UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549



Form 10-Q

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                    to


Commission file number 0-12138



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


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

Depositary Receipts(Title of each Class)

American Stock Exchange(Name of each Exchange on which Registered)


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

Class A
Limited Partnership Units(Title of class)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o


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

As of August 11, 2008, there were 105,803 Class A units (1,058,032 Depositary Receipts) 33,015 Class B units of limited partnership units
issued and outstanding.

(For
this computation, the Registrant has excluded the market value of all Depositary Receipts reported as beneficially owned by executive officers and directors of the General Partner
of the Registrant; such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of the Registrant.)



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INDEX

PART IFINANCIAL INFORMATIONItem 1.

Financial Statements

3Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December 31, 2007 (audited)

3Consolidated Statements of Income for the Three Months Ended June 30, 2008 and June 30, 2007, and the Six Months Ended June 30, 2008 and June 30, 2007 (all unaudited)

4Consolidated Statement of Changes in Partners' Capital for the Six Months Ended June 30, 2008 and June 30, 2007 (all unaudited)

5Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and June 30, 2007 (all unaudited)

6Notes to Financial Statements

8Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

28Item 3.

Quantitative and Qualitative Disclosures About Market Risk

42Item 4.

Controls and Procedures

42PART IIOTHER INFORMATIONItem 1.

Legal Proceedings

43Item 1A.

Risk Factors

43Item 2.

Unregistered Sales of Equity Securities

43Item 3.

Defaults Upon Senior Securities

43Item 4.

Submission of Matters to a Vote of Security Holders

43Item 5.

Other Information

43Item 6.

Exhibits

44SIGNATURES

45


2

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NEW ENGLAND REALTY ASSOCIATES, L.P.

PART 1FINANCIAL INFORMATION

Item 1.    Financial Statements

The accompanying unaudited consolidated balance sheets, statements of income, changes in partners' capital, and cash flows and related
notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and in conjunction with the
rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. The financial
statements reflect all adjustments consisting only of normal, recurring adjustments, which are in the opinion of management, necessary for a fair presentation for the interim periods.

The
aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations and the financial statements and notes thereto included in New England Realty Associates L.P.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 2007.

The
results of operations for the six month period ended June 30, 2008 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES    CONSOLIDATED BALANCE SHEETS

June 30,
2008

December 31,
2007(Unaudited)

(Audited)ASSETSRental Properties

$
92,870,709

$
96,730,044Property Held for Sale


766,092


1,047,492Cash and Cash Equivalents


12,679,210


6,890,525Rents Receivable


594,396


505,869Real Estate Tax Escrows


280,664


483,010Prepaid Expenses and Other Assets


6,417,625


3,335,431Investment in Joint Ventures


11,971,768


15,011,786Financing and Leasing Fees


1,081,467


387,613Total Assets

$
126,661,931

$
124,391,770LIABILITIES AND PARTNERS' CAPITALNotes Payable

$


$
3,224,419Mortgage Notes Payable


135,157,209


113,579,904Accounts Payable and Accrued Expenses


1,246,957


1,746,266Advance Rental Payments and Security Deposits


3,226,932


3,176,322Total Liabilities


139,631,098


121,726,911Commitments and Contingent Liabilities (Note 9)Partners' Capital 132,254 units outstanding in 2008


(12,969,167
)

2,664,859Total Liabilities and Partners' Capital

$
126,661,931

$
124,391,770


See
notes to consolidated financial statements.

3

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended
June 30,

Six Months Ended
June 30,2008

2007

2008

2007(Unaudited)

(Unaudited)RevenuesRental income

$
7,934,836

$
7,599,322

$
15,857,659

$
15,308,058Laundry and sundry income


97,854


96,264


206,998


201,1618,032,690


7,695,586


16,064,657


15,509,219ExpensesAdministrative


456,450


381,949


882,239


772,862Depreciation and amortization


1,609,953


1,720,388


3,228,609


3,397,282Interest


1,917,353


1,854,083


3,843,212


3,692,604Management fees


330,190


309,859


652,470


620,788Operating


928,163


773,208


2,332,615


2,140,956Renting


106,654


98,898


186,865


165,330Repairs and maintenance


1,204,625


1,227,917


2,244,691


2,261,943Taxes and insurance


861,150


820,497


1,770,140


1,756,4447,414,538


7,186,800


15,140,841


14,808,209Income Before Other Income and Discontinued Operations


618,152


508,786


923,816


701,010Other Income (loss)Interest income


32,253


96,827


80,622


196,953Casualty loss


(4,151
)




(4,151
)

(60,000
)Mortgage prepayment penalties


(785,538
)




(4,487,706
)

Income (loss) from investment in joint ventures


(217,213
)

11,303


(465,018
)

(408,922
)(974,649
)

108,130


(4,876,253
)

(271,969
)Income (loss) from Continuing Operations


(356,497
)

616,916


(3,952,437
)

429,041Discontinued OperationsGain on the sale of real estate


3,937,551





9,990,942


Income (loss) from discontinued operations


(7,408
)

(29,393
)

(34,855
)

98,9283,930,143


(29,393
)

9,956,087


98,928Net Income

$
3,573,646

$
587,523

$
6,003,650

$
527,969Income per UnitIncome (loss) before discontinued operations

$
(2.70
)
$
3.56

$
(28.06
)
$
2.47Income (loss) from discontinued operations


29.72


(0.17
)

70.68


0.58Net Income per Unit

$
27.02

$
3.39

$
42.62

$
3.05Weighted Average Number of Units Outstanding


132,254


173,252


140,875


173,252


See
notes to consolidated financial statements.

4

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL        (UNAUDITED)

Units

Partner's CapitalLimited









LimitedGeneral
Partnership



Treasury
Units



General
PartnershipClass A

Class B

Subtotal

Total

Class A

Class B

TotalBalance, January 1, 2007


144,180


34,243


1,802


180,225


6,973


173,252

$
9,310,672

$
2,214,737

$
116,594

$
11,642,003Distribution to Partners




















(1,937,286
)

(460,106
)

(24,216
)

(2,421,608
)Net Income




















422,375


100,314


5,280


527,969Balance, June 30, 2007


144,180


34,243


1,802


180,225


6,973


173,252

$
7,795,761

$
1,854,945

$
97,658

$
9,748,364Balance, January 1, 2008


144,180


34,243


1,802


180,225


14,109


166,116

$
1,052,816


1,531,414


80,629

$
2,664,859Distribution to Partners




















(1,514,276
)

(359,640
)

(18,929
)

(1,892,845
)Stock buyback














25,439


25,439


(19,744,831
)







(19,744,831
)Net Income




















4,802,920


1,140,693


60,037


6,003,650Balance, June 30, 2008


144,180


34,243


1,802


180,225


39,548


140,677

$
(15,403,371
)
$
2,312,467

$
121,737

$
(12,969,167
)


See notes to consolidated financial statements.

5

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended
June 30,2008

2007(Unaudited)Cash Flows from Operating ActivitiesNet income

$
6,003,650

$
527,969Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization


3,228,609


3,467,889Loss from investment in joint ventures


465,018


408,922Income from the sale of real estate from discontinued operations


(9,990,942
)Changes in operating assets and liabilities(Increase) in rents receivable


(88,527
)

(32,649
)(Increase) in insurance recovery receivable





(300,000
)Increase (decrease) in accounts payable and accrued expense


(499,309
)

22,161(Increase) Decrease in real estate tax escrow


202,346


(28,403
)(Increase) Decrease in prepaid expenses and other assets


(3,082,194
)

(49,823
)Increase in advance rental payments and security deposits


50,610


89,626Total Adjustments


(9,714,389
)

3,577,723Net cash provided by (used in) operating activities


(3,710,739
)

4,105,692Cash Flows provided by (used in) Investing Activities(Investment in) unconsolidated joint ventures





(45,000
)Net proceeds from the sale of rental properties


7,222,454


Proceeds from joint ventures


2,575,000


500,000Purchase and improvement of rental properties


(1,305,863
)

(1,326,324
)Net cash provided by (used in) investing activities


8,491,591


(871,324
)Cash Flows (provided by) used in Financing ActivitiesPayment of mortgage notes payable


(3,224,419
)

Payment of financing costs


(867,377
)

Principal payments of mortgage notes payable


(389,795
)

(536,286
)Stock buyback


(19,744,831
)

Proceeds of mortgage notes payable


27,127,100


Distributions to partners


(1,892,845
)

(2,421,608
)Net cash provided by (used in) financing activities


1,007,833


(2,957,894
)Net Increase in Cash and Cash Equivalents


5,788,685


276,474Cash and Cash Equivalents, at beginning of period


6,890,525


9,773,250Cash and Cash Equivalents, at end of period

$
12,679,210

$
10,049,724


See
notes to consolidated financial statements

6

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        JUNE 30, 2008        (UNAUDITED)

NOTE 1.    SIGNIFICANT ACCOUNTING POLICIES

Line of Business:New England Realty Associates Limited Partnership ("NERA" or the "Partnership") was organized in Massachusetts in 1977. NERA and its subsidiaries
own and operate various residential apartment buildings, condominium units and commercial properties located in Massachusetts and New Hampshire. NERA has also made investments in other real estate
partnerships and has participated in other real estate-related activities, primarily located in Massachusetts.

Principles of Consolidation:The consolidated financial statements include the accounts of NERA and its subsidiaries. NERA has a 99.67% to 100% ownership interest
in each subsidiary except for the nine limited liability companies (the "Investment Properties" or "Joint Ventures") in which the Partnership has a 50% ownership interest. The consolidated group is
referred to as the "Partnerships." Minority interests are not recorded, since they are insignificant. All significant intercompany accounts and transactions are eliminated in consolidation. The
Partnership accounts for its investment in the above-mentioned Investment Properties using the equity method of consolidation. (See Note 3: Investments in Unconsolidated Joint Ventures).

The
Partnership accounts for its investments in unconsolidated joint ventures for which Financial Accounting Standards ("FASB") Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest Entities ("FIN 46") does not apply under the equity method of accounting as the company exercises significant influence, but does not control these entities.
These investments are recorded initially at cost, as Investments in Unconsolidated Joint Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions.

On
a periodic basis, management assesses whether there are any indicators that the value of the Company's investments in unconsolidated joint ventures may be impaired. An investment is
impaired only if management's estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent
impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment. Management does not believe that the value of any of the
company's investments in unconsolidated joint ventures is impaired.

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

Revenue Recognition:Rental income from residential and commercial properties is recognized over the term of the related lease. Amounts 60 days in arrears
are charged against income. Certain leases of the commercial properties provide for increasing stepped minimum rents, which are accounted for on a straight-line basis over the term of the
lease.

Rental Properties:Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and
additions are capitalized. When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such
disposition is included in income. Fully depreciated assets are removed from the accounts. Rental properties are depreciated by both

7

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 1.    SIGNIFICANT ACCOUNTING POLICIES (Continued)

straight-line
and accelerated methods over their estimated useful lives. Significant acquisitions with long term leases are evaluated to determine if a portion of the purchase price is
allocable to intangibles such as non market rate rents.

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

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

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

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

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

Comprehensive Income:Comprehensive income is defined as changes in partners' equity, exclusive of transactions with owners (such as capital contributions and
dividends). NERA did not have any comprehensive income items in the six months ended June 30, 2008 or the year ended December 31, 2007.

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

Concentration of Credit Risks and Financial Instruments:The Partnership's properties are located in New England, and the Partnership is subject to the general
economic risks related thereto. No single tenant
accounted for more than 5% of the Partnership's revenues in 2008 or 2007. The Partnership makes its temporary cash investments with high-credit-quality financial institutions. At
June 30, 2008, substantially all of the Partnership's cash and cash equivalents were held in interest-bearing accounts at financial institutions, earning interest at rates from 0.1% to 3.0%. At
June 30, 2008 and December 31, 2007, respectively, approximately $13,000,000 and $7,500,000 of cash and cash equivalents, and cash included in prepaid expenses and other assets exceeded
federally insured amounts.

