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 softened, and the Partnership anticipates the climate will remain the same in the foreseeable future. This may result in increases in vacancy rates and a reduction in some rents. 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. Continued market deterioration and/or loss of a significant commercial tenant may result in the Partnership recording an impairment loss in the future.

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 downsizing by many corporations. We believe the market conditions will not improve locally for the remaining 2009 calendar year.

During the six months ended June 30, 2009, the Partnership's income rose by better than 4% and operating expenses declined overall by 2.6%. While much of the increase in revenue is due to the 2008 acquisition in Brookline, core operating revenues continue to remain steady. Management has been effective in reducing operating expenses with increases only in noncontrollable expenses such as real estate taxes and insurance. Management believes that continued efforts to control operating expenses will be effective for the remaining year, however, real estate taxes are likely to continue to increase. Bad debt remains at approximately 1% and revenue at the commercial properties has shown no sign of weakness. Early indicators in the third quarter, the busiest renewal season, show that revenue increases going forward will be modest (1% overall increase for the same period last year). Additionally, the market softness has required more free rent than in previous seasons which will have a negative impact on third quarter revenue, though not significant. Management believes that the local economy has yet to rebound or demonstrate job growth and expects future revenue growth for 2009 and the first two quarters of 2010 to be modest.

The Stock Repurchase Program that was initiated in 2007 has purchased 387,924 depository receipts through June 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 June 30, 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 15% of the repair and maintenance expense paid for by the Partnership in the years six months ended June 30, 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 75% of the legal services paid for by the Partnership during the six months ended June 30, 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. During the six months ended June 30, 2009, Hamilton provided construction and architectural services paid for by the Partnership totaling approximately $18,000.

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 six months ended June 30, 2009, Hamilton charged the Partnership $62,500 ($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

Comparison of the three months ended June 30, 2009 to the three months ended June 30, 2008 (as adjusted for discontinued operations)

The Partnership and its Subsidiary Partnerships earned income before other income and discontinued operations of approximately $3,005,000 during the three months ended June 30, 2009, compared to approximately $2,536,000 for the three months ended June 30, 2008, an increase of approximately $469,000.

The rental activity is summarized as follows:

                                                     Occupancy Date
                                              July 27, 2009   July 28, 2008
Residential
Units-exclusive of available for sale units           2,269           2,265
Vacancies                                                60              31
Vacancy rate                                            2.6 %           1.3 %
Commercial
Total square feet                                   114,395          90,848
Vacancy                                                   0               0
Vacancy rate                                              0 %             0 %




                                          Rental Income (in thousands)
                                           Three Months Ended June 30,
                                     2009                              2008
                            Total          Continuing         Total          Continuing
                          Operations       Operations       Operations       Operations
Total rents              $      8,179     $      8,179     $      7,968     $      7,935
Residential percentage             90 %             90 %             93 %             93 %
Commercial percentage              10 %             10 %              7 %              7 %
Contingent rentals       $        110     $        110     $        109     $        109

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008:



                                             Three Months Ended June 30,        Dollar       Percent
                                                2009              2008          Change        Change
Revenues:
Rental income                              $     8,179,090    $  7,934,836        244,254         3.0 %
Laundry and sundry income                           97,257          97,854           (597 )      (0.1 )%
                                                 8,276,347       8,032,690        243,657         3.0 %
Expenses
Administrative                                     386,417         456,450        (70,033 )     (15.3 )%
Depreciation and amortization                    1,504,877       1,609,953       (105,076 )      (6.5 )%
Management fees                                    333,898         330,190          3,708         1.1 %
Operating                                          868,593         928,163        (59,570 )      (6.4 )%
Renting                                             83,170         106,654        (23,484 )     (22.0 )%
Repairs and maintenance                          1,167,345       1,204,625        (37,280 )      (3.0 )%
Taxes and insurance                                926,639         861,150         65,489         7.6 %
                                                 5,270,939       5,497,185       (226,246 )      (4.1 )%
Income Before Other Income and
Discontinued Operations                          3,005,408       2,535,505        469,903        18.5 %
Other Income (Loss)
Interest expense                                (1,962,093 )    (1,917,353 )      (44,740 )      (2.3 )%
Interest income                                     14,228          32,253        (18,025 )     (55.9 )%
Casualty (loss)                                          -          (4,151 )        4,151      (100.0 )%
Mortgage prepayment penalties                            -        (785,538 )      785,538      (100.0 )%
(Loss) from investment in
unconsolidated joint ventures                     (281,733 )      (217,213 )       64,520       (29.7 )%
                                                (2,229,598 )    (2,892,002 )      662,404       (22.9 )%
(Loss) income from Continuing
Operations                                         775,810        (356,497 )    1,132,307      (317.6 )%
Discontinued Operations:
Income (loss) from discontinued
operations                                               -          (7,408 )        7,408       100.0 %
Gain on sale of real estate from
discontinued operations                              2,165       3,937,551     (3,935,386 )     (99.9 )%
                                                     2,165       3,930,143      3,927,978      (100.0 )%
Net Income                                 $       777,975    $  3,573,646    $ 2,795,671       (78.2 )%

Rental income from continuing operations for the three months ended June 30, 2009 was approximately $8,179,000, compared to approximately $7,935,000 for the three months ended June 30, 2008, an increase of approximately $244,000 (3.0%). The Partnership's acquisition of Cypress Street in October 2008 represents approximately $211,000 of this increase. Other properties with significant increases include 1144 Commonwealth Avenue, an increase of approximately $33,000 and

Worcester Road with an increase of approximately $16,000. These increases are offset by decreases in rental income at properties including Executive Apartments with a decrease of approximately $23,000; North Beacon Street with a decrease of approximately $19,000 and Lincoln Street with a decrease of approximately $17,000.

