10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2012

OR

oTRANSITION 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
(State or other jurisdiction of
incorporation or organization) 04-2619298
(I.R.S. employer
identification no.)

39 Brighton Avenue, Allston, Massachusetts
(Address of principal executive offices) 02134
(Zip Code)

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

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

Depositary Receipts
(Title of each Class) NYSE AMEX
(Name of each Exchange on which Registered)

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

Class A

Limited Partnership Units

(Title of class)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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 x  No o

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

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

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

As of September 30, 2012, there were 104,621 of the registrant’s Class A units (3,138,643 Depositary Receipts) of limited partnership issued and outstanding and 24,847 Class B units issued and outstanding.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP

INDEX

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011	3
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2012 and 2011	4
	Consolidated Statements of Changes in Partners’ Capital for the Nine Months Ended September 30, 2012 and 2011	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011	6
	Notes to Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosure	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
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, 2011 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, 2011.

The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2012			2011
	(Unaudited)			(Audited)
ASSETS
Rental Properties	$	96,137,618		$	98,924,534
Cash and Cash Equivalents	5,322,287			4,050,157
Rents Receivable	545,496			434,252
Real Estate Tax Escrows	446,314			401,325
Prepaid Expenses and Other Assets	3,460,422			3,866,652
Investments in Unconsolidated Joint Ventures	14,786,580			16,780,657
Financing and Leasing Fees	960,064			919,187
Total Assets	$	121,658,781		$	125,376,764
LIABILITIES AND PARTNERS’ CAPITAL
Note Payable	$	—		$	1,668,600
Mortgage Notes Payable	138,335,670			139,161,612
Accounts Payable and Accrued Expenses	2,143,534			2,253,696
Advance Rental Payments and Security Deposits	3,604,570			3,603,708
Total Liabilities	144,083,774			146,687,616
Commitments and Contingent Liabilities (Notes 3 and 9)	—			—
Partners’ Capital 130,776 and 131,484 units outstanding in 2012 and 2011 respectively	(22,424,993		)	(21,310,852		)
Total Liabilities and Partners’ Capital	$	121,658,781		$	125,376,764

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						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Revenues
Rental income	$	8,782,896		$	8,543,908		$	26,245,505		$	24,957,004
Laundry and sundry income	92,700			104,618			282,889			318,059
	8,875,596			8,648,526			26,528,394			25,275,063
Expenses
Administrative	463,687			411,836			1,362,276			1,237,424
Depreciation and amortization	1,571,942			1,603,529			4,632,173			4,412,144
Management fee	360,578			347,833			1,078,188			1,032,069
Operating	731,618			774,998			2,684,760			3,104,722
Renting	48,483			63,482			148,602			260,819
Repairs and maintenance	1,487,272			1,421,084			3,857,918			3,800,836
Taxes and insurance	1,066,739			1,042,470			3,241,830			3,103,215
	5,730,319			5,665,232			17,005,747			16,951,229
Income Before Other Income and Discontinued Operations	3,145,277			2,983,294			9,522,647			8,323,834
Other Income (Expense)
Interest income	554			895			1,746			3,129
Interest expense	(1,953,645		)	(2,033,082		)	(5,853,647		)	(5,962,907		)
(Loss) from investments in unconsolidated joint ventures	(417,733		)	(491,128		)	(1,222,077		)	(1,443,374		)
	(2,370,824		)	(2,523,315		)	(7,073,978		)	(7,403,152		)
Income From Continuing Operations	774,453			459,979			2,448,669			920,682
Discontinued Operations
Income from discontinued operations	—			(2,245		)	—			81,567
Gain on the sale of real estate	—			(808		)	—			7,720,459
	—			(3,053		)	—			7,802,026
Net Income	$	774,453		$	456,926		$	2,448,669		$	8,722,708
Income per Unit
Income before discontinued operations	$	5.90		$	3.50		$	18.63		$	7.00
Income from discontinued operations	—			(0.02		)	—			59.34
Net Income per Unit	$	5.90		$	3.48		$	18.63		$	66.34
Weighted Average Number of Units Outstanding	131,277			131,484			131,410			131,484

See notes to consolidated financial statements

4

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ 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, 2011	144,180	34,243	1,802	180,225	48,741	131,484		$	(21,539,906	)	$	(5,111,628	)	$	(269,033	)	$	(26,920,567	)
Distribution to Partners	—	—	—	—	—	—		(2,208,941		)	(524,623		)	(27,612		)	(2,761,176		)
Net Income	—	—	—	—	—	—		6,978,166			1,657,315			87,227			8,722,708
Balance September 30, 2011	144,180	34,243	1,802	180,225	48,741	131,484		$	(16,770,681	)	$	(3,978,936	)	$	(209,418	)	$	(20,959,035	)
Balance January 1, 2012	144,180	34,243	1,802	180,225	48,741	131,484		$	(17,052,134	)	$	(4,045,783	)	$	(212,935	)	$	(21,310,852	)
Distribution to Partners						—		(2,362,012		)	(560,978		)	(29,525		)	(2,952,515		)
Stock Buyback					708	(708	)	(488,627		)	(115,584		)	(6,083		)	(610,294		)
Net Income						—		1,958,935			465,247			24,487			2,448,668
Balance September 30, 2012	144,180	34,243	1,802	180,225	49,449	130,776		$	(17,943,838	)	$	(4,257,098	)	$	(224,057	)	$	(22,424,993	)

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	September 30,
	2012			2011
Cash Flows from Operating Activities
Net income	$	2,448,669		$	8,722,708
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,632,173			4,412,144
Loss from investments in joint venture	1,222,077			1,443,374
Depreciation and amortization - discontinued operations	—			30,295
Gain on the sale of rental property				(7,720,459		)
Change in operating assets and liabilities
(Increase) Decrease in rents receivable	(111,244		)	(25,030		)
Increase (Decrease) in accounts payable and accrued expense	(110,162		)	(324,307		)
(Increase) Decrease in real estate tax escrow	(44,989		)	(90,999		)
(Increase) Decrease in prepaid expenses and other assets	406,230			(579,064		)
Increase in advance rental payments and security deposits	862			52,220
Total Adjustments	5,994,947			(2,801,826		)
Net cash provided by operating activities	8,443,616			5,920,882
Cash Flows Used in Investing Activities
Proceed from unconsolidated joint venture	772,000			890,710
Investment in unconsolidated joint venture	—			(40,710		)
Purchase and improvement of rental properties	(1,640,502		)	(11,871,330		)
Net proceeds from the sale of rental property	—			8,297,928
Net cash (used in) investing activities	(868,502		)	(2,723,402		)
Cash Flows from Financing Activities
Payment of financing costs	(245,633		)	(101,689		)
Proceeds of mortgage notes payable	—			5,000,000
Proceeds of note payable	—			3,998,573
Principal payments of mortgage notes payable	(825,943		)	(3,263,623		)
Principal payments of note payable	(1,668,600		)	(4,998,573		)
Stock buyback	(610,294		)	—
Distributions to partners	(2,952,514		)	(2,761,176		)
Net cash (used in) financing activities	(6,302,984		)	(2,126,488		)
Net Increase in Cash and Cash Equivalents	1,272,130			1,070,992
Cash and Cash Equivalents, at beginning of period	4,050,157			3,245,361
Cash and Cash Equivalents, at end of period	$	5,322,287		$	4,316,353

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

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 24 properties which include 16 residential buildings; 4 mixed use residential, retail and office buildings; 3 commercial buildings and individual units at one condominium complex.   These properties total 2,251 apartment units, 19 condominium units and 110,949 square feet of commercial space.  Additionally, the Partnership also owns a 40-50% interest in nine residential and mixed use properties consisting of 799 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 preparation of the financial statements, in conformity with accounting principles generally accepted in the United State of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates.

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 nine limited liability companies (the “Investment Properties” or “Joint Ventures”) in which the Partnership has between a 40 - 50% ownership interest. The consolidated group is referred to as the “Partnerships.” 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: Investments 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. 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 entity’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 Partnership adopted the updated provisions of ASC 810, pursuant to FASB No. 167, which amends FIN 46(R) to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  Additionally, FASB No. 167 amends FIN 46(R) to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity, which was based on determining which enterprise absorbs the majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both.  FASB No. 167 amends certain guidance in Interpretation 46(R) for determining whether an entity is a variable interest entity. Also, FASB No. 167 amends FIN 46(R) to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity.  The enhanced disclosures are required for any enterprise that holds a variable interest in a variable interest entity.  The adoption of this guidance did not have a material impact to these financial statements.

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

7

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. Concessions made on residential leases 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.

8

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.

Financing and Leasing Fees: Financing fees are capitalized and amortized, using the interest method, over the life of the related mortgages. 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.

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 2012 or 2011 other than net income as reported.

Income 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).

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 2012 or 2011. The Partnership makes its temporary cash investments with high-credit quality financial institutions.  At September 30, 2012, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.01% to 0.45%.  At September 30, 2012 and December 31, 2011, respectively approximately $6,243,000  and $5,051,000 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 $43,190 and $59,997 for the nine months ended September 30, 2012 and 2011, respectively.

Discontinued Operations and 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. If, in management’s opinion, the net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

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 amount 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.

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 nine months ended September 30, 2012 and the year ended December 31, 2011 there was no capitalized interest.

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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. Historically, all refinancing has qualified 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 September 30, 2012, the Partnership and its Subsidiary Partnerships owned 2,251 residential apartment units in 20 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 September 30, 2012, 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 nine residential and mixed use complexes (the “Investment Properties”) at September 30, 2012 with a total of 799 units, accounted for using the equity method of consolidation. See Note 14 for summary information on these investments.

Rental properties consist of the following:

	September 30, 2012			December 31, 2011			Useful Life
Land, improvements and parking lots	$	27,781,268		$	27,614,537		15—40 years
Buildings and improvements	119,318,092			119,097,186			15—40 years
Kitchen cabinets	3,990,449			3,542,249			5—10 years
Carpets	3,847,902			3,307,499			5—10 years
Air conditioning	830,218			788,146			7—10 years
Laundry equipment	375,167			368,955			5—7 years
Elevators	1,139,296			1,139,296			20 years
Swimming pools	235,242			235,242			10 years
Equipment	1,812,027			1,744,006			5—7 years
Motor vehicles	107,788			107,788			5 years
Fences	26,874			22,974			5—10 years
Furniture and fixtures	1,095,562			1,039,439			5—7 years
Smoke alarms	204,416			116,482			5—7 years
Total fixed assets	$	160,764,301		$	159,123,799
Less: Accumulated depreciation	(64,626,683		)	(60,199,265		)
	$	96,137,618		$	98,924,534

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On May 18, 2011, the Partnership sold Avon Street Apartments, a 66 unit residential apartment complex located at 130 Avon Street, Malden, Massachusetts.  The sales price was $8,750,000, which resulted in a gain of approximately $7,700,000.  The net proceeds of the sale, of approximately $5,444,000 were held by a qualified intermediary in order for the Partnership to structure a tax free exchange in accordance with Section 1031 of the IRS code.  This tax free exchange was completed with the purchase of Battle Green Apartments described below.

On June 1, 2011, the Partnership purchased the Battle Green Apartments, a 48 unit residential apartment complex located at 34-42 Worthen Road, Lexington, Massachusetts.  The purchase price was $10,000,000.  The Partnership used cash reserves, the proceeds from the sale of Avon Street and borrowed $3,998,573 from Harold Brown, Treasurer of the General Partner to make this purchase.  This loan had an interest rate of 6% and was secured by the Partnership’s ownership interest in Battle Green Apartments, LLC.  The term of the loan is four years with a provision requiring payment in whole or in part upon demand within six months of notice or prepay without penalty.  On July 27, 2011, the Partnership financed the Battle Green Apartments with a new $5,000,000 mortgage at 4.95% which matures in August 2026.  Principal payments will be made using a 30 year amortization schedule.  Deferred financing costs associated with this mortgage totaled approximately $100,000 and accordingly the effective interest rate is 5.07%.  After paying off the existing loan of $3,998,573, approximately $1,000,000 was received by the Partnership. The interest paid on this loan to Harold Brown was $38,123.

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 $1,078,000 and $1,047,000 during the nine months ended September 30, 2012 and 2011 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 nine months ended September 30, 2012 and 2011, approximately $503,000, and $601,000, was charged to NERA for legal, accounting, construction, maintenance, rental and architectural services and supervision of capital improvements.  Of the 2012 expenses referred to above, approximately $216,000 consisted of repairs and maintenance and $242,000 of administrative expense.  Approximately $22,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties.   Rental commissions were approximately $23,000 for the nine months ended September 30, 2012. Additionally in 2012, the Hamilton Company received approximately $552,000 from the Investment Properties of which approximately $423,000 was the management fee, approximately $10,000 was for construction supervision and architectural fees, approximately $53,000 was for maintenance services and approximately $62,000 was for administrative services. The management fee is equal to 4% of gross receipts of rental income on the majority of investment properties and 2% on Dexter Park.

On January 1, 2004, all employees were transferred to the Management Company’s payroll. The Partnership reimburses the Management Company for the payroll and related expenses of the employees who work at the properties. Total reimbursement was approximately $1,999,000 and $1,923,000 for the nine months ended September 30, 2012 and 2011, 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 in 2012 and 2011.

Prior to 1991, the Partnership employed an outside, unaffiliated company to perform its bookkeeping and accounting functions. Since that time, such services have been provided by the Management Company’s accounting staff, which consists of approximately 14 people.  During the nine months ended September 30, 2012 and 2011, the Management Company charged the Partnership $93,750 ($125,000 per year) for bookkeeping and accounting services included in administrative expenses of $242,000 above.

In 1996, prior to becoming an employee of the Management Company, the President of the Management Company performed asset management consulting services for the Partnership. This individual continues to perform this service and receives an asset management fee from the Partnership.  The Partnership does not have a written agreement with this individual.  During each of the nine months ended September 30, 2012 and 2011, this individual received $56,250.

The Partnership has invested in nine limited partnerships, which have invested in mixed use residential apartment complexes. The Partnership has between a 40% and 50% ownership interest in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 57%. See Note 14 for a description of the properties and their operations.

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On October 28, 2009, the Partnership borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brown and his affiliates (“HBC”).  The term of the loan is four years with a provision requiring payment in whole or in part upon demand by HBC with six months notice.  The Partnership may also prepay the note without penalty.  On August 17, 2010, HBC gave six months written notice to the Partnership requesting a principal pay down of $2,500,000.  During the fourth quarter of 2010, the Partnership paid HBC $2,500,000 as requested.  During 2011, the Partnership elected to make principal payments of $1,000,000 on August 1, 2011, $1,000,000 on October 1, 2011 and $1,000,000 on December 15, 2011 reducing the loan balance to $1,668,600.  In February 2012, the Partnership elected to make an additional principal payment of $750,000 to HBC Holdings and the balance of $918,600 was paid in April 2012. The interest paid during the nine months ended September 30, 2012 and 2011 was approximately $18,960 and $202,000, respectively.

See Note 8 for information regarding the repurchase of Class B and General Partnership Units.

NOTE 4. OTHER ASSETS

Approximately $1,923,000 and $1,879,000 of security deposits and prepaid rent deposits are included in prepaid expenses and other assets at September 30, 2012 and December 31, 2011, respectively. The security deposits and escrow accounts are restricted cash.

Included in prepaid expenses and other assets at September 30, 2012 and December 31, 2011 is approximately $710,000 and $1,014,000, respectively, held in escrow to fund future capital improvements.

Financing and leasing fees of approximately $960,000 and $919,000 are net of accumulated amortization of approximately $740,000 and $636,000 at September 30, 2012 and December 31, 2011, respectively.

NOTE 5. MORTGAGE NOTES PAYABLE

At September 30, 2012 and December 31, 2011, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2. At September 30, 2012, the interest rates on these loans ranged from 4.25% to 7.07%, payable in monthly installments aggregating approximately $742,000, including principal, to various dates through 2026. The majority of the mortgages are subject to prepayment penalties.  At September 30, 2012, the weighted average interest rate on the above mortgages was 5.53%. The effective rate of 5.62% 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.

The Partnerships have pledged tenant leases as additional collateral for certain of these loans.

Approximate annual maturities at September 30, 2012 are as follows:

2013—current maturities	$	41,357,000
2014	7,889,000
2015	9,116,000
2016	192,000
2017	202,000
Thereafter	79,580,000
	$	138,336,000

On July 27, 2011, the Partnership financed the Battle Green Apartments with a new $5,000,000 mortgage at 4.95% which matures in August 2026.  Principal payments will be made using a 30 year amortization schedule.  Deferred financing costs associated with this mortgage totaled approximately $100,000 and accordingly the effective interest rate is 5.07%.

The Partnership is currently working on refinancing the mortgages at Boylston Street, Westgate Woburn, School Street and Cypress Street.  The total amount expected to be refinanced is approximately $47,000,000.  The Partnership may incur prepayment penalties of approximately $1,000,000 upon refinancing. The Partnership has no lender commitment at this time and does not anticipate closing on these mortgages in 2012.

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NOTE 6. ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

The Partnership’s residential lease agreements may require tenants to maintain a one-month advance rental payment and/or a security deposit. At September 30, 2012, amounts received for prepaid rents of approximately $1,314,000 are included in cash and cash equivalents, and security deposits of approximately $1,832,000 are included in 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.

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.

On January 17, 2012, 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, 2012 and payable on March 31, 2012.  The quarterly distribution per Class A Limited Partnership Unit was increased from $7.00 per unit to $7.50 per unit.  Taking into consideration the 3-for-1 forward split of Depositary Receipts that was completed on January 3, 2012, the quarterly distribution per Depositary Receipt has been increased from $0.23 to $0.25.

In 2012, the Partnership approved quarterly distributions of $7.50 per unit ($0.25 per receipt) payable on March 31, June 30, September 30, 2012 and December 31, 2012.

In 2011 the Partnership paid quarterly distributions of $7.00 per unit ($0.23 per receipt) in March, June, September, and December for a total distribution of $28.00 per unit ($0.93 per receipt).

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

	Nine Months Ended September 30,
	2012		2011
Income per Depositary Receipt before Discontinued Operations	$	0.62	$	0.23
Income from Discontinued Operations	—		1.98
Net Income per Depositary Receipt after Discontinued Operations	$	0.62	$	2.21
Distributions per Depositary Receipt	$	0.75	$	0.70

NOTE 8. TREASURY UNITS

Treasury Units at September 30, 2012 are as follows:

Class A	39,559
Class B	9,395
General Partnership	495
	49,449

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”).  Under the terms of the Repurchase Program, the Partnership may purchase up to 1,500,000 Depositary Receipts from the start of the program in 2007 through March 31, 2015.  The Repurchase Program requires the Partnership to repurchase a proportionate number of Class B Units and General Partnership 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

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from time to time in its sole discretion in open market transactions or in privately negotiated transactions.  From August 20, 2007 through September 30, 2012, the Partnership has repurchased 1,211,945 Depositary Receipts at an average price of $24.59 per receipt (or $737.70 per underlying Class A Unit), 1,859 Class B Units and 98 General Partnership Units, at an average price of $604.92 per Unit, totaling approximately $31,150,000 including brokerage fees paid by the Partnership.

During the nine months ended September 30, 2012, the Partnership purchased 16,985 Depositary Receipts for a cost of $488,627; 135 Class B Units for a cost of $115,585 and 7 General Partnership Units for a cost of $6,083 for a total cost of $610,294.

From October 1, 2012 through November 9, 2012, the Partnership purchased a total of 942 Depositary Receipts.  The average price was $28.85 per receipt or $865.50 per unit. The total cost was $28,344.  The Partnership is required to repurchase 7.5 Class B Units and 0.39 General Partnership units at a cost of $6,454 and $340, respectively.

NOTE 9. COMMITMENTS AND CONTINGENCIES

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

NOTE 10. RENTAL INCOME

During the nine months ended September 30, 2012, approximately 90% 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 10% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at September 30, 2012 as follows:

	Commercial Property Leases
2013	$	2,453,000
2014	2,125,000
2015	1,601,000
2016	1,299,000
2017	508,000
Thereafter	828,000
	$	8,814,000

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 $477,000 and $461,000 for the nine months ended September 30, 2012 and 2011 respectively.

The following information is provided for commercial leases:

					Percentage of
	Annual base rent		Total square feet	Total number	Annual base rent for
	for expiring leases		for expiring leases	of leases expiring	expiring leases
Through September 30,
2013	$	518,465	19,182	10	19	%
2014	599,370		30,118	13	21	%
2015	146,240		6,415	5	5	%
2016	715,380		24,210	6	26	%
2017	497,412		16,818	6	18	%
2018	—		—	—	—
2019	123,200		3,850	1	4	%
2020	141,831		3,056	2	5	%
2021	64,800		1,800	1	2	%
2022	—		—	—	—
Totals	$	2,806,698	105,449	44	100	%

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Rents receivable are net of an allowance for doubtful accounts of approximately $563,000 and $448,000 at September 30, 2012 and December 31, 2011, respectively.  Included in rents receivable at September 30, 2012 is approximately $285,000 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 with Staples and Trader Joe’s at Staples Plaza in Framingham, Massachusetts.

Rents receivable also includes approximately $14,000 representing the deferral of rental concession primarily related to the residential properties.

For the nine months ended September 30, 2012 rent at the commercial properties includes approximately $3,600 of amortization of deferred rents arising from the fair values assigned to in-place leases upon the purchase of Cypress Street in Brookline, Massachusetts.

NOTE 11. CASH FLOW INFORMATION

During the nine months ended September 30, 2012 and 2011, cash paid for interest was approximately $5,854,000, and $6,008,000 respectively.  Cash paid for state taxes was approximately $23,000 and $54,000 during the nine months ended September 30, 2012 and 2011 respectively.

NOTE 12. FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At September 30, 2012 and December 31, 2011, 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 September 30, 2012 and December 31, 2011 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 September 30, 2012 and December 31, 2011, 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 September 30, 2012 and December 31, 2011, 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, 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.

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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 September 30, 2012	$	138,335,689	$	158,058,689
At December 31, 2011	$	139,161,612	$	158,050,039
Investment Properties
At September 30, 2012	$	138,735,174	$	160,344,245

Disclosure about fair value of financial instruments is based on pertinent information available to management as of September 30, 2012 and December 31, 2011.  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 September 30, 2012 and current estimates of fair value may differ significantly from the amounts presented herein.

NOTE 13. TAXABLE INCOME AND TAX BASIS

Taxable income reportable by the Partnership and includable in its partners’ tax returns is different than financial statement income because of tax free exchanges, accelerated depreciation, different tax lives, and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions. Taxable income was approximately $8,856,000 less than statement income for the year ended December 31, 2011. The primary reason for the decrease is the tax free sale of Avon Street and accelerated depreciation. The cumulative tax basis of the Partnership’s real estate at December 31, 2011 is approximately $12,000,000, less than the statement basis. The primary reasons for the lower tax basis are tax free exchanges, and accelerated depreciation. The Partnership’s tax basis in its joint venture investments is approximately $2,000,000 less than statement basis because of accelerated depreciation.

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

Certain allowable accelerated depreciation deductions have been reduced by 50% in 2012 and are expected to be eliminated for 2013.  This will result in higher taxable income in those years.  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 adjustments 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 September 30, 2012, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2004 forward.

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

Since November 2001, the Partnership has invested in nine limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three partnerships investing in commercial property. The Partnership has between a 40%-50% ownership interests in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 57%, 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, referred to as Dexter Park, is a 409 unit residential complex. The purchase price was $129,500,000.  The total mortgage was $89,914,000 with an interest rate of 5.57% and it matures in 2019.  The mortgage calls for interest only payments for the first two years of the loan and amortized over 30 years thereafter.  The balance of this mortgage is approximately $88,891,000 at September 30, 2012.  In order to fund this investment, the Partnership used approximately $8,757,000 of its cash reserves and borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brown and his affiliates (“HBC”).  The term of the loan was four years with a provision requiring payment in whole or in part upon demand by HBC with six months notice.  On August 17, 2010, HBC gave six months written notice to the Partnership requesting a principal pay down of $2,500,000.  During the fourth

16

quarter of 2010, the Partnership paid HBC $2,500,000 as requested.  During 2011, the Partnership elected to make principal payments of $1,000,000 on August 1, 2011, $1,000,000 on October 1, 2011, and an additional $1,000,000 on December 15, 2011 reducing the loan balance to $1,668,600 at December 31, 2011.  In February 2012, the Partnership elected to make an additional principal payment of $750,000 to HBC Holdings and the balance of $918,600 was paid in April 2012. The interest paid during the nine months ended September 30, 2012 and 2011 was approximately $18,960 and $202,000, respectively.   A majority of the apartments were leased at the time of the acquisition.  As a result, the Partnership amortized the intangible assets associated with the “in place” leases over a 12 month period which began in November 2009.  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 Partnership plans to sell the majority of units as condominium and retain 48 units for long-term investment. Gains from the sales of units were taxed at ordinary income rates. In February 2007, the Partnership refinanced the 48 units which will be retained with a new mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. As of September 30, 2012, the balance of the mortgage is approximately $ 4,717,000.  This investment is referred to as Hamilton Bay Apartments, LLC. The loan will be amortized over 30 years thereafter and matures in March 2017.  In April 2008, the Partnership refinanced an additional 20 units and obtained a new mortgage in the amount of $2,368,000 with interest at 5.75%, interest only, which matures in 2013. As of November 1, 2012, 105 units have been sold, the proceeds of which went to pay down the mortgage on the property.  The balance on the new mortgage is approximately $1,668,000 at September 30, 2012. This investment is referred to as Hamilton Bay, LLC.

On March 7, 2005, the Partnership invested $2,000,000 for a 50% ownership interest in a building comprising 49 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 Partnership plans to operate the building and initiate development of the parking lot.  In June 2007, the Partnership 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 Partnership restructured the mortgages on both parcels at Essex 81 and transferred the residential apartments to Hamilton Essex 81, LLC.  The mortgage on Hamilton Essex 81, LLC is approximately $8,380,000 amortizing over 30 years at 5.79% due in August 2016.  The mortgage on Essex Development, LLC, or the parking lot is approximately $2,106,000 with a variable interest rate of 2.25% over the daily Libor rate (0.22% at September 30, 2012). This loan was extended to August 2013 with the same conditions except for the addition of fixed principal payments in the amount of $4,301 per month. The cost associated with the extension was approximately $6,000. Harold Brown has issued a personal guaranty up to $1,000,000 of this mortgage. In the event that he is obligated to make payments to the lender as a result of this guaranty, the Partnership and other investors have, in turn, agreed to indemnify him for their proportionate share of any such payments.  The investment in the parking lot is referred to as Hamilton Essex Development, LLC; the investment in the apartments is referred to as Hamilton Essex 81, LLC.