Advertising Expense:Advertising is expensed as incurred. Advertising expense was $39,720 and $62,823 for the six months ended June 30, 2008, and 2007
respectively.

Discontinued Operations and Rental Property Held for Sale:When assets are identified by management as held for sale, the Partnership discontinues depreciating the
assets and estimates the

8

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 1.    SIGNIFICANT ACCOUNTING POLICIES (Continued)

sales
price, net of selling costs, of such assets. If, in management's opinion, the net sales price of the assets which have been identified as held for sale is less than the net book of the assets, a
valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

If
circumstances arise that previously were considered unlikely and, as a result, the Partnership decides not to sell a property previously classified as held for sale, the property is
reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale,
adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the
subsequent decision not to sell.

Interest Capitalized:The Company follows the policy of capitalizing interest as a component of the cost of rental property when the time of construction exceeds
one year. During the six months ended June 30, 2008 and the year ended December 31, 2007, there was no capitalized interest.

Extinguishment of Debt:When existing mortgages are refinanced with the same lender, EITF 96-19 "Debtors Accounting for a Modification or
exchange of Debt Instruments" require they be analyzed to determine if the refinancing are substantially different to be recorded as an
extinguishment of debt or substantially the same be recorded as an exchange of debt. All refinancing qualify for extinguishment of debt.

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

NOTE 2.    RENTAL PROPERTIES

As of June 30, 2008, the Partnership and its Subsidiary Partnerships owned 2,265 residential apartment units in 20 residential and mixed-use complexes (collectively,
the "Apartment Complexes"). The Partnership also owns 21 condominium units in two residential condominium complexes, all of which are leased to residential tenants (collectively referred to as the
"Condominium Units"). The Apartment Complexes and Condominium Units are located primarily in the metropolitan Boston area of Massachusetts.

Additionally,
as of June 30, 2008, the Partnership and Subsidiary Partnerships owned a commercial shopping center in Framingham, Massachusetts and mixed-use properties
in Boston, Brockton and Newton, all in Massachusetts. These properties are referred to collectively as the "Commercial Properties."

The
Partnership also owned a 50% ownership interest in nine residential and mixed use complexes (the "Investment Properties") at June 30, 2008 with a total of 392 units,
accounted for using the equity method of consolidation. See Note 14 for summary information on these investments.

9

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 2.    RENTAL PROPERTIES (Continued)

Rental
properties consist of the following:

June 30,
2008

December 31,
2007

Useful LifeLand, improvements and parking lots

$
23,529,042

$
23,829,256

10-31 yearsBuildings and improvements


105,616,223


107,200,909

15-31 yearsKitchen cabinets


4,413,296


4,164,828

5-10 yearsCarpets


3,721,030


3,441,808

5-10 yearsAir conditioning


906,993


864,564

7-10 yearsLaundry equipment


240,904


191,527

5-7 yearsElevators


946,607


896,394

20 yearsSwimming pools


126,275


126,275

10 yearsEquipment


1,783,873


1,668,493

5-7 yearsMotor vehicles


104,725


105,800

5 yearsFences


230,022


226,171

5-10 yearsFurniture and fixtures


4,361,611


4,310,312

5-7 yearsSmoke alarms


117,731


99,214

5-7 years146,098,333


147,125,551Less accumulated depreciation


(53,227,624
)

(50,395,507
)$
92,870,709

$
96,730,044


On
January 3, 2008, the Partnership sold the Oak Ridge Apartments, a 61-unit residential apartment complex located in Foxboro, Massachusetts. The sale price was
$7,150,000, which resulted in a gain of approximately $6,400,000. In November, the Partnership purchased a fully occupied commercial building located in Newton, Massachusetts, known as
Linewt LLC. The purchase price was $3,475,000 and the building consists of 5,850 square feet of commercial space. The Partnership utilized Section 1031 of the IRS code to affect a tax
free exchange on the gain of Oak Ridge up to the purchase price of the Newton property. Most of the taxable gain of approximately $3,000,000 will be taxed at the capital gain rates. In accordance with
Section 1031, the Newton property was owned by a Qualified Intermediary for the period from the purchase date of the Newton property and the sale date of the Foxboro property. The Qualified
Intermediary borrowed $3,225,112 from Harold Brown, Treasurer of the General Partner, to purchase the Newton property. This loan was paid in full, with interest at 6% of $34,401, from the proceeds of
the Oak Ridge sale on January 3, 2008. On January 22, 2008, the Partnership financed the Newton property with a first mortgage of $1,700,000 at 5.75% interest only until maturity in
January 2018.

In
April 2008, the Partnership sold the Coach Apartments in Acton, Massachusetts. The sale price of $4,600,000 resulted in a gain to the Partnership of approximately $3,800,000. The
Partnership will
utilize Section 1031 of the IRS code to affect a tax free exchange with a purchase of a medical office building in Brookline, Massachusetts. The purchase price of the new building is
$7,000,000. The net cash from the sale of Coach of approximately $2,600,000 is being held by a Qualified Intermediary and will be used to purchase the property. The Partnership will also assume the
existing mortgage of approximately $4,020,000, at an interest rate of 5.92% maturing in May 2013. The balance of the purchase price, approximately $400,000, will be funded from the Partnership's cash
reserves.

10

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 3.    RELATED PERSON TRANSACTIONS

The Partnership's properties are managed by an entity that is owned by the majority shareholder of the General Partner. The management fee is equal to 4% of rental revenue and laundry
income. Total fees paid were approximately $661,000 and $647,000 during the six months ended June 30, 2008 and 2007, respectively.

The
Partnership Agreement permits the General Partner or management company to charge the costs of professional services (such as counsel, accountants and contractors) to NERA. In the
six months ended June 30, 2008 and 2007, approximately $311,000 and $419,000 respectively, was charged to NERA for legal, accounting, construction, maintenance, rental and architectural
services and supervision of capital improvements. Of the 2008 expenses referred to above, approximately $139,000 consisted of repairs and maintenance and $130,000 of administrative expense.
Approximately $42,000 of expenses for construction, architectural services and supervision of capital projects was capitalized in rental properties.

Additionally
in 2008, the Hamilton Company received approximately $226,000 from the Investment Properties of which approximately $139,000 was the management fee, $14,000 was for
construction supervision and architectural fees, $61,000 was for maintenance services and $13,000 was for administrative services. The Hamilton Company legal department acts as closing attorney on
certain condo sales receiving approximately $15,000 during the six months ended June 30, 2008. As more fully described in Note 14, an entity partially owned by the majority shareholder
of the General Partner is the sales agent for certain condominium sales receiving approximately $43,000 of commissions in 2008.

On
January 1, 2004, all employees were transferred to the management company's payroll. The Partnership reimburses the management company for the payroll and related expenses of
the employees directly employed by the properties. Total reimbursement was approximately $1,108,000 and $1,074,000 for the six months ended June 30, 2008 and 2007, respectively. The Management
Company maintains a 401K plan for all eligible employees whereby the employees may contribute the maximum allowed by law. The plan also provides for discretionary contributions by the employer. There
were no employer contributions in 2008 and 2007.

In
1996, prior to becoming an employee and President of the Management Company, the current President of the Management Company performed asset management consulting services to the
Partnership. This individual continues to perform this service and receives an asset management fee from the Partnership, receiving $25,000 during the six months ended June 30, 2008 and 2007.

The
Partnership has invested in nine limited partnerships, which have invested in mixed use residential apartment complexes. The Partnership has a 50% ownership interest in each
investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the Management Company. Harold Brown's ownership interest is between 43.2% and
47.5%, with the balance of 6.8% and 2.5% owned by others. See Note 14 for a description of the properties and their operations.

On
June 30, 2003, the Partnership purchased five condominium units in a 42-unit building located in Brookline, Massachusetts. These were purchased from
Harvard 45 Associates LLC ("Harvard 45") which is owned 70% by the 75% shareholder and treasurer of the General Partner, and 5% by the President of Hamilton. The total purchase
price for these condominiums was approximately $2,416,000 and was approved both by the Partnership's Advisory Committee and the General Partner.

11

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 3.    RELATED PERSON TRANSACTIONS (Continued)

Harvard 45
realized a gain of approximately $648,000 from these sales. Harvard 45 also sold 16 units to unrelated parties; the prices for all 21 units sold were comparable.

During
the second quarter of 2008, the Partnership sold three of the units originally purchased in 2003. The Partnership realized a gain of approximately $126,000 which is included in
other income. The remaining two units are recorded as property held for sale on the balance sheet and their operations have been reclassified from continuing operations.

The
above 42-unit condominium building is managed by an entity wholly owned by the 25% shareholder and President of the General Partner. That entity will receive annual
management fees from the five units of approximately $1,500, and Hamilton will reduce its management fees to approximately 2%, so that the total management fee will not exceed the 4% allowed by the
Partnership's Partnership Agreement.

In
March 2005, the Partnership sold the Middlesex Apartments to an entity wholly owned by the majority shareholder of the General Partner. The selling price was $6,500,000 which resulted
in a capital gain for the Partnership of approximately $5,800,000 and an increase in the Partnership's cash reserves of approximately $4,800,000 after paying off the existing $1,300,000 mortgage,
prepayment penalties and other selling expenses. The buyer is selling the property as condominium units. An entity 31% owned by the majority shareholder of the General Partner and 5% owned by the
President of the management company is the sales agent and will receive a variable commission of 3% to 5% on each sale. Total commissions paid to date are approximately $138,000. Although the buyer is
assuming the costs and economic risks of converting and selling the condominium units, if the net gains from the sale of these units exceed $500,000, the excess will be split equally between the buyer
and the Partnership. The buyer estimates that the gain from the sale of these units will exceed $500,000. There is one remaining unit unsold at June 30, 2008.

NOTE 4.    OTHER ASSETS

Included in prepaid expenses and other assets at June 30, 2008 and December 31, 2007 is a provision for insurance recovery from casualty losses of approximately $805,000
and $600,000, respectively. In addition, approximately $1,355,000 and $1,325,000 of security deposits and prepaid rent deposits are included in prepaid expenses and other assets at June 30,
2008 and December 31, 2007, respectively.

Included
in prepaid expenses and other assets at June 30, 2008 and December 31, 2007 is approximately $727,000 and $394,000, respectively, held in escrow to fund future
capital improvements.

Also
included in prepaid expenses and other assets is approximately $2,600,000 held by a Qualified Intermediary for the acquisition described in Note 2.

Financing
and leasing fees of $1,081,467 and $387,613 are net of accumulated amortization of $314,508 and $609,843 at June 30, 2008 and December 31, 2007, respectively.

NOTE 5.    MORTGAGE NOTES PAYABLE

At June 30, 2008 and December 31, 2007, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in
Note 2. At June 30, 2008, the fixed

12

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 5.    MORTGAGE NOTES PAYABLE (Continued)

interest
rates on these loans ranged from 4.84% to 8.46%, payable in monthly installments aggregating approximately $709,000, including interest, to various dates through 2023. The majority of the
mortgages are subject to prepayment penalties. At June 30, 2008, the weighted average interest rate on the above mortgages was 5.63%. The effective rate of 5.71% includes the amortization
expense of deferred financing costs. See Note 12 for fair value information.

The
Partnerships have pledged tenant leases as additional collateral for certain of these loans.

