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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2000 Commission File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2593067
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
units of beneficial assignments of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of March 1, 2001, 3,303,387 units of limited partnership interest of the
registrant were outstanding and the estimated aggregate market value of the
units as of such date held by non-affiliates, as estimated by the General
Partner (based on a 2001 appraisal of Partnership properties), was approximately
$49,942,642.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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PART I
This Form 10-K contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements are
based on assumptions and expectations which may not be realized and are
inherently subject to risks and uncertainties, many of which cannot be predicted
with accuracy and some of which might not even be anticipated. Future events and
actual results, financial and otherwise, may differ materially from the results
discussed in the forward-looking statements. Risks and other factors that might
cause such a difference include, but are not limited to, the effect of economic
and market conditions; financing risks, such as the inability to obtain debt
financing on favorable terms; the level and volatility of interest rates; and
failure of the Partnership's properties to generate additional income to offset
increases in operating expenses, as well as other risks listed herein under Item
1.
ITEM 1. BUSINESS
General Development of Business
Uniprop Manufactured Housing Communities Income Fund II, a Michigan
Limited Partnership (the "Partnership"), acquired, maintains, operates and
ultimately will dispose of income producing residential real properties
consisting of nine manufactured housing communities (the "Properties"). The
Partnership was organized and formed under the laws of the State of Michigan on
November 7, 1986. Its principal offices are located at 280 Daines Street,
Birmingham, Michigan 48009 and its telephone number is (248) 645-9261.
The Partnership filed an S-11 Registration Statement in November 1986,
which was declared effective by the Securities and Exchange Commission on
December 23, 1986. The Partnership thereafter sold 3,303,387 units (the "Units")
of beneficial assignment of limited partnership interest representing capital
contributions by unit holders (the "Unit Holders") to the Partnership of $20 per
unit. The sale of all 3,303,387 Units was completed in December 1987, generating
$66,067,740 of contributed capital to the Partnership.
The Partnership acquired seven of the Properties in 1987 and acquired
two additional Properties in 1988.
The Partnership operates the Properties as manufactured housing
communities with the primary investment objectives of: (1) providing cash from
operations to investors; (2) obtaining capital appreciation; and (3) preserving
capital of the Partnership. There can be no assurance that such objectives can
be achieved.
On August 20, 1998, the Partnership borrowed $30,000,000 (the "Loan")
from GMAC Commercial Mortgage Corporation. It secured the Loan by placing new
mortgages on seven of its nine properties. The Loan carries a fixed interest
rate of 6.37% over its
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term of 126 months and is amortized over 360 months. The Partnership used the
proceeds from the Loan to refinance the Partnership's outstanding indebtedness
of $30,045,000, which was the result of a 1993 mortgage financing transaction.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation
of its nine manufactured housing communities. Partnership operations commenced
in April 1987 upon the acquisition of the first two Properties. For a
description of the Partnership's revenues, operating profit and assets, please
refer to Items 6 and 8.
Narrative Description of Business
General
The Sunshine Village, Ardmor Village and Camelot Manor Properties were
selected from 25 manufactured housing communities then owned by affiliates of
Genesis Associates Limited Partnership, the General Partner of the Partnership
(the "General Partner"). The other six communities were purchased from
unaffiliated third parties. The Partnership rents space in the Properties to
owners of manufactured homes thereby generating rental revenues. It was intended
that the Partnership would hold the Properties for extended periods of time,
originally anticipated to be seven to ten years after their acquisition. The
General Partner has the discretion to determine when a Property is to be sold;
provided, however, that the determination of whether a particular Property
should be disposed of will be made by the General Partner only after
consultation with an independent consultant, Manufactured Housing Services Inc.
(the "Consultant"). In making their decision, the General Partner and Consultant
will consider relevant factors, including current operating results of the
particular Property and prevailing economic conditions, and will make the
decision with a view to achieving maximum capital appreciation to the
Partnership considering relevant tax consequences and the Partnership's
investment objectives.
Competition
The business of owning and operating residential manufactured housing
communities is highly competitive, and the Partnership may be competing with a
number of established companies having greater financial resources. Moreover,
there has been a trend for manufactured housing community residents to purchase
(where zoning permits) their manufactured home sites on a collective basis. This
trend may result in increased competition with the Partnership for tenants. In
addition, the General Partner, its affiliates or both, has and may in the future
participate directly or through other partnerships or
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investment vehicles in the acquisition, ownership, development, operation and
sale of projects which may be in direct competition with one or more of the
Properties.
Each of the Properties competes with numerous similar facilities
located in its geographic area. The Davie/Fort Lauderdale area contains
approximately five communities offering approximately 2,045 housing sites
competing with Sunshine Village. Ardmor Village competes with approximately nine
communities in the Lakeville, Minnesota area offering approximately 2,363
housing sites. Camelot Manor competes with approximately 16 communities in the
Grand Rapids, Michigan area offering approximately 3,631 housing sites. In the
Jacksonville, Florida area, Country Roads competes with approximately nine
communities offering approximately 3,636 housing sites. The Tampa, Florida area
contains approximately four communities offering approximately 1,190 housing
sites competing with Paradise Village. Dutch Hills and Stonegate Manor compete
with approximately 11 other communities in the Lansing, Michigan area offering
approximately 3,438 housing sites. In the Las Vegas, Nevada area, West Valley
and El Adobe compete with approximately 13 other communities offering
approximately 3,719 housing sites. The Properties also compete against other
forms of housing, including apartment and condominium complexes.
Governmental Regulations
The Properties owned by the Partnership are subject to certain state
regulations regarding the conduct of the Partnership operations. For example,
the State of Florida regulates agreements and relationships between the
Partnership and the residents of Sunshine Village, Country Roads and Paradise
Village. Under Florida law, the Partnership is required to deliver to new
residents of those Properties a prospectus describing the property and all
tenant rights, Property rules and regulations, and changes to Property rules and
regulations. Florida law also requires minimum lease terms, requires notice of
rent increases, grants to tenant associations certain rights to purchase the
community if being sold by the owner and regulates other aspects of the
management of such properties. The Partnership is required to give 90 days
notice to the residents of Florida Properties of any rate increase, reduction in
services or utilities, or change in rules and regulations. If a majority of the
residents object to such changes as unreasonable, the matter must be submitted
to the Florida Department of Professional Business Regulations for mediation
prior to any legal adjudication of the matter. In addition, if the Partnership
seeks to sell Florida Properties to the general public, it must notify any
homeowners association for the residents, and the association shall have the
right to purchase the Property on the price, terms and conditions being offered
to the public within 45 days of notification by the owner. If the Partnership
receives an unsolicited bona fide offer to purchase the Property from any party
that it is considering or negotiating with, it must notify any such homeowners
association that it has received an offer, state to the homeowners association
the price, terms and conditions upon which the Partnership would sell the
Property, and consider (without obligation) accepting an offer from the
homeowners association. The Partnership has, to the best of its knowledge,
complied in all material
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respects with all requirements of the States of Florida, Michigan, Minnesota and
Nevada, where its operations are conducted.
Employees
The Partnership employs two part-time employees to perform Partnership
management and investor relations' services. The Partnership retains an
affiliate, Uniprop, Inc., as the property manager for each of its Properties.