On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176-unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Partnership sold 127 of the units as condominiums and retained 49 units for long-term investment. The Partnership obtained a new 10-year mortgage in the amount of $5,000,000 on the units to be retained by the Partnership. The interest on the new loan is 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.   The balance of this mortgage is approximately $4,950,000 at September 30, 2012.  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 Partnership obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Partnership obtained a new 10-year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan is 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. At September 30, 2012, the balance of this mortgage is approximately $5,450,000.  This investment is referred to as Hamilton Minuteman, LLC.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280-unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. As of May 2008, the Partnership sold 137 units as condominiums. Gains from these sales were taxed as ordinary income. The majority of the sales proceeds were applied to reduce the mortgage with the final payment made during the second quarter of 2007. With the sale of the units and the payments of the liabilities, the assets were combined with Hamilton on Main Apartments, LLC.  An entity partially owned by the majority shareholder of the General Partner and the President of the management company, 31% and 5%, respectively, was

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the sales agent and received a variable commission on each sale of 3% to 5%. 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. Hamilton on Main LLC paid a fee of approximately $400,000 in connection with this early extinguishment of debt.  At September 30, 2012, the remaining balance on the mortgage is approximately $15,680,000.

In November 2001, the Partnership invested approximately $1,533,000 for a 50% ownership interest in a 40-unit apartment building in Cambridge, Massachusetts. This property has a 12-year mortgage, with a remaining balance at September 30, 2012 of approximately $6,894,000 at 6.9% which is amortized on a 30-year schedule, with a final payment of approximately $6,000,000 in 2014. This investment is referred to as 345 Franklin, LLC.

As required by the lender, the Treasurer of the General Partner has provided a limited repayment guaranty equal to fifty percent (50%) of the outstanding balance for the loan on the for sale units at Hamilton Bay and a limited guaranty of $1,000,000 for the loan on Hamilton Essex Development.  In the event that he is obligated to make payments to the lenders as a result of these guaranties, the Partnership and other investors have, in turn, agreed to indemnify him for their proportionate share of any such payments.

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Summary financial information as of September 30, 2012

			Hamilton										Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Apts		Apts		Park		Total
ASSETS
Rental Properties	$	9,201,729	$	2,611,197	$	7,962,705	$	5,685,935	$	1,863,770	$	7,045,549	$	7,077,941	$	21,317,705	$	108,880,125	$	171,646,656
Cash & Cash Equivalents	3,682		12,525		57,974		66		14,203		98		42,880		159,507		782,730		1,073,665
Rent Receivable	45,283		—		905		7,924		654		2,929		4,791		5,055		50,229		117,770
Real Estate Tax Escrow	49,793		—		39,686		71,850		—		95,568		42,857		109,839		430,978		840,573
Prepaid Expenses & Other Assets	96,118		807		97,491		102,622		152,270		107,997		76,040		292,984		1,328,474		2,254,803
Financing & Leasing Fees	64,805		5,946		10,205		20,902		2,771		27,833		16,942		16,296		414,507		580,208
Total Assets	$	9,461,410	$	2,630,476	$	8,168,966	$	5,889,300	$	2,033,669	$	7,279,975	$	7,261,451	$	21,901,385	$	111,887,043	$	176,513,675
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,379,679	$	2,106,087	$	6,893,510	$	4,949,865	$	1,668,000	$	4,716,555	$	5,450,034	$	15,680,318	$	88,891,126	$	138,735,173
Accounts Payable & Accrued Expense	72,817		5,870		146,324		49,095		20,272		6,929		94,046		248,055		841,053		1,484,461
Advance Rental Pmts& Security Deposits	148,662		—		140,048		86,764		23,802		84,376		68,652		267,641		1,837,442		2,657,387
Total Liabilities	8,601,158		2,111,957		7,179,881		5,085,724		1,712,074		4,807,860		5,612,731		16,196,014		91,569,622		142,877,021
Partners’ Capital	860,252		518,519		989,085		803,576		321,595		2,472,115		1,648,720		5,705,372		20,317,421		33,636,654
Total Liabilities and Capital	$	9,461,410	$	2,630,476	$	8,168,966	$	5,889,300	$	2,033,669	$	7,279,975	$	7,261,451	$	21,901,385	$	111,887,043	$	176,513,675
Partners’ Capital - NERA 50%	$	430,126	$	259,259	$	494,542	$	401,788	$	160,798	$	1,236,057	$	824,360	$	2,852,686			6,659,616
Partners’ Capital - NERA 40%																	$	8,126,969	8,126,969
																			$	14,786,585
Total units/condominiums
Apartments	48		—		40		175		120		48		42		148		409		1,030
Commercial	1		1		—		1		—		—		—		—		—		3
Total	49		1		40		176		120		48		42		148		409		1,033
Units to be retained	49		1		40		49		—		48		42		148		409		786
Units to be sold	—		—		—		127		120		—		—		—		—		247
Units sold through November 1, 2012	—		—		—		127		105		—		—		—		—		232
Unsold units	—		—		—		—		15		—		—		—		—		15
Unsold units with deposits for future sale as of November 1, 2012.	—		—		—		—		—		—		—		—		—		—

19

Summary financial information for the nine months ended September 30, 2012

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total
Revenues
Rental Income	$	937,284		$	216,137		$	873,734		$	639,791		$	173,054		$	659,463		$	603,212		$	1,953,493		$	9,056,079		$	15,112,247
Laundry and Sundry Income	10,488			—			1,788			—			—			—			666			13,732			75,239			101,913
	947,772			216,137			875,522			639,791			173,054			659,463			603,878			1,967,225			9,131,318			15,214,160
Expenses
Administrative	10,430			1,432			23,211			4,079			6,617			29,996			6,755			37,307			169,223			289,048
Depreciation and Amortization	308,642			9,394			336,339			190,555			59,208			224,008			238,621			717,664			4,314,274			6,398,704
Management Fees	40,573			8,645			36,070			25,964			7,268			25,753			24,241			78,862			196,041			443,417
Operating	85,319			—			42,933			636			1,237			1,070			54,385			242,157			764,389			1,192,125
Renting	16,664			—			3,459			5,718			1,450			3,660			3,013			8,845			71,830			114,639
Repairs and Maintenance	94,156			5,475			61,720			235,472			53,379			205,125			45,315			283,251			707,486			1,691,378
Taxes and Insurance	149,722			37,211			75,919			109,871			34,890			121,571			77,022			253,782			1,115,971			1,975,959
	705,506			62,158			579,650			572,294			164,047			611,182			449,351			1,621,867			7,339,215			12,105,270
Income Before Other Income	242,266			153,980			295,872			67,497			9,007			48,281			154,527			345,358			1,792,103			3,108,891
Other Income (Loss)
Interest Expense	(373,357		)	(45,437		)	(366,348		)	(216,254		)	(73,609		)	(203,375		)	(238,036		)	(628,955		)	(3,818,020		)	(5,963,390		)
Interest Income	—			—			36			62			165			—			—			—			—			262
Interest Income from Note	—			—			—			—			4,901			—			—			—			—			4,901
	(373,357		)	(45,437		)	(366,311		)	(216,193		)	(68,543		)	(203,375		)	(238,036		)	(628,955		)	(3,818,020		)	(5,958,227		)
Net Income (Loss)	$	(131,091	)	$	108,543		$	(70,439	)	$	(148,696	)	$	(59,537	)	$	(155,094	)	$	(83,509	)	$	(283,597	)	$	(2,025,917	)	$	(2,849,337	)
Net Income (Loss) - NERA 50%	$	(65,546	)	$	54,271		$	(35,220	)	$	(74,348	)	$	(29,768	)	$	(77,547	)	$	(41,754	)	$	(141,798	)				(411,710		)
Net Income (Loss) - NERA 40%																									$	(810,367	)	(810,367		)
																												$	(1,222,077	)

20

Summary financial information for the three months ended September 30, 2012

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total
Revenues
Rental Income	$	311,281		$	72,046		$	295,031		$	218,064		$	61,862		$	223,301		$	204,535		$	656,122		$	2,993,242		$	5,035,486
Laundry and Sundry Income	3,415			—			600			—			—			—			175			3,752			31,384			39,327
	314,697			72,046			295,631			218,064			61,862			223,301			204,711			659,875			3,024,626			5,074,812
Expenses
Administrative	2,824			317			7,845			1,599			2,514			6,285			3,823			11,209			59,789			96,206
Depreciation and Amortization	101,777			2,909			114,199			63,962			19,736			74,920			80,075			240,997			1,443,275			2,141,849
Management Fees	13,547			2,882			11,953			9,079			2,681			8,761			8,225			26,655			66,474			150,256
Operating	32,187			—			13,451			1			310			165			16,664			63,833			217,288			343,898
Renting	14,574			—			3,318			3,389			—			389			1,019			2,265			30,033			54,987
Repairs and Maintenance	39,279			950			17,401			89,279			21,202			71,906			15,818			85,358			277,534			618,728
Taxes and Insurance	48,843			12,025			25,358			36,279			11,329			39,893			26,154			85,473			371,328			656,683
	253,031			19,084			193,525			203,588			57,772			202,319			151,778			515,790			2,465,720			4,062,608
Income Before Other Income	61,665			52,962			102,106			14,476			4,090			20,982			52,933			144,085			558,906			1,012,205
Other Income (Loss)
Interest Expense	(124,806		)	(15,110		)	(120,435		)	(72,408		)	(24,738		)	(68,108		)	(79,666		)	(210,248		)	(1,277,390		)	(1,992,910		)
Interest Income	—			—			12			21			51			—			—			—			—			84
Interest Income from Note	—			—			—			—			1,458			—			—			—			—			1,458
	(124,806		)	(15,110		)	(120,423		)	(72,388		)	(23,229		)	(68,108		)	(79,666		)	(210,248		)	(1,277,390		)	(1,991,367		)
Net Income (Loss)	$	(63,141	)	$	37,852		$	(18,317	)	$	(57,912	)	$	(19,139	)	$	(47,126	)	$	(26,733	)	$	(66,164	)	$	(718,484	)	$	(979,163	)
Net Income (Loss) - NERA 50%	$	(31,571	)	$	18,926		$	(9,158	)	$	(28,956	)	$	(9,569	)	$	(23,563	)	$	(13,366	)	$	(33,082	)				(130,339		)
Net Income (Loss) - NERA 40%																									$	(287,394	)	(287,394		)
																												$	(417,733	)

21

Future annual mortgage maturities at September 30, 2012 are as follows:

			Hamilton
	Hamilon		Essex		345		Hamilton		Hamilton		Hamilton		Hamilton		Hamilton on		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Minuteman		Main Apts		Park
	March		March		November		March		October		October		August		August		October
Period End	2005		2005		2001		2005		2005		2005		2004		2004		2009		Total
9/30/2013	$	123,859	$	2,106,087	$	177,887	$	64,222	$	1,668,000	$	65,250	$	70,339	$	289,374	$	1,258,232	$	5,823,250
9/30/2014	131,223				6,715,623		68,013				68,979		74,491		305,121		1,330,133		8,693,582
9/30/2015	139,026						72,028				72,921		78,887		15,085,823		1,406,142		16,854,826
9/30/2016	7,985,570						75,510				77,088		82,697				1,486,495		9,707,361
9/30/2017							4,670,091				4,432,317		5,143,620				1,571,440		15,817,469
Thereafter																	81,838,683		81,838,683
	$	8,379,678	$	2,106,087	$	6,893,510	$	4,949,864	$	1,668,000	$	4,716,555	$	5,450,034	$	15,680,318	$	88,891,125	$	138,735,171

22

Summary financial information as of September 30, 2011

	Hamilton Essex 81		Hamilton Essex Development		345 Franklin		Hamilton 1025		Hamilton Bay Sales		Hamilton Bay Apts		Hamilton Minuteman		Hamilton on Main Apts		Dexter Park		Total
ASSETS
Rental Properties	$	9,546,059	$	2,597,309	$	8,336,008	$	5,906,387	$	1,951,075	$	7,347,113	$	7,387,465	$	22,162,035	$	114,310,012	$	179,543,463
Cash & Cash Equivalents	117		12,916		10,019		33		24,382		12,951		14,118		281		815,551		890,367
Rent Receivable	92,005		19,146		879		9,278		904		1,819		2,222		12,054		172,623		310,930
Due from Investment Properties	15,000		15,000		—		—		—		—		—		—		—
Real Estate Tax Escrow	93,721		—		38,291		60,411		—		86,578		44,193		102,117		620,090		1,045,402
Prepaid Expenses & Other Assets	98,142		789		91,158		86,663		189,773		93,298		81,180		526,254		1,178,633		2,345,890
Fin & Leasing Fees	78,711		9,607		18,371		25,928		7,836		34,195		20,911		23,158		473,908		692,624
Total Assets	$	9,923,756	$	2,639,767	$	8,494,727	$	6,088,700	$	2,173,969	$	7,575,954	$	7,550,088	$	22,825,899	$	117,570,816	$	184,843,676
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,487,795	$	2,157,699	$	7,059,569	$	5,000,00	$	1,668,000	$	4,750,000	$	5,500,000	$	15,952,852	$	89,914,000	$	140,489,916
Due from Investment Properties	15,000		15,000		—		—		—		—		—		—		—		—
Accts Pay & Acc Exp	50,338		5,826		71,853		48,147		17,514		6,661		83,378		200,478		750,820		1,235,011
Adv Rent Pmt & Sec Dep	149,104		—		111,782		70,319		21,446		83,709		63,134		244,407		1,764,347		2,508,248
Total Liabilities	8,687,238		2,178,525		7,243,205		5,118,466		1,706,960		4,840,370		5,646,512		16,397,734		92,429,166		144,248,175
Partners’ Capital	1,236,518		461,242		1,251,523		970,234		467,010		2,735,584		1,903,576		6,428,164		25,141,650		40,595,500
Total Liabilities & Capital	$	9,923,756	$	2,639,767	$	8,494,727	$	6,088,700	$	2,173,969	$	7,575,954	$	7,550,088	$	22,825,899	$	117,570,816	$	184,843,676
Partners’ Capital — NERA 50%	$	618,259	$	230,621	$	625,761	$	485,117	$	233,505	$	1,367,792	$	951,788	$	3,214,082			7,726,925
NERA 40%																	$	10,056,660	10,056,660
																			$	17,783,585
Total units/ condominiums
Apartments	48		—		40		175		120		48		42		148		409		1,030
Commercial	1		1		—		1		—		—		—		—		—		3
Total	49		1		40		176		120		48		42		148		409		1,033
Units to be retained	49		1		40		49		—		48		42		148		409		786
Units to be sold	—		—		—		127		120		—		—		—		—		247
Units sold through October 24, 2011	—		—		—		127		105		—		—		—		0		232
Unsold units	—		—		—		—		15		—		—		—		—		15
Unsold units with deposits for future sale as of October  24 , 2011	—		—		—		—		0		—		—		—		—		—

23

Summary financial information for the nine months ended September 30, 2011

	Hamilton Essex 81			Hamilton Essex Development			345 Franklin			Hamilton 1025			Hamilton Bay Sales			Hamilton Bay Apts			HamiltonMinuteman			Hamilton on Main			Dexter Park			Total
Revenues
Rental Income	$	940,881		$	214,196		$	848,631		$	607,752		$	178,514		$	643,284		$	589,360		$	1,856,189		$	8,588,891		$	14,467,697
Laundry and Sundry Income	11,870			—			921			—			—			—			579			15,698			74,713			103,782
	952,750			214,196			849,552			607,752			178,514			643,284			589,939			1,871,887			8,663,605			14,571,479
Expenses
Administrative	12,818			1,084			20,368			7,812			3,529			14,587			9,431			25,019			122,470			217,119
Depreciation and Amortization	317,669			5,048			333,321			194,986			67,248			235,595			244,550			724,597			4,276,964			6,399,978
Management Fees	36,596			8,280			34,012			24,089			7,320			25,268			23,493			74,867			188,088			422,011
Operating	91,167			—			53,705			1,148			170			378			30,360			285,510			699,466			1,161,904
Renting	7,667			—			14,979			9,338			1,750			6,755			2,676			12,791			133,066			189,022
Repairs and Maintenance	103,137			3,050			57,642			224,152			55,285			221,000			76,312			267,194			750,306			1,758,077
Taxes and Insurance	139,499			36,014			71,706			108,471			34,328			117,288			68,306			242,777			959,720			1,778,109
	708,553			53,476			585,734			569,995			169,630			620,870			455,128			1,632,755			7,130,079			11,926,220
Income Before Other Income	244,197			160,720			263,818			37,757			8,884			22,414			134,812			239,132			1,533,525			2,645,259
Other Income (Loss)
Interest Income							37			66			378												3,219			3,701
Interest Expense	(376,847		)	(46,036		)	(371,875		)	(216,310		)	(73,297		)	(202,923		)	(237,765		)	(636,029		)	(3,824,313		)	(5,985,397		)
Gain on Sale of Real Estate
Interest income from Note													6,926															6,926
Other Income (Expenses)	(2,331		)	—			(5,375		)	(3,621		)				(2,271		)				(1,152		)				(14,751		)
	(379,178		)	(46,036		)	(377,213		)	(219,865		)	(65,993		)	(205,194		)	(237,765		)	(637,181		)	(3,821,094		)	(5,989,521		)
Net Income (Loss)	$	(134,981	)	$	114,684		$	(113,395	)	$	(182,108	)	$	(57,110	)	$	(182,781	)	$	(102,953	)	$	(398,049	)	$	(2,287,569	)	$	(3,344,262	)
Net Loss - NERA 50%	$	(67,491	)	$	57,342		$	(56,697	)	$	(91,054	)	$	(28,555	)	$	(91,390	)	$	(51,476	)	$	(199,024	)				(528,346		)
NERA 40%																									$	(915,028	)	(915,028		)
																												$	(1,443,374	)

24

Summary financial information for the three months ended September 30, 2011

	Hamilton Essex 81			Hamilton Essex Development			345 Franklin			Hamilton 1025			Hamilton Bay Sales			Hamilton Bay Apts			Hamilton Minuteman			Hamilton on Main			Dexter Park			Total
Revenues
Rental Income	$	374,433		$	73,146		$	288,169		$	206,445		$	59,375		$	217,079		$	196,335		$	625,370		$	2,848,930		$	4,889,281
Laundry and Sundry Income	4,668						(307		)										579			4,910			24,900			34,750
	379,102			73,146			287,862			206,445			59,375			217,079			196,914			630,280			2,873,830			4,924,031
Expenses
Administrative	1,548			255			11,388			2,934			1,728			7,003			1,387			9,334			55,971			91,548
Depreciation and Amortization	106,099			1,922			112,028			65,582			22,416			78,381			81,891			242,907			1,429,538			2,140,763
Management Fees	11,495			2,760			11,372			8,182			2,416			8,516			7,589			24,345			64,815			141,490
Operating	26,096						17,674			280			75			159			9,789			75,443			205,322			334,838
Renting	487						4,572			2,209			675			2,166			899			5,740			34,679			51,427
Repairs and Maintenance	47,258						21,504			74,625			17,377			65,890			32,238			99,953			306,231			665,076
Taxes and Insurance	45,262			12,195			24,438			34,912			11,548			38,775			24,754			82,541			353,478			627,903
	238,245			17,132			202,976			188,724			56,235			200,889			158,546			540,263			2,450,035			4,053,046
Income Before Other Income	140,856			56,014			84,886			17,721			3,140			16,190			38,368			90,016			423,795			870,985
Other Income (Loss)
Interest Income							12			22			108															142
Interest Expense	(126,599		)	(15,349		)	(123,353		)	(72,913		)	(24,715		)	(68,403		)	(80,190		)	(213,905		)	(1,288,240		)	(2,013,666		)
Gain on Sale of Real Estate
Interest income from Note													2,145															2,145
Other Income (Expenses)	(2,331		)				(5,375		)	(3,621		)				(2,271		)				(1,152		)				(14,751		)
	(128,930		)	(15,349		)	(128,716		)	(76,513		)	(22,462		)	(70,674		)	(80,190		)	(215,057		)	(1,288,240		)	(2,026,130		)
Net Income (Loss)	$	11,926		$	40,665		$	(43,830	)	$	(58,792	)	$	(19,322	)	$	(54,484	)	$	(41,822	)	$	(125,040	)	$	(864,445	)	$	(1,155,144	)
Net Loss - NERA 50%	$	5,963		$	20,333		$	(21,915	)	$	(29,396	)	$	(9,661	)	$	(27,242	)	$	(20,911	)	$	(62,520	)				(145,350		)
NERA 40%																									$	(345,778	)	(345,778		)
																												$	(491,128	)

25

NOTE 15. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”(“ASU 2011-04).  The objective of ASU 2011-04 is to provide common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs.  Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the amendments do not result in a change in the application of the requirements in ASC Topic 820 “Fair Value Measurement”.  ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011.    The Partnership does not expect this standard to have a material impact on the Partnership’s consolidated financial statements.

NOTE 16. DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

The following tables summarize income from discontinued operations and realized gain and loss on the sale of rental property held for sale for the nine months ended September 30, 2012 and 2011:

	September  30,		September 30,
	2012		2011
Total Revenues	$	—	$	349,548
Operating and other expenses	—		235,441
Depreciation and amortization	—		32,540
	—		267,981
Income from discontinued operations	$	—	$	81,567

Gain on the sale of Avon Street in the second quarter of 2011:

Sale price	$	8,750,000
Net book value	(594,035		)
Expense of sale	(435,506		)
Gain on the sale of real estate	$	7,720,459

NOTE 17. SUBSEQUENT EVENTS

From October 1, 2012 through November 9, 2012, the Partnership purchased a total of 942 Depositary Receipts.  The average price was $28.85 per receipt or $865.50 per unit. The total cost was $28,344.  The Partnership is required to repurchase 7.5 Class B Units and 0.39 General Partnership units at a cost of $6,454 and $340, respectively.

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

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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 2012 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 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.

As anticipated, the third quarter results reflect both last year’s leasing gains as well as the current strong demand for rental units yielding revenue increases at the majority of the properties.  These increases will be reflected over the next four quarters.  Pending an early winter, we expect the 2012 results to continue to exceed 2011.  Similar to the second quarter, the portfolio experienced higher tenant retention in the third quarter than it did for the same period in 2011.  In addition to revenue growth, the portfolio continues to experience flat to lower operating expenses. External factors include, the rental housing supply/demand imbalance, limited additions to supply, national and local growth in the renter population, a historic shift in homebuyer sentiment and a local employment base stronger than the national average.  These factors combined to produce an overall growth in rental income of 5.2% as compared to 2011.  Management expects these increases to continue through the remainder of the 2012 calendar year. The Partnership properties and Joint Ventures have experienced a vacancy rate of 3% or less, with many properties 100% occupied as of November 1, 2012.  Management believes that increasing student applications and a continued decline in the local unemployment rate will keep occupancy high for the next 18-24 months and revenue growth will continue to be positive during this time frame.

Eliminating depreciation from the comparative operations, operating expenses for the nine months ended September 30, 2012 compared to 2011 have actually declined by 1.3%.  Contributing to this has been the dramatic reduction in leasing commissions of approximately $76,000 (48%), a decrease in snow removal and heating costs due to an unseasonably warm winter in 2012 as well as management’s capitalization of energy conversion and purchasing power.  The high tenant retention experience has also resulted in no growth in the repairs and maintenance expenses for 2012 year to date.

Management expects to refinance at least $28m in long term debt for 62 Boylston Street and Westgate Apartments during the first quarter 2013.  It is anticipated that the interest rates for these new mortgages will be lower than the current mortgage interest rates.  Management will be considering raising additional debt with these new loans in balance with its future acquisition goals and to take advantage of the historically low interest rate environment.  Management believes the existing trading range for the stock is worthy of continuing its Depositary Receipt Repurchase Program.  As such, during the third  quarter 14,932  Class A Depositary Receipts were acquired during  at a cost of $432,849, 119  Class B units were acquired at a cost of $102,663 and 6 General Partner Units were acquired at a cost of $5,403.  When appropriate, Management will continue to repurchase shares per its repurchase program as submitted to the SEC.  Management continues to weigh investment alternatives against cash liquidity and the current depositary receipt price.  Management believes the recent increase in distributions in 2012 is appropriate given the sustained performance of the portfolio and the expected future earnings that the Partnership will be realizing.

The Stock Repurchase Program that was initiated in 2007 has repurchased 1,211,945 Depositary Receipts through September 2012 or 39% of the outstanding Class A Depositary Receipts at September 30, 2012.

The Partnership has retained The Hamilton Company (“Hamilton”) to manage and administer the Partnership’s and Joint Ventures’ Properties. Hamilton is a full-service real estate management company, which has legal, construction, maintenance, architectural, accounting and administrative departments. The Partnership’s properties represent approximately 36% of the total properties and 45% of the residential properties managed by Hamilton. Substantially all of the other properties managed by Hamilton are owned, wholly or partially, directly or indirectly, by Harold Brown. The Partnership’s Second Amended and Restated Contract of Limited Partnership (the “Partnership Agreement”) expressly provides that the general partner may employ a management company to manage the properties, and that such management company may be paid a fee of up to 4% of rental receipts for administrative and management services (the “Management Fee”). The Partnership pays Hamilton the full annual Management Fee, in monthly installments.

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At September 30, 2012, Harold Brown, his brother Ronald Brown and the President of Hamilton, Carl Valeri, collectively own approximately 40% of the Depositary Receipts representing the Partnership Class A Units (including Depositary Receipts held by trusts for the benefit of such persons’ family members). Harold Brown also controls 75% of the Partnership’s Class B Units, 75% of the capital stock of NewReal, Inc. (“NewReal”), the Partnership’s sole general partner, and all of the outstanding stock of Hamilton. Ronald Brown also owns 25% of the Partnership’s Class B Units and 25% of NewReal’s capital stock. In addition, Ronald Brown is the President and director of NewReal and Harold Brown is NewReal’s Treasurer and a director. One of NewReal’s directors, Roberta Ornstein also owns immaterial amounts of the Partnership’s Class A Receipts. The 75% of the issued and outstanding Class B Units of the Partnership, controlled by Harold Brown, are owned by HBC Holdings LLC, an entity of which he is the manager.

