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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

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**FORM 10-Q**

 

**(Mark One)**

 

**x****           QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

**For thequarterly period ended June 30, 2010**

 

**OR**

 

**o****              TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

**For thetransition period from              to**

** **

**Commission file number 0-12138**

 

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**New England Realty Associates Limited Partnership**

(Exact name of registrant as specified in its charter)

 

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

 

| **39  Brighton Avenue, Allston, Massachusetts**

(Address  of principal executive offices) |   | **02134**

(Zip  Code) |
|--------------------------------------------------------------------------------------------|--------|------------------------|

 

Registrant’s telephonenumber, including area code: **(617) 783-0039**

 

Securitiesregistered pursuant to Section 12(b) of the Act:

 

| **Depositary  Receipts**  (Title of each Class) |   | **NYSE  AMEX**  (Name of each Exchange on which Registered) |
|-------------------------------------------------|--------|-------------------------------------------------------------|

 

Securitiesregistered pursuant to Section 12(g) of the Act:

 

**Class A**

**Limited Partnership Units**

(Titleof class)

 

**Not applicable**

(Former name, former address and former fiscalyear, if changed since last report)

 

Indicateby checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act.  Yes o No x

 

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Exchange Act. Yes o No x

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. Yes x  No o

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (232.405 ofthis chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).  Yes o No o (theRegistrant is not yet required to submit Interactive Data)Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer,a non-accelerated filer or a smaller reporting company. See definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” inRule 12b-2 of the Exchange Act. (Check one):

 

| Large  accelerated filer o                                              |   | Accelerated  filer o         |
|-------------------------------------------------------------------------|--------|------------------------------|
|                                                                    |   |                         |
| Non-accelerated  filer x  (Do not check if a smaller reporting company) |   | Smaller  reporting company o |

 

Indicateby check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes o  No x

 

Asof June 30, 2010, there were 105,188 of the registrant’s Class Aunits (1,051,876 Depositary Receipts) of limited partnership issued andoutstanding and 24,982 Class B units issued and outstanding.

 

 

 

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**NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP**

 

**INDEX**

 
| ** **     | **PART I—FINANCIAL  INFORMATION**                                                                                                 |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| Item 1.   | Financial Statements (Unaudited)                                                                                                            |
|           | Consolidated Balance  Sheets as of June 30, 2010 and December 31, 2009                                                            |
|           | Consolidated Statements of Income for the Three Months  Ended June 30, 2010 and 2009 and Six Months ended June 30, 2010 and  2009 |
|           | Consolidated Statements of Changes in Partners’  Capital for the Six Months Ended June 30, 2010 and June 30, 2009            |
|           | Consolidated Statements of Cash Flows for the Six  Months Ended June 30, 2010 and June 30, 2009                                   |
|           | Notes to Financial Statements                                                                                                               |
| Item 2.   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                 |
| Item 3.   | Quantitative  and Qualitative Disclosures About Market Risk                                                                                 |
| Item 4.   | Controls and  Procedures                                                                                                                    |
|           | **PART II—OTHER  INFORMATION**                                                                                                    |
| Item 1.   | Legal Proceedings                                                                                                                           |
| Item 1A.  | Risk Factors                                                                                                                                |
| Item 2.   | Unregistered  Sales of Equity Securities and Use of Proceeds                                                                                |
| Item 3.   | Defaults  Upon Senior Securities                                                                                                            |
| Item 4.   | (Removed and  Reserved)                                                                                                                     |
| Item 5.   | Other Information                                                                                                                           |
| Item 6.   | Exhibits                                                                                                                                    |
| **SIGNATURES** |

 

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**NEW ENGLAND REALTY ASSOCIATES, L.P.**

 

**PART 1 — FINANCIALINFORMATION**

 

Item1. Financial Statements

 

Theaccompanying unaudited consolidated balance sheets, statements of income,changes in partners’ capital, and cash flows and related notes thereto, havebeen prepared in accordance with generally accepted accounting principles inthe United States of America (“GAAP”) for interim financial information and inconjunction with the rules and regulations of the Securities and ExchangeCommission (“SEC”).  Accordingly, they donot include all of the disclosures required by GAAP for complete financialstatements.  The financial statementsreflect all adjustments consisting only of normal, recurring adjustments, whichare in the opinion of management, necessary for a fair presentation for theinterim periods.

 

Theconsolidated balance sheet as of December 31, 2009 has been derived fromthe audited consolidated balance sheet at that date but does not include all ofthe information and footnotes required by U.S. generally accepted accountingprinciples for complete financial statements.

 

Theaforementioned financial statements should be read in conjunction with thenotes to the aforementioned financial statements and Management’s Discussionand Analysis of Financial Condition and Results of Operations and the financialstatements and notes thereto included in New England Realty Associates L.P.’sAnnual Report on Form 10-K for the fiscal year ended December 31,2009.

 

Theresults of operations for the six month period ended June 30, 2010 are notnecessarily indicative of the results to be expected for the entire fiscal yearor any other period.

 

** NEW ENGLAND REALTY ASSOCIATES LIMITEDPARTNERSHIP AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS**

 
| ** **                                                                                   | ** ** | **June 30,  2010** | ** **  | **December 31,  2009** | ** ** |
|----------------------------------------------------------------------------------------------|------------|-------------------------|-------------|-----------------------------|------------|
| ** **                                                                                   | ** ** | **(Unaudited)**         | ** **  | **(Audited)**               | ** ** |
| **ASSETS**                                                                                   |       |                    |        |                        |       |
| Rental  Properties                                                                           |       | $                       | 94,026,488  |                        | $          | 95,971,937 |   |
| Cash  and Cash Equivalents                                                                   |       | 5,030,399               |        | 2,879,663                   |       |
| Rents  Receivable                                                                            |       | 763,898                 |        | 1,038,820                   |       |
| Real  Estate Tax Escrows                                                                     |       | 308,784                 |        | 311,582                     |       |
| Prepaid  Expenses and Other Assets                                                           |       | 3,154,584               |        | 2,857,288                   |       |
| Investments  in Unconsolidated Joint Ventures                                                |       | 22,295,882              |        | 24,964,453                  |       |
| Financing  and Leasing Fees                                                                  |       | 1,005,154               |        | 1,065,993                   |       |
| **Total  Assets**                                                                            |       | $                       | 126,585,189 |                        | $          | 129,089,736 |   |
| **LIABILITIES  AND PARTNERS’ CAPITAL**                                                  |       |                    |        |                        |       |
| Note  Payable                                                                                |       | $                       | 7,168,600   |                        | $          | 7,168,600 |   |
| Mortgage  Notes Payable                                                                      |       | 138,121,811             |        | 137,641,354                 |       |
| Accounts  Payable and Accrued Expenses                                                       |       | 2,197,871               |        | 2,195,245                   |       |
| Advance  Rental Payments and Security Deposits                                               |       | 3,414,862               |        | 3,417,361                   |       |
| **Total  Liabilities**                                                                       |       | 150,903,144             |        | 150,422,560                 |       |
|                                                                                         |       |                    |        |                        |       |
| Commitments  and Contingent Liabilities (Notes 3 and 9)                                 |       |                    |        |                        |       |
|                                                                                         |       |                    |        |                        |       |
| Partners’  Capital 131,484 and 132,346 units outstanding in 2010 and 2009, respectively |       | (24,317,955             | )           | (21,332,824                 | )          |
| **Total  Liabilities and Partners’ Capital**                                            |       | $                       | 126,585,189 |                        | $          | 129,089,736 |   |

 

See notes to consolidated financial statements.

 

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**NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP ANDSUBSIDIARIES**

 

**CONSOLIDATEDSTATEMENTS OF INCOME**

 

**(Unaudited)**

 
| ** **                                               | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|----------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                               | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| Revenues                                                 |       |                                  |       |                                |       |   |   |   |   |
| Rental  income                                           |       | $                                     | 8,116,004  |                                | $          | 8,179,090 |   | $ | 16,312,820 |   | $ | 16,544,672 |   |
| Laundry  and sundry income                               |       | 114,726                               |       | 97,257                              |       | 235,926 |   | 192,370 |   |
|                                                     |       | 8,230,730                             |       | 8,276,347                           |       | 16,548,746 |   | 16,737,042 |   |
| Expenses                                                 |       |                                  |       |                                |       |   |   |   |   |
| Administrative                                           |       | 431,564                               |       | 386,417                             |       | 922,600 |   | 852,347 |   |
| Depreciation  and amortization                           |       | 1,418,408                             |       | 1,504,877                           |       | 2,797,319 |   | 2,921,497 |   |
| Management  fees                                         |       | 341,577                               |       | 333,898                             |       | 680,219 |   | 676,787 |   |
| Operating                                                |       | 824,583                               |       | 868,593                             |       | 2,106,245 |   | 2,374,329 |   |
| Renting                                                  |       | 107,946                               |       | 83,170                              |       | 174,996 |   | 144,129 |   |
| Repairs  and maintenance                                 |       | 1,254,860                             |       | 1,167,345                           |       | 2,252,603 |   | 2,145,631 |   |
| Taxes  and insurance                                     |       | 1,041,412                             |       | 926,639                             |       | 2,119,437 |   | 1,891,506 |   |
|                                                     |       | 5,420,350                             |       | 5,270,939                           |       | 11,053,419 |   | 11,006,226 |   |
| Income  Before Other Income and Discontinued Operations  |       | 2,810,380                             |       | 3,005,408                           |       | 5,495,327 |   | 5,730,816 |   |
| Other  Income (loss)                                     |       |                                  |       |                                |       |   |   |   |   |
| Interest  income                                         |       | 1,754                                 |       | 14,228                              |       | 2,513 |   | 32,591 |   |
| Interest  expense                                        |       | (2,047,512                            | )          | (1,962,093                          | )          | (4,076,672 | ) | (3,907,240 | ) |
| Gain  on the sale of equipment                           |       | —                                |       | —                              |       | — |   | 4,190 |   |
| (Loss)  from investment in unconsolidated joint ventures |       | (1,019,074                            | )          | (281,733                            | )          | (2,018,571 | ) | (555,288 | ) |
|                                                     |       | (3,064,832                            | )          | (2,229,598                          | )          | (6,092,730 | ) | (4,425,747 | ) |
| Income  (loss) from Continuing Operations                |       | (254,452                              | )          | 775,810                             |       | (597,403 | ) | 1,305,069 |   |
| Discontinued  Operations                                 |       |                                  |       |                                |       |   |   |   |   |
| Gain  (loss) on the sale of real estate                  |       | —                                |       | 2,165                               |       | — |   | (7,009 | ) |
|                                                     |       | —                                |       | 2,165                               |       | — |   | (7,009 | ) |
| Net  Income                                              |       | $                                     | (254,542   | )                                   | $          | 777,975 |   | $ | (597,403 | ) | $ | 1,298,060 |   |
| Income  per Unit                                         |       |                                  |       |                                |       |   |   |   |   |
| Income  (loss) before discontinued operations            |       | $                                     | (1.93      | )                                   | $          | 5.84 |   | $ | (4.53 | ) | $ | 9.77 |   |
| Income  (loss) from discontinued operations              |       | —                                |       | 0.02                                |       | — |   | (0.05 | ) |
| Net  Income (Loss) per Unit                              |       | $                                     | (1.93      | )                                   | $          | 5.86 |   | $ | (4.53 | ) | $ | 9.72 |   |
| Weighted  Average Number of Units Outstanding            |       | 131,512                               |       | 132,784                             |       | 131,911 |   | 133,489 |   |

 

See notes to consolidated financial statements.

 

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**NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES**

** **

**CONSOLIDATED STATEMENTS OFCHANGES IN PARTNERS’ CAPITAL**

 

**(Unaudited)**

 
| ** **                     | ** ** | **Unit**         | ** ** | **Partner’s Capital** | ** ** |
|--------------------------------|------------|------------------|------------|----------------------------|------------|
| ** **                     | ** ** | **Limited**      | ** ** | **General**                | ** ** | ** ** | ** ** | **Treasury** | ** ** | ** ** | ** ** | **Limited** | ** ** | **General** | ** ** | ** ** | ** ** |
| ** **                     | ** ** | **Class A** | ** ** | **Class B**           | ** ** | **Partnership** | ** ** | **Subtotal** | ** ** | **Units** | ** ** | **Total** | ** ** | **Class A** | ** ** | **Class B** | ** ** | **Partnership** | ** ** | **Total** | ** ** |
| Balance, January 1,  2009 |       | 144,180          |       | 34,243                     |       | 1,802 |   | 180,225 |   | 44,974 |   | 135,251 |   | $ | (14,173,745 | ) | $ | (3,366,265 | ) | $ | (177,172 | ) | $ | (17,717,182 | ) |
| Distribution to Partners       |       | —           |       | —                     |       | — |   | — |   | — |   | — |   | (1,488,791 | ) | (353,588 | ) | (18,610 | ) | (1,860,989 | ) |
| Stock Buyback                  |       | —           |       | —                     |       | — |   | — |   | 2,468 |   | (2,468 | ) | (1,025,734 | ) | (239,738 | ) | (12,618 | ) | (1,278,090 | ) |
| Net Income                     |       | —           |       | —                     |       | — |   | — |   | — |   | — |   | 1,038,448 |   | 246,631 |   | 12,981 |   | 1,298,060 |   |
| Balance, June 30,  2009   |       | 144,180          |       | 34,243                     |       | 1,802 |   | 180,225 |   | 47,442 |   | 132,783 |   | $ | (15,649,822 | ) | $ | (3,712,960 | ) | $ | (195,419 | ) | $ | (19,558,201 | ) |
|                           |       |             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1,  2010 |       | 144,180          |       | 34,243                     |       | 1,802 |   | 180,225 |   | 47,879 |   | 132,346 |   | $ | (17,069,520 | ) | $ | (4,050,138 | ) | $ | (213,165 | ) | $ | (21,332,823 | ) |
| Distribution to Partners       |       | —           |       | —                     |       | — |   | — |   |   |   |   |   | (1,477,454 | ) | (350,895 | ) | (18,468 | ) | (1,846,817 | ) |
| Stock Buyback                  |       | —           |       | —                     |       | — |   | — |   | 862 |   | (862 | ) | (432,920 | ) | (102,591 | ) | (5,400 | ) | (540,911 | ) |
| Net (Loss)                     |       | —           |       | —                     |       | — |   | — |   |   |   |   |   | (477,923 | ) | (113,507 | ) | (5,974 | ) | (597,404 | ) |
| Balance, June 30,  2010   |       | 144,180          |       | 34,243                     |       | 1,802 |   | 180,225 |   | 48,741 |   | 131,484 |   | $ | (19,457,817 | ) | $ | (4,617,131 | ) | $ | (243,007 | ) | $ | (24,317,955 | ) |

 

See notes to consolidated financial statements.

 

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**NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES**

** **

**CONSOLIDATED STATEMENTS OF CASHFLOWS**

 

**(Unaudited)**

 
| ** **                                                                                   | ** ** | **Six Months Ended  June 30,** | ** ** |
|----------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                                                                   | ** ** | **2010**                            | ** ** | **2009** | ** ** |
|                                                                                         |       |                                |       |   |   |
| Cash  Flows from Operating Activities                                                        |       |                                |       |   |   |
| Net  income (loss)                                                                           |       | $                                   | (597,403   | ) | $ | 1,298,060 |   |
| Adjustments  to reconcile net income to net cash provided by (used in) operating  activities |       |                                |       |   |   |
| Depreciation  and amortization                                                               |       | 2,797,319                           |       | 2,921,497 |   |
| Loss  from investment in joint ventures                                                      |       | 2,018,571                           |       | 555,288 |   |
| Gain  on the sale of equipment                                                               |       | —                              |       | (4,190 | ) |
| Changes  in operating assets and liabilities                                                 |       |                                |       |   |   |
| (Increase)  decrease in rents receivable                                                     |       | 274,922                             |       | (71,914 | ) |
| (Decrease)  increase in accounts payable and accrued expense                                 |       | 2,626                               |       | (283,094 | ) |
| Decrease  in real estate tax escrow                                                          |       | 2,799                               |       | 4,129 |   |
| (Increase)  Decrease in prepaid expenses and other assets                                    |       | (297,295                            | )          | 371,865 |   |
| Increase  (Decrease) in advance rental payments and security deposits                        |       | (2,498                              | )          | 147,997 |   |
| Total  Adjustments                                                                           |       | 4,796,444                           |       | 3,641,578 |   |
| Net  cash provided by (used in) operating activities                                         |       | 4,199,041                           |       | 4,939,638 |   |
| Cash  Flows provided by (used in) Investing Activities                                       |       |                                |       |   |   |
| Net  proceeds from the sale of equipment                                                     |       | —                              |       | 20,648 |   |
| Investment  in consolidated joint venture                                                    |       | (25,000                             | )          | — |   |
| Proceeds  from unconsolidated joint ventures                                                 |       | 675,000                             |       | 167,500 |   |
| Purchase  and improvement of rental properties                                               |       | (787,727                            | )          | (1,275,163 | ) |
| Net  cash provided by (used in) investing activities                                         |       | (137,727                            | )          | (1,087,015 | ) |
| Cash  Flows provided by (used in) Financing Activities                                       |       |                                |       |   |   |
| Payment  of financing costs                                                                  |       | (3,308                              | )          | (6,549 | ) |
| Principal  payments of mortgage notes payable                                                |       | (423,664                            | )          | (409,661 | ) |
| Stock  buyback                                                                               |       | (540,911                            | )          | (1,278,090 | ) |
| Proceeds  of mortgage notes payable                                                          |       | 904,122                             |       | — |   |
| Distributions  to partners                                                                   |       | (1,846,817                          | )          | (1,860,989 | ) |
| Net  cash provided by (used in) financing activities                                         |       | (1,910,578                          | )          | (3,555,289 | ) |
| Net  Increase in Cash and Cash Equivalents                                                   |       | 2,150,736                           |       | 297,334 |   |
| Cash  and Cash Equivalents, at beginning of period                                           |       | 2,879,663                           |       | 10,752,931 |   |
| Cash  and Cash Equivalents, at end of period                                                 |       | $                                   | 5,030,399  |   | $ | 11,050,265 |   |

 

Seenotes to consolidated financial statements.

 

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**NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

 

**JUNE 30, 2010**

 

**(UNAUDITED)**

 

**NOTE 1.SIGNIFICANT ACCOUNTING POLICIES**

 

*Line ofBusiness:*  New EnglandRealty Associates Limited Partnership (“NERA” or the “Partnership”) wasorganized in Massachusetts in 1977. NERA and its subsidiaries own and operatevarious residential apartment buildings, condominium units and commercialproperties located in Massachusetts and New Hampshire. NERA has also madeinvestments in other real estate partnerships and has participated in otherreal estate related activities, primarily located in Massachusetts.

