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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, 1995 Commission File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2593067
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(810) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
$20 per unit, units of beneficial assignments of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
As of March 1, 1996, 3,303,387 units of limited partnership interest of the
registrant were outstanding and the estimated aggregate market value of the
units as of such date held by non-affiliates, as estimated by the General
Partner (based on a 1996 appraisal of Partnership properties), was
approximately $40,668,000.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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PART I
ITEM 1. BUSINESS
General Development of Business
Uniprop Manufactured Housing Communities Income Fund II, a Michigan
Limited Partnership (the "Partnership"), acquired, maintains, operates and
ultimately will dispose of income producing residential real properties
consisting of nine manufactured housing communities (the "Properties"). The
Partnership was organized and formed under the laws of the State of Michigan on
November 7, 1986. Its principal offices are located at 280 Daines Street,
Birmingham, Michigan 48009 and its telephone number is (810) 645-9261.
The Partnership filed an S-11 Registration Statement in November 1986
which was declared effective by the Securities and Exchange Commission on
December 23, 1986. The Partnership thereafter sold 3,303,387 units (the
"Units") of beneficial assignment of limited partnership interest representing
capital contributions by unit holders (the "Unit Holders") to the Partnership
of $20 per unit. The sale of all 3,303,387 Units was completed in December,
1987, generating $66,067,740 of contributed capital to the Partnership.
On April 1, 1987, the Partnership acquired Sunshine Village, a 356-space
manufactured housing community located in Davie, Florida and Ardmor Village, a
339-space manufactured housing community located in Lakeville, Minnesota. On
May 22, 1987, the Partnership acquired Camelot Manor, a 335-space manufactured
housing community located in Grand Rapids, Michigan. On July 1, 1987, Country
Roads, a 312-space manufactured housing community located in Jacksonville,
Florida and Paradise Village, a 611-space manufactured housing community
located in Tampa, Florida, were acquired by the Partnership. On September 1,
1987, Dutch Hills, a 278-space manufactured housing community located in
Haslett, Michigan and Stonegate Manor, a 308-space manufactured housing
community located in Lansing, Michigan, were acquired by the Partnership. On
January 8 and 15, 1988, respectively, the Partnership acquired West Valley, a
420-space manufactured housing community, and El Adobe, a 371-space
manufactured housing community, both located in Las Vegas, Nevada.
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 December 27, 1993, the Partnership participated in a financing
transaction (the "Mortgage Financing") which created mortgage financing for 28
manufactured housing communities (collectively, the "Projects," and
individually, a "Project"). Seven (7) of the Projects are owned by the
Partnership; thirteen (13) are owned by affiliates of Genesis Associates
Limited Partnership, the general partner of the Partnership (the "General
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Partner"), and eight (8) are owned by unrelated third parties. The Projects
owned by the Partnership (the "Fund II Projects") are as follows:
Ardmor Village
Camelot Manor
Dutch Hills
El Adobe
Stonegate
Sunshine Village
West Valley
Essentially, mortgage notes executed by the owners of each of the Projects
were issued in favor of Neutron-Uniprop, Inc. ("Neutron"), a wholly-owned
subsidiary of Uniprop, Inc. (an affiliate of the General Partner), and assigned
by Neutron to an independent trustee of a newly-formed trust (the "Trust").
The specific purpose of the Trust is to hold the mortgage notes and the
mortgages and other security provided in connection therewith for the benefit
of the owners of the newly-issued Uniprop MHC Mortgage Pass-Through
Certificates (the "Mortgage Certificates"). The proceeds derived from the sale
of the Mortgage Certificates were used to fund the mortgage loans made to the
Project owners and pay the various expenses of the transaction.
Five classes of Mortgage Certificates were issued with varying seniority
and carrying different interest rates. The interest rate on the senior
securities (i.e. the Class A Certificates) floats and equals 1.67% in excess of
the LIBOR rate, computed monthly. The Class B and D Certificates carry fixed
rates of interest of 7.04% and 7.5%, respectively. The interest rate on the
Class C Certificate floats and equals 2.5% in excess of the libor rate,
computed monthly. The Class R Certificates do not have a principal balance or
accrue interest.
The original principal amounts of the mortgage loans for the Fund II
Projects and their terms are as follows:
Ardmor Village $2,930,000
Camelot Manor $3,490,000
Dutch Hills $2,580,000
El Adobe $5,530,000
Stonegate $3,015,000
Sunshine Village $4,290,000
West Valley $8,210,000
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Term: 30 years
Amortization: Years 1-5; none
Years 6-30; 25 year schedule
Interest Rate: Weighted average cost of the Mortgage Certificates
plus 135 basis points (the "Excess Interest"),
computed monthly, but in no event greater than 9.9%
per annum in years 1 through 10 and 10.9% per annum
in years 11 through 30, or less than 7% per annum
in years 1 through 10 or 8% per annum in years 11
through 30. After payment of certain servicing
expenses and the costs of administering the Trust,
the Excess Interest will be used to reduce the
principal balance of the Mortgage Certificates,
which could ultimately result in an increase in the
value of the Class R Certificates.
Prepayment: Penalty of 5%, 4%, 3%, 2%, and 1% of the principal
amount outstanding for prepayment in years 1, 2, 3, 4,
and 5, respectively. No prepayment penalty after year 5.
All prepayments of principal made under any of the mortgage notes will
be applied in reduction of the principal balance of the Mortgage Certificates
according to their respective payment priorities. To the extent the Excess
Interest is not used to pay servicing fees and other costs of the trustee and
servicers, it will be applied first in reduction of the principal balance of
the Class B Certificates and Class C Certificates, pro rata until reduced to
zero, then in reduction of the principal balance of the Class A Certificates
until reduced to zero, and then in reduction of the Class D Certificates until
reduced to zero. As a result of the foregoing, the weighted average cost of
the Mortgage Certificates and, therefore, the interest rate charged to each
Project owner, may increase due to prepayment by another borrower and as the
principal amount of the Mortgage Certificates is reduced. In addition, because
the Fund II Projects all have a common owner, the loans to each of the Fund II
Projects are cross-defaulted and cross-collateralized with one another, such
that a default by Uniprop Income Fund II with respect to any one of its loans
will permit the enforcement of remedies on behalf of the Trust against all
seven (7) Fund II Projects and recovery against each Fund II Project in excess
of the amount of its mortgage loan.
As a condition to participating in the mortgage-backed securities
transaction, each Project owner was required to use approximately 5% of its
mortgage proceeds to purchase a subordinated portion of the mortgage-backed
securities, the Class D Certificates. The Class D Certificates are not rated,
carry a fixed interest rate of 7.5% per annum and are subordinated to the Class
A, Class B and Class C Mortgage Certificates, although, as long as there are
sufficient funds in the Trust, the holders of the Class D Certificates are
entitled to receive monthly payments of interest. The Partnership was issued a
Class D Certificate with a face amount of $1,502,250.
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The Class R Certificates, which constitute the residual interest in the
Trust, are owned by Uniprop MHC Residual L.L.C., a newly created Michigan
limited liability company (the "R Holder"or "LLC"). The owners of the R Holder
are the respective owners of the Projects participating in this mortgage-backed
securities financing, with their ownership interest determined based on the
amount each Project owner contributes to the value of the Class R Certificates.
Initially, the Partnership holds a 20.986% interest in the R Holder.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation of
its nine manufactured housing communities. Partnership operations commenced in
April 1987 upon the acquisition of the first two Properties. For a description
of the Partnership's revenues, operating profit and assets, please refer to
Items 6 and 8.
Narrative Description of Business
General
The Sunshine Village, Ardmor Village and Camelot Manor Properties were
selected from 25 manufactured housing communities then owned by affiliates of
Genesis Associates Limited Partnership, the General Partner of the Partnership
(the "General Partner"). The other six communities were purchased from
unaffiliated third parties. The Partnership rents space in the Properties to
owners of manufactured homes thereby generating rental revenues. It is
intended that the Partnership will hold the Properties for extended periods of
time, originally anticipated to be seven to ten years after their acquisition,
although a Property may be disposed of earlier or later, if in the opinion of
the General Partner, it is in the best interest of the Partnership to do so.
