UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-31568

New England Realty Associates Limited Partnership

(Exact name of registrant as specified in its charter)


Massachusetts		04-2619298
(State or other jurisdiction of		(I.R.S. employer
incorporation or organization)		identification no.)

39 Brighton Avenue, Allston, Massachusetts		02134
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (617) 783-0039

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐		Accelerated Filer ☒

Non-accelerated filer ☐		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Class A	NEN	NYSE MKT Exchange

As of May 8, 2023, there were 95,042 of the registrant’s Class A units (2,851,254 Depositary Receipts) of limited partnership issued and outstanding and 22,572 Class B units issued and outstanding.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	March 31,		December 31,
	2023		2022
ASSETS
Rental Properties	$	248,529,340	$	241,076,431
Cash and Cash Equivalents		24,654,625		49,560,723
Rents Receivable		801,990		655,814
Real Estate Tax Escrows		2,031,757		1,943,680
Investment in U.S. Treasury Bills		97,759,876		88,332,133
Prepaid Expenses and Other Assets		9,782,554		8,814,112
Investments in Unconsolidated Joint Ventures		1,436,252		1,437,387
Total Assets	$	384,996,394	$	391,820,280
LIABILITIES AND PARTNERS’ CAPITAL
Mortgage Notes Payable	$	410,449,284	$	410,966,199
Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture		25,244,289		24,419,129
Accounts Payable and Accrued Expenses		5,094,811		7,271,729
Advance Rental Payments and Security Deposits		9,137,784		9,032,580
Total Liabilities		449,926,168		451,689,637
Commitments and Contingent Liabilities (Notes 3 and 9)		—		—
Partners’ Capital 118,824 and 119,255 units outstanding in 2023 and 2022 respectively		(64,929,774)		(59,869,357)
Total Liabilities and Partners’ Capital	$	384,996,394	$	391,820,280

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



	Three Months Ended March 31,
	2023		2022
Revenues
Rental income	$	17,568,727	$	16,460,006
Laundry and sundry income		122,959		120,403
		17,691,686		16,580,409
Expenses
Administrative		737,101		707,786
Depreciation and amortization		3,846,260		4,020,768
Management fee		697,764		673,084
Operating		2,533,796		2,676,208
Renting		191,585		169,389
Repairs and maintenance		2,763,136		2,279,651
Taxes and insurance		2,470,679		2,276,573
		13,240,321		12,803,459
Income Before Other Income (Expense)		4,451,365		3,776,950
Other Income (Expense)
Interest income		974,546		34
Interest expense		(3,899,240)		(3,454,635)
Income from investments in unconsolidated joint ventures		227,704		20,069
		(2,696,990)		(3,434,532)
Net Income	$	1,754,375	$	342,418

Net Income per Unit	$	14.72	$	2.82
Weighted Average Number of Units Outstanding		119,181		121,247

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNER’S CAPITAL

(Unaudited)


	Units						Partner’s Capital
	Limited		General		Treasury		Limited				General			Accumulated
	Class A	Class B	Partnership	Subtotal	Units	Total	Class A		Class B		Partnership			Comprehensive Income		Total
Balance January 1, 2022	144,180	34,243	1,802	180,225	58,709	121,516	$	(39,462,357)	$	(9,338,738)	$	(491,512)	$	—	$		(49,292,607)
Distribution to Partners	—	—	—	—	—	—		(4,656,907)		(1,106,016)		(58,211)		—			(5,821,134)
Stock Buyback	—	—	—	—	589	(589)		(1,070,321)		(254,118)		(13,375)		—			(1,337,814)
Net Income	—	—	—	—	—	—		273,935		65,059		3,424		—			342,418
Balance March 31 , 2022	144,180	34,243	1,802	180,225	59,298	120,927		(44,915,650)		(10,633,813)		(559,674)		—			(56,109,137)

Balance January 1, 2023	144,180	34,243	1,802	180,225	60,970	119,255	$	(48,160,462)	$	(11,403,635)	$	(600,191)		294,931		$	(59,869,357)
Distribution to Partners	—	—	—	—				(4,563,508)		(1,083,833)		(57,044)		—			(5,704,385)
Stock Buyback	—	—	—	—	431	(431)		(755,666)		(179,411)		(9,443)		—			(944,520)
Net Income	—	—	—	—	—	—		1,403,500		333,331		17,544		—			1,754,375
Net unrealized (loss) on derivative instruments for interest rate swaps	—	—	—	—	—	—		—		—		—		(165,887)			(165,887)

