NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP

Previous wording

The vacancy rate for the Partnership’s residential properties as of May 1, 2026 was 2.4% as compared with a vacancy rate of 1.6% as of May 1, 2025. The vacancy rate for the Joint Venture properties as of May 1, 2026 was 1.3%, as compared to 2.0% for the same period last year. The Boston area rental market is currently experiencing elevated vacancy rates, and NERA has responded aggressively to keep vacancy below the Boston area’s current availability rates.

Current wording

The vacancy rate for the Partnership’s residential properties as of August 1, 2026 was 2.7% as compared with a vacancy rate of 2.4% as of August 1, 2025. The vacancy rate for the Joint Venture properties as of August 1, 2026 was 3.9%, as compared to 1.9% for the same period last year. The Boston area rental market is currently experiencing elevated vacancy rates, and NERA has responded aggressively to keep vacancy below the Boston area’s current availability rates.

Previous wording

During the first quarter of 2026, rents increased an average of 4.4% for renewals and decreased an average of 5.8% for new leases. For the balance of 2026, management expects a rental market with slowing rent growth.

Current wording

During the second quarter of 2026, rents increased an average of 2.9% for renewals and decreased an average of 1.2% for new leases. For the balance of 2026, management expects a rental market with slowing rent growth.

Previous wording

For the first quarter of 2026, consolidated revenue, excluding Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed property), increased by 1.8%, operating expenses increased by 17.3%, and Income before Other Income (Expense) decreased by 33.9%, as compared to the first quarter of 2025.

Current wording

For the second quarter of 2026, consolidated revenue, excluding Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed property), increased by 0.3%, operating expenses increased by 9.8%, and Income before Other Income (Expense) decreased by 17.3%, as compared to the second quarter of 2025.

Previous wording

From the start of the Stock Repurchase Program in 2007 through March 31, 2026, the Partnership has purchased 1,561,062 Depositary Receipts. During the three months ended March 31, 2026, the Partnership purchased a total of 1,653 Depositary Receipts.

Current wording

From the start of the Stock Repurchase Program in 2007 through June 30, 2026, the Partnership has purchased 1,575,610 Depositary Receipts. During the six months ended** **June 30, 2026, the Partnership purchased a total of 16,201 Depositary Receipts.

Previous wording

Residential tenants sign a one year lease. During the three months ended March 31, 2026, tenant renewals were approximately 72% with an average rental increase of approximately 4.4%, new leases accounted for approximately 28% with a rental rate decrease of approximately 5.8%. During the three months ended March 31, 2026, leasing commissions were approximately $316,000 compared to approximately $145,000 for the three months ended March 31, 2025, an increase of approximately $171,000 (118.3%). Tenant concessions were approximately $21,000 for the three months ended March 31, 2026, compared to approximately $16,000 for the three months ended March 31, 2025, an increase of approximately $5,000 (31.3%). Tenant improvements were approximately $1,507,000 for the three months ended March 31, 2026, compared to** **approximately $871,000 for the three months ended March 31, 2025, an increase of approximately $636,000 (73.0%). We are actively monitoring proposed rent control ballot initiative for the Commonwealth of Massachusetts, and are taking actions to mitigate the potential risks associated with the proposal, including limiting future capital expenditures and addressing expense increases to the extent possible.

Current wording

Residential tenants sign a one year lease. During the six months ended** June 30, 2026, tenant renewals were approximately 75% with an average rental increase of approximately 3.4%, new leases accounted for approximately 25% with a rental rate decrease of approximately 3.1%. During the six months ended June 30, 2026, leasing commissions were approximately $741,000 compared to approximately $316,000 for the six months ended June 30, 2025, an increase of approximately $425,000 (134.5%). Tenant concessions were approximately $42,000 for the six months ended June 30, 2026, compared to approximately $30,000 for the six months ended June 30, 2025, an increase of approximately $12,000 (40.0%). Tenant improvements were approximately $2,558,000 for the six months ended June 30, 2026, compared to **approximately $1,779,000 for the six months ended June 30, 2025, an increase of approximately $779,000 (43.8%).

Previous wording

Hamilton accounted for approximately 1.6% of the repair and maintenance expenses paid for by the Partnership during the three months ended March 31, 2026 and 1.2% during the three months ended March 31, 2025. 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. Several of the larger Partnership properties have their own maintenance staff. Those properties that do not have their own maintenance staff and are located more than a reasonable distance from Hamilton’s headquarters in Allston, Massachusetts are generally serviced by local, independent companies.

