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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, 2001 Commission File No. 0-15940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
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 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, 2002, 30,000 units of limited partnership interest of the
registrant were outstanding and the estimated aggregate market value of the
units as of such date (based on a 2002 appraisal of Partnership properties) held
by non-affiliates was approximately $18,156,534.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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, a Michigan
Limited Partnership (the "Partnership"), acquired, maintains, operates and
ultimately will dispose of income producing residential real properties
consisting of four manufactured housing communities (the "Properties"). The
Partnership was organized and formed under the laws of the State of Michigan on
May 16, 1985. 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 (Registration No.
2-98180) in June 1985, which was declared effective by the Securities and
Exchange Commission on September 24, 1985. The Partnership thereafter offered a
maximum of 30,000 units of limited partnership interest representing capital
contributions by the limited partners to the Partnership of $1,000 per unit (the
"Units"). The sale of all 30,000 Units was completed in March 1986, generating
$30 million of contributed capital to the Partnership.
On February 10, 1986, the Partnership acquired Aztec Estates, a
645-space manufactured housing community in Margate, Florida and Kings Manor, a
314-space manufactured housing community in Ft. Lauderdale, Florida. On March 4,
1986, the Partnership acquired Old Dutch Farms, a 293-space manufactured housing
community in Novi, Michigan. On March 27, 1986, the Partnership acquired The
Park of the Four Seasons, a 572-space manufactured housing community in Blaine,
Minnesota.
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 March 25, 1997 the Partnership borrowed $33,500,000 from Nomura
Asset Capital Corporation and secured the borrowing with liens on its Properties
(the
"Financing"). The interest rate on the Financing is 8.24% and the term is
120 months. The loan is amortized over 360 months. On March 26, 1997 the
Partnership distributed $30,000,000 to the Limited Partners, representing a full
return of original capital contributions of $1,000 per unit held. The
Partnership continues to own and operate its properties and has been able to
continue to pay cash distributions to the Limited Partners, although in amounts
substantially lower than the distributions paid prior to the Financing. Limited
Partners continue to have an interest in the Partnership because their original
capital contributions have appreciated since their initial investments were made
and only the original capital contributions were returned on March 26, 1997.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation
of its four manufactured housing communities. 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 Properties were selected from 23 manufactured housing communities
then owned by affiliates of P.I. Associates Limited Partnership, a Michigan
limited partnership, the General Partner (the "General Partner") of the
Partnership. 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 decisions they will consider relevant factors, including,
current operating results of the particular Property, prevailing economic
conditions and 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 homesites 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, have participated, and
may in the future participate, directly or through other partnerships or
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.
-3-
Each of the Properties competes with numerous similar facilities
located in its geographic area. The Margate/Fort Lauderdale area contains
approximately seven communities offering approximately 2,713 housing sites
competing with Aztec Estates. The Davie/Fort Lauderdale area contains
approximately five communities offering approximately 1,765 housing sites
competing with Kings Manor. Old Dutch Farms competes with approximately seven
communities offering approximately 3,455 housing sites. Park of the Four Seasons
competes with approximately 11 communities offering approximately 3,207 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 Aztec Estates and Kings Manor. 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 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 for the price, terms
and conditions being offered to the public within 45 days of notification by the
owner. If the Partnership receives an unsolicited bonafide offer to purchase the
Property from any party that it is considering or negotiating, 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 respects with all requirements of the
States of Florida, Michigan and Minnesota, 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
-4-
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 four manufactured housing communities for
cash. As a result of the 1997 financing, the 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. Each
of the Properties has a community center which includes offices, meeting rooms
and game rooms. Each of the Properties, except Old Dutch Farms, has a swimming
pool and tennis courts.
The table below contains certain information concerning the
Partnership's four properties.
-5-
PROPERTY NAME YEAR NUMBER OF
AND LOCATION CONSTRUCTED ACREAGE SITES
------------- ----------- ------- ---------
Aztec Estates
Sundial Circle
Margate, FL 1970 100 645
Kings Manor
State Road 84
& Flamingo Road
Ft. Lauderdale, FL 1972 45 314
Old Dutch Farms
Novi Road
Novi, MI 1972 47 293
Park of the Four
Seasons
University Avenue
Blaine, MN 1972 107 572
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 limited partners are restricted to certain
matters of fundamental significance to the Partnership. The 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 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 Limited Partners,
as a group, holding more than 50% of the then outstanding Units. No matters were
submitted to Limited Partners for vote during 2001.
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 and it is
not anticipated that one will ever develop. During the last two years, less than
four percent of the Units have been transferred each year, excluding transfers
on account of death or intra-family
-6-
transfers. The Partnership believes there is no formal 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 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 mortgage debt and sales expenses (but without
consideration to tax consequences of the sale), by 30,000. In March 2002, the
Properties were appraised at an aggregate fair market value of $58,700,000.
Assuming a sale of the four properties at the appraised value in March 2002,
less payment of 3.0% selling expenses, mortgage debt of $32,273,332, the
$1,970,000 Contingent Purchase Price due to certain partners of the General
Partner, and after the 80/20% split of sale or financing proceeds with the
General Partner, the net aggregate proceeds available for distribution to the
Limited Partners is estimated to be $18,156,534, or $605.22 per Unit (rounded),
as of March 31, 2002. There can be no assurance that the estimated net asset
value could ever be realized. As of March 31, 2002, the Partnership had
approximately 2,625 Limited Partners holding Units.
