Forward Looking Statements

Certain information contained herein includes forward looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Liquidation Reform Act of 1995 (the "Act"). Forward looking statements in this report, or which management may make orally or in written form from time to time, reflect management's good faith belief when those statements are made, and are based on information currently available to management. Caution should be exercised in interpreting and relying on such forward looking statements, the realization of which may be impacted by known and unknown risks and uncertainties, events that may occur subsequent to the forward looking statements, and other factors which may be beyond the Partnership's control and which can materially affect the Partnership's actual results, performance or achievements for 2011 and beyond. Should one or more of the risks or uncertainties mentioned below materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We expressly disclaim any responsibility to update our forward looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

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. If available acquisitions do not meet the Partnership's criteria, the Partnership may purchase additional depositary receipts. The Partnership will consider refinancing existing properties if the Partnership's cash reserves are insufficient to repay existing mortgages or if the Partnership needs additional funds for future acquisitions.

As expected, operating performance in the first quarter of 2012 continues to build on growth demonstrated in 2011. The imbalance in supply and demand in the rental housing market coupled with a growing renter pool, both nationally and locally, has supported both historically high occupancy and growth in rental rates. Together, these events have produced improving income growth with the portfolio achieving a 6% increase in new rentals and a 3% average increase in renewing rents. Management expects these increases to widen during the upcoming strong leasing season. While the regional real estate industry vacancy rates are at 4%, the Partnership's portfolio, including the Joint Ventures, hovers at less than 2% for the quarter. Ever increasing student applications at Massachusetts institutions of higher education and an unemployment rate consistently lower than the national average put additional pressure on demand and rental rates for the foreseeable future. As anticipated, leasing commissions continue to decline and concessions are now almost nonexistent. Management believes this will continue for the next 18 months. Management is expecting higher renewal/tenant retention for 2012 which will manifest itself in lower operating costs overall. Management expects revenues for 2012 to exceed 2011 by approximately 4%.

The move to gas utilities for both efficiency and fuel savings, coupled with the warmest winter on record for the northeast is evident in the $300,000 reduction in fuel costs and snow removal expense compared to the same quarter 2011. Due to expense reductions in R&M, Leasing, Bad Debt, and Utilities, Management believes that overall operating expenses will remain flat for 2012. Therefore, Management expects net operating income before depreciation, amortization, and interest expense to increase by approximately 10% from the net operating income before depreciation, amortization and interest expense in 2011. The Joint Ventures are experiencing similar occupancy, revenue and operating expense improvements. Dexter Park, the largest joint venture, is expected to outperform 2011 on all facets of operations. In particular, Dexter Park's performance will be more evident in the third quarter of 2012 once the renewal and turnover rental rates take hold.

Management is actively exploring long term debt refinancing ahead of the debt maturities in order to take advantage of historically low long term fixed interest rates. Management's focus will be on balancing existing debt levels with raising some additional capital for future Partnership growth. Though the Depositary Receipt Repurchase Program is current, there were no shares repurchased during 2011 or during the first quarter of 2012. Management continues to weigh investment alternatives against cash liquidity and the current depositary receipt price. Management believes the recent increase in distributions in 2012 is appropriate given the sustained performance of the portfolio and the expected future earnings that the Partnership will be realizing.

The Stock Repurchase Program that was initiated in 2007 has purchased 1,194,960 Depositary Receipts through May 2012 or 29% of the outstanding class A Depositary Receipts. 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 36% of the total properties and 45% 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 up to 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, 2012, Harold Brown, his brother Ronald Brown and the President of Hamilton, Carl Valeri, collectively own approximately 40% 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 controls 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. One of NewReal's directors, Roberta Ornstein also owns immaterial amounts of the Partnership's Class A receipts. The 75% of the issued and outstanding Class B units of the Partnership, controlled by Harold Brown, are owned by HBC Holdings LLC, an entity of which he is the manager.

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.

Residential tenants generally sign a one year lease. In the first quarter of 2012, tenant renewals were approximately 68% with an average rental increase of approximately 3%, new leases accounted for approximately 32% with rental rate increases of approximately 6%. In 2012, leasing commissions decreased approximately 74% from 2011, while tenant concessions decreased approximately 33% from 2011. Tenant improvements were approximately $216,000 for the first quarter of 2012, compared to approximately $205,000 for the first quarter of 2011, an increase of approximately $11,000.

Hamilton accounted for approximately 6.3% of the repair and maintenance expense paid for by the Partnership for the three months ended March 31, 2012 and 3.6% during the three months ended March 31, 2011. 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 84% and 73% of the legal services paid for by the Partnership during the three months ended March 31, 2012 and 2011, respectively.

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

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 three months ended March 31, 2012, Hamilton provided the Partnership approximately $2,200 in construction and architectural services, compared to $66,000 for the three months ended March 31, 2011.

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 each of the three months ended March 31, 2012 and 2011, Hamilton charged the Partnership $31,250 per quarter ($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. Concessions made on residential leases are also accounted for on the straight-line basis.

Discontinued Operations and Rental Property Held for Sale: 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.

If circumstances arise that previously were considered unlikely and, as a result, the Partnership decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

Rental Properties: Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions are capitalized. When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such disposition is included in income. Fully depreciated assets are removed from the accounts. Rental properties are depreciated by both straight-line and accelerated methods over their estimated useful lives. Upon acquisition of rental property, the Partnership estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Partnership allocated the purchase price to the assets acquired and liabilities assumed based on their fair values. The Partnership records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Other intangible assets acquired include amounts for in-place lease values and tenant relationship values, which are based on management's evaluation of the specific characteristics of each tenant's lease and the Partnership's overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Partnership's existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.