Expenses from continuing operations for the three months ended June 30, 2009 were approximately $5,271,000 compared to approximately $5,497,000 for the three months ended June 30, 2008, a decrease of approximately $226,000 (4.1%). The most significant factor contributing to this decrease was a decrease in depreciation and amortization expense of approximately $105,000(6.5%) due to assets being fully depreciated at June 30, 2009; a decrease in administrative expenses of approximately $70,000(15.3%) due to significant legal and accounting fees paid in 2008 in connection with the stock buyback program; a decrease in operating expenses of approximately $60,000(6.4%) due to a decrease in utility costs; a decrease in renting expense of approximately $23,000 (22%) due to a decrease in rental commissions and a decrease in repairs and maintenance expenses of approximately $37,000 (3.0%) due to major repairs done at the properties in the 2008.

These decreases are offset by an increase in taxes and insurance of approximately $65,000 (7.6%) due to increase in property taxes.

Interest expense increased approximately $45,000 (2.3%) due to the refinancing of Partnership properties in 2008 resulting in a higher level of debt offset by lower interest rates.

At June 30, 2009, the Partnership has a 50% ownership interest in eight Investment Properties. See a description of these properties included in 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 $282,000 for the three months ended June 30, 2009 compared to a loss of approximately $217,000 for the three months ended June 30, 2008, an increase of approximately $65,000. Included in the loss at June 30, 2008 is a gain of approximately $136,000 on the sale of six units compared to a gain of approximately $25,000 on the sale of one unit during the three months ended June 30, 2009.

Interest income for the three months ended June 30, 2009 was approximately $14,000 compared to approximately $32,000 for the three months ended June 30, 2008, a decrease of approximately $18,000. This decrease is due to a drop in interest rates.

During the second quarter of 2008, the Partnership refinanced the property located at Worcester Road. Non-recurring prepayment penalties of approximately $786,000 were incurred in these transactions and are included in other expenses for the three months ended June 30, 2008.

In April 2008, the Partnership sold the Coach Apartments in Acton, Massachusetts. The gain on the sale is approximately $3,938,000 and is included in discontinued operations.

As a result of the changes discussed above, net income for the three months ended June 30, 2009 was $777,975 compared to $3,573,646 for the three months ended June 30, 2008, a decrease of $2,795,671(78.2%).

Comparison of the six months ended June 30, 2009 to the six months ended June 30, 2008

The Partnership and its subsidiary Partnerships earned income before other income and discontinued operations of $5,730,816 for the six months ended June 30, 2009, compared to $4,767,028 for the six months ended June 30, 2008, an increase of $963,788(20%). The following is a summary of the Partnership's operations for the six months ended June 30, 2009 and 2008.

                                             Six Months Ended June 30,          Dollar       Percent
                                                2009             2008           Change        Change
Revenues:
Rental income                              $   16,544,672    $ 15,857,659         687,013         4.3 %
Laundry and sundry income                         192,370         206,998         (14,628 )      (7.1 )%
                                               16,737,042      16,064,657         672,385         4.2 %
Expenses
Administrative                                    852,347         882,239         (29,892 )      (3.4 )%
Depreciation and amortization                   2,921,497       3,228,609        (307,112 )      (9.5 )%
Management fees                                   676,787         652,470          24,317         3.7 %
Operating                                       2,374,329       2,332,615          41,714         1.8 %
Renting                                           144,129         186,865         (42,736 )     (22.9 )%
Repairs and maintenance                         2,145,631       2,244,691         (99,060 )      (4.4 )%
Taxes and insurance                             1,891,506       1,770,140         121,366         6.9 %
                                               11,006,226      11,297,629        (291,403 )      (2.6 )%
Income Before Other Income and
Discontinued Operations                         5,730,816       4,767,028         963,788        20.2 %
Other Income (Loss)
Interest expense                               (3,907,240 )    (3,843,212 )       (64,028 )       1.7 %
Interest income                                    32,591          80,622         (48,031 )     (59.6 )%
Casualty (loss)                                         -          (4,151 )         4,151      (100.0 )%
Mortgage prepayment penalties                           -      (4,487,706 )     4,487,706      (100.0 )%
Gain on sale of equipment                           4,190               -           4,190          NA
(Loss) from investment in
unconsolidated joint ventures                    (555,288 )      (465,018 )       (90,270 )      19.4 %
                                               (4,425,747 )    (8,719,465 )     4,293,718       (49.2 )%
(Loss) Income from Continuing
Operations                                      1,305,069      (3,952,437 )     5,257,506      (133.0 )%
Discontinued Operations:
Income (loss) from discontinued
operations                                              -         (34,855 )        34,855      (100.0 )%
Gain (loss) on sale of real estate from
. . .