In addition to the Management Fee, the Partnership Agreement further provides for the employment of outside professionals to provide services to the Partnership and allows Hamilton 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.

Residential tenants generally sign a one year lease.  During the first nine months of 2012, tenant renewals were approximately 69% with an average rental increase of approximately 3%, new leases accounted for approximately 31% with rental rate increases of approximately 6%.  Tenant improvements were approximately $988,000 in 2012, compared to approximately $868,000 in 2011, an increase of approximately $120,000.

Hamilton accounted for approximately 5% of the repair and maintenance expense paid for by the Partnership for the nine months ended September 30, 2012 and 2011. 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. However, several of the larger Partnership properties have their own maintenance staff.  Further, 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 $148,000 (82%) and approximately $137,000 (71%) of the legal services paid for by the Partnership during the nine months ended September 30, 2012 and 2011, 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 $5,000. Hamilton may be one of the three bidders on a particular project and may be awarded the contract if its bid and its ability to successfully complete the project are deemed appropriate.  For contracts that are not awarded to Hamilton, Hamilton charges the Partnership a construction supervision fee equal to 5% of the contract amount. Hamilton’s architectural department also provides services to the Partnership on an as-needed basis. During the nine months ended September 30, 2012, Hamilton provided the Partnership approximately $20,000 in construction and architectural services, compared to $44,000 for the nine months ended September 30, 2011.

Prior to 1991, the Partnership employed an outside, unaffiliated company to perform its bookkeeping and accounting functions. Since that time, such services have been provided by Hamilton’s accounting staff, which consists of approximately 14 people. During the nine months ended September 30, 2012 and 2011, Hamilton charged the Partnership $31,250 per quarter ($125,000 per year) 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

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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.

Discontinued Operations and 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. If, in management’s opinion, the net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

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 amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

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

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.

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

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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 Partnerships:  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 Partnerships, 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.

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

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

RESULTS OF OPERATIONS

Three Months Ended September 30, 2012 and September 30, 2011

The Partnership and its Subsidiary Partnerships earned income before interest expense, loss from investments in unconsolidated joint ventures and interest income of approximately $3,145,000 for the three months ended September 30, 2012, compared to approximately $2,983,000 for the three months ended September 30, 2011, an increase of approximately $162,000 (5.4%).

The rental activity is summarized as follows:

	Occupancy Date
	November 1, 2012		October 24, 2011
Residential
Units	2,270		2,270
Vacancies	68		50
Vacancy rate	3.0	%	2.2	%
Commercial
Total square feet	110,949		110,949
Vacancy	5,500		0
Vacancy rate	4.9	%	0	%

	Rental Income (in thousands) Three Months Ended September 30,
	2012						2011
	Total Operations			Continuing Operations			Total Operations			Continuing Operations
Total rents	$	8,783		$	8,783		$	8,544		$	8,544
Residential percentage	90		%	90		%	90		%	90		%
Commercial percentage	10		%	10		%	10		%	10		%
Contingent rentals	$	167		$	167		$	168		$	168

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Three Months Ended September 30, 2012 compared to the Three months ended September 30, 2011:

	Three Months Ended
	September 30,						Dollar			Percent
	2012			2011			Change			Change
Revenues
Rental income	$	8,782,896		$	8,543,908		$	238,988		2.8	%
Laundry and sundry income	92,700			104,618			(11,918		)	(11.4	)%
	8,875,596			8,648,526			227,070			2.6	%
Expenses
Administrative	463,687			411,836			51,851			12.6	%
Depreciation and amortization	1,571,942			1,603,529			(31,587		)	(2.0	)%
Management fee	360,578			347,833			12,745			3.7	%
Operating	731,618			774,998			(43,380		)	(5.6	)%
Renting	48,483			63,482			(14,999		)	(23.6	)%
Repairs and maintenance	1,487,272			1,421,084			66,188			4.7	%
Taxes and insurance	1,066,739			1,042,470			24,269			2.3	%
	5,730,319			5,665,232			65,087			1.1	%
Income Before Other Income and Discontinued Operations	3,145,277			2,983,294			161,983			5.4	%
Other Income (Expense)
Interest income	554			895			(341		)	(38.1	)%
Interest expense	(1,953,645		)	(2,033,082		)	79,437			(3.9	)%
(Loss) from investments in unconsolidated joint ventures	(417,733		)	(491,128		)	73,395			(14.9	)%
	(2,370,824		)	(2,523,315		)	152,491			(6.0	)%
Income From Continuing Operations	774,453			459,979			314,474			68.4	%
Discontinued Operations
Income from discontinued operations	—			(2,245		)	2,245			(100.0	)%
Gain on the sale of real estate	—			(808		)	808			(100.0	)%
	—			(3,053		)	3,053			(100.0	)%
Net Income	$	774,453		$	456,926		$	317,527		69.5	%

Rental income from continuing operations for the three months ended September 30, 2012 was approximately $8,783,000, compared to approximately $8,544,000 for the three months ended September 30, 2011, an increase of approximately $239,000 (2.8%).  The factors which can be attributed to this increase in rental income are rental rate increases and a drop in the vacancy rates at the majority of the Partnership properties.  The Partnership Properties with the most significant increases in rental income include 62 Boylston Street, Westgate Woburn, 1144 Commonwealth Avenue, Westside Colonial, North Beacon and School Street with increases of approximately $81,000, $43,000, $35,000, $23,000, $21,000, and $16,000, 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.  These rental income increases are offset by a decrease in rental income at Cypress Street of approximately $77,000 due to the loss of tenants in 2012.

Operating expenses from continuing operations for the three months ended September 30, 2012 were approximately $5,730,000 compared to approximately $5,665,000 for the three months ended September 30, 2011, an increase of approximately $65,000 (1.1%). The most significant factors contributing to this increase is an increase in repairs and maintenance expenses of approximately $66,000 (4.7%) due to continued repairs to the properties to maintain occupancy, an increase in administrative expenses of approximately $52,000 (12.6%) due to an increase in professional fees, an increase in taxes and insurance of approximately $24,000 (2.3%) due to an increase in insurance recovery loss, and an increase in the management fee of approximately $13,000 (3.7%) due to the  increase in rental income.

These increases are offset by decreases in operating expenses of approximately $43,000 (5.6%) due to a decrease in utility charges in 2012 compared to the same period in 2011, a decrease in renting expenses of approximately $15,000 (23.6%) due to decreases in  rental commissions, advertising and rental concessions caused by the high occupancy rate at the majority of the Partnership properties, and a decrease in depreciation and amortization expense of approximately $32,000 (2.0%) due to assets being fully depreciated in 2011.

Interest expense for the three months ended September 30, 2012 was approximately $1,954,000 compared to approximately $2,033,000 for the three months ended September 30, 2011, a decrease of approximately $79,000 (3.9%).  This decrease is due to a lower average level of debt outstanding in 2012 compared to 2011.

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At September 30, 2012, the Partnership has between a 40% and 50% ownership interests in nine different Investment Properties. See 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 loss from the Investment Properties was approximately $418,000 for the three months ended September 30, 2012, compared to approximately $491,000 for the three months ended September 30, 2011, a decrease in the loss of approximately $73,000 (14.9%). Included in the loss for the three months ended September 30, 2012 is depreciation and amortization expense of approximately $927,000.  The allocable loss for the three months ended September 30, 2012 associated with the investment in Dexter Park is approximately $287,000 of which approximately $577,000 is depreciation and amortization.

Interest income for the three months ended September 30, 2012 was approximately $600 compared to approximately $900 for the three months ended September 30, 2011, a decrease of approximately $300. This decrease is due to a drop in interest rates.

In June 2011, the Partnership sold the Avon Street Apartments located in Malden, Massachusetts.  The net income from Avon Street for the three months ended September 30, 2011 was approximately $3,000 which is included in discontinued operations.

As a result of the changes discussed above, net income for the three months ended September 30, 2012 was approximately $774,000 compared to approximately $457,000 for the three months ended September 30, 2011, an increase of approximately $317,000 (69.5%).

Nine Months Ended September 30, 2012 Compared to Nine Months ended September 30, 2011

The Partnership and its subsidiary Partnerships earned income before other income and discontinued operations of approximately $9,523,000 for the nine months ended September 30, 2012, compared to approximately $8,324,000 for the nine months ended September 30, 2011, an increase of approximately $1,199,000 (14.4%).  The following is a summary of the Partnership’s operations for the nine months ended September 30, 2012 and 2011:

	Nine Months Ended
	September 30,						Dollar			Percent
	2012			2011			Change			Change
Revenues
Rental income	$	26,245,505		$	24,957,004		$	1,288,501		5.2	%
Laundry and sundry income	282,889			318,059			(35,170		)	(11.1	)%
	26,528,394			25,275,063			1,253,331			5.0	%
Expenses
Administrative	1,362,276			1,237,424			124,852			10.1	%
Depreciation and amortization	4,632,173			4,412,144			220,029			5.0	%
Management fee	1,078,188			1,032,069			46,119			4.5	%
Operating	2,684,760			3,104,722			(419,962		)	(13.5	)%
Renting	148,602			260,819			(112,217		)	(43.0	)%
Repairs and maintenance	3,857,918			3,800,836			57,082			1.5	%
Taxes and insurance	3,241,830			3,103,215			138,615			4.5	%
	17,005,747			16,951,229			54,518			0.3	%
Income Before Other Income and Discontinued Operations	9,522,647			8,323,834			1,198,813			14.4	%
Other Income (Expense)
Interest income	1,746			3,129			(1,383		)	(44.2	)%
Interest expense	(5,853,647		)	(5,962,907		)	109,260			(1.8	)%
(Loss) from investments in unconsolidated joint ventures	(1,222,077		)	(1,443,374		)	221,297			(15.3	)%
	(7,073,978		)	(7,403,152		)	329,174			(4.4	)%
Income From Continuing Operations	2,448,669			920,682			1,527,987			166.0	%
Discontinued Operations
Income from discontinued operations	—			81,567			(81,567		)	(100.0	)%
Gain on the sale of real estate	—			7,720,459			(7,720,459		)	(100.0	)%
	—			7,802,026			(7,802,026		)	(100.0	)%
Net Income	$	2,448,669		$	8,722,708		$	(6,274,039	)	(71.9	)%

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Rental income from continuing operations for the nine months ended September 30, 2012 was approximately $26,246,000 compared to approximately $24,957,000 for the nine months ended September 30, 2011, an increase of approximately $1,289,000 (5.2%). The factors which can be attributed to this increase include the acquisition of the Battle Green Apartments in June 2011which resulted in an increase in rental income of approximately $404,000.  In addition, the following properties experienced rental income increases:  62 Boylston Street, Westgate Woburn, 1144 Commonwealth Avenue, Westside Colonial, 140 North Beacon Street and School Street with increases of approximately $194,000, $144,000, $64,000, $62,000, $55,000 and $55,000 respectively.  These increases are offset by decreases in commercial property rental income of approximately $129,000 at Cypress Street due to vacancies at the property and a decrease of approximately $28,000 at Linewt due to the restructuring of the tenant lease in an effort to maintain occupancy.

Expenses from continuing operations for the nine months ended September 30, 2012 were approximately $17,006,000 compared to approximately $16,951,000 for the nine months ended September 30, 2011, an increase of approximately $55,000 (0.3%). The expenses with the most significant increases include an increase in depreciation and amortization of approximately $220,000 (5.0%), an increase in taxes and insurance of approximately $139,000 (4.5%), an increase in administrative expenses of approximately $125,000 (10.1%), an increase in repairs and maintenance expenses of approximately $57,000 (1.5%) and an increase in the management fee of approximately $46,000 (4.5%).  The increase in depreciation and amortization expense is due to the acquisition of the Battle Green Apartments in June 2011 resulting in nine months of depreciation for 2012 versus one quarter in 2011. The reason for the increases in the other expenses is discussed in the section for the results for the three months ended September 30, 2012.

These increases in expenses are offset by a decrease in operating expense of approximately $420,000 (13.5%) and a decrease in renting expenses of approximately $112,000 (43.0%).  The decrease in operating expense is primarily due to the decreasing snow removal costs resulting from the markedly warm winter. The other reasons for these decreases are discussed in the section for the results for the three months ended September 30, 2012.

At September 30, 2012, the Partnership has between a 40 - 50% ownership interest in nine Investment Properties. See a description of these properties included in 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 loss from these Investment Properties was approximately $1,222,000 for the nine months ended September 30, 2012 compared to a loss of approximately $1,443,000 for the nine months ended September 30, 2011, a decrease of approximately $221,000 (15.3%).  Included in the loss for the nine months ended September 30, 2012 is depreciation and amortization of approximately $2,768,000.

As previously discussed, the Partnership sold the Avon Street Apartments in June 2011.  The net income from Avon Street was approximately $82,000 for the nine months ended September 30, 2011 and the gain on the sale of Avon Street was approximately $7,720,000.  The income and gain are included in discontinued operations.

Interest income for the nine months ended September 30, 2012 was approximately $1,700 compared to approximately $3,100 for the nine months ended September 30, 2011, a decrease of approximately $1,400 (44.2%).

As a result of the changes discussed above, net income for the nine months ended September 30, 2012 was approximately $2,449,000 compared to approximately $8,723,000 for the nine months ended September 30, 2011, a decrease of approximately $6,274,000 (71.9%).

LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s principal source of cash during 2012 and 2011 was the collection of rents and refinancing of Partnership properties. The majority of cash and cash equivalents of $5,322,287 at September 30, 2012 and $4,050,157 at December 31, 2011 were held in interest bearing accounts at creditworthy financial institutions.

This increase of $1,272,130 at September 30, 2012 is summarized as follows:

	Nine Months Ended September  30,
	2012			2011
Cash provided by operating activities	$	8,443,616		$	5,920,882
Cash (used in) investing activities	(868,502		)	(2,723,402		)
Cash (used in) provided by financing activities	(2,740,176		)	634,688
Repurchase of Depositary Receipts, Class B and General Partner Units	(610,294		)	—
Distributions paid	(2,952,514		)	(2,761,176		)
Net increase in cash and cash equivalents	$	1,272,130		$	1,070,992

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The cash provided by operating activities is primarily due to the collection of rents less cash operating expenses. The increase in cash provided by operating activities is due to the increase in rent from continuing operations in 2012 compared to the comparable period in 2011.  The increase in cash used in financing activities is substantially due to the principal payments of $1,668,600 of the note payable ;  the decrease in the cash used in investing activities is due to the acquisition of the Battle Green Apartments, offset by the sale of Avon Street Apartments, both events occurring in 2011.  In 2012, the Partnership purchased Depositary Receipts, and Class B and General Partnership Units for a total cost of $610,294.  The Partnership did not buy any receipts in 2011.

During 2012, the Partnership and its Subsidiary Partnerships completed improvements to certain of the Properties at a total cost of approximately $1,641,000. These improvements were funded from cash reserves and, to some extent, escrow accounts established in connection with the financing or refinancing of the applicable Properties. These sources have been adequate to fully fund improvements. The most significant improvements were made at Westgate Woburn, 62 Boylston Street, Hamilton Oaks, Olde English, and 1144 Commonwealth Avenue at a cost of approximately $341,000, $211,000, $208,000, $164,000 and $97,000 respectively. The Partnership plans to invest an additional $174,000 in capital improvements in 2012.

On June 1, 2011, the Partnership purchased the Battle Green Apartments, a 48 unit residential apartment complex located at 34-42 Worthen Road, Lexington, Massachusetts.  The purchase price was $10,000,000.  The Partnership used cash reserves, the proceeds from the sale of Avon Street and borrowed $3,998,573 from Harold Brown, Treasurer of the General Partner to make this purchase.  This loan had an interest rate of 6% and was secured by the Partnership’s ownership interest in Battle Green Apartments, LLC.  The term of the loan is four years with a provision requiring payment in whole or in part upon demand within six months of notice or prepay without penalty.  On July 27, 2011, the Partnership financed the Battle Green Apartments with a new $5,000,000 mortgage at 4.95% which matures in August 2026.  Principal payments will be made using a 30 year amortization schedule.  Deferred financing costs associated with this mortgage totaled approximately $100,000 and accordingly the effective interest rate is 5.07%.  After paying off the existing loan of $3,998,573, approximately $1,000,000 was received by the Partnership. The interest paid on this loan to Harold Brown was $38,123.

On May 18, 2011, the Partnership sold Avon Street Apartments, a 66 unit residential apartment complex located at 130 Avon Street, Malden, Massachusetts.  The sales price was $8,750,000, which resulted in a gain of approximately $7,720,000.  The net proceeds of the sale, of approximately $5,444,000 were held by a qualified intermediary in order for the Partnership to structure a tax free exchange in accordance with Section 1031 of the IRS code.  This tax free exchange was completed with the purchase of Battle Green Apartments.

During the nine months ended September 30, 2012, the Partnership purchased 16,985 Depositary Receipts for a cost of $488,627, 135 Class B Units for a cost of $115,585 and 7 General Partnership Unit for a cost of $6,083 for a total cost of $610,294.  There were no purchases of Depositary Receipts in 2011.

On October 28, 2009, the Partnership borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brown and his affiliates (“HBC”).  The term of the loan was four years with a provision requiring payment in whole or in part upon demand by HBC with six months notice.  The Partnership could also prepay the note without penalty.  On August 17, 2010, HBC gave six months written notice to the Partnership requesting a principal pay down of $2,500,000.  During the fourth quarter of 2010, the Partnership paid HBC $2,500,000 as requested.  During 2011, the Partnership elected to make principal payments of $1,000,000 on August 1, 2011, $1,000,000 on October 1, 2011 and $1,000,000 on December 15, 2011 reducing the loan balance to $1,668,600.  In February 2012, the Partnership elected to make an additional principal payment of $750,000 to HBC Holdings and the balance of $918,600 was paid in April 2012. The interest paid during the nine months ended September 30, 2012 and 2011 was approximately $18,960 and $141,000, respectively.

During the nine months ended September 30, 2012, the Partnership received distributions of approximately $772,000 from the investment properties of which $562,000 was from Dexter Park.  In 2012, Dexter Park is required to increase principal payments on its mortgage by approximately $1,000,000.  The Partnership’s share of this increased amortization is

34

approximately $400,000. Distributions from Dexter Park for the nine months ended September 30, 2012 were $562,000 compared to $650,000 for the nine months ended September 30, 2011.

The Partnership approved quarterly distributions of $7.50 per Unit ($0.25 per Receipt) payable on March 31, 2012, June 30, 2012, September 30, 2012 and December 31, 2012.

The Partnership anticipates that cash from operations and interest bearing accounts will be sufficient to fund its current operations, pay distributions, and make required debt payments and to 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 September 30, 2012, the Partnership had between a 40%-50% ownership interest in nine Joint Ventures, all of which have mortgage indebtedness. We do not have control of these partnerships and therefore we account for them using the equity method of consolidation. At September 30, 2012, our proportionate share of the non-recourse debt related to these investments was approximately $60,478,000. See Note 14 to the Consolidated Financial Statements.

Contractual Obligations

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

Factors That May Affect Future Results

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

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

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

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

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

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

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

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

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

·The Partnership properties face competition from similar properties in the same market. This competition may

35

affect the Partnership’s ability to attract and retain tenants and may reduce the rents that can be charged.

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

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

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

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

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

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

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

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

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

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 30, 2012, the Partnership, its Subsidiary Partnerships and the Investment Properties collectively have approximately $277,071,000 in long-term debt, substantially all of which pays interest at fixed rates. Accordingly, the fair value of these debt instruments is affected by changes in market interest rates. These mortgages mature through 2026. For information regarding the fair value and maturity dates of these debt obligations, see Item 2. Properties and 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.  We have evaluated the design and operation of our disclosure controls and procedures to determine whether they are effective in ensuring that the disclosure of required information is timely made in accordance with the Securities Exchange Act of 1934 (“Exchange Act”) and the rules and forms of the Securities and Exchange Commission. This evaluation was made under the supervision and with the participation of management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of our General Partner as of the end of the period covered by

36

this quarterly report on Form 10-Q. The CEO and CFO have concluded, based on their reviews, that our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), are effective to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting.  There were no changes in our internal control over financial reporting during the third quarter of 2012 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II  —  OTHER INFORMATION

Item 1.  Legal Proceedings

The Partnership, the Subsidiary Partnerships and their properties are not presently subject to any material litigation, and, to management’s knowledge, there is not any material litigation presently threatened against them.  The Partnership and Subsidiary Partnerships are occasionally subject to ordinary routine legal and administrative proceedings incident to the ownership of residential and commercial real estate.  Some of the legal and other expenses related to these proceedings are covered by insurance and none of these costs and expenses are expected to have a material adverse effect on the Consolidated Financial Statements of the Partnership.

Item 1A.  Risk Factors

There were no material changes to the risk factors disclosed in our annual report on Form 10K for the year ended December 31, 2011.

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

(a)None

(b)None

(c)Issuer Purchases of Equity Securities during the third Quarter of 2012:

				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)
July 1 - 30, 2012	$	26.10	91	302,896
August 1- 31, 2012	$	27.62	360	302,536
September 1 - 30, 2012	$	29.00	14,481	288,055
Total			14,932

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”).  Under the terms of the Repurchase Program, the Partnership may purchase up to 1,500,000 Depositary Receipts from the start of the program in 2007 through March 31, 2015.  The Repurchase Program requires the Partnership to repurchase a proportionate number of Class B Units and General Partnership 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 September 30, 2012, the Partnership has repurchased 1,211,945 Depositary Receipts at an average price of $24.59 per receipt (or $737.70 per underlying Class A Unit), 1,859 Class B Units and 98 General Partnership Units, at an average price of $604.92 per Unit, totaling approximately $31,150,000 including brokerage fees paid by the Partnership.

From October 1, 2012 through November 9, 2012, the Partnership purchased a total of 942 Depositary Receipts.  The average price was $28.85 per receipt or $865.50 per unit. The total cost was $28,344.  The Partnership is required to repurchase 7.5 Class B Units and 0.39 General Partnership units at a cost of $6,454 and $340, respectively.

37

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosure

Not applicable.

Item 5.  Other Information

None.

Item 6.  Exhibits

See the exhibit index below.

38

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: November 13, 2012

39

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 Harold Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership)
(32.1)	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Ronald Brown, Principal Executive Officer of the Partnership (President and a Director of NewReal, Inc., sole General Partner of the Partnership) and Harold Brown, Principal Financial Officer of the Partnership (Treasurer and a Director of NewReal, Inc., sole General Partner of the Partnership).
(101.1)	The following financial statements from New England Realty Associates Limited Partnership Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 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).

40

EX-31.1

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: November 13, 2012

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Harold Brown, certify that:

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

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

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

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

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

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

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

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

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

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

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

	/s/ HAROLD BROWN
	Principal Financial Officer
	(Treasurer and Director of the
	Partnership’s General Partner, NewReal, Inc.)
Date: November 13, 2012

EX-32.1

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 quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ronald Brown, as President and  Director of the Partnership’s General Partner, NewReal, Inc., and Harold Brown, the President and a Director of the Partnership’s General Partner, NewReal, Inc., each hereby certifies, pursuant to 18.U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

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

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

	/s/ RONALD BROWN
	Ronald Brown
	Principal Executive Officer
	(President and Director of the
	Partnership’s General Partner, NewReal, Inc.)
Date: November 13, 2012
	/s/ Harold Brown
	Harold Brown
	Principal Financial Officer
	(Treasurer and Director of the
	Partnership’s General Partner, NewReal, Inc.)
Date: November 13, 2012

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.

