INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

3 Months Ended

Mar. 31, 2021

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

NOTE 14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

The Partnership has invested in seven limited partnerships and limited liability companies, the majority of which have invested in residential apartment complexes, with three Joint Ventures investing in commercial property. The Partnership has between a 40%-50% ownership interests in each investment. The other investors are the Brown Family related entities and five current and former employees of the Management Company. The Brown Family’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 was to mature 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 , 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 are 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.

At March 31, 2021, the balance on this mortgage before unamortized deferred financing costs is $125,000,000. This investment, Hamilton Park Towers, LLC is referred to as Dexter Park.

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. At March 31, 2021, the balance on this mortgage before unamortized deferred financing costs is approximately $10,000,000. 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 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. After paying off the mortgage, the Partnership began to sell off the individual units. In 2019, all residential units were sold. The Partnership still owns the commercial building. 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. At March 31, 2021, the balance on this mortgage before unamortized deferred financing costs is approximately $6,000,000. 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. 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. 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, 2021, the balance of the mortgage before unamortized deferred finance is $16,900,000. 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. The investment is referred to as Hamilton on Main 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 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, 2021, the balance of this mortgage before unamortized deferred financing costs is approximately $9,097,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information March 31, 2021

				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	6,583,704		$	2,590,036		$	5,289,712		$	84,003		$	4,914,411		$	14,982,149		$	80,053,070		$	114,497,085
Cash & Cash Equivalents		66,579			40,821			139,721			6,435			132,455			574,605			2,564,784			3,525,400
Rent Receivable		31,379			—			35,916			11,669			9,749			49,425			447,666			585,804
Real Estate Tax Escrow		74,083			—			54,505			—			38,883			113,702			—			281,173
Prepaid Expenses & Other Assets		274,840			75,119			85,816			191			15,187			177,044			1,400,615			2,028,812
Total Assets	$	7,030,585		$	2,705,976		$	5,605,670		$	102,298		$	5,110,685		$	15,896,925		$	84,466,135		$	120,918,274
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,937,949		$	—		$	9,048,329		$	—		$	5,914,414		$	16,845,158		$	124,536,869		$	166,282,719
Accounts Payable & Accrued Expense		66,760			4,000			106,469			3,225			75,274			172,092			722,157			1,149,977
Advance Rental Pmts & Security Deposits		102,170			—			214,146			—			136,840			424,300			2,083,729			2,961,185
Total Liabilities		10,106,879			4,000			9,368,944			3,225			6,126,528			17,441,550			127,342,755			170,393,881
Partners’ Capital		(3,076,294)			2,701,976			(3,763,274)			99,073			(1,015,843)			(1,544,625)			(42,876,620)			(49,475,607)
Total Liabilities and Capital	$	7,030,585		$	2,705,976		$	5,605,670		$	102,298		$	5,110,685		$	15,896,925		$	84,466,135		$	120,918,274
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,350,988		$	—		$	49,536		$	—		$	—		$	—			1,400,524
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,538,147)		$	—		$	(1,881,637)		$	—		$	(507,922)		$	(772,313)		$	(17,150,648)			(21,850,666)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(20,450,142)
Total units/condominiums
Apartments		48			—			40			175			42			148			409			862
Commercial		1			1			—			1			—			—			—			3
Total		49			1			40			176			42			148			409			865
Units to be retained		49			1			40			1			42			148			409			690
Units to be sold		—			—			—			175			—			—			—			175
Units sold through May 1, 2021		—			—			—			175			—			—			—			175
Unsold units		—			—			—			—			—			—			—			—
Unsold units with deposits for future sale as of May 1, 2021		—			—			—			—			—			—			—			—

Financial information for the three months ended March 31, 2021

			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	230,217	$	—	$	333,093	$	24,369	$	284,524	$	816,812	$	3,069,883	$	4,758,898
Laundry and Sundry Income		3,013		—		112		—		1,276		8,777		26,152		39,330
		233,230		—		333,205		24,369		285,800		825,589		3,096,035		4,798,228
Expenses
Administrative		14,556		853		4,803		714		3,583		20,219		46,851		91,579
Depreciation and Amortization		118,942		5,074		85,345		816		84,025		269,915		924,560		1,488,677
Management Fees		5,260		—		12,412		628		11,296		32,375		65,278		127,249
Operating		29,432		—		13,521		91		34,596		124,933		298,094		500,667
Renting		32,784		—		14,328		—		360		30,760		84,955		163,187
Repairs and Maintenance		52,547		—		23,278		—		19,405		122,446		452,895		670,571
Taxes and Insurance		65,539		14,885		43,670		4,797		34,976		110,134		597,786		871,787
		319,060		20,812		197,357		7,046		188,241		710,782		2,470,419		3,913,717
Income Before Other Income		(85,830)		(20,812)		135,848		17,323		97,559		114,807		625,616		884,511
Other Income (Loss)
Interest Expense		(61,312)		—		(90,643)		—		(58,625)		(187,378)		(1,264,708)		(1,662,666)
Gain on Sale of Real Estate		—		—		—		—		—		—		—		—
		(61,312)		—		(90,643)		—		(58,625)		(187,378)		(1,264,708)		(1,662,666)
Net Income (Loss)	$	(147,142)	$	(20,812)	$	45,205	$	17,323	$	38,934	$	(72,571)	$	(639,092)	$	(778,155)
Net Income (Loss)—NERA 50%	$	(73,571)	$	(10,406)	$	22,602	$	8,662	$	19,466	$	(36,286)				(69,534)
Net Income (Loss) —NERA 40%													$	(255,636)		(255,636)
															$	(325,170)