Approximate
annual maturities at June 30, 2008 are as follows:

2009current maturities

$
706,0002010


1,392,0002011


4,439,0002012


849,0002013


16,057,000Thereafter


111,714,000$
135,157,000


In
January 2008, the Partnership obtained a $1,700,000 mortgage on an unencumbered commercial property in Newton, Massachusetts known as Linewt LLC. The mortgage which matures in
January 2018 requires interest only payments at 5.75% for the term of the mortgage.

In
February 2008, the Partnership refinanced ten properties with outstanding 8.44% mortgages of approximately $37,800,000 with new mortgages totaling approximately $60,000,000. The new
mortgages which mature in February 2023 require interest only payments at interest rates from 5.6% to 5.7%. Deferred costs associated with these mortgages totaled approximately $710,000 and,
accordingly, the effective interest rates are 5.7% to 5.8%. Prepayment penalties of approximately $3,700,000 were incurred in these transactions. After payment of existing mortgages, prepayment
penalties and other costs of the transactions, approximately $17,000,000 was received by the Partnership.

In
April, the Partnership refinanced the property located at Worcester Road with a mortgage balance of approximately $3,500,000 at 8% with a new $6,000,000 mortgage at 5.97% interest
only mortgage which matures in March 2018. Prepayment penalties and other costs were approximately $850,000. In June, the Partnership refinanced the Westside Colonial Apartments property with a
balance of approximately $4,600,000 maturing in 2008 with interest at a rate of 6.52% with $7,000,000 at 5.59% interest only mortgage maturing in June 2023. Closing costs were approximately $100,000.
There were no prepayment penalties. Approximately $4,000,000 was received by the Partnership from these refinancings.

13

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 5.    MORTGAGE NOTES PAYABLE (Continued)

PROFORMA INFORMATION IS AS FOLLOWS

Six Months Ended
June 30, 2008

Year Ended
December 31, 2007Historic

Adjustment

Proforma

Historic

Adjustment

Proforma(Unaudited)RevenuesRental income


15,857,659


0


15,857,659


31,228,847


0


31,228,847Laundry and sundry income


206,998


0


206,998


396,894


0


396,89416,064,657


0


16,064,657


31,625,741


0


31,625,741ExpensesAdministrative


882,239


0


882,239


1,617,349


0


1,617,349Depreciation and amortization


3,228,609


0


3,228,609


6,903,790


0


6,903,790Interest


3,843,212


96,759


3,939,971


7,574,784


402,721


7,977,505Management fees


652,470


0


652,470


1,279,770


0


1,279,770Operating


2,332,615


0


2,332,615


4,121,795


0


4,121,795Renting


186,865


0


186,865


496,335


0


496,335Repairs and maintenance


2,244,691


0


2,244,691


4,869,479


0


4,869,479Taxes and insurance


1,770,140


0


1,770,140


3,498,347


0


3,498,34715,140,841


96,759


15,237,600


30,361,649


402,721


30,764,370Income Before Other Income and Discontinued Operations


923,816


(96,759
)

822,906


1,264,092


(402,721
)

861,371


The
above proforma information shows the effect of the Partnership's refinancing of approximately $46 million with interest at 6.52% to 8.44% with new mortgages of approximately
$71 million with interest of 5.54% to 5.97% as described above. The new mortgages are included in the June 30, 2008 balance sheet and the cash flows are included in the statement of cash
flows for the six months then ended. Net cash flows necessary to service these new interest only mortgages is approximately $106,000 less per year than the required payments on the old mortgages which
included principal payments of approximately $500,000 per year.

NOTE 6.    ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

The Partnership's residential lease agreements may require tenants to maintain a one-month advance rental payment and/or a security deposit. At June 30, 2008, amounts
received for prepaid rents of approximately $1,577,000 are included in cash and cash equivalents, and security deposits of approximately $1,355,000 are included in other assets.

14

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 7.    PARTNERS' CAPITAL

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

In
2008, the Partnership approved quarterly distributions of $7.00 per unit ($0.70 per receipt) payable on March 31, and June 30, 2008.

In
2007, the Partnership paid quarterly distributions of $7.00 per unit ($.70 per receipt) in March, June, September, and December 2007 for a total distribution of $28.00 per unit ($2.80
per receipt).

The
Partnership has entered into a deposit agreement with an agent to facilitate public trading of limited partners' interests in Class A Units. Under the terms of this agreement,
the holders of Class A Units have the right to exchange each Class A Unit for 10 Depositary Receipts. The following is information per Depositary Receipt:

Six Months Ended
June 30,2008

2007Income (Loss) per Depositary Receipt before Discontinued Operations

($
2.81
)
$
0.25Income (loss) from Discontinued Operations


7.07


0.06Net Income per Depositary Receipt after Discontinued Operations

$
4.26

$
0.31Distributions per Depositary Receipt

$
1.40

$
1.40


NOTE 8.    TREASURY UNITS

Treasury Units at June 30, 2008 are as follows:

Class A


38,256Class B


1,228General Partnership


6439,548


On
August 20, 2007, the Partnership established a Depositary Receipts (each of which is one-tenth of a Class A Unit) Repurchase Program whereby up to 100,000
receipts may be purchased over a 12 month period. On January 15, 2008, the General Partner authorized an increase from 100,000 to 200,000 the total number of Depositary Receipts that
could be repurchased pursuant to the Repurchase Program. On January 31, 2008, the General Partner authorized an additional increase in the total number of Depositary Receipts that could be
repurchased pursuant to the Repurchase Program from 200,000 to 300,000, and to 500,000 on March 10, 2008. The timing and amount of repurchases is dependent upon market conditions including, but
not limited to, trading price and availability and the Partnership may suspend the program at any time. As of June 30, 2008, the Partnership had repurchased 325,744 Depositary Receipts at an
average price of $72.13 per receipt totaling approximately $25,126,000 including brokerage fees paid by the Partnership.

15

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 8.    TREASURY UNITS (Continued)

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

As
of June 30, 2008, substantially as a result of the $25,126,000 repurchase of Depositary Receipts described above, the Partnership has a negative Partners' Capital of
$12,969,167.

NOTE 9.    COMMITMENTS AND CONTINGENCIES

From time to time, the Partnerships are involved in various ordinary routine litigation incidental to their business. The Partnership either has insurance coverage or has provided for
any uninsured claims which, in the aggregate, are not significant. The Partnerships are not involved in any material pending legal proceedings.

NOTE 10.    RENTAL INCOME

During the six months ended June 30, 2008, approximately 92% of rental income was related to residential apartments and condominium units with leases of one year or less. The
remaining 8% was related to commercial properties, which have minimum future annual rental income on non-cancellable operating leases at June 30, 2008 as follows:

Commercial
Property Leases2009

$
2,035,0002010


1,709,0002011


1,510,0002012


1,358,0002013


1,128,000Thereafter


2,240,000$
9,980,000


The
aggregate minimum future rental income does not include contingent rentals that may be received under various leases in connection with percentage rents, common area charges and real
estate taxes. Aggregate contingent rentals from continuing operations were approximately $231,000 and $366,000 for the six months ended June 30, 2008 and for the year ended December 31,
2007, respectively.

Rents
receivable are net of allowances for doubtful accounts of approximately $734,000 and $558,000 at June 30, 2008 and December 31, 2007, respectively. Included in rents
receivable is approximately $400,000 resulting from recognizing rental income from non-cancelable commercial leases with future rental increases on a straight-line basis. The
majority of this amount is for long-term leases with Staples and Trader Joe's at Staples Plaza in Framingham, Massachusetts.

16

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 11.    CASH FLOW INFORMATION

During the six months ended June 30, 2008 and 2007, cash paid for interest was $3,837,770 and $3,824,813, respectively.

NOTE 12.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Partnership in estimating the fair value of its financial instruments:



Carrying Amount

Estimated Fair ValueMortgage Notes PayableAt June 30, 2008

$
135,157,209

$
132,541,446At December 31, 2007

$
113,579,904

$
115,104,658


Disclosure
about fair value of financial instruments is based on pertinent information available to management as of June 30, 2008 and December 31, 2007. Although
management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since
December 31, 2007 and current estimates of fair value differ significantly from these amounts presented herein.

NOTE 13.    TAXABLE INCOME AND TAX BASIS

Taxable income reportable by the Partnership and includable in its partner's tax returns is different than financial statement income because of deferred gains, accelerated depreciation,
different tax lives, and timing differences related to prepaid rents and allowances. Taxable income is approximately $300,000 greater than statement income for the six months ended June 30,
2008 and approximately $1,000,000 greater than statement income for the year ended December 31, 2007. The cumulative tax basis of the Partnership's real estate at December 31, 2007 is
approximately $1,000,000 less than the statement basis. The primary reason for the lower basis is the acquisition of Linewt in 2007 utilizing a tax free exchange. The Partnership's tax basis in its
joint venture investments is approximately $200,000 less than statement basis. The tax free exchanges in 2007 and 2008 and depreciation rules that generated substantial tax deductions in prior years
may result in taxable income in future years exceeding statement income.

17

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 14.    INVESTMENT IN PARTNERSHIPS

Since November 2001, the Partnership has invested in nine limited partnerships, the majority of which has invested in residential apartment complexes, with one partnership investing in
commercial property. The Partnership has a 50% ownership interest in each investment. The other investors are Harold Brown, the President of the Management Company and five other employees of the
Management Company. Harold Brown's ownership interest is between 43.2% and 47.5%, with the balance of 6.8% and 2.5% owned by the others. A description of each investment is as follows:

On
October 3, 2005, the Partnership invested $2,500,000 for a 50% ownership interest in a 168-unit apartment complex in Quincy, Massachusetts. The purchase price was
$30,875,000. The Partnership plans to sell the majority of units as condominium and retain 48 units for long-term investment. The proceeds from the condominium sales are primarily to be
used to reduce the above-mentioned mortgage. Gains from the sales of units will be taxed at ordinary income rates (approximately $47,000 per unit). As of July 28, 2008, 102 units have been sold
and an additional unit has a signed purchase and sales agreement. In February 2007, the Partnership refinanced the 48 units which will be retained with a new mortgage in the amount of $4,750,000 with
an interest rate of 5.57%, interest only for five years. The loan will be amortized over 30 years thereafter and matures in March 2017. In April 2008, the Partnership refinanced 20 units and
obtained a new mortgage in the amount of $2,368,000 with interest at 5.75%, interest only, with matures in 2013. As of July 28, 2008, the Partnership sold two units, the proceeds of which were
used to pay down the mortgage on the property. The balance on the original loan on the units held for sale has been paid in full. This investment is referred to as Hamilton Bay, LLC.

On
March 7, 2005, the Partnership invested $2,000,000 for a 50% ownership interest in a building comprising 49 apartments, one commercial space and a 50-car surface
parking lot located in Boston, Massachusetts. The purchase price was $14,300,000, with a $10,750,000 mortgage. The Partnership plans to operate the building and initiate development of the parking
lot. The plan may also include disposition of selected units, as condominiums in order to reduce the above mentioned mortgage. Any profits from the condominium sales will be taxed at ordinary rates.
In June 2007, the Partnership separated the parcels, formed an additional limited liability company for the residential apartments and obtained a mortgage on the property. The new limited liability
company formed for the residential apartments is referred to as Hamilton Essex 81 Apartments, LLC. The new mortgage of $7,762,000 at 5.88% on the apartments matures in 2017. This mortgage
requires interest only payments through August 2009. Principal payments thereafter are based on a 30-year amortization until maturity in 2017. The original mortgage with a balance of
$3,000,000 at 4.25% is on the commercial space and is due in 2009. This mortgage may be extended for an additional two years, requiring that the balance be reduced by $1,000,000 for each year's
extension. The investment in the commercial property is referred to as Essex 81 LLC.

