PARTNERSHIP (LON:PA) Files An 8-K Completion of Acquisition or Disposition of Assets

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PARTNERSHIP (LON:PA) Files An 8-K Completion of Acquisition or Disposition of Assets
ITEM 2.01.COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

In a Current Report on Form8-K (the “Original Report”) filed by New England Realty Associates Limited Partnership (“NERA” or the “Partnership”) with the Securities and Exchange Commission on July11, 2017 the Partnership reported the completion of the following acquisition:

On June19, 2017, New England Realty Associates Limited Partnership (the “Partnership”) entered into an Offer to Purchase Agreement with M.J. Realty Trust II, u/d/t dated November4, 1980 (the “Purchase Agreement”). On July6, 2017, the Partnership borrowed $16,000,000 from HBC Holdings, LLC to a Promissory Note (the “Note”) and a Pledge Agreement (the “Pledge Agreement”).The information included in Items 2.01 and 2.03 of this report, which includes a description of the material terms and conditions of the Purchase Agreement, Note and Pledge Agreement, is incorporated by reference into this Item 1.01.Such descriptions are qualified by reference to the text of the Purchase Agreement, Note and Pledge Agreement, which were filed as Exhibits 10.2, 10.4 and 10.5 respectively with the Current Report on Form8-K on July11, 2017.

On July6, 2017, Woodland Park Partners, LLC, a Massachusetts limited liability company (“Woodland Park”) closed on an Offer to Purchase (the “Purchase Agreement”) with M.J. Realty Trust II, u/d/t dated November4, 1980, and recorded with the Middlesex South District Registry of Deeds in Book 15893, Page382, and filed with said Middlesex Registry District of the Land Court as Document No.604171, as amended (the “Seller”) to which Woodland Park acquired the Woodland Park Apartments, a 126-unit apartment complex located at 264-290 Grove Street, Newton, Massachusetts (the “Property”), for a purchase price of $45,500,000 in cash.The manager of Woodland Park is NewReal,Inc. (“NewReal”), the general partner of the Partnership. The Partnership is the sole member of Woodland Park.

To fund the purchase price, the Partnership borrowed $25,000,000 under its outstanding line of credit with KeyBank, NA, and $16,000,000 from HBC Holdings, LLC, a Massachusetts limited liability company controlled by Harold Brown. The balance of the purchase price was funded by the Partnership’s cash reserves.

Harold Brown and his brother, Ronald Brown, own 50% of the capital stock, and serve on the board of directors, of New Real.

The Partnership filed a Current Report on Form8-K on July11, 2017 (the “Form8-K”) to report, among other things, the completion of the transaction discussed above. The Partnership hereby amends the Form8-K to include in Item 9.01 thereof required financial statements and pro forma financial information.

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Report of Independent Auditors

To the Partners

New England Realty Association Limited Partnership

We have audited the accompanying statement of revenue and certain expenses of Woodland Park Apartments, (the “Property”), for the year ended December31, 2016, and the related notes to the financial statement.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the statement of revenue and certain expenses in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenue and certain expenses that are free of material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the statement of revenue and certain expenses based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenue and certain expenses is free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statement of revenue and certain expenses. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the statement of revenue and certain expenses, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Property’s preparation and fair presentation of the statement of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the statement of revenue and certain expenses.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the statement of revenue and certain expenses referred to above present fairly, in all material respects, the revenue and certain expenses as described in Note 2, for the year ended December31, 2016, in conformity with U.S. generally accepted accounting principles.

Basis of Accounting

As described in Note 2, the accompanying statement of revenue and certain expenses has been prepared for the purpose of complying with the rulesand regulations of the Securities and Exchange Commission for inclusion in the Form8-K/A of New England Realty Association Limited Partnership and are not intended to be a complete presentation of the Property’s revenue and expenses. Our opinion is not modified in this respect.

