CHATEAU COMMUNITIES INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------

FORM 10-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the year ended December 31, 2001

or

[_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

Commission file number 1-12496

- --------------------------------------------------------------------------------

CHATEAU COMMUNITIES, INC.
(exact name of registrant as specified in its charter)

MARYLAND 38-3132038
(State of incorporation) (I.R.S. Employer
Identification No.)

6160 South Syracuse Way, Greenwood Village, Colorado 80111
(Address of principal executive offices)
Registrant's telephone number, including area code: (303) 741-3707

Securities registered pursuant to section 12(b) of the Act
and listed on the New York Stock Exchange:

Common Stock, $0.01 Par Value

Securities registered pursuant to Section 12(g) of the Act: NONE

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 Act of 1934 during
the preceding 12 months, 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 filer pursuant to Item 405 of
Regulations S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy of information statements
incorporated by references in Part III of this Form 10-K or any amendments to
this Form 10-K. [_]

The aggregate market value of voting stock held by non-affiliates of the
Registrant on March 15, 2002 was approximately $727,000,000 based on the closing
price of the stock on the New York Stock Exchange on such date. For the purposes
of this response, executive officers and directors have been deemed to be
affiliates of the Registrant.

The number of shares of the Registrant's Common Stock outstanding on March 15
2002 was 29,188,500 shares.

Portions of the Registrant's 2001 definitive Proxy Statement to be filed for its
2002 Annual Meeting of Shareholders are incorporated by reference into Part III
of this report.

CHATEAU COMMUNITIES, INC.

FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2001

TABLE OF CONTENTS

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Item Pages
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PART

1. Business 3
2. Properties 6
3. Legal Proceedings 14
4. Submission of Matters to a Vote of Security Holders 14

PART II

5. Market for Registrant's Common Equity and Related Security Holder Matters 15
6. Selected Financial Data 16
7. Management's Discussion and Analysis of Financial Condition and Results
of Operations 18
7A. Quantitative and Qualitative Disclosures About Market Risk 26
8. Financial Statements and Supplementary Data 28
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 49

PART III

10. Directors and Executive Officers of the Registrant 49
11. Executive Compensation 49
12. Security Ownership of Certain Beneficial Owners and Management 49
13. Certain Relationships and Related Transactions 49

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 49
Signatures 54

PART I

Item 1. Business
- ------- --------

General Development of Business

Chateau Communities, Inc. is a self-administered and self-managed equity real
estate investment trust ("REIT"), and the largest owner/manager of manufactured
home communities in the United States. We conduct substantially all of our
activities through CP Limited Partnership, a Maryland Limited Partnership (the
"Operating Partnership"), in which we own, directly and through ROC Communities,
Inc. ("ROC"), the other general partner of the Operating Partnership, an
approximate 83% general partner interest. We consider ourselves to be engaged in
only one industry segment. We own and operate 217 manufactured home communities
(the "Properties") containing 70,723 homesites and 1,359 park model/RV sites in
33 states. We also fee manage 38 manufactured home community properties
containing 8,118 homesites. In addition, we are involved in the development and
expansion of manufactured home communities, and through our subsidiary,
Community Sales, Inc. ("CSI"), the sale of new and pre-owned homes, brokerage of
used homes and in assisting residents in arranging financing and insurance
services.

Formation of the Company

We were formed in Maryland on August 25, 1993, as Chateau Properties, Inc., to
continue and expand the manufactured home community operations and business
objectives of Chateau Estates, a Michigan co-partnership, which had developed,
owned and operated manufactured home communities and properties since 1966.

Industry Overview

A manufactured home community is a residential subdivision designed and improved
with homesites for the placement of manufactured homes, including related
improvements and amenities. Manufactured homes are detached, single-family homes
which are produced off-site by manufacturers and installed on sites within the
community. Manufactured homes are available in a variety of architectural styles
and floor plans, offering a variety of amenities, custom options and on-site
built additional structures, such as a garage, carport or storage unit.

Modern manufactured home communities are similar to typical residential
subdivisions and generally contain centralized entrances, paved streets, curbs,
gutters and parkways. In addition, such communities often provide a variety of
amenities to residents which may include: a clubhouse; swimming pools and
jacuzzis; playgrounds; basketball, shuffleboard, and tennis courts; picnic
areas; cable television service; golf courses; marinas; and laundry facilities.
Utilities are provided or arranged for by the owner of the community. Some
communities provide water and sewer service through public or private utilities,
while others provide these services to residents from on-site facilities.

The owner of each home in a manufactured home community leases a site from the
community. The manufactured home community is the owner of the underlying land,
utility connections, streets, lighting, driveways, common area amenities and
other capital improvements and is responsible for enforcement of community
guidelines and maintenance. Each resident within the manufactured home community
is responsible for the maintenance of his/her home and leased site.

Additionally, manufactured home communities tend to have stable resident bases,
with relatively few residents moving their homes out of the communities.
Management thus tends to be more stable, and capital expenditures needs less
significant, relative to multi-family rental apartment complexes.

3

Operating and Investment Strategies

We seek to maximize long-term growth in income and portfolio value through
active management and expansion of certain manufactured home communities and
selective acquisition and development of additional communities. We focus on
manufactured home communities that have growth potential and expect to hold such
properties for long-term investment and capital appreciation. We have reviewed
the focus of our basic property management activities to include:

Operations

* Collections

* Budget Control

* Sales and marketing

* Community appearance

* Resident Relations

Development, Expansion and Acquisitions

* Utilizing the expertise and relationships developed by our
management to identify acquisition and development opportunities;

* Selectively developing new communities in strategically desirable
regions where development is supported by favorable demographics
and strong market demand;

* Capitalizing on opportunities to renovate and expand properties
consistent with local market demand;

* Selectively acquiring well-located manufactured home communities
that demonstrate the potential for increase in revenue and cash
flow through professional property management, improved operating
efficiencies, aggressive leasing and, where appropriate, expansion
on adjacent land; and

4

Financing Strategies

We intend to maintain a conservative and flexible capital structure that enables
us to (i) continue to access the capital markets on favorable terms; (ii)
enhance potential earnings growth; (iii) minimize our level of encumbered
assets; and (iv) limit our exposure to variable rate debt. We intend to maintain
a debt-to-market capitalization ratio of approximately 50% or less. We will,
however, re-evaluate this policy from time to time and decrease or increase such
ratio accordingly in light of then current economic conditions, relative costs
to us of debt and equity capital, market values of the properties and other
factors.

During 2001, we made a significant acquisition of 46 communities for $552
million. In connection with this acquisition, we increased our leverage to just
over fifty percent. Simultaneously, we announced a disposition strategy to
identify non-core assets for disposition. The proceeds from the dispositions
will be used to reduce our short-term debt issued in connection with the
acquisition and ultimately to reduce our debt to market capitalization ratio.
During 2001, we disposed of seven properties for an aggregate sales price of $42
million and reduced our debt to market capitalization ratio to 48 percent as of
December 31, 2001.

To the extent we seek to obtain additional financing in the future, we may,
depending on market conditions, do so through additional equity or debt
financings. Equity financing may include sales of our common stock or preferred
stock or issuance of common or preferred partnership units by our operating
partnership for cash. We may also issue our equity securities in exchange for
property acquisitions. Debt financings are expected to involve the issuance of
senior notes by our operating partnership, additional mortgage financings and
borrowings under existing or new revolving credit facilities.

Expansion and Improvement of Manufactured Home Community Properties

We will seek to increase the income generated from our manufactured home
communities by expanding the number of sites available to be leased to
residents, if justified by local market conditions and permitted by zoning and
other applicable laws, and by filling vacant sites. We are currently involved in
expansion of our existing properties, as well as the development of our 14
greenfield developments. The majority of these greenfield properties are owned
through joint ventures. During 2001, we substantially completed the development
of approximately 350 sites. As of December 31, 2001, we owned undeveloped land
adjacent to existing communities containing approximately 4,800 expansion sites,
and greenfield developments which contain approximately 4,900 future sites, all
of which are zoned for manufactured housing. The undeveloped land will
facilitate additional growth to the extent market conditions warrant. In
addition, where appropriate, we will consider upgrading or adding facilities and
amenities to certain communities in order to make those communities more
attractive in their market.

Other Policies

We may, although we have no plans to do so, make acquisitions, investments and
engage in development activities outside of the strategies described above. In
connection with our joint venture investments, we may make loans to the joint
ventures as part of the financing package. We may also invest in the securities
of other issuers in connection with a proposed or contemplated acquisition. We
will not engage in trading, underwriting or agency distribution of securities of
other issues. We have in the past and may in the future, depending on market
conditions, repurchase our common stock. At all times, we will seek to operate
in a manner consistent with maintaining our REIT status.

2001 Property Acquisitions

During 2001, we purchased CWS Communities Trust ("CWS"), a private real estate
investment trust for $552 million. The portfolio consisted of 46 manufactured
home communities with approximately 16,600 homesites, approximately 1,500
expansion sites and three RV communities with 431 RV sites in 11 states. The
properties are concentrated in Florida, Georgia and Texas. In addition to CWS,
we also completed 3 acquisitions in Indiana, Georgia and Colorado for a total of
1,445 homesites and an aggregate purchase price of $43 million.

2001 Property Dispositions

In the third quarter of 2001, we began implementing a disposition plan and
started identifying a number of mature properties that no longer meet our
portfolio objectives. As of December 31, 2001, we had sold 7 properties for
approximately $42 million. The net proceeds from these sales, of approximately
$37 million were used primarily to pay down the Acquisition Facility. These
dispositions resulted in a net gain of $585,000.

5

Sales Brokerage and Finance

We conduct our sales and brokerage activities through our taxable subsidiary,
Community Sales, Inc. ("CSI"). During 2001, CSI sold 684 new or pre-owned homes
and brokered sales of 1,221 homes. CSI also has a financial services division,
which arranges financing and insurance services for prospective residents and,
on a limited basis, provides financing to residents. During 2001, the financial
services division arranged financing on approximately 750 loans and provided
financing on approximately 40 loans, including a balance of approximately $1.8
million.

Competition

Many of the Properties are located in developed areas that include other
manufactured home communities. The number of competitive manufactured home
community properties in a particular area could have a material effect on our
ability to lease sites at our communities and the rents charged. In addition,
other forms of multi-family residential properties and single-family housing
provide housing alternatives to residents.

Employees

As of December 31, 2001, we had approximately 1,400 full and part-time
employees. We utilize a resident administrator for the on-site administration of
each of the Properties. Important duties of on-site administrators, as well as
the office manager, include extensive contact with residents through initial
introduction to community guidelines and on-going accessibility for resident
assistance. Typically, clerical and maintenance workers are employed to assist
in the management and care of residents and the properties. Direct supervision
of on-site administrators is the responsibility of our regional vice presidents
and managers and four divisional presidents. These individuals have significant
experience in addressing the needs of residents and are charged to find or
create innovative approaches to value maximization and increasing cash flow from
property operations. Approximately 90 corporate employees support on-site
administrators in all property management functions, as well as divisional and
regional property management staff.

Commitment to resident satisfaction is demonstrated by ongoing training that we
provide for all our employees. Community administrators meet periodically at
regional and divisional seminars to review Company philosophy and policy, to
discuss relevant administration issues and solutions, and to share ideas and
experiences.

Tax Status

We have elected to be taxed as a REIT under Section 856(c) of the Internal
Revenue Code of 1986, as amended (the "Code"). We are generally not subject to
Federal income tax to the extent we distribute 90 percent of our REIT taxable
income to our shareholders. REITs are subject to a number of organizational and
operational requirements. If we fail to qualify as a REIT in any taxable year,
we will be subject to Federal income tax (including any applicable alternative
minimum tax) on our taxable income at regular corporate rates. As a REIT, we are
subject to certain state and local taxes on our income and property and Federal
income and excise taxes to the extent of our undistributed income.

Item 2. Properties
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On December 31, 2001, we owned and operated 217 manufactured home communities
containing 70,723 homesites and 1,359 park model/RV sites, in 33 states, with
amenities designed for either retirement or family living. We also fee managed
38 manufactured home communities containing 8,118 sites in 14 states. In
addition, we owned land adjacent to certain existing communities containing
approximately 4,800 expansion sites, and greenfield developments with a
potential of approximately 4,900 future sites, which, although not yet
developed, are zoned for manufactured housing.

6

As of December 31, 2001, occupancy in our stabilized portfolio was 92.5 percent.
The active expansion portfolio had occupancy of 79.5 percent, while our
greenfield development portfolio had occupancy of 30.8 percent, for a total
occupancy of 88.3 percent. On a per-site basis, weighted monthly rental revenue
for the year ended December 31, 2001 was $331 compared with $316 for the same
period in 2000, an increase of 4.6 percent. Weighted average rent is calculated
as rental and utility income for the period, on a monthly basis, divided by the
weighted average occupied sites. Weighted average occupancy is computed by
averaging the number of revenue producing sites at the end of each month in the
period.

We believe that our properties provide amenities and common facilities that
create a safe and attractive community for residents. All of our properties
provide residents with appealing amenities with most offering a clubhouse, a
swimming pool and playgrounds. Many properties offer additional amenities such
as jacuzzis, indoor pools, libraries, shuffleboard, basketball, and tennis
courts, golf courses, day care facilities, exercise rooms, marinas and laundry
facilities.

Since residents own their homes, it is their responsibility to maintain their
homes and surrounding area. The communities have extensive guidelines for
maintenance. It is our role to maintain common areas, facilities and amenities
and to ensure that residents comply with community guidelines. We hold periodic
meetings of our property management team for training and implementation of our
strategies. In addition, the property administrators are expected to make a
daily inspection of their community. We believe that, due in part to this
strategy, the Properties historically have had and will continue to have low
turnover and high occupancy rates.

Leases

The typical lease entered into between the resident and one of our manufactured
home communities for the rental of a site is month-to-month or year-to-year,
renewable upon consent of both parties or, in some instances, as provided by
statute.

Property Information

We classify all our properties in either the stable, greenfield development, or
active expansion portfolio. The stable portfolio includes communities where we
do not have, or have not recently had, expansion of the community. These
communities normally have stable occupancy rates. The greenfield development
portfolio includes properties where we are developing the community. The active
expansion portfolio includes properties where we are currently, or have
recently, expanded the community by adding homesites to the available homesites
for rent. Generally, both the greenfield and the active expansion portfolios
will have a lower occupancy rate than the stable portfolio, as they are in the
lease-up phase. In addition, we own three park model/RV communities.

The following table sets forth certain information, as of December 31, 2001,
regarding our properties, excluding the three park model/RV communities. A park
model/RV community is a community where the majority of the sites are leased on
an annual basis, although the resident only occupies the home for a portion of
the year. A minority of the sites are rented with recreational vehicles on a
daily, weekly or monthly basis. This table excludes four of our greenfield
properties as there are currently no developed sites.

7

Weighted
Average
Total Monthly
Location (Closest Total Comm- Number of Rent Per
Community State Major City) unities Sites Occupancy Site
- -------------------------------------------------------------------------------------------------------------

100 Oaks AL Fultondale 230 86.52% $ 232.19
(a) Lakewood AL Montgomery 397 49.75% $ 192.64
Green Park South AL Montgomery 417 92.29% $ 272.25
Total Alabama 3 1,044 74.83% $ 233.11
Westpark AZ Phoenix 222 86.94% $ 345.61
Total Arizona 1 222 86.94% $ 345.61
Bermuda Palms CA Palm Springs 185 96.22% $ 366.83
Eastridge CA San Jose 187 99.47% $ 661.62
La Quinta Ridge CA Palm Springs 152 92.76% $ 430.94
The Colony CA Palm Springs 220 98.18% $ 650.00
The Orchard CA San Francisco 233 99.57% $ 654.62
Green River CA Los Angeles 333 99.40% $ 716.44
Jurupa Hills Cascade CA Los Angeles 323 98.76% $ 579.80
Los Ranchos CA Los Angeles 389 73.01% $ 350.67
Total California 8 2,022 93.32% $ 551.36
CV-Denver CO Denver 345 93.91% $ 428.51
CV-Longmont CO Longmont 310 98.71% $ 428.71
Friendly Village CO Greeley 226 98.67% $ 342.01
Pine Lakes Ranch CO Denver 762 98.69% $ 394.51
Redwood Estates CO Denver 753 98.67% $ 382.94
(b) Prairie Greens CO Denver 139 5.04% $ 244.75
Longview CO Longmont 400 99.00% $ 457.10
(b) Antelope Ridge CO Colorado Springs 140 47.86% $ 420.18
Total Colorado 8 3,075 91.64% $ 397.62
Cedar Grove CT New Haven 60 98.33% $ 329.17
Evergreen CT New Haven 102 98.04% $ 329.28
Green Acres CT New Haven 64 98.44% $ 322.26
Highland CT New Haven 50 96.00% $ 337.10
Total Connecticut 4 276 97.83% $ 329.05
Anchor North FL Tampa Bay 94 93.55% $ 294.44
Audubon FL Orlando 280 97.50% $ 286.29
Colony Cove FL Sarasota 2,211 99.10% $ 375.67
Conway Circle FL Orlando 111 90.09% $ 321.91
Crystal Lake FL St. Petersburg 166 92.17% $ 272.46
(a) Crystal Lakes FL Tampa 330 61.21% $ 163.48
CV-Jacksonville FL Jacksonville 643 89.58% $ 321.42
Del Tura FL Fort Myers 1,344 88.02% $ 450.89
Eldorado Estates FL Daytona Beach 126 97.62% $ 304.71
Emerald Lake FL Fort Myers 201 99.00% $ 307.81
Fairways Country Club FL Orlando 1,141 99.56% $ 305.33
(a) Foxwood Farms FL Orlando 375 80.27% $ 229.39
Hidden Valley FL Orlando 303 99.67% $ 326.81

8

Weighted
Average
Total Monthly
Location (Closest Total Comm- Number of Rent per
Community State Major City) unities Sites Occupancy Site
- ----------------------------------------------------------------------------------------------------------------