On
March 2, 2005, the Partnership invested $2,352,000 for a 50% ownership interest in a 176-unit apartment complex with an additional small commercial building located
in Quincy, Massachusetts. The purchase price was $23,750,000. The Partnership plans to sell the majority of units as condominiums and retain 49 units for long-term investment. The
Partnership obtained a new 10-year mortgage in the amount of $5,000,000 on the units to be retained by the Partnership. The interest on the new loan is 5.67% fixed for the 10 year
term with interest only payments for five years and amortized over a 30 year period for the balance of the loan term. As of July 28, 2008, 125 units have been sold, and an

18

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 14.    INVESTMENT IN PARTNERSHIPS (Continued)

additional
unit has a signed purchase and sales agreement. Gains from the sales of units (approximately $56,000 per unit) will be taxed at ordinary income rates. This investment is referred to as
Hamilton 1025, LLC.

In
September 2004, the Partnership invested approximately $5,075,000 for a 50% ownership interest in a 42-unit apartment complex located in Lexington, Massachusetts. The
purchase price was $10,100,000. In October 2004, the Partnership obtained a mortgage on the property in the amount of $8,025,000 and returned $3,775,000 to the Partnership. The Partnership obtained a
new 10-year mortgage in the amount of $5,500,000. The interest on the new loan is 5.67% fixed for the ten year term with interest only payments for five years and amortized over a
30 year period for the balance of the loan. This new loan required a cash contribution by the Partnership of $1,250,000 in 2006. The unamortized deferred financing costs of approximately
$30,000 were written off in the first quarter of 2007. This investment is referred to as Hamilton Minuteman, LLC.

In
August 2004, the Partnership invested $8,000,000 for a 50% ownership interest in a 280-unit apartment complex located in Watertown, Massachusetts. The total purchase price
was $56,000,000. As of July 28, 2008, the Partnership sold 137 units as condominiums which were located in three buildings. Gains from these sales will be taxed as ordinary income
(approximately $33,000 per unit). The majority of the sales proceeds were applied to reduce the mortgage with the final payment made during the second quarter of 2007. With the sale of the units and
the payments of the liabilities, the assets will be combined with Hamilton on Main Apartments. An entity partially owned by the majority shareholder of the General Partner and the President of the
management company, 31% and 5% respectively, is the sales agent and will receive a variable commission on each sale of 3% to 5%. Hamilton on Main, LLC is known as Hamilton Place.

In
2005, Hamilton on Main Apartments, LLC obtained a new ten year mortgage on the three buildings to be retained. The new mortgage is $16,825,000, with interest only of 5.18% for
three years and amortizing on a 30 year schedule for the remaining seven years when the balance is due. The net proceeds after funding escrow accounts and closing costs on the new mortgage were
approximately $16,700,000, which were used to reduce the existing mortgage. Hamilton on Main LLC paid a fee of approximately $400,000 in connection with this early extinguishment of debt.

In
November 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, 2008 of $7,526,734 at 6.9% which is 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 for the 2004 and 2005 acquisitions, the Treasurer of the General Partner has provided a limited guaranty equal to fifty percent (50%) of the outstanding
balance, reducing to zero percent (0%) upon the completion of the Curtailment Payments. The mortgage on Essex 81 Commercial is the only mortgage with a guaranty. In the event that he is obligated to
make payments to the lender as a result of this guaranty, the Partnership and other investors have, in turn, agreed to indemnify him for their proportionate share of any such payments.

19

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 14.    INVESTMENT IN PARTNERSHIPS (Continued)

Summary financial information for the six months ended June 30, 2008 (unaudited)

Essex 81
Commercial

Essex 81
Apartments

345
Franklin

Hamilton
1025

Hamilton
Bay
Sales

Hamilton
Bay
Apartments

Minuteman

Hamilton
on Main

Hamilton
Place
Sales

TotalASSETSRental Properties


2,839,274


10,492,129


9,242,705


7,020,145


2,671,332


8,390,370


8,497,267


25,896,582





75,049,804Cash & Cash Equivalents


70,068


1,586


9,267


13,178


379,317


40,783


37,940


118,720


2,579


673,439Rent Receivable


55,846


14,222


14,210


4,287


606


(1,562
)

514


5,635





93,757Real Estate Tax Escrow





48,350


26,386


43,414





38,056


18,759


85,979





260,944Due From Investment Properties


23,000




















185,000


1,796,355


2,004,355Prepaid Expenses & Other Assets


1,518


136,842


70,512


71,871


133,167


51,648


59,666


324,796





850,020Financing & Leasing Fees


22,223


145,323


44,911


42,264


24,296


54,871


36,243


47,598





417,728Total Assets


3,011,930


10,838,451


9,407,990


7,195,158


3,208,718


8,574,165


8,650,389


26,664,311


1,798,935


79,350,047LIABILITIES AND PARTNERS' CAPITALMortgage Notes Payable


3,000,000


7,762,000


7,526,734


5,000,000


2,088,000


4,750,000


5,500,000


16,751,162





52,377,896Due to Investment Properties








108,000


25,000








75,000


1,796,355





2,004,355Accounts Payable & Accrued Exp


20,209


43,335


71,647


4,457


35,682


4,015


36,308


154,637


1,285


371,575Advance Rental Payments & Security Deposits


24,000


112,851


132,231


59,648


20,281


79,706


47,255


176,709





652,681Total Liabilities


3,044,209


7,918,186


7,918,186


5,089,105


2,143,963


4,833,722


5,658,563


18,878,862





55,406,507Partners' Capital


(32,279
)

2,920,265


1,569,378


2,106,053


1,064,755


3,740,444


2,991,826


7,785,448


1,797,650


23,943,540Total Liabilities & Capital


3,011,930


10,838,451


9,407,990


7,195,158


3,208,718


8,574,165


8,650,389


26,664,311


1,798,935


79,350,047Partners' CapitalNERA 50%


(16,140
)

1,460,133


784,689


1,053,027


532,378


1,870,222


1,495,913


3,892,724


898,825


11,971,770


20

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

Summary financial information for the six months ended June 30, 2008 (unaudited)

Essex 81
Commercial

Essex 81
Apartments

345
Franklin

Hamilton
1025

Hamilton
Bay
Sales

Hamilton
Bay
Apartments

Minuteman

Hamilton
on Main

Hamilton
Place
Sales

TotalRevenuesRental Income


206,953


530,619


517,077


393,602


115,855


409,835


372,127


1,174,931


1,747


3,722,746Laundry and Sundry Income





570


657











983


10,285





12,495206,953


531,189


517,734


393,602


115,855


409,835


373,110


1,185,216


1,747


3,735,241ExpensesAdministrative


4,323


3,890


14,456


8,430


7,834


4,686


892


29,556


3,770


77,836Depreciation and Amortization


59,764


198,459


177,598


165,995


105,856


194,355


258,300


765,734


20,508


1,946,571Interest


72,141


232,311


262,839


143,919


32,179


135,251


158,146


442,720


7


1,479,512Management Fees


14,351


20,720


20,924


15,665


5,283


16,232


15,055


49,411


51


157,692Operating


20,902


48,570


31,957


827


1,656


543


29,572


207,870


214


342,110Renting





5,325


16,663


3,076


1,556


1,187


1,778


14,871





44,456Repairs and Maintenance


1,579


48,073


26,787


162,223


100,236


152,895


48,674


227,057


5,828


773,352Taxes and Insurance


37,370


51,141


43,891


76,492


35,727


68,636


69,860


162,028


4,861


550,006210,428


608,489


595,114


576,626


290,329


573,786


582,277


1,899,248


35,239


5,371,535Income (Loss) Before Other Income


(3,475
)

(77,299
)

(77,380
)

(183,024
)

(174,474
)

(163,951
)

(209,167
)

(714,031
)

(33,492
)

(1,636,294
)Other Income (Loss)Interest Income


1,324


26


229


555


3,049


393


209


1,243


2,639


9,667Gain on Sale of Real Estate











54,980


281,028








12,381


348,204


696,594Other Income (Expenses)





























1,324


26


229


55,536


284,077


393


209


13,624


350,843


706,261Net Income (Loss)


(2,151
)

(77,274
)

(77,151
)

(127,489
)

109,604


(163,558
)

(208,959
)

(700,408
)

317,351


(930,034
)P&LNERA 50%


(1,076
)

(38,637
)

(38,575
)

(63,744
)

54,802


(81,779
)

(104,479
)

(350,204
)

158,676


(465,017
)Total units/condominiums


1


49


40


176


120


48


42


146


137


758Units to be retained


1


49


40


49


0


48


42


146


0


374Units to be sold











127


120











137


384Units sold through July 28, 2008











125


102











137


364Balance of unsold units











2


18














20Unsold units with deposits for future sale as of July 28, 2008











1


1














2


21

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

Summary financial information for the three months ended June 30, 2008 (unaudited)

Essex 81
Commercial

Essex 81
Apartments

345
Franklin

Hamilton
1025

Hamilton
Bay
Sales

Hamilton
Bay
Apartments

Minuteman

Hamilton
on Main

Hamilton
Place
Sales

TotalRevenuesRental Income


111,581


260,428


256,571


194,675


65,414


206,127


185,812


585,054





1,865,662Laundry and Sundry Income





1,866


241














4,095





6,203111,581


262,295


256,813


194,675


65,414


206,127


185,812


589,149





1,871,865ExpensesAdministrative


557


2,009


8,237


4,734


1,512


2,599


1,696


11,731


1,304


34,378Depreciation and Amortization


29,882


103,514


90,904


82,997


53,442


97,350


129,844


391,709


6,236


985,880Interest


33,198


116,142


131,156


71,968


26,861


67,638


79,086


221,170





747,220Management Fees


3,252


12,563


10,594


7,868


2,645


8,161


7,807


24,675





77,567Operating


12,426


20,934


15,960


340


363


302


9,919


79,894


13


140,152Renting





2,325


12,825


2,806


389


770


1,223


6,286





26,624Repairs and Maintenance


840


25,353


14,992


73,639


22,125


50,555


23,043


92,950


(4,727
)

298,769Taxes and Insurance


18,965


25,815


22,175


39,789


13,417


34,251


35,457


80,897


1,393


272,15999,118


308,655


306,845


284,141


120,755


261,626


288,077


909,313


4,219


2,582,748Income Before Other Income


12,463


(46,361
)

(50,032
)

(89,466
)

(55,341
)

(55,499
)

(102,264
)

(320,163
)

(4,219
)

(710,883
)Other Income (Loss)Interest Income


597


21


103


10


3,049


148


118


726


68


4,840Gain on Sale of Real Estate














204,356











67,261


271,617Other Income (Expenses)





























597


21


103


10


207,405


148


118


726


67,328


276,456Net Income (Loss)


13,060


(46,340
)

(49,929
)

(89,456
)

152,064


(55,352
)

(102,146
)

(319,437
)

63,109


(434,426
)P&LNERA 50%


6,530


(23,170
)

(24,965
)

(44,728
)

76,032


(27,676
)

(51,073
)

(159,719
)

31,555


(217,213
)


Future annual mortgage maturities at June 30, 2008 are as follows:

Essex 81

Essex 81
Apartments

345
Franklin

Hamilton
1025

Hamilton
Bay
Sales

Hamilton
Bay
Apartments

Minuteman

Hamilton
on Main

Hamilton
Place
SalesPeriod End

March
2005

March
2005

November
2005

March
2005

October
2005

October
2005

August
2004

August
2004

August
2004

TotalJune 30, 2009


3,000,000





132,786














249,332





3,382,118June 30, 2010





99,321


142,244














257,422





498,987June 30, 2011





97,016


152,375














271,077





520,468June 30, 2012





101,709


163,228


35,232


20,668





33,648


285,457





639,942June 30, 2013





109,192


174,853


63,301


64,350


2,088,000


69,329


300,600





2,869,625Thereafter





7,354,763


6,761,248


4,901,467


4,664,982





5,397,023


15,387,273





44,466,7563,000,000


7,762,000


7,526,734


5,000,000


4,750,000


2,088,000


5,500,000


16,751,162


0


52,377,896


22

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

Summary financial information for the six months ended June 30, 2007 (unaudited)

