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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, 2003 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]
The estimated aggregate Net Asset Value of the units as of June 30,2003 (based
on a 2003 appraisal of Partnership properties) held by non-affiliates was
approximately $19,703,932. As of March 1, 2004 the number of units of limited
partnership interest of the registrant outstanding was 30,000.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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-site manufactured housing community in Margate, Florida and Kings Manor, a
314-site manufactured housing community in Ft. Lauderdale, Florida. On March 4,
1986, the Partnership acquired Old Dutch Farms, a 293-site manufactured housing
community in Novi, Michigan. On March 27, 1986, the Partnership acquired The
Park of the Four Seasons, a 572-site 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 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 loan agreement. The loan may be prepaid without penalty
beginning in January 2007. 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 as 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 of this Form 10-K.
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 home sites in the Properties to owners of
manufactured homes. 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 and prevailing economic conditions,
with a view to achieving maximum capital appreciation to the Partnership while
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 home sites on a collective basis. This trend may
result in increased competition with the Partnership for residents. In addition,
the General Partner, its affiliates or both, have participated, and may in the
future participate, directly or through other partnerships or
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investment vehicles in the acquisition, ownership, development, operation and
sale of projects, which may be in direct competition with one or more of the
Properties.
Each of the Properties competes with numerous similar facilities
located in its geographic area. The Margate/Fort Lauderdale area contains
approximately seven communities offering approximately 2,758 sites competing
with Aztec Estates. The Davie/Fort Lauderdale area contains approximately five
communities offering approximately 3,587 sites competing with Kings Manor. Old
Dutch Farms competes with approximately seven communities offering approximately
3,455 sites. Park of the Four Seasons competes with approximately 11 communities
offering approximately 3,207 sites. The Properties also compete against other
forms of housing, including apartment and condominium complexes, and site built
homes.
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, 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 three part-time employees to perform
partnership management and investor relations services. The Partnership retains
an affiliate, Uniprop AM, LLC, as the property manager for each of its
Properties. Uniprop AM, LLC is paid a fee equal to the lesser of 5% of the
annual gross receipts from each of the Properties or the amount which would be
payable to unaffiliated third parties for comparable services.
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Uniprop AM, LLC 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 AM, LLC. Local managers are employees of the Partnership and are paid
semi-monthly. The yearly salaries and expenses for local managers range from
$22,000 to $52,000. 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 AM, LLC, 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.
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
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ITEM 3. LEGAL PROCEEDINGS
The City of Novi, Michigan, on February 11, 2004 filed a lawsuit in
Circuit Court of Oakland County against the Partnership to compel the Old Dutch
Farms community to connect to the City of Novi sanitary sewer system. Legal
counsel for the Partnership is currently in negotiations with the City and DEQ
to resolve this matter. Estimates for the connection fees and the cost of
abandonment of that Property's waste water treatment plant range from $850,000
to $1,000,000. The Partnership expects to pay any such fees and costs over a
five-year period.
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 with respect to the 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 holding in the aggregate more than 50% of the then outstanding
Units. No matters were submitted to the Limited Partners for a vote during 2003.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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 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 2004, the
Properties were appraised at an aggregate fair market value of $63,400,000.
Assuming a sale of the four properties at the appraised value in March 2004,
less payment of 3.0% selling expenses, mortgage debt of $31,576,444, 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 $22,361,244, or $745.38 per Unit (rounded),
as of March 31, 2004. There can be no assurance that the
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estimated net asset value could ever be realized. As of March 31, 2004, the
Partnership had approximately 2,340 Limited Partners holding 30,000 Units.
The Partnership has no equity compensation plans.
The following table sets forth the distributions per limited partnership unit
for each calendar quarter in the last two fiscal years. Distributions were paid
in the periods immediately subsequent to the periods in which such distributions
were declared.
Distribution per Distribution to
Limited Partnership Unit General Partners
----------------------- ----------------
Quarter Ended
March 31, 2003 $ 3.00 $173,375
June 30, 2003 $ 3.00 $173,375
September 30, 2003 $ 3.00 $173,375
December 31, 2003 $ 3.00 $173,375
March 31, 2002 $ 3.00 $169,250
June 30, 2002 $ 3.00 $169,250
September 30, 2002 $ 3.00 $169,250
December 31, 2002 $ 3.00 $169,250
The Partnership intends to continue to declare quarterly distributions. However,
distributions are determined by the General Partner and will depend on the
results of the Partnership's operations.
