NOTE 18. SUBSEQUENT EVENTS

From January 1, 2013 through March 14, 2013, the Partnership purchased a total of 9,709 Depositary Receipts. The average price was $32.24 per receipt or $967.20 per unit. The total cost was $321,240. The Partnership is required to repurchase 76.86 Class B Units and 4.05 General Partnership units at a cost of $74,335 and $3,912, respectively.

On February 4, 2013, the Partnership announced the approval of a quarterly distribution to its Class A Limited Partners and holders of Depositary Receipts of record as of March 15, 2013 and payable on March 31, 2013 of $7.50 per unit and $0.25 per receipt.

Discontinued Operations

At the February 4, 2013 meeting of the Advisory Committee, the Committee approved managements plan to seek a sale of the 32 unit Nashoba Apartments LP in Acton, Massachusetts. This complex will be accounted for as a discontinued operation in 2013. There is no assurance that the complex can be sold at an acceptable price. The selling price is expected to be well in excess of its book value and outstanding mortgage. Summary historical information is presented below:

Financial Statements for Nashoba Apartments LP is as follows:

Nashoba Apartments LP
Balance Sheets
(In Thousands)

	December 31,

	2012			2011
Assets:
Rental property	$	1,283		$	1,210
Accumulated depreciation		821			743

Rental property (net)		462			467
Other current assets		123			80
Other assets		2			6

Total assets	$	587		$	553

Liabilities:
Mortgage note payable	$	2,000		$	2,000
Other liabilities		71			70

Total liabilities		2,071			2,070
Partner's equity		(1,484	)		(1,517	)

Total liabilities & partner's equity	$	587		$	553

Nashoba Apartments LP
Statements of Income
(In Thousands)

	Years ended December 31,

	2012		2011		2010
Rental and other Income	$	462	$	451	$	450

Operating Expenses		241		260		261
Interest Expense		108		108		108
Depreciation		80		72		63

Total Expenses		429		440		432

Net Income	$	33	$	11	$	18

Nashoba Apartments LP
Cash Flow Information
(In Thousands)

	Years ended December 31,

	2012		2011			2010
Distributions from (to) Nashoba	$	1	$	(72	)	$	45

Mortgage Notes Payable—Refinancing

On February 25, 2013, the Partnership paid off the mortgage of approximately $3,697,000 on Hamilton Cypress LLC. There was no penalty on the early payoff. The funds used to pay off the mortgage were from the Partnerships cash reserves.

On March 11, 2013, the Partnership refinanced the property located at School Street. The new loan is $15,000,000 with an interest rate of 3.7% due in 2023. The loan calls for interest only for three years followed by principal and interest payments over the remainder of the loan term. The costs associated with this refinancing were approximately $159,000.

Additionally, the Partnership is anticipating refinancing debt of approximately $28,000,000 in maturing debt for Boylston Downtown LP and Westgate Apartments LLC. In connection with this refinancing, the Partnership may borrow additional debt of approximately $29,000,000. These funds will be used for future acquisitions, repurchase of additional Depositary Receipts, improvements to its properties or other operating items.

Unaudited Pro Forma Financial Information

Four of the Partnerships mortgaged properties have or will have changes to their mortgage debt during 2013. On February 25, 2013, the Partnership paid off the mortgage of approximately $3,697,000 on Hamilton Cypress LLC. On March 11, 2013, the Partnership refinanced the property held by School Street 9, LLC with a new mortgage loan in the amount of $15,000,000. For the balance of 2013, the Partnership is working towards refinancing the properties held by Boylston Downtown L.P. and Westgate Apartments, LLC. As of March 22, 2013 no firm commitment had been executed with a lender. However, the Partnership anticipates refinancing the existing Boylston Downtown loan of $19,500,000 with a new loan of $40,000,000 and refinancing the existing Westgate Apartments loan of approximately $7,932,000 with a new loan of $17,000,000. The cumulative effects of these financing activities are presented in the following unaudited pro forma financial statements.

The following unaudited pro forma consolidated balance sheet as of December 31, 2012 has been prepared to give effect to the payoff and refinancing of mortgage debt occurring in the first quarter of 2013 and additional refinancing expected to occur during the balance of the year. The following unaudited pro forma balance sheet does not purport to reflect the actual transactions as the majority have yet to occur.