Indian Rocks FL Clearwater 148 70.55% $ 266.71
Jade Isle FL Orlando 101 95.05% $ 315.90
Lakeland Harbor FL Tampa 504 99.80% $ 266.89
Lakeland Junction FL Tampa 191 100.00% $ 205.63
Lakes at Leesburg FL Orlando 640 99.84% $ 282.43
Land O' Lakes FL Orlando 173 96.53% $ 270.85
Midway Estates FL Vero Beach 204 70.59% $ 322.39
Oak Springs FL Orlando 438 72.83% $ 249.45
Orange Lake FL Orlando 242 97.52% $ 269.38
Palm Beach Colony FL West Palm Beach 285 89.82% $ 324.64
Pedaler's Pond FL Orlando 214 84.11% $ 229.72
Pinellas Cascades FL Clearwater 238 92.44% $ 390.98
Shady Lane FL Clearwater 108 94.44% $ 275.80
Shady Oak FL Clearwater 250 95.60% $ 354.37
Shady Village FL Clearwater 156 96.15% $ 325.25
Southwind Village FL Naples 338 92.90% $ 331.43
Starlight Ranch FL Orlando 783 95.53% $ 328.03
Tarpon Glen FL Clearwater 170 87.06% $ 326.04
Town & Country FL Orlando 73 93.15% $ 342.03
Whispering Pines FL Clearwater 392 94.64% $ 388.19
Winter Haven Oaks FL Orlando 343 53.64% $ 219.82
Beacon Hill Colony FL Tampa 201 99.50% $ 243.58
Beacon Terrace FL Tampa 297 100.00% $ 245.56
Crystal Lake Club FL Tampa 599 77.63% $ 332.79
Haselton Village FL Orlando 292 98.29% $ 246.71
Lakeside Terrace FL Orlando 241 99.17% $ 254.12
(a) Palm Valley FL Orlando 789 81.27% $ 362.06
Parkwood Communities FL Orlando 698 96.13% $ 187.62
(a) Pinelake Gardens FL Vero Beach 532 84.02% $ 322.03
Shadow Hills FL Orlando 670 81.04% $ 349.72
Sunny South Estates FL West Palm Beach 319 94.98% $ 413.33
Tara Woods FL Tampa 531 98.12% $ 323.96
University Village FL Orlando 480 83.13% $ 349.93
Village Green FL Vero Beach 780 100.00% $ 336.13
Total Florida 47 19,745 91.16% $ 320.30
Atlanta Meadows GA Atlanta 75 96.00% $ 273.40
(a) Butler Creek GA Augusta 376 66.76% $ 201.45
Camden Point GA Kingsland 268 44.40% $ 181.49
Castlewood Estates GA Atlanta 334 83.83% $ 338.10
Colonial Coach Estates GA Atlanta 481 77.55% $ 332.00
Golden Valley GA Atlanta 131 92.37% $ 303.60
Landmark GA Atlanta 524 88.17% $ 308.58

9

Weighted Average
Location (Closest Total Comm- Total Number Monthly Rent
Community State Major City) unities of Sites Occupancy per Site
- -------------------------------------------------------------------------------------------------------------------------------

Marnelle GA Atlanta 205 92.68% $ 313.09
Oak Grove Estates GA Albany 174 85.63% $ 159.71
Paradise Village GA Albany 226 64.60% $ 180.57
South Oaks GA Atlanta 295 40.34% $ 146.45
Hunter Ridge GA Atlanta 850 94.59% $ 288.89
Four Seasons GA Atlanta 214 96.73% $ 299.34
Friendly Village GA Atlanta 203 97.03% $ 378.33
Lamplighter Village GA Atlanta 431 98.14% $ 372.18
The Mill GA Atlanta 150 86.67% $ 308.60
Pooles Manor GA Atlanta 194 78.87% $ 342.45
Shadowood GA Atlanta 506 95.45% $ 361.99
Smoke Creek GA Atlanta 264 85.23% $ 309.90
Stone Mountain GA Atlanta 354 96.05% $ 379.24
Suburban Woods GA Atlanta 216 91.20% $ 339.96
Woodlands of Kennesaw GA Atlanta 273 95.97% $ 389.55
Total Georgia 22 6,744 84.56% $ 301.52
Lakewood Estates IA Davenport 180 91.67% $ 303.57
Terrace Heights IA Dubuque 317 93.69% $ 275.07
Total Iowa 2 497 92.96% $ 285.39
Coach Royale ID Boise 91 96.70% $ 326.02
Maple Grove Estates ID Boise 270 95.56% $ 331.16
Shenandoah Estates ID Boise 154 96.10% $ 322.10
Total Idaho 3 515 95.92% $ 327.54
Falcon Farms IL Moline 215 88.37% $ 265.85
Maple Ridge IL Kankakee 75 98.67% $ 285.30
Maple Valley IL Kankakee 201 98.51% $ 285.30
Total Illinois 3 491 94.09% $ 276.78
(a) Broadmore IN South Bend 358 81.67% $ 280.07
Forest Creek IN South Bend 167 89.22% $ 314.70
(a) Fountainvue IN Marion 120 85.83% $ 181.33
Hickory Knoll IN Indianapolis 325 95.08% $ 330.32
Hoosier Estates IN Indianapolis 288 98.26% $ 172.60
Mariwood IN Indianapolis 296 83.11% $ 312.88
Oak Ridge IN South Bend 205 88.29% $ 277.40
Pendleton IN Indianapolis 102 84.31% $ 239.92
(a) Sherwood IN Marion 135 40.00% $ 203.87
Skyway IN Indianapolis 156 86.54% $ 305.57
Twin Pines IN Goshen 238 93.28% $ 290.15
Total Indiana 11 2,390 86.20% $ 258.50
Mosby's Point KY Cincinnati 150 95.33% $ 319.70
Total Kentucky 1 150 95.33% $ 319.70
Pinecrest Village LA Shreveport 446 74.22% $ 171.79

10

Weighted Average
Location (Closest Total Comm- Total Number Monthly Rent
Community State Major City) unities of Sites Occupancy per Site
- -------------------------------------------------------------------------------------------------------------------------------

Stonegate, LA LA Shreveport 157 98.09% $ 194.40
Total Louisiana 2 603 80.43% $ 177.67
Hillcrest MA Boston 83 98.80% $ 359.27
Leisurewoods Rockland MA Boston 394 99.24% $ 355.63
(a) Leisurewoods Taunton MA Boston 222 95.50% $ 309.79
The Glen MA Boston 36 100.00% $ 417.86
Total Massachusetts 4 735 98.10% $ 345.24
(a) Algoma Estates MI Grand Rapids 343 82.80% $ 333.45
Anchor Bay MI Detroit 1,384 93.86% $ 369.45
Arbor Village MI Jackson 266 96.62% $ 279.74
Avon MI Detroit 617 97.41% $ 432.64
(a) Canterbury Estates MI Grand Rapids 290 65.52% $ 256.43
Chesterfield MI Detroit 345 96.23% $ 390.31
(a) Chestnut Creek MI Flint 221 86.88% $ 316.07
Clinton MI Detroit 1,000 93.30% $ 381.14
Colonial Acres MI Kalamazoo 612 92.96% $ 315.03
Colonial Manor MI Kalamazoo 195 95.38% $ 278.17
Country Estates MI Grand Rapids 254 87.01% $ 312.50
(a) Cranberry MI Pontiac 328 78.96% $ 392.13
(b) Deerfield Manor (aka Allendale) MI Allendale 96 36.46% $ 180.85
Ferrand Estates MI Grand Rapids 420 99.05% $ 364.40
(a) Forest Lake Estates MI Grand Rapids 221 77.83% $ 317.84
(b) Glenmoor MI Leroy Township 41 0.00% $ -
(a) Grand Blanc MI Flint 478 87.66% $ 380.30
Holiday Estates MI Grand Rapids 205 97.06% $ 349.11
(b) Holly Hills MI Holly 96 41.67% $ 189.84
Howell MI Lansing 455 95.82% $ 407.03
(a) Huron Estates MI Flint 111 81.98% $ 235.20
Lake in the Hills MI Detroit 238 99.16% $ 416.38
(a) Leonard Gardens MI Grand Rapids 271 87.82% $ 310.57
Macomb MI Detroit 1,427 92.64% $ 411.17
(b) Maple Run MI Clio 145 53.10% $ 269.25
(c) Norton Shores MI Grand Rapids 656 82.16% $ 292.43
Novi MI Detroit 725 88.69% $ 441.27
Oakhill MI Flint 504 86.71% $ 363.13
Old Orchard MI Flint 200 99.50% $ 360.22
Orion MI Detroit 423 94.56% $ 372.05
(b) Pine Lakes MI Lapeer 137 62.50% $ 326.68
Pinewood MI Columbus 380 94.47% $ 348.47
Pleasant Ridge MI Lansing 305 68.20% $ 230.55
Royal Estates MI Kalamazoo 183 87.98% $ 351.46
Science City MI Midland 171 91.81% $ 320.18

11

Weighted Average
Location (Closest Total Comm- Total Number Monthly Rent
Community State Major City) unities of Sites Occupancy per Site
- -------------------------------------------------------------------------------------------------------------------------------

Springbrook MI Utica 400 98.24% $ 344.58
Sun Valley MI Jackson 197 90.86% $ 268.74
Swan Creek MI Ann Arbor 294 99.66% $ 380.72
(a) The Highlands MI Flint 683 89.15% $ 314.97
(a) Torrey Hills MI Flint 377 88.86% $ 374.50
Valley Vista MI Grand Rapids 137 92.70% $ 337.27
Villa MI Flint 319 84.64% $ 342.57
(a) Westbrook MI Detroit 386 85.75% $ 408.84
(c) Yankee Spring MI Grand Rapids 284 84.15% $ 252.58
Total Michigan 44 16,820 88.99% $ 353.72
Cedar Knolls MN Minneapolis 458 96.51% $ 427.39
Cimmaron MN St. Paul 505 97.43% $ 421.99
Rosemount MN Minneapolis/St. Paul 182 100.00% $ 414.27
Twenty-Nine Pines MN St. Paul 152 90.79% $ 332.16
Total Minnesota 4 1,297 96.68% $ 412.29
(b) North Creek MO Kansas City 234 0.00% $ -
(a) Springfield Farms MO Springfield 290 48.28% $ 187.67
Total Missouri 2 524 26.72% $ 187.67
Countryside Village G.F. MT Great Falls 226 95.58% $ 215.85
Total Montana 1 226 95.58% $ 215.85
Autumn Forest NC Greensboro 299 78.93% $ 261.39
Foxhall Village NC Raleigh 315 96.83% $ 317.10
Oakwood Forest NC Greensboro 481 84.65% $ 271.80
Woodlake NC Greensboro 308 88.31% $ 265.00
Total North Carolina 4 1,403 86.97% $ 247.00
Buena Vista ND Fargo 400 96.75% $ 277.18
Columbia Heights ND Grand Forks 302 97.02% $ 294.34
President's Park ND Grand Forks 174 85.63% $ 234.93
Meadow Park ND Fargo 117 97.44% $ 217.69
Total North Dakota 4 993 94.96% $ 258.34
Shenandoah Village NJ Philadelphia 359 100.00% $ 356.90
Total New Jersey 1 359 100.00% $ 356.90
Tierra West NM Albuquerque 653 60.64% $ 363.19
Total New Mexico 1 653 60.64% $ 363.19
Mountain View NV Las Vegas 349 99.71% $ 528.52
Total Nevada 1 349 99.71% $ 528.52
Casual Estates NY Syracuse 961 67.85% $ 316.77
Meadowbrook NY Ithaca 237 65.40% $ 287.60
Total New York 2 1,198 67.36% $ 311.00
(a) Hunter's Chase OH Lima 135 65.93% $ 180.99
Vance OH Columbus 110 79.65% $ 252.59

12

Weighted Average
Location (Closest Total Comm- Total Number Monthly Rent
Community State Major City) unities of Sites Occupancy per Site
- -------------------------------------------------------------------------------------------------------------------------------

Willo-Arms OH Cleveland 262 95.80% $ 226.44
Yorktowne OH Cincinnati 354 93.50% $ 345.64
Total Ohio 4 861 88.08% $ 271.59
Crestview OK Stillwater 237 67.93% $ 201.67
Total Oklahoma 1 237 67.93% $ 201.67
Knoll Terrace OR Salem 212 91.04% $ 388.59
Riverview OR Portland 133 93.98% $ 456.15
Total Oregon 2 345 92.17% $ 414.63
(b) Berryman's Branch PA Philadelphia 221 98.22% $ 352.93
Greenbriar Village PA Allentown 319 98.43% $ 383.03
Total Pennsylvania 2 540 98.35% $ 370.58
(a) Carnes Crossing SC Summerville 608 85.29% $ 210.95
(a) Conway Plantation SC Myrtle Beach 299 75.92% $ 189.43
Saddlebrook SC Charleston 426 93.90% $ 223.88
Total South Carolina 3 1,333 85.94% $ 210.25
(a) Eagle Creek TX Tyler 199 89.39% $ 177.47
Homestead Ranch TX McAllen 126 88.10% $ 209.15
Leisure World TX Brownsville 201 93.53% $ 209.08
The Homestead TX McAllen 99 96.97% $ 237.00
Trail's End TX Brownsville 299 83.39% $ 205.04
Arlington Lakeside TX Dallas 233 94.42% $ 315.83
Creekside TX Dallas 585 97.61% $ 397.85
Grand Place TX Dallas 333 97.30% $ 368.16
(a) Misty Winds TX Corpus Christi 357 81.51% $ 289.23
North Bluff Estates TX Austin 274 95.62% $ 361.87
Northwood TX Dallas 455 95.60% $ 386.56
Oakcrest Pointe TX San Antonio 297 91.58% $ 349.02
Stonegate Austin TX Austin 359 97.77% $ 369.77
Stonegate Pines TX Dallas 160 99.38% $ 316.70
(b) Harston Woods TX Dallas 180 0.00% $ -
(b) Onion Creek TX Austin 190 62.63% $ 316.01
Total Texas 16 4,347 88.02% $ 309.03
(a) Regency Lakes VA Winchester 384 91.41% $ 244.64
Total Virginia 1 384 91.41% $ 244.64
Eagle Point WA Seattle 230 96.09% $ 480.09
Total Washington 1 230 96.09% $ 480.09
Breazeale WY Laramie 115 96.58% $ 255.35
Total Wyoming 1 115 96.58% $ 255.35

Totals 214 70,723 88.30% $ 331.00

(a) These properties are included in our active expansion portfolio.
(b) These properties are included in our greenfield development portfolio

13

The following table provides additonal information for our top five properties,
which together represent 13.8% of our total revenues for the year ended December
31, 2001. We do not have any current plans to dispose of any of these
communities.

* The note that is secured by the mortgage on this property bears interest at
a rate of 7.83% per annum and matures in 2010.

Our policy is generally to add expansion sites to the extent that market
conditions warrant. The cost of each site expansion varies depending on location
and market conditions and generally range from $15,000 to $18,000 per site. We
expect to fund the cost of our new site expansions for these properties out of
our cash generated from operations, or borrowing from our line of credit.

Indebtedness

The following table sets forth certain information relating to secured and
unsecured indebtness outstanding as of December 31, 2001.

Weighted
Average
Amount of Percent of Effective Maturity
(In thousands) Indebtedness Total Debt Interest Rate Date
----------------- ------------ ----------------- -------------

Fixed Rate Debt:

Mortgage Debt:

FNMA Mortgage (5 properties) $ 114,929 10.9% 7.8% 2010
Northwestern (9 properties) 73,496 7.0% 7.2% 2009-2010
Other (22 properties) 97,225 9.2% 7.6% 2002-2011
----------------- ------------ -----------------

Total Mortgages 285,650 27.1% 7.6%

Unsecured Debt:

Unsecured Senior Notes 20,000 2.0% 7.5% 2003
Unsecured Senior Notes 50,000 4.7% 8.3% 2021
Unsecured Senior Notes 50,000 4.7% 8.0% 2003
Unsecured Senior Notes 100,000 9.5% 6.4% 2004
Unsecured Senior Notes 100,000 9.5% 8.3% 2005
Unsecured Senior Notes 150,000 14.2% 7.1% 2011
---------------- ------------ -----------------

Total Unsecured 470,000 44.6% 7.5%
---------------- ------------ -----------------

Unsecured Installment Notes 9,942 0.9% 7.5% 2012
---------------- ------------ -----------------

Total Fixed Rate 765,592 72.6% 7.6%

Variable Rate Debt:

Acquisition Facility 162,700 15.5% 3.6% 2002
Credit Facilities 125,144 11.9% 3.0% 2002-2004
---------------- -------------

Total Fixed and Variable $ 1,053,436 100.0%
================ =============

In August 2001, we entered into a forward interest rate swap agreement to hedge
the interest rate risk associated with the anticipated issuance of $150 million
of fixed rate senior notes. The bonds were issued in October 2001. We entered
into the swap to hedge movements in interest rates between the trade date on the
swap and the date the bonds were issued.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the Company's security holders during the
last quarter of its fiscal year ended December 31, 2001.

14

PART II

Item 5. Market for Registrant's Common Equity and Related Security Holder
Matters

Our Common Stock is traded on the New York Stock Exchange ("NYSE") under the
symbol CPJ. The following table sets forth, for the quarterly periods shown, the
high and low sales price per share as reported on the NYSE for the years ended
December 31, 2000 and 2001.

Cash
Price Range Dividend
-------------------------------
Quarter Ended High Low Declared
- ------------------------------------- ------------ ---------------- ----------------

March 31, 2000 $27-5/16 $23-1/4 $ 0.515
June 30, 2000 $28-3/8 $24-5/16 $ 0.515
September 30, 2000 $28-7/8 $26 $ 0.515
December 31, 2000 $31-5/8 $26-1/2 $ 0.515

March 31, 2001 $31.60 $29.19 $ 0.545
June 30, 2001 $31.75 $29.90 $ 0.545
September 30, 2001 $31.75 $28.90 $ 0.545
December 31, 2001 $31.70 $28.95 $ 0.545

Distributions by us, to the extent of our current and accumulated earnings and
profits for Federal income tax purposes, will be taxable to stockholders as
dividend income. Distributions in excess of earnings and profits generally will
be treated as a non-taxable reduction of the shareholder's basis in the common
stock to the extent thereof, with the remainder as taxable gain.