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, 2003, 2002, 2001, 2000 and 1999:
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 2003 31, 2002 31, 2001 31, 2000 31, 1999
------------ ------------ ------------ ----------- -----------
Total Assets $20,466,593 $20,890,327 $21,354,052 $21,694,688 $22,403,064
=========== =========== =========== =========== ===========
Long Term Debt $31,576,444 $31,939,585 $32,273,332 $32,580,418 $32,879,105
=========== =========== =========== =========== ===========
Income $10,713,194 $10,797,708 $10,059,885 $10,003,551 $ 8,748,916
Expenses (9,905,031) (9,793,992) (9,138,331) (8,863,417) (7,977,428)
----------- ----------- ----------- ----------- -----------
Net Income $ 808,163 $ 1,003,716 $ 921,554 $ 1,140,134 $ 771,488
=========== =========== =========== =========== ===========
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FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 2003 31, 2002 31, 2001 31, 2000 31, 1999
-------- -------- -------- -------- --------
Distributions to
Limited Partners,
per Unit $ 12.00 $ 12.00 $ 11.75 $ 10.75 $ 9.25
Income per Unit:
Class A $ 9 $ 15 $ 13 $ 18 $ 8
Class B $ 47 $ 51 $ 49 $ 55 $ 46
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.
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 believes will be adequate to maintain the Properties. All funds in excess of
operating needs, amounts
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sufficient to pay debt service, and cash reserves have been distributed to the
Partners quarterly.
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, 2003, the Partnership's cash balance
amounted to $258,423. The amount of any funds placed in reserve 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 that expires in October 2004. The
interest rate floats 180 basis points above the one month LIBOR, which on
December 31, 2003 was 2.94%. 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. The Partnership plans to renew the line of credit
at the expiration. Over the past five years, sales of the new and used model
homes, including purchases of repossessed homes, have increased. The General
Partner believes that continuing the model home program is in the best interest
of the Partnership. As of December 31, 2003, the outstanding balance on the line
of credit was $235,000.
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 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.
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 in amounts substantially lower
than paid prior to the Financing, due to payment of debt service resulting from
the Financing. Limited Partners will continue to have an interest in the
Partnership. Only the original capital contributions were returned on March 26,
1997.
Future maturities on the note payable for the next five years are as
follows: 2004 - $372,000; 2005 - $412,000; 2006 - $450,000, 2007 - $487,000; and
2008 - $522,000.
The yearly Partnership Management Distribution due to the General
Partner for 2003 was $603,500, or 1.0% of the then most recent appraised value
of the properties held by the Partnership.
The General Partner elected to make a total distribution of $450,000
during 2003, 80.0% of which, or $360,000, was paid to the Limited Partners and
20.0% of which, or $90,000, was paid to the General Partner as the Incentive
Management Interest.
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Results of Operations
a. Distributions
For the year ended December 31, 2003, the Partnership made
distributions to Limited Partners of $12.00 per Unit held, or $360,000. In 2002
the Partnership made distributions to Limited Partners of $12.00 per Unit held,
or $360,000.
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 $603,500 annually based on current 2003 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
$689,375, $678,000, and $678,063 during the years ended December 31, 2003, 2002,
and 2001, respectively.
b. Revenue
The manufactured housing industry in general has experienced declining
retail home sales due to restrictive financing. In addition, the U.S. economy
has experienced sluggish growth during 2003 and high unemployment . These
adverse conditions caused the Partnership to experience a decline in occupancy
levels resulting in gross revenue decreasing by $84,514 from 2002 to 2003.
c. Net Income
For the years ended December 31, 2003, 2002 and 2001, net income was
$808,163, $1,003,716 and $921,554 on total revenues of $10,713,194, $10,797,708
and $10,059,885 respectively.
Distributions to all Partners, was $699,681, $883,362 and $801,193, for
the years ended December 31, 2003, 2002, and 2001, respectively.
d. Partnership Management
Certain employees of the Partnership are also employees of affiliates
of the General Partner. The Partnership paid these employees an aggregate of
$113,289, $96,429 and $97,652, in 2003, 2002 and 2001, respectively, to perform
partnership management and investor relations services for the Partnership.
e. Recent Accounting Pronouncements
There are no recent accounting pronouncements that the Fund is required
to adopt.
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f. Critical Accounting Policies
In the course of developing and evaluating accounting policies and
procedures, we use estimates, assumptions and judgments to determine the most
appropriate methods to be applied. Such processes are used in determining
capitalization of costs related to real estate investments and potential
impairment of real estate investments.
Real estate assets are stated at cost less accumulated depreciation.
Expenditures for property maintenance are charged to operations as incurred,
while significant renovations are capitalized. Depreciation of the buildings is
recorded on the straight-line method using an estimated useful life of forty
years.
