Table of Contents

 

 

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, 2019

 

OR

 

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

 

For the transition period from              to             

 

Commission file number 001-31568

 


 

New England Realty Associates Limited Partnership

(Exact name of registrant as specified in its charter)

 

 

 

 

Massachusetts

 

04-2619298

(State or other jurisdiction of

 

(I.R.S. employer

incorporation or organization)

 

identification no.)

 

 

 

39 Brighton Avenue, Allston, Massachusetts

 

02134

(Address of principal executive offices)

 

(Zip Code)

 

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

 

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

 

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

 

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

 

 

 

 

Large accelerated filer ☐

 

Accelerated filer ☒

 

 

 

Non-accelerated filer ☐

 

Smaller reporting company ☒

(Do not check if a smaller reporting company)

 

Emerging growth company ☐

 

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

 

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

 

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

 

 

 

 

 

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Class A

 

NEN

 

NYSE MKT Exchange

 

As of May 3, 2019, there were 98,073 of the registrant’s Class A units (2,942,187 Depositary Receipts) of limited partnership issued and outstanding and 23,292 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, 2019 and December 31, 2018

4

 

Consolidated Statements of Income for the Three Months Ended March 31, 2019 and 2018

5

 

Consolidated Statements of Changes in Partners’ Capital for the Three Months ended March 31, 2019 and 2018

6

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018

7

 

Notes to Consolidated Financial Statements

8

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4. 

Controls and Procedures

35

PART II—OTHER INFORMATION 

Item 1. 

Legal Proceedings

36

Item 1A. 

Risk Factors

36

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 3. 

Defaults Upon Senior Securities

36

Item 4. 

Mine Safety Disclosure

36

Item 5. 

Other Information

37

Item 6. 

Exhibits

37

SIGNATURES 

39

 

 

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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, 2018 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, 2018.

 

The results of operations for the three month period ended March 31, 2019 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,

 

 

    

2019

    

2018

 

ASSETS

 

 

  (Unaudited)

 

 

 

 

Rental Properties

 

$

227,660,057

 

$

230,511,263

 

Cash and Cash Equivalents

 

 

7,649,882

 

 

9,059,901

 

Rents Receivable

 

 

779,159

 

 

762,923

 

Real Estate Tax Escrows

 

 

471,913

 

 

495,824

 

Prepaid Expenses and Other Assets

 

 

4,812,005

 

 

4,219,749

 

Investments in Unconsolidated Joint Ventures

 

 

1,801,702

 

 

1,985,680

 

Total Assets

 

$

243,174,718

 

$

247,035,340

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

Mortgage Notes Payable

 

 

251,953,066

 

 

252,370,843

 

Notes Payable

 

 

 —

 

 

2,000,000

 

Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture

 

 

18,858,645

 

 

18,351,562

 

Accounts Payable and Accrued Expenses

 

 

4,126,517

 

 

3,927,889

 

Advance Rental Payments and Security Deposits

 

 

6,468,073

 

 

6,009,056

 

Total Liabilities

 

 

281,406,301

 

 

282,659,350

 

Commitments and Contingent Liabilities (Notes 3 and 9)

 

 

 —

 

 

 —

 

Partners’ Capital 122,591 and 124,386 units outstanding in 2019 and 2018 respectively

 

 

(38,231,583)

 

 

(35,624,010)

 

Total Liabilities and Partners’ Capital

 

$

243,174,718

 

$

247,035,340

 

 

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,

 

 

    

2019

    

2018

 

Revenues

 

 

 

 

 

 

 

Rental income

 

$

14,768,475

 

$

13,942,645

 

Laundry and sundry income

 

 

113,669

 

 

116,355

 

 

 

 

14,882,144

 

 

14,059,000

 

Expenses

 

 

 

 

 

 

 

Administrative

 

 

612,757

 

 

539,145

 

Depreciation and amortization

 

 

3,682,678

 

 

3,507,091

 

Management fee

 

 

590,610

 

 

559,629

 

Operating

 

 

1,884,017

 

 

1,900,766

 

Renting

 

 

182,058

 

 

107,899

 

Repairs and maintenance

 

 

1,944,231

 

 

1,814,283

 

Taxes and insurance

 

 

2,034,106

 

 

1,868,483

 

 

 

 

10,930,457

 

 

10,297,296

 

Income Before Other Income (Expense)

 

 

3,951,687

 

 

3,761,704

 

Other Income (Expense)

 

 

 

 

 

 

 

Interest income

 

 

179

 

 

164

 

Interest expense

 

 

(3,000,289)

 

 

(2,984,210)

 

Income  from investments in unconsolidated joint ventures

 

 

548,939

 

 

1,100,900

 

 

 

 

(2,451,171)

 

 

(1,883,146)

 

Net Income

 

$

1,500,516

 

$

1,878,558

 

 

 

 

 

 

 

 

 

Net Income per Unit

 

$

12.21

 

$

15.10

 

 

 

 

 

 

 

 

 

Weighted Average Number of Units Outstanding

 

 

122,941

 

 

124,386

 

 

See notes to consolidated financial statements.

 

 

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER’S CAPITAL

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units

 

Partners’s Capital

 

 

 

Limited

 

General

 

 

 

Treasury

 

 

 

Limited

 

General

 

 

 

 

 

  

Class A

  

Class B

  

Partnership

  

Subtotal

  

Units

  

Total

  

Class A

  

Class B

  

Partnership

  

Total

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 1 , 2019

 

144,180

 

34,243

 

1,802

 

180,225

 

55,839

 

124,386

 

$

(28,527,352)

 

$

(6,741,825)

 

$

(354,833)

 

$

(35,624,010)

 

Distribution to Partners

 

 

 

 

 

 —

 

 

 

(941,882)

 

 

(223,697)

 

 

(11,774)

 

 

(1,177,353)

 

Stock Buyback

 

 

 

 

 

 

 

 —

 

1,795

 

(1,795)

 —

 

(2,344,601)

 

 

(556,828)

 

 

(29,307)

 

 

(2,930,736)

 

Net Income

 

 

 

 

 

 —

 

 

 

1,200,413

 

 

285,098

 

 

15,005

 

 

1,500,516

 

Balance March 31, 2019

 

144,180

 

34,243

 

1,802

 

180,225

 

57,634

 

122,591

 

$

(30,613,422)

 

$

(7,237,252)

 

$

(380,909)

 

$

(38,231,583)

 

 

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,

 

 

    

2019

    

2018

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

Net income

 

$

1,500,516

 

$

1,878,558

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,682,678

 

 

3,507,091

 

Amortization of deferred financing costs

 

 

54,843

 

 

51,541

 

(Income)  from investments in joint ventures

 

 

(548,939)

 

 

(1,100,900)

 

Change in operating assets and liabilities

 

 

 

 

 

 

 

Proceeds from unconsolidated joint ventures

 

 

425,000

 

 

1,770,000

 

(Increase) Decrease in rents receivable

 

 

(16,236)

 

 

(23,160)

 

Increase (Decrease) in accounts payable and accrued expense

 

 

198,628

 

 

(25,471)

 

Decrease   in real estate tax escrow

 

 

23,911

 

 

1,640

 

(Increase)  in prepaid expenses and other assets

 

 

(746,891)

 

 

(523,530)

 

Increase in advance rental payments and security deposits

 

 

459,025

 

 

87,257

 

Total Adjustments

 

 

3,532,019

 

 

3,744,468

 

Net cash provided by operating activities

 

 

5,032,535

 

 

5,623,026

 

Cash Flows From Investing Activities

 

 

 

 

 

 

 

Distribution in excess of investment in unconsolidated joint ventures

 

 

823,490

 

 

210,402

 

(Investment)  in unconsolidated joint ventures

 

 

(8,490)

 

 

(526,402)

 

Improvement of rental properties

 

 

(676,844)

 

 

(868,468)

 

Purchase of rental property

 

 

 —

 

 

(13,213,294)

 

Net cash provided by (used in) investing activities

 

 

138,156

 

 

(14,397,762)

 

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

 

Payment of note payable

 

 

(2,000,000)

 

 

 —

 

Principal payments of mortgage notes payable

 

 

(472,621)

 

 

(452,900)

 

Stock buyback

 

 

(2,930,736)

 

 

 —

 

Distributions to partners

 

 

(1,177,353)

 

 

(1,119,481)

 

Net cash provided by (used in) financing activities

 

 

(6,580,710)

 

 

6,363,299

 

Net (Decrease) Increase in Cash and Cash Equivalents

 

 

(1,410,019)

 

 

(2,411,437)

 

Cash and Cash Equivalents, at beginning of period

 

 

9,059,901

 

 

7,238,905

 

Cash and Cash Equivalents, at end of period

 

$

7,649,882

 

$

4,827,468

 

 

 

 

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, 2019

 

(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 690 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 $55,000 and $52,000 for the three months ended March 31, 2019 and 2018, 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 2019 or 2018 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 2019 or 2018. The Partnership makes its temporary cash investments with high-credit quality financial institutions. At March 31, 2019, 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 1.61%. At March 31, 2019 and December 31, 2018, respectively approximately $7,406,000, and $10,784,000 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 $62,969 and $44,381 for the three months ended March 31, 2019 and 2018, 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, 2019 and 2018 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, 2019, 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, 2019, 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, 2019 with a total of 690 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, 2019

    

December 31, 2018

    

Useful Life

 

Land, improvements and parking lots

 

$

72,547,547

 

$

72,547,547

 

15

-

40

years

 

Buildings and improvements

 

 

221,837,652

 

 

221,697,939

 

15

-

40

years

 

Kitchen cabinets

 

 

12,247,767

 

 

12,134,519

 

 5

-

10

years

 

Carpets

 

 

7,773,940

 

 

7,591,591

 

 5

-

10

years

 

Air conditioning

 

 

603,149

 

 

603,149

 

 5

-

10

years

 

Laundry equipment

 

 

349,071

 

 

327,643

 

 5

-

 7

years

 

Elevators

 

 

1,873,847

 

 

1,839,590

 

20

-

40

years

 

Swimming pools

 

 

444,629

 

 

444,629

 

10

-

30

years

 

Equipment

 

 

13,016,249

 

 

12,919,389

 

 5

-

30

years

 

Motor vehicles

 

 

216,260

 

 

216,260

 

 

 

 5

years

 

Fences

 

 

38,213

 

 

38,213

 

 5

-

15

years

 

Furniture and fixtures

 

 

7,102,834

 

 

7,013,845

 

 5

-

 7

years

 

Smoke alarms

 

 

528,097

 

 

528,097

 

 5

-

 7

years

 

Total fixed assets

 

 

338,579,255

 

 

337,902,411

 

 

 

 

 

 

Less: Accumulated depreciation

 

 

(110,919,198)

 

 

(107,391,148)

 

 

 

 

 

 

 

 

$

227,660,057

 

$

230,511,263

 

 

 

 

 

 

 

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

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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. 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.

 

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 $591,000 and $560,000 for the three months ended March 31, 2019 and 2018, 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, 2019 and 2018, approximately $349,000 and $354,000, was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements. Of the 2019 expenses referred to above, approximately $108,000 consisted of repairs and maintenance, $90,000 of administrative expense and $1,000 for rental commissions. Approximately $150,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties. Additionally in 2019, the Hamilton Company received approximately $316,000 from the Investment Properties of which approximately $163,000 was the management fee, approximately $121,000 for rental commissions, approximately $18,000 was for maintenance services, approximately $11,000 was for administrative services and approximately $3,000 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 $789,000 and $824,000 for the three months ended March 31, 2019 and 2018, 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. For the three months ended March 31, 2019, the Partnership contributed $12,000 for the employer’s match portion to the plan. See Note 15.

 

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, 2019 and 2018, the Management Company charged the Partnership $31,250 ($125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

 

The former President of the Management Company performed asset management consulting services and received an asset management fee from the Partnership. The Partnership did not have a written agreement with this individual. During the three months ended March  31, 2018 this individual received fees of $18,750. At June 29, 2018, the individual resigned his position.

 

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 the Estate of Harold Brown, and five current and previous employees of the Management Company. Harold Brown’s ownership interest was between 47.6% and 59%. See Note 14 for a description of the properties and their operations.

 

NOTE 4. OTHER ASSETS

 

Approximately $2,639,000, and $2,571,000 of security deposits are included in prepaid expenses and other assets at March 31, 2019 and December 31, 2018, respectively. The security deposits and escrow accounts are restricted cash.

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Included in prepaid expenses and other assets at March 31, 2019 and December 31, 2018 is approximately $494,000 and $477,000, 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 $18,000 net of accumulated amortization of approximately $1,093,000 and approximately $152,000 net of accumulated amortization of approximately $959,000 at March 31, 2019 and December 31, 2018, respectively.

 

Financing fees in association with the line of credit of approximately $68,000 and $78,000 are net of accumulated amortization of approximately $60,000 and $50,000 at March 31, 2019 and December 31, 2018 respectively.

 

NOTE 5. MORTGAGE NOTES PAYABLE

 

At March 31, 2019 and December 31, 2018, 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, 2019, the interest rates on these loans ranged from 3.76% to 5.81%, payable in monthly installments aggregating approximately $1,139,000 including principal, to various dates through 2029. The majority of the mortgages are subject to prepayment penalties. At March 31, 2019, the weighted average interest rate on the above mortgages was 4.63%. The effective rate of 4.71% 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 $1,354,000 and $1,420,000 are net of accumulated amortization of approximately $1,363,000 and $1,298,000 at March  31, 2019 and December 31, 2018, respectively.

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

 

Approximate annual maturities at March 31, 2019 are as follows:

 

 

 

 

 

 

2020—current maturities

    

$

4,319,000

 

2021

 

 

2,049,000

 

2022

 

 

2,606,000

 

2023

 

 

67,098,000

 

2024

 

 

38,362,000

 

Thereafter

 

 

138,804,000

 

 

 

 

253,238,000

 

Less: unamortized deferred financing costs

 

 

(1,285,000)

 

 

 

$

251,953,000

 

 

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 purchase 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.

 

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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 in April, 2021, monthly payments of principal and interest in the amount of $32,427 are being 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. The closing costs were approximately $69,000

 

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.

On March 29, 2018, the Partnership drew down $8,000,000 in conjunction with the purchase of Webster Green Apartments.  On June 4, 2018, the Partnership paid down the credit line by $16,000,000 as a result of the proceeds from the refinancing of Hamilton Park Towers, LLC, also known as Dexter Park. In July, 2018, the Partnership paid down the line of credit by $4,000,000. In October of 2018, the Partnership paid down the line of credit by $3,000,000. In January 2019, the Partnership paid off  the $2,000,000 balance on the line of credit.

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 $12,000 in fees for the three months ended March 31, 2019.

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, 2019.

 

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, 2019, amounts received for prepaid rents of approximately $2,234,000 are included in cash and cash equivalents, and security deposits of approximately $2,639,000 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.

 

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In January 2019, the Partnership approved a quarterly distribution to its Class A Limited Partners and holders of Depositary Receipts of record as of March 15, 2019 and payable on March 31, 2019, of $9.60 per unit ($0.32 per receipt).

In 2018, regular quarterly distributions of $9.00 per unit ($0.30 per receipt) were paid in March, June, September and December.

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

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2019

    

2018

 

Net Income per Depositary Receipt

 

$

0.41

 

$

0.50

 

Distributions per Depositary Receipt

 

$

0.32

 

$

0.30

 

 

 

NOTE 8. TREASURY UNITS

 

Treasury Units at March 31, 2019 are as follows:

 

 

 

 

 

Class A

    

46,107

 

Class B

 

10,950

 

General Partnership

 

577

 

 

 

57,634

 

 

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, 2019, the Partnership has repurchased 1,408,401 Depositary Receipts at an average price of $27.97 per receipt (or $839.10 per underlying Class A Unit), 3,413 Class B Units and 180 General Partnership Units, both at an average price of $996.79 per Unit, totaling approximately $43,205,000 including brokerage fees paid by the Partnership.

 

During the three months ended March 31, 2019, the Partnership purchased a total of 43,095 Depositary Receipts. The average price was $54.40 per receipt or $1,632.12 per unit. The total cost including commission was $2,344,601. The Partnership was required to repurchase 341 Class B Units and 18 General Partnership units at a cost of $556,828 and $29,307 respectively.

 

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.

 

In February, 2019, a water pipe broke at Hamilton Oak in Brockton, MA. resulting in the evacuation of 40 apartments for approximately one week. The Partnership has insurance coverage on both the repairs and rental loss. As of March 31, 2019, the Partnership has received $75,000 on this claim, and has an estimated insurance recovery receivable of approximately $212,000, which is included on the prepaid expenses and other assets as of March 31, 2019.

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NOTE 10. RENTAL INCOME 

 

During the three months ended March 31, 2019, approximately 94% 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 6% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2019 as follows:

 

 

 

 

 

 

 

    

Commercial

 

 

 

Property Leases

 

2020

 

$

2,565,000

 

2021

 

 

2,299,000

 

2022

 

 

1,591,000

 

2023

 

 

946,000

 

2024

 

 

523,000

 

Thereafter

 

 

756,000

 

 

 

$

8,680,000

 

 

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 $129,000 and $223,000  for the three months ended March 31, 2019 and 2018 respectively. Staples and Trader Joes, tenants at Staples Plaza, are approximately 36% 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

 

2020

 

$

454,412

 

22,400

 

12

 

16

%

2021

 

 

225,337

 

5,679

 

 7

 

 8

%

2022

 

 

1,143,867

 

47,854

 

10

 

39

%

2023

 

 

246,341

 

7,087

 

 4

 

 9

%

2024

 

 

658,784

 

19,209

 

 8

 

22

%

2025

 

 

15,936

 

604

 

 3

 

 1

%

2026

 

 

 —

 

 —

 

 —

 

 —

%

2027

 

 

 —

 

 —

 

 —

 

 —

%

2028

 

 

 —

 

 —

 

 —

 

 —

%

2029

 

 

 —

 

 —

 

 —

 

 —

%

2030

 

 

142,450

 

3,850

 

 1

 

 5

%

Totals

 

$

2,887,127

 

106,683

 

45

 

100

%

 

Rents receivable are net of an allowance for doubtful accounts of approximately $369,000 and $532,000 at March 31, 2019 and December 31, 2018. Included in rents receivable at March 31, 2019 is approximately $69,000 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 and Staples Plaza in Massachusetts.

 

Rents receivable at March 31, 2019 also includes approximately $82,000 representing the deferral of rental concession primarily related to the residential properties.

 

NOTE 11. CASH FLOW INFORMATION

 

During the three months ended March 31, 2019 and 2018, cash paid for interest was approximately $2,944,000, and $3,010,000 respectively.  Cash paid for state income taxes was approximately $48,000 and $47,000 during the three months ended March 31, 2019 and 2018 respectively. Additionally, 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.

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NOTE 12. FAIR VALUE MEASUREMENTS

 

Fair Value Measurements on a Recurring Basis

 

At March 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018 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, 2019 and December 31, 2018, 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, 2019 and December 31, 2018, 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, 2019

*

$

251,953,066

 

$

235,100,502

 

At December 31, 2018

*

$

252,370,843

 

$

233,362,501

 

Investment Properties

 

 

 

 

 

 

 

At March 31, 2019

*

$

166,471,296

 

$

163,347,932

 

At December 31, 2018

*

$

166,492,692

 

$

160,956,055

 

 

* 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, 2019 and December 31, 2018. 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, 2019 and current estimates of fair value may differ significantly from the amounts presented herein.

