RENTAL PROPERTIES

12 Months Ended

Dec. 31, 2018

RENTAL PROPERTIES

RENTAL PROPERTIES

NOTE 2. RENTAL PROPERTIES 

As of December 31, 2018, the Partnership and its Subsidiary Partnerships owned 2,711 residential apartment units in 23 residential and mixed‑use complexes (collectively, the “Apartment Complexes”). The Partnership also owns 19 condominium units in a residential condominium complex, all of which are leased to residential tenants (collectively referred to as the “Condominium Units”). The Apartment Complexes and Condominium Units are located primarily in the metropolitan Boston area of Massachusetts.

Additionally, as of December 31, 2018, the Partnership and Subsidiary Partnerships owned a commercial shopping center in Framingham, commercial buildings in Newton and Brookline and mixed‑use properties in Boston, Brockton and Newton, all in Massachusetts. These properties are referred to collectively as the “Commercial Properties.”

The Partnership also owned a 40% to 50% ownership interest in eight residential and mixed use complexes (the “Investment Properties”) at December 31, 2018 with a total of 693 units, accounted for using the equity method of consolidation. See Note 14 for summary information on these investments.

Rental properties consist of the following:

	December 31, 2018		December 31, 2017		Useful Life
Land, improvements and parking lots	$	72,547,547	$	65,087,214	15	-	40	years
Buildings and improvements		221,697,939		201,844,565	15	-	40	years
Kitchen cabinets		12,134,519		12,338,627	5	-	10	years
Carpets		7,591,591		8,802,831	5	-	10	years
Air conditioning		603,149		641,079	5	-	10	years
Laundry equipment		327,643		263,275	5	-	7	years
Elevators		1,839,590		1,139,296	20	-	40	years
Swimming pools		444,629		444,629	10	-	30	years
Equipment		12,919,389		11,163,864	5	-	30	years
Motor vehicles		216,260		216,260			5	years
Fences		38,213		37,465	5	-	15	years
Furniture and fixtures		7,013,845		9,390,021	5	-	7	years
Smoke alarms		528,097		582,471	5	-	7	years
Total fixed assets		337,902,411		311,951,597
Less: Accumulated depreciation		(107,391,148)		(104,797,803)
	$	230,511,263	$	207,153,794