In determining the fair value of real estate investments, we consider
future cash flow projections on a property by property basis, current interest
rates and current market conditions of the geographical location of each
property.
The following table outlines our contractual obligations (in thousands)
as of December 31, 2003.
Total Yr1 2-3 Yrs 4-5 Yrs Over 5 Yrs
----- --- ------- ------- ----------
Line-of-credit $ 235 $235
Mortgages payable $31,576 $372 $862 $1,009 $29,333
- -----------------------------------------------------------------------------------------------------
Total $31,811 $607 $862 $1,009 $29,333
- ------------------------------------------------------------------------------------------------------
g. Property Operations
Overall, the four Properties had a combined average occupancy of 88%
the year ended December 31, 2003; as compared to 91% the year ended December 31,
2002; and 93% the year ended December 31, 2001. The average collected monthly
rent for the year ended December 31, 2003 (not a weighted average) was
approximately $468 per home-site as compared to $455 for the year ended December
31, 2002 and $443 for the year ended December 31, 2001.
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TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
2003 2002 2001 2003 2002 2001 2003 2002 2001
---- ---- ---- ---- ---- ---- ---- ---- ----
Aztec Estates 645 498 552 568 78% 86% 88% $505 $493 $485
Kings Manor 314 303 305 298 97 97 95 495 479 466
Old Dutch Farms 293 252 254 268 86 87 92 448 440 427
Park 4 Seasons 572 525 555 568 92 97 99 423 405 391
----- ----- ----- ----- -- -- -- ---- ---- ----
Overall 1,824 1,578 1,666 1,702 88% 91% 93% $468 $455 $443
The following table summarizes gross revenues and net operating income
for the Partnership and Properties during 2003, 2002 and 2001.
GROSS REVENUE NET OPERATING INCOME
AND NET INCOME
------------------------------------------- ------------------------------------------
2003 2002 2001 2003 2002 2001
---- ---- ------ ---- ---- ----
Aztec Estates $ 3,922,469 $ 4,220,557 $4,0017,927 $ 1,419,806 $ 1,576,265 $ 1,549,088
Kings Manor 2,265,236 2,208,754 1,852,851 1,167,936 1,136,743 1,019,435
Old Dutch Farms 1,431,640 1,541,086 1,385,427 750,094 764,565 792,339
Park of the Four Seasons 3,086,083 2,810,588 2,753,957 1,608,843 1,692,116 1,661,279
----------- ----------- ----------- ----------- ----------- -----------
$10,705,428 $10,780,985 $10,010,162 $ 4,946,679 $ 5,169,689 $ 5,022,141
Partnership
Management $ 7,766 $ 16,723 $ 49,723 (250,785) (220,418) (200,408)
Other
Expenses (294,459) (345,639) (269,305)
Debt Service (2,652,379) (2,682,270) (2,720,672)
Depreciation and
Amortization (940,893) (917,646) (910,202)
----------- ----------- ----------- ----------- ----------- -----------
TOTAL: $10,713,194 $10,797,708 $10,059,885 $ 808,163 $ 1,003,716 $ 921,554
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COMPARISON OF YEAR ENDED DECEMBER 31, 2003 TO YEAR ENDED DECEMBER 31, 2002
Gross revenue decreased $84,514 or less than 1%, to $10,713,194 in
2003, compared to $10,797,708 in 2002. The decrease was primarily the result of
lower occupancy levels. Rental Income decreased $305,748. Home Sale Income
increased by $199,292 due to aggressive sales and marketing campaigns.
The Partnership's operating expenses increased $111,039, from
$9,793,992 in 2002, to $9,905,031 in 2003 due to higher home sale expense
corresponding with increased home sales. Home sales expense increased due to
higher sales volumes
As a result of the foregoing factors, net income decreased $195,553
from $1,003,716 in 2002 to $808,163 in 2003.
COMPARISON OF YEAR ENDED DECEMBER 31, 2002 TO YEAR ENDED DECEMBER 31, 2001
Gross revenue increased $737,823 or 7% to $10,797,708 in 2002, compared
to $10,059,885 in 2001. The increase was primarily the result of higher income
from home sales and rent increases. Rental Income increased $109,000 due to
higher site rent, which more than offset lower occupancy. Home Sale Income
increased by $626,000 due to aggressive sales and marketing campaigns.
The Partnership's operating expenses increased, from $9,138,331 in
2001, to $9,793,992 in 2002 or 7% due to higher property taxes, higher home sale
expense and increased administrative costs. Home sales expense increased due to
higher sales volumes.
As a result of the foregoing factors, Net Income increased from
$921,554 in 2001 to $1,003,716 in 2002, a 9% increase.