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data for Uniprop Manufactured
Housing Communities Income Fund, a Michigan Limited Partnership, for the periods
ended December 31, 2001, 2000, 1999, 1998 and 1997:
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 2001 31, 2000 31, 1999 31, 1998 31, 1997
-------- -------- -------- -------- --------
Total Assets $21,354,052 $21,694,688 $22,403,064 $22,508,884 $23,052,433
============ =========== =========== =========== ===========
Long Term Debt $32,273,332 $32,580,418 $32,879,105 $33,119,108 $33,355,940
============ =========== =========== =========== ===========
Income $8,905,017 $8,907,670 $8,748,916 $8,451,561 $8,234,904
Expenses (7,983,463) (7,767,536) (7,977,428) (7,934,674) (7,175,119)
------------ ----------- ----------- ----------- -----------
Net Income $921,554 $1,140,134 $ 771,488 $ 516,887 $1,059,785
============ ========== =========== =========== ==========
Distributions to
Limited Partners,
-7-
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 2001 31, 2000 31, 1999 31, 1998 31, 1997
-------- -------- -------- -------- --------
per Unit $11.75 $10.75 $9.25 $8 $1,052
Income per Unit:
Class A $13 $18 $8 $2 $17
Class B $49 $55 $46 $39 $52
Weighted average
number of Units
outstanding:
Class A 20,230 20,230 20,230 20,230 20,230
Class B 9,770 9,770 9,770 9,770 9,770
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 February 10,
1986, when Aztec Estates and Kings Manor were purchased by the Partnership and
operations commenced. On March 4, 1986, and March 27, 1986, Old Dutch Farms and
Park of the Four Seasons were purchased, respectively. From the $30,000,000
capital raised from the sale of the units, $26,400,000 was used to purchase the
four Properties after deducting sales commissions, advisory fees and other
organization and offering costs.
The Partnership anticipates a capital expenditure of $500,000 in the
year 2002 for road and sewer repairs at the community Aztec.
In an effort to provide Limited Partners with a full return of
original capital contributions of $1,000 per unit, the General Partner, with
majority consent from the Limited Partners, mortgaged the four Properties owned
by the Partnership on March 25, 1997 in the aggregate amount of $33,500,000. The
General Partner acknowledges that the mortgages impose some risks to the
Partnership, but considers 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 have
been distributed to the Partners quarterly.
-8-
While the Partnership is not required to maintain a working capital
reserve, it has not distributed all the cash generated from operations in order
to build cash reserves. As of December 31, 2001, the Partnerships cash balance
amounted to $902,752. The amount of any funds placed in reserves is at the
discretion of the General Partner. The Partnership expects to generate adequate
amounts of cash to meet its operating needs and debt service during the next
fiscal year.
The Partnership has a renewable line of credit of $1,000,000 with
National City Bank of Michigan/Illinois (formerly First of America Bank). The
interest rate floats 180 basis points above 1 month LIBOR, which on December 31,
2001 was 3.70%. The sole purpose for the line of credit is to purchase new and
used homes to be used as model homes and offered for sale with the Partnership's
communities. Over the past five years, sales of the new and used model homes has
been steady and the General Partner believes that continuing the model home
program is in the best interest of the Partnership. As of December 31, 2001, the
outstanding balance on the line of credit was $270,755. During 2001, the General
Partner has determined that cash reserves are adequate, and that the Partnership
may therefore pay down the outstanding balance on the line of credit. If the
Partnership's consultant, Manufactured Housing Services, agrees with the
Partnership's intent to pay down the balance, The General Partner intends to
make payments quarterly until the balance is paid in full.
On March 25, 1997, the Partnership completed the Financing pursuant to
which the Partnership borrowed $33,500,000 from Nomura Asset Capital Corporation
and secured the borrowing with liens on its Properties. The interest rate on the
Financing is 8.24%, and the term is 120 months loan is amortized over 360
months. On March 26,1997, the Partnership distributed $30,000,000 of the
financing proceeds to the Limited Partners, representing a full return of
original capital contributions of $1,000 per Unit held. The Partnership
continues its operations and expects to be able to continue to pay cash
distributions to the Limited Partners, although, due to payment of debt service
resulting from the Financing, in amounts substantially lower than paid prior to
the financing. Limited Partners will continue to have an interest in the
Partnership because their original capital contributions have appreciated since
their initial investments were made. Only the original capital contributions
were returned on March 26, 1997.
Net Cash from Operations available for aggregate distributions (defined
as Net Income plus Depreciation) to all Partners during the year ended December
31, 2001 amounted to $1,831,756. Management considers Net Cash from Operations
to be a supplemental measure of the Partnership's operating performance. Net
Cash from Operations is defined to mean net income computed in accordance with
generally accepted accounting principles ("GAAP"), plus depreciation and
amortization expense. Net Cash from Operations does not represent cash generated
from operating activities in accordance with GAAP and is not necessarily
indicative of cash available to fund cash needs. Net Cash from Operations should
not be considered as an alternative to net income as the primary indicator of
the Partnership's operating performance or as an alternative to cash flow as a
measure of liquidity.
-9-
The yearly Partnership Management Distribution due and paid to the
General Partner for 2001 was $589,938, or 1.0% of the then most recent appraised
value of the properties held by the Partnership.
The cash available after payment of the Partnership Management
Distribution of $589,938 from Net Cash from Operations was $1,241,818. From this
amount the General Partner elected to make a total distribution of $440,625
during 2001, 80.0% of which, or $352,500, was paid to the Limited Partners and
20.0% of which, or $88,125, was paid to the General Partner. The remaining Net
Cash from Operations was used to reduce debt and general purposes.
Results of Operations
a. Distributions
For the year ended December 31, 2001, the Partnership made
distributions to Limited Partners of $11.75 per Unit held, or $352,500. In 2000
the Partnership made distributions to Limited Partners of $10.75 per Unit held,
or $322,500. In 1999 the Partnership made distributions to Limited Partners of
$9.25 per Unit held, or $277,500.
The General Partner receives a quarterly Partnership Management
Distribution equal to 0.25% of the appraised value of the properties of the
Partnership (equal to $589,938 annually based on current 2001 appraisals).