The determination of whether a particular Property should be disposed of will
be made by the General Partner only after consultation with Hutton Manufactured
Housing Services Inc. (the "Consultant"). In making their decision, the
General Partner and Consultant will consider relevant factors, including,
current operating results of the particular Property and prevailing economic
conditions, and will make the decision with a view to achieving maximum capital
appreciation to the Partnership considering relevant tax consequences and the
Partnership's investment objectives.
Competition
The business of owning and operating residential manufactured housing
communities is highly competitive, and the Partnership may be competing with a
number of established companies having greater financial resources. Moreover,
there has been a trend for manufactured housing community residents to purchase
(where zoning permits) their manufactured home sites on a collective basis.
This trend may result in increased competition with the Partnership for
tenants. In addition, the General Partner, its affiliates or both, has and may
in the future participate directly or through other partnerships or
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investment vehicles in the acquisition, ownership, development,
operation and sale of projects which may be in direct competition with one or
more of the Properties.
Each of the Properties competes with numerous similar facilities
located in its geographic area. The Davie/Fort Lauderdale area contains
approximately seven communities offering approximately 3,441 housing sites
competing with Sunshine Village. Ardmor Village competes with approximately
nine communities in the Lakeville, Minnesota area offering approximately 2,362
housing sites. Camelot Manor competes with approximately 15 communities in the
Grand Rapids, Michigan area offering approximately 3,538 housing sites. In
the Jacksonville, Florida area, Country Roads competes with approximately five
communities offering approximately 1,332 housing sites. The Tampa, Florida
area contains approximately four communities offering approximately 1,568
housing sites competing with Paradise Village. Dutch Hills and Stonegate
Manor compete with approximately 13 other communities in the Lansing, Michigan
area offering approximately 3,887 housing sites. In the Las Vegas, Nevada
area, West Valley and El Adobe compete with approximately 10 other communities
offering approximately 2,948 housing sites. The Properties also compete
against other forms of housing, including apartment and condominium complexes.
Governmental Regulations
The Properties owned by the Partnership are subject to certain state
regulations regarding the conduct of the Partnership operations. For example,
the State of Florida regulates agreements and relationships between the
Partnership and the residents of Sunshine Village, Country Roads and Paradise
Village. Under Florida law, the Partnership is required to deliver to new
residents of those Properties a prospectus describing the property and all
tenant rights, Property rules and regulations, and changes to Property rules
and regulations. Florida law also requires minimum lease terms, requires
notice of rent increases, grants to tenant associations certain rights to
purchase the community if being sold by the owner and regulates other aspects
of the management of such properties. The Partnership is required to give 90
days notice to the residents of Florida properties of any rate increase,
reduction in services or utilities, or change in rules and regulations. If a
majority of the residents object to such changes as unreasonable, the matter
must be submitted to the Florida Department of Professional Business
Regulations for mediation prior to any legal adjudication of the matter. In
addition, if the Partnership seeks to sell Florida Properties to the general
public, it must notify any homeowners association for the residents, and the
association shall have the right to purchase the Property on the price, terms
and conditions being offered to the public within 45 days of notification by
the owner. If the Partnership receives an unsolicited bona fide offer to
purchase the Property from any party that it is considering or negotiating, 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, Minnesota and Nevada, where
its operations are conducted.
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Employees
The Partnership employs three part-time employees to perform
Partnership management and investor relations services. The Partnership
retains an affiliate, Uniprop, Inc., as the property manager for each of its
Properties. Uniprop, Inc. is paid a fee equal to the lesser of 5% of the annual
gross receipts from each of the Properties or the amount which would be payable
to unaffiliated third parties for comparable services. Uniprop, Inc. retains
local managers on behalf of the Partnership at each of the Properties. Salaries
and fringe benefits of such local managers are paid by the Partnership and are
not included in any property management fee payable to Uniprop, Inc. Local
managers are employees of the Partnership and are paid semi-monthly. The yearly
salaries and expenses for local managers range from $20,000 to $40,000. Local
managers have no direct management authority, make no decisions regarding
operations and act only in accordance with instructions from the property
manager. They are utilized by the Partnership to provide on-site maintenance
and administrative services. Uniprop, Inc., as property manager, has overall
management authority for each Property.
ITEM 2. PROPERTIES
The Partnership purchased all nine manufactured housing communities for
cash. As a result of the Mortgage Financing, seven of the nine Properties are
encumbered with mortgages in the following original principal amounts:
Ardmor Village $2,930,000
Camelot Manor $3,490,000
Dutch Hills $2,580,000
El Adobe $5,530,000
Stonegate $3,015,000
Sunshine Village $4,290,000
West Valley $8,210,000
Each of the Properties is a modern manufactured housing community containing
lighted and paved streets, side-by-side off-street parking and complete
underground utility systems. The Properties consist of only the underlying
real estate and improvements, not the actual homes themselves. In January
1990, the Partnership did begin acquiring some homes in conjunction with its
home purchase/lease program for Country Roads and Paradise Village. Each of
the Properties has a community center which includes offices, meeting rooms and
game rooms. The Ardmor Village community includes a resident manager's
apartment. Country Roads has a 1,200 square foot rental cottage. Each of the
Properties, except Stonegate Manor, has a swimming pool. Several of the
Properties also have laundry rooms, playground areas, garage and maintenance
areas and recreational vehicle or boat storage areas.
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The table below contains certain information concerning the Partnership's
nine properties.
PROPERTY NAME NUMBER
AND LOCATION YEAR CONSTRUCTED ACREAGE OF SITES
- ------------ ---------------- ------- --------
Ardmor Village
Cedar Avenue S.
Lakeville, MN 1974 74 339
Camelot Manor
South Division
Grand Rapids, MI 1973 57 335
Country Roads
Townsend Road
Jacksonville, FL 1967 37 312
Dutch Hills
Upton Road
Haslett, MI 1975 42.8 278
El Adobe
N. Lamb Blvd.
Las Vegas, NV 1975 36 371
Paradise Village
Paradise Drive
Tampa, FL 1971 91 611
Stonegate Manor
Eaton Rapids Drive
Lansing, MI 1968 43.6 308
Sunshine Village
Southwest 5th St.
Davie, FL 1972 45 356
West Valley
W. Tropicana Ave
Las Vegas, NV 1972 53 420
ITEM 3. LEGAL PROCEEDINGS
In the opinion of the Partnership and its legal counsel, there are no
material legal proceedings pending except such ordinary routine matters as are
incident to the kind of business conducted by the Partnership. To the
knowledge of the Partnership and its counsel, no legal proceedings have been
instituted or are being contemplated by any governmental authority against the
Partnership.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The voting privileges of the Unit Holders and limited partners are
restricted to certain matters of fundamental significance to the Partnership.
The Unit Holders and Limited Partners must approve certain major decisions of
the General Partner if the General Partner proposes to act without the approval
of the Consultant. The Unit Holders and Limited Partners also have a right to
vote upon removal and replacement of the General Partner, dissolution of the
Partnership, material amendments to the partnership agreement and the sale or
other disposition of all or substantially all of the Partnership's assets,
except in the ordinary course of the Partnership's disposing of the Properties.
Such matters must be approved by Unit Holders and Limited Partners, as a group,
holding more than 50% of the then outstanding interests. There have been no
matters submitted to a vote of the limited partners during the last fiscal year.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SECURITY HOLDER MATTERS
There is no established public trading market for the Units of the
Partnership and it is not anticipated that one will ever develop. During the
last twelve months, less than two and one-half percent (2.5%) of the Units
have been transferred, excluding transfers on account of death or intra-family
transfers. The Partnership believes there is no secondary market, or the
substantial equivalent thereof, and none will develop.