IMPORTANT DISCLOSURES
The General Partner believes it is important to disclose certain recent
events to the Limited Partners along with a description of the actions taken by
the General Partner to respond to the events.
During 2003, industry conditions remained depressed due to the lack of
available retail financing. Declining retail home sales for manufactured homes
and high default rates on chattel mortgage loans for manufactured homes
continued through 2003. The increase in foreclosures has created a surplus of
pre-owned homes for sale in the market place. The availability of pre-owned home
inventory contributed to the reduced number of new homes purchased for the
industry as a whole. The Partnership has aggressively pursued home sales by
increasing marketing efforts, including but not limited to the addition of sales
personnel.
The surplus of pre-owned homes available in the market has presented an
opportunity for the Partnership to purchase homes at low prices. On a limited
basis, these
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homes have been purchased by the Partnership and reviewed on a case by case
basis for retail sale. The maximum term of the retail contracts is ten years,
significantly less than is generally available from retail lenders. This shorter
amortization period allows for a faster return of principal and reduces the risk
of loss through repossession. The total amount of retail loans made by the
Partnership and outstanding at this time is not material relative to the total
assets and revenues of the Partnership. The General Partner believes its retail
sales and financing activity will help to increase occupancy and thereby rental
income. To date, the delinquency and default rates of the retail loans are not
significant. However the General Partner will continue to monitor the portfolio
and adjust its underwriting criteria accordingly.
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, 2003 the Partnership had a note payable
outstanding in the amount of $31,576,444. Interest on this note is at a fixed
annual rate of 8.24% through June 2007.
Line-of-Credit: At December 31, 2003 the Partnership owed $235,000
pursuant to its line-of-credit agreement, whereby interest is accrued at a
variable rate of 1.80% in excess of LIBOR. As of December 31, 2003 the one month
LIBOR was 2.94%.
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 following Partnership's financial statements for the fiscal years
ended December 31, 2003, 2002 and 2001, and supplementary data are filed with
this Report:
(i) Report of Independent Certified Public Accountants
(ii) Balance Sheets as of December 31, 2003 and 2002 and
Statements of Income for the fiscal years ended
December 31, 2003, 2002 and 2001
(iii) Statements of Partners' Equity for the fiscal years
ended December 31, 2003, 2002 and 2001
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(iv) Statements of Cash Flows for the fiscal years ended
December 31, 2003, 2002 and 2001
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change in the Partnership's independent public
accountants nor have there been any disagreements during the Partnership's two
most recent fiscal years.
ITEM 9A. CONTROLS AND PROCEDURES
The Partnership maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the
Partnership's Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and that such information is accumulated and
communicated to the Partnership's management, including its Principal Executive
Officer and Principal Financial Officer, as appropriate to allow timely
decisions regarding required disclosure based closely on the definition of
"disclosure controls and procedures" in Rule 13a - 14(c). In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. As of the end of
the period covered by this report (the-evaluation date) the Partnership
conducted an evaluation under the supervision and with the participation of its
Principal Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of its disclosure controls and
procedures (as defined in Rule 13a - 14(c) under the Securities Exchange Act of
1934 ("the Exchange Act")). Based on this evaluation, the Principal Executive
Officer and Principal Financial Officer concluded that, as of the evaluation
date, the Partnership's disclosure controls and procedures were effective to
reasonably ensure that information required to be disclosed by us in the reports
we file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.
There was no significant change in the Partnership's internal control
over financial reporting during its most recently completed fiscal year that has
materially affected, or is reasonably likely to materially affect, its internal
control over financial reporting.
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
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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, 54, 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, 54 Director and President
Gloria Koster, 50 Secretary/Treasurer
Arthur Weiss, 54 Director
Charles Soberman, 55 Director/Vice President
Roger Zlotoff, 43 Vice President
Arthur Weiss, 54 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.
Charles Soberman, 55 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.
-16-
Gloria Koster, 50, joined Uniprop, Inc. in July 1989 as its Chief
Financial Officer. 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. Prior to
joining Uniprop, Inc., she served as First Vice President with Michigan National
Bank. Ms. Koster received her MBA from the University of Detroit and received a
BBA from Western Michigan University. Ms. Koster is the Secretary/Treasurer of
P.I. Associates Limited Partnership.
Roger Zlotoff, 43 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;
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).
CODE OF ETHICS
Because the Partnership has no executive officers, the Partnership has
not adopted a Code of Ethics for the Partnership. A code of ethics has been
established for Directors, Officers, and Employees of Uniprop. A copy of the
Code of Ethics is available at no charge upon request.
