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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

6 Months Ended

Jun. 30, 2023

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

NOTE 15. 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. At June 30, 2023, 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 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 June 30, 2023, the balance on this mortgage before unamortized deferred financing costs is $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. 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. 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. At June 30 2023, the balance on this mortgage before unamortized deferred financing costs is $6,000,000. 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. 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 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. 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. At June 30, 2023, the balance of the mortgage before unamortized deferred finance is $16,900,000. 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 June 30, 2023, the balance of this mortgage before unamortized deferred financing costs is approximately $8,599,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information at June 30, 2023


				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	5,614,141		$	2,584,435		$	4,650,472		$	76,659		$	4,324,746		$	12,985,301		$	74,525,027		$	104,760,781
Cash & Cash Equivalents		997,622			60,182			374,750			16,853			251,310			611,236			2,088,673			4,400,626
Rent Receivable		211,562			80,184			—			4,931			2,589			9,044			140,146			448,456
Real Estate Tax Escrow		67,281			—			23,412			—			43,542			139,831			—			274,066
Prepaid Expenses & Other Assets		326,548			50,175			104,393			1,049			42,306			248,929			2,635,666			3,409,066
Total Assets	$	7,217,154		$	2,774,976		$	5,153,027		$	99,492		$	4,664,493		$	13,994,341		$	79,389,512		$	113,292,995
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,968,975		$	—		$	8,565,993		$	—		$	5,932,827		$	16,881,274		$	124,682,270		$	166,031,339
Accounts Payable & Accrued Expense		165,149			1,500			124,185			2,660			74,550			196,773			816,401			1,381,218
Advance Rental Pmts & Security Deposits		309,790			—			335,465			—			192,370			515,070			3,506,661			4,859,356
Total Liabilities		10,443,914			1,500			9,025,643			2,660			6,199,747			17,593,117			129,005,332			172,271,913
Partners’ Capital		(3,226,760)			2,773,476			(3,872,616)			96,832			(1,535,254)			(3,598,776)			(49,615,820)			(58,978,918)
Total Liabilities and Capital	$	7,217,154		$	2,774,976		$	5,153,027		$	99,492		$	4,664,493		$	13,994,341		$	79,389,512		$	113,292,995
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,386,738		$	—		$	48,416		$	—		$	—		$	—			1,435,154
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,613,380)		$	—		$	(1,936,308)		$	—		$	(767,627)		$	(1,799,388)		$	(19,846,328)			(25,963,031)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(24,527,877)
Total units/condominiums
Apartments		48			—			40			175			42			148			409			687
Commercial		1			1			—			1			—			—			—			3
Total		49			1			40			176			42			148			409			690
Units to be retained		49			1			40			1			42			148			409			690
Units to be sold		—			—			—			—			—			—			—			—
Units sold through August 1, 2023		—			—			—			175			—			—			—			175
Unsold units		—			—			—			—			—			—			—			—

Financial information for the six months ended June 30, 2023


			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	850,177	$	120,942	$	834,013	$	49,735	$	638,730	$	1,886,063	$	8,015,963	$	12,395,623
Laundry and Sundry Income		3,040		—		—		—		—		—		48,433		51,473
		853,217		120,942		834,013		49,735		638,730		1,886,063		8,064,396		12,447,096
Expenses
Administrative		10,531		1,500		13,043		1,871		9,482		38,973		113,118		188,518
Depreciation and Amortization		234,133		5,855		172,866		1,632		168,308		530,006		1,821,273		2,934,073
Management Fees		33,744		4,768		32,632		1,989		25,663		74,129		160,975		333,900
Operating		150,518		—		57,035		142		68,372		224,264		653,665		1,153,996
Renting		30,945		—		18,200		—		1,573		24,455		67,759		142,932
Repairs and Maintenance		95,955		—		62,538		—		44,233		336,730		894,898		1,434,354
Taxes and Insurance		141,245		30,681		94,286		8,704		70,400		262,939		1,271,219		1,879,474
		697,071		42,804		450,600		14,338		388,031		1,491,496		4,982,907		8,067,247
Income Before Other Income		156,146		78,138		383,413		35,397		250,699		394,567		3,081,489		4,379,849
Other Income (Loss)
Interest Expense		(358,852)		—		(173,474)		—		(118,108)		(400,743)		(2,522,054)		(3,573,231)
		(358,852)		—		(173,474)		—		(118,108)		(400,743)		(2,522,054)		(3,573,231)
Net (Loss) Income	$	(202,706)	$	78,138	$	209,939	$	35,397	$	132,591	$	(6,176)	$	559,435	$	806,618
Net (Loss) Income —NERA 50%	$	(101,353)	$	39,070	$	104,970	$	17,699	$	66,296	$	(3,088)				123,593
Net Income —NERA 40%													$	223,774		223,774
															$	347,368