XML

ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS
Period for advance rental payment	1 month
Amount received for prepaid rent	$ 1,314,000
Security deposits	$ 1,832,000

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Details 3) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Hamilton Essex 81	Sep. 30, 2011 Hamilton Essex 81	Sep. 30, 2012 Hamilton Essex 81	Sep. 30, 2011 Hamilton Essex 81	Sep. 30, 2012 Hamilton Essex 81 NERA 50%	Sep. 30, 2011 Hamilton Essex 81 NERA 50%	Sep. 30, 2012 Hamilton Essex 81 NERA 50%	Sep. 30, 2011 Hamilton Essex 81 NERA 50%	Sep. 30, 2012 Hamilton Essex Development	Sep. 30, 2011 Hamilton Essex Development	Sep. 30, 2012 Hamilton Essex Development	Sep. 30, 2011 Hamilton Essex Development	Sep. 30, 2012 Hamilton Essex Development NERA 50%	Sep. 30, 2011 Hamilton Essex Development NERA 50%	Sep. 30, 2012 Hamilton Essex Development NERA 50%	Sep. 30, 2011 Hamilton Essex Development NERA 50%	Sep. 30, 2012 345 Franklin	Sep. 30, 2011 345 Franklin	Sep. 30, 2012 345 Franklin	Sep. 30, 2011 345 Franklin	Nov. 30, 2001 345 Franklin	Sep. 30, 2012 345 Franklin NERA 50%	Sep. 30, 2011 345 Franklin NERA 50%	Sep. 30, 2012 345 Franklin NERA 50%	Sep. 30, 2011 345 Franklin NERA 50%	Sep. 30, 2012 Hamilton 1025	Sep. 30, 2011 Hamilton 1025	Sep. 30, 2012 Hamilton 1025	Sep. 30, 2011 Hamilton 1025	Mar. 02, 2005 Hamilton 1025	Sep. 30, 2012 Hamilton 1025 NERA 50%	Sep. 30, 2011 Hamilton 1025 NERA 50%	Sep. 30, 2012 Hamilton 1025 NERA 50%	Sep. 30, 2011 Hamilton 1025 NERA 50%	Sep. 30, 2012 Hamilton Bay Sales	Sep. 30, 2011 Hamilton Bay Sales	Sep. 30, 2012 Hamilton Bay Sales	Sep. 30, 2011 Hamilton Bay Sales	Sep. 30, 2012 Hamilton Bay Sales NERA 50%	Sep. 30, 2011 Hamilton Bay Sales NERA 50%	Sep. 30, 2012 Hamilton Bay Sales NERA 50%	Sep. 30, 2011 Hamilton Bay Sales NERA 50%	Sep. 30, 2012 Hamilton Bay Apts	Sep. 30, 2011 Hamilton Bay Apts	Sep. 30, 2012 Hamilton Bay Apts	Sep. 30, 2011 Hamilton Bay Apts	Oct. 03, 2005 Hamilton Bay Apts	Sep. 30, 2012 Hamilton Bay Apts NERA 50%	Sep. 30, 2011 Hamilton Bay Apts NERA 50%	Sep. 30, 2012 Hamilton Bay Apts NERA 50%	Sep. 30, 2011 Hamilton Bay Apts NERA 50%	Sep. 30, 2012 Hamilton Minuteman Apts	Sep. 30, 2011 Hamilton Minuteman Apts	Sep. 30, 2012 Hamilton Minuteman Apts	Sep. 30, 2011 Hamilton Minuteman Apts	Sep. 30, 2004 Hamilton Minuteman Apts	Sep. 30, 2012 Hamilton Minuteman Apts NERA 50%	Sep. 30, 2011 Hamilton Minuteman Apts NERA 50%	Sep. 30, 2012 Hamilton Minuteman Apts NERA 50%	Sep. 30, 2011 Hamilton Minuteman Apts NERA 50%	Sep. 30, 2012 Hamilton on Main Apts	Sep. 30, 2011 Hamilton on Main Apts	Sep. 30, 2012 Hamilton on Main Apts	Sep. 30, 2011 Hamilton on Main Apts	Aug. 31, 2004 Hamilton on Main Apts	Sep. 30, 2012 Hamilton on Main Apts NERA 50%	Sep. 30, 2011 Hamilton on Main Apts NERA 50%	Sep. 30, 2012 Hamilton on Main Apts NERA 50%	Sep. 30, 2011 Hamilton on Main Apts NERA 50%	Sep. 30, 2012 Dexter Park	Sep. 30, 2011 Dexter Park	Sep. 30, 2012 Dexter Park	Sep. 30, 2011 Dexter Park	Sep. 30, 2012 Dexter Park NERA 40%	Sep. 30, 2011 Dexter Park NERA 40%	Sep. 30, 2012 Dexter Park NERA 40%	Sep. 30, 2011 Dexter Park NERA 40%	Sep. 30, 2012 Total	Sep. 30, 2011 Total	Sep. 30, 2012 Total	Sep. 30, 2011 Total	Sep. 30, 2012 Total NERA 50%	Sep. 30, 2011 Total NERA 50%	Sep. 30, 2012 Total NERA 50%	Sep. 30, 2011 Total NERA 50%	Sep. 30, 2012 Total NERA 40%	Sep. 30, 2011 Total NERA 40%	Sep. 30, 2012 Total NERA 40%	Sep. 30, 2011 Total NERA 40%
Revenues
Rental income	$ 8,782,896	$ 8,543,908	$ 26,245,505	$ 24,957,004	$ 311,281	$ 374,433	$ 937,284	$ 940,881					$ 72,046	$ 73,146	$ 216,137	$ 214,196					$ 295,031	$ 288,169	$ 873,734	$ 848,631						$ 218,064	$ 206,445	$ 639,791	$ 607,752						$ 61,862	$ 59,375	$ 173,054	$ 178,514					$ 223,301	$ 217,079	$ 659,463	$ 643,284						$ 204,535	$ 196,335	$ 603,212	$ 589,360						$ 656,122	$ 625,370	$ 1,953,493	$ 1,856,189						$ 2,993,242	$ 2,848,930	$ 9,056,079	$ 8,588,891					$ 5,035,486	$ 4,889,281	$ 15,112,247	$ 14,467,697
Laundry and sundry income	92,700	104,618	282,889	318,059	3,415	4,668	10,488	11,870													600	(307)	1,788	921																																175	579	666	579						3,752	4,910	13,732	15,698						31,384	24,900	75,239	74,713					39,327	34,750	101,913	103,782
Total Revenues	8,875,596	8,648,526	26,528,394	25,275,063	314,697	379,102	947,772	952,750					72,046	73,146	216,137	214,196					295,631	287,862	875,522	849,552						218,064	206,445	639,791	607,752						61,862	59,375	173,054	178,514					223,301	217,079	659,463	643,284						204,711	196,914	603,878	589,939						659,875	630,280	1,967,225	1,871,887						3,024,626	2,873,830	9,131,318	8,663,605					5,074,812	4,924,031	15,214,160	14,571,479
Expenses
Administrative	463,687	411,836	1,362,276	1,237,424	2,824	1,548	10,430	12,818					317	255	1,432	1,084					7,845	11,388	23,211	20,368						1,599	2,934	4,079	7,812						2,514	1,728	6,617	3,529					6,285	7,003	29,996	14,587						3,823	1,387	6,755	9,431						11,209	9,334	37,307	25,019						59,789	55,971	169,223	122,470					96,206	91,548	289,048	217,119
Depreciation and amortization	1,571,942	1,603,529	4,632,173	4,412,144	101,777	106,099	308,642	317,669					2,909	1,922	9,394	5,048					114,199	112,028	336,339	333,321						63,962	65,582	190,555	194,986						19,736	22,416	59,208	67,248					74,920	78,381	224,008	235,595						80,075	81,891	238,621	244,550						240,997	242,907	717,664	724,597						1,443,275	1,429,538	4,314,274	4,276,964					2,141,849	2,140,763	6,398,704	6,399,978
Management fees					13,547	11,495	40,573	36,596					2,882	2,760	8,645	8,280					11,953	11,372	36,070	34,012						9,079	8,182	25,964	24,089						2,681	2,416	7,268	7,320					8,761	8,516	25,753	25,268						8,225	7,589	24,241	23,493						26,655	24,345	78,862	74,867						66,474	64,815	196,041	188,088					150,256	141,490	443,417	422,011
Operating	731,618	774,998	2,684,760	3,104,722	32,187	26,096	85,319	91,167													13,451	17,674	42,933	53,705						1	280	636	1,148						310	75	1,237	170					165	159	1,070	378						16,664	9,789	54,385	30,360						63,833	75,443	242,157	285,510						217,288	205,322	764,389	699,466					343,898	334,838	1,192,125	1,161,904
Renting	48,483	63,482	148,602	260,819	14,574	487	16,664	7,667													3,318	4,572	3,459	14,979						3,389	2,209	5,718	9,338							675	1,450	1,750					389	2,166	3,660	6,755						1,019	899	3,013	2,676						2,265	5,740	8,845	12,791						30,033	34,679	71,830	133,066					54,987	51,427	114,639	189,022
Repairs and maintenance	1,487,272	1,421,084	3,857,918	3,800,836	39,279	47,258	94,156	103,137					950		5,475	3,050					17,401	21,504	61,720	57,642						89,279	74,625	235,472	224,152						21,202	17,377	53,379	55,285					71,906	65,890	205,125	221,000						15,818	32,238	45,315	76,312						85,358	99,953	283,251	267,194						277,534	306,231	707,486	750,306					618,728	665,076	1,691,378	1,758,077
Taxes and insurance	1,066,739	1,042,470	3,241,830	3,103,215	48,843	45,262	149,722	139,499					12,025	12,195	37,211	36,014					25,358	24,438	75,919	71,706						36,279	34,912	109,871	108,471						11,329	11,548	34,890	34,328					39,893	38,775	121,571	117,288						26,154	24,754	77,022	68,306						85,473	82,541	253,782	242,777						371,328	353,478	1,115,971	959,720					656,683	627,903	1,975,959	1,778,109
Total Expenses	5,730,319	5,665,232	17,005,747	16,951,229	253,031	238,245	705,506	708,553					19,084	17,132	62,158	53,476					193,525	202,976	579,650	585,734						203,588	188,724	572,294	569,995						57,772	56,235	164,047	169,630					202,319	200,889	611,182	620,870						151,778	158,546	449,351	455,128						515,790	540,263	1,621,867	1,632,755						2,465,720	2,450,035	7,339,215	7,130,079					4,062,608	4,053,046	12,105,270	11,926,220
Income Before Other Income	3,145,277	2,983,294	9,522,647	8,323,834	61,665	140,856	242,266	244,197					52,962	56,014	153,980	160,720					102,106	84,886	295,872	263,818						14,476	17,721	67,497	37,757						4,090	3,140	9,007	8,884					20,982	16,190	48,281	22,414						52,933	38,368	154,527	134,812						144,085	90,016	345,358	239,132						558,906	423,795	1,792,103	1,533,525					1,012,205	870,985	3,108,891	2,645,259
Other Income (Expense)
Interest expense	(1,953,645)	(2,033,082)	(5,853,647)	(5,962,907)	(124,806)	(126,599)	(373,357)	(376,847)					(15,110)	(15,349)	(45,437)	(46,036)					(120,435)	(123,353)	(366,348)	(371,875)						(72,408)	(72,913)	(216,254)	(216,310)						(24,738)	(24,715)	(73,609)	(73,297)					(68,108)	(68,403)	(203,375)	(202,923)						(79,666)	(80,190)	(238,036)	(237,765)						(210,248)	(213,905)	(628,955)	(636,029)						(1,277,390)	(1,288,240)	(3,818,020)	(3,824,313)					(1,992,910)	(2,013,666)	(5,963,390)	(5,985,397)
Interest income	554	895	1,746	3,129																	12	12	36	37						21	22	62	66						51	108	165	378																																			3,219					84	142	262	3,701
Interest Income from Note																																							1,458	2,145	4,901	6,926																																								1,458	2,145	4,901	6,926
Gain on the sale of real estate		(808)		7,720,459
Other Income (Expenses)						(2,331)		(2,331)														(5,375)		(5,375)							(3,621)		(3,621)															(2,271)		(2,271)																(1,152)		(1,152)															(14,751)		(14,751)
Total Other Income (Expense)	(2,370,824)	(2,523,315)	(7,073,978)	(7,403,152)	(124,806)	(128,930)	(373,357)	(379,178)					(15,110)	(15,349)	(45,437)	(46,036)					(120,423)	(128,716)	(366,311)	(377,213)						(72,388)	(76,513)	(216,193)	(219,865)						(23,229)	(22,462)	(68,543)	(65,993)					(68,108)	(70,674)	(203,375)	(205,194)						(79,666)	(80,190)	(238,036)	(237,765)						(210,248)	(215,057)	(628,955)	(637,181)						(1,277,390)	(1,288,240)	(3,818,020)	(3,821,094)					(1,991,367)	(2,026,130)	(5,958,227)	(5,989,521)
Net income	774,453	456,926	2,448,669	8,722,708	(63,141)	11,926	(131,091)	(134,981)					37,852	40,665	108,543	114,684					(18,317)	(43,830)	(70,439)	(113,395)						(57,912)	(58,792)	(148,696)	(182,108)						(19,139)	(19,322)	(59,537)	(57,110)					(47,126)	(54,484)	(155,094)	(182,781)						(26,733)	(41,822)	(83,509)	(102,953)						(66,164)	(125,040)	(283,597)	(398,049)						(718,484)	(864,445)	(2,025,917)	(2,287,569)					(979,163)	(1,155,144)	(2,849,337)	(3,344,262)
Proportionate share of net loss									$ (31,571)	$ 5,963	$ (65,546)	$ (67,491)					$ 18,926	$ 20,333	$ 54,271	$ 57,342						$ (9,158)	$ (21,915)	$ (35,220)	$ (56,697)						$ (28,956)	$ (29,396)	$ (74,348)	$ (91,054)					$ (9,569)	$ (9,661)	$ (29,768)	$ (28,555)						$ (23,563)	$ (27,242)	$ (77,547)	$ (91,390)						$ (13,366)	$ (20,911)	$ (41,754)	$ (51,476)						$ (33,082)	$ (62,520)	$ (141,798)	$ (199,024)					$ (287,394)	$ (345,778)	$ (810,367)	$ (915,028)	$ (417,733)	$ (491,128)	$ (1,222,077)	$ (1,443,374)	$ (130,339)	$ (145,350)	$ (411,710)	$ (528,346)	$ (287,394)	$ (345,778)	$ (810,367)	$ (915,028)
Percentage of ownership interest									50.00%	50.00%	50.00%	50.00%					50.00%	50.00%	50.00%	50.00%					50.00%	50.00%	50.00%	50.00%	50.00%					50.00%	50.00%	50.00%	50.00%	50.00%					50.00%	50.00%	50.00%	50.00%					50.00%	50.00%	50.00%	50.00%	50.00%					50.00%	50.00%	50.00%	50.00%	50.00%					50.00%	50.00%	50.00%	50.00%	50.00%					40.00%	40.00%	40.00%	40.00%					50.00%	50.00%	50.00%	50.00%	40.00%	40.00%	40.00%	40.00%

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Details) (USD $)	9 Months Ended			9 Months Ended			9 Months Ended				1 Months Ended					1 Months Ended				1 Months Ended			1 Months Ended	9 Months Ended			1 Months Ended				1 Months Ended							1 Months Ended				9 Months Ended				12 Months Ended					1 Months Ended	9 Months Ended																											1 Months Ended							3 Months Ended	9 Months Ended			1 Months Ended						3 Months Ended	9 Months Ended					9 Months Ended		9 Months Ended			9 Months Ended
	Sep. 30, 2012 item	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 Hamilton Park Towers, LLC item	Sep. 30, 2011 Hamilton Park Towers, LLC item	Oct. 28, 2009 Hamilton Park Towers, LLC	Sep. 30, 2012 Hamilton Park Towers, LLC Mortgage loan	Sep. 30, 2012 Hamilton Bay Apartments, LLC item	Sep. 30, 2011 Hamilton Bay Apartments, LLC item	Apr. 30, 2008 Hamilton Bay Apartments, LLC item	Feb. 28, 2007 Hamilton Bay Apartments, LLC Mortgage loan	Sep. 30, 2012 Hamilton Bay Apartments, LLC Mortgage loan	Sep. 30, 2012 Hamilton Bay, LLC item	Sep. 30, 2011 Hamilton Bay, LLC item	Oct. 03, 2005 Hamilton Bay, LLC item	Apr. 30, 2008 Hamilton Bay, LLC Mortgage loan	Nov. 30, 2012 Hamilton Bay, LLC Mortgage loan item	Sep. 30, 2012 Hamilton Bay, LLC Mortgage loan	Mar. 07, 2005 Hamilton Essex Development, LLC and Hamilton Essex 81, LLC	Mar. 31, 2005 Hamilton Essex Development, LLC and Hamilton Essex 81, LLC Mortgage loan	Sep. 30, 2012 Hamilton Essex 81, LLC item	Sep. 30, 2011 Hamilton Essex 81, LLC item	Aug. 31, 2008 Hamilton Essex 81, LLC Mortgage loan	Sep. 30, 2012 Hamilton Essex 81, LLC Mortgage loan	Sep. 30, 2012 Hamilton Essex Development, LLC item	Sep. 30, 2011 Hamilton Essex Development, LLC item	Aug. 31, 2008 Hamilton Essex Development, LLC Mortgage loan	Sep. 30, 2012 Hamilton 1025, LLC item	Sep. 30, 2011 Hamilton 1025, LLC item	Mar. 02, 2005 Hamilton 1025, LLC item	Mar. 31, 2005 Hamilton 1025, LLC Mortgage loan	Sep. 30, 2012 Hamilton 1025, LLC Mortgage loan	Mar. 02, 2005 Hamilton 1025, LLC Mortgage loan	Sep. 30, 2012 Hamilton Minuteman, LLC item	Sep. 30, 2011 Hamilton Minuteman, LLC item	Oct. 31, 2004 Hamilton Minuteman, LLC	Sep. 30, 2004 Hamilton Minuteman, LLC item	Jan. 31, 2007 Hamilton Minuteman, LLC Mortgage loan	Oct. 31, 2004 Hamilton Minuteman, LLC Mortgage loan	Sep. 30, 2012 Hamilton Minuteman, LLC Mortgage loan	Dec. 31, 2006 Hamilton Minuteman, LLC Mortgage loan	Sep. 30, 2012 Hamilton on Main, LLC item	Sep. 30, 2011 Hamilton on Main, LLC item	May 31, 2008 Hamilton on Main, LLC item	Aug. 31, 2004 Hamilton on Main, LLC item	Dec. 31, 2005 Hamilton on Main Apartments, LLC Mortgage loan	Sep. 30, 2012 Hamilton on Main Apartments, LLC Mortgage loan	Sep. 30, 2012 345 Franklin, LLC item	Sep. 30, 2011 345 Franklin, LLC item	Nov. 30, 2001 345 Franklin, LLC item	Nov. 30, 2001 345 Franklin, LLC Mortgage loan	Sep. 30, 2012 345 Franklin, LLC Mortgage loan	Sep. 30, 2012 Residential buildings Hamilton Park Towers, LLC item	Sep. 30, 2011 Residential buildings Hamilton Park Towers, LLC item	Sep. 30, 2012 Residential buildings Hamilton Bay Apartments, LLC item	Sep. 30, 2011 Residential buildings Hamilton Bay Apartments, LLC item	Sep. 30, 2012 Residential buildings Hamilton Bay, LLC item	Sep. 30, 2011 Residential buildings Hamilton Bay, LLC item	Sep. 30, 2012 Residential buildings Hamilton Essex 81, LLC item	Sep. 30, 2011 Residential buildings Hamilton Essex 81, LLC item	Sep. 30, 2012 Residential buildings Hamilton 1025, LLC item	Sep. 30, 2011 Residential buildings Hamilton 1025, LLC item	Sep. 30, 2012 Residential buildings Hamilton Minuteman, LLC item	Sep. 30, 2011 Residential buildings Hamilton Minuteman, LLC item	Sep. 30, 2012 Residential buildings Hamilton on Main, LLC item	Sep. 30, 2011 Residential buildings Hamilton on Main, LLC item	Sep. 30, 2012 Residential buildings 345 Franklin, LLC item	Sep. 30, 2011 Residential buildings 345 Franklin, LLC item	Mar. 07, 2005 Apartment Hamilton Essex Development, LLC and Hamilton Essex 81, LLC item	Mar. 07, 2005 Commercial Hamilton Essex Development, LLC and Hamilton Essex 81, LLC item	Sep. 30, 2012 Commercial Hamilton Essex 81, LLC item	Sep. 30, 2011 Commercial Hamilton Essex 81, LLC item	Sep. 30, 2012 Commercial Hamilton Essex Development, LLC item	Sep. 30, 2011 Commercial Hamilton Essex Development, LLC item	Sep. 30, 2012 Commercial Hamilton 1025, LLC item	Sep. 30, 2011 Commercial Hamilton 1025, LLC item	Mar. 07, 2005 Car parking lot Hamilton Essex Development, LLC and Hamilton Essex 81, LLC item	Aug. 31, 2008 Harold Brown Hamilton Essex Development, LLC Mortgage loan	Apr. 30, 2012 HBC	Feb. 29, 2012 HBC	Dec. 31, 2011 HBC	Oct. 31, 2011 HBC	Aug. 31, 2011 HBC	Aug. 31, 2010 HBC	Oct. 31, 2009 HBC	Dec. 31, 2010 HBC	Sep. 30, 2012 HBC	Sep. 30, 2011 HBC	Oct. 28, 2009 HBC	Apr. 30, 2012 HBC Hamilton Park Towers, LLC Mortgage loan	Feb. 29, 2012 HBC Hamilton Park Towers, LLC Mortgage loan	Dec. 31, 2011 HBC Hamilton Park Towers, LLC Mortgage loan	Oct. 31, 2011 HBC Hamilton Park Towers, LLC Mortgage loan	Aug. 31, 2011 HBC Hamilton Park Towers, LLC Mortgage loan	Aug. 31, 2010 HBC Hamilton Park Towers, LLC Mortgage loan	Dec. 31, 2010 HBC Hamilton Park Towers, LLC Mortgage loan	Sep. 30, 2012 HBC Hamilton Park Towers, LLC Mortgage loan	Sep. 30, 2011 HBC Hamilton Park Towers, LLC Mortgage loan	Sep. 30, 2012 Management Company item	Sep. 30, 2012 Minimum Mortgage loan	Sep. 30, 2012 Minimum Limited Partnerships	Sep. 30, 2012 Minimum Hamilton on Main, LLC	Sep. 30, 2012 Minimum Harold Brown	Sep. 30, 2012 Minimum Harold Brown Hamilton Bay, LLC	Sep. 30, 2012 Maximum Mortgage loan	Sep. 30, 2012 Maximum Limited Partnerships	Sep. 30, 2012 Maximum Hamilton on Main, LLC	Sep. 30, 2012 Maximum Harold Brown
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
Number of limited partnerships and limited liability companies in which the entity has invested	9
Number of partnerships investing in commercial property	3
Percentage of ownership interest															50.00%				50.00%											50.00%							50.00%								50.00%					50.00%																																																			40.00%		43.20%			50.00%		57.00%
Number of employees having ownership interest																																																																																																			6
Investments in joint venture	$ 14,786,580		$ 16,780,657			$ 15,925,000									$ 2,500,000				$ 2,000,000											$ 2,352,000							$ 5,075,000								$ 8,000,000					$ 1,533,000
Number of units	120			409	409			120	120	20			48	48	168						49	49			1	1		176	176	176				42	42		42					148	148		280			40	40	40			409	409	120	120	48	48	48	48	175	175	42	42	148	148	40	40	49		1	1	1	1	1	1
Number of properties																																																																						1
Purchase price of investments						129,500,000									30,875,000				14,300,000											23,750,000							10,100,000								56,000,000
Borrowings							89,914,000				4,750,000					2,368,000				10,750,000			8,380,000				2,106,000				5,000,000							5,500,000	8,025,000							16,825,000																																							7,168,000												7,168,000
Interest rate (as a percent)							5.57%				5.57%					5.75%							5.79%										5.67%					5.67%								5.18%					6.90%																																						6.00%								6.00%			4.25%					7.07%
Interest rate (as a percent)																																																																																																				2.50%
Interest rate (as a percent)																																																																																																									6.90%
Period for which the entity is required to make interest only payments							2 years				5 years																				5 years							5 years								3 years
Amortization period of debt							30 years				30 years												30 years	30 years							30 years							30 years								30 years					30 years
Outstanding amount of mortgage loan	138,335,670		139,161,612	88,891,126	89,914,000			1,668,000	1,668,000			4,717,000	4,716,555	4,750,000				1,668,000			8,379,679	8,487,795			2,106,087	2,157,699		4,949,865	500,000			4,950,000		5,450,034	5,500,000					5,450,000		15,680,318	15,952,852				15,680,000	6,893,510	7,059,569			6,894,000																													1,668,600											1,668,600
Investments funded using cash reserves							8,757,000
Term of debt																															10 years							10 years								10 years					12 years																																		4 years												4 years
Notice period for principal paydown of debt																																																																																				6 months													6 months
Principal amount requested to be repaid																																																																																				2,500,000											2,500,000
Repayment of loan																																																																															918,600							2,500,000				918,600						2,500,000
Principal payments elected to be made																																																																																750,000	1,000,000	1,000,000	1,000,000								750,000	1,000,000	1,000,000	1,000,000
Interest paid	5,854,000	6,008,000																																																																																					18,960	202,000									18,960	202,000
Amortization period of intangible assets				12 months
Number of units retained for long-term investment				409	409								48	48	48						49	49			1	1		49	49	49				42	42							148	148					40	40
Number of units sold	105							105	105								105											127	127	127														137
Capacity of real estate property (in cars per lot)																																																																													50
Margin over basis of interest rate (as a percent)																											2.25%
Basis of interest rate																											Libor
Notional margin over basis of interest rate (as a percent)																											0.22%
Principal amount of debt to be paid per month																											4,301
Cost associated with loan extension																											6,000
Limited guaranty issued by related party																																																																														1,000,000
Amount retained by partnership																																				3,775,000
Cash contribution by the entity towards loan																																									1,250,000
Ownership percentage in third party entity by majority shareholder of the General Partner																																										31.00%
Ownership percentage in third party entity by President of management company																																										5.00%
Percentage of variable commission on each sale																																																																																																						3.00%					5.00%
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
Fee for early extinguishment of debt																																														400,000
Final payment due on the maturity date																																																				$ 6,000,000
Repayment guaranty by related party (as a percent)																																																																																																								50.00%

XML

SIGNIFICANT ACCOUNTING POLICIES (Details)	Sep. 30, 2012 item
Line of business
Number of units	120
Residential and mixed-use properties
Line of business
Number of properties	20
Number of units	2,251
Condominium
Line of business
Number of properties	1
Number of units	19
Wholly owned properties
Line of business
Number of properties	24
Wholly owned properties | Residential buildings
Line of business
Number of properties	16
Number of units	2,251
Wholly owned properties | Mixed use residential, retail and office buildings
Line of business
Number of properties	4
Wholly owned properties | Commercial
Line of business
Number of properties	3
Area of property (in square feet)	110,949
Wholly owned properties | Condominium
Line of business
Number of properties	1
Number of units	19
Partially owned properties | Residential and mixed-use properties
Line of business
Number of properties	9
Number of units	799
Area of property (in square feet)	12,500
Partially owned properties | Residential and mixed-use properties | Minimum
Line of business
Percentage of ownership interest	40.00%
Partially owned properties | Residential and mixed-use properties | Maximum
Line of business
Percentage of ownership interest	50.00%
Partially owned properties | Car parking lot
Line of business
Capacity of real estate property (in cars per lot)	50

XML

RENTAL PROPERTIES (Tables)

9 Months Ended

Sep. 30, 2012

RENTAL PROPERTIES

Schedule of rental properties

	September 30, 2012			December 31, 2011			Useful Life
Land, improvements and parking lots	$	27,781,268		$	27,614,537		15—40 years
Buildings and improvements	119,318,092			119,097,186			15—40 years
Kitchen cabinets	3,990,449			3,542,249			5—10 years
Carpets	3,847,902			3,307,499			5—10 years
Air conditioning	830,218			788,146			7—10 years
Laundry equipment	375,167			368,955			5—7 years
Elevators	1,139,296			1,139,296			20 years
Swimming pools	235,242			235,242			10 years
Equipment	1,812,027			1,744,006			5—7 years
Motor vehicles	107,788			107,788			5 years
Fences	26,874			22,974			5—10 years
Furniture and fixtures	1,095,562			1,039,439			5—7 years
Smoke alarms	204,416			116,482			5—7 years
Total fixed assets	$	160,764,301		$	159,123,799
Less: Accumulated depreciation	(64,626,683		)	(60,199,265		)
	$	96,137,618		$	98,924,534