-17-
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 AM, LLC,
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 AM, LLC during the next fiscal
year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
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 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
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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, 2003, the General Partner had received a
distribution of $90,000. 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 2003 aggregate appraised value of $60,350,000,
the Partnership Management Distribution due to the General Partner was $603,500.
The Partnership Management Distribution paid to the General Partner during 2003
was $599,375, a portion of which was calculated on the 2002 aggregate appraised
value of $58,700,000. As of December 31, 2003, the Partnership Management
Distribution due the General Partner totaled $150,875. This amount was paid to
the General Partner on February 15, 2004 from cash reserves. Based on the
Properties' March 2004 aggregate appraised value of $63,400,000, the Partnership
Management Distribution due the General Partner for the Partnership's 2004
fiscal year will be $634,000 (63,400,000 x 1.0% = $634,000).
Uniprop AM, LLC, an affiliate of the General Partner, received and will
receive property management fees for each Property managed by it. Uniprop AM,
LLC is primarily
-19-
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 AM, LLC, or the amount which
would be payable to an unaffiliated third party for comparable services. During
the last fiscal year, Uniprop AM, LLC received property management fees totaling
$435,846. 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 $113,289 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. Uniprop Inc. had been the Partnership's management entity until it
was replaced by Uniprop AM, LLC in 2003. Uniprop Homes, Inc., an affiliate of
the General Partner, received commissions totaling $100,500 for certain services
provided as a broker/dealer of manufactured homes for the communities. Uniprop
Homes represented the communities in the sale of new and pre-owned homes to
community residents.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Partnership retained BDO Seidman, LLP to audit its financial statements for
the year ended December 31, 2003. The Partnership also retained BDO Seidman to
provide other services in 2003.
The Aggregate fees billed to the Partnership for professional services performed
by BDO Seidman were as follows.
2002 2003
---- ----
(1) Audit Fees $18,690 $19,000
(2) Audit-Related Fees $ 0 $ 0
(3) Tax Fees $11,310 $12,100
(4) All Other Fees $ 0 $ 0
(5) Total $30,000 $31,100
AUDIT FEES: pertain to the audit of the Partnerships annual financial
statements, Including reviews of the interim financial statements contained in
the Partnerships Quarterly Reports of Form 10-Q.
TAX FEES: pertain to services performed for tax compliance, tax planning and tax
advice, including preparation of tax returns and partners Schedule K-1
processing. Tax Planning and advice also includes assistance with tax audits and
appeals, and tax advice related to specific transactions.
The services performed by BDO Seidman in 2003 were pre-approved by the General
Partner.
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PART IV
ITEM 15. 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, 2003 and 2002 and
Statements of Income for the fiscal years ended
December 31, 2003, 2002 and 2001
(iii) Statements of Partners' Equity for the fiscal years
ended December 31, 2003, 2002 and 2001
(v) Statements of Cash Flows for the fiscal years ended
December 31, 2003, 2002 and 2001
(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,
2003, 2002 and 2001
(3) Exhibits
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., as amended.
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).
-21-
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, 2004.
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth quarter of
2003.
-22-
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,
2003 and 2002, and the related statements of income, partners' equity (deficit)
and cash flows for each of the three years in the period ended December 31,
2003. We have also audited the schedule listed under Item 15 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, 2003 and 2002 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2003 in conformity with accounting principles generally accepted in
the United States of America.
Also, in our opinion, the schedule listed under Item 15 of Form 10-K presents
fairly, in all material respects, the information set forth therein.
BDO SEIDMAN, LLP
February 6, 2004, except for Note 11
which is as of February 11, 2004
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
December 31, 2003 2002
- ------------ ---- ----
ASSETS
PROPERTY AND EQUIPMENT (Note 2)
Buildings and improvements $ 25,419,430 $ 25,249,181
Land 5,280,000 5,280,000
Furniture and equipment 218,518 213,513
---------------- ----------------
Partners Equit (Deficit)
Class A limited partners 30,917,948 30,742,694
Less accumulated depreciation 13,866,583 13,011,689
---------------- ----------------
NET PROPERTY AND EQUIPMENT 17,051,365 17,731,005
Cash 258,423 607,207
Cash - security deposit escrow 305,158 305,158
Manufactured homes and improvements 1,312,787 1,152,759
Unamortized financing costs 280,548 366,548
Other assets (Note 3) 1,258,312 727,650
---------------- ----------------
$ 20,466,593 $ 20,890,327
================ ================
LIABILITIES AND PARTNERS' DEFICIT
Note payable (Note 2) $ 31,576,444 $ 31,939,585
Line-of-credit (Note 4) 235,000 195,755
Accounts payable 149,213 120,004
Other liabilities (Note 5) 885,533 773,368
---------------- ----------------
TOTAL LIABILITIES 32,846,190 33,028,712
---------------- ----------------
PARTNERS' EQUITY (DEFICIT)
Class A limited partners (9,473,234) (9,421,318)
Class B limited partners 1,282,630 944,184
General partner (4,188,993) (3,661,251)
---------------- ----------------
TOTAL PARTNERS' DEFICIT (12,379,597) (12,138,385)
---------------- ----------------
$ 20,466,593 $ 20,890,327
================ ================
See accompanying notes to financial statements.
