NEN Swings to Q3 Loss Amid Soaring Interest Costs, Despite Revenue Growth

TL;DR

**NEN's Q3 loss and ballooning debt make it a risky bet in a rising rate environment; steer clear.**

AI Summary

New England Realty Associates Limited Partnership (NEN) reported a net loss of $521,828 for the three months ended September 30, 2025, a significant decline from a net income of $3,909,398 in the same period of 2024. For the nine months ended September 30, 2025, net income decreased to $7,423,771 from $11,445,720 in 2024. This downturn was primarily driven by a substantial increase in interest expense, which rose to $13,377,493 for the nine-month period in 2025 from $11,637,720 in 2024, and a sharp decrease in interest income from $3,413,620 to $1,765,468. Rental income, however, showed growth, increasing to $65,025,406 for the nine months ended September 30, 2025, up from $59,573,125 in the prior year. The company's total assets grew to $492,851,883 as of September 30, 2025, from $393,508,658 at December 31, 2024, largely due to a significant increase in rental properties from $278,516,649 to $458,030,396. Mortgage notes payable also increased substantially to $511,247,097 from $406,205,910, indicating increased leverage. Cash and cash equivalents decreased from $17,615,940 to $13,374,205.

Why It Matters

This filing reveals a critical shift in NEN's financial health, moving from profitability to a net loss in Q3 2025, primarily due to rising interest rates impacting its highly leveraged real estate portfolio. For investors, this signals potential erosion of returns and increased financial risk, especially given the substantial increase in mortgage notes payable to over $511 million. Employees and customers might see indirect impacts through potential operational adjustments or slower property improvements if financial pressures persist. In a competitive real estate market, NEN's increased debt burden and reduced profitability could hinder its ability to acquire new properties or maintain existing ones, potentially affecting its market position against less leveraged competitors.

Risk Assessment

Risk Level: high — The company reported a net loss of $521,828 for the three months ended September 30, 2025, a stark contrast to a $3,909,398 net income in the prior year. This is primarily driven by a significant increase in mortgage notes payable to $511,247,097 from $406,205,910 at December 31, 2024, leading to a substantial rise in interest expense to $13,377,493 for the nine months ended September 30, 2025, up from $11,637,720 in 2024.

Analyst Insight

Investors should consider reducing exposure to NEN given the significant net loss in Q3 2025 and the substantial increase in interest expense and mortgage debt. Monitor future interest rate trends and NEN's ability to refinance its considerable debt obligations, as continued high rates could further depress earnings and cash flow.

Financial Highlights

debt To Equity

N/A

revenue

$65,025,406

operating Margin

N/A

total Assets

$492,851,883

total Debt

$511,247,097

net Income

-$521,828

eps

-$4.48

gross Margin

N/A

cash Position

$13,374,205

revenue Growth

+9.16%

Revenue Breakdown

Key Numbers

• $521,828 — Net Loss (for the three months ended September 30, 2025, compared to $3,909,398 net income in 2024)
• $7,423,771 — Net Income (for the nine months ended September 30, 2025, down from $11,445,720 in 2024)
• $13,377,493 — Interest Expense (for the nine months ended September 30, 2025, up from $11,637,720 in 2024)
• $65,025,406 — Rental Income (for the nine months ended September 30, 2025, up from $59,573,125 in 2024)
• $511,247,097 — Mortgage Notes Payable (as of September 30, 2025, up from $406,205,910 at December 31, 2024)
• $458,030,396 — Rental Properties (as of September 30, 2025, up from $278,516,649 at December 31, 2024)
• $4.48 — Net Loss per Unit (for the three months ended September 30, 2025, compared to $33.44 net income per unit in 2024)
• $63.67 — Net Income per Unit (for the nine months ended September 30, 2025, down from $97.72 in 2024)

Key Players & Entities

• New England Realty Associates Limited Partnership (company) — registrant
• SEC (regulator) — filing oversight
• NYSE MKT Exchange (regulator) — stock exchange
• Massachusetts (location) — state of incorporation
• 39 Brighton Avenue, Allston, Massachusetts (location) — principal executive offices
• GAAP (other) — accounting principles
• Bloomberg (company) — publisher