Uniprop, Inc. is paid a fee equal to the lesser of 5% of the annual gross
receipts from each of the Properties or the amount which would be payable to
unaffiliated third parties for comparable services. Uniprop, Inc. retains local
managers on behalf of the Partnership at each of the Properties. Salaries and
fringe benefits of such local managers are paid by the Partnership and are not
included in any property management fee payable to Uniprop, Inc. Local managers
are employees of the Partnership and are paid semi-monthly. The yearly salaries
and expenses for local managers range from $20,000 to $40,000. Local managers
have no direct management authority, make no decisions regarding operations and
act only in accordance with instructions from the property manager. They are
utilized by the Partnership to provide on-site maintenance and administrative
services. Uniprop, Inc., as property manager, has overall management authority
for each Property.
ITEM 2. PROPERTIES
The Partnership purchased all nine manufactured housing communities for
cash. As a result of the Loan, however, seven of the nine Properties are now
encumbered with mortgages.
Each of the Properties is a modern manufactured housing community
containing lighted and paved streets, side-by-side off-street parking and
complete underground utility systems. The Properties consist of only the
underlying real estate and improvements, not the actual homes themselves. In
January 1990, the Partnership did begin acquiring some homes in conjunction with
its home purchase/lease program for Country Roads and Paradise Village. Each of
the Properties has a community center, which includes offices, meeting rooms and
game rooms. Country Roads has a 1,200 square foot rental cottage. Each of the
Properties, except Stonegate Manor, has a swimming pool. Several of the
Properties also have laundry rooms, playground areas, garage and maintenance
areas and recreational vehicle or boat storage areas.
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The table below contains certain information concerning the Partnership's nine
properties.
PROPERTY NAME NUMBER
AND LOCATION YEAR CONSTRUCTED ACREAGE OF SITES
- ------------ ---------------- ------- --------
Ardmor Village
Cedar Avenue S.
Lakeville, MN 1974 74 339
Camelot Manor
South Division
Grand Rapids, MI 1973 57 335
Country Roads
Townsend Road
Jacksonville, FL 1967 37 312
Dutch Hills
Upton Road
Haslett, MI 1975 42.8 278
El Adobe
N. Lamb Blvd.
Las Vegas, NV 1975 36 371
Paradise Village
Paradise Drive
Tampa, FL 1971 91 611
Stonegate Manor
Eaton Rapids Drive
Lansing, MI 1968 43.6 308
Sunshine Village
Southwest 5th St.
Davie, FL 1972 45 356
West Valley
W. Tropicana Ave
Las Vegas, NV 1972 53 420
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ITEM 3. LEGAL PROCEEDINGS
In the opinion of the Partnership and its legal counsel, there are no
material legal proceedings pending except such ordinary routine matters as are
incident to the kind of business conducted by the Partnership. To the knowledge
of the Partnership and its counsel, no legal proceedings have been instituted or
are being contemplated by any governmental authority against the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The voting privileges of the Unit Holders and Limited Partners are
restricted to certain matters of fundamental significance to the Partnership.
The Unit Holders and Limited Partners must approve certain major decisions of
the General Partner if the General Partner proposes to act without the approval
of the Consultant. The Unit Holders and Limited Partners also have a right to
vote upon removal and replacement of the General Partner, dissolution of the
Partnership, material amendments to the partnership agreement and the sale or
other disposition of all or substantially all of the Partnership's assets,
except in the ordinary course of the Partnership's disposing of the Properties.
Such matters must be approved by Unit Holders and Limited Partners, as a group,
holding more than 50% of the then outstanding interests. No matters were
submitted to Unit Holders for vote during 2000.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY
HOLDER MATTERS
There is no established public trading market for the Units of the
Partnership and it is not anticipated that one will ever develop. During the
last twelve months, less than five percent (5.0%) of the Units have been
transferred, excluding transfers due to death or intra-family transfers. The
Partnership believes there is no secondary market, or the substantial equivalent
thereof, and none will develop.
The General Partner calculates the estimated net asset value of each
Unit by dividing (i) the amount of distributions that would be made to the
Limited Partners in the event of the current sale of the Properties at their
current appraised value, less the outstanding balances of the mortgages on the
mortgaged Properties and sales expenses (but without consideration to tax
consequences of the sale), by (ii) 3,303,387. In March 2001, the Properties were
appraised at an aggregate fair market value of $81,600,000. Assuming a sale of
the nine properties in March 2001, at the appraised value, less payment of
selling expenses and mortgage debt, the net aggregate proceeds available for
distribution to the Unit Holders is estimated to be $49,942,642 or $15.12 per
Unit. There can be no assurance that the estimated net asset value could ever be
realized. As of March 1, 2001, the Partnership had approximately 4,675 Unit
Holders.
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ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data for the
Partnership for the periods ended December 31, 2000, 1999, 1998, 1997 and 1996:
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 2000 31, 1999 31, 1998 31, 1997 31, 1996
-------- -------- -------- -------- --------
Total Assets $ 46,542,559 $ 47,525,657 $ 48,834,623 $ 52,652,238 $ 53,583,381
============ ============ ============ ============ ============
Long Term
Debt $ 29,209,358 $ 29,572,116 $ 29,915,975 $ 30,045,000 $ 30,025,487
============ ============ ============ ============ ============
Income 13,023,904 12,718,010 12,419,636 11,922,526 11,250,156
Operating Expenses (11,034,040) (11,077,253) (11,488,193) (10,755,270) (10,854,181)
------------ ------------ ------------ ------------ ------------
Income before
Extraordinary Item: $ 1,989,864 $ 1,640,757 $ 931,443 1,167,256 $ 395,975
Extraordinary Item: - - $ 250,998 - -
------------ ------------ ------------ ------------ ------------
Net Income: $ 1,989,864 $ 1,640,757 $ 1,182,441 $ 1,167,256 $ 395,975
============ ============ ============ ============ ============
Distributions to Unit
Holders,
per Unit: $.76 $.73 $1.43 $.64 $.54
Income per Unit:
Before Extra. Item $.60 $.49 $.28 $.35 $.12
Extraordinary Item - - .08 - -
Weighted average
Number of Units
Outstanding: 3,303,387 3,303,387 3,303,387 3,303,387 3,303,387
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Capital Resources
The capital formation phase of the Partnership began on April 1, 1987
when Sunshine Village and Ardmor Village were purchased by the Partnership and
operations commenced. It ended on January 15, 1988 when El Adobe, the
Partnership's last property, was purchased. The total capital raised through
December 1987 was $66,067,740 of which approximately $58,044,000 was used to
purchase the nine Properties after deducting sales commissions, advisory fees
and other organization and offering costs.
The Partnership had no capital expenditure commitments as of December
31, 2000 and does not anticipate any during the next fiscal year.
As described in Item 1, the Partnership borrowed $30,000,000 from GMAC
Commercial Mortgage Corporation. The Loan carries a fixed interest rate of 6.37%
over its term of 120 months, amortized over 30 years. The Loan was secured by
mortgages on the Partnership's Ardmor Village, Camelot Manor, Dutch Hills, El
Adobe, Stonegate Manor, Sunshine Village and West Valley Properties. The
Partnership used the proceeds from the Loan to refinance the Partnership's
outstanding indebtedness of $30,045,000.
The General Partner acknowledges that the mortgages pose some risks to
the Partnership, but believes that such risks are not greater than risks
typically associated with real estate financing.