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DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE (Details) (USD $)	3 Months Ended	9 Months Ended	3 Months Ended
	Sep. 30, 2011	Sep. 30, 2011	Jun. 30, 2011 Avon Street Apartments
DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE
Total Revenues		$ 349,548
Operating and other expenses		235,441
Depreciation and amortization - discontinued operations		30,295
Total Expenses		267,981
Income from discontinued operations	(2,245)	81,567
Gain on the sale of Avon Street:
Sales price of real estate properties			8,750,000
Net book value			(594,035)
Expense of sale			(435,506)
Gain on the sale of real estate	$ (808)	$ 7,720,459	$ 7,720,459

XML

RENTAL INCOME (Details) (USD $)	9 Months Ended
	Sep. 30, 2012 squarefoot item	Sep. 30, 2011	Dec. 31, 2011
RENTAL INCOME
Percentage of rental income related to residential apartments and condominium units with leases of one year or less	90.00%
Maximum period of non-cancellable operating lease	1 year
Percentage of rental income related to commercial properties	10.00%
Minimum future rental income
2013	$ 2,453,000
2014	2,125,000
2015	1,601,000
2016	1,299,000
2017	508,000
Thereafter	828,000
Commercial Property Leases	8,814,000
Aggregate contingent rentals from continuing operations	477,000	461,000
RENTAL INCOME
Annual base rent for expiring leases	2,806,698
Total square feet for expiring leases	105,449
Total number of leases expiring	44
Percentage of annual base rent for expiring leases	100.00%
Allowance for doubtful rent receivable	563,000		448,000
Recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis	285,000
Deferred rental concession	14,000
Amortization of deferred rents	3,600
Through September 30, 2013
RENTAL INCOME
Annual base rent for expiring leases	518,465
Total square feet for expiring leases	19,182
Total number of leases expiring	10
Percentage of annual base rent for expiring leases	19.00%
Through September 30, 2014
RENTAL INCOME
Annual base rent for expiring leases	599,370
Total square feet for expiring leases	30,118
Total number of leases expiring	13
Percentage of annual base rent for expiring leases	21.00%
Through September 30, 2015
RENTAL INCOME
Annual base rent for expiring leases	146,240
Total square feet for expiring leases	6,415
Total number of leases expiring	5
Percentage of annual base rent for expiring leases	5.00%
Through September 30, 2016
RENTAL INCOME
Annual base rent for expiring leases	715,380
Total square feet for expiring leases	24,210
Total number of leases expiring	6
Percentage of annual base rent for expiring leases	26.00%
Through September 30, 2017
RENTAL INCOME
Annual base rent for expiring leases	497,412
Total square feet for expiring leases	16,818
Total number of leases expiring	6
Percentage of annual base rent for expiring leases	18.00%
Through September 30, 2019
RENTAL INCOME
Annual base rent for expiring leases	123,200
Total square feet for expiring leases	3,850
Total number of leases expiring	1
Percentage of annual base rent for expiring leases	4.00%
Through September 30, 2020
RENTAL INCOME
Annual base rent for expiring leases	141,831
Total square feet for expiring leases	3,056
Total number of leases expiring	2
Percentage of annual base rent for expiring leases	5.00%
Through September 30, 2021
RENTAL INCOME
Annual base rent for expiring leases	$ 64,800
Total square feet for expiring leases	1,800
Total number of leases expiring	1
Percentage of annual base rent for expiring leases	2.00%

XML

OTHER ASSETS (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
OTHER ASSETS
Security deposits and prepaid rent deposits	$ 1,923,000	$ 1,879,000
Escrow deposits to fund future capital improvements	710,000	1,014,000
Financing and leasing fees, net	960,000	919,000
Accumulated amortization on financing and leasing fees	$ 740,000	$ 636,000

XML

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Details 2) (USD $)	Sep. 30, 2012 item	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2012 Hamilton Essex 81 item	Sep. 30, 2011 Hamilton Essex 81 item	Sep. 30, 2012 Hamilton Essex 81 NERA 50%	Sep. 30, 2011 Hamilton Essex 81 NERA 50%	Sep. 30, 2012 Hamilton Essex 81 Apartments item	Sep. 30, 2011 Hamilton Essex 81 Apartments item	Sep. 30, 2012 Hamilton Essex 81 Commercial item	Sep. 30, 2011 Hamilton Essex 81 Commercial item	Sep. 30, 2012 Hamilton Essex Development item	Sep. 30, 2011 Hamilton Essex Development item	Sep. 30, 2012 Hamilton Essex Development NERA 50%	Sep. 30, 2011 Hamilton Essex Development NERA 50%	Sep. 30, 2012 Hamilton Essex Development Commercial item	Sep. 30, 2011 Hamilton Essex Development Commercial item	Sep. 30, 2012 345 Franklin item	Sep. 30, 2011 345 Franklin item	Nov. 30, 2001 345 Franklin item	Sep. 30, 2012 345 Franklin NERA 50%	Sep. 30, 2011 345 Franklin NERA 50%	Sep. 30, 2012 345 Franklin Apartments item	Sep. 30, 2011 345 Franklin Apartments item	Sep. 30, 2012 Hamilton 1025 item	Sep. 30, 2011 Hamilton 1025 item	Mar. 02, 2005 Hamilton 1025 item	Sep. 30, 2012 Hamilton 1025 NERA 50%	Sep. 30, 2011 Hamilton 1025 NERA 50%	Sep. 30, 2012 Hamilton 1025 Apartments item	Sep. 30, 2011 Hamilton 1025 Apartments item	Sep. 30, 2012 Hamilton 1025 Commercial item	Sep. 30, 2011 Hamilton 1025 Commercial item	Sep. 30, 2012 Hamilton Bay Sales item	Sep. 30, 2011 Hamilton Bay Sales item	Apr. 30, 2008 Hamilton Bay Sales item	Sep. 30, 2012 Hamilton Bay Sales NERA 50%	Sep. 30, 2011 Hamilton Bay Sales NERA 50%	Sep. 30, 2012 Hamilton Bay Sales Apartments item	Sep. 30, 2011 Hamilton Bay Sales Apartments item	Sep. 30, 2012 Hamilton Bay Apts item	Sep. 30, 2011 Hamilton Bay Apts item	Oct. 03, 2005 Hamilton Bay Apts item	Sep. 30, 2012 Hamilton Bay Apts NERA 50%	Sep. 30, 2011 Hamilton Bay Apts NERA 50%	Sep. 30, 2012 Hamilton Bay Apts Apartments item	Sep. 30, 2011 Hamilton Bay Apts Apartments item	Sep. 30, 2012 Hamilton Minuteman Apts item	Sep. 30, 2011 Hamilton Minuteman Apts item	Sep. 30, 2004 Hamilton Minuteman Apts item	Sep. 30, 2012 Hamilton Minuteman Apts NERA 50%	Sep. 30, 2011 Hamilton Minuteman Apts NERA 50%	Sep. 30, 2012 Hamilton Minuteman Apts Apartments item	Sep. 30, 2011 Hamilton Minuteman Apts Apartments item	Sep. 30, 2012 Hamilton on Main Apts item	Sep. 30, 2011 Hamilton on Main Apts item	May 31, 2008 Hamilton on Main Apts item	Aug. 31, 2004 Hamilton on Main Apts item	Sep. 30, 2012 Hamilton on Main Apts NERA 50%	Sep. 30, 2011 Hamilton on Main Apts NERA 50%	Sep. 30, 2012 Hamilton on Main Apts Apartments item	Sep. 30, 2011 Hamilton on Main Apts Apartments item	Sep. 30, 2012 Dexter Park item	Sep. 30, 2011 Dexter Park item	Sep. 30, 2012 Dexter Park NERA 40%	Sep. 30, 2011 Dexter Park NERA 40%	Sep. 30, 2012 Dexter Park Apartments item	Sep. 30, 2011 Dexter Park Apartments item	Sep. 30, 2012 Total item	Sep. 30, 2011 Total item	Sep. 30, 2012 Total NERA 50%	Sep. 30, 2011 Total NERA 50%	Sep. 30, 2012 Total NERA 40%	Sep. 30, 2011 Total NERA 40%	Sep. 30, 2012 Total Apartments item	Sep. 30, 2011 Total Apartments item	Sep. 30, 2012 Total Commercial item	Sep. 30, 2011 Total Commercial item
ASSETS
Rental Properties	$ 96,137,618	$ 98,924,534			$ 9,201,729	$ 9,546,059							$ 2,611,197	$ 2,597,309					$ 7,962,705	$ 8,336,008						$ 5,685,935	$ 5,906,387								$ 1,863,770	$ 1,951,075						$ 7,045,549	$ 7,347,113						$ 7,077,941	$ 7,387,465						$ 21,317,705	$ 22,162,035							$ 108,880,125	$ 114,310,012					$ 171,646,656	$ 179,543,463
Cash & Cash Equivalents	5,322,287	4,050,157	4,316,353	3,245,361	3,682	117							12,525	12,916					57,974	10,019						66	33								14,203	24,382						98	12,951						42,880	14,118						159,507	281							782,730	815,551					1,073,665	890,367
Rent Receivable	545,496	434,252			45,283	92,005								19,146					905	879						7,924	9,278								654	904						2,929	1,819						4,791	2,222						5,055	12,054							50,229	172,623					117,770	310,930
Due from Investment Properties						15,000								15,000
Real Estate Tax Escrow	446,314	401,325			49,793	93,721													39,686	38,291						71,850	60,411															95,568	86,578						42,857	44,193						109,839	102,117							430,978	620,090					840,573	1,045,402
Prepaid Expenses & Other Assets	3,460,422	3,866,652			96,118	98,142							807	789					97,491	91,158						102,622	86,663								152,270	189,773						107,997	93,298						76,040	81,180						292,984	526,254							1,328,474	1,178,633					2,254,803	2,345,890
Financing & Leasing Fees	960,064	919,187			64,805	78,711							5,946	9,607					10,205	18,371						20,902	25,928								2,771	7,836						27,833	34,195						16,942	20,911						16,296	23,158							414,507	473,908					580,208	692,624
Total Assets	121,658,781	125,376,764			9,461,410	9,923,756							2,630,476	2,639,767					8,168,966	8,494,727						5,889,300	6,088,700								2,033,669	2,173,969						7,279,975	7,575,954						7,261,451	7,550,088						21,901,385	22,825,899							111,887,043	117,570,816					176,513,675	184,843,676
LIABILITIES AND PARTNERS' CAPITAL
Mortgage Notes Payable	138,335,670	139,161,612			8,379,679	8,487,795							2,106,087	2,157,699					6,893,510	7,059,569						4,949,865	500,000								1,668,000	1,668,000						4,716,555	4,750,000						5,450,034	5,500,000						15,680,318	15,952,852							88,891,126	89,914,000					138,735,173	140,489,916
Due from Investment Properties						15,000								15,000
Accounts Payable & Accrued Expense	2,143,534	2,253,696			72,817	50,338							5,870	5,826					146,324	71,853						49,095	48,147								20,272	17,514						6,929	6,661						94,046	83,378						248,055	200,478							841,053	750,820					1,484,461	1,235,011
Advance Rental Pmts & Security Deposits	3,604,570	3,603,708			148,662	149,104													140,048	111,782						86,764	70,319								23,802	21,446						84,376	83,709						68,652	63,134						267,641	244,407							1,837,442	1,764,347					2,657,387	2,508,248
Total Liabilities	144,083,774	146,687,616			8,601,158	8,687,238							2,111,957	2,178,525					7,179,881	7,243,205						5,085,724	5,118,466								1,712,074	1,706,960						4,807,860	4,840,370						5,612,731	5,646,512						16,196,014	16,397,734							91,569,622	92,429,166					142,877,021	144,248,175
Partners Capital	(22,424,993)	(21,310,852)	(20,959,035)	(26,920,567)	860,252	1,236,518	430,126	618,259					518,519	461,242	259,259	230,621			989,085	1,251,523		494,542	625,761			803,576	970,234		401,788	485,117					321,595	467,010		160,798	233,505			2,472,115	2,735,584		1,236,057	1,367,792			1,648,720	1,903,576		824,360	951,788			5,705,372	6,428,164			2,852,686	3,214,082			20,317,421	25,141,650	8,126,969	10,056,660			33,636,654	40,595,500	6,659,616	7,726,925	8,126,969	10,056,660
Total Liabilities and Partners' Capital	121,658,781	125,376,764			9,461,410	9,923,756							2,630,476	2,639,767					8,168,966	8,494,727						5,889,300	6,088,700								2,033,669	2,173,969						7,279,975	7,575,954						7,261,451	7,550,088						21,901,385	22,825,899							111,887,043	117,570,816					176,513,675	184,843,676
Share of partners capital in investments																																																																						$ 14,786,585	$ 17,783,585
Percentage of ownership interest							50.00%	50.00%							50.00%	50.00%					50.00%	50.00%	50.00%					50.00%	50.00%	50.00%								50.00%	50.00%					50.00%	50.00%	50.00%					50.00%	50.00%	50.00%						50.00%	50.00%	50.00%					40.00%	40.00%					50.00%	50.00%	40.00%	40.00%
Total units/ condominiums
Total	120				49	49			48	48	1	1	1	1			1	1	40	40	40			40	40	176	176	176			175	175	1	1	120	120	20			120	120	48	48	168			48	48	42	42	42			42	42	148	148		280			148	148	409	409			409	409	1,033	1,033					1,030	1,030	3	3
Units to be retained					49	49							1	1					40	40						49	49	49														48	48	48					42	42						148	148							409	409					786	786
Units to be sold	120																									127	127								120	120																																		247	247
Units sold	105																									127	127	127							105	105																						137												232	232
Unsold units	15																																		15	15																																		15	15

XML

RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2012

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 $1,078,000 and $1,047,000 during the nine months ended September 30, 2012 and 2011 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 nine months ended September 30, 2012 and 2011, approximately $503,000, and $601,000, was charged to NERA for legal, accounting, construction, maintenance, rental and architectural services and supervision of capital improvements.  Of the 2012 expenses referred to above, approximately $216,000 consisted of repairs and maintenance and $242,000 of administrative expense.  Approximately $22,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties.   Rental commissions were approximately $23,000 for the nine months ended September 30, 2012. Additionally in 2012, the Hamilton Company received approximately $552,000 from the Investment Properties of which approximately $423,000 was the management fee, approximately $10,000 was for construction supervision and architectural fees, approximately $53,000 was for maintenance services and approximately $62,000 was for administrative services. The management fee is equal to 4% of gross receipts of rental income on the majority of investment properties and 2% on Dexter Park.

On January 1, 2004, all employees were transferred to the Management Company’s payroll. The Partnership reimburses the Management Company for the payroll and related expenses of the employees who work at the properties. Total reimbursement was approximately $1,999,000 and $1,923,000 for the nine months ended September 30, 2012 and 2011, 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 in 2012 and 2011.

Prior to 1991, the Partnership employed an outside, unaffiliated company to perform its bookkeeping and accounting functions. Since that time, such services have been provided by the Management Company’s accounting staff, which consists of approximately 14 people.  During the nine months ended September 30, 2012 and 2011, the Management Company charged the Partnership $93,750 ($125,000 per year) for bookkeeping and accounting services included in administrative expenses of $242,000 above.

In 1996, prior to becoming an employee of the Management Company, the President of the Management Company performed asset management consulting services for the Partnership. This individual continues to perform this service and receives an asset management fee from the Partnership.  The Partnership does not have a written agreement with this individual.  During each of the nine months ended September 30, 2012 and 2011, this individual received $56,250.

The Partnership has invested in nine limited partnerships, which have invested in mixed use residential apartment complexes. The Partnership has between a 40% and 50% ownership interest in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 57%. See Note 14 for a description of the properties and their operations.

On October 28, 2009, the Partnership borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brown and his affiliates (“HBC”).  The term of the loan is four years with a provision requiring payment in whole or in part upon demand by HBC with six months notice.  The Partnership may also prepay the note without penalty.  On August 17, 2010, HBC gave six months written notice to the Partnership requesting a principal pay down of $2,500,000.  During the fourth quarter of 2010, the Partnership paid HBC $2,500,000 as requested.  During 2011, the Partnership elected to make principal payments of $1,000,000 on August 1, 2011, $1,000,000 on October 1, 2011 and $1,000,000 on December 15, 2011 reducing the loan balance to $1,668,600.  In February 2012, the Partnership elected to make an additional principal payment of $750,000 to HBC Holdings and the balance of $918,600 was paid in April 2012. The interest paid during the nine months ended September 30, 2012 and 2011 was approximately $18,960 and $202,000, respectively.

See Note 8 for information regarding the repurchase of Class B and General Partnership Units.

XML

CASH FLOW INFORMATION (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
CASH FLOW INFORMATION
Cash paid for interest	$ 5,854,000	$ 6,008,000
Cash paid for state taxes	$ 23,000	$ 54,000

XML

RENTAL INCOME (Tables)

9 Months Ended

Sep. 30, 2012

RENTAL INCOME

Schedule of minimum future annual rental income on non-cancellable operating leases

	Commercial Property Leases
2013	$	2,453,000
2014	2,125,000
2015	1,601,000
2016	1,299,000
2017	508,000
Thereafter	828,000
	$	8,814,000

Schedule of information for commercial leases

					Percentage of
	Annual base rent		Total square feet	Total number	Annual base rent for
	for expiring leases		for expiring leases	of leases expiring	expiring leases
Through September 30,
2013	$	518,465	19,182	10	19	%
2014	599,370		30,118	13	21	%
2015	146,240		6,415	5	5	%
2016	715,380		24,210	6	26	%
2017	497,412		16,818	6	18	%
2018	—		—	—	—
2019	123,200		3,850	1	4	%
2020	141,831		3,056	2	5	%
2021	64,800		1,800	1	2	%
2022	—		—	—	—
Totals	$	2,806,698	105,449	44	100	%

XML

TREASURY UNITS (Tables)

9 Months Ended

Sep. 30, 2012

TREASURY UNITS

Schedule of treasury units

Class A	39,559
Class B	9,395
General Partnership	495
	49,449

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FAIR VALUE MEASUREMENTS (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Mortgage Notes Payable
Carrying Amount	$ 138,335,670	$ 139,161,612
Partnership Properties
Mortgage Notes Payable
Carrying Amount	138,335,689	139,161,612
Estimated Fair Value	158,058,689	158,050,039
Investment Properties
Mortgage Notes Payable
Carrying Amount	138,735,174
Estimated Fair Value	$ 160,344,245

XML

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2012

FAIR VALUE MEASUREMENTS

Schedule of carrying amounts and estimated fair value of debt

	Carrying Amount		Estimated Fair Value
Mortgage Notes Payable
Partnership Properties
At September 30, 2012	$	138,335,689	$	158,058,689
At December 31, 2011	$	139,161,612	$	158,050,039
Investment Properties
At September 30, 2012	$	138,735,174	$	160,344,245

XML

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Tables)

9 Months Ended

Sep. 30, 2012

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

Summary of financial position relating to investment in unconsolidated joint ventures

Summary financial information as of September 30, 2012

			Hamilton										Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Apts		Apts		Park		Total
ASSETS
Rental Properties	$	9,201,729	$	2,611,197	$	7,962,705	$	5,685,935	$	1,863,770	$	7,045,549	$	7,077,941	$	21,317,705	$	108,880,125	$	171,646,656
Cash & Cash Equivalents	3,682		12,525		57,974		66		14,203		98		42,880		159,507		782,730		1,073,665
Rent Receivable	45,283		—		905		7,924		654		2,929		4,791		5,055		50,229		117,770
Real Estate Tax Escrow	49,793		—		39,686		71,850		—		95,568		42,857		109,839		430,978		840,573
Prepaid Expenses & Other Assets	96,118		807		97,491		102,622		152,270		107,997		76,040		292,984		1,328,474		2,254,803
Financing & Leasing Fees	64,805		5,946		10,205		20,902		2,771		27,833		16,942		16,296		414,507		580,208
Total Assets	$	9,461,410	$	2,630,476	$	8,168,966	$	5,889,300	$	2,033,669	$	7,279,975	$	7,261,451	$	21,901,385	$	111,887,043	$	176,513,675
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,379,679	$	2,106,087	$	6,893,510	$	4,949,865	$	1,668,000	$	4,716,555	$	5,450,034	$	15,680,318	$	88,891,126	$	138,735,173
Accounts Payable & Accrued Expense	72,817		5,870		146,324		49,095		20,272		6,929		94,046		248,055		841,053		1,484,461
Advance Rental Pmts& Security Deposits	148,662		—		140,048		86,764		23,802		84,376		68,652		267,641		1,837,442		2,657,387
Total Liabilities	8,601,158		2,111,957		7,179,881		5,085,724		1,712,074		4,807,860		5,612,731		16,196,014		91,569,622		142,877,021
Partners’ Capital	860,252		518,519		989,085		803,576		321,595		2,472,115		1,648,720		5,705,372		20,317,421		33,636,654
Total Liabilities and Capital	$	9,461,410	$	2,630,476	$	8,168,966	$	5,889,300	$	2,033,669	$	7,279,975	$	7,261,451	$	21,901,385	$	111,887,043	$	176,513,675
Partners’ Capital - NERA 50%	$	430,126	$	259,259	$	494,542	$	401,788	$	160,798	$	1,236,057	$	824,360	$	2,852,686			6,659,616
Partners’ Capital - NERA 40%																	$	8,126,969	8,126,969
																			$	14,786,585
Total units/condominiums
Apartments	48		—		40		175		120		48		42		148		409		1,030
Commercial	1		1		—		1		—		—		—		—		—		3
Total	49		1		40		176		120		48		42		148		409		1,033
Units to be retained	49		1		40		49		—		48		42		148		409		786
Units to be sold	—		—		—		127		120		—		—		—		—		247
Units sold through November 1, 2012	—		—		—		127		105		—		—		—		—		232
Unsold units	—		—		—		—		15		—		—		—		—		15
Unsold units with deposits for future sale as of November 1, 2012.	—		—		—		—		—		—		—		—		—		—

Summary financial information as of September 30, 2011

	Hamilton Essex 81		Hamilton Essex Development		345 Franklin		Hamilton 1025		Hamilton Bay Sales		Hamilton Bay Apts		Hamilton Minuteman		Hamilton on Main Apts		Dexter Park		Total
ASSETS
Rental Properties	$	9,546,059	$	2,597,309	$	8,336,008	$	5,906,387	$	1,951,075	$	7,347,113	$	7,387,465	$	22,162,035	$	114,310,012	$	179,543,463
Cash & Cash Equivalents	117		12,916		10,019		33		24,382		12,951		14,118		281		815,551		890,367
Rent Receivable	92,005		19,146		879		9,278		904		1,819		2,222		12,054		172,623		310,930
Due from Investment Properties	15,000		15,000		—		—		—		—		—		—		—
Real Estate Tax Escrow	93,721		—		38,291		60,411		—		86,578		44,193		102,117		620,090		1,045,402
Prepaid Expenses & Other Assets	98,142		789		91,158		86,663		189,773		93,298		81,180		526,254		1,178,633		2,345,890
Fin & Leasing Fees	78,711		9,607		18,371		25,928		7,836		34,195		20,911		23,158		473,908		692,624
Total Assets	$	9,923,756	$	2,639,767	$	8,494,727	$	6,088,700	$	2,173,969	$	7,575,954	$	7,550,088	$	22,825,899	$	117,570,816	$	184,843,676
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,487,795	$	2,157,699	$	7,059,569	$	5,000,00	$	1,668,000	$	4,750,000	$	5,500,000	$	15,952,852	$	89,914,000	$	140,489,916
Due from Investment Properties	15,000		15,000		—		—		—		—		—		—		—		—
Accts Pay & Acc Exp	50,338		5,826		71,853		48,147		17,514		6,661		83,378		200,478		750,820		1,235,011
Adv Rent Pmt & Sec Dep	149,104		—		111,782		70,319		21,446		83,709		63,134		244,407		1,764,347		2,508,248
Total Liabilities	8,687,238		2,178,525		7,243,205		5,118,466		1,706,960		4,840,370		5,646,512		16,397,734		92,429,166		144,248,175
Partners’ Capital	1,236,518		461,242		1,251,523		970,234		467,010		2,735,584		1,903,576		6,428,164		25,141,650		40,595,500
Total Liabilities & Capital	$	9,923,756	$	2,639,767	$	8,494,727	$	6,088,700	$	2,173,969	$	7,575,954	$	7,550,088	$	22,825,899	$	117,570,816	$	184,843,676
Partners’ Capital — NERA 50%	$	618,259	$	230,621	$	625,761	$	485,117	$	233,505	$	1,367,792	$	951,788	$	3,214,082			7,726,925
NERA 40%																	$	10,056,660	10,056,660
																			$	17,783,585
Total units/ condominiums
Apartments	48		—		40		175		120		48		42		148		409		1,030
Commercial	1		1		—		1		—		—		—		—		—		3
Total	49		1		40		176		120		48		42		148		409		1,033
Units to be retained	49		1		40		49		—		48		42		148		409		786
Units to be sold	—		—		—		127		120		—		—		—		—		247
Units sold through October 24, 2011	—		—		—		127		105		—		—		—		0		232
Unsold units	—		—		—		—		15		—		—		—		—		15
Unsold units with deposits for future sale as of October  24 , 2011	—		—		—		—		0		—		—		—		—		—

Summary of income statement relating to investment in unconsolidated joint ventures