The General Partner calculates the estimated net asset value of each
Unit by dividing (i) the amount of distributions that would be made to the
Limited Partners in the event of the current sale of the Properties at their
current appraised value, less the outstanding balances of the mortgages on the
mortgaged Properties and sales expenses (but without consideration to tax
consequences of the sale), by (ii) 3,303,387. In March, 1996, the Properties
were appraised at an aggregate fair market value of $72,900,000. Assuming a
sale of the nine properties in March 1996, at the appraised value, less payment
of selling expenses, the contingent purchase price due to sellers and mortgage
debt, the net aggregate proceeds available for distribution to the Unit Holders
is estimated to be $40,668,000 or $12.31 per unit. There can be no assurance
that the estimated net asset value could ever be realized. As of March 1,
1996, the Partnership had approximately 4,850 Limited Partners holding Units.
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ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data for the
Partnership for the periods ended December 31, 1995, 1994, 1993, 1992 and 1991:
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
Ended Ended Ended Ended Ended
December December December December December
31, 1995 31, 1994 31, 1993 31, 1992 31, 1991
------------ ----------- ----------- ----------- -----------
Total Assets $54,472,196 $56,093,938 $80,219,220 $54,341,204 $54,347,511
============ =========== =========== =========== ===========
Long Term
Debt $29,894,586 $29,786,033 $29,660,353 N/A N/A
------------ ----------- ----------- ----------- -----------
Income 11,210,541 11,302,229 10,114,080 9,771,109 8,890,147
Expenses (10,670,390) (9,857,350) (7,261,446) (6,761,328) (6,214,520)
------------ ----------- ----------- ----------- -----------
Net Income $540,151 $1,444,879 $2,852,634 $3,009,781 $2,675,627
============ =========== =========== =========== ===========
Distributions to
Unit Holders, per
Unit: $.66 $7.60 $1.40 $1.05 $1.40
Income per Unit: $.16 $.43 $.85 $.90 $.80
Weighted average
number of Units
outstanding: 3,303,387 3,303,387 3,303,387 3,303,387 3,303,387
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Liquidity
During 1995, the Partnership generated adequate amounts of cash to meet
its operating needs, fund capital improvements and pay distributions to
Partners. The Partnership borrowed $30,045,000 in December of 1993 through the
Mortgage Financing. The net proceeds from the Mortgage Financing, after
expenses and repayment of $2,350,523 in unsecured debt, were approximately
$24,800,000. With the financing proceeds, the Partnership's Statement of Cash
Flows for the year ended December 31, 1993 reflected Cash and Cash Equivalents,
at year end of $25,701,460. However, as discussed under the section entitled
"Capital Resources," $23,119,767 of the net proceeds of the Mortgage Financing
was distributed to the Unit Holders in February, 1994.
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The Partnership expects to generate adequate amounts of cash to meet its
operating needs during the next fiscal year.
Capital Resources
The capital formation phase of the Partnership began on April 1, 1987
when Sunshine Village and Ardmor Village were purchased by the Partnership and
operations commenced. It ended on January 15, 1988 when El Adobe, the
Partnership's last property, was purchased. The total capital raised through
December 1987 was $66,067,740 of which approximately $58,044,000 was used to
purchase the nine Properties after deducting sales commissions, advisory fees
and other organization and offering costs.
In an effort to provide Unit Holders with a return of capital and
eliminate the cumulative preferred return deficit owed to them, the General
Partner, with majority consent from the Unit Holders, mortgaged seven of its
nine Properties through the Mortgage Financing at approximately 56.0% of their
appraised value, or $30,045,000.
On or around February 15, 1994, the Partnership distributed $23,119,767
to the Unit Holders or $6.99 per $20.00 Unit held. $13,572,978 (or $4.11 per
Unit), restored the shortfall in the Unit Holders 10.0% cumulative preferred
return, and $9,546,789 (or $2.89 per unit), was a partial return of the Limited
Partners' original capital contributions.
After payment of the $23,119,767 distribution to the Unit Holders, the
Partnership had sufficient cash to establish a long-term capital improvement
reserve of $1,500,000. This capital improvement reserve will be used to cover
expenses associated with the long term capital improvements budgeted for the
Properties over the next five years.
As described in Note 3 to the Financial Statements, the term of the
mortgage notes executed in connection with the Mortgage Financing payable are
for a period of 30 years with interest only payments required for the first 5
years. Beginning in year 6, principal and interest payments are required on a
self amortizing basis through December of 2023. The minimum mortgage interest
rate is 7.0% per annum through December 2003 and 8.0% thereafter. The maximum
mortgage interest rate is 9.9% per annum through December 2003 and 10.9%
thereafter. Each of the seven mortgaged Properties is cross-collateralized.
As part of the Mortgage Financing, the Partnership was required to
purchase $1,502,250 in mortgage-backed securities. These mortgage-backed
securities equal approximately 5.0% of the seven mortgage notes payable and pay
interest computed at a monthly fixed rate of 7.5% per annum.
The General Partner acknowledges that the mortgages impose some risks to
the Partnership, but that such risks are not greater than risks typically
associated with real estate financing. In addition, as a result of the
borrowing, there is potential adverse impact on the amount of distributions to
the Unit Holders in future years. The General Partner
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anticipates, based on 1996 projections, that distributions to the Unit Holders
will be approximately 3.0% to 4.5% through 1997.
Results of Operations
a. Distributions
Distributions to the Unit Holders totalled $2,195,720 in 1995,
$25,098,000 in 1994, and $4,624,742 in 1993.
In February 1994, $23,119,767, a part of the Mortgage Financing
proceeds, was distributed to the Unit Holders, of which $13,572,978 represented
the elimination of the preferred return deficit that existed, and $9,546,789
which represented a partial return of capital.
Annual distributable cash from operations was less than the amount
required for the annual 10% preferred return to Unit Holders in 1995, 1994 and
1993. As described in Note 3 to the Partnership's financial statements, the
cummulative preferred return deficit, through December 1993 was paid in full in
February 1994. The cummulative unpaid preferred return deficit that has
accumulated during 1995 totalled approximately $3,456,000. No distributions can
be made to the General Partner until the cummulative preferred return deficit
has been distributed to the Unit Holders. At December 31, 1995, the unpaid
amount to be distributed to the General Partner from future capital transactions
was approximately $5,300,000.
b. Net Income
For the years ended December 31, 1995, 1994 and 1993, net income was
$540,151, $1,444,879 and $2,852,634 on total revenues of $11,210,541,
$11,302,229, and $10,114,080, respectively.
Net income plus depreciation and amortization, less distributions to
Unit Holders, was $235,334, $1,329,538 and $(84,171) for 1995, 1994 and 1993,
respectively. The higher income reported in 1994 is a direct result of the
Mortgage Financing completed in December 1993.
c. Partnership Management
Net expenses for the management of the Partnership (i.e. gross expenses
for such management, less transfer fees, interest on reserves, interest on funds
awaiting distribution, and certain non-recurring income) were $149,523 in 1995,
$49,897 in 1994 and $288,651 in 1993. Transfer fees, net income equity in the
LLC and interest on cash reserves totalled $608,464 in 1995, $717,137 in 1994
and $19,722 in 1993.
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The decrease in net management expenses between 1994 and 1993 is due to
the net income related to equity in the LLC as described in Note 3 of the
Financial Statements and interest income on cash reserves.
d. Property Operations
Overall, as illustrated in the table below, the Partnership's nine
properties had a combined average occupancy of 88.2% (2,936/3,330 sites) as of
December 1995, versus 89.3% in December 1994; and 86.7% in December 1993. The
average collected monthly rent was approximately $316 per home site in December
1995, versus $307 in December, 1994 and $289 in December, 1993, an increase each
year of 2.9% and 6.2%, respectively.
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
----- ------------------- ------------------- ----------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
----- ----- ----- ----- ----- ----- ---- ---- ----
Ardmor Village 339 298 290 283 87.9% 85.5% 83.5% $304 $297 $291
Camelot Manor 335 316 318 310 94.3 94.9 92.5 290 281 274
Country Roads 312 265 257 227 84.9 82.4 72.8 205 205 206
Dutch Hills 278 260 252 255 93.5 90.6 91.7 289 281 270
El Adobe 371 347 342 346 93.5 92.2 93.3 347 337 316
Paradise Village 611 435 487 434 71.2 79.7 71.0 257 246 233
Stonegate Manor 308 292 285 291 94.8 92.5 94.5 291 283 274
Sunshine Village 356 331 342 345 93.0 96.1 96.9 368 364 342
West Valley 420 392 400 397 93.3 95.2 94.5 428 412 396
----- ----- ----- ----- ----- ----- ----- ---- ---- ----
Overall 3,330 2,936 2,973 2,888 88.2% 89.3% 86.7% $316 $307 $289
During the 1995 fiscal year, before Partnership management and
nonrecurring expenses and debt service, the Partnership's nine properties
generated net operating income of $5,069,250 or 47.4% of total revenues compared
to $5,424,401 or 51.2% of total revenues; and $5,082,161 or 50.3% of total
revenues, in 1994 and 1993, respectively.