Liquidity
The Partnership has, since inception, generated adequate amounts of
cash to meet its operating needs. The Partnership retains cash reserves, which
it considers adequate to maintain the Properties. All funds in excess of
operating needs, amounts sufficient to pay debt service, and cash reserves are
distributed to the Unit Holders on a quarterly basis. While the Partnership is
not required to maintain a working capital reserve, the Partnership has not
distributed all the cash generated from operations in order to build capital
reserves. As of December 31, 2000, the Partnership had $3,155,170 in reserves.
In February of 1994, the Partnership distributed $23,119,767 to the
Unit Holders, or $7.00 per $20.00 Unit held. Of this amount, $13,572,978 (or
$4.11 per Unit), restored the then shortfall in the Unit Holders' 10.0%
cumulative preferred return, and $9,546,789 (or $2.89 per Unit), was a partial
return of the Limited Partners' original capital contributions.
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Results of Operations
Distributions
For the year ended December 31, 2000, the Partnership made
distributions to the Unit Holders of $2,510,569, which is equal, on an
annualized basis, to 4.4% on their adjusted capital contributions ($.76 per
$17.11 Unit). Distributions paid to Unit Holders in 1999 totaled $2,411,479, and
$4,723,832 was paid in 1998, (of which $2,543,608 was the result of the
liquidation of the Class D and R certificates, which were issued as a result of
the original 1993 financing transaction).
The distributions paid in 2000 were less than the amount required for
the annual 10.0% preferred return to the Unit Holders by approximately
$3,142,000. As described in Note 7 to the Partnership's financial statements,
the cumulative preferred return deficit through December 2000 was approximately
$22,006,000. No distributions can be made to the General Partner in regard to
its incentive management interest until the cumulative preferred return deficit
has been distributed to the Unit Holders. At December 31, 2000, the unpaid
amount to be distributed to the General Partner was approximately $7,700,000.
Net Income
For the years ended December 31, 2000, 1999 and 1998, income before
extraordinary item was $1,989,864, $1,640,757 and $931,443 on total revenues of
$13,023,904, $12,718,010 and $12,419,636, respectively. The increases are due
primarily to higher revenue and lower operating expenses, specifically the
reduction in interest paid on the Partnership's mortgage debt.
Net income plus depreciation and amortization less distributions to
Unit Holders, was $1,280,243, $1,072,491 and $(1,694,214), for the years ended
December 31, 2000, 1999 and 1998, respectively.
Partnership Management
Certain employees of the Partnership are also employees of affiliates
of the general partner. These employees were paid by the Partnership the amount
of $222,181, $208,593, and $222,949, respectively, to perform local property
management and investor relations services for the Partnership.
Property Operations
Overall, as illustrated in the table below, the Partnership's nine
properties had a combined average occupancy of 92% as of December 2000, versus
93% in December 1999, and 93% in December 1998. The average monthly rent (not
weighted average) was
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approximately $363 per home site in December 2000, versus $353 in December 1999
and $348 in December 1998, an increase of 2.8% and 1.4%, respectively.
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
- -------------------------------------------------------------------------------------------------------------------
2000 1999 1998 2000 1999 1998 2000 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
Ardmor Village 339 336 335 329 99% 98.8% 97.1% $346 $333 $319
Camelot Manor 335 311 323 321 93% 96.4 95.8 342 331 320
Country Roads 312 273 283 287 88% 90.7 92.0 242 253 240
Dutch Hills 278 274 269 261 99% 96.8 93.9 341 331 321
El Adobe 371 323 344 363 87% 93.7 97.8 419 404 384
Paradise Village 611 481 504 504 79% 82.1 82.5 303 291 297
Stonegate Manor 308 293 302 295 95% 98.1 95.8 348 336 326
Sunshine Village 356 325 327 336 91% 91.9 94.4 447 434 418
West Valley 420 401 403 415 95% 95.7 98.8 479 467 449
----- ----- ----- ----- ---- ---- ---- ---- ---- ----
Overall 3,330 3,017 3,090 3,111 92% 92.8% 93.4% $363 $353 $348
The table below summarizes gross revenues and net operating income for
the Partnership and Properties during 2000, 1999 and 1998.
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GROSS REVENUE NET OPERATING INCOME
AND NET INCOME
- -------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 2000 1999 1998
---- ------ ---- ---- ---- ----
Ardmor Village $1,373,948 $1,267,773 $1,241,339 $789,214 $ 614,910 $ 664,873
Camelot Manor 1,223,979 1,172,434 1,131,841 595,198 508,750 519,695
Country Roads 810,253 864,405 836,800 197,804 284,374 43,923
Dutch Hills 1,032,657 989,591 958,776 492,197 487,671 500,881
El Adobe 1,703,048 1,748,554 1,731,799 1,051,291 1,128,435 1,137,530
Paradise Village 1,641,550 1,570,490 1,448,095 356,666 248,023 297,217
Stonegate Manor 1,157,531 1,146,597 1,110,040 591,013 568,042 544,209
Sunshine Village 1,607,842 1,595,829 1,547,644 916,686 913,078 950,739
West Valley 2,315,855 2,288,155 2,326,778 1,458,246 1,458,086 1,548,420
----------- ----------- ----------- ---------- ---------- ----------
12,866,663 12,643,828 12,333,112 $6,448,315 6,211,369 6,207,487
Partnership
Mgmt. $157,241 74,182 86,524 ($176,792) (213,440) (413,691)
Extinguisment of Debt - - 250,998
Other nonrecurring
Expenses (578,247)
(590,678) (589,597)
Debt Service (1,890,033) (1,935,712) (2,425,579)
Depreciation and
Amortization (1,800,948) (1,843,213) (1,847,177)
----------- ----------- ----------- ---------- ---------- ----------
TOTAL: $13,023,904 $12,718,010 $12,419,636 $1,989,864 $1,640,757 $1,182,441
===============================================================================================================================
COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999
Gross revenues increased $305,894, or 2.4%, to $13,023,904 in 2000,
compared to $12,718,010 in 1999. The increase is primarily the result of an
increase in rental income due to higher average monthly rents. (See table on
previous page).
The Partnership's operating expenses decreased $43,213, or .4%, to
$11,034,040 in 2000, compared to $11,077,253 in 1999. The decrease in due
primarily to lower interest expense associated with the Partnership's mortgage
debt.
As a result of the foregoing factors, net income increased from
$1,640,757 in 1999 to $1,989,864 in 2000.
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COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
Gross revenues increased $298,374, or 2.34%, to $12,718,010 in 1999,
compared to $12,419,636 in 1998. The increase was primarily the result of higher
average occupancy and an increase in rental income due to higher average monthly
rents. (See table on previous page.)
The Partnership's operating expenses decreased $410,940, or 3.6%, to
$11,077,253 in 1999, compared to $11,488,193 in 1998. The decrease is due
primarily to lower interest expense associated with the Partnership'sMortgage
debt and lower administrative expenses due to the absence of costs associated
with the 1998 proxy.
As a result of the foregoing factors, net income increased from $1,182,441 in
1998 to $1,640,757 in 1999.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate risk primarily through its
borrowing activities. There is inherent roll over risk for borrowings as they
mature and are renewed at current market rates. The extent of this risk is not
quantifiable or predictable because of the variability of future interest rates
and the Partnership's future financing requirements.
Note Payable: At December 31, 2000 the Partnership had a note payable
outstanding in the amount of $29,209,358. Interest on this note is at a fixed
rate of 6.37% through March 2009.
