NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

The Partnership has invested in eight limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three partnerships investing in commercial property. The Partnership has between a 40%-50% ownership interest in each investment. The other investors were Harold Brown, and five current and former employees of the Management Company. Harold Brown’s ownership interest was between 47.6% and 59%, with the balance owned by the others. A description of each investment is as follows:

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

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

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

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

On October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168-unit apartment complex in Quincy, Massachusetts. The purchase price was $30,875,000. The Joint Venture sold 120 units as condominiums and retained 48 units for long-term investment. In February 2007, the Joint Venture refinanced the 48 units with a new mortgage in the amount of $4,750,000 with an interest rate of 5.57%, interest only for five years. The loan was to be amortized over 30 years thereafter and matured in March, 2017. On March 1, 2017, the mortgage balance was paid in full, with the Partnership contributing its share of the mortgage balance of approximately $2,222,000. 2 units were sold in the first three months of 2019, resulting in a gain of approximately $433,000. This investment is referred to as Hamilton Bay Apartments, LLC. As of March 31, 2019, all units were sold by this Joint Venture.

On March 7, 2005, the Partnership invested $2,000,000 for a 50% ownership interest in a building comprising 48 apartments, one commercial space and a 50-car surface parking lot located in Boston, Massachusetts. The purchase price was $14,300,000, with a $10,750,000 mortgage. The Joint Venture planned to operate the building and initiate development of the parking lot. In June 2007, the Joint Venture separated the parcels, formed an additional limited liability company for the residential apartments and obtained a mortgage on the property. The new limited liability company formed for the residential apartments and commercial space is referred to as Hamilton Essex 81, LLC. In August 2008, the Joint Venture restructured the mortgages on both parcels at Essex 81. On September 28, 2015, Hamilton Essex Development, LLC paid off the outstanding mortgage balance of $1,952,286. The Partnership made a capital contribution of $978,193 to Hamilton Essex Development LLC for its share of the funds required for the transaction. Additionally, the Partnership made a capital contribution of $100,000 to Hamilton Essex 81, LLC. On September 30, 2015, Hamilton Essex 81, LLC obtained a new 10 year mortgage in the amount of $10,000,000, interest only at 2.18% plus the one month Libor rate. The proceeds of the note were used to pay off the existing mortgage of $8,040,719 and the Partnership received a distribution of $978,193 for its share of the excess proceeds. As a result of the distribution, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting. Although the Partnership has no legal obligation, the Partnership intends to fund its share of any future operating deficits if needed. The investment in the parking lot is referred to as Hamilton Essex Development, LLC; the investment in the apartments is referred to as Hamilton Essex 81, LLC. At March 31, 2019, the balance on this mortgage before unamortized deferred financing costs is approximately $10,000,000.

On March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176‑unit apartment complex with an additional small commercial building located in Quincy, Massachusetts. The purchase price was $23,750,000. The Joint Venture sold 127 of the units as condominiums and retained 49 units for long‑term investment. The Joint Venture obtained a new 10‑year mortgage in the amount of $5,000,000 on the units to be retained by the Joint Venture. The interest on the new loan was 5.67% fixed for the 10 year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan term. On July 8, 2016, Hamilton 1025 LLC paid off the outstanding balance of the mortgage balance. The Partnership made a capital contribution of $2,359,500 to Hamilton 1025, LLC for its share of the funds required for the transaction. As of March 31, 2019, 1 unit was under purchase and sales agreement and the Partnership owned 3 units. This investment is referred to as Hamilton 1025, LLC.

In September 2004, the Partnership invested approximately $5,075,000 for a 50% ownership interest in a 42‑unit apartment complex located in Lexington, Massachusetts. The purchase price was $10,100,000. In October 2004, the Joint Venture obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Joint Venture obtained a new 10- year mortgage in the amount of $5,500,000 in January 2007. The interest on the new loan was 5.67% fixed for the ten year term with interest only payments for five years and amortized over a 30 year period for the balance of the loan. This loan required a cash contribution by the Partnership of $1,250,000 in December 2006. On September 12, 2016, the property was refinanced with a 15 year mortgage in the amount of $6,000,000, at 3.71%, interest only. The Joint Venture Partnership paid off the prior mortgage of approximately $5,158,000 with the proceeds of the new mortgage and made a distribution of $385,000 to the Partnership. The cost associated with the refinancing was approximately $123,000. This investment is referred to as Hamilton Minuteman, LLC. At March 31, 2019, the balance on this mortgage before unamortized deferred financing costs is approximately $6,000,000.This investment is referred to as Hamilton Minuteman, LLC. In 2018, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting, although the Partnership has no legal obligation to fund its share of any future operating deficiencies, if needed.