/s/ Miller Wachman LLP

Boston, Massachusetts

September20, 2017

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Woodland Park Apartments

Statement of Revenue and Certain Expenses

SixMonthsEnded

June30,2017

YearEnded

(unaudited)

December31,2016

Revenues

Rental income

$

1,292,770

$

2,466,778

Laundry and sundry income

8,300

15,777

1,301,070

2,482,555

Expenses

Administrative

30,571

50,846

Management fee

46,815

82,066

Operating

106,281

195,620

Renting

8,852

6,560

Repairs and Maintenance

39,945

258,428

Taxes and Insurance

116,712

225,123

Total certain expenses

349,176

818,643

Revenue in excess of certain expenses

$

951,894

$

1,663,912

See Notes to the Statement of Revenue and Certain Expenses

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Woodland Park Apartments

Notes to Statement of Revenue and Certain Expenses

Year ended December31, 2016

And for the Six Months ended June30, 2017

(unaudited)

1. Organization

On June19, 2017, New England Realty Associates Limited Partnership (the “Partnership”) entered into an Offer to Purchase Agreement (the “Purchase Agreement”) with M.J. Realty Trust II (the “Seller”) to acquire Woodland Park Apartments , a 126 unit apartment complex located at 264-290 Grove Street, Newton,, Massachusetts (the “Property”), for a purchase price of $45.5 million.

On July6, 2017, the Partnership closed on the Purchase and Sale contract, through its’ wholly owned subsidiary, Woodland Park Partners, LLC ( “Woodland Park”). and acquired the property. The Partnership borrowed $25,000,000 from its outstanding line of credit with KeyBank, N.A., $16,000,000 from HBC Holdings, LLC, a Massachusetts limited liability company controlled by Harold Brown, and the balance from the Partnership’s cash reserves to purchase the property.

Harold Brown and his brother, Ronald Brown, own 50% of the capital stock, and serve on the board of directors, of New Real.

2. Basis of Presentation and Significant Accounting Policies

The accompanying statement of revenue and certain expenses of Woodland Park Apartments (the “statement”) has been prepared in accordance with the rulesof Regulation S-X of the Securities and Exchange Commission for inclusion in the Partnership’s Current Report on Form8-K/A. Accordingly, the statement of revenue and certain expenses excludes certain expenses that may not be comparable to those expected to be incurred in the future operations of the aforementioned property. Items excluded consist of interest expense, depreciation, amortization, corporate expenses, and other costs not directly related to future property operations.

Use of Estimates

The preparation of the statement of revenue and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the statement of revenue and certain expenses and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

Rental revenue is recognized monthly over the terms of the lease. Leases are generally for a one-year term. No single tenant accounted for more than 5% of the Property’s revenue in the year ended December31, 2016, or the six months ended June30, 2017.

Laundry and other income is recognized when the related services are utilized by the tenants.

Unaudited Interim Information

The statement of revenue and certain expenses for the six months ended June30, 2017 is unaudited. In the opinion of management, the statement reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal recurring nature. The results of operations for the period are not necessarily indicative of the Property’s future results of operations.

3. Income Taxes

Woodland Park Apartments is a 126 unit apartment complex, and is not directly subject to income taxes.

4. Subsequent Events

Woodland Park evaluated subsequent events through September20, 2017, the date the statement was available to be issued.

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NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated balance sheet as of June30, 2017 gives effect to the New England Realty Associates Limited Partnership ( “NERA”) acquisition and financing described in Note A as if such transaction had been completed as of June30, 2017. The following unaudited pro forma consolidated income statements for the six months ended June30, 2017, and for the year ended December31, 2016, under the property’s previous ownership, are presented as if the acquisition and financings were effective January1, 2016.

The pro forma information is based on the historical financial statements of NERA and Woodland Park Apartments and gives effect to the transactions, assumptions and adjustments described in the accompanying notes to the unaudited pro forma consolidated financial statements. In addition, these unaudited pro forma financial statements do not purport to project the future financial position or operating results of the entities.

The pro forma statements are not necessarily indicative of the results that actually would have been achieved if the acquisition and financing had occurred as assumed. They should be read in conjunction with the historical financial statements of NERA, included in its Form10-K for the year ended December31, 2016, its Forms10-Q for the three and six months ended March31, and June30, 2017, and the historical operating summary of Woodland Park Apartments elsewhere herein.

As previously mentioned, on June19, 2017, New England Realty Associates Limited Partnership (the “Partnership”) entered into an Offer to Purchase Agreement (the “Purchase Agreement”) with M.J. Realty Trust II (the “Seller”) to acquire Woodland Park Apartments, a 126 unit apartment complex located at 264-290 Grove Street, Newton,, Massachusetts (the “Property”), for a purchase price of $45.5 million. Woodland Park’s sole member is New England Realty Associates Limited Partnership.