The following unaudited pro forma consolidated statement of income for the twelve months ended December 31, 2012 has been prepared to give effect of the payoff and refinancing of mortgage debt occurring in the first quarter of 2013 and additional refinancing expected to occur during the balance of the year.

The following unaudited pro forma financial statements have been prepared for informational purposes only and are not necessarily indicative of future results or actual results that would have been achieved had the Partnership structured its debt refinancing as presented.

New England Realty Associates Limited Partnership
Pro Forma Consolidated Balance Sheet
As of December 31, 2012
(Unaudited)

				Pro Forma

	Historical NERA			Adjustments Refinancings			Consolidated Totals
ASSETS
Rental Properties	$	95,435,850		$	—		$	95,435,850
Cash and Cash Equivalents		6,981,906	(a)		21,465,693			28,447,599
Rents Receivable		475,083			—			475,083
Real Estate Tax Escrows		449,652			—			449,652
Prepaid Expenses and Other Assets		3,073,890	(b)		2,028,400			5,102,290
Investments in Unconsolidated Joint Ventures		13,986,173			—			13,986,173
Financing and Leasing Fees		1,135,936	(c)		1,445,795			2,581,731

Total Assets	$	121,538,490		$	24,939,888		$	146,478,378

LIABILITIES AND PARTNERS' CAPITAL
Mortgage Notes Payable	$	138,055,522	(d)	$	24,980,014		$	163,035,536
Accounts Payable and Accrued Expenses		2,361,942			—			2,361,942
Advance Rental Payments and Security Deposits		3,636,704			—			3,636,704

Total Liabilities	$	144,054,168		$	24,980,014		$	169,034,182
Partners' Capital 130,444 units outstanding in 2012		(22,515,678	)		(40,126	)		(22,555,804	)

Total Liabilities and Partners' Capital	$	121,538,490		$	24,939,888		$	146,478,378

New England Realty Associates Limited Partnership
Pro Forma Consolidated Statement of Income
For the Twelve Months Ended December 31, 2012
(Unaudited)

				Pro Forma

	Historic NERA			Adjustments Refinancing			Consolidated Totals
Revenues
Rental income	$	35,244,008		$	—		$	35,244,008
Laundry and sundry income		388,401			—			388,401

		35,632,409			—			35,632,409

Expenses
Administrative		1,825,951			—			1,825,951
Depreciation and amortization		6,092,725	(e)		112,948			6,205,673
Management fee		1,446,620			—			1,446,620
Operating		3,633,619			—			3,633,619
Renting		183,529			—			183,529
Repairs and maintenance		5,179,408			—			5,179,408
Taxes and insurance		4,348,492			—			4,348,492

		22,710,344			112,948			22,823,292

Income Before Other Income and Discontinued Operations		12,922,065			(112,948	)		12,809,117

Other Income (Loss)
Interest income		2,216			—			2,216
Interest expense		(7,802,999	)(f)		72,822			(7,730,177	)
(Loss) from investments in unconsolidated joint ventures		(1,487,484	)		—			(1,487,484	)
Other		—			—			—

		(9,288,267	)		72,822			(9,215,445	)

Income From Continuing Operations		3,633,798			(40,126	)		3,593,672

Discontinued Operations
Income from discontinued operations		—			—			—
Gain on the sale of real estate from discontinued operations		—			—			—

		—			—			—

Net Income	$	3,633,798		$	(40,126	)	$	3,593,672

Income per Unit
Income before discontinued operations	$	27.69		$	(0.31	)	$	27.38
Income from discontinued operations		—			—			—

Net Income per Unit	$	27.69		$	(0.30	)	$	27.38

Weighted Average Number of Units Outstanding		131,230			131,230			131,230

Notes to unaudited pro forma consolidated balance sheet and consolidated statement of income:

(a): Cash adjusted for new loan proceeds, existing loan payoff, financing fees, replacement reserves and changes to mortgage debt service.

(b): Replacement reserves required by new debt agreement
(c): Change in prepaid financing fees between existing debt and refinanced debt
(d): Difference between existing debt balance and refinanced debt balance
(e): Increase in the amortization of the balance of prepaid finance costs for the existing debt and the proportionate share of prepaid finance costs for the refinanced debt
(f): Decrease in mortgage interest expense between existing mortgage debt and refinanced debt