costs $ 141,000                  
659 Worcester Road                    
MORTGAGE NOTES PAYABLE                    
Loan amount   $ 6,083,683                
Interest rate (as a percent)   4.87%                
Amortization period of debt   30 years                
Future monthly payment amount   $ 32,427                
Woodland Park Apartments LLC Newton Massachusetts                    
MORTGAGE NOTES PAYABLE                    
Number of units | item     126              
Loan amount     $ 16,000,000       $ 22,250,000      
Purchase price of real estate properties     45,600,000              
Line of credit     $ 25,000,000     $ 17,000,000        
Interest rate (as a percent)     4.75%       3.79%      
Mortgages payable | Hamilton on Main Apartments, LLC                    
MORTGAGE NOTES PAYABLE                    
Interest rate (as a percent)       5.18%         4.34%  
Amortization period of debt       30 years            
Mortgages payable | Minimum                    
MORTGAGE NOTES PAYABLE                    
Interest rate (as a percent)         3.61%          
Mortgages payable | Maximum                    
MORTGAGE NOTES PAYABLE                    
Interest rate (as a percent)         5.81%          
v3.8.0.1
MORTGAGE NOTES PAYABLE (Line of Credit) (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Mar. 29, 2018
USD ($)
Sep. 30, 2015
Jul. 31, 2014
USD ($)
item
Aug. 31, 2014
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2005
Sep. 29, 2017
USD ($)
Jul. 06, 2017
USD ($)
Mar. 07, 2005
item
Line of Credit                      
Interest expense         $ 2,984,210 $ 2,520,826          
Credit line balance         25,000,000   $ 17,000,000        
Line Of Credit Facility Unused Capacity Commitment Fee         3,000            
Woodland Park Apartments LLC Newton Massachusetts                      
Line of Credit                      
Loan amount                 $ 22,250,000 $ 16,000,000  
Credit line balance             17,000,000     $ 25,000,000  
Webster Green Apartments                      
Line of Credit                      
Loan amount $ 21,500,000                    
Credit line balance 8,000,000                    
Hamilton Essex 81                      
Line of Credit                      
Number of properties in which borrowing amount collateralized | item                     1
Minimum                      
Line of Credit                      
Tangible net worth         $ 150,000,000            
Ratio of net operating income to total indebtedness         9.50%            
Debt service coverage ratio         1.6            
Maximum                      
Line of Credit                      
Leverage ratio         65.00%            
Aggregate increase in indebtedness         $ 15,000,000            
Mortgages payable | Hamilton Essex 81                      
Line of Credit                      
Term of debt   10 years                  
Mortgages payable | Hamilton on Main Apartments, LLC                      
Line of Credit                      
Term of debt       10 years       10 years      
Mortgages payable | LIBOR | Hamilton Essex 81                      
Line of Credit                      
Margin over basis of interest rate (as a percent)   2.18%                  
Line of Credit                      
Line of Credit                      
Maximum borrowings     $ 25,000,000                
Term of debt     3 years                
Amount of refinancing costs             128,000        
Number of properties in which borrowing amount collateralized | item     23                
Line of Credit | Woodland Park Apartments LLC Newton Massachusetts                      
Line of Credit                      
Payment on line of credit             8,000,000        
Credit line balance             17,000,000        
Funds drawn by the company             $ 25,000,000        
Line of Credit | Webster Green Apartments                      
Line of Credit                      
Payment on line of credit $ 8,000,000                    
Credit line balance         $ 25,000,000            
Line of Credit | Federal Funds Rate                      
Line of Credit                      
Basis of effective interest rate used in calculation of Base Rate (as a percent)     0.50%                
Line of Credit | LIBOR                      
Line of Credit                      
Basis of effective interest rate used in calculation of Base Rate (as a percent)     1.00%                
Margin over basis of interest rate (as a percent)     2.50%                
Line of Credit | Minimum                      
Line of Credit                      
Pledged interests of the Partnership's ownership interest (as a percent)     49.00%                
Commitment fee for unused amount (as a percent)     0.15%                
Line of Credit | Maximum                      
Line of Credit                      
Pledged interests of the Partnership's ownership interest (as a percent)     100.00%                
Commitment fee for unused amount (as a percent)     0.20%                
v3.8.0.1
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS (Details)
3 Months Ended
Mar. 31, 2018
USD ($)
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS  
Period for advance rental payment 1 month
Amount received for prepaid rent $ 2,175,000
Security deposits $ 2,564,000
v3.8.0.1
PARTNERS' CAPITAL (Details)
1 Months Ended 3 Months Ended
Jan. 03, 2012
Apr. 30, 2018
$ / item
Jan. 31, 2018
$ / item
Dec. 31, 2017
$ / item
Mar. 31, 2018
item
$ / item
Mar. 31, 2017
$ / item
Sep. 30, 2017
$ / item
Jun. 30, 2017
$ / item
Aug. 20, 2007
Depositary receipts exchange ratio for Class A units | item         30        
Quarterly distributions per depositary receipt (in dollars per receipt)       (0.30)   (0.30) (0.30) (0.30)  
Quarterly distribution per unit (in dollars per unit)       9.00   9.00 9.00 9.00  
Special distribution per unit (in dollars per unit)       28.50          
Special distribution per depository receipt (in dollars per receipt)       0.95          
Earnings per depository receipt                  
Net Income per Depositary Receipt (in dollars per receipt)         0.50 0.51      
Distributions per Depositary Receipt (in dollars per share)         0.30 0.30      
Limited Partner                  
Number of classes of partners | item         2        
General Partnership                  
Number of classes of partners | item         1        
Fixed distribution percentage of unit holders         1.00%        
Class A                  
Fixed distribution percentage of unit holders         80.00%        
Forward split of depositary receipts 3                
Exchange ratio of depositary receipts for partnership units before adjustment 10                
Exchange ratio of depositary receipts for partnership units after adjustment 30                
Number of units in each depository receipt 0.03333               0.1
Quarterly distribution per unit approved (in dollars per unit)     9.00            
Quarterly distributions per depositary receipt (in dollars per receipt)     0.30            
Class A | Subsequent event                  
Quarterly distribution per unit approved (in dollars per unit)   9.00              
Quarterly distributions per depositary receipt (in dollars per receipt)   (0.30)              
Class B                  
Fixed distribution percentage of unit holders         19.00%        
v3.8.0.1
TREASURY UNITS (Details)
3 Months Ended 115 Months Ended
Mar. 31, 2017
$ / item
shares
Mar. 10, 2015
shares
Aug. 20, 2007
$ / item
shares
Mar. 31, 2018
shares
Mar. 31, 2017
USD ($)
shares
Mar. 31, 2017
USD ($)
$ / item
Mar. 06, 2008
shares
Treasury units       55,839      
Period for repurchase of depository receipts   5 years 12 months        
Depository receipts authorized to be repurchased   2,000,000 300,000       1,500,000
Number of depository receipts repurchased 1,365,306   1,365,306        
Repurchase price of depository receipts (in dollars per receipt) | $ / item           27.14  
Units repurchased (in shares)         23    
Total cost of repurchase | $         $ 42,548 $ 40,274,000  
General Partnership              
Treasury units       559      
Fixed distribution percentage of unit holders       1.00%      
Number of depository receipts repurchased 162   162        
Total cost of repurchase | $         $ 426    
Treasury Units              
Units repurchased (in shares)         23    
Class A              
Treasury units       44,671      
Fixed distribution percentage of unit holders       80.00%      
Repurchase price of units (in dollars per unit) | $ / item 814.20   814.20        
Total cost of repurchase | $         $ 34,038    
Class B              
Treasury units       10,609      
Fixed distribution percentage of unit holders       19.00%      
Number of depository receipts repurchased 3,072   3,072        
Total cost of repurchase | $         $ 8,084    
Class B | General Partnership              
Repurchase price of units (in dollars per unit) | $ / item 926.26   926.26        
v3.8.0.1
RENTAL INCOME (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
RENTAL INCOME    
Percentage of rental income related to residential apartments and condominium units with leases of one year or less 93.00%  
Maximum period of non-cancelable operating lease 1 year  
Percentage of rental income related to commercial properties 7.00%  
Minimum future rental income    
2018 $ 2,662,000  
2019 2,213,000  
2020 1,943,000  
2021 1,290,000  
2022 646,000  
Thereafter 1,105,000  
Commercial Property Leases 9,859,000  
Aggregate contingent rentals from continuing operations $ 223,000 $ 166,000
v3.8.0.1
RENTAL INCOME (Concentration) (Details)
3 Months Ended
Mar. 31, 2018
Commercial rental income | Major tenant  
Concentration Risk  
Concentration risk percentage 31.00%
v3.8.0.1
RENTAL INCOME (Commercial Leases) (Details)
3 Months Ended
Mar. 31, 2018
USD ($)
ft²
item
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 2,988,883
Total square feet for expiring leases | ft² 108,043
Total number of leases expiring | item 46
Percentage of annual base rent for expiring leases 100.00%
Through December 31, 2019  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 431,751
Total square feet for expiring leases | ft² 16,542
Total number of leases expiring | item 12
Percentage of annual base rent for expiring leases 14.00%
Through December 31, 2020  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 458,122
Total square feet for expiring leases | ft² 17,135
Total number of leases expiring | item 10
Percentage of annual base rent for expiring leases 15.00%
Through December 31, 2021  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 193,519