At March 15, 2002 there were approximately 600 holders of record and
approximately 12,500 beneficial owners of our common stock.

15

Item 6. Selected Financial Data

The following table sets forth selected financial data and other data concerning
Chateau Communities for each of the last five years.

For the Year Ended December 31,
(In thousands, except per share data) 2001(1) 2000 1999 1998 1997
-------------------------------------------------------------------------

Operating Data:
Revenues
Rental income $ 224,431 $ 186,963 $ 177,789 $ 167,206 $ 134,801
Management fee, interest and other income 15,089 17,802 11,574 5,924 3,368
------------ --------------- ---------- ------------ -----------
Total revenues 239,520 204,765 189,363 173,130 138,169
Expenses
Property operating and administrative 96,362 75,723 73,062 67,699 56,053
Depreciation and amortization 57,919 43,920 41,826 39,658 31,510
Interest and related amortization 47,618 36,400 32,318 31,287 25,918
------------ ------------ ---------- ------------ -----------
Total expenses 201,899 156,043 147,206 138,644 113,481
------------ ------------ ---------- ------------ -----------
Income before impairment/net gain on sales
of properties and minority interests 37,621 48,722 42,157 34,486 24,688
Impairment/net gain on sales of properties (1,503 - 2,805 - -
------------ ------------ ---------- ------------ -----------
Income before minority interests 36,118 48,722 44,962 34,486 24,688
Less income allocated to minority interests
Preferred OP Units 6,094 6,094 6,094 4,249 -
Common OP Units 3,768 4,842 4,242 3,436 2,986
------------ ------------ ---------- ------------ -----------
Net income available to common shareholders $ 26,256 $ 37,786 $ 34,626 $ 26,801 $ 21,702
============ ============ ========== ============ ===========

Weighted average common shares outstanding 28,723 28,480 28,135 27,282 23,688
Weighted average common shares
and OP Units outstanding 33,346 32,130 31,582 30,779 26,947

Earnings per Common Share/OP Unit Data:
Net income - basic $ 0.90 $ 1.33 1.23 $ 0.98 $ 0.92
Net income - diluted $ 0.90 $ 1.32 1.23 $ 0.97 $ 0.91
Dividends/distributions declared $ 2.18 $ 2.06 1.94 $ 1.82 $ 1.72
Tax status of dividends, return of capital
portion $ 0.91 $ 0.64 0.60 $ 0.69 $ 0.62

Cash Flow Data:
Net cash provided by operating activities $ 88,898 $ 84,961 77,464 $ 72,560 $ 54,545
Net cash used in investing activities $ (371,048) $ (73,123) (56,777) $ (167,089) $ (61,309)
Net cash provided by (used in) financing
activities $ 282,112 $ (12,087) (20,789) $ 80,069 $ 21,088

Balance Sheet Data:
Rental property, before accumulated
depreciation $ 1,686,674 $ 1,132,493 $1,055,450 $ 1,026,509 $ 836,175
Rental property, net of accumulated
depreciation $ 1,401,465 $ 896,253 $ 863,435 $ 875,249 $ 723,861
Total assets $ 1,591,873 $ 1,017,864 $ 981,673 $ 959,194 $ 782,738
Total debt $ 1,053,436 $ 531,629 $ 452,556 $ 427,778 $ 387,015
Minority interests in Operating Partnership $ 144,919 $ 116,863 $ 121,142 $ 120,475 $ 35,272
Shareholders' equity $ 344,954 $ 335,912 $ 361,820 $ 367,935 $ 322,966

Other Data:
Total properties (at end of period) 217 166 165 165 131
Total sites (at end of period) (2) 70,723 52,347 51,659 51,101 43,800
Occupied sites (at end of period) 62,478 47,678 47,383 47,192 40,286
Weighted average occupied sites 54,333 47,466 47,181 45,882 38,053
Funds from operations (3) $ 88,331 $ 85,917 $ 77,629 $ 69,392 $ 55,962

(1) In August 2001, we purchased CWS for $552 million.
(2) Does not include park model/RV sites.
(3) Funds from operations ("FFO") is defined by the National Association of
Real Estate Investment Trusts ("NAREIT") as consolidated net income without
giving effect

16

to gains (or losses) from debt restructuring and sales of property and
rental property depreciation and amortization. Management believes that FFO
is an important and widely used measure of the operating performance of
REITs, which provides a relevant basis for comparison among REITs. FFO (i)
does not represent cash flow from operations as defined by generally
accepted accounting principles; (ii) should not be considered as an
alternative to net income as a measure of operating performance or to cash
flows from operating, investing and financing activities; (iii) is not an
alternative to cash flows as a measure of liquidity; and (iv) may not be
comparable to similarly titled measures reported by other companies. FFO is
calculated as follows:

For the Year Ended December 31,
(In thousands) 2001 2000 1999 1998 1997
--------- -------- -------- -------- --------

Income before minority interests $ 36,118 48,722 44,962 34,486 24,688

Less:
Income allocated to Preferred OP Units 6,094 6,094 6,094 4,249 -

Plus: 56,804 43,289 41,161 38,962 30,867
Depreciation of rental property

Amortization of intangibles - - 405 446 407

Impairment / (gain) on sales of properties 1,503 - (2,805) (253) -
--------- -------- -------- -------- --------
Funds from operations $ 88,331 $ 85,917 $ 77,629 $ 69,392 $ 55,962
========= ======== ========= ======== ========

NAREIT has revised its definition of FFO. We adopted the new definition
effective January 1, 2000. The new definition of FFO substantially eliminates
the add-back of non-recurring items in the calculation of FFO. The application
of this new definition decreased FFO in 1998 by $375,000, and had no effect on
any other years reported.

17

Item 7. Management Discussion and Analysis of Financial Condition and Results
- ------ ---------------------------------------------------------------------
of Operations
-------------

The following discussion should be read in conjunction with the consolidated
financial statements and Notes thereto included elsewhere in this Annual Report.
Certain statements in this discussion constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements may involve our plans, objectives and
expectations, which are dependent upon a number of factors, including site
expansions, development, acquisitions, dispositions and other new business
initiatives which are all subject to a number of contingency factors such as the
effects of national and local economic conditions, changes in interest rates,
supply and demand for affordable housing and the condition of the capital
markets that may prevent us from achieving our objectives.

Overview

We added 19,622 manufactured home sites to our portfolio over the three-year
period ended December 31, 2001. This includes acquisitions and dispositions of
manufactured home communities, as well as our development activity. At the end
of this period, our portfolio comprised 217 manufactured home communities
containing 70,723 manufactured homesites and 1,359 park model/RV sites, located
in 33 states.

We also provide property management and advisory services to N'Tandem Trust
("N'Tandem"). N'Tandem owns 36 communities with an aggregate of 7,882 homesites.
We own approximately ten percent of N'Tandem's outstanding equity and have made
loans and advances to N'Tandem.

We conduct substantially all of our activities through CP Limited Partnership
(the "Operating Partnership") in which we owned a combined 83 percent general
partner interest as of December 31, 2001. In addition, effective January 1,
2001, we consolidated six development joint ventures that we control. The
effects of consolidation were not material to our financial position or results
of our operations.

We also conduct manufactured home sales and brokerage activities through our
taxable subsidiary Community Sales, Inc. ("CSI").

Company growth since the beginning of 1999 can be attributed to community
acquisitions, increased operating performance at existing communities, community
expansions, and new community development, offset somewhat by property
dispositions. On August 1, 2001, we purchased CWS Communities Trust ("CWS"), a
private real estate investment trust for approximately $552 million. The
portfolio consisted of 46 manufactured home communities with approximately
16,600 homesites and approximately 1,500 expansion sites and three RV
communities with 431 RV sites in 11 states. This transaction extended our
leading position in the manufactured housing community sector, making us
substantially larger than our next largest REIT competitor in that sector.

Since our organization, we have elected to qualify as a REIT under the Internal
Revenue Code and thus do not generally pay Federal corporate income taxes on
earnings to the extent that such earnings are distributed to shareholders in
accordance with REIT requirements.

Historical Results of Operations

Comparison of the year ended December 31, 2001 to the year ended December 31,
2000

The following table summarizes certain information relative to our properties,
as of and for the years ended December 31, 2001 and 2000. We consider all
communities owned by us at both January 1, 2000 and December 31, 2001, as the
"Core 2000 Portfolio".

18

Core 2000 Portfolio Total
Dollars in thousands, except per site 2001 2000 2001 2000
--------- ----------- ----------- ------------

As of December 31,
- --------------------------------
Number of communities 160 160 217 166
Total manufactured homesites 52,078 51,570 70,723 52,347
Occupied sites 46,455 47,114 62,478 47,678
Occupancy % 89.2% 91.4% 88.3% 91.1%

For the year ended, December 31,
- --------------------------------
Rental income $ 192,234 $ 185,026 $ 224,431 $ 186,963
Property operating expenses $ 73,066 $ 65,417 $ 86,481 $ 65,845
Net operating income $ 119,168 $ 119,609 $ 137,950 $ 121,118
Weighted average monthly rent per site $ 331 $ 316 $ 331 $ 316

For the year ended December 31, 2001, income before minority interests was
$36,118,000, a decrease of $12,604,000 from the year ended December 31, 2000.
The decrease was due primarily to increased depreciation due to the acquisition
of CWS. Rental revenue for the year ended December 31, 2001 was $224,431,000, an
increase of $37,468,000 from 2000. Approximately 81 percent of the increase was
due to acquisitions, net of dispositions, and 19 percent was due to rental
increases in our Core 2000 Portfolio.

As of December 31, 2001, occupancy in our stabilized portfolio, was 92.5
percent. The active expansion portfolio had occupancy of 79.5 percent, while our
greenfield development portfolio had occupancy of 30.8 percent, for a total
occupancy of 88.3 percent. On a per-site basis, weighted monthly rental revenue
for the year ended December 31, 2001 was $331 compared with $316 for the same
period in 2000, an increase of 4.6 percent.

Management fee and other income primarily include management fee and transaction
fee income for the management of 38 manufactured home communities and equity
earnings from CSI.

Property operating and maintenance expense for the year ended December 31, 2001
increased by $18,360,000 or 35.0 percent from the prior year. The majority of
the increase was due to the acquisition of CWS, along with increased bad debt
and collection costs of approximately $5,300,000 and operating expense increases
in our Core 2000 Portfolio. The increase in bad debt expense was due to economic
conditions as well as the implementation of our enterprise-wide technology
solution. In many of our market areas the economic conditions have created a
more difficult than normal collections environment, which has significantly
impacted the cost of collections, as well the overall ability to collect past
due amounts. In addition, difficulties encountered related to the implementation
and utilization of our enterprise-wide technology solution, which was initiated
in the last quarter of 2000, was also a factor in the unusually high expense
recognized in 2001.

The majority of problems were isolated to less than 10 percent of our
communities, and we are working diligently to bring the collections performance
of these locations in line with the rest of the portfolio. Although we believe
that these issues have been substantially resolved, we will continue to monitor
the collections performance of each community as well as to improve operational
processes to ensure timely billing and collection of delinquent accounts.

Real estate taxes for the year ended December 31, 2001 increased by $2,276,000
or 17.0 percent from the year ended December 31, 2000. The increase is due
primarily to acquisitions, expansion of communities, and increases in property
tax rates. On a per site basis, monthly weighted average real estate taxes were
$24.10 in 2001 compared to $23.57 in 2000. Real estate taxes may increase or
decrease due to inflation, expansion and improvement of communities, as well as
changes in taxation in the tax jurisdictions in which we operate.

19

Administrative expense in 2001 was 4.1 percent of total revenues as compared to
4.8 percent in 2000.

Interest and related amortization costs increased for the year ended December
31, 2001 by $11,218,000, as compared with the year ended December 31, 2000. The
increase is attributed primarily to the indebtedness incurred to finance
acquisitions and lending activities. Interest expense as a percentage of average
debt outstanding decreased to approximately 6.8 percent in 2001 from 7.3 percent
in 2000, due to lower interest rates, and greater amounts of variable rate debt.

Depreciation expense for the year ended December 31, 2001 increased $13,999,000
from the same period a year ago. The increase is directly attributed to
acquisitions, expansions, and additions of rental property. Depreciation expense
as a percentage of average depreciable rental property in 2001 remained
relatively unchanged from 2000.

Comparison of the year ended December 31, 2000 to the year ended December 31,
1999

The following table summarizes certain information relative to our properties,
as of and for the years ended December 31, 2000 and 1999. We consider all
communities owned by us at both January 1, 1999 and December 31, 2000 as the
"Core 1999 Portfolio".

Core 1999 Portfolio Total
Dollars in thousands, except per site 2000 1999 2000 1999
-------- ---------- --------- ------------

As of December 31,
- -----------------
Number of Communities 161 161 166 165
Total manufactured homesites 51,325 51,042 52,347 51,659
Occupied sites 46,912 46,847 47,678 47,383
Occupancy % 91.4% 91.8% 91.1% 91.7%

For the year ended, December 31,
- --------------------------------
Rental income $ 184,438 $ 176,872 $ 186,963 $ 177,789
Property operating expenses $ 64,557 $ 62,770 $ 65,845 $ 63,181
Net operating income $ 119,881 $ 114,102 $ 121,118 $ 114,608
Weighted average monthly rent per site $ 316 $ 302 $ 316 $ 302

For the year ended December 31, 2000, income before minority interests was
$48,722,000, an increase of $3,760,000 from the year ended December 31, 1999.
The increase was due primarily to increased net operating income from the Core
1999 Portfolio and acquisitions. The increase in net operating income from our
Core 1999 Portfolio was due to increased occupancy and rental increases
partially offset by general operating expense increases. Rental revenue for the
year ended December 31, 2000 was $186,963,000, an increase of $9,174,000 from
1999. Approximately 17 percent of the increase was due to acquisitions, net of
dispositions, and 83 percent was due to rental increases and occupancy gains in
our Core 1999 Portfolio.

Weighted average occupancy for the year ended December 31, 2000 was 47,466 sites
compared with 47,181 sites for the same period in 1999. The occupancy rate for
the total portfolio was 91.1 percent on 52,347 sites as of December 31, 2000,
compared to 91.7 percent on 51,659 sites as of December 31, 1999. The occupancy
rate on the stabilized portfolio (communities where we do not have or have not
recently had, expansion of the community) was 94.7 percent as of December 31,
2000. We also added 275 available sites to our portfolio through expansion of
our communities. On a per-site basis, weighted monthly rental revenue for the
year ended December 31, 2000 was $316 compared with $302 for the same period in
1999.

Management fee and other income primarily includes management fee and
transaction fee income for the management of 44 manufactured home communities
and equity earnings from CSI.

20

Included in interest income and management fee and other income is approximately
$3.2 million of interest and related fees, from N'Tandem.

Property operating and maintenance expense for the year ended December 31, 2000
increased by $1,913,000 or 3.8 percent from the prior year. The majority of the
increase was due to operating expense increases in our Core 1999 Portfolio, and
to a lesser extent, acquisitions. On a per site basis, monthly weighted average
property operating and maintenance expense increased to $91.03 per site, or 2.0
percent.

Real estate taxes for the year ended December 31, 2000 increased by $751,000 or
5.9 percent from the year ended December 31, 1999. The increase is due primarily
to acquisitions, expansions of communities, and increases in property tax rates.
On a per site basis, monthly weighted average real estate taxes were $23.57 in
2000 compared to $22.39 in 1999, an increase of 5.3 percent. Real estate taxes
may increase or decrease due to inflation, expansions and improvements of
communities, as well as changes in taxation in the tax jurisdictions in which we
operate.

Administrative expense in 2000 was 4.8 percent of total revenues as compared to
5.2 percent in 1999.

Interest and related amortization costs increased for the year ended December
31, 2000 by $4,082,000, as compared with the year ended December 31, 1999. The
increase is attributed primarily to the indebtedness incurred to finance
acquisitions and lending activities. Interest expense as a percentage of average
debt outstanding decreased to approximately 7.3 percent in 2000 from 7.4 percent
in 1999.

Depreciation expense for the year ended December 31, 2000 increased $2,094,000
from the same period a year ago. The increase is directly attributed to
acquisitions, expansions, and additions. Depreciation expense as a percentage of
average depreciable rental property in 2000 remained relatively unchanged from
1999.

Liquidity and Capital Resources

Net cash provided by operating activities was $88.9 million for the year ended
December 31, 2001, compared to $85.0 million for the same period in 2000. The
increase in cash provided by operating activities was due primarily to increases
in net operating income, offset by the changes in operating assets and
liabilities.

Net cash used in investing activities for the year ended December 31, 2001 was
$371.1 million. In 2001, we purchased CWS Communities Trust ("CWS"), a private
real estate investment trust for a net amount of approximately $320 million and
three additional communities for $22.2 million in cash. We also sold seven
properties and received net proceeds of $36.7 million in the latter part of
2001. Total investments in development, expansion, and property and equipment
were $40.9 million in 2001 and we advanced $12.1 million on our notes
receivables.

On August 3, 2001 we purchased CWS for $552 million, consisting of $323 million
borrowed under a bridge facility, $151 million in assumed liabilities, 2,040,878
OP Units (valued for purposes of the transaction at $30.935 per OP Unit) and
$9.9 million in 7.5% Senior Unsecured Notes due 2012 (the "August 2012 Notes").
The portfolio consisted of 46 manufactured home communities with approximately
16,600 homesites and approximately 1,500 expansion sites and three RV
communities with 431 RV sites in 11 states. We financed the cash portion of this
transaction primarily through borrowings of a $323 million bridge facility (the
"Acquisition Facility"), which carries an interest rate of LIBOR plus 150 basis
points, and matures August 2, 2002. In connection with this transaction, we
agreed to issue in a private placement to the holders of the August 2012 Notes,
an aggregate of 309,371 OP Units at $30.935 per OP Unit, in exchange for the
issuance by such holders of 7.5% notes, due August 2010, subject to extension in
certain events. These notes are collateralized by the related OP Units. We also
acquired three other communities in 2001 for approximately $10 million in OP
units and approximately $22 million in cash, which were financed primarily by
borrowings under our lines of credit.