The decrease in net operating income between 1995 and 1994, is a direct
result of decreased occupancies and higher expenses.
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The table below summarizes gross revenues and net operating income for
the Properties during 1995, 1994 and 1993.
GROSS REVENUE NET OPERATING INCOME(1)
------------------------------------- ------------------------------------
1995 1994 1993 1995 1994 1993
----------- ----------- ----------- ----------- ----------- ----------
Ardmor Village $1,058,592 $997,311 $932,822 $563,269 $548,538 $471,314
Camelot Manor 1,050,043 1,022,205 953,944 560,413 486,508 430,512
Country Roads 624,061 582,832 553,547 (43,518) 54,916 (5,398)
Dutch Hills 859,073 834,170 810,431 449,811 449,401 440,281
El Adobe 1,436,567 1,355,322 1,348,107 902,642 861,757 831,487
Paradise Village 1.236.377 1,479,452 1,346,439 78,478 304,769 378,482
Stonegate Manor 956,926 959,618 944,586 474,846 529,542 520,687
Sunshine Village 1,448,518 1,451,896 1,306,554 881,978 904,305 733,381
West Valley 1,931,920 1,902,286 1,897,928 1,201,331 1,284,665 1,281,415
----------- ----------- ----------- ----------- ----------- ----------
10,602,077 10,585,092 10,094,358 5,069,250 5,424,401 5,082,161
Partnership
Mgmt. 608,464 717,137 19,722 (149,523) (49,897) (288,651)
Other nonrecurring
expenses (229,647) (200,126) (252,939)
Debt Service (2,757,125) (2,367,501) N/A
----------- ----------- ----------- ----------- ----------- ----------
TOTAL: $11,210,541 $11,302,229 $10,114,080 $1,932,955 $2,806,877 $4,540,571
(1) Net operating income does not include depreciation or amortization.
Each of the following three Properties had occupancy rates well below
the other six Properties which had occupancy rates between 90% and 97%.
Ardmor Village, in Lakeville, Minnesota, had an occupancy of 87.9%
(298/339 sites) as of December, 1995 compared to 85.5% as of December, 1994 and
83.5% in 1993. The average rent in December, 1995 was $304 per home site versus
$297 in December, 1994 and $291 in December, 1993, an increase of 2.4% and 2.0%
in each year, respectively.
The property's 1995 net operating income of $563,269 represented 53.2%
of revenues versus $548,538 or 55.0% of revenues in 1994 and $471,314 or 50.5%
in 1993. The increase in net operating income is primarily due to increased
occupancy and higher rents. The General Partner has stopped placing
lease/purchase homes at the community and started a new home sales program,
which the General Partner anticipates will continue to help improve occupancy
during 1996.
-14-
15
Country Roads, in Jacksonville, Florida, reported an occupancy of 84.9%
(265/312 sites) as of December, 1995 compared to 82.4% in 1994 and 72.8% in
1993. The average rent in December, 1995 was $205, which represents no increase
from the $205 reported in December 1994 and is a slight decrease from the $206
reported in December 1993.
The property's 1995 net operating income loss of ($43,518) represented
- -7.0% of revenues versus $54,916 or 9.4% of revenues in 1994 and $5,398 or -1.0%
of revenues in 1993. The decrease in net operating income from 1994 to 1995 is
primarily due to higher marketing expenses.
Paradise Village, in Tampa, Florida, reported an occupancy of 71.2%
(435/611 sites) as of December, 1995 compared to 79.7% in 1994 and 71.0% in
1993. The average rent in December, 1995 was $257, versus $246 in 1994 and
$233 in 1993, an increase of 4.5% and 5.6% respectively.
The property's 1995 net operating income of $78,478 represented 6.3% of
revenues compared to $304,769 or 20.6% of revenues in 1994 and $378,482 or
28.1% in 1993. During 1995, management has started to phase out the
lease/purchase proram. As a result, lease home income declined significantly
and expenses to repair the lease homes increased.
In 1996 and for the foreseeable future, the Partnership expects to meet
its expenditures from operating revenues and to distribute excess cash flow,
after retention of an adequate cash reserve, to its Unit Holders and Partners.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the fiscal year ended
December 31, 1995, 1994 and 1993, and supplementary data are filed with this
Report under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in the Partnership's independent public
accountants nor have there been any disagreements during the past two fiscal
years.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership, as an entity, does not have any officers or directors.
The General Partner is a Michigan limited partnership which has two general
partners; Uniprop, Inc. and Paul M. Zlotoff. The managing general partner of
Genesis Associates is Uniprop, Inc.
-15-
16
Information concerning Mr. Zlotoff's age and principal occupations, as
well as for other officers and directors of Uniprop, Inc., during the last five
years or more is as follows:
Paul M. Zlotoff, 46, is and has been an individual general partner of
Genesis Associates since its inception in November 1986. Mr. Zlotoff became the
Chairman and Chief Executive Officer of Uniprop, Inc. in May 1986 and has been
its President since 1979. He is also an individual general partner of P.I.
Associates Limited Partnership, the general partner of Uniprop Manufactured
Housing Communities Income Fund, a public limited partnership which owns and
operates four manufactured housing communities. Mr. Zlotoff currently, and in
the past, has acted as the general partner for various other limited
partnerships owning manufactured housing communities and some commercial
properties.
Steven P. Adler, 45, has been Vice President - Acquisitions and
Director of Operations for Uniprop, Inc. since 1984. Mr. Adler is a past
member of the Michigan Mobile Home Commission. He has been involved in the
manufactured housing industry since 1978. Mr. Adler's responsibilities on
behalf of Uniprop, Inc. include property acquisitions, and the overall
direction for the operation of properties, including management, marketing and
construction. Mr. Adler obtained a B.A. from Bard College, a M.S. in Resource
Management and a M.A. in Sociology from the University of New Hampshire.
Ron Bunce, 39, has been Vice President - Western Regional Director
since July 1993. Mr. Bunce's responsibilities include property acquisitions
and administration of all western properties. Before joining Uniprop, Inc.,
Mr. Bunce served as Vice President of Angeles Corporation for eight years, as
well as managed 21 manufactured home communities located throughout the
country. In addition, he was a member of the Board of Directors of the Florida
Manufactured Housing Association. Mr. Bunce graduated magna cum laude from
Bryant College in Smithfield, Rhode Island with a degree in economics, and also
holds a general securities license.
Gloria Koster, 42, has been Vice President - Finance of Uniprop, Inc.
since July 1989. She is responsible for accounting, financial controls, data
processing, cash management, financial reporting, budgeting, financing, and tax
matters. Prior to joining Uniprop, Inc., Ms. Koster had been with Michigan
National Bank for 13 years, most recently as a first vice-president. She has
an M.B.A. from the University of Detroit.