Financial information for the three months ended June 30, 2023


			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	411,189	$	60,471	$	422,123	$	24,867	$	325,228	$	963,511	$	4,018,665	$	6,226,054
Laundry and Sundry Income		337		—		—		—		—		(15,429)		12,433		(2,659)
		411,526		60,471		422,123		24,867		325,228		948,082		4,031,098		6,223,395
Expenses
Administrative		5,791		750		9,574		951		5,607		26,269		65,111		114,053
Depreciation and Amortization		117,146		2,928		86,560		816		84,591		265,496		915,526		1,473,063
Management Fees		14,652		1,589		16,495		994		12,857		36,933		79,366		162,886
Operating		67,170		—		31,655		75		30,856		95,322		276,666		501,744
Renting		27,770		—		9,943		—		205		12,509		27,136		77,563
Repairs and Maintenance		41,487		—		38,327		—		23,299		183,276		576,924		863,313
Taxes and Insurance		70,311		15,224		47,111		4,203		35,042		130,566		647,645		950,102
		344,327		20,491		239,665		7,039		192,457		750,371		2,588,374		4,142,724
Income Before Other Income		67,199		39,980		182,458		17,828		132,771		197,711		1,442,724		2,080,671
Other Income (Loss)
Interest Expense		(186,539)		—		(86,515)		—		(59,358)		(213,366)		(1,258,781)		(1,804,559)
		(186,539)		—		(86,515)		—		(59,358)		(213,366)		(1,258,781)		(1,804,559)
Net Income (Loss)	$	(119,340)	$	39,980	$	95,943	$	17,828	$	73,413	$	(15,655)	$	183,943	$	276,112
Net Income (Loss)—NERA 50%	$	(59,670)	$	19,990	$	47,972	$	8,914	$	36,708	$	(7,827)				46,087
Net Income —NERA 40%													$	73,577		73,577
															$	119,664

Future annual mortgage maturities at June 30, 2023 are as follows:


	Hamilton		345		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		Minuteman		Main Apts		Park		Total
6/30/2024	$	—	$	235,293	$	—	$	—	$	—	$	235,293
6/30/2025		—		244,563		—		16,900,000		—		17,144,563
6/30/2026		10,000,000		254,197		—		—		—		10,254,197
6/30/2027		—		264,211		—		—		—		264,211
6/30/2028		—		274,619		—		—		—		274,619
Thereafter		—		7,326,402		6,000,000		—		125,000,000		138,326,402
		10,000,000		8,599,285		6,000,000		16,900,000		125,000,000		166,499,285
Less: unamortized deferred financing costs		(31,025)		(33,292)		(67,173)		(18,726)		(317,730)		(467,946)
	$	9,968,975	$	8,565,993	$	5,932,827	$	16,881,274	$	124,682,270	$	166,031,339

At June 30, 2023 the weighted average interest rate on the above mortgages was 4.21%. The effective rate was 4.28% including the amortization expense of deferred financing costs.

Summary financial information at June 30, 2022


				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	6,045,672		$	2,586,925		$	4,897,693		$	79,923		$	4,581,892		$	13,896,435		$	77,385,213		$	109,473,753
Cash & Cash Equivalents		709,651			113,595			217,415			13,122			252,822			808,436			1,890,452			4,005,493
Rent Receivable		208,605			75,159			3,531			4,898			16,493			29,724			136,897			475,307
Real Estate Tax Escrow		73,643			—			34,630			—			29,447			70,172			—			207,892
Prepaid Expenses & Other Assets		319,717			56,859			118,903			630			26,635			176,283			2,792,920			3,491,947
Total Assets	$	7,357,288		$	2,832,538		$	5,272,172		$	98,573		$	4,907,289		$	14,981,050		$	82,205,482		$	117,654,392
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,955,186		$	—		$	8,785,710		$	—		$	5,924,643		$	16,865,222		$	124,617,647		$	166,148,408
Accounts Payable & Accrued Expense		105,777			1,713			64,101			2,064			53,140			168,858			702,566			1,098,219
Advance Rental Pmts& Security Deposits		282,378			—			303,449			—			195,781			455,979			3,825,600			5,063,187
Total Liabilities		10,343,341			1,713			9,153,260			2,064			6,173,564			17,490,059			129,145,813			172,309,814
Partners’ Capital		(2,986,053)			2,830,825			(3,881,088)			96,509			(1,266,275)			(2,509,009)			(46,940,331)			(54,655,422)
Total Liabilities and Capital	$	7,357,288		$	2,832,538		$	5,272,172		$	98,573			4,907,289		$	14,981,050		$	82,205,482		$	117,654,392
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,415,411		$	—		$	48,254		$			$			$			$	1,463,665
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,493,027)		$	—		$	(1,940,544)		$	—		$	(633,138)		$	(1,254,505)		$	(18,776,132)			(24,097,346)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(22,633,681)
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		—			—			—			—			—			—			—			—
Units sold through August 1, 2022		—			—			—			175			—			—			—			175
Unsold units		—			—			—			—			—			—			—			—