21

During 2001, we invested approximately $26 million in the expansion and
development of our communities; resulting in the addition of approximately 350
available sites to our portfolio in 2002, and including finish costs on sites
added previously and substantial progress on sites that will be added to our
portfolio in 2002. For the year ended December 31, 2001, recurring property
capital expenditures, other than development costs, were approximately $7.2
million. Capital expenditures have historically been financed out of operating
cash flow and it is our intention that such future expenditures will also be
financed out of operating cash flow. In addition, during 2001, we advanced $12
million to non-affiliated entities that own or are developing manufactured home
communities.

Net cash provided by financing activities for the year ended December 31, 2001
was $282.1 million. This consisted primarily of the issuance of $150 million of
debt and net borrowings under our Credit Facilities and the Acquisition Facility
of $213.1 million. These were offset partially by $72.7 million in dividends and
distributions paid to shareholders and OP Unitholders.

On October 23, 2001, we issued $150 million of 7.125% Senior Unsecured Notes,
due 2011 in a private placement. Net proceeds of $148.3 million were used to
repay a portion of the outstanding indebtedness under the Acquisition Facility.
In connection with the private placement, we entered into a hedge of forecasted
interest payments. We recorded a hedge loss of approximately $7.1 million in
other comprehensive income and will amortize this into interest expense over the
life of the debt.

In October 2001, we extended $50 million of our $70 million 7.54% senior
unsecured notes scheduled to mature in November 2003 to October 2021 at 8.3%.

In addition to the Acquisition Facility, we have a $125 million line of credit
arrangement with BankOne, NA acting as lead agent for a bank group to provide
financing for future construction, acquisitions and general business obligations
(the "BankOne Credit Facility"). The line of credit is unsecured, bears interest
at the prime rate of interest or, at our option, LIBOR plus 90 basis points. The
line is scheduled to mature in 2004. In addition, we have a $7.5 million
unsecured line of credit from US Bank, which bears interest at a rate of LIBOR
plus 125 basis points and matures in March 2002, which is under discussion for
an extension, (the "US Bank Facility" and, together with the BankOne Credit
Facility the "Credit Facilities"). As of December 31, 2001, approximately $125.1
million was outstanding under our Credit Facilities and we had $7.4 million
available in additional borrowing capacity.

As of December 31, 2001, we had outstanding, in addition to the Credit
Facilities, $470.0 million of unsecured senior debt with a weighted average
interest rate and remaining maturity of 7.5 percent and 6.9 years, respectively,
$285.6 million of secured mortgage debt with a weighted average interest rate
and remaining maturity of 7.6 percent and 7.5 years, respectively, and $163
million on our Acquisition Facility with an interest rate of 3.6 percent. As of
December 31, 2001, we had approximately $1.1 billion of total debt outstanding,
representing approximately 48.4 percent of our total market capitalization. All
of the debt is fixed rate debt, other than our Credit Facilities and Acquisition
Facility. The fixed rate debt carries a weighted average interest rate of 7.5
percent.

In the third quarter of 2001, we began implementing a disposition plan,
identifying a number of properties that do not fit strategically with our
overall investment portfolio, due to location, proximity to other properties,
alternative investment opportunities or other factors. As of December 31, 2001,
we had sold seven properties for approximately $42 million. The net proceeds
from these sales, of approximately $37 million were used primarily to pay down
the Acquisition Facility. Due to the timing of these sales, approximately $11
million was received in January of 2002. Since December 31, 2001, we have sold
an additional three properties for approximately $6.2 million. The net proceeds
were used to pay down the Acquisition Facility. As of March 15, 2002, we had
$145.8 million outstanding under the Acquisition Facility and $22.4 million
available under our Credit Facilities. We will continue to evaluate our
properties and, depending on market conditions, expect to sell additional
communities in 2002.

22

We expect to re-pay the balance of the Acquisition Facility, which matures in
August of 2002, depending on current market conditions and capital availability
factors, with proceeds from the disposition of properties, and the issuance of
additional debt or equity securities.

Our principal long term liquidity needs include: repayment of long-term
borrowings and amounts outstanding under the Credit Facilities and the
Acquisition Facility, future acquisitions of communities and land for
development, and new and existing community development activities. We do not
expect to generate sufficient funds from operations to finance these long-term
liquidity needs and instead intend to meet our long-term liquidity requirements
through additional borrowing under the Credit Facilities or other lines of
credit, the assumption of existing secured or unsecured indebtedness and,
depending on market conditions and capital availability factors, the issuance of
additional equity or debt securities.

We expect to meet our short-term liquidity requirements, including expansion
activities and capital expenditure requirements, through cash flow from
operations and, if necessary, and depending on our operating performance,
borrowings under the Credit Facilities and other lines of credit.

The following is a summary of our aggregate commitments, in millions, as of
December 31, 2001:

Payments Due by Period
-----------------------------------------------------------------------------
Contractual Less than 1
Obligations Total year 1 - 3 years 4 - 5 years After 5 years
- ---------------------------------------------------------------------------------------------------

Fixed Rate Debt $766 $ 6 $190 $121 $449
Variable Rate Debt 288 167 121 - -

Amount of Commitment Expiration Per Period
----------------------------------------------------------------
Total
Other Commercial Amounts Less than 1
Commitments Committed year 1 - 3 years 4 - 5 years After 5 years
- ---------------------------------------------------------------------------------------------------

Lines of Credit $132.5 $7.5 $125 - -
Guarantees 48.4 (1) (1) (1) (1)

(1) These guarantees expire at various times.

The financing arrangements contain customary covenants, including a debt service
coverage ratio and a restriction on the incurrence of additional collateralized
indebtedness without a corresponding increase in rental property. We were out of
compliance on one of our covenants as of December 31, 2001 associated with both
our BankOne Credit Facility and the Acquisition Facility. Also, in February
2002, we were out of compliance on another of our covenants under both
agreements that limit the amount of variable rate debt outstanding. In February
2002, we received waivers from the lenders and amended the agreements to change
the covenant for the remaining term of the Acquisition Facility and until March
2003 for the Credit Facility.

In March 2002, Moody's Investor Service lowered our debt rating to Baa3 from
Baa2. The reason for the change was due to a weaker capital structure and
coverage ratios since completing the CWS acquisition. Standard and Poors has not
changed its rating of BBB. In the event that our debt rating is lowered again,
it may have an impact on the cost of our debt.

We currently own approximately 10 percent of N'Tandem's outstanding stock and
account for our investment utilizing the equity method of accounting. We also
recognize income from a property management agreement, an advisory agreement,
overhead reimbursements and interest income on advances as earned. The amount of
fee income and interest income earned is outlined in the table below.

23

2001 2000 1999
--------- --------- ---------
Interest income and related fees $ 3,345 $ 3,165 $ 1,914
Transaction fees 522 2,530 1,055
Advisory fees 1,335 777 346
Management and overhead fees 1,935 1,303 1,217
------ --------- ---------
$ 7,137 $ 7,775 $ 4,532
====== ========= =========

Interest is earned on the loan to N'Tandem (Prime plus one percent, or 5.75
percent at December 31, 2001) and includes fees paid by N'Tandem for the
subordination of our loan to the N'Tandem bank debt ($730,000 in both 2001 and
2000). The transaction fees are related to acquisition services provided by us
to N'Tandem and are calculated as three percent of the acquisition price. The
advisory fees are charged based on one percent of N'Tandem's average assets. The
management fees are charged based on five percent of revenues of properties
managed by us on behalf of N'Tandem. Overhead reimbursement fees are based on a
fixed fee per site. We expect to receive modest increases on the recurring fees
due to increases in expected revenues and sites. However, as the non-recurring
fees are subject to the completion of a transaction, these are difficult to
predict.

N'Tandem currently has net losses of approximately $8 million for the year ended
December 31, 2001 and also has experienced negative cash flows from operations.
We serve as a guarantor on N'Tandem's $20 million line of credit. We do not have
any agreements to fund future operating losses of N'Tandem, however our ability
to recover our fees charged to N'Tandem and our loans and advances to N'Tandem
is dependent on the ultimate sale of the N'Tandem properties. N'Tandem will
likely continue to generate negative cash flow from operations in the near term.
We believe that based on current market conditions the loans and advances to
N'Tandem, which totaled approximately $33 million at December 31, 2001, will be
recovered from the ultimate sale of the properties.

The following table summarizes certain financial information for N'Tandem for
the years ending December 31, 2001 and 2000.

2001 2000
-------------------------

Total revenues $ 23,066 $ 10,487
Operating and administrative expenses 14,103 5,986
Interest expense 11,744 7,287
Depreciation expense 5,555 2,623
Preferred dividends 110 110
-------------------------
Net loss $ (8,446) $ (5,519)
-------------------------

Rental property $ 128,941 $ 127,291
Total assets $ 134,009 $ 132,678
Amounts due to the Company $ 33,348 $ 32,120
Other debt $ 109,675 $ 102,216
Shareholders' deficit $ (27,892) $ (10,474)

24

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with generally
accepted accounting principles, which requires us to make certain estimates and
assumptions. A summary of our significant accounting policies is provided in
Note 2 to our consolidated financial statements. The following section is a
summary of certain aspects of those accounting policies that both require our
most difficult, subjective or complex judgments and are most important to the
portrayal of our financial condition and results of operations. We believe that
there is a low probability that the use of different estimates or assumptions in
making these judgments would result in materially different amounts being
reported on our consolidated financial statements.

. When we acquire real estate properties, we allocate the components of
these acquisitions using relative fair values computed using our
estimates and assumptions. These estimates and assumptions impact the
amount of costs allocated between land and different categories of
land improvements as well as the amount of costs assigned to
individual properties in multiple property acquisitions. These
allocations also impact depreciation expense and gains or losses
recorded on future sales of properties.

. We recognize an impairment loss on a real estate asset to be held and
used in operations if the asset's undiscounted expected future cash
flows are less than its depreciated cost. We compute a real estate
assets undiscounted expected future cash flow using certain estimates
and assumptions.

. We use two different accounting methods to report our investments in
entities: the consolidation method and the equity method. We use the
consolidation method when we own most of the outstanding voting
interests in an entity and/or can control its operations. We use the
equity method of accounting when we own an interest in an entity and
can exert significant influence over the entity's operations but
cannot control the entity's operations. We review these investments
regularly for possible impairment using certain estimates and
assumptions regarding undiscounted expected future cash flows. We also
review these investments regularly for proper accounting treatment.
However, a key factor in this review, the determination of whether or
not we can control or exert significant influence over an entity's
operations, is subjective in nature.

. We report receivables net of an allowance for receivables that may be
uncollectible in the future. We review our receivables regularly for
potential collection problems in computing the allowance recorded
against our receivables; this review process requires we make certain
judgments regarding collections that are inherently difficult to
predict.

. Collectibility of advances to N'Tandem and other Notes Receivable is
based on the determination of the fair market value of the properties
and the related net proceeds from the ultimate liquidation of the
properties.

Inflation

All of the leases or terms of tenants' occupancies at the communities allow for
at least annual rental adjustments. In addition, all leases are short-term
(generally one year or less) and enable us to seek market rentals upon reletting
the sites. Such leases generally minimize the risk to us of any adverse effect
of inflation.

25

Recently Issued Accounting Standards

In June 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires all business
combinations to be accounted for by the purchase method and defines criteria
under which intangible assets acquired in connection with a business combination
be recognized as assets apart from goodwill. SFAS No. 141 is effective for all
fiscal business combinations initiated after June 30, 2001. SFAS No. 142 changes
the useful life of goodwill recorded on a company's books from 40 years to
indefinite and requires goodwill to be reviewed annually for impairment. SFAS
No. 142 is effective for all fiscal years beginning after December 15, 2001.
Adoption of SFAS No. 141 and No. 142 did not have and is not expected to have a
significant impact on the Company's financial position or results of operations.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment on
Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and provides
guidance for measuring the amount of impairment. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001. As individual properties to be
sold qualify as components of an entity, properties classified as held for sale
or sold in a reporting period will be treated as discontinued operations for
reporting purposes. The statement of income will reflect the properties' results
of operations, including any gains or losses recognized, as a separate component
in the income statement.

Other

Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as consolidated net income without giving
effect to gains (or losses) from debt restructuring and sales of property and
rental property depreciation and amortization. Management believes that FFO is
an important and widely used measure of the operating performance of REITs,
which provides a relevant basis for comparison among REITs. FFO (i) does not
represent cash flow from operations as defined by generally accepted accounting
principles; (ii) should not be considered as an alternative to net income as a
measure of operating performance or to cash flows from operating, investing and
financing activities; (iii) is not an alternative to cash flows as a measure of
liquidity; and (iv) may not be comparable to similarly titled measures reported
by other companies. FFO is calculated as follows:

For the Year Ended December 31,
(In thousands) 2001 2000 1999
--------- --------- ----------

Income before minority interests $ 36,118 $ 48,722 $ 44,962
Less:
Income allocated to Preferred OP Units 6,094 6,094 6,094
Plus:
Depreciation of rental property 56,804 43,289 41,161
Amortization of intangibles - - 405
Impairment / (gain) on sales of properties 1,503 - (2,805)
--------- --------- ----------
Funds from operations $ 88,331 $ 85,917 $ 77,629
========= ========= ==========

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- ------- ----------------------------------------------------------

Our primary market risk exposure is interest rate risk. Management has and will
continue to manage interest rate risk by (1) maintaining a conservative ratio of
fixed-rate, long-term debt to total debt such that variable rate exposure is
kept at an acceptable level and (2) taking advantage of favorable market
conditions for long-term debt and/or equity. As of December 31, 2001, our Credit
and Acquisition Facilities represented our only variable rate debt.

26

The following table sets forth information as of December 31, 2001, concerning
our debt obligations, including principal cash flows by scheduled maturity,
weighted average interest rates and estimated fair value ("FV"):

For the Year Ended December 31,
2002 2003 2004 2005 2006 Thereafter Total FV

Debt obligations
Fixed rate 5,617 76,177 113,894 109,615 11,644 448,645 $ 765,592 788,914
Average interest rate 7.7% 7.8% 7.1% 8.5% 8.1% 7.5%
Variable rate 166,844 121,000 $ 287,844 287,844
Average interest rate 3.4% 3.0%
Total debt 172,461 76,177 234,894 109,615 11,644 448,645 1,053,436 1,076,758

We face market risk relating to our fixed-rate debt upon re-financing of such
debt and depending upon prevailing interest rates at the time of such
re-finance. As a result of our successful re-financing and extension of our
fixed-rate debt, as illustrated in the above chart, we will not need to
re-finance any of our fixed-rate debt until 2003. Our Acquisition Facility
matures in August of 2002. We expect to re-pay the balance, depending on current
market conditions and capital availability factors, with proceeds from the
disposition of properties, a bank term loan, or the issuance of additional debt
or equity securities.

In addition, we have assessed the market risk for our variable rate debt and
believe that a 1% increase in LIBOR rates would result in an approximate $2.9
million increase in interest expense based on $287.8 million of variable rate
debt outstanding at December 31, 2001.

The fair value of our long-term debt is estimated based on discounted cash flows
at interest rates that management believes reflect the risks associated with
long term debt of similar risk and duration.

27

Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------

Report of Independent Accountants

To the Shareholders and Board of Directors of Chateau Communities, Inc.:

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) and (2) present fairly, in all material respects,
the financial position of Chateau Communities, Inc. (the "Company") at December
31, 2001 and 2000, and the results of its operations and its cash flows for the
three years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and the
financial statement schedule are the responsibility of Company management; our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

Denver, Colorado
February 27, 2002

28

CHATEAU COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

For the Year Ended December 31,
-----------------------------------------
In thousands, except per share data
2001 2000 1999
----------- ------------ -----------

Revenues
Rental income $224,431 $ 186,963 $ 177,789
Interest income 10,084 10,794 6,796
Management fee and other income 5,005 7,008 4,778
-------- --------- ---------
239,520 204,765 189,363
Expenses
Property operating and maintenance 70,779 52,419 50,506
Real estate taxes 15,702 13,426 12,675
Depreciation and amortization 57,919 43,920 41,826
Administrative 9,881 9,878 9,881
Interest and related amortization 47,618 36,400 32,318
-------- --------- ---------
201,899 156,043 147,206
-------- --------- ---------

Income before impairment/net gain on sales of properties 37,621 48,722 42,157
Impairment / net gain on sales of properties (1,503) - 2,805
-------- --------- ---------

Income before minority interests 36,118 48,722 44,962
Less income allocated to minority interests:
Preferred OP Units 6,094 6,094 6,094
Common OP Units 3,768 4,842 4,242
-------- --------- ---------
Net income available to common shareholders $ 26,256 $ 37,786 $ 34,626
======== ========= =========

Per share/OP Unit information

Basic earnings per common share $ 0.90 $ 1.33 $ 1.23
======== ========= =========

Diluted earnings per common share $ 0.90 $ 1.32 $ 1.23
======== ========= =========

The accompanying notes are an integral part of financial statements.

