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 $87,179,000 at March 31, 2014. 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. The loan was paid in full in April 2012. 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 sold 120 units as condominiums and retained 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 with a new mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. The loan will be amortized over 30 years thereafter and matures in March 2017. As of March 31, 2014, the balance of the mortgage is approximately $4,623,000. This investment is referred to as Hamilton Bay Apartments, LLC. 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 matured in 2013. On October 18, 2013, the Partnership and its joint venture partner each made capital contributions to the entity of $660,000. The capital was used to pay off the outstanding mortgage. One unit was sold during the quarter ended March 31, 2014 with a gain of approximately $ 52,000. As of May 6, 2014, 14 units are still owned by the Partnership. 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 48 apartments, one commercial space and a 50-car surface parking lot located in Boston, Massachusetts. The purchase price was $14,300,000, with a $10,750,000 mortgage. The 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 $8,202,000 amortizing over 30 years at 5.79% due in August 2016. The mortgage on Essex Development, LLC, or the parking lot is approximately $2,028,000 with a variable interest rate of 2.25% over the daily Libor rate (0.152% at March 31, 2014). 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. In September 2013, the loan was extended for an additional two years to August 2015 with the same conditions except for the increased principal payments of $4,443 per month. The costs associated with the extension were approximately $9,000. 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 $4,857,000 at March 31, 2014. This investment is referred to as Hamilton 1025, 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. At March 31, 2014, the remaining balance on the mortgage is approximately $15,263,000. Hamilton on Main, LLC is in the process of refinancing its mortgage and has paid approximately $339,000 in deposits for the refinancing. These deposits are included in other assets. The Partnership expects the closing of the refinancing will be completed in the third quarter of 2014.

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 March 31, 2014, the balance of this mortgage is approximately $5,348,000. This investment is referred to as Hamilton Minuteman, LLC.

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

Summary information as of March 31, 2014

				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	$	8,665,490		$	2,623,618		$	7,409,606		$	5,331,142		$	1,626,115		$	6,604,500		$	6,702,438		$	20,026,347		$	100,826,473		$	159,815,729
Cash & Cash Equivalents	31,408			61,603			26,136			23,018			124,765			25,766			80,847			118			1,027,202			1,400,862
Rent Receivable	28,674			—			2,565			995			1,793			4,641			737			8,623			74,141			122,170
Real Estate Tax Escrow	101,256			—			40,681			68,445			—			37,283			35,466			43,577			339,330			666,038
Prepaid Expenses & Other Assets	71,795			222			32,078			37,561			206,859			35,603			42,400			712,377			1,607,358			2,746,253
Financing & Leasing Fees	42,259			11,982			94,884			13,363			—			18,291			10,989			6,001			325,532			523,300
Total Assets	$	8,940,881		$	2,697,426		$	7,605,950		$	5,474,523		$	1,959,533		$	6,726,084		$	6,872,876		$	20,797,043		$	104,200,037		$	165,274,352
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,202,370		$	2,027,817		$	10,000,000		$	4,856,961		$	—		$	4,622,842		$	5,348,277		$	15,263,225		$	87,179,208		$	137,500,700
Accounts Payable & Accrued Expense	52,518			6,373			81,538			27,653			19,186			10,896			64,247			172,902			708,297			1,143,611
Advance Rental Pmts& Security Deposits	163,668			—			190,001			91,568			20,483			95,060			80,327			291,564			2,294,713			3,227,383
Total Liabilities	8,418,556			2,034,190			10,271,539			4,976,181			39,668			4,728,798			5,492,851			15,727,691			90,182,218			141,871,694
Partners’ Capital	522,325			663,236			(2,665,589		)	498,342			1,919,864			1,997,286			1,380,025			5,069,351			14,017,818			23,402,658
Total Liabilities and Capital	$	8,940,881		$	2,697,426		$	7,605,950		$	5,474,523		$	1,959,533		$	6,726,084		$	6,872,876		$	20,797,043		$	104,200,037		$	165,274,352

Partners’ Capital % - NERA	50		%	50		%	50		%	50		%	50		%	50		%	50		%	50		%	40		%
Investment in Unconsolidated Joint Ventures	$	261,162		$	331,618		$	—		$	249,171		$	959,932		$	998,643		$	690,012		$	2,534,676		$	5,607,127		11,632,342
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	—		$	—		$	(1,332,795	)	$	—		$	—		$	—		$	—		$	—		$	—		(1,332,795		)
Total Investment in Unconsolidated Joint Ventures (Net)																												$	10,299,547

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 May 1, 2014	—			—			—			127			106			—			—			—			—			233
Unsold units	—			—			—			—			14			—			—			—			—			14
Unsold units with deposits for future sale as of May 1, 2014	—			—			—			—			—			—			—			—			—			—