Balance March 31, 2023	144,180	34,243	1,802	180,225	61,401	118,824	$	(52,076,136)	$	(12,333,548)	$	(649,134)		129,044		$	(64,929,774)

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2023		2022
Cash Flows from Operating Activities
Net Income	$	1,754,375	$	342,418
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		3,846,260		4,020,768
Amortization of deferred finance costs		94,946		89,578
(Income) from investments in joint ventures		(227,704)		(20,069)
Change in operating assets and liabilities
Proceeds from unconsolidated joint ventures		30,000		35,000
(Increase) Decrease in rents receivable		(146,176)		309,484
(Decrease) Increase in accounts payable and accrued expense		(2,176,919)		281,508
(Increase) in real estate tax escrow		(88,077)		(308,180)
(Increase) in interest receivable U.S. Treasury bills		(257,119)		—
(Increase) in prepaid expenses and other assets		(555,260)		(117,404)
Increase (Decrease) in advance rental payments and security deposits		105,204		(51,696)
Total Adjustments		625,155		4,238,989
Net cash provided by operating activities		2,379,530		4,581,407
Cash Flows From Investing Activities
Distribution in excess of investment in unconsolidated joint ventures		550,000		405,000
Investment in U.S. Treasury Bills		(53,713,756)		—
Proceeds from U.S. Treasury Bills		44,286,013		—
Purchase of rental property		(8,974,242)		—
Improvement of rental properties		(2,172,877)		(1,045,311)
Net cash (used in) investing activities		(20,024,862)		(640,311)
Cash Flows from Financing Activities
Principal payments of mortgage notes payable		(611,861)		(600,190)
Stock buyback		(944,520)		(1,337,814)
Distributions to partners		(5,704,385)		(5,821,134)
Net cash (used in) provided by financing activities		(7,260,766)		(7,759,138)
Net Increase (Decrease) in Cash and Cash Equivalents		(24,906,098)		(3,818,042)
Cash and Cash Equivalents, at beginning of period		49,560,723		96,083,508
Cash and Cash Equivalents, at end of period	$	24,654,625	$	92,265,466

See notes to consolidated financial statements.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

Line of Business: New England Realty Associates Limited Partnership (“NERA”, the “Company” or the “Partnership”) was organized in Massachusetts in 1977. NERA and its subsidiaries own 30 properties which include 21 residential buildings; 4 mixed use residential, retail and office buildings; 5 commercial buildings and individual units at one condominium complex. These properties total 2,892 apartment units, 19 condominium units and 128,096 square feet of commercial space. Additionally, the Partnership also owns a 40 - 50% interest in 7 residential and mixed use properties consisting of 688 apartment units, 12,500 square feet of commercial space and a 50 car parking lot. The properties are located in Eastern Massachusetts and Southern New Hampshire.

Basis of Presentation: The financial statements have been prepared in conformity with GAAP. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. These estimates and assumptions are based on management’s historical experience that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgement. The Partnership’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Partnership’s financial results. Judgements and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances.

Principles of Consolidation: The consolidated financial statements include the accounts of NERA and its subsidiaries. NERA has a 99.67% to 100% ownership interest in each subsidiary except for the seven limited liability companies (the “Investment Properties” or “Joint Ventures”) in which the Partnership has a 40 - 50% ownership interest. The consolidated group is referred to as the “Partnership”. Minority interests are not recorded, since they are insignificant. All significant intercompany accounts and transactions are eliminated in consolidation. The Partnership accounts for its investment in the above-mentioned Investment Properties using the equity method of consolidation. (See Note 15: Investment in Unconsolidated Joint Ventures.)

The Partnership accounts for its investments in joint ventures using the equity method of accounting. These investments are recorded initially at cost, as Investments in Unconsolidated Joint Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions. Generally, the Partnership would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Partnership has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Partnership only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses. In 2013 and beyond, the carrying values of some investments fell below zero. We intend to fund our share of the investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. (See Note 15: Investment in Unconsolidated Joint Ventures.)

The authoritative guidance on consolidation provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIE (the “primary beneficiary”). Generally, the consideration of whether an entity is a VIE applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that equity’s activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the

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variable interest entity’s performance; and (2) the obligation to absorb losses and rights to receive the returns from VIE that would be significant to the VIE.