Thereafter, distributions are made at the discretion of the general partner, and
are allocated 20% to the General Partner as an Incentive Management Interest and
80% to the Limited Partners. The General Partner received distributions totaling
$678,063, $663,939, and $638,600 during the years ended December 31, 2001, 2000,
and 1999, respectively.
b. Net Income
For the years ended December 31, 2001, 2000 and 1999 net income was
$921,554, $1,140,134 and $771,488 on total revenues of $8,905,017, $8,907,670
and $8,748,916 respectively. The decrease in net income from 2000 to 2001 is the
result of higher operating expenses, including property taxes over which the
Partnership has little control.
Net income, plus depreciation and amortization, less distributions to
all Partners, was $801,193, $1,091,845 and $808,670, for the years ended
December 31, 2001, 2000, and 1999, respectively.
-10-
c. 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 $97,652, $81,749 and $80,591, in 2001, 2000 and 1999, respectively, to
perform partnership management and investor relations services for the
Partnership.
d. Recent Accounting Pronouncements
In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 establishes a
single accounting model for the impairment or disposal of long-lived assets,
including discontinued operations. SFAS 144 superseded Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed of (SFAS 121), and APB Opinion No. 30,
Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. The provisions of SFAS 144 are effective in fiscal
years beginning after December 15, 2001, with early adoption permitted, and in
general are to be applied prospectively.
The Partnership does not expect that the adoption of this standard
will have a material impact on its results of operations and financial position.
e. Property Operations
Overall, the four Properties had a combined average occupancy of 94% as
of December 2001; 95% as of December 2000; and 97% as of December 1999. The
average collected monthly rent as of December 2001 (not a weighted average) was
approximately $443 per home-site verses $429 as of December 2000 and $411 as of
December 1999, an increase each year of 3.3% and 4.4%, respectively.
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
----- -------------- -------------- ------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
---- ---- ---- ---- ---- ---- ---- ---- ----
Aztec Estates 645 568 591 614 88% 92% 95% $485 $472 $454
Kings Manor 314 298 294 298 95 94 95 466 451 438
Old Dutch Farms 293 268 279 282 92 95 96 427 415 401
Park 4 Seasons 572 568 571 572 99 100 100 391 377 362
----- ----- ----- ----- -- --- --- ---- ---- ----
Overall 1,824 1,702 1,735 1,766 93% 95% 97% $443 $429 $411
===== ===== ===== ===== == === === ==== ==== ====
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The table below summarizes gross revenues and net operating income
for the Partnership and Properties during 2001, 2000 and 1999.
NET OPERATING INCOME
GROSS REVENUE AND NET INCOME
------------- --------------
2001 2000 1999 2001 2000 1999
---- ---- ---- ---- ---- ----
Aztec Estates $3,250,047 $3,300,399 $3,292,625 $1,549,088 $1,886,589 $1,635,311
Kings Manor 1,572,586 1,521,458 1,491,893 1,019,435 950,406 915,165
Old Dutch Farms 1,389,926 1,395,018 1,403,048 792,339 818,893 893,138
Park of the Four Seasons 2,642,735 2,573,506 2,501,226 1,661,279 1,656,005 1,515,013
---------- ---------- ---------- ---------- ---------- ----------
$8,855,294 $8,790,381 $8,688,792 $5,022,141 $5,311,893 $4,958,627
Partnership
Management $49,723 $117,289 60,124 (200,408) (148,266) (162,104)
Other Non-Recurring
Expenses (269,305) (308,561) (231,720)
Debt Service (2,720,672) (2,776,782) (2,840,033)
Depreciation and
Amortization (910,202) (938,150) (953,282)
---------- ---------- ---------- ----------- ----------- -----------
TOTAL: $8,905,017 $8,907,670 $8,748,916 $921,554 $1,140,134 $771,488
========== ========== ========== =========== =========== ===========
COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000
Gross revenues decreased $2,653 to $8,905,017 in 2001, compared to
$8,907,670 in 2000. The decrease was primarily the result of lower occupancy
rates offset by increased rental rates. (See table on previous page.)
The Partnership's operating expenses increased, from $7,767,536 in
2000, to $7,983,463 in 2001 due to higher property taxes, higher utility costs
and increased operating costs.
As a result of the foregoing factors, net income decreased from
$1,140,134 in 2000 to $921,554 in 2001, a 19% decline.
COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999
Gross revenues increased $158,754, or 1.8%, to $8,907,670 in 2000,
compared to $8,748,916 in 1999. The increase was primarily the result of the
increase in rental income due to higher average monthly rents. (See table on
previous page.)
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The Partnership's operating expenses decreased $209,892 from $7,977,428
in 1999 to $7,767,536 in 2000. Due to lower taxes and lower interest expenses.
As a result of the foregoing factors, net income increased from
$771,488 in 1999 to $1,140,134 in 2000, a 48% increase
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, 2001 the Partnership had a note payable
outstanding in the amount of $32,273,332. Interest on this note is at a fixed
annual rate of 8.24% through June 2007.
Line-of-Credit: At December 31, 2001 the Partnership owed $270,755
pursuant to its line-of-credit agreement, whereby interest is charged at a
variable rate of 1.80% in excess of LIBOR which as of December 31, 2001 totaled
3.70%.
A 10% adverse change in interest rates on the portion of the
Partnership's debt bearing interest at variable rates would result in an
increase in interest expense of less than $10,000.
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 years ended
December 31, 2001, 2000 and 1999, 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.
-13-
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 of the Partnership is P.I. Associates Limited Partnership.
P.I. Associates is a Michigan limited partnership. From November 1985 until
March 19, 1997, Paul M. Zlotoff served as the sole general partner of P.I.
Associates. In order to address concerns raised by the lender in connection with
the Financing, on March 19, 1997, GP P.I. Associates Corp. was admitted as a
corporate General Partner of the P.I. Associates. GP P.I. Associates Corp. is
wholly owned by Paul M. Zlotoff. Under the amended partnership agreement of P.I.
Associates, all actions taken by P.I. Associates must be approved by both
general partners.