 

*AccountingStandards*: On July 1, 2009, the Financial AccountingStandards Board (“FASB”) issued the FASB Accounting Standards Codification andthe Hierarchy of Generally Accepted Accounting Principles, also known as FASBAccounting Standards Codification (“ASC 105-10”), General Accepted AccountingPrinciples (“ASC 105-10”).  ASC 105-10established the FASB Accounting Standards Codification (“Codification”) as thesingle source of authoritative U.S. GAAP recognized by the FASB to be appliedby nongovernmental entities.  Rules andinterpretive releases of the Securities and Exchange Commission (“SEC”) underauthority of federal securities laws are also sources of authoritative GAAP forSEC registrants.  The Codificationsupersedes all existing non-SEC accounting and reporting standards.  All other non -grandfathered, non-SECaccounting literature not included in the Codification will becomenon-authoritative.  Following theCodification, the FASB will not issue new standards in the form of Statements,FASB Staff Positions or Emerging Issues Task Force Abstracts.  Instead, it will issue Accounting StandardsUpdates, which will serve to update the Codification, provide backgroundinformation about the guidance and provide the basis for conclusions on thechanges to the Codification.  GAAP wasnot intended to be changed as a result of the FASB’s Codification project, butit will change the way the guidance is organized and presented.  As a result, these changes will have asignificant impact on how companies reference GAAP in their financialstatements and in their accounting policies for financial statements issued forinterim and annual periods ending after September 15, 2009.  The Partnership has implemented theCodification in this report by providing references to the Codification topics,as appropriate.

 

*Principlesof Consolidation:* The consolidated financial statements include theaccounts of NERA and its subsidiaries. NERA has a 99.67% to 100% ownershipinterest in each subsidiary except for the nine limited liability companies(the “Investment Properties” or “Joint Ventures”) in which the Partnership hasa 40 - 50% ownership interest. The consolidated group is referred to as the “Partnerships”.Minority interests are not recorded, since they are insignificant. Allsignificant intercompany accounts and transactions are eliminated inconsolidation. The Partnership accounts for its investment in theabove-mentioned Investment Properties using the equity method of consolidation.(See Note 14: Investments in Unconsolidated Joint Ventures).

 

The Partnership accounts forits investments in joint ventures using the equity method of accounting. Theseinvestments are recorded initially at cost, as Investments in UnconsolidatedJoint Ventures, and subsequently adjusted for equity in earnings and cashcontributions and distributions. The authoritative guidance on consolidationprovides guidance on the identification of entities for which control isachieved through means other than voting rights (“variable interest entities”or “VIEs”) and the determination of which business enterprise, if any, shouldconsolidate the VIE (the “primary beneficiary”).  Generally, theconsideration of whether an entity is a VIE applies when either (1) theequity investors (if any) lack one or more of the essential characteristics ofa controlling financial interest, (2) the equity investment at risk isinsufficient to finance that entity’s activities without additionalsubordinated financial support or (3) the equity investors have votingrights that are not proportionate to their economic interests and theactivities of the entity involve or are conducted on behalf of an investor witha disproportionately small voting interest.

 

On January 1, 2010, thePartnership adopted the updated provisions of ASC 810, pursuant to FASB No. 167,which amends FIN 46® to require ongoing reassessments of whether an enterpriseis the primary beneficiary of a variable interest entity.  Additionally, FASB No. 167 amends FIN46® to eliminate the quantitative approach previously required for determiningthe primary beneficiary of a variable interest entity, which was based ondetermining which enterprise absorbs the majority of the entity’s expectedlosses, receives a majority of the entity’s expected residual returns, orboth.  FASB No. 167 amends certainguidance in Interpretation 46® for determining whether an entity is a variableinterest entity. Also, FASB No. 167 amends FIN 46® to require enhanceddisclosures that will provide users of financial 

 

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statements with more transparentinformation about an enterprise’s involvement in a variable interestentity.  The enhanced disclosures arerequired for any enterprise that holds a variable interest in a variableinterest entity.  The adoption of thisguidance did not have a material impact to these financial statements.

 

*Impairment*:  On an annual basis management assesseswhether there are any indicators that the value of the Partnership’s rentalproperties or investments in unconsolidated subsidiaries may be impaired.  A property’s value is impaired only ifmanagement’s estimate of the aggregate future cash flows (undiscounted andwithout interest charges) to be generated by the property is less than thecarrying value of the property.  To theextent impairment has occurred, the loss shall be measured as the excess of thecarrying amount of the property over the fair value of the property.  The Partnership’s estimates of aggregatefuture cash flows expected to be generated by each property are based on anumber of assumptions that are subject to economic and market uncertaintiesincluding, among others, demand for space, competition for tenants, changes inmarket rental rates, and costs to operate each property.  As these factors are difficult to predict andare subject to future events that may alter management’s assumptions, thefuture cash flows estimated by management in its impairment analyses may not beachieved. The Partnership has not recognized an impairment loss since 1995.

 

*AccountingEstimates:* The preparation of the financial statements, inconformity with accounting principles generally accepted in the United State ofAmerica, requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosures of contingent assetsand liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reported period. Accordingly,actual results could differ from those estimates.

 

*RevenueRecognition:*  Rentalincome from residential and commercial properties is recognized over the termof the related lease. For residential tenants, amounts 60 days in arrearsare charged against income. The commercial tenants are evaluated on a case bycase basis. Certain leases of the commercial properties provide for increasingstepped minimum rents, which are accounted for on a straight-line basis overthe term of the lease. Concessions made on residential leases are alsoaccounted for on the straight-line basis.

 

Above-marketand below-market lease values for acquired properties are initially recordedbased on the present value (using a discount rate which reflects the risksassociated with the leases acquired) of the differences between (i) thecontractual amounts to be paid pursuant to each in-place lease and (ii) management’sestimate of fair market lease rates for each corresponding in-place lease,measured over a period equal to the remaining term of the lease forabove-market leases and the initial term plus the term of any below-marketfixed —rate renewal options for below-market leases.  The capitalized above-market lease values foracquired properties are amortized as a reduction of base rental revenue overthe remaining term of the respective leases, and the capitalized below-marketlease values are amortized as an increase to base rental revenue over theremaining initial terms plus the terms of any below-market fixed-rate renewaloptions of the respective leases.

 

*RentalProperties:*  Rentalproperties are stated at cost less accumulated depreciation. Maintenance andrepairs are charged to expense as incurred; improvements and additions arecapitalized. When assets are retired or otherwise disposed of, the cost of theasset and related accumulated depreciation is eliminated from the accounts, andany gain or loss on such disposition is included in income. Fully depreciatedassets are removed from the accounts. Rental properties are depreciated by bothstraight-line and accelerated methods over their estimated useful lives. Uponacquisition of rental property, the Partnership estimates the fair value ofacquired tangible assets, consisting of land, building and improvements, andidentified intangible assets and liabilities assumed, generally consisting ofthe fair value of (i) above and below market leases, (ii) in-placeleases and (iii) tenant relationships. The Partnership allocated the purchase price to the assets acquired andliabilities 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 purchaseconsideration of a transaction.  Inestimating the fair value of the tangible and intangible assets acquired, thePartnership considers information obtained about each property as a result ofits due diligence and marketing and leasing activities, and utilizes variousvaluation methods, such as estimated cash flow projections utilizingappropriate discount and capitalization rates, estimates of replacement costsnet of depreciation, and available market information.  The fair value of the tangible assets of anacquired property considers the value of the property as if it were vacant.

 

Otherintangible assets acquired include amounts for in-place lease values and tenantrelationship values, which are based on management’s evaluation of the specificcharacteristics of each tenant’s lease and the Partnership’s overallrelationship with the respective tenant. Factors to be considered by management in its analysis of in-place leasevalues include an estimate of carrying costs during hypothetical expectedlease-up periods considering current market conditions, and costs to executesimilar leases at market rates during the expected lease-up periods, dependingon local market conditions.  In estimatingcosts to execute similar leases, management considers leasing commissions,legal and other related expenses. Characteristics considered by management in valuing tenant relationshipsinclude the nature and extent of the Partnership’s existing business relationshipswith 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 toexpense over the 

 

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remaining initial terms ofthe respective leases.  The value oftenant relationship intangibles are amortized to expense over the anticipatedlife of the relationships.

 

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

 

*Financingand Leasing Fees:* Financing fees are capitalized and amortized, usingthe interest method, over the life of the related mortgages. Leasing fees arecapitalized and amortized on a straight-line basis over the life of the relatedlease. Unamortized balances are expensed when the corresponding fee is nolonger applicable.

 

*IncomeTaxes:* The financial statements have been prepared on the basis that NERA andits subsidiaries are entitled to tax treatment as partnerships. Accordingly, noprovision for income taxes has been recorded.

 

*CashEquivalents:* The Partnership considers cash equivalents to beall highly liquid instruments purchased with a maturity of three months orless.

 

*SegmentReporting:* Operating segments are revenue producing componentsof the Partnership for which separate financial information is producedinternally for management. Under the definition, NERA operated, for all periodspresented, as one segment.

 

*ComprehensiveIncome:* Comprehensive income is defined as changes in partners’ equity,exclusive of transactions with owners (such as capital contributions anddividends). NERA did not have any comprehensive income items in 2010 and 2009other than net income as reported.

 

*IncomePer Unit:* Net income per unit has been calculated based uponthe weighted average number of units outstanding during each period presented.The Partnership has no dilutive units and, therefore, basic net income is thesame as diluted net income per unit (see Note 7).

 

*Concentrationof Credit Risks and Financial Instruments:* The Partnership’sproperties are located in New England and the Partnership is subject to thegeneral economic risks related thereto. No single tenant accounted for morethan 5% of the Partnership’s revenues in 2010 or 2009.  The Partnership makes its temporary cashinvestments with high-credit quality financial institutions. At June 30,2010, substantially all of the Partnership’s cash and cash equivalents wereheld in interest-bearing accounts at financial institutions, earning interestat rates from 0.05% to 1.24%.  At June 30,2010 and December 31, 2009, respectively approximately $6,018,000 and$4,026,000 of cash and cash equivalents, and security deposits included inprepaid expenses and other assets exceeded federally insured amounts.

 

*AdvertisingExpense:* Advertising is expensed as incurred. Advertisingexpense was $32,661 and $38,466 for the six months ended June 30, 2010 and2009, respectively.

 

*DiscontinuedOperations and Rental Property Held for Sale:*  When assets are identified by management asheld for sale, the Partnership discontinues depreciating the assets andestimates the sales price, net of selling costs, of such assets. If, inmanagement’s opinion, the net sales price of the assets which have beenidentified as held for sale is less than the net book value of the assets, avaluation allowance is established. Properties identified as held for saleand/or sold are presented in discontinued operations for all periods presented.

 

Ifcircumstances arise that previously were considered unlikely and, as a result,the Partnership decides not to sell a property previously classified as heldfor sale, the property is reclassified as held and used. A property that isreclassified is measured and recorded individually at the lower of (a) itscarrying amount before the property was classified as held for sale, adjustedfor any depreciation (amortization) expense that would have been recognized hadthe property been continuously classified as held and used, or (b) thefair value at the date of the subsequent decision not to sell.

 

*InterestCapitalized:* The Partnership follows the policy of capitalizinginterest as a component of the cost of rental property when the time of constructionexceeds one year. During the six months ended June 30, 2010 and year endedDecember 31, 2009, there was no capitalized interest.

 

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*Extinguishmentof Debt:* When existing mortgages are refinanced with thesame lender and it is determined that the refinancing is substantiallydifferent then they are recorded as an extinguishment of debt.  However if it is determined that therefinancing is substantially the same then they are recorded as an exchange ofdebt. All refinancings qualify as extinguishment of debt.

 

*Reclassifications:*  Certain reclassifications have been made toprior period amounts in order to conform to current period presentation.

 

**NOTE 2.RENTAL PROPERTIES**

 

Asof June 30, 2010, the Partnership and its Subsidiary Partnerships owned2,269 residential apartment units in 20 residential and mixed-use complexes(collectively, the “Apartment Complexes”). The Partnership also owns 19condominium units in a residential condominium complex, all of which are leasedto residential tenants (collectively referred to as the “Condominium Units”).The Apartment Complexes and Condominium Units are located primarily in themetropolitan Boston area of Massachusetts.

 

Additionally,as of June 30, 2010, the Partnership and Subsidiary Partnerships owned acommercial shopping center in Framingham, commercial buildings in Newton andBrookline and mixed-use properties in Boston, Brockton and Newton, all inMassachusetts. These properties are referred to collectively as the “CommercialProperties.”

 

ThePartnership also owned a 40% or 50% ownership interest in nine residential andmixed use complexes (the “Investment Properties”) at June 30, 2010 with atotal of 798 residential units, two commercial spaces and one parking lot,accounted for using the equity method of consolidation. See Note 14 forsummary information on these investments.

 
| Rental properties consist of the following: |   |   |   |   |   |   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|

 
| ** **                           | ** ** | **June 30,  2010** | ** ** | **December 31,  2009** | ** ** | **Useful  Life**      | ** ** |
|--------------------------------------|------------|-------------------------|------------|-----------------------------|------------|-----------------------|------------|
| Land,  improvements and parking lots |       | $                       | 26,087,105 |                        | $          | 26,072,100            |       | 15—40 years |   |
| Buildings  and improvements          |       | 111,133,633             |       | 111,016,179                 |       | 15—40 years |       |
| Kitchen  cabinets                    |       | 4,194,322               |       | 3,977,528                   |       | 5—10 years  |       |
| Carpets                              |       | 3,818,375               |       | 3,506,481                   |       | 5—10 years  |       |
| Air  conditioning                    |       | 897,793                 |       | 882,354                     |       | 7—10 years  |       |
| Laundry  equipment                   |       | 368,369                 |       | 367,209                     |       | 5—7 years   |       |
| Elevators                            |       | 1,021,676               |       | 984,506                     |       | 20 years         |       |
| Swimming  pools                      |       | 157,489                 |       | 157,489                     |       | 10 years         |       |
| Equipment                            |       | 2,121,524               |       | 2,087,287                   |       | 5—7 years   |       |
| Motor  vehicles                      |       | 142,520                 |       | 142,520                     |       | 5 years          |       |
| Fences                               |       | 51,882                  |       | 51,882                      |       | 5—10 years  |       |
| Furniture  and fixtures              |       | 1,099,991               |       | 1,063,897                   |       | 5—7 years   |       |
| Smoke  alarms                        |       | 104,603                 |       | 102,123                     |       | 5—7 years   |       |
|                                 |       | 151,199,282             |       | 150,411,555                 |       |                  |       |
| Less  accumulated depreciation       |       | (57,172,794             | )          | (54,439,618                 | )          |                  |       |
|                                 |       | $                       | 94,026,488 |                        | $          | 95,971,937            |       |   |   |

 

**NOTE 3. RELATED PARTYTRANSACTIONS**

 

ThePartnership’s properties are managed by an entity that is owned by the majorityshareholder of the General Partner. The management fee is equal to 4% of rentalrevenue and laundry income on the majority of the Partnership’s properties and3% on Linewt.  Total management fees paidwere approximately $680,000 and $677,000 during the six months ended June 30,2010 and 2009, respectively.

 

ThePartnership Agreement permits the General Partner or Management Company tocharge the costs of professional services (such as counsel, accountants andcontractors) to NERA. During the six months ended June 30, 2010 and 2009,approximately $334,000 and $362,000 was charged to NERA for legal, accounting,construction, maintenance, rental and architectural services and supervision ofcapital improvements.  Of the 2010 expensesreferred to above, approximately $156,000 consisted of repairs and maintenanceand $167,000 of administrative expense. Approximately $11,000 of expenses forconstruction, architectural services and supervision of capital projects werecapitalized in rental properties. Additionally in 2010, the Hamilton Companyreceived approximately $331,000 from the Investment 

 

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Properties of whichapproximately $261,000 was the management fee, approximately $2,000 was forconstruction supervision and architectural fees, and approximately $56,000 wasfor maintenance services and approximately $12,000 was for administrativeservices.  The management fee is equal to4% of rental income at the majority of investment properties and 2% at DexterPark.

 

OnJanuary 1, 2004, all employees were transferred to the Management Company’spayroll. The Partnership reimburses the Management Company for the payroll andrelated expenses of the employees who work at the properties. Totalreimbursement was approximately $1,261,000 and $1,115,000 during the six monthsended June 30, 2010 and 2009, respectively. The Management Companymaintains a 401K plan for all eligible employees whereby the employees maycontribute the maximum allowed by law. The plan also provides for discretionarycontributions by the employer. There were no employer contributions in 2010 and2009.

 

Priorto 1991, the Partnership employed an outside, unaffiliated company to performits bookkeeping and accounting functions. Since that time, such services havebeen provided by the Management Company’s accounting staff, which consists ofapproximately 14 people. During the six months ended June 30, 2010, theManagement Company charged the Partnership $62,500 ($125,000 per year) forbookkeeping and accounting services included in administrative expenses of$167,000 above.

 

In1996, prior to becoming an employee of the Management Company, the President ofthe Management Company performed asset management consulting services for thePartnership. This individual continues to perform this service and receives anasset management fee from the Partnership. During the six months ended June 30, 2010, this individual received$56,250 which includes a bonus of $25,000, a quarterly fee of $12,500 for thefirst quarter of 2010 and a quarterly fee of $18,750 for the second quarter of2010. Going forward, the quarterly fee payable to this individual will be$18,750.

 

ThePartnership has invested in nine limited partnerships, which have invested inmixed use residential apartment complexes. The Partnership has a 40% or 50%ownership interest in each investment. The other investors are Harold Brown,the President of the Management Company and five other employees of theManagement Company.  Harold Brown’sownership interest is between 43.2% and 60%. See Note 14 for a descriptionof the properties and their operations.

 

SeeNote 8 for information regarding the repurchase of Class B and GeneralPartnership Units.

 

OnOctober 28, 2009, the Partnership borrowed approximately $7,168,000 withan interest rate of 6% from HBC Holdings, LLC, an entity owned by Harold Brownand his affiliates.  The term of the loanis four years with a provision requiring payment upon six month notice. Theinterest paid during the six months ended June 30, 2010 was approximately$216,000 and $78,000 for the year ended December 31, 2009. This loan iscollateralized by the Partnerships 99% ownership interest in 62 BoylstonStreet.

 

**NOTE 4.OTHER ASSETS**

 

Approximately$1,499,000 and $1,426,000 of security deposits are included in prepaid expensesand other assets at June 30, 2010 and December 31, 2009,respectively.

 

Includedin prepaid expenses and other assets at June 30, 2010 and December 31,2009 is approximately $820,000 and $829,000, respectively, held in escrow tofund future capital improvements. The security deposits and escrow accounts arerestricted cash.

 

Financingand leasing fees of approximately $1,005,000 and $1,066,000 are net ofaccumulated amortization of approximately $481,000 and $450,000 at June30, 2010and December 31, 2009, respectively.

