INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

9 Months Ended

Sep. 30, 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 September 30, 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 September 30, 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 September 30 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. 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 August 2024, the property was refinanced with a 10 year mortgage in the amount of $23,589,000 at 5.425% interest only. The Joint Venture paid off the prior mortgage of approximately $16,900,000 with the proceeds of the new mortgage and distributed $2,000,000 to the Partnership. The costs associated with the refinancing were approximately $243,000. 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 September 30, 2024, the balance of the mortgage before unamortized deferred finance is $23,589,000. 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 September 30, 2024, the balance of this mortgage before unamortized deferred financing costs is approximately $8,304,000. This investment is referred to as 345 Franklin, LLC.

Summary financial information at September 30, 2024

				Hamilton									Hamilton			Hamilton
	Hamilton			Essex			345			Hamilton			Minuteman			on Main			Dexter
	Essex 81			Development			Franklin			1025			Apts			Apts			Park			Total
ASSETS
Rental Properties	$	5,156,533		$	2,581,323		$	4,234,113		$	72,579		$	3,977,260		$	13,619,389		$	71,377,601		$	101,018,798
Cash & Cash Equivalents		1,325,418			62,274			103,930			17,234			81,885			2,796,390			1,621,908			6,009,039
Rent Receivable		189,026			74,223			2,057			2,482			7,656			36,654			42,643			354,741
Real Estate Tax Escrow		78,201			—			71,866			—			29,531			—			—			179,598
Prepaid Expenses & Other Assets		335,724			38,022			100,024			769			67,481			280,877			2,672,293			3,495,190
Total Assets	$	7,084,902		$	2,755,842		$	4,511,990		$	93,064		$	4,163,813		$	16,733,310		$	75,714,445		$	111,057,366
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,986,211		$	—		$	8,278,765		$	—		$	5,943,056		$	23,348,070		$	124,763,049		$	172,319,151
Accounts Payable & Accrued Expense		330,733			3,000			126,680			2,604			62,619			257,732			709,139			1,492,507
Advance Rental Pmts & Security Deposits		366,000			—			262,862			—			165,213			492,520			3,212,838			4,499,433
Total Liabilities		10,682,944			3,000			8,668,307			2,604			6,170,888			24,098,322			128,685,026			178,311,091
Partners’ Capital		(3,598,042)			2,752,842			(4,156,317)			90,460			(2,007,075)			(7,365,012)			(52,970,581)			(67,253,725)
Total Liabilities and Capital	$	7,084,902		$	2,755,842		$	4,511,990		$	93,064		$	4,163,813		$	16,733,310		$	75,714,445		$	111,057,366
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,376,421		$	—		$	45,230		$	—		$	—		$	—			1,421,651
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,799,020)		$	—		$	(2,078,158)		$	—		$	(1,003,538)		$	(3,682,506)		$	(21,188,233)			(29,751,455)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(28,329,804)
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 nine months ended September 30, 2024

			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	1,417,322	$	181,413	$	1,346,589	$	77,243	$	1,076,051	$	3,094,579	$	12,738,225	$	19,931,422
Laundry and Sundry Income		9,399		—		(236)		—		—		36,929		132,418		178,510
		1,426,721		181,413		1,346,353		77,243		1,076,051		3,131,508		12,870,643		20,109,932
Expenses
Administrative		16,359		4,000		22,547		2,101		14,383		57,765		148,131		265,286
Depreciation and Amortization		350,002		8,782		259,392		2,448		250,158		807,037		2,772,916		4,450,735
Management Fees		57,488		6,611		52,909		3,126		42,829		130,703		269,853		563,519
Operating		319,903		—		59,664		86		84,517		347,123		1,022,506		1,833,799
Renting		33,103		—		22,016		93		13,556		87,951		104,549		261,268
Repairs and Maintenance		168,259		—		99,452		1,650		103,900		530,985		1,618,100		2,522,346
Taxes and Insurance		213,584		51,471		149,378		14,677		118,953		330,930		1,977,123		2,856,116
		1,158,698		70,864		665,358		24,181		628,296		2,292,494		7,913,178		12,753,069
Income Before Other Income		268,023		110,549		680,995		53,062		447,755		839,014		4,957,465		7,356,863
Other Income (Loss)
Interest Expense		(593,920)		—		(252,874)		—		(178,044)		(633,432)		(3,859,011)		(5,517,281)
Interest Income		32,532		1,480		7,035		629		7,454		44,590		77,327		171,047
Other income (Expense)				—				—				42,938				42,938
		(561,388)		1,480		(245,839)		629		(170,590)		(545,904)		(3,781,684)		(5,303,296)
Net (Loss) Income	$	(293,365)	$	112,029	$	435,156	$	53,691	$	277,165	$	293,110	$	1,175,781	$	2,053,567
Net (Loss) Income —NERA 50%	$	(146,682)	$	56,015	$	217,578	$	26,846	$	138,583	$	146,555				438,894
Net Income —NERA 40%													$	470,313		470,313
															$	909,207