Impairment: On an annual basis management assesses whether there are any indicators that the value of the Partnership’s rental properties or investments in unconsolidated subsidiaries may be impaired. In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment. The criteria considered by management include reviewing low leased percentages, significant near term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near term mortgage debt maturities or other factors that might impact the Partnership’s intent and ability to hold property. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. The Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Revenue Recognition: Rental income from residential and commercial properties is recognized over the term of the related lease. For residential tenants, amounts 60 days in arrears are charged against income. The commercial tenants are evaluated on a case by case basis. Certain leases of the commercial properties provide for increasing stepped minimum rents, which are accounted for on a straight-line basis over the term of the lease. Revenue from commercial leases also include reimbursements and recoveries received from tenants for certain costs as provided in the lease agreement. The costs generally include real estate taxes, utilities, insurance, common area maintenance and recoverable costs. Rental concessions are also accounted for on the straight-line basis.

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the differences between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed-rate renewal options for below-market leases. The capitalized above-market lease amounts are accounted for as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.

The Partnership evaluates the non-lease components (lease arrangements that include common area maintenance services) with related lease components (lease revenues). If both the timing and pattern of transfer are the same for the non-lease component and related lease component, the lease component is the predominant component. The Partnership elected an allowed practical expedient. For (i) operating lease arrangements involving real estate that include common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance costs, we present these amounts within lease revenues in our consolidated statements of income. We record amounts reimbursed by the lessee in the period in which the applicable expenses are incurred.

Rental Properties: Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions which improve or extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such disposition is included in income. Fully depreciated assets are removed from the accounts. Rental properties are depreciated by both straight-line and accelerated methods over their estimated useful lives. Upon acquisition of rental property, the Partnership estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Partnership allocated the purchase price to the assets acquired and liabilities assumed based on their fair values. The Partnership records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing

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activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Other intangible assets acquired include amounts for in-place lease values and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Partnership’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.

In the event that facts and circumstances indicate that the carrying value of a rental property may be impaired, an analysis of the value is prepared. The estimated future undiscounted cash flows are compared to the asset’s carrying value to determine if a write-down to fair value is required.

Leasing Fees: Leasing fees are capitalized and amortized on a straight-line basis over the life of the related lease. Unamortized balances are expensed when the corresponding fee is no longer applicable.

Deferred Financing Costs: Costs incurred in obtaining financing are capitalized and amortized over the term of the related indebtedness. Deferred financing costs are presented in the balance sheet as a direct deduction from the carrying value of the debt liability to which they relate, except deferred financing costs related to the revolving credit facility, which are presented in prepaid expenses and other assets. In all cases, amortization of such costs is included in interest expense and was approximately $95,000 and $90,000 for the three months ended March 31, 2023 and 2022, respectively.

Income Taxes: The financial statements have been prepared on the basis that NERA and its subsidiaries are entitled to tax treatment as partnerships. Accordingly, no provision for income taxes have been recorded (See Note 14).

Cash Equivalents: The Partnership considers cash equivalents to be all highly liquid instruments purchased with a maturity of three months or less at the time of purchase.

Investments in Treasury Bills: Investments in Treasury Bills are recorded at amortized cost and classified as held to maturity as the Partnership has the intent and the ability to hold them until they mature. The carrying value of the Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment. Income related to the Treasury Bills is recognized in interest income in the Partnership’s consolidated statement of income.

Segment Reporting: Operating segments are revenue producing components of the Partnership for which separate financial information is produced internally for management. Under the definition, NERA operated, for all periods presented, as one segment.

Other Comprehensive Income (Loss): Other comprehensive income (loss) includes items that are recorded in equity, such as effective portions of derivatives designated as cash flow hedges or unrealized holding gains or losses on marketable securities available for sale. NERA had a comprehensive loss of approximately $166,000 for the three months ended March 31, 2023, but had no comprehensive income or loss for the three months ended March 31, 2022.

Income (Loss) Per Depositary Receipt: Effective January 3, 2012, the Partnership authorized a 3-for-1 forward split of its Depositary Receipts listed on the NYSE Amex and a concurrent adjustment of the exchange ratio of Depositary Receipts for Class A Units of the Partnership from 10-to-1 to 30-to-1, such that each Depositary Receipt represents one-thirtieth (1/30) of a Class A Unit of the Partnership. All references to Depositary Receipts in the report are reflective of the 3-for-1 forward split.