 

**NOTE 5.MORTGAGE NOTES PAYABLE**

 

AtJune 30, 2010 and December 31, 2009, the mortgages payable consistedof various loans, all of which were secured by first mortgages on propertiesreferred to in Note 2. At June 30, 2010, the fixed interest rates onthese loans ranged from 4.84% to 7.07%, payable in monthly installmentsaggregating approximately $726,000, including principal, to various datesthrough 2023. The majority of the mortgages are subject to prepaymentpenalties.  At June 30, 2010, theweighted average interest rate on the above mortgages was 5.55%. The effectiverate of 5.64% includes the amortization expense of deferred financing costs.See Note 12 for fair value information.

 

ThePartnerships have pledged tenant leases as additional collateral for certain ofthese loans.

 

Approximateannual maturities at June 30, 2010 are as follows:

 

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| 2011—current  maturities |   | $          | 914,000     |   |
|-------------------------------|--------|------------|-------------|--------|
| 2012                          |   | 985,000    |        |
| 2013                          |   | 19,861,000 |        |
| 2014                          |   | 31,974,000 |        |
| 2015                          |   | 9,066,000  |        |
| Thereafter                    |   | 75,322,000 |        |
|                          |   | $          | 138,122,000 |   |

 

InDecember 2009, the Partnership refinanced Linhart, LLP, located in Newton,Massachusetts.  The new loan is$2,000,000, with a rate of 3.75% over the Libor rate or 4.25% whichever isgreater and matures five years from the date of closing.  The interest rate as of June 30, 2010was 4.25%.  The loan agreement calls forinterest only payments for twenty four months and principal and interestpayments for the remainder of the five year period based on a thirty year amortization.  The loan proceeds were used to pay off theprior loan of approximately $1,700,000, and closing costs of approximately$38,000.

 

OnMarch 25, 2010, the Partnership refinanced the Brookside Apartments.  The new loan is $2,820,000, matures in 2020and has an interest rate of 5.81%.  Theloan is a ten year note however it is being amortized over 30 years. Theproceeds of the loan were used to pay off the old mortgage of approximately$1,900,000.  There were no prepaymentpenalties.

 

**NOTE 6.ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS**

 

ThePartnership’s residential lease agreements may require tenants to maintain aone-month advance rental payment and/or a security deposit. At June30, 2010,amounts received for prepaid rents of approximately $1,540,000 are included incash and cash equivalents, and security deposits of approximately $1,611,000are included in other assets and are restricted cash.

 

**NOTE 7.PARTNERS’ CAPITAL**

 

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

 

In2010, the Partnership approved quarterly distributions of $7.00 per unit ($0.70per receipt) payable on March 31, June 30, and September 30,2010.

 

In2009, the Partnership paid quarterly distributions of $7.00 per unit ($0.70 perreceipt) in March, June, September, and December for a total distributionof $28.00 per unit ($2.80 per receipt).

 

ThePartnership has entered into a deposit agreement with an agent to facilitatepublic trading of limited partners’ interests in Class A Units. Under theterms of this agreement, the holders of Class A Units have the right toexchange each Class A Unit for 10 Depositary Receipts. The following isinformation per Depositary Receipt:

 
| ** **                                                             | ** ** | **Six  Months Ended   June 30,** | ** ** |
|------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                             | ** ** | **2010**                              | ** ** | **2009** | ** ** |
| Income  (loss) per Depositary Receipt before Discontinued Operations   |       | $                                     | (0.45      | ) | $ | 0.98 |   |
| Income  (loss) from Discontinued Operations                            |       | —                                |       | (0.01 | ) |
| Net  (loss)income per Depositary Receipt after Discontinued Operations |       | $                                     | (0.45      | ) | $ | 0.97 |   |
| Distributions  per Depositary Receipt                                  |       | $                                     | 1.40       |   | $ | 1.40 |   |

 

**NOTE 8.TREASURY UNITS**

 

TreasuryUnits at June 30, 2010 are as follows:

 
| Class A         |   | 38,993 |   |
|----------------------|--------|--------|--------|
| Class B         |   | 9,260  |   |
| General  Partnership |   | 488    |   |
|                 |   | 48,741 |   |

 

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OnAugust 20, 2007, NewReal, Inc., the General Partner authorized anequity repurchase program (“Repurchase Program”) under which the Partnership waspermitted to purchase, over a period of twelve months, up to 100,000 DepositaryReceipts (each of which is one-tenth of a Class A Unit).  OnJanuary 15, 2008, the General Partner authorized an increase in theRepurchase Program from 100,000 to 200,000 Depositary Receipts. OnJanuary 30, 2008 the General Partner authorized an increase the RepurchaseProgram from 200,000 to 300,000 Depositary Receipts.  On March 6,2008, the General Partner authorized the increase in the total number of DepositaryReceipts that could be repurchased pursuant to the Repurchase Program from300,000 to 500,000.  On August 8,2008, the General Partner re-authorized and renewed the Repurchase Program foran additional 12-month period ended August 19, 2009.  On March 22,2010, the General Partner re-authorized and renewed the Repurchase Program thatexpired on August 19, 2009.  Underthe terms of the renewed Repurchase Program, the Partnership may purchase up to500,000 Depositary Receipts from the start of the program in 2007 through March 31,2015.  The Repurchase Program requiresthe Partnership to repurchase a proportionate number of Class B Units andGeneral Partner Units in connection with any repurchases of any DepositaryReceipts by the Partnership based upon the 80%, 19% and 1% fixed distributionpercentages of the holders of the Class A, Class B and GeneralPartner Units under the Partnership’s Second Amended and Restate Contract ofLimited Partnership.  Repurchases of Depositary Receipts or PartnershipUnits pursuant to the Repurchase Program may be made by the Partnership fromtime to time in its sole discretion in open market transactions or in privatelynegotiated transactions.  From August 20,2007 through June 30, 2010, the Partnership has repurchased 398,320Depositary Receipts at an average price of $73.59 per receipt (or $735.90 perunderlying Class A Unit), 1,724 Class B Units and 91 GeneralPartnership Units, both at an average price of $585.05 per Unit, totalingapproximately $30,480,000 including brokerage fees paid by the Partnership.

 

OnSeptember 17, 2008, the Partnership completed the issuance of an aggregateof 6,642 Class A Units held in treasury to current holders of Class Band General Partner Units upon the simultaneous retirement to treasury of 6,309Class B Units and 333 General Partner Units pursuant to an equitydistribution plan authorized by the Board of Directors of the General Partneron August 8, 2008 and as further described under Item 3.02 of thePartnership’s Current Report on Form 8-K as filed with the Securities andExchange Commission on September 18, 2008, which is incorporated herein byreference. Harold Brown, the treasurer of the General Partner, owns 75% of theissued and outstanding Class B Units of the Partnership and 75% of theissued and outstanding equity of the General Partner, Ronald Brown, the brotherof Harold Brown and the president of the General Partner, owns 25% of theissued and outstanding Class B Units of the Partnership and 25% of theissued and outstanding equity of the General Partner.

 

OnJanuary 18, 2008, 113,518 Depositary Receipts included above becameavailable to purchase at a price of $75.50 per receipt. In order for thePartnership to take advantage of this opportunity, the Partnership borrowed$5,285,000 from Harold Brown, the Treasurer of the General Partner. This loanwas paid in full, with interest at 6% of $37,899, on February 29, 2008.

 

Duringthe six months ended June 30, 2010 the Partnership purchased 6,896receipts for $432,920, 164 Class B Units for $102,591 and 9 GeneralPartnership units for $5,400.

 

Asof June 30, 2010, the equity repurchase program described above resultedin the Partnership having a negative Partners’ Capital of approximately$24,318,000.

 

**NOTE 9.COMMITMENTS AND CONTINGENCIES**

 

Fromtime to time, the Partnerships are involved in various ordinary routinelitigation incidental to their business. The Partnership either has insurancecoverage or provides for any uninsured claims when appropriate. ThePartnerships are not involved in any material pending legal proceedings.

 

**NOTE10. RENTAL INCOME**

 

Duringthe six months ended June 30, 2010, approximately 90% of rental income wasrelated to residential apartments and condominium units with leases of one yearor less. Approximately 10% was related to commercial properties, which haveminimum future annual rental income on non-cancellable operating leases at June 30,2010 as follows:

 
| ** ** | ** ** | **Commercial  Property Leases** | ** ** |
|------------|------------|---------------------------------|------------|
| 2011       |       | $                               | 2,856,000  |   |
| 2012       |       | 2,562,000                       |       |
| 2013       |       | 1,928,000                       |       |
| 2014       |       | 1,716,000                       |       |
| 2015       |       | 1,148,000                       |       |
| Thereafter |       | 1,468,000                       |       |
|       |       | $                               | 11,678,000 |   |

 

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Theaggregate minimum future rental income does not include contingent rentals thatmay be received under various leases in connection with percentage rents,common area charges and real estate taxes. Aggregate contingent rentals fromcontinuing operations were approximately $315,000 for the six months ended June 30,2010 and approximately $583,000 for the year ended December 31, 2009.

 

Rentsreceivable are net of an allowance for doubtful accounts of approximately$689,000 at June 30, 2010 and $476,000 at December 31, 2009.  Included in rents receivable at June 30,2010 is approximately $257,000 resulting from recognizing rental income fromnon-cancelable commercial leases with future rental increases on astraight-line basis.  The majority ofthis amount is for long-term leases with Staples and Trader Joe’s at StaplesPlaza in Framingham, Massachusetts.

 

Rentsreceivable also includes approximately $238,000 representing the straight-lineof rental concessions.

 

In2010, rent at the commercial properties includes approximately $5,600 ofamortization of deferred rents arising from the fair values assigned toin-place leases upon the purchase of Cypress Street in Brookline, Massachusetts**.**

 

**NOTE11. CASH FLOW INFORMATION**

 

Duringthe six months ended June 30, 2010 and 2009, cash paid for interest wasapproximately $4,076,000, and $3,907,000 respectively.

 

**NOTE12. FAIR VALUE MEASUREMENTS**

 

FairValue Measurements on a Recurring Basis

 

AtJune 30, 2010 and December 31, 2009, we do not have any significantfinancial assets or financial liabilities that are measured at fair value on arecurring basis in our consolidated financial statements.

 

FinancialAssets and Liabilities not Measured at Fair Value

 

At June 30, 2010 and December 31,2009 the carrying amounts of certain of our financial instruments, includingcash and cash equivalents, accounts receivable, and note payable, accounts payable and accrued expenses wererepresentative of their fair values due to the short-term nature of theseinstruments or, the recent acquisition of these items.

 

At June 30, 2010 and December 31,2009, we estimated the fair value of our mortgages payable and other notesbased upon quoted market prices for the same (Level 1) or similar (Level 2)issues when current quoted market prices are available.  We estimated the fair value of our secured mortgagedebt that does not have current quoted market prices available by discountingthe future cash flows using rates currently available to us for debt withsimilar terms and maturities (Level 3). The differences in the fair value of our debt from the carrying valueare the result of differences in interest rates and/or borrowing spreads thatwere available to us at June 30, 2010 and December 31, 2009, ascompared with those in effect when the debt was issued or acquired.  The secured mortgage debt contain pre-paymentpenalties or yield maintenance provisions that could make the cost ofrefinancing the debt at lower rates exceed the benefit that would be derivedfrom doing so.

 

Thefollowing methods and assumptions were used by the Partnership in estimatingthe fair value of its financial instruments:

 

·                  For cash andcash equivalents, other assets, investment in partnerships, accounts payable,advance rents and security deposits: fair value approximates the carrying valueof such assets and liabilities.

 

·                  For mortgagenotes payable: fair value is generally based on estimated future cash flows,which are discounted using the quoted market rate from an independent sourcefor similar obligations. Refer to the table below for the carrying amount andestimated fair value of such instruments.

 

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The following table reflectsthe carrying amounts and estimated fair value of our debt.

 
| ** **                 | ** ** | **Carrying  Amount** | ** **  | **Estimated  Fair Value** | ** ** |
|----------------------------|------------|----------------------|-------------|---------------------------|------------|
| Mortgage  Notes Payable    |       |                 |        |                      |       |
| Partnership  Properties    |       |                 |        |                      |       |   |   |
| At  June 30, 2010     |       | $                    | 138,121,811 |                      | $          | 145,818,793 |   |
| At  December 31, 2009 |       | $                    | 137,641,354 |                      | $          | 139,997,718 |   |
| Investment  Properties     |       |                 |        |                      |       |   |   |
| At  June 30, 2010     |       | $                    | 141,120,762 |                      | $          | 147,050,173 |   |

 

Disclosureabout fair value of financial instruments is based on pertinent informationavailable to management as of June 30, 2010 and December 31, 2009.Although management is not aware of any factors that would significantly affectthe fair value amounts, such amounts have not been comprehensively revalued forpurposes of these financial statements since December 31, 2009 and currentestimates of fair value may differ significantly from the amounts presentedherein.

 

**NOTE13. TAXABLE INCOME AND TAX BASIS**

 

Taxableincome reportable by the Partnership and includable in its partners’ taxreturns is different than financial statement income because of a tax freeexchanges, accelerated depreciation, different tax lives, and timingdifferences related to prepaid rents, allowances and intangible assets atsignificant acquisitions. Taxable income was approximately $300,000 greaterthan statement income for the year ended December 31, 2009 andapproximately $7,500,000 less than statement income for the year ended December 31,2008. The cumulative tax basis of the Partnership’s real estate atDecember 31, 2009 is approximately $5,200,000 less than the statementbasis. The primary reason for the lower tax basis is the acquisition of Linewtand Cypress Street utilizing tax free exchanges in 2008. The Partnership’s taxbasis in its joint venture investments is approximately $1,500,000 greater thanstatement basis. Certain entities included in the Partnership’s consolidatedfinancial statements are subject to certain state taxes.  These taxes are not significant and arerecorded as operating expenses in the accompanying consolidates financialstatements.

 

ThePartnership adopted the amended provisions related to uncertain tax provisionsof ASC 740, Income Taxes.  As aresult of the implementation of the guidance, the Partnership recognized nomaterial adjustments regarding its tax accounting treatment.  The Partnership expects to recognize interestand penalties related to uncertain tax positions, if any, as income taxexpense, which would be included in general and administrative expense.

 

Inthe normal course of business the Partnership or one of its subsidiaries issubject to examination by federal, state and local jurisdictions in which itoperates, where applicable.  As of  June 30, 2010, the tax years that remainsubject to examination by the major tax jurisdictions under the statute oflimitations is from the year 2003 forward.

 

**NOTE14. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES**

 

SinceNovember 2001, the Partnership has invested in nine limited partnershipsand limited liability companies, the majority of which have invested inresidential apartment complexes, with three partnerships investing incommercial property. The Partnership has between a 40%- 50% ownership interestsin each investment. The other investors are Harold Brown, the President of theManagement Company and five other employees of the Management Company. HaroldBrown’s ownership interest is between 43.2% and 60%, with the balance owned bythe others. A description of each investment is as follows:

 

OnOctober 28, 2009 the Partnership invested approximately $15,925,000 in ajoint venture to acquire a 40% interest in a residential property located inBrookline, Massachusetts.  The property,referred to as Dexter Park, is a 409 unit residential complex. The purchaseprice was $129,500,000.  The totalmortgage is $89,914,000 with an interest rate of 5.57% and it matures in2019.  The mortgage calls for interestonly payments for the first two years of the loan and amortized over 30 yearsthereafter.  In order to fund thisinvestment, the Partnership used approximately $8,757,000 of its cash reservesand borrowed approximately $7,168,000 with an interest rate of 6% from HBC Holdings,LLC, an entity owned by Harold Brown and his affiliates.  The term of the loan is four years with aprovision requiring payment upon six months notice.  The Partnership has pledged its ownership in62 Boylston Street as security for this note.  A majority of the apartments were leased at the time of theacquisition.  As a result, thePartnership is amortizing the intangible assets associated with the “in place”leases over a 12 month period which began in November 2009.  The total monthly amortization isapproximately $407,000 which at 40% reduces the Partnership’s income byapproximately $163,000 per month. For the six months ended June 30, 2010the total amortization in connection with these leases is approximately$2,442,000, of which the Partnership’s share is approximately $976,000.  In November 2010, the intangible assetswill be fully amortized which will result in lower amortization expense.  For the six months ended June 30, 2010,the 

 

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Partnership’s share of losson Dexter Park is approximately $1,560,000. This investment, Hamilton Park Towers, LLC is referred to as DexterPark.

 

OnOctober 3, 2005, the Partnership invested $2,500,000 for a 50% ownershipinterest in a 168-unit apartment complex in Quincy, Massachusetts. The purchaseprice was $30,875,000. The Partnership plans to sell the majority of units ascondominium and retain 48 units for long-term investment. Gains from the salesof units will be taxed at ordinary income rates (approximately $47,000 perunit). In February 2007, the Partnership refinanced the 48 units whichwill be retained with a new mortgage in the amount of $4,750,000 with aninterest rate of 5.57%, interest only for five years. This investment isreferred to as Hamilton Bay Apartments, LLC. The loan will be amortized over30 years thereafter and matures in March 2017. In April 2008,the Partnership refinanced an additional 20 units and obtained a new mortgagein the amount of $2,368,000 with interest at 5.75%, interest only, whichmatures in 2013.  As of July 26,2010, the Partnership sold 105 units, the proceeds of which went to pay downthe mortgage on the property.  Thebalance on the new mortgage is approximately $1,668,000 at June 30, 2010.This investment is referred to as Hamilton Bay, LLC.

 

OnMarch 7, 2005, the Partnership invested $2,000,000 for a 50% ownershipinterest in a building comprising 49 apartments, one commercial space and a50-car surface parking lot located in Boston, Massachusetts. The purchase pricewas $14,300,000, with a $10,750,000 mortgage. The Partnership plans to operatethe building and initiate development of the parking lot.  In June 2007, the Partnership separatedthe parcels, formed an additional limited liability company for the residentialapartments and obtained a mortgage on the property. The new limited liabilitycompany formed for the residential apartments and commercial space is referredto as Hamilton Essex 81, LLC.  In August 2008,the Partnership restructured the mortgages on both parcels at Essex 81 andtransferred the residential apartments to Hamilton Essex 81, LLC.  The mortgage on Hamilton Essex 81, LLC is$8,600,000 with interest only at 5.79% due in August 2015.  The mortgage on Essex Development, LLC, orthe parking lot is $2,162,000 with a variable interest rate of 2.25% over thedaily Libor rate (0.35% at June 30, 2010) and is due in August 2011.  Harold Brown has issued a personal guarantyup to $1,000,000 of this mortgage. In the event that he is obligated to makepayments to the lender as a result of this guaranty, the Partnership and otherinvestors have, in turn, agreed to indemnify him for their proportionate shareof any such payments.  The investment inthe parking lot is referred to as Hamilton Essex Development, LLC; theinvestment in the apartments is referred to as Hamilton Essex 81, LLC.