Essex 81

345
Franklin

Hamilton
1025

Hamilton
Bay
Sales

Hamilton
Bay
Apartments

Minuteman

Hamilton
on Main

Hamilton
Place
Sales

TotalASSETSRental Properties


13,724,843


9,376,708


7,937,563


8,546,487


9,276,323


8,973,312


26,015,416


5,665,935


89,516,587Cash & Cash Equivalents


49,199


49,161


88,325


2,615


97,975


1,033


104,413


240,763


633,488Rent Receivable


118,175


8,813


4,214


(2,821
)

1,609


2,846


14,283


11,073


158,193Real Estate Tax Escrow


38,103


35,404


19,741





29,692


18,764


401,460





543,164Due From Investment Properties








600,000


4,113,398











219,214


4,932,612Prepaid Expenses & Other Assets


100,778


112,033


234,302


135,181


34,693


111,493


374,327


509,423


1,612,228Financing & Leasing Fees


179,356


53,077


47,290


23,120


61,024


41,231


56,294


9,408


470,799Total Assets


14,210,453


9,635,196


8,931,435


12,817,979


9,501,316


9,148,683


26,966,193


6,655,816


97,717,071LIABILITIES AND PARTNERS' CAPITALMortgage Notes Payable


10,762,000


7,650,691


5,000,000


6,513,496


4,750,000


5,500,000


16,825,000





57,001,188Due to Investment Properties














4,713,398


150,000


69,214





4,932,612Accounts Payable & Accrued Exp


93,087


43,690


47,540


175,698


3,000


25,144


139,910


39,478


567,547Advance Rental Payments & Security Deposits


138,849


161,867


58,019


70,145


84,113


38,220


143,632


12,371


707,215Total Liabilities


10,993,936


7,856,248


5,105,559


6,759,340


9,550,510


5,713,364


17,177,756


51,849


63,058,561Partners' Capital


3,216,517


1,778,948


3,825,876


6,058,639


(49, 194
)

3,435,319


9,788,437


6,603,967


34,658509Total Liabilities and Capital


14,210,453


9,635,196


8,931,435


12,817,979


9,501,316


9,148,683


26,966,193


6,655,816


97,717,071Partners' CapitalNERA 50%


1,608,259


889,474


1,912,938


3,029,320


(24,597
)

1,717,659


4,894,218


3,301,984


17,329,255


23

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

Summary financial information for the six months ended June 30, 2007 (unaudited)

Essex 81

345
Franklin

Hamilton
1025

Hamilton
Bay
Sales

Hamilton
Bay
Apartments

Minuteman

Hamilton
on Main

Hamilton
Place
Sales

TotalRevenuesRental Income


717,497


515,882


403,756


492,218


247,869


360,583


1,181,301


183,184


4,102,290Laundry and Sundry Income


1,571


2,446











751


13,752





18,519719,067


518,328


403,756


492,218


247,869


361,334


1,195,052


183,184


4,120,808ExpensesAdministrative


7,562


10,999


13,903


22,082


5,796


3,686


26,965


6,013


97,006Depreciation and Amortization


222,042


166,386


194,412


498,713


45,764


288,201


1,023,658


166,634


2,605,811Interest


399,788


266,860


142,924


376,671


102,085


163,272


440,320


50,001


1,941,922Management Fees


26,690


22,432


17,972


20,016


13,369


14,511


46,939


6,927


168,855Operating


64,597


33,775


1,326


14,268


144


33,512


153,084


3,325


304,029Renting


2,600


12,983


2,999


1,391


2,952


1,627


4,219





28,771Repairs and Maintenance


42,615


24,362


143,126


194,478


76,905


33,812


147,210


126,120


788,627Taxes and Insurance


86,091


44,668


86,259


112,697


50,413


36,314


139,630


52,434


608,507851,986


582,465


602,920


1,240,317


297,427


574,935


1,982,026


411,454


6,543,528Income Before Other Income


(132,918
)

(64,137
)

(199,164
)

(748,099
)

(49,558
)

(213,601
)

(786,973
)

(228,270
)

(2,422,720
)Other Income (Loss)Interest Income


1,081


522


5,049


109


363


5,470


441


2,359


15,395,Gain on Sale of Real Estate








473,429


624,139











531,584


1,629,152Other Income (Expenses)








(37,428
)







(2,248
)







(39,676
)1,081


522


441,050


624,248


363


3,222


441


533,943


1,604,870Net Income (Loss)


(131,837
)

(63,615
)

241,886


(123,850
)

(49,195
)

(210,379
)

(786,532
)

305,673


(817,850
)P&LNERA 50%


(65,919
)

(31,807
)

120,943


(61,925
)

(24,597
)

(105,190
)

(393,266
)

152,836


(408,925
)Total units/condominiums


49


40


176


120


48


42


146


137


758Units to be retained


49


40


49


0


48


42


146


0


374Units to be sold








127


120











137


384Units sold through July 23, 2007








119


66











111


296Balance of unsold units








8


54











26


88Unsold units with deposits for future sale as of July 23, 2007








3


12











5


20


24

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

Summary income statement for the three months ended June 30, 2007 (unaudited)

Essex 81

345
Franklin

Hamilton
1025

Hamilton
Bay
Sales

Hamilton
Bay
Apartments

Minuteman

Hamilton
on Main

Hamilton
Place
Sales

TotalRevenuesRental Income


354,361


255,820


176,561


174,561


186,098


180,729


592,459


80,734


2,001,324Laundry and Sundry Income


295


858


(7,973
)

(4,193
)




751


6,900





(3,363
)354,656


256,678


168,588


170,368


186,098


181,480


599,359


80,734


1,997,961ExpensesAdministrative


3,767


3,387


7,317


7,669


3,632


(42,175
)

12,682


3,588


(133
)Depreciation and Amortization


111,134


83,849


97,207


252,468


31,141


129,266


512,345


84,567


1,301,975Interest


198,116


133,122


71,874


151,687


67,544


77,198


221,411


11,741


932,692Management Fees


12,337


11,685


8,206


6,885


13,369


7,197


23,079


2,967


85,725Operating


28,165


15,261


652


1,124


144


10,282


65,796


2,015


123,437Renting


2,600


11,580


540


185


2,952


617


1,259





19,733Repairs and Maintenance


25,187


15,227


69,999


87,510


53,747


17,116


73,586


54,998


397,368Taxes and Insurance


43,439


16,813


42,303


41,072


37,155


18,281


57,443


22,645


279,151424,744


290,923


298,098


548,598


209,683


217,782


967,600


182,520


3,139,947Income Before Other Income


(70,087
)

(34,246
)

(129,511
)

(378,230
)

(23,584
)

(36,302
)

(368,241
)

(101,785
)

(1,141,986
)Other Income (Loss)Interest Income


518


283


3,049





359





333


334


4,876Gain on Sale of Real Estate








332,106


460,944











406,332


1,199,381Other Income (Expenses)








(37,428
)







(2,248
)







(39,676
)518


283


297,727


460,944


359


(2,248
)

333


406,666


1,164,582Net Income (Loss)


(69,570
)

(33,962
)

168,217


82,714


(23,225
)

(38,551
)

(367,908
)

304,880


22,595P&LNERA 50%


(34,785
)

(16,981
)

84,108


41,357


(11,613
)

(19,275
)

(183,954
)

152,440


11,298


Future annual mortgage maturities at June 30, 2007 are as follows:

Essex 81

345
Franklin

Hamilton
1025

Hamilton
Bay
Sales

Hamilton
Bay
Apartments

Hamilton
Minuteman

Hamilton
on Main
ApartmentsPeriod End

March
2005

November
2005

March
2005

October
2005

October
2005

August
2004

August
2004

TotalJune 30, 2008


3,000,000


123,957





6,513,496








78,717


6,716,170June 30, 2009





132,786














244,454


3,377,240June 30, 2010





142,244














257,422


399,665June 30, 2011





152,375














271,077


423,452June 30, 2012





163,228


35,232





20,668


33,648


285,457


538,232Thereafter


7,762,000


6,969,102


4,964,768





4,729,332


5,466,352


15,687,873


45,546,42810,762,000


7,650,691


5,000,000


6,513,496


4,750,000


5,500,000


16,751,162


57,001,188


Interest rates, the majority of which are variable, range from 4.45% to 6.90% at June 30, 2008.

25

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 15.    NEW ACCOUNTING PRONOUNCEMENT

In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force ("EITF") regarding EITF 04-05, "Investor's Accounting for an Investment in a
Limited Partnership When the Investor is the Sole General Partner and the Limited Partners Have Certain Rights." The conclusion provides a framework for addressing the question of when a sole general
partner, as defined in EITF 04-05, should consolidate a limited partnership. The EITF has concluded that the general partner of a limited partnership should consolidate a limited
partnership, unless the limited partners have either (a) the substantive ability to dissolve the limited partnership or otherwise remove the general partner without cause, or
(b) substantive participating rights. In addition, the EITF concluded that the guidance should be expanded to include all limited partnerships, including those with multiple general partners.
We adopted EITF 04-05 as of January 1, 2006. We have assessed our investments in unconsolidated real estate joint ventures and have determined that
EITF 04-05 did not have an impact on our financial condition or results of operations.

In
September 2006, the FASB issued Statement No. 157,Fair Value Measurements("SFAS No. 157"). SFAS No. 157 provides
guidance for using fair value to measure assets and liabilities. This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when
pricing the asset or liability. SFAS No. 157 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data.
SFAS No. 157 applies whenever other standards require assets or liabilities to be measured at fair value. This statement is effective in fiscal years beginning after November 15, 2007.
We believe that the adoption of this standard on January 1, 2008 will not have a material effect on our consolidated financial statements.

In
September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 ("SAB 108"), which becomes effective for the first fiscal period ending
after November 15, 2006. SAB 108 provides guidance on the consideration of the effects of prior period misstatements in quantifying current year misstatements for the purpose of a
materiality assessment. SAB 108 provides for the quantification of the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on
the current year financial statements. The adoption of SAB 108 on December 21, 2006 did not have a material effect on our consolidated financial statements.

In
February 2007, the FASB issued statement No. 159,The Fair Value Option for Financial Assets and Financial Liabilities("SFAS No. 159"). SFAS No. 159 expands opportunities to use fair value measurement in financial reporting and permits entities to choose to measure many financial
instruments and certain other items at fair value.

FASB Statement No. 141(R)(revised 2007), ("FASB No. 141(R)"),Business Combinations

In December 2007, the FASB issued FASB No. 141(R) which establishes principles and requirements for how the acquirer
shall recognize and measure in financial statements the identifiable assets acquired, liabilities assumed, any noncontrolling interest in the acquiree and goodwill acquired in a business combination.
This statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.
The Partnership is currently assessing the potential impact that the adoption of FASB No. 141(R) will have on its financial position and results of operations.

26

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2008

(UNAUDITED)

NOTE 15.    NEW ACCOUNTING PRONOUNCEMENT (Continued)

FASB Statement No. 160 ("FASB No. 160")Noncontrolling Interests in Consolidated Financial Statementsan Amendment of
ARB No. 151

In December 2007, the FASB issued No. 160, which establishes and expands accounting and reporting standards for noncontrolling
interests, which will be recharacterized as noncontrolling interests, in a subsidiary and the deconsolidation of a subsidiary. FASB 160 is effective for business combinations for which the
acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This statement is effective for fiscal years beginning on or after
December 31, 2008. The Partnership is currently assessing the potential impact that the adoption of FASB No. 160 will have on its financial position and results of operations.