On July6, 2017, the Partnership, through its’ wholly owned subsidiary, Woodland Park, closed on the Purchase and Sale contract and acquired the property. The Partnership borrowed $25,000,000 from its outstanding line of credit with KeyBank, N.A., and $16,000,000 from HBC Holdings, LLC, a Massachusetts limited liability company controlled by Harold Brown. The balance of the purchase price was funded from the Partnership’s cash reserves.

The partnership’s management considered many factors in assessing the acquisition of the Woodland Park property. These factors included the level of rental income of the property, the availability of rental units and Woodland Park’s competitors in the Newton market place and its occupancy level. Management also considered potential changes in expenses due to economies of scale expected to be obtained via Woodland Park’s proximity to other properties of the Partnership, expense reductions expected from planned changes, potential increase in real estate taxes, as well as other matters.

The Partnership does not have a material relationship or significant business activities with the seller of the property and the acquisition is not an affiliated transaction.

Pro forma information is intended to provide investors with information about the impact of transactions by showing how specific transactions might have affected historical financial statements, illustrating the scope of the change in the historical financial position and results of operations. The adjustments made to historical information give effect to events that are directly attributable to the acquisition of the property and are factually supportable. The unaudited Pro Forma Consolidated Financial Statements are prepared in accordance with Regulation S-X.

The unaudited Pro Forma Consolidated Financial Statements set forth below are not facts and there can be no assurance that the Partnership’s results would not have differed significantly from those set forth below if the acquisition had actually occurred on January1, 2016. Accordingly, the unaudited Pro Forma Consolidated Financial Statements are presented for illustrative purposes only and do not purport to represent, and are not necessarily indicative of what our actual financial position and results of operations would have been had the acquisition of the property occurred on the dates indicated, nor are they indicative of our future financial position or results of operations. Readers are cautioned not to place undue reliance on such information and the Partnership makes no representations regarding the information set forth below or its ultimate performance compare to it. The unaudited Pro Forma Consolidated Financial Statements exclude any non-recurring charges or credits directly attributable to the acquisition.

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New England Realty Associates Limited Partnership

Unaudited Pro Forma Consolidated Balance Sheet

As of June30, 2017

ProForma

Historic

Adjustments

Consolidated

NERA(a)

WoodlandPark(b)

Totals

ASSETS

Rental Properties

$

165,745,385

$

44,981,198

$

210,726,583

Cash and Cash Equivalents

10,953,067

(3,567,746

)

7,385,321

Rents Receivable

472,606

472,606

Insurance Recovery Receivable

68,270

68,270

Real Estate Tax Escrows

469,807

469,807

Prepaid Expenses,Intangibles and Other Assets

3,645,465

582,343

4,227,808

Deposit and Escrow Held for the Acquisition of Real Estate

600,000

(600,000

)

Investments in Unconsolidated Joint Ventures

9,029,232

9,029,232

Total Assets

$

190,983,832

$

41,395,795

$

232,379,627

LIABILITIES AND PARTNERS’ CAPITAL

Mortgage Notes Payable

211,934,121

211,934,121

Notes Payable and Line of Credit

41,000,000

41,000,000

Distribution and Loss in Excess of Investment in Unconsolidated Joint Venture

2,754,771

2,754,771

Accounts Payable and Accrued Expenses

2,728,121

11,290

2,739,411

Advance Rental Payments and Security Deposits

5,695,319

384,505

6,079,824

Total Liabilities

$

223,112,332

$

41,395,795

$

264,508,127

Partners’ Capital

(32,128,500

)

(32,128,500

)

Total Liabilities and Partners’ Capital

$

190,983,832

$

41,395,795

$

232,379,627

ADJUSTMENTS TO PRO FORMA JUNE 30, 2017 BALANCE SHEET

(a) Derived from the Partnerships unaudited financial statements at June30, 2017.

(b) The following summarizes the transaction to be included in the pro forma balance sheet which is more fully described in Forms 8-K previously filed by NERA and in the Item 2 above.