 

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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, other items with limited tax deductibility and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions. Taxable income of approximately $4,841,000 was approximately $672,000 more than statement income for the year ended December 31, 2018. The cumulative tax basis of the Partnership’s real estate at December 31, 2018 is approximately $878,000 less than the statement basis. The primary reasons for the difference in tax basis are tax free exchanges, accelerated depreciation and bonus depreciation. The Partnership’s tax basis in its joint venture investments is approximately $1,121,000 more than statement basis.

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.

Allowable accelerated depreciation deductions were extended through 2018. The 2018 tax law changes had a significant impact on the taxable income of the Partnership. 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, 2019, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2015 forward.

 

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

 

The Partnership has invested in eight 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 were Harold Brown, and five current and former employees of the Management Company. Harold Brown’s ownership interest was between 47.6% and 59%, with the balance owned by the others. A description of each investment is as follows:

 

On October 28, 2009 the Partnership invested approximately $15,925,000 in a joint venture to acquire a 40% interest in a residential property located in Brookline, Massachusetts. The property, Hamilton Park Towers LLC, referred to as Dexter Park, or Hamilton Park is a 409 unit residential complex. The purchase price was $129,500,000. The original mortgage was  $89,914,000 with an interest rate of 5.57% and it matured in 2019. The mortgage called for interest only payments for the first two years of the loan and amortized over 30 years thereafter.

 

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

 

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

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Partnership incurred 40% of this charge, an expense of approximately $1,532,000. This charge had a material effect on the 2018 net income.

At March 31, 2019, the balance on this mortgage before unamortized deferred financing costs is approximately $125,000,000.This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

On October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168-unit apartment complex in Quincy, Massachusetts. The purchase price was  $30,875,000. The Joint Venture sold 120 units as condominiums and retained 48 units for long-term investment. In February 2007, the Joint Venture refinanced the  48 units with a new 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. 2 units were sold in the first three months of 2019, resulting in a gain of approximately $433,000. This investment is referred to as Hamilton Bay Apartments, LLC. As of March 31, 2019, all units were sold by this Joint Venture.

 

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, 2019, 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. As of March 31, 2019,  1 unit was under purchase and sales agreement and the Partnership owned 3 units. 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, 2019, 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 2018, the carrying value of

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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 31, 2019, 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 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 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, 2019, the balance of this mortgage before unamortized deferred financing costs is approximately $9,504,000. This investment is referred to as 345 Franklin, LLC.

 

Summary financial information as of March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

  

$

7,117,613

  

$

2,595,015

  

$

5,919,727

  

$

103,238

  

$

0

  

$

5,556,929

  

$

16,490,749

  

$

86,186,211

  

$

123,969,482

 

Rental property held for sale

 

 

0

 

 

0

 

 

0

 

 

159,188

 

 

0

 

 

0

 

 

0

 

 

0

 

 

159,188

 

Cash & Cash Equivalents

 

 

192,441

 

 

169,930

 

 

213,656

 

 

51,285

 

 

359,291

 

 

132,903

 

 

163,789

 

 

1,853,435

 

 

3,136,730

 

Rent Receivable

 

 

222,191

 

 

49,619

 

 

4,437

 

 

2,441

 

 

0

 

 

1,487

 

 

17,049

 

 

136,962

 

 

434,186

 

Real Estate Tax Escrow

 

 

72,624

 

 

 —

 

 

50,334

 

 

 —

 

 

0

 

 

28,960

 

 

95,525

 

 

0

 

 

247,443

 

Prepaid Expenses & Other Assets

 

 

274,111

 

 

110,681

 

 

61,989

 

 

30,377

 

 

3,595

 

 

16,287

 

 

105,663

 

 

1,022,670

 

 

1,625,373

 

Total Assets

 

$

7,878,980

 

$

2,925,245

 

$

6,250,143

 

$

346,529

 

$

362,886

 

$

5,736,566

 

$

16,872,775

 

$

89,199,278

 

$

129,572,402

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,910,371

 

$

 —

 

$

9,442,200

 

$

 —

 

$

 —

 

$

5,898,047

 

$

16,813,056

 

$

124,407,623

 

$

166,471,297

 

Accounts Payable & Accrued Expense

 

 

84,485

 

 

2,187

 

 

121,342

 

 

10,844

 

 

10,951

 

 

61,051

 

 

205,044

 

 

701,699

 

 

1,197,603

 

Advance Rental Pmts & Security Deposits

 

 

297,683

 

 

 —

 

 

283,486

 

 

7,174

 

 

101

 

 

123,167

 

 

391,075

 

 

2,620,890

 

 

3,723,576

 

Total Liabilities

 

 

10,292,539

 

 

2,187

 

 

9,847,028

 

 

18,018

 

 

11,052

 

 

6,082,265

 

 

17,409,175

 

 

127,730,212

 

 

171,392,476

 

Partners’ Capital

 

 

(2,413,559)

 

 

2,923,058

 

 

(3,596,885)

 

 

328,511

 

 

351,834

 

 

(345,699)

 

 

(536,400)

 

 

(38,530,934)

 

 

(41,820,074)

 

Total Liabilities and Capital

 

$

7,878,980

 

$

2,925,245

 

$

6,250,143

 

$

346,529

 

$

362,886

 

$

5,736,566

 

$

16,872,775

 

$

89,199,278

 

$

129,572,402

 

Partners’ Capital %—NERA

 

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,461,529

 

$

 

 

$

164,256

 

$

175,917

 

$

 

 

$

 

 

$

 

 

 

1,801,702

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(1,206,780)

 

$

 —

 

$

(1,798,443)

 

$

 —

 

$

 —

 

$

(172,850)

 

$

(268,200)

 

$

(15,412,374)

 

 

(18,858,645)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(17,056,944)

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

 1

 

 

 1

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Total

 

 

49

 

 

 1

 

 

40

 

 

176

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

 1

 

 

40

 

 

 —

 

 

 —

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

175

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2019

 

 

 —

 

 

 —

 

 

 —

 

 

173

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

221

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Unsold units with deposits for future sale as of  May 1, 2019

 

 

 —

 

 

 —

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Financial information for the three months ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Hamilton

    

 

 

    

 

 

    

 

 

    

Hamilton

    

Hamilton

    

 

 

    

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income

 

$

459,573

 

$

75,290

 

$

385,243

 

$

23,594

 

$

3,629

 

$

274,837

 

$

822,668

 

 

4,028,259

 

$

6,073,093

 

Laundry and Sundry Income

 

 

3,005

 

 

 —

 

 

1,389

 

 

 —

 

 

 —

 

 

1,907

 

 

10,062

 

 

24,025

 

 

40,388

 

 

 

 

462,578

 

 

75,290

 

 

386,632

 

 

23,594

 

 

3,629

 

 

276,744

 

 

832,730

 

 

4,052,284

 

 

6,113,481

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

5,379

 

 

2,092

 

 

5,390

 

 

1,694

 

 

3,445

 

 

3,716

 

 

17,847

 

 

55,532

 

 

95,095

 

Depreciation and Amortization

 

 

119,544

 

 

5,074

 

 

86,226

 

 

3,196

 

 

5,420

 

 

88,595

 

 

258,438

 

 

900,101

 

 

1,466,594

 

Management Fees

 

 

17,206

 

 

2,160

 

 

14,056

 

 

965

 

 

145

 

 

11,067

 

 

31,868

 

 

86,149

 

 

163,616

 

Operating

 

 

21,450

 

 

 8

 

 

22,603

 

 

775

 

 

(109)

 

 

23,755

 

 

107,289

 

 

381,644

 

 

557,415

 

Renting

 

 

3,330

 

 

 —

 

 

3,520

 

 

 

 

 

 

 

 

2,032

 

 

16,112

 

 

19,663

 

 

44,657

 

Repairs and Maintenance

 

 

37,884

 

 

 —

 

 

18,467

 

 

8,040

 

 

10,266

 

 

36,672

 

 

124,192

 

 

256,585

 

 

492,106

 

Taxes and Insurance

 

 

61,830

 

 

15,677

 

 

40,241

 

 

7,349

 

 

4,906

 

 

32,251

 

 

104,431

 

 

518,726

 

 

785,411

 

 

 

 

266,623

 

 

25,011

 

 

190,503

 

 

22,019

 

 

24,073

 

 

198,088

 

 

660,177

 

 

2,218,400

 

 

3,604,894

 

Income Before Other Income

 

 

195,955

 

 

50,279

 

 

196,129

 

 

1,575

 

 

(20,444)

 

 

78,656

 

 

172,553

 

 

1,833,884

 

 

2,508,587

 

Other Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

(121,005)

 

 

 —

 

 

(94,247)

 

 

 

 

 

(6)

 

 

(57,991)

 

 

(188,268)

 

 

(1,270,103)

 

 

(1,731,620)

 

Gain on Sale of Real Estate

 

 

 

 

 

 —

 

 

 —

 

 

754

 

 

432,908

 

 

 

 

 

 

 

 

 

 

 

433,662

 

 

 

 

(121,005)

 

 

 —

 

 

(94,247)

 

 

754

 

 

432,902

 

 

(57,991)

 

 

(188,268)

 

 

(1,270,103)

 

 

(1,297,958)

 

Net Income (Loss)

 

$

74,950

 

$

50,279

 

$

101,882

 

$

2,329

 

$

412,458

 

$

20,665

 

$

(15,715)

 

$

563,781

 

$

1,210,629

 

Net Income (Loss)—NERA 50%

    

$

37,475

 

$

25,140

 

$

50,941

 

$

1,165

 

$

206,229

 

$

10,333

 

$

(7,858)

 

 

 

 

 

323,424

 

Net Income —NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

225,515

 

 

225,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

548,939

 

 

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Future annual mortgage maturities at March 31, 2019 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton

 

345

 

Hamilton

 

Hamilton on

 

Dexter

 

 

 

 

Period End

    

Essex 81

    

Franklin

    

Minuteman

    

Main Apts

    

Park

    

Total

 

3//31/2020

 

$

 —

 

$

199,661

 

$

 

 

$

 —

 

$

 

 

$

199,661

 

3/31/2021

 

 

 —

 

 

207,527

 

 

 

 

 

 —

 

 

 

 

 

207,527

 

3/31/2022

 

 

 —

 

 

215,702

 

 

 —

 

 

 —

 

 

 

 

 

215,702

 

3/31/2023

 

 

 —

 

 

224,199

 

 

 —

 

 

 —

 

 

 

 

 

224,199

 

3/31/2024

 

 

 —

 

 

233,032

 

 

 —

 

 

 —

 

 

 

 

 

233,032

 

Thereafter

 

 

10,000,000

 

 

8,423,670

 

 

6,000,000

 

 

16,900,000

 

 

125,000,000

 

 

166,323,670

 

 

 

 

10,000,000

 

 

9,503,791

 

 

6,000,000

 

 

16,900,000

 

 

125,000,000

 

 

167,403,791

 

Less: unamortized deferred financing costs

 

 

(89,629)

 

 

(61,591)

 

 

(101,953)

 

 

(86,944)

 

 

(592,377)

 

 

(932,494)

 

 

 

$

9,910,371

 

$

9,442,200

 

$

5,898,047

 

$

16,813,056

 

$

124,407,623

 

$

166,471,297

 

 

At March 31, 2019 the weighted average interest rate on the above mortgages was 3.87%. The effective rate was 3.94% including the amortization expense of deferred financing costs.

 

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Summary financial information as 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

 

 

 —

 

 

 —

 

 

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

 

 

0

 

 

0

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

176

 

 

46

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

143

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

264

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

32

 

 

47

 

 

 —

 

 

 —

 

 

 —

 

 

79

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 4

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

14

 

 

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)

 

Interest Income

 

 

 

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

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 (Loss)—NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

233,143

 

 

233,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,100,900

 

 

 

NOTE 15. EMPLOYEE BENEFIT 401(k) PLANS

 

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

 

The amounts contributed by employees are immediately vested and non-forfeitable.  Beginning January 1, 2019, the Partnership matched 50% up to the 6% of compensation deferred by each employee in the 401(k) plan. The Partnership may make discretionary matching or profit-sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year.  Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any

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matching or profit-sharing contributions made on their behalf after two years of service with the Partnership at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Partnership. Total expense recognized by the Partnership for the 401(k) Plan for the three months ended March 31, 2019 was $12,000.

 

NOTE 16. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

 

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

 

NOTE 17—SUBSEQUENT EVENTS

From April 1, 2019 through May 3, 2019, the Partnership purchased a total of 1,540 Depository Receipts. The average price was $64.91 per receipt or $1,947.21 per unit. The total cost was $96,861.

The Partnership is required to purchase 12 Class B units and 1 General Partnership units at a cost of $23,740 and $1,249 respectively.

The Partnership is currently negotiating a refinancing of the mortgage for Captain Parker held by KeyBank. The new loan would be for $20,750,000 for 10 years, interest only at 4.05%. If the negotiation is successful, there will be a 1% prepayment penalty on the existing loan balance of $20,071,000. The penalty charge would be approximately $200,000, and would have a material effect on the 2019 second quarter net income. The Partnership is expected to close on the refinancing at the end of May, 2019.

Effective as of May 3, 2019, the Board of Directors of the Partnership’s General Partner, NewReal, Inc. (“New Real”), elected Andrew Bloch as a member of the Board. Mr. Bloch is the CO-CEO and CFO of The Hamilton Company, Inc., the Manager of the Partnership’s properties.

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

 

Forward Looking Statements

 

Certain information contained herein includes forward looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Liquidation Reform Act of 1995 (the “Act”). Forward looking statements in this report, or which management may make orally or in written form from time to time, reflect management’s good faith belief when those statements are made, and are based on information currently available to management. Caution should be exercised in interpreting and relying on such forward looking statements, the realization of which may be impacted by known and unknown risks and uncertainties, events that may occur subsequent to the forward looking statements, and other factors which may be beyond the Partnership’s control and which can materially affect the Partnership’s actual results, performance or achievements for 2019 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.

 

During the first quarter of 2019, rents continued to increase with average increases of 4.1% for renewals and 2.8% for new leases.  Early indications for 2019 are that rents will continue to increase and renewal rents are expected to be in the range of 3-4%.

 

For the first quarter of 2019, including the purchase of Hamilton Highlands, consolidated revenue increased by 5.9%, operating expenses increased by 6.2% and Income before Other Income (Expense) grew by 5.1%. Excluding the Hamilton Highland acquisition, same store revenue grew by 2.4%, operating expenses decreased by 1.9% and Income before Other Income (Expense) grew by 13.9%. For the same reporting period, vacancy was 2.8% vs 2.4%. Excluding Depreciation and Amortization, same store revenues (excluding Woodland Park and Hamilton Highlands) grew by 2.4%, operating expenses by 2.6% and Net Operating Income by 2.1%. Management believes similar same store operating results will be achieved for 2019 and that the recent acquisition will result in higher performance.

 

The Joint Ventures of 1025 Hancock and Hamilton Bay made significant progress in 2018 towards the goal of completely selling out all residential condominium units.   Each Joint Venture sold 16 units in 2018, 1025 Hancock has 2 remaining units and Hamilton Bay sold its remaining 3units during the first quarter of 2019.  It is now projected that the remaining residential units at 1025 Hancock will be sold in the second quarters of 2019.  The estimated profit to the Partnership for the sale of these units from 2014 through 2019 is approximately $6,800,000.

 

On July 31, 2014, the Partnership entered into an agreement for a $25,000,000 revolving line of credit. The term of the line is three years with a floating interest rate equal to a base rate of the greater of (a) the Prime Rate (b) the Federal Funds Rate plus one‑half of one percent per annum, or (c) the LIBOR Rate for a period of one month plus 1% per annum, plus an applicable margin of 2.5%. The agreement originally expired on July 31, 2017, and was subsequently extended until October 31, 2020. The costs associated with the line of credit extension were approximately $128,000.  In January 2019, the Partnership paid off the $2,000,000 balance on the line of credit.  As of March 31, 2019, the credit line had no outstanding balance.

In January 2019, the Partnership purchased 40,000 Depository Receipts from the former president of the management company.  The cost of this transaction was $2,155,400 or $53.89 per receipt.  Subsequently, the Partnership purchase 1,704 receipts in February and 1,391 receipts in March.  The total cost for the 43,095 receipts purchased during the first quarter of 2019, was $2,344,601.

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The Partnership is currently in the process of refinancing the Residences at Captain Parkers. The current mortgage of $20,071,000 has a variable interest rate; currently 4.5%, which matures in February 2026, and has interest only payments until March 2021, with a thirty year amortization schedule thereafter.  The new mortgage is expected to be for $20,750,000, with a fixed rate of 4.05%, maturing in 10 years, with interest only payments for the term of the loan.

The Stock Repurchase Program that was initiated in 2007 has purchased 1,408,401 Depositary Receipts through March 31, 2019 or approximately 32% of the outstanding Class A Depositary Receipts. During the three months ended March 31, 2019, the Partnership purchased a total of 43,095 Depositary Receipts. The average price was $54.40 per receipt or $1,632.12 per unit. The total cost including commission was $2,344,601. The Partnership was required to repurchase 341 Class B Units and 18 General Partnership units at a cost of $556,828 and $29,307 respectively.

 

At May 1, 2019, the Estate of Harold Brown and his brother Ronald Brown  collectively own approximately 21% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members). The Estate of Harold Brown also controls 75% of the Partnership’s Class B Units, 75% of the capital stock of NewReal, Inc.(“NewReal”), the Partnership’s sole general partner, and all of the outstanding stock of Hamilton. Ronald Brown also owns 25% of the Partnership’s Class B Units and 25% of NewReal’s capital stock. In addition, Ronald Brown is the President and director of NewReal and Jameson Brown is NewReal’s Treasurer and a director. The 75% of the issued and outstanding Class B units of the Partnership, controlled by the Estate of Harold Brown, are owned by HBC Holdings LLC, an entity of which Jameson Brown is the manager.

 

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

 

Residential tenants sign a one year lease. During the three months ended March 31, 2019, tenant renewals were approximately 82% with an average rental increase of approximately 4.1%, new leases accounted for approximately 18% with rental rate increases of approximately 2.8 %. During the three months ended March 31, 2019, leasing commissions were approximately $86,000 compared to approximately $38,000 for the three months ended March 31, 2018,  an increase of approximately $48,000 (126.3%) from 2018. Tenant concessions were approximately $33,000 for the three months ended March 31, 2019, compared to approximately $16,000 for the three months ended March 31, 2018, an increase of approximately $17,000 (106.3%). Tenant improvements were approximately $385,000 for the three months ended March 31, 2019, compared to approximately $517,000 for the three months ended March 31, 2018, a decrease of approximately $132,000 (25.5%).

 

Hamilton accounted for approximately 5.6% of the repair and maintenance expenses paid for by the Partnership during the three months ended March 31, 2019 and 4.5 % during the three months ended March 31, 2018. 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 $59,000 (66.3%) and approximately $53,000 (84.4 %) of the legal services paid for by the Partnership during the three months ended March 31, 2019 and 2018 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

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department also provides services to the Partnership on an as-needed basis. During the three months ended March 31, 2019, Hamilton provided the Partnership approximately $150,000 in construction and architectural services, compared to approximately $168,000 for the three months ended March 31, 2018.