Total square feet for expiring leases | ft² 4,170
Total number of leases expiring | item 6
Percentage of annual base rent for expiring leases 6.00%
Through December 31, 2022  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 1,137,030
Total square feet for expiring leases | ft² 47,591
Total number of leases expiring | item 9
Percentage of annual base rent for expiring leases 39.00%
Through December 31, 2023  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 246,341
Total square feet for expiring leases | ft² 7,087
Total number of leases expiring | item 4
Percentage of annual base rent for expiring leases 8.00%
Through December 31, 2024  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 379,670
Total square feet for expiring leases | ft² 11,668
Total number of leases expiring | item 4
Percentage of annual base rent for expiring leases 13.00%
Through December 31, 2029  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 142,450
Total square feet for expiring leases | ft² 3,850
Total number of leases expiring | item 1
Percentage of annual base rent for expiring leases 5.00%
v3.8.0.1
RENTAL INCOME (Rent Receivable) (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
RENTAL INCOME    
Allowance for doubtful rent receivable $ 605,000 $ 644,000
Recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis 114,000  
Deferred rental concession $ 120,000  
v3.8.0.1
CASH FLOW INFORMATION (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
CASH FLOW INFORMATION    
Cash paid for interest $ 3,010,000 $ 2,472,000
Cash paid for state income taxes 47,000 $ 33,000
Non-cash financing activities in connection with acquisition $ 21,000,000  
v3.8.0.1
FAIR VALUE MEASUREMENTS (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Mortgage Notes Payable    
Carrying Amount $ 253,584,894 $ 233,221,258
Estimated Fair Value 233,103,625 237,895,708
Partially owned properties    
Mortgage Notes Payable    
Carrying Amount 123,720,733 124,145,012
Estimated Fair Value $ 123,539,032 $ 125,519,974
v3.8.0.1
TAXABLE INCOME AND TAX BASIS (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
TAXABLE INCOME AND TAX BASIS      
Excess amount of statement income over taxable income     $ 1,500,000
Excess amount of cumulative statement basis over cumulative taxable basis     1,532,000
Excess amount of statement income from joint venture investments over taxable income     5,000,000
Reconciliation of GAAP net income to taxable income      
Financial statement ("book") net income $ 1,878,558 $ 1,894,234  
Reconciliation of Income from Book Basis to Tax Basis Profit (Loss) Tax Basis     $ 5,438,000
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Details)
3 Months Ended
Mar. 31, 2018
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
Number of limited partnerships and limited liability companies in which the entity has invested 8
Number of partnerships investing in commercial property 3
Limited Partnerships  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
Number of limited partnerships and limited liability companies in which the entity has invested 9
Management Company [Member]  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
Number of employees having ownership interest in the investment properties 6
Minimum | Limited Partnerships  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
Ownership interest (as a percent) 40.00%
Minimum | Harold Brown  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
Ownership interest (as a percent) 43.20%
Maximum | Limited Partnerships  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
Ownership interest (as a percent) 50.00%
Maximum | Harold Brown  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
Ownership interest (as a percent) 56.00%
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Dexter) (Details)
1 Months Ended 3 Months Ended
Oct. 28, 2009
USD ($)
item
Feb. 28, 2007
USD ($)
Jun. 30, 2018
USD ($)
Mar. 31, 2018
USD ($)
Mar. 27, 2018
USD ($)
Mar. 22, 2018
USD ($)
Dec. 31, 2017
USD ($)
Mar. 31, 2017
USD ($)
item
Mar. 01, 2017
USD ($)
Oct. 03, 2005
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Investments in joint venture       $ 6,986,470     $ 7,212,044 $ 9,955,145    
Number of units | item               1,033    
Outstanding amount of mortgage       253,584,894     $ 233,221,258      
Dexter Park                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Investments in joint venture $ 15,925,000             $ 3,300,098    
Ownership interest (as a percent) 40.00%             40.00%    
Number of units | item 409             409    
Purchase price of investments $ 129,500,000                  
Dexter Park | Mortgages payable                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Interest rate (as a percent) 5.57%                  
Period for which the entity is required to make interest only payments 2 years                  
Amortization period of debt 30 years                  
Outstanding amount of mortgage       $ 81,601,000            
Borrowings $ 89,914,000                  
Hamilton Bay Apts                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Investments in joint venture               $ 2,956,030   $ 2,500,000
Ownership interest (as a percent)               50.00%   50.00%
Number of units | item               48   168
Interest rate (as a percent)   5.57%                
Period for which the entity is required to make interest only payments   5 years                
Amortization period of debt   30 years                
Purchase price of investments                   $ 30,875,000
Borrowings   $ 4,750,000                
Hamilton Bay Apts | Mortgages payable                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Outstanding amount of mortgage                 $ 2,222,000  
John Hancock | Hamilton Bay Apts                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Interest rate (as a percent)           3.99%        
Outstanding amount of mortgage           $ 82,000,000        
Rate lock confirmation deposit         $ 1,290,000 1,290,000        
Loan amount           $ 125,000,000        
Forecast | John Hancock | Hamilton Bay Apts                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Defeasance cost     $ 3,750,000              
Defeasance cost (as a percent)     40.00%              
General Partnership | Forecast | John Hancock | Hamilton Bay Apts                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Defeasance cost     $ 1,500,000              
Residential buildings                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Number of units | item               1,030    
Residential buildings | Dexter Park                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Number of units | item               409    
Residential buildings | Hamilton Bay Apts                    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                    
Number of units | item               48    
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton Bay Apts and Sales) (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Feb. 28, 2007
item
Mar. 31, 2018
USD ($)
item
Dec. 31, 2017
USD ($)
item
Mar. 31, 2017
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Investments in joint venture | $   $ 6,986,470 $ 7,212,044 $ 9,955,145
Number of units       1,033
Number of units sold       264
Number of units retained for long-term investment       (690)
Outstanding amount of mortgage | $   $ 253,584,894 $ 233,221,258  
Unsold units       79
Hamilton Bay Apts        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units sold     29  
Number of units refinanced 48      
Gain on the sale of real estate | $     $ 3,628,000  
Hamilton Bay Sales        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units   13    
Number of units sold   6    
Number of units under a purchase and sale agreement   5    
Gain on the sale of real estate | $   $ 828,000    
Residential buildings        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units       1,030
Mortgages payable | Minimum        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Interest rate (as a percent)   3.61%    
Mortgages payable | Maximum        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Interest rate (as a percent)   5.81%    
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton Essex) (Details)
3 Months Ended
Sep. 30, 2015
USD ($)
Sep. 28, 2015
USD ($)
Mar. 07, 2005
USD ($)
item
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
item
Dec. 31, 2017
USD ($)
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture       $ 6,986,470 $ 9,955,145 $ 7,212,044
Number of units | item         1,033  
Distribution to the Partnership       1,119,481 $ 1,119,687  
Mortgage Notes Payable       $ 253,584,894   $ 233,221,258
Hamilton Essex Development, LLC and Hamilton Essex 81, LLC            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture     $ 2,000,000      
Ownership interest (as a percent)     50.00%      
Purchase price of investments     $ 14,300,000      
Hamilton Essex 81            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Ownership interest (as a percent)         50.00%  
Number of units | item     48   49  
Number of properties in which borrowing amount collateralized | item     1      
Capital contributions   $ 100,000        
Distribution to the Partnership $ 978,193          
Hamilton Essex Development            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture         $ 1,336,486  
Ownership interest (as a percent)         50.00%  
Number of units | item         1  
Capacity of real estate property (in cars per lot) | item     50      
Capital contributions   978,193        
Residential buildings            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | item         1,030  
Residential buildings | Hamilton Essex 81            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | item         48  
Commercial            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | item         3  
Commercial | Hamilton Essex 81            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | item         1  
Commercial | Hamilton Essex Development            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | item         1  
Mortgages payable | Maximum            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Interest rate (as a percent)       5.81%    
Mortgages payable | Hamilton Essex Development, LLC and Hamilton Essex 81, LLC            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Borrowings     $ 10,750,000      
Mortgages payable | Hamilton Essex 81            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Amount of loan proceeds utilized for pay off the existing mortgage $ 8,040,719          
