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 entitles "Factors That May Affect Future Results" and elsewhere in this Report.

The real estate market in the Greater Boston area has continued to soften, but not to the degree of other major markets throughout the country. The Partnership anticipated the climate will remain the same for the balance of 2009 as well as 2010. Though not apparent now, Management believes the second half of 2009 will show higher vacancy and slowing revenue increases. The Partnership believes its present cash reserves as well as anticipated rental revenue will be sufficient to fund its current operations, finance current planned improvements to its properties, and continue distribution payments in the foreseeable future. The Partnership does not anticipate recording any impairment losses at this time.

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 or selling existing properties if the Partnership's cash reserves are insufficient to repay existing mortgages or if the Partnership needs additional funds for future acquisitions.

Management believes that the financial difficulties experienced since the lending crisis in 2007 will continue and recovery will take longer than previous recessions. Management also believes that the national recession and the challenging credit market will continue into 2010 and the recovery will be slow and steady. The Greater Boston Metropolitan Area, the Partnership's primary market, continues to experience high unemployment levels and continued downsizing by many corporations and we believe the conditions will continue to decline locally thru the balance of 2009.

During the three months ended March 31, 2009, the Partnership's rental income increased approximately 6% from the same quarter in 2008. Occupancy remained above 97 percent for the quarter and bad debt did not rise to levels previously anticipated by Management. Operating expenses decreased by 1%, due primarily to the decrease in depreciation and amortization expense. Currently, the Partnership properties are all experiencing high occupancy levels. However, Management believes that any increase in revenue will be offset by a rise in bad debt, a higher vacancy rate in the latter half of 2009, higher turnover costs, and increases in utility costs. Management believes that the weakening economy will negatively impact both revenue and operating expenses mitigating any earnings growth for 2009 as compared to 2008.

The Stock Repurchase Program that was initiated in 2007 has purchased 387,924 depository receipts through March 2009. Given the lack of alternative investments, liquidity markets and the current share price, Management continues to support the buyback program and believe it to be accretive to the remaining shareholders. Management continues to be active bidding on commercial real estate within Massachusetts and remains poised to acquire real estate it deems opportune given the current selling and financing environment.

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 pays Hamilton the full annual Management Fee, in monthly installments.

At March 31, 2009, Harold Brown, his brother Ronald Brown and the President of Hamilton, Carl Valeri, collectively own approximately 38% of the Depositary Receipts representing the Partnership 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 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 10% of the repair and maintenance expense paid for by the Partnership in the years three months ended March 31, 2009 and 5% for the year ended December 31, 2008. 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 and 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 72% of the legal services paid for by the Partnership during the three months ended March 31, 2009 and approximately 50% for the year ended December 31, 2008.

Additionally, as described in Note 3 to the consolidated financial statements, The Hamilton Company receives similar fees from the Investment Properties.

R. Brown Partners, which is owned by Ronald Brown, managed the condominium association containing five condominium units which were sold in 2008 located in Brookline, Massachusetts. That entity received annual management fees from the five units of approximately $1,500, and Hamilton reduced 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 2009, the construction and architectural service provided to the Partnership by Hamilton was insignificant. During the three months ended March 31, 2008, Hamilton provided construction and architectural services paid for by the Partnership totaling $6,000.

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 Hamilton's accounting staff, which consists of approximately 14 people. During the three months ended March 31, 2009, Hamilton charged the Partnership $31,250 ($125,000 per year) for bookkeeping and accounting services.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the 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. For residential tenants, amounts 60 days in arrears are charged against income. The commercial tenants are evaluated on a case by case basis. 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, 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 replacements, windows, appliances, flooring, carpeting and kitchen/bath replacements and renovations, are capitalized and depreciated over their estimated useful lives as follows:

† Depreciation is computed on the straight-line and accelerated methods over the estimated useful lives of the related assets. In assessing estimated useful lives, the Partnership makes assumptions based on historical experience acquired from both within and outside the Partnership. These assumptions have a direct impact on the Partnership's net income.

† Ordinary repairs and maintenance, such as unit cleaning and painting and appliance repairs, are expensed.

Impairment: On an annual basis management assesses whether there are any indicators that the value of the Company's rental properties may be impaired. A property's value is impaired only if management's estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. The Company's estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management's assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved. 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 management's estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property.