NOTE 16.    DISCONTINUED OPERATIONS AND SALES OF REAL ESTATE

The following tables summarize income from discontinued operations for the six months ended June 30, 2008 and 2007:

Six Months Ended
June 30,2008

2007Total Revenues

$
177,591

$
661,557Operating and other expenses


164,991


492,023Depreciation and amortization


47,455


70,606212,446


562,629(Loss) income from discontinued operations


(34,855
)

98,928Gain on the sale of real estate


9,990,942


0$
9,956,087

$
98,928


27

---





Item 2MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion should be read in conjunction with the financial statements and notes thereof appearing elsewhere in this
Report. This Report, on Form 10-Q, contains forward-looking statements within the meaning of the securities law. Actual results or developments could differ materially from those
projected in such statements as a result of certain factors set forth in the section below entitled "Factors That May Affect Future Results" and elsewhere in this Report.

For
the first half of 2008, the Partnership was on target for its revenue, expense and occupancy expectations. Management anticipates that bad debt and vacancy will rise in the latter
half of the year as economic weakness and inflationary pressures begin to take their toll on the local economy thereby negatively impacting both revenues and operating expenses. A review of the
financial data reveals that revenue gains in the portfolio are being matched by increases in utility costs. Management continues to be diligent in offsetting the expense increases with reductions in
other line items.

With
the substantial completion of the Joint Venture condominium sales, Management is now focused on improving the rental income produced by the units retained for future sale. All
remaining units have been financed for between 5 and 10 years which gives the Partnership the opportunity to realize future market appreciation while avoiding any demands for mortgage payoffs
which arise out of the recent disequilibrium in the credit markets.

In
April, the Partnership sold Coach Estates for $4,600,000 which resulted in net proceeds of $2,700,000. These funds were placed with a Qualified Intermediary in order to execute a 1031
tax free
exchange which will limit future capital gains tax to the Partnership. The Partnership has identified a $7,000,000 like kind purchase which will eliminate the tax associated with the sale. We
anticipate acquiring the property prior to October 1st of this year. To fund this purchase, the Partnership will be assuming an existing mortgage of approximately
$4,000,000, the sales proceeds of approximately $2,600,000 from the sale of Coach and the balance will be funded from the Partnership's cash reserves.

With
the successful refinance of Westside Colonial in June, Management has completed its refinancing goal for 2008 which resulted in a reduction in principal and interest payments in
excess of $100,000 annually, raised capital for the stock repurchase program and extended maturities out 15 years while at the same time providing flexibility for future refinancing if
necessary.

Given
market conditions during the last half of 2007 and the first six months of 2008, Management believed that the stock repurchase program was a better alternative to purchasing real
estate or making a one time distribution to the Partners. The Repurchase Program was adopted by management to provide long-term value to the Partners through the repurchase of Depositary
Receipts at prices that management believed to be at a discount to the per Unit net realizable value of the Partnership. As a result of the Repurchase Program, which was solely accretive to the
holders of Class A Units, the Class A Units now represent 75.3% of the equity of the Partnership and the Class B Units and General Partner Units now represent 23.5% and 1.2% of
the equity of the Partnership, respectively. However in accordance with the terms and conditions of the Partnership Agreement, the holders of Class A Units, Class B Units and General
Partner Units remain entitled to an 80%, 19%, and 1% share of profits, losses, distributions and other allocations of the Partnership, respectively. Prior to the adoption of the Repurchase Program,
the economic interest of each class of Partnership Units was identical to its respective equity interests in the Partnership. The Repurchase Program was intended to provide long-term value
to all Partners but was not intended to cause the economic and equity interests of each class to be disproportionate. Consequently, management is considering whether, how and to what extent it can
restore proportionate economic and equity interests of the classes, including without limitation the repurchase of Class B or General Partner Units or the issuance of Class A Units in
treasury in exchange of Class B Units and General Partner Units.

28

---



While
Management is active in the stock repurchase plan, it weighs alternative investments in real estate and thus considers this when real estate opportunities avail themselves from
time to time.

The
Partnership has retained The Hamilton Company ("Hamilton") to manage and administer the Partnership's and Joint Ventures' Properties. Hamilton is a full-service real
estate management company, which has legal, construction, maintenance, architectural, accounting and administrative departments. The Partnership's properties represent approximately 40% of the total
properties and 70% of the residential properties managed by Hamilton. Substantially all of the other properties managed by Hamilton are ownedwholly or partially, directly or
indirectlyby Harold Brown. The Partnership's Second Amended and Restated Contract of Limited Partnership (the "Partnership Agreement") expressly provides that the general partner may
employ a management company to manage the properties, and that such management company may be paid a fee of 4% of rental receipts for administrative and management services (the "Management Fee"). The
Partnership annually pays Hamilton the full Management Fee, in monthly installments.

At
June 30, 2008, Harold Brown, his brother Ronald Brown and the President of Hamilton, Carl Valeri, collectively own approximately 31.2% of the Depositary Receipts representing
the Partnership's Class A Units (including Depositary Receipts 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 the capital stock of NewReal, Inc. ("NewReal"), the Partnership's sole general partner, and all of the outstanding stock of Hamilton. Ronald Brown also owns 25% 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 Harold Brown is NewReal's Treasurer and also a director.
Two of NewReal's other directors Roberta Ornstein and Conrad DiGregorio, also own immaterial amounts of the Partnership's Class A Units or receipts.

In
addition to the Management Fee, the Partnership Agreement further provides for the employment of outside professionals to provide services to the Partnership and allows NewReal to
charge the Partnership for the cost of employing professionals to assist with the administration of the Partnership's properties. Additionally, from time to time, the Partnership pays Hamilton for
repairs and maintenance services, legal services, construction services and accounting services. The costs charged by Hamilton for these services are at the same hourly rate charged to all entities
managed by Hamilton, and management believes such rates are competitive in the marketplace.

Hamilton
accounted for approximately 6% of the repair and maintenance expense paid for by the Partnership in the six months ended June 30, 2008, and approximately 5% for the year
ended December 31, 2007. Of the funds paid to Hamilton for this purpose, the great majority was to cover the cost of services provided by the Hamilton maintenance department, including
plumbing, electrical, carpentry services, and snow 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 but are located more than a reasonable distance from Hamilton's headquarters in Allston, Massachusetts are generally
serviced by local, independent companies.

Hamilton's
legal department handles most of the Partnership's eviction and collection matters. Additionally, it prepares most long-term commercial lease agreements and
represents the Partnership in selected purchase and sale transactions. Overall, Hamilton provided approximately 45% of the legal services paid for by the Partnership during the six months ended
June 30, 2008 and approximately 59% for the year ended December 31, 2007.

Additionally,
as described in Note 3 to the Consolidated Financial Statements, the Hamilton Company received similar fees from the Investment Properties.

R.
Brown Partners, which is owned by Ronald Brown, manages the condominium association containing two condominium units located in Brookline, Massachusetts. That entity will receive
annual

29

---



management
fees from the five units of approximately $3,000, and Hamilton will reduce its management fees to approximately 2%, so that the total management fee will not exceed the 4% allowed by the
Partnership's Partnership Agreement.

The
Partnership requires that three bids be obtained for construction contracts in excess of $5,000. Hamilton may be one of the three bidders on a particular project and may be awarded
the contract if its bid and its ability to successfully complete the project are deemed appropriate. For contracts that are not awarded to Hamilton, Hamilton charges the Partnership a construction
supervision fee equal to 5% of the contract amount. Hamilton's architectural department also provides services to the Partnership on an as-needed basis. In 2008, Hamilton provided the
Partnership approximately $33,500 in construction and architectural services. In 2007, Hamilton provided construction and architectural services paid for by the Partnership totaling $750,000.

Prior
to 1991, the Partnership employed an outside, unaffiliated company to perform its bookkeeping and accounting functions. Since that time, such services have been provided by the
accounting staff at Hamilton which consists of approximately 14 people. During the six months ended June 30, 2008, Hamilton charged the Partnership $50,000 ($25,000 per quarter) for bookkeeping
and accounting services and anticipates an additional $25,000 for each of the remaining quarters in 2008.

For
more information on related party transactions, see Note 3 to the Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Revenue
Recognition: Rental income from residential and commercial properties is recognized over the term of the related lease. Amounts 60 days in arrears are charged against
income. Certain leases of the commercial properties provide for increasing stepped minimum rents, which are accounted for on a straight line basis over the term of the lease.

Real
Estate and Depreciation: Real estate assets are stated at the lower of cost or fair value, less accumulated depreciation. Costs related to the acquisition, development, construction
and improvement of properties are capitalized, including interest, internal wages and benefits, real estate taxes and insurance. Capitalization usually begins with commencement of development activity
and ends when the property is ready for leasing. Replacements and improvementssuch as HVAC equipment, structural

30

---



replacements,
windows, appliances, flooring, carpeting and kitchen/bath replacements and renovationsare capitalized and depreciated over their estimated useful lives as
follows:



If
there is an event or change in circumstances that indicates an impairment in the value of a property, the Partnership's policy is to assess the impairment by making a comparison of
the current and projected operating cash flows of the property over its remaining useful life, on an undiscounted basis, to the carrying amount of the property. If the carrying value is in excess of
the estimated projected operating cash flows of the property, the Partnership would recognize an impairment loss equivalent to
the amount required to adjust the carrying amount to its estimated fair value. The Partnership has not recognized an impairment loss since 1995.

Rental
Property Held for Sale and Discontinued Operations: When assets are identified by management as held for sale, the Partnership discontinues depreciating the assets and estimates
the sales price, net of selling costs, of such assets. If, in management's opinion, the net sales price of the assets which have been identified as held for sale is less than the net book value of the
assets, a valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

Investments
in Partnerships: The Partnership accounts for its 50% ownership in the Investment Properties under the equity method of accounting, as it exercises significant influence
over, but does not control these entities. These investments are recorded initially at cost, as Investments in Partnerships, and subsequently adjusted for the Partnership's share in earnings, cash
contributions and distributions. Under the equity method of accounting, our net equity is reflected on the consolidated balance sheets, and our share of net income or loss from the Partnership is
included on the consolidated statements of income.

With
respect to investments in and advances to the Investment Properties, the Partnership looks to the underlying properties to assess performance and the recoverability of carrying
amounts for those investments in a manner similar to direct investments in real estate properties. An impairment charge is recorded if the carrying value of the investment exceeds its fair value.

Legal
Proceedings: The Partnership is subject to various legal proceedings and claims that arise, from time to time, in the ordinary course of business. These matters are frequently
covered by insurance. If it is determined that a loss is likely to occur, the estimated amount of the loss is recorded in the financial statements. Both the amount of the loss and the point at which
its occurrence is considered likely can be difficult to determine.

31

---



RESULTS OF OPERATIONS

Comparison of the three months ended June 30, 2008 to the three months ended June 30, 2007 (as adjusted for
discontinued operations).

The
Partnership and its Subsidiary Partnerships earned income before other income and discontinued operations of approximately $618,000 during the three months ended June 30, 2008
compared to approximately $509,000 for the three months ended June 30, 2007, an increase of approximately $109,000 (21%).