Term of debt 10 years          
Mortgage Notes Payable       $ 10,000,000    
Borrowings $ 10,000,000          
Mortgages payable | Hamilton Essex 81 | LIBOR            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Margin over basis of interest rate (as a percent) 2.18%          
Mortgages payable | Hamilton Essex Development            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Repayment of loan   $ 1,952,286        
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton 1025) (Details)
3 Months Ended 12 Months Ended
Jul. 08, 2016
USD ($)
Mar. 02, 2005
USD ($)
item
Mar. 31, 2018
USD ($)
item
Dec. 31, 2017
USD ($)
item
Mar. 31, 2017
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Investments in joint venture | $     $ 6,986,470 $ 7,212,044 $ 9,955,145
Number of units         1,033
Number of units sold         264
Unsold units         79
Number of units retained for long-term investment         (690)
Outstanding amount of mortgage | $     $ 253,584,894 233,221,258  
Gain on sale of assets | $       $ 2,380,000  
Hamilton 1025          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Investments in joint venture | $   $ 2,352,000     $ 1,799,349
Ownership interest (as a percent)   50.00%     50.00%
Number of units   176 10   176
Number of units sold   127 8 20 143
Unsold units         32
Number of units retained for long-term investment   49     0
Capital contributions | $ $ 2,359,500        
Number of units under a purchase and sale agreement     3    
Purchase price of investments | $   $ 23,750,000      
Gain on sale of assets | $     $ 817,000    
Hamilton 1025 | Mortgages payable          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Term of debt   10 years      
Interest rate (as a percent)   5.67%      
Period for which the entity is required to make interest only payments   5 years      
Amortization period of debt   30 years      
Borrowings | $   $ 5,000,000      
Residential buildings          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Number of units         1,030
Residential buildings | Hamilton 1025          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Number of units         175
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton Minuteman) (Details)
1 Months Ended 3 Months Ended
Sep. 12, 2016
USD ($)
Jan. 31, 2007
USD ($)
Oct. 31, 2004
USD ($)
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
item
Dec. 31, 2017
USD ($)
Dec. 31, 2006
USD ($)
Sep. 30, 2004
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                
Investments in joint venture       $ 6,986,470 $ 9,955,145 $ 7,212,044    
Number of units | item         1,033      
Distribution to the Partnership       1,119,481 $ 1,119,687      
Outstanding amount of mortgage       253,584,894   $ 233,221,258    
Hamilton Minuteman                
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                
Investments in joint venture         $ 70,108     $ 5,075,000
Ownership interest (as a percent)         50.00%     50.00%
Number of units | item         42     42
Cash contribution by the entity towards loan             $ 1,250,000  
Outstanding amount of mortgage       $ 6,000,000        
Purchase price of investments               $ 10,100,000
Amount returned to partnership     $ 3,775,000          
Residential buildings                
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                
Number of units | item         1,030      
Residential buildings | Hamilton Minuteman                
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                
Number of units | item         42      
Mortgages payable | Hamilton Minuteman                
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                
Distribution to the Partnership $ 385,000              
Mortgage amount 6,000,000              
Term of debt   10 years            
Amount of mortgage paid off 5,158,000              
Refinancing costs $ 123,000              
Interest rate (as a percent) 3.71% 5.67%            
Period for which the entity is required to make interest only payments 15 years 5 years            
Amortization period of debt   30 years            
Borrowings   $ 5,500,000 $ 8,025,000          
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton on Main) (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Aug. 31, 2014
USD ($)
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
item
Dec. 31, 2005
USD ($)
item
Dec. 31, 2017
USD ($)
Aug. 31, 2004
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture   $ 6,986,470 $ 9,955,145   $ 7,212,044  
Number of units | item     1,033      
Number of units sold | item     264      
Outstanding amount of mortgage   253,584,894     $ 233,221,258  
Distribution to the Partnership   1,119,481 $ 1,119,687      
Hamilton on Main Apts            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture     $ 413,328     $ 8,000,000
Ownership interest (as a percent)     50.00%     50.00%
Number of units | item     148     280
Number of units sold | item           137
Purchase price of investments           $ 56,000,000
Residential buildings            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | item     1,030      
Residential buildings | Hamilton on Main Apts            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | item     148      
Mortgages payable | Hamilton on Main Apartments, LLC            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Term of debt 10 years     10 years    
Number of buildings | item       3    
Outstanding amount of mortgage   $ 16,900,000        
Interest rate (as a percent) 4.34%     5.18%    
Period for which the entity is required to make interest only payments       3 years    
Amortization period of debt       30 years    
Debt Instrument, Loan Proceeds distributed to the Partnership $ 850,000          
Term excluding period for which interest only payments to be made       7 years    
Net proceeds after funding escrow accounts and closing costs       $ 16,700,000    
Repayment of loan 15,205,000          
Cost associated with loan extension 161,000          
Borrowings $ 16,900,000     $ 16,825,000    
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (345 Franklin) (Details)
1 Months Ended 3 Months Ended
Jun. 30, 2013
USD ($)
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
item
Dec. 31, 2017
USD ($)
Nov. 30, 2001
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Investments in joint venture   $ 6,986,470 $ 9,955,145 $ 7,212,044  
Number of units | item     1,033    
Distribution to the Partnership   1,119,481 $ 1,119,687    
Outstanding amount of mortgage   $ 253,584,894   $ 233,221,258  
Maximum | Mortgages payable          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Interest rate (as a percent)   5.81%      
345 Franklin | Mortgages payable          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Outstanding amount of mortgage   $ 9,696,000      
Residential buildings          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Number of units | item     1,030    
345 Franklin          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Investments in joint venture         $ 1,533,000
Ownership interest (as a percent)     50.00%   50.00%
Number of units | item     40   40
Distribution to the Partnership $ 1,610,000        
Legal obligation to fund operating results   $ 0      
345 Franklin | Mortgages payable          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Term of debt 15 years        
Interest rate (as a percent) 3.87%        
Period for which the entity is required to make interest only payments 3 years        
Amortization period of debt 30 years        
Repayment of loan $ 6,776,000        
Borrowings $ 10,000,000        
345 Franklin | Residential buildings          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Number of units | item     40    
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Balance Sheet) (Details)
Mar. 31, 2018
USD ($)
property
item
Dec. 31, 2017
USD ($)
item
Mar. 31, 2017
USD ($)
item
Oct. 28, 2009
USD ($)
item
Oct. 03, 2005
USD ($)
item
Mar. 07, 2005
item
Mar. 02, 2005
USD ($)
item
Sep. 30, 2004
USD ($)
item
Aug. 31, 2004
USD ($)
item
Nov. 30, 2001
USD ($)
item
ASSETS                    
Rental Properties     $ 141,066,471              
Cash & Cash Equivalents     2,423,420              
Rent Receivable     203,506              
Real Estate Tax Escrow     656,876              
Prepaid Expenses & Other Assets     2,090,797              
Total Assets     146,441,070              
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable     125,320,159              
Accounts Payable and Accrued Expenses     980,329              
Advance Rental Payments and Security Deposits     3,853,054              
Total Liabilities     130,153,542              
Partners' Capital     16,287,528              
Total Liabilities and Capital     146,441,070              
Investment in Unconsolidated Joint Ventures $ 6,986,470 $ 7,212,044 9,955,145              
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture (2,933,844) $ (2,806,319) (2,636,410)              
Total Investment in Unconsolidated Joint Ventures (Net)     $ 7,318,735              
Total units/ condominiums                    
Total | item     1,033              
Units to be retained | item     690              
Units to be sold | item     343              
Units sold | item     264              
Unsold units | item     79              
Units unsold with deposits for future sale | item     14              
Residential buildings                    
Total units/ condominiums                    
Total | item     1,030              
Commercial                    
Total units/ condominiums                    
Total | item     3              
Investment Properties                    
ASSETS                    
Rental Properties 131,325,750                  
Cash & Cash Equivalents 1,652,736                  
Rent Receivable 410,459                  
Real Estate Tax Escrow 665,426                  
Prepaid Expenses & Other Assets 4,193,283                  
Total Assets 138,247,654                  
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable 123,720,733                  
Accounts Payable and Accrued Expenses 1,042,477                  
Advance Rental Payments and Security Deposits 3,652,076                  
Total Liabilities 128,415,286                  
Partners' Capital 9,831,368                  
Total Liabilities and Capital 138,246,654                  
Investment in Unconsolidated Joint Ventures 6,986,470                  