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
Year Ended December 31, 2003 2002 2001
- ----------------------- ---- ---- ----
INCOME
Rental $ 8,255,857 $ 8,561,605 $ 8,452,500
Home sale income 1,980,043 1,780,751 1,154,868
Other 477,294 455,352 452,517
-------------- -------------- --------------
10,713,194 10,797,708 10,059,885
-------------- -------------- --------------
OPERATING EXPENSES
Administrative (Note 6) 1,925,496 1,874,648 1,842,364
Property taxes 958,023 950,624 911,649
Utilities 513,806 542,070 556,798
Property operations 1,153,281 1,150,933 995,859
Depreciation and amortization 940,893 917,646 910,202
Interest 2,652,379 2,682,270 2,720,672
Home sale expense 1,761,153 1,675,801 1,200,787
-------------- -------------- --------------
9,905,031 9,793,992 9,138,331
-------------- -------------- --------------
NET INCOME $ 808,163 $ 1,003,716 $ 921,554
============== ============== ==============
INCOME PER LIMITED PARTNERSHIP UNIT (Note 8)
Class A $ 9.43 $ 14.95 $ 12.85
Class B $ 46.64 $ 51.24 $ 48.85
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT (Note 8)
Class A $ 12.00 $ 12.00 $ 11.75
Class B $ 12.00 $ 12.00 $ 11.75
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 $ 161,633 $ 200,743 $ 184,311
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER $ 689,375 $ 678,000 $ 678,063
============== ============== ==============
See accompanying notes to financial statements.
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
TOTAL
Class A Class B PARTNERS'
General Limited Limited EQUITY
Partner Partners Partners (DEFICIT)
BALANCE, January 1, 2001 $ (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)
Distributions to partners (678,000) (242,760) (117,240) (1,038,000)
Net income for the year 200,743 302,343 500,630 1,003,716
-------------- --------------- -------------- ---------------
BALANCE, December 31, 2002 (3,661,251) (9,421,318) 944,184 (12,138,385)
Distributions to partners (689,375) (242,760) (117,240) (1,049,375)
Net income for the year 161,633 190,844 455,686 808,163
-------------- --------------- -------------- ---------------
BALANCE. December 31, 2003 $ (4,188,993) $ (9,473,234) $ 1,282,630 $ (12,379,597)
============== =============== ============== ===============
See accompanying notes to financial statements.
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Year Ended December 31, 2003 2002 2001
- ---------------------- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 808,163 $ 1,003,716 $ 921,554
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 854,893 831,646 824,202
Amortization 86,000 86,000 86,000
Increase in homes and improvements (160,028) (26,586) (103,456)
(Increase) decrease in other assets (530,662) 104,594 60,021
Increase (decrease) in accounts payable 29,209 (39,547) 88,643
Increase in other liabilities 112,165 18,853 16,061
------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,199,740 1,978,676 1,893,025
------------- ------------- -------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment (175,253) (827,474) (100,208)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (1,049,375) (1,038,000) (1,030,563)
Repayment of note payable (363,141) (333,747) (307,086)
Net proceeds (payments) under line of credit 39,245 (75,000) (29,245)
NET CASH USED IN FINANCING ACTIVITIES (1,373,271) (1,446,747) (1,366,894)
------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH (348,784) (295,545) 425,923
CASH, at beginning of year 607,207 902,752 476,829
------------- ------------- -------------
CASH, at end of year $ 258,423 $ 607,207 $ 902,752
============= ============= =============
See accompanying notes to financial statements.
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.
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 $16,069,009 and $14,706,409
as of December 31, 2003 and 2002,
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,
2003.
MANUFACTURED HOMES AND IMPROVEMENTS
Manufactured homes and improvements are
stated at the lower of cost or market
and represent manufactured homes held
for sale.
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.
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
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:
2004 - $372,000; 2005 - $412,000; 2006 -
$450,000; 2007 - $487,000; and 2008 -
$522,000.
3. OTHER ASSETS At December 31, 2003 and 2002, "Other
Assets" included cash of approximately
$816,000 and $399,000, 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 2004. Interest on
outstanding balances is charged at 1.80%
in excess of LIBOR; the Partnership's
interest rate at December 31, 2003 was
2.94 %.