Current wording

Hamilton accounted for approximately 1.0% of the repair and maintenance expenses paid for by the Partnership during the six months ended June 30, 2026 and 1.2% during the six months ended June 30, 2025. 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. Several of the larger Partnership properties have their own maintenance staff. Those properties that do not have their own maintenance staff and are located more than a reasonable distance from Hamilton’s headquarters in Allston, Massachusetts are generally serviced by local, independent companies.

Previous wording

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 $59,000 (15.3%) and approximately $32,000 (82.8%) of the legal services paid for by the Partnership during the three months ended March 31, 2026 and 2025, respectively.

Current wording

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 $97,000 (20.1%) and approximately $41,000 (100%) of the legal services paid for by the Partnership during the six months ended June 30, 2026 and 2025, respectively.

Previous wording

The Partnership requires that three bids be obtained for construction contracts in excess of $15,000. 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. During the three months ended March 31, 2026, Hamilton provided the Partnership approximately $255,000 in construction and architectural services, compared to approximately $96,000 for the three months ended March 31, 2025.

Current wording

The Partnership requires that three bids be obtained for construction contracts in excess of $15,000. 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. During the six months ended June 30, 2026, Hamilton provided the Partnership approximately $324,000 in construction and architectural services, compared to approximately $225,000 for the six months ended June 30, 2025.

Previous wording

Hamilton’s accounting staff perform bookkeeping and accounting functions for the Partnership. During the three months ended March 31, 2026 and 2025, Hamilton charged the Partnership $31,250 for bookkeeping and accounting services. For more information on related party transactions, see Note 3 to the Consolidated Financial Statements.

Current wording

Hamilton’s accounting staff perform bookkeeping and accounting functions for the Partnership. During the six months ended June 30, 2026 and 2025, Hamilton charged the Partnership $62,500 for bookkeeping and accounting services. For more information on related party transactions, see Note 3 to the Consolidated Financial Statements.

Previous wording

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, and other expense of approximately $1,496,000 during the three months ended March 31, 2026, compared to approximately $6,233,000 for the three months ended March 31, 2025, a decrease of approximately $4,737,000 (76.0%).

Current wording

The Partnership and its Subsidiary Partnerships earned income before interest expense, income from investments in unconsolidated joint ventures, and other expense of approximately $4,040,000 during the three months ended June 30, 2026, compared to approximately $7,063,000 for the three months ended June 30, 2025, a decrease of approximately $3,023,000 (42.8%).

Previous wording

Rental income for the three months ended March 31, 2026 was approximately $23,956,000, compared to approximately $20,496,000 for the three months ended** **March 31, 2025, an increase of approximately $3,460,000 (16.9%). Excluding revenues from the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed), of approximately $3,085,000, revenue increased approximately $375,000 (1.8%). The Partnership properties with the largest increases in rental income include 62 Boylston, Hamilton Oaks, WCB Associates, and River Drive, with increases of $246,000, $72,000, $66,000, and $52,000, respectively, partially offset by a decrease at 1144 Commonwealth Apartments of approximately $132,000. Included in rental income is contingent rentals collected on commercial properties. Contingent rentals include such charges as bill backs of common area maintenance charges, real estate taxes, and utility charges.

Current wording

Rental income for the three months ended June 30, 2026 was approximately $24,184,000, compared to approximately $21,038,000 for the three months ended June 30, 2025, an increase of approximately $3,146,000 (15.0%). Excluding net rental income from the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed), of approximately $3,086,000, net rental income increased approximately $60,000 (0.3%). The Partnership properties with the largest increases in rental income include Hamilton Oaks, Clovelly Apartments, and WCB Associates, with increases of $75,000, $57,000, and $54,000, respectively, partially offset by decreases at 62 Boylston, and Mill Street Gardens of approximately $63,000 and $62,000, respectively. Included in rental income is contingent rentals collected on commercial properties. Contingent rentals include such charges as bill backs of common area maintenance charges, real estate taxes, and utility charges.

Previous wording

Interest expense for the three months ended March 31, 2026 was approximately $5,712,000 compared to approximately $3,791,000 for the three months ended March 31, 2025, an increase of approximately $1,921,000 (50.7%). The increase was due to the interest expense incurred when the Partnership borrowed an additional $40,000,000 in May, 2025 at an interest rate of 5.99% on the Master Credit Facility, the mortgages incurred upon the acquisition of Hill Estates, and the newly constructed property at Mill Street Heights.