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.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2009 and 2008 (as adjusted for discontinued operations)

The Partnership and its Subsidiary Partnerships earned income before other income and discontinued operations of approximately $2,725,000 during the three months ended March 31, 2009, compared to approximately $2,232,000 for the three months ended March 31, 2008, an increase of approximately $494,000 (22%).

The rental activity is summarized as follows:

                                                      Occupancy Date
                                              April 27, 2009   April 28, 2008
Residential
Units-exclusive of available for sale units            2,269            2,297
Vacancies                                                 42               44
Vacancy rate                                             1.9 %            1.9 %
Commercial
Total square feet                                    114,395           90,848
Vacancy                                                    0                0
Vacancy rate                                               0 %              0 %




                                       Rental Income (in thousands)
                                       Three Months Ended March 31,
                                    2009                          2008
                            Total        Continuing       Total        Continuing
                          Operations     Operations     Operations     Operations
Total rents              $      8,461   $      8,461   $      8,175   $      8,032
Residential percentage             90 %           90 %           92 %           93 %
Commercial percentage              10 %           10 %            8 %            7 %
Contingent rentals       $        174   $        174   $        120   $        120

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008:



                                     Three Months Ended March 31,         Dollar        Percent
                                         2009              2008           Change        Change
Revenues:
Rental income                      $      8,367,582    $  7,922,823    $    444,759            6 %
Laundry and sundry income                    93,113         109,144         (16,031 )        (15 )%
                                   $      8,460,695       8,031,967         428,728            5 %
Expenses
Administrative                              465,930         425,789          40,141            9 %
Depreciation and amortization             1,416,620       1,618,656        (202,036 )        (12 )%
Management fees                             342,888         322,280          20,608            6 %
Operating                                 1,505,737       1,404,452         101,285            7 %
Renting                                      60,958          80,211         (19,253 )        (24 )%
Repairs and maintenance                     978,286       1,040,066         (61,780 )         (6 )%
Taxes and insurance                         964,867         908,990          55,877            6 %
                                          5,735,286       5,800,444         (65,158 )         (1 )%
Income Before Other Income and
Discontinued Operations                   2,725,409       2,231,523         493,886           22 %
Other Income (Loss)
Interest expense                         (1,945,147 )    (1,925,859 )       (19,288 )          1 %
Interest income                              18,362          48,369         (30,007 )       (62) %
Casualty (loss)                                   -               -               -
(Loss) from investment in
unconsolidated joint ventures              (273,555 )      (247,805 )       (25,750 )         10 %
Other income (loss)                               -      (3,702,168 )     3,702,168         (100 )%
                                         (2,200,340 )    (5,827,463 )     3,627,123          (62 )%
Income from Continuing
Operations                                  525,069      (3,595,940 )     4,121,009          115 %
Discontinued Operations:
Income (loss) from discontinued
operations                                        -         (27,447 )        27,447          100 %
Gain (loss) on sale of real
estate from discontinued
operations                                   (4,984 )     6,053,391      (6,058,375 )       (100 )%
                                            (4,984)       6,025,944      (6,030,928 )       (100 )%
Net Income                         $        520,085    $  2,430,004    $ (1,909,919 )        (79 )%

Rental income from continuing operations for the three months ended March 31, 2009 was approximately $8,368,000, compared to approximately $7,923,000 for the three months ended March 31, 2008, an increase of approximately $445,000 (6%). Properties with significant increases in rental income include the 62 Boylston Street, Westgate Apartments, 1144

Commonwealth Avenue, and Redwood Hills. The Partnership's acquisition of Cypress Street in October 2008 represents approximately $201,000 of this increase.

Expenses from continuing operations for the three months ended March 31, 2009 were approximately $5,735,000 compared to approximately $5,800,000 for the three months ended March 31, 2008, a decrease of approximately $65,000 (1%). The most significant factor contributing to this decrease was: a decrease in depreciation and amortization expense of approximately $202,000 (12%); a decrease in renting expense of approximately $19,000 (24%) due to a decrease in rental commissions and a decrease in repairs and maintenance expenses of approximately 62,000 (6%) due to some major repairs done at the properties in the first quarter of 2008.