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Income Per Unit: Net income per unit has been calculated based upon the weighted average number of units outstanding during each period presented. The Partnership has no dilutive units and, therefore, basic net income is the same as diluted net income per unit (see Note 7: Partner’s Capital).

Concentration of Credit Risks and Financial Instruments: The Partnership’s properties are located in New England, and the Partnership is subject to the general economic risks related thereto. No single tenant accounted for more than 5% of the Partnership’s revenues in 2023 or 2022. The Partnership makes its temporary cash investments with high-credit quality financial institutions. At March 31, 2023, substantially all of the Partnership’s cash and cash equivalents were held in interest-bearing accounts at financial institutions, and investments in U.S. Treasury bills, earning interest at rates from 0.01% to 4.75%. At March 31, 2023 and December 31, 2022, respectively approximately $25,063,000, and $49,641,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts. Of the $25,063,000, approximately $9,885,000 is invested in U.S. Treasury bills maturing in three months.

Advertising Expense: Advertising is expensed as incurred. Advertising expense was approximately $109,000 and $73,000 for the three months ended March 31, 2023, and 2022, respectively.

Rental Property Held for Sale: When assets are identified by management as held for sale, the Partnership discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. The Partnership generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale. If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance is established.

Interest Capitalized: The Partnership follows the policy of capitalizing interest as a component of the cost of rental property when the time of construction exceeds one year. During the three months ended March 31, 2023, and 2022 there was no capitalized interest.

Extinguishment of Debt: When existing mortgages are refinanced with the same lender and it is determined that the refinancing is substantially different, then they are recorded as an extinguishment of debt. However, if it is determined that the refinancing is substantially the same, then they are recorded as an exchange of debt. All refinancings qualify as extinguishment of debt.

Reclassification: Certain reclassifications have been made to prior period amounts in order to conform to current period presentation.

NOTE 2. RENTAL PROPERTIES

As of March 31, 2023, the Partnership and its Subsidiary Partnerships owned 2,892 residential apartment units in 25 residential and mixed-use complexes (collectively, the “Apartment Complexes”). The Partnership also owns 19 condominium units in a residential condominium complex, all of which are leased to residential tenants (collectively referred to as the “Condominium Units”). The Apartment Complexes and Condominium Units are located primarily in the metropolitan Boston area of Massachusetts.

Additionally, as of March 31, 2023, the Partnership and Subsidiary Partnerships owned two commercial shopping centers in Framingham, commercial buildings in Newton and Brookline and mixed-use properties in Boston, Brockton, and Newton, all in Massachusetts. These properties are referred to collectively as the “Commercial Properties.”

The Partnership also owned a 40% to 50% ownership interest in seven residential and mixed use complexes (the “Investment Properties”) at March 31, 2023 with a total of 688 apartment units, accounted for using the equity method of consolidation. See Note 15 for summary information on these investments.

The Partnership purchased a commercial retail property of approximately 20,700 square feet, located at 653 Worcester Road in Framingham, Massachusetts for the sum of approximately $10,151,000 on January 18, 2023. This acquisition was funded from the Partnership’s cash reserves and closing costs were approximately $59,000. From the purchase price, the Partnership allocated approximately $585,000 to in- place leases, and approximately $378,000 to the value of tenant relationships. The value assigned to in-place leases is being amortized over a twelve-month period. The

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value assigned to tenant relationships is being amortized over the individual tenant’s lease term, ranging from 20 months to 156 months.

Rental properties consist of the following:


	March 31, 2023		December 31, 2022		Useful Life
Land, improvements and parking lots	$	90,839,091	$	87,405,897	15	-	40	years
Buildings and improvements		261,724,341		256,035,191	15	-	40	years
Kitchen cabinets		14,744,566		14,347,212	5	-	10	years
Carpets		12,609,952		12,047,573	5	-	10	years
Air conditioning		501,697		501,697	5	-	10	years
Laundry equipment		553,140		553,140	5	-	7	years
Elevators		1,885,265		1,885,265	20	-	40	years
Swimming pools		1,090,604		1,090,604	10	-	30	years
Equipment		19,215,896		18,716,758	5	-	30	years
Motor vehicles		232,954		171,519			5	years
Fences		46,872		46,872	5	-	15	years
Furniture and fixtures		8,406,539		7,902,182	5	-	7	years
Total fixed assets		411,850,917		400,703,910
Less: Accumulated depreciation		(163,321,577)		(159,627,479)
	$	248,529,340	$	241,076,431

NOTE 3. RELATED PARTY TRANSACTIONS

The Partnership’s properties are managed by The Hamilton Company, Inc. (the “Management Company”), an entity that is owned by the majority shareholder of NewReal, Inc., the general partner of the Partnership (the “General Partner”). The management fee is equal to 4% of gross receipts of rental revenue and laundry income on the majority of the Partnership’s properties and 3% on Linewt. Total fees paid were approximately $698,000 and $673,000 for the three months ended March 31, 2023 and 2022, respectively.

