INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

3 Months Ended

Mar. 31, 2024

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 March 31, 2024, 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 March 31, 2024, 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 March 31 2024, 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 March 31, 2024, the balance of the mortgage before unamortized deferred finance is $16,900,000. The investment is referred to as Hamilton on Main LLC.

On August 23, 2023, Hamilton on Main Apartments, LLC (the “Borrower”), a 50% owned joint venture of the Partnership, received notice from KeyBank, as servicer for the lender of a $16,900,000 loan, indicating that the Borrower failed to comply with certain terms of the loan documents pertaining to the transfer of interests in the Borrower that occurred on the occasion of Harold Brown’s death, and that such transfer constitutes an event of default under the loan documents. While the Borrower has disputed that any events of default actually exist, it worked diligently with KeyBank to obtain KeyBank’s consent to the transfer. On March 8, 2024, the Borrower received notice from KeyBank that it was providing ex-post facto consent to the transfer of interest subject to certain conditions being met by the Borrower. The Partnership’s share of costs associated with the transfer of interests in the Borrower was approximately $107,000. On April 18, 2024 the Borrower and KeyBank executed amended loan documents reflecting the transfer of interest in the Borrower. In conjunction with the execution of the amended loan documents, KeyBank provided a courtesy reduction equal to 50% of the transfer fee.

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, 2024, the balance of this mortgage before unamortized deferred financing costs is approximately $8,424,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information at March 31,2024

				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	5,314,109		$	2,582,568		$	4,395,208		$	74,211		$	4,118,836		$	12,594,324		$	72,539,709		$	101,618,965
Cash & Cash Equivalents		1,226,034			58,242			118,521			19,844			267,322			1,218,033			2,566,642			5,474,638
Rent Receivable		170,515			77,243			537			3,715			254			20,744			121,564			394,572
Real Estate Tax Escrow		81,278			0			69,765			—			29,481			168,242			—			348,766
Prepaid Expenses & Other Assets		315,092			41,185			74,126			233			42,429			222,756			2,449,104			3,144,925
Total Assets	$	7,107,028		$	2,759,238		$	4,658,157		$	98,003		$	4,458,322		$	14,224,099		$	77,677,019		$	110,981,866
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,979,316		$	—		$	8,395,372		$	—		$	5,938,965		$	16,893,312			124,730,738		$	165,937,703
Accounts Payable & Accrued Expense		132,826			1,521			112,431			1,201			67,581			331,127			840,958			1,487,645
Advance Rental Pmts & Security Deposits		348,654			20,660			275,597			—			174,690			474,036			3,309,073			4,602,710
Total Liabilities		10,460,796			22,181			8,783,400			1,201			6,181,236			17,698,475			128,880,769			172,028,058
Partners’ Capital		(3,353,768)			2,737,057			(4,125,243)			96,802			(1,722,914)			(3,474,376)			(51,203,750)			(61,046,192)
Total Liabilities and Capital	$	7,107,028		$	2,759,238		$	4,658,157		$	98,003		$	4,458,322		$	14,224,099		$	77,677,019		$	110,981,866
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,368,529		$	—		$	48,401		$	—		$	—		$	—			1,416,930
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,676,884)		$	—		$	(2,062,622)		$	—		$	(861,457)		$	(1,737,188)		$	(20,481,500)			(26,819,651)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(25,402,721)
Total units/condominiums
Apartments		48			—			40			—			42			148			409			687
Commercial		1			1			—			1			—			—			—			3
Total		49			1			40			1			42			148			409			690

Financial information for the three months ended March 31, 2024

			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	468,478	$	60,471	$	443,756	$	26,889	$	351,447	$	1,008,232	$	4,348,009	$	6,707,282
Laundry and Sundry Income		2,776		—		6		—		—		12,664		45,430		60,876
		471,254		60,471		443,762		26,889		351,447		1,020,896		4,393,439		6,768,158
Expenses
Administrative		5,218		2,000		8,920		700		6,934		9,324		52,039		85,135
Depreciation and Amortization		115,844		2,927		86,398		816		82,733		261,252		913,751		1,463,721
Management Fees		20,426		2,479		17,417		1,062		14,230		40,191		91,881		187,686
Operating		83,040		—		25,865		(212)		45,574		134,402		438,302		726,971
Renting		1,239		—		4,095		18		5,529		27,586		32,392		70,859
Repairs and Maintenance		38,457		—		23,046		—		29,285		146,331		354,190		591,309
Taxes and Insurance		69,343		17,592		49,285		4,676		39,168		101,542		642,138		923,744
		333,567		24,998		215,026		7,060		223,453		720,628		2,524,693		4,049,425
Income Before Other Income		137,687		35,473		228,736		19,829		127,994		300,268		1,868,746		2,718,733
Other Income (Loss)
Interest Expense		(197,199)		—		(84,867)		—		(59,151)		(193,115)		(1,296,807)		(1,831,139)
Interest Income		10,421		772		2,361		205		2,483		12,850		20,674		49,766
Other Income		—		—		—		—		—		63,745		—		63,745
		(186,778)		772		(82,506)		205		(56,668)		(116,520)		(1,276,133)		(1,717,628)
Net (Loss) Income	$	(49,091)	$	36,245	$	146,230	$	20,034	$	71,326	$	183,748	$	592,613	$	1,001,105
Net (Loss) Income —NERA 50%	$	(24,546)	$	18,123	$	73,115	$	10,017	$	35,663	$	91,874				204,246
Net Income —NERA 40%													$	237,045		237,045
															$	441,291