							Cost
			Initial Cost to				Capitalized		Gross Amount at Which								Years
Property Name	Encumbrances		Partnerships(1)				Subsequent to		Carried at Close of Period								Built/	Depreciable
Type	(First				Buildings		Acquisition(2)				Buildings				Accumulated		Redecorated	Lives
Location	Mortgages)		Land		Improvements		Improvements		Land		Improvements		Totals		Depreciation		Date Acquired	Years
Boylston Downtown L.P. Residential Apartments Boston, Massachusetts	$	38,303,055	$	2,112,000	$	8,593,109	$	9,092,105	$	2,112,000	$	17,685,214	$	19,797,214	$	12,755,764	July 1995	(3)
Brookside Associates LLC Residential Apartments Woburn, Massachusetts	$	2,449,146	$	684,000	$	3,116,000	$	432,470	$	684,000	$	3,548,470	$	4,232,470	$	2,303,052	Oct. 2000	(3)
Clovelly Apartments L.P. Residential Apartments Nashua, New Hampshire	$	4,160,000	$	177,610	$	1,478,359	$	1,643,458	$	177,610	$	3,121,817	$	3,299,427	$	2,289,823	Sept. 1977	(3)
Commonwealth 1137 L.P. Residential Apartments Boston, Massachusetts	$	3,750,000	$	342,000	$	1,367,669	$	1,151,109	$	342,000	$	2,518,778	$	2,860,778	$	1,872,703	July 1995	(3)
Commonwealth 1144 L.P. Residential Apartments Boston, Massachusetts	$	14,780,000	$	1,410,000	$	5,664,816	$	4,016,797	$	1,410,000	$	9,681,613	$	11,091,613	$	6,313,509	July 1995	(3)
Executive Apartments L.P. Residential Apartments Framingham, Massachusetts	$	2,415,000	$	91,400	$	740,360	$	1,361,625	$	91,400	$	2,101,985	$	2,193,385	$	1,304,598	Sept. 1977	(3)
Hamilton Battle Green LLC Residential Apartments Lexington, Massachusetts	$	4,358,279	$	1,341,737	$	8,457,497	$	135,799	$	1,341,737	$	8,593,296	$	9,935,033	$	2,635,081	Jun. 2011	(3)
Hamilton Cypress LLC  Commercial- 1031  Exchange Brookline, Massachusetts	$	—	$	2,362,596	$	4,613,985	$	36,319	$	2,362,596	$	4,650,304	$	7,012,900	$	1,423,342	Oct. 2008	(3)
Hamilton Green Apartments, LLC Residential Apartments Andover, Massachusetts	$	35,910,042	$	16,054,336	$	44,794,438	$	(8,265,823)	$	16,054,336	$	36,528,615	$	52,582,951	$	9,142,815	Jul. 2013	(3)
Hamilton Highlands, LLC Residential  Apartments Needham, Massachusetts	$	20,829,315		6,815,522		27,262,087		302,384		6,815,522		27,564,471		34,379,993		1,248,735	Mar. 2018	(3)
Hamilton Linewt LLC Commercial 1031  Exchange Newton, Massachusetts	$	—	$	884,042	$	2,652,127	$	138,904	$	884,042	$	2,791,031	$	3,675,073	$	780,407	Nov. 2007	(3)
Hamilton Oaks Associates LLC Residential Apartments Brockton, Massachusetts	$	11,925,000	$	2,175,000	$	12,325,000	$	3,316,818	$	2,175,000	$	15,641,818	$	17,816,818	$	10,333,004	Dec. 1999	(3)
Highland Street Apartments, L.P. Residential Apartments Lowell, Massachusetts	$	1,050,000	$	156,000	$	634,085	$	344,651	$	156,000	$	978,736	$	1,134,736	$	662,712	Dec. 1996	(3)
Linhart L.P.  Residential / Commercial  Newton, Massachusetts	$	—	$	385,000	$	1,540,000	$	1,608,452	$	385,000	$	3,148,452	$	3,533,452	$	2,364,279	Jan. 1995	(3)
NERA Dean St. Associates LLC Residential Apartments Norwood, Massachusetts	$	5,687,000	$	1,512,000	$	5,701,480	$	1,077,782	$	1,512,000	$	6,779,262	$	8,291,262	$	3,963,672	Jun. 2002	(3)
North Beacon 140 L.P. Residential Apartments Boston, Massachusetts	$	6,937,000	$	936,000	$	3,762,013	$	2,385,904	$	936,000	$	6,147,917	$	7,083,917	$	4,568,754	July 1995	(3)
Olde English Apartments L.P. Residential Apartments Lowell, Massachusetts	$	3,080,000	$	46,181	$	878,323	$	951,975	$	46,181	$	1,830,298	$	1,876,479	$	1,275,870	Sept. 1977	(3)
Redwood Hills L.P. Residential Apartments Worcester, Massachusetts	$	6,743,000	$	1,200,000	$	4,810,604	$	4,582,731	$	1,200,000	$	9,393,335	$	10,593,335	$	6,018,415	July 1995	(3)
Residences at Captain Parkers LLC Residential Apartments Lexington, Massachusetts	$	20,071,000	$	6,247,153	$	24,954,777	$	1,136,881	$	6,247,153	$	26,091,658	$	32,338,811	$	4,591,926	Sept. 2015	(3)
River Drive L.P Residential Apartments Danvers, Massachusetts	$	3,465,000	$	72,525	$	587,777	$	978,012	$	72,525	$	1,565,789	$	1,638,314	$	841,906	Sept. 1977	(3)
Riverside Apartments  Condominium Units Watertown Massachusetts	$	—	$	23,346	$	190,807	$	89,693	$	23,346	$	280,500	$	303,846	$	236,775	Sept. 1977	(3)
School St Associates LLC Residential Apartments Framingham, Massachusetts	$	14,264,674	$	4,686,728	$	18,746,911	$	(591,809)	$	4,686,728	$	18,155,102	$	22,841,830	$	9,786,476	Apr. 2003	(3)
WRF Associates LLC Strip Mall  Framingham, Massachusetts	$	6,083,683	$	3,280,000	$	4,920,000	$	72,337	$	3,280,000	$	4,992,337	$	8,272,337	$	3,230,828	May 1999	(3)
WCB Associates LLC Residential Apartments Brockton, Massachusetts	$	7,000,000	$	1,335,000	$	7,565,501	$	2,420,595	$	1,335,000	$	9,986,096	$	11,321,096	$	6,567,275	Dec. 1999	(3)
Westgate Apartments Burlington LLC Residential Apartments Burlington, Massachusetts	$	2,500,000	$	44,965	$	4,478,687	$	247,604	$	44,965	$	4,726,291	$	4,771,256	$	2,503,776	Sept. 2004	(3)
Westgate Apartments LLC Residential Apartments Woburn, Massachusetts	$	15,700,000	$	461,300	$	2,424,636	$	6,378,400	$	461,300	$	8,803,036	$	9,264,336	$	5,277,436	Sept. 1977	(3)
Woodland Park Apartments LLC Residential Apartments Newton Massachusetts	$	22,250,000	$	9,114,334	$	35,874,994	$	770,418	$	9,114,334	$	36,645,412	$	45,759,746	$	3,098,215	July 2017	(3)
	$	253,711,194	$	63,950,775	$	238,136,042	$	35,815,591	$	63,950,775	$	273,951,633	$	337,902,411	$	107,391,148

