NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP_December 31, 2024
New England Realty Associates Limited Partnership (NEN) filed its annual report for the fiscal year ended December 31, 2024. The report highlights the company’s financial performance, with total revenues of $141.5 million and net income of $23.1 million. The company’s assets increased by 12% to $543.8 million, while its liabilities decreased by 10% to $243.9 million. NEN’s cash and cash equivalents stood at $123.9 million, and its total equity increased by 15% to $299.9 million. The company’s Class A units (2,800,146 Depositary Receipts) and Class B units (22,168) were issued and outstanding as of March 12, 2025.
Financial Performance Overview
New England Realty Associates Limited Partnership had a strong financial performance in 2024, with income before interest expense, investments, and other income increasing by 34.8% compared to 2023. Total revenue grew by 8.1% year-over-year, while operating expenses decreased by 0.9%. This resulted in a significant boost to the Partnership’s bottom line, with net income rising 85.3% to $15.7 million.
The Partnership’s rental properties performed well, with occupancy rates remaining high at 97.7% for residential units and 98.2% for commercial space as of February 2025. Rental income increased by 7.9%, driven by rent increases averaging 5.8% for renewals and 4.8% for new leases in 2024. The Partnership also benefited from the acquisition of two new properties in 2023 - a commercial retail property in Framingham and a mixed-use property in Boston’s South End.
Expenses were well-controlled, with decreases in areas like repairs and maintenance, depreciation, and property impairment charges. The Partnership’s management fee paid to the Hamilton Company, which oversees property operations, increased by 7.8% but remained a relatively small portion of overall expenses.
Income from the Partnership’s investments in unconsolidated joint ventures also grew substantially, rising 46.3% to $1.3 million. This demonstrates the value of the Partnership’s diversified real estate portfolio and strategic partnerships.
Strengths and Opportunities
A key strength of New England Realty Associates is its strong market position in Eastern Massachusetts, particularly the Greater Boston area. The Partnership’s properties have maintained high occupancy rates, even through the challenges of the COVID-19 pandemic. This speaks to the desirability of the Partnership’s rental units and the resilience of the local real estate market.
The Partnership has also demonstrated financial discipline, taking advantage of the low interest rate environment in 2022 to refinance 15 properties and increase its cash reserves. This has positioned the firm well to capitalize on potential acquisition opportunities in the future, should attractive properties become available. The Partnership’s sizable cash holdings of $84 million invested in short-term Treasuries also provide a buffer against rising interest rates.
Another strength is the Partnership’s relationship with the Hamilton Company, which provides comprehensive property management services. Hamilton’s in-house capabilities across areas like maintenance, legal, construction, and accounting help the Partnership operate efficiently. While the management fee paid to Hamilton represents a cost, the Partnership believes the services provided are competitive and valuable.
Looking ahead, the Partnership sees opportunities for continued growth, particularly through the development of new rental properties. The 72-unit project underway at the Mill Street site in Woburn represents a significant investment that should contribute to future earnings once completed in 2025.
Risks and Challenges
Despite the Partnership’s overall positive performance, there are some risks and challenges that merit attention. The most significant is the Partnership’s reliance on the real estate market in Eastern Massachusetts. While the local market has remained strong, any downturn in economic conditions or shifts in housing preferences could negatively impact occupancy rates and rental income.
The Partnership is also subject to rising interest rates, which could increase its borrowing costs and put pressure on profitability, especially if the firm needs to refinance debt in the future. The Partnership’s variable-rate debt of $10 million is particularly exposed to rate hikes, and a 100-basis-point increase could add $50,000 annually in interest expense.
Another risk is the Partnership’s ongoing compliance with financial covenants on its $25 million revolving line of credit. As of the end of 2023, the Partnership fell short of the required 9.0% debt yield, restricting its ability to draw on the line. While the Partnership was able to renegotiate more favorable terms in late 2024, maintaining compliance with leverage ratios, debt service coverage, and other metrics will require diligent financial management.
The Partnership also faces competition from other real estate firms and alternative housing options, such as single-family homes, which could make it more challenging to attract and retain tenants. Rising costs for items like utilities, maintenance, and insurance also present headwinds that the Partnership must navigate.
Outlook and Conclusion
Overall, New England Realty Associates Limited Partnership delivered impressive financial results in 2024, demonstrating the strength of its real estate portfolio and operational capabilities. The firm’s strategic focus on the Greater Boston market, disciplined financial management, and productive partnership with Hamilton have positioned it well for continued success.
Looking ahead, the Partnership’s development pipeline, acquisition opportunities, and share repurchase program provide avenues for future growth. However, the firm must remain vigilant in monitoring and mitigating risks related to interest rates, market conditions, and operational costs.
If the Partnership can continue executing its strategy, capitalize on opportunities, and effectively manage its risks, it should be well-positioned to deliver solid returns for its investors in the years to come.