 

OnMarch 2, 2005, the Partnership invested $2,352,000 for a 50% ownershipinterest in a 176-unit apartment complex with an additional small commercialbuilding located in Quincy, Massachusetts. The purchase price was $23,750,000.The Partnership sold 127 of the units as condominiums and retained 49 units forlong-term investment. The Partnership obtained a new 10-year mortgage in theamount of $5,000,000 on the units to be retained by the Partnership. Theinterest on the new loan is 5.67% fixed for the 10 year term with interestonly payments for five years and amortized over a 30 year period for thebalance of the loan term.   Thisinvestment is referred to as Hamilton 1025, LLC.

 

InSeptember 2004, the Partnership invested approximately $5,075,000 for a50% ownership interest in a 42-unit apartment complex located in Lexington,Massachusetts. The purchase price was $10,100,000. In October 2004, thePartnership obtained a mortgage on the property in the amount of $8,025,000 andreturned $3,775,000 to the Partnership. The Partnership obtained a new 10-yearmortgage in the amount of $5,500,000 in January 2007. The interest on thenew loan is 5.67% fixed for the ten year term with interest only payments forfive years and amortized over a 30 year period for the balance of theloan. This loan required a cash contribution by the Partnership of $1,250,000in December 2006. This investment is referred to as HamiltonMinuteman, LLC.

 

InAugust 2004, the Partnership invested $8,000,000 for a 50% ownershipinterest in a 280-unit apartment complex located in Watertown, Massachusetts.The total purchase price was $56,000,000. As of May 2008, the Partnershipsold 137 units as condominiums. Gains from these sales were taxed as ordinaryincome (approximately $50,000 per unit). The majority of the sales proceedswere applied to reduce the mortgage with the final payment made during the secondquarter of 2007. With the sale of the units and the payments of theliabilities, the assets were combined with Hamilton on Main Apartments,LLC.  An entity partially owned by themajority shareholder of the General Partner and the President of the managementcompany, 31% and 5%, respectively, was the sales agent and received a variablecommission on each sale of 3% to 5%. Hamilton on Main, LLC is known asHamilton Place.

 

In2005, Hamilton on Main Apartments, LLC obtained a ten year mortgage on thethree buildings to be retained. The mortgage is $16,825,000, with interest onlyof 5.18% for three years and amortizing on a 30 year schedule for theremaining seven years when the balance is due. The net proceeds after fundingescrow accounts and closing costs on the mortgage were approximately$16,700,000, which were used to reduce the existing mortgage. Hamilton onMain LLC paid a fee of approximately $400,000 in connection with thisearly extinguishment of debt.  At June 30,2010, the remaining balance on the mortgage is approximately $16,275,000.

 

InNovember 2001, the Partnership invested approximately $1,533,000 for a 50%ownership interest in a 40-unit apartment building in Cambridge, Massachusetts.This property has a 12-year mortgage, with a remaining balance at June 30,2010 of approximately $7,252,000

 

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at 6.9% whichis amortized on a 30-year schedule, with a final payment of approximately$6,000,000 in 2014. This investment is referred to as 345 Franklin, LLC.

 

As required by the lender, the Treasurer of the General Partner hasprovided a limited repayment guaranty equal to fifty percent (50%) of theoutstanding balance for the loan on the for sale units at Hamilton Bay and alimited guaranty of $1,000,000 for the loan on Hamilton Essex Development.  In the event that he is obligated to makepayments to the lenders as a result of these guaranties, the Partnership andother investors have, in turn, agreed to indemnify him for their proportionateshare of any such payments.

 

**Summaryfinancial information as of June 30, 2010**

 
| ** **                                                           | ** ** | **Hamilton  Essex 81** | ** ** | **Hamilton  Essex  Development** | ** ** | **345  Franklin** | ** ** | **Hamilton  1025** | ** ** | **Hamilton  Bay Sales** | ** ** | **Hamilton  Bay Apts** | ** ** | **Hamilton  Minuteman  Apts** | ** ** | **Hamilton  on Main  Apts** | ** ** | **Dexter  Park** | ** ** | **Total**       | ** ** |
|----------------------------------------------------------------------|------------|------------------------|------------|----------------------------------|------------|-------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|-------------------------------|------------|-----------------------------|------------|------------------|------------|-----------------|------------|
|                                                                 |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |             |       |            |       |
| **ASSETS**                                                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |             |       |            |       |
| Rental Properties                                                    |       | 10,021,631             |       | 2,576,552                        |       | 8,841,772         |       | 6,206,631          |       | 2,048,679               |       | 7,743,968              |       | 7,706,619                     |       | 23,294,573                  |       | 121,100,206      |       | 189,540,630     |       |
| Cash & Cash  Equivalents                                    |       | 2,630                  |       | 40,037                           |       | 1,433             |       | 5,676              |       | 23,381                  |       | 1,016                  |       | 50,165                        |       | 100,765                     |       | 649,943          |       | 875,046         |       |
| Rent Receivable                                                      |       | 30,748                 |       | —                           |       | 14,371            |       | 9,232              |       | 1,731                   |       | 3,664                  |       | 3,792                         |       | 14,223                      |       | 154,871          |       | 232,633         |       |
| Real Estate Tax Escrow                                               |       | 67,262                 |       | —                           |       | 18,929            |       | 50,556             |       | —                  |       | 78,948                 |       | 33,480                        |       | 97,753                      |       | 381,920          |       | 728,847         |       |
| Prepaid  Expenses & Other Assets                            |       | 85,714                 |       | —                           |       | 91,827            |       | 96,763             |       | 233,502                 |       | 86,797                 |       | 68,650                        |       | 387,322                     |       | 2,637,834        |       | 3,688,408       |       |
| Financing &  Leasing Fees                                   |       | 107,701                |       | 7,302                            |       | 28,579            |       | 32,211             |       | 14,167                  |       | 42,147                 |       | 25,871                        |       | 31,734                      |       | 548,053          |       | 837,766         |       |
|                                                                 |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |             |       |            |       |
| **Total  Assets**                                                    | ** ** | **10,315,687**         | ** ** | **2,623,891**                    | ** ** | **8,996,909**     | ** ** | **6,401,069**      | ** ** | **2,321,459**           | ** ** | **7,956,541**          | ** ** | **7,888,577**                 | ** ** | **23,926,371**              | ** ** | **125,472,827**  | ** ** | **195,903,331** | ** ** |
| ** **                                                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |             |       |            |       |
| **LIABILITIES  AND PARTNERS’ CAPITAL**                          |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |             |       |            |       |
|                                                                 |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |             |       |            |       |
| Mortgage Notes Payable                                               |       | 8,600,000              |       | 2,162,000                        |       | 7,251,704         |       | 5,000,000          |       | 1,668,000               |       | 4,750,000              |       | 5,500,000                     |       | 16,275,058                  |       | 89,914,000       |       | 141,120,762     |       |
| Accounts Payable&  Accrued Exp                                   |       | 54,748                 |       | 5,853                            |       | 73,038            |       | 44,985             |       | 15,775                  |       | 9,437                  |       | 73,758                        |       | 204,957                     |       | 762,024          |       | 1,244,574       |       |
| Advance Rental  Payments & Security Deposits                |       | 164,643                |       | —                           |       | 149,341           |       | 61,992             |       | 20,143                  |       | 79,758                 |       | 65,760                        |       | 241,928                     |       | 1,504,128        |       | 2,287,693       |       |
| **Total  Liabilities**                                               |       | 8,819,391              |       | 2,167,853                        |       | 7,474,083         |       | 5,106,977          |       | 1,703,918               |       | 4,839,196              |       | 5,639,517                     |       | 16,721,944                  |       | 92,180,152       |       | 144,653,029     |       |
| Partners’ Capital                                               |       | 1,496,296              |       | 456,039                          |       | 1,522,826         |       | 1,294,093          |       | 617,541                 |       | 3,117,345              |       | 2,249,060                     |       | 7,204,427                   |       | 33,292,675       |       | 51,250,301      |       |
| **Total  Liabilities and Capital**                                   | ** ** | **10,315,687**         | ** ** | **2,623,891**                    | ** ** | **8,996,909**     | ** ** | **6,401,069**      | ** ** | **2,321,459**           | ** ** | **7,956,541**          | ** ** | **7,888,577**                 | ** ** | **23,926,371**              | ** ** | **125,472,827**  | ** ** | **195,903,331** | ** ** |
| **Partners’  Capital****NERA 50%**                              | ** ** | **748,148**            | ** ** | **228,020**                      | ** ** | **761,413**       | ** ** | **647,047**        | ** ** | **308,771**             | ** ** | **1,558,673**          | ** ** | **1,124,530**                 | ** ** | **3,602,214**               | ** ** | ** **       | ** ** | **8,978,815**   | ** ** |
| **NERA  40%**                                                        | ** ** | ** **             | ** ** | ** **                       | ** ** | ** **        | ** ** | ** **         | ** ** | ** **              | ** ** | ** **             | ** ** | ** **                    | ** ** | ** **                  | ** ** | **13,317,070**   | ** ** | **13,317,070**  | ** ** |
| ** **                                                           | ** ** | ** **             | ** ** | ** **                       | ** ** | ** **        | ** ** | ** **         | ** ** | ** **              | ** ** | ** **             | ** ** | ** **                    | ** ** | ** **                  | ** ** | ** **       | ** ** | **22,295,886**  | ** ** |
|                                                                 |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |             |       |            |       |
| Total units/condominiums                                             |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |             |       |            |       |
| Apartments                                                           |       | 48                     |       | —                           |       | 40                |       | 175                |       | 120                     |       | 48                     |       | 42                            |       | 148                         |       | 409              |       | 1,030           |       |
| Commercial                                                           |       | 1                      |       | 1                                |       | —            |       | 1                  |       | —                  |       | —                 |       | —                        |       | —                      |       | —           |       | 3               |       |
| Total                                                                |       | 49                     |       | 1                                |       | 40                |       | 176                |       | 120                     |       | 48                     |       | 42                            |       | 148                         |       | 409              |       | 1,033           |       |
| Units to be retained                                                 |       | 49                     |       | 1                                |       | 40                |       | 49                 |       | —                  |       | 48                     |       | 42                            |       | 148                         |       | 409              |       | 786             |       |
| Units to be sold                                                     |       | —                 |       | —                           |       | —            |       | 127                |       | 120                     |       | —                 |       | —                        |       | —                      |       | —           |       | 247             |       |
| Units sold through  July 26, 2010                               |       | —                 |       | —                           |       | —            |       | 127                |       | 105                     |       | —                 |       | —                        |       | —                      |       | —           |       | 232             |       |
| Unsold units                                                         |       | —                 |       | —                           |       | —            |       | —             |       | 15                      |       | —                 |       | —                        |       | —                      |       |             |       | 15              |       |
| Unsold units with  deposits for future sale as of July 26, 2010 |       | —                 |       | —                           |       | —            |       | —             |       | —                  |       | —                 |       | —                        |       | —                      |       | —           |       | —          |       |

 

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**Summaryfinancial information for the six months ended June 30, 2010**

 
| ** **                     | ** ** | **Hamilton  Essex 81** | ** ** | **Hamilton  Essex  Development** | ** ** | **345  Franklin** | ** ** | **Hamilton  1025** | ** ** | **Hamilton  Bay Sales** | ** ** | **Hamilton  Bay Apts** | ** ** | **Hamilton  Minuteman  Apts** | ** ** | **Hamilton  on Main  Apts** | ** ** | **Dexter Park** | ** ** | **Total**      | ** ** |
|--------------------------------|------------|------------------------|------------|----------------------------------|------------|-------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|-------------------------------|------------|-----------------------------|------------|-----------------|------------|----------------|------------|
| **Revenues**                   |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| Rental  Income                 |       | 567,486                |       | 138,000                          |       | 551,869           |       | 398,369            |       | 106,940                 |       | 418,116                |       | 381,019                       |       | 1,223,349                   |       | 5,622,380       |       | 9,407,527      |       |
| Laundry and  Sundry Income     |       | 7,827                  |       | —                           |       | 702               |       | —             |       | —                  |       | —                 |       | 265                           |       | 10,656                      |       | 48,784          |       | 68,233         |       |
|                           |       | 575,312                |       | 138,000                          |       | 552,570           |       | 398,369            |       | 106,940                 |       | 418,116                |       | 381,284                       |       | 1,234,005                   |       | 5,671,164       |       | 9,475,760      |       |
| **Expenses**                   |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| Administrative                 |       | 7,723                  |       | (166                             | )          | 18,772            |       | 3,685              |       | 2,580                   |       | 8,076                  |       | 5,362                         |       | 21,790                      |       | 76,085          |       | 143,906        |       |
| Depreciation  and Amortization |       | 213,002                |       | 3,127                            |       | 219,651           |       | 134,840            |       | 48,064                  |       | 179,067                |       | 160,258                       |       | 490,917                     |       | 5,091,729       |       | 6,540,654      |       |
| Management  Fees               |       | 24,175                 |       | 5,520                            |       | 23,422            |       | 15,735             |       | 4,682                   |       | 16,560                 |       | 15,944                        |       | 49,048                      |       | 120,505         |       | 275,589        |       |
| Operating                      |       | 71,442                 |       | (137                             | )          | 30,631            |       | 947                |       | (138                    | )          | 313                    |       | 36,097                        |       | 181,155                     |       | 490,850         |       | 811,160        |       |
| Renting                        |       | 10,413                 |       | —                           |       | 35,100            |       | 2,968              |       | 200                     |       | 2,043                  |       | 1,892                         |       | 8,967                       |       | 123,286         |       | 184,869        |       |
| Repairs and  Maintenance       |       | 68,035                 |       | —                           |       | 29,173            |       | 126,667            |       | 50,129                  |       | 219,270                |       | 39,419                        |       | 172,544                     |       | 379,873         |       | 1,085,110      |       |
| Taxes and  Insurance           |       | 94,361                 |       | 24,244                           |       | 50,567            |       | 63,423             |       | 21,524                  |       | 75,265                 |       | 50,500                        |       | 159,532                     |       | 766,817         |       | 1,306,233      |       |
|                           |       | 489,152                |       | 32,587                           |       | 407,316           |       | 348,264            |       | 127,041                 |       | 500,593                |       | 309,472                       |       | 1,083,953                   |       | 7,049,145       |       | 10,347,522     |       |
| **Income Before Other Income** |       | 86,161                 |       | 105,413                          |       | 145,255           |       | 50,106             |       | (20,101                 | )          | (82,477                | )          | 71,812                        |       | 150,052                     |       | (1,137,981      | )          | (871,762       | )          |
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| **Other Income (Loss)**        |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| Interest  Income               |       | 2                      |       | 1                                |       | 23                |       | 45                 |       | 6,310                   |       | —                 |       | 2                             |       | 4                           |       | 5               |       | 6,396          |       |
| Interest  Expense              |       | (251,848               | )          | (30,943                          | )          | (253,576          | )          | (143,317           | )          | (48,538                 | )          | (134,628               | )          | (157,375                      | )          | (428,388                    | )          | (2,522,654      | )          | (3,971,267     | )          |
| Gain on  Sale of Real Estate   |       | —                 |       | —                           |       | —            |       | —             |       | —                  |       | 9,478                  |       | —                        |       | —                      |       | —          |       | 9,478          |       |
| Other  Income (Expenses)       |       | —                 |       | —                           |       | —            |       | —             |       | 7,721                   |       | —                 |       | —                        |       | 2,168                       |       | —          |       | 9,889          |       |
|                           |       | (251,846               | )          | (30,942                          | )          | (253,554          | )          | (143,272           | )          | (34,507                 | )          | (125,150               | )          | (157,373                      | )          | (426,216                    | )          | (2,522,649      | )          | (3,945,507     | )          |
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| **Net Income (Loss)**          | ** ** | **(165,686**           | **)**      | **74,471**                       | ** ** | **(108,299**      | **)**      | **(93,166**        | **)**      | **(54,608**             | **)**      | **(207,627**           | **)**      | **(85,561**                   | **)**      | **(276,164**                | **)**      | **(3,900,630**  | **)**      | **(4,817,270** | **)**      |
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| **Net Loss - NERA 50%**        | ** ** | **(82,843**            | **)**      | **37,236**                       | ** ** | **(54,149**       | **)**      | **(46,583**        | **)**      | **(27,304**             | **)**      | **(103,813**           | **)**      | **(42,781**                   | **)**      | **(138,082**                | **)**      | ** **      | ** ** | **(458,320**   | **)**      |
| **NERA 40%**                   | ** ** | ** **             | ** ** | ** **                       | ** ** | ** **        | ** ** | ** **         | ** ** | ** **              | ** ** | ** **             | ** ** | ** **                    | ** ** | ** **                  | ** ** | **(1,560,252**  | **)**      | **(1,560,252** | **)**      |
| ** **                     | ** ** | ** **             | ** ** | ** **                       | ** ** | ** **        | ** ** | ** **         | ** ** | ** **              | ** ** | ** **             | ** ** | ** **                    | ** ** | ** **                  | ** ** | ** **      | ** ** | **(2,018,572** | **)**      |

 

