New England Realty's Second-Quarter Loss Widens
The Boston-area landlord posted a $1.16 million net loss for the three months ended June 30, 2026, as interest expense and depreciation on new properties rose.
New England Realty Associates Limited Partnership (NEN) swung to a $1.16 million net loss for the three months ended June 30, 2026, from $4.15 million of net income a year earlier.
Income before other income (expense) fell to $4.04 million from $7.06 million, a 42.8% decline. That year-over-year drop narrowed from a 76.0% decline in the first quarter. The partnership and its subsidiary partnerships still earned positive pre-interest operating income, but interest expense, depreciation on recently purchased properties, and a collapse in interest income carried the bottom line into the red.
Rental income rose 15.0% to $24.18 million from $21.04 million. Excluding Hill Estates, two sold commercial properties, and Mill Street Heights, net rental income increased only about $60,000, or 0.3%. Residential rents accounted for 95% of total rents.
Reported operating expenses increased 43.6% to $20.36 million from $14.18 million. Excluding the same three properties, operating expenses rose 9.8% and income before other income (expense) fell 17.3%. Depreciation and amortization rose 81.1% to $8.10 million from $4.47 million, of which about $3.50 million related to recently purchased properties. Interest expense increased 38.6% to $5.73 million from $4.14 million. Interest income fell 85.7% to $105,000 from $737,000. Income from unconsolidated joint ventures declined 12.0% to $427,000 from $485,000.
Factors behind the higher operating expenses included an increase in operating expenses of about $357,000, which included an increase in snow removal of about $184,000 and an increase in utility expenses of about $81,000; an increase in repairs and maintenance of about $310,000, including plumbing of about $176,000 and HVAC repairs of about $88,000; and an increase in taxes and insurance of about $188,000. Properties with the largest rental-income increases included Hamilton Oaks, Clovelly Apartments, and WCB Associates, with increases of $75,000, $57,000, and $54,000, respectively, partially offset by decreases at 62 Boylston and Mill Street Gardens of about $63,000 and $62,000.
Residential vacancy was 2.68% as of August 1, 2026, versus 2.35% a year earlier. Commercial vacancy was 8.52% versus 4.64%. Residential units increased to 3,430 from 3,358; commercial square footage fell to 140,991 from 159,266. Joint Venture property vacancy was 3.9% as of August 1, 2026, compared with 1.9% a year earlier. The Boston area rental market is currently experiencing elevated vacancy rates, and NERA has responded aggressively to keep vacancy below the Boston area’s current availability rates.
During the second quarter of 2026, renewal rents rose an average of 2.9% and new-lease rents fell an average of 1.2%. Renewal growth slowed from 4.4% in the first quarter, while the new-lease decline narrowed from 5.8%. For the balance of 2026, management expects a rental market with slowing rent growth.
The partnership was in compliance with the financial covenants on its $25 million Brookline Bank revolving line of credit as of June 30, 2026. During the six months ended June 30, 2026, it purchased 16,201 depositary receipts, bringing the program total since 2007 to 1,575,610. On March 11, 2026, the General Partner authorized a one-year renewal of the repurchase plan.
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