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture (2,933,844)                  
Total Investment in Unconsolidated Joint Ventures (Net) $ 4,052,626                  
Total units/ condominiums                    
Total | property 1,033                  
Units to be retained | property 690                  
Units to be sold | property 343                  
Units sold | property 205                  
Unsold units | property 18                  
Units unsold with deposits for future sale | property 6                  
Investment Properties | Residential buildings                    
Total units/ condominiums                    
Total | property 1,030                  
Investment Properties | Commercial                    
Total units/ condominiums                    
Total | property 3                  
Hamilton Essex 81                    
ASSETS                    
Rental Properties     $ 7,907,838              
Cash & Cash Equivalents     158,945              
Rent Receivable     17,373              
Real Estate Tax Escrow     119,722              
Prepaid Expenses & Other Assets     96,193              
Total Assets     8,300,071              
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable $ 9,896,582   9,882,793              
Accounts Payable and Accrued Expenses     48,972              
Advance Rental Payments and Security Deposits     232,421              
Total Liabilities     10,164,186              
Partners' Capital     (1,864,115)              
Total Liabilities and Capital     $ 8,300,071              
Partners' Capital % - NERA     50.00%              
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture     $ (932,058)              
Total units/ condominiums                    
Total | item     49     48        
Units to be retained | item     49              
Hamilton Essex 81 | NERA 50%                    
ASSETS                    
Rental Properties 7,515,492                  
Cash & Cash Equivalents 148,701                  
Rent Receivable 133,580                  
Real Estate Tax Escrow 83,760                  
Prepaid Expenses & Other Assets 80,429                  
Total Assets 7,961,962                  
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable 9,896,582                  
Accounts Payable and Accrued Expenses 74,966                  
Advance Rental Payments and Security Deposits 341,039                  
Total Liabilities 10,312,587                  
Partners' Capital (2,349,625)                  
Total Liabilities and Capital $ 7,962,962                  
Partners' Capital % - NERA 50.00%                  
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture $ (1,174,814)                  
Total units/ condominiums                    
Total | property 49                  
Units to be retained | property 49                  
Hamilton Essex 81 | Residential buildings                    
Total units/ condominiums                    
Total | item     48              
Hamilton Essex 81 | Residential buildings | NERA 50%                    
Total units/ condominiums                    
Total | property 48                  
Hamilton Essex 81 | Commercial                    
Total units/ condominiums                    
Total | item     1              
Hamilton Essex 81 | Commercial | NERA 50%                    
Total units/ condominiums                    
Total | property 1                  
Hamilton Essex Development                    
ASSETS                    
Rental Properties     $ 2,622,729              
Cash & Cash Equivalents     50,621              
Prepaid Expenses & Other Assets     246              
Total Assets     2,673,596              
LIABILITIES AND PARTNERS' CAPITAL                    
Accounts Payable and Accrued Expenses     623              
Total Liabilities     623              
Partners' Capital     2,672,973              
Total Liabilities and Capital     $ 2,673,596              
Partners' Capital % - NERA     50.00%              
Investment in Unconsolidated Joint Ventures     $ 1,336,486              
Total units/ condominiums                    
Total | item     1              
Units to be retained | item     1              
Hamilton Essex Development | NERA 50%                    
ASSETS                    
Rental Properties $ 2,597,633                  
Cash & Cash Equivalents 50,004                  
Prepaid Expenses & Other Assets 279                  
Total Assets 2,647,916                  
LIABILITIES AND PARTNERS' CAPITAL                    
Accounts Payable and Accrued Expenses 2,188                  
Total Liabilities 2,188                  
Partners' Capital 2,645,728                  
Total Liabilities and Capital $ 2,647,916                  
Partners' Capital % - NERA 50.00%                  
Investment in Unconsolidated Joint Ventures $ 1,322,863                  
Total units/ condominiums                    
Total | property 1                  
Units to be retained | property 1                  
Hamilton Essex Development | Commercial                    
Total units/ condominiums                    
Total | item     1              
Hamilton Essex Development | Commercial | NERA 50%                    
Total units/ condominiums                    
Total | property 1                  
345 Franklin                    
ASSETS                    
Rental Properties     $ 6,542,738              
Cash & Cash Equivalents     70,277              
Rent Receivable     3,496              
Real Estate Tax Escrow     45,948              
Prepaid Expenses & Other Assets     45,250              
Total Assets     6,707,709              
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable $ 9,627,636   9,805,791              
Accounts Payable and Accrued Expenses     84,711              
Advance Rental Payments and Security Deposits     225,911              
Total Liabilities     10,116,413              
Partners' Capital     (3,408,704)              
Total Liabilities and Capital     $ 6,707,709              
Partners' Capital % - NERA     50.00%             50.00%
Investment in Unconsolidated Joint Ventures                   $ 1,533,000
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture     $ (1,704,352)              
Total units/ condominiums                    
Total | item     40             40
Units to be retained | item     40              
345 Franklin | NERA 50%                    
ASSETS                    
Rental Properties 6,242,990                  
Cash & Cash Equivalents 123,091                  
Rent Receivable 19,937                  
Real Estate Tax Escrow 46,751                  
Prepaid Expenses & Other Assets 50,269                  
Total Assets 6,483,038                  
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable 9,627,636                  
Accounts Payable and Accrued Expenses 87,137                  
Advance Rental Payments and Security Deposits 245,550                  
Total Liabilities 9,960,323                  
Partners' Capital (3,477,285)                  
Total Liabilities and Capital $ 6,483,038                  
Partners' Capital % - NERA 50.00%                  
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture $ (1,738,644)                  
Total units/ condominiums                    
Total | property 40                  
Units to be retained | property 40                  
345 Franklin | Residential buildings                    
Total units/ condominiums                    
Total | item     40              
345 Franklin | Residential buildings | NERA 50%                    
Total units/ condominiums                    
Total | property 40                  
Hamilton 1025                    
ASSETS                    
Rental Properties     $ 3,029,735              
Cash & Cash Equivalents     490,522              
Rent Receivable     12,438              
Prepaid Expenses & Other Assets     131,148              
Total Assets     3,663,843              
LIABILITIES AND PARTNERS' CAPITAL                    
Accounts Payable and Accrued Expenses     15,600              
Advance Rental Payments and Security Deposits     49,544              
Total Liabilities     65,144              
Partners' Capital     3,598,699              
Total Liabilities and Capital     $ 3,663,843              
Partners' Capital % - NERA     50.00%       50.00%      
Investment in Unconsolidated Joint Ventures     $ 1,799,349       $ 2,352,000      
Total units/ condominiums                    
Total | item 10   176       176      
Units to be retained | item     0       (49)      
Units to be sold | item     176              
Units sold | item 8 20 143       127      
Unsold units | item     32              
Units unsold with deposits for future sale | item     4              
Hamilton 1025 | NERA 50%                    
ASSETS                    
Rental Properties $ 887,890                  
Cash & Cash Equivalents 136,822                  
Rent Receivable 6,902                  
Prepaid Expenses & Other Assets 586,555                  
Total Assets 1,618,169                  
LIABILITIES AND PARTNERS' CAPITAL                    
Accounts Payable and Accrued Expenses 8,434                  
Advance Rental Payments and Security Deposits 12,555                  
Total Liabilities 20,989                  
Partners' Capital 1,597,180                  
Total Liabilities and Capital $ 1,618,169                  
Partners' Capital % - NERA 50.00%                  
Investment in Unconsolidated Joint Ventures $ 798,589                  
Total units/ condominiums                    
Total | property 176                  
Units to be sold | property 175                  
Units sold | property 167                  
Unsold units | property 8                  
Units unsold with deposits for future sale | property 3                  
Hamilton 1025 | Residential buildings                    
Total units/ condominiums                    
Total | item     175              
Hamilton 1025 | Residential buildings | NERA 50%                    
Total units/ condominiums                    
Total | property 175                  
Hamilton 1025 | Commercial                    
Total units/ condominiums                    
Total | item     1              
Hamilton 1025 | Commercial | NERA 50%                    
Total units/ condominiums                    
Total | property 1                  
Hamilton Bay Sales                    
ASSETS                    
Rental Properties     $ 145,134              
Cash & Cash Equivalents     88              
Rent Receivable     225              
Prepaid Expenses & Other Assets     16,480              
Total Assets     161,927              