Future annual mortgage maturities at March 31, 2024 are as follows:

	Hamilton		345		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		Minuteman		Main Apts		Park		Total
3/31/2025	$	—	$	242,212	$	—	$	16,900,000	$	—	$	17,142,212
3/31/2026		10,000,000		251,753		—		—		—		10,251,753
3/31/2027		—		261,671		—		—		—		261,671
3/31/2028		—		271,979		—		—		—		271,979
3/31/2029		—		7,396,056		—		—		125,000,000		132,396,056
Thereafter		—		—		6,000,000		—		—		6,000,000
		10,000,000		8,423,671		6,000,000		16,900,000		125,000,000		166,323,671
Less: unamortized deferred financing costs		(20,684)		(28,298)		(61,035)		(6,688)		(269,263)		(385,968)
	$	9,979,316	$	8,395,373	$	5,938,965	$	16,893,312	$	124,730,737	$	165,937,703

At March 31, 2024, the weighted average interest rate on the above mortgages was 4.23%. The effective rate was 4.29% including the amortization expense of deferred financing costs.

Summary financial information at March 31, 2023

				Hamilton								Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton		Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025		Apts			Apts			Park			Total
ASSETS
Rental Properties	$	5,721,864		$	2,585,058		$	4,727,451		$	77,475	$	4,402,156		$	13,223,620		$	75,278,758		$	106,016,382
Cash & Cash Equivalents		1,032,885			132,374			553,282			28,558		377,286			1,201,715			3,827,354			7,153,454
Rent Receivable		209,427			79,310			—			4,923		—			21,329			71,071			386,060
Real Estate Tax Escrow		70,066			—			62,888			—		39,192			135,371			—			307,517
Prepaid Expenses & Other Assets		301,295			50,371			70,323			229		22,867			213,731			2,283,781			2,942,597
Total Assets	$	7,335,537		$	2,847,113		$	5,413,944		$	111,185	$	4,841,501		$	14,795,766		$	81,460,964		$	116,806,010
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,965,527		$	—		$	8,621,745		$	—	$	5,930,781		$	16,877,261		$	124,666,115		$	166,061,429
Accounts Payable & Accrued Expense		141,973			43,750			337,102			22,181		266,363			785,701			2,161,658			3,758,728
Advance Rental Pmts& Security Deposits		335,457			19,866			283,654			—		178,024			455,924			3,002,957			4,275,882
Total Liabilities		10,442,957			63,616			9,242,501			22,181		6,375,168			18,118,886			129,830,730			174,096,039
Partners’ Capital		(3,107,420)			2,783,497			(3,828,557)			89,004		(1,533,667)			(3,323,120)			(48,369,766)			(57,290,029)
Total Liabilities and Capital	$	7,335,537		$	2,847,113		$	5,413,944		$	111,185		4,841,501		$	14,795,766		$	81,460,964		$	116,806,010
Partners’ Capital %—NERA		50	%		50	%		50	%		50		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,391,750		$	—		$	44,502	$	—		$	—		$	—		$	1,436,252
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,553,710)		$	—		$	(1,914,279)		$	—	$	(766,834)		$	(1,661,560)		$	(19,347,906)			(25,244,289)
Total Investment in Unconsolidated Joint Ventures (Net)																					$	(23,808,037)
Total units/condominiums
Apartments		48			—			40			0		42			148			409			687
Commercial		1			1			—			1		—			—			—			3
Total		49			1			40			1		42			148			409			690

Financial information for the three months ended March 31, 2023

			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	438,988	$	60,471	$	411,890	$	24,867	$	313,502	$	924,814	$	3,997,298	$	6,171,830
Laundry and Sundry Income		2,703		—		—		—		—		13,167		36,000		51,870
		441,691		60,471		411,890		24,867		313,502		937,981		4,033,298		6,223,700
Expenses
Administrative		4,740		750		3,469		921		3,875		12,705		48,007		74,467
Depreciation and Amortization		116,987		2,927		86,306		816		83,717		264,509		905,747		1,461,009
Management Fees		19,092		3,179		16,137		994		12,806		37,196		81,609		171,013
Operating		83,347		—		25,379		67		37,516		128,942		376,999		652,250
Renting		3,175		—		8,256		—		1,367		11,946		40,623		65,367
Repairs and Maintenance		54,468		—		24,210		—		20,934		153,454		317,975		571,041
Taxes and Insurance		70,934		15,457		47,175		4,500		35,358		132,372		623,574		929,370
		352,743		22,313		210,932		7,298		195,573		741,124		2,394,534		3,924,517
Income Before Other Income		88,948		38,158		200,958		17,569		117,929		196,857		1,638,764		2,299,183
Other Income (Loss)
Interest Expense		(172,313)		—		(86,958)		—		(58,750)		(187,378)		(1,263,273)		(1,768,672)
		(172,313)		—		(86,958)		—		(58,750)		(187,378)		(1,263,273)		(1,768,672)
Net Income (Loss)	$	(83,365)	$	38,158	$	114,000	$	17,569	$	59,179	$	9,479	$	375,491	$	530,511
																—
Net Income (Loss)—NERA 50%	$	(41,683)	$	19,078	$	56,999	$	8,785	$	29,590	$	4,740				77,508
Net Income —NERA 40%													$	150,196		150,196
															$	227,704