29

CHATEAU COMMUNITIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands) December 31,
-----------------------------
Assets 2001 2000
------------- ------------

Rental property:
Land $ 205,416 $ 139,565
Land and improvements for expansion sites 112,821 51,043
Manufactured home community improvements 1,212,195 851,325
Community buildings 116,677 57,152
Furniture and other equipment 39,565 33,408
------------- ------------
Total rental property 1,686,674 1,132,493

Less accumulated depreciation 285,209 236,240
------------- ------------

Net rental property 1,401,465 896,253

Rental properties held for sale 6,626 -
Cash and cash equivalents 61 99
Rents and other receivables, net 17,591 7,107
Notes receivable 45,514 24,539
Investments in and advances to affiliates 108,674 79,272
Prepaid expenses and other assets 11,942 10,594
------------- ------------

Total assets $ 1,591,873 $ 1,017,864
============= ============

Liabilities
Debt $ 1,053,436 $ 531,629
Accrued interest payable 10,668 6,953
Accounts payable and accrued expenses 24,387 17,926
Rents received in advance and security deposits 12,749 7,816
Dividends and distributions payable 760 765
------------- ------------

Total liabilities 1,102,000 565,089

Minority interests in Operating Partnership 144,919 116,863

Commitments and contingencies (Note 13) - -

Shareholders' Equity
Preferred stock, $.01 par value, 2 million shares authorized;
no shares issued or outstanding - -
Common stock, $.01 par value, 90 million shares authorized
29,188,440 and 28,531,675 shares issued and outstanding
at December 31, 2001 and 2000, respectively 292 285
Additional paid-in capital 499,068 445,905
Dividends in excess of accumulated earnings (134,158) (97,605)
Accumulated other comprehensive income (6,516) -
Notes receivable from officers, 577,432 shares
outstanding at December 31, 2001 and 2000 (13,732) (12,673)
------------- ------------

Total shareholders' equity 344,954 335,912
------------- ------------

Total liabilities and shareholders' equity $ 1,591,873 $ 1,017,864
============= ============

The accompanying notes are an integral part of financial statements.

30

CHATEAU COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

For the Year Ended December 31,
---------------------------------------
In thousands, except per share data 2001 2000 1999
---------- ---------- ----------

Common stock:
Balance at beginning of period $ 285 $ 284 $ 279
Issuance of shares from awards, exercise of
options and sales to key employees 2 4 1
Issuance of shares in exchange for OP Units 5 1 4
Repurchase and retirement of shares - (4) -
---------- ---------- ----------
Balance at end of period $ 292 $ 285 $ 284
========== ========== ==========

Additional paid-in capital:
Balance at beginning of period $ 445,905 $ 446,231 $432,711
Issuance of shares from awards, exercise of options
and sales to key employees 3,443 8,607 3,394
Issuance of shares in exchange for OP Units 15,897 3,700 9,212
Repurchase and retirement of shares - (11,319) (61)
Transfer (to) from minority interests ownership in
Operating Partnership 33,823 (1,314) 975
---------- -------- ----------
Balance at end of period $ 499,068 $ 445,905 $ 446,231
========== ======== ==========

Dividends in excess of accumulated earnings:
Balance at beginning of period $ (97,605) $ (76,647) $ (56,637)
Net income available to common shareholders 26,256 37,786 34,626
Dividends declared $2.18, $2.06, and $1.94 per share (62,809) (58,744) (54,636)
---------- -------- ----------
Balance at end of period $(134,158) $ (97,605) $ (76,647)
========== ======== ==========

Accumulated other comprehensive income:
Balance at beginning of period $ - $ - $ -

Cumulative effect of adoption of SFAS 133 658 - -
Current year hedge loss (7,317) - -
Amortization of hedge loss and transition adjustment 143 - -
---------- ---------- ----------
Balance at end of period $ (6,516) $ - $ -
========== ========== ==========

Notes receivable, officers:
Balance at beginning of period $ (12,673) $ (8,048) $ (8,418)
Advances to key employees (1,088) - -
Issuance of 205,734 shares in 2000
through sales to key employees - (4,670) -
Payments received 29 45 370
---------- ---------- ----------
Balance at end of period $ (13,732) $ (12,673) $ (8,048)
========== ========== ==========

Total shareholders' equity, end of period $ 344,954 $ 335,912 $ 361,820
========== ========== ==========

The accompanying notes are an integral part of the financial statements.

31

CHATEAU COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended December 31,
-----------------------------------------
In thousands 2001 2000 1999
---------- --------- ----------

Cash flows from operating activities:
Net income available to common shareholders $ 26,256 $ 37,786 $ 34,626
Adjustments to reconcile net income to net cash provided
by operating activities:
Income attributed to minority interests 3,768 4,842 4,242
Bad debt expense 5,157 971 1,105
Impairment / net gain on sales of properties 1,503 - (2,805)
Depreciation and amortization 57,919 43,920 41,826
Amortization of debt issuance costs 1,053 605 730
Increase in operating assets (2,660) (2,270) (4,348)
Increase (decrease) in operating liabilities (4,098) (893) 2,088
---------- --------- ----------
Net cash provided by operating activities 88,898 84,961 77,464
---------- --------- ----------

Cash flows from investing activities:
Acquisitions of rental properties and land to be developed (22,167) (5,725) (13,259)
Dispositions of rental properties 25,981 - 13,108
Additions to rental properties and equipment (40,854) (29,378) (24,606)
Investments in and advances to affiliates (1,383) (21,966) (27,682)
Acquisition of CWS (320,486) - -
Advances on notes receivables, net (12,139) (16,054) (4,338)
---------- --------- ----------
Net cash used in investing activities (371,048) (73,123) (56,777)
---------- --------- ----------

Cash flows from financing activities:
Borrowings on lines of credit 489,512 304,099 119,130
Payments on lines of credit (276,398) (328,186) (58,549)
Principal payments on debt (2,738) (1,572) (1,176)
Proceeds from the issuance of debt 150,000 295,295 -
Payoff of debt - (190,838) (23,598)
Payment of debt issuance costs (1,377) (617) -
Settlement of hedge transaction (7,107) 1,500 -
Distributions to shareholders/OP Unitholders (72,703) (81,534) (60,244)
Common shares/OP Units repurchased and retired - (11,323) (76)
Exercise of common stock options and other 2,923 1,089 3,724
---------- --------- ----------
Net cash provided by (used in) financing activities 282,112 (12,087) (20,789)
---------- --------- ----------

Decrease in cash and cash equivalents (38) (249) (102)
Cash and cash equivalents, beginning of period 99 348 450
---------- --------- ----------
Cash and cash equivalents, end of period $ 61 $ 99 $ 348
========== ========= ==========

Supplemental information:
Cash paid for interest, net of amounts capitalized $ 42,811 $ 34,126 $ 30,626
========== ========= ==========
Fair market value of OP Units/shares issued for acquisitions/development $ 74,325 $ 754 $ 13,341
========== ========= ==========
Debt assumed in connection with acquisitions and development $ 171,748 $ 1,835 $ 650
========== ========= ==========
Notes payable issued in connection with acquisitions $ 9,942 $ - $ -
========== ========= ==========
Notes receivable issued in connection with acquisitions and dispositions $ 14,071 $ - $ -
========== ========= ==========
Note receivable used for consideration in acquisition $ 7,140 $ - $ -
========== ========= ==========

The accompanying notes are an integral part of the financial statements.

32

Chateau Communities, Inc

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

1. Organization and Formation of Company:
-------------------------------------

Chateau Communities, Inc. (the "Company"), a real estate investment trust, was
formed in August 1993 as Chateau Properties, Inc.

The Company considers itself to be engaged in only one industry segment. The
Company is engaged in the business of owning and operating manufactured housing
community properties primarily through CP Limited Partnership (the "Operating
Partnership"). As of December 31, 2001, the Company owned 217 properties
containing an aggregate of 70,723 homesites and 1,359 park model/RV sites,
located in 33 states. Approximately 28 percent of these homesites were in
Florida, 24 percent were in Michigan, and 10 percent were in Georgia. The
Company also fee managed 38 properties containing an aggregate of 8,118
homesites. A manufactured housing community is real estate designed and improved
with sites for placement of manufactured homes. The owner of the home leases the
site from the Company, generally for a term of one year or less.

2. Summary of Significant Accounting Policies:
------------------------------------------

Basis of Presentation

The accompanying consolidated financial statements include all accounts of the
Company, its wholly owned qualified REIT subsidiaries, its Operating
Partnership, and controlled joint ventures. The Company and ROC Communities,
Inc. are general partners of the Operating Partnership. All significant
inter-entity balances and transactions have been eliminated in consolidation.
Investments in joint ventures or entities, which we do not control but exercise
significant influence over, are accounted for using the equity method.

The Company conducts manufactured home sales and brokerage activities through
its taxable service corporation, Community Sales, Inc. ("CSI"). The Company owns
100% of the preferred stock of CSI and is entitled to 100% of its cash flow and
economics. The Company accounts for its investment in CSI utilizing the equity
method of accounting, since the Company does not own any of the voting common
stock of CSI. Equity earnings or losses are recorded as management fee and other
income in the accompanying statements of income.

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions. These estimates may affect the reported amount of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Certain reclassifications have been made to the prior year information to
conform to the current year presentation. These reclassifications have no impact
on net operating results previously reported.

Revenue Recognition

Rental income is recognized when earned and due from residents. The leases
entered into by residents for the rental of a site are generally for terms not
longer than one year and are renewable upon the consent of both parties or, in
some instances, as provided by statute. Rent received in advance is deferred and
recognized in income when earned.

33

Chateau Communities, Inc

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

Income Taxes

The Company has elected to be taxed as a real estate investment trust (REIT)
under Section 856(c) of the Internal Revenue Code of 1986, as amended. The
Company generally will not be subject to Federal income tax to the extent it
distributes at least 90% of its REIT taxable income to its shareholders. REITs
are subject to a number of organizational and operational requirements. If the
Company fails to qualify as a REIT in any taxable year, the Company will be
subject to Federal income tax (including any applicable alternative minimum tax)
on its taxable income at regular corporate rates. The Company remains subject to
certain state and local taxes on its income and property as well as Federal
income and excise taxes on its undistributed income.

For income tax purposes, distributions paid to common shareholders consist of
ordinary income, capital gains, return of capital or a combination thereof. For
the years ended December 31, 2001, 2000 and 1999, distributions declared per
share were taxable as follows:

2001 2000 1999
Amount Percentage Amount Percentage Amount Percentage
-------------------- --------------------- --------------------

Ordinary income $ 1.27 58.4% $ 1.42 68.8% $ 1.34 68.9%
Return of capital .91 41.6% .64 31.2% .60 31.1%
-------------------- --------------------- --------------------
$ 2.18 100.0% $ 2.06 100.0% $ 1.94 100.0%
==================== ===================== ====================

Earnings Per Share

Basic earnings per share are computed based upon the weighted average number of
common shares outstanding during the period. The conversion of an operating
partnership unit ("OP Unit") to common stock has no effect on earnings per
common share since the earnings of an OP Unit are equivalent to the earnings of
a share of common stock. Diluted earnings per common share are computed assuming
the exercise of all outstanding stock options that would have a dilutive effect.

Rental Property

Rental property is carried at cost less accumulated depreciation. Management
evaluates the recoverability of its investment in rental property whenever
events or changes in circumstances indicate that full asset recoverability is
questionable. Management's assessment of the recoverability of its rental
property includes, but is not limited to, recent operating results, expected net
operating cash flow and management's plans for future operations. In the event
that facts and circumstances indicate that the carrying amounts of rental
property may be impaired, an evaluation of recoverability would be performed. If
an evaluation were required, the estimated future undiscounted cash flows
associated with the asset would be compared to the asset's carrying amount to
determine if a write down is required. If this review indicates that the assets
will not be recoverable, the carrying value of the Company's assets would be
reduced to their estimated market value.

Rental Property Held for Sale

Assets held for sale are carried at the lower of book value or fair value less
costs to sell the assets. During the fourth quarter of 2001, the Company
identified four communities for disposition and as such, reclassified these
assets from rental property to rental property held for sale. As a result, the
Company evaluated its carrying value of these assets, and recognized an asset
impairment charge of approximately $2.1 million. These charges have been
included in the Company's accompanying consolidated statements of income.

34

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

Depreciation

Depreciation on manufactured home communities is computed primarily on the
straight-line method over the estimated useful lives of the assets. The
estimated useful lives of the various classes of rental property assets are
primarily as follows:

Estimated Useful
Class of Asset Lives (Years)
- -------------- --------------------
Manufactured home community improvements 20 to 30
Community buildings 25 to 30
Furniture and other equipment 3 to 10
Computer software and hardware 3 to 7

Maintenance, repairs, and minor improvements to rental properties are expensed
when incurred. Major improvements and renewals are capitalized and depreciated
over their estimated useful lives. When rental property assets are sold or
otherwise retired, the cost of such assets, net of accumulated depreciation,
compared to the sales proceeds, are recognized in income as gains or losses on
disposition.

Capitalized Interest

Interest is capitalized on development projects during periods of construction
through the substantial completion of the site. Interest capitalized by the
Company for the years ended December 31, 2001, 2000, and 1999, was $4,368,000,
$1,646,000, and $1,249,000, respectively.

Cash Equivalents

All highly liquid investments with an initial maturity of three months or less
are considered to be cash equivalents.

Debt Issuance Costs

Costs incurred to obtain financing are deferred and amortized on a straight-line
basis, which approximates the effective interest method, over the term of the
related loans or agreements. These costs, net of accumulated amortization, are
included in prepaid expenses and other assets in the accompanying consolidated
balance sheets.

Fair Value of Financial Instruments

The fair value of the Company's financial instruments other than debt
approximate their carrying values at December 31, 2001 and 2000. The fair value
of the Company's debt at December 31, 2001 and 2000 was estimated to be $1.1
billion and $533 million, respectively, based on current interest rates for
comparable loans.

35

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

Minority Interests

Minority interests include common OP Units that are convertible into an
equivalent number of shares of the Company's common stock. Issuance of
additional shares of common stock by the Company, results in the issuance to the
Company of an equal amount of OP Units, thus changing the percentage ownership
of both the minority interests and the Company. Since an OP Unit is equivalent
to a common share (due to, among other things, its exchangeability for a common
stock share), such transactions are treated as capital transactions and result
in an equity transfer adjustment among shareholders' equity and minority
interests in the Company's consolidated balance sheet to account for the change
in the respective ownership in the underlying equity of the Operating
Partnership.

Income before minority interests is ascribed to the holders of common OP Units
based on their respective weighted average ownership percentage of the Operating
Partnership. The ownership percentage is determined by dividing the number of
common OP Units held by the limited partners by the total common OP Units
outstanding, including the OP Units held by the Company.

Also included in minority interests is approximately $73 million, which
represents 1.5 million 8.125% Series A Cumulative Redeemable Preferred Units
("Preferred Units"). The Preferred Units are exchangeable on or after April 20,
2008 for authorized but unissued shares of 8.125% Series A Cumulative Redeemable
Preferred Stock of the Company.

Derivatives

The Company adopted SFAS No. 133, "Accounting for Derivative Instruments and for
Hedging Activities," as amended by SFAS No. 138, on January 1, 2001. SFAS No.
133 provides comprehensive guidelines for the recognition and measurement of
derivatives and hedging activities and, specifically, requires all derivatives
to be recorded on the balance sheet at fair value as an asset or liability, with
an offset to accumulated other comprehensive income or income. Upon adoption of
SFAS No. 138, the Company recorded a transition adjustment of $658,000 as a
cumulative effect to accumulated other comprehensive income, which is included
in the equity section of the Consolidated Balance Sheets. The cumulative effect
adjustment relates to net deferred gains on prior hedges of anticipated
refinancing of debt which had been completed at the date of adoption. The amount
in the accumulated other comprehensive income account will be amortized over the
remaining life of the related debt instruments.

In assessing the fair value of its financial instruments, both derivative and
non-derivative, CP Limited uses a variety of methods and assumptions that are
based on market conditions and risks existing at each balance sheet date.
Primarily, CP Limited uses quoted market prices or quotes from brokers or
dealers for the same or similar instruments. These values represent a general
approximation of possible value and may never actually be realized.

Comprehensive Income

Comprehensive income is defined as all changes in shareholders' equity,
exclusive of transactions with owners, such as capital investments.
Comprehensive income includes net income and changes in certain assets and
liabilities that are reported directly in equity such as changes in the fair
value of derivatives.

36

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

Recently Issued Accounting Standards

In June 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires all business
combinations to be accounted for by the purchase method and defines criteria
under which intangible assets acquired in connection with a business combination
be recognized as assets apart from goodwill. SFAS No. 141 is effective for all
fiscal business combinations initiated after June 30, 2001. SFAS No. 142 changes
the useful life of goodwill recorded on a company's books to an indefinite life
and requires goodwill to be reviewed annually for impairment. SFAS No. 142 is
effective for all fiscal years beginning after December 15, 2001. Adoption of
SFAS No. 141 and No. 142 did not have and is not expected to have a significant
impact on the Company's financial position or results of operations.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment on
Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and provides
guidance for measuring the amount of impairment. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001. As individual properties to be
sold qualify as components of an entity, properties classified as held for sale
or sold in a reporting period will be treated as discontinued operations for
reporting purposes. The statements of income will reflect the properties'
results of operations, including any gains or losses recognized, as a separate
component in the income statement.

3. Acquisitions and Dispositions of Rental Property:
-------------------------------------------------

Acquisition of CWS

On August 3, 2001 the Company purchased CWS Communities Trust ("CWS"), a private
real estate investment trust for $552 million, consisting of $323 million in
cash (including the payoff of $20 million in debt), $151 million in assumed
liabilities, 2,040,878 OP Units (valued for purposes of the transaction at
$30.935 per OP Unit) and $9.9 million in 7.5% Unsecured Installment Notes due
2012 (the "7.5% Notes"). The portfolio consisted of 46 manufactured home
communities with approximately 16,600 homesites and 1,518 expansion sites and
three RV communities with 431 RV sites in 11 states. The Company financed the
cash portion of this transaction primarily through borrowings on a $323 million
bridge facility (the "Acquisition Facility"), which carries an interest rate of
LIBOR plus 120 basis points, and matures August 2, 2002.

In connection with the CWS acquisition, the following related transactions
occurred:

. As of August 2, 2001, certain limited partners in the CWS operating
partnership ("CWS OP") amended their $26 million loans and agreed to, among
other things, replace the collateral with a proportionate amount of OP
Units, provide for an initial purchase price for such OP Units subject to
our repurchase option at $27.17 per OP Units, eliminate our right to
exercise this repurchase option in the event of a prepayment of these loans
in full prior to January 1, 2003 and lower the exercise price of this
repurchase option in the event that certain distributions are made to the
borrowers. The maturity dates of these loans range between June 14, 2009
and September 26, 2010. These loans bear initial interest rates of 6.25% or
6.5%, increasing at increments of 25 basis points on each anniversary of
each loan, but not to exceed 7.5%, and are included in Investment in and
advances to affiliates in the accompanying consolidated balance sheets as
of December 31, 2001.