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**Summaryfinancial information for the three months ended June 30, 2010**

 
| ** **                     | ** ** | **Hamilton  Essex 81** | ** ** | **Hamilton  Essex  Development** | ** ** | **345  Franklin** | ** ** | **Hamilton  1025** | ** ** | **Hamilton  Bay Sales** | ** ** | **Hamilton  Bay Apts** | ** ** | **Hamilton  Minuteman  Apts** | ** ** | **Hamilton  on Main  Apts** | ** ** | **Dexter Park** | ** ** | **Total**      | ** ** |
|--------------------------------|------------|------------------------|------------|----------------------------------|------------|-------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|-------------------------------|------------|-----------------------------|------------|-----------------|------------|----------------|------------|
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| **Revenues**                   |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| Rental Income                  |       | 286,638                |       | 69,000                           |       | 282,484           |       | 201,108            |       | 56,173                  |       | 210,849                |       | 193,792                       |       | 605,336                     |       | 2,759,204       |       | 4,664,584      |       |
| Laundry and Sundry Income      |       | 3,777                  |       | —                           |       | 238               |       | —             |       | —                  |       | —                 |       | —                        |       | 5,296                       |       | 25,139          |       | 34,451         |       |
|                           |       | 290,415                |       | 69,000                           |       | 282,722           |       | 201,108            |       | 56,173                  |       | 210,849                |       | 193,792                       |       | 610,632                     |       | 2,784,344       |       | 4,699,035      |       |
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| **Expenses**                   |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| Administrative                 |       | 5,286                  |       | 1,007                            |       | 9,447             |       | 2,224              |       | 1,646                   |       | 3,539                  |       | 2,607                         |       | 10,254                      |       | 30,577          |       | 66,586         |       |
| Depreciation and Amortization  |       | 106,823                |       | 1,563                            |       | 109,826           |       | 67,564             |       | 24,032                  |       | 89,473                 |       | 80,213                        |       | 246,095                     |       | 2,551,371       |       | 3,276,959      |       |
| Management Fees                |       | 12,497                 |       | 2,760                            |       | 12,303            |       | 7,773              |       | 2,448                   |       | 8,272                  |       | 7,863                         |       | 24,614                      |       | 58,987          |       | 137,517        |       |
| Operating                      |       | 30,769                 |       | —                           |       | 13,527            |       | 843                |       | 35                      |       | 30                     |       | 14,326                        |       | 72,654                      |       | 192,751         |       | 324,934        |       |
| Renting                        |       | 10,413                 |       | —                           |       | 29,100            |       | 2,833              |       | 200                     |       | 1,439                  |       | 794                           |       | 5,564                       |       | 74,578          |       | 124,920        |       |
| Repairs and Maintenance        |       | 27,177                 |       | —                           |       | 16,224            |       | 62,855             |       | 13,188                  |       | 110,703                |       | 14,885                        |       | 92,776                      |       | 219,866         |       | 557,675        |       |
| Taxes and Insurance            |       | 46,034                 |       | 12,370                           |       | 23,085            |       | 31,464             |       | 10,999                  |       | 37,502                 |       | 25,507                        |       | 82,146                      |       | 384,783         |       | 653,890        |       |
|                           |       | 238,999                |       | 17,701                           |       | 213,512           |       | 175,555            |       | 52,548                  |       | 250,958                |       | 146,195                       |       | 534,102                     |       | 3,512,912       |       | 5,142,482      |       |
| **Income Before Other Income** |       | 51,416                 |       | 51,299                           |       | 69,210            |       | 25,553             |       | 3,625                   |       | (40,109                | )          | 47,597                        |       | 76,530                      |       | (728,568        | )          | (443,447       | )          |
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| **Other Income (Loss)**        |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| Interest Income                |       | 1                      |       | 1                                |       | 12                |       | 22                 |       | 3,080                   |       | —                 |       | 1                             |       | 1                           |       | —          |       | 3,119          |       |
| Interest Expense               |       | (126,604               | )          | (15,809                          | )          | (126,482          | )          | (72,051            | )          | (24,404                 | )          | (67,693                | )          | (79,127                       | )          | (214,934                    | )          | (1,270,537      | )          | (1,997,642     | )          |
| Gain on Sale of Real Estate    |       | —                 |       | —                           |       | —            |       | —             |       | —                  |       | —                 |       | —                        |       | —                      |       | —          |       | —         |       |
| Other Income (Expenses)        |       | —                 |       | —                           |       | —            |       | —             |       | —                  |       | —                 |       | —                        |       | —                      |       | —          |       | —         |       |
|                           |       | (126,603               | )          | (15,808                          | )          | (126,470          | )          | (72,029            | )          | (21,324                 | )          | (67,693                | )          | (79,127                       | )          | (214,932                    | )          | (1,270,537      | )          | (1,994,523     | )          |
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| **Net Income (Loss)**          | ** ** | **(75,187**            | **)**      | **35,491**                       | ** ** | **(57,260**       | **)**      | **(46,476**        | **)**      | **(17,699**             | **)**      | **(107,802**           | **)**      | **(31,529**                   | **)**      | **(138,402**                | **)**      | **(1,999,106**  | **)**      | **(2,437,970** | **)**      |
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            |       |           |       |
| **P&L- NERA 50%**          | ** ** | **(37,594**            | **)**      | **17,746**                       | ** ** | **(28,630**       | **)**      | **(23,238**        | **)**      | **(8,849**              | **)**      | **(53,901**            | **)**      | **(15,765**                   | **)**      | **(69,201**                 | **)**      | ** **      | ** ** | **(219,432**   | **)**      |
| **P&L- NERA 40%**          |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        | ** ** | **(799,642**    | **)**      | **(799,642**   | **)**      |
|                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |            | ** ** | **(1,019,075** | **)**      |

 

Future annualmortgage maturities at June 30, 2010 are as follows:

 
| ** **          | ** ** | **Hamilton  Essex 81** | ** ** | **Hamilton  Essex  Development** | ** ** | **Franklin  Street**     | ** ** | **1025  Hamilton** | ** ** | **Hamilton  Bay Sales** | ** ** | **Hamilton  Bay Apts** | ** ** | **Hamilton  Minuteman** | ** ** | **Hamilton on  Main** | ** ** | **Hamilton  Park  Towers** | ** ** | ** **  | ** ** |
|---------------------|------------|------------------------|------------|----------------------------------|------------|--------------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|-------------------------|------------|-----------------------|------------|----------------------------|------------|-------------|------------|
| **Period End**      | ** ** | **March  2005**        | ** ** | **March  2005**                  | ** ** | **November   2001** | ** ** | **March  2005**    | ** ** | **October  2005**       | ** ** | **October  2005**      | ** ** | **August  2004**        | ** ** | **August 2004**  | ** ** | **October  2009**          | ** ** | **Total**   | ** ** |
| June 30, 2011  |       | 91,070                 |       |                             |       | 152,375                  |       |               |       |                    |       |                   |       |                    |       | 255,069               |       |                       |       | 498,514     |       |
| June 30, 2012  |       | 115,231                |       | 2,162,000                        |       | 163,228                  |       | 35,232             |       |                    |       | 20,668                 |       | 33,648                  |       | 271,154               |       | 789,756                    |       | 3,590,917   |       |
| June 30, 2013  |       | 122,083                |       |                             |       | 174,853                  |       | 63,301             |       | 1,668,000               |       | 64,350                 |       | 69,329                  |       | 285,743               |       | 1,240,873                  |       | 3,688,532   |       |
| June  30, 2014 |       | 129,342                |       |                             |       | 6,761,248                |       | 67,037             |       |                    |       | 68,027                 |       | 73,421                  |       | 301,118               |       | 1,311,782                  |       | 8,711,975   |       |
| June 30, 2015  |       | 137,033                |       |                             |       |                     |       | 70,994             |       |                    |       | 71,915                 |       | 77,755                  |       | 15,161,974            |       | 1,386,742                  |       | 16,906,413  |       |
| Thereafter          |       | 8,005,241              |       |                             |       |                     |       | 4,763,436          |       |                    |       | 4,525,040              |       | 5,245,847               |       |                  |       | 85,184,847                 |       | 107,724,411 |       |
|                |       | 8,600,000              |       | 2,162,000                        |       | 7,251,704                |       | 5,000,000          |       | 1,668,000               |       | 4,750,000              |       | 5,500,000               |       | 16,275,058            |       | 89,914,000                 |       | 141,120,762 |       |

 

19

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**Summary financial information asof June 30, 2009**

 
| ** **                                                           | ** ** | **Hamilton  Essex 81** | ** ** | **Hamilton  Essex  Development** | ** ** | **345  Franklin** | ** ** | **Hamilton  1025** | ** ** | **Hamilton  Bay Sales** | ** ** | **Hamilton  Bay Apts** | ** ** | **Hamilton  Minuteman  Apts** | ** ** | **Hamilton  on Main  Apts** | ** ** | **Total**  | ** ** |
|----------------------------------------------------------------------|------------|------------------------|------------|----------------------------------|------------|-------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|-------------------------------|------------|-----------------------------|------------|------------|------------|
| **ASSETS**                                                           |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |       |       |
| Rental Properties                                                    |       | 10,402,640             |       | 2,576,552                        |       | 9,183,178         |       | 6,479,101          |       | 2,136,485               |       | 8,101,204              |       | 8,069,672                     |       | 24,488,055                  |       | 71,436,887 |       |
| Cash & Cash  Equivalents                                    |       | 49,965                 |       | 12,480                           |       | 3,694             |       | 14,674             |       | 65,564                  |       | 1,215                  |       | 12,129                        |       | 201,073                     |       | 360,795    |       |
| Rent Receivable                                                      |       | 16,635                 |       | 3,050                            |       | 1,890             |       | 1,000              |       | 1,141                   |       | 1,679                  |       | (1,794                        | )          | 14,828                      |       | 38,429     |       |
| Real Estate Tax Escrow                                               |       | 54,935                 |       | —                           |       | 24,702            |       | 24,268             |       | —                  |       | 49,330                 |       | 46,941                        |       | 98,177                      |       | 298,353    |       |
| Due From Investment  Properties                                      |       | 100,000                |       | —                           |       | —            |       | 70,000             |       | 100,713                 |       | 40,000                 |       | —                        |       | 210,000                     |       | 520,713    |       |
| Prepaid  Expenses & Other Assets                            |       | 68,261                 |       | 1,095                            |       | 80,089            |       | 79,571             |       | 223,791                 |       | 55,924                 |       | 64,778                        |       | 304,337                     |       | 877,846    |       |
| Financing &  Leasing Fees                                   |       | 130,893                |       | 13,555                           |       | 36,745            |       | 37,238             |       | 19,231                  |       | 48,509                 |       | 30,222                        |       | 38,902                      |       | 355,295    |       |
| **Total Assets**                                                     |       | 10,823,329             |       | 2,606,733                        |       | 9,330,298         |       | 6,705,852          |       | 2,546,925               |       | 8,297,861              |       | 8,221,948                     |       | 25,355,372                  |       | 73,888,318 |       |
| **LIABILITIES AND PARTNERS’  CAPITAL**                          |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |       |       |
| Mortgage Notes Payable                                               |       | 8,600,000              |       | 2,162,000                        |       | 7,393,948         |       | 5,000,000          |       | 1,668,000               |       | 4,750,000              |       | 5,500,000                     |       | 16,519,346                  |       | 51,593,294 |       |
| Due to Investment  Properties                                        |       | —                 |       | —                           |       | 405,000           |       |               |       | 44,000                  |       | 26,713                 |       | 25,000                        |       | 20,000                      |       | 520,713    |       |
| Accounts  Payable & Accrued Expense                         |       | 103,417                |       | 9,236                            |       | 67,429            |       | 4,497              |       | 18,338                  |       | 47,103                 |       | 42,694                        |       | 186,482                     |       | 479,196    |       |
| Advance Rental  Pymts & Security Dep                        |       | 148,663                |       | —                           |       | 130,827           |       | 58,231             |       | 17,480                  |       | 78,709                 |       | 50,584                        |       | 208,969                     |       | 693,463    |       |
| Total Liabilities                                                    |       | 8,852,080              |       | 2,171,236                        |       | 7,997,204         |       | 5,062,728          |       | 1,747,818               |       | 4,902,525              |       | 5,618,278                     |       | 16,934,797                  |       | 53,286,666 |       |
| Partners’ Capital                                               |       | 1,971,249              |       | 435,497                          |       | 1,333,094         |       | 1,643,124          |       | 799,107                 |       | 3,395,336              |       | 2,603,670                     |       | 8,420,575                   |       | 20,601,652 |       |
| **Total Liabilities and Capital**                                    |       | 10,823,329             |       | 2,606,733                        |       | 9,330,298         |       | 6,705,853          |       | 2,546,925               |       | 8,297,861              |       | 8,221,948                     |       | 25,355,372                  |       | 73,888,318 |       |
| **Partners’ Capital—NERA 50%**                             |       | 985,625                |       | 217,748                          |       | 666,547           |       | 821,562            |       | 399,553                 |       | 1,697,668              |       | 1,301,835                     |       | 4,210,287                   |       | 10,300,826 |       |
|                                                                 |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |       |       |
| Total units/condominiums                                             |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |       |       |
| Apartments                                                           |       | 48                     |       | —                           |       | 40                |       | 175                |       | 120                     |       | 48                     |       | 42                            |       | 148                         |       | 621        |       |
| Commercial                                                           |       | 1                      |       | 1                                |       | —            |       | 1                  |       | —                  |       | —                 |       | —                        |       | —                      |       | 3          |       |
| Total                                                                |       | 49                     |       | 1                                |       | 40                |       | 176                |       | 120                     |       | 48                     |       | 42                            |       | 148                         |       | 624        |       |
| Units to be retained                                                 |       | 49                     |       | 1                                |       | 40                |       | 49                 |       | —                  |       | 48                     |       | 42                            |       | 148                         |       | 377        |       |
| Units to be sold                                                     |       | —                 |       | —                           |       | —            |       | 127                |       | 120                     |       | —                 |       | —                        |       | —                      |       | 247        |       |
| Units sold through  July 27, 2009                               |       | —                 |       | —                           |       | —            |       | 127                |       | 105                     |       | —                 |       | —                        |       | —                      |       | 232        |       |
| Balance of unsold units                                              |       | —                 |       | —                           |       | —            |       | —             |       | 15                      |       | —                 |       | —                        |       | —                      |       | 15         |       |
| Unsold units with  deposits for future sale as of July 27, 2009 |       | —                 |       | —                           |       | —            |       | —             |       | —                  |       | —                 |       | —                        |       | —                      |       | —     |       |

 

20

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**Summary financial information forthe six months ended June 30, 2009**

 
| ** **                          | ** ** | **Hamilton  Essex 81** | ** ** | **Hamilton  Essex  Development** | ** ** | **345  Franklin** | ** ** | **Hamilton  1025** | ** ** | **Hamilton  Bay Sales** | ** ** | **Hamilton  Bay Apts** | ** ** | **Hamilton  Minuteman  Apts** | ** ** | **Hamilton  on Main  Apts** | ** ** | **Total**  | ** ** |
|-------------------------------------|------------|------------------------|------------|----------------------------------|------------|-------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|-------------------------------|------------|-----------------------------|------------|------------|------------|
| **Revenues**                        |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |       |       |
| Rental Income                       |       | 608,507                |       | 148,298                          |       | 558,956           |       | 403,934            |       | 113,977                 |       | 399,916                |       | 377,985                       |       | 1,202,838                   |       | 3,814,411  |       |
| Laundry and Sundry  Income          |       | 1,892                  |       | —                           |       | 1,293             |       | —             |       | —                  |       | —                 |       | 567                           |       | 11,165                      |       | 14,917     |       |
|                                |       | 610,399                |       | 149,298                          |       | 560,249           |       | 403,934            |       | 113,977                 |       | 399,916                |       | 378,552                       |       | 1,214,003                   |       | 3,829,328  |       |
| **Expenses**                        |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |       |       |
| Administrative                      |       | 8,322                  |       | 9,752                            |       | 11,169            |       | 9,038              |       | 4,176                   |       | 7,955                  |       | 6,180                         |       | 16,743                      |       | 73,335     |       |
| Depreciation and  Amortization      |       | 216,111                |       | 1,919                            |       | 213,238           |       | 156,149            |       | 53,068                  |       | 199,157                |       | 228,756                       |       | 749,370                     |       | 1,817,768  |       |
| Management Fees                     |       | 24,942                 |       | 5,541                            |       | 22,591            |       | 16,024             |       | 4,478                   |       | 15,571                 |       | 14,308                        |       | 49,370                      |       | 152,825    |       |
| Operating                           |       | 70,264                 |       | —                           |       | 31,680            |       | 1,409              |       | 130                     |       | 3,718                  |       | 46,721                        |       | 186,701                     |       | 340,623    |       |
| Renting                             |       | 15,500                 |       | —                           |       | 22,550            |       | 2,998              |       | —                  |       | 810                    |       | 2,615                         |       | 7,365                       |       | 51,838     |       |
| Repairs and Maintenance             |       | 52,000                 |       | 3,930                            |       | 39,520            |       | 132,597            |       | 29,876                  |       | 131,500                |       | 38,394                        |       | 136,782                     |       | 564,599    |       |
| Taxes and Insurance                 |       | 61,985                 |       | 44,300                           |       | 39,685            |       | 75,524             |       | 24,063                  |       | 86,154                 |       | 50,680                        |       | 149,695                     |       | 532,086    |       |
|                                |       | 449,124                |       | 65,442                           |       | 380,433           |       | 393,739            |       | 115,791                 |       | 444,865                |       | 387,654                       |       | 1,296,026                   |       | 3,533,074  |       |
| **Income Before Other Income**      |       | 161,275                |       | 82,856                           |       | 179,816           |       | 10,195             |       | (1,814                  | )          | (44,949                | )          | (9,102                        | )          | (82,023                     | )          | 296,255    |       |
| **Other Income (Loss)**             |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |       |       |
| Interest Expense                    |       | (251,915               | )          | (32,632                          | )          | (258,482          | )          | (143,315           | )          | (50,836                 | )          | (134,516               | )          | (157,348                      | )          | (435,009                    | )          | (1,464,053 | )          |
| Interest Income                     |       | 2                      |       | —                           |       | 29                |       | 35                 |       | 7,510                   |       | —                 |       | —                        |       | 2                           |       | 7,578      |       |
| Gain on Sale of Real  Estate        |       | —                 |       | —                           |       | —            |       | —             |       | 49,646                  |       | —                 |       | —                        |       | —                      |       | 49,646     |       |
|                                |       | (251,913               | )          | (32,632                          | )          | (258,453          | )          | (143,280           | )          | 6,320                   |       | (134,516               | )          | (157,348                      | )          | (435,007                    | )          | (1,406,829 | )          |
| **Net Income (Loss)**               |       | (90,638                | )          | 50,224                           |       | (78,637           | )          | (133,085           | )          | 4,506                   |       | (179,465               | )          | (166,450                      | )          | (517,030                    | )          | (1,110,575 | )          |
| **Net Income (loss)—NERA 50%** |       | (45,319                | )          | 25,112                           |       | (39,319           | )          | (66,543            | )          | 2,253                   |       | (89,733                | )          | (83,225                       | )          | (258,515                    | )          | (555,288   | )          |

 