Financial information for the three months ended September 30, 2024

			Hamilton						Hamilton		Hamilton
	Hamilton		Essex		345		Hamilton		Minuteman		on Main		Dexter
	Essex 81		Development		Franklin		1025		Apts		Apts		Park		Total
Revenues
Rental Income	$	498,469	$	60,471	$	455,505	$	25,610	$	364,435	$	1,037,278	$	4,208,926	$	6,650,694
Laundry and Sundry Income		3,054		—		—		—		—		11,685		36,881		51,620
		501,523		60,471		455,505		25,610		364,435		1,048,963		4,245,807		6,702,314
Expenses
Administrative		5,816		1,000		7,568		700		4,065		35,429		47,983		102,561
Depreciation and Amortization		118,091		2,927		86,596		816		84,153		273,712		935,756		1,502,051
Management Fees		20,302		2,479		17,955		1,057		14,520		48,469		89,561		194,343
Operating		142,906		—		18,280		123		19,741		102,651		272,000		555,701
Renting		25,469		—		12,241		30		3,865		31,214		51,733		124,552
Repairs and Maintenance		73,640		—		54,569		—		42,734		200,707		734,698		1,106,348
Taxes and Insurance		49,619		16,279		49,898		4,503		40,197		123,938		692,982		977,416
		435,843		22,685		247,107		7,229		209,275		816,120		2,824,713		4,562,972
Income Before Other Income		65,680		37,786		208,398		18,381		155,160		232,843		1,421,094		2,139,342
Other Income (Loss)
Interest Expense		(199,679)		—		(83,768)		—		(59,749)		(248,334)		(1,292,563)		(1,884,093)
Interest Income		11,282		290		2,406		211		1,991		21,940		32,037		70,157
		(188,397)		290		(81,362)		211		(57,758)		(226,394)		(1,260,526)		(1,813,936)
Net Income (Loss)	$	(122,717)	$	38,076	$	127,036	$	18,592	$	97,402	$	6,449	$	160,568	$	325,406
Net Income (Loss)—NERA 50%	$	(61,359)	$	19,038	$	63,518	$	9,296	$	48,701	$	3,226				82,420
Net Income —NERA 40%													$	64,227		64,227
															$	146,647

Future annual mortgage maturities at September 30, 2024 are as follows:

	Hamilton		345		Hamilton		Hamilton on		Dexter
Period End	Essex 81		Franklin		Minuteman		Main Apts		Park		Total
9/30/2025	$	10,000,000	$	246,936	$	—	$	—	$	—	$	10,246,936
9/30/2026		—		256,664		—		—		—		256,664
9/30/2027		—		266,775		—		—		—		266,775
9/30/2028		—		7,533,359		—		—		125,000,000		132,533,359
9/30/2029		—		—		—		—		—		—
Thereafter		—		—		6,000,000		23,589,000		—		29,589,000
		10,000,000		8,303,734		6,000,000		23,589,000		125,000,000		172,892,734
Less: unamortized deferred financing costs		(13,789)		(24,969)		(56,944)		(240,930)		(236,951)		(573,583)
	$	9,986,211	$	8,278,765	$	5,943,056	$	23,348,070	$	124,763,049	$	172,319,151

At September 30, 2024, the weighted average interest rate on the above mortgages was 4.38%. The effective rate was 4.44% including the amortization expense of deferred financing costs.