37

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

. The Company agreed to issue to the holders of the 7.5% Notes, an aggregate
of 309,371 OP Units, for an aggregate purchase price of approximately $9.6
million paid to the Company through the issuance of 7.5% promissory notes
due 2010 secured by the OP Units held by the obligor. As of December 31,
2001, the Company has issued $9,570,000 of such notes/OP Units and the
notes are included in Investment in and advances to affiliates in the
accompanying consolidated balance sheet as of December 31, 2001.

The total CWS purchase price and liabilities assumed was allocated as follows:

Rental property $ 519,691
Net working capital 32,299
-----------------
$ 551,990
=================

The following unaudited pro forma income statement information has been prepared
as if the CWS Acquisition and related transactions had occurred on January 1,
2000. In addition, the pro forma information is presented as if the acquisition
of eight properties made in 2000 by CWS and the disposition of certain CWS
properties by the Company in 2001 had occurred on January 1, 2000. The pro forma
income statement information is not necessarily indicative of the results that
actually would have occurred if the CWS acquisition had been consummated on
January 1, 2000.

For the Year Ended December 31,
-------------------------------------
2001 2000
------------------ ----------------

Revenues $ 270,981 $ 260,145
Total expenses* 246,396 237,633
------------------ ----------------
Net income** $ 24,585 $ 22,512
================== ================
Earning per share - basic $ 0.71 $ 0.65
================== ================
Earnings per share - diluted $ 0.70 $ 0.65
================== ================
Weighted average common shares and OP Units outstanding - basic 34,811 34,481
================== ================
Weighted average common shares and OP Units outstanding - diluted 35,011 34,575
================== ================

- -------------------------------
* Includes depreciation of $69,639 and $64,688 for the year ended December 31,
2001 and 2000, respectively.
**After impairment/gain on sale of properites and allocation to Preferred OP
Units. Assumes all common OP Units are exchanged for common stock.

38

Chateau Communities, Inc

Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

Other Acquisitions

The following table summarizes acquisitions, other than CWS, made by the
Company:

(Dollars in thousands)

Amount Fair Market
Allocated to Value of OP
Number of Number of Assets Units/Shares Debt
Acquisition Date Communities Sites State Acquired Issued Assumed Cash (1)
- ------------------------------------------------------------------------------------------------------------------------

October 2001 (2) 1 401 CO $ 14,160 $ 1,555 $ 7,140 $ 5,465

May 2001 1 756 GA $ 23,837 $ 8,534 $ 4,418 $ 10,885

April 2001 1 288 IN $ 5,400 $ - $ - $ 5,400

December 2000 1 295 GA $ 2,550 $ 17 $ 1,835 $ 698

February 2000 1 115 AL $ 1,600 $ - $ - $ 1,600

October 1999 1 315 AL $ 8,712 $ - $ 650 $ 8,062

April 1999 1 309 AL $ 4,013 $ - $ - $ 4,013

(1) The cash used to finance the Company's acquisitions was provided by
borrowings on the line of credit.
(2) The Company purchased the remaining interests in the joint venture,
including a note receivable to the Company.

Dispositions

In the third quarter of 2001, the Company began implementing a plan to sell a
number of mature properties that no longer meets its portfolio objectives. As of
December 31, 2001, the Company had sold 7 properties for approximately $42
million. The net proceeds from these sales, approximately $37 million, were used
primarily to pay down the Acquisition Facility. Due to the timing of these
sales, approximately $11 million was received in January of 2002. The Company
will continue to evaluate its properties and, depending on market conditions,
expects to sell additional communities in 2002. In 1999, the Company disposed of
two communities, with 509 homesites, for a net amount of $11.7 million,
resulting in a gain of $2.8 million.

4. Notes Receivable
----------------

Notes receivable are from entities that are not affiliated with the Company and
all own, or are developing, manufactured home communities. These notes are
collateralized by manufactured home communities or by partnership interests in
partnerships that own manufactured home communities. These notes have a weighted
average interest rate of 10.9% and mature between 2002 and 2022. Management has
evaluated the collectibility of these notes and has determined that no valuation
allowance is necessary.

39

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

5. Investments in and Advances to Affiliates
-----------------------------------------

Investments in and advances to affiliates as of December 31, consisted of the
following:

2001 2000
---- ----

Community Sales, Inc. ("CSI") $ 29,039 $ 25,242
N'Tandem Trust ("N'Tandem") 33,348 32,120
Notes Receivables - OP Unitholders 35,570 -
Other 10,717 21,910
----------- -----------
$ 108,674 $ 79,272
=========== ===========
CSI
- ---

Advances to CSI are primarily used to finance inventory purchases. These
advances have an interest rate of prime plus 1% (5.75 percent as of December 31,
2001).

N'Tandem
- --------

The Company currently owns approximately 10 percent of N'Tandem's outstanding
equity, wholly owns N'Tandem's external advisor and provides management and
other services to N'Tandem for a fee. As such, the Company possesses significant
influence over the operating and financial decisions of N'Tandem, and
accordingly, accounts for its investment in N'Tandem utilizing the equity method
of accounting. The Company also recognizes income from a property management
agreement, an advisory agreement and interest income on advances as earned, as
more fully outlined in Note 12.

The Company has loaned N'Tandem approximately $27 million and advanced an
additional $6 million over the past several years. The loan is due December
2002, is unsecured and bears interest at the prime rate of interest plus one
percent per annum.

As of December 31, 2001, N'Tandem owned 36 communities with 7,882 homesites.

Notes Receivable - OP Unitholders
- ---------------------------------

These notes are loans to former CWS shareholders of $26 million (the "$26
Million Notes") and promissory notes of $9.6 million (the "$9.6 Million Notes")
(see note 3). The collateral for the loans are the OP Units held by the former
CWS shareholders. The loan agreements provide for principal payment of the loans
through the use of the collateral or cash. Interest on the $26 Million Notes are
payable quarterly at an annual rate of 6%, increasing by one-quarter of one
percent on each anniversary date of the loan agreement up to a maximum of 8.25%
and 7.5% on the $9.6 Million Notes. The Company earned $793,000 of interest
income for these notes in 2001.

40

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

6. Financing:
----------

The following table sets forth certain information regarding debt at December
31:

Weighted Principal Balance
Average (In thousands)
Interest Rate Maturity Date 2001 2000
------------- ------------- ----------- ---------

Fixed rate mortgage notes 7.63% 2002-2011 $ 285,650 $ 136,899
Unsecured Senior Notes 7.47% 2003-2011 470,000 320,000
Unsecured Installment Notes 7.50% 2012 9,942 -
----------- ---------
Total fixed rate debt 765,592 456,899
Acquisition Facility 3.59% 2002 162,700 -
Unsecured lines of credit 3.02% 2002-2004 125,144 74,730
----------- ---------
Total variable rate debt 287,844 74,730
----------- ---------
$ 1,053,436 $ 531,629
=========== =========

At December 31, 2001, the Company had a $125 million line of credit arrangement
with BankOne, NA acting as lead agent for a bank group to provide financing for
future construction, acquisitions and general business obligations. The line of
credit is unsecured, bears interest at the prime rate of interest or, at the
Company's option, LIBOR plus 90 basis points (2.77 percent at December 31,
2001). The line is scheduled to mature in 2004. In addition, The Company has a
$7.5 million unsecured line of credit from US Bank, which bears interest at a
rate of LIBOR plus 125 basis points (3.12 percent at December 31, 2001), which
matures in March 2002. As of December 31, 2001, approximately $125.1 million was
outstanding under the Company's lines of credit and the Company had available
$7.4 million in additional borrowing capacity.

The following table summarizes significant debt issuances and the related use of
proceeds made during the year ended December 31, 2001 and 2000:

Transaction Date Original Interest Classification Expiration Use of Proceeds
Amount Rate Date
- -------------------------------------------------------------------------------------------------------------

October 2001 $ 150,000 7.13% Senior Unsecured 2011 Repay portion of Acquisition
Facility
October 2001 50,000 8.30% Senior Unsecured 2021 Repay a portion of 7.54% debt
maturing in 2003
August 2001 323,000 3.59% Acquisition Facility 2002 CWS Acquisition
June 2000 116,000 7.83% Mortgage Debt 2010 Repay debt
100,000 8.30% Senior Unsecured 2005 Repay debt
50,000 8.00% Senior Unsecured 2003 Repay debt

In connection with the debt issuance of $150 million, the Company entered into a
hedge of forecasted interest payments. At the time of closing, there was an
accumulated hedge loss of $7.1 million that was recorded in accumulated other
comprehensive income and which will be amortized over the life of the debt.

41

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

The Company has $100 million 6.92% MandatOry Par Put Remarketed Securities(SM)
("MOPPRS(SM)") due December 10, 2014. The remarketing dealer paid The Company $2
million for the right to remarket the securities in 2004. The remarketing fee is
being amortized over the life of the related debt. Upon the remarketing dealer's
election to remarket the MOPPRS(SM), the interest rate to the December 10, 2014
maturity date of the MOPPRS(SM) will be adjusted to equal the sum of 5.75% plus
the Applicable Spread (as defined in the remarketing agreement). In the event
the remarketing dealer does not elect to remarket the MOPPRS(SM), the MOPPRS(SM)
will mature in 2004.

As of December 31, 2001 the Company has a total of 36 collateralized properties.

The financing arrangements contain customary covenants, including a debt service
coverage ratio and a restriction on the incurrence of additional collateralized
or variable rate indebtedness without a corresponding increase in rental
property. The Company was out of compliance on one of its covenants as of
December 31, 2001 associated with both its BankOne Credit Facility and the
Acquisition Facility. Also, in February 2002, the Company was out of compliance
on another covenant under both agreements that limit the amount of variable rate
debt outstanding. In February 2002, the Company received waivers from the
lenders and amended the agreements to change the covenants for the remaining
term of the Acquisition facility and until March 2003 for the Credit Facility.

The Acquisition Facility matures in August of 2002. The Company expects to
re-pay the balance, depending on current market conditions and capital
availability factors, with proceeds from the disposition of properties, a bank
term loan, or the issuance of additional debt or equity securities.

The aggregate amount of principal maturities for the fixed rate debt, including
the Unsecured Senior Notes and Unsecured Installment Notes, subsequent to
December 31, 2001 (in thousands) is as follows:
2002 $ 5,617
2003 76,177
2004 113,894
2005 109,615
2006 11,644
Thereafter 448,645
---------------
$ 765,592
===============

7. Minority Interests in Operating Partnership:
--------------------------------------------

Minority interests in the accompanying consolidated balance sheets represent
both the common and preferred ownership interest in the Operating Partnership
held by third parties. The common minority interest represents common OP Units,
which are convertible into an equivalent number of shares of the Company's
common stock. As of December 31, 2001 and 2000, common minority interest was
approximately 17 and 11 percent, respectively.

Common OP Unitholders may convert their common OP Units into shares of common
stock of the Company at a one for one exchange ratio. These transactions result
in an increase of outstanding common shares, and a corresponding decrease of
outstanding OP Units, classified as minority interests in the consolidated
balance sheets.

The following is a summary of activity of the common minority interest in the
Operating Partnership, including the transfer adjustment among the common
minority interest and shareholders' equity in the consolidated balance sheets to
account for the change in the respective ownership in the underlying equity of
the Operating Partnership.

42

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

Operating
Partnership Minority
(In thousands) Units Interest
-----------------------

Minority interest in Operating Partnership at January 1, 1999 3,524 $ 47,473
Minority interest in income - 4,242
Distributions declared, $1.94 per unit - (6,680)
Issuance of OP Units at fair value in connection with
acquisitions and development 531 13,341
Exchange of OP Units for shares of common stock (349) (9,216)
Transfer to shareholders' equity - (975)
----------- ---------
Minority interest in Operating Partnership at December 31, 1999 3,706 $ 48,185

Minority interest in income - 4,842
Distributions declared, $2.06 per unit - (7,488)
Issuance of OP Units at fair value in connection with
acquisitions and development 28 754
Exchange of OP Units for shares of common stock (141) (3,701)
Transfer from shareholders' equity - 1,314
----------- ---------
Minority interest in Operating Partnership at December 31, 2000 3,593 $ 43,906

Minority interest in income - 3,768
Distributions declared, $2.18 per unit - (9,883)
Issuance of OP Units at fair value in connection with
acquisitions and development 2,751 83,896
Exchange of OP Units for shares of common stock (511) (15,902)
Transfer from shareholders' equity - (33,823)
----------- ---------
Minority interest in Operating Partnership at December 31, 2001 5,833 $ 71,962
=========== =========

Also included in minority interests in the accompanying consolidated balance
sheets are 1.5 million Preferred OP Units issued in April 1998. The balance at
both December 31, 2001 and 2000 was approximately $73 million, issued with a
coupon rate of 8.125%.

8. Common Stock and Related Transactions:
--------------------------------------

The following table represents the changes in the Company's outstanding common
stock for the years ended December 31, 2001, 2000, and 1999 (in thousands).

2001 2000 1999
------ ------- -------

Common shares outstanding at January 1 28,532 28,425 27,936
Common stock issued - - -
Shares repurchased and retired - (453) (2)
Shares issued in exchange for OP Units 511 141 349
Shares issued through stock awards, sales
to key employees and the exercise of
stock options 145 419 142
------ ------- -------
Common shares outstanding at December 31
29,188 28,532 28,425
====== ======= =======

43

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

The Company paid a dividend/distribution of $.545 per common share/OP Unit on
April 16, 2001; July 16, 2001; October 15, 2001 and December 31, 2001 to
shareholders and OP Unitholders of record as of March 30, 2001; June 29, 2001;
September 30, 2001 and December 15, 2001, respectively.

The Company paid a dividend/distribution of $.515 per common share/OP Unit on
April 14, 2000; July 14, 2000; October 16, 2000 and December 29, 2000 to
shareholders and OP Unitholders of record as of March 31, 2000; June 30, 2000;
September 30, 2000 and December 15, 2000, respectively.

The notes receivable from officers bear interest, primarily at LIBOR plus 80
basis points, range in maturity dates of 2003 and 2005, and are collateralized
by the underlying common shares.

In 2000, the Company repurchased 453,900 shares for approximately $11.3 million.

Basic and diluted earnings per share ("EPS") are summarized in the following
table:

For the Year Ended December 31,
--------------------------------------
(In thousands, except per share data) 2001 2000 1999
--------- --------- ----------

Basic EPS:
Income (1) $ 30,024 $ 42,628 $ 38,868
========= ========= ==========

Weighted average common shares outstanding 28,723 28,480 28,135
Weighted average common OP Units outstanding 4,623 3,650 3,447
--------- --------- ----------
Weighted average common shares and OP Units - Basic 33,346 32,130 31,582
========= ========= =========

Per Share $ 0.90 $ 1.33 $ 1.23
========= ========= ==========

Diluted EPS
Income (1) $ 30,024 $ 42,628 $ 38,868
========= ========= ==========

Weighted average common shares outstanding 28,723 28,480 28,135
Weighted average common OP Units outstanding 4,623 3,650 3,447
Employee stock options 200 94 132
--------- --------- ----------

Weighted average common shares and OP Units - Diluted 33,546 32,224 31,714
========= ========= ==========

Per Share $ 0.90 $ 1.32 $ 1.23
========= ========= ==========

_______________
(1) Represents income before minority interests less the income allocated to the
Preferred OP Units

9. Comprehensive Income:
---------------------

In August 2001, the Company entered into a forward interest rate swap agreement
to hedge the anticipated issuance of $150 million of senior notes, which were
issued pursuant to a debt issuance in October 2001. The purpose of the swap was
to hedge future interest rate payments on the fixed rate bonds to be issued.
This swap is accounted for as a cash flow hedge, in accordance with SFAS No.
133. In accordance with SFAS No. 133, the Company recorded a loss on the swap of
approximately $7.1 million as of the date of the debt issuance in other
comprehensive income, which is included in the equity section of the
Consolidated Balance Sheet. Under SFAS No. 133, the Company began amortizing the
amounts in other comprehensive income related to this hedge once the debt was
issued.

44

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

Total comprehensive income for the year ended December 31, 2001 is summarized as
follows (in thousands):

Net income before minority interests $ 36,118
Cumulative effect of adoption of SFAS 133 658
Net amortization of hedge loss and transition adjustment 143
Accumulated hedge loss on bond issue and other (7,317)
----------------
Total comprehensive income $ 29,602
================

10. Stock Option Plans:
-------------------

The Company measures compensation cost using the intrinsic value method, in
accordance with Accounting Principles Board Opinion No. 25 ("APB 25"),
"Accounting for Stock Issued to Employees."

The Company's equity compensation plans, (collectively, the "Plans") provide for
the grant of approximately 3.6 million options and restricted stock awards. The
compensation committee of the Board of Directors approves the awards and
determines the vesting schedule of each option and the term, which term shall
not exceed ten years from the date of grant.

During 2001, the Company's Board of Directors approved the 2001 Equity
Compensation Plan and the CWS Equity Compensation Plan, which provides for up to
500,000 and 55,000, shares of common stock, respctively, that may be granted to
key employes other than directors and executive officers.

