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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2002 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:
$1,000 per unit, 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 [ ]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
June 30, 2002 (Unaudited) and
December 31, 2001 3
Statements of Income
Six months ended June 30, 2002 and 2001
Three months ended June 30, 2002
and 2001 (Unaudited) 4
Statement of Partners' Equity
Six months ended June 30, 2002 (Unaudited) 4
Statements of Cash Flows
Six months ended June 30, 2002
and 2001 (Unaudited) 5
Notes to Financial Statements
June 30, 2002 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK 10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS JUNE 30,2002 DECEMBER 31, 2001
------------ -----------------
(UNAUDITED)
Properties:
Land $ 5,280,000 $ 5,280,000
Buildings And Improvements 25,130,132 24,444,204
Furniture And Fixtures 229,660 207,164
----------- -----------
30,639,792 29,931,368
Less Accumulated Depreciation 12,609,752 12,196,191
----------- -----------
18,030,040 17,735,177
Cash And Cash Equivalents 538,438 902,752
Cash - Security Escrow 305,158 305,158
Unamortized Finance Costs 409,548 452,548
Manufactured Homes and Improvements 1,172,553 1,126,173
Other Assets 980,255 832,244
----------- -----------
Total Assets $21,435,992 $21,354,052
----------- -----------
LIABILITIES AND PART. EQUITY JUNE 30, 2002 DECEMBER 31, 2001
------------- -----------------
(UNAUDITED)
Line of Credit $ 195,755 $ 270,755
Accounts Payable 116,747 159,551
Other Liabilities 1,054,373 754,515
Mortgage Payable 32,106,253 32,273,332
----------- -----------
Total Liabilities $33,473,128 $33,458,153
Partners' Equity:
General Partner (3,406,201) (3,183,994)
Class A Limited Partners (9,408,468) (9,480,901)
Class B Limited Partners 777,533 560,794
----------- -----------
Total Partners' Equity (12,037,136) (12,104,101)
------------ ------------
Total Liabilities And
Partners' Equity $21,435,992 $21,354,052
----------- -----------
See Notes to Financial Statements
3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF INCOME SIX MONTHS ENDED THREE MONTHS ENDED
June 30,2002 June 30,2001 June 30, 2002 June 30,2001
------------ ------------ ------------- ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Income:
Rental Income $4,305,356 $4,235,218 $2,161,519 $2,121,879
Home Sale Income $1,086,112 $ 456,720 $ 760,192 $ 197,720
Other 229,818 222,163 121,778 110,628
---------- ---------- ---------- ----------
Total Income $5,621,286 $4,914,101 $3,043,489 $2,430,227
---------- ---------- ---------- ----------
Operating Expenses:
Administrative Expenses
(Including $226.255, $222,813,$113,284 and $111,175 in
Property Management Fees Paid to An Affiliate for the
Six and Three Month Period
Ended June 30, 2002 and 2001, respectively) 916,786 892,473 433,935 458,355
Property Taxes 435,102 423,489 217,533 211,308
Utilities 274,538 291,043 136,509 128,976
Property Operations 600,532 533,001 321,259 276,293
Depreciation And Amortization 456,562 453,361 236,369 219,323
Interest 1,335,773 1,349,406 671,822 678,452
Home Sale Expense 1,015,528 429,108 708,580 183,083
---------- ---------- ---------- ----------
Total Operating Expenses $5,034,821 $4,371,881 $2,726,007 $2,155,790
---------- ---------- ---------- ----------
Net Income $ 586,465 $ 542,220 $ 317,482 $ 274,437
---------- ---------- ---------- ----------
Income Per Limited Partnership Unit:
Class A $ 9.58 $ 8.45 $ 5.33 $ 4.41
Class B $ 28.18 $ 26.90 $ 14.96 $ 13.34
Distribution Per Limited Partnership Unit
Class A $ 6.00 $ 5.75 $ 3.00 $ 3.00
Class B $ 6.00 $ 5.75 $ 3.00 $ 3.00
Weighted Average Number Of Limited
Partnership Units Outstanding
Class A 20,230 20,230 20,230 20,230
Class B 9,770 9,770 9,770 9,770
STATEMENT OF PARTNER'S EQUITY (UNAUDITED)
General Partner Class A Limited Class B Limited
Beginning Balance of December 31, 2001 (3,183,994) (9,480,901) 560,794
Net Income 117,293 193,813 275,359
Distributions (339,500) (121,380) (58,620)
BALANCE AS OF JUNE 30, 2002 (3,406,201) (9,408,468) 777,533
See Notes to Financial Statements
4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
June 30, 2002 June 30,2001
------------- ------------
(unaudited) (unaudited)
Cash Flows From Operating Activities:
Net Income $ 586,465 $ 542,220
----------- -----------
Adjustments To Reconcile Net Income
To Net Cash Provided By
Operating Activities:
Depreciation 413,562 410,361
Amortization 43,000 43,000
(Increase) Decrease In Homes & Improvements (46,380) (202,500)
(Increase) Decrease In Other Assets (148,011) (338,959)
Increase (Decrease) In Accounts Payable (42,804) 90,212
Increase (Decrease) In Other Liabilities 299,858 286,324
----------- -----------
Total Adjustments: 519,225 288,438
----------- -----------
Net Cash Provided By
Operating Activities 1,105,690 830,658
----------- -----------
Cash Flows From Investing Activities:
Capital Expenditures (708,424) (47,080)
----------- -----------
Net Cash Provided By (Used In)
Investing Activities (708,424) (47,080)
----------- -----------