 

Hamilton’s accounting staff perform bookkeeping and accounting functions for the Partnership. During the three months ended March 31, 2019 and 2018, Hamilton charged the Partnership $31,250 for bookkeeping and accounting services. For more information on related party transactions, see Note 3 to the Consolidated Financial Statements.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

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

 

Revenue Recognition:  Rental income from residential and commercial properties is recognized over the term of the related lease. For residential tenants, amounts 60 days in arrears are charged against income. The commercial tenants are evaluated on a case by case basis. Certain leases of the commercial properties provide for increasing stepped minimum rents, which are accounted for on a straight-line basis over the term of the lease. Concessions made on residential leases are also accounted for on the straight-line basis.

 

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

 

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

 

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

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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 carrying amount of the property over the fair value of the property. The Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

 

Investments in Joint Ventures: The Partnership accounts for its 40%‑50% ownership in the Investment Properties under the equity method of accounting, as it exercises significant influence over, but does not control these entities. These investments are recorded initially at cost, as Investments in Joint Ventures, and subsequently adjusted for the Partnership’s share in earnings, cash contributions and distributions. Under the equity method of accounting, our net equity is reflected on the consolidated balance sheets, and our share of net income or loss from the Partnership is included on the consolidated statements of income. Generally, the Partnership would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Partnership only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses.

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

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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,  2019 and March 31, 2018

 

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 $3,952,000 during the three months ended March 31, 2019,  compared to approximately $3,762,000 for the three months ended March 31, 2018,  an  increase of approximately $190,000 (5.1%).

 

The rental activity is summarized as follows:

 

 

 

 

 

 

 

 

 

Occupancy Date

 

 

    

May 1, 2019

    

May 1, 2018

 

Residential

 

 

 

 

 

Units

 

2,730

 

2,730

 

Vacancies

 

76

 

65

 

Vacancy rate

 

2.8

%  

2.4

%

Commercial

 

 

 

 

 

Total square feet

 

108,043

 

108,043

 

Vacancy

 

1,360

 

 —

 

Vacancy rate

 

1.3

%  

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income (in thousands)

 

 

 

Three Months Ended  March 31, 

 

 

 

2019

 

2018

 

 

    

Total

    

Continuing

    

Total

    

Continuing

 

 

 

Operations

 

Operations

 

Operations

 

Operations

 

Total rents

 

$

14,768

 

$

14,768

 

$

13,943

 

$

13,943

 

Residential percentage

 

 

94

%  

 

94

%  

 

93

%  

 

93

%

Commercial percentage

 

 

 6

%  

 

 6

%  

 

 7

%  

 

 7

%

Contingent rentals

 

$

129

 

$

129

 

$

223

 

$

223

 

 

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Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Dollar

 

Percent

 

 

    

2019

    

2018

    

Change

    

Change

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

14,768,475

 

$

13,942,645

 

$

825,830

 

5.9

%

Laundry and sundry income

 

 

113,669

 

 

116,355

 

 

(2,686)

 

(2.3)

%

 

 

 

14,882,144

 

 

14,059,000

 

 

823,144

 

5.9

%

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

612,757

 

 

539,145

 

 

73,612

 

13.7

%

Depreciation and amortization

 

 

3,682,678

 

 

3,507,091

 

 

175,587

 

5.0

%

Management fee

 

 

590,610

 

 

559,629

 

 

30,981

 

5.5

%

Operating

 

 

1,884,017

 

 

1,900,766

 

 

(16,749)

 

(0.9)

%

Renting

 

 

182,058

 

 

107,899

 

 

74,159

 

68.7

%

Repairs and maintenance

 

 

1,944,231

 

 

1,814,283

 

 

129,948

 

7.2

%

Taxes and insurance

 

 

2,034,106

 

 

1,868,483

 

 

165,623

 

8.9

%

 

 

 

10,930,457

 

 

10,297,296

 

 

633,161

 

6.1

%

Income Before Other Income  (Expense)

 

 

3,951,687

 

 

3,761,704

 

 

189,983

 

5.1

%

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

179

 

 

164

 

 

15

 

9.1

%

Interest expense

 

 

(3,000,289)

 

 

(2,984,210)

 

 

(16,079)

 

0.5

%

Income  from investments in unconsolidated joint ventures

 

 

548,939

 

 

1,100,900

 

 

(551,961)

 

(50.1)

%

 

 

 

(2,451,171)

 

 

(1,883,146)

 

 

(568,025)

 

30.2

%

Net Income

 

$

1,500,516

 

$

1,878,558

 

$

(378,042)

 

(20.1)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income for the three months ended March 31, 2019 was approximately $14,769,000, compared to approximately $13,943,000 for the three months ended March 31, 2018,  an  increase of approximately $826,000 (5.9%). The factors that can be attributed to this increase are as follows: the acquisition of Hamilton Highland resulted in an increase in rental income of approximately $493,000. In addition, rental income has increased at a number of properties due to increased demand and increases in rental rates. The Partnership Properties with the most significant increases in rental income include 62 Boylston, Captain Parker, Redwood Hills, Westgate Apartments, School Street 9 Associates, and Woodland Park, , with increases of approximately $76,000, $58,000, $47,000, $43,000, $31,000, and $26,000, 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, 2019 were approximately $10,930,000 compared to approximately $10,297,000 for the three months ended March 31, 2018,  an increase of approximately $633,000 (6.1%). Excluding the increase in operating expenses attributable to the acquisition of Hamilton Highland of approximately $824,000, operating expenses decreased approximately $191,000 (1.9%). The factors contributing to this net decrease are a decrease in depreciation and amortization of approximately $ 369,000 (10.6%) due to fully depreciated assets, a decrease in operating costs of approximately $67,000 (7.5%), partially offset by an increase in taxes and insurance of approximately $98,000 (5.3%), and an increase in repairs and maintenance of approximately $63,000 (3.5%).

 

Interest expense for the three months ended March 31, 2019 was approximately $3,000,000 compared to approximately $2,984,000 for the three months ended March 31, 2018, an increase of approximately $16,000 (0.5%). Excluding the increase in interest expense attributable to Hamilton Highland of approximately $230,000, there was a decrease in interest expense of approximately $214,000, primarily due to the payoff of the line of credit.

At March 31, 2019, 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.

 

As described in Note 14 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $549,000 for  the three months ended March 31, 2019, compared to net income of approximately $1,101,000 for the three months ended March 31, 2018,  a decrease in income of

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approximately $552,000 (50 .1%). This decrease is primarily due to a the gain on the sale of real estate of approximately $434,000, with the Partnership’s share amounting to 50%, on the sale of 2 units at Hamilton Bay Apartments LLC, compared to a gain of approximately $1,645,000 on the sale of 6 units at Hamilton Bay Apartments LLC, and 8 units at Hamilton 1025 LLC, for the three months ended March 31, 2018. Included in the income for the three months ended March 31, 2019 is depreciation and amortization expense of approximately $643,000. The proportional income for the three months ended March 31, 2019 from the investment in Dexter Park is approximately $226,000.

 

As a result of the changes discussed above, net income for the three months ended March 31, 2019 was approximately $1,501,000 compared to income of approximately $1,879,000 for the three months ended March 31, 2018, a decrease  in income of approximately $378,000 (20.1 %).

 

LIQUIDITY AND CAPITAL RESOURCES

 

The Partnership’s principal source of cash during the first three months of 2019 was the collection of rents. The Partnership’s principal source of cash in 2018 was the collection of rents, the proceeds from the line of credit, and the refinancing proceeds from Hamilton Park Towers, LLC. The majority of cash and cash equivalents of $7,649,882 at March 31, 2019 and $9,059,901 at December 31, 2018 were held in interest bearing accounts at creditworthy financial institutions.

 

The decrease in cash of $1,410,019 for the three months ended March 31, 2019 is summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

    

2019

    

2018

 

Cash provided by operating activities *

 

$

5,032,535

 

$

5,623,026

 

Cash provided by (used in) investing activities*

 

 

138,156

 

 

(14,397,762)

 

Cash  (used in) provided by financing activities

 

 

(2,472,621)

 

 

7,482,780

 

Repurchase of Depositary Receipts, Class B and General Partner Units

 

 

(2,930,736)

 

 

 —

 

Distributions paid

 

 

(1,177,353)

 

 

(1,119,481)

 

Net (decrease) increase in cash and cash equivalents

 

$

(1,410,019)

 

$

(2,411,437)

 

            *Reclassed to comply with new FASB standard

 

The change in cash provided by operating activities is due to various factors, including a change in depreciation expense due to recent acquisitions, a change in income and distribution from joint ventures, and the sale of units, as well as other factors. The increase in cash provided by investing activities is primarily due to the distribution from Dexter Park, partially offset by improvements to rental properties. The change in cash provided by financing activities is primarily due to the pay down of the line of credit originally used 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 $677,000. These improvements were funded from cash reserves. Cash reserves have been adequate to fully fund improvements. The most significant improvements were made at School Street Associates, 62 Boylston Street, Hamilton Oaks, Hamilton Green,  Redwood Hills, and Dean Street Associates, at a cost of approximately $103,000, $61,000, $60,000, $51,000, $47,000 and $42,000 respectively. The Partnership plans to invest approximately $2,182,000 in additional capital improvements in 2019.

 

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 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.

 

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During the three months ended March 31, 2019 the Partnership received distributions of approximately $1,240,000 from the investment properties. For the three months ended, March 31, 2018, the Partnership received distributions of approximately $1,980,000 from the investment properties. Included in these net distributions is the amount from Dexter Park of approximately $620,000 and $240,000 for the three months ended March 31, 2019 and 2018 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. In January, 2019 the Partnership paid off the $2,000,000 balance on the line of credit.

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, 2019, the Partnership had a 40%-50% ownership interest in eight Joint Ventures, five of which have mortgage indebtedness. We do not have control of these partnerships and therefore we account for them using the equity method of consolidation. At March 31, 2019, our proportionate share of the non-recourse debt related to these investments was approximately $71,202,000. See Note 14 to the Consolidated Financial Statements.

 

Contractual Obligations

 

As of March 31, 2019, we are subject to contractual payment obligations as described in the table below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments due by period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

2020

  

2021

  

2022

  

2023

  

2024

  

Thereafter

  

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual Obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long -term debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage debt*

 

$

4,318,703

 

$

2,048,769

 

$

2,606,516

 

$

67,098,335

 

$

38,361,814

 

$

138,804,437

 

$

253,238,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other obligations

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Total Contractual Obligations

 

$

4,318,703

 

$

2,048,769

 

$

2,606,516

 

$

67,098,335

 

$

38,361,814

 

$

138,804,437

 

$

253,238,574

 

* Excluding unamortized deferred financing costs

 

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

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

 

Factors That May Affect Future Results

 

Along with risks detailed in Item 1A and from time to time in the Partnership’s filings with the Securities and Exchange Commission, some factors that could cause the Partnership’s actual results, performance or achievements to

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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 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.

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·

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, 2019, the Partnership, its Subsidiary Partnerships and the Investment Properties collectively have approximately $420,642,000 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 $50,900,000 (without taking out unamortized deferred financing costs) as of March 31, 2019. 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 $459,000 annually and the increase or decrease in the fair value of the Partnership’s fixed rate debt as of March 31, 2019 would be approximately $11  million. For information regarding the fair value and maturity dates of these debt obligations,  See Note 5 to the Consolidated Financial Statements — “Mortgage Notes Payable,” Note 12 to the Consolidated Financial Statements — “Fair Value Measurements” and Note 14 to the Consolidated Financial Statements — “Investment in Unconsolidated Joint Ventures.”

 

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

 

ITEM 4.  CONTROLS AND PROCEDURES

 

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

 

Changes in Internal Control over Financial Reporting.  There were no changes in our internal control over financial reporting during the first quarter of 2019 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

35


 

Table of Contents

PART II  —  OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

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

 

Item 1A. Risk Factors

 

There have been no material changes to the risk factors disclosed in Part 1, Item 1A, of our annual report on Form 10K for the fiscal year ended December 31, 2018.

 

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

 

(a)None

 

(b)None

 

(c)Issuer Purchase of Equity Securities during the first quarter of 2019:

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

    

Remaining number of Depositary

 

 

 

 

 

 

Depositary Receipts

 

Receipts that may be purchased

 

Period

 

Average Price Paid

 

Purchased as Part of Publicly Announced Plan

 

Under the Plan (as Amended)

 

 

 

 

 

 

 

 

 

 

January 1-31, 2019

 

$

53.89

 

40,000

 

594,694

 

February 1-28, 2019

 

$

58.66

 

1,704

 

592,990

 

March 1-31, 2019

 

$

64.12

 

1,391

 

591,599

 

Total

 

 

 

 

43,095

 

 

 

 

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, 2019, the Partnership has repurchased 1,408,401 Depositary Receipts at an average price of $27.97 per receipt (or $839.10 per underlying Class A Unit), 3,413 Class B Units and 180 General Partnership Units, both at an average price of $996.79 per Unit, totaling approximately $43,205,000 including brokerage fees paid by the Partnership.

 

During the three months ended March 31, 2019, the Partnership purchased a total of 43,095 Depositary Receipts. The average price was $54.40 per receipt or $1,632.12 per unit. The total cost including commission was $2,344,601. The Partnership was required to repurchase 341 Class B Units and 18 General Partnership units at a cost of $556,828 and $29,307 respectively.

 

Item 3.  Defaults Upon Senior Securities

 

None.

 

Item 4.  Mine Safety Disclosure

 

Not applicable.

36


 

Table of Contents

 

Item 5.  Other Information

 

None

 

Item 6.  Exhibits

 

See the exhibit index below.

37


 

Table of Contents

EXHIBIT INDEX

 

 

 

 

Exhibit No.

 

Description of Exhibit

(31.1)

 

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald Brown, Principal Executive Officer of the Partnership (President and a Director of NewReal, Inc., sole General Partner of the Partnership).

 

(31.2)

 

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Jameson Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership).

 

(32.1)

 

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Ronald Brown, Principal Executive Officer of the Partnership (President and a Director of NewReal, Inc., sole General Partner of the Partnership) and Jameson Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership).

 

(101.1)

 

The following financial statements from New England Realty Associates Limited Partnership Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, 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).

 

 

38


 

Table of Contents

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, 2019

 

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, 2019

Ronald Brown

 

(Principal Executive Officer)

 

 

 

 

 

 

 

/s/ JAMESON BROWN

 

Treasurer and Director of the General Partner

 

May 8, 2019

Jameson Brown

 

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

 

 

 

/s/ GUILLIAEM AERTSEN

 

Director of the General Partner

 

May 8, 2019

Guilliaem Aertsen

 

 

 

 

 

 

 

 

 

/s/ DAVID ALOISE

 

Director of the General Partner

 

May 8, 2019

David Aloise

 

 

 

 

 

 

 

 

 

/s/ ANDREW BLOCH

 

Director of the General Partner

 

May 8, 2019

Andrew Bloch

 

 

 

 

 

 

 

 

 

/s/ EUNICE HARPS

 

Director of the General Partner

 

May 8, 2019

Eunice Harps

 

 

 

 

 

 

 

 

 

 

 

1

39


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, 2019

 

 


nen_Ex31_2

Exhibit 31.2

 

New England Realty Associates Limited Partnership

 

CERTIFICATIONS

 

I, Jameson 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/ JAMESON BROWN

 

 

 

Principal Financial Officer

 

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

Date: May  8, 2019

 

 


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, 2019, 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 Jameson Brown, the Treasurer 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, 2019

 

 

/s/ Jameson Brown

 

 

 

Jameson Brown

 

Principal Financial Officer

 

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

Date: May  8, 2019

 

 

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.

 

 


v3.19.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2019
May 03, 2019
Entity Registrant Name NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP  
Entity Central Index Key 0000746514  
Document Type 10-Q  
Document Period End Date Mar. 31, 2019  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
Class A    
Entity Common Stock, Shares Outstanding   98,073
Class B    
Entity Common Stock, Shares Outstanding   23,292
v3.19.1
CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2019
Dec. 31, 2018
ASSETS    
Rental Properties $ 227,660,057 $ 230,511,263
Cash and Cash Equivalents 7,649,882 9,059,901
Rents Receivable 779,159 762,923
Real Estate Tax Escrows 471,913 495,824
Prepaid Expenses and Other Assets 4,812,005 4,219,749
Investments in Unconsolidated Joint Ventures 1,801,702 1,985,680
Total Assets 243,174,718 247,035,340
LIABILITIES AND PARTNERS' CAPITAL    
Mortgage Notes Payable 251,953,066 252,370,843
Notes Payable   2,000,000
Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture 18,858,645 18,351,562
Accounts Payable and Accrued Expenses 4,126,517 3,927,889
Advance Rental Payments and Security Deposits 6,468,073 6,009,056
Total Liabilities 281,406,301 282,659,350
Partners’ Capital 124,386 and 124,386 units outstanding in 2018 and 2017 respectively (38,231,583) (35,624,010)
Total Liabilities and Partners' Capital $ 243,174,718 $ 247,035,340
v3.19.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
Mar. 31, 2019
Dec. 31, 2018
Mar. 31, 2018
Dec. 31, 2017
CONSOLIDATED BALANCE SHEETS        
Partners' Capital, units outstanding 122,591 124,386 124,386 124,386
v3.19.1
CONSOLIDATED STATEMENTS OF INCOME - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Revenues    
Rental income $ 14,768,475 $ 13,942,645
Laundry and sundry income 113,669 116,355
Total Revenues 14,882,144 14,059,000
Expenses    
Administrative 612,757 539,145
Depreciation and amortization 3,682,678 3,507,091
Management fee 590,610 559,629
Operating 1,884,017 1,900,766
Renting 182,058 107,899
Repairs and maintenance 1,944,231 1,814,283
Taxes and insurance 2,034,106 1,868,483
Total Expenses 10,930,457 10,297,296
Income Before Other Income (Expense) 3,951,687 3,761,704
Other Income (Expense)    
Interest income 179 164
Interest expense (3,000,289) (2,984,210)
Income from investments in unconsolidated joint ventures 548,939 1,100,900
Total Other Income (Expense) (2,451,171) (1,883,146)
Net Income $ 1,500,516 $ 1,878,558
Income per Unit    
Net Income per Unit (in dollars per unit) $ 12.21 $ 15.10
Weighted Average Number of Units Outstanding (in units) 122,941 124,386
v3.19.1
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER'S CAPITAL - USD ($)
3 Months Ended 139 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Mar. 31, 2019
Increase (Decrease) in Partners' Capital      
Balance $ (35,624,010) $ (35,315,177)  
Balance (in units) 124,386 124,386  
Distribution to Partners $ (1,177,353) $ (1,119,481)  
Stock Buyback $ (2,930,736)   $ (43,205,000)
Stock Buyback (in units) (1,795)    
Net income $ 1,500,516 1,878,558  
Balance $ (38,231,583) $ (34,556,100) $ (38,231,583)
Balance (in units) 122,591 124,386 122,591
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 $ (354,833) $ (351,745)  
Balance (in units) 1,802 1,802  
Distribution to Partners $ (11,774) $ (11,195)  
Stock Buyback $ (29,307)    
Stock Buyback (in units) (18)    
Net income $ 15,005 18,786  
Balance $ (380,909) $ (344,154) $ (380,909)
Balance (in units) 1,802 1,802 1,802
Treasury Units      
Increase (Decrease) in Partners' Capital      
Balance (in units) (55,839) (55,839)  
Stock Buyback (in units) (1,795)    
Balance (in units) (57,634) (55,839) (57,634)
Class A      
Increase (Decrease) in Partners' Capital      
Balance $ (28,527,352) $ (28,280,285)  
Balance (in units) 144,180 144,180  
Distribution to Partners $ (941,882) $ (895,585)  
Stock Buyback (2,344,601)    
Net income 1,200,413 1,502,846  
Balance $ (30,613,422) $ (27,673,024) $ (30,613,422)
Balance (in units) 144,180 144,180 144,180
Class B      
Increase (Decrease) in Partners' Capital      
Balance $ (6,741,825) $ (6,683,147)  
Balance (in units) 34,243 34,243  
Distribution to Partners $ (223,697) $ (212,701)  
Stock Buyback (556,828)    
Net income 285,098 356,926  
Balance $ (7,237,252) $ (6,538,922) $ (7,237,252)
Balance (in units) 34,243 34,243 34,243
v3.19.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Cash Flows from Operating Activities    
Net income $ 1,500,516 $ 1,878,558
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 3,682,678 3,507,091
Amortization of deferred finance costs 54,843 51,541
(Income) from investments in joint venture (548,939) (1,100,900)
Change in operating assets and liabilities    
Distribution from unconsolidated joint ventures 425,000 1,770,000
Decrease in rents receivable (16,236) (23,160)
Increrase (Decrease) in accounts payable and accrued expense 198,628 (25,471)
Decrease (Increase) in real estate tax escrow 23,911 1,640
(Increase) in prepaid expenses and other assets (746,891) (523,530)
Increase in advance rental payments and security deposits 459,025 87,257
Total Adjustments 3,532,019 3,744,468
Net cash provided by operating activities 5,032,535 5,623,026
Cash Flows From Investing Activities    
Distribution in excess of investment in unconsolidated joint ventures 823,490 210,402
(Investment) in unconsolidated joint ventures (8,490) (526,402)
Improvement of rental properties (676,844) (868,468)
Purchase of rental property   (13,213,294)
Net cash (used in) investing activities 138,156 (14,397,762)
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
Payment of note payable (2,000,000)  
Principal payments of mortgage notes payable (472,621) (452,900)
Stock buyback (2,930,736)  
Distributions to partners (1,177,353) (1,119,481)
Net cash (used in) provided by financing activities (6,580,710) 6,363,299
Net Increase in Cash and Cash Equivalents (1,410,019) (2,411,437)
Cash and Cash Equivalents, at beginning of period 9,059,901 7,238,905
Cash and Cash Equivalents, at end of period $ 7,649,882 $ 4,827,468
v3.19.1
SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2019
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 690 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 $55,000 and $52,000 for the three months ended March 31, 2019 and 2018, 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 2019 or 2018 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 2019 or 2018. The Partnership makes its temporary cash investments with high-credit quality financial institutions. At March 31, 2019, 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 1.61%. At March 31, 2019 and December 31, 2018, respectively approximately $7,406,000, and $10,784,000 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 $62,969 and $44,381 for the three months ended March 31, 2019 and 2018, 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, 2019 and 2018 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.