Information concerning stock options is as follows:

2001 2000 1999
---------------------------- ---------------------------- ----------------------------
Weighted- Weighted- Weighted-
Average Average Average
Shares subject to option: Shares Price Shares Price Shares Price
- ------------------------------------- ------------ ----------- ------------ ------------- ------------- -------------

Outstanding at beginning of year 1,540,334 26.01 1,417,218 25.66 1,236,893 24.79
Granted/(1)(3)/ 441,192 30.16 547,000 24.19 384,160 27.73
Exercised (124,432) 23.22 (364,486) 21.79 (137,480) 21.30
Forfeited / expired (28,157) 26.79 (59,398) 27.46 (66,355) 28.97
------------ ----------- ------------ ------------- ------------- -------------
Outstanding at end of year/(2)/ 1,828,937 27.18 1,540,334 26.01 1,417,218 25.66
============ =========== ============ ============= ============= =============

Options exercisable at year-end
839,111 634,442 803,696
============ ============ =============
Options available for grant
at year-end 583,233 458,268 945,870
============ ============ =============

(1) The options granted do not include the grant of 50,000 shares of restricted
stock in 2000 to executive officers of the Company and 17,000 shares of
restricted stock granted to key employees of the Company in 2001.
(2) For the years ended December 31, 2001 and 2000 approximately 70,000 and
720,000 options, respectively, were considered anti-dilutive.
(3) Options granted in 2001 includes 49,162 shares granted prior to 2001, but
now included due to the CWS merger.

For all options granted during 2001, 2000, and 1999, the weighted average market
price of the Company's common stock on the grant date was approximately equal to
the weighted average exercise price.

45

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

The following table summarizes information concerning outstanding and
exercisable options at December 31, 2001.

Options Outstanding Options Exercisable
-------------------------------------------------------- ---------------------------------
Average Weighted- Weighted-
Range of Exercise Number Remaining Average Number Average
Prices Outstanding Contract Life Exercise Price Exercisable Exercise Price
- ------------------------ ------------------ ------------------- ----------------- --------------- -----------------

$18.26 - $26.00 677,958 6.99 $23.44 309,262 $22.52
$26.25 - $30.70 1,150,979 7.55 $29.38 529,849 $29.26

The fair value of each option was estimated as of date of grant using an option-
pricing model and the following assumptions:

2001 2000 1999
-------------- --------------- --------------

Estimated fair value per option granted $ 1.84 $ 2.44 $ 2.22

Assumptions:
Annualized dividend yield 7.14% 7.70% 6.90%
Common stock price volatility 19.7% 20.5% 17.3%
Risk-free rate of return 5.03% 6.38% 5.29%
Expected option term (in years) 7 9 10

If compensation cost for stock option grants had been recognized based on the
fair value at the grant dates for 2001, 2000, and 1999 consistent with the
method allowed by SFAS No. 123 "Accounting for Stock-Based Compensation", net
income and net income per common share would have been (in thousands, except per
share data):

2001 2000 1999
----------------- ----------------- ------------------

Net income, as reported $ 26,256 $ 37,786 $ 34,626
================= ================= ==================
Net income, pro forma $ 25,061 $ 36,756 $ 34,347
================= ================= ==================
Basic earnings per common share, as reported $ .90 $ 1.33 $ 1.23
================= ================= ==================
Basic earnings per common share, pro forma $ .87 $ 1.29 $ 1.22
================= ================= ==================
Diluted earnings per common share, as reported $ .90 $ 1.32 $ 1.23
================= ================= ==================
Diluted earnings per common share, pro forma $ .87 $ 1.29 $ 1.22
================= ================= ==================

11. Savings Plan:
-------------

The Company has a qualified retirement plan designed to qualify under Section
401 of the Internal Revenue Code (the "Savings Plan"). The Savings Plan allows
employees of the Company and its subsidiaries to defer a portion of their
compensation on a pre-tax basis subject to certain maximum amounts.
Contributions by the Company are discretionary and determined by the Company's
management. Company contributions are allocated to each participant based on the
relative compensation of the participant to the compensation of all
participants. The Company contributed approximately $250,000, $500,000, and
$560,000 for the Plan years ended December 31, 2001, 2000, and 1999,
respectively.

46

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

12. Related Party Transactions:
---------------------------

Rental expense of approximately $130,000 annually has been incurred for leased
space in an office building owned by certain officers and equity owners.

When CSI sells homes, the purchaser may obtain financing from Vanderbilt
Mortgage and Finance, Inc. ("Vanderbilt"), which is affiliated with one of the
Company's directors. In certain cases, for homes sold before June 1998,
Vanderbilt has recourse to the Company if the loans are not repaid. As of
December 31, 2001 there is a total of approximately $13.2 million of such
amounts that are recourse to the Company.

Included in management fee and other income and interest income are amounts
earned from N'Tandem, as outlined below:

2001 2000 1999
---------- ---------- ----------
Interest income and related fees $ 3,345 $ 3,165 $ 1,914
Transaction fees 522 2,530 1,055
Advisory fees 1,335 777 346
Management and overhead fees 1,935 1,303 1,217
---------- ---------- ----------
$ 7,137 $ 7,775 $ 4,532
========== ========== ==========

Interest is earned on the loan to N'Tandem (Prime plus one percent, or 5.75
percent at December 31, 2001) and includes fees paid by N'Tandem for the
subordination of the loan to the N'Tandem, $730,000 in both 2001 and 2000. The
transaction fees are related to acquisition services provided by the Company to
N'Tandem and are calculated as three percent of the acquisition price. The
advisory fees are charged based on one percent of N'Tandem's average assets. The
management fees are charged based on five percent of revenues of properties
managed by the Company on behalf of N'Tandem. Overhead reimbursement fees are
based on a fixed fee per site.

In December 2000, the Company purchased a manufactured home community from a
partnership owned by two officers of the Company for $2,550,000. This community
contains 295 developed homesites (See Note 3.)

13. Contingencies:
--------------

Several claims and legal actions arising from the normal course of business have
been asserted against the Company, and are pending final resolution. In the
opinion of management, none of these matters will have a material adverse effect
upon the results of operations, financial condition or cash flows of the
Company.

The Company, through its joint venture and affiliate arrangements, has
guaranteed approximately $48.4 million of debt, $20 million of which is to
N'Tandem.

47

Chateau Communities, Inc

Notes To Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------

14. Quarterly Financial Information (Unaudited):
--------------------------------------------

The following is quarterly financial information for the years ended December
31, 2001 and 2000. (amounts in thousands, except per share data)

First Second Third Fourth
Quarter Quarter Quarter Quarter
2001 March 31, June 30, September 30, December 31,
----------- ---------- -------------- -------------

Total revenues $ 51,743 $ 53,442 $ 64,570 $ 69,765
----------- ---------- ------------- ------------

Operating income (a) $ 32,272 $ 32,835 $ 38,561 $ 39,490
----------- ---------- -------------- ------------

Income before minority interests $ 11,335 $ 12,162 $ 12,226 $ 395

Less income/(loss) allocated to minority interests
Preferred OP Units 1,523 1,524 1,523 1,524
Common OP Units 1,098 1,220 1,643 (193)
----------- ------------ ------------ ------------
Net income/(loss) available to common shareholders $ 8,714 $ 9,418 $ 9,060 $ (936)
=========== ========== ============ ============

Net income/(loss) per share - basic (b) $ 0.30 $ 0.33 $ 0.32 $ (0.03)
=========== ========== ============ ============
Net income/(loss) per share - diluted (b) $ 0.30 $ 0.33 $ 0.31 $ (0.03)
=========== ========== ============ ============

2000

Total revenues $ 48,849 $ 50,774 $ 51,270 $ 53,872
----------- ---------- ------------ ------------

Operating income (a) $ 30,593 $ 31,976 $ 32,235 $ 34,238
----------- ---------- ------------ ------------

Income before minority interests $ 11,307 $ 12,607 $ 11,759 $ 13,049

Less income allocated to minority interests
Preferred OP Units 1,523 1,524 1,523 1,524
Common OP Units 1,125 1,256 1,160 1,301
----------- ---------- ------------ ------------
Net income available to common shareholders $ 8,659 $ 9,827 $ 9,076 $ 10,224
=========== ========== ============ ============

Net income per share - basic (b) $ 0.30 $ 0.35 $ 0.32 $ 0.36
=========== ========== ============ ============
Net income per share - diluted (b) $ 0.30 $ 0.34 $ 0.32 $ 0.36
=========== ========== ============ ============

(a) Operating income represents total revenues less property operating and
maintenance expense, real estate taxes and administrative expense.
Operating income is a measure of the performance of the properties before
the effects of depreciation and interest and related amortization costs.

(b) Quarterly earnings per common share amounts may not total to the annual
amounts due to rounding and to the change in the number of common shares
outstanding.

48

Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------ ---------------------------------------------------------------
Financial Disclosures
- ---------------------

None.

PART III

Item 10. Directors and Executive Officers of the Registrant
- ------- --------------------------------------------------

The information required by Item 10 is incorporated by reference to the
information in the Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Shareholders to be held on May 16,
2002.

Item 11. Executive Compensation
- ------- ----------------------

The information required by Item 11 is incorporated by reference to the
information in the Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Shareholders to be held on May 16,
2002.

Item 12. Security Ownership of Certain Beneficial Owners and Management
- ------- --------------------------------------------------------------

The information required by Item 12 is incorporated by reference to the
information in the Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Shareholders to be held on May 16,
2002.

Item 13. Certain Relationships and Related Transactions
- ------- ----------------------------------------------

The information required by Item 13 is incorporated by reference to the
information in the Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Shareholders to be held on May 16,
2002.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------- ----------------------------------------------------------------

a. 1. Financial Statements

Report of Independent Accountants

Consolidated Statements of Income for the years ended December 31,
2001, 2000, and 1999.

Consolidated Balance Sheets as of December 31, 2001 and 2000.

Consolidated Statements of Shareholders' Equity for the years ended
December 31, 2001, 2000, and 1999

Consolidated Statements of Cash Flows for the years ended December 31,
2001, 2000, and 1999.

Notes to Consolidated Financial Statements

49

2. Financial Statement Schedule

III - Real Estate and Accumulated Depreciation

3. Exhibits

Exhibit Number (Referenced to Item 601 of Regulation S-K)

3 (i) (a)(c) Chateau Communities, Inc. Amended and Restated Articles
of Incorporation
3 (ii) (b)(e) Chateau Communities, Inc. Amended and Restated Bylaws
3 (iii) (d) Amendment to Bylaws of Chateau Communities, Inc. dated
March 21, 2000
3 (iv) (f) Articles supplementary dated April 20, 1998
4.1 (b) Form of Stock Certificate
4.2 (i) (g) Indenture dated as of December 19, 1997 between CP Limited
Partnership and The First National Bank of Chicago, as
supplemented.
4.2 (ii) (g) First Supplemental Indenture dated as of December 19, 1997
between CP Limited Partnership and The First National Bank of
Chicago, related to the $100,000,000 Madatory Par Put Remarked
SecuritiesSM ("MOPPRSSM") due December 10, 2014.
4.2 (iii) (g) Remarking Agreement dated as of December 23,1997 among
Chateau Communities, Inc., CP Limited Partnership and the
"Remarketing Dealer" named therein.
4.3* (h) $100,000,000 8.5% Indenture, dated February 25, 2000, of CP
Limited Partnership.
4.4* (i) Form of $150,000,000 - 7.125% Senior Note due 2011 issued
by CP Limited Partnership
4.5 (j) Form of $9,942,000 - 7.5% 11 year notes due August 2012
10.1 (k) Amended and Restated Agreement of Limited Partnership of CP
Limited Partnership dated January 22, 1997
10.2 (o) Lease of 19500 Hall Road
10.3 (b) Form of Noncompetition Agreement (Boll and Allen)
10.4(i) (e) Employment Agreement (McDaniel)
10.4(ii) (e) Employment Agreement (Kellogg)
10.4(iii) (e) Employment Agreement (Fischer)
10.4(iv) (e) Employment Agreement (Davis)
10.5 (k) 1997 Equity Compensation Plan
10.6 (d) Long-Term Incentive Stock Plan
10.7 (l) Amendment to Amended and restated Agreement of Limited
Partnership of CP Limited Partnership dated April 20, 1998
10.8 (l) 1999 Equity Compensation Plan
10.9 2001 Equity Compensation Plan
10.10 (j) Acquisition Facility - Credit Agreement dated as of August
3, 2001 among CP Limited Partnership, a Maryland limited
partnership, Bank One, NA, certain other bank, financial
institutions and other entities and Bank One, as Administrative
Agent.
10.11 (j) $26 million loans - Form of Investment Loan Agreement and
Form of Non-Investment Loan Agreement dated August 2, 2002
21 (n) List of Subsidiaries of Chateau Communities, Inc.
23 Consent of PricewaterhouseCoopers LLP

* Other instruments defining long-term debt not exceeding 10 percent of
total assets have been omitted in reliance on Item 601 (b) (4)
(iii)(A) of Regulation S-K but will be filed upon request of the
Commission.

50

(a) Incorporated by reference to the Exhibits filed with the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1995 filed with the Commission on August 10, 1995 (Commission File No.
1-12496).

(b) Incorporated by reference to the Exhibits filed with the Company's
Registration Statement on Form S-11 filed with the Commission on
November 10, 1993 (Commission File No. 33-69150).

(c) Incorporated by reference to the Exhibits filed with the Company's
Form 8-K filed with Commission on May 23, 1997

(d) Incorporated by reference to the Company's Annual Report on Form 10-K
filed for the year ended December 31, 1999.

(e) Incorporated by reference to the Company's Quarterly Report on Form
10-Q filed with the Commission on May 14, 1997.

(f) Incorporated by reference to the Company's Form 8-K filed with the
Commission on May 1, 1998.

(g) Incorporated by reference to the Company's Form 8-K filed with the
Commission on December 9, 1997.

(h) Incorporated by reference to the Exhibits filed with CP Limited
Partnership's Form 8-K dated February 24 2000 and filed with the
Commission on February 25, 2000.

(i) Incorporated by reference to CP Limited Partnership's Form S-4/A filed
with the Commission on March 1, 2002

(j) Incorporated by reference to the Exhibits filed with the Company's
Form 8-K dated August 3, 2001 and filed with the Commission on August
20, 2001.

(k) Incorporated by reference to the Company's Annual Report on Form 10-K
filed for the year ended December 31, 1997.

(l) Incorporated by reference to CP Limited Partnership's Form 8-K filed
with the Commission on May 1, 1998.

(m) Incorporated by reference to the Company's Proxy Statement for the
Annual Meeting held on May 20, 1999 as filed with the Commission on
April 7, 1999.

(n) Incorporated by reference to the Exhibits filed with the Company's
Annual Report on Form 10-K filed for the year ended December 31, 1995
with the Commission on March 29, 1996.

(o) Incorporated by referene to the Company's Annual Report on Form 10-K
filed for the year ended December 31, 2000.

b. Reports on Form 8-K
-------------------

The Company filed a Form 8-K/A on October 17, 2001 and December 21,
2001.

51

Exhibits
Index

Exhibits Number
(Referenced to Item 601 of
Regulation S-K)
3 (i) (a)(c) Chateau Communities, Inc. Amended and Restated Articles
of Incorporation
3 (ii) (b)(e) Chateau Communities, Inc. Amended and Restated Bylaws
3 (iii) (d) Amendment to Bylaws of Chateau Communities, Inc. dated March
21, 2000
3 (iv) (f) Articles supplementary dated April 20, 1998
4.1 (b) Form of Stock Certificate
4.2 (i) (g) Indenture dated as of December 19, 1997 between CP Limited
Partnership and The First National Bank of Chicago, as
supplemented.
4.2 (ii) (g) First Supplemental Indenture dated as of December 19, 1997
between CP Limited Partnership and The First National Bank of
Chicago, related to the $100,000,000 MadatOry Par Put Remarked
SecuritiesSM ("MOPPRSSM") due December 10, 2014.
4.2 (iii) (g) Remarking Agreement dated as of December 23,1997 among
Chateau Communities, Inc., CP Limited Partnership and the
"Remarketing Dealer" named therein.
4.3* (h) $100,000,000 8.5% Indenture, dated February 25, 2000, of CP
Limited Partnership.
4.4* (i) Form of $150,000,000 - 7.125% Senior Note due 2011 issued by
CP Limited Partnership
4.5 (j) Form of $9,942,000 - 7.5% 11 year notes due August 2012
10.1 (k) Amended and Restated Agreement of Limited Partnership of CP
Limited Partnership dated January 22, 1997
10.2 (o) Lease of 19500 Hall Road
10.3 (b) Form of Noncompetition Agreement (Boll and Allen)
10.4(i) (e) Employment Agreement (McDaniel)
10.4(ii) (e) Employment Agreement (Kellogg)
10.4(iii) (e) Employment Agreement (Fischer)
10.4(iv) (e) Employment Agreement (Davis)
10.5 (k) 1997 Equity Compensation Plan
10.6 (d) Long-Term Incentive Stock Plan
10.7 (l) Amendment to Amended and restated Agreement of Limited
Partnership of CP Limited Partnership dated April 20, 1998
10.8 (l) 1999 Equity Compensation Plan
10.9 2001 Equity Compensation Plan
10.10 (j) Acquisition Facility - Credit Agreement dated as of
August 3, 2001 among CP Limited Partnership, a Maryland
limited partnership, Bank One, NA, certain other bank,
financial institutions and other entities and Bank One,
as Administrative Agent.
10.11 (j) $26 million loans - Form of Investment Loan Agreement and
Form of Non-Investment Loan Agreement dated August 2, 2002
21 (n) List of Subsidiaries of Chateau Communities, Inc.
23 Consent of PricewaterhouseCoopers LLP

52

Exhibits
Index

* Other instruments defining long-term debt not exceeding 10 percent of
total assets have been omitted in reliance on Item 601 (b) (4) (iii)(A)
of Regulation S-K but will be filed upon request of the Commission.

(a) Incorporated by reference to the Exhibits filed with the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1995 filed with the Commission on August 10, 1995 (Commission File No.
1-12496).

(b) Incorporated by reference to the Exhibits filed with the Company's
Registration Statement on Form S-11 filed with the Commission on
November 10, 1993 (Commission File No. 33-69150).

(c) Incorporated by reference to the Exhibits filed with the Company's Form
8-K filed with Commission on May 23, 1997

(d) Incorporated by reference to the Company's Annual Report on Form 10-K
filed for the year ended December 31, 1999.

(e) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
filed with the Commission on May 14, 1997.

(f) Incorporated by reference to the Company's Form 8-K filed with the
Commission on May 1, 1998.