The Partnership does not enter into financial instruments transactions
for trading or other speculative purposes or to manage its interest rate
exposure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the fiscal year ended
December 31, 2000, 1999 and 1998, and supplementary data are filed with this
Report under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in the Partnership's independent public
accountants nor have there been any disagreements during the past two fiscal
years.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership, as an entity, does not have any officers or directors.
The General Partner, Genesis Associates Limited Partnership, is a Michigan
limited partnership which has two general partners, Uniprop, Inc., the managing
General Partner, and Paul M. Zlotoff.
Information concerning Mr. Zlotoff's age and principal occupations, as
well as for other officers of Uniprop, Inc., during the last five years or more
is as follows:
Paul M. Zlotoff, 51, is and has been an individual general partner of
Genesis Associates since its inception in November 1986. Mr. Zlotoff became the
Chairman of Uniprop, Inc. in May 1986 and was its President from 1979 through
1997. He is also an individual general partner of P.I. Associates Limited
Partnership, the general partner of Uniprop Manufactured Housing Communities
Income Fund, a public limited partnership which owns and operates four
manufactured housing communities. Mr. Zlotoff currently, and in the past, has
acted as the general partner for various other limited partnerships owning
manufactured housing communities and some commercial properties.
Charles Soberman, 51, joined Uniprop, Inc. in June 1999 as its Chief
Executive Officer and Executive Vice President. Mr. Soberman's responsibilities
include supervision of property operations and corporate oversight. Mr. Soberman
has a law degree from The Harvard Law School and a M.B.A. from Michigan State
University. Mr. Soberman also has a B.A. from the University of Michigan. From
1979 through 1996, he was president of Mercury Paint Company, a manufacturer and
retailer of coatings and allied products. From 1996 to 1999 Mr. Soberman was a
Senior Lecturer at Wayne State University School of Business Administration.
Gloria Koster, 47, became Chief Financial Officer of Uniprop, Inc. on
January 1, 1998. Previously, Ms. Koster had been Vice President - Finance of
Uniprop, Inc. since July 1989. She is responsible for accounting, financial
controls, data processing, cash management, financial reporting, budgeting,
financing, and tax matters. Prior to joining Uniprop, Inc., Ms. Koster had been
with Michigan National Bank for 13 years, most recently as a first
vice-president. Ms. Koster has a M.B.A. from the University of Detroit.
Roger Zlotoff, 40, became Chief Investment Officer of Uniprop, Inc. on
October 18, 1999. Mr. Zlotoff is primarily responsible for raising equity
capital, managing partnership investments, evaluating acquisitions of existing
properties and leading the development process for new properties. From 1997 to
1999, Mr. Zlotoff served as Director of Business Development for Vistana, Inc.
in Orlando, FL. Previously, Mr. Zlotoff was Managing Director for Sterling
Finance International from 1994 to 1997 and was a corporate banker with First
Union National Bank from 1988 to 1994. Mr. Zlotoff received his B.A. from the
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University of Central Florida as a philosophy major, and received his Masters
Degree in International Business from the University of South Carolina.
Paul M. Zlotoff and Roger Zlotoff are brothers.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no executive officers and therefore, no officers
received a salary or remuneration exceeding $100,000 during the last fiscal
year. The General Partner of the Partnership and an affiliate, Uniprop, Inc.,
received certain compensation and fees during the fiscal year in the amounts
described in Item 13. Depending upon the results of operations and other
factors, the Partnership anticipates that it will provide similar compensation
to the General Partner and Uniprop, Inc. during the next fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Partnership is a limited partnership duly formed pursuant to the
Uniform Limited Partnership Act, as amended, of the State of Michigan. The
General Partner, Genesis Associates Limited Partnership, is vested with full
authority as to the general management and supervision of business and the other
affairs of the Partnership, subject to certain constraints in the partnership
agreement and consulting agreement. Unit holders and/or Limited Partners have no
right to participate in the management of the Partnership and have limited
voting privileges only on certain matters of fundamental significance. To the
knowledge of the Partnership, no person owns of record or beneficially, more
than five percent of the Partnership's Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion describes all of the types of compensation,
fees or other distributions paid by the Partnership or others to the General
Partner or its affiliates from the operations of the Partnership during the last
fiscal year, as well as certain of such items which may be payable during the
next fiscal year. Certain of the following arrangements for compensation and
fees were not determined by arm's length negotiations between the General
Partner, its affiliates and the Partnership.
Paul M. Zlotoff has an interest in the original sellers of Sunshine
Village and Ardmor Village and is entitled to share in a contingent purchase
price with respect to each Property, when and if the Properties are sold and the
sellers become entitled thereto. The maximum amounts which could be payable to
the sellers are as follows: Sunshine Village, $1,108,260 and Ardmor Village,
$946,236. The cash purchase price and contingent
-15-
16
purchase price for each Property were determined by reference to the average of
two independent real estate appraisals which were obtained by the General
Partner. Such appraisals are only estimates of value and are not necessarily
indicative of the actual real estate value. Each seller will become entitled to
any unpaid contingent purchase price upon the sale, financing or other
disposition of each such Property, but, only after the receipt by each Unit
Holder and Limited Partner of aggregate distributions equal to the sum of (i)
his 10% cumulative preferred return plus (ii) 125% of his capital contribution.
The actual amounts to be received, if any, will depend upon the results of the
Partnership's operations and the amounts received upon the sale, financing or
other disposition of the Properties and are not determinable at this time. The
Partnership does not anticipate any such amount will become payable during the
next fiscal year.
The Partnership will pay an Incentive Management Interest to
the General Partner for managing the Partnership's affairs, including:
determining distributions, negotiating agreements, selling or financing
properties, preparing records and reports, and performing other ongoing
Partnership responsibilities. This incentive management interest is 15%
of distributable cash from operations in any quarter. However, in each
quarter, the General Partner's right to receive any net cash from
operations is subordinated to the extent necessary to first provide
each Unit Holder and Limited Partner his 10% cumulative preferred
return. During the last fiscal year, the General Partner received no
distributions on account of its Incentive Management Interest from
operations because distributions were approximately $3,142,000 less
than the 10% cumulative preferred return due Unit Holders. Any such
amounts of Incentive Management Interest unpaid in a taxable year will
be accumulated and paid from distributable cash from capital
transactions, but only after each Unit Holder and Limited Partner has
first received his 10% cumulative preferred return and 125% of his
capital contribution. For 2000, approximately $600,000 was accumulated
for the General Partner, and the General Partner's aggregate
accumulated Incentive Management Interest as of December 2000 was
approximately $7,700,000. The actual Incentive Management Interest from
operations to be accumulated or paid during the next fiscal year will
depend upon the results of the Partnership's operations and is not
determinable at this time. The Partnership does not anticipate any such
amount will be distributed to the General Partner during the next
fiscal year and will again be accumulated with payment deferred. No
distributions of Incentive Management Interest could be made to the
General Partner until the 10% cumulative preferred return of
approximately $22,006,000, as of December 31, 2000, is first
distributed to the Unit Holders. In February of 1994, as part of the
1993 mortgage financing, $23,119,767 was distributed to the Unit
Holders, $13,572,978 of which eliminated the Unit Holders' preferred
return deficit through December 31, 1993.