These decreases are offset by an increase in operating expenses of approximately $101,000 (7%) due to the increases in snow removal and utility costs; an increase in taxes and insurance of approximately $56,000 (6%) due to increase in property taxes and an increase in administrative expenses of approximately $40,000 (9%) due to an increase in professional fees and employee benefits.

Interest expense increased approximately $19,000 (1.0%) due to the refinancing of Partnership properties resulting in a higher level of debt offset by lower interest rates.

At March 31, 2009, the Partnership has a 50% ownership interest in eight Investment Properties. See a description of these properties included in the section titled Investment Properties as well as Note 14 to the Consolidated Financial Statements for a detail of the financial information of each Investment Property.

As described in Note 14 to the Consolidated Financial Statements, the Partnership's share of the net loss from the 50% owned Investment Properties was approximately $274,000 for the three months ended March 31, 2009 compared to a loss of approximately $248,000 for the three months ended March 31, 2008, an increase of approximately $26,000. No units were sold during the three months ended March 31, 2009.

Interest income for the three months ended March 31, 2009 was approximately $18,000 compared to approximately $48,000 for the three months ended March 31, 2008, a decrease of approximately $30,000. This decrease is due to a drop in interest rates.

During the first quarter of 2008, the Partnership refinanced a number of mortgages with outstanding 8.44% mortgages of approximately $37,800,000 with new mortgages totaling approximately $60,000,000. Non-recurring prepayment penalties of approximately $3,702,000 were incurred in these transactions and are included in other expenses during the three months ended March 31, 2008.

In January 2008, the Partnership sold the Oak Ridge Apartments in Foxboro, Massachusetts. The net loss from operations of approximately $27,000 and the gain on the sale of approximately $6,053,000 is included in discontinued operations.

As a result of the changes discussed above, net income for the three months ended March 31, 2009 was $520,085 compared to $2,430,004 for the three months ended March 31, 2008, a decrease of $1,909,919.

LIQUIDITY AND CAPITAL RESOURCES

The Partnership's principal source of cash during 2009 and 2008 was the collection of rents, sale of real estate, and refinancing of partnership properties. The majority of cash and cash equivalents of $10,220,538 at March 31, 2009 and $10,752,931 at December 31, 2008 were held in interest bearing accounts at creditworthy financial institutions.

This decrease of $532,393 at March 31, 2009 is summarized as follows:

                                                        Three Months Ended March 31,
                                                           2009              2008
Cash provided by (used in) operating activities       $     2,361,287    $  (2,940,622 )
Cash provided by (used in) investing activities              (474,870 )      3,932,371
Cash (used in) provided by financing activities              (209,219 )     18,715,740
Repurchase of Depositary Receipts, Class B and
General Partner Units                                      (1,278,090 )    (19,744.831 )
Distributions paid                                           (931,500 )       (965,317 )
Net (decrease) in cash and cash equivalents           $      (532,393 )  $  (1,002,659 )

The cash provided by operating activities is primarily due to the collection of rents less cash operating expenses. The decrease in cash provided by investing activities is due to the sale of properties in 2008 and a reduction in the distribution received from the joint ventures. The decrease in cash provided by financing activities is due to the refinancing of Partnership properties in 2008.

During the three months ended March 31, 2009, the Partnership and its Subsidiary Partnerships completed improvements to certain of the Properties at a total cost of approximately $602,000. These improvements were funded from cash reserves and, to some extent, escrow accounts established in connection with the financing or refinancing of the applicable Properties. These sources have been adequate to fully fund improvements. The most significant improvements were made at Redwood Hills, Olde English, Hamilton Oaks and Clovelly, at a cost of approximately $87,000, $76,000, $67,000, and $48,000, respectively. The Partnership plans to invest approximately $1,371,000 in additional capital improvements in 2009.

In 2009 the Partnership repurchased 2,468 Class A Units, Class B Units and General Partnership Units at a total cost of $1,278,090.

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 $6,000,000. In November 2007, 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 2008, the Partnership obtained mortgages on 13 properties. The new mortgages total approximately $73,000,000 with interest rates ranging 5.6% to 5.97%. The new mortgages mature in 2023 and call for interest only payments. After . . .