Information concerning Mr. Zlotoff's age and principal occupations
during the last five years or more is as follows:
Paul M. Zlotoff, 52, is and has been an individual general partner of
P.I. Associates since its inception in May 1985. 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 Genesis Associates Limited Partnership,
the general partner of Uniprop Manufactured Housing Communities Income Fund II,
a public limited partnership, which owns and operates nine manufactured housing
communities. Mr. Zlotoff currently, and in the past, has acted as the general
partner for various other limited partnerships owning manufactured home
communities, as well as some commercial properties.
The following individuals are the directors and officers of GP P.I.
Associates Corp.:
Name and Age Position Held
- ------------ -------------
Paul M. Zlotoff, 52 Director and President
Gloria Koster, 48 Secretary/Treasurer
Arthur Weiss, 52 Independent Director
Charles Soberman, 52 Director/Vice President
Arthur Weiss, 52 has been practicing law at Jaffe, Raitt, Heuer &
Weiss, Professional Corporation ("JRH&W"), which has represented the company in
various matters since 1976. Mr. Weiss is currently a shareholder, director and
vice president of JRH&W.
Arthur Weiss is an Independent Director, meaning that he has not been,
at any time, in the five years preceding his appointment: (a) a stockholder,
director, officer, employee, or partner of GP P.I. Associates Corp., P.I.
Associates, or the Partnership; (b) a customer, supplier, or other person who
derives more than 10% of its purchases or
-14-
revenues from its activities with GP P.I. Associates Corp., P.I. Associates, or
the Partnership; (c) a person or other entity controlling or under common
control with any such stockholder, partner, customer, supplier or other person
referenced in subparagraph (a) or (b) above; or (d) a member of the immediate
family of any such stockholder, director, officer employee, partner, customer,
supplier or other person referenced in subparagraph (a) or (b) above.
Charles Soberman, 52, 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 an 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, 48, Joined Uniprop, Inc, in July 1989. In addition to
general executive, administrative and financial assignments, Ms. Koster's
responsibilities encompass financial reporting for the company's public and
private limited partnerships.
Roger Zlotoff, 41, 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
University of Central Florida as a philosophy major, and received his Master
Degree in International Business from the University of South Carolina.
Paul M. Zlotoff and Roger Zlotoff are brothers.
Under the Articles of Incorporation of GP P.I. Associates Corp., until
such time as the notes payable to the lender in connection with the Financing
have been discharged and the liens have been released from the Properties,
certain major corporate actions may be taken only with the unanimous vote of the
directors of GP P.I. Associates Corp. These actions include:
a) Filing or consenting to the filing of any bankruptcy, insolvency or
reorganization case or proceeding, instituting any proceedings under any
applicable insolvency law or otherwise seeking relief under any laws relating to
the relief from debts or the protection of debtors generally;
b) Seeking or consenting to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for GP P.I.
Associates Corp., P.I. Associates, or the Partnership or a substantial portion
of any of their properties;
-15-
c) Making any assignment for the benefit of the creditors of GP P.I.
Associates Corp., P.I. Associates, or the Partnership; or
d) Taking any action in furtherance of the foregoing subparagraphs (a)
through (c).
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. 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 formed pursuant to the
Michigan Uniform Limited Partnership Act, as amended. The General Partner, P.I.
Associates Limited Partnership, is vested with full authority as to the general
management and supervision of the business and other affairs of the Partnership,
subject to certain constraints in the partnership agreement and consulting
agreement. 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 Partnership's knowledge, 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 successors to the sellers of all
the Properties acquired by the Partnership and may be entitled to share in a
Contingent Purchase Price with respect to each Property, when and if the
successors to the sellers become entitled thereto. Each of the sellers has been
dissolved and liquidated and their interests in the Contingent Purchase Price
have been assigned to certain partners of the General Partner. The Contingent
Purchase Price for each Property was determined by reference to the average of
two independent real estate appraisals that 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 becomes entitled to any
unpaid Contingent Purchase Price upon the sale, financing or other disposition
of one or more Properties, but, only after the receipt by each Limited Partner
of any shortfall in his 9% cumulative preferred return plus the return of his
adjusted capital contribution. Because the Financing
-16-
resulted in a complete return of the Limited Partners' capital contributions,
and because the Limited Partners have received their cumulative preferred return
in full, the successors to the sellers did receive $1,500,000 in partial payment
of the Contingent Purchase Price on or about May 15, 1997. The maximum amounts
which could be payable to the successors to the sellers are as follows: Aztec
Estates, $1,374,323; Kings Manor, $529,724; Old Dutch Farms, $452,359; and Park
of the Four Seasons, $1,113,594. The partial payment made for each property was
as follows: Aztec Estates, $594,088; Kings Manor, $228,987; Old Dutch Farms,
$195,544; and Park of the 4 Seasons, $481,381. The maximum amounts remaining
which could be payable to the successors of the sellers are as follows: Aztec
Estates, $780,235; Kings Manor, $300,737; Old Dutch Farms, $256,815; and Park of
the Four Seasons, $632,213. 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 paid and will continue to 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. As a result of the Financing and full
return of the $30,000,000 original capital contributions of the Limited
Partners, no further Preferred Return or Cumulative Return will apply, and the
payment of the Incentive Management Interest will not be contingent on the
satisfaction of those returns. The Incentive Management Interest is
discretionary and is based on 20% of the net cash from operations (cash revenues
less cash operating expenses and specified reserves) in any taxable year. For
the year ended December 31, 2001, the General Partner had received an Incentive
Management Interest of $88,125. The actual amount to be received in future years
will depend upon the results of the Partnership's operations and is not
determinable at this time. Because the Limited Partners have received the return
of their adjusted capital contributions, the General Partner also has a right to
receive 20% of any sale or financing proceeds.