The Partnership must also pay an Incentive Management Interest
from capital transactions to the General Partner for its services
rendered to the Partnership. The General Partner will be entitled to
receive its share of distributable
-16-
17
cash from capital transactions after (i) each Unit Holder and Limited
Partner has received aggregate distributions in an amount equal to the
sum of (a) his 10% cumulative preferred return plus (b) 125% of his
capital contribution, (ii) any contingent purchase prices have been
paid, and (iii) any property disposition fees to Uniprop, Inc. have
been paid. The General Partner's share of distributable cash from
capital transactions so payable will be (i) 100% of such distributable
cash from capital distributions until the General Partner's share of
the aggregate capital distributions made under section 11c(iii) and
11c(v) of the partnership agreement equal 25% and (ii) thereafter, 25%
of such distributable cash from capital transactions. No Incentive
Management Interest from capital transactions was paid to the General
Partner for the fiscal year ended December 31, 2000. The Partnership
does not anticipate that any such amounts will be paid or become
payable to the General Partner during the next fiscal year.
Uniprop, Inc. received and will receive property management
fees for each Property managed by it. Uniprop, Inc. is primarily
responsible for the day-to-day management of the Properties and for the
payment of the costs of operating each Property out of the rental
income collected. The property management fees are equal to the lesser
of 5% of the annual gross receipts from the Properties managed by
Uniprop, Inc., or the amount which would be payable to an unaffiliated
third party for comparable services. During the last fiscal year,
Uniprop, Inc. received the following property management fees totaling
$643,765: Ardmor Village, $68,815; Camelot Manor, $61,199; Country
Roads, $40,558; Dutch Hills, $51,634; El Adobe, $85,150; Paradise
Village, $82,299; Stonegate Manor, $57,877; Sunshine Village, $80,439;
and West Valley, $115,794. The actual amounts to be received during the
next fiscal year will depend upon the results of the Partnership's
operations and are not determinable at this time.
Certain employees of affiliates of the General Partner were
paid an aggregate of $222,181 during 2000 perform local property
management, data processing and investor relation services for the
Partnership. It is anticipated comparable amounts will be paid in the
next fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
(a) Financial Statements
(1) The following financial statements and related documents are
filed with this report:
(i) Report of Independent Certified Public Accountants
-17-
18
(ii) Balance Sheets as of December 31, 2000 and 1999
(iii) Statements of Income for the fiscal years ended
December 31, 2000, 1999 and 1998
(iv) Statements of Partners' Equity for the fiscal years
ended December 31, 2000, 1999 and 1998
(v) Statements of Cash Flows for the fiscal years ended
December 31, 2000, 1999 and 1998
(2) The following financial statement schedule is filed with this
report:
Schedule III - Real Estate and Accumulated
Depreciation for the fiscal years ended
December 31, 2000, 1999 and 1998
(3) Exhibits
The following exhibits are incorporated by reference to the S-11
Registration Statement of the Partnership filed November 12, 1986, as amended on
December 22, 1986 and January 16, 1987:
3(a) Certificate of Limited Partnership for the Partnership
3(b) Uniprop Income Fund II Agreement of Limited Partnership
4(a) First Amendment to Uniprop Income Fund II Agreement of Limited
Partnership (April 1, 1987)
10(a) Form of Management Agreement between the Partnership and
Uniprop, Inc.
10(b) Form of Consulting Agreement among the Partnership, the
General Partner and Consultant
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth
quarter of 2000.
The following exhibits are incorporated by reference to the Form 10-K
for the fiscal year ended December 31, 1997:
4(b) Form of Beneficial Assignment Certificate (BAC) for the
Partnership
(Originally submitted with Form 10-K for the fiscal year ended
December 31, 1987.)
-18-
19
10(c) Contingent Purchase Price Agreement with Sunrise Broward
Associates, Ltd. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
10(d) Contingent Purchase Price Agreement with Ardmor Associates
Limited Partnership. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
10(e) Incentive Acquisition Fee Agreement between the Partnership
and Uniprop, Inc. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
The following exhibit is incorporated by reference to the Form 8-K that
was filed on September 8, 1998:
2 Mortgage notes, made as of August 20, 1998, between Uniprop
Manufactured Housing Communities Income Fund II and GMACCM.
The following exhibits are attached to this Report:
28 Letter summary of the estimated fair market values of the
Partnership's nine manufactured housing communities, as of
March 1, 2001
-19-
20
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Uniprop Manufactured Housing
Communities Income Fund II
(a Michigan limited partnership)
We have audited the accompanying balance sheets of Uniprop Manufactured Housing
Communities Income Fund II (a Michigan limited partnership), as of December 31,
2000 and 1999, and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Uniprop Manufactured Housing
Communities Income Fund II at December 31, 2000 and 1999 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000 in conformity with auditing standards generally accepted in
the United States of America.
February 7, 2001
21
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
22
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
CONTENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 3
FINANCIAL STATEMENTS
Balance Sheets 4
Statements of Income 5
Statements of Partners' Equity 6
Statements of Cash Flows 7
NOTES TO FINANCIAL STATEMENTS 8-15
23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Uniprop Manufactured Housing
Communities Income Fund II
(a Michigan limited partnership)
We have audited the accompanying balance sheets of Uniprop Manufactured Housing
Communities Income Fund II (a Michigan limited partnership), as of December 31,
2000 and 1999, and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 2000. We have
also audited the schedule listed under Item 14 of Form 10-K. These financial
statements and the schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the schedule are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and the schedule. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements and the
schedule. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Uniprop Manufactured Housing
Communities Income Fund II at December 31, 2000 and 1999 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.
Also, in our opinion, the schedule listed under Item 14 of Form 10-K presents
fairly, in all material respects, the information set forth therein.
BDO SEIDMAN, LLP
February 7, 2001
24
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
December 31, 2000 1999
- -------------------------------------------------------------------------------
ASSETS
PROPERTY AND EQUIPMENT (Note 2)
Buildings and improvements $50,263,748 $49,776,786
Land 11,662,525 11,644,103
Manufactured homes and improvements 1,495,538 1,875,567
Furniture and equipment 506,322 453,437
- -------------------------------------------------------------------------------
63,928,133 63,749,893
Less accumulated depreciation 22,262,202 20,587,823
- -------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 41,665,931 43,162,070
Cash 3,155,170 2,821,681
Unamortized financing costs (Note 2) 578,652 597,528
Other assets (Note 3) 1,142,806 944,378
- -------------------------------------------------------------------------------
$46,542,559 $47,525,657
===============================================================================
LIABILITIES AND PARTNERS' EQUITY
Notes payable (Note 2) $29,209,358 $29,572,116
Accounts payable 179,442 235,098
Other liabilities (Note 4) 725,874 769,853
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 30,114,674 30,577,067
- -------------------------------------------------------------------------------
PARTNERS' EQUITY
Unit holders 16,149,566 16,690,170
General partner 278,319 258,420
- -------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 16,427,885 16,948,590
- -------------------------------------------------------------------------------
$46,542,559 $47,525,657
===============================================================================
See accompanying notes to financial statements.