The Partnership Agreement permits the General Partner or the Management Company to charge the costs of professional services (such as counsel, accountants and contractors) to NERA. During the three months ended March 31, 2023 and 2022, approximately $493,000 and $195,000 was charged to NERA for legal, accounting, construction, maintenance, brokerage fees, rental and architectural services and supervision of capital improvements. Of the 2023 expenses referred to above, approximately $48,000 consisted of repairs and maintenance, $99,000 of administrative expense, and approximately $57,000 for renting expense. Approximately $289,000 of expenses for construction, architectural services and supervision of capital projects were capitalized in rental properties. Additionally in 2023, the Hamilton Company received approximately $181,000 from the Investment Properties of which approximately $171,000 was the management fee, approximately $4,000 for construction, architectural services and supervision of capital projects, approximately $3,000 for repairs and maintenance, and approximately $3,000 for legal expense. The management fee is equal to 4% of gross receipts of rental income on the majority of investment properties and 2% on Dexter Park.

The Partnership reimburses the Management Company for the payroll and related expenses of the employees who work at the properties. Total reimbursement was approximately $1,114,000 and $1,039,000 for the three months ended March 31, 2023 and 2022, respectively. The Management Company maintains a 401K plan for all eligible employees whereby the employees may contribute the maximum allowed by law. The plan also provides for discretionary contributions by the employer. For the three months ended March 31, 2023, the Partnership accrued $16,000 for the employer’s match portion to the plan. For the three months ended March 31, 2022, the Partnership contributed $37,000 for the employer’s match portion to the plan.

Bookkeeping and accounting functions are provided by the Management Company’s accounting staff, which consists of approximately 14 people. During the nine months ended March 31, 2023 and 2022, the Management Company charged the Partnership $31,250 ($125,000 per year) for bookkeeping and accounting services included in administrative expenses above.

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Sally Michael is a Director of New Real, Inc., and she is a Partner at Saul Ewing Arnstein & Lear LLP. Saul Ewing billed the Partnership for legal fees totaling approximately $37,000 and $0 for the three months ended March 31, 2023 and 2022 respectively.

The Partnership has invested in seven limited partnerships, which have invested in mixed use residential apartment complexes. The Partnership has a 40% to 50% ownership interest in each investment property. The other investors are the Brown family related entities, and five current and previous employees of the Management Company. The Brown Family related entities’ ownership interest was between 47.6% and 59%. See Note 15 for a description of the properties and their operations.

NOTE 4. PREPAID EXPENSES and OTHER ASSETS

Approximately $3,414,000, and $3,406,000 of security deposits are included in prepaid expenses and other assets at March 31, 2023 and December 31, 2022, respectively. The security deposits and escrow accounts are restricted cash.

Also, included in prepaid expenses and other assets at March 31, 2023 and December 31, 2022 is approximately $2,111,000 and $1,979,000, respectively, held in escrow to fund future capital improvements, and approximately $831,000 and $573,000 respectively in interest receivable, U.S. Treasury bills.

Intangible assets on the acquisition of 653 Worcester Road are included in prepaid expenses and other assets. Intangible assets are approximately $834,000 and $0 net of accumulated amortization of approximately $129,000 and $1,418,000 at March 31, 2023, and at December 31, 2022 respectively.

Financing fees in association with the line of credit of approximately $95,000 and $109,000 are net of accumulated amortization of approximately $85,000 and $70,000 at March 31, 2023 and December 31, 2022 respectively.