 

v3.19.1
RENTAL PROPERTIES
3 Months Ended
Mar. 31, 2019
RENTAL PROPERTIES  
RENTAL PROPERTIES

NOTE 2. RENTAL PROPERTIES

 

As of March 31, 2019, 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, 2019, 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, 2019 with a total of 690 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, 2019

    

December 31, 2018

    

Useful Life

 

Land, improvements and parking lots

 

$

72,547,547

 

$

72,547,547

 

15

-

40

years

 

Buildings and improvements

 

 

221,837,652

 

 

221,697,939

 

15

-

40

years

 

Kitchen cabinets

 

 

12,247,767

 

 

12,134,519

 

 5

-

10

years

 

Carpets

 

 

7,773,940

 

 

7,591,591

 

 5

-

10

years

 

Air conditioning

 

 

603,149

 

 

603,149

 

 5

-

10

years

 

Laundry equipment

 

 

349,071

 

 

327,643

 

 5

-

 7

years

 

Elevators

 

 

1,873,847

 

 

1,839,590

 

20

-

40

years

 

Swimming pools

 

 

444,629

 

 

444,629

 

10

-

30

years

 

Equipment

 

 

13,016,249

 

 

12,919,389

 

 5

-

30

years

 

Motor vehicles

 

 

216,260

 

 

216,260

 

 

 

 5

years

 

Fences

 

 

38,213

 

 

38,213

 

 5

-

15

years

 

Furniture and fixtures

 

 

7,102,834

 

 

7,013,845

 

 5

-

 7

years

 

Smoke alarms

 

 

528,097

 

 

528,097

 

 5

-

 7

years

 

Total fixed assets

 

 

338,579,255

 

 

337,902,411

 

 

 

 

 

 

Less: Accumulated depreciation

 

 

(110,919,198)

 

 

(107,391,148)

 

 

 

 

 

 

 

 

$

227,660,057

 

$

230,511,263

 

 

 

 

 

 

 

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.

 

v3.19.1
RELATED PARTY TRANSACTIONS
3 Months Ended
Mar. 31, 2019
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 $591,000 and $560,000 for the three months ended March 31, 2019 and 2018, 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, 2019 and 2018, approximately $349,000 and $354,000, was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements. Of the 2019 expenses referred to above, approximately $108,000 consisted of repairs and maintenance, $90,000 of administrative expense and $1,000 for rental commissions. Approximately $150,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties. Additionally in 2019, the Hamilton Company received approximately $316,000 from the Investment Properties of which approximately $163,000 was the management fee, approximately $121,000 for rental commissions, approximately $18,000 was for maintenance services, approximately $11,000 was for administrative services and approximately $3,000 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 $789,000 and $824,000 for the three months ended March 31, 2019 and 2018, 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. For the three months ended March 31, 2019, the Partnership contributed $12,000 for the employer’s match portion to the plan. See Note 15.

 

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, 2019 and 2018, the Management Company charged the Partnership $31,250 ($125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

 

The former President of the Management Company performed asset management consulting services and received an asset management fee from the Partnership. The Partnership did not have a written agreement with this individual. During the three months ended March 31, 2018 this individual received fees of $18,750. At June 29, 2018, the individual resigned his position.

 

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 the Estate of Harold Brown, and five current and previous employees of the Management Company. Harold Brown’s ownership interest was between 47.6% and 59%. See Note 14 for a description of the properties and their operations.

 

v3.19.1
OTHER ASSETS
3 Months Ended
Mar. 31, 2019
OTHER ASSETS  
OTHER ASSETS

NOTE 4. OTHER ASSETS

 

Approximately $2,639,000, and $2,571,000 of security deposits are included in prepaid expenses and other assets at March 31, 2019 and December 31, 2018, respectively. The security deposits and escrow accounts are restricted cash.

 

Included in prepaid expenses and other assets at March 31, 2019 and December 31, 2018 is approximately $494,000 and $477,000, 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 $18,000 net of accumulated amortization of approximately $1,093,000 and approximately $152,000 net of accumulated amortization of approximately $959,000 at March 31, 2019 and December 31, 2018, respectively.

 

Financing fees in association with the line of credit of approximately $68,000 and $78,000 are net of accumulated amortization of approximately $60,000 and $50,000 at March 31, 2019 and December 31, 2018 respectively.

 

v3.19.1
MORTGAGE NOTES PAYABLE
3 Months Ended
Mar. 31, 2019
MORTGAGE NOTES PAYABLE  
MORTGAGE NOTES PAYABLE

NOTE 5. MORTGAGE NOTES PAYABLE

 

At March 31, 2019 and December 31, 2018, 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, 2019, the interest rates on these loans ranged from 3.76% to 5.81%, payable in monthly installments aggregating approximately $1,139,000 including principal, to various dates through 2029. The majority of the mortgages are subject to prepayment penalties. At March 31, 2019, the weighted average interest rate on the above mortgages was 4.63%. The effective rate of 4.71% 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 $1,354,000 and $1,420,000 are net of accumulated amortization of approximately $1,363,000 and $1,298,000 at March  31, 2019 and December 31, 2018, respectively.

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

 

Approximate annual maturities at March 31, 2019 are as follows:

 

 

 

 

 

 

2020—current maturities

    

$

4,319,000

 

2021

 

 

2,049,000

 

2022

 

 

2,606,000

 

2023

 

 

67,098,000

 

2024

 

 

38,362,000

 

Thereafter

 

 

138,804,000

 

 

 

 

253,238,000

 

Less: unamortized deferred financing costs

 

 

(1,285,000)

 

 

 

$

251,953,000

 

 

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 purchase 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 in April, 2021, monthly payments of principal and interest in the amount of $32,427 are being 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. The closing costs were approximately $69,000

 

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.

On March 29, 2018, the Partnership drew down $8,000,000 in conjunction with the purchase of Webster Green Apartments.  On June 4, 2018, the Partnership paid down the credit line by $16,000,000 as a result of the proceeds from the refinancing of Hamilton Park Towers, LLC, also known as Dexter Park. In July, 2018, the Partnership paid down the line of credit by $4,000,000. In October of 2018, the Partnership paid down the line of credit by $3,000,000. In January 2019, the Partnership paid off  the $2,000,000 balance on the line of credit.

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 $12,000 in fees for the three months ended March 31, 2019.

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, 2019.

v3.19.1
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS
3 Months Ended
Mar. 31, 2019
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, 2019, amounts received for prepaid rents of approximately $2,234,000 are included in cash and cash equivalents, and security deposits of approximately $2,639,000 are included in prepaid expenses and other assets and are restricted cash.

v3.19.1
PARTNERS' CAPITAL
3 Months Ended
Mar. 31, 2019
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 2019, the Partnership approved a quarterly distribution to its Class A Limited Partners and holders of Depositary Receipts of record as of March 15, 2019 and payable on March 31, 2019, of $9.60 per unit ($0.32 per receipt).

In 2018, regular quarterly distributions of $9.00 per unit ($0.30 per receipt) were paid in March, June, September and December.

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

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2019

    

2018

 

Net Income per Depositary Receipt

 

$

0.41

 

$

0.50

 

Distributions per Depositary Receipt

 

$

0.32

 

$

0.30

 

 

v3.19.1
TREASURY UNITS
3 Months Ended
Mar. 31, 2019
TREASURY UNITS  
TREASURY UNITS

NOTE 8. TREASURY UNITS

 

Treasury Units at March 31, 2019 are as follows:

 

 

 

 

 

Class A

    

46,107

 

Class B

 

10,950

 

General Partnership

 

577

 

 

 

57,634

 

 

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, 2019, the Partnership has repurchased 1,408,401 Depositary Receipts at an average price of $27.97 per receipt (or $839.10 per underlying Class A Unit), 3,413 Class B Units and 180 General Partnership Units, both at an average price of $996.79 per Unit, totaling approximately $43,205,000 including brokerage fees paid by the Partnership.

 

During the three months ended March 31, 2019, the Partnership purchased a total of 43,095 Depositary Receipts. The average price was $54.40 per receipt or $1,632.12 per unit. The total cost including commission was $2,344,601. The Partnership was required to repurchase 341 Class B Units and 18 General Partnership units at a cost of $556,828 and $29,307 respectively.

 

v3.19.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2019
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.

 

In February, 2019, a water pipe broke at Hamilton Oak in Brockton, MA. resulting in the evacuation of 40 apartments for approximately one week. The Partnership has insurance coverage on both the repairs and rental loss. As of March 31, 2019, the Partnership has received $75,000 on this claim, and has an estimated insurance recovery receivable of approximately $212,000, which is included on the prepaid expenses and other assets as of March 31, 2019.

 

v3.19.1
RENTAL INCOME
3 Months Ended
Mar. 31, 2019
RENTAL INCOME  
RENTAL INCOME

NOTE 10. RENTAL INCOME

 

During the three months ended March 31, 2019, approximately 94% 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 6% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2019 as follows:

 

 

 

 

 

 

 

    

Commercial

 

 

 

Property Leases

 

2020

 

$

2,565,000

 

2021

 

 

2,299,000

 

2022

 

 

1,591,000

 

2023

 

 

946,000

 

2024

 

 

523,000

 

Thereafter

 

 

756,000

 

 

 

$

8,680,000

 

 

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 $129,000 and $223,000 for the three months ended March 31, 2019 and 2018 respectively. Staples and Trader Joes, tenants at Staples Plaza, are approximately 36% 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

 

2020

 

$

454,412

 

22,400

 

12

 

16

%

2021

 

 

225,337

 

5,679

 

 7

 

 8

%

2022

 

 

1,143,867

 

47,854

 

10

 

39

%

2023

 

 

246,341

 

7,087

 

 4

 

 9

%

2024

 

 

658,784

 

19,209

 

 8

 

22

%

2025

 

 

15,936

 

604

 

 3

 

 1

%

2026

 

 

 —

 

 —

 

 —

 

 —

%

2027

 

 

 —

 

 —

 

 —

 

 —

%

2028

 

 

 —

 

 —

 

 —

 

 —

%

2029

 

 

 —

 

 —

 

 —

 

 —

%

2030

 

 

142,450

 

3,850

 

 1

 

 5

%

Totals

 

$

2,887,127

 

106,683

 

45

 

100

%

 

Rents receivable are net of an allowance for doubtful accounts of approximately $369,000 and $532,000 at March 31, 2019 and December 31, 2018. Included in rents receivable at March 31, 2019 is approximately $69,000 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 and Staples Plaza in Massachusetts.

 

Rents receivable at March 31, 2019 also includes approximately $82,000 representing the deferral of rental concession primarily related to the residential properties.

v3.19.1
CASH FLOW INFORMATION
3 Months Ended
Mar. 31, 2019
CASH FLOW INFORMATION  
CASH FLOW INFORMATION

NOTE 11. CASH FLOW INFORMATION

 

During the three months ended March 31, 2019 and 2018, cash paid for interest was approximately $2,944,000, and $3,010,000 respectively.  Cash paid for state income taxes was approximately $48,000 and $47,000 during the three months ended March 31, 2019 and 2018 respectively. Additionally, 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

v3.19.1
FAIR VALUE MEASUREMENTS
3 Months Ended
Mar. 31, 2019
FAIR VALUE MEASUREMENTS  
FAIR VALUE MEASUREMENTS

NOTE 12. FAIR VALUE MEASUREMENTS

 

Fair Value Measurements on a Recurring Basis

 

At March 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018 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, 2019 and December 31, 2018, 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, 2019 and December 31, 2018, 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, 2019

*

$

251,953,066

 

$

235,100,502

 

At December 31, 2018

*

$

252,370,843

 

$

233,362,501

 

Investment Properties

 

 

 

 

 

 

 

At March 31, 2019

*

$

166,471,296

 

$

163,347,932

 

At December 31, 2018

*

$

166,492,692

 

$

160,956,055

 

 

* 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, 2019 and December 31, 2018. 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, 2019 and current estimates of fair value may differ significantly from the amounts presented herein.

 

v3.19.1
TAXABLE INCOME AND TAX BASIS
3 Months Ended
Mar. 31, 2019
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, other items with limited tax deductibility and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions. Taxable income of approximately $4,841,000 was approximately $672,000 more than statement income for the year ended December 31, 2018. The cumulative tax basis of the Partnership’s real estate at December 31, 2018 is approximately $878,000 less than the statement basis. The primary reasons for the difference in tax basis are tax free exchanges, accelerated depreciation and bonus depreciation. The Partnership’s tax basis in its joint venture investments is approximately $1,121,000 more than statement basis.

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.

Allowable accelerated depreciation deductions were extended through 2018. The 2018 tax law changes had a significant impact on the taxable income of the Partnership. 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, 2019, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2015 forward.

 

v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
3 Months Ended
Mar. 31, 2019
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

 

The Partnership has invested in eight 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 were Harold Brown, and five current and former employees of the Management Company. Harold Brown’s ownership interest was between 47.6% and 59%, with the balance owned by the others. A description of each investment is as follows:

 

On October 28, 2009 the Partnership invested approximately $15,925,000 in a joint venture to acquire a 40% interest in a residential property located in Brookline, Massachusetts. The property, Hamilton Park Towers LLC, referred to as Dexter Park, or Hamilton Park is a 409 unit residential complex. The purchase price was $129,500,000. The original mortgage was  $89,914,000 with an interest rate of 5.57% and it matured in 2019. The mortgage called for interest only payments for the first two years of the loan and amortized over 30 years thereafter.

 

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

 

Hamilton Park used the proceeds of the loan to pay off an outstanding loan of approximately $82,000,000 and distributed approximately $41,200,000 to its’ owners. The Partnership’s share of the distribution was approximately $16,500,000. As a result of the distribution, the carrying value of the investment fell below zero. The Partnership will continue to account for the investment using the equity method of accounting, although the Partnership has no legal obligation to fund its’ share of any future operating deficiencies as needed. In connection with this refinancing, the property incurred a defeasance charge of approximately $3,830,000.   Based on its’ ownership in the property, the Partnership incurred 40% of this charge, an expense of approximately $1,532,000. This charge had a material effect on the 2018 net income.

At March 31, 2019, the balance on this mortgage before unamortized deferred financing costs is approximately $125,000,000.This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

On October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168-unit apartment complex in Quincy, Massachusetts. The purchase price was  $30,875,000. The Joint Venture sold 120 units as condominiums and retained 48 units for long-term investment. In February 2007, the Joint Venture refinanced the  48 units with a new 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. 2 units were sold in the first three months of 2019, resulting in a gain of approximately $433,000. This investment is referred to as Hamilton Bay Apartments, LLC. As of March 31, 2019, all units were sold by this Joint Venture.

 

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, 2019, 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. As of March 31, 2019,  1 unit was under purchase and sales agreement and the Partnership owned 3 units. 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, 2019, 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 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 31, 2019, 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 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 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, 2019, the balance of this mortgage before unamortized deferred financing costs is approximately $9,504,000. This investment is referred to as 345 Franklin, LLC.