LIABILITIES AND PARTNERS' CAPITAL                    
Accounts Payable and Accrued Expenses     2,330              
Advance Rental Payments and Security Deposits     101              
Total Liabilities     2,431              
Partners' Capital     159,496              
Total Liabilities and Capital     $ 161,927              
Partners' Capital % - NERA     50.00%              
Investment in Unconsolidated Joint Ventures     $ 79,747              
Total units/ condominiums                    
Total | item     120              
Units to be sold | item     120              
Units sold | item     120              
Unsold units | item     0              
Hamilton Bay Sales | Residential buildings                    
Total units/ condominiums                    
Total | item     120              
Hamilton Bay Apts                    
ASSETS                    
Rental Properties     $ 5,848,498              
Cash & Cash Equivalents     17,718              
Rent Receivable     5,844              
Real Estate Tax Escrow     17,849              
Prepaid Expenses & Other Assets     103,595              
Total Assets     5,993,504              
LIABILITIES AND PARTNERS' CAPITAL                    
Accounts Payable and Accrued Expenses     5,782              
Advance Rental Payments and Security Deposits     75,660              
Total Liabilities     81,442              
Partners' Capital     5,912,062              
Total Liabilities and Capital     $ 5,993,504              
Partners' Capital % - NERA     50.00%   50.00%          
Investment in Unconsolidated Joint Ventures     $ 2,956,030   $ 2,500,000          
Total units/ condominiums                    
Total | item     48   168          
Units to be retained | item     0   (48)          
Units to be sold | item     46              
Units sold | item     1   120          
Unsold units | item     47              
Units unsold with deposits for future sale | item     10              
Hamilton Bay Apts | NERA 50%                    
ASSETS                    
Rental Properties $ 1,583,448                  
Cash & Cash Equivalents 122,350                  
Rent Receivable 2,463                  
Real Estate Tax Escrow 0                  
Prepaid Expenses & Other Assets 693,936                  
Total Assets 2,402,197                  
LIABILITIES AND PARTNERS' CAPITAL                    
Accounts Payable and Accrued Expenses 9,554                  
Advance Rental Payments and Security Deposits 10,975                  
Total Liabilities 20,529                  
Partners' Capital 2,381,668                  
Total Liabilities and Capital $ 2,402,197                  
Partners' Capital % - NERA 50.00%                  
Investment in Unconsolidated Joint Ventures $ 1,190,833                  
Total units/ condominiums                    
Total | property 48                  
Units to be sold | property 48                  
Units sold | property 38                  
Unsold units | property 10                  
Units unsold with deposits for future sale | property 3                  
Hamilton Bay Apts | Residential buildings                    
Total units/ condominiums                    
Total | item     48              
Hamilton Bay Apts | Residential buildings | NERA 50%                    
Total units/ condominiums                    
Total | property 48                  
Hamilton Minuteman                    
ASSETS                    
Rental Properties     $ 6,095,634              
Cash & Cash Equivalents     60,393              
Rent Receivable     1,152              
Real Estate Tax Escrow     19,048              
Prepaid Expenses & Other Assets     31,844              
Total Assets     6,208,071              
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable $ 5,889,863   5,881,680              
Accounts Payable and Accrued Expenses     61,455              
Advance Rental Payments and Security Deposits     124,719              
Total Liabilities     6,067,854              
Partners' Capital     140,217              
Total Liabilities and Capital     $ 6,208,071              
Partners' Capital % - NERA     50.00%         50.00%    
Investment in Unconsolidated Joint Ventures     $ 70,108         $ 5,075,000    
Total units/ condominiums                    
Total | item     42         42    
Units to be retained | item     42              
Hamilton Minuteman | NERA 50%                    
ASSETS                    
Rental Properties 5,854,350                  
Cash & Cash Equivalents 107,268                  
Rent Receivable 5,206                  
Real Estate Tax Escrow 32,229                  
Prepaid Expenses & Other Assets 17,475                  
Total Assets 6,016,528                  
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable 5,889,863                  
Accounts Payable and Accrued Expenses 55,333                  
Advance Rental Payments and Security Deposits 112,103                  
Total Liabilities 6,057,299                  
Partners' Capital (40,771)                  
Total Liabilities and Capital $ 6,016,528                  
Partners' Capital % - NERA 50.00%                  
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture $ (20,387)                  
Total units/ condominiums                    
Total | property 42                  
Units to be retained | property 42                  
Hamilton Minuteman | Residential buildings                    
Total units/ condominiums                    
Total | item     42              
Hamilton Minuteman | Residential buildings | NERA 50%                    
Total units/ condominiums                    
Total | property 42                  
Hamilton on Main Apts                    
ASSETS                    
Rental Properties     $ 17,593,862              
Cash & Cash Equivalents     214,895              
Rent Receivable     11,479              
Real Estate Tax Escrow     213,815              
Prepaid Expenses & Other Assets     107,642              
Total Assets     18,141,693              
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable $ 16,797,004   16,780,953              
Accounts Payable and Accrued Expenses     153,499              
Advance Rental Payments and Security Deposits     380,586              
Total Liabilities     17,315,038              
Partners' Capital     826,655              
Total Liabilities and Capital     $ 18,141,693              
Partners' Capital % - NERA     50.00%           50.00%  
Investment in Unconsolidated Joint Ventures     $ 413,328           $ 8,000,000  
Total units/ condominiums                    
Total | item     148           280  
Units to be retained | item     148              
Units sold | item                 137  
Hamilton on Main Apts | NERA 50%                    
ASSETS                    
Rental Properties 17,359,777                  
Cash & Cash Equivalents 102,710                  
Rent Receivable 21,196                  
Real Estate Tax Escrow 152,782                  
Prepaid Expenses & Other Assets 95,705                  
Total Assets 17,732,170                  
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable 16,797,004                  
Accounts Payable and Accrued Expenses 169,932                  
Advance Rental Payments and Security Deposits 321,274                  
Total Liabilities 17,288,210                  
Partners' Capital 443,960                  
Total Liabilities and Capital $ 17,732,170                  
Partners' Capital % - NERA 50.00%                  
Investment in Unconsolidated Joint Ventures $ 221,979                  
Total units/ condominiums                    
Total | property 148                  
Units to be retained | property 148                  
Hamilton on Main Apts | Residential buildings                    
Total units/ condominiums                    
Total | item     148              
Hamilton on Main Apts | Residential buildings | NERA 50%                    
Total units/ condominiums                    
Total | property 148                  
Dexter Park                    
ASSETS                    
Rental Properties     $ 91,280,303              
Cash & Cash Equivalents     1,359,961              
Rent Receivable     151,499              
Real Estate Tax Escrow     240,494              
Prepaid Expenses & Other Assets     1,558,399              
Total Assets     94,590,656              
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable $ 81,509,648   82,968,942              
Accounts Payable and Accrued Expenses     607,357              
Advance Rental Payments and Security Deposits     2,764,112              
Total Liabilities     86,340,411              
Partners' Capital     8,250,245              
Total Liabilities and Capital     $ 94,590,656              
Partners' Capital % - NERA     40.00% 40.00%            
Investment in Unconsolidated Joint Ventures     $ 3,300,098 $ 15,925,000            
Total units/ condominiums                    
Total | item     409 409            
Units to be retained | item     409              
Dexter Park | NERA 40%                    
ASSETS                    
Rental Properties 89,284,170                  
Cash & Cash Equivalents 861,790                  
Rent Receivable 221,175                  
Real Estate Tax Escrow 349,904                  
Prepaid Expenses & Other Assets 2,668,635                  
Total Assets 93,385,674                  
LIABILITIES AND PARTNERS' CAPITAL                    
Mortgage Notes Payable 81,509,648                  
Accounts Payable and Accrued Expenses 634,933                  
Advance Rental Payments and Security Deposits 2,608,580                  
Total Liabilities 84,753,161                  
Partners' Capital 8,630,513                  
Total Liabilities and Capital $ 93,383,674                  
Partners' Capital % - NERA 40.00%                  
Investment in Unconsolidated Joint Ventures $ 3,452,204                  
Total units/ condominiums                    
Total | property 409                  
Units to be retained | property 409                  
Dexter Park | Residential buildings                    
Total units/ condominiums                    
Total | item     409              
Dexter Park | Residential buildings | NERA 40%                    
Total units/ condominiums                    
Total | property 409                  
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Income) (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Oct. 28, 2009
Oct. 03, 2005
Mar. 02, 2005
Sep. 30, 2004
Aug. 31, 2004
Nov. 30, 2001
Revenues                
Rental income $ 5,945,278 $ 6,082,799            
Laundry and Sundry Income 38,711 38,431            
Total Revenues 5,983,989 6,121,230            