Terry Winter, 36, joined Uniprop, Inc. in August 1990 to become Vice
President - Public Programs. He is responsible for financial analysis of
properties, placement of investments, management and marketing for public and
private programs. From March 1989 until August 1990, Mr. Winter was vice
president of marketing/business development in Dallas, Texas, with Home Owners
Funding Corp. of America, a mortgage banking originator and servicer
specializing in loans for manufactured homes and manufactured housing
communities. From February 1987 to March 1989, he had been vice president of
loan services at Home Owners. From July 1982 until February 1987, before
assets of that company were acquired by Home Owners in 1987, Mr. Winter had
been vice-president of
-16-
17
real estate management with Commodore Financial Services Corp. Mr. Winter has
a B.B.A. in finance from Wayne State University.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no executive officers and therefore, no officers
received a salary or remuneration exceeding $100,000 during the last fiscal
year. The General Partner of the Partnership and an affiliate, Uniprop, Inc.,
received certain compensation and fees during the fiscal year in the amounts
described in Item 13. Depending upon the results of operations and other
factors, the Partnership anticipates that it will provide similar compensation
to the General Partner and Uniprop, Inc. during the next fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The Partnership is a limited partnership duly formed pursuant to the
Uniform Limited Partnership Act, as amended, of the State of Michigan. The
General Partner, Genesis Associates Limited Partnership, is vested with full
authority as to the general management and supervision of business and the
other affairs of the Partnership, subject to certain constraints in the
partnership agreement and consulting agreement. Unit holders and/or limited
partners have no right to participate in the management of the Partnership and
have limited voting privileges only on certain matters of fundamental
significance. No person owns of record or beneficially, more than five percent
of the Partnership's Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion describes all of the types of compensation,
fees or other distributions paid by the Partnership or others to the General
Partner or its affiliates from the operations of the Partnership during the
last fiscal year, as well as certain of such items which may be payable during
the next fiscal year. Certain of the following arrangements for compensation
and fees were not determined by arm's length negotiations between the General
Partner, its affiliates and the Partnership.
Paul M. Zlotoff has an interest in the original sellers of Sunshine
Village and Ardmor Village and is entitled to share in a contingent purchase
price with respect to each Property, when and if the Properties are sold and
the sellers become entitled thereto. The maximum amounts which could be
payable to the sellers are as follows: Sunshine Village, $1,108,260 and Ardmor
Village, $946,236. The cash purchase price and contingent purchase price for
each Property were determined by reference to the average of two independent
real estate appraisals which were obtained by the General Partner. Such
appraisals are only estimates of value and are not necessarily indicative of
the actual real estate. Each seller will become entitled to any unpaid
contingent purchase price upon the sale, financing or other disposition of each
such Property, but, only after the receipt by each Unit Holder and Limited
Partner of aggregate distributions equal to the sum of (i) his
-17-
18
10% cumulative preferred return plus (ii) 125% of his capital contribution.
The actual amounts to be received, if any, will depend upon the results of the
Partnership's operations and the amounts received upon the sale, financing or
other disposition of the Properties and are not determinable at this time. The
Partnership does not anticipate any such amount will become payable during the
next fiscal year.
The Partnership will pay an incentive management interest to the
General Partner for managing the Partnership's affairs, including: determining
distributions, negotiating agreements, selling or financing properties,
preparing records and reports, and performing other ongoing Partnership
responsibilities. This incentive management interest is 15% of distributable
cash from operations in any quarter. However, in each quarter, the General
Partner's right to receive any net cash from operations is subordinated to the
extent necessary to first provide each Unit Holder and Limited Partner his 10%
cumulative preferred return. During the last fiscal year, the General Partner
received no distributions on account of its incentive management interest from
operations because distributions were approximately $3,456,375 less than the
10% cumulative preferred return due Unit Holders. Any such amounts unpaid in a
taxable year will be accumulated and paid from distributable cash from capital
transactions, but only after each Unit Holder and Limited Partner has first
received his 10% cumulative preferred return and 125% of his capital
contribution. For 1995, approximately $400,000 was accumulated for the General
Partner, and the General Partner's aggregate accumulated incentive management
interest as of December 1995 was approximately $5,300,000. The actual
incentive management interest from operations to be accumulated or paid during
the next fiscal year will depend upon the results of the Partnership's
operations and is not determinable at this time. The Partnership does not
anticipate any such amount will be distributed to the General Partner during
the next fiscal year and will again be accumulated with payment deferred. No
distributions could be made to the General Partner until an approximately
$7,289,350 10% cumulative preferred return deficit as of December 31, 1995, is
first distributed to the Unit Holders. In February of 1994, as part of the
Mortgage Financing, $23,119,767 was distributed to the Unit Holders,
$13,572,978 of which eliminated the Unit Holders' preferred return deficit
through December 31, 1993.
The Partnership must also pay an incentive management interest from
capital transactions to the General Partner for its services rendered to the
Partnership. The General Partner will be entitled to receive its share of
distributable cash from capital transactions after (i) each Unit Holder and
Limited Partner has received aggregate distributions in an amount equal to the
sum of (a) his 10% cumulative preferred return plus (b) 125% of his capital
contribution, (ii) any contingent purchase prices have been paid, and (iii) any
property disposition fees to Uniprop, Inc. have been paid. The General
Partner's share of distributable cash from capital transactions so payable will
be (i) 100% of such distributable cash from capital distributions until the
General Partner's share of the aggregate capital distributions made under
section 11c(iii) and 11c(v) of the partnership agreement equal 25% and (ii)
thereafter, 25% of such distributable cash from capital transactions. No
incentive management interest from capital transactions was paid to the General
Partner for the fiscal year ended December 31, 1995. The Partnership does not
-18-
19
anticipate that any such amounts will be paid or become payable to the General
Partner during the next fiscal year.
Uniprop, Inc. received and will receive property management fees for
each Property managed by it. Uniprop, Inc. is primarily responsible for the
day-to-day management of the Properties and for the payment of the costs of
operating each Property out of the rental income collected. The property
management fees are equal to the lesser of 5% of the annual gross receipts from
the Properties managed by Uniprop, Inc., or the amount which would be payable
to an unaffiliated third party for comparable services. During the last fiscal
year, Uniprop, Inc. received the following property management fees totaling
$524,609: Ardmor Village, $51,610; Camelot Manor, $51,889; Country Roads,
$31,212; Dutch Hills, $42,510; El Adobe, $70,658; Paradise Village, $62,341;
Stonegate Manor, $47,290; Sunshine Village, $71,620; and West Valley, $95,479.
The actual amounts to be received during the next fiscal year will depend upon
the results of the Partnership's operations and are not determinable at this
time.
Certain employees of affiliates of the General Partner were paid an
aggregate of $164,657 during 1995 to perform local property management, data
processing and investor relations services for the Partnership. It is
anticipated comparable amounts will be paid in the next fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) Financial Statements
The following financial statements and related documents are filed with
this Report:
(1) Report of Independent Certified Public Accountants
(2) Balance Sheets as of December 31, 1995 and 1994
(3) Statements of Income for the fiscal years ended
December 31, 1995, 1994 and 1993
(4) Statements of Partners' Equity for the fiscal years ended
December 31, 1995, 1994 and 1993
(5) Statements of Cash Flows for the fiscal years ended
December 31, 1995, 1994 and 1993
-19-
20
(6) Schedule III - Real Estate and Accumulated Depreciation for
the fiscal years ended December 31, 1995, 1994 and 1993
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth quarter of
1995.
(c) Exhibits
The following exhibits are incorporated by reference to the S-11
Registration Statement of the Partnership filed November 12, 1986, as amended
on December 22, 1986 and January 16, 1987:
3(a) Certificate of Limited Partnership for the Partnership
3(b) Uniprop Income Fund II Agreement of Limited Partnership
4(a) First Amendment to Uniprop Income Fund II Agreement of Limited
Partnership (April 1, 1987)
10(a) Form of Management Agreement between the Partnership and Uniprop,
Inc.
10(b) Form of Consulting Agreement between the Partnership, the
General Partner and Consultant
The following exhibits are incorporated by reference to the Form 10-K for
the fiscal year ended December 31, 1992:
4(b) Form of Beneficial Assignment Certificate (BAC) for the
Partnership (originally filed with Form 10-K for the fiscal year
ended December 31, 1987)
10(c) Contingent Purchase Price Agreement with Sunrise Broward
Associates, Ltd
10(d) Contingent Purchase Price Agreement with Ardmor Associates
Limited Partnership
10(e) Incentive Acquisition Fee Agreement between the Partnership
and Uniprop, Inc.