The General Partner is also entitled to a quarterly Partnership
Management Distribution equal to one-fourth of 1% of the most recent appraised
value of the Properties of the Partnership. The Partnership Management
Distribution for each quarter is paid in arrears, 45 days after the end of each
fiscal quarter. The Partnership Management Distribution was proposed by the
General Partner and approved by the Limited Partners to compensate, in part, for
the substantial reduction in the amounts expected to be paid to the General
Partner pursuant to the Incentive Management Interest following the Financing.
Based on the Properties' March 2001 aggregate appraised value of $59,100,000,
the Partnership Management Distribution due to the General Partner was $591,000.
The Partnership Management Distribution paid to the General Partner during 2001
was $589,983, a portion of which was calculated on the 2000 aggregate appraised
value of $58,675,000. As of December 31, 2001, the Partnership Management
Distribution due the General Partner totaled $147,750. This amount was paid to
the General Partner on February 15, 2002 from cash reserves. Based on the
Properties' March 2002 aggregate appraised value of $58,700,000, the Partnership
Management Distribution due
-17-
the General Partner for the Partnership's 2002, fiscal year will be $587,000
(58,700,000 x 1.0% = $587,000).
Uniprop, Inc., an affiliate of the General Partner, 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 $443,133: Aztec Estates, $163,848; Kings
Manor, $77,496; Old Dutch Farms, $70,248; and Park of the Four Seasons,
$131,541. In addition, certain employees of the Partnership are also employees
of affiliates of the General Partner. During the last fiscal year, these
employees received an aggregate of $97,652 for performing partnership
management, data processing and investor relations' services for the
Partnership. 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.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) Financial Statements
(1) The following financial statements and related documents are filed
with this Report:
(i) Report of Independent Certified Public Accountants
(ii) Balance Sheets as of December 31, 2001 and 2000 and
Statements of Income for the fiscal years ended December 31,
2001, 2000 and 1999
(iii) Statements of Partners' Equity for the fiscal years ended
December 31, 2001, 2000 and 1999
(iv) Statements of Cash Flows for the fiscal years ended December
31, 2001, 2000 and 1999
(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, 2001, 2000 and 1999
(3) Exhibits
-18-
The following exhibits are incorporated by reference to the S-11
Registration Statement of the Partnership filed June 4, 1985, as amended on
August 1, 1985 and September 11, 1985:
3(a) Amended Certificate of Limited Partnership for the Partnership
3(b) Agreement of Limited Partnership for the Partnership
10(a) Form of Management Agreement between the Partnership and Uniprop,
Inc.
The following exhibits are incorporated by reference to the Form 10-K
for fiscal year ended December 31, 1997:
3(c) Certificate of Amendment to the Certificate of Limited
Partnership for the Partnership (originally filed with Form 10-Q
for the fiscal quarter ended June 30, 1986).
4 Form of Certificate of Limited Partnership Interest in the
Partnership (Originally filed with Form 10-K for the fiscal year
ended December 31, 1986)
10(c) Contingent Purchase Price Agreement between the Partnership,
Aztec Estates (Originally filed with Form 10-K for the fiscal
year ended December 31, 1987)
10(d) Contingent Purchase Price Agreement between the Partnership and
O.D.F. Mobile Home Park (Originally filed with Form 10-K for the
fiscal year ended December 31, 1987)
10(e) Contingent Purchase Price Agreement between the Partnership and
The Park of the Four Seasons (Originally filed with Form 10-K for
the fiscal year ended December 31, 1987)
The following exhibits are attached to this Report:
10(f) First Amended and Restated Consulting Agreement among the
Partnership, the General Partner and the Consultant.
28 Letter summary of the estimated fair market values of the
Partnership's four Manufactured housing communities, as of March
1, 2002.
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth quarter of
2001.
-19-
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Uniprop Manufactured Housing
Communities Income Fund
(a Michigan limited partnership)
We have audited the accompanying balance sheets of Uniprop Manufactured Housing
Communities Income Fund (a Michigan limited partnership), as of December 31,
2001 and 2000, and the related statements of income, partners' equity (deficit)
and cash flows for each of the three years in the period ended December 31,
2001. 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 at December 31, 2001 and 2000 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001 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 8, 2002
-20-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
- --------------------------------------------------------------------------------
December 31, 2001 2000
- --------------------------------------------------------------------------------
ASSETS
PROPERTY AND EQUIPMENT (Note 2)
Buildings and improvements $24,444,204 $24,350,053
Land 5,280,000 5,280,000
Manufactured homes and improvements 1,126,173 1,022,717
Furniture and equipment 207,164 201,106
- --------------------------------------------------------------------------------
31,057,541 30,853,876
Less accumulated depreciation 12,196,191 11,371,988
- --------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 18,861,350 19,481,888
Cash 902,752 476,829
Cash - security deposit escrow 305,158 231,158
Unamortized financing costs 452,548 538,548
Other assets (Note 3) 832,244 966,265
- --------------------------------------------------------------------------------
$21,354,052 $21,694,688
================================================================================
LIABILITIES AND PARTNERS' DEFICIT
Note payable (Note 2) $32,273,332 $32,580,418
Line-of-credit (Note 4) 270,755 300,000
Accounts payable 159,551 70,908
Other liabilities (Note 5) 754,515 738,454
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 33,458,153 33,689,780
- --------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT)
Class A limited partners (9,480,901) (9,503,207)
Class B limited partners 560,794 198,357
General partner (3,183,994) (2,690,242)
- --------------------------------------------------------------------------------
TOTAL PARTNERS' DEFICIT (12,104,101) (11,995,092)
- --------------------------------------------------------------------------------
$21,354,052 $21,694,688
================================================================================
See accompanying notes to financial statements.