Current wording

Interest expense for the three months ended June 30, 2026 was approximately $5,732,000 compared to approximately $4,136,000 for the three months ended June 30, 2025, an increase of approximately $1,596,000 (38.6%). The increase was due to the interest expense incurred when the Partnership borrowed an additional $40,000,000 in May, 2025 at an interest rate of 5.99% on the Master Credit Facility, the mortgages incurred upon the acquisition of Hill Estates, and the newly constructed property at Mill Street Heights.

Previous wording

Interest and dividend income for the three months ended March 31, 2026 was approximately $116,000 compared to approximately $991,000 for the three months ended March 31, 2025, a decrease of approximately $875,000 (88.3%). The decrease in the interest income was due to the use of the Investment in U.S. Treasury bills to acquire the Hill Estates property in June of 2025.

Current wording

Interest and dividend income for the three months ended June 30, 2026 was approximately $105,000 compared to approximately $737,000 for the three months ended June 30, 2025, a decrease of approximately $632,000 (85.7%). The decrease in the interest income was due to the use of the Investment in U.S. Treasury bills to acquire the Hill Estates property in June of 2025.

Previous wording

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $343,000 for the three months ended March 31, 2026, compared to net income of approximately $362,000 for the three months ended March 31, 2025. Included in the income for the three months ended March 31, 2026 is depreciation and amortization expense of approximately $675,000.

Current wording

As described in Note 15 to the Consolidated Financial Statements, the Partnership’s share of the net income from the Investment Properties was approximately $427,000 for the three months ended June 30, 2026, compared to net income of approximately $485,000 for the three months ended June 30, 2025. Included in the income for the three months ended June 30, 2026 is depreciation and amortization expense of approximately $679,000.

Previous wording

As a result of the changes discussed above, there was a net loss for the three months ended March 31, 2026 of approximately $3,907,000 compared to net income of approximately $3,796,000 for the three months ended March 31, 2025, a decrease in income of approximately $7,703,000 (202.9%).

Current wording

As a result of the changes discussed above, there was a net loss for the three months ended June 30, 2026 of approximately $1,159,000 compared to net income of approximately $4,150,000 for the three months ended June 30, 2025, a decrease in income of approximately $5,309,000 (127.9%).

Previous wording

Expenses for the three months ended March 31, 2026 were approximately $22,665,000 compared to approximately $14,455,000 for the three months ended March 31, 2025, an increase of approximately $8,210,000 (56.8%). Excluding expenses from the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed) properties of approximately $5,726,000, operating expenses were approximately $16,938,000, an increase of approximately $2,503,000 (17.3%). The factors contributing to the increase are an increase in operating expenses of approximately $1,318,000 (40.2%), which included an increase in snow removal costs of approximately $870,000 over the three months ended March 31,2025, an increase in administrative expenses of approximately $696,000 ( 112.1%), including an increase in legal costs related to a tenant complaint ($240,000), and a public policy contribution related to a residential housing regulatory matter in the Greater Boston area ($360,000) and an increase in taxes and insurance of approximately $175,000 (6.5%). Depreciation and amortization expense increased approximately $4,060,000, (104.0%) of which approximately $3,948,000 of the expenses are associated with the recently purchased properties.

Current wording

Operating expenses for the six months ended June 30, 2026 were approximately $43,028,000 compared to approximately $28.632,000 for the six months ended June 30, 2025, an increase of approximately $14,396,000 (50.3%), Excluding operating costs for the Hill Estates, two sold commercial properties, and Mill Street Heights (newly constructed) properties of approximately $10,568,000, net operating expenses increased approximately $3,828,000 (13.7%). The factors contributing to the increase are an increase in operating expenses of approximately $1,656,000, which include an increase in snow removal costs of approximately $1,054,000, (107.6%) and an increase in utility expenses of approximately $444,000 (13.8%), an increase in administrative expenses of approximately $872,000 (68.3%), including an increase in legal costs related to a tenant complaint ($200,000) and public policy contributions related to a residential housing regulatory matter in the Greater Boston area ($420,000), and an increase in repairs and maintenance expense of approximately $462,000 (7.4%). Depreciation and amortization expense increased approximately $7,687,000 (91.7%) of which approximately $7,439,000 of the expenses are associated with the recently purchased properties.