In the event that facts and circumstances indicate that the carrying value of a rental property may be impaired, an analysis of the value is prepared. The estimated future undiscounted cash flows are compared to the asset's carrying value to determine if a write-down to fair value is required.

Impairment: On an annual basis management assesses whether there are any indicators that the value of the Partnership'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 Partnership'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.

Investments in Partnerships: The Partnership accounts for its 40%-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 Unconsolidated Joint ventures, 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, 2012 and March 31, 2011

The Partnership and its Subsidiary Partnerships earned income before interest expense, loss from investments in unconsolidated joint ventures, other income and loss and discontinued operations of approximately $2,991,000 for the three months ended March 31, 2012, compared to approximately $2,507,000 for the three months ended March 31, 2011, an increase of approximately $484,000 (19.3%).

The rental activity is summarized as follows:

                         Occupancy Date
                    May 1, 2012   May 3, 2011
Residential
Units                     2,270         2,288
Vacancies                    59            63
Vacancy rate                2.6 %         2.8 %
Commercial
Total square feet       110,949       110,949
Vacancy                   5,500             0
Vacancy rate                5.0 %           0 %




                                       Rental Income (in thousands)
                                       Three Months Ended March 31,
                                    2012                          2011
                            Total        Continuing       Total        Continuing
                          Operations     Operations     Operations     Operations
Total rents              $      8,760   $      8,760   $      8,407   $      8,179
Residential percentage             90 %           90 %           90 %           90 %
Commercial percentage              10 %           10 %           10 %           10 %
Contingent rentals       $        156   $        156   $        153   $        153

Three Months Ended March 31, 2012 Compared to the Three Months Ended March 31, 2011:

                                       Three Months Ended March 31,         Dollar        Percent
                                         2012               2011            Change         Change
Revenues:
Rental income                       $     8,759,703    $     8,178,851        580,852           7.1 %
Laundry and sundry income                    92,679            102,043         (9,364 )        (9.2 )%
                                          8,852,382          8,280,894        571,488           6.9 %
Expenses
Administrative                              489,775            425,743         64,032          15.0 %
Depreciation and amortization             1,514,045          1,353,609        160,436          11.9 %
Management fees                             351,745            333,350         18,395           5.5 %
Operating                                 1,242,103          1,458,686       (216,583 )       (14.8 )%
Renting                                      46,751             87,886        (41,135 )       (46.8 )%
Repairs and maintenance                   1,124,883          1,062,141         62,742           5.9 %
Taxes and insurance                       1,092,392          1,052,526         39,866           3.8 %
                                          5,861,694          5,773,941         87,753           1.5 %
Income Before Other Income and
Discontinued Operations                   2,990,688          2,506,953        483,735          19.3 %
Other Income (Loss)
Interest expense                         (1,961,256 )       (1,946,709 )      (14,547 )         0.7 %
Interest income                                 638              1,226           (588 )       (48.0 )%
(Loss) from investment in
unconsolidated joint ventures              (403,117 )         (454,047 )       50,930         (11.2 )%
                                         (2,363,735 )       (2,399,530 )       35,795           1.5 )%
Income from Continuing
Operations                                  626,953            107,423        519,530         483.6 %
Discontinued Operations
Income from discontinued
operations                                        -             65,389        (65,389 )      (100.0 )%
Net Income                          $       626,953    $       172,812    $   454,141         262.8 %

Rental income from continuing operations for the three months ended March 31, 2012 was approximately $8,760,000, compared to approximately $8,179,000 for the three months ended March 31, 2011, an increase of approximately $581,000 (7.1%). The factors which can be attributed to this increase include the acquisition of the Battle Green Apartments in June 2011 which resulted in an increase in rental income of approximately $236,000, the amortization of free rent granted of approximately $12,000 in 2011 and rental rate increases of approximately 6% in 2012. The Partnership Properties with the most significant increases in rental income include 62 Boylston Street, Westgate Woburn, Hamilton Oaks, and Westside Colonial with increases of approximately $48,000, $46,000, $39,000, and $27,000, respectively. Included in rental income is contingent rentals collected on commercial properties. Contingent rentals include such charges as bill backs of common area maintenance charges, real estate taxes, and utility charges.

Operating expenses from continuing operations for the three months ended March 31, 2012 were approximately $5,862,000 compared to approximately $5,774,000 for the three months ended March 31, 2011, an increase of approximately $88,000 (1.5%). The most significant factors contributing to this increase were an increase in depreciation and amortization expenses of approximately $160,000 (11.9%) due to the acquisition of the Battle Green Apartments in June 2011; an increase in taxes and insurance of approximately $40,000 (3.8%) due to increases in real estate taxes and insurance premiums; an increase in repairs and maintenance expenses of approximately $63,000 (5.9%) due to casualty losses incurred in excess of the insurance proceeds and an increase in administrative expenses of approximately $64,000 (15.0%) due to increases in professional fees as well as the administrative service fees paid to the management company in connection with the maintenance at the properties.

These increases are offset by a decrease in operating expenses of approximately $217,000 (14.8%) due to a mild winter in 2012 which resulted in lower snow removal and utility costs; and a decrease in renting expenses of approximately $41,000 (46.8%) due to decreases in rental commissions and rental concessions as a result of the increased demand for apartments and the lower vacancy levels.

Interest expense for the three months ended March 31, 2012 was approximately $1,961,000 compared to approximately $1,947,000 for the three months ended March 31, 2011, a decrease of approximately $14,000 (0.7%). This decrease is due to a lower level of debt in 2012 compared to 2011.

At March 31, 2012, the Partnership has between a 40% and 50% ownership interests in nine different 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 Investment Properties was approximately $403,000 for the three months ended March 31, 2012, compared to approximately $454,000 for the three months ended March 31, 2011, a decrease in . . .