**Summary financial information forthe three months ended June 30, 2009**

 
| ** **                          | ** ** | **Hamilton  Essex 81** | ** ** | **Hamilton  Essex  Development** | ** ** | **345  Franklin** | ** ** | **Hamilton  1025** | ** ** | **Hamilton  Bay Sales** | ** ** | **Hamilton  Bay Apts** | ** ** | **Hamilton  Minuteman  Apts** | ** ** | **Hamilton  on Main  Apts** | ** ** | **Total** | ** ** |
|-------------------------------------|------------|------------------------|------------|----------------------------------|------------|-------------------|------------|--------------------|------------|-------------------------|------------|------------------------|------------|-------------------------------|------------|-----------------------------|------------|-----------|------------|
| **Revenues**                        |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |      |       |
| Rental Income                       |       | 266,179                |       | 72,050                           |       | 279,904           |       | 199,310            |       | 55,567                  |       | 204,043                |       | 187,040                       |       | 590,792                     |       | 1,854,885 |       |
| Laundry and Sundry  Income          |       | 1,299                  |       | —                           |       | 691               |       | —             |       | —                  |       | —                 |       | 238                           |       | 4,928                       |       | 7,156     |       |
|                                |       | 267,478                |       | 72,050                           |       | 280,595           |       | 199,310            |       | 55,567                  |       | 204,043                |       | 187,278                       |       | 595,720                     |       | 1,862,041 |       |
| **Expenses**                        |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |      |       |
| Administrative                      |       | 5,601                  |       | 7,628                            |       | 5,072             |       | 4,926              |       | 2,711                   |       | 2,903                  |       | 3,409                         |       | 6,040                       |       | 38,290    |       |
| Depreciation and  Amortization      |       | 108,140                |       | 1,563                            |       | 107,997           |       | 78,239             |       | 26,534                  |       | 100,775                |       | 114,378                       |       | 374,806                     |       | 912,432   |       |
| Management Fees                     |       | 10,503                 |       | 2,760                            |       | 11,063            |       | 7,939              |       | 2,125                   |       | 7,978                  |       | 7,103                         |       | 24,467                      |       | 73,938    |       |
| Operating                           |       | 30,264                 |       | —                           |       | 12,504            |       | 706                |       | 69                      |       | 300                    |       | 18,961                        |       | 74,233                      |       | 137,037   |       |
| Renting                             |       | 9,650                  |       | —                           |       | 7,880             |       | 1,733              |       | —                  |       | 270                    |       | 1,716                         |       | 3,309                       |       | 24,558    |       |
| Repairs and Maintenance             |       | 27,959                 |       | 3,600                            |       | 26,472            |       | 65,067             |       | 14,920                  |       | 65,816                 |       | 21,081                        |       | 69,154                      |       | 294,069   |       |
| Taxes and Insurance                 |       | 24,937                 |       | 22,307                           |       | 22,284            |       | 37,770             |       | 12,031                  |       | 43,550                 |       | 26,066                        |       | 74,526                      |       | 263,471   |       |
|                                |       | 217,054                |       | 37,858                           |       | 193,272           |       | 196,380            |       | 58,390                  |       | 221,592                |       | 192,714                       |       | 626,535                     |       | 1,743,795 |       |
| **Income Before Other Income**      |       | 50,424                 |       | 34,192                           |       | 87,323            |       | 2,930              |       | (2,823                  | )          | (17,549                | )          | (5,437                        | )          | (30,815                     | )          | 118,246   |       |
| **Other Income (Loss)**             |       |                   |       |                             |       |              |       |               |       |                    |       |                   |       |                          |       |                        |       |      |       |
| Interest Expense                    |       | (126,641               | )          | (16,203                          | )          | (128,972          | )          | (72,076            | )          | (24,673                 | )          | (67,641                | )          | (79,104                       | )          | (218,338                    | )          | (733,648  | )          |
| Interest Income                     |       | —                 |       | —                           |       | 14                |       | 18                 |       | 2,570                   |       | —                 |       | —                        |       | 1                           |       | 2,603     |       |
| Gain on Sale of Real  Estate        |       | —                 |       | —                           |       | —            |       | —             |       | 49,336                  |       | —                 |       | —                        |       | —                      |       | 49,336    |       |
|                                |       | (126,641               | )          | (16,203                          | )          | (128,958          | )          | (72,058            | )          | 27,233                  |       | (67,641                | )          | (79,104                       | )          | (218,337                    | )          | (681,709  | )          |
| **Net Income (Loss)**               |       | (76,217                | )          | 17,989                           |       | (41,635           | )          | (69,128            | )          | 24,410                  |       | (85,190                | )          | (84,540                       | )          | (249,152                    | )          | (563,463  | )          |
| **Net Income (loss)—NERA 50%** |       | (38,109                | )          | 8,995                            |       | (20,817           | )          | (34,564            | )          | 12,205                  |       | (42,595                | )          | (42,270                       | )          | (124,576                    | )          | (281,732  | )          |

 

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**NOTE 15. IMPACT OFRECENTLY-ISSUED ACCOUNTING STANDARDS**

 

**FASB Accounting Standards Update No. 2010-02,Consolidation (Topic 810), *Accounting and Reportingfor Decreases in Ownership of a Subsidiary — a Scope Clarification***

 

The objective of this Updateis to address implementation issues related to the changes in ownershipprovisions in the Consolidation — Overall Subtopic (Subtopic 810-10) of *FASB Accounting Standards Codification*, originally issued asFASB Statement No. 160, *Noncontrolling Interestsin Consolidated Financial Statements*.  Subtopic 810-10 establishes the accountingand reporting guidance for noncontrolling interests and changes in ownershipinterests of a subsidiary.  An entity isrequired to deconsolidate a subsidiary when the entity ceases to have acontrolling financial interest in the subsidiary.  Upon deconsolidation of a subsidiary, anentity recognizes a gain or loss on the transaction and measures retainedinvestment in the subsidiary at fair value. The gain or loss includes any gain or loss associated with thedifference between the fair value of the retained investment in the subsidiaryand its carrying amount at the date the subsidiary is deconsolidated.  In contrast, an entity is required to accountfor a decrease in its ownership interest of a subsidiary that does not resultin a change of control of the subsidiary as an equity transaction.  The adoption of this Update did not have amaterial impact on the Partnership’s financial position, results of operationsand disclosures contained in its financial statements.

 

**ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

Thefollowing discussion should be read in conjunction with the financialstatements and notes thereof appearing elsewhere in this Report.  This Report, on Form 10-Q, containsforward-looking statements within the meaning of the securities law.  Actual results or developments could differmaterially from those projected in such statements as a result of certainfactors set forth in the section below entitles “Factors That May AffectFuture Results” and elsewhere in this Report.

 

Thereal estate market in the Greater Boston area has softened, and the Partnershipanticipates the climate will remain the same in the foreseeable future. Thismay result in increases in vacancy rates and/or a reduction in some rents. ThePartnership believes its present cash reserves as well as anticipated rentalrevenue will be sufficient to fund its current operations, finance currentplanned improvements to its properties, and continue distribution payments inthe foreseeable future. Continued deterioration and/or loss of a significantcommercial tenant may result in the Partnership recording an impairment loss inthe future.

 

Sincethe Partnership’s long-term goals include the acquisition of additionalproperties, a portion of the proceeds from the refinancing and sale ofproperties is reserved for this purpose. The Partnership will considerrefinancing or selling existing properties if the Partnership’s cash reservesare insufficient to repay existing mortgages or if the Partnership needsadditional funds for future acquisitions.

 

Management believes that thefinancial difficulties experienced since the lending crisis in 2007 willcontinue and recovery will take longer than previous recessions.  Management also believes that while thenational recession has academically ended and the credit markets have begun toemerge from their dormancy, the recovery at the local level will be slow andsteady.  The Greater Boston MetropolitanArea, the Partnership’s primary market, continues to experience highunemployment levels and continued downsizing by many corporations and webelieve the conditions will not begin improving until the fourth quarter of2010.

 

During the six months ended June 30,2010, the Partnership’s rental income decreased approximately 1.4% from thesame period in 2009.  Management believesthat the modest decline will abate during the fourth quarter 2010 as the rentalmarket tightens.  Occupancy continues toremain above 95 % for the quarter and bad debt did not rise to levelspreviously anticipated by Management. Expenses increased less than 1%, the most significant increase was inreal estate taxes and insurance. Operating expenses declined due to a drop in utility costs as the resultof the ongoing capital improvements in heating equipment.  Property management’s focus on tenantretention and curb appeal is having an impact on occupancy and lower turnovercosts.  Management believes that thesecollective efforts will improve results for the remainder of 2010.  Management is satisfied with the performanceof its latest Joint Venture acquisition, Dexter Park.

 

The Stock Repurchase Programthat was initiated in 2007 has purchased 398,320 Depository Receipts through June 2010.  Given the lack of alternative investments,liquidity markets and the current share price, Management continues to supportthe buyback program and believes it to be accretive to the remainingshareholders.  Management continues to beactive bidding on commercial real estate within Massachusetts and remainspoised to acquire real estate it deems opportune given the 

 

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current selling andfinancing environment.

 

ThePartnership has retained The Hamilton Company (“Hamilton”) to manage and administerthe Partnership’s and Joint Ventures’ Properties. Hamilton is a full-servicereal estate management company, which has legal, construction, maintenance,architectural, accounting and administrative departments. The Partnership’sproperties represent approximately 40% of the total properties and 70% of theresidential properties managed by Hamilton. Substantially all of the otherproperties managed by Hamilton are owned, wholly or partially, directly orindirectly, by Harold Brown. The Partnership’s Second Amended and RestatedContract of Limited Partnership (the “Partnership Agreement”) expresslyprovides that the general partner may employ a management company to manage theproperties, and that such management company may be paid a fee of 4% of rentalreceipts for administrative and management services (the “Management Fee”). ThePartnership pays Hamilton the full annual Management Fee, in monthlyinstallments (2% at Hamilton Park Towers).

 

AtJune 30, 2010, Harold Brown, his brother Ronald Brown and the President ofHamilton, Carl Valeri, collectively own approximately 39% of the DepositaryReceipts representing the Partnership Class A Units (including DepositaryReceipts held by trusts for the benefit of such persons’ family members).Harold Brown also owns 75% of the Partnership’s Class B Units, 75% of thecapital stock of NewReal, Inc. (“NewReal”), the Partnership’s sole generalpartner, and all of the outstanding stock of Hamilton. Ronald Brown also owns25% of the Partnership’s Class B Units and 25% of NewReal’s capital stock.In addition, Ronald Brown is the President and director of NewReal and HaroldBrown is NewReal’s Treasurer and a director. Two of NewReal’s other directors,Roberta Ornstein and Conrad DiGregorio, also own immaterial amounts of thePartnership’s Class A Units or receipts.

 

Inaddition to the Management Fee, the Partnership Agreement further provides forthe employment of outside professionals to provide services to the Partnershipand allows NewReal to charge the Partnership for the cost of employingprofessionals to assist with the administration of the Partnership’sproperties. Additionally, from time to time, the Partnership pays Hamilton forrepairs and maintenance services, legal services, construction services andaccounting services. The costs charged by Hamilton for these services are atthe same hourly rate charged to all entities managed by Hamilton, andmanagement believes such rates are competitive in the marketplace.

 

Hamilton accounted forapproximately 7% of the repair and maintenance expense paid for by thePartnership in the six months ended June 30, 2010 and 3% for the yearended December 31, 2009. Of the funds paid to Hamilton for this purpose,the great majority was to cover the cost of services provided by the Hamiltonmaintenance department, including plumbing, electrical, carpentry services, andsnow removal for those properties close to Hamilton’s headquarters. However,several of the larger Partnership properties have their own maintenance staff.Further, those properties that do not have their own maintenance staff and arelocated more than a reasonable distance from Hamilton’s headquarters inAllston, Massachusetts are generally serviced by local, independent companies.

 

Hamilton’slegal department handles most of the Partnership’s eviction and collectionmatters. Additionally, it prepares most long-term commercial lease agreementsand represents the Partnership in selected purchase and sale transactions.Overall, Hamilton provided approximately 75% of the legal services paid for bythe Partnership during the six months ended June 30, 2010 and for the yearended December 31, 2009.

 

Additionally,as described in Note 3 to the consolidated financial statements, TheHamilton Company receives similar fees from the Investment Properties.

 

ThePartnership requires that three bids be obtained for construction contracts inexcess of $5,000. Hamilton may be one of the three bidders on a particularproject and may be awarded the contract if its bid and its ability tosuccessfully complete the project are deemed appropriate. For contracts thatare not awarded to Hamilton, Hamilton charges the Partnership a constructionsupervision fee equal to 5% of the contract amount. Hamilton’s architecturaldepartment also provides services to the Partnership on an as-needed basis.During the six months ended June 30, 2010 and 2009, the construction andarchitectural service provided to the Partnership by Hamilton wasinsignificant.

 

Priorto 1991, the Partnership employed an outside, unaffiliated company to performits bookkeeping and accounting functions. Since that time, such services havebeen provided by Hamilton’s accounting staff, which consists of approximately14 people. During the six months ended June 30, 2010, Hamilton charged thePartnership $62,500 ($125,000 per year) for bookkeeping and accountingservices.

 

Formore information on related party transactions, see Note 3 to theConsolidated Financial Statements.

 

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**CRITICALACCOUNTING POLICIES AND ESTIMATES**

 

Thepreparation of the consolidated financial statements, in accordance withaccounting principles generally accepted in the United States of America,requires the Partnership to make estimates and judgments that affect thereported amounts of assets, liabilities, revenues and expenses and relateddisclosures of contingent assets and liabilities. The Partnership regularly andcontinually evaluates its estimates, including those related to acquiring,developing and assessing the carrying values of its real estate properties andits investments in and advances to joint ventures. The Partnership bases itsestimates on historical experience, current market conditions, and on variousother assumptions that are believed to be reasonable under the circumstances.However, because future events and their effects cannot be determined withcertainty, the determination of estimates requires the exercise of judgment.The Partnership’s critical accounting policies are those which requireassumptions to be made about such matters that are highly uncertain. Differentestimates could have a material effect on the Partnership’s financial results.Judgments and uncertainties affecting the application of these policies andestimates may result in materially different amounts being reported underdifferent conditions and circumstances. See Note 1 to the ConsolidatedFinancial Statements, Principles of Consolidation.

 

*RevenueRecognition:*  Rentalincome from residential and commercial properties is recognized over the termof the related lease. For residential tenants, amounts 60 days in arrearsare charged against income. The commercial tenants are evaluated on a case bycase basis. Certain leases of the commercial properties provide for increasingstepped minimum rents, which are accounted for on a straight-line basis overthe term of the lease.

 

*RentalProperties: *Rentalproperties are stated at cost less accumulated depreciation.  Maintenance and repairs are charged toexpense as incurred; improvements and additions are capitalized.  When assets are retired or otherwise disposedof, the cost of the asset and related accumulated depreciation is eliminatedfrom the accounts, and any gain or loss on such disposition is included inincome.  Fully depreciated assets areremoved from the accounts.  Rentalproperties are depreciated by both straight-line and accelerated methods overtheir estimated useful lives.  Uponacquisition of rental property, the Partnership estimates the fair value ofacquired tangible assets, consisting of land, building and improvements, andidentified intangible assets and liabilities assumed, generally consisting ofthe fair value of (i) above and below market leases, (ii) in-placeleases and (iii) tenant relationships. The Partnership allocates the purchase price to the assets acquired andliabilities 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 purchaseconsideration of a transaction.  Inestimating the fair value of the tangible and intangible assets acquired, thePartnership considers information obtained about each property as a result ofits due diligence and marketing and leasing activities, and utilizes variousvaluation methods, such as estimated cash flow projections utilizingappropriate discount and capitalization rates, estimates of replacement costs netof depreciation, and available market information.  The fair value of the tangible assets of anacquired property considers the value of the property as if it were vacant.

 

Otherintangible assets acquired include amounts for in-place lease values and tenantrelationship values, which are based on management’s evaluation of therespective tenant.  Factors to beconsidered by management in its analysis of in-place lease values include aestimate of carrying costs during hypothetical expected lease-up periodsconsidering current market conditions, and costs to execute similar leases atmarket rates during the expected lease-up periods, depending on local marketconditions.  In estimating costs toexecute similar leases, management considers leasing commissions, legal andother related expenses.  Characteristicsconsidered by management in valuing tenant relationships included the natureand extent of the Partnership’s existing business relationships with thetenant, growth prospects for developing new business with the tenant, thetenant’s credit quality and expectations of lease renewals.  The value of in-place leases are amortized toexpense over the remaining initial terms of the respective leases.  The value of tenant relationship intangiblesare amortized to expense over the anticipated life of the relationships.

 

Inthe event that facts and circumstances indicate that the carrying value of arental property may be impaired, analysis of the value is prepared.  The estimated future undiscounted cash flowsare compared to the asset’s carrying value to determine if a write-down isrequired.

 

*Impairment*:  On an annual basis management assesseswhether there are any indicators that the value of the Company’s rentalproperties may be impaired.  A property’svalue is impaired only if management’s estimate of the aggregate future cashflows (undiscounted and without interest charges) to be generated by theproperty is less than the carrying value of the property.  To the extent impairment has occurred, the lossshall be measured as the excess of the carrying amount of the property over thefair value of the property.  The Company’sestimates of aggregate future cash flows expected to be generated by eachproperty are based on a number of assumptions that are subject to economic andmarket uncertainties including, among others, demand for space, competition fortenants, changes in market rental rates, and costs to operate eachproperty.  As these factors are difficultto predict and are subject to future events that may alter management’sassumptions, the future cash flows 

 

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estimated by management inits impairment analyses may not be achieved. The Partnership has not recognizedan impairment loss since 1995.

 

*RentalProperty Held for Sale and Discontinued Operations:*  When assets are identified by management asheld for sale, the Partnership discontinues depreciating the assets andestimates the sales price, net of selling costs, of such assets. If, inmanagement’s opinion, the net sales price of the assets which have beenidentified as held for sale is less than the net book value of the assets, avaluation allowance is established. Properties identified as held for saleand/or sold are presented in discontinued operations for all periods presented.

 

*Investmentsin Partnerships:*  ThePartnership accounts for its 40-50% ownership in the Investment Propertiesunder the equity method of accounting, as it does not control these entities.These investments are recorded initially at cost, as Investments inPartnerships, and subsequently adjusted for the Partnership’s share inearnings, cash contributions and distributions. Under the equity method ofaccounting, our net equity is reflected on the consolidated balance sheets, andour share of net income or loss from the Partnership is included on theconsolidated statements of income.

 

Withrespect to investments in and advances to the Investment Properties, thePartnership looks to the underlying properties to assess performance and therecoverability of carrying amounts for those investments in a manner similar todirect investments in real estate properties. An impairment charge is recordedif management’s estimate of the aggregate future cash flows (undiscounted andwithout interest charges) to be generated by the property is less than thecarrying value of the property.

 

*LegalProceedings:*  ThePartnership is subject to various legal proceedings and claims that arise, fromtime to time, in the ordinary course of business. These matters are frequentlycovered by insurance. If it is determined that a loss is likely to occur, theestimated amount of the loss is recorded in the financial statements. Both theamount of the loss and the point at which its occurrence is considered likelycan be difficult to determine.

 

**RESULTSOF OPERATIONS**

 

Comparisonof the three months ended June 30, 2010 to the three months ended June 30,2009

 

ThePartnership and its Subsidiary Partnerships incurred a loss of approximately$254,000 during the three months ended June 30, 2010, compared to incomeof approximately $776,000 for the three months ended June 30, 2009, adecrease in income of approximately $1,030,000.