Summary financial information for the nine months ended September 30, 2012

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total
Revenues
Rental Income	$	937,284		$	216,137		$	873,734		$	639,791		$	173,054		$	659,463		$	603,212		$	1,953,493		$	9,056,079		$	15,112,247
Laundry and Sundry Income	10,488			—			1,788			—			—			—			666			13,732			75,239			101,913
	947,772			216,137			875,522			639,791			173,054			659,463			603,878			1,967,225			9,131,318			15,214,160
Expenses
Administrative	10,430			1,432			23,211			4,079			6,617			29,996			6,755			37,307			169,223			289,048
Depreciation and Amortization	308,642			9,394			336,339			190,555			59,208			224,008			238,621			717,664			4,314,274			6,398,704
Management Fees	40,573			8,645			36,070			25,964			7,268			25,753			24,241			78,862			196,041			443,417
Operating	85,319			—			42,933			636			1,237			1,070			54,385			242,157			764,389			1,192,125
Renting	16,664			—			3,459			5,718			1,450			3,660			3,013			8,845			71,830			114,639
Repairs and Maintenance	94,156			5,475			61,720			235,472			53,379			205,125			45,315			283,251			707,486			1,691,378
Taxes and Insurance	149,722			37,211			75,919			109,871			34,890			121,571			77,022			253,782			1,115,971			1,975,959
	705,506			62,158			579,650			572,294			164,047			611,182			449,351			1,621,867			7,339,215			12,105,270
Income Before Other Income	242,266			153,980			295,872			67,497			9,007			48,281			154,527			345,358			1,792,103			3,108,891
Other Income (Loss)
Interest Expense	(373,357		)	(45,437		)	(366,348		)	(216,254		)	(73,609		)	(203,375		)	(238,036		)	(628,955		)	(3,818,020		)	(5,963,390		)
Interest Income	—			—			36			62			165			—			—			—			—			262
Interest Income from Note	—			—			—			—			4,901			—			—			—			—			4,901
	(373,357		)	(45,437		)	(366,311		)	(216,193		)	(68,543		)	(203,375		)	(238,036		)	(628,955		)	(3,818,020		)	(5,958,227		)
Net Income (Loss)	$	(131,091	)	$	108,543		$	(70,439	)	$	(148,696	)	$	(59,537	)	$	(155,094	)	$	(83,509	)	$	(283,597	)	$	(2,025,917	)	$	(2,849,337	)
Net Income (Loss) - NERA 50%	$	(65,546	)	$	54,271		$	(35,220	)	$	(74,348	)	$	(29,768	)	$	(77,547	)	$	(41,754	)	$	(141,798	)				(411,710		)
Net Income (Loss) - NERA 40%																									$	(810,367	)	(810,367		)
																												$	(1,222,077	)

Summary financial information for the three months ended September 30, 2012

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total
Revenues
Rental Income	$	311,281		$	72,046		$	295,031		$	218,064		$	61,862		$	223,301		$	204,535		$	656,122		$	2,993,242		$	5,035,486
Laundry and Sundry Income	3,415			—			600			—			—			—			175			3,752			31,384			39,327
	314,697			72,046			295,631			218,064			61,862			223,301			204,711			659,875			3,024,626			5,074,812
Expenses
Administrative	2,824			317			7,845			1,599			2,514			6,285			3,823			11,209			59,789			96,206
Depreciation and Amortization	101,777			2,909			114,199			63,962			19,736			74,920			80,075			240,997			1,443,275			2,141,849
Management Fees	13,547			2,882			11,953			9,079			2,681			8,761			8,225			26,655			66,474			150,256
Operating	32,187			—			13,451			1			310			165			16,664			63,833			217,288			343,898
Renting	14,574			—			3,318			3,389			—			389			1,019			2,265			30,033			54,987
Repairs and Maintenance	39,279			950			17,401			89,279			21,202			71,906			15,818			85,358			277,534			618,728
Taxes and Insurance	48,843			12,025			25,358			36,279			11,329			39,893			26,154			85,473			371,328			656,683
	253,031			19,084			193,525			203,588			57,772			202,319			151,778			515,790			2,465,720			4,062,608
Income Before Other Income	61,665			52,962			102,106			14,476			4,090			20,982			52,933			144,085			558,906			1,012,205
Other Income (Loss)
Interest Expense	(124,806		)	(15,110		)	(120,435		)	(72,408		)	(24,738		)	(68,108		)	(79,666		)	(210,248		)	(1,277,390		)	(1,992,910		)
Interest Income	—			—			12			21			51			—			—			—			—			84
Interest Income from Note	—			—			—			—			1,458			—			—			—			—			1,458
	(124,806		)	(15,110		)	(120,423		)	(72,388		)	(23,229		)	(68,108		)	(79,666		)	(210,248		)	(1,277,390		)	(1,991,367		)
Net Income (Loss)	$	(63,141	)	$	37,852		$	(18,317	)	$	(57,912	)	$	(19,139	)	$	(47,126	)	$	(26,733	)	$	(66,164	)	$	(718,484	)	$	(979,163	)
Net Income (Loss) - NERA 50%	$	(31,571	)	$	18,926		$	(9,158	)	$	(28,956	)	$	(9,569	)	$	(23,563	)	$	(13,366	)	$	(33,082	)				(130,339		)
Net Income (Loss) - NERA 40%																									$	(287,394	)	(287,394		)
																												$	(417,733	)

Summary financial information for the nine months ended September 30, 2011

	Hamilton Essex 81			Hamilton Essex Development			345 Franklin			Hamilton 1025			Hamilton Bay Sales			Hamilton Bay Apts			HamiltonMinuteman			Hamilton on Main			Dexter Park			Total
Revenues
Rental Income	$	940,881		$	214,196		$	848,631		$	607,752		$	178,514		$	643,284		$	589,360		$	1,856,189		$	8,588,891		$	14,467,697
Laundry and Sundry Income	11,870			—			921			—			—			—			579			15,698			74,713			103,782
	952,750			214,196			849,552			607,752			178,514			643,284			589,939			1,871,887			8,663,605			14,571,479
Expenses
Administrative	12,818			1,084			20,368			7,812			3,529			14,587			9,431			25,019			122,470			217,119
Depreciation and Amortization	317,669			5,048			333,321			194,986			67,248			235,595			244,550			724,597			4,276,964			6,399,978
Management Fees	36,596			8,280			34,012			24,089			7,320			25,268			23,493			74,867			188,088			422,011
Operating	91,167			—			53,705			1,148			170			378			30,360			285,510			699,466			1,161,904
Renting	7,667			—			14,979			9,338			1,750			6,755			2,676			12,791			133,066			189,022
Repairs and Maintenance	103,137			3,050			57,642			224,152			55,285			221,000			76,312			267,194			750,306			1,758,077
Taxes and Insurance	139,499			36,014			71,706			108,471			34,328			117,288			68,306			242,777			959,720			1,778,109
	708,553			53,476			585,734			569,995			169,630			620,870			455,128			1,632,755			7,130,079			11,926,220
Income Before Other Income	244,197			160,720			263,818			37,757			8,884			22,414			134,812			239,132			1,533,525			2,645,259
Other Income (Loss)
Interest Income							37			66			378												3,219			3,701
Interest Expense	(376,847		)	(46,036		)	(371,875		)	(216,310		)	(73,297		)	(202,923		)	(237,765		)	(636,029		)	(3,824,313		)	(5,985,397		)
Gain on Sale of Real Estate
Interest income from Note													6,926															6,926
Other Income (Expenses)	(2,331		)	—			(5,375		)	(3,621		)				(2,271		)				(1,152		)				(14,751		)
	(379,178		)	(46,036		)	(377,213		)	(219,865		)	(65,993		)	(205,194		)	(237,765		)	(637,181		)	(3,821,094		)	(5,989,521		)
Net Income (Loss)	$	(134,981	)	$	114,684		$	(113,395	)	$	(182,108	)	$	(57,110	)	$	(182,781	)	$	(102,953	)	$	(398,049	)	$	(2,287,569	)	$	(3,344,262	)
Net Loss - NERA 50%	$	(67,491	)	$	57,342		$	(56,697	)	$	(91,054	)	$	(28,555	)	$	(91,390	)	$	(51,476	)	$	(199,024	)				(528,346		)
NERA 40%																									$	(915,028	)	(915,028		)
																												$	(1,443,374	)

Summary financial information for the three months ended September 30, 2011

	Hamilton Essex 81			Hamilton Essex Development			345 Franklin			Hamilton 1025			Hamilton Bay Sales			Hamilton Bay Apts			Hamilton Minuteman			Hamilton on Main			Dexter Park			Total
Revenues
Rental Income	$	374,433		$	73,146		$	288,169		$	206,445		$	59,375		$	217,079		$	196,335		$	625,370		$	2,848,930		$	4,889,281
Laundry and Sundry Income	4,668						(307		)										579			4,910			24,900			34,750
	379,102			73,146			287,862			206,445			59,375			217,079			196,914			630,280			2,873,830			4,924,031
Expenses
Administrative	1,548			255			11,388			2,934			1,728			7,003			1,387			9,334			55,971			91,548
Depreciation and Amortization	106,099			1,922			112,028			65,582			22,416			78,381			81,891			242,907			1,429,538			2,140,763
Management Fees	11,495			2,760			11,372			8,182			2,416			8,516			7,589			24,345			64,815			141,490
Operating	26,096						17,674			280			75			159			9,789			75,443			205,322			334,838
Renting	487						4,572			2,209			675			2,166			899			5,740			34,679			51,427
Repairs and Maintenance	47,258						21,504			74,625			17,377			65,890			32,238			99,953			306,231			665,076
Taxes and Insurance	45,262			12,195			24,438			34,912			11,548			38,775			24,754			82,541			353,478			627,903
	238,245			17,132			202,976			188,724			56,235			200,889			158,546			540,263			2,450,035			4,053,046
Income Before Other Income	140,856			56,014			84,886			17,721			3,140			16,190			38,368			90,016			423,795			870,985
Other Income (Loss)
Interest Income							12			22			108															142
Interest Expense	(126,599		)	(15,349		)	(123,353		)	(72,913		)	(24,715		)	(68,403		)	(80,190		)	(213,905		)	(1,288,240		)	(2,013,666		)
Gain on Sale of Real Estate
Interest income from Note													2,145															2,145
Other Income (Expenses)	(2,331		)				(5,375		)	(3,621		)				(2,271		)				(1,152		)				(14,751		)
	(128,930		)	(15,349		)	(128,716		)	(76,513		)	(22,462		)	(70,674		)	(80,190		)	(215,057		)	(1,288,240		)	(2,026,130		)
Net Income (Loss)	$	11,926		$	40,665		$	(43,830	)	$	(58,792	)	$	(19,322	)	$	(54,484	)	$	(41,822	)	$	(125,040	)	$	(864,445	)	$	(1,155,144	)
Net Loss - NERA 50%	$	5,963		$	20,333		$	(21,915	)	$	(29,396	)	$	(9,661	)	$	(27,242	)	$	(20,911	)	$	(62,520	)				(145,350		)
NERA 40%																									$	(345,778	)	(345,778		)
																												$	(491,128	)

Schedule of future annual mortgage maturities

			Hamilton
	Hamilon		Essex		345		Hamilton		Hamilton		Hamilton		Hamilton		Hamilton on		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Minuteman		Main Apts		Park
	March		March		November		March		October		October		August		August		October
Period End	2005		2005		2001		2005		2005		2005		2004		2004		2009		Total
9/30/2013	$	123,859	$	2,106,087	$	177,887	$	64,222	$	1,668,000	$	65,250	$	70,339	$	289,374	$	1,258,232	$	5,823,250
9/30/2014	131,223				6,715,623		68,013				68,979		74,491		305,121		1,330,133		8,693,582
9/30/2015	139,026						72,028				72,921		78,887		15,085,823		1,406,142		16,854,826
9/30/2016	7,985,570						75,510				77,088		82,697				1,486,495		9,707,361
9/30/2017							4,670,091				4,432,317		5,143,620				1,571,440		15,817,469
Thereafter																	81,838,683		81,838,683
	$	8,379,678	$	2,106,087	$	6,893,510	$	4,949,864	$	1,668,000	$	4,716,555	$	5,450,034	$	15,680,318	$	88,891,125	$	138,735,171

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RENTAL PROPERTIES

9 Months Ended

Sep. 30, 2012

RENTAL PROPERTIES

RENTAL PROPERTIES

NOTE 2. RENTAL PROPERTIES

As of September 30, 2012, the Partnership and its Subsidiary Partnerships owned 2,251 residential apartment units in 20 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 September 30, 2012, 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 nine residential and mixed use complexes (the “Investment Properties”) at September 30, 2012 with a total of 799 units, accounted for using the equity method of consolidation. See Note 14 for summary information on these investments.

Rental properties consist of the following:

	September 30, 2012			December 31, 2011			Useful Life
Land, improvements and parking lots	$	27,781,268		$	27,614,537		15—40 years
Buildings and improvements	119,318,092			119,097,186			15—40 years
Kitchen cabinets	3,990,449			3,542,249			5—10 years
Carpets	3,847,902			3,307,499			5—10 years
Air conditioning	830,218			788,146			7—10 years
Laundry equipment	375,167			368,955			5—7 years
Elevators	1,139,296			1,139,296			20 years
Swimming pools	235,242			235,242			10 years
Equipment	1,812,027			1,744,006			5—7 years
Motor vehicles	107,788			107,788			5 years
Fences	26,874			22,974			5—10 years
Furniture and fixtures	1,095,562			1,039,439			5—7 years
Smoke alarms	204,416			116,482			5—7 years
Total fixed assets	$	160,764,301		$	159,123,799
Less: Accumulated depreciation	(64,626,683		)	(60,199,265		)
	$	96,137,618		$	98,924,534

On May 18, 2011, the Partnership sold Avon Street Apartments, a 66 unit residential apartment complex located at 130 Avon Street, Malden, Massachusetts.  The sales price was $8,750,000, which resulted in a gain of approximately $7,700,000.  The net proceeds of the sale, of approximately $5,444,000 were held by a qualified intermediary in order for the Partnership to structure a tax free exchange in accordance with Section 1031 of the IRS code.  This tax free exchange was completed with the purchase of Battle Green Apartments described below.

On June 1, 2011, the Partnership purchased the Battle Green Apartments, a 48 unit residential apartment complex located at 34-42 Worthen Road, Lexington, Massachusetts.  The purchase price was $10,000,000.  The Partnership used cash reserves, the proceeds from the sale of Avon Street and borrowed $3,998,573 from Harold Brown, Treasurer of the General Partner to make this purchase.  This loan had an interest rate of 6% and was secured by the Partnership’s ownership interest in Battle Green Apartments, LLC.  The term of the loan is four years with a provision requiring payment in whole or in part upon demand within six months of notice or prepay without penalty.  On July 27, 2011, the Partnership financed the Battle Green Apartments with a new $5,000,000 mortgage at 4.95% which matures in August 2026.  Principal payments will be made using a 30 year amortization schedule.  Deferred financing costs associated with this mortgage totaled approximately $100,000 and accordingly the effective interest rate is 5.07%.  After paying off the existing loan of $3,998,573, approximately $1,000,000 was received by the Partnership. The interest paid on this loan to Harold Brown was $38,123.

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DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE (Tables)

9 Months Ended

Sep. 30, 2012

DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

Summary of income from discontinued operations

	September  30,		September 30,
	2012		2011
Total Revenues	$	—	$	349,548
Operating and other expenses	—		235,441
Depreciation and amortization	—		32,540
	—		267,981
Income from discontinued operations	$	—	$	81,567

Avon Street Apartments

DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

Summary of realized gain and loss on sale of rental property held for sale

Gain on the sale of Avon Street in the second quarter of 2011:

Sale price	$	8,750,000
Net book value	(594,035		)
Expense of sale	(435,506		)
Gain on the sale of real estate	$	7,720,459

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PARTNERS' CAPITAL (Details) (USD $)	1 Months Ended	9 Months Ended			9 Months Ended	1 Months Ended	9 Months Ended									9 Months Ended
	Jan. 31, 2012	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 Limited Partner item	Jan. 31, 2012 Class A	Sep. 30, 2012 Class A USDPerUnit	Dec. 31, 2012 Class A USDPerUnit	Jun. 30, 2012 Class A USDPerUnit	Mar. 31, 2012 Class A USDPerUnit	Jan. 03, 2012 Class A	Dec. 31, 2011 Class A USDPerUnit	Sep. 30, 2011 Class A USDPerUnit	Jun. 30, 2011 Class A USDPerUnit	Mar. 31, 2011 Class A USDPerUnit	Sep. 30, 2012 Class B	Sep. 30, 2012 General Partnership item
Number of classes of limited partners					2												1
Fixed distribution percentage of unit holders							80.00%									19.00%	1.00%
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
Quarterly distribution per unit (in dollars per unit)							7.50	7.50	7.50	7.50		7.00	7.00	7.00	7.00
Quarterly distributions per depositary receipt (in dollars per share)							$ 0.25	$ 0.25	$ 0.25	$ 0.25		$ 0.23	$ 0.23	$ 0.23	$ 0.23
Distribution per unit (in dollars per unit)				$ 28.00
Earnings per depository receipt
Income per Depositary Receipt before Discontinued Operations (in dollars per share)		$ 0.62	$ 0.23
Income from Discontinued Operations (in dollars per share)			$ 1.98
Net Income per Depositary Receipt after Discontinued Operations (in dollars per share)		$ 0.62	$ 2.21
Distributions per Depositary Receipt (in dollars per share)		$ 0.75	$ 0.70	$ 0.93

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CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Rental Properties	$ 96,137,618	$ 98,924,534
Cash and Cash Equivalents	5,322,287	4,050,157
Rents Receivable	545,496	434,252
Real Estate Tax Escrows	446,314	401,325
Prepaid Expenses and Other Assets	3,460,422	3,866,652
Investments in Unconsolidated Joint Ventures	14,786,580	16,780,657
Financing and Leasing Fees	960,064	919,187
Total Assets	121,658,781	125,376,764
LIABILITIES AND PARTNERS' CAPITAL
Note Payable		1,668,600
Mortgage Notes Payable	138,335,670	139,161,612
Accounts Payable and Accrued Expenses	2,143,534	2,253,696
Advance Rental Payments and Security Deposits	3,604,570	3,603,708
Total Liabilities	144,083,774	146,687,616
Commitments and Contingent Liabilities (Notes 3 and 9)
Partners' Capital 130,776 and 131,484 units outstanding in 2012 and 2011 respectively	(22,424,993)	(21,310,852)
Total Liabilities and Partners' Capital	$ 121,658,781	$ 125,376,764

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TAXABLE INCOME AND TAX BASIS (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
TAXABLE INCOME AND TAX BASIS
Excess amount of statement income over taxable income		$ 8,856,000
Excess amount of cumulative statement basis over cumulative taxable basis		12,000,000
Excess amount of statement income from joint venture investments over taxable income	$ 2,000,000
Reduction in percentage of allowable deduction of accelerated depreciation	50.00%

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash Flows from Operating Activities
Net income	$ 2,448,669	$ 8,722,708
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,632,173	4,412,144
Loss from investments in joint ventures	1,222,077	1,443,374
Depreciation and amortization - discontinued operations		30,295
Gain on the sale of rental property		(7,720,459)
Change in operating assets and liabilities
(Increase) Decrease in rents receivable	(111,244)	(25,030)
Increase (Decrease) in accounts payable and accrued expense	(110,162)	(324,307)
(Increase) Decrease in real estate tax escrow	(44,989)	(90,999)
(Increase) Decrease in prepaid expenses and other assets	406,230	(579,064)
Increase in advance rental payments and security deposits	862	52,220
Total Adjustments	5,994,947	(2,801,826)
Net cash provided by operating activities	8,443,616	5,920,882
Cash Flows Used in Investing Activities
Proceed from unconsolidated joint venture	772,000	890,710
Investment in unconsolidated joint venture		(40,710)
Purchase and improvement of rental properties	(1,640,502)	(11,871,330)
Net proceeds from the sale of rental property		8,297,928
Net cash (used in) investing activities	(868,502)	(2,723,402)
Cash Flows From Financing Activities
Payment of financing costs	(245,633)	(101,689)
Proceeds of mortgage notes payable		5,000,000
Proceeds of note payable		3,998,573
Principal payments of mortgage notes payable	(825,943)	(3,263,623)
Principal payments of note payable	(1,668,600)	(4,998,573)
Stock Buyback	(610,294)
Distributions to Partners	(2,952,515)	(2,761,176)
Net cash (used in) financing activities	(6,302,984)	(2,126,488)
Net Increase in Cash and Cash Equivalents	1,272,130	1,070,992
Cash and Cash Equivalents, at beginning of period	4,050,157	3,245,361
Cash and Cash Equivalents, at end of period	$ 5,322,287	$ 4,316,353

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RENTAL PROPERTIES (Details) (USD $)	9 Months Ended				1 Months Ended							1 Months Ended							9 Months Ended				9 Months Ended				9 Months Ended				9 Months Ended				9 Months Ended				9 Months Ended				9 Months Ended				9 Months Ended						9 Months Ended				9 Months Ended				9 Months Ended
	Sep. 30, 2012 item	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 Mortgages payable	May 31, 2011 Avon Street Apartments	Jun. 30, 2011 Battle Green Apartments	Jul. 31, 2011 Battle Green Apartments Mortgages payable	Sep. 30, 2012 Battle Green Apartments Mortgages payable	Jul. 27, 2011 Battle Green Apartments Mortgages payable	Sep. 30, 2012 Minimum Mortgages payable	Sep. 30, 2012 Maximum Mortgages payable	Jul. 31, 2011 Harold Brown Battle Green Apartments Mortgages payable	Jun. 30, 2011 Harold Brown Battle Green Apartments Mortgages payable	Jun. 02, 2011 Harold Brown Battle Green Apartments Mortgages payable	Sep. 30, 2012 Harold Brown Minimum	Sep. 30, 2012 Harold Brown Maximum	Sep. 30, 2012 Land, improvements and parking lots	Dec. 31, 2011 Land, improvements and parking lots	Sep. 30, 2012 Land, improvements and parking lots Minimum	Sep. 30, 2012 Land, improvements and parking lots Maximum	Sep. 30, 2012 Buildings and improvements	Dec. 31, 2011 Buildings and improvements	Sep. 30, 2012 Buildings and improvements Minimum	Sep. 30, 2012 Buildings and improvements Maximum	Sep. 30, 2012 Kitchen cabinets	Dec. 31, 2011 Kitchen cabinets	Sep. 30, 2012 Kitchen cabinets Minimum	Sep. 30, 2012 Kitchen cabinets Maximum	Sep. 30, 2012 Carpets	Dec. 31, 2011 Carpets	Sep. 30, 2012 Carpets Minimum	Sep. 30, 2012 Carpets Maximum	Sep. 30, 2012 Air conditioning	Dec. 31, 2011 Air conditioning	Sep. 30, 2012 Air conditioning Minimum	Sep. 30, 2012 Air conditioning Maximum	Sep. 30, 2012 Laundry equipment	Dec. 31, 2011 Laundry equipment	Sep. 30, 2012 Laundry equipment Minimum	Sep. 30, 2012 Laundry equipment Maximum	Sep. 30, 2012 Elevators	Dec. 31, 2011 Elevators	Sep. 30, 2012 Swimming pools	Dec. 31, 2011 Swimming pools	Sep. 30, 2012 Equipment	Dec. 31, 2011 Equipment	Sep. 30, 2012 Equipment Minimum	Sep. 30, 2012 Equipment Maximum	Sep. 30, 2012 Motor vehicles	Dec. 31, 2011 Motor vehicles	Sep. 30, 2012 Fences	Dec. 31, 2011 Fences	Sep. 30, 2012 Fences Minimum	Sep. 30, 2012 Fences Maximum	Sep. 30, 2012 Furniture and fixtures	Dec. 31, 2011 Furniture and fixtures	Sep. 30, 2012 Furniture and fixtures Minimum	Sep. 30, 2012 Furniture and fixtures Maximum	Sep. 30, 2012 Smoke alarms	Dec. 31, 2011 Smoke alarms	Sep. 30, 2012 Smoke alarms Minimum	Sep. 30, 2012 Smoke alarms Maximum	May 18, 2011 Residential buildings Avon Street Apartments item	Jun. 02, 2011 Residential buildings Battle Green Apartments item	Sep. 30, 2012 Residential and mixed-use properties item	Sep. 30, 2012 Residential and mixed-use properties Partially owned properties item	Sep. 30, 2012 Residential and mixed-use properties Partially owned properties Minimum	Sep. 30, 2012 Residential and mixed-use properties Partially owned properties Maximum	Sep. 30, 2012 Condominium item
RENTAL PROPERTIES
Number of units	120																																																														66	48	2,251	799			19
Number of properties																																																																	20	9			1
Percentage of ownership interest															43.20%	57.00%																																																			40.00%	50.00%
Rental properties
Total fixed assets	$ 160,764,301		$ 159,123,799
Less: Accumulated depreciation	(64,626,683)		(60,199,265)
Total fixed assets, net	96,137,618		98,924,534														27,781,268	27,614,537			119,318,092	119,097,186			3,990,449	3,542,249			3,847,902	3,307,499			830,218	788,146			375,167	368,955			1,139,296	1,139,296	235,242	235,242	1,812,027	1,744,006			107,788	107,788	26,874	22,974			1,095,562	1,039,439			204,416	116,482
Useful Life																			15 years	40 years			15 years	40 years			5 years	10 years			5 years	10 years			7 years	10 years			5 years	7 years	20 years		10 years				5 years	7 years	5 years				5 years	10 years			5 years	7 years			5 years	7 years
Sales price of real estate properties					8,750,000
Gain on sale of property					7,700,000
Net proceeds from sale of property		8,297,928			5,444,000
Purchase price of real estate properties						10,000,000
Borrowings							5,000,000						3,998,573
Interest rate (as a percent)								4.95%		4.25%	7.07%			6.00%
Term of debt													4 years
Notice period demanding early payment													6 months
Amortization period of debt							30 years
Deferred financing cost associated with mortgage									100,000
Effective interest rate (as a percent)				5.62%				5.07%
Interest paid	$ 5,854,000	$ 6,008,000										$ 38,123

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DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

9 Months Ended

Sep. 30, 2012

DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

NOTE 16. DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

The following tables summarize income from discontinued operations and realized gain and loss on the sale of rental property held for sale for the nine months ended September 30, 2012 and 2011:

	September  30,		September 30,
	2012		2011
Total Revenues	$	—	$	349,548
Operating and other expenses	—		235,441
Depreciation and amortization	—		32,540
	—		267,981
Income from discontinued operations	$	—	$	81,567

Gain on the sale of Avon Street in the second quarter of 2011:

Sale price	$	8,750,000
Net book value	(594,035		)
Expense of sale	(435,506		)
Gain on the sale of real estate	$	7,720,459

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RELATED PARTY TRANSACTIONS (Details) (USD $)	3 Months Ended		9 Months Ended								9 Months Ended			9 Months Ended								1 Months Ended							3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 item	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 Limited Partnerships Minimum	Sep. 30, 2012 Limited Partnerships Maximum	Sep. 30, 2012 Partially Owned Properties [Member]	Sep. 30, 2012 Wholly Owned Properties [Member]	Dec. 31, 2011 Wholly Owned Properties [Member]	Sep. 30, 2012 General Partner or Management Company	Sep. 30, 2011 General Partner or Management Company	Sep. 30, 2012 General Partner or Management Company Minimum	Sep. 30, 2012 General Partner or Management Company Partially Owned Properties [Member] Limited Partnerships Minimum 62 Boylston Street	Sep. 30, 2012 Management Company item	Sep. 30, 2011 Management Company	Sep. 30, 2012 Hamilton Company	Sep. 30, 2012 Dexter Park	Sep. 30, 2011 President of Management Company	Sep. 30, 2012 Harold Brown Minimum	Sep. 30, 2012 Harold Brown Maximum	Apr. 30, 2012 HBC	Feb. 29, 2012 HBC	Dec. 31, 2011 HBC	Oct. 31, 2011 HBC	Aug. 31, 2011 HBC	Aug. 31, 2010 HBC	Oct. 31, 2009 HBC	Dec. 31, 2010 HBC	Sep. 30, 2012 HBC	Sep. 30, 2011 HBC	Oct. 28, 2009 HBC
RELATED PARTY TRANSACTIONS
Management fee as a percentage of rental revenue			4.00%														4.00%	2.00%
Management fee as percentage of Linewt			3.00%
Management fees of related party			$ 1,078,000	$ 1,047,000
Costs related to professional services											503,000	601,000
Repairs and maintenance	1,487,272	1,421,084	3,857,918	3,800,836							216,000						53,000
Administrative expense	463,687	411,836	1,362,276	1,237,424							242,000						62,000
Expenses for construction, architectural services and supervision of capital projects											22,000						10,000
Rental commissions											23,000
Amount paid to related party																	552,000
Management fee	360,578	347,833	1,078,188	1,032,069													423,000
Reimbursement to related party for payroll transfers															1,999,000	1,923,000
Number of accounting staff of related party providing bookkeeping and accounting functions															14
Fees for accounting and bookkeeping services															93,750	93,750
Fee for asset management consulting services														56,250					56,250
Number of limited partnerships and limited liability companies in which the entity has invested			9
Percentage of ownership interest						40.00%	50.00%						40.00%							43.20%	57.00%
Number of employees having ownership interest															6
Borrowings																												7,168,000
Interest rate (as a percent)																																6.00%
Term of mortgage loan																												4 years
Notice period demanding early payment																											6 months
Principal paydown of debt upon notice																											2,500,000
Repayment of loan																						918,600							2,500,000
Amount of principal payment																							750,000	1,000,000	1,000,000	1,000,000
Outstanding amount of mortgage loan	138,335,670		138,335,670		139,161,612			138,735,174	138,335,689	139,161,612														1,668,600
Interest paid			$ 5,854,000	$ 6,008,000																										$ 18,960	$ 202,000

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2012

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 24 properties which include 16 residential buildings; 4 mixed use residential, retail and office buildings; 3 commercial buildings and individual units at one condominium complex.   These properties total 2,251 apartment units, 19 condominium units and 110,949 square feet of commercial space.  Additionally, the Partnership also owns a 40-50% interest in nine residential and mixed use properties consisting of 799 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 preparation of the financial statements, in conformity with accounting principles generally accepted in the United State of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates.