Three months Ended March 31, 2014

				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	$	328,770		$	73,236		$	327,740		$	231,187		$	62,798		$	238,891		$	223,942		$	717,680		$	3,357,055		$	5,561,299
Laundry and Sundry Income	3,920			—			(423		)	—			—			—			169			9,456			25,380			38,501
	332,690			73,236			327,317			231,187			62,798			238,891			224,111			727,136			3,382,434			5,599,800
Expenses
Administrative	3,178			317			6,823			1,968			705			4,845			3,003			9,485			54,543			84,868
Depreciation and Amortization	107,903			2,822			99,725			60,152			19,175			79,314			79,402			236,015			1,345,463			2,029,971
Management Fees	13,275			2,929			13,666			9,231			2,384			9,460			9,310			28,263			71,898			160,417
Operating	44,972			—			24,823			160			251			459			32,854			142,160			488,785			734,463
Renting	117			—			3,443			5,753			753			3,492			2,466			6,829			18,590			41,441
Repairs and Maintenance	32,278			—			12,337			80,443			23,824			73,437			16,887			90,518			196,494			526,219
Taxes and Insurance	58,284			13,569			29,644			40,604			11,899			40,759			29,572			95,639			381,185			701,154
	260,008			19,638			190,461			198,311			58,990			211,766			173,493			608,908			2,556,958			4,278,532
Income Before Other Income	72,682			53,598			136,856			32,876			3,808			27,125			50,619			118,227			825,476			1,321,267
Other Income (Loss)
Interest Expense	(119,368		)	(13,919		)	(97,753		)	(69,560		)	(195		)	(65,465		)	(76,500		)	(200,379		)	(1,227,695		)	(1,870,833		)
Interest Income	—			—			—			4			—			—			—			—			—			4
Interest Income from Note	—			—			—			—			334			—			—			—			—			334
Gain on Sale of Real Estate	—			—			—			—			52,283			—			—			—			—			52,283
	(119,368		)	(13,919		)	(97,753		)	(69,555		)	52,422			(65,465		)	(76,500		)	(200,379		)	(1,227,695		)	(1,818,212		)
Net Income (Loss)	$	(46,687	)	$	39,679		$	39,104		$	(36,679	)	$	56,230		$	(38,340	)	$	(25,881	)	$	(82,152	)	$	(402,219	)	$	(496,945	)
Net Income (Loss) - NERA 50%	$	(23,343	)	$	19,840		$	19,552		$	(18,340	)	$	28,115		$	(19,170	)	$	(12,941	)	$	(41,076	)				(47,363		)
Net Income (Loss) - NERA 40%																									$	(160,888	)	(160,888		)
																												$	(208,250	)

Future annual mortgage maturities at March 31, 2014 are as follows:

			Hamilton
	Hamilon		Essex 81		345		Hamilton		Hamilton		Hamilton		Hamilton on		Dexter
	Essex 81		Development		Franklin		1025		Bay Apts		Minuteman		Main Apts		Park		Total
Period End
3/31/2015	129,898		53,316				69,646		74,111		76,279		15,263,225		1,361,291		17,027,766
3/31/2016	142,413		1,974,501				73,013		74,975		79,962				1,439,081		3,783,946
3/31/2017	7,930,059				131,657		4,714,301		4,473,756		5,192,035				1,521,316		23,963,125
3/31/2018					185,410										1,608,251		1,793,661
3/31/2019					192,714										1,700,153		1,892,867
Thereafter					9,490,220										79,549,116		89,039,336
	$	8,202,370	$	2,027,817	$	10,000,000	$	4,856,961	$	4,622,842	$	5,348,277	$	15,263,225	$	87,179,208	$	137,500,701

At March 31, 2014 the weighted average interest rate on the above mortgages was 5.38%. The effective rate was 5.46% including the amortization expense of deferred financing costs.