25
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
Year Ended December 31, 2000 1999 1998
- ---------------------------------------------------------------------------------------------
INCOME
Rental $12,290,877 $12,091,007 $11,737,284
Interest 160,100 76,964 183,803
Other 572,927 550,039 498,549
- ---------------------------------------------------------------------------------------------
13,023,904 12,718,010 12,419,636
- ---------------------------------------------------------------------------------------------
OPERATING EXPENSES
Property operations 5,171,193 5,170,508 5,054,906
Depreciation and amortization 1,800,948 1,843,213 1,847,177
Administrative (Note 5) 1,157,307 1,134,947 1,233,734
Property taxes 1,014,559 992,873 926,797
Interest 1,890,033 1,935,712 2,425,579
- ---------------------------------------------------------------------------------------------
11,034,040 11,077,253 11,488,193
- ---------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY ITEM 1,989,864 1,640,757 931,443
EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT
OF DEBT (Note 2) - - 250,998
- ---------------------------------------------------------------------------------------------
NET INCOME $ 1,989,864 $ 1,640,757 $ 1,182,441
=============================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT (Note 7)
Income before extraordinary item $ .60 $ .49 $ .28
Extraordinary item - - .08
- ---------------------------------------------------------------------------------------------
$ .60 $ .49 $ .36
=============================================================================================
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT (Note 7) $ .76 $ .73 $ 1.43
=============================================================================================
NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 3,303,387 3,303,387 3,303,387
=============================================================================================
NET INCOME ALLOCABLE TO GENERAL PARTNER (Note 7)
Income before extraordinary item $ 19,899 $ 16,408 $ 9,314
Extraordinary item - - 2,510
- ---------------------------------------------------------------------------------------------
$ 19,899 $ 16,408 $ 11,824
=============================================================================================
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER $ - $ - $ -
=============================================================================================
See accompanying notes to financial statements.
26
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
General
Partner Unit Holders TOTAL
- --------------------------------------------------------------------------------
BALANCE, January 1, 1998 $230,188 $21,030,515 $21,260,703
Distributions to unit holders - (4,723,832) (4,723,832)
Net income for the year 11,824 1,170,617 1,182,441
- --------------------------------------------------------------------------------
BALANCE, December 31, 1998 242,012 17,477,300 17,719,312
Distributions to unit holders - (2,411,479) (2,411,479)
Net income for the year 16,408 1,624,349 1,640,757
- --------------------------------------------------------------------------------
BALANCE, December 31, 1999 258,420 16,690,170 16,948,590
Distributions to unit holders - (2,510,569) (2,510,569)
Net income for the year 19,899 1,969,965 1,989,864
- --------------------------------------------------------------------------------
BALANCE, December 31, 2000 $278,319 $16,149,566 $16,427,885
================================================================================
See accompanying notes to financial statements.
27
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Year Ended December 31, 2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,989,864 $ 1,640,757 $ 1,182,441
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 1,779,936 1,817,941 1,817,628
Amortization 21,012 25,272 29,549
Loss (gain) on sale of property and equipment 220,950 (70,903) (188,583)
Extraordinary item - gain on extinguishment of debt - - (250,998)
(Increase) decrease in other assets (200,564) 36,968 (365,610)
Increase (decrease) in accounts payable (55,656) (87,242) 196,277
Decrease in other liabilities (43,979) (107,143) (343,476)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,711,563 3,255,650 2,077,228
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,723,045) (994,655) (1,422,431)
Proceeds from sale of property and equipment 1,218,298 833,710 1,183,069
Proceeds from redemption of investment - - 2,418,891
Proceeds from redemption of mortgage backed securities - - 1,502,250
Proceeds from sale of marketable securities - - 875,859
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (504,747) (160,945) 4,557,638
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to unit holders (2,510,569) (2,411,479) (4,723,832)
Repayments of notes payable (362,758) (343,859) (30,129,025)
Proceeds from note payable - - 30,000,000
Payment for financing costs - - (930,247)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (2,873,327) (2,755,338) (5,783,104)
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 333,489 339,367 851,762
CASH, at beginning of year 2,821,681 2,482,314 1,630,552
- -----------------------------------------------------------------------------------------------------------------------
CASH, at end of year $ 3,155,170 $ 2,821,681 $ 2,482,314
=======================================================================================================================
See accompanying notes to financial statements.
28
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING ORGANIZATION AND BUSINESS
POLICIES
Uniprop Manufactured Housing Communities Income
Fund II, a Michigan Limited Partnership (the
"Partnership") acquired, maintains, operates and
will ultimately dispose of income producing
residential real properties consisting of nine
manufactured housing communities (the
"properties") located in Florida, Michigan,
Nevada and Minnesota. The Partnership was
organized and formed under the laws of the State
of Michigan on November 7, 1986.
In accordance with its Prospectus dated December
1986, the Partnership sold 3,303,387 units of
beneficial assignment of limited partnership
interest ("Units") for $66,067,740. The
Partnership purchased the properties for an
aggregate purchase price of approximately
$56,000,000. Three of the properties costing
approximately $16,008,000 were previously owned
by entities which were affiliates of the general
partner.
The general partner is Genesis Associates Limited
Partnership. Uniprop Beneficial Corporation was
the initial limited partner who assigned to those
persons purchasing units a beneficial limited
partnership interest when the minimum number of
units were sold.
USE OF ESTIMATES
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the reported amounts
of (1) assets and liabilities and the disclosure
of contingent assets and liabilities as of the
date of the financial statements, and (2)
revenues and expenses during the reporting
period. Actual results could differ from these
estimates.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and notes payable
approximate their fair values.
29
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost.
Depreciation is provided using the straight-line
method over a period of thirty years except for
furniture and equipment which is depreciated over
a period ranging from three to ten years.
Accumulated depreciation for tax purposes was
$19,817,204 and $18,414,221 as of December 31,
2000 and 1999, respectively.
Long-lived assets such as property and equipment
are evaluated for impairment when events or
changes in circumstances indicate that the
carrying amount of the assets may not be
recoverable through the estimated undiscounted
future cash flows from the use of these assets.
When any such impairment exists, the related
assets will be written down to fair value. No
impairment loss recognition has been required
through December 31, 2000.
MORTGAGE-BACKED SECURITIES
In connection with the Partnership's 1993
financing transaction (see Note 2), the
Partnership was required to use approximately 5%
of its mortgage proceeds to purchase a
subordinated portion of the mortgage-backed
securities ("Class D Certificates"). These Class
D Certificates were not rated, carried a fixed
interest rate of 7.5% per annum and were
subordinated to the Class A, B and C mortgage
certificates issued as part of the aforementioned
financing transaction. The Partnership was issued
a Class D Certificate in 1993 with a face amount
of $1,502,250, which represented cost.
In 1998, as part of the refinancing of its note
payable (see Note 2), the Partnership redeemed
the Class D Certificate at cost.
30
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FINANCING COSTS
Costs to obtain financing have been capitalized
and are amortized using the straight-line method
over the 30-year term of the related mortgage
note payable.
INVESTMENT
In 1998, as part of the refinancing of its note
payable (see Note 2), the Partnership redeemed
the Class R Certificates. As a result, the
Partnership recognized a gain of $1,419,896 on
the redemption of the certificates, which has
been included in the calculation of the
extraordinary gain on the extinguishment of debt
(see Note 2).
REVENUE RECOGNITION
Rental income attributable to leases is recorded
when due from the lessees.
INCOME TAXES
Federal income tax regulations provide that any
taxes on income of a partnership are payable by
the partners as individuals. Therefore, no
provision for such taxes has been made at the
partnership level.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards (SFAS) No. 133 "Accounting for
Derivative Instruments and Hedging Activities."
This statement, which was subsequently amended by
SFAS No. 137 and 138, will become effective in
fiscal 2001, and will not have any impact on the
Partnership's financial statements.