-21-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
Year Ended December 31, 2001 2000 1999
- ---------------------------------------------------------------------------------
INCOME
Rental $8,452,500 $8,358,102 $8,226,292
Other 452,517 549,568 522,624
- ---------------------------------------------------------------------------------
8,905,017 8,907,670 8,748,916
- ---------------------------------------------------------------------------------
OPERATING EXPENSES
Administrative (Note 6) 1,842,364 1,796,730 1,735,178
Property taxes 911,649 852,105 877,745
Utilities 556,798 487,468 497,525
Property operations 1,041,778 916,301 1,073,665
Depreciation and amortization 910,202 938,150 953,282
Interest 2,720,672 2,776,782 2,840,033
- ---------------------------------------------------------------------------------
7,983,463 7,767,536 7,977,428
- ---------------------------------------------------------------------------------
NET INCOME $ 921,554 $1,140,134 $ 771,488
=================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT (Note 8)
Class A $ 12.85 $ 18.32 $ 8.29
Class B $ 48.85 $ 55.43 $ 46.00
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT (Note 8)
Class A $ 11.75 $ 10.75 $ 9.25
Class B $ 11.75 $ 10.75 $ 9.25
NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING
Class A 20,230 20,230 20,230
Class B 9,770 9,770 9,770
NET INCOME ALLOCABLE TO GENERAL PARTNER $ 184,311 $ 228,027 $ 154,298
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER $ 678,063 $ 663,939 $ 638,600
=================================================================================
See accompanying notes to financial statements.
-22-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
- --------------------------------------------------------------------------------
TOTAL
Class A Class B PARTNERS'
General Limited Limited EQUITY
Partner Partners Partners (DEFICIT)
- -----------------------------------------------------------------------------------------
BALANCE, January 1, 1999 $ (1,770,028) $ (9,636,980) $ (597,167) $(12,004,175)
Distributions to partners (638,600) (187,128) (90,372) (916,100)
Net income for the year 154,298 167,784 449,406 771,488
- -----------------------------------------------------------------------------------------
BALANCE, December 31, 1999 (2,254,330) (9,656,324) (238,133) (12,148,787)
Distributions to partners (663,939) (217,473) (105,027) (986,439)
Net income for the year 228,027 370,590 541,517 1,140,134
- -----------------------------------------------------------------------------------------
BALANCE, December 31, 2000 (2,690,242) (9,503,207) 198,357 (11,995,092)
Distributions to partners (678,063) (237,703) (114,797) (1,030,563)
Net income for the year 184,311 260,009 477,234 921,554
- -----------------------------------------------------------------------------------------
BALANCE, December 31, 2001 $ (3,183,994) $ (9,480,901) $ 560,794 $(12,104,101)
=========================================================================================
See accompanying notes to financial statements.
-23-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
Year Ended December 31, 2001 2000 1999
- ---------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 921,554 $ 1,140,134 $ 771,488
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 824,202 850,150 867,282
Amortization 86,000 88,000 86,000
Gain on disposals of property and equipment (37,609) (104,422) (54,075)
(Increase) decrease in other assets 60,021 (598,811) 223,655
Increase (decrease) in accounts payable 88,643 (126,902) 121,222
Increase (decrease) in other liabilities 16,061 (136,482) 27,096
- ---------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,958,872 1,111,667 2,042,668
- ---------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,166,705) (1,122,377) (1,322,832)
Proceeds from disposals of property and equipment 1,000,650 959,604 881,074
- ---------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (166,055) (162,773) (441,758)
- ---------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (1,030,563) (986,439) (916,100)
Repayment of note payable (307,086) (298,687) (240,003)
Net advances (payments) under line of credit (29,245) (300,000) 130,477
- ---------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (1,366,894) (1,585,126) (1,025,626)
- ---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 425,923 (636,232) 575,284
CASH, at beginning of year 476,829 1,113,061 537,777
- ---------------------------------------------------------------------------------------------
CASH, at end of year $ 902,752 $ 476,829 $ 1,113,061
=============================================================================================
See accompanying notes to financial statements.
-24-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING ORGANIZATION AND BUSINESS
POLICIES
Uniprop Manufactured Housing Communities Income
Fund, a Michigan Limited Partnership (the
"Partnership") acquired, maintains, operates and
will ultimately dispose of income producing
residential real properties consisting of four
manufactured housing communities (the
"properties") located in Florida, Minnesota and
Michigan. The Partnership was organized and
formed under the laws of the State of Michigan on
May 16, 1985.
The general partner of the Partnership is P. I.
Associates Limited Partnership. Taxable investors
acquired 20,230 Class A units, and 9,770 Class B
units were acquired by tax exempt investors.
Depreciation is allocated only to holders of
Class A units and to the general partner.
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 VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Partnership's
financial instruments, which consist of cash, the
line-of-credit and note payable, approximate
their fair values.
-25-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(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
$13,725,888 and $12,772,152 as of December 31,
2001 and 2000, 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, 2001.
FINANCING COSTS
As a result of management's present intent to
refinance the note payable after ten years, costs
to obtain the 1997 financing (see Note 2) are
amortized over a ten-year period.
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.
RECLASSIFICATIONS
Certain amounts in prior years' financial
statements have been reclassified to conform with
current year's presentation.
-26-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
RECENT ACCOUNTING PRONOUNCEMENTS
In October 2001, the Financial Accounting
Standards Board issued Statement of Financial
Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (SFAS
144). SFAS 144 establishes a single accounting
model for the impairment or disposal of
long-lived assets, including discontinued
operations. SFAS 144 superseded Statement of
Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed
of (SFAS 121), and APB Opinion No. 30, Reporting
the Results of Operations--Reporting the Effects
of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. The provisions of SFAS
144 are effective in fiscal years beginning after
December 15, 2001, with early adoption permitted,
and in general are to be applied prospectively.
The Partnership does not expect that the adoption
of this standard will have a material impact on
its results of operations and financial position.
2. NOTE PAYABLE In 1997, the Partnership entered into a
$33,500,000 note payable agreement. The
borrowings are secured by mortgages on the
Partnership's properties and the assignment of
all current and future leases and rents. The note
is payable in monthly installments of $251,439,
including interest, through March 2027. The
interest rate is 8.24% per annum through June
2007; thereafter, the interest rate will be
adjusted based on the provisions of the note
agreement. The loan may be prepaid without
penalty beginning in January 2007. There are
certain requirements and restrictions contained
in the note payable agreement. The Partnership is
in compliance with these requirements.