FAQ

Risk Factors

• Increased Leverage and Debt Service [high — financial]: Mortgage notes payable increased significantly by $105,041,187 to $511,247,097 as of September 30, 2025, from $406,205,910 at December 31, 2024. This substantial increase in debt, coupled with a rise in interest expense to $13,377,493 for the nine-month period in 2025, heightens financial risk and sensitivity to interest rate fluctuations.
• Declining Profitability and Interest Income [high — financial]: The company reported a net loss of $521,828 for the three months ended September 30, 2025, a sharp contrast to a net income of $3,909,398 in the prior year. Net income for the nine-month period also decreased to $7,423,771 from $11,445,720. This decline is exacerbated by a significant drop in interest income from $3,413,620 to $1,765,468.
• Concentration of Rental Properties [medium — operational]: The company's portfolio consists of 34 properties, including residential, mixed-use, and commercial buildings, located in Eastern Massachusetts and Southern New Hampshire. While rental properties grew substantially to $458,030,396, a concentration in specific geographic areas could expose the partnership to localized economic downturns or regulatory changes.
• Reduced Cash Position [medium — financial]: Cash and cash equivalents decreased from $17,615,940 at December 31, 2024, to $13,374,205 as of September 30, 2025. This reduction in liquidity, alongside increased debt obligations, could strain the company's ability to meet short-term financial commitments.
• Interest Rate Sensitivity [high — market]: The significant increase in mortgage notes payable makes the partnership highly sensitive to changes in interest rates. Rising rates would further increase interest expense, potentially eroding profitability and cash flow, especially given the current trend of increasing interest expenses.

Industry Context

The real estate investment trust (REIT) sector, particularly those focused on rental properties, is sensitive to interest rate environments and economic growth. While rental income growth is positive, rising interest expenses and increased leverage are significant headwinds. The sector faces ongoing demand for housing and commercial space, but capital costs and property valuations are key determinants of performance.

Regulatory Implications

As a publicly traded partnership, NEN is subject to SEC regulations and accounting standards (GAAP). Changes in tax laws or real estate regulations could impact its operations and profitability. The company's financial disclosures must adhere to strict reporting requirements, and any misstatements could lead to regulatory scrutiny.

What Investors Should Do

1. Monitor interest rate trends closely, as they directly impact NEN's significant debt servicing costs and profitability.
2. Analyze the sustainability of rental income growth against rising operating expenses and debt obligations.
3. Evaluate the company's strategy for managing its increased leverage and its ability to service its growing mortgage notes payable.
4. Assess the impact of the declining cash position on the company's short-term financial flexibility and operational capacity.
5. Review the company's plans for its 'Real Estate Assets Held for Sale' and their potential impact on future cash flows and asset composition.

Glossary

Rental Properties

Assets owned by the partnership that are leased to tenants for residential, commercial, or mixed-use purposes. (This is the primary asset class for NEN, and its significant increase to $458,030,396 reflects the company's expansion strategy, but also its increased reliance on real estate market conditions.)

Mortgage Notes Payable

Debt obligations secured by real estate properties, typically used to finance the acquisition or development of these properties. (The substantial increase to $511,247,097 indicates a significant rise in leverage, making the partnership more vulnerable to interest rate changes and debt servicing challenges.)

Interest Expense

The cost incurred by the company for borrowed funds, primarily from mortgage notes payable. (This expense increased to $13,377,493 for the nine months ended September 30, 2025, significantly impacting profitability and contributing to the net loss reported.)

Interest Income

Revenue generated from investments in interest-bearing assets, such as U.S. Treasury Bills. (A sharp decrease in interest income from $3,413,620 to $1,765,468 for the nine-month period further reduced the company's overall earnings.)

Cash and Cash Equivalents

Highly liquid financial instruments that are readily convertible to cash, including currency on hand, bank deposits, and short-term investments. (The decrease to $13,374,205 suggests a tightening liquidity position, which could be a concern given the increased debt load.)