ProFormaBalance

SheetAdjustments

WoodlandParkApartments

Date of Acquisition

July6, 2017

Rental Properties

44,981,198

Intangibles

582,343

Deposits and Escrow Held for Acquisition

(600,000

)

Advanced Rental Payments and Security Deposits

(384,505

)

Accounts Payable and Accrued Expenses

(11,290

)

Notes Payable

(16,000,000

)

Line of Credit

(25,000,000

)

Cash

$

(3,567,746

)

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The above reflects the pro forma acquisition cost of Woodland Park Apartments in the amount of $44,981,198: $25,000,000 borrowed under the Partnership’s outstanding line of credit with KeyBank, NA, at an interest rate of 4.75%, $16,000,000 from HBC Holdings, LLC, accruing interest at an annual rate of 4.75%, payable on the earlier of (1)the date on which Woodland Park enters into a mortgage lender financing, or (2)July31,2018. The Partnership is currently in the process of analyzing the fair value of in-place leases and other intangibles as well as the allocation of the building purchase price to specific assets classes. The partnership has included estimates of these intangibles and other items in the pro forma financial statements. Accordingly, the purchase price allocation is preliminary and may be subject to change.

New England Realty Associates Limited Partnership

Unaudited Pro Forma Consolidated Income Statement

For the Six Months Ended June30, 2017

ProForma

Historic

Consolidated

HistoricNERA(a)

WoodlandPark(b)

Adjustments

Totals

Revenues

Rental income

25,314,962

$

1,292,770

$

$

26,607,732

Laundry and sundry income

216,436

8,300

224,736

25,531,398

1,301,070

26,832,468

Expenses

Administrative

988,744

30,571

1,019,315

Depreciation and amortization

5,982,753

581,166

(d)

6,563,919

Management fee

1,055,248

46,815

5,228

(c)

1,107,291

Operating

2,746,025

106,281

2,852,306

Renting

180,735

8,852

189,587

Repairs and maintenance

3,508,894

39,945

3,548,839

Taxes and insurance

3,356,457

116,712

61,208

(e)

3,534,377

17,818,856

349,176

647,602

18,815,634

Income Before Other Income ( Expense)

7,712,542

951,894

(647,602

)

8,016,834

Other Income (Expense)

Interest income

Interest expense

(5,066,379

)

(973,750

)(f)

(6,040,129

)

Income from investments in unconsolidated joint ventures

1,731,062

1,731,062

(3,334,601

)

(973,750

)

(4,308,351

)

Net Income

$

4,377,941

$

951,894

$

(1,621,352

)

$

3,708,483

Income per Unit

Net Income per Unit

$

35.19

$

29.81

Weighted Average Number of Units Outstanding

124,392

124,392

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A. ADJUSTMENTS TO UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED JUNE 30, 2017:

(a) Derived from the Partnership’s unaudited financial statements for the six months ended June30, 2017,

(b) Reflects revenues and certain expenses as reported by Woodland Park Apartments for the six months ended June 30, 2017.

(c) Reflects increase in the management fee to 4.0%.

(d) Reflects depreciation expense for the six months ended June30, 2017 for Woodland Park Apartments by using various estimated useful lives for fixed assets categories (27.5 year estimated useful life for building and 5 to 15 year estimated useful lives for improvements and equipment) as if the Property has been owned for the entire period. From the purchase price of $45,500,000, the Partnership allocated approximately $31,395,000 to the building and improvements, approximately $541,000 to in-place leases, approximately $41,000 to tenant relationships and the remaining balance to land. The value of in-place leases and the value of tenant relationships are amortized over 12 and 24 months respectively. The value of in-place leases were fully amortized in unaudited pro forma consolidated income statement for the year ended on December31, 2016.

(e) Reflects adjustment for estimated changes in real estate taxes.

(f) Represents interest expense on $41,000,000 debt incurred to purchase the property at an interest rate of 4.75%, (the current rate of interest both on the Partnership’s outstanding line of credit with KeyBank, N.A., and on the note payable to HBC Holdings, LLC) for the six months ended June30, 2017. Future changes in the interest rate and /or the amount of debt incurred will result in a change in the interest expense.