The following exhibits are incorporated by reference to the Form 8-K filed
January 7, 1994:
28(a) Specimen Mortgage Note (without exhibit)
-20-
21
28(b) Specimen Open-End Mortgage, Deed of Trust, Security Agreement,
Fixture Financing Statement and Assignment of Leases and Rents
(without exhibits), with: Specimen Rider for properties located in
Michigan; Specimen Rider for property located in Minnesota; Specimen
Rider for property located in Florida; and Specimen Rider for
properties located in Nevada
28(c) Specimen Assignment of Rents and Leases (without exhibits),
with: Specimen Rider for property located in Minnesota; Specimen
Rider for properties located in Nevada
The following exhibit is attached to this Report:
27 Financial Data Schedule
28 Letter summary of the estimated fair market values of the
Partnership's nine manufactured housing communities, as of March 1,
1996
(d) Other Financial Statements
There are no other financial statements required by the instructions
contained in Regulation S-X or, the information is included elsewhere in the
financial statements or the notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Uniprop Manufactured Housing Communities Income Fund II,
a Michigan Limited Partnership, has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc., Managing General Partner
By: /s/ Paul M. Zlotoff
----------------------------
Paul M. Zlotoff, President
Dated: March 29, 1996
-21-
22
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 Koster By: /s/ Paul M. Zlotoff
----------------------------- ------------------------------------------
Gloria Koster Paul M. Zlotoff, Director of Uniprop, Inc.
(Principal Financial Officer
of Uniprop, Inc.)
Date: March 29, 1996
By: /s/ Andrew Feuereisen
-----------------------------
Andrew Feuereisen
(Controller of Uniprop, Inc.)
Date: March 29, 1996 Date: March 29, 1996
-22-
23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Uniprop Manufactured Housing
Communities Income Fund II
(a Michigan limited partnership)
We have audited the accompanying balance sheets of Uniprop Manufactured Housing
Communities Income Fund II (a Michigan limited partnership), as of December 31,
1995 and 1994 and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 1995. We
have also audited the schedule listed under Item 14 of Form 10-K. These
financial statements and the schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the schedule
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements and the schedule. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements and the
schedule. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Uniprop Manufactured Housing
Communities Income Fund II at December 31, 1995 and 1994 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Also, in our opinion, the schedule listed under Item 14 of Form 10-K presents
fairly, in all material respects, the information set forth therein.
BDO SEIDMAN, LLP
Troy, Michigan
February 9, 1996
24
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
===============================================================================================================
December 31, 1995 1994
- ---------------------------------------------------------------------------------------------------------------
ASSETS
PROPERTY AND EQUIPMENT (Note 3)
Buildings and improvements $ 48,305,293 $ 47,691,900
Land 11,644,603 11,562,361
Manufactured homes and improvements 2,456,505 2,430,221
Furniture and equipment 295,715 246,821
- ---------------------------------------------------------------------------------------------------------------
62,702,116 61,931,303
Less accumulated depreciation 13,566,058 11,834,802
- ---------------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 49,136,058 50,096,501
Cash 388,328 1,373,182
Marketable securities 956,753 1,000,000
Mortgage-backed securities (Note 3) 1,502,250 1,502,250
Unamortized financing costs 964,585 998,958
Investment (Note 3) 998,995 500,896
Other assets (Note 2) 525,227 622,151
- ---------------------------------------------------------------------------------------------------------------
$ 54,472,196 $ 56,093,938
===============================================================================================================
LIABILITIES AND PARTNERS' EQUITY
Notes payable (Note 3) $ 29,894,586 $ 29,786,033
Accounts payable 154,712 239,888
Other liabilities (Note 4) 827,387 816,937
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 30,876,685 30,842,858
- ---------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY
Unit holders 23,380,956 25,041,927
General partner 214,555 209,153
- ---------------------------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 23,595,511 25,251,080
- ---------------------------------------------------------------------------------------------------------------
$ 54,472,196 $ 56,093,938
===============================================================================================================
See accompanying notes to financial statements.
25
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
===============================================================================================================
Year Ended December 31, 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
INCOME
Rental $ 10,257,258 $ 10,275,710 $ 9,880,687
Interest 224,027 330,581 22,119
Equity in net income of LLC (Note 3) 498,099 500,896 -
Other 231,157 195,042 211,274
- ---------------------------------------------------------------------------------------------------------------
11,210,541 11,302,229 10,114,080
- ---------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Property operations 4,230,166 3,885,849 3,391,164
Depreciation and amortization 1,890,903 1,862,892 1,687,937
Administrative (Note 5) 956,742 915,617 933,865
Property taxes 835,454 825,491 924,002
Interest 2,757,125 2,367,501 324,478
- ---------------------------------------------------------------------------------------------------------------
10,670,390 9,857,350 7,261,446
- ---------------------------------------------------------------------------------------------------------------
NET INCOME $ 540,151 $ 1,444,879 $ 2,852,634
===============================================================================================================
INCOME PER LIMITED PARTNERSHIP
UNIT (Note 7) $ .16 $ .43 $ .85
===============================================================================================================
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT (Note 7) $ .66 $ 7.60 $ 1.40
===============================================================================================================
NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 3,303,387 3,303,387 3,303,387
===============================================================================================================
NET INCOME ALLOCABLE TO
GENERAL PARTNER $ 5,402 $ 14,449 $ 28,526
===============================================================================================================
DISTRIBUTIONS ALLOCABLE TO
GENERAL PARTNER $ - $ - $ -
===============================================================================================================
See accompanying notes to financial statements.
26
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
================================================================================================================
General
Partner Unit Holders TOTAL
- ----------------------------------------------------------------------------------------------------------------
BALANCE, January 1, 1993 $ 166,178 $ 50,510,131 $ 50,676,309
Distributions to unit holders - (4,624,742) (4,624,742)
Net income for the year 28,526 2,824,108 2,852,634
- ----------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1993 $ 194,704 $ 48,709,497 $ 48,904,201
Distributions to unit holders - (25,098,000) (25,098,000)
Net income for the year 14,449 1,430,430 1,444,879
- ----------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1994 $ 209,153 $ 25,041,927 $ 25,251,080
Distributions to unit holders - (2,195,720) (2,195,720)
Net income for the year 5,402 534,749 540,151
- ----------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1995 $ 214,555 $ 23,380,956 $ 23,595,511
================================================================================================================
See accompanying notes to financial statements.
27
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
================================================================================================================
Year Ended December 31, 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 540,151 $ 1,444,879 $ 2,852,634
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 1,747,977 1,704,979 1,687,937
Amortization 142,926 157,913 -
Equity in net income of LLC (498,099) (500,896) -
Loss (gain) loss on sale of property and equipment (1,933) 1,394 (6,901)
Decrease (increase) in other assets 96,924 156,428 (97,129)
(Decrease) increase in accounts payable (85,176) 105,459 (5,782)
Increase (decrease) in other liabilities 10,450 (682,944) 346,076
- ----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,953,220 2,387,212 4,776,835
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment (961,537) (805,848) (458,647)
Proceeds from sale of marketable securities 525,000 - -
Purchase of marketable securities (481,753) (1,000,000) -
Proceeds from sale of property and equipment 175,936 188,358 331,958
Purchase of mortgage-backed securities - - (1,502,250)
- ----------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (742,354) (1,617,490) (1,628,939)
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to unit holders (2,195,720) (25,098,000) (4,624,742)
Proceeds from notes payable borrowings - - 29,660,353
Repayment of notes payable borrowings - - (2,350,523)
Payment for financing costs - - (1,051,547)
- ----------------------------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (2,195,720) (25,098,000) 21,633,541
- ----------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH (984,854) (24,328,278) 24,781,437
CASH, at beginning of year 1,373,182 25,701,460 920,023
- ----------------------------------------------------------------------------------------------------------------
CASH, at end of year $ 388,328 $ 1,373,182 $ 25,701,460
================================================================================================================
See accompanying notes to financial statements.
28
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ORGANIZATION AND BUSINESS
ACCOUNTING
POLICIES Uniprop Manufactured Housing Communities Income Fund II,
a Michigan Limited Partnership (the "Partnership") acquired,
maintains, operates and will ultimately dispose of income
producing residential real properties consisting of nine
manufactured housing communities (the "properties") located
in Florida, Michigan, Nevada and Minnesota. The Partnership
was organized and formed under the laws of the State of
Michigan on November 7, 1986.