In August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280‑unit apartment complex located in Watertown, Massachusetts. The total purchase price was $56,000,000. The Joint Venture sold 137 units as condominiums. The assets were combined with Hamilton on Main Apartments. Hamilton on Main, LLC is known as Hamilton Place. In 2005, Hamilton on Main Apartments, LLC obtained a ten year mortgage on the three buildings to be retained. The mortgage was $16,825,000, with interest only of 5.18% for three years and amortizing on a 30 year schedule for the remaining seven years when the balance is due. The net proceeds after funding escrow accounts and closing costs on the mortgage were approximately $16,700,000, which were used to reduce the existing mortgage. In August 2014, the property was refinanced with a 10 year mortgage in the amount of $16,900,000 at 4.34% interest only. The Joint Venture paid off the prior mortgage of approximately $15,205,000 with the proceeds of the new mortgage and distributed $850,000 to the Partnership. The costs associated with the refinancing were approximately $161,000. At March 31, 2019, the balance of the mortgage before unamortized deferred financing costs is approximately $16,900,000.The investment is referred to as Hamilton on Main LLC. In 2018, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting, although the Partnership has no legal obligation to fund its share of any future operating deficiencies, if needed.

In November 2001, the Partnership invested approximately $1,533,000 for a 50% ownership interest in a 40-unit apartment building in Cambridge, Massachusetts. In June 2013, the property was refinanced with a 15 year mortgage in the amount of $10,000,000 at 3.87%, interest only for 3 years and is amortized on a 30-year schedule for the balance of the term. The Joint Venture paid off the prior mortgage of approximately $6,776,000 with the proceeds of the new mortgage. After the refinancing, the Joint Venture made a distribution of $1,610,000 to the Partnership. As a result of the distribution, the carrying value of the investment fell below zero. The Partnership will continue to account for this investment using the equity method of accounting. Although the Partnership has no legal obligation, the Partnership intends to fund its share of any future operating deficits if needed. At March 31, 2019, the balance of this mortgage before unamortized deferred financing costs is approximately $9,504,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information as of March 31, 2019


				Hamilton												Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Apts			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	7,117,613		$	2,595,015		$	5,919,727		$	103,238		$	0		$	5,556,929		$	16,490,749		$	86,186,211		$	123,969,482
Rental property held for sale		0			0			0			159,188			0			0			0			0			159,188
Cash & Cash Equivalents		192,441			169,930			213,656			51,285			359,291			132,903			163,789			1,853,435			3,136,730
Rent Receivable		222,191			49,619			4,437			2,441			0			1,487			17,049			136,962			434,186
Real Estate Tax Escrow		72,624			—			50,334			—			0			28,960			95,525			0			247,443
Prepaid Expenses & Other Assets		274,111			110,681			61,989			30,377			3,595			16,287			105,663			1,022,670			1,625,373
Total Assets	$	7,878,980		$	2,925,245		$	6,250,143		$	346,529		$	362,886		$	5,736,566		$	16,872,775		$	89,199,278		$	129,572,402
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,910,371		$	—		$	9,442,200		$	—		$	—		$	5,898,047		$	16,813,056		$	124,407,623		$	166,471,297
Accounts Payable & Accrued Expense		84,485			2,187			121,342			10,844			10,951			61,051			205,044			701,699			1,197,603
Advance Rental Pmts & Security Deposits		297,683			—			283,486			7,174			101			123,167			391,075			2,620,890			3,723,576
Total Liabilities		10,292,539			2,187			9,847,028			18,018			11,052			6,082,265			17,409,175			127,730,212			171,392,476
Partners’ Capital		(2,413,559)			2,923,058			(3,596,885)			328,511			351,834			(345,699)			(536,400)			(38,530,934)			(41,820,074)
Total Liabilities and Capital	$	7,878,980		$	2,925,245		$	6,250,143		$	346,529		$	362,886		$	5,736,566		$	16,872,775		$	89,199,278		$	129,572,402
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$			$	1,461,529		$			$	164,256		$	175,917		$			$			$				1,801,702
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,206,780)		$	—		$	(1,798,443)		$	—		$	—		$	(172,850)		$	(268,200)		$	(15,412,374)			(18,858,645)
Total Investment in Unconsolidated Joint Ventures (Net)																									$	(17,056,944)
Total units/condominiums
Apartments		48			—			40			175			48			42			148			409			1,030
Commercial		1			1			—			1			—			—			—			—			3
Total		49			1			40			176			48			42			148			409			1,033
Units to be retained		49			1			40			—			—			42			148			409			690
Units to be sold		—			—			—			175			48			—			—			—			343
Units sold through May 1, 2019		—			—			—			173			48			—			—			—			221
Unsold units		—			—			—			3			—			—			—			—			3
Unsold units with deposits for future sale as of May 1, 2019		—			—			—			1			—			—			—			—			1