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 nine limited liability companies (the “Investment Properties” or “Joint Ventures”) in which the Partnership has between a 40 - 50% ownership interest. The consolidated group is referred to as the “Partnerships.” 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: Investments 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. 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 entity’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 Partnership adopted the updated provisions of ASC 810, pursuant to FASB No. 167, which amends FIN 46(R) to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  Additionally, FASB No. 167 amends FIN 46(R) to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity, which was based on determining which enterprise absorbs the majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both.  FASB No. 167 amends certain guidance in Interpretation 46(R) for determining whether an entity is a variable interest entity. Also, FASB No. 167 amends FIN 46(R) to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity.  The enhanced disclosures are required for any enterprise that holds a variable interest in a variable interest entity.  The adoption of this guidance did not have a material impact to these financial statements.

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. Concessions made on residential leases 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.

Financing and Leasing Fees

Financing and Leasing Fees: Financing fees are capitalized and amortized, using the interest method, over the life of the related mortgages. 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.

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 2012 or 2011 other than net income as reported.

Income Per Depositary Receipt

Income 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).

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 2012 or 2011. The Partnership makes its temporary cash investments with high-credit quality financial institutions.  At September 30, 2012, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.01% to 0.45%.  At September 30, 2012 and December 31, 2011, respectively approximately $6,243,000  and $5,051,000 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 $43,190 and $59,997 for the nine months ended September 30, 2012 and 2011, respectively.

Discontinued Operations and Rental Property Held for Sale

Discontinued Operations and 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. If, in management’s opinion, the net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

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 amount 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.

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 nine months ended September 30, 2012 and the year ended December 31, 2011 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. Historically, all refinancing has qualified as extinguishment of debt.

Reclassifications

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

Subsequent Events

SUBSEQUENT EVENTS

From October 1, 2012 through November 9, 2012, the Partnership purchased a total of 942 Depositary Receipts.  The average price was $28.85 per receipt or $865.50 per unit. The total cost was $28,344.  The Partnership is required to repurchase 7.5 Class B Units and 0.39 General Partnership units at a cost of $6,454 and $340, respectively.

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SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2012

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 24 properties which include 16 residential buildings; 4 mixed use residential, retail and office buildings; 3 commercial buildings and individual units at one condominium complex.   These properties total 2,251 apartment units, 19 condominium units and 110,949 square feet of commercial space.  Additionally, the Partnership also owns a 40-50% interest in nine residential and mixed use properties consisting of 799 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 preparation of the financial statements, in conformity with accounting principles generally accepted in the United State of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates.

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 nine limited liability companies (the “Investment Properties” or “Joint Ventures”) in which the Partnership has between a 40 - 50% ownership interest. The consolidated group is referred to as the “Partnerships.” 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: Investments 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. 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 entity’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 Partnership adopted the updated provisions of ASC 810, pursuant to FASB No. 167, which amends FIN 46(R) to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  Additionally, FASB No. 167 amends FIN 46(R) to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity, which was based on determining which enterprise absorbs the majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both.  FASB No. 167 amends certain guidance in Interpretation 46(R) for determining whether an entity is a variable interest entity. Also, FASB No. 167 amends FIN 46(R) to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity.  The enhanced disclosures are required for any enterprise that holds a variable interest in a variable interest entity.  The adoption of this guidance did not have a material impact to these financial statements.

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. Concessions made on residential leases 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.

Financing and Leasing Fees: Financing fees are capitalized and amortized, using the interest method, over the life of the related mortgages. 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.

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 2012 or 2011 other than net income as reported.

Income 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).

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 2012 or 2011. The Partnership makes its temporary cash investments with high-credit quality financial institutions.  At September 30, 2012, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.01% to 0.45%.  At September 30, 2012 and December 31, 2011, respectively approximately $6,243,000  and $5,051,000 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 $43,190 and $59,997 for the nine months ended September 30, 2012 and 2011, respectively.

Discontinued Operations and 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. If, in management’s opinion, the net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

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 amount 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.

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 nine months ended September 30, 2012 and the year ended December 31, 2011 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. Historically, all refinancing has qualified as extinguishment of debt.

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

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CONSOLIDATED BALANCE SHEETS (Parenthetical)	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
CONSOLIDATED BALANCE SHEETS
Partners' Capital, units outstanding	130,776	131,484	131,484	131,484

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CASH FLOW INFORMATION

9 Months Ended

Sep. 30, 2012

CASH FLOW INFORMATION

CASH FLOW INFORMATION

NOTE 11. CASH FLOW INFORMATION

During the nine months ended September 30, 2012 and 2011, cash paid for interest was approximately $5,854,000, and $6,008,000 respectively.  Cash paid for state taxes was approximately $23,000 and $54,000 during the nine months ended September 30, 2012 and 2011 respectively.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012
Entity Registrant Name	NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP
Entity Central Index Key	0000746514
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Partnership Units Outstanding	0
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Class A
Entity Partnership Units Outstanding	104,621
Class B
Entity Partnership Units Outstanding	24,847

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2012

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 12. FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At September 30, 2012 and December 31, 2011, 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 September 30, 2012 and December 31, 2011 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 September 30, 2012 and December 31, 2011, 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 September 30, 2012 and December 31, 2011, 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, 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 September 30, 2012	$	138,335,689	$	158,058,689
At December 31, 2011	$	139,161,612	$	158,050,039
Investment Properties
At September 30, 2012	$	138,735,174	$	160,344,245

Disclosure about fair value of financial instruments is based on pertinent information available to management as of September 30, 2012 and December 31, 2011.  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 September 30, 2012 and current estimates of fair value may differ significantly from the amounts presented herein.

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CONSOLIDATED STATEMENTS OF INCOME (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues
Rental income	$ 8,782,896	$ 8,543,908	$ 26,245,505	$ 24,957,004
Laundry and sundry income	92,700	104,618	282,889	318,059
Total Revenues	8,875,596	8,648,526	26,528,394	25,275,063
Expenses
Administrative	463,687	411,836	1,362,276	1,237,424
Depreciation and amortization	1,571,942	1,603,529	4,632,173	4,412,144
Management fee	360,578	347,833	1,078,188	1,032,069
Operating	731,618	774,998	2,684,760	3,104,722
Renting	48,483	63,482	148,602	260,819
Repairs and maintenance	1,487,272	1,421,084	3,857,918	3,800,836
Taxes and insurance	1,066,739	1,042,470	3,241,830	3,103,215
Total Expenses	5,730,319	5,665,232	17,005,747	16,951,229
Income Before Other Income and Discontinued Operations	3,145,277	2,983,294	9,522,647	8,323,834
Other Income (Expense)
Interest income	554	895	1,746	3,129
Interest expense	(1,953,645)	(2,033,082)	(5,853,647)	(5,962,907)
(Loss) from investments in unconsolidated joint ventures	(417,733)	(491,128)	(1,222,077)	(1,443,374)
Total Other Income (Expense)	(2,370,824)	(2,523,315)	(7,073,978)	(7,403,152)
Income from Continuing Operations	774,453	459,979	2,448,669	920,682
Discontinued Operations
Income from discontinued operations		(2,245)		81,567
Gain on the sale of real estate		(808)		7,720,459
Total Discontinued Operations		(3,053)		7,802,026
Net Income	$ 774,453	$ 456,926	$ 2,448,669	$ 8,722,708
Income per Unit
Income before discontinued operations (in dollars per unit)	$ 5.90	$ 3.50	$ 18.63	$ 7.00
Income from discontinued operations (in dollars per unit)		$ (0.02)		$ 59.34
Net Income per Unit (in dollars per unit)	$ 5.90	$ 3.48	$ 18.63	$ 66.34
Weighted Average Number of Units Outstanding (in units)	131,277	131,484	131,410	131,484

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ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

9 Months Ended

Sep. 30, 2012

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 September 30, 2012, amounts received for prepaid rents of approximately $1,314,000 are included in cash and cash equivalents, and security deposits of approximately $1,832,000 are included in other assets and are restricted cash.

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MORTGAGE NOTES PAYABLE

9 Months Ended

Sep. 30, 2012

MORTGAGE NOTES PAYABLE

MORTGAGE NOTES PAYABLE

NOTE 5. MORTGAGE NOTES PAYABLE

At September 30, 2012 and December 31, 2011, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2. At September 30, 2012, the interest rates on these loans ranged from 4.25% to 7.07%, payable in monthly installments aggregating approximately $742,000, including principal, to various dates through 2026. The majority of the mortgages are subject to prepayment penalties.  At September 30, 2012, the weighted average interest rate on the above mortgages was 5.53%. The effective rate of 5.62% 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.

The Partnerships have pledged tenant leases as additional collateral for certain of these loans.

Approximate annual maturities at September 30, 2012 are as follows:

2013—current maturities	$	41,357,000
2014	7,889,000
2015	9,116,000
2016	192,000
2017	202,000
Thereafter	79,580,000
	$	138,336,000

On July 27, 2011, the Partnership financed the Battle Green Apartments with a new $5,000,000 mortgage at 4.95% which matures in August 2026.  Principal payments will be made using a 30 year amortization schedule.  Deferred financing costs associated with this mortgage totaled approximately $100,000 and accordingly the effective interest rate is 5.07%.

The Partnership is currently working on refinancing the mortgages at Boylston Street, Westgate Woburn, School Street and Cypress Street.  The total amount expected to be refinanced is approximately $47,000,000.  The Partnership may incur prepayment penalties of approximately $1,000,000 upon refinancing. The Partnership has no lender commitment at this time and does not anticipate closing on these mortgages in 2012.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2012

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 17. SUBSEQUENT EVENTS

From October 1, 2012 through November 9, 2012, the Partnership purchased a total of 942 Depositary Receipts.  The average price was $28.85 per receipt or $865.50 per unit. The total cost was $28,344.  The Partnership is required to repurchase 7.5 Class B Units and 0.39 General Partnership units at a cost of $6,454 and $340, respectively.

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TAXABLE INCOME AND TAX BASIS

9 Months Ended

Sep. 30, 2012

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, and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions. Taxable income was approximately $8,856,000 less than statement income for the year ended December 31, 2011. The primary reason for the decrease is the tax free sale of Avon Street and accelerated depreciation. The cumulative tax basis of the Partnership’s real estate at December 31, 2011 is approximately $12,000,000, less than the statement basis. The primary reasons for the lower tax basis are tax free exchanges, and accelerated depreciation. The Partnership’s tax basis in its joint venture investments is approximately $2,000,000 less than statement basis because of accelerated depreciation.

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

Certain allowable accelerated depreciation deductions have been reduced by 50% in 2012 and are expected to be eliminated for 2013.  This will result in higher taxable income in those years.  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 adjustments 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 September 30, 2012, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2004 forward.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

NOTE 9. COMMITMENTS AND CONTINGENCIES

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

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PARTNERS' CAPITAL

9 Months Ended

Sep. 30, 2012

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.

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.

On January 17, 2012, 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, 2012 and payable on March 31, 2012.  The quarterly distribution per Class A Limited Partnership Unit was increased from $7.00 per unit to $7.50 per unit.  Taking into consideration the 3-for-1 forward split of Depositary Receipts that was completed on January 3, 2012, the quarterly distribution per Depositary Receipt has been increased from $0.23 to $0.25.

In 2012, the Partnership approved quarterly distributions of $7.50 per unit ($0.25 per receipt) payable on March 31, June 30, September 30, 2012 and December 31, 2012.

In 2011 the Partnership paid quarterly distributions of $7.00 per unit ($0.23 per receipt) in March, June, September, and December for a total distribution of $28.00 per unit ($0.93 per receipt).

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

	Nine Months Ended September 30,
	2012		2011
Income per Depositary Receipt before Discontinued Operations	$	0.62	$	0.23
Income from Discontinued Operations	—		1.98
Net Income per Depositary Receipt after Discontinued Operations	$	0.62	$	2.21
Distributions per Depositary Receipt	$	0.75	$	0.70

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TREASURY UNITS

9 Months Ended

Sep. 30, 2012

TREASURY UNITS

TREASURY UNITS

NOTE 8. TREASURY UNITS

Treasury Units at September 30, 2012 are as follows:

Class A	39,559
Class B	9,395
General Partnership	495
	49,449

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”).  Under the terms of the Repurchase Program, the Partnership may purchase up to 1,500,000 Depositary Receipts from the start of the program in 2007 through March 31, 2015.  The Repurchase Program requires the Partnership to repurchase a proportionate number of Class B Units and General Partnership 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 September 30, 2012, the Partnership has repurchased 1,211,945 Depositary Receipts at an average price of $24.59 per receipt (or $737.70 per underlying Class A Unit), 1,859 Class B Units and 98 General Partnership Units, at an average price of $604.92 per Unit, totaling approximately $31,150,000 including brokerage fees paid by the Partnership.

During the nine months ended September 30, 2012, the Partnership purchased 16,985 Depositary Receipts for a cost of $488,627; 135 Class B Units for a cost of $115,585 and 7 General Partnership Units for a cost of $6,083 for a total cost of $610,294.

From October 1, 2012 through November 9, 2012, the Partnership purchased a total of 942 Depositary Receipts.  The average price was $28.85 per receipt or $865.50 per unit. The total cost was $28,344.  The Partnership is required to repurchase 7.5 Class B Units and 0.39 General Partnership units at a cost of $6,454 and $340, respectively.

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RENTAL INCOME

9 Months Ended

Sep. 30, 2012

RENTAL INCOME

RENTAL INCOME

NOTE 10. RENTAL INCOME

During the nine months ended September 30, 2012, approximately 90% 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 10% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at September 30, 2012 as follows:

	Commercial Property Leases
2013	$	2,453,000
2014	2,125,000
2015	1,601,000
2016	1,299,000
2017	508,000
Thereafter	828,000
	$	8,814,000

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 $477,000 and $461,000 for the nine months ended September 30, 2012 and 2011 respectively.

The following information is provided for commercial leases:

					Percentage of
	Annual base rent		Total square feet	Total number	Annual base rent for
	for expiring leases		for expiring leases	of leases expiring	expiring leases
Through September 30,
2013	$	518,465	19,182	10	19	%
2014	599,370		30,118	13	21	%
2015	146,240		6,415	5	5	%
2016	715,380		24,210	6	26	%
2017	497,412		16,818	6	18	%
2018	—		—	—	—
2019	123,200		3,850	1	4	%
2020	141,831		3,056	2	5	%
2021	64,800		1,800	1	2	%
2022	—		—	—	—
Totals	$	2,806,698	105,449	44	100	%

Rents receivable are net of an allowance for doubtful accounts of approximately $563,000 and $448,000 at September 30, 2012 and December 31, 2011, respectively.  Included in rents receivable at September 30, 2012 is approximately $285,000 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 with Staples and Trader Joe’s at Staples Plaza in Framingham, Massachusetts.

Rents receivable also includes approximately $14,000 representing the deferral of rental concession primarily related to the residential properties.

For the nine months ended September 30, 2012 rent at the commercial properties includes approximately $3,600 of amortization of deferred rents arising from the fair values assigned to in-place leases upon the purchase of Cypress Street in Brookline, Massachusetts.

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SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $)	1 Months Ended	9 Months Ended			1 Months Ended		9 Months Ended			9 Months Ended
	Jan. 31, 2012	Sep. 30, 2012 item	Sep. 30, 2011	Dec. 31, 2011	Jan. 31, 2012 Class A units	Jan. 03, 2012 Class A units	Sep. 30, 2012 Minimum	Sep. 30, 2012 Minimum Cash and cash equivalents	Sep. 30, 2012 Maximum	Sep. 30, 2012 Maximum Cash and cash equivalents	Sep. 30, 2012 Investment Properties/Joint Venture item	Sep. 30, 2012 Investment Properties/Joint Venture Minimum	Sep. 30, 2012 Investment Properties/Joint Venture Maximum
Principles of Consolidation
Ownership interest in each subsidiary (as a percent)							99.67%		100.00%
Number of limited liability companies											9
Percentage of ownership in Joint Ventures												40.00%	50.00%
Revenue Recognition
Period for which arrears are charged against income		60 days
Segment Reporting
Number of segments		1
Income 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
Concentration of Credit Risks and Financial Instruments
Interest rate on interest bearing accounts (as a percent)								0.01%		0.45%
Federally uninsured amounts of cash and cash equivalents, and security deposits included in prepaid expenses and other assets		$ 6,243,000		$ 5,051,000
Advertising Expense
Advertising expense		$ 43,190	$ 59,997
Interest Capitalized
Criteria of capitalization of interest on property based on specified period of construction							1 year

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SUBSEQUENT EVENTS (Details) (USD $)	9 Months Ended	61 Months Ended	9 Months Ended	61 Months Ended	9 Months Ended	61 Months Ended	1 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Sep. 30, 2012 Class B Units	Sep. 30, 2012 Class B Units	Sep. 30, 2012 General Partnership	Sep. 30, 2012 General Partnership	Nov. 09, 2012 Subsequent event	Nov. 09, 2012 Subsequent event Class B Units	Nov. 09, 2012 Subsequent event General Partnership
Subsequent events
Repurchase of depository receipts (in shares)	16,985	1,211,945	135	1,859	7	98	942
Repurchase price of depository receipts (in dollars per share)		$ 24.59					$ 28.85
Repurchase price of units (in dollars per share)				$ 604.92		$ 604.92	$ 865.50
Repurchase of units	$ 610,294	$ 31,150,000	$ 115,584		$ 6,083		$ 28,344	$ 6,454	$ 340
Repurchase of units (in shares)	(708)							7.5	0.39

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IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

9 Months Ended

Sep. 30, 2012

IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

NOTE 15. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”(“ASU 2011-04).  The objective of ASU 2011-04 is to provide common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs.  Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the amendments do not result in a change in the application of the requirements in ASC Topic 820 “Fair Value Measurement”.  ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011.    The Partnership does not expect this standard to have a material impact on the Partnership’s consolidated financial statements.

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MORTGAGE NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2012

MORTGAGE NOTES PAYABLE

Schedule of approximate annual maturities

Approximate annual maturities at September 30, 2012 are as follows:

2013—current maturities	$	41,357,000
2014	7,889,000
2015	9,116,000
2016	192,000
2017	202,000
Thereafter	79,580,000
	$	138,336,000

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Details 4) (USD $)	Sep. 30, 2012
Hamilton Essex 81
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	$ 123,859
9/30/2014	131,223
9/30/2015	139,026
9/30/2016	7,985,570
Total	8,379,678
Hamilton Essex Development
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	2,106,087
Total	2,106,087
345 Franklin
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	177,887
9/30/2014	6,715,623
Total	6,893,510
Hamilton 1025
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	64,222
9/30/2014	68,013
9/30/2015	72,028
9/30/2016	75,510
9/30/2017	4,670,091
Total	4,949,864
Hamilton Bay Sales
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	1,668,000
Total	1,668,000
Hamilton Bay Apts
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	65,250
9/30/2014	68,979
9/30/2015	72,921
9/30/2016	77,088
9/30/2017	4,432,317
Total	4,716,555
Hamilton Minuteman Apts
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	70,339
9/30/2014	74,491
9/30/2015	78,887
9/30/2016	82,697
9/30/2017	5,143,620
Total	5,450,034
Hamilton on Main Apts
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	289,374
9/30/2014	305,121
9/30/2015	15,085,823
Total	15,680,318
Dexter Park
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	1,258,232
9/30/2014	1,330,133
9/30/2015	1,406,142
9/30/2016	1,486,495
9/30/2017	1,571,440
Thereafter	81,838,683
Total	88,891,125
Total
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
9/30/2013	5,823,250
9/30/2014	8,693,582
9/30/2015	16,854,826
9/30/2016	9,707,361
9/30/2017	15,817,469
Thereafter	81,838,683
Total	$ 138,735,171

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TREASURY UNITS (Details) (USD $)	9 Months Ended	61 Months Ended		1 Months Ended	9 Months Ended		61 Months Ended	1 Months Ended	9 Months Ended	61 Months Ended	1 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Aug. 20, 2007	Nov. 09, 2012 Subsequent event	Sep. 30, 2012 Class A Treasury Units	Sep. 30, 2012 Class B Treasury Units	Sep. 30, 2012 Class B Treasury Units	Nov. 09, 2012 Class B Treasury Units Subsequent event	Sep. 30, 2012 General Partnership	Sep. 30, 2012 General Partnership	Nov. 09, 2012 General Partnership Subsequent event
Treasury units (in shares)	49,449	49,449			39,559	9,395	9,395		495	495
Depository receipts authorized to be repurchased (in shares)			1,500,000
Fixed distribution percentage of unit holders					80.00%	19.00%			1.00%
Repurchase of depository receipts (in shares)	16,985	1,211,945		942		135	1,859		7	98
Repurchase of depository receipts	$ 488,627
Repurchase price of depository receipts (in dollars per share)		$ 24.59		$ 28.85
Repurchase price of units (in dollars per share)				$ 865.50			$ 604.92			$ 604.92
Repurchase of units	$ 610,294	$ 31,150,000		$ 28,344	$ 488,627	$ 115,584		$ 6,454	$ 6,083		$ 340
Repurchase of units (in shares)	(708)							7.5			0.39

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CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (USD $)	Total USD ($)	Subtotal	Class A USD ($)	Class B USD ($)	General Partnership USD ($)	Treasury Units
Balance at Dec. 31, 2010	$ (26,920,567)		$ (21,539,906)	$ (5,111,628)	$ (269,033)
Balance (in units) at Dec. 31, 2010	131,484	180,225	144,180	34,243	1,802	48,741
Increase (Decrease) in Partners' Capital
Distributions to Partners	(2,761,176)		(2,208,941)	(524,623)	(27,612)
Net Income	8,722,708		6,978,166	1,657,315	87,227
Balance at Sep. 30, 2011	(20,959,035)		(16,770,681)	(3,978,936)	(209,418)
Balance (in units) at Sep. 30, 2011	131,484	180,225	144,180	34,243	1,802	48,741
Balance at Dec. 31, 2011	(21,310,852)		(17,052,134)	(4,045,783)	(212,935)
Balance (in units) at Dec. 31, 2011	131,484	180,225	144,180	34,243	1,802	48,741
Increase (Decrease) in Partners' Capital
Distributions to Partners	(2,952,515)		(2,362,012)	(560,978)	(29,525)
Stock Buyback	(610,294)		(488,627)	(115,584)	(6,083)
Stock Buyback (in units)	(708)					708
Net Income	2,448,669		1,958,935	465,247	24,487
Balance at Sep. 30, 2012	$ (22,424,993)		$ (17,943,838)	$ (4,257,098)	$ (224,057)
Balance (in units) at Sep. 30, 2012	130,776	180,225	144,180	34,243	1,802	49,449

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OTHER ASSETS

9 Months Ended

Sep. 30, 2012

OTHER ASSETS

OTHER ASSETS

NOTE 4. OTHER ASSETS

Approximately $1,923,000 and $1,879,000 of security deposits and prepaid rent deposits are included in prepaid expenses and other assets at September 30, 2012 and December 31, 2011, respectively. The security deposits and escrow accounts are restricted cash.

Included in prepaid expenses and other assets at September 30, 2012 and December 31, 2011 is approximately $710,000 and $1,014,000, respectively, held in escrow to fund future capital improvements.