The
rental activity is summarized as follows:

Occupancy DateJuly 28,
2008

April 28,
2008

July 23,
2007ResidentialUnits


2,265


2,297


2,377Vacancies


31


44


50Vacancy rate


1.3
%

1.9
%

2.1
%CommercialTotal square feet


90,848


90,848


84,998Vacancy


0


0


0Vacancy rate


0
%

0
%

0
%




Rental Income (in thousands)
Three Months Ended June 30,2008

2007Total
Operations

Continuing
Operations

Total
Operations

Continuing
OperationsTotal rents

$
7,968

$
7,935

$
7,929

$
7,599Residential percentage


93
%

93
%

93
%

93
%Commercial percentage


7
%

7
%

7
%

7
%Contingent rentals

$
109

$
109

$
124

$
124


32

---







June 30,
2008

June 30,
2007

Dollar
Change

Percent
ChangeRevenues:Rental income

$
7,934,836

$
7,599,322

$
335,514


4.42
%Laundry and sundry income


97,854


96,264


96,264


1.65
%8,032,690


7,695,586


337,104


4.38
%Expenses:Administrative


456,450


381,949


74,501


19.51
%Depreciation and amortization


1,609,953


1,720,388


(110,435
)

(6.42
%)Interest


1,917,353


1,854,083


63,270


3.41
%Management fees


330,190


309,859


20,331


6.56
%Operating


928,163


773,208


154,955


20.04
%Renting


106,654


98,898


7,756


7.84
%Repairs and maintenance


1,204,625


1,227,917


(23,292
)

(1.90
%)Taxes and insurance


861,150


820,497


40,653


4.95
%7,414,538


7,186,800


227,738


3.17
%Income Before Other Income and Discontinued Operations


618,152


508,786


109,366


21.50
%Other Income (Loss)Interest income


32,253


96,827


(64,574
)

(66.69
%)Casualty loss


(4,151
)




(4,151
)

(100.00
%)Mortgage prepayment penalties


(785,538
)




(785,538
)

(100.00
%)(Loss) Income from investment in joint ventures


(217,213
)

11,303


(228,516
)

(2,021.73
%)(974,649
)

108,130


(1,082,779
)

(1,001.37
%)Income (loss) from continuing operations


(356,497
)

616,916


(973,413
)

(157.79
%)Discontinued Operations:Gain on the sale of real estate


3,937,551





3,937,551


100.00
%(Loss) from discontinued operations


(7,408
)

(29,393
)

21,985


74.80
%3,930,143


(29,393
)

3,959,536


13,471.02
%Net Income

$
3,573,646

$
587,523

$
2,986,123


508.26
%


Rental
income for the three months ended June 30, 2008 was approximately $7,935,000 compared to approximately $7,599,000 for the three months ended June 30, 2007, an
increase of approximately $336,000 (4.4%). The properties with the most significant increases include 62 Boylston Street with an increase of approximately $89,000; Westgate Apartments with an increase
of approximately $39,000; School Street with an increase of approximately $24,000; Redwood Hills with an increase of approximately $27,000; and Hamilton Linewt with an increase of approximately
$71,000. The majority of the Partnership's other properties experienced minimal rental income increases.

Total
expenses for the three months ended June 30, 2008 were approximately $7,414,000 compared to approximately $7,186,000 for the three months ended June 30, 2007, an
increase of approximately $228,000 (3.17%). The most significant increases were interest expense of approximately $63,000 (3.4%) due to a higher level of debt; administrative expenses of
approximately $74,000 (19.5%) due to an increase in professional fees due to SEC compliance costs and equity repurchase related legal expenses; an increase in operating expenses of approximately
$155,000 (20.0%) due to increases in utility costs; and an increase in taxes and insurance of approximately $41,000 (4.9%) due to increased insurance

33

---



premiums.
These increases are offset by decreases in depreciation and amortization expenses of approximately $110,000 (6.4%), and decrease in repairs and maintenance expenses of approximately
$23,000 (1.9%) due to significant repairs in 2007 in an effort to improve occupancy levels.

At
June 30, 2008, the Partnership has a 50% ownership interest in nine joint ventures. The loss on these investments is $217,213 for the three months ended June 30, 2008
compared to income of $11,303 for the three months ended June 30, 2007, a decrease of $228,516. Included in the loss at June 30, 2008 is a gain on the sale of units of approximately
$272,000; included in the income for the three months ended June 30, 2007 is a gain on the sale of units of approximately $600,000. A number of units held for sale are vacant which has resulted
in the loss of rental income, as well as continued maintenance of these units by the Partnership. See Note 14 to the Consolidated Financial Statements for financial information of these
investment properties. The summaries are as follows:

345
Franklin Street, Cambridge, Massachusetts

The
Partnership invested in a 40-unit property in 2001. The Partnership's share of loss on this investment is $24,965 and $16,981 for the three
months ended June 30, 2008 and 2007, respectively. The Partnership's share of loss on this investment is $38,575 and $31,807 for the six months ended June 30, 2008 and 2007,
respectively. There was one vacant unit at July 28, 2008.

Hamilton
on Main, Watertown, Massachusetts

The
Partnership invested in 146 units in three buildings in August 2004. The Partnership plans to retain all of these units as a rental property. The
Partnership's share of loss is approximately $159,000 and $184,000 for the three months ended June 30, 2008 and 2007 respectively. The Partnership's share of loss is approximately $350,000 and
$393,000 for the six months ended June 30, 2008 and 2007, respectively. The decrease in loss for both the three and six months ended June 30, 2008 is due to decreases in depreciation as
well as and taxes and insurance. There were no vacant units at July 28, 2008.

Hamilton
Place Sales, Watertown, Massachusetts

The
Partnership invested in 137 units in three buildings in August 2004. At the time of the acquisition, it was the Partnership's plan to sell all of the units
as condominiums. As of July 28, 2008, all of the units have been sold. The Partnership's share of income is approximately $32,000 and $152,000 for the three months ended June 30, 2008
and 2007, respectively. The income includes a gain on the sale of units of approximately $34,000 and $203,000 for the three months ended June 30, 2008 and 2007, respectively. The Partnership's
share of income is approximately $159,000 and $153,000 for the six months ended June 30, 2008 and 2007, respectively. The Partnership's share of income includes a gain on unit sales of
approximately $174,000 and $266,000 for the six months ended June 30, 2008 and 2007, respectively.

Hamilton
Minuteman, Lexington, Massachusetts

The
Partnership invested in a 42-unit residential complex in September 2004. The Partnership's share of loss on this investment is approximately
$51,000 and $19,000 for the three months ended June 30, 2008 and 2007, respectively. The Partnership's share of loss
is approximately $104,000 and $105,000 for the six months ended June 30, 2008 and 2007, respectively. There were no vacant units at July 28, 2008.

Essex
81 Commercial, Boston, Massachusetts

The
Partnership invested in this property in March 2005. The property consists of 7,715 square feet of commercial space. The Partnership's share of income on
this investment is approximately $6,500 for

34

---



the
three months ended June 30, 2008, and a loss of approximately $1,100 for the six months ended June 30, 2008.

Hamilton
Essex 81 Apartments, Boston, Massachusetts

The
Partnership invested in this property in March 2005. The property consists of 49 residential units and a 50 car surface parking lot. The Partnership's
share of loss on this investment is approximately $23,000 for the three months ended June 30, 2008 and approximately $391,000 for the six months ended June 30, 2008. There were no vacant
units at July 28, 2008.

Hamilton
1025, Quincy, Massachusetts

The
Partnership invested in a 176-unit property in March 2005. The Partnership plans to sell 127 units as condominiums. The Partnership's share of
loss is approximately $45,000 for the three months ended June 30, 2008 compared to income of approximately $84,000 for the three months ended June 30, 2007. There is no gain on the sale
of units for the three months ended June 30, 2008, however there is a gain of approximately $161,000 included in income for the three months ended June 30, 2007. The Partnership's share
of income is approximately $64,000 and $121,000 for the six months ended June 30, 2008 and 2007, respectively. Included in the income for the six months ended June 30, 2008 and 2007 is a
gain of approximately $28,000 and $236,000 on the sale of units. As of July 28, 2008, 125 units have been sold and one unit has a reservation agreement. There was one vacant unit at
July 28, 2008.

Hamilton
Bay Apartments, Quincy, Massachusetts

The
Partnership invested in a 48 unit apartment complex in October 2005. The Partnership plans to retain these units for long term investment. The
Partnership's share of loss is approximately $28,000 and $12,000 for the three months ended June 30, 2008 and 2007, respectively. The Partnership's share of loss is approximately $82,000 and
$25,000 for the six months ended June 30, 2008 and 2007 respectively. There is one vacant unit at July 28, 2008.

Hamilton
Bay Sales, Quincy, Massachusetts

The
Partnership invested in a 120 unit apartment complex in October 2005. The Partnership plans to sell all of the units as condominiums. The Partnership's
share of income is approximately $76,000 and $41,000 for the three months ended June 30, 2008 and 2007, respectively. Included in income for the three months ended June 30, 2008 and 2007
is a gain on the sale of units of approximately $202,000 and $230,000, respectively. The Partnership's share of income is approximately $55,000 for the six months ended June 30, 2008 compared
to a loss of approximately $62,000 for the six months ended June 30, 2007. Included in the income and loss for the six months ended June 30, 2008 and 2007 is a gain on the sale of units
of approximately $141,000 and $312,000, respectively. In April 2008, the Partnership refinanced 20 units and obtained a new mortgage of $2,368,000, interest only at a rate of 5.75% which matures in
2013. At July 28, 2008, 102 units have been sold and one unit has a signed purchase and sales agreement. There are no vacant units at July 28, 2008.

Interest
income was approximately $32,000 for the three months ended June 30, 2008 compared to approximately $97,000 for the three months ended June 30, 2007, a decrease of
approximately $65,000 (67%). This decrease reflects a decrease in cash available for investment as well as lower interest rates.

During
the three months ended June 30, 2008, the Partnership refinanced the mortgages on two properties. The penalty on the early repayment of these mortgages was $785,538 and is
included in other income (loss).

35

---



In
April, the Partnership sold the Coach Apartments in Acton, Massachusetts. The gain on the sale is approximately $3,938,000 and is included in discontinued operations.

As
a result of the changes discussed above, net income for the three months ended June 30, 2008 was $3,573,646 compared to $587,523 for the three months ended June 30,
2007, an increase of $2,986,123.

Comparison of the six months ended June 30, 2008 to the six months ended June 30, 2007

The Partnership and its Subsidiary Partnerships earned income before other income and discontinued operations of $923,816 for the six
months ended June 30, 2008 compared to $701,010 for the six months ended June 30, 2007, an increase of $222,806 (32%). The following is a summary of the Partnership's operations
for the six months ended June 30, 2008 and 2007.

June 30,
2008

June 30,
2007

Dollar
Change

Percent
ChangeRevenues:Rental income

$
15,857,659

$
15,308,058

$
549,601


3.59
%Laundry and sundry income


206,998


201,161


5,837


2.90
%16,064,657


15,509,219


555,438


3.58
%Expenses:Administrative


882,239


772,862


109,377


14.15
%Depreciation and amortization


3,228,609


3,397,282


(168,673
)

(4.96
%)Interest


3,843,212


3,692,604


150,608


4.08
%Management fees


652,470


620,788


31,682


5.10
%Operating


2,332,615


2,140,956


191,659


8.95
%Renting


186,865


165,330


21,535


13.03
%Repairs and maintenance


2,244,691


2,261,943


(17,252
)

(0.76
%)Taxes and insurance


1,770,140


1,756,444


13,696


0.78
%15,140,841


14,808,209


332,632


2.25
%Income before other income


923,816


701,010


222,806


31.78
%Other Income (Loss)Interest income


80,622


196,953


(116,331
)

(59.07
%)Casualty (Loss)


(4,151
)

(60,000
)

55,849


93.08
%Mortgage prepayment penalties


(4,487,706
)




(4,487,706
)

(100.00
%)(Loss) from investment in partnerships


(465,018
)

(408,922
)

(56,096
)

(13.72
%)(4,876,253
)

(271,969
)

(4,604,284
)

(1,692.94
%)Income (loss) from continuing operations


(3,952,437
)

429,041


(4,381,478
)

(1,021.23
%)Discontinued Operations:Gain on the sale of real estate


9,990,942





9,990,942


100.00
%Income (loss) from discontinued operations


(34,855
)

98,928


(133,783
)

(135.23
%)9,956,087


98,928


9,857,159


9,963.97
%Net Income

$
6,003,650

$
527,969

$
5,475,681


1,037.12
%


Rental
income from continuing operations for the six months ended June 30, 2008 was approximately $15,858,000 compared to approximately $15,308,000 for the six months ended
June 30, 2007, an increase of approximately $550,000 (3.5%). There were increases in rental income at many of the Partnership properties the most significant increases are as follows: 62
Boylston Street, with an increase of approximately $100,000; 1144 Commonwealth Avenue with an increase of approximately

36

---



$43,000;
Westgate Apartments with an increase of approximately $40,000; Redwood Hills with an increase of approximately $29,000; School Street with an increase of approximately $24,000 and 1131
Commonwealth Avenue with an increase of approximately $22,000. There were insignificant increases and/or decreases at other properties.