Financial information for the three months ended March 31, 2019


			Hamilton								Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Apts		Apts		Apts		Park		Total
Revenues
Rental Income	$	459,573	$	75,290	$	385,243	$	23,594	$	3,629	$	274,837	$	822,668		4,028,259	$	6,073,093
Laundry and Sundry Income		3,005		—		1,389		—		—		1,907		10,062		24,025		40,388
		462,578		75,290		386,632		23,594		3,629		276,744		832,730		4,052,284		6,113,481
Expenses
Administrative		5,379		2,092		5,390		1,694		3,445		3,716		17,847		55,532		95,095
Depreciation and Amortization		119,544		5,074		86,226		3,196		5,420		88,595		258,438		900,101		1,466,594
Management Fees		17,206		2,160		14,056		965		145		11,067		31,868		86,149		163,616
Operating		21,450		8		22,603		775		(109)		23,755		107,289		381,644		557,415
Renting		3,330		—		3,520						2,032		16,112		19,663		44,657
Repairs and Maintenance		37,884		—		18,467		8,040		10,266		36,672		124,192		256,585		492,106
Taxes and Insurance		61,830		15,677		40,241		7,349		4,906		32,251		104,431		518,726		785,411
		266,623		25,011		190,503		22,019		24,073		198,088		660,177		2,218,400		3,604,894
Income Before Other Income		195,955		50,279		196,129		1,575		(20,444)		78,656		172,553		1,833,884		2,508,587
Other Income (Loss)
Interest Expense		(121,005)		—		(94,247)				(6)		(57,991)		(188,268)		(1,270,103)		(1,731,620)
Gain on Sale of Real Estate				—		—		754		432,908								433,662
		(121,005)		—		(94,247)		754		432,902		(57,991)		(188,268)		(1,270,103)		(1,297,958)
Net Income (Loss)	$	74,950	$	50,279	$	101,882	$	2,329	$	412,458	$	20,665	$	(15,715)	$	563,781	$	1,210,629
Net Income (Loss)—NERA 50%	$	37,475	$	25,140	$	50,941	$	1,165	$	206,229	$	10,333	$	(7,858)				323,424
Net Income —NERA 40%															$	225,515		225,515
																	$	548,939

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


	Hamilton		345		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		Minuteman		Main Apts		Park		Total
3//31/2020	$	—	$	199,661	$		$	—	$		$	199,661
3/31/2021		—		207,527				—				207,527
3/31/2022		—		215,702		—		—				215,702
3/31/2023		—		224,199		—		—				224,199
3/31/2024		—		233,032		—		—				233,032
Thereafter		10,000,000		8,423,670		6,000,000		16,900,000		125,000,000		166,323,670
		10,000,000		9,503,791		6,000,000		16,900,000		125,000,000		167,403,791
Less: unamortized deferred financing costs		(89,629)		(61,591)		(101,953)		(86,944)		(592,377)		(932,494)
	$	9,910,371	$	9,442,200	$	5,898,047	$	16,813,056	$	124,407,623	$	166,471,297