 

Therental activity is summarized as follows:

 
| ** **                                        | ** ** | **Occupancy  Date**     | ** ** |
|---------------------------------------------------|------------|-------------------------|------------|
| ** **                                        | ** ** | **July 26,  2010** | ** ** | **July 27,  2009** | ** ** |
| **Residential**                                   |       |                    |       |   |   |
| Units—exclusive  of available for sale units |       | 2,288                   |       | 2,288 |   |
| Vacancies                                         |       | 109                     |       | 112 |   |
| Vacancy  rate                                     |       | 4.8                     | %          | 4.9 | % |
| **Commercial**                                    |       |                    |       |   |   |
| Total  square feet                                |       | 110,949                 |       | 110,949 |   |
| Vacancy                                           |       | 0                       |       | 0 |   |
| Vacancy  rate                                     |       | 0                       | %          | 0 | % |

 
| ** **              | ** ** | **Rental  Income (in thousands)  Three Months Ended June 30,** | ** ** |
|-------------------------|------------|---------------------------------------------------------------------|------------|
| ** **              | ** ** | **2010**                                                            | ** ** | **2009** | ** ** |
| ** **              | ** ** | **Total  Operations**                                               | ** ** | **Continuing  Operations** | ** ** | **Total  Operations** | ** ** | **Continuing  Operations** | ** ** |
| Total  rents            |       | $                                                                   | 8,116      |   | $ | 8,116 |   | $ | 8,179 |   | $ | 8,179 |   |
| Residential  percentage |       | 90                                                                  | %          | 90 | % | 90 | % | 90 | % |
| Commercial  percentage  |       | 10                                                                  | %          | 10 | % | 10 | % | 10 | % |
| Contingent  rentals     |       | $                                                                   | 147        |   | $ | 147 |   | $ | 110 |   | $ | 110 |   |

 

ThreeMonths Ended June 30, 2010 Compared to Three Months Ended June 30,2009:

 

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| ** **                                                       | ** ** | **Three  Months Ended June 30,** | ** ** | **Dollar** | ** ** | **Percent** | ** ** |
|------------------------------------------------------------------|------------|---------------------------------------|------------|------------|------------|-------------|------------|
| ** **                                                       | ** ** | **2010**                              | ** ** | **2009**   | ** ** | **Change**  | ** ** | **Change** | ** ** |
| Revenues:                                                        |       |                                  |       |       |       |        |       |   |   |
| Rental  income                                                   |       | $                                     | 8,116,004  |       | $          | 8,179,090   |       | $ | (63,086 | ) | (0.7 | )% |
| Laundry  and sundry income                                       |       | 114,726                               |       | 97,257     |       | 17,469      |       | 17.9 | % |
|                                                             |       | 8,230,730                             |       | 8,276,347  |       | (45,617     | )          | (0.5 | )% |
| Expenses                                                         |       |                                  |       |       |       |        |       |   |   |
| Administrative                                                   |       | 431,564                               |       | 386,417    |       | 45,147      |       | 11.7 | % |
| Depreciation  and amortization                                   |       | 1,418,408                             |       | 1,504,877  |       | (86,469     | )          | (5.7 | )% |
| Management  fees                                                 |       | 341,577                               |       | 333,898    |       | 7,679       |       | 2.3 | % |
| Operating                                                        |       | 824,583                               |       | 868,593    |       | (44,010     | )          | (5.0 | )% |
| Renting                                                          |       | 107,946                               |       | 83,170     |       | 24,776      |       | 29.8 | % |
| Repairs  and maintenance                                         |       | 1,254,860                             |       | 1,167,345  |       | 87,515      |       | 7.5 | % |
| Taxes  and insurance                                             |       | 1,041,412                             |       | 926,639    |       | 114,773     |       | 12.4 | % |
|                                                             |       | 5,420,350                             |       | 5,270,939  |       | 149,411     |       | 2.8 | % |
| Income  Before Other Income and Discontinued Operations          |       | 2,810,380                             |       | 3,005,408  |       | (195,028    | )          | (6.5 | )% |
| Other  Income (Loss)                                             |       |                                  |       |       |       |        |       |   |   |
| Interest  expense                                                |       | (2,047,512                            | )          | (1,962,093 | )          | (85,419     | )          | (4.3 | )% |
| Interest  income                                                 |       | 1,754                                 |       | 14,228     |       | (12,474     | )          | (87.6 | )% |
| (Loss)  from investment in unconsolidated joint ventures         |       | (1,019,074                            | )          | (281,733   | )          | (737,341    | )          | (261.7 | )% |
| Other  income (loss)                                             |       | —                                |       | —     |       |        |       |   |   |
|                                                             |       | (3,064,832                            | )          | (2,229,598 | )          | (835,234    | )          | (37.4 | )% |
| Income  (loss) from Continuing Operations                        |       | (254,452                              | )          | 775,810    |       | (1,030,262  | )          | (132.7 | )% |
| Discontinued  Operations:                                        |       |                                  |       |       |       |        |       |   |   |
| Gain  (loss) on sale of real estate from discontinued operations |       | —                                |       | 2,165      |       | (2,165      | )          | 100.0 | % |
|                                                             |       | —                                |       | 2,165      |       | (2,165      | )          | 100.0 | % |
| Net  (loss) income                                               |       | $                                     | (254,452   | )          | $          | 777,975     |       | $ | (1,032,427 | ) | (132.7 | )% |

 

Rentalincome from continuing operations for the three months ended June 30, 2010was approximately $8,116,000, compared to approximately $8,179,000 for thethree months ended June 30, 2009, a decrease of approximately $63,000(0.7%). This decrease in rental income is due to the amortization ofapproximately $122,000 in connection with the free rent granted totenants.  Properties with increases inrental income in the second quarter of 2010 compared to 2009 include; WestgateWoburn, Executive Apartments, Redwood Hills, Clovelly and 140 North BeaconStreet with increases of approximately $18,000, $16,000, $15,000, $11,000, and$10,000 respectively.

 

Expensesfrom continuing operations for the three months ended June 30, 2010 wereapproximately $5,420,000 compared to approximately $5,271,000 for the threemonths ended June 30, 2009, an increase of approximately $149,000 (2.8%).The most significant factors contributing to this increase were an increase intaxes and insurance of approximately $114,000 (12.4%) due to an increase inreal estate taxes, an increase in repairs and maintenance expenses ofapproximately $88,000 (7.5%) due to significant repairs at the properties in aneffort to maintain occupancy, an increase in renting expenses of approximately$25,000 (29.7%) due to increases in rental commissions, and an increase inadministrative expenses of approximately $45,000 (11.7%) due to an increase inprofessional fees as well as an administrative service fee in connection withthe maintenance costs at the partnership properties.  These increases are offset by decreases inoperating expenses of approximately $44,000 (5.0%) due to a decrease in heatingcosts resulting from the efficiency of new heating systems at many of thepartnership properties and a decrease in depreciation and amortization expenseof approximately $86,000 (5.7%).Interest expense increased approximately$85,000 (4.3%) primarily due to the $7,168,600 borrowed in October 2009.

 

AtJune 30, 2010, the Partnership has a 40 - 50% ownership interest in nineInvestment Properties. See Note 14 to the Consolidated FinancialStatements for a detail of the financial information of each InvestmentProperty.

 

Asdescribed in Note 14 to the Consolidated Financial Statements, thePartnership’s share of the net loss from the Investment Properties wasapproximately $1,019,000 for the three months ended June 30, 2010 comparedto a loss of approximately $282,000 for the three months ended June 30,2009, an increase of approximately $737,000. Included in this loss is depreciation and amortization expense ofapproximately $1,383,000.  For the threemonths ended June 30, 2010, the loss 

 

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associated with the 2009acquisition of Dexter Park is approximately $799,000, of which approximately$1,021,000 is depreciation and amortization. See the six month discussion of Dexter Park for additional information.

 

Interestincome for the three months ended June 30, 2010 was approximately $1,700compared to approximately $14,000 for the three months ended June 30,2009, a decrease of approximately $12,000(87.7%). This decrease is due to a decreasein the cash available for investment as well as a drop in interest rates.

 

Asa result of the changes discussed above, net loss for the three months ended June 30,2010 was approximately $254,000 compared to income of approximately $778,000for the three months ended June 30, 2009, a change of approximately$1,032,000.

 

**Comparison of the six monthsended June 30, 2010 compared to six months ended June 30, 2009**

 

ThePartnership and its subsidiary Partnerships earned income before other incomeand discontinued operations of $5,495,327 for the six months ended June 30,2010, compared to $5,730,816 for the six months ended June 30, 2009, adecrease of $235,489(4.1%).  Thefollowing is a summary of the Partnership’s operations for the six months endedJune 30, 2010 and 2009.

 
| ** **                                                       | ** ** | **Six  Months Ended June 30,** | ** ** | **Dollar** | ** ** | **Percent** | ** ** |
|------------------------------------------------------------------|------------|-------------------------------------|------------|------------|------------|-------------|------------|
| ** **                                                       | ** ** | **2010**                            | ** ** | **2009**   | ** ** | **Change**  | ** ** | **Change** | ** ** |
| Revenues:                                                        |       |                                |       |       |       |        |       |   |   |
| Rental  income                                                   |       | $                                   | 16,312,820 |       | $          | 16,544,672  |       | (231,852 | ) | (1.4 | )% |
| Laundry  and sundry income                                       |       | 235,926                             |       | 192,370    |       | 43,556      |       | 22.6 | % |
|                                                             |       | 16,548,746                          |       | 16,737,042 |       | (188,296    | )          | (1.1 | )% |
| Expenses                                                         |       |                                |       |       |       |        |       |   |   |
| Administrative                                                   |       | 922,600                             |       | 852,347    |       | 70,253      |       | 8.2 | % |
| Depreciation  and amortization                                   |       | 2,797,319                           |       | 2,921,497  |       | (124,178    | )          | (4.2 | )% |
| Management  fees                                                 |       | 680,219                             |       | 676,787    |       | 3,432       |       | 0.5 | % |
| Operating                                                        |       | 2,106,245                           |       | 2,374,329  |       | (268,084    | )          | (11.3 | )% |
| Renting                                                          |       | 174,996                             |       | 144,129    |       | 30,867      |       | 21.4 | % |
| Repairs  and maintenance                                         |       | 2,252,603                           |       | 2,145,631  |       | 106,972     |       | 4.9 | % |
| Taxes  and insurance                                             |       | 2,119,437                           |       | 1,891,506  |       | 227,931     |       | 12.0 | % |
|                                                             |       | 11,053,419                          |       | 11,006,226 |       | 47,193      |       | 0.4 | % |
| Income  Before Other Income and Discontinued Operations          |       | 5,495,327                           |       | 5,730,816  |       | (235,489    | )          | (4.1 | )% |
| Other  Income (Loss)                                             |       |                                |       |       |       |        |       |   |   |
| Interest  expense                                                |       | (4,076,672                          | )          | (3,907,240 | )          | (169,432    | )          | (4.3 | )% |
| Interest  income                                                 |       | 2,513                               |       | 32,591     |       | (30,078     | )          | (92.2 | )% |
| Gain  on sale of equipment                                       |       | —                              |       | 4,190      |       | (4,190      | )          | (100.0 | )% |
| (Loss)  from investment in unconsolidated joint ventures         |       | (2,018,571                          | )          | (555,288   | )          | (1,463,283  | )          | (263.5 | )% |
|                                                             |       | (6,092,730                          | )          | (4,425,747 | )          | (1,666,983  | )          | (37.6 | )% |
| Income  (loss) from Continuing Operations                        |       | (597,403                            | )          | 1,305,069  |       | (1,902,472  | )          | (145.7 | )% |
| Discontinued  Operations:                                        |       |                                |       |       |       |        |       |   |   |
| Gain  (loss) on sale of real estate from discontinued operations |       | —                              |       | (7,009     | )          | 7,009       |       | 100.0 | % |
|                                                             |       | —                              |       | (7,009     | )          | 7,009       |       | 100.0 | % |
| Net  (loss) income                                               |       | $                                   | (597,403   | )          | $          | 1,298,060   |       | $ | (1,895,463 | ) | (146.0 | )% |
|                                                                  |            |                                     |            |            |            |             |            |  |  |  |  |  |

 

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Rentalincome from continuing operations for the six months ended June 30, 2010was approximately $16,313,000 compared to approximately $16,545,000 for the sixmonths ended June 30, 2009, a decrease of approximately $232,000 (1.4%).This decrease in rental income is due to the amortization of approximately$306,000 in connection with the free rent granted to tenants.  The following properties experienced rentalincome increases:  Westside Colonial,Westgate Apartments, Executive Apartments, Avon Street and Redwood Hills withincrease of approximately $31,000, $28,000, $23,000, $18,000 and $18,000respectively.  These increases are offsetby decreases in rental income at the following properties:  Linewt, Brookside, and 1131 Commonwealth Avewith decreases of approximately $16,000, $13,000, and $9,000 respectively.

 

Expensesfrom continuing operations for the six months ended June 30, 2010 wereapproximately $11,053,000 compared to approximately $11,006,000 for the sixmonths ended June 30, 2009, an increase of approximately $47,000 (0.4%).The most significant factor contributing to this increase was an increase intaxes and insurance of approximately $236,000(12.6%); an increase inadministrative expenses of approximately $70,000(8.2%); an increase in repairsand maintenance expenses of approximately $107,000(5.0%); and an increase inrenting expenses of approximately $31,000(21.4%).  The reasons for these changes are discussedin the section for the results for the three months ended June 30, 2010.

 

Theseincreases in expenses are offset by a decrease in operating expenses ofapproximately $268,000 (11.3%), and a decrease in depreciation and amortizationof approximately $124,000(4.2%).

 

Interestexpense increased approximately $169,000 (4.3%) due to a higher level of debtoffset by lower interest rates and $7,168,000 borrowed for the Dexter Parkacquisition in October 2009.

 

AtJune 30, 2010, the Partnership has between a 40 - 50% ownership interestin nine Investment Properties. See a description of these properties includedin Note 14 to the Consolidated Financial Statements for a detail of thefinancial information of each Investment Property.

 

Asdescribed in Note 14 to the Consolidated Financial Statements, thePartnership’s share of loss from these Investment Properties was approximately$2,019,000 for the six months ended June 30, 2010 compared to a loss ofapproximately $555,000 for the six months ended June 30, 2009, an increaseof approximately $1,464,000.  Included inthe net loss during the six months ended June 30, 2010 is depreciation andamortization of approximately $2,761,000.

 

Asdiscussed in Note 14 to the Consolidated Financial Statements, the Partnershipacquired Dexter Park in October 2009. A majority of the apartments were leased at the time of theacquisition.  As a result, thePartnership is amortizing the intangible assets associated with the “in place”leases over a 12 month period which began in November 2009.  The total monthly amortization isapproximately $407,000 which at 40% reduces the Partnership’s income byapproximately $163,000 per month. For the six months ended June 30, 2010the total amortization in connection with these leases is approximately$2,442,000, of which the Partnership’s share is approximately $976,000.  In November 2010, the intangible assetswill be fully amortized which will result in lower amortization expense. Forthe six months ended June 30, 2010, the Partnership’s share of loss onDexter Park is approximately $1,560,000.

 

Interestincome for the six months ended June 30, 2010 was approximately $2,500compared to approximately $33,000 for the six months ended June 30, 2009,a decrease of approximately $30,000 (92%). This decrease is due to a drop ininterest rates.

 

Asa result of the changes discussed above, net loss for the six months ended June 30,2010 was $597,403 compared to income of $1,298,060 for six months ended June 30,2009, a decrease in income of $1,895,463(146.0%).

 

**LIQUIDITYAND CAPITAL RESOURCES**

 

ThePartnership’s principal source of cash during 2010 and 2009 was the collectionof rents and refinancing of partnership properties. The majority of cash andcash equivalents of $5,030,399 at June 30, 2010 and $2,879,663 atDecember 31, 2009 was held in interest bearing accounts at creditworthyfinancial institutions.

 

Thisincrease of $2,150,736 at June 30, 2010 is summarized as follows:

 

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| ** **                                                                 | ** ** | **Six  Months Ended June 30,** | ** ** |
|----------------------------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                                                 | ** ** | **2010**                            | ** ** | **2009** | ** ** |
| Cash  provided by operating activities                                     |       | $                                   | 4,199,041  |   | $ | 4,939,638 |   |
| Cash  (used in) investing activities                                       |       | (137,727                            | )          | (1,087,015 | ) |
| Cash  (used in) provided by financing activities                           |       | 477,150                             |       | (416,210 | ) |
| Repurchase  of Depositary Receipts, Class B and General Partner Units |       | (540,911                            | )          | (1,278,090 | ) |
| Distributions  paid                                                        |       | (1,846,817                          | )          | (1,860,989 | ) |
| Net  increase in cash and cash equivalents                                 |       | $                                   | 2,150,736  |   | $ | 297,334 |   |

 

Thecash provided by operating activities is primarily due to the collection ofrents less cash operating expenses. The decrease in cash used in investingactivities is due to increases in the distributions from the joint venture in2010 as well as the decrease in capital improvements to Partnership properties.The increase in cash provided by financing activities is due to the refinancingof a Partnership property in 2010 resulting in an increase in cash.

 

Duringthe six months ended June 30, 2010, the Partnership and its SubsidiaryPartnerships completed improvements to certain of the properties at a totalcost of approximately $788,000. These improvements were funded from cashreserves and, to some extent, escrow accounts established in connection withthe financing or refinancing of the applicable properties. These sources havebeen adequate to fully fund improvements. The most significant improvementswere made at Westgate Woburn, 62 Boylston Street, Hamilton Oaks, and WestsideColonial, at a cost of approximately $124,000, $93,000, $79,000, and $55,000,respectively. The Partnership plans to invest approximately $1,380,000 inadditional capital improvements in 2010.

 

In2010, the Partnership approved quarterly distributions of $7.00 per unit ($0.70per receipt) payable on March 31,  June 30,and September 30, 2010.

 

In2009, the Partnership paid quarterly distributions of $7.00 per unit ($0.70 perreceipt) in March, June, September, and December for a total distributionof $28.00 per unit ($2.80 per receipt).

 

Duringthe six months ended June 30, 2010 the Partnership purchased 6,896receipts for $432,920, 164 Class B Units for $102,591 and 9 GeneralPartnership units for $5,400.

 

InDecember 2009, the Partnership refinanced Linhart, LLP, located in Newton,Massachusetts.  The new loan is$2,000,000, with a rate of 3.75% over the Libor rate or 4.25% whichever isgreater and matures five years from the date of closing.  The interest rate as of June 30, 2010 was4.25%.  The loan agreement calls forinterest only payments for twenty four months and principal and interestpayments for the remainder of the five year period based on a thirty yearamortization.  The loan proceeds wereused to pay off the prior loan of approximately $1,700,000, and closing costsof approximately $38,000.

 

OnMarch 25, 2010, the Partnership refinanced the NERA Brookside Associates,LLC.  The new loan is $2,820,000, maturesin 2020 and has an interest rate of 5.81%. The loan is a ten year note however it is being amortized over 30 years.The proceeds of the loan were used to pay off the old mortgage of approximately$1,900,000.  There were no prepaymentpenalties.

 

ThePartnership anticipates that cash from operations and interest bearing accountswill be sufficient to fund its current operations and to finance currentimprovements to its properties. The Partnership’s net income and cash flow mayfluctuate dramatically from year to year as a result of the sale of properties,increases or decreases in rental income or expenses, or the loss of significanttenants.

 

**Off-BalanceSheet Arrangements-Joint Venture Indebtedness**

 

Asof June 30, 2010, the Partnership had between a 40 - 50% ownershipinterest in nine joint ventures, all of which have mortgage indebtedness. We donot have control of these partnerships and therefore we account for them usingthe equity method.  At June 30,2010, our proportionate share of the non-recourse debt related to theseinvestments was equal to approximately $61,569,000.  See Note 14 to the ConsolidatedFinancial Statements.