Total
expenses from continuing operations for the six months ended June 30, 2008 were approximately $15,140,000 compared to approximately $14,808,000 for the six months ended
June 30, 2007, an increase of approximately $333,000 (2.3%). The most significant increases were administrative expenses of approximately $109,000 (14.1%), operating expenses of
approximately $192,000 (8.9%), renting expenses of approximately $22,000 (13.0%) and interest expenses of approximately $151,000 (4.0%) offset by a decrease in depreciation of
approximately $170,000. An explanation of these changes is included in the discussion for the three month ended June 30, 2008.

Interest
income was approximately $81,000 for the six months ended June 30, 2008, compared to approximately $197,000 for the six months ended June 30, 2007, a decrease of
approximately $116,000 (59%). This decrease is due primarily to a decrease in cash available for investment as well as a decrease in the interest rates.

During
the six months ended June 30, 2008, the Partnership refinanced the mortgages in twelve properties. The penalty on the early repayment of these mortgages is $4,487,706 and
is included in other income (loss).

During
the six months ended June 30, 2008, the Partnership sold the Oak Ridge Apartments, Coach Apartments and three condominium units. The gain on the sale of these properties is
$9,990,942 and is included in discontinued operations.

As
discussed previously, the Partnership has a 50% ownership interest in investment properties. The net loss from these investments is approximately $465,000 for the six months ended
June 30, 2008 compared to a loss of approximately $408,000 for the six months ended June 30, 2007, an increase of approximately $57,000. The Partnership's share of loss includes a gain
on the sale of units of approximately $348,000 and $815,000 for the six months ended June 30, 2008 and 2007, respectively. (See Note 14 to the financial statements for additional
information.)

As
a result of the changes discussed above, net income for the six months ended June 30, 2008 was $6,003,650 compared to $527,969 for the six months ended June 30, 2007, an
increase of $5,475,681.

LIQUIDITY AND CAPITAL RESOURCES

The Partnership's principal source of cash during 2008 and 2007 was the collection of rents, as well as the refinancing of Partnership
properties.

The
majority of cash and cash equivalents of $12,679,210 at June 30, 2008 and $6,890,525 at December 31, 2007 were held in interest bearing accounts at creditworthy
financial institutions.

This
increase of $5,788,686 for the six months ended June 30, 2008 is summarized as follows:

Six Months Ended
June 30,2008

2007Cash (used in) provided by operating activities

$
(3,710,739
)
$
4,105,692Cash provided by (used in) investing activities


8,491,591


(871,324
)Cash provided by (used in) financing activities


2,900,678


(536,286
)Distributions paid


(1,892,845
)

(2,421,608
)Net increase in cash and cash equivalents

$
5,788,685

$
276,474


37

---



The
cash used in operating activities is due to an increase in prepaid expenses as well as a non cash gain on the sale of real estate. The cash provided by investing activities is due to
the sale of Partnership properties as well as distributions from the joint ventures. The increase in cash provided by financing activities is due to the refinancing of Partnership properties during
the six months ended June 30, 2008.

During
the six months ended June 30, 2008, the Partnership repurchased 254,387 Depositary Receipts at a total cost of $19,744,831. The purchase was funded from cash reserves, as
well as from a loan from Harold Brown. In January, the Partnership borrowed $5,825,000 from Harold Brown, at a rate of 6%. The loan was repaid in full on February 29, 2008, with interest of
$37,899.

During
the six months ended June 30, 2008, the Partnership refinanced 12 properties. The new mortgages total approximately $71,000,000 with interest rates ranging 5.6% to 6.0%.
The new mortgages mature from 2018 to 2023 and call for interest only payments. After payments of existing mortgages of approximately $46,000,000 and prepayment penalties of approximately $4,500,000,
the excess funds were used to pay the loan of $5,285,000 to Harold Brown and to purchase Depositary Receipts.

In
the second quarter of 2008, the Partnership sold three condominiums located at Harvard Gardens as well as the Coach Apartments. The total gain on the sale of these properties is
$3,937,551 and is included in discontinued operations.

During
the six months ended June 30, 2008 the Partnership received distributions of $2,575,000 from the joint ventures compared to an investment of $500,000 from the joint venture
during the six months ended June 30, 2007. See Note 14 of the Consolidated Financial Statements for additional information on the joint ventures and the related financial information.

The
Partnership paid a quarterly distribution of $7.00 per unit ($0.70 per depositary receipts) on March 31, and June 30, 2008 for a total distribution of $1,892,845.
Management anticipates that similar distributions will continue to be made during 2008.

During
the six months ended June 30, 2008, the Partnership and its Subsidiary Partnerships completed certain improvements to their properties at a total cost of approximately
$1,305,863. The most significant improvements were made at the following properties: approximately $300,000 at Westgate Apartments; approximately $135,000 at School Street; approximately $114,000 at
Hamilton Oaks; and approximately $136,000 at Redwood Hills. All such improvements were funded from the Partnership's cash reserves and escrow accounts established in connection with the financing of
applicable properties.

In
addition to the improvements made to date in 2008, the Partnership and its Subsidiary Partnerships plan to invest approximately $1,078,000 in capital improvements during the balance
of 2008, the majority of which will be spent at 62 Boylston Street, 1144 Commonwealth Avenue, Westside Colonial, Redwood Hills, School Street, and Westgate Woburn. These improvements will be funded
from escrow accounts established in connection with the financing of applicable properties, as well as from the Partnership's cash.

Off-Balance Sheet ArrangementsJoint Venture Indebtedness

The Partnership anticipates that cash from operations and interest-bearing investments will be sufficient to fund its current
operations, finance current improvements to its properties and meet bank obligations on current mortgages. The Partnership's net income and cash flow may fluctuate dramatically from year to year as a
result of the sale of properties, mortgage financings, unanticipated increases in expenses, or the loss of significant tenants.

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As
of June 30, 2008, the Partnership had a 50% ownership in nine joint ventures, all of which have mortgage indebtedness. We do not have control of these partnerships and
therefore we account for them using the equity method of consolidation. At June 30, 2008, our proportionate share of the non-recourse debt related to these investments was equal to
approximately $26,200,000. See Note 14 to the Consolidated Financial Statements for details of the investment in joint ventures including results of operations, equity and units sales.

Contractual Obligations

Please see Note 5 to the Consolidated Financial Statements for a description of mortgage notes payable. The Partnerships have no
other contractual obligation to be disclosed.

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Factors That May Affect Future Results

Certain information contained herein includes forward-looking statements, which are made pursuant to the safe harbor provisions of the
Private Securities Liquidation Reform Act of 1995 (the "Act"). While forward looking statements reflect management's good faith beliefs when those statements are made, caution should be exercised in
interpreting and relying on such forward looking statements, the realization of which may be impacted by known and unknown risks and uncertainties, events that may occur subsequent to the
forward-looking statements, and other factors which may be beyond the Partnership's control and which can materially affect the Partnership's actual results, performance or achievements for 2008 and
beyond. Should one or more of the risks or uncertainties mentioned below materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated,
estimated or projected. We expressly disclaim any responsibility to update our forward looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors
should use caution in relying on past forward looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

Along
with risks detailed from time to time in the Partnership's filings with the Securities and Exchange Commission, some factors that could cause the Partnership's actual results,
performance or achievements to differ materially from those expressed or implied by forward-looking statements include but are not limited to the following:



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Competition
for acquisitions may result in increased prices for properties.



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

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

Since
the Partnership's long-term goals include the acquisition of additional properties, a portion of the proceeds from the refinancing and sale of properties is reserved
for this purpose. The Partnership will consider refinancing existing properties if the Partnership's cash reserves are insufficient to repay existing mortgages or if the Partnership needs additional
funds for future acquisitions.

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Item 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, 2008, the Partnership and its subsidiary Partnerships collectively have approximately $135,000,000 in
long-term debt, all of which have fixed interest rates. Accordingly, the fair value of these debt instruments is affected by changes in market interest rates. Approximately $3,000,000 of
Investment Property mortgages payable are at a variable rate of 1.75% over the 30 day LIBOR rate (2.46% at June 30, 2008). These mortgages mature through
2009. For information regarding the fair value and maturity dates of these debt obligations, see Notes 5 and 12 to the Consolidated Financial Statements.

For
additional disclosures about market risk, see "Item 2Management's Discussion and Analysis of Financial Condition and Results of OperationsFactors
that May Affect Future Results."

Item 4CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period
covered by this report. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of such period, our disclosure controls and
procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange
Act.

Internal Control Over Financial Reporting.There have not been any changes in our internal control over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

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PART IIOTHER INFORMATION

Item 1.    Legal Proceedings

Item 1A.    Risk Factors

There were no material changes to the Risk Factors disclosed in our annual report on Form 10-K for the year ended
December 31, 2007.

None.

Item 2.    Unregistered Sale of Equity Securities and Use of Proceeds





Period

Average Price
Paid

Depositary
Receipts
Purchased as
Part of
Publicly
Announced
Plan

Remaining
Number of
Depositary
Receipts that
may be
purchased Under
the Plan
(as amended)Balance of Authorized Repurchases at 06/30/08








174,256


On
August 20, 2007, the General Partner of the Partnership authorized a Depositary Receipt Repurchase Program pursuant to which the Partnership was authorized to purchase up to
100,000 receipts of its authorize and issued Depositary Receipts. On January 15, 2008, the General Partner authorized an increase in the total number of Depositary Receipts that could be
repurchased pursuant to the Repurchase Program from 100,000 to 200,000. On January 30, 2008, the General Partner authorized an increase in the total number of Depositary Receipts that could be
repurchased pursuant to the Repurchase Program from 200,000 to 300,000. On March 10, 2008, the General Partner authorized an increase in the total number of Depositary Receipts that could be
repurchased pursuant to the Repurchase Program from 300,000 to 500,000.

See
Note 8 to the Consolidated Financial Statements for information concerning this repurchase program through June 30, 2008.

The
program expires August 19, 2008. The authority may be exercised from time to time and in such amounts as market conditions warrant. Any repurchases are intended to make
appropriate adjustments to the Partnership's capital structure.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Submission of Matters to a Vote of Security Holders

None.

Item 5.    Other Information

None.

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Item 6.    Exhibits

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)(32.2)

Certification Pursuant to Section 906 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)


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

NEW ENGLAND REALTY ASSOCIATES LIMITED
    PARTNERSHIPBy:

/s/NEWREAL, INC.Its General PartnerBy:

/s/RONALD BROWNRonald Brown, President


Dated:
August 11, 2008

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature

Title

Date/s/RONALD BROWNRonald Brown

President and Director of the General Partner
(Principal Executive Officer)

August 11, 2008/s/HAROLD BROWNHarold Brown

Treasure and Director to the General Partner
(Principal and Finance Officer and Principal Accounting Officer)

August 11, 2008


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