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New England Realty Associates Limited Partnership

Unaudited Pro Forma Consolidated Income Statement

For the Twelve Months Ended December31, 2016

ProForma

Historic

Consolidated

HistoricNERA(a)

WoodlandPark(b)

Adjustments

Totals

Revenues

Rental income

$

49,121,705

$

2,466,778

$

$

51,588,483

Laundry and sundry income

433,385

15,777

449,162

49,555,090

2,482,555

52,037,645

Expenses

Administrative

2,102,812

50,846

2,153,658

Depreciation and amortization

12,181,396

1,703,136

(d)

13,884,532

Management fee

2,029,171

82,066

17,236

(c)

2,128,473

Operating

4,822,921

195,620

5,018,541

Renting

636,803

6,560

643,363

Repairs and maintenance

8,258,263

258,428

8,516,691

Taxes and insurance

6,263,774

225,123

130,717

(e)

6,619,614

36,295,140

818,643

1,851,089

38,964,872

Income Before Other Income ( Expense)

13,259,950

1,663,912

(1,851,089

)

13,072,773

Other Income (Expense)

Interest income

1,025

1,025

Interest expense

(10,200,393

)

(1,947,500

)(f)

(12,147,893

)

Income from investments in unconsolidated joint ventures

1,785,827

1,785,827

Gain on sale of real estate

104,443

104,443

(8,309,098

)

(1,947,500

)

(10,256,598

)

Net Income

$

4,950,852

$

1,663,912

$

(3,798,589

)

$

2,816,175

Income per Unit

Net Income per Unit

$

39.62

$

22.54

Weighted Average Number of Units Outstanding

124,951

124,951

B. ADJUSTMENTS TO UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2016:

(a) Derived from the Partnership’s audited financial statements for the year ended December31, 2016.

(b) Reflects revenues and certain expenses as reported by Woodland Apartments for the year ended December31, 2016.

(c) Reflects an expected increase in the management fee to 4.0%.

(d) Reflects depreciation expense for the twelve months ended December31, 2016 for Woodland Park Apartments by using various estimated useful lives for fixed assets categories (27.5 year estimated useful life for building and 5 to 15 year estimated useful lives for improvements and equipment) as if the Property has been owned for the entire period. From the purchase price of $45,500,000, the Partnership allocated approximately $31,395,000 to the building and improvements, approximately $541,000 to in-place leases, approximately $41,000 to tenant relationships and the remaining balance to land. The value of in-place leases and the value of tenant relationships are amortized over 12 and 24 months respectively. The in-place leases were fully amortized in unaudited pro forma consolidated income statement for the year ended on December31, 2016.

(e) Reflects adjustment for estimated changes in real estate taxes.

(f) Represents interest expense on $41,000,000 debt incurred to purchase the property at an interest rate of 4.75%, (the

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current rate of interest both on the Partnership’s outstanding line of credit with KeyBank, N.A., and on the note payable to HBC Holdings, LLC) for the twelve months ended December31, 2016. Future changes in the interest rate and /or the amount of debt incurred will result in a change in the interest expense.

C. NERA PRO FORMA TAXABLE INCOME

The pro forma acquisition of Woodland Park Apartments would result in approximately $1,594,000 reduction in the pro forma taxable income of NERA for the most recent available year ended December31, 2016, or $12.75 per unit or $0.43 per receipt.

D. NERA PRO FORMA CASH AVAILABLE BY OPERATIONS

The pro forma acquisition of Woodland Park Apartments would result in a decrease in pro forma cash available by operations of approximately $432,000 or $3.45 per unit or $0.12 per receipt for the most recent available twelve month period.


About PARTNERSHIP (LON:PA)

Partnership Assurance Group plc is a United Kingdom-based holding company. The Company is an insurer engaged in the design and manufacture of financial products. It offers a range of products within areas, including retirement income, payment of care fees, life assurance/protection and lifetime mortgages/equity release. It offers retirement annuities, including pension annuity, enhanced choice annuity and purchased life annuity. It offers payment of care fees products, including paying for long-term care, immediate care plan and deferred care plan. The Company’s life assurance products include level/decreasing term assurance and whole of life insurance. It also offers equity release for advisors. It serves clients with a range of lifestyle habits and health conditions, such as a smoking habit and high blood pressure, heart failure, stroke, diabetes, kidney failure and cancer. It offers various tools to advisors, including target income calculator and income tax calculator.