Expenses                
Administrative 101,568 79,279            
Depreciation and amortization 1,428,571 1,489,214            
Management Fees 159,840 179,082            
Operating 579,810 532,304            
Renting 45,600 38,718            
Repairs and Maintenance 675,249              
Taxes and Insurance 710,397 760,774            
Total Expenses 3,701,035 3,700,102            
Income Before Other Income 2,282,954 2,421,128            
Other Income (loss)                
Interest Expense (1,609,345) (1,657,372)            
Gain on Sale of Real Estate 1,644,763              
Total Other Income (Loss) 35,418 (946,613)            
Net Income (Loss) 2,318,372 1,474,515            
Proportionate share of net income (loss) 1,100,900 672,837            
NERA 50%                
Other Income (loss)                
Net Income (Loss)   415,132            
Proportionate share of net income (loss) 867,757              
NERA 40%                
Other Income (loss)                
Proportionate share of net income (loss) 233,143 257,705            
Hamilton Essex 81                
Revenues                
Rental income 411,222 401,194            
Laundry and Sundry Income 3,005 3,531            
Total Revenues 414,227 404,725            
Expenses                
Administrative 9,680 5,201            
Depreciation and amortization 114,285 113,299            
Management Fees 13,204 17,380            
Operating 24,131 23,637            
Renting 3,291 3,722            
Repairs and Maintenance 54,501              
Taxes and Insurance 62,527 60,469            
Total Expenses 281,619 244,439            
Income Before Other Income 132,608 160,286            
Other Income (loss)                
Interest Expense (99,313) (78,991)            
Total Other Income (Loss) (99,313) (78,991)            
Net Income (Loss) 33,295 $ 81,295            
Ownership interest (as a percent)   50.00%            
Hamilton Essex 81 | NERA 50%                
Other Income (loss)                
Net Income (Loss)   $ 40,648            
Proportionate share of net income (loss) $ 16,648              
Ownership interest (as a percent) 50.00%              
Hamilton Essex Development                
Revenues                
Rental income $ 53,928 60,000            
Total Revenues 53,928 60,000            
Expenses                
Administrative 488 425            
Depreciation and amortization 665 707            
Management Fees 2,157 2,400            
Repairs and Maintenance 4,163              
Taxes and Insurance 16,723 14,532            
Total Expenses 24,196 18,064            
Income Before Other Income 29,732 41,936            
Other Income (loss)                
Net Income (Loss) 29,732 $ 41,936            
Ownership interest (as a percent)   50.00%            
Hamilton Essex Development | NERA 50%                
Other Income (loss)                
Net Income (Loss)   $ 20,968            
Proportionate share of net income (loss) $ 14,866              
Ownership interest (as a percent) 50.00%              
345 Franklin                
Revenues                
Rental income $ 403,837 372,417            
Laundry and Sundry Income 1,217 945            
Total Revenues 405,054 373,362            
Expenses                
Administrative 6,455 6,390            
Depreciation and amortization 86,251 86,422            
Management Fees 16,126 15,958            
Operating 20,580 23,145            
Renting 497 2,136            
Repairs and Maintenance 21,497              
Taxes and Insurance 41,631 36,718            
Total Expenses 193,037 190,069            
Income Before Other Income 212,017 183,293            
Other Income (loss)                
Interest Expense (96,961) (99,404)            
Total Other Income (Loss) (96,961) (99,404)            
Net Income (Loss) 115,056 $ 83,889            
Ownership interest (as a percent)   50.00%           50.00%
345 Franklin | NERA 50%                
Other Income (loss)                
Net Income (Loss)   $ 41,945            
Proportionate share of net income (loss) $ 57,528              
Ownership interest (as a percent) 50.00%              
Hamilton 1025                
Revenues                
Rental income $ 38,221 130,398            
Total Revenues 38,221 130,398            
Expenses                
Administrative 1,499 964            
Depreciation and amortization   45,626            
Management Fees 1,508 4,763            
Operating 156 (37)            
Renting   62            
Repairs and Maintenance 40,207              
Taxes and Insurance 18,171 29,378            
Total Expenses 61,541 136,258            
Income Before Other Income (23,320) (5,860)            
Other Income (loss)                
Interest Expense (26) (503)            
Gain on Sale of Real Estate 817,006              
Total Other Income (Loss) 816,980 710,256            
Net Income (Loss) 793,660 $ 704,396            
Ownership interest (as a percent)   50.00%     50.00%      
Hamilton 1025 | NERA 50%                
Other Income (loss)                
Net Income (Loss)   $ 352,199            
Proportionate share of net income (loss) $ 396,830              
Ownership interest (as a percent) 50.00%              
Hamilton Bay Sales                
Revenues                
Rental income   2,867            
Total Revenues   2,867            
Expenses                
Administrative   824            
Depreciation and amortization   1,230            
Management Fees   135            
Operating   19            
Renting   62            
Taxes and Insurance   863            
Total Expenses   5,113            
Income Before Other Income   (2,246)            
Other Income (loss)                
Interest Expense   (2)            
Total Other Income (Loss)   (2)            
Net Income (Loss)   $ (2,248)            
Ownership interest (as a percent)   50.00%            
Hamilton Bay Sales | NERA 50%                
Other Income (loss)                
Net Income (Loss)   $ (1,124)            
Hamilton Bay Apts                
Revenues                
Rental income $ 22,203 222,036            
Total Revenues 22,203 222,036            
Expenses                
Administrative 3,066 3,065            
Depreciation and amortization 10,000 81,252            
Management Fees 1,022 8,650            
Operating 825 652            
Renting   62            
Repairs and Maintenance 34,224              
Taxes and Insurance 16,459 46,095            
Total Expenses 65,596 246,381            
Income Before Other Income (43,393) (24,345)            
Other Income (loss)                
Interest Expense (49) (41,525)            
Gain on Sale of Real Estate 827,757              
Total Other Income (Loss) 827,708 (41,525)            
Net Income (Loss) 784,315 $ (65,870)            
Ownership interest (as a percent)   50.00%   50.00%        
Hamilton Bay Apts | NERA 50%                
Other Income (loss)                
Net Income (Loss)   $ (32,935)            
Proportionate share of net income (loss) $ 392,158              
Ownership interest (as a percent) 50.00%              
Hamilton Minuteman                
Revenues                
Rental income $ 263,051 256,788            
Laundry and Sundry Income 675 675            
Total Revenues 263,726 257,463            
Expenses                
Administrative 1,824 1,205            
Depreciation and amortization 87,722 86,675            
Management Fees 10,368 11,141            
Operating 33,850 27,875            
Renting 3,378 1,321            
Repairs and Maintenance 19,617              
Taxes and Insurance 31,046 31,445            
Total Expenses 187,805 180,516            
Income Before Other Income 75,921 76,947            
Other Income (loss)                
Interest Expense (58,519) (59,091)            
Total Other Income (Loss) (58,519) (59,091)            
Net Income (Loss) 17,402 $ 17,856            
Ownership interest (as a percent)   50.00%       50.00%    
Hamilton Minuteman | NERA 50%                
Other Income (loss)                
Net Income (Loss)   $ 8,929            
Proportionate share of net income (loss) $ 8,701              
Ownership interest (as a percent) 50.00%              
Hamilton on Main Apts                
Revenues                
Rental income $ 858,213 826,303            
Laundry and Sundry Income 9,126 8,947            
Total Revenues 867,339 835,250            
Expenses                
Administrative 13,127 11,018            
Depreciation and amortization 255,506 242,316            
Management Fees 32,443 34,103            
Operating 120,393 104,159            
Renting 8,652 10,026            
Repairs and Maintenance 182,374              
Taxes and Insurance 104,551 109,815            
Total Expenses 717,046 675,563            
Income Before Other Income 150,293 159,687            
Other Income (loss)                
Interest Expense (188,239) (190,684)            
Total Other Income (Loss) (188,239) (190,684)            
Net Income (Loss) (37,946) $ (30,997)            
Ownership interest (as a percent)   50.00%         50.00%  
Hamilton on Main Apts | NERA 50%                
Other Income (loss)                
Net Income (Loss)   $ (15,498)            
Proportionate share of net income (loss) $ (18,973)              
Ownership interest (as a percent) 50.00%              
Dexter Park                
Revenues                
Rental income $ 3,894,603 3,810,796            
Laundry and Sundry Income 24,688 24,333            
Total Revenues 3,919,291 3,835,129            
Expenses                
Administrative 65,429 50,187            
Depreciation and amortization 874,142 831,687            
Management Fees 83,012 84,552            
Operating 379,875 352,854            
Renting 29,782 21,327            
Repairs and Maintenance 318,666              
Taxes and Insurance 419,289 431,459            
Total Expenses 2,170,195 2,003,699            
Income Before Other Income 1,749,096 1,831,430            
Other Income (loss)                
Interest Expense (1,166,238) (1,187,172)            
Total Other Income (Loss) (1,166,238) (1,187,172)            
Net Income (Loss) 582,858 $ 644,258            
Ownership interest (as a percent)   40.00% 40.00%          
Dexter Park | NERA 40%                
Other Income (loss)                
Proportionate share of net income (loss) $ 233,143 $ 257,705            
Ownership interest (as a percent) 40.00%              
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Mortgage Maturities) (Details) - USD ($)
Mar. 31, 2018
Mar. 31, 2017
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Less: unamortized deferred financing costs $ (1,505,000)  
Debt maturities net of unamortized deferred financing costs   $ 125,320,159