 

Summary financial information as of March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

  

$

7,117,613

  

$

2,595,015

  

$

5,919,727

  

$

103,238

  

$

0

  

$

5,556,929

  

$

16,490,749

  

$

86,186,211

  

$

123,969,482

 

Rental property held for sale

 

 

0

 

 

0

 

 

0

 

 

159,188

 

 

0

 

 

0

 

 

0

 

 

0

 

 

159,188

 

Cash & Cash Equivalents

 

 

192,441

 

 

169,930

 

 

213,656

 

 

51,285

 

 

359,291

 

 

132,903

 

 

163,789

 

 

1,853,435

 

 

3,136,730

 

Rent Receivable

 

 

222,191

 

 

49,619

 

 

4,437

 

 

2,441

 

 

0

 

 

1,487

 

 

17,049

 

 

136,962

 

 

434,186

 

Real Estate Tax Escrow

 

 

72,624

 

 

 —

 

 

50,334

 

 

 —

 

 

0

 

 

28,960

 

 

95,525

 

 

0

 

 

247,443

 

Prepaid Expenses & Other Assets

 

 

274,111

 

 

110,681

 

 

61,989

 

 

30,377

 

 

3,595

 

 

16,287

 

 

105,663

 

 

1,022,670

 

 

1,625,373

 

Total Assets

 

$

7,878,980

 

$

2,925,245

 

$

6,250,143

 

$

346,529

 

$

362,886

 

$

5,736,566

 

$

16,872,775

 

$

89,199,278

 

$

129,572,402

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,910,371

 

$

 —

 

$

9,442,200

 

$

 —

 

$

 —

 

$

5,898,047

 

$

16,813,056

 

$

124,407,623

 

$

166,471,297

 

Accounts Payable & Accrued Expense

 

 

84,485

 

 

2,187

 

 

121,342

 

 

10,844

 

 

10,951

 

 

61,051

 

 

205,044

 

 

701,699

 

 

1,197,603

 

Advance Rental Pmts & Security Deposits

 

 

297,683

 

 

 —

 

 

283,486

 

 

7,174

 

 

101

 

 

123,167

 

 

391,075

 

 

2,620,890

 

 

3,723,576

 

Total Liabilities

 

 

10,292,539

 

 

2,187

 

 

9,847,028

 

 

18,018

 

 

11,052

 

 

6,082,265

 

 

17,409,175

 

 

127,730,212

 

 

171,392,476

 

Partners’ Capital

 

 

(2,413,559)

 

 

2,923,058

 

 

(3,596,885)

 

 

328,511

 

 

351,834

 

 

(345,699)

 

 

(536,400)

 

 

(38,530,934)

 

 

(41,820,074)

 

Total Liabilities and Capital

 

$

7,878,980

 

$

2,925,245

 

$

6,250,143

 

$

346,529

 

$

362,886

 

$

5,736,566

 

$

16,872,775

 

$

89,199,278

 

$

129,572,402

 

Partners’ Capital %—NERA

 

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,461,529

 

$

 

 

$

164,256

 

$

175,917

 

$

 

 

$

 

 

$

 

 

 

1,801,702

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(1,206,780)

 

$

 —

 

$

(1,798,443)

 

$

 —

 

$

 —

 

$

(172,850)

 

$

(268,200)

 

$

(15,412,374)

 

 

(18,858,645)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(17,056,944)

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

 1

 

 

 1

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Total

 

 

49

 

 

 1

 

 

40

 

 

176

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

 1

 

 

40

 

 

 —

 

 

 —

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

175

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2019

 

 

 —

 

 

 —

 

 

 —

 

 

173

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

221

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Unsold units with deposits for future sale as of  May 1, 2019

 

 

 —

 

 

 —

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial information for the three months ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Hamilton

    

 

 

    

 

 

    

 

 

    

Hamilton

    

Hamilton

    

 

 

    

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income

 

$

459,573

 

$

75,290

 

$

385,243

 

$

23,594

 

$

3,629

 

$

274,837

 

$

822,668

 

 

4,028,259

 

$

6,073,093

 

Laundry and Sundry Income

 

 

3,005

 

 

 —

 

 

1,389

 

 

 —

 

 

 —

 

 

1,907

 

 

10,062

 

 

24,025

 

 

40,388

 

 

 

 

462,578

 

 

75,290

 

 

386,632

 

 

23,594

 

 

3,629

 

 

276,744

 

 

832,730

 

 

4,052,284

 

 

6,113,481

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

5,379

 

 

2,092

 

 

5,390

 

 

1,694

 

 

3,445

 

 

3,716

 

 

17,847

 

 

55,532

 

 

95,095

 

Depreciation and Amortization

 

 

119,544

 

 

5,074

 

 

86,226

 

 

3,196

 

 

5,420

 

 

88,595

 

 

258,438

 

 

900,101

 

 

1,466,594

 

Management Fees

 

 

17,206

 

 

2,160

 

 

14,056

 

 

965

 

 

145

 

 

11,067

 

 

31,868

 

 

86,149

 

 

163,616

 

Operating

 

 

21,450

 

 

 8

 

 

22,603

 

 

775

 

 

(109)

 

 

23,755

 

 

107,289

 

 

381,644

 

 

557,415

 

Renting

 

 

3,330

 

 

 —

 

 

3,520

 

 

 

 

 

 

 

 

2,032

 

 

16,112

 

 

19,663

 

 

44,657

 

Repairs and Maintenance

 

 

37,884

 

 

 —

 

 

18,467

 

 

8,040

 

 

10,266

 

 

36,672

 

 

124,192

 

 

256,585

 

 

492,106

 

Taxes and Insurance

 

 

61,830

 

 

15,677

 

 

40,241

 

 

7,349

 

 

4,906

 

 

32,251

 

 

104,431

 

 

518,726

 

 

785,411

 

 

 

 

266,623

 

 

25,011

 

 

190,503

 

 

22,019

 

 

24,073

 

 

198,088

 

 

660,177

 

 

2,218,400

 

 

3,604,894

 

Income Before Other Income

 

 

195,955

 

 

50,279

 

 

196,129

 

 

1,575

 

 

(20,444)

 

 

78,656

 

 

172,553

 

 

1,833,884

 

 

2,508,587

 

Other Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

(121,005)

 

 

 —

 

 

(94,247)

 

 

 

 

 

(6)

 

 

(57,991)

 

 

(188,268)

 

 

(1,270,103)

 

 

(1,731,620)

 

Gain on Sale of Real Estate

 

 

 

 

 

 —

 

 

 —

 

 

754

 

 

432,908

 

 

 

 

 

 

 

 

 

 

 

433,662

 

 

 

 

(121,005)

 

 

 —

 

 

(94,247)

 

 

754

 

 

432,902

 

 

(57,991)

 

 

(188,268)

 

 

(1,270,103)

 

 

(1,297,958)

 

Net Income (Loss)

 

$

74,950

 

$

50,279

 

$

101,882

 

$

2,329

 

$

412,458

 

$

20,665

 

$

(15,715)

 

$

563,781

 

$

1,210,629

 

Net Income (Loss)—NERA 50%

    

$

37,475

 

$

25,140

 

$

50,941

 

$

1,165

 

$

206,229

 

$

10,333

 

$

(7,858)

 

 

 

 

 

323,424

 

Net Income —NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

225,515

 

 

225,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

548,939

 

 

Future annual mortgage maturities at March 31, 2019 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton

 

345

 

Hamilton

 

Hamilton on

 

Dexter

 

 

 

 

Period End

    

Essex 81

    

Franklin

    

Minuteman

    

Main Apts

    

Park

    

Total

 

3//31/2020

 

$

 —

 

$

199,661

 

$

 

 

$

 —

 

$

 

 

$

199,661

 

3/31/2021

 

 

 —

 

 

207,527

 

 

 

 

 

 —

 

 

 

 

 

207,527

 

3/31/2022

 

 

 —

 

 

215,702

 

 

 —

 

 

 —

 

 

 

 

 

215,702

 

3/31/2023

 

 

 —

 

 

224,199

 

 

 —

 

 

 —

 

 

 

 

 

224,199

 

3/31/2024

 

 

 —

 

 

233,032

 

 

 —

 

 

 —

 

 

 

 

 

233,032

 

Thereafter

 

 

10,000,000

 

 

8,423,670

 

 

6,000,000

 

 

16,900,000

 

 

125,000,000

 

 

166,323,670

 

 

 

 

10,000,000

 

 

9,503,791

 

 

6,000,000

 

 

16,900,000

 

 

125,000,000

 

 

167,403,791

 

Less: unamortized deferred financing costs

 

 

(89,629)

 

 

(61,591)

 

 

(101,953)

 

 

(86,944)

 

 

(592,377)

 

 

(932,494)

 

 

 

$

9,910,371

 

$

9,442,200

 

$

5,898,047

 

$

16,813,056

 

$

124,407,623

 

$

166,471,297

 

 

At March 31, 2019 the weighted average interest rate on the above mortgages was 3.87%. The effective rate was 3.94% including the amortization expense of deferred financing costs.

 

Summary financial information as 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

 

 

 —

 

 

 —

 

 

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

 

 

0

 

 

0

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

176

 

 

46

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

143

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

264

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

32

 

 

47

 

 

 —

 

 

 —

 

 

 —

 

 

79

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 4

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

14

 

 

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)

 

Interest Income

 

 

 

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

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 (Loss)—NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

233,143

 

 

233,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,100,900

 

 

v3.19.1
EMPLOYEE BENEFIT 401(k) PLANS
3 Months Ended
Mar. 31, 2019
EMPLOYEE BENEFTI 401(k) PLANS  
EMPLOYEE BENEFIT 401(k) PLANS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

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)

 

Interest Income

 

 

 

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

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 (Loss)—NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

233,143

 

 

233,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,100,900

 

 

 

NOTE 15. EMPLOYEE BENEFIT 401(k) PLANS

 

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

 

The amounts contributed by employees are immediately vested and non-forfeitable.  Beginning January 1, 2019, the Partnership matched 50% up to the 6% of compensation deferred by each employee in the 401(k) plan. The Partnership may make discretionary matching or profit-sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year.  Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit-sharing contributions made on their behalf after two years of service with the Partnership at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Partnership. Total expense recognized by the Partnership for the 401(k) Plan for the three months ended March 31, 2019 was $12,000.

 

v3.19.1
IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
3 Months Ended
Mar. 31, 2019
IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS  
IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

NOTE 16. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

 

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

 

v3.19.1
SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2019
SUBSEQUENT EVENTS  
SUBSEQUENT EVENTS

NOTE 17—SUBSEQUENT EVENTS

From April 1, 2019 through May 3, 2019, the Partnership purchased a total of 1,540 Depository Receipts. The average price was $64.91 per receipt or $1,947.21 per unit. The total cost was $96,861.

The Partnership is required to purchase 12 Class B units and 1 General Partnership units at a cost of $23,740 and $1,249 respectively.

The Partnership is currently negotiating a refinancing of the mortgage for Captain Parker held by KeyBank. The new loan would be for $20,750,000 for 10 years, interest only at 4.05%. If the negotiation is successful, there will be a 1% prepayment penalty on the existing loan balance of $20,071,000. The penalty charge would be approximately $200,000, and would have a material effect on the 2019 second quarter net income. The Partnership is expected to close on the refinancing at the end of May, 2019.

Effective as of May 3, 2019, the Board of Directors of the Partnership’s General Partner, NewReal, Inc. (“New Real”), elected Andrew Bloch as a member of the Board. Mr. Bloch is the CO-CEO and CFO of The Hamilton Company, Inc., the Manager of the Partnership’s properties.

v3.19.1
SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2019
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 690 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 $55,000 and $52,000 for the three months ended March 31, 2019 and 2018, 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 2019 or 2018 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 2019 or 2018. The Partnership makes its temporary cash investments with high-credit quality financial institutions. At March 31, 2019, 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 1.61%. At March 31, 2019 and December 31, 2018, respectively approximately $7,406,000, and $10,784,000 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 $62,969 and $44,381 for the three months ended March 31, 2019 and 2018, 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, 2019 and 2018 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.

v3.19.1
RENTAL PROPERTIES (Tables)
3 Months Ended
Mar. 31, 2019
RENTAL PROPERTIES  
Schedule of rental properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

March 31, 2019

    

December 31, 2018

    

Useful Life

 

Land, improvements and parking lots

 

$

72,547,547

 

$

72,547,547

 

15

-

40

years

 

Buildings and improvements

 

 

221,837,652

 

 

221,697,939

 

15

-

40

years

 

Kitchen cabinets

 

 

12,247,767

 

 

12,134,519

 

 5

-

10

years

 

Carpets

 

 

7,773,940

 

 

7,591,591

 

 5

-

10

years

 

Air conditioning

 

 

603,149

 

 

603,149

 

 5

-

10

years

 

Laundry equipment

 

 

349,071

 

 

327,643

 

 5

-

 7

years

 

Elevators

 

 

1,873,847

 

 

1,839,590

 

20

-

40

years

 

Swimming pools

 

 

444,629

 

 

444,629

 

10

-

30

years

 

Equipment

 

 

13,016,249

 

 

12,919,389

 

 5

-

30

years

 

Motor vehicles

 

 

216,260

 

 

216,260

 

 

 

 5

years

 

Fences

 

 

38,213

 

 

38,213

 

 5

-

15

years

 

Furniture and fixtures

 

 

7,102,834

 

 

7,013,845

 

 5

-

 7

years

 

Smoke alarms

 

 

528,097

 

 

528,097

 

 5

-

 7

years

 

Total fixed assets

 

 

338,579,255

 

 

337,902,411

 

 

 

 

 

 

Less: Accumulated depreciation

 

 

(110,919,198)

 

 

(107,391,148)

 

 

 

 

 

 

 

 

$

227,660,057

 

$

230,511,263

 

 

 

 

 

 

 

v3.19.1
MORTGAGE NOTES PAYABLE (Tables)
3 Months Ended
Mar. 31, 2019
MORTGAGE NOTES PAYABLE  
Schedule of approximate annual maturities

Approximate annual maturities at March 31, 2019 are as follows:

 

 

 

 

 

 

2020—current maturities

    

$

4,319,000

 

2021

 

 

2,049,000

 

2022

 

 

2,606,000

 

2023

 

 

67,098,000

 

2024

 

 

38,362,000

 

Thereafter

 

 

138,804,000

 

 

 

 

253,238,000

 

Less: unamortized deferred financing costs

 

 

(1,285,000)

 

 

 

$

251,953,000

 

 

v3.19.1
PARTNERS' CAPITAL (Tables)
3 Months Ended
Mar. 31, 2019
PARTNERS' CAPITAL  
Schedule of information per depositary receipt

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2019

    

2018

 

Net Income per Depositary Receipt

 

$

0.41

 

$

0.50

 

Distributions per Depositary Receipt

 

$

0.32

 

$

0.30

 

 

v3.19.1
TREASURY UNITS (Tables)
3 Months Ended
Mar. 31, 2019
TREASURY UNITS  
Schedule of treasury units

Treasury Units at March 31, 2019 are as follows:

 

 

 

 

 

Class A

    

46,107

 

Class B

 

10,950

 

General Partnership

 

577

 

 

 

57,634

 

 

v3.19.1
RENTAL INCOME (Tables)
3 Months Ended
Mar. 31, 2019
RENTAL INCOME  
Schedule of minimum future annual rental income on non-cancellable operating leases

Approximately 6% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2019 as follows:

 

 

 

 

 

 

 

    

Commercial

 

 

 

Property Leases

 

2020

 

$

2,565,000

 

2021

 

 

2,299,000

 

2022

 

 

1,591,000

 

2023

 

 

946,000

 

2024

 

 

523,000

 

Thereafter

 

 

756,000

 

 

 

$

8,680,000

 

 

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

 

2020

 

$

454,412

 

22,400

 

12

 

16

%

2021

 

 

225,337

 

5,679

 

 7

 

 8

%

2022

 

 

1,143,867

 

47,854

 

10

 

39

%

2023

 

 

246,341

 

7,087

 

 4

 

 9

%

2024

 

 

658,784

 

19,209

 

 8

 

22

%

2025

 

 

15,936

 

604

 

 3

 

 1

%

2026

 

 

 —

 

 —

 

 —

 

 —

%

2027

 

 

 —

 

 —

 

 —

 

 —

%

2028

 

 

 —

 

 —

 

 —

 

 —

%

2029

 

 

 —

 

 —

 

 —

 

 —

%

2030

 

 

142,450

 

3,850

 

 1

 

 5

%

Totals

 

$

2,887,127

 

106,683

 

45

 

100

%

 

v3.19.1
FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Mar. 31, 2019
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, 2019

*

$

251,953,066

 

$

235,100,502

 

At December 31, 2018

*

$

252,370,843

 

$

233,362,501

 

Investment Properties

 

 

 

 

 

 

 

At March 31, 2019

*

$

166,471,296

 

$

163,347,932

 

At December 31, 2018

*

$

166,492,692

 

$

160,956,055

 

 

* Net of unamortized deferred financing costs

 

v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Tables)
3 Months Ended
Mar. 31, 2019
Schedule of future annual mortgage maturities

Future annual mortgage maturities at March 31, 2019 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton

 

345

 

Hamilton

 

Hamilton on

 

Dexter

 

 

 

 

Period End

    

Essex 81

    

Franklin

    

Minuteman

    

Main Apts

    

Park

    

Total

 

3//31/2020

 

$

 —

 

$

199,661

 

$

 

 

$

 —

 

$

 

 

$

199,661

 

3/31/2021

 

 

 —

 

 

207,527

 

 

 

 

 

 —

 

 

 

 

 

207,527

 

3/31/2022

 

 

 —

 

 

215,702

 

 

 —

 

 

 —

 

 

 

 

 

215,702

 

3/31/2023

 

 

 —

 

 

224,199

 

 

 —

 

 

 —

 

 

 

 

 

224,199

 

3/31/2024

 

 

 —

 

 

233,032

 

 

 —

 

 

 —

 

 

 

 

 

233,032

 

Thereafter

 

 

10,000,000

 

 

8,423,670

 

 

6,000,000

 

 

16,900,000

 

 

125,000,000

 

 

166,323,670

 

 

 

 

10,000,000

 

 

9,503,791

 

 

6,000,000

 

 

16,900,000

 

 

125,000,000

 

 

167,403,791

 

Less: unamortized deferred financing costs

 

 

(89,629)

 

 

(61,591)

 

 

(101,953)

 

 

(86,944)

 

 

(592,377)

 

 

(932,494)

 

 

 

$

9,910,371

 

$

9,442,200

 

$

5,898,047

 

$

16,813,056

 

$

124,407,623

 

$

166,471,297

 

 

At March

2019  
Summary of financial position and income statements relating to investment in unconsolidated joint ventures

Summary financial information as of March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

  

Hamilton

  

 

 

  

 

 

  

 

 

  

Hamilton

  

Hamilton

  

 

 

  

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Properties

  

$

7,117,613

  

$

2,595,015

  

$

5,919,727

  

$

103,238

  

$

0

  

$

5,556,929

  

$

16,490,749

  

$

86,186,211

  

$

123,969,482

 

Rental property held for sale

 

 

0

 

 

0

 

 

0

 

 

159,188

 

 

0

 

 

0

 

 

0

 

 

0

 

 

159,188

 

Cash & Cash Equivalents

 

 

192,441

 

 

169,930

 

 

213,656

 

 

51,285

 

 

359,291

 

 

132,903

 

 

163,789

 

 

1,853,435

 

 

3,136,730

 

Rent Receivable

 

 

222,191

 

 

49,619

 

 

4,437

 

 

2,441

 

 

0

 

 

1,487

 

 

17,049

 

 

136,962

 

 

434,186

 

Real Estate Tax Escrow

 

 

72,624

 

 

 —

 

 

50,334

 

 

 —

 

 

0

 

 

28,960

 

 

95,525

 

 

0

 

 

247,443

 

Prepaid Expenses & Other Assets

 

 

274,111

 

 

110,681

 

 

61,989

 

 

30,377

 

 

3,595

 

 

16,287

 

 

105,663

 

 

1,022,670

 

 

1,625,373

 

Total Assets

 

$

7,878,980

 

$

2,925,245

 

$

6,250,143

 

$

346,529

 

$

362,886

 

$

5,736,566

 

$

16,872,775

 

$

89,199,278

 

$

129,572,402

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Notes Payable

 

$

9,910,371

 

$

 —

 

$

9,442,200

 

$

 —

 

$

 —

 

$

5,898,047

 

$

16,813,056

 

$

124,407,623

 

$

166,471,297

 

Accounts Payable & Accrued Expense

 

 

84,485

 

 

2,187

 

 

121,342

 

 

10,844

 

 