Financial information for the six months ended June 30, 2022


			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	760,751	$	175,371	$	714,821	$	50,122	$	598,537	$	1,806,118	$	7,120,130	$	11,225,850
Laundry and Sundry Income		5,394		—		125		—		776		17,150		49,593		73,038
		766,145		175,371		714,946		50,122		599,313		1,823,268		7,169,723		11,298,888
Expenses
Administrative		8,873		1,548		19,992		1,349		5,755		35,579		109,732		182,828
Depreciation and Amortization		238,779		5,855		173,191		1,632		168,403		537,314		1,865,883		2,991,057
Management Fees		37,096		7,526		28,109		2,053		23,529		72,517		152,670		323,500
Operating		119,220		—		36,715		1,165		75,203		191,826		581,751		1,005,880
Renting		14,065		—		17,206		—		7,014		25,580		72,674		136,539
Repairs and Maintenance		69,868		3,180		83,758		—		44,990		305,954		797,670		1,305,420
Taxes and Insurance		133,102		31,508		87,467		9,120		75,678		261,364		1,220,611		1,818,850
		621,003		49,617		446,438		15,319		400,572		1,430,134		4,800,991		7,764,074
Income Before Other Income		145,142		125,754		268,508		34,803		198,741		393,134		2,368,732		3,534,814
Other Income (Loss)
Interest Expense		(141,388)		—		(176,400)		—		(118,129)		(376,798)		(2,534,570)		(3,347,285)
Other Income		—		—		—		—		—		—		—		—
		(141,388)		—		(176,400)		—		(118,129)		(376,798)		(2,534,570)		(3,347,285)
Net Income (Loss)	$	3,754	$	125,754	$	92,108	$	34,803	$	80,612	$	16,336	$	(165,838)	$	187,529
Net Income (Loss)—NERA 50%	$	1,877	$	62,878	$	46,054	$	17,402	$	40,306	$	8,168				176,685
Net Income —NERA 40%													$	(66,334)		(66,334)
															$	110,351

Financial information for the three months ended June 30, 2022


			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	318,903	$	89,269	$	368,001	$	25,752	$	304,499	$	915,736	$	3,649,413	$	5,671,573
Laundry and Sundry Income		—		—		125		—		1,076		6,599		22,538		30,338
		318,903		89,269		368,126		25,752		305,575		922,335		3,671,951		5,701,911
Expenses
Administrative		4,099		798		8,468		699		3,404		11,059		54,214		82,741
Depreciation and Amortization		119,593		2,928		86,777		816		84,443		268,850		936,748		1,500,155
Management Fees		18,611		4,208		14,306		1,095		12,136		35,145		76,298		161,799
Operating		66,248		—		14,822		(8)		19,617		83,136		234,223		418,038
Renting		8,437		—		7,046		—		3,212		10,591		14,812		44,098
Repairs and Maintenance		34,939		3,180		29,226		—		28,777		172,036		442,881		711,039
Taxes and Insurance		66,641		15,518		43,744		4,712		37,950		130,695		610,745		910,005
		318,568		26,632		204,389		7,314		189,539		711,512		2,369,921		3,827,875
Income Before Other Income		335		62,637		163,737		18,438		116,036		210,823		1,302,030		1,874,036
Other Income (Loss)
Interest Expense		(79,158)		—		(87,963)		—		(59,390)		(189,421)		(1,271,425)		(1,687,357)
Other Income		—		—		—		—		—		—		—		—
		(79,158)		—		(87,963)		—		(59,390)		(189,421)		(1,271,425)		(1,687,357)
Net Income (Loss)	$	(78,823)	$	62,637	$	75,774	$	18,438	$	56,646	$	21,402	$	30,605	$	186,679
Net Income (Loss)—NERA 50%	$	(39,411)	$	31,319	$	37,888	$	9,219	$	28,324	$	10,702				78,041
Net Income —NERA 40%													$	12,242		12,242
															$	90,283