NOTE 5. MORTGAGE NOTES PAYABLE

At March 31, 2023 and December 31, 2022, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2. At March 31, 2023, the interest rates on these loans ranged from 2.97% to 4.95%, payable in monthly installments aggregating approximately $1,523,000 including principal, to various dates through 2035. The majority of the mortgages are subject to prepayment penalties. At March 31, 2023, the weighted average interest rate on the above mortgages was 3.69%. The effective rate of 3.78% includes the amortization expense of deferred financing costs. See Note 12 for fair value information. The Partnership’s mortgage debt and the mortgage debt of its unconsolidated joint ventures generally is non-recourse except for customary exceptions pertaining to misuse of funds and material misrepresentations.

Financing fees of approximately $3,064,000 and $3,159,000 are net of accumulated amortization of approximately $1,068,000 and $973,000 at March 31, 2023 and December 31, 2022, respectively, which offset the total mortgage notes payable.

The Partnership has pledged tenant leases as additional collateral for certain of these loans.

Approximate annual maturities at March 31, 2023 are as follows:


2024—current maturities	$	2,753,000
2025		3,014,000
2026		22,063,000
2027		6,625,000
2028		23,163,000
Thereafter		355,895,000
		413,513,000
Less: unamortized deferred financing costs		3,064,000
	$	410,449,000

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On June 16, 2022, the Partnership entered into an amendment to the Facility Agreement. The additional advance under the Amended Agreement is in the amount of $80,284,000, at a fixed interest rate of 4.33%. The Partnership’s obligations under the Facility Agreement are secured by mortgages on certain properties pursuant to certain Mortgage, Assignment of Leases and Rents, and Security Agreement and Fixture Filings.

The Partnership used the proceeds to pay down approximately $37,065,000 of existing debt secured by four properties, along with approximately $834,000 in prepayment penalties. The remaining balance of approximately $42,404,000 will be used for general partnership purposes.

On November 30, 2021, New England Realty Associates Limited Partnership (the “Partnership”), entered into a Master Credit Facility Agreement ( the “Facility Agreement”) with KeyBank National Association (“KeyBank”) dated as of November 30, 2021, with an initial advance in the amount of $156,000,000. Interest only on the debt at a fixed interest rate of 2.97% is payable on a monthly basis through December 31, 2031. The Partnership’s obligations under the Facility Agreement are secured by mortgages on certain properties pursuant to certain Mortgage, Assignment of Leases and Rents, and Security Agreement and Fixture Filings (“Mortgages”).

The Partnership used the proceeds to pay down approximately $65,305,000 of existing debt secured by 11 properties, along with approximately $2,700,000 in prepayment penalties. The remaining balance of approximately $89,000,000 will be used for general partnership purposes.

On October 14, 2022, the Partnership entered into a loan agreement with Brookline Bank refinancing its loan on 659-665 Worcester Road, Framingham, MA. The agreement pays down the loan on the existing debt of $5,954,546.14, extends the maturity until October 14, 2032, at a variable interest rate of SOFR rate, plus 1.7% interest only for 2 years and amortizing using a thirty-year schedule for the balance of the term. At closing, the Partnership entered into an interest rate swap contract with Brookline Bank with a notional amount equivalent to the underlying loan principal amortization, resulting in a fixed rate of 4.60% through the expiration of the interest rate swap contract. The agreement also allows for an earn out of up to an additional $1,495,453.86 once the property performance reaches a 1.35x debt service coverage ratio and the loan to value equates to at most 65%.

Line of Credit

On July 31, 2014, the Partnership entered into an agreement for a $25,000,000 revolving line of credit. The term of the line was for three years with a floating interest rate equal to a base rate of the greater of (a) the Prime Rate (b) the Federal Funds Rate plus one-half of one percent per annum, or (c) the LIBOR Rate for a period of one month plus 1% per annum, plus the applicable margin of 2.5%. The agreement originally expired on July 31, 2017, and was extended until October 31, 2020. The costs associated with the line of credit extension were approximately $128,000. Prior to the line’s expiration in 2020, the Partnership exercised its option for a one-year extension until October 31, 2021. The Partnership paid an extension fee of approximately $37,500 in association with the extension.

On October 29, 2021, the Partnership closed on the modification of its existing line of credit. The agreement extends the credit line for three years until October 29, 2024. The commitment amount is for $25 million but is restricted to $17 million during the modification period. The modification period phased out as of December 31, 2022. During this period, the loan covenants were modified from a minimum consolidated debt service ratio of 1.60 to a ratio of 1.35 until September 30, 2022; from a minimum tangible net worth requirement of $200 million to a net worth of $175 million until September 30, 2022; from a maximum consolidated leverage ratio of 65% to a ratio of 70% until September 30, 2022 and from a minimum debt yield of 9.5% to a yield of 8.5% until September 30, 2022 and a yield of 9.0% until December 31, 2022. Once the financial performance of the Partnership meets the original covenant tests for the trailing 12-month period, the commitment amount will return to $25 million. As of March 31,2023, the portfolio’s debt yield fell below the minimum of 9.5% to 8.5%, thus the Partnership did not comply with the debt yield financial covenant. As such, the Partnership is unable to draw down any amount from the line of credit until the Partnership meets the required financial covenants.