Previous wording

The Partnership’s principal source of cash during the first three months of 2026 and 2025 was the collection of rents. The Partnership’s principal use of cash during the first three months of 2026 was improvements to rental properties, mortgage principal payments, and distributions to partners.

Current wording

The Partnership’s principal use of cash during the first six months of 2026 was improvements to rental properties, mortgage principal payments, the repurchase of depositary receipts, and distributions to partners. The Partnership’s principal use of cash during the first six months of 2025 was the purchase of a new property, construction of the Mill Street Development property, improvements to rental properties, mortgage principal payments, purchases of U.S. Treasury bills, and distributions to partners.

Previous wording

The majority of cash and cash equivalents of $25,559,751 at March 31, 2026 and $26,668,978 at December 31, 2025 was held in interest bearing accounts at creditworthy financial institutions.

Current wording

The majority of cash and cash equivalents of $24,749,739 at June 30, 2026 and $26,668,978 at December 31, 2025 was held in interest bearing accounts at creditworthy financial institutions.

Previous wording

The decrease in cash of $1,109,227 for the three months ended March 31, 2026 is summarized as follows:

Current wording

The decrease in cash of $1,919,239 for the six months ended June 30, 2026 is summarized as follows:

Previous wording

The net increase in cash provided by operating activities is due to various factors, including a change in depreciation expense, a change in income and distribution from joint ventures, and other factors. The net decrease in cash used in investing activities is primarily for the improvement of rental properties, offset by the sale of two commercial properties. Financing activities include mortgage principal payments and distributions to partners, and repurchase of depositary receipts.

Current wording

The cash provided by operating activities is approximately $7,570,000. The cash used in investing activities is primarily for the improvement of rental properties, offset by the sale of two commercial properties. The cash used in financing activities include mortgage principal payments and distributions to partners, and repurchase of depositary receipts.

Previous wording

During 2026, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $3,823,000. These improvements were funded from cash reserves. Cash reserves have been adequate to fully fund improvements. The most significant improvements were made at Hill Estates, Hamilton Green, Hamilton Battlegreen, Hamilton Oaks, Mill Street Heights, and Executive Apartments, at a cost of approximately $1,219,000, $791,000, $309,000, $236,000, $218,000 and $217,000, respectively.

Current wording

During 2026, the Partnership and its Subsidiary Partnerships have completed improvements to certain of the Properties at a total cost of approximately $6,944,000. These improvements were funded from cash reserves. Cash

Previous wording

During the three months ended March 31, 2026, the Partnership received distributions of approximately $345,000 from the investment properties. For the three months ended March 31, 2025, the Partnership received $482,000 in distributions from the investment properties. Included in these net distributions is the amount from Dexter Park of approximately $100,000** and $200,000 for the three months ended March 31, 2026 and 2025,respectively. **

Current wording

During the six months ended June 30, 2026, the Partnership received distributions of approximately $720,000 from the investment properties. For the six months ended June 30, 2025, the Partnership received $838,000 in distributions from the investment properties. Included in these net distributions is the amount from Dexter Park of approximately $200,000** and $400,000, and 345 Franklin of approximately $245,000 and $200,000, respectively, for the six months ended June 30, 2026 and 2025.**

Previous wording

In March 2026, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on March 31, 2026. In May 2026, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on June 30, 2026**.**

Current wording

In August 2026, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on September 30, 2026. In May 2026, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on June 30, 2026**.**In March 2026, the Partnership approved a quarterly distribution of $12.00 per Unit ($0.40 per Receipt), payable on March 31, 2026.

Previous wording

The Partnership anticipates that cash from operations will be sufficient to fund its current operations, pay distributions, and make required debt payments.

Current wording

The Partnership anticipates that cash from operations, proceeds from loan refinancings, and availability under the line of credit should be sufficient to fund its current operations, pay distributions, and make required debt payments.

Previous wording

As of March 31, 2026, the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five 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. As of March 31, 2026, our proportionate share of the non-recourse debt related to these investments was approximately $74,867,000. See Note 15 to the Consolidated Financial Statements.

Current wording

As of June 30, 2026, the Partnership had a 40%-50% ownership interest in seven Joint Ventures, five 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. As of June 30, 2026, our proportionate share of the non-recourse debt related to these investments was approximately $74,834,000. See Note 15 to the Consolidated Financial Statements.