Weighted average interest rate (as a percent) 3.87%  
Effective interest rate (as a percent) 3.95%  
Investment Properties    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
3/31/2018 $ 1,892,247  
3/31/2019 80,100,849  
3/31/2020 207,527  
3/31/2021 215,702  
3/31/2022 224,199  
Thereafter 41,556,703  
Total 124,197,227  
Less: unamortized deferred financing costs (476,494)  
Debt maturities net of unamortized deferred financing costs 123,720,733  
Hamilton Essex 81    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Thereafter 10,000,000  
Total 10,000,000  
Less: unamortized deferred financing costs (103,418)  
Debt maturities net of unamortized deferred financing costs 9,896,582 9,882,793
345 Franklin    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
3/31/2018 192,094  
3/31/2019 199,661  
3/31/2020 207,527  
3/31/2021 215,702  
3/31/2022 224,199  
Thereafter 8,656,703  
Total 9,695,886  
Less: unamortized deferred financing costs (68,250)  
Debt maturities net of unamortized deferred financing costs 9,627,636 9,805,791
Hamilton Minuteman    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Thereafter 6,000,000  
Total 6,000,000  
Less: unamortized deferred financing costs (110,137)  
Debt maturities net of unamortized deferred financing costs 5,889,863 5,881,680
Hamilton on Main Apts    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Thereafter 16,900,000  
Total 16,900,000  
Less: unamortized deferred financing costs (102,996)  
Debt maturities net of unamortized deferred financing costs 16,797,004 16,780,953
Dexter Park    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
3/31/2018 1,700,153  
3/31/2019 79,901,188  
Total 81,601,341  
Less: unamortized deferred financing costs (91,693)  
Debt maturities net of unamortized deferred financing costs $ 81,509,648 $ 82,968,942
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Sep. 12, 2016
USD ($)
Jul. 08, 2016
USD ($)
Sep. 30, 2015
USD ($)
Sep. 28, 2015
USD ($)
Oct. 28, 2009
USD ($)
item
Mar. 07, 2005
USD ($)
item
Mar. 02, 2005
USD ($)
item
Aug. 31, 2014
USD ($)
Jun. 30, 2013
USD ($)
Feb. 28, 2007
USD ($)
Jan. 31, 2007
USD ($)
Oct. 31, 2004
USD ($)
Mar. 31, 2018
USD ($)
property
item
Mar. 31, 2017
USD ($)
item
Dec. 31, 2005
USD ($)
Dec. 31, 2017
USD ($)
item
Mar. 01, 2017
USD ($)
Dec. 31, 2006
USD ($)
Oct. 03, 2005
USD ($)
item
Sep. 30, 2004
USD ($)
item
Aug. 31, 2004
USD ($)
item
Nov. 30, 2001
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of limited partnerships and limited liability companies in which the entity has invested | item                         8                  
Number of partnerships investing in commercial property | item                         3                  
Investments in joint venture                         $ 6,986,470 $ 9,955,145   $ 7,212,044            
Outstanding amount of mortgage                         253,584,894     $ 233,221,258            
Number of units | item                           1,033                
Number of units retained for long-term investment | item                           (690)                
Number of units sold | item                           264                
Interest paid                         3,010,000 $ 2,472,000                
Units to be sold | item                           343                
Distribution to the Partnership                         1,119,481 $ 1,119,687                
Carrying value of investment to discontinue applying the equity method                         $ 0                  
Limited Partnerships                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of limited partnerships and limited liability companies in which the entity has invested | item                         9                  
Dexter Park                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)         40.00%                 40.00%                
Investments in joint venture         $ 15,925,000                 $ 3,300,098                
Number of units | item         409                 409                
Number of units retained for long-term investment | item                           (409)                
Purchase price of investments         $ 129,500,000                                  
Dexter Park | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Outstanding amount of mortgage                         $ 81,601,000                  
Interest rate (as a percent)         5.57%                                  
Period for which the entity is required to make interest only payments         2 years                                  
Amortization period of debt         30 years                                  
Borrowings         $ 89,914,000                                  
Hamilton Bay Apts                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                           50.00%         50.00%      
Investments in joint venture                           $ 2,956,030         $ 2,500,000      
Number of units | item                           48         168      
Number of units retained for long-term investment | item                           0         48      
Number of units sold | item                           1         120      
Interest rate (as a percent)                   5.57%                        
Period for which the entity is required to make interest only payments                   5 years                        
Amortization period of debt                   30 years                        
Purchase price of investments                                     $ 30,875,000      
Borrowings                   $ 4,750,000                        
Units to be sold | item                           46                
Hamilton Bay Apts | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Outstanding amount of mortgage                                 $ 2,222,000          
Hamilton Bay Sales                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                           50.00%                
Investments in joint venture                           $ 79,747                
Number of units | item                           120                
Number of units sold | item                           120                
Units to be sold | item                           120                
Hamilton Essex Development, LLC and Hamilton Essex 81, LLC                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)           50.00%                                
Investments in joint venture           $ 2,000,000                                
Purchase price of investments           14,300,000                                
Hamilton Essex Development, LLC and Hamilton Essex 81, LLC | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Borrowings           $ 10,750,000                                
Hamilton Essex 81                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                           50.00%                
Number of units | item           48               49                
Number of units retained for long-term investment | item                           (49)                
Capital contributions       $ 100,000                                    
Number of properties | item           1                                
Distribution to the Partnership     $ 978,193                                      
Hamilton Essex 81 | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Outstanding amount of mortgage                         $ 10,000,000                  
Borrowings     $ 10,000,000                                      
Term of debt     10 years                                      
Hamilton Essex 81 | Mortgages payable | LIBOR                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Margin over basis of interest rate (as a percent)     2.18%                                      
Hamilton Essex Development                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                           50.00%                
Investments in joint venture                           $ 1,336,486                
Number of units | item                           1                
Number of units retained for long-term investment | item                           (1)                
Capacity of real estate property (in cars per lot) | item           50                                
Capital contributions       978,193                                    
Hamilton Essex Development | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Repayment of loan       $ 1,952,286                                    
Hamilton 1025                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)             50.00%             50.00%                
Investments in joint venture             $ 2,352,000             $ 1,799,349                
Number of units | item             176           10 176                
Number of units retained for long-term investment | item             49             0                
Number of units sold | item             127           8 143   20            
Purchase price of investments             $ 23,750,000                              
Capital contributions   $ 2,359,500                                        
Units to be sold | item                           176                
Hamilton 1025 | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Interest rate (as a percent)             5.67%                              
Period for which the entity is required to make interest only payments             5 years                              
Amortization period of debt             30 years                              
Borrowings             $ 5,000,000                              
Term of debt             10 years                              
Hamilton Minuteman                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                           50.00%           50.00%    
Investments in joint venture                           $ 70,108           $ 5,075,000    
Outstanding amount of mortgage                         $ 6,000,000                  
Number of units | item                           42           42    
Number of units retained for long-term investment | item                           (42)                
Purchase price of investments                                       $ 10,100,000    
Amount returned to partnership                       $ 3,775,000                    
Cash contribution by the entity towards loan                                   $ 1,250,000        
Hamilton Minuteman | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Mortgage amount $ 6,000,000                                          
Interest rate (as a percent) 3.71%                   5.67%                      