(1) The initial cost to the Partnerships represents both the balance of mortgages assumed in September 1977, including subsequent adjustments to such amounts, and subsequent acquisitions at cost.

(2) Net of retirements.

(3) In 2018, rental properties were depreciated over the following estimated useful lives:

Assets	Life
Buildings and Improvements	10	-	40	years
Other Categories of Assets	5	-	15	years

A reconciliation of rental properties and accumulated depreciation is as follows:

	December 31,
	2018		2017		2016
Rental Properties
Balance, Beginning	$	311,951,597	$	263,659,293	$	261,276,898
Additions:
Buildings, improvements and other assets		38,160,379		50,784,476		5,163,081
		350,111,976		314,443,769		266,439,979
Deduct:
Write-offs of retired or disposed assets		12,209,565		2,492,172		2,112,142
Rental properties held for sale and/or sold						668,544
Balance, Ending	$	337,902,411	$	311,951,597	$	263,659,293
Accumulated Depreciation
Balance, Beginning	$	104,797,803	$	94,196,482	$	84,579,584
Add:
Depreciation for the year		14,802,911		13,093,493		11,729,039
		119,600,714		107,289,975		96,308,623
Deduct
Accumulated depreciation of retired or disposed assets		12,209,566		2,492,172		2,112,141
Balance, Ending	$	107,391,148	$	104,797,803	$	94,196,482

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

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

On July 6, 2017, Woodland Park Partners, LLC, a newly formed subsidiary of the Partnership, purchased the Woodland Park Apartments, a 126-unit apartment complex located at 264-290 Grove Street, Newton, Massachusetts (the “Property”), for a purchase price of $45,600,000. The closing costs were approximately $64,000. To fund the purchase price, the Partnership borrowed $25,000,000 under its outstanding line of credit with KeyBank, NA, and $16,000,000 from HBC Holdings, LLC, a Massachusetts limited liability company controlled by Harold Brown and  the Partnership’s cash reserves. On September 29, 2017, the Partnership obtained a mortgage on Woodland Park. The new mortgage is $22,250,000, interest is fixed at 3.79% for 10 years, interest only for the first 5 years, and the mortgage to be amortized over 30 years. The closing costs associated with the financing were approximately $176,000.  From the purchase price, the Partnership allocated approximately $541,000 for in-place leases, and approximately $42,000 to the value of tenant relationships. These amounts are being amortized over 12 and 24 months respectively.

On August 3, 2016, Hamilton Green Apartments, LLC sold a single family house contiguous with its apartment complex in Andover, Massachusetts.  The sale price of the property was $1,000,000 with closing costs of $227,663 and a cost basis of $668,544 resulting in a gain on the sale of $103,793.  Included in the closing costs is a mortgage prepayment penalty of $187,905. The proceeds from the sale were used to reduce the principal amount on the apartment complex’s mortgage.