New England Realty Associates Limited Partnership: Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2024
New England Realty Associates Limited Partnership has filed a Form 10-Q for the quarter ended March 31, 2024, reporting financial results and providing updates on their financial condition and operations. The company’s financial statements are unaudited and prepared in accordance with generally accepted accounting principles in the United States. The financial statements include consolidated balance sheets, statements of income, comprehensive income, changes in partners’ capital, and cash flows, along with related notes. The company’s results for the three-month period ended March 31, 2024, may not be indicative of the results for the entire fiscal year or any other period.
Company Overview
New England Realty Associates Limited Partnership is a real estate company that owns and operates residential and commercial properties, mainly in Eastern Massachusetts. As of March 31, 2024, the company owned 2,962 residential units and 131,159 square feet of commercial space.
Recent Developments
In July 2023, the company purchased a mixed-use property in Boston for $27.5 million using its cash reserves.
The company has been taking advantage of low interest rates to refinance properties and raise cash. It has raised $130 million recently, with $69.4 million invested in short-term US Treasury bills earning 5-5.5% interest.
The cash is being held to acquire more properties when opportunities arise.
Financial Highlights
Occupancy rates as of May 1, 2024 were 98.8% for residential and 99% for commercial.
For Q1 2024 vs Q1 2023:
Total rental income increased 12.2% to $19.7 million
Net income increased 97.4% to $3.5 million
The increase was driven by higher rents and lower interest expense.
Property Operations
| Metric | Q1 2024 | Change vs Q1 2023 |
|---|---|---|
| Total Rental Income | $19.7 million | +12.2% |
| Operating Expenses | $14.1 million | +6.8% |
| Net Operating Income | $5.8 million | +29.2% |
Rents increased 5.8% for renewals and 5.4% for new leases
Occupancy and rents expected to remain strong in 2024
Cash Flow and Liquidity
Cash from operations is funding distributions, debt payments, and improvements
$30 million budgeted for Mill Street Development over next 2 years
Cash reserves are adequate to fully fund capital projects
Joint Ventures
- 40-50% stake in 7 investment properties with total debt of $70.7 million
Distributions
$12 per unit quarterly distribution paid in March 2024
Additional $48 per unit special distribution in March 2024
Outlook
The company believes:
Fundamentals of rental market remain strong
Occupancy and rents will continue increasing
Acquisition opportunities exist using cash reserves
Cash flow is sufficient to fund operations and distributions
However, results could be impacted by:
Economic conditions and real estate markets
Ability to lease space at favorable rates
Rising interest rates and financing availability
Construction costs overruns
Natural disasters and other external events
Conclusion
New England Realty Associates delivered excellent results in Q1 2024, with higher rents driving net income nearly 100% higher. With a solid balance sheet and cash reserves, the company is positioned to continue acquiring properties in strong real estate markets. Execution of the Mill Street Development over the next 2 years will provide future growth.