The interest rate for the new term is LIBOR plus 300 basis points. The costs associated with the modification and renewal of the line of credit was approximately $179,000.

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The line of credit may be used for acquisition, refinancing, improvements, working capital and other needs of the Partnership. The line may not be used to pay dividends, make distributions or acquire equity interests of the Partnership.

The line of credit is collateralized by varying percentages of the Partnership’s ownership interest in 23 of its subsidiary properties and joint ventures. Pledged interests range from 49% to 100% of the Partnership’s ownership interest in the respective entities.

NOTE 6. ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

The Partnership’s residential lease agreements may require tenants to maintain a one-month advance rental payment and/or a security deposit. At March 31, 2023, amounts received for prepaid rents of approximately $2,699,000 are included in cash and cash equivalents, and security deposits of approximately $3,414,000 are included in prepaid expenses and other assets and are restricted cash.

NOTE 7. PARTNERS’ CAPITAL

The Partnership has two classes of Limited Partners (Class A and B) and one category of General Partner. Under the terms of the Partnership Agreement, distributions to holders of Class B Units and General Partnership Units must represent 19% and 1%, respectively, of the distributions made to the total units outstanding. All classes have equal profit sharing and distribution rights, in proportion to their ownership interests.

In January 2023, the Partnership approved a quarterly distribution of $9.60 per Unit ($0.32 per Receipt), payable on March 31, 2023. In addition to the quarterly distribution, there was a special distribution of $38.40 per Class A unit ($1.28 per Receipt) payable on March 31, 2023.

In 2022 the Partnership paid a total distribution of an aggregate $76.80 per Unit ($2.56 per Receipt) for a total payment of $9,267,981.

The Partnership has entered into a deposit agreement with an agent to facilitate public trading of limited partners’ interests in Class A Units. Under the terms of this agreement, the holders of Class A Units have the right to exchange each Class A Unit for 30 Depositary Receipts. The following is information per Depositary Receipt:


	Three Months Ended
	March 31,
	2023		2022
Net Income (Loss) per Depositary Receipt	$	0.49	$	0.09
Distributions per Depositary Receipt	$	1.60	$	1.60

NOTE 8. TREASURY UNITS

Treasury Units at March 31, 2023 are as follows:


Class A		49,121
Class B		11,666
General Partnership		614
		61,401

On August 20, 2007, NewReal, Inc., the General Partner authorized an equity repurchase program (“Repurchase Program”) under which the Partnership was permitted to purchase, over a period of twelve months, up to 300,000 Depositary Receipts (each of which is one-tenth of a Class A Unit). Over time, the General Partner has authorized increases in the equity repurchase program. On March 10, 2015, the General Partner authorized an increase in the Repurchase Program from 1,500,000 to 2,000,000 Depository Receipts and extended the Program for an additional five years from March 31, 2015 until March 31, 2020. On March 9, 2020, the General Partner extended the program for an additional five years from March 31, 2020 to March 31, 2025. The Repurchase Program requires the Partnership to repurchase a proportionate number of Class B Units and General Partner Units in connection with any repurchases of any Depositary Receipts by the Partnership based upon the 80%, 19% and 1% fixed distribution percentages of the holders of

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the Class A, Class B and General Partner Units under the Partnership’s Second Amended and Restated Contract of Limited Partnership. Repurchases of Depositary Receipts or Partnership Units pursuant to the Repurchase Program may be made by the Partnership from time to time in its sole discretion in open market transactions or in privately negotiated transactions.

From August 20, 2007 through March 31, 2023, the Partnership has repurchased 1,498,809 Depositary Receipts at an average price of $30.44 per receipt (or $913.09 per underlying Class A Unit), 4,129 Class B Units and 217 General Partnership Units, both at an average price of $1,203.00 per Unit, totaling approximately $51,440,000 including brokerage fees paid by the Partnership.