31
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
2. NOTES PAYABLE In 1998, the Partnership refinanced its
outstanding long-term debt by entering into a new
note agreement totaling $30,000,000. These
borrowings are secured by mortgages on the
Partnership's properties. The note is payable in
monthly installments of $188,878, including
interest at 6.37%, through March, 2009.
Thereafter, the monthly installment and interest
rate will be adjusted based on the provisions of
the agreement through the note maturity date of
September 2028.
In connection with the refinancing, the
Partnership recorded a gain in 1998 on the
extinguishment of debt of $250,998, which
includes the gain on the redemption of the Class
R Certificates ($1,419,896), less loan prepayment
penalties ($300,450) and the write-off of
unamortized financing costs related to the
original 1993 financing ($868,448).
Future maturities on the note payable for the
next five years are as follows: 2001 - $392,000;
2002 - $418,000; 2003 - $445,000; 2004 -
$470,000; and 2005 - $506,000.
3. OTHER ASSETS At December 31, 2000 and 1999, "Other Assets"
included cash of approximately $316,000 and
$319,000 in an escrow account for property taxes,
insurance, and capital improvements, as required
by the Partnership's note payable agreement. The
cash is restricted from operating use.
At December 31, 2000 and 1999, "Other assets"
also included cash of approximately $216,000 in a
security deposit escrow account for three of the
Partnership's properties, which is required by
the laws of the state in which they are located
and is restricted from operating use.
32
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
4. OTHER LIABILITIES Other liabilities consisted of:
December 31, 2000 1999
--------------------------------------------------------
Tenants' security deposits $558,773 $548,434
Accrued interest 106,066 125,049
Other 61,035 96,370
--------------------------------------------------------
TOTAL $725,874 $769,853
========================================================
5. RELATED PARTY MANAGEMENT AGREEMENT
TRANSACTIONS
The Partnership has an agreement with an
affiliate of the general partner to manage the
properties owned by the Partnership. The
management agreement is automatically renewable
annually, but may be terminated by either party
upon sixty days written notice. The property
management fee is the lesser of 5% of annual
gross receipts from the properties managed, or
the amount which would be payable to an
unaffiliated third party for comparable services.
FEES AND EXPENSES
During the years ended December 31, 2000, 1999
and 1998, the affiliate earned property
management fees of $643,765, $631,175 and
$611,741, respectively, as permitted in the
Agreement of Limited Partnership. These fees are
included with "Administrative" expenses in the
respective statements of income. The Partnership
was owed $18,635 by the affiliate at December 31,
2000 and owed the affiliate $13,231 at December
31, 1999.
Certain employees of the Partnership are also
employees of affiliates of the general partner.
These employees were paid by the Partnership
$222,181, $208,593 and $222,949 in 2000, 1999 and
1998, respectively, to perform local property
management and investor relations services for
the Partnership.
33
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
CONTINGENT PURCHASE PRICE
A general partner of Genesis Associates Limited
Partnership has an interest in the sellers of two
of the properties acquired by the Partnership and
is entitled to share in a contingent purchase
price that will not exceed $2,054,000. Additional
amounts to be paid, if any, will depend upon the
results of the Partnership's operations and the
amounts received upon the sale, financing or
other disposition of the properties, and are not
determinable at this time. The Partnership does
not anticipate any such amount will become
payable during the next fiscal year.
6. RECONCILIATION OF
FINANCIAL STATEMENT
INCOME AND TAXABLE
INCOME
Year Ended December 31, 2000 1999 1998
-----------------------------------------------------------------------
Income per the financial
statements $ 1,989,864 $ 1,640,757 $ 1,182,441
Adjustments to depreciation
for difference in methods 271,397 158,545 168,071
Adjustments for prepaid
rent, meals and
entertainment 47,582 (7,920) 3,448
Adjustment for LLC income - - (1,106,973)
-----------------------------------------------------------------------
INCOME PER THE PARTNER-
SHIP'S TAX RETURN $ 2,308,843 $ 1,791,382 $ 246,987
=======================================================================
7. PARTNERS' CAPITAL Subject to the orders of priority under certain
specified conditions more fully described in the
Agreement of Limited Partnership, distributions
of partnership funds and allocations of net
income from operations are principally determined
as follows:
34
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DISTRIBUTIONS
Distributable cash from operations in the
Agreement (generally defined as net income plus
depreciation and amortization) is to be
distributed to unit holders until they have
received a 10% cumulative preferred return. After
the unit holders have received their 10%
cumulative preferred return, all remaining cash
from operations is distributed to the general
partner in the form of an incentive management
interest until the total amount received by the
general partner is equal to 15% of the aggregate
amount of cash distributed from operations in a
given year. Amounts payable to but not paid to
the general partner will be accumulated and paid
from future capital transactions after the unit
holders have first received their 10% preferred
return and 125% of their capital contributions.
Thereafter, 85% of distributable cash from
operations is to be paid to the unit holders and
15% to the general partner.
Annual distributable cash from operations was
less than the amount required for the annual 10%
preferred return to the unit holders by
approximately $3,142,000 and $3,240,000 in 2000
and 1999, respectively. No distributions can be
made to the general partner until the cumulative
preferred return deficit of approximately
$22,006,000 has been distributed to the unit
holders.
At December 31, 2000, the general partner's
cumulative incentive management interest to be
distributed was approximately $7.7 million. The
actual amount to be accumulated or paid in the
future depends on the results of the
Partnership's operations and is not currently
determinable; however, no such distribution to
the general partner is anticipated during fiscal
2001.
35
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
ALLOCATION OF NET INCOME
Net income is principally allocated 99% to the
unit holders and 1% to the general partner until
the cumulative amount of net income allocated to
the unit holders equals the aggregate cumulative
amount of cash distributable to the unit holders.
After sufficient net income has been allocated to
the unit holders to equal the amount of cash
distributable to them, all the net income is to
be allocated to the general partner until it
equals the amount of cash distributed to it.
8. SUPPLEMENTAL CASH FLOW Interest paid during 2000, 1999 and 1998 was
INFORMATION approximately $1,909,000, $1,935,000 and
$2,531,000, respectively.