The proceeds of the note were used primarily to
return to the limited partners their original
$30,000,000 capital contribution, to pay certain
amounts to the general partner as described in
Note 6, and to pay related financing costs.
Future maturities on the note payable for the
next five years are as follows: 2002 - $320,000;
2003 - $350,000; 2004 - $372,000; 2005 -
$412,000; and 2006 - $450,000.
-27-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. OTHER ASSETS At December 31, 2001 and 2000, "Other assets"
included cash of approximately $601,000 and
$765,000, respectively, in an escrow account for
property taxes, capital improvements, and debt
service payments, as required by the
Partnership's note payable agreement, which is
restricted from operating use.
4. LINE-OF-CREDIT The Partnership currently has an unsecured
$1,000,000 revolving line-of-credit agreement
with a bank that expires in October 2002.
Interest on outstanding balances is charged at
1.80% in excess of LIBOR; the Partnership's
interest rate at December 31, 2001 was 3.70%.
5. OTHER LIABILITIES Other liabilities consisted of:
December 31, 2001 2000
-----------------------------------------------------------------------------
Tenants' security deposits $ 566,283 $ 552,405
Accrued interest 155,127 156,000
Other 33,105 30,049
-----------------------------------------------------------------------------
TOTAL $ 754,515 $ 738,454
============================================================================
6. 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.
-28-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FEES AND EXPENSES
During the years ended December 31, 2001, 2000
and 1999 the affiliate earned property management
fees of $443,123, $440,267, and $432,033,
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
$7,020 and $9,493 by the affiliate at December
31, 2001 and 2000, respectively.
CONTINGENT PURCHASE PRICE
The general partner of P.I. Associates has an
interest in the sellers of all the properties
acquired by the Partnership and is entitled to
share in a contingent purchase price with respect
to each property. Each seller will become
entitled to any unpaid contingent purchase price
upon the sale, financing or other distribution of
one or more of the properties, but only after the
receipt by the limited partners of any shortfall
in their 9% cumulative preferred return, plus the
return of their adjusted capital contribution.
Since inception of the Partnership, there has
been no shortfall in the 9% cumulative return
and, as described in Note 2, the Partnership used
a portion of the proceeds from the 1997 financing
to return the limited partners' original capital
contribution. In addition, $1,500,000 of the
proceeds from the financing transaction was used
to make a partial payment in 1997 on the
contingent purchase price. The total remaining
contingent purchase price will not exceed
$1,970,000. 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; such amounts are not determinable
at this time. Therefore, no liability related to
this remaining contingency has been recorded at
December 31, 2001.
-29-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7. RECONCILIATION OF Year Ended December 31, 2001 2000 1999
FINANCIAL STATEMENT ----------------------------------------------------------------------------
INCOME AND TAXABLE
INCOME
Income per the financial
statements $ 921,554 $ 1,140,134 $ 771,488
Adjustments to depreciation
for difference in methods (129,535) 17,257 (82,759)
Adjustments for prepaid
rent, meals and entertain-
ment 5,550 (9,867) 19,926
----------------------------------------------------------------------------
Income Per the Partnership's
Tax Return $ 797,569 $ 1,147,524 $ 708,655
============================================================================
8. PARTNERS' CAPITAL Subject to the orders of priority under certain
specified conditions more fully described in the
Agreement of Limited Partnership (as amended on
February 6, 1997), distributions of partnership
funds and allocations of net income from
operations are principally determined as follows:
DISTRIBUTIONS
The general partner receives a quarterly
Partnership Management Distribution equal to .25%
of the appraised value of the properties of the
Partnership (equal to $591,000 annually based on
current 2001 appraisals). Thereafter,
distributions are made at the discretion of the
general partner, and are allocated 20% to the
general partner as an Incentive Management
Interest and 80% to the limited partners.
ALLOCATION OF NET INCOME
Net income is to be allocated in the same manner
as distributions except that:
a) Depreciation expense is allocated only to the
general partner and the Class A (taxable)
limited partners and,
b) In all cases, the general partner is to be
allocated at least 1% of all Partnership
items.
-30-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. SUPPLEMENTAL CASH FLOW Cash paid for interest totaled approximately
INFORMATION $2,722,000, $2,777,000, and $2,843,000 in 2001,
2000 and 1999, respectively.
10. 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, 2000 through
December 31, 2001:
Three Months Ended
--------------------------------------------------------------------------------------------
2001 March 31, June 30, September 30, December 31,
--------------------------------------------------------------------------------------------
REVENUES $ 2,238 $ 2,247 $ 2,254 $ 2,166
============================================================================================
NET INCOME $ 268 $ 274 $ 336 $ 44
============================================================================================
INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT
Class A $ 4 $ 4 $ 6 $ (1)
Class B $ 14 $ 13 $ 15 $ 7
============================================================================================
Three Months Ended
--------------------------------------------------------------------------------------------
2000 March 31, June 30, September 30, December 31,
--------------------------------------------------------------------------------------------
REVENUES $ 2,239 $ 2,217 $ 2,246 $ 2,206
============================================================================================
NET INCOME $ 318 $ 228 $ 324 $ 270
============================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT
Class A $ 5 $ 3 $ 6 $ 4
Class B $ 15 $ 13 $ 15 $ 12
============================================================================================
11. MATERIAL FOURTH During 2001, the Partnership made adjustments
QUARTER which are material to the fourth quarter results.
ADJUSTMENTS These adjustments included an increase in
property taxes of approximately $65,000 due to
assessments received higher than estimated
amounts and write-downs to fair value of
manufactured homes totaling $70,000 due to
changing market conditions.