10,951

 

 

61,051

 

 

205,044

 

 

701,699

 

 

1,197,603

 

Advance Rental Pmts & Security Deposits

 

 

297,683

 

 

 —

 

 

283,486

 

 

7,174

 

 

101

 

 

123,167

 

 

391,075

 

 

2,620,890

 

 

3,723,576

 

Total Liabilities

 

 

10,292,539

 

 

2,187

 

 

9,847,028

 

 

18,018

 

 

11,052

 

 

6,082,265

 

 

17,409,175

 

 

127,730,212

 

 

171,392,476

 

Partners’ Capital

 

 

(2,413,559)

 

 

2,923,058

 

 

(3,596,885)

 

 

328,511

 

 

351,834

 

 

(345,699)

 

 

(536,400)

 

 

(38,530,934)

 

 

(41,820,074)

 

Total Liabilities and Capital

 

$

7,878,980

 

$

2,925,245

 

$

6,250,143

 

$

346,529

 

$

362,886

 

$

5,736,566

 

$

16,872,775

 

$

89,199,278

 

$

129,572,402

 

Partners’ Capital %—NERA

 

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

50

%  

 

40

%  

 

 

 

Investment in Unconsolidated Joint Ventures

 

$

 

 

$

1,461,529

 

$

 

 

$

164,256

 

$

175,917

 

$

 

 

$

 

 

$

 

 

 

1,801,702

 

Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures

 

$

(1,206,780)

 

$

 —

 

$

(1,798,443)

 

$

 —

 

$

 —

 

$

(172,850)

 

$

(268,200)

 

$

(15,412,374)

 

 

(18,858,645)

 

Total Investment in Unconsolidated Joint Ventures (Net)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(17,056,944)

 

Total units/condominiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apartments

 

 

48

 

 

 —

 

 

40

 

 

175

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,030

 

Commercial

 

 

 1

 

 

 1

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Total

 

 

49

 

 

 1

 

 

40

 

 

176

 

 

48

 

 

42

 

 

148

 

 

409

 

 

1,033

 

Units to be retained

 

 

49

 

 

 1

 

 

40

 

 

 —

 

 

 —

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

175

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May 1, 2019

 

 

 —

 

 

 —

 

 

 —

 

 

173

 

 

48

 

 

 —

 

 

 —

 

 

 —

 

 

221

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

Unsold units with deposits for future sale as of  May 1, 2019

 

 

 —

 

 

 —

 

 

 —

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of income statement relating to investment in unconsolidated joint ventures

Financial information for the three months ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Hamilton

    

 

 

    

 

 

    

 

 

    

Hamilton

    

Hamilton

    

 

 

    

 

 

 

 

 

Hamilton

 

Essex

 

345

 

Hamilton

 

Hamilton

 

Minuteman

 

on Main

 

Dexter

 

 

 

 

 

 

Essex 81

 

Development

 

Franklin

 

1025

 

Bay Apts

 

Apts

 

Apts

 

Park

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Income

 

$

459,573

 

$

75,290

 

$

385,243

 

$

23,594

 

$

3,629

 

$

274,837

 

$

822,668

 

 

4,028,259

 

$

6,073,093

 

Laundry and Sundry Income

 

 

3,005

 

 

 —

 

 

1,389

 

 

 —

 

 

 —

 

 

1,907

 

 

10,062

 

 

24,025

 

 

40,388

 

 

 

 

462,578

 

 

75,290

 

 

386,632

 

 

23,594

 

 

3,629

 

 

276,744

 

 

832,730

 

 

4,052,284

 

 

6,113,481

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

5,379

 

 

2,092

 

 

5,390

 

 

1,694

 

 

3,445

 

 

3,716

 

 

17,847

 

 

55,532

 

 

95,095

 

Depreciation and Amortization

 

 

119,544

 

 

5,074

 

 

86,226

 

 

3,196

 

 

5,420

 

 

88,595

 

 

258,438

 

 

900,101

 

 

1,466,594

 

Management Fees

 

 

17,206

 

 

2,160

 

 

14,056

 

 

965

 

 

145

 

 

11,067

 

 

31,868

 

 

86,149

 

 

163,616

 

Operating

 

 

21,450

 

 

 8

 

 

22,603

 

 

775

 

 

(109)

 

 

23,755

 

 

107,289

 

 

381,644

 

 

557,415

 

Renting

 

 

3,330

 

 

 —

 

 

3,520

 

 

 

 

 

 

 

 

2,032

 

 

16,112

 

 

19,663

 

 

44,657

 

Repairs and Maintenance

 

 

37,884

 

 

 —

 

 

18,467

 

 

8,040

 

 

10,266

 

 

36,672

 

 

124,192

 

 

256,585

 

 

492,106

 

Taxes and Insurance

 

 

61,830

 

 

15,677

 

 

40,241

 

 

7,349

 

 

4,906

 

 

32,251

 

 

104,431

 

 

518,726

 

 

785,411

 

 

 

 

266,623

 

 

25,011

 

 

190,503

 

 

22,019

 

 

24,073

 

 

198,088

 

 

660,177

 

 

2,218,400

 

 

3,604,894

 

Income Before Other Income

 

 

195,955

 

 

50,279

 

 

196,129

 

 

1,575

 

 

(20,444)

 

 

78,656

 

 

172,553

 

 

1,833,884

 

 

2,508,587

 

Other Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

(121,005)

 

 

 —

 

 

(94,247)

 

 

 

 

 

(6)

 

 

(57,991)

 

 

(188,268)

 

 

(1,270,103)

 

 

(1,731,620)

 

Gain on Sale of Real Estate

 

 

 

 

 

 —

 

 

 —

 

 

754

 

 

432,908

 

 

 

 

 

 

 

 

 

 

 

433,662

 

 

 

 

(121,005)

 

 

 —

 

 

(94,247)

 

 

754

 

 

432,902

 

 

(57,991)

 

 

(188,268)

 

 

(1,270,103)

 

 

(1,297,958)

 

Net Income (Loss)

 

$

74,950

 

$

50,279

 

$

101,882

 

$

2,329

 

$

412,458

 

$

20,665

 

$

(15,715)

 

$

563,781

 

$

1,210,629

 

Net Income (Loss)—NERA 50%

    

$

37,475

 

$

25,140

 

$

50,941

 

$

1,165

 

$

206,229

 

$

10,333

 

$

(7,858)

 

 

 

 

 

323,424

 

Net Income —NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

225,515

 

 

225,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

548,939

 

 

2018  
Summary of financial position and income statements relating to investment in unconsolidated joint ventures

Summary financial information as 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

 

 

 —

 

 

 —

 

 

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

 

 

0

 

 

0

 

 

42

 

 

148

 

 

409

 

 

690

 

Units to be sold

 

 

 —

 

 

 —

 

 

 —

 

 

176

 

 

46

 

 

 —

 

 

 —

 

 

 —

 

 

343

 

Units sold through May1, 2018

 

 

 —

 

 

 —

 

 

 —

 

 

143

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

 

264

 

Unsold units

 

 

 —

 

 

 —

 

 

 —

 

 

32

 

 

47

 

 

 —

 

 

 —

 

 

 —

 

 

79

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 4

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

14

 

 

Summary of income statement relating to investment in unconsolidated joint ventures

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)

 

Interest Income

 

 

 

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

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 (Loss)—NERA 40%

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

233,143

 

 

233,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,100,900

 

 