9. INTERIM RESULTS The following summary represents the unaudited
(UNAUDITED) results of operations of the Partnership,
expressed in thousands except per unit amounts,
for the periods from January 1, 1999 through
December 31, 2000:
Three Months Ended
--------------------------------------------------------------------------------------------
2000 March 31, June 30, September 30, December 31,
--------------------------------------------------------------------------------------------
REVENUES $ 3,244 $ 3,251 $ 3,316 $ 3,213
============================================================================================
NET INCOME $ 615 $ 402 $ 446 $ 527
============================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT $ .19 $ .12 $ .13 $ .16
============================================================================================
Three Months Ended
--------------------------------------------------------------------------------------------
1999 March 31, June 30, September 30, December 31,
--------------------------------------------------------------------------------------------
REVENUES $ 3,198 $ 3,107 $ 3,187 $ 3,226
============================================================================================
NET INCOME $ 484 $ 351 $ 367 $ 439
============================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT $ .15 $ .11 $ .11 $ .12
============================================================================================
36
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Column A Column B Column C Column D
- ----------------------- -------------- -------------------------------- ------------------------------
Costs
Capitalized
Subsequent to
Initial Cost Acquisition
-------------------------------- ------------------------------
Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements
- --------------------------------------------------------------------------- ------------------------------
Ardmor Village
(Lakeville, MN) $2,833,308 $1,063,253 $ 4,253,011 $ - $ 983,814
Sunshine Village
(Davie, FL) 4,176,938 1,215,862 4,875,878 - 202,610
Camelot Manor
(Grand Rapids, MI) 3,373,681 918,949 3,681,051 - 648,836
Country Roads
(Jacksonville, FL) - 636,550 2,546,200 38,106 660,460
Paradise Village
(Tampa, FL) - 1,760,000 7,040,000 279,053 1,316,495
Dutch Hills
(Haslett, MI) 2,512,005 839,693 3,358,771 41,526 465,916
Stonegate Manor
(Lansing, MI) 2,935,540 930,307 3,721,229 40,552 384,914
El Adobe
(Las Vegas, NV) 5,384,258 1,480,000 5,920,000 39,964 372,017
West Valley
(Las Vegas NV) 7,993,628 2,289,700 9,158,800 89,010 673,746
- -----------------------------------------------------------------------------------------------------------
$29,209,358 $11,134,314 $44,554,940 $528,211 $5,708,808
===========================================================================================================
Column A Column E Column F Column G Column H
- ----------------------- ---------------------------------------- ------------- ---------- --------------
Gross Amount at Which Carried Life on Which
at Close of Period Depreciation in
---------------------------------------- Latest Income
Buildings and Accumulated Date Statement is
Description Land Improvements Total Depreciation Acquired Computed
- ----------------------------------------------------------------------------------------------------------------
Ardmor Village
(Lakeville, MN) $1,063,253 $ 5,236,825 $6,300,078 $2,169,071 1987 30 years
Sunshine Village
(Davie, FL) 1,215,862 5,078,488 6,294,350 2,324,246 1987 30 years
Camelot Manor
(Grand Rapids, MI) 918,949 4,329,887 5,248,836 1,897,209 1987 30 years
Country Roads
(Jacksonville, FL) 674,656 3,206,660 3,881,316 1,251,519 1987 30 years
Paradise Village
(Tampa, FL) 2,039,053 8,356,495 10,395,548 3,407,310 1987 30 years
Dutch Hills
(Haslett, MI) 881,219 3,824,687 4,705,906 1,644,059 1987 30 years
Stonegate Manor
(Lansing, MI) 970,859 4,106,143 5,077,002 1,772,926 1987 30 years
El Adobe
(Las Vegas, NV) 1,519,964 6,292,017 7,811,981 2,725,425 1988 30 years
West Valley
(Las Vegas NV) 2,378,710 9,832,546 12,211,256 4,212,095 1988 30 years
- ----------------------------------------------------------------------------------------------------------------
$11,662,525 $50,263,748 $61,926,273 $21,403,860
=================================================================================================================
37
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO SCHEDULE III
DECEMBER 31, 2000
1. RECONCILIATION OF LAND The following table reconciles the
land from January 1, 1998 to
December 31, 2000:
2000 1999 1998
----------------------------------------------------------------------------
BALANCE, at January 1 $ 11,644,103 $ 11,644,103 $ 11,644,103
Additions to land 18,422 - -
----------------------------------------------------------------------------
BALANCE, at December 31 $ 11,662,525 $ 11,644,103 $ 11,644,103
----------------------------------------------------------------------------
2. RECONCILIATION OF BUILDINGS The following table reconciles the
AND IMPROVEMENTS buildings and improvements from
January 1, 1998 to December 31,:
2000 1999 1998
--------------------------------------------------------------------------
BALANCE, at January 1 $ 49,776,786 $ 49,421,935 $ 49,099,290
Additions to buildings and
improvements 720,962 354,851 322,645
Cost of assets sold (234,000) - -
--------------------------------------------------------------------------
BALANCE, at December 31 $ 50,263,748 $ 49,776,786 $ 49,421,935
--------------------------------------------------------------------------
3. RECONCILIATION OF The following table reconciles the
ACCUMULATED accumulated depreciation from
DEPRECIATION January 1, 1998 to December 31,
2000:
2000 1999 1998
---------------------------------------------------------------------------
BALANCE, at January 1 $ 19,813,467 $ 18,101,874 $ 16,399,511
Current year
depreciation expense 1,718,836 1,711,593 1,702,363
Accumulated depreciation
on assets sold (128,443) - -
---------------------------------------------------------------------------
BALANCE, at December 31 $ 21,403,860 $ 19,813,467 $ 18,101,874
---------------------------------------------------------------------------
4. TAX BASIS OF BUILDINGS AND The aggregate cost of buildings and
IMPROVEMENTS improvements for federal income tax
purposes is equal to the cost basis
used for financial statements
purposes.
38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Uniprop Manufactured Housing Communities Income Fund II, a
Michigan Limited Partnership, has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc., Managing General Partner
By: /s/ Paul M. Zlotoff
------------------------------------
Paul M. Zlotoff, Chairman
Dated: March 30, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Gloria A. Koster By: /s/ Paul M. Zlotoff
-------------------------------- ------------------------------------------
Gloria A. Koster Paul M. Zlotoff, Chairman of Uniprop, Inc.
(Chief Financial Officer of (Principal Executive Officer)
Uniprop, Inc.)
Dated: March 30, 2001 Dated: March 30, 2001
By: /s/ Susann Szepytowski
-----------------------
Susann Szepytowski
(Controller of Uniprop, Inc.)
Dated: March 30, 2001
-20-
39
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING PAGE
2 Mortgage Notes,made on August 20, Incorporated by reference to the Form
1998 between Uniprop Income Fund II 8-K filed on September 8, 1998.
and GMACCM
3(a) Certificate of Limited Partnership Incorporated by reference to the S-11
for the Partnership Registration Statement of the
Partnership filed November 12, 1986, as
amended on December 22, 1986 and
January 16, 1987 (the "Registration
Statement").
3(b) Uniprop Income Fund II Agreement of Incorporated by reference to the
Limited Partnership Registration Statement.
4(a) First Amendment to Uniprop Income Incorporated by reference to the
Fund II Agreement of Limited Registration Statement.
Partnership (April 1, 1987)
4(b) Form of Beneficial Assignment Incorporated by reference to Form 10-K
Certificate (BAC) for the for fiscal year ended December 31, 1997.
Partnership (originally filed with
Form 10-K for the fiscal year ended
December 31, 1987)
10(a) Form of Management Agreement Incorporated by reference to the
between the Partnership and Registration Statement.
Uniprop, Inc.
10(b) Form of Consulting Agreement among Incorporated by reference to the
the Partnership, the General Registration Statement.
Partner and Consultant
-21-
40
10(c) Contingent Purchase Price Agreement Incorporated by reference to Form 10-K
with Sunrise Broward Associates, for fiscal year ended December 31, 1997.
Ltd. (originally filed with Form
10-K for the fiscal year ended
December 31, 1987)
10(d) Contingent Purchase Price Agreement Incorporated by reference to Form 10-K
with Ardmor Associates Limited for fiscal year ended December 31, 1997.
Partnership (originally filed with
Form 10-K for the fiscal year ended
December 31, 1987)
10(e) Incentive Acquisition Fee Agreement Incorporated by reference to Form 10-K
between the Partnership and for fiscal year ended December 31, 1997.
Uniprop, Inc. (originally filed
with Form 10-K for the fiscal year
ended December 31, 1987)
28 Letter summary of the estimated fair
market values of the Partnership's
nine manufactured housing communities, Filed herewith.
as of March 1, 2000.
-22-