In accordance with its Prospectus dated December 1986,
the Partnership sold 3,303,387 units of beneficial assignment
of limited partnership interest ("Units") for $66,067,740.
The Partnership purchased the properties for an aggregate
purchase price of approximately $56,000,000. Three of the
properties costing approximately $16,008,000 were previously
owned by entities which were affiliates of the general
partner.
The general partner is Genesis Associates Limited
Partnership. Uniprop Beneficial Corporation was the initial
limited partner who assigned to those persons purchasing
units a beneficial limited partnership interest when the
minimum number of units were sold.
USE OF ESTIMATES
In preparing financial statements in conformity with
generally accepted accounting principles, management is
required to make estimates and assumptions that affect (1)
the reported amounts of 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.
29
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Partnership's financial
instruments, which consist of cash, marketable securities,
mortgage-backed securities, investments, notes payable, and
accounts payable, approximate their fair values.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation
is provided using the straight-line method over the following
estimated useful lives:
Buildings and improvements 30 years
Manufactured homes and improvements 30 years
Furniture and equipment 3-10 years
Accumulated depreciation for tax purposes was
$12,057,650 and $10,490,657 as of December 31, 1995 and 1994,
respectively.
MARKETABLE SECURITIES
Marketable securities consist mainly of U.S. Government
and Federal Agency Bonds with maturity dates ranging from
November 1996 to April 1998. These securities are carried at
amortized cost and management intends to hold such securities
to maturity. The rate of return on these securities ranges
from 4.37% to 7.87%.
MORTGAGE-BACKED SECURITIES
These mortgage pass-through certificates represent
beneficial ownership interests in a trust fund, the assets of
which consist of a pool of mortgage loans originated by the
issuer of the securities. Mortgages of seven of the
Partnership's properties are included in the assets of the
trust fund. Thirteen other properties owned in part by
affiliates of the general partner are also included in the
assets of the trust fund. These securities are carried at
cost, and management intends to hold such securities to
maturity. The rate of return on these securities is 7.5% per
annum.
30
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FINANCING COSTS
Costs to obtain financing have been capitalized and are
amortized using the straight-line method over the 30-year
term of the related mortgage notes payable.
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.
2. OTHER ASSETS At December 31, 1995 and 1994, "Other assets" included cash
of approximately $88,000 in a security deposit escrow
account for two of the Partnership's properties, as
required by the laws of the state in which they are located,
which is restricted from operating use.
3. NOTES PAYABLE Notes payable consisted of:
December 31, 1995 1994
===================================================================================
Mortgage notes payable totalling $30,045,000,
less unamortized discount of $150,414 and
$258,967 in 1995 and 1994, respectively
(See further description below) $ 29,894,586 $ 29,786,033
===================================================================================
In December 1993, the Partnership mortgaged seven of its
properties in connection with a financing transaction which
involved twenty-one other properties, thirteen of which are
owned in part by affiliates of the general partner. The
borrowings, which are secured by the mortgages on the
Partnership's properties as well as the mortgages on the
other twenty-one properties, were funded through the issuance
of mortgage-backed securities. As part of the financing, the
Partnership was required to purchase $1,502,250 in
mortgage-backed securities. The entity that issued these
securities was a newly created trust fund.
31
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
The proceeds of the mortgage notes payable were obtained
primarily to eliminate the cumulative preferred return
deficit owed to the unit holders that existed as of December
31, 1993, and also to distribute a return of capital to the
unit holders. In February 1994, $23,119,767 was distributed
to the unit holders, of which $13,572,978 represented the
elimination of the preferred return deficit that existed, and
$9,546,789 which represented a return of capital.
The mortgage notes payable require monthly payments of
interest only through December 1998. Thereafter, monthly
payments of principal and interest are required through
December 2023. Principal payments to be made in 1999 and 2000
are approximately $363,000 and $395,000, respectively. The
minimum mortgage interest rate is 7.0% per annum through
December 2003 and 8.0% thereafter. The maximum mortgage
interest rate is 9.9% per annum through December 2003 and
10.9% thereafter. These minimum and maximum rates are
determined based on formulas specified in the borrowing
agreement. Each of the seven mortgaged properties of the
Partnership is cross-collateralized under the terms of the
agreement.
The Partnership also has a 20.98% interest in the
residual interest of the trust fund and will be entitled to
receive a pro-rata share of the proceeds of the remaining
assets of the trust fund after the principal balance of the
regular security holders have been paid. The residual
interest of the trust fund is a separate legal entity and is
organized as a Limited Liability Corporation ("LLC") for
federal income tax purposes. At December 31, 1995 and 1994,
the Partnership's equity in the LLC was $998,995 and
$500,896, respectively, which was determined using a method
similar to the equity method of accounting. Under this
method, the investment is carried in the accompanying balance
sheets at an amount which approximates the Partnership's
equity in the underlying net assets of the LLC. The
Partnership recognizes its share of the net income of the LLC
for financial statement purposes in the statements of income.
During 1995 and 1994, $498,099 and $500,896, respectively,
was recognized in the statements of income.
32
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
4. OTHER Other liabilities consisted of:
LIABILITIES
December 31, 1995 1994
==================================================================================
Tenants' security deposits $ 462,178 $ 450,105
Accrued interest 229,221 232,491
Other 135,988 134,341
----------------------------------------------------------------------------------
TOTAL $ 827,387 $ 816,937
==================================================================================
5. RELATED PARTY MANAGEMENT AGREEMENT
TRANSACTIONS
The Partnership has an agreement with an affiliate of
the general partner to manage the properties owned by the
Partnership. The management agreement is automatically
renewable annually, but may be terminated by either party
upon sixty days written notice. The property management fee
is the lesser of 5% of annual gross receipts from the
properties managed, or the amount which would be payable to
an unaffiliated third party for comparable services.
REPORT OF FEES
During the years ended December 31, 1995, 1994 and 1993,
the affiliate earned property management fees of $524,609,
$523,331 and $503,855, respectively, as permitted in the
Agreement of Limited Partnership. These operating expenses
are included with "Administrative" expenses in the respective
statements of income. The Partnership was owed $37,677 and
$9,469 by the affiliate at December 31, 1995 and 1994,
respectively, for overpayments made. Certain employees of the
Partnership are also employees of affiliates of the general
partner. These employees were paid by the Partnership
$164,657, $119,734 and $109,536 in 1995, 1994 and 1993,
respectively, to perform local property management and
investor relations services for the Partnership.
During 1994, the Partnership paid approximately $161,000
to an affiliate, representing an accrued incentive
acquisition fee.
33
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
CONTINGENT PURCHASE PRICE
A general partner of Genesis Associates Limited
Partnership has an interest in the sellers of two of the
properties acquired by the Partnership and is entitled to
share in a contingent purchase price with respect to these
properties, when and if the properties are sold and the
sellers become entitled thereto. The actual amounts to be
received, if any, will depend upon the results of the
Partnership's operations and the amounts received upon the
sale, financing or other disposition of the properties and
are not determinable at this time. The Partnership does not
anticipate any such amount will become payable during the
next fiscal year.
6. RECONCILIATION Year Ended December 31, 1995 1994 1993
OF FINANCIAL ===============================================================================
INCOME AND
TAXABLE Income per the financial
INCOME statements $ 540,151 $ 1,444,879 $ 2,852,634
Adjustments to depreciation
for difference in methods 168,185 174,624 170,680
Adjustments for prepaid rent,
meals and entertainment 25,580 9,609 2,460
Adjustment to loss on disposal
of assets for difference in
basis - - (9,328)
-------------------------------------------------------------------------------
Income Per the Partnership's
Tax Return $ 733,916 $ 1,629,112 $ 3,016,446
===============================================================================
34
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
7. PARTNERS' Subject to the orders of priority under certain specified
CAPITAL conditions more fully described in the Agreement of Limited
Partnership, distributions of partnership funds and
allocations of net income from operations are principally
determined as follows:
DISTRIBUTIONS
Distributable cash from operations in the Agreement
(generally defined as net income plus depreciation and
amortization) is to be distributed to unit holders until they
have received a 10% cumulative preferred return. After the
unit holders have received their 10% cumulative preferred
return, all remaining cash from operations is distributed to
the general partner until the total amount received by the
general partner is equal to 15% of the aggregate amount of
cash distributed from operations in a given year. Amounts
payable to but not paid to the general partner will be
accumulated and paid from future capital transactions after
the unit holders have first received their 10% preferred
return and 125% of their capital contributions. Thereafter,
85% of distributable cash from operations is to be paid to
the unit holders and 15% to the general partner.