5. OTHER LIABILITIES Other liabilities consisted of:
December 31, 2003 2002
- ----------- ---- ----
Tenants' security deposits $ 561,196 $ 576,476
Accrued interest 151,777 153,523
Other 172,560 43,369
-------------- --------------
TOTAL $ 885,533 $ 773,368
============== ==============
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
6. RELATED PARTY TRANSACTIONS MANAGEMENT AGREEMENT
The Partnership has an agreement with an
affiliate of the general partner to
manage the properties owned by the
Partnership. The management agreement is
automatically renewable annually, but may
be terminated by either party upon sixty
days written notice. The property
management fee is the lesser of 5% of
annual gross receipts from the properties
managed, or the amount which would be
payable to an unaffiliated third party
for comparable services.
FEES AND EXPENSES
During the years ended December 31, 2003,
2002 and 2001 the affiliate earned
property management fees of $435,846,
$449,867, and $443,123, 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 $23,754 and $12,133
by the affiliate at December 31, 2003 and
2002, 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, 2003.
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
7. RECONCILIATION OF
FINANCIAL STATEMENT
INCOME AND TAXABLE
INCOME
Year Ended December 31, 2003 2002 2001
- ----------------------- ------------ ------------ ------------
Income per the financial
statements $ 808,163 $ 1,003,716 $ 921,554
Adjustments to depreciation
for difference in methods (507,707) (165,022) (129,535)
Adjustments for prepaid
rent, meals and
entertainment 10,834 10,887 5,550
------------ ------------ ------------
Income Per the Partnership's
Tax Return $ 311,290 $ 849,581 $ 797,569
============ ============ ============
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
$603,500 annually based on current 2003
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.
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
9. SUPPLEMENTAL Cash paid for interest totaled
CASH FLOW approximately $2,654,000, $2,684,000,
INFORMATION and $2,722,000 in 2003, 2002 and 2001,
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, 2002 through December
31, 2003:
Three Months Ended
------------------
2003 March 31, June 30, September 30, December 31,
- ---- --------- -------- ------------- ------------
REVENUES $ 2,515 $ 2,848 $ 2,561 $ 2,789
========= ======== =========== ===========
NET INCOME $ 304 $ 268 $ 152 $ 84
========= ======== =========== ===========
INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT
Class A $ 5 $ 4 $ 1 $ (1)
Class B $ 14 $ 13 $ 11 $ 9
========= ======== =========== ===========
Three Months Ended
------------------
2002 March 31, June 30, September 30, December 31,
- ---- --------- -------- ------------- ------------
REVENUES $ 2,578 $ 3,043 $ 2,678 $ 2,499
========= ======== =========== ===========
NET INCOME $ 269 $ 317 $ 241 $ 177
========= ======== =========== ===========
INCOME PER LIMITED PARTNERSHIP UNIT
Class A $ 4 $ 5 $ 3 $ 3
Class B $ 13 $ 15 $ 13 $ 10
========= ======== =========== ===========
11. SUBSEQUENT EVENT On February 11, 2004, the City of Novi,
Michigan filed a lawsuit against the
Partnership to compel the community of
Old Dutch Farms to connect to the City of
Novi sanitary sewer system. Legal counsel
for the Partnership is currently in
negotiation with the City of Novi to
resolve the matter. Estimates for the
connection fees and abandonment of the
wastewater treatment plant range from
$850,000 to $1,000,000, which would be
paid over a five-year period.