Summary financial information at September 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	$	5,517,486		$	2,583,813		$	4,567,358		$	75,843		$	4,261,249		$	12,742,373		$	73,786,757		$	103,534,879
Cash & Cash Equivalents		1,044,888			73,383			112,129			16,328			404,742			902,251			1,593,551			4,147,272
Rent Receivable		197,549			80,264			3,272			4,526			1,890			22,244			114,086			423,831
Real Estate Tax Escrow		70,897			—			66,029			—			40,477			139,457			—			316,860
Prepaid Expenses & Other Assets		331,025			47,178			94,692			777			54,728			233,231			2,501,688			3,263,319
Total Assets	$	7,161,845		$	2,784,638		$	4,843,480		$	97,474		$	4,763,086		$	14,039,556		$	77,996,082		$	111,686,161
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	9,972,422		$	—		$	8,509,683		$	—		$	5,934,873		$	16,885,286		$	124,698,426		$	166,000,690
Accounts Payable & Accrued Expense		162,273			2,250			111,162			2,739			103,267			192,429			801,974			1,376,094
Advance Rental Pmts& Security Deposits		354,788			—			277,672			612			183,421			492,006			2,975,056			4,283,555
Total Liabilities		10,489,483			2,250			8,898,517			3,351			6,221,561			17,569,721			128,475,456			171,660,339
Partners’ Capital		(3,327,638)			2,782,388			(4,055,037)			94,123			(1,458,475)			(3,530,165)			(50,479,374)			(59,974,178)
Total Liabilities and Capital	$	7,161,845		$	2,784,638		$	4,843,480		$	97,474			4,763,086		$	14,039,556		$	77,996,082		$	111,686,161
Partners’ Capital %—NERA		50	%		50	%		50	%		50	%		50	%		50	%		40	%
Investment in Unconsolidated Joint Ventures	$	—		$	1,391,194		$	—		$	47,061		$			$			$			$	1,438,255
Distribution and Loss in Excess of investments in Unconsolidated Joint Ventures	$	(1,663,819)		$	—		$	(2,027,519)		$	—		$	(729,238)		$	(1,765,082)		$	(20,191,749)			(26,377,405)
Total Investment in Unconsolidated Joint Ventures (Net)																						$	(24,939,150)
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 nine months ended September 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	$	1,305,180	$	181,413	$	1,265,519	$	73,989	$	977,459	$	2,877,609	$	12,087,700	$	18,768,869
Laundry and Sundry Income		807		—		115		—		—		11,298		92,735		104,955
		1,305,987		181,413		1,265,634		73,989		977,459		2,888,907		12,180,435		18,873,824
Expenses
Administrative		14,957		2,278		23,617		2,600		12,622		59,441		181,971		297,486
Depreciation and Amortization		352,019		8,782		259,744		2,448		253,492		796,968		2,748,175		4,421,628
Management Fees		52,475		7,183		49,489		3,000		39,269		113,643		248,873		513,932
Operating		228,886		—		70,775		218		93,771		329,701		963,365		1,686,716
Renting		55,933		—		34,840		—		5,596		38,553		98,487		233,409
Repairs and Maintenance		140,557		—		127,427		—		77,035		499,894		1,513,141		2,358,054
Taxes and Insurance		211,209		46,119		143,274		13,037		108,611		395,153		1,951,235		2,868,638
		1,056,036		64,362		709,166		21,303		590,396		2,233,353		7,705,247		12,379,863
Income Before Other Income		249,951		117,051		556,468		52,686		387,063		655,554		4,475,188		6,493,961
Other Income (Loss)
Interest Expense		(553,535)		—		(258,949)		—		(177,694)		(593,120)		(3,779,306)		(5,362,604)
		(553,535)		—		(258,949)		—		(177,694)		(593,120)		(3,779,306)		(5,362,604)
Net Income (Loss)	$	(303,584)	$	117,051	$	297,519	$	52,686	$	209,369	$	62,434	$	695,882	$	1,131,357
Net Income (Loss)—NERA 50%	$	(151,792)	$	58,527	$	148,760	$	26,343	$	104,685	$	31,217				217,739
Net Income —NERA 40%													$	278,353		278,353
															$	496,092

Financial information for the three months ended September 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	$	450,353	$	60,471	$	431,453	$	24,255	$	338,729	$	986,514	$	4,071,737	$	6,363,512
Laundry and Sundry Income		2,418		—		168		—		—		16,329		44,302		63,217
		452,771		60,471		431,621		24,255		338,729		1,002,843		4,116,039		6,426,729
Expenses
Administrative		4,426		778		10,574		729		3,140		20,469		68,852		108,968
Depreciation and Amortization		117,886		2,927		86,878		816		85,184		266,962		926,902		1,487,555
Management Fees		18,730		2,416		16,856		1,011		13,606		39,514		87,897		180,030
Operating		78,368		—		13,741		75		25,399		105,437		309,700		532,720
Renting		24,988		—		16,641		—		4,023		14,099		30,728		90,479
Repairs and Maintenance		44,602		—		64,889		—		32,802		163,163		618,245		923,701
Taxes and Insurance		69,964		15,438		48,988		4,333		38,211		132,214		680,016		989,164
		358,964		21,559		258,567		6,964		202,365		741,858		2,722,340		4,312,617
Income Before Other Income		93,807		38,912		173,054		17,291		136,364		260,985		1,393,699		2,114,112
Other Income (Loss)
Interest Expense		(194,683)		—		(85,476)		—		(59,586)		(192,376)		(1,257,252)		(1,789,373)
		(194,683)		—		(85,476)		—		(59,586)		(192,376)		(1,257,252)		(1,789,373)
Net Income (Loss)	$	(100,876)	$	38,912	$	87,578	$	17,291	$	76,778	$	68,609	$	136,447	$	324,739
Net Income (Loss)—NERA 50%	$	(50,439)	$	19,456	$	43,789	$	8,645	$	38,390	$	34,305				94,145
Net Income —NERA 40%													$	54,578		54,578
															$	148,723