Cash Flows From Financing Activities:
Net Payment on Line of Credit (75,000) (78,264)
Distributions To Partners (519,500) (510,063)
Principal Payments on Mortgage (167,080) (154,063)
----------- -----------
Net Cash Provided By (Used In) Financing Activites (761,580) (742,390)
----------- -----------
Increase (Decrease) In Cash and Equivalents (364,314) 41,188
Cash and Equivalents, Beginning 902,752 476,829
----------- -----------
Cash and Equivalents, Ending $ 538,438 $ 518,017
----------- -----------
See Notes to Financial Statements
5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
June 30, 2002 (Unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited 2002 financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The balance sheet at December 31, 2001 has been derived from the
audited financial statements at that date. Operating results for the six months
ended June 30, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002, or for any other interim period.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Partnership's Form 10-K for the year ending
December 31, 2001.
2. RECLASSIFICATION
Certain prior year amounts have been reclassified in the financial statements to
conform with current year presentation with respect to manufactured homes and
the sales of those homes. As of result, total revenue and total operating
expenses in the statement of income for the six months and quarter ended June
30, 2001 increased by $456,720 and $197,720, respectively; net income was not
affected by the reclassification.
-6-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its four manufactured
housing communities. On March 25, 1997 the Partnership borrowed $33,500,000 from
Nomura Asset Capital Corporation (the "Financing"). It secured the Financing by
placing liens on its four communities. As a result of the Financing, the
Partnership distributed $30,000,000 to the Limited Partners, which represented a
full return of the original capital contributions of $1,000 per unit.
Liquidity
As a result of the Financing, the Partnership's four properties are mortgaged.
At the time of the Financing, the aggregate principal amount due under the four
mortgage notes was $33,500,000 and the aggregate fair market value of the
Partnership's mortgaged properties was $53,200,000. The Partnership expects to
meet its short-term liquidity needs generally through its working capital
provided by operating activities.
The Partnership's long-term liquidity is based, in part, upon its investment
strategy. The properties owned by the Partnership were anticipated to be held
for seven to ten years after their acquisition. All of the properties have been
owned by the Partnership more than ten years. The General Partner may elect to
have the Partnership own the properties for as long as, in the opinion of the
General Partner, it is in the best interest of the Partnership to do so.
The Partnership has a renewable $1,000,000 line of credit with National City
Bank of Michigan/Illinois (formerly First of America Bank). The interest rate,
on such line of credit, floats 180 basis points above 1 month LIBOR, which on
June 30, 2002 was 3.312%. The sole purpose of the line of credit is to purchase
new and used homes to be used as model homes offered for sale within the
Partnership's communities. Over the past three years, sales of the new and used
model homes has been growing and the General Partner believes that continuing
the model home program is in the best interest of the Partnership. As of June
30, 2002 the outstanding balance on the line of credit was $195,755. Because the
Partnership's cash reserves have remained stable over the past several quarters,
the General Partner has elected to continue paying down the line of credit in
order to minimize interest costs.
Net Cash from Operations available for aggregate distributions to all Partners
in UMHCIF during the quarter ended June 30, 2002 amounted to $553,851.
-7-
The amount available during the same period in 2001 was $493,760. Net Cash from
Operations is meant to be a supplemental measure of the Partnership's operating
performance. Net Cash from Operations is defined as net income computed in
accordance with generally accepted accounting principles ("GAAP"), plus real
estate related depreciation and amortization.
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 nor as an alternative to cash flow as a measure of
liquidity.
The quarterly Partnership Management Distribution paid to the General Partner
during the third quarter based on second quarter results was $146,750, or
one-fourth of 1.0% of the most recent appraised value of the properties held by
the Partnership ($58,700,000 x .01 = $587,000 / 4 = $146,750).
The cash available after payment of the Partnership Management Distribution
amounted to $407,101. From this amount, the General Partner elected to make a
total distribution of $112,500 for the second quarter of 2002 equal to the
amount distributed for the second quarter of 2001, 80.0% or $90,000, was paid to
the Limited Partners and 20.0% or $22,500 was paid to the General Partner.