v3.19.1
SIGNIFICANT ACCOUNTING POLICIES (Business) (Details)
Mar. 31, 2019
ft²
property
item
Mar. 31, 2018
property
Line of Business    
Number of units | property   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 | property   1,030
Commercial    
Line of Business    
Number of units | property   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 690  
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 690  
v3.19.1
SIGNIFICANT ACCOUNTING POLICIES (Details)
3 Months Ended 6 Months Ended
Jan. 03, 2012
Mar. 31, 2019
USD ($)
item
shares
Mar. 31, 2018
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2016
USD ($)
Dec. 31, 2018
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   $ 55,000 $ 52,000        
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   $ 7,406,000       $ 10,784,000  
Advertising Expense              
Advertising expense   $ 62,969 $ 44,381        
Interest Capitalized              
Capitalized interest       $ 0 $ 0    
Minimum              
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 | Cash and cash equivalents              
Concentration of Credit Risks and Financial Instruments              
Interest rate on interest bearing accounts (as a percent)   1.61%          
Less Than Wholly Owned Subsidiaries [Member] | Minimum              
Principles of Consolidation              
Ownership interest in each subsidiary (as a percent)   99.67%          
Less Than Wholly Owned Subsidiaries [Member] | Maximum              
Principles of Consolidation              
Ownership interest in each subsidiary (as a percent)   100.00%          
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
v3.19.1
RENTAL PROPERTIES (Details)
3 Months Ended
Mar. 31, 2019
USD ($)
property
item
Dec. 31, 2018
USD ($)
Mar. 31, 2018
property
RENTAL PROPERTIES      
Number of units | property     1,033
Rental properties      
Total fixed assets $ 338,579,255 $ 337,902,411  
Less: Accumulated depreciation (110,919,198) (107,391,148)  
Total fixed assets, net 227,660,057 230,511,263  
Land, improvements and parking lots      
Rental properties      
Total fixed assets $ 72,547,547 72,547,547  
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 $ 221,837,652 221,697,939  
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 $ 12,247,767 12,134,519  
Kitchen cabinets | Minimum      
Rental properties      
Useful Life 5 years    
Kitchen cabinets | Maximum      
Rental properties      
Useful Life 10 years    
Carpets      
Rental properties      
Total fixed assets $ 7,773,940 7,591,591  
Carpets | Minimum      
Rental properties      
Useful Life 5 years    
Carpets | Maximum      
Rental properties      
Useful Life 10 years    
Air conditioning      
Rental properties      
Total fixed assets $ 603,149 603,149  
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 $ 349,071 327,643  
Laundry equipment | Minimum      
Rental properties      
Useful Life 5 years    
Laundry equipment | Maximum      
Rental properties      
Useful Life 7 years    
Elevators      
Rental properties      
Total fixed assets $ 1,873,847 1,839,590  
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 $ 13,016,249 12,919,389  
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 $ 38,213 38,213  
Fences | Minimum      
Rental properties      
Useful Life 5 years    
Fences | Maximum      
Rental properties      
Useful Life 15 years    
Furniture and fixtures      
Rental properties      
Total fixed assets $ 7,102,834 7,013,845  
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 $ 528,097 $ 528,097  
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 690    
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 690    
Condominium      
RENTAL PROPERTIES      
Number of units | item 19    
Condominium | Wholly owned properties      
RENTAL PROPERTIES      
Number of units | item 19    
Number of properties | item 1    
v3.19.1
RENTAL PROPERTIES (Webster Green Apartments) (Details)
Mar. 29, 2018
USD ($)
item
Mar. 31, 2018
property
RENTAL PROPERTIES    
Number of units | property   1,033
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  
v3.19.1
RENTAL PROPERTIES (Woodland Park Apartments) (Details)
Mar. 31, 2018
property
RENTAL PROPERTIES  
Number of units 1,033
v3.19.1
RELATED PARTY TRANSACTIONS (Details)
3 Months Ended 12 Months Ended 24 Months Ended
Mar. 31, 2019
USD ($)
item
Mar. 31, 2018
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2019
USD ($)
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 $ 591,000 $ 560,000    
Management fee 590,610 559,629    
Repairs and maintenance 1,944,231 1,814,283    
Administrative expense 612,757 539,145    
Employer contributions in 401K plan $ 12,000      
Number of limited partnerships and limited liability companies in which the entity has invested | item 8      
Interest expense $ 3,000,289 2,984,210    
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    
Harold Brown | Minimum        
RELATED PARTY TRANSACTIONS        
Ownership interest (as a percent) 47.60%      
Harold Brown | Maximum        
RELATED PARTY TRANSACTIONS        
Ownership interest (as a percent) 59.00%      
General Partner or Management Company [Member]        
RELATED PARTY TRANSACTIONS        
Repairs and maintenance $ 108,000      
Administrative expense 90,000      
Commercial brokerage fees 1,000      
Expenses for construction, architectural services and supervision of capital projects 150,000      
Costs related to professional services 349,000 354,000    
Management Company [Member]        
RELATED PARTY TRANSACTIONS        
Reimbursement to related party for payroll transfers 789,000 824,000    
Employer contributions in 401K plan $ 12,000   $ 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 5      
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 $ 163,000      
Repairs and maintenance 18,000      
Administrative expense 11,000      
Commercial brokerage fees 121,000      
Construction, architectural services and supervision of capital projects 3,000      
Amount paid to related party $ 316,000      
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%      
v3.19.1
OTHER ASSETS (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
OTHER ASSETS    
Security deposits $ 2,639,000 $ 2,571,000
Escrow deposits to fund future capital improvements 494,000 477,000
Deposits and escrows held for acquisitions 471,913 495,824
Intangible assets, net of accumulated amortization 18,000 152,000
Financing fees, net 68,000 78,000
Accumulated amortization on intangible assets $ 1,093,000 $ 959,000
v3.19.1
MORTGAGE NOTES PAYABLE (Mortgages Payable) (Details) - USD ($)
3 Months Ended
Mar. 31, 2019
Dec. 31, 2018
MORTGAGE NOTES PAYABLE    
Effective interest rate (as a percent) 3.94%  
Financing fees, net $ 68,000 $ 78,000
Accumulated amortization on financing and leasing fees 60,000 50,000
Annual maturities of mortgage debt    
2020-current maturities 4,319,000  
2021 2,049,000  
2022 2,606,000  
2023 67,098,000  
2024 38,362,000  
Thereafter 138,804,000  
Total 253,238,000  
Less: unamortized deferred financing costs (1,285,000)  
Secured Debt 251,953,066 252,370,843
Mortgages payable    
MORTGAGE NOTES PAYABLE    
Amount of monthly installments including principal $ 1,139,000  
Weighted average interest rate (as a percent) 4.63%  
Effective interest rate (as a percent) 4.71%  
Financing fees, net $ 1,354,000 1,420,000
Accumulated amortization on financing and leasing fees $ 1,363,000 $ 1,298,000
Mortgages payable | Minimum    
MORTGAGE NOTES PAYABLE    
Interest rate (as a percent) 3.76%  
Mortgages payable | Maximum    
MORTGAGE NOTES PAYABLE    
Interest rate (as a percent) 5.81%  
v3.19.1
MORTGAGE NOTES PAYABLE (Mortgage by property) (Details)
Mar. 29, 2018
USD ($)
item
Mar. 12, 2018
USD ($)
Mar. 31, 2019
property
Mar. 31, 2018
property
Aug. 31, 2014
Dec. 31, 2005
Mar. 07, 2005
item
MORTGAGE NOTES PAYABLE              
Number of units | property       1,033      
Hamilton Essex 81              
MORTGAGE NOTES PAYABLE              
Number of units     49 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          
Closing Costs   $ 69,000          
Interest rate (as a percent)   4.87%          
Amortization period of debt   30 years          
Future monthly payment amount   $ 32,427          
Mortgages payable | Hamilton on Main Apartments, LLC              
MORTGAGE NOTES PAYABLE              
Interest rate (as a percent)         4.34% 5.18%  
Amortization period of debt           30 years  
Mortgages payable | Minimum              
MORTGAGE NOTES PAYABLE              
Interest rate (as a percent)     3.76%        
Mortgages payable | Maximum              
MORTGAGE NOTES PAYABLE              
Interest rate (as a percent)     5.81%        
v3.19.1
MORTGAGE NOTES PAYABLE (Line of Credit) (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Jun. 04, 2018
USD ($)
Sep. 29, 2017
USD ($)
Sep. 30, 2015
Jul. 31, 2014
USD ($)
item
May 31, 2019
USD ($)
Jan. 31, 2019
USD ($)
Oct. 31, 2018
USD ($)
Jul. 31, 2018
USD ($)
Aug. 31, 2014
Mar. 31, 2019
USD ($)
Mar. 31, 2018
USD ($)
Dec. 31, 2005
Mar. 29, 2018
USD ($)
Jul. 16, 2017
USD ($)
Mar. 07, 2005
item
Line of Credit                              
Interest expense                   $ 3,000,289 $ 2,984,210        
Line Of Credit Facility Unused Capacity Commitment Fee                   12,000          
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
Residences at Captain Parkers LLC Residential Apartments Lexington, Massachusetts | Subsequent event                              
Line of Credit                              
Term of debt         10 years                    
Loan amount         $ 20,750,000                    
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                      
Payment on line of credit   $ 8,000,000       $ 2,000,000 $ 3,000,000 $ 4,000,000              
Amount of refinancing costs                   $ 128,000          
Credit line balance                           $ 25,000,000  
Number of properties in which borrowing amount collateralized | item       23                      
Line of Credit | Dexter Park                              
Line of Credit                              
Payment on line of credit $ 16,000,000                            
Line of Credit | Hamilton Highlands LLC Residential Needham Massachusetts [Member]                              
Line of Credit                              
Funds drawn by the company                         $ 8,000,000    
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%                      
v3.19.1
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS (Details)
3 Months Ended
Mar. 31, 2019
USD ($)
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS  
Period for advance rental payment 1 month
Amount received for prepaid rent $ 2,234,000
Security deposits $ 2,639,000
v3.19.1
PARTNERS' CAPITAL (Details)
1 Months Ended 3 Months Ended
Jan. 03, 2012
Jan. 31, 2019
$ / item
Mar. 31, 2019
item
$ / item
Mar. 31, 2018
$ / item
Dec. 31, 2018
$ / item
Sep. 30, 2018
$ / item
Jun. 30, 2018
$ / item
Aug. 20, 2007
Depositary receipts exchange ratio for Class A units | item     30          
Quarterly distribution per unit approved (in dollars per unit)   9.60            
Quarterly distributions per depositary receipt (in dollars per receipt)   0.32   0.30 0.30 0.30 0.30  
Quarterly distribution per unit (in dollars per unit)       9.00 9.00 9.00 9.00  
Earnings per depository receipt                
Net Income per Depositary Receipt (in dollars per receipt)     0.41 0.50        
Distributions per Depositary Receipt (in dollars per share)     0.32 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
Class B                
Fixed distribution percentage of unit holders     19.00%          
v3.19.1
TREASURY UNITS (Details)
1 Months Ended 3 Months Ended 132 Months Ended 139 Months Ended
Mar. 10, 2015
shares
Aug. 31, 2007
$ / item
shares
Aug. 20, 2007
shares
May 03, 2019
USD ($)
$ / item
shares
Apr. 30, 2019
USD ($)
shares
Sep. 30, 2007
$ / item
shares
Mar. 31, 2019
USD ($)
$ / item
shares
Dec. 31, 2018
$ / item
shares
Mar. 31, 2019
USD ($)
$ / item
shares
Mar. 06, 2008
shares
Treasury units             57,634   57,634  
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   1,408       1,408 1,408 1,408    
Repurchase price of depository receipts (in dollars per receipt) | $ / item                 27.97  
Units required to be repurchased (in shares)             1,795      
Total cost of repurchase | $             $ 2,930,736   $ 43,205,000  
Subsequent event                    
Number of depository receipts repurchased       1,540            
Repurchase price of depository receipts (in dollars per receipt) | $ / item       64.91            
Total cost of repurchase | $       $ 96,861            
General Partnership                    
Treasury units             577   577  
Fixed distribution percentage of unit holders             1.00%      
Number of depository receipts repurchased   180       180 180 180    
Units required to be repurchased (in shares)             18      
Total cost of repurchase | $             $ 29,307      
Value of units required to be repurchased | $             $ 29,307      
General Partnership | Subsequent event                    
Units required to be repurchased (in shares)         1          
Value of units required to be repurchased | $         $ 1,249          
Treasury Units                    
Units required to be repurchased (in shares)             1,795      
Class A                    
Treasury units             46,107   46,107  
Fixed distribution percentage of unit holders             80.00%      
Repurchase price of units (in dollars per unit) | $ / item   839.10       839.10 839.10 839.10    
Total cost of repurchase | $             $ 2,344,601      
Class B                    
Treasury units             10,950   10,950  
Fixed distribution percentage of unit holders             19.00%      
Number of depository receipts repurchased   3,413       3,413 3,413 3,413    
Total cost of repurchase | $             $ 556,828      
Class B | Subsequent event                    
Units required to be repurchased (in shares)         12          
Value of units required to be repurchased | $         $ 23,740          
Class B                    
Value of units required to be repurchased | $             $ 556,828      
Class B | General Partnership                    
Units required to be repurchased (in shares)             341      
Repurchase price of units (in dollars per unit) | $ / item   996.79       996.79 996.79 996.79    
Treasury Units                    
Repurchase price of depository receipts (in dollars per receipt) | $ / item             54.40      
Units required to be repurchased (in shares)             43,095      
Repurchase price of units (in dollars per unit) | $ / item             1,632.12      
Total cost of repurchase | $             $ 2,344,601      
v3.19.1
COMMITMENTS AND CONTINGENCIES (Details)
3 Months Ended
Mar. 31, 2019
USD ($)
Feb. 28, 2019
item
COMMITMENTS AND CONTINGENCIES    
Number of apartments damaged | item   40
Proceeds from Insurance $ 75,000  
Insurance recovery receivable $ 212,000  
v3.19.1
RENTAL INCOME (Details) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
RENTAL INCOME    
Percentage of rental income related to residential apartments and condominium units with leases of one year or less 94.00%  
Maximum period of non-cancelable operating lease 1 year  
Percentage of rental income related to commercial properties 6.00%  
Minimum future rental income    
2020 $ 2,565,000  
2021 2,299,000  
2022 1,591,000  
2023 946,000  
2024 523,000  
Thereafter 756,000  
Commercial Property Leases 8,680,000  
Aggregate contingent rentals from continuing operations $ 129,000 $ 223,000
v3.19.1
RENTAL INCOME (Concentration) (Details)
3 Months Ended
Mar. 31, 2019
Commercial rental income | Major tenant  
Concentration Risk  
Concentration risk percentage 36.00%
v3.19.1
RENTAL INCOME (Commercial Leases) (Details)
3 Months Ended
Mar. 31, 2019
USD ($)
ft²
item
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 2,887,127
Total square feet for expiring leases | ft² 106,683
Total number of leases expiring | item 45
Percentage of annual base rent for expiring leases 100.00%
Through March 31, 2020  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 454,412
Total square feet for expiring leases | ft² 22,400
Total number of leases expiring | item 12
Percentage of annual base rent for expiring leases 16.00%
Through March 31, 2021  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 225,337
Total square feet for expiring leases | ft² 5,679
Total number of leases expiring | item 7
Percentage of annual base rent for expiring leases 8.00%
Through March 31, 2022  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 1,143,867
Total square feet for expiring leases | ft² 47,854
Total number of leases expiring | item 10
Percentage of annual base rent for expiring leases 39.00%
Through March 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 9.00%
Through March 31, 2024  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 658,784
Total square feet for expiring leases | ft² 19,209
Total number of leases expiring | item 8
Percentage of annual base rent for expiring leases 22.00%
Through March 31, 2025  
RENTAL INCOME  
Annual base rent for expiring leases | $ $ 15,936
Total square feet for expiring leases | ft² 604
Total number of leases expiring | item 3
Percentage of annual base rent for expiring leases 1.00%
Through March 31, 2030  
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%
v3.19.1
RENTAL INCOME (Rent Receivable) (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
RENTAL INCOME    
Allowance for doubtful rent receivable $ 369,000 $ 532,000
Recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis 69,000  
Deferred rental concession $ 82,000  
v3.19.1
CASH FLOW INFORMATION (Details) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
CASH FLOW INFORMATION    
Cash paid for interest $ 2,944,000 $ 3,010,000
Cash paid for state income taxes 48,000 $ 47,000
Non-cash financing activities in connection with acquisition $ 21,000,000  
v3.19.1
FAIR VALUE MEASUREMENTS (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Mortgage Notes Payable    
Carrying Amount $ 251,953,066 $ 252,370,843
Estimated Fair Value 235,100,502 233,362,501
Partially owned properties    
Mortgage Notes Payable    
Carrying Amount 166,471,296 166,492,692
Estimated Fair Value $ 163,347,932 $ 160,956,055
v3.19.1
TAXABLE INCOME AND TAX BASIS (Details)
3 Months Ended
Mar. 31, 2019
USD ($)
TAXABLE INCOME AND TAX BASIS  
Taxable net income $ 4,841,000
Excess amount of statement income over taxable income 672,000
Excess amount of cumulative statement basis over cumulative taxable basis 878,000
Excess amount of statement income from joint venture investments over taxable income $ 1,121,000
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Details)
3 Months Ended
Mar. 31, 2019
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 8
Management Company [Member]  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES  
Number of employees having ownership interest in the investment properties 5
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) 47.60%
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) 59.00%
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Dexter) (Details)
3 Months Ended
May 31, 2018
USD ($)
Oct. 28, 2009
USD ($)
item
Mar. 31, 2019
USD ($)
Sep. 30, 2018
USD ($)
Mar. 31, 2018
USD ($)
property
Dec. 31, 2018
USD ($)
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture     $ 1,801,702   $ 6,986,470 $ 1,985,680
Number of units | property         1,033  
Outstanding amount of mortgage     251,953,066     $ 252,370,843
Distribution to the Partnership     1,177,353   $ 1,119,481  
Dexter Park            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture   $ 15,925,000     $ 3,452,204  
Ownership interest (as a percent)   40.00%     40.00%  
Number of units   409     409  
Purchase price of investments   $ 129,500,000        
Outstanding amount of mortgage $ 82,000,000   125,000,000      
Distribution to the Partnership 41,200,000          
Dexter Park | Mortgages payable            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Loan amount   $ 89,914,000        
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        
John Hancock | Dexter Park            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Loan amount $ 125,000,000          
Interest rate (as a percent) 3.99%          
Defeasance cost       $ 3,830,000    
Defeasance cost (as a percent)       40.00%    
General Partnership            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Distribution to the Partnership     $ 11,774   $ 11,195  
General Partnership | Dexter Park            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Distribution to the Partnership $ 16,500,000          
General Partnership | John Hancock | Dexter Park            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Defeasance cost       $ 1,532,000    
Residential buildings            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | property         1,030  
Residential buildings | Dexter Park            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | property         409  
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton Bay Apts and Sales) (Details)
1 Months Ended 3 Months Ended
Feb. 28, 2007
USD ($)
item
Mar. 31, 2019
USD ($)
property
Dec. 31, 2018
USD ($)
Mar. 31, 2018
USD ($)
property
Mar. 01, 2017
USD ($)
Oct. 03, 2005
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture   $ 1,801,702 $ 1,985,680 $ 6,986,470    
Number of units | property       1,033    
Number of units retained for long-term investment | property       (690)    
Outstanding amount of mortgage   251,953,066 $ 252,370,843      
Unsold units | property       79    
Hamilton Bay Apts            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture   $ 175,917   $ 1,190,833   $ 2,500,000
Ownership interest (as a percent)       50.00%   50.00%
Number of units   48   48   168
Number of units sold | item           120
Number of units retained for long-term investment       0   48
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          
Outstanding amount of mortgage         $ 2,222,000  
Gain on the sale of real estate   $ 433,000        
Unsold units | property       47    
Purchase price of investments           $ 30,875,000
Borrowings $ 4,750,000          
Residential buildings            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | property       1,030    
Residential buildings | Hamilton Bay Apts            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units 48 48   48    
Mortgages payable | Minimum            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Interest rate (as a percent)   3.76%        
Mortgages payable | Maximum            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Interest rate (as a percent)   5.81%        
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton Essex) (Details)
3 Months Ended
Sep. 30, 2015
USD ($)
Sep. 28, 2015
USD ($)
Mar. 07, 2005
USD ($)
item
Mar. 31, 2019
USD ($)
property
Mar. 31, 2018
USD ($)
property
Dec. 31, 2018
USD ($)
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture       $ 1,801,702 $ 6,986,470 $ 1,985,680
Number of units | property         1,033  
Distribution to the Partnership       1,177,353 $ 1,119,481  
Mortgage Notes Payable       $ 251,953,066   $ 252,370,843
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     48 49 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       $ 1,461,529 $ 1,322,863  
Ownership interest (as a percent)         50.00%  
Number of units | property       1 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 | property         1,030  
Residential buildings | Hamilton Essex 81            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | property       48 48  
Commercial            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | property         3  
Commercial | Hamilton Essex 81            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | property       1 1  
Commercial | Hamilton Essex Development            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | property       1 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        
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton 1025) (Details)
3 Months Ended
Jul. 08, 2016
USD ($)
Mar. 02, 2005
USD ($)
item
Mar. 31, 2019
property
item
Mar. 31, 2019
item
Mar. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Mar. 31, 2018
USD ($)
property
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES              
Investments in joint venture | $         $ 1,801,702 $ 1,985,680 $ 6,986,470
Number of units | property             1,033
Unsold units | property             79
Number of units retained for long-term investment | property             (690)
Outstanding amount of mortgage | $         251,953,066 $ 252,370,843  
Hamilton 1025              
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES              
Investments in joint venture | $   $ 2,352,000     $ 164,256   $ 798,589
Ownership interest (as a percent)   50.00%         50.00%
Number of units   176 176 3     176
Number of units sold | item   127          
Unsold units | property     3       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 | item     1        
Purchase price of investments | $   $ 23,750,000          
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 | property             1,030
Residential buildings | Hamilton 1025              
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES              
Number of units | property     175       175
v3.19.1
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 ($)
Mar. 31, 2019
USD ($)
property
Mar. 31, 2018
USD ($)
property
Dec. 31, 2018
USD ($)
Dec. 31, 2006
USD ($)
Sep. 30, 2004
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                
Investments in joint venture       $ 1,801,702 $ 6,986,470 $ 1,985,680    
Number of units | property         1,033      
Distribution to the Partnership       1,177,353 $ 1,119,481      
Outstanding amount of mortgage       $ 251,953,066   $ 252,370,843    
Hamilton Minuteman                
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                
Investments in joint venture               $ 5,075,000
Ownership interest (as a percent)         50.00%     50.00%
Number of units       42 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 | property         1,030      
Residential buildings | Hamilton Minuteman                
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES                
Number of units | property       42 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          
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Hamilton on Main) (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Aug. 31, 2014
USD ($)
Mar. 31, 2019
USD ($)
Mar. 31, 2018
USD ($)
property
Dec. 31, 2005
USD ($)
item
Dec. 31, 2018
USD ($)
Aug. 31, 2004
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture   $ 1,801,702 $ 6,986,470   $ 1,985,680  
Number of units | property     1,033      
Outstanding amount of mortgage   251,953,066     $ 252,370,843  
Distribution to the Partnership   1,177,353 $ 1,119,481      
Hamilton on Main Apts            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Investments in joint venture     $ 221,979     $ 8,000,000
Ownership interest (as a percent)     50.00%     50.00%
Number of units     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 | property     1,030      
Residential buildings | Hamilton on Main Apts            
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES            
Number of units | property     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    
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (345 Franklin) (Details)
1 Months Ended 3 Months Ended
Jun. 30, 2013
USD ($)
Mar. 31, 2019
USD ($)
property
Mar. 31, 2018
USD ($)
property
Dec. 31, 2018
USD ($)
Nov. 30, 2001
USD ($)
item
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Investments in joint venture   $ 1,801,702 $ 6,986,470 $ 1,985,680  
Number of units | property     1,033    
Distribution to the Partnership   1,177,353 $ 1,119,481    
Outstanding amount of mortgage   $ 251,953,066   $ 252,370,843  
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   $ 9,504,000      
Residential buildings          
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES          
Number of units | property     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   40 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 | property   40 40    
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Balance Sheet) (Details)
Mar. 31, 2019
property
Mar. 31, 2019
item
Mar. 31, 2019
USD ($)
Mar. 31, 2019
Dec. 31, 2018
USD ($)
Mar. 31, 2018
USD ($)
property
Oct. 28, 2009
USD ($)
item
Feb. 28, 2007
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           $ 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     $ 1,801,702   $ 1,985,680 6,986,470                
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture     (18,858,645)   $ (18,351,562) (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                
Total number of units sold | property           264                
Unsold units | property           79                
Units unsold with deposits for future sale | property           14                
NERA 50%                            
LIABILITIES AND PARTNERS' CAPITAL                            
Partners' Capital % - NERA       50.00%   50.00%                
NERA 40%                            
LIABILITIES AND PARTNERS' CAPITAL                            
Partners' Capital % - NERA       40.00%   40.00%                
Residential buildings                            
Total units/ condominiums                            
Total | property           1,030                
Commercial                            
Total units/ condominiums                            
Total | property           3                
Investment Properties                            
ASSETS                            
Rental Properties     123,969,482                      
Assets held for sales     159,188                      
Cash & Cash Equivalents     3,136,730                      
Rent Receivable     434,186                      
Real Estate Tax Escrow     247,443                      
Prepaid Expenses & Other Assets     1,625,373                      
Total Assets     129,572,402                      
LIABILITIES AND PARTNERS' CAPITAL                            