Future annual mortgage maturities at March 31, 2021 are as follows:

	Hamilton		345		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		Minuteman		Main Apts		Park		Total
3//31/2022	$	—	$	215,702	$	—	$	—	$	—	$	215,702
3/31/2023		—		224,199		—		—		—		224,199
3/31/2024		—		233,032		—		—		—		233,032
3/31/2025		—		242,212		—		16,900,000		—		17,142,212
3/31/2026		10,000,000		251,753		—		—		—		10,251,753
Thereafter		—		7,929,705		6,000,000		—		125,000,000		138,929,705
		10,000,000		9,096,603		6,000,000		16,900,000		125,000,000		166,996,603
Less: unamortized deferred financing costs		(62,051)		(48,274)		(85,586)		(54,842)		(463,131)		(713,884)
	$	9,937,949	$	9,048,329	$	5,914,414	$	16,845,158	$	124,536,869	$	166,282,719

At March 31, 2021 the weighted average interest rate on the above mortgages was 3.91%. The effective rate was 3.98% including the amortization expense of deferred financing costs.

Summary financial information at March 31, 2020

				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	6,977,869		$	2,592,526		$	5,597,090		$	87,267		$	5,240,627		$	15,722,824		$	83,230,537		$	119,448,740
Cash & Cash Equivalents		336,900			105,620			387,085			11,568			234,919			514,145			3,510,840			5,101,077
Rent Receivable		215,143			38,463			—			—			205			12,553			27,015			293,379
Real Estate Tax Escrow		62,924			—			52,215			—			27,345			77,969			—			220,453
Prepaid Expenses & Other Assets		311,711			92,886			76,295			1,682			19,098			185,332			1,559,233			2,246,237
																							0
Total Assets	$	7,904,547		$	2,829,495		$	6,112,685		$	100,517		$	5,522,194		$	16,512,823		$	88,327,625		$	127,309,886
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,924,160		$	—		$	9,249,198		$	—		$	5,906,230		$	16,829,107		$	124,472,246		$	166,380,941
Accounts Payable & Accrued Expense		82,063			3,250			103,274			5,948			50,102			152,433			639,480			1,036,550
Advance Rental Pmts& Security Deposits		294,765			—			312,134			—			137,848			439,382			2,744,163			3,928,292
Total Liabilities		10,300,988			3,250			9,664,606			5,948			6,094,180			17,420,922			127,855,889			171,345,783
Partners’ Capital		(2,396,441)			2,826,245			(3,551,921)			94,569			(571,986)			(908,099)			(39,528,264)			(44,035,897)
Total Liabilities and Capital	$	7,904,547		$	2,829,495		$	6,112,685		$	100,517		$	5,522,194		$	16,512,823		$	88,327,625		$	127,309,886
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,413,123		$	—		$	47,284		$	—		$	—		$	—		$	1,460,406
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,198,220)		$	—		$	(1,775,961)		$	—		$	(285,993)		$	(454,050)		$	(15,811,306)			(19,525,528)
Total Investment in Unconsolidated Joint Ventures (Net)																							(18,065,122)
Total units/condominiums
Apartments		48			—			40			175			42			148			409			862
Commercial		1			1			—			1			—			—			—			3
Total		49			1			40			176			42			148			409			865
Units to be retained		49			1			40			1			42			148			409			690
Units to be sold		—			—			—			175			—			—			—			175
Units sold through May1, 2020		—			—			—			175			—			—			—			175
Unsold units		—			—			—			—			—			—			—			—
Unsold units with deposits for future sale as of May 1, 2020		—			—			—			—			—			—			—			—

Financial information for three months ended March 31, 2020

										Hamilton		Hamilton
	Hamilton		Hamilton Essex		345		Hamilton			Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025			Apts		Apts		Park		Total
Revenues
Rental Income	$	439,380	$	60,471	$	428,150	$	20,558	$	290,693	$	905,700	$	4,206,503	$	6,351,455
Laundry and Sundry Income		3,385		—		454		—		—		8,749		25,742		38,330
		442,765		60,471		428,604		20,558		290,693		914,449		4,232,245		6,389,785
Expenses
Administrative		6,188		650		7,757		10,125		2,481		15,848		47,052		90,101
Depreciation and Amortization		121,642		5,074		84,494		816		86,826		261,047		916,987		1,476,886
Management Fees		17,736		2,203		16,466		822		11,532		34,984		87,082		170,825
Operating		25,524		—		12,988		45		22,226		93,845		310,381		465,009
Renting		2,775		—		8,753		—		3,000		7,720		16,804		39,052
Repairs and Maintenance		27,009		—		21,578		—		10,895		134,837		287,012		481,331
Taxes and Insurance		64,677		15,218		39,906		4,189		36,051		122,762		576,221		859,024
		265,551		23,145		191,942		15,997		173,011		671,043		2,241,539		3,582,228
Income Before Other Income		177,214		37,326		236,662		4,561		117,682		243,406		1,990,706		2,807,557
Other Income (Loss)
Interest Expense		(100,733)		—		(93,426)		—		(59,259)		(192,382)		(1,268,104)		(1,713,904)
Interest Income		—		—		—		—		—		—		—		—
		(100,733)		—		(93,426)		—		(59,259)		(192,382)		(1,268,104)		(1,713,904)
Net Income (Loss)	$	76,481	$	37,326	$	143,236	$	4,561	$	58,423	$	51,024	$	722,602	$	1,093,653
Net Income (Loss)—NERA 50%	$	38,241	$	18,663	$	71,618	$	2,281	$	29,211	$	25,512				185,525
Net Income (Loss)—NERA 40%													$	289,042		289,042
															$	474,567