-31-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
- --------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------
Aztec Estates
(Margate, FL) $12,211,924 $ 2,199,868 $ 8,799,475 $ - $ 901,880
Kings Manor
(Ft. Lauderdale,
FL) 6,161,704 847,923 3,391,694 - 452,722
Park of the Four
Seasons
(Blaine, MN) 5,522,204 1,508,121 6,032,483 - 860,953
Old Dutch Farms
(Novi, MI) 8,377,500 724,088 2,896,348 - 1,108,649
- -------------------------------------------------------------------------------------------------
$32,273,332 $5,280,000 $21,120,000 $ - $3,324,204
- -------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------
Aztec Estates
(Margate, FL) $ 2,199,868 $ 9,701,355 $11,901,223 $4,910,735 1986 30 years
Kings Manor
(Ft. Lauderdale,
FL) 847,923 3,844,416 4,692,339 1,919,428 1986 30 years
Park of the Four
Seasons
(Blaine, MN) 1,508,121 6,893,436 8,401,557 3,366,948 1986 30 years
Old Dutch Farms
(Novi, MI) 724,088 4,004,997 4,729,085 1,845,829 1986 30 years
- -------------------------------------------------------------------------------------------------------------
$ 5,280,000 $24,444,204 $29,724,204 $12,042,940
- -------------------------------------------------------------------------------------------------------------
-32-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO SCHEDULE III
DECEMBER 31, 2001
- --------------------------------------------------------------------------------
1. RECONCILIATION OF The following table reconciles buildings and
BUILDINGS AND improvements from January 1, 1999 to December 31,
IMPROVEMENTS 2001:
2001 2000 1999
---------------------------------------------------------------------------------
BALANCE, at January 1 $ 24,350,053 $ 24,134,260 $ 23,934,391
Additions to buildings and
improvements 94,151 215,793 199,869
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 24,444,204 $ 24,350,053 $ 24,134,260
=================================================================================
There were no additions to land during this
three-year period.
2. RECONCILIATION OF The following table reconciles the accumulated
ACCUMULATED DEPRECIATION depreciation from January 1, 1999 to December 31,
2001:
2001 2000 1999
---------------------------------------------------------------------------------
BALANCE, at January 1 $ 11,229,636 $ 10,400,696 $ 9,550,371
Current year depreciation
expense 813,304 828,940 850,325
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 12,042,940 $ 11,229,636 $ 10,400,696
---------------------------------------------------------------------------------
3. TAX BASIS OF BUILDINGS The aggregate cost of buildings and improvements
AND IMPROVEMENTS for federal income tax purposes is equal to the
cost basis used for financial statements
purposes.
-33-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Uniprop Manufactured Housing Communities Income Fund, 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, a Michigan Limited Partnership
BY: P.I. Associates Limited Partnership,
General Partner
Dated: March 30, 2002 BY: /s/ Paul M. Zlotoff
------------------------------------
Paul M. Zlotoff, General Partner
BY: GP P.I. Associates Corp.,
General Partner
BY: /s/ Paul M. Zlotoff
------------------------------------
Dated: March 30, 2002 Paul M. Zlotoff, President
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
(Chief Financial Officer) (Principal Executive Officer)
(President & Director of
GP P.I. Associates Corp.)
Dated: March 30, 2002 Dated: March 30, 2002
By: /s/ Susann E. Szepytowski By: /s/ Charles A. Soberman
----------------------------- --------------------------------
Susann E. Szepytowski Charles A. Soberman
(Controller) (Director of GP
P.I. Associates Corp.)
Dated: March 30, 2002 Dated: March 30, 2002
-34-
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------- ----------- ---------------- ----
3(a) Amended Certificate of Incorporated by reference to
Limited Partnership for the the S-11 Registration
Partnership Statement of the Partnership
filed June 4,
1985, as amended
on August 1, 1985
and September 11,
1985
("Registration
Statement").
3(b) Agreement of Limited Incorporated by reference to
Partnership for the The Registration Statement.
Partnership
3(c) Certificate of Amendment to Incorporated by reference to
the Certificate of Limited Form 10-K for fiscal year
Partnership for the ended December 31, 1992.
Partnership (originally filed
with Form 10-Q for the fiscal
Quarter ended June 30, 1986).
3(d) First Amendment to Agreement Incorporated by reference to
of Limited Partnership Form 10-K for the fiscal year
ended December 31, 1996.
3(e) Second Amendment to Agreement Incorporated by reference to
of Limited Partnership Form 10-K for the fiscal year
ended December 31, 1996.
4 Form of Certificate of Limited Incorporated by reference to Form
-35-
Partnership Interest in the Partnership 10-K for fiscal year ended December 1997.
(originally filed with Form 10-K for
the fiscal year ended December 31,
1986).
10(a) Form of Management Incorporated by reference to
Agreement between the The Registration Statement.
Partnership and Uniprop, Inc.
10(b) Form of Consulting Incorporated by reference to
Agreement between the The Registration Statement.
Partnership, the General
Partner and Consultant
10(c) Contingent Purchase Price Incorporated by reference to Form
Agreement between the 10-K for fiscal year ended
Partnership, Aztec Estates, December 1997.
Ltd., and Kings Manor
Associates (originally filed
with Form 10-K for the fiscal
year ended December 31, 1987)
10(d) Contingent Purchase Price Incorporated by reference to Form
Agreement between the 10-K for fiscal year ended
Partnership and O.D.F. December 1997.
Mobile Home Park (originally filed
with Form 10-K for the fiscal year
ended December 31, 1987
10(e) Contingent Purchase Price Incorporated by reference to Form
Agreement between the 10-K for fiscal year ended
Partnership and The Park of December 1997.
the Four Seasons (originally
filed with Form 10-K for the
fiscal year ended December
31, 1987)
28 Letter summary of the Filed herewith.
Estimated fair market values
of the Partnership's four
manufactured housing Communities,
as of March 1, 2002
-36-