Financing and leasing fees of approximately $960,000 and $919,000 are net of accumulated amortization of approximately $740,000 and $636,000 at September 30, 2012 and December 31, 2011, respectively.

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PARTNERS' CAPITAL (Tables)

9 Months Ended

Sep. 30, 2012

PARTNERS' CAPITAL

Schedule of information per depositary receipt

	Nine Months Ended September 30,
	2012		2011
Income per Depositary Receipt before Discontinued Operations	$	0.62	$	0.23
Income from Discontinued Operations	—		1.98
Net Income per Depositary Receipt after Discontinued Operations	$	0.62	$	2.21
Distributions per Depositary Receipt	$	0.75	$	0.70

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MORTGAGE NOTES PAYABLE (Details) (Mortgages payable, USD $)	9 Months Ended	1 Months Ended			1 Months Ended		9 Months Ended
	Sep. 30, 2012	Jul. 31, 2011 Battle Green Apartments	Sep. 30, 2012 Battle Green Apartments	Jul. 27, 2011 Battle Green Apartments	Jun. 30, 2011 Battle Green Apartments Harold Brown	Jun. 02, 2011 Battle Green Apartments Harold Brown	Sep. 30, 2012 Boylston Street, Westgate Woburn, School Street and Cypress Street	Sep. 30, 2012 Minimum	Sep. 30, 2012 Weighted average	Sep. 30, 2012 Maximum
MORTGAGE NOTES PAYABLE
Interest rate (as a percent)			4.95%			6.00%		4.25%	5.53%	7.07%
Amount of monthly installments including principal	$ 742,000
Effective interest rate (as a percent)	5.62%		5.07%
Annual maturities of mortgage debt
2013-current maturities	41,357,000
2014	7,889,000
2015	9,116,000
2016	192,000
2017	202,000
Thereafter	79,580,000
Total	138,336,000
Additional disclosures related to mortgages
Borrowings		5,000,000			3,998,573
Amortization period of debt		30 years
Deferred financing cost associated with mortgage				100,000
Total amount expected to be refinanced							47,000,000
Expected prepayment penalties upon refinancing							$ 1,000,000

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

9 Months Ended

Sep. 30, 2012

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

Since November 2001, the Partnership has invested in nine limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three partnerships investing in commercial property. The Partnership has between a 40%-50% ownership interests in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown’s ownership interest is between 43.2% and 57%, 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, referred to as Dexter Park, is a 409 unit residential complex. The purchase price was $129,500,000.  The total mortgage was $89,914,000 with an interest rate of 5.57% and it matures in 2019.  The mortgage calls for interest only payments for the first two years of the loan and amortized over 30 years thereafter.  The balance of this mortgage is approximately $88,891,000 at September 30, 2012.  In order to fund this investment, the Partnership used approximately $8,757,000 of its cash reserves and borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brown and his affiliates (“HBC”).  The term of the loan was four years with a provision requiring payment in whole or in part upon demand by HBC with six months notice.  On August 17, 2010, HBC gave six months written notice to the Partnership requesting a principal pay down of $2,500,000.  During the fourth quarter of 2010, the Partnership paid HBC $2,500,000 as requested.  During 2011, the Partnership elected to make principal payments of $1,000,000 on August 1, 2011, $1,000,000 on October 1, 2011, and an additional $1,000,000 on December 15, 2011 reducing the loan balance to $1,668,600 at December 31, 2011.  In February 2012, the Partnership elected to make an additional principal payment of $750,000 to HBC Holdings and the balance of $918,600 was paid in April 2012. The interest paid during the nine months ended September 30, 2012 and 2011 was approximately $18,960 and $202,000, respectively.   A majority of the apartments were leased at the time of the acquisition.  As a result, the Partnership amortized the intangible assets associated with the “in place” leases over a 12 month period which began in November 2009.  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 Partnership plans to sell the majority of units as condominium and retain 48 units for long-term investment. Gains from the sales of units were taxed at ordinary income rates. In February 2007, the Partnership refinanced the 48 units which will be retained with a new mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. As of September 30, 2012, the balance of the mortgage is approximately $ 4,717,000.  This investment is referred to as Hamilton Bay Apartments, LLC. The loan will be amortized over 30 years thereafter and matures in March 2017.  In April 2008, the Partnership refinanced an additional 20 units and obtained a new mortgage in the amount of $2,368,000 with interest at 5.75%, interest only, which matures in 2013. As of November 1, 2012, 105 units have been sold, the proceeds of which went to pay down the mortgage on the property.  The balance on the new mortgage is approximately $1,668,000 at September 30, 2012. This investment is referred to as Hamilton Bay, LLC.

On March 7, 2005, the Partnership invested $2,000,000 for a 50% ownership interest in a building comprising 49 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 Partnership plans to operate the building and initiate development of the parking lot.  In June 2007, the Partnership 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 Partnership restructured the mortgages on both parcels at Essex 81 and transferred the residential apartments to Hamilton Essex 81, LLC.  The mortgage on Hamilton Essex 81, LLC is approximately $8,380,000 amortizing over 30 years at 5.79% due in August 2016.  The mortgage on Essex Development, LLC, or the parking lot is approximately $2,106,000 with a variable interest rate of 2.25% over the daily Libor rate (0.22% at September 30, 2012). This loan was extended to August 2013 with the same conditions except for the addition of fixed principal payments in the amount of $4,301 per month. The cost associated with the extension was approximately $6,000. Harold Brown has issued a personal guaranty up to $1,000,000 of this mortgage. In the event that he is obligated to make payments to the lender as a result of this guaranty, the Partnership and other investors have, in turn, agreed to indemnify him for their proportionate share of any such payments.  The investment in the parking lot is referred to as Hamilton Essex Development, LLC; the investment in the apartments is referred to as Hamilton Essex 81, LLC.

On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176-unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Partnership sold 127 of the units as condominiums and retained 49 units for long-term investment. The Partnership obtained a new 10-year mortgage in the amount of $5,000,000 on the units to be retained by the Partnership. The interest on the new loan is 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.   The balance of this mortgage is approximately $4,950,000 at September 30, 2012.  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 Partnership obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Partnership obtained a new 10-year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan is 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. At September 30, 2012, the balance of this mortgage is approximately $5,450,000.  This investment is referred to as Hamilton Minuteman, LLC.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280-unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. As of May 2008, the Partnership sold 137 units as condominiums. Gains from these sales were taxed as ordinary income. The majority of the sales proceeds were applied to reduce the mortgage with the final payment made during the second quarter of 2007. With the sale of the units and the payments of the liabilities, the assets were combined with Hamilton on Main Apartments, LLC.  An entity partially owned by the majority shareholder of the General Partner and the President of the management company, 31% and 5%, respectively, was the sales agent and received a variable commission on each sale of 3% to 5%. 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. Hamilton on Main LLC paid a fee of approximately $400,000 in connection with this early extinguishment of debt.  At September 30, 2012, the remaining balance on the mortgage is approximately $15,680,000.

In November 2001, the Partnership invested approximately $1,533,000 for a 50% ownership interest in a 40-unit apartment building in Cambridge, Massachusetts. This property has a 12-year mortgage, with a remaining balance at September 30, 2012 of approximately $6,894,000 at 6.9% which is amortized on a 30-year schedule, with a final payment of approximately $6,000,000 in 2014. This investment is referred to as 345 Franklin, LLC.

As required by the lender, the Treasurer of the General Partner has provided a limited repayment guaranty equal to fifty percent (50%) of the outstanding balance for the loan on the for sale units at Hamilton Bay and a limited guaranty of $1,000,000 for the loan on Hamilton Essex Development.  In the event that he is obligated to make payments to the lenders as a result of these guaranties, the Partnership and other investors have, in turn, agreed to indemnify him for their proportionate share of any such payments.

Summary financial information as of September 30, 2012

			Hamilton										Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Apts		Apts		Park		Total
ASSETS
Rental Properties	$	9,201,729	$	2,611,197	$	7,962,705	$	5,685,935	$	1,863,770	$	7,045,549	$	7,077,941	$	21,317,705	$	108,880,125	$	171,646,656
Cash & Cash Equivalents	3,682		12,525		57,974		66		14,203		98		42,880		159,507		782,730		1,073,665
Rent Receivable	45,283		—		905		7,924		654		2,929		4,791		5,055		50,229		117,770
Real Estate Tax Escrow	49,793		—		39,686		71,850		—		95,568		42,857		109,839		430,978		840,573
Prepaid Expenses & Other Assets	96,118		807		97,491		102,622		152,270		107,997		76,040		292,984		1,328,474		2,254,803
Financing & Leasing Fees	64,805		5,946		10,205		20,902		2,771		27,833		16,942		16,296		414,507		580,208
Total Assets	$	9,461,410	$	2,630,476	$	8,168,966	$	5,889,300	$	2,033,669	$	7,279,975	$	7,261,451	$	21,901,385	$	111,887,043	$	176,513,675
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,379,679	$	2,106,087	$	6,893,510	$	4,949,865	$	1,668,000	$	4,716,555	$	5,450,034	$	15,680,318	$	88,891,126	$	138,735,173
Accounts Payable & Accrued Expense	72,817		5,870		146,324		49,095		20,272		6,929		94,046		248,055		841,053		1,484,461
Advance Rental Pmts& Security Deposits	148,662		—		140,048		86,764		23,802		84,376		68,652		267,641		1,837,442		2,657,387
Total Liabilities	8,601,158		2,111,957		7,179,881		5,085,724		1,712,074		4,807,860		5,612,731		16,196,014		91,569,622		142,877,021
Partners’ Capital	860,252		518,519		989,085		803,576		321,595		2,472,115		1,648,720		5,705,372		20,317,421		33,636,654
Total Liabilities and Capital	$	9,461,410	$	2,630,476	$	8,168,966	$	5,889,300	$	2,033,669	$	7,279,975	$	7,261,451	$	21,901,385	$	111,887,043	$	176,513,675
Partners’ Capital - NERA 50%	$	430,126	$	259,259	$	494,542	$	401,788	$	160,798	$	1,236,057	$	824,360	$	2,852,686			6,659,616
Partners’ Capital - NERA 40%																	$	8,126,969	8,126,969
																			$	14,786,585
Total units/condominiums
Apartments	48		—		40		175		120		48		42		148		409		1,030
Commercial	1		1		—		1		—		—		—		—		—		3
Total	49		1		40		176		120		48		42		148		409		1,033
Units to be retained	49		1		40		49		—		48		42		148		409		786
Units to be sold	—		—		—		127		120		—		—		—		—		247
Units sold through November 1, 2012	—		—		—		127		105		—		—		—		—		232
Unsold units	—		—		—		—		15		—		—		—		—		15
Unsold units with deposits for future sale as of November 1, 2012.	—		—		—		—		—		—		—		—		—		—

Summary financial information for the nine months ended September 30, 2012

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total
Revenues
Rental Income	$	937,284		$	216,137		$	873,734		$	639,791		$	173,054		$	659,463		$	603,212		$	1,953,493		$	9,056,079		$	15,112,247
Laundry and Sundry Income	10,488			—			1,788			—			—			—			666			13,732			75,239			101,913
	947,772			216,137			875,522			639,791			173,054			659,463			603,878			1,967,225			9,131,318			15,214,160
Expenses
Administrative	10,430			1,432			23,211			4,079			6,617			29,996			6,755			37,307			169,223			289,048
Depreciation and Amortization	308,642			9,394			336,339			190,555			59,208			224,008			238,621			717,664			4,314,274			6,398,704
Management Fees	40,573			8,645			36,070			25,964			7,268			25,753			24,241			78,862			196,041			443,417
Operating	85,319			—			42,933			636			1,237			1,070			54,385			242,157			764,389			1,192,125
Renting	16,664			—			3,459			5,718			1,450			3,660			3,013			8,845			71,830			114,639
Repairs and Maintenance	94,156			5,475			61,720			235,472			53,379			205,125			45,315			283,251			707,486			1,691,378
Taxes and Insurance	149,722			37,211			75,919			109,871			34,890			121,571			77,022			253,782			1,115,971			1,975,959
	705,506			62,158			579,650			572,294			164,047			611,182			449,351			1,621,867			7,339,215			12,105,270
Income Before Other Income	242,266			153,980			295,872			67,497			9,007			48,281			154,527			345,358			1,792,103			3,108,891
Other Income (Loss)
Interest Expense	(373,357		)	(45,437		)	(366,348		)	(216,254		)	(73,609		)	(203,375		)	(238,036		)	(628,955		)	(3,818,020		)	(5,963,390		)
Interest Income	—			—			36			62			165			—			—			—			—			262
Interest Income from Note	—			—			—			—			4,901			—			—			—			—			4,901
	(373,357		)	(45,437		)	(366,311		)	(216,193		)	(68,543		)	(203,375		)	(238,036		)	(628,955		)	(3,818,020		)	(5,958,227		)
Net Income (Loss)	$	(131,091	)	$	108,543		$	(70,439	)	$	(148,696	)	$	(59,537	)	$	(155,094	)	$	(83,509	)	$	(283,597	)	$	(2,025,917	)	$	(2,849,337	)
Net Income (Loss) - NERA 50%	$	(65,546	)	$	54,271		$	(35,220	)	$	(74,348	)	$	(29,768	)	$	(77,547	)	$	(41,754	)	$	(141,798	)				(411,710		)
Net Income (Loss) - NERA 40%																									$	(810,367	)	(810,367		)
																												$	(1,222,077	)

Summary financial information for the three months ended September 30, 2012

				Hamilton															Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Sales			Bay Apts			Apts			Apts			Park			Total
Revenues
Rental Income	$	311,281		$	72,046		$	295,031		$	218,064		$	61,862		$	223,301		$	204,535		$	656,122		$	2,993,242		$	5,035,486
Laundry and Sundry Income	3,415			—			600			—			—			—			175			3,752			31,384			39,327
	314,697			72,046			295,631			218,064			61,862			223,301			204,711			659,875			3,024,626			5,074,812
Expenses
Administrative	2,824			317			7,845			1,599			2,514			6,285			3,823			11,209			59,789			96,206
Depreciation and Amortization	101,777			2,909			114,199			63,962			19,736			74,920			80,075			240,997			1,443,275			2,141,849
Management Fees	13,547			2,882			11,953			9,079			2,681			8,761			8,225			26,655			66,474			150,256
Operating	32,187			—			13,451			1			310			165			16,664			63,833			217,288			343,898
Renting	14,574			—			3,318			3,389			—			389			1,019			2,265			30,033			54,987
Repairs and Maintenance	39,279			950			17,401			89,279			21,202			71,906			15,818			85,358			277,534			618,728
Taxes and Insurance	48,843			12,025			25,358			36,279			11,329			39,893			26,154			85,473			371,328			656,683
	253,031			19,084			193,525			203,588			57,772			202,319			151,778			515,790			2,465,720			4,062,608
Income Before Other Income	61,665			52,962			102,106			14,476			4,090			20,982			52,933			144,085			558,906			1,012,205
Other Income (Loss)
Interest Expense	(124,806		)	(15,110		)	(120,435		)	(72,408		)	(24,738		)	(68,108		)	(79,666		)	(210,248		)	(1,277,390		)	(1,992,910		)
Interest Income	—			—			12			21			51			—			—			—			—			84
Interest Income from Note	—			—			—			—			1,458			—			—			—			—			1,458
	(124,806		)	(15,110		)	(120,423		)	(72,388		)	(23,229		)	(68,108		)	(79,666		)	(210,248		)	(1,277,390		)	(1,991,367		)
Net Income (Loss)	$	(63,141	)	$	37,852		$	(18,317	)	$	(57,912	)	$	(19,139	)	$	(47,126	)	$	(26,733	)	$	(66,164	)	$	(718,484	)	$	(979,163	)
Net Income (Loss) - NERA 50%	$	(31,571	)	$	18,926		$	(9,158	)	$	(28,956	)	$	(9,569	)	$	(23,563	)	$	(13,366	)	$	(33,082	)				(130,339		)
Net Income (Loss) - NERA 40%																									$	(287,394	)	(287,394		)
																												$	(417,733	)

Future annual mortgage maturities at September 30, 2012 are as follows:

			Hamilton
	Hamilon		Essex		345		Hamilton		Hamilton		Hamilton		Hamilton		Hamilton on		Dexter
	Essex 81		Development		Franklin		1025		Bay Sales		Bay Apts		Minuteman		Main Apts		Park
	March		March		November		March		October		October		August		August		October
Period End	2005		2005		2001		2005		2005		2005		2004		2004		2009		Total
9/30/2013	$	123,859	$	2,106,087	$	177,887	$	64,222	$	1,668,000	$	65,250	$	70,339	$	289,374	$	1,258,232	$	5,823,250
9/30/2014	131,223				6,715,623		68,013				68,979		74,491		305,121		1,330,133		8,693,582
9/30/2015	139,026						72,028				72,921		78,887		15,085,823		1,406,142		16,854,826
9/30/2016	7,985,570						75,510				77,088		82,697				1,486,495		9,707,361
9/30/2017							4,670,091				4,432,317		5,143,620				1,571,440		15,817,469
Thereafter																	81,838,683		81,838,683
	$	8,379,678	$	2,106,087	$	6,893,510	$	4,949,864	$	1,668,000	$	4,716,555	$	5,450,034	$	15,680,318	$	88,891,125	$	138,735,171

Summary financial information as of September 30, 2011

	Hamilton Essex 81		Hamilton Essex Development		345 Franklin		Hamilton 1025		Hamilton Bay Sales		Hamilton Bay Apts		Hamilton Minuteman		Hamilton on Main Apts		Dexter Park		Total
ASSETS
Rental Properties	$	9,546,059	$	2,597,309	$	8,336,008	$	5,906,387	$	1,951,075	$	7,347,113	$	7,387,465	$	22,162,035	$	114,310,012	$	179,543,463
Cash & Cash Equivalents	117		12,916		10,019		33		24,382		12,951		14,118		281		815,551		890,367
Rent Receivable	92,005		19,146		879		9,278		904		1,819		2,222		12,054		172,623		310,930
Due from Investment Properties	15,000		15,000		—		—		—		—		—		—		—
Real Estate Tax Escrow	93,721		—		38,291		60,411		—		86,578		44,193		102,117		620,090		1,045,402
Prepaid Expenses & Other Assets	98,142		789		91,158		86,663		189,773		93,298		81,180		526,254		1,178,633		2,345,890
Fin & Leasing Fees	78,711		9,607		18,371		25,928		7,836		34,195		20,911		23,158		473,908		692,624
Total Assets	$	9,923,756	$	2,639,767	$	8,494,727	$	6,088,700	$	2,173,969	$	7,575,954	$	7,550,088	$	22,825,899	$	117,570,816	$	184,843,676
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,487,795	$	2,157,699	$	7,059,569	$	5,000,00	$	1,668,000	$	4,750,000	$	5,500,000	$	15,952,852	$	89,914,000	$	140,489,916
Due from Investment Properties	15,000		15,000		—		—		—		—		—		—		—		—
Accts Pay & Acc Exp	50,338		5,826		71,853		48,147		17,514		6,661		83,378		200,478		750,820		1,235,011
Adv Rent Pmt & Sec Dep	149,104		—		111,782		70,319		21,446		83,709		63,134		244,407		1,764,347		2,508,248
Total Liabilities	8,687,238		2,178,525		7,243,205		5,118,466		1,706,960		4,840,370		5,646,512		16,397,734		92,429,166		144,248,175
Partners’ Capital	1,236,518		461,242		1,251,523		970,234		467,010		2,735,584		1,903,576		6,428,164		25,141,650		40,595,500
Total Liabilities & Capital	$	9,923,756	$	2,639,767	$	8,494,727	$	6,088,700	$	2,173,969	$	7,575,954	$	7,550,088	$	22,825,899	$	117,570,816	$	184,843,676
Partners’ Capital — NERA 50%	$	618,259	$	230,621	$	625,761	$	485,117	$	233,505	$	1,367,792	$	951,788	$	3,214,082			7,726,925
NERA 40%																	$	10,056,660	10,056,660
																			$	17,783,585
Total units/ condominiums
Apartments	48		—		40		175		120		48		42		148		409		1,030
Commercial	1		1		—		1		—		—		—		—		—		3
Total	49		1		40		176		120		48		42		148		409		1,033
Units to be retained	49		1		40		49		—		48		42		148		409		786
Units to be sold	—		—		—		127		120		—		—		—		—		247
Units sold through October 24, 2011	—		—		—		127		105		—		—		—		0		232
Unsold units	—		—		—		—		15		—		—		—		—		15
Unsold units with deposits for future sale as of October  24 , 2011	—		—		—		—		0		—		—		—		—		—

Summary financial information for the nine months ended September 30, 2011

	Hamilton Essex 81			Hamilton Essex Development			345 Franklin			Hamilton 1025			Hamilton Bay Sales			Hamilton Bay Apts			HamiltonMinuteman			Hamilton on Main			Dexter Park			Total
Revenues
Rental Income	$	940,881		$	214,196		$	848,631		$	607,752		$	178,514		$	643,284		$	589,360		$	1,856,189		$	8,588,891		$	14,467,697
Laundry and Sundry Income	11,870			—			921			—			—			—			579			15,698			74,713			103,782
	952,750			214,196			849,552			607,752			178,514			643,284			589,939			1,871,887			8,663,605			14,571,479
Expenses
Administrative	12,818			1,084			20,368			7,812			3,529			14,587			9,431			25,019			122,470			217,119
Depreciation and Amortization	317,669			5,048			333,321			194,986			67,248			235,595			244,550			724,597			4,276,964			6,399,978
Management Fees	36,596			8,280			34,012			24,089			7,320			25,268			23,493			74,867			188,088			422,011
Operating	91,167			—			53,705			1,148			170			378			30,360			285,510			699,466			1,161,904
Renting	7,667			—			14,979			9,338			1,750			6,755			2,676			12,791			133,066			189,022
Repairs and Maintenance	103,137			3,050			57,642			224,152			55,285			221,000			76,312			267,194			750,306			1,758,077
Taxes and Insurance	139,499			36,014			71,706			108,471			34,328			117,288			68,306			242,777			959,720			1,778,109
	708,553			53,476			585,734			569,995			169,630			620,870			455,128			1,632,755			7,130,079			11,926,220
Income Before Other Income	244,197			160,720			263,818			37,757			8,884			22,414			134,812			239,132			1,533,525			2,645,259
Other Income (Loss)
Interest Income							37			66			378												3,219			3,701
Interest Expense	(376,847		)	(46,036		)	(371,875		)	(216,310		)	(73,297		)	(202,923		)	(237,765		)	(636,029		)	(3,824,313		)	(5,985,397		)
Gain on Sale of Real Estate
Interest income from Note													6,926															6,926
Other Income (Expenses)	(2,331		)	—			(5,375		)	(3,621		)				(2,271		)				(1,152		)				(14,751		)
	(379,178		)	(46,036		)	(377,213		)	(219,865		)	(65,993		)	(205,194		)	(237,765		)	(637,181		)	(3,821,094		)	(5,989,521		)
Net Income (Loss)	$	(134,981	)	$	114,684		$	(113,395	)	$	(182,108	)	$	(57,110	)	$	(182,781	)	$	(102,953	)	$	(398,049	)	$	(2,287,569	)	$	(3,344,262	)
Net Loss - NERA 50%	$	(67,491	)	$	57,342		$	(56,697	)	$	(91,054	)	$	(28,555	)	$	(91,390	)	$	(51,476	)	$	(199,024	)				(528,346		)
NERA 40%																									$	(915,028	)	(915,028		)
																												$	(1,443,374	)

Summary financial information for the three months ended September 30, 2011

	Hamilton Essex 81			Hamilton Essex Development			345 Franklin			Hamilton 1025			Hamilton Bay Sales			Hamilton Bay Apts			Hamilton Minuteman			Hamilton on Main			Dexter Park			Total
Revenues
Rental Income	$	374,433		$	73,146		$	288,169		$	206,445		$	59,375		$	217,079		$	196,335		$	625,370		$	2,848,930		$	4,889,281
Laundry and Sundry Income	4,668						(307		)										579			4,910			24,900			34,750
	379,102			73,146			287,862			206,445			59,375			217,079			196,914			630,280			2,873,830			4,924,031
Expenses
Administrative	1,548			255			11,388			2,934			1,728			7,003			1,387			9,334			55,971			91,548
Depreciation and Amortization	106,099			1,922			112,028			65,582			22,416			78,381			81,891			242,907			1,429,538			2,140,763
Management Fees	11,495			2,760			11,372			8,182			2,416			8,516			7,589			24,345			64,815			141,490
Operating	26,096						17,674			280			75			159			9,789			75,443			205,322			334,838
Renting	487						4,572			2,209			675			2,166			899			5,740			34,679			51,427
Repairs and Maintenance	47,258						21,504			74,625			17,377			65,890			32,238			99,953			306,231			665,076
Taxes and Insurance	45,262			12,195			24,438			34,912			11,548			38,775			24,754			82,541			353,478			627,903
	238,245			17,132			202,976			188,724			56,235			200,889			158,546			540,263			2,450,035			4,053,046
Income Before Other Income	140,856			56,014			84,886			17,721			3,140			16,190			38,368			90,016			423,795			870,985
Other Income (Loss)
Interest Income							12			22			108															142
Interest Expense	(126,599		)	(15,349		)	(123,353		)	(72,913		)	(24,715		)	(68,403		)	(80,190		)	(213,905		)	(1,288,240		)	(2,013,666		)
Gain on Sale of Real Estate
Interest income from Note													2,145															2,145
Other Income (Expenses)	(2,331		)				(5,375		)	(3,621		)				(2,271		)				(1,152		)				(14,751		)
	(128,930		)	(15,349		)	(128,716		)	(76,513		)	(22,462		)	(70,674		)	(80,190		)	(215,057		)	(1,288,240		)	(2,026,130		)
Net Income (Loss)	$	11,926		$	40,665		$	(43,830	)	$	(58,792	)	$	(19,322	)	$	(54,484	)	$	(41,822	)	$	(125,040	)	$	(864,445	)	$	(1,155,144	)
Net Loss - NERA 50%	$	5,963		$	20,333		$	(21,915	)	$	(29,396	)	$	(9,661	)	$	(27,242	)	$	(20,911	)	$	(62,520	)				(145,350		)
NERA 40%																									$	(345,778	)	(345,778		)
																												$	(491,128	)