(g) Incorporated by reference to the Company's Form 8-K filed with the
Commission on December 9, 1997.

(h) Incorporated by reference to the Exhibits filed with CP Limited
Partnership's Form 8-K dated February 24 2000 and filed with the
Commission on February 25, 2000.

(i) Incorporated by reference to CP Limited Partnership's Form S-4/A filed
with the Commission on March 1, 2002

(j) Incorporated by reference to the Exhibits filed with the Company's Form
8-K dated August 3, 2001 and filed with the Commission on August 20,
2001.

(k) Incorporated by reference to the Company's Annual Report on Form 10-K
filed for the year ended December 31, 1997.

(l) Incorporated by reference to CP Limited Partnership's Form 8-K filed
with the Commission on May 1, 1998.

(m) Incorporated by reference to the Company's Proxy Statement for the
Annual Meeting held on May 20, 1999 as filed with the Commission on
April 7, 1999.

(n) Incorporated by reference to the Exhibits filed with the Company's
annual Report on Form 10-K filed for the year ended December 31, 1995
with the Commission on March 29, 1996.

(o) Incorporated by reference to the Company's Annual Report on Form 10-K
filed for the year ended December 31, 2000.

b. Reports on Form 8-K
-------------------

The Company filed a Form 8-K/A on October 17, 2001 and December 21,
2001.

53

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, and in the capacities
indicated, on the 29/th/ day of March, 2002.

CHATEAU COMMUNITITES, INC.

By:/s/ Gary P. McDaniel
-----------------------
Gary P. McDaniel
Director and Chief Executive Officer
(Principal Executive Officer)

By:/s/ Tamara D. Fischer
------------------------
Tamara D. Fischer
Executive Vice President and Chief financial
Officer
(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
following persons on behalf of the Registrant and in the capacities indicated on
March 29/th/, 2002, have signed this report below.

Signature Title
--------- -----

/s/ John A. Boll Chairman of the Board of Directors
- --------------------------------
John A. Boll

/s/ C. G. Kellogg Director and President
- --------------------------------
C. G. Kellogg

/s/ Gary P. McDaniel Director and Chief Executive Officer
- --------------------------------
Gary P. McDaniel

/s/ Edward R. Allen Director
- --------------------------------
Edward R. Allen

/s/ Gebran S. Anton, Jr. Director
- --------------------------------
Gebran S. Anton, Jr.

/s/ James L. Clayton Director
- --------------------------------
James L. Clayton

54

/s/ Steven G. Davis Director
- ---------------------------
Steven G. Davis

/s/ James M. Hankins Director
- ---------------------------
James M. Hankins

/s/ Rhonda Hogan Director
- ---------------------------
Rhonda Hogan

/s/ James M. Lane Director
- ---------------------------
James M. Lane

/s/ Donald E. Miller Director
- ---------------------------
Donald E. Miller

55

SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
for the year ended December 31, 2001
(in thousands)

Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
------------------------- ------------------------------
Depreciable Depreciable
Community Location Encumbrance Land Property Land Property
- ------------------------------------------------------------- --------- -------------- ------------------------------

Algoma Algoma Township, MI $ - $ 60 $ - $ 73 $ 3,837
Allendale Allendale, MI 1,274 3,747 - -
Anchor Bay Ira Township, MI 432 80 2,877 16,348
Anchor North Bay Tampa Bay, FL 288 1,422 - 49
Antelope Ridge Colorado Springs, CO 1,796 12,022 - -
Arbor Village Jackson, MI 1,047 813 4,787 - 212
Arlington Lakeside Arlington, TX 3,161 920 4,943 - 6
Atlanta Meadows Atlanta, GA 625 435 - 53
Audubon Orlando, FL 281 296 2 3,046
Autumn Forest Greensboro, NC 4,473 911 6,747 - 417
Avalon RV Park Clearwater, FL 263 2,202 - 30
Avon Rochester Hills, MI 621 484 640 7,234

Beacon Hill Colony Lakeland, FL 1,912 804 3,626 - 9
Beacon Terrace Lakeland, FL 3,512 1,188 6,002 - 5
Bermuda Palms Indio, CA 1,291 2,477 - 155
Berryman's Ranch Vineland, NJ 872 5,536 - 8
Breazeale Laramie, WY. 251 1,618 - 67
Broadmore South Bend, IN 777 4,115 - 2,783
Buena Vista Fargo, ND 713 6,248 - 456
Butler Creek Augusta, GA 1,238 2,309 - 476

Camden Point Kingsland, GA 466 1,701 - 191
Camp Inn RV Park Frostproof, FL 796 4,220 - 142
Canterbury Grand Rapids, MI 705 3,107 111 1,694

Gross Amount
Carried at Close of
Period 12/31/01
------------------------------------------- Date of
Depreciable Accumulated Constrution (C)
Community Location Land Property Total Depreciation Acquisition (A)
- ------------------------------------------ -----------------------------------------------------------------------------

Algoma Algoma Township, MI $ 133 $ 3,837 $ 3,970 $ 1,184 1974(C)
Allendale Allendale, MI 1,274 3,747 5,021 135 2000(C)
Anchor Bay Ira Township, MI 3,309 16,428 19,737 9,087 1968(C)
Anchor North Bay Tampa Bay, FL 288 1,471 1,759 155 1998(A)
Antelope Ridge Colorado Springs, CO 1,796 12,022 13,818 424 1999(C)
Arbor Village Jackson, MI 813 4,999 5,812 953 1998(A)
Arlington Lakeside Arlington, TX 920 4,949 5,869 88 2001(A)
Atlanta Meadows Atlanta, GA 625 488 1,113 114 1993(A)
Audubon Orlando, FL 283 3,342 3,625 2,151 1988(A)
Autumn Forest Greensboro, NC 911 7,164 8,075 1,336 1998(A)
Avalon RV Park Clearwater, FL 263 2,232 2,495 432 1998(A)
Avon Rochester Hills, MI 1,261 7,718 8,979 6,250 1988(A)

Beacon Hill Colony Lakeland, FL 804 3,635 4,439 76 2001(A)
Beacon Terrace Lakeland, FL 1,188 6,007 7,195 127 2001(A)
Bermuda Palms Indio, CA 1,291 2,632 3,923 697 1994(A)
Berryman's Ranch Vineland, NJ 872 5,544 6,416 117 2001(A)
Breazeale Laramie, WY. 251 1,685 1,936 377 1993(A)
Broadmore South Bend, IN 777 6,898 7,675 1,177 1998(A)
Buena Vista Fargo, ND 713 6,704 7,417 2,081 1994(A)
Butler Creek Augusta, GA 1,238 2,785 4,023 650 1993(A)

Camden Point Kingsland, GA 466 1,892 2,358 471 1993(A)
Camp Inn RV Park Frostproof, FL 796 4,362 5,158 507 1998(A)
Canterbury Grand Rapids, MI 816 4,801 5,617 755 1998(A)

56

Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
----------------------- -----------------------
Depreciable Depreciable
Community Location Encumbrance Land Property Land Property
- ------------------------------------------------------------------ -------- ------------- -------- -------------

Carnes Crossing Summerville, SC 1,503 7,161 2 1,495
Castlewood Estates Mabelton, GA 656 2,918 - 481
Casual Estates Syracuse, NY 2,136 14,324 - 8,098
Cedar Grove Clinton, CT 180 1,140 - 157
Cedar Knolls Minneapolis, MN 1,217 11,006 - 521
Central Office Englewood, CO - - 72 81,251
Chesterfield Chesterfield Township, MI 405 - 262 2,164
Cimarron Park St. Paul, MN 1,424 12,882 - 846
Clinton Clinton Township, MI 989 - 430 6,037
Coach Royale Boise, ID 197 1,065 - 57
Colonial Kalamazoo, MI 816 195 4 7,859
Colonial Coach Riverdale, GA 1,052 4,277 25 655
Colony Cove Ellenton, FL 5,683 28,256 - 811
Columbia Heights Grand Forks, ND 588 5,282 - 308
Conway Circle Orlando, FL 544 864 - 44
Conway Plantation Conway, SC 428 3,696 - 355
Country Estates Spring Lake Township, MI 30 - - 1,915
Countryside Great Falls Great Falls, MT 361 1,650 - 262
Countryside Village Denver Denver, CO 1,460 4,384 - 235
Countryside Village Jackson. Jacksonville, FL 962 4,796 - 701
Countryside Village Longmont Longmont, CO 1,481 4,455 - 316
Cranberry Lake White Lake Township, MI 432 220 1,052 5,385
Creekside Lewisville, TX 12,802 2,340 19,836 - 8
Crestview Stillwater, OK 362 963 - 189
Crystal Lake St. Petersburg, FL 498 2,475 - 43
Crystal Lake Club Avon Park, FL 2,396 11,747 - 133
Crystal Lakes Zephryhills, FL 661 2,239 - 333

Del Tura Fort Myers, FL 42,170 4,360 50,508 412 4,195

Eagle Creek Tyler, TX 144 1,761 - 1,608
Eagle Point Seattle, WA 1,048 3,514 - 110
Eastridge San Jose, CA 7,084 2,476 4,671 - 153

Gross Amount
Carried at Close of
Period 12/31/01
-------------------------------- Date of
Depreciable Accumulated Construction (C)
Community Location Land Property Total Depreciation Acquisition (A)
- ----------------------------------------------------- ----------------------------------------------------- ----------------

Carnes Crossing Summerville, SC 1,505 8,656 10,161 1,448 1998(A)
Castlewood Estates Mabelton, GA 656 3,399 4,055 765 1997(A)
Casual Estates Syracuse, NY 2,136 22,422 24,558 3,112 1993(A)
Cedar Grove Clinton, CT 180 1,297 1,477 154 1998(A)
Cedar Knolls Minneapolis, MN 1,217 11,527 12,744 3,635 1994(A)
Central Office Englewood, CO 72 81,251 81,323 14,620
Chesterfield Chesterfield Township, MI 667 2,164 2,831 1,779 1969(C)
Cimarron Park St. Paul, MN 1,424 13,728 15,152 4,246 1994(A)
Clinton Clinton Township, MI 1,419 6,037 7,456 5,041 1969(C)
Coach Royale Boise, ID 197 1,122 1,319 274 1994(A)
Colonial Kalamazoo, MI 820 8,054 8,874 6,355 1985(A)
Colonial Coach Riverdale, GA 1,077 4,932 6,009 1,250 1997(A)
Colony Cove Ellenton, FL 5,683 29,067 34,750 6,958 1994(A)
Columbia Heights Grand Forks, ND 588 5,590 6,178 1,738 1994(A)
Conway Circle Orlando, FL 544 908 1,452 218 1993(A)
Conway Plantation Conway, SC 428 4,051 4,479 1,061 1997(A)
Country Estates Spring Lake Township, MI 30 1,915 1,945 1,486 1974(C)
Countryside Great Falls Great Falls, MT 361 1,912 2,273 518 1993(A)
Countryside Village Denver Denver, CO 1,460 4,619 6,079 1,094 1993(A)
Countryside Village Jackson. Jacksonville, FL 962 5,497 6,459 1,332 1993(A)
Countryside Village Longmont Longmont, CO 1,481 4,771 6,252 1,174 1993(A)
Cranberry Lake White Lake Township, MI 1,484 5,605 7,089 2,385 1986(A)
Creekside Lewisville, TX 2,340 19,844 22,184 416 2001(A)
Crestview Stillwater, OK 362 1,152 1,514 277 1993(A)
Crystal Lake St. Petersburg, FL 498 2,518 3,016 262 1998(A)
Crystal Lake Club Avon Park, FL 2,396 11,880 14,276 260 2001(A)
Crystal Lakes Zephryhills, FL 661 2,572 3,233 720 1998(A)

Del Tura Fort Myers, FL 4,772 54,703 59,475 16,028 1994(A)

Eagle Creek Tyler, TX 144 3,369 3,513 622 1997(A)
Eagle Point Seattle, WA 1,048 3,624 4,672 879 1993(A)
Eastridge San Jose, CA 2,476 4,824 7,300 1,144 1994(A)

57

Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
----------------------- -----------------------
Depreciable Depreciable
Community Location Encumbrance Land Property Land Property
- ------------------------------------------------------------------ -------- ------------- -------- -------------

Eldorado Daytona Bch, FL 408 1,248 - 123
Emerald Lake Punta Gorda, FL 399 1,150 - 316
Evergreen New Haven, CT 309 1,883 - 384

Fairways Country Club Orlando, FL 955 5,823 9 2,286
Falcon Farms Moline, IL 295 1,576 - 459
Ferrand Estates Wyoming, MI 8,020 257 1,579 - 434
Forest Creek South Bend, IN 501 4,849 - 124
Forest Lake Estates Spring Lake Township, MI 414 2,293 27 804
Fountain Vue Marion, IN 360 1,210 - 105
Four Seasons Fayetteville, GA 1,999 856 4,057 - 37
Foxhall Village Raleigh, NC 521 5,283 - 614
Foxwood Farms Ocala, FL 691 1,502 - 622
Friendly Village Lawrenceville, GA 518 2,865 - -
Friendly Village Greely, CO 523 2,702 269 3,007

Glenmoor Battle Creek, MI 204 203 - 1,290
Golden Valley Douglasville, TX 254 800 - 269
Grand Blanc Grand Blanc, MI 1,199 - - 9,211
Grand Place GramdPrairie, TX 5,957 1,332 8,834 - 10
Green Acres New Haven, CT 195 1,286 - 97
Green Park South Montgomery, AL 1,021 7,704 269 1,418
Green River Village Corona, CA 7,270 1,332 20,245 - -
Greenbriar Village Bath, PA 4,743 1,276 11,911 - 10

Haselton Village Eustis, FL 3,161 1,168 4,804 - 3
Hickory Knoll Indianapolis, IN 356 2,669 - 150
Hidden Valley Orlando, FL 492 5,714 - 251
Highland New Haven, CT 153 1,140 - 185
Highlands (The) Flint, MI 6,000 2,323 13,260 2 2,002
Hillcrest Rockland, MA 236 1,285 1 48
Holiday Estates Byron Township, MI 93 - - 1,806
Holly Hills Holly, MI 1,982 6,103 - -

Gross Amount
Carried at Close of
Period 12/31/01
-------------------------------- Date of
Depreciable Accumulated Construction (C)
Community Location Land Property Total Depreciation Acquisition (A)
- ------------------------------------------------------------------------------------------------------------ ----------------

Eldorado Daytona Bch, FL 408 1,371 1,779 322 1993(A)
Emerald Lake Punta Gorda, FL 399 1,466 1,865 880 1988(A)
Evergreen New Haven, CT 309 2,267 2,576 223 1998(A)

Fairways Country Club Orlando, FL 964 8,109 9,073 6,202 1979(A)(C)
Falcon Farms Moline, IL 295 2,035 2,330 452 1993(A)
Ferrand Estates Wyoming, MI 257 2,013 2,270 1,595 1989(A)
Forest Creek South Bend, IN 501 4,973 5,474 896 1998(A)
Forest Lake Estates Spring Lake Township, MI 441 3,097 3,538 989 1994(A)
Fountain Vue Marion, IN 360 1,315 1,675 246 1998(A)
Four Seasons Fayetteville, GA 856 4,094 4,950 86 2001(A)
Foxhall Village Raleigh, NC 521 5,897 6,418 1,422 1997(A)
Foxwood Farms Ocala, FL 691 2,124 2,815 467 1994(A)
Friendly Village Lawrenceville, GA 518 2,865 3,383 697 2001(A)
Friendly Village Greely, CO 792 5,709 6,501 121 1994(A)

Glenmoor Battle Creek, MI 204 1,493 1,697 6 1999 - 2000(C)
Golden Valley Douglasville, TX 254 1,069 1,323 250 1997(A)
Grand Blanc Grand Blanc, MI 1,199 9,211 10,410 3,361 1990(C)
Grand Place GramdPrairie, TX 1,332 8,844 10,176 186 2001(A)
Green Acres New Haven, CT 195 1,383 1,578 252 1998(A)
Green Park South Montgomery, AL 1,290 9,122 10,412 1,065 1999(A)
Green River Village Corona, CA 1,332 20,245 21,577 425 2001(A)
Greenbriar Village Bath, PA 1,276 11,921 13,197 250 2001(A)

Haselton Village Eustis, FL 1,168 4,807 5,975 102 2001(A)
Hickory Knoll Indianapolis, IN 356 2,819 3,175 699 1993(A)
Hidden Valley Orlando, FL 492 5,965 6,457 1,296 1995(A)
Highland New Haven, CT 153 1,325 1,478 226 1998(A)
Highlands (The) Flint, MI 2,325 15,262 17,587 2,782 1998(A)
Hillcrest Rockland, MA 237 1,333 1,570 267 1997(A)
Holiday Estates Byron Township, MI 93 1,806 1,899 1,446 1984(C)
Holly Hills Holly, MI 1,982 6,103 8,085 280 2000(C)

58

Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
----------------------- -----------------------
Depreciable Depreciable
Community Location Encumbrance Land Property Land Property
- ------------------------------------------------------------------ -------- ------------- -------- -------------

Homestead Ranch McAllen, TX 195 1,108 - 175
Hoosier Estates Lebanon, IN 1,008 4,412 - 23
Howell Howell, MI 345 - 151 2,895
Hunters Chase Lima, OH 138 1,246 - 863
Hunter Ridge Jonesboro, GA 2,564 19,675 - 396
Huron Estates Flint, MI 354 1,882 78 505

Indian Rocks Clearwater, FL 441 1,032 - 87

Jade Isle Orlando, FL 273 1,076 - 48
Jurupa Hills Riverside, CA 8,511 1,288 11,459 - -

Knoll Terrace Salem, OR 1,379 2,050 - 324

La Quinta Ridge Indio, CA 1,013 1,873 - 463
Lake in the Hills Auburn Hills, MI 952 6,389 - 105
Lakeland Harbor Lakeland, FL 875 - - 3,407
Lakeland Junction Lakeland, FL 471 972 - 139
Lakes at Leesburg Leesburg, FL 9,089 1,