 

**ContractualObligations**

 

SeeNotes 5 and 14 to the Consolidated Financial Statements for a description ofmortgage notes payable. The Partnerships have no other material contractualobligations to be disclosed.

 

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**FactorsThat May Affect Future Results**

 

Certaininformation contained herein includes forward-looking statements, which aremade pursuant to the safe harbor provisions of the Private SecuritiesLiquidation Reform Act of 1995 (the “Act”). While forward looking statementsreflect management’s good faith beliefs when those statements are made, cautionshould be exercised in interpreting and relying on such forward lookingstatements, the realization of which may be impacted by known and unknown risksand uncertainties, events that may occur subsequent to the forward-lookingstatements, and other factors which may be beyond the Partnership’s control andwhich can materially affect the Partnership’s actual results, performance orachievements for 2010 and beyond. Should one or more of the risks oruncertainties mentioned below materialize, or should underlying assumptionsprove incorrect, actual results may vary materially from those anticipated,estimated or projected. We expressly disclaim any responsibility to update ourforward looking statements, whether as a result of new information, futureevents or otherwise. Accordingly, investors should use caution in relying onpast forward looking statements, which are based on results and trends at thetime they are made, to anticipate future results or trends.

 

Alongwith risks detailed from time to time in the Partnership’s filings with theSecurities and Exchange Commission, some factors that could cause thePartnership’s actual results, performance or achievements to differ materiallyfrom those expressed or implied by forward-looking statements include but arenot limited to the following:

 

ThePartnership depends on the real estate markets where its properties arelocated, primarily in Eastern Massachusetts and these markets may be adverselyaffected by local economic market conditions, which are beyond the Partnership’scontrol.

 

ThePartnership is subject to the general economic risks affecting the real estateindustry, such as dependence on tenant’s financial condition and the need toenter into new leases or renew leases on terms favorable to tenants in order togenerate rental revenues and our ability to collect rents from our tenants.

 

ThePartnership is also impacted by changing economic conditions making alternativehousing arrangements more or less attractive to the Partnership’s tenants, suchas the interest rates on single family home mortgages and the availability andpurchase price of single-family homes in the Greater Boston metropolitan area.

 

ThePartnership is subject to significant expenditures associated with eachinvestment, such as debt service payments, real estate taxes, insurance andmaintenance costs, which are generally not reduced when circumstances cause areduction in revenues from a property.

 

ThePartnership is subject to increases in heating and utility costs that may ariseas a result of economic and market conditions and fluctuations in seasonalweather conditions.

 

Civildisturbances, earthquakes and other natural disasters may result in uninsuredor underinsured losses.

 

Actualor threatened terrorist attacks may adversely affect our ability to generaterevenues and the value of our properties.

 

Financingor refinancing of Partnership properties may not be available to the extentnecessary or desirable, or may not be available on favorable terms.

 

ThePartnership properties face competition from similar properties in the samemarket. This competition may affect the Partnership’s ability to attract andretain tenants and may reduce the rents that can be charged.

 

Giventhe nature of the real estate business, the Partnership is subject to potentialenvironmental liabilities. These include environmental contamination in thesoil at the Partnership’s or neighboring real estate, whether caused by thePartnership, previous owners of the subject property or neighbors of thesubject property, and the presence of hazardous materials in the Partnership’s buildings,such as asbestos, mold and radon gas. Management is not aware of any materialenvironmental liabilities at this time.

 

Insurancecoverage for and relating to commercial properties is increasingly costly anddifficult to obtain. In addition, insurance carriers have excluded certainspecific items from standard insurance policies, which have resulted inincreased risk exposure for the Partnership. These include insurance coveragefor acts of terrorism and war, and 

 

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coveragefor mold and other environmental conditions. Coverage for these items is eitherunavailable, or prohibitively expensive.

 

Marketinterest rates could adversely affect the market prices for Class APartnership Units and Depositary Receipts as well as performance and cash flow.

 

Changesin income tax laws and regulations may affect the income taxable to owners ofthe Partnership. These changes may affect the after-tax value of futuredistributions.

 

ThePartnership may fail to identify, acquire, construct, or develop additionalproperties; may develop or acquire properties that do not produce a desired orexpected yield on invested capital; may be unable to sell poorly- performing orotherwise undesirable properties quickly; or may fail to effectively integrateacquisitions of properties or portfolios of properties.

 

Risksassociated with the use of debt to fund acquisitions and developments.

 

Competitionfor acquisitions may result in increased prices for properties.

 

Anyweakness identified in the Partnership’s internal controls as part of theevaluation being undertaken by the Partnership and its independent publicaccountants pursuant to Section 404 of the Sarbanes-Oxley Act of 2002could have an adverse effect on the Partnership’s business.

 

Ongoingcompliance with Sarbanes-Oxley Act of 2002 may require additional personnel orsystem changes.

 

Theforegoing factors should not be construed as exhaustive or as an admissionregarding the adequacy of disclosures made by the Partnership prior to the datehereof or the effectiveness of said Act. The Partnership expressly disclaimsany obligation to publicly update or revise any forward- looking statement,whether as a result of new information, future events or otherwise.

 

Theresidential real estate market in the Greater Boston area has softened and thePartnership anticipates the climate will remain the same in the foreseeablefuture. This may result in increases in vacancy rates and/or a reduction inrents. The Partnership believes its present cash reserves as well asanticipated rental revenue will be sufficient to fund its current operations,and to finance current planned improvements to its properties and continuedividend payments in the foreseeable future.

 

Sincethe Partnership’s long-term goals include the acquisition of additionalproperties, a portion of the proceeds from the refinancing and sale ofproperties is reserved for this purpose. The Partnership will considerrefinancing existing properties if the Partnership’s cash reserves areinsufficient to repay existing mortgages or if the Partnership needs additionalfunds for future acquisitions.

 

**ITEM 3.  QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

Asof June 30, 2010, the Partnership, its Subsidiary Partnerships and theInvestment Properties collectively have approximately $286,000,000 in long-termdebt, substantially all of which pays interest at fixed rates. Accordingly, thefair value of these debt instruments is affected by changes in market interestrates. These mortgages mature through 2023. For information regarding the fairvalue and maturity dates of these debt obligations, see Item 2 andNotes 5, 12 and 14 to the Consolidated Financial Statements.

 

Foradditional disclosure about market risk, see “Item 7. Management’sDiscussion and Analysis of Financial Condition and Results ofOperations—Factors That May Affect Future Results”.

 

**ITEM 4. CONTROLS AND PROCEDURES**

 

*Disclosure Controls andProcedures*.  The Company’s management, with theparticipation of the president and chief financial officer of its generalpartner, has evaluated the effectiveness of the Company’s disclosure controlsand procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) underthe Exchange Act) as of the end of the period covered by thisreport.  Based 

 

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on such evaluation, thepresident and chief executive officer and chief financial officer of theCompany’s general partner have concluded that, as of the end of such period,the Company’s disclosure controls and procedures are effective in recording,processing, summarizing and reporting, on a timely basis, information requiredto be disclosed by the Company in the reports that it files or submits underthe Exchange Act.

 

*Internal Control Over FinancialReporting*.  There have not been any changes in theCompany’s internal control over financial reporting (as such term is defined inRules 13a-15(f) and 15d-15(f) under the Exchange Act) during thefiscal quarter to which this report relates that have materially affected, orare reasonably likely to materially affect, the Company’s internal control overfinancial reporting.

 

**PART II—OTHER INFORMATION**

 

**Item 1.  Legal Proceedings**

 

ThePartnership, the Subsidiary Partnerships and their properties are not presentlysubject to any material litigation, and, to management’s knowledge, there isnot any material litigation presently threatened against them.  The Partnership and Subsidiary Partnershipsare occasionally subject to ordinary routine legal and administrativeproceedings incident to the ownership of residential and commercial realestate.  Some of the legal and otherexpenses related to these proceedings are covered by insurance and none ofthese costs and expenses are expected to have a material adverse effect on theConsolidated Financial Statements of the Partnership.

 

**Item 1A.  Risk Factors**

 

Therewere no material changes to the Risk Factors disclosed in our annual report onForm 10-K for the year ended December 31, 2009.

 

None.

 

**Item 2.  Unregistered Saleof Equity Securities and Use of Proceeds**

 

(a)           None

 

(b)           None.

 

(c)           IssuerPurchases of Equity Securities during the Second Quarter of 2010:

 
| ** **              | ** ** | ** **                       | ** ** | ** **                                                                                               | ** ** | **Remaining number of Depositary**                                                 | ** ** |
|-------------------------|------------|----------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|------------|
| **Period**              | ** ** | **Average Price Paid** | ** ** | **Depositary Receipts  Purchased as Part of Publicly Announced Plan** | ** ** | **Receipts that may be purchased  Under the Plan(as Amended)** | ** ** |
| April 1 - 30, 2010 |       | $                                | 65.85      |                                                                                                     | 2,375      |                                                                                              | 101,680    |   |
| May 1 - 31, 2010   |       | $                                | 0          |                                                                                                     | —     |                                                                                              | 101,680    |   |
| June 1 - 30, 2010  |       | $                                | 0          |                                                                                                     | —     |                                                                                              | 101,680    |   |
| Total                   |       |                             |       | 2,375                                                                                                    |       |                                                                                              |       |

 

OnAugust 20, 2007, NewReal, Inc., the General Partner authorized an equityrepurchase program (“Repurchase Program”) under which the Partnership waspermitted to purchase, over a period of twelve months, up to 100,000 DepositaryReceipts (each of which is one-tenth of a Class A Unit).  OnJanuary 15, 2008, the General Partner authorized an increase in theRepurchase Program from 100,000 to 200,000 Depositary Receipts and onJanuary 30, 2008 the General Partner further increased the RepurchaseProgram from 200,000 to 300,000 Depositary Receipts.  On March 6, 2008,the General Partner further increased the total number of Depositary Receiptsthat could be repurchased pursuant to the Repurchase Program from 300,000 to500,00.  On August 8, 2008, theGeneral Partner re-authorized and renewed the Repurchase Program for anadditional 12-month period ending August 19, 2009.  On March 22,2010, the General Partner re-authorized and renewed the Repurchase Program thatexpired on August 19, 2009.  Underthe terms of the renewed Repurchase Program, the Partnership may purchase up to500,000 Depositary Receipts from the start of the program in 2007 through March 31,2015.  The Repurchase Program requiresthe Partnership to repurchase a proportionate number of Class B Units andGeneral Partner Units in connection with any repurchases of any DepositaryReceipts by the Partnership based upon the 80%, 19% and 1% fixed distributionpercentages of the holders of the Class A, Class B and GeneralPartner Units under the Partnership’s Second Amended and Restate Contract ofLimited Partnership.  Repurchases of Depositary Receipts or PartnershipUnits pursuant to the Repurchase Program may be made by the Partnership fromtime to time in its sole discretion in open market transactions or in privatelynegotiated transactions.  From August 20,2007 through June 30, 2010, the Partnership has repurchased 398,320 

 

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Depositary Receipts at anaverage price of $73.59 per receipt (or $735.90 per underlying Class AUnit), 1,724 Class B Units and 91 General Partner Units both at an averageprice of $585.05 per Unit, totaling approximately $30,480,000 includingbrokerage fees paid by the Partnership. See Note 8 to the ConsolidatedFinancial Statements for information concerning this repurchase program throughJune 30, 2010.

 

**Item 3.  Defaults UponSenior Securities**

 

None.

 

**Item 4.  (Removed andReserved)**

 

**Item 5.  Other Information**

 

None.

 

**Item 6.  Exhibits**

 

(a)           See the exhibitindex below.

 

**EXHIBIT INDEX**

 
| **Exhibit  No.** | ** ** | **Description  of Exhibit**                                                                                                                                                                                                                                                                                                                                                                              |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (31.1)           |       | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald Brown, Principal  Executive Officer of the Partnership (President and a Director of  NewReal, Inc., sole General Partner of the Partnership)                                                                                                                                                                |
| (31.2)           |       | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 of Harold Brown, Principal  Financial Officer of the Partnership (Treasurer and a Director of  NewReal, Inc., sole General Partner of the Partnership)                                                                                                                                                                |
| (32.1)           |       | Certification Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002, of Ronald Brown,  Principal Executive Officer of the Partnership (President and a Director of  NewReal, Inc., sole General Partner of the Partnership) and Harold  Brown, Principal Financial Officer of the Partnership (Treasurer and a  Director of NewReal, Inc., sole General Partner of the Partnership). |

 

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**SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|   |   | NEW ENGLAND REALTY ASSOCIATES  LIMITED  PARTNERSHIP |
|--------|--------|-----------------------------------------------------|
|   |   | By:                                                 | /s/  NEWREAL, INC. |
|   |   |                                                | Its  General Partner |
|   |   | By:                                                 | /s/  RONALD BROWN |
|   |   |                                                | Ronald  Brown, President |

 

Dated: August 12, 2010

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.

 
| **Signature**     | ** ** | **Title**                                                       | ** ** | **Date**              |
|-------------------|------------|-----------------------------------------------------------------|------------|-----------------------|
| /s/  RONALD BROWN |       | President and Director of  the General Partner                  |       | August 12,  2010 |
| Ronald  Brown     |       | (Principal Executive  Officer)                                  |       |                  |
| /s/  HAROLD BROWN |       | Treasure and Director to  the General Partner                   |       | August 12,  2010 |
| Harold  Brown     |       | (Principal Financial  Officer and Principal Accounting Officer) |       |                  |

 

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EXHIBIT INDEX

 
| **Exhibit No.** | ** ** | **Description  of Exhibit**                                                                                                                                                                                                                                                                                                                                                                              |
|----------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  (3)            |       | Second Amended and  Restated Contract of Limited Partnership.(1)                                                                                                                                                                                                                                                                                                                                         |
|  (4)            |       | (a)                                                                                                                                                                                                                                                                                                                                                                                                      | Specimen certificate  representing Depositary Receipts.(2) |
|                 |       | (b)                                                                                                                                                                                                                                                                                                                                                                                                      | Description of rights of  holders of Partnership securities.(2) |
|                 |       | (c)                                                                                                                                                                                                                                                                                                                                                                                                      | Deposit Agreement, dated  August 12, 1987, between the General Partner and the First National Bank  of Boston.(3) |
| (10.1)               |       | Purchase and Sale  Agreement by and between Sally A. Starr and Lisa Brown, Trustees of Omnibus  Realty Trust, a nominee trust.(5)                                                                                                                                                                                                                                                                        |
| (10.2)               |       | Commitment letter from  Wachovia Multifamily Capital, Inc. to The Hamilton Company dated  January 11, 2008.(6)                                                                                                                                                                                                                                                                                 |
| (10.3)               |       | Amendment dated  February 27, 2008 to Commitment letter from Wachovia Multifamily  Capital, Inc. to The Hamilton Company dated January 11, 2008.(7)                                                                                                                                                                                                                                       |
| (10.4)               |       | Purchase and Sale and  Escrow Agreement dated September 1, 2009 by and between 175 Free Street  Investors LLC, as Seller, The Hamilton Company, as Purchaser, and First  American Title Insurance Company, as Escrow Agent. (8)                                                                                                                                                                     |
| (10.5)               |       | Limited Liability Company  Operating Agreement of HBC Holdings, LLC. (9)                                                                                                                                                                                                                                                                                                                                 |
| (10.6)               |       | Limited Liability Company  Agreement of Hamilton Park Towers, LLC. (10)                                                                                                                                                                                                                                                                                                                                  |
| (10.7)               |       | Pledge Agreement dated  October 28, 2009 by and between New England Realty Associates Limited  Partnership and HBC Holdings, LLC. (11)                                                                                                                                                                                                                                                              |
| (10.8)               |       | Promissory Note dated  October 28, 2009 of New England Realty Associates Limited Partnership in  favor of HBC Holdings, LLC. (12)                                                                                                                                                                                                                                                                   |
| (10.9)               |       | MultiFamily Note - CME of  Hamilton Park Towers, LLC, as Borrower, in favor of Wachovia Multifamily  Capital, Inc., as Lender, in the principal amount of $89,914,000 dated  October 28, 2009. (13)                                                                                                                                                                                            |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                     |
| (21)                 |       | Subsidiaries of the  Partnership.(4)                                                                                                                                                                                                                                                                                                                                                                     |
| (31.1)               |       | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald Brown, Principal  Executive Officer of the Partnership (President and a Director of  NewReal, Inc., sole General Partner of the Partnership)                                                                                                                                                                |
| (31.2)               |       | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 of Harold Brown, Principal  Financial Officer of the Partnership (Treasurer and a Director of  NewReal, Inc., sole General Partner of the Partnership)                                                                                                                                                                |
| (32.1)               |       | Certification Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002, of Ronald Brown,  Principal Executive Officer of the Partnership (President and a Director of  NewReal, Inc., sole General Partner of the Partnership) and Harold  Brown, Principal Financial Officer of the Partnership (Treasurer and a  Director of NewReal, Inc., sole General Partner of the Partnership). |

 

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(1)           Incorporated byreference to Exhibit A to the Partnership’s Statement Furnished inConnection with the Solicitation of Consents filed under the SecuritiesExchange Act of 1934 on October 14, 1986.

 

(2)           Incorporatedherein by reference to Exhibit A to Exhibit 2(b) to thePartnership’s Registration Statement on Form 8-A, filed under theSecurities Exchange Act of 1934 on August 17, 1987.

 

(3)           Incorporatedherein by reference to Exhibit 2(b) to the Partnership’s RegistrationStatement on Form 8-A, filed under the Securities Exchange Act of 1934 onAugust 17, 1987.

 

(4)           Incorporated byreference to Notes 2 and 14 to Financial Statements included as part ofthis Form 10-K.

 

(5)           Incorporated byreference to Exhibit 2.1 to the Partnership’s Current Report onForm 8-K dated June 30, 1995.

 

(6)           Incorporatedherein by reference to Exhibit 10.1 to the Partnership’s Current Report onForm 8-K dated January 11, 2008 and filed with the Securities andExchange Commission on February 6, 2008.

 

(7)           Incorporatedherein by reference to Exhibit 10.1 to the Partnership’s Current Report onForm 8-K dated February 27, 2008 and filed with the Securities andExchange Commission on March 4, 2008.

 

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(8)           Incorporated herein by reference to Exhibit 10.1 to thePartnership’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,2009.

 

(9)           Incorporated herein by reference to Exhibit 10.2 to thePartnership’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,2009.

 

(10)         Incorporated herein by reference to Exhibit 10.3 to thePartnership’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,2009.

 

(11)         Incorporated herein by reference to Exhibit 10.1 to thePartnership’s Current Report on Form 8-K as filed with the Securities andExchange Commission on November 3, 2009.

 

(12)         Incorporated herein by reference to Exhibit 10.2 to thePartnership’s Current Report on Form 8-K as filed with the Securities andExchange Commission on November 3, 2009.

 

(13)         Incorporated herein by reference to Exhibit 10.3 to thePartnership’s Current Report on Form 8-K as filed with the Securities andExchange Commission on November 3, 2009.

 

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