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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. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2702802
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
units of beneficial assignments of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
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 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS JUNE 30,2002 DECEMBER 31, 2001
------------ -----------------
(UNAUDITED)
Properties:
Land $11,647,745 $11,662,525
Buildings And Improvements 51,015,063 50,708,179
Furniture And Fixtures 593,455 551,111
----------- -----------
63,256,263 62,921,815
Less Accumulated Depreciation 24,764,032 23,894,162
----------- -----------
38,492,231 39,027,653
Cash And Cash Equivalents 3,371,283 3,741,016
Unamortized Finance Costs 548,648 557,736
Manufactured Homes & Improvements 1,462,775 1,142,579
Other Assets 1,154,876 1,147,960
----------- -----------
Total Assets $45,029,813 $45,616,944
----------- -----------
LIABILITIES & PARTNER EQUITY JUNE 30,2002 DECEMBER 31, 2001
------------ -----------------
(UNAUDITED)
Accounts Payable $ 95,005 $ 265,037
Other Liabilities 913,667 704,218
Notes Payable 28,486,813 28,817,758
----------- -----------
Total Liabilities $29,495,485 $29,787,013
Partners' Equity:
General Partner 311,006 299,427
Unit Holders 15,223,322 15,530,504
----------- -----------
Total Partners' Equity 15,534,328 15,829,931
----------- -----------
Total Liabilities And
Partners' Equity $45,029,813 $45,616,944
----------- -----------
See Notes to Financial Statements
3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
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 $5,953,389 $6,164,348 2,949,429 3,064,758
Other 410,281 365,298 263,944 172,841
Home Sale Income 363,000 611,153 194,564 460,153
---------- ---------- ---------- ----------
Total Income $6,726,670 $7,140,799 3,407,937 3,697,752
---------- ---------- ---------- ----------
Operating Expenses:
Administrative Expenses
(Including $311,545, $323,555, $156,921
and $162,683, in Property Management Fees
Paid to an Affiliate for the
Six and Three Month Period Ending
June 30, 2001 and 2000 Respectively) 1,569,913 1,591,258 729,171 803,964
Property Taxes 540,330 498,869 270,096 257,064
Utilities 426,073 423,969 211,258 215,826
Property Operations 875,055 935,117 459,383 512,457
Depreciation And Amortization 880,328 881,487 449,101 431,250
Interest 918,647 936,318 460,601 469,508
Home Sale Expense 358,437 720,086 173,342 510,656
---------- ---------- ---------- ----------
Total Operating Expenses $5,568,783 $5,987,104 $2,752,952 $3,200,725
---------- ---------- ---------- ----------
Net Income $1,157,887 $1,153,695 $ 654,985 $ 497,027
---------- ---------- ---------- ----------
Income Per Unit: 0.35 0.35 0.20 0.15
Distribution Per Unit: 0.44 0.40 0.23 0.21
Weighted Average Number Of Units
Of Beneficial Assignment Of Limited Partnership
Interest Outstanding During The Period Ending
June 30, 2002 and 2001 3,303,387 3,303,387 3,303,387 3,303,387
STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
General Partner Unit Holders Total
--------------- ------------ -----
Balance, January 1, 2001 $ 299,427 $ 15,530,504 $ 15,829,931
Distributions 0 (1,453,490) (1,453,490)
Net Income 11,579 1,146,308 $ 1,157,887
------------ ------------ ------------
Balance as of June 30, 2002 $ 311,006 $ 15,223,322 $ 15,534,328
------------ ------------ ------------
See Notes to Financial Statements
4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
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 $ 1,157,887 $ 1,153,695
----------- -----------
Adjustments To Reconcile Net Income
To Net Cash Provided By
Operating Activities:
Depreciation 869,870 870,981
Amortization 10,458 10,506
Gain on Sale of Property and Equipment (107,688) 0
(Increase ) Decrease in Manufactured Homes & Improvements (320,196) (6,449)
(Increase) Decrease In Other Assets (8,286) 105,903
Increase (Decrease) In Accounts Payables (170,032) (52,819)
Increase (Decrease) In Other Liabilities 209,449 190,734
----------- -----------
Total Adjustments 483,575 1,118,856
----------- -----------
Net Cash Provided By
Operating Activities 1,641,462 2,272,551
----------- -----------
Cash Flows From Investing Activities:
Capital Expenditures (349,228) (130,104)
Proceeds from Sale of Property and Equipment 122,468 0
----------- -----------
Net Cash Provided By (Used In)
Investing Activities (226,760) (130,104)
----------- -----------
Cash Flows From Financing Activities:
Distributions To Partners (1,453,490) (1,321,355)
Payment On Mortgage (330,945) (195,218)
----------- -----------
Net Cash Provided By (Used In)
Financing Activities (1,784,435) (1,516,573)
----------- -----------
Increase (Decrease) In Cash and Equivalents (369,733) 625,874
Cash and Equivalents, Beginning 3,741,016 3,155,170
----------- -----------
Cash and Equivalents, Ending $ 3,371,283 $ 3,781,044
----------- -----------
See Notes to Financial Statements
5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
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 $611,153 and $460,153, respectively; net income was not
affected by the reclassification.
-6-
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured
home communities. On August 20, 1998, the Partnership refinanced seven of its
nine properties with GMAC Commercial Mortgage Corporation (the "Refinancing").