Net Loss per Unit

The net loss attributable to each outstanding unit of partnership interest. (The significant drop from $33.44 net income per unit in 2024 to a $4.48 net loss per unit for the three months ended September 30, 2025, highlights the severe deterioration in profitability on a per-unit basis.)

Year-Over-Year Comparison

Compared to the prior year, New England Realty Associates Limited Partnership (NEN) has experienced a significant downturn in profitability, shifting from net income to a net loss for the three-month period and a substantial decrease for the nine-month period. This is driven by a sharp increase in interest expense and a decrease in interest income, despite growth in rental income. Total assets and rental properties have grown considerably, but this expansion has been financed by a substantial increase in mortgage notes payable, leading to higher leverage and a reduced cash position.

Filing Documents

• nen-20250930x10q.htm (10-Q) — 3082KB
• nen-20250930xex31d1.htm (EX-31.1) — 15KB
• nen-20250930xex31d2.htm (EX-31.2) — 15KB
• nen-20250930xex32d1.htm (EX-32.1) — 12KB
• 0001104659-25-108441.txt ( ) — 14968KB
• nen-20250930.xsd (EX-101.SCH) — 84KB
• nen-20250930_cal.xml (EX-101.CAL) — 50KB
• nen-20250930_def.xml (EX-101.DEF) — 379KB
• nen-20250930_lab.xml (EX-101.LAB) — 597KB
• nen-20250930_pre.xml (EX-101.PRE) — 553KB
• nen-20250930x10q_htm.xml (XML) — 3880KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 4 Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 2025 and 2024 5 Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 6 Consolidated Statements of Changes in Partners' Capital for the Nine Months Ended September 30, 2025 and 2024 7 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 29 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 42 Item 4.

Controls and Procedures

Controls and Procedures 42

—OTHER INFORMATION

PART II—OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 43 Item 1A.

Risk Factors

Risk Factors 43 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 43 Item 3. Defaults Upon Senior Securities 44 Item 4. Mine Safety Disclosure 44 Item 5. Other Information 44 Item 6. Exhibits 44

SIGNATURES

SIGNATURES 45 2 Table of Contents NEW ENGLAND REALTY ASSOCIATES, L.P. PART 1 -- FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements The accompanying unaudited consolidated balance sheets, statements of income, statements of comprehensive income, changes in partners' capital, and cash flows and related notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. The financial statements reflect all adjustments consisting only of normal, recurring adjustments, which are, in the opinion of management, necessary for a fair presentation for the interim periods. The consolidated balance sheet as of December 31, 2024, has been derived from the audited consolidated balance sheet at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in New England Realty Associates L.P.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The results of operations for the three and nine month periods ended September 30, 2025 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period. 3 Table of Contents NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, December 31, 2025 2024 ASSETS (Unaudited) Rental Properties $ 458,030,396 $ 278,516,649 Real Estate Assets Held for Sale 3,003,310 — Cash and Cash Equivalents 13,374,205 17,615,940 Rents R

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (Unaudited) NOTE 1. SIGNIFICANT ACCOUNTING POLICIES Line of Business : New England Realty Associates Limited Partnership ("NERA", the "Company" or the "Partnership") was organized in Massachusetts in 1977. NERA and its subsidiaries own 34 properties which include 22 residential buildings; 6 mixed use residential, retail and office buildings; 6 commercial buildings and individual units at one condominium complex. These properties total 3,339 apartment units, 19 condominium units and approximately 159,000 square feet of commercial space. Additionally, the Partnership also owns a 40 - 50 % interest in 7 residential and mixed use properties consisting of 688 apartment units, 12,500 square feet of commercial space and a 50 car parking lot. The properties are located in Eastern Massachusetts and Southern New Hampshire. Basis of Presentation: The financial statements have been prepared in conformity with GAAP. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. These estimates and assumptions are based on management's historical experience that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgement. The Partnership's critical accounting policies are those which require assumptions to be made about 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 diffe

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