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 cash reserves. For the quarter ended June 30, 2002, the Partnership
added $294,601 to reserves. During the same quarter in 2001, the Partnership
added $233,510 to cash reserves. The amount placed in reserves is at the
discretion of the General Partner.
Results of Operations
OVERALL, as illustrated in the tables below, the four properties had a combined
average occupancy of 94% at the end of June 2002, same as the second quarter of
2001. The average monthly rent in June 2002 was approximately $450, or 3% more
than the $438 average monthly rent in June 2001 (average rent not a weighted
average).
-8-
Total Occupied Occupancy Average*
Capacity Sites Rate Rent
Aztec Estates 645 574 89% $ 493
Kings Manor 314 304 97 479
Old Dutch Farms 293 261 89 432
Park of the Four Seasons 572 564 99 397
----- ----- ----- -----
Total on 6/30/02: 1,824 1,703 94% $ 450
Total on 6/30/01: 1,824 1,709 94% $ 438
*Not a weighted average
FOR THE THREE MONTHS ENDING JUNE 30, 2002
GROSS REVENUES NET INCOME
6/30/02 6/30/01 6/30/02 6/30/01
Aztec Estates $ 1,243,202 $ 896,192 $ 427,283 $ 433,538
Kings Manor 664,254 433,102 311,644 262,069
Old Dutch Farms 390,209 370,072 199,709 199,506
Park of the Four Seasons 741,167 716,573 450,078 409,286
----------- ----------- ----------- -----------
3,038,832 2,415,939 1,388,714 $ 1,304,399
Partnership Management: 4,657 14,288 (48,989) (67,362)
Other Non Recurring expenses: -- -- (114,052) (64,825)
Debt Service (671,822) (678,452)
Depreciation and Amortization -- -- (236,369) (219,323)
----------- ----------- ----------- -----------
$ 3,043,489 $ 2,430,227 $ 317,482 $ 274,437
COMPARISON OF QUARTER ENDED JUNE 30, 2002 TO QUARTER ENDED JUNE 30, 2001
Gross revenues increased $613,262 to $3,043,489 in 2002, as compared to
$2,430,227 in 2001. (See table in previous section). The increase in revenue was
due primarily to a $562,472 increase in Home Sale Income.
As described in the Statements of Income, total operating expenses were higher,
increasing from $2,155,790 in 2001 to $2,726,007 in 2002. This was due primarily
to a $525,497 increase in Home Sale Expense.
As a result of the aforementioned factors, Net Income increased 16% for the
second quarter of 2002 compared to the same quarter of the prior year,
increasing from $274,437 for 2001 to $317,482 for 2002.
-9-
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2002 AND SIX MONTHS ENDED JUNE 30, 2001
For the first six months of 2002, Gross Revenues were $5,621,286, an increase of
$707,185 compared to $4,914,101 for the same period of 2001. Total Operating
Expenses for the first two quarters of 2002 were $5,034,821, an increase of
$662,940 compared to $4,371,881 for 2001. Net Income for the first six months
ending June 30, 2002 was $586,465 an increase of $44,245 compared to the
$542,220 reported for the first six months ending June 30, 2001.
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise 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 June 30, 2002 the Partnership had a note payable
outstanding in the amount of $32,106,253. Interest on this note is at a fixed
annual rate of 8.24% through June 2007.
Line-of-Credit: At June 30, 2002 the Partnership owed $195,755 under
its line-of-credit agreement, whereby interest is charged at a variable rate of
1.80% in excess of LIBOR.
A 10% adverse change in interest rates of 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 annually.
The Partnership does not enter into financial instruments transactions for
trading or other speculative purposes or to manage its interest rate exposure.
-10-
PART II - OTHER INFORMATION
ITEM 6. REPORTS OF FORM 8-K
(A) Reports of Form 8-K
There were no reports filed on Form 8-K during
the three months ended June 30, 2002.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned. We the undersigned certify to the best of our knowledge neither the
report nor the financial statements therein, contain any untrue statements of
material fact. The financial information included in the report fairly
represents the financial condition and result of operations for the periods
presented herein.
Uniprop Manufactured Housing
Communities Income Fund,
A Michigan Limited Partnership
BY: P.I. Associates Limited Partnership,
A Michigan Limited Partnership,
its General Partner
BY: /s/ Paul M. Zlotoff
---------------------------------------------
Paul M. Zlotoff, General Partner
BY: /s/ Gloria A. Koster
---------------------------------------------
Gloria A. Koster, Principal Financial Officer
Dated: August 8, 2002
-11-
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Uniprop Manufactured Housing
Income Fund (the "Company") on Form 10-Q for the period ending June 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Paul M Zlotoff, General Partner of the Partnership, certify,
pursuant to U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company as of June 30, 2002.
P.I. Associates Limited Partnership its General Partner
/s/ Paul M. Zlotoff
- -----------------------------
By: Paul M Zlotoff its General Partner