Annual distributable cash from operations was less than
the amount required for the annual 10% preferred return to
the unit holders by approximately $3,456,000 in 1995 and
$3,833,000 in 1994. No distributions can be made to the
general partner until the cumulative preferred return deficit
of approximately $7,289,000 has been distributed to the unit
holders.
At December 31, 1995, the unpaid amount to be
distributed to the general partner from future capital
transactions was approximately $5.3 million.
ALLOCATION OF NET INCOME
Net income is principally allocated 99% to the unit
holders and 1% to the general partner until the cumulative
amount of net income allocated to the unit holders equals the
aggregate cumulative amount of cash distributable to the unit
holders. After sufficient net income has been allocated to
the unit holders to equal the amount of cash distributable to
them, all the net income is to be allocated to the general
partner until it equals the amount of cash distributed to it.
35
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
8. SUPPLEMENTAL Interest paid during 1995, 1994 Cash and 1993 was
FLOW AND approximately $2,760,000, $2,307,000 $150,000, respectively.
INFORMATION
36
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Column A Column B Column C Column D Column E
- ------------- -------- ------------------------ --------------------- ---------------------------------------
Costs
Capitalized
Subsequent to Gross Amount at Which Carried
Initial Cost Acquisition at Close of Period
------------------------ --------------------- ----------------------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements Total
- ----------------------------------------------------------------------------------------------------------------------------
Ardmor Village
(Lakeville, MN) $ 2,930,000 $ 1,063,253 $ 4,253,011 $ - $ 630,415 $ 1,063,253 $ 4,883,426 $ 5,946,679
Sunshine Village
(Davie, FL) 4,290,000 1,215,862 4,875,878 - 83,790 1,215,862 4,959,668 6,175,530
Camelot Manor
(Grand Rapids, MI) 3,490,000 918,949 3,681,051 - 513,639 918,949 4,194,690 5,113,639
Country Roads
(Jacksonville, FL) - 636,550 2,546,200 38,106 487,802 674,656 3,034,002 3,708,658
Paradise Village
(Tampa, FL) - 1,760,000 7,040,000 279,553 764,275 2,039,553 7,804,275 9,843,828
Dutch Hills
(Haslett, MI) 2,580,000 839,693 3,358,771 23,104 295,679 862,797 3,654,450 4,517,247
Stonegate Manor
(Lansing, MI) 3,015,000 930,307 3,721,229 40,552 234,035 970,859 3,955,264 4,926,123
El Adobe
(Las Vegas, NV) 5,530,000 1,480,000 5,920,000 39,964 322,854 1,519,964 6,242,854 7,762,818
West Valley
(Las Vegas, NV) 8,210,000 2,289,700 9,158,800 89,010 417,864 2,378,710 9,576,664 11,955,374
- ----------------------------------------------------------------------------------------------------------------------------
$30,045,000 $11,134,314 $44,554,940 $510,289 $3,750,353 $11,644,603 $48,305,293 $59,949,896
============================================================================================================================
Column F Column G Column H
------------ --------- ---------------
Life on Which
Depreciation in
Latest Income
Accumulated Date Statement is
Description Depreciation Acquired Computed
- --------------------------------------------------------------
Ardmor Village
(Lakeville, MN) $ 1,285,940 1987 30 years
Sunshine Village
(Davie, FL) 1,443,752 1987 30 years
Camelot Manor
(Grand Rapids, MI) 1,144,260 1987 30 years
Country Roads
(Jacksonville, FL) 819,550 1987 30 years
Paradise Village
(Tampa, FL) 2,099,000 1987 30 years
Dutch Hills
(Haslett, MI) 1,010,089 1987 30 years
Stonegate Manor
(Lansing, MI) 1,085,828 1987 30 years
El Adobe
(Las Vegas, NV) 1,651,972 1988 30 years
West Valley
(Las Vegas, NV) 2,540,201 1988 30 years
- --------------------------------------------------------------
$13,080,592
==============================================================
37
Uniprop Manufactured Housing
Communities Income Fund II
(a Michigan limited partnership)
Notes to Schedule III
December 31, 1995
1. Reconciliation The following table reconciles the land from January 1, 1993
of Land to December 31, 1995:
1995 1994 1993
=====================================================================
BALANCE, at January 1 $11,562,361 $11,412,361 $11,412,361
Additions to land 82,242 150,000 -
-------------------------------------------------------------------
BALANCE, at December 31 $11,644,603 $11,562,361 $11,412,361
===================================================================
2. Reconciliation The following table reconciles the buildings and improvements
of Buildings and from January 1, 1993 to December 31, 1995:
Improvements
1995 1994 1993
=====================================================================
BALANCE, at January 1 $47,691,900 $47,223,775 $47,183,927
Additions to buildings
and improvements 613,393 468,125 39,848
-------------------------------------------------------------------
BALANCE, at December 31 $48,305,293 $47,691,900 $47,223,775
=====================================================================
3. Reconciliation The following table reconciles the accumulated depreciation.
of Accumulated from January 1, 1993 to December 31, 1995:
Depreciation
1995 1994 1993
=====================================================================
BALANCE, at January 1 $11,449,637 $ 9,855,036 $ 8,269,848
Current year
depreciation expense $ 1,630,955 $ 1,594,601 $ 1,585,288
-------------------------------------------------------------------
BALANCE, at December 31 $13,080,592 $11,449,637 $ 9,855,036
===================================================================
4. Tax Basis of The aggregate cost of buildings and improvements for federal
Buildings and income tax purposes is equal to the cost basis used for
Improvements financial statement purposes.
38
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------- ----------- ---------------- ----
3(a) Certificate of Limited Incorporated by reference
Partnership for the to the S-11 Registration
Partnership Statement of the
Partnership filed November
12, 1986, as amended on
December 22, 1986 and
January 16, 1987 (the
"Registration Statement").
3(b) Uniprop Income Fund II Incorporated by reference
Agreement of Limited to the Registration
Partnership Statement.
4(a) First Amendment to Incorporated by reference
Uniprop Income Fund II to the Registration
Agreement of Limited Statement.
Partnership (April 1,
1987)
4(b) Form of Beneficial Incorporated by reference
Assignment Certificate to Form 10-K for the fiscal
(BAC) for the year ended December 31,
Partnership (originally 1992.
filed with Form 10-K for
the fiscal year ended
December 31, 1987)
10(a) Form of Management Incorporated by reference
Agreement between the to the Registration
Partnership and Uniprop, Statement.
Inc.
10(b) Form of Consulting Incorporated by reference
Agreement between the to the Registration
Partnership, the General Statement.
Partner and Consultant
39
10(c) Contingent Purchase Incorporated by reference
Price Agreement with to Form 10-K for the fiscal
Sunrise Broward year ended December 31,
Associates, Ltd. 1992.
(originally filed with
Form 10-K for the fiscal
year ended December 31,
1987)
10(d) Contingent Purchase Incorporated by reference
Price Agreement with to Form 10-K for the fiscal
Ardmor Associates year ended December 31,
Limited Partnership 1992.
(originally filed with
Form 10-K for the fiscal
year ended December 31,
1987)
10(e) Incentive Acquisition Incorporated by reference
Fee Agreement between to Form 10-K for the fiscal
the Partnership and year ended December 31,
Uniprop, Inc. 1992.
(originally filed with
Form 10-K for the fiscal
year ended December 31,
1987)
27 Financial Data Schedule Filed herewith Page 26
28 Letter summary of the Filed herewith. Page 27
estimated fair market
values of the
Partnership's nine
manufactured housing
communities, as of March
1, 1996