Period for which the entity is required to make interest only payments 15 years                   5 years                      
Amortization period of debt                     30 years                      
Borrowings                     $ 5,500,000 $ 8,025,000                    
Term of debt                     10 years                      
Repayment of loan $ 5,158,000                                          
Distribution to the Partnership $ 385,000                                          
Hamilton on Main Apts                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                           50.00%             50.00%  
Investments in joint venture                           $ 413,328             $ 8,000,000  
Number of units | item                           148             280  
Number of units retained for long-term investment | item                           (148)                
Number of units sold | item                                         137  
Purchase price of investments                                         $ 56,000,000  
Hamilton on Main Apartments, LLC | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Outstanding amount of mortgage                         16,900,000                  
Interest rate (as a percent)               4.34%             5.18%              
Period for which the entity is required to make interest only payments                             3 years              
Amortization period of debt                             30 years              
Borrowings               $ 16,900,000             $ 16,825,000              
Term of debt               10 years             10 years              
Repayment of loan               $ 15,205,000                            
Cost associated with loan extension               $ 161,000                            
Term excluding period for which interest only payments to be made                             7 years              
Net proceeds after funding escrow accounts and closing costs                             $ 16,700,000              
345 Franklin                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                           50.00%               50.00%
Investments in joint venture                                           $ 1,533,000
Number of units | item                           40               40
Number of units retained for long-term investment | item                           (40)                
Distribution to the Partnership                 $ 1,610,000                          
345 Franklin | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Interest rate (as a percent)                 3.87%                          
Period for which the entity is required to make interest only payments                 3 years                          
Amortization period of debt                 30 years                          
Borrowings                 $ 10,000,000                          
Term of debt                 15 years                          
Repayment of loan                 $ 6,776,000                          
Investment Properties                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Investments in joint venture                         $ 6,986,470                  
Number of units | property                         1,033                  
Number of units retained for long-term investment | property                         (690)                  
Number of units sold | property                         205                  
Units to be sold | property                         343                  
Residential buildings                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           1,030                
Residential buildings | Dexter Park                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           409                
Residential buildings | Hamilton Bay Apts                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           48                
Residential buildings | Hamilton Bay Sales                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           120                
Residential buildings | Hamilton Essex 81                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           48                
Residential buildings | Hamilton 1025                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           175                
Residential buildings | Hamilton Minuteman                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           42                
Residential buildings | Hamilton on Main Apts                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           148                
Residential buildings | 345 Franklin                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           40                
Residential buildings | Investment Properties                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | property                         1,030                  
Commercial                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           3                
Commercial | Hamilton Essex 81                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           1                
Commercial | Hamilton Essex Development                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           1                
Commercial | Hamilton 1025                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | item                           1                
Commercial | Investment Properties                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of units | property                         3                  
Management Company [Member]                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Number of employees having ownership interest in the investment properties | item                         6                  
Minimum | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Interest rate (as a percent)                         3.61%                  
Minimum | Limited Partnerships                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                         40.00%                  
Minimum | Harold Brown                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                         43.20%                  
Maximum | Mortgages payable                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Interest rate (as a percent)                         5.81%                  
Maximum | Limited Partnerships                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                         50.00%                  
Maximum | Harold Brown                                            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                                            
Ownership interest (as a percent)                         56.00%                  
v3.8.0.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Feb. 28, 2007
item
Mar. 31, 2018
USD ($)
property
item
Mar. 31, 2017
USD ($)
item
Dec. 31, 2017
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of limited partnerships and limited liability companies in which the entity has invested   8    
Number of partnerships investing in commercial property   3    
Investments in joint venture | $   $ 6,986,470 $ 9,955,145 $ 7,212,044
Number of units     1,033  
Outstanding amount of mortgage | $   253,584,894   $ 233,221,258
Number of units sold     264  
Number of units retained for long-term investment     (690)  
Unsold units     79  
Distribution to the Partnership | $   1,119,481 $ 1,119,687  
Investment Properties        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Investments in joint venture | $   $ 6,986,470    
Number of units | property   1,033    
Number of units sold | property   205    
Number of units retained for long-term investment | property   (690)    
Unsold units | property   18    
Hamilton Bay Apts        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units sold       29
Number of units refinanced 48      
Gain on the sale of real estate | $       $ 3,628,000
Hamilton Bay Sales        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units   13    
Number of units sold   6    
Gain on the sale of real estate | $   $ 828,000    
345 Franklin | Mortgages payable        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Outstanding amount of mortgage | $   $ 9,696,000    
Condominium        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units   19    
Residential buildings        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units     1,030  
Residential buildings | Investment Properties        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units | property   1,030    
Commercial        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units     3  
Commercial | Investment Properties        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Number of units | property   3    
Minimum | Mortgages payable        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Interest rate (as a percent)   3.61%    
Minimum | Harold Brown        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Ownership interest (as a percent)   43.20%    
Maximum | Mortgages payable        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Interest rate (as a percent)   5.81%    
Maximum | Harold Brown        
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES        
Ownership interest (as a percent)   56.00%    
v3.8.0.1
SUBSEQUENT EVENTS (Details) - USD ($)
3 Months Ended
Mar. 22, 2018
Jun. 30, 2018
Apr. 11, 2018
Mar. 31, 2018
Mar. 27, 2018
Dec. 31, 2017
Feb. 28, 2007
Subsequent events              
Outstanding amount of mortgage       $ 253,584,894   $ 233,221,258  
Hamilton Bay Apts              
Subsequent events              
Interest rate (as a percent)             5.57%
Hamilton Bay Apts | John Hancock              
Subsequent events              
Rate Lock Deposit Amount $ 1,290,000       $ 1,290,000    
Partnership contribution 1,016,000            
Loan amount $ 125,000,000            
Interest rate (as a percent) 3.99%            
Outstanding amount of mortgage $ 82,000,000            
Hamilton Bay Apts | John Hancock | Subsequent event              
Subsequent events              
Rate Lock Deposit Amount     $ 1,250,000        
Hamilton Bay Apts | Forecast | John Hancock              
Subsequent events              
Defeasance cost   $ 3,750,000          
Defeasance cost (as a percent)   40.00%          
Hamilton Bay Apts | General Partnership | Forecast | John Hancock              
Subsequent events              
Defeasance cost   $ 1,500,000