Summary financial information as of March 31, 2013

				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	$	9,015,547		$	2,609,952		$	7,788,886		$	5,563,140		$	1,824,421		$	6,900,646		$	6,965,331		$	20,884,885		$	106,099,815		$	167,652,623
Cash & Cash Equivalents	11,201			19,577			25,807			7,151			16,776			20,043			20,106			125,776			998,232			1,244,669
Rent Receivable	39,722						251			5,179			4,816			958			4,444			2,510			26,486			84,366
Real Estate Tax Escrow	49,793						45,617			74,350						47,332			39,197			72,665			392,816			721,770
Prepaid Expenses & Other Assets	70,830			202			102,039			36,541			135,511			16,689			48,597			202,059			1,429,338			2,041,806
Financing & Leasing Fees	59,745			2,703			21,122			18,389			4,239			24,652			14,958			12,865			384,849			543,522
Total Assets	$	9,246,838		$	2,632,434		$	7,983,722		$	5,704,750		$	1,985,763		$	7,010,320		$	7,092,633		$	21,300,760		$	109,331,536		$	172,288,756
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	8,321,852		$	2,080,281		$	6,806,096		$	4,917,835		$	1,668,000		$	4,685,952		$	5,414,951		$	15,536,345		$	88,300,726		$	137,732,038
Accounts Payable & Accrued Expense	39,583			6,604			139,062			50,520			24,838			25,608			70,988			200,055			868,483			1,425,741
Advance Rental Pmts& Security Deposits	160,144						162,681			83,076			25,592			81,290			69,598			275,348			1,977,679			2,835,408
Total Liabilities	8,521,579			2,086,885			7,107,839			5,051,431			1,718,430			4,792,850			5,555,537			16,011,748			91,146,888			141,993,187
Partners’ Capital	725,259			545,549			875,883			653,319			267,333			2,217,470			1,537,096			5,289,012			18,184,648			30,295,569
Total Liabilities and Capital	$	9,246,838		$	2,632,434		$	7,983,722		$	5,704,750		$	1,985,763		$	7,010,320		$	7,092,633		$	21,300,760		$	109,331,536		$	172,288,756

Partners’ Capital % - NERA	50		%	50		%	50		%	50		%	50		%	50		%	50		%	50		%	40		%
Investment in Unconsolidated Joint Ventures	$	362,630		$	272,775		$	437,942		$	326,660		$	133,667		$	1,108,735		$	768,548		$	2,644,506		$	7,273,859		13,329,320
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		—
Total Investment in Unconsolidated Joint Ventures (Net)																												$	13,329,320

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 April 30, 2013	—			—			—			127			105			—			—			—			—			232
Unsold units	—			—			—			—			15			—			—			—			—			15
Unsold units with deposits for future sale as of April 30, 2013	—			—			—			—			—			—			—			—			—			—

Three Months Ended March 31, 2013

				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	$	328,455		$	71,896		$	304,290		$	220,217		$	59,608		$	219,281		$	215,857		$	676,946		$	3,160,009		$	5,256,559
Laundry and Sundry Income	3,846			—			645			—			—			—			211			9,771			21,432			35,905
	332,301			71,896			304,935			220,217			59,608			219,281			216,068			686,717			3,181,441			5,292,464
Expenses
Administrative	3,854			317			5,732			1,681			773			3,881			423			8,639			46,878			72,178
Depreciation and Amortization	105,572			2,244			105,684			60,087			21,063			76,798			78,708			244,534			1,438,457			2,133,147
Management Fees	12,252			2,876			13,075			8,959			2,338			8,464			8,537			29,041			65,010			150,552
Operating	35,066			—			25,853			260			1,579			422			23,211			113,996			328,825			529,212
Renting	9,350			—			1,766			703			—			405			2,338			1,312			11,555			27,429
Repairs and Maintenance	22,243			550			13,586			76,109			22,770			74,913			10,096			85,905			181,585			487,757
Taxes and Insurance	55,882			12,199			28,186			38,750			10,230			35,679			30,866			84,817			396,213			692,822
	244,219			18,186			193,882			186,549			58,753			200,562			154,179			568,244			2,468,523			4,093,097
Income Before Other Income	88,082			53,710			111,053			33,668			855			18,719			61,889			118,473			712,918			1,199,367
Other Income (Loss)
Interest Expense	(121,155		)	(14,598		)	(118,942		)	(70,483		)	(24,182		)	(66,267		)	(77,462		)	(203,954		)	(1,243,258		)	(1,940,301		)
Interest Income	—			—			12			1			45			—			—			—			—			58
Interest Income from Note	—			—			—			—			1,096			—			—			—			—			1,096
	(121,155		)	(14,598		)	(118,930		)	(70,482		)	(23,041		)	(66,267		)	(77,462		)	(203,954		)	(1,243,258		)	(1,939,147		)
Net Income (Loss)	$	(33,073	)	$	39,112		$	(7,877	)	$	(36,814	)	$	(22,186	)	$	(47,548	)	$	(15,573	)	$	(85,481	)	$	(530,340	)	$	(739,780	)
Net Income (Loss) - NERA 50%	$	(16,537	)	$	19,556		$	(3,939	)	$	(18,407	)	$	(11,093	)	$	(23,774	)	$	(7,787	)	$	(42,741	)				(104,720		)
Net Income (Loss) - NERA 40%																									$	(212,136	)	(212,136		)
																												$	(316,856	)