During the three months ended March 31, 2023, the Partnership purchased a total of 10,349 Depositary Receipts. The average price was $72.99 per receipt, or $2,189.70 per unit. The cost including commission was $755,666.The Partnership was required to repurchase 81.93 Class B Units and 4.31 General Partnership units at a cost of $179,411 and $9,443 respectively.

NOTE 9. COMMITMENTS AND CONTINGENCIES

The Partnership, the Subsidiary Partnerships, and the Investment Properties and their properties are not presently subject to any material litigation, and, to management’s knowledge, there is not any material litigation presently threatened against them. The properties are occasionally subject to ordinary routine legal and administrative proceedings incident to the ownership of residential and commercial real estate. Some of the legal and other expenses related to these proceedings are covered by insurance and none of these costs and expenses are expected to have a material adverse effect on the Consolidated Financial Statements of the Partnership.

NOTE 10. RENTAL INCOME

During the three months ended March 31, 2023, approximately 94% of rental income was related to residential apartments and condominium units with leases of one year or less. The majority of these leases expire in June, July and August. Approximately 6% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at March 31, 2023 as follows:


	Commercial
	Property Leases
2024	$	2,897,764
2025		2,315,063
2026		2,056,990
2027		1,799,506
2028		1,511,676
Thereafter		10,553,216
	$	21,134,215

The aggregate minimum future rental income does not include contingent rentals that may be received under various leases in connection with common area charges and real estate taxes. Aggregate contingent rentals from continuing operations were approximately $147,000 and $175,000 for the three months ended March 31, 2023 and 2022 respectively. Trader Joe’s and Walgreen’s, tenants at Staples Plaza and 653 Worcester Road, Framingham, MA. respectively, are approximately 23% of the total commercial rental income.

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The following information is provided for commercial leases:


	Annual base				Percentage of
	rent for		Total square feet	Total number of	annual base rent for
Through March 31,	expiring leases		for expiring leases	leases expiring	expiring leases
2024	$	593,243	35,102	21	17	%
2025		489,754	17,963	11	14	%
2026		196,439	4,516	7	6	%
2027		395,326	15,162	8	12	%
2028		189,605	5,493	2	6	%
2029		132,747	3,412	2	4	%
2030		—	—	—	—	%
2031		—	—	—	—	%
2032		—	—	—	—	%
Thereafter		1,428,260	46,987	4	41	%
Totals	$	3,425,374	128,635	55	100	%

Rents receivable are net of an allowance for doubtful accounts of approximately $1,188,000 and $1,007,000 at March 31, 2023 and December 31, 2022. Included in rents receivable at March 31, 2023 is approximately $86,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis.

Rents receivable at March 31, 2023 also includes approximately $22,000 representing the deferral of rental concession primarily related to the residential properties.

NOTE 11. CASH FLOW INFORMATION

During the three months ended March 31, 2023 and 2022, cash paid for interest was approximately $3,754,000, and $3,370,000 respectively. Cash paid for state income taxes was approximately $4,000 and $2,000 during the three months ended March 31, 2023 and 2022 respectively.

NOTE 12. FAIR VALUE MEASUREMENTS

Fair Value Measurements on a Recurring Basis

At March 31, 2023 and December 31, 2022, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements.

Financial Assets and Liabilities not Measured at Fair Value

At March 31, 2023 and December 31, 2022 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and note payable, accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments or, the recent acquisition of these items. The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents. Cash, cash equivalents, and restricted cash include cash held in checking, U.S. Treasury Bills, and money market accounts.

The Partnership has investments in Treasury Bills some of which mature over a period greater than 90 days and are classified as short-term investments. The Treasury Bills are carried at amortized cost and classified as held to maturity as the Partnership has the intent and the ability to hold them until they mature. The carrying value of the Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment. Income related to the Treasury Bills is recognized in interest income in the Partnership’s consolidated statement of income. The Treasury Bills classified within Level I of the fair value hierarchy.

At March 31, 2023


	For the Three Months Ended March 31, 2023
	Previously Reported		Restated
Weighted average number of units outstanding		117,861		119,181
Net income per unit	$	14.89	$	14.72


PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	5
	Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022	6
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	7
	Consolidated Statements of Changes in Partners’ Capital for the Three Months Ended March 31, 2023 and 2022	8
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	9
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosure	41
Item 5.	Other Information	41
Item 6.	Exhibits	41
SIGNATURES		42