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2003
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) $11,947,800 $ 2,199,868 $ 8,799,475 $ - $ 1,540,113
Kings Manor
(Ft. Lauderdale,
FL) 6,028,714 847,923 3,391,694 - 471,166
Park of the Four
Seasons
(Blaine, MN) 8,196,600 1,508,121 6,032,483 - 1,011,882
Old Dutch Farms
(Novi, MI) 5,403,330 724,088 2,896,348 - 1,276,269
----------- ----------- ------------- ------- -----------
$31,576,444 $ 5,280,000 $ 21,120,000 $ - $ 4,299,430
=========== =========== ============= ======= ===========
Column A Column E Column F Column G Column H
- ---------- --------------------------------------- ----------- --------- ---------------
Life on Which
Gross Amount at Which Carried Depreciation in
at Close of Period Latest Income
---------------------------------------
Buildings and Accumulated Date Statement is
Description Land Improvements Total Depreciation Acquired Computed
- ------------ ---- -------------- ----- ------------ -------- ------------
Aztec Estates
(Margate, FL) $2,199,868 $ 10,339,588 12,539,456 $ 5,530,559 1986 30 years
Kings Manor
(Ft. Lauderdale, 2,174,099 1986 30 years
FL) 847,923 3,862,860 4,710,783
Park of the Four
Seasons
(Blaine, MN) 1,508,121 7,044,365 8,552,486 3,832,119 1986 30 years
Old Dutch Farms
(Novi, MI) 724,088 4,172,617 4,896,705 2,144,317 1986 30 years
---------- -------------- ----------- ------------ ---- --
$5,280,000 $ 25,419,430 $30,699,430 $ 13,681,094
========== ============== =========== ============
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO SCHEDULE III
DECEMBER 31, 2003
1. RECONCILIATION OF BUILDINGS The following table reconciles buildings
AND IMPROVEMENTS and improvements from January 1, 2001
to December 31, 2003:
2003 2002 2001
------------- -------------- --------------
BALANCE, at January 1 $ 25,249,181 $ 24,444,204 $ 24,350,053
Additions to buildings and
improvements 170,249 804,977 94,151
-------------- -------------- --------------
BALANCE, at December 31 $ 25,419,430 $ 25,249,181 $ 24,444,204
============== ============== ==============
There were no additions to land during
this three-year period.
2. RECONCILIATION OF The following table reconciles the
ACCUMULATED DEPRECIATION accumulated depreciation from January 1,
2001 to December 31, 2003:
2003 2002 2001
---------- -------------- --------------
BALANCE, at January 1 $12,846,019 $ 12,042,940 $ 11,229,636
Current year depreciation expense 835,075 803,079 813,304
----------- -------------- --------------
BALANCE, at December 31 $13,681,094 $ 12,846,019 $ 12,042,940
=========== ============== ==============
3. TAX BASIS OF BUILDINGS The aggregate cost of buildings and
AND IMPROVEMENTS improvements for federal income tax
purposes is equal to the cost basis used
for financial statements purposes.
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 29, 2004 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 29, 2004 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
(Principal Financial Officer) (Principal Executive Officer,
President & Director of
GP P.I. Associates Corp.)
Dated: March 29, 2004 Dated: March 29, 2004
By: /s/ Susann E. Szepytowski
----------------------------
Susann E. Szepytowski
(Chief Accounting Officer)
Dated: March 29, 2004
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
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).
First Amendment to Agreement
3(d) Agreement of Limited Incorporated by reference to
Partnership Form 10-K for the fiscal year
ended December 31, 1996.
Second Amendment to
3(e) Agreement of Limited Incorporated by reference to
Partnership Form 10-K for the fiscal year
ended December 31, 1996.
-28-
4 Form of Certificate of Limited Incorporated by reference
Partnership Interest in the Partnership to Form 10-K for fiscal
(originally filed with Form 10-K for year ended December 1997.
the fiscal year ended December 31,
1986).
10(a) Form of Management Incorporated by reference
Agreement between the to The Registration
Partnership and Uniprop, Inc. Statement.
10(b) Form of Consulting Incorporated by reference
Agreement between the to The Registration
Partnership, the General Statement.
Partner and Consultant
10(c) Contingent Purchase Price Incorporated by reference
Agreement between the to Form 10-K for fiscal
Partnership, Aztec Estates, year ended 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
Agreement between the to Form 10-K for fiscal
Partnership and O.D.F. year ended 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
Agreement between the to Form 10-K for fiscal
Partnership and The Park of year ended December 1997.
the Four Seasons (originally
filed with Form 10-K for the
fiscal year ended December
31, 1987)
10(f) Refinancing loan Agreement between Filed herewith
the Partnership and Nomura Asset
Capital Corporation March 24, 1997
10(g) Line of Credit Loan Agreement between Filed herewith
the
-29-
Partnership and National City Bank of
Michigan/Illinois August 24, 1994
28 Letter summary of the estimated fair
market values of the Partnership's
four Manufactured housing communities, as
of March 1, 2004.
31.1 Certificate of Principal Executive Filed herewith
Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certificate of Principal Financial Filed herewith
Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
*32.1 Certification Pursuant to Section 906 Filed herewith
of the Sarbanes-Oxley Act of 2002
*32.2 Certification Pursuant to Section 906 Filed herewith
of the Sarbanes-Oxley Act of 2002
* This certificate is being furnished solely to accompany the report pursuant to
18 U.S.C. 1350 and is not being filed for purposes of Section 18 of the
Securities and Exchange Act of 1934, as amended, and is not to be incorporated
by reference into any filing of the Partnership, whether made before or after
the date hereof, regardless of any general incorporation language in such
filing.
-30-