Liquidity
As a result of the Refinancing, seven of the Partnership's nine properties are
mortgaged. At the time of the Refinancing, the aggregate principal amount due
under the seven mortgage notes was $30,000,000 and the aggregate fair market
value of the Partnership's mortgaged properties was $66,000,000. The Partnership
expects to meet its short-term liquidity needs generally through its working
capital provided by operating activities.
Partnership liquidity is based, in part, upon its investment strategy. Upon
acquisition, the Partnership anticipated owning the properties for seven to ten
years. All of the properties have been owned by the Partnership for 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.
Net Cash from Operations totaled $1,104,086 and $928,277 for the quarters ended
June 30, 2002 and 2001, respectively. Net Cash from Operations is defined as net
income computed in accordance with generally accepted accounting principals
("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. From
Net Cash from Operations the General Partner has decided to distribute $759,779,
or $.23 per unit, to the unit holders during the quarter ending June 30, 2002.
The General Partner will continue to monitor cash flow generated by the
Partnership's nine properties during the coming quarters. If cash flow generated
is greater or lesser than the amount needed to maintain the current distribution
level, the General Partner may elect to reduce or increase the level of future
distributions paid to Unit Holders.
While the Partnership is not required to maintain a working capital reserve, the
Partnership has not distributed all the Distributable Cash from Operations in
order to build reserves. As of June 30, 2002, the Partnership's cash reserves
amounted to $3.4 million.
-7-
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine
properties reported combined occupancy of 85% (2,783/3,329 sites) at the end of
June 2002, versus 89% (2,948/3,329) for June 2001. The average monthly homesite
rent as of June 30, 2002 was approximately $380, versus $370, an increase of 3%
from June 2001.
TOTAL OCCUPIED OCCUPANCY AVERAGE*
CAPACITY SITES RATE RENT
Ardmor Village 339 329 97% $ 362
Camelot Manor 335 278 83% 360
Country Roads 311 258 83% 261
Dutch Hills 278 263 95% 356
El Adobe 367 286 78% 432
Paradise Village 614 414 67% 325
Stonegate Manor 308 256 83% 360
Sunshine Village 356 336 94% 477
West Valley 421 363 86% 486
----- ----- ----- -----
TOTAL ON 6/30/02: 3,329 2,783 85% $ 380
TOTAL ON 6/30/01: 3,329 2,948 89% $ 370
*NOT A WEIGHTED AVERAGE
-8-
GROSS REVENUES NET INCOME
6/30/02 6/30/01 6/30/02 6/30/01
Ardmor Village $ 545,206 $ 585,136 $ 310,540 $ 210,288
Camelot Manor 306,823 297,570 135,744 141,586
Country Roads 202,124 237,586 71,783 21,344
Dutch Hills 322,892 256,229 166,969 117,344
El Adobe 351,616 393,503 157,592 230,487
Paradise Village 494,600 530,874 119,696 131,902
Stonegate Manor 261,348 275,455 123,807 138,991
Sunshine Village 462,616 521,877 282,561 261,717
West Valley 452,442 566,552 345,186 345,963
----------- ----------- ----------- -----------
3,399,667 3,664,782 1,713,878 1,599,622
Partnership Management: 8,270 32,970 (50,575) (62,663)
Other Non Recurring expenses: -- -- (98,616) (139,174)
Debt Service (460,601) (469,508)
Depreciation and Amortization -- -- (449,101) (431,250)
----------- ----------- ----------- -----------
$ 3,407,937 $ 3,697,752 $ 645,985 $ 497,027
COMPARISON OF SIX MONTHS AND QUARTER ENDED JUNE 30, 2002 TO SIX MONTHS AND
QUARTER ENDED JUNE 30, 2001
Gross revenues for the first six months of 2002 decreased to $6,726,670 as
compared to $7,140,799 for the same six months of 2001. Gross revenues for the
quarter ended June 30, 2002 decreased to $3,407,937 in 2002, as compared to
$3,697,752 the same three months of 2001. The decrease was the result of the
decrease in site rentals and income from home sales.
As described in the Statements of Income, Total Operating Expenses for the first
six months of 2002 were $5,568,783 a 7% decrease from $5,987,104 for the same
six months of 2001. Total Operating Expenses for the three months ended June 30,
2002 decreased $447,773, or 13.9%, to $2,752,952 in 2002, as compared to
$3,200,725 in 2001.
As a result of the aforementioned factors, Net Income for the six month period
increased to $1,157,887, compared to $1,153,695 in 2001. Net Income for the
three months ended June 30,2002 increased to $654,985 compared to $497,027 for
the same three months of 2001, a 32% increase.
-9-
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 $28,486,813. Interest on this note is at a fixed
annual rate of 6.37% through March 2009.
The Partnership does not enter into financial instruments transactions for
trading or other speculative purposes or to manage its interest rate exposure
PART II - OTHER INFORMATION
ITEM 6. REPORTS ON FORM 8-K
(a) Reports on Form 8-K
There were no reports filed on Form 8-K during
the three months ended June 30, 2002.
-10-
SIGNATURES
Pursuant to the requirements of the Securities 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 II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc.,
its Managing General Partner
By: /s/ Paul M. Zlotoff
---------------------------------------------
Paul M. Zlotoff, Chairman
By: /s/ Gloria A. Koster
---------------------------------------------
Gloria A. Koster, Principal Financial Officer
Dated: August 8, 2002
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 II (the "Partnership") 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.
Genesis Associates Limited Partnership,
General Partner
/s/ Paul M. Zlotoff
- --------------------------
By: Paul M. Zlotoff, its' General Partner