Mortgage Notes Payable     166,471,297                      
Accounts Payable and Accrued Expenses     1,197,603                      
Advance Rental Payments and Security Deposits     3,723,576                      
Total Liabilities     171,392,476                      
Partners' Capital     (41,820,074)                      
Total Liabilities and Capital     129,572,402                      
Investment in Unconsolidated Joint Ventures     1,801,702                      
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture     (18,858,645)                      
Total Investment in Unconsolidated Joint Ventures (Net)     (17,056,944)                      
Total units/ condominiums                            
Total | property 1,033                          
Units to be retained | property 690                          
Units to be sold | property 343                          
Total number of units sold | property 221                          
Unsold units | property 3                          
Units unsold with deposits for future sale | property 1                          
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     7,117,613     $ 7,515,492                
Assets held for sales     0                      
Cash & Cash Equivalents     192,441     148,701                
Rent Receivable     222,191     133,580                
Real Estate Tax Escrow     72,624     83,760                
Prepaid Expenses & Other Assets     274,111     80,429                
Total Assets     7,878,980     7,961,962                
LIABILITIES AND PARTNERS' CAPITAL                            
Mortgage Notes Payable     9,910,371     9,896,582                
Accounts Payable and Accrued Expenses     84,485     74,966                
Advance Rental Payments and Security Deposits     297,683     341,039                
Total Liabilities     10,292,539     10,312,587                
Partners' Capital     (2,413,559)     (2,349,625)                
Total Liabilities and Capital     7,878,980     $ 7,962,962                
Partners' Capital % - NERA           50.00%                
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture     (1,206,780)     $ (1,174,814)                
Total units/ condominiums                            
Total 49         49       48        
Units to be retained | property 49         49                
Hamilton Essex 81 | NERA 50%                            
LIABILITIES AND PARTNERS' CAPITAL                            
Partners' Capital % - NERA       50.00%                    
Hamilton Essex 81 | Residential buildings                            
Total units/ condominiums                            
Total | property 48         48                
Hamilton Essex 81 | Commercial                            
Total units/ condominiums                            
Total | property 1         1                
Hamilton Essex Development                            
ASSETS                            
Rental Properties     2,595,015     $ 2,597,633                
Assets held for sales     0                      
Cash & Cash Equivalents     169,930     50,004                
Rent Receivable     49,619                      
Prepaid Expenses & Other Assets     110,681     279                
Total Assets     2,925,245     2,647,916                
LIABILITIES AND PARTNERS' CAPITAL                            
Accounts Payable and Accrued Expenses     2,187     2,188                
Total Liabilities     2,187     2,188                
Partners' Capital     2,923,058     2,645,728                
Total Liabilities and Capital     2,925,245     $ 2,647,916                
Partners' Capital % - NERA           50.00%                
Investment in Unconsolidated Joint Ventures     1,461,529     $ 1,322,863                
Total units/ condominiums                            
Total | property 1         1                
Units to be retained | property 1         1                
Hamilton Essex Development | NERA 50%                            
LIABILITIES AND PARTNERS' CAPITAL                            
Partners' Capital % - NERA       50.00%                    
Hamilton Essex Development | Commercial                            
Total units/ condominiums                            
Total | property 1         1                
345 Franklin                            
ASSETS                            
Rental Properties     5,919,727     $ 6,242,990                
Assets held for sales     0                      
Cash & Cash Equivalents     213,656     123,091                
Rent Receivable     4,437     19,937                
Real Estate Tax Escrow     50,334     46,751                
Prepaid Expenses & Other Assets     61,989     50,269                
Total Assets     6,250,143     6,483,038                
LIABILITIES AND PARTNERS' CAPITAL                            
Mortgage Notes Payable     9,442,200     9,627,636                
Accounts Payable and Accrued Expenses     121,342     87,137                
Advance Rental Payments and Security Deposits     283,486     245,550                
Total Liabilities     9,847,028     9,960,323                
Partners' Capital     (3,596,885)     (3,477,285)                
Total Liabilities and Capital     6,250,143     $ 6,483,038                
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     (1,798,443)     $ (1,738,644)                
Total units/ condominiums                            
Total 40         40               40
Units to be retained | property 40         40                
345 Franklin | NERA 50%                            
LIABILITIES AND PARTNERS' CAPITAL                            
Partners' Capital % - NERA       50.00%                    
345 Franklin | Residential buildings                            
Total units/ condominiums                            
Total | property 40         40                
Hamilton 1025                            
ASSETS                            
Rental Properties     103,238     $ 887,890                
Assets held for sales     159,188                      
Cash & Cash Equivalents     51,285     136,822                
Rent Receivable     2,441     6,902                
Prepaid Expenses & Other Assets     30,377     586,555                
Total Assets     346,529     1,618,169                
LIABILITIES AND PARTNERS' CAPITAL                            
Accounts Payable and Accrued Expenses     10,844     8,434                
Advance Rental Payments and Security Deposits     7,174     12,555                
Total Liabilities     18,018     20,989                
Partners' Capital     328,511     1,597,180                
Total Liabilities and Capital     346,529     $ 1,618,169                
Partners' Capital % - NERA           50.00%         50.00%      
Investment in Unconsolidated Joint Ventures     164,256     $ 798,589         $ 2,352,000      
Total units/ condominiums                            
Total 176 3       176         176      
Units to be retained           0         (49)      
Units to be sold | property 175         176                
Total number of units sold | property 173         143                
Unsold units | property 3         32                
Units unsold with deposits for future sale | property 1         4                
Hamilton 1025 | NERA 50%                            
LIABILITIES AND PARTNERS' CAPITAL                            
Partners' Capital % - NERA       50.00%                    
Hamilton 1025 | Residential buildings                            
Total units/ condominiums                            
Total | property 175         175                
Hamilton 1025 | Commercial                            
Total units/ condominiums                            
Total | property 1         1                
Hamilton Bay Apts                            
ASSETS                            
Rental Properties     0     $ 1,583,448                
Assets held for sales     0                      
Cash & Cash Equivalents     359,291     122,350                
Rent Receivable     0     2,463                
Real Estate Tax Escrow     0                      
Prepaid Expenses & Other Assets     3,595     693,936                
Total Assets     362,886     2,402,197                
LIABILITIES AND PARTNERS' CAPITAL                            
Accounts Payable and Accrued Expenses     10,951     9,554                
Advance Rental Payments and Security Deposits     101     10,975                
Total Liabilities     11,052     20,529                
Partners' Capital     351,834     2,381,668                
Total Liabilities and Capital     362,886     $ 2,402,197                
Partners' Capital % - NERA           50.00%     50.00%          
Investment in Unconsolidated Joint Ventures     175,917     $ 1,190,833     $ 2,500,000          
Total units/ condominiums                            
Total 48         48     168          
Units to be retained           0     (48)          
Units to be sold | property 48         46                
Total number of units sold | property 48         1                
Unsold units | property           47                
Units unsold with deposits for future sale | property           10                
Hamilton Bay Apts | NERA 50%                            
LIABILITIES AND PARTNERS' CAPITAL                            
Partners' Capital % - NERA       50.00%                    
Hamilton Bay Apts | Residential buildings                            
Total units/ condominiums                            
Total 48         48   48            
Hamilton Minuteman                            
ASSETS                            
Rental Properties     5,556,929     $ 5,854,350                
Assets held for sales     0                      
Cash & Cash Equivalents     132,903     107,268                
Rent Receivable     1,487     5,206                
Real Estate Tax Escrow     28,960     32,229                
Prepaid Expenses & Other Assets     16,287     17,475                
Total Assets     5,736,566     6,016,528                
LIABILITIES AND PARTNERS' CAPITAL                            
Mortgage Notes Payable     5,898,047     5,889,863                
Accounts Payable and Accrued Expenses     61,051     55,333                
Advance Rental Payments and Security Deposits     123,167     112,103                
Total Liabilities     6,082,265     6,057,299                
Partners' Capital     (345,699)     (40,771)                
Total Liabilities and Capital     5,736,566     $ 6,016,528                
Partners' Capital % - NERA           50.00%           50.00%    
Investment in Unconsolidated Joint Ventures                       $ 5,075,000    
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture     (172,850)     $ (20,387)                
Total units/ condominiums                            
Total 42         42           42    
Units to be retained | property 42         42                
Hamilton Minuteman | NERA 50%                            
LIABILITIES AND PARTNERS' CAPITAL                            
Partners' Capital % - NERA       50.00%                    
Hamilton Minuteman | Residential buildings                            
Total units/ condominiums                            
Total | property 42         42                
Hamilton on Main Apts                            
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     16,813,056     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%             50.00%  
Investment in Unconsolidated Joint Ventures           $ 221,979             $ 8,000,000  
Total units/ condominiums                            
Total           148             280  
Units to be retained | property           148                
Hamilton on Main Apts | NERA 50%                            
ASSETS                            
Rental Properties     16,490,749                      
Assets held for sales     0                      
Cash & Cash Equivalents     163,789                      
Rent Receivable     17,049                      
Real Estate Tax Escrow     95,525                      
Prepaid Expenses & Other Assets     105,663                      
Total Assets     16,872,775                      
LIABILITIES AND PARTNERS' CAPITAL                            
Mortgage Notes Payable     16,813,056                      
Accounts Payable and Accrued Expenses     205,044                      
Advance Rental Payments and Security Deposits     391,075                      
Total Liabilities     17,409,175                      
Partners' Capital     (536,400)                      
Total Liabilities and Capital     16,872,775                      
Partners' Capital % - NERA       50.00%                    
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture     (268,200)                      
Total units/ condominiums                            
Total | property 148                          
Units to be retained | property 148                          
Hamilton on Main Apts | Residential buildings                            
Total units/ condominiums                            
Total | property           148                
Hamilton on Main Apts | Residential buildings | NERA 50%                            
Total units/ condominiums                            
Total | property 148                          
Dexter Park                            
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     124,407,623     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% 40.00%              
Investment in Unconsolidated Joint Ventures           $ 3,452,204 $ 15,925,000              
Total units/ condominiums                            
Total           409 409              
Units to be retained | property           409                
Dexter Park | NERA 40%                            
ASSETS                            
Rental Properties     86,186,211                      
Assets held for sales     0                      
Cash & Cash Equivalents     1,853,435                      
Rent Receivable     136,962                      
Real Estate Tax Escrow     0                      
Prepaid Expenses & Other Assets     1,022,670                      
Total Assets     89,199,278                      
LIABILITIES AND PARTNERS' CAPITAL                            
Mortgage Notes Payable     124,407,623                      
Accounts Payable and Accrued Expenses     701,699                      
Advance Rental Payments and Security Deposits     2,620,890                      
Total Liabilities     127,730,212                      
Partners' Capital     (38,530,934)                      
Total Liabilities and Capital     89,199,278                      
Partners' Capital % - NERA       40.00%                    
Distribution and Loss in Excess of investments in Unconsolidated Joint Venture     $ (15,412,374)                      
Total units/ condominiums                            
Total | property 409                          
Units to be retained | property 409                          
Dexter Park | Residential buildings                            
Total units/ condominiums                            
Total | property           409                
Dexter Park | Residential buildings | NERA 40%                            
Total units/ condominiums                            
Total | property 409                          
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Income) (Details) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Oct. 28, 2009
Oct. 03, 2005
Mar. 02, 2005
Sep. 30, 2004
Aug. 31, 2004
Nov. 30, 2001
Revenues                
Rental income $ 6,073,093 $ 5,945,278            
Laundry and Sundry Income 40,388 38,711            
Total Revenues 6,113,481 5,983,989            
Expenses                
Administrative 95,095 101,568            
Depreciation and amortization 1,466,594 1,428,571            
Management Fees 163,616 159,840            
Operating 557,415 579,810            
Renting 44,657 45,600            
Repairs and Maintenance 492,106 675,249            
Taxes and Insurance 785,411 710,397            
Total Expenses 3,604,894 3,701,035            
Income Before Other Income 2,508,587 2,282,954            
Other Income (loss)                
Interest Expense (1,731,620) (1,609,345)            
Gain on Sale of Real Estate 433,662 1,644,763            
Total Other Income (Loss) (1,297,958) 35,418            
Net Income (Loss) 1,210,629 2,318,372            
Proportionate share of net income (loss) 548,939 1,100,900            
NERA 50%                
Other Income (loss)                
Proportionate share of net income (loss) $ 323,424 $ 867,757            
Ownership interest (as a percent) 50.00% 50.00%            
NERA 40%                
Other Income (loss)                
Proportionate share of net income (loss) $ 225,515 $ 233,143            
Ownership interest (as a percent) 40.00% 40.00%            
Hamilton Essex 81                
Revenues                
Rental income $ 459,573 $ 411,222            
Laundry and Sundry Income 3,005 3,005            
Total Revenues 462,578 414,227            
Expenses                
Administrative 5,379 9,680            
Depreciation and amortization 119,544 114,285            
Management Fees 17,206 13,204            
Operating 21,450 24,131            
Renting 3,330 3,291            
Repairs and Maintenance 37,884 54,501            
Taxes and Insurance 61,830 62,527            
Total Expenses 266,623 281,619            
Income Before Other Income 195,955 132,608            
Other Income (loss)                
Interest Expense (121,005) (99,313)            
Total Other Income (Loss) (121,005) (99,313)            
Net Income (Loss) 74,950 $ 33,295            
Ownership interest (as a percent)   50.00%            
Hamilton Essex 81 | NERA 50%                
Other Income (loss)                
Proportionate share of net income (loss) $ 37,475 $ 16,648            
Ownership interest (as a percent) 50.00%              
Hamilton Essex Development                
Revenues                
Rental income $ 75,290 53,928            
Total Revenues 75,290 53,928            
Expenses                
Administrative 2,092 488            
Depreciation and amortization 5,074 665            
Management Fees 2,160 2,157            
Operating 8              
Repairs and Maintenance   4,163            
Taxes and Insurance 15,677 16,723            
Total Expenses 25,011 24,196            
Income Before Other Income 50,279 29,732            
Other Income (loss)                
Net Income (Loss) 50,279 $ 29,732            
Ownership interest (as a percent)   50.00%            
Hamilton Essex Development | NERA 50%                
Other Income (loss)                
Proportionate share of net income (loss) $ 25,140 $ 14,866            
Ownership interest (as a percent) 50.00%              
345 Franklin                
Revenues                
Rental income $ 385,243 403,837            
Laundry and Sundry Income 1,389 1,217            
Total Revenues 386,632 405,054            
Expenses                
Administrative 5,390 6,455            
Depreciation and amortization 86,226 86,251            
Management Fees 14,056 16,126            
Operating 22,603 20,580            
Renting 3,520 497            
Repairs and Maintenance 18,467 21,497            
Taxes and Insurance 40,241 41,631            
Total Expenses 190,503 193,037            
Income Before Other Income 196,129 212,017            
Other Income (loss)                
Interest Expense (94,247) (96,961)            
Total Other Income (Loss) (94,247) (96,961)            
Net Income (Loss) 101,882 $ 115,056            
Ownership interest (as a percent)   50.00%           50.00%
345 Franklin | NERA 50%                
Other Income (loss)                
Proportionate share of net income (loss) $ 50,941 $ 57,528            
Ownership interest (as a percent) 50.00%              
Hamilton 1025                
Revenues                
Rental income $ 23,594 38,221            
Total Revenues 23,594 38,221            
Expenses                
Administrative 1,694 1,499            
Depreciation and amortization 3,196              
Management Fees 965 1,508            
Operating 775 156            
Repairs and Maintenance 8,040 40,207            
Taxes and Insurance 7,349 18,171            
Total Expenses 22,019 61,541            
Income Before Other Income 1,575 (23,320)            
Other Income (loss)                
Interest Expense   (26)            
Gain on Sale of Real Estate 754 817,006            
Total Other Income (Loss) 754 816,980            
Net Income (Loss) 2,329 $ 793,660            
Ownership interest (as a percent)   50.00%     50.00%      
Hamilton 1025 | NERA 50%                
Other Income (loss)                
Proportionate share of net income (loss) $ 1,165 $ 396,830            
Ownership interest (as a percent) 50.00%              
Hamilton Bay Apts                
Revenues                
Rental income $ 3,629 22,203            
Total Revenues 3,629 22,203            
Expenses                
Administrative 3,445 3,066            
Depreciation and amortization 5,420 10,000            
Management Fees 145 1,022            
Operating (109) 825            
Repairs and Maintenance 10,266 34,224            
Taxes and Insurance 4,906 16,459            
Total Expenses 24,073 65,596            
Income Before Other Income (20,444) (43,393)            
Other Income (loss)                
Interest Expense (6) (49)            
Gain on Sale of Real Estate 432,908 827,757            
Total Other Income (Loss) 432,902 827,708            
Net Income (Loss) 412,458 $ 784,315            
Ownership interest (as a percent)   50.00%   50.00%        
Hamilton Bay Apts | NERA 50%                
Other Income (loss)                
Proportionate share of net income (loss) $ 206,229 $ 392,158            
Ownership interest (as a percent) 50.00%              
Hamilton Minuteman                
Revenues                
Rental income $ 274,837 263,051            
Laundry and Sundry Income 1,907 675            
Total Revenues 276,744 263,726            
Expenses                
Administrative 3,716 1,824            
Depreciation and amortization 88,595 87,722            
Management Fees 11,067 10,368            
Operating 23,755 33,850            
Renting 2,032 3,378            
Repairs and Maintenance 36,672 19,617            
Taxes and Insurance 32,251 31,046            
Total Expenses 198,088 187,805            
Income Before Other Income 78,656 75,921            
Other Income (loss)                
Interest Expense (57,991) (58,519)            
Total Other Income (Loss) (57,991) (58,519)            
Net Income (Loss) 20,665 $ 17,402            
Ownership interest (as a percent)   50.00%       50.00%    
Hamilton Minuteman | NERA 50%                
Other Income (loss)                
Proportionate share of net income (loss) $ 10,333 $ 8,701            
Ownership interest (as a percent) 50.00%              
Hamilton on Main Apts                
Revenues                
Rental income $ 822,668 858,213            
Laundry and Sundry Income 10,062 9,126            
Total Revenues 832,730 867,339            
Expenses                
Administrative 17,847 13,127            
Depreciation and amortization 258,438 255,506            
Management Fees 31,868 32,443            
Operating 107,289 120,393            
Renting 16,112 8,652            
Repairs and Maintenance 124,192 182,374            
Taxes and Insurance 104,431 104,551            
Total Expenses 660,177 717,046            
Income Before Other Income 172,553 150,293            
Other Income (loss)                
Interest Expense (188,268) (188,239)            
Total Other Income (Loss) (188,268) (188,239)            
Net Income (Loss) (15,715) $ (37,946)            
Ownership interest (as a percent)   50.00%         50.00%  
Hamilton on Main Apts | NERA 50%                
Other Income (loss)                
Proportionate share of net income (loss) $ (7,858) $ (18,973)            
Ownership interest (as a percent) 50.00%              
Dexter Park                
Revenues                
Rental income $ 4,028,259 3,894,603            
Laundry and Sundry Income 24,025 24,688            
Total Revenues 4,052,284 3,919,291            
Expenses                
Administrative 55,532 65,429            
Depreciation and amortization 900,101 874,142            
Management Fees 86,149 83,012            
Operating 381,644 379,875            
Renting 19,663 29,782            
Repairs and Maintenance 256,585 318,666            
Taxes and Insurance 518,726 419,289            
Total Expenses 2,218,400 2,170,195            
Income Before Other Income 1,833,884 1,749,096            
Other Income (loss)                
Interest Expense (1,270,103) (1,166,238)            
Total Other Income (Loss) (1,270,103) (1,166,238)            
Net Income (Loss) 563,781 $ 582,858            
Ownership interest (as a percent)   40.00% 40.00%          
Dexter Park | NERA 40%                
Other Income (loss)                
Proportionate share of net income (loss) $ 225,515 $ 233,143            
Ownership interest (as a percent) 40.00%              
v3.19.1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Mortgage Maturities) (Details) - USD ($)
Mar. 31, 2019
Mar. 31, 2018
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Less: unamortized deferred financing costs $ (1,285,000)  
Debt maturities net of unamortized deferred financing costs   $ 123,720,733
Weighted average interest rate (as a percent) 3.87%  
Effective interest rate (as a percent) 3.94%  
Investment Properties    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
3/31/2019 $ 199,661  
3/31/2020 207,527  
3/31/2021 215,702  
3/31/2022 224,199  
3/31/2023 233,032  
Thereafter 166,323,670  
Total 167,403,791  
Less: unamortized deferred financing costs (932,494)  
Debt maturities net of unamortized deferred financing costs 166,471,297  
Hamilton Essex 81    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Thereafter 10,000,000  
Total 10,000,000  
Less: unamortized deferred financing costs (89,629)  
Debt maturities net of unamortized deferred financing costs 9,910,371 9,896,582
345 Franklin    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
3/31/2019 199,661  
3/31/2020 207,527  
3/31/2021 215,702  
3/31/2022 224,199  
3/31/2023 233,032  
Thereafter 8,423,670  
Total 9,503,791  
Less: unamortized deferred financing costs (61,591)  
Debt maturities net of unamortized deferred financing costs 9,442,200 9,627,636
Hamilton Minuteman    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Thereafter 6,000,000  
Total 6,000,000  
Less: unamortized deferred financing costs (101,953)  
Debt maturities net of unamortized deferred financing costs 5,898,047 5,889,863
Hamilton on Main Apts    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Thereafter 16,900,000  
Total 16,900,000  
Less: unamortized deferred financing costs (86,944)  
Debt maturities net of unamortized deferred financing costs 16,813,056 16,797,004
Dexter Park    
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES    
Thereafter 125,000,000  
Total 125,000,000  
Less: unamortized deferred financing costs (592,377)  
Debt maturities net of unamortized deferred financing costs $ 124,407,623 $ 81,509,648
v3.19.1
EMPLOYEE BENEFIT 401(k) PLANS (Details)
3 Months Ended
Mar. 31, 2019
USD ($)
EMPLOYEE BENEFTI 401(k) PLANS  
Maximum deferral percentage 90.00%
Matching contribution (as a percent) 50.00%
Percent of compensation 6.00%
Employee contribution vesting percentage 100.00%
Years of service required to vest in employer contributions 2 years
Years of service required to vest 100% in employer contributions 6 years
Annual vesting percentage 20.00%
Total plan expense $ 12,000
v3.19.1
SUBSEQUENT EVENTS (Details)
1 Months Ended 3 Months Ended 132 Months Ended 139 Months Ended
Jul. 31, 2014
Aug. 31, 2007
shares
May 31, 2019
USD ($)
May 03, 2019
USD ($)
$ / item
shares
Apr. 30, 2019
USD ($)
shares
Sep. 30, 2007
shares
Mar. 31, 2019
USD ($)
shares
Dec. 31, 2018
shares
Mar. 31, 2019
USD ($)
$ / item
Mar. 29, 2018
USD ($)
Subsequent events                    
Number of depository receipts repurchased | shares   1,408       1,408 1,408 1,408    
Repurchase price of depository receipts (in dollars per receipt) | $ / item                 27.97  
Total cost of repurchase             $ 2,930,736   $ 43,205,000  
Units required to be repurchased (in shares) | shares             1,795      
Loan balance             $ 253,238,000   $ 253,238,000  
Webster Green Apartments                    
Subsequent events                    
Loan amount                   $ 21,500,000
Line of Credit                    
Subsequent events                    
Term of debt 3 years                  
Subsequent event                    
Subsequent events                    
Number of depository receipts repurchased | shares       1,540            
Repurchase price of depository receipts (in dollars per receipt) | $ / item       64.91            
Price per unit of depository receipts | $ / item       1,947.21            
Total cost of repurchase       $ 96,861            
Subsequent event | Residences at Captain Parkers LLC Residential Apartments Lexington, Massachusetts                    
Subsequent events                    
Loan amount     $ 20,750,000              
Term of debt     10 years              
Interest rate (as a percent)     4.05%              
Loan balance     $ 20,071,000              
Mortgage prepayment penalties     $ 200,000              
Mortgage prepayment penalties (as a percent)     1.00%              
Class B                    
Subsequent events                    
Number of depository receipts repurchased | shares   3,413       3,413 3,413 3,413    
Total cost of repurchase             $ 556,828      
Class B | Subsequent event                    
Subsequent events                    
Units required to be repurchased (in shares) | shares         12          
Value of units required to be repurchased         $ 23,740          
General Partnership                    
Subsequent events                    
Number of depository receipts repurchased | shares   180       180 180 180    
Total cost of repurchase             $ 29,307      
Units required to be repurchased (in shares) | shares             18      
Value of units required to be repurchased             $ 29,307      
General Partnership | Subsequent event                    
Subsequent events                    
Units required to be repurchased (in shares) | shares         1          
Value of units required to be repurchased         $ 1,249