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

Summary financial information as March 31, 2018


				Hamilton												Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Bay Apts			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	7,515,492		$	2,597,633		$	6,242,990		$	887,890		$	1,583,448		$	5,854,350		$	17,359,777		$	89,284,170		$	131,325,750
Cash & Cash Equivalents		148,701			50,004			123,091			136,822			122,350			107,268			102,710			861,790			1,652,736
Rent Receivable		133,580			—			19,937			6,902			2,463			5,206			21,196			221,175			410,459
Real Estate Tax Escrow		83,760			—			46,751			—			—			32,229			152,782			349,904			665,426
Prepaid Expenses & Other Assets		80,429			279			50,269			586,555			693,936			17,475			95,705			2,668,635			4,193,283
Total Assets	$	7,961,962		$	2,647,916		$	6,483,038		$	1,618,169		$	2,402,197		$	6,016,528		$	17,732,170		$	93,385,674		$	138,247,654
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,896,582		$	—		$	9,627,636		$	—		$	—		$	5,889,863		$	16,797,004		$	81,509,648		$	123,720,733
Accounts Payable & Accrued Expense		74,966			2,188			87,137			8,434			9,554			55,333			169,932			634,933			1,042,477
Advance Rental Pmts& Security Deposits		341,039			—			245,550			12,555			10,975			112,103			321,274			2,608,580			3,652,076
Total Liabilities		10,312,587			2,188			9,960,323			20,989			20,529			6,057,299			17,288,210			84,753,161			128,415,286
Partners’ Capital		(2,349,625)			2,645,728			(3,477,285)			1,597,180			2,381,668			(40,771)			443,960			8,630,513			9,831,368
Total Liabilities and Capital	$	7,962,962		$	2,647,916		$	6,483,038		$	1,618,169		$	2,402,197		$	6,016,528		$	17,732,170		$	93,383,674		$	138,246,654
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$			$	1,322,863		$	—		$	798,589		$	1,190,833		$			$	221,979		$	3,452,204		$	6,986,470
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,174,814)		$	—		$	(1,738,644)		$	—		$	—		$	(20,387)		$	—		$	—			(2,933,844)
Total Investment in Unconsolidated Joint Ventures (Net)																									$	4,052,626
Total units/condominiums
Apartments		48			—			40			175			48			42			148			409			1,030
Commercial		1			1			—			1			—			—			—			—			3
Total		49			1			40			176			48			42			148			409			1,033
Units to be retained		49			1			40			0			0			42			148			409			690
Units to be sold		—			—			—			176			46			—			—			—			343
Units sold through May1, 2018		—			—			—			143			1			—			—			—			264
Unsold units		—			—			—			32			47			—			—			—			79
Unsold units with deposits for future sale as of May 1, 2018		—			—			—			4			10			—			—			—			14

Financial information for the three months ended March 31, 2018


											Hamilton		Hamilton
	Hamilton		Hamilton Essex		345		Hamilton		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Bay Apts		Apts		Apts		Park		Total
Revenues
Rental Income	$	411,222	$	53,928	$	403,837	$	38,221	$	22,203	$	263,051	$	858,213	$	3,894,603	$	5,945,278
Laundry and Sundry Income		3,005		—		1,217		—		—		675		9,126		24,688		38,711
		414,227		53,928		405,054		38,221		22,203		263,726		867,339		3,919,291		5,983,989
Expenses
Administrative		9,680		488		6,455		1,499		3,066		1,824		13,127		65,429		101,568
Depreciation and Amortization		114,285		665		86,251		—		10,000		87,722		255,506		874,142		1,428,571
Management Fees		13,204		2,157		16,126		1,508		1,022		10,368		32,443		83,012		159,840
Operating		24,131		—		20,580		156		825		33,850		120,393		379,875		579,810
Renting		3,291		—		497		—		—		3,378		8,652		29,782		45,600
Repairs and Maintenance		54,501		4,163		21,497		40,207		34,224		19,617		182,374		318,666		675,249
Taxes and Insurance		62,527		16,723		41,631		18,171		16,459		31,046		104,551		419,289		710,397
		281,619		24,196		193,037		61,541		65,596		187,805		717,046		2,170,195		3,701,035
Income Before Other Income		132,608		29,732		212,017		(23,320)		(43,393)		75,921		150,293		1,749,096		2,282,954
Other Income (Loss)
Interest Expense		(99,313)		—		(96,961)		(26)		(49)		(58,519)		(188,239)		(1,166,238)		(1,609,345)
Interest Income				—		—						—		—		—		—
Gain on sale of real estate				—		—		817,006		827,757		—		—		—		1,644,763
		(99,313)		—		(96,961)		816,980		827,708		(58,519)		(188,239)		(1,166,238)		35,418
Net Income (Loss)	$	33,295	$	29,732	$	115,056	$	793,660	$	784,315	$	17,402	$	(37,946)	$	582,858	$	2,318,372
Net Income (Loss)—NERA 50%	$	16,648	$	14,866	$	57,528	$	396,830	$	392,158	$	8,701	$	(18,973)				867,757
Net Income (Loss)—NERA 40%															$	233,143		233,143
																	$	1,100,900