Shares of New England Realty Associates Limited Partnership NEN have declined 0.5% since the company reported its earnings for the quarter ended June 30, 2026. This compares with the 0.2% decline in the S&P 500 index over the same period. Over the past month, NEN shares have fallen 3.4%, while the S&P 500 has advanced 2.1%.
For the second quarter of 2026, NERA incurred a net loss of $9.99 per unit against a net income of $35.59 per unit in the prior-year quarter.
Total revenues increased 14.9% year over year to $24.4 million from $21.2 million. Rental income, the company's primary revenue source, rose 15% to $24.2 million from $21 million, while laundry and sundry income increased 8.7% to $0.2 million.
Despite higher revenues, NERA posted a net loss of $1.2 million against a net income of $4.2 million in the prior-year quarter. Income before other income and expenses declined 42.8% to $4 million from $7.1 million.
Other Key Business Metrics
As of Aug. 1, 2026, the partnership had 3,430 residential units, up from 3,358 a year earlier. Residential vacancies increased to 92 units from 79, pushing the vacancy rate to 2.68% from 2.35%. Commercial space totaled 140,991 square feet compared with 159,266 square feet a year earlier, while the commercial vacancy rate increased to 8.52% from 4.64%. Residential properties generated 95% of rental income during the quarter, up from 94% a year earlier. Commercial properties contributed the remaining 5%.
The partnership's share of net income from its seven unconsolidated investment properties was approximately $0.4 million, down from about $0.5 million in the prior-year quarter. The 2026 figure included approximately $0.7 million of depreciation and amortization expense.
Factors Influencing the Results
The revenue increase primarily reflected contributions from Hill Estates and newly constructed Mill Street Heights. Excluding Hill Estates, two sold commercial properties and Mill Street Heights, rental income increased only about $0.06 million, or 0.3%. Hamilton Oaks, Clovelly Apartments and WCB Associates recorded the largest rental-income increases, while 62 Boylston and Mill Street Gardens posted declines.
Higher costs more than offset the revenue growth. Operating expenses climbed 43.6% to $20.4 million from $14.2 million. Excluding Hill Estates, the two sold commercial properties and Mill Street Heights, expenses increased 9.8%. Depreciation and amortization jumped 81.1%, with approximately $3.5 million of the increase associated with recently purchased properties. Repairs and maintenance costs increased 9%, reflecting higher plumbing and HVAC repair expenses, while taxes and insurance rose 7%.
Interest expense increased 38.6% to approximately $5.7 million from $4.1 million, reflecting additional borrowing under the Master Credit Facility, mortgages associated with Hill Estates and financing for Mill Street Heights. Interest and dividend income dropped 85.7% to about $0.1 million from $0.7 million because U.S. Treasury bill investments were used to fund the Hill Estates acquisition.
Management Commentary and Liquidity
Management said the partnership's principal source of cash during the first six months of 2026 was rent collections. Cash provided by operating activities was $7.6 million, while cash and cash equivalents stood at $24.8 million at June 30, down from $26.7 million at Dec. 31, 2025. During 2026, the partnership spent approximately $6.9 million on property improvements, funded from cash reserves, with the largest expenditures directed toward Hill Estates, Hamilton Green and 62 Boylston.
Distribution Update
Management expects cash from operations, proceeds from loan refinancings and availability under its line of credit to be sufficient to fund current operations, distributions and required debt payments. In August 2026, the partnership also approved a quarterly distribution of $12 per unit, or 40 cents per receipt, payable on Sept. 30, 2026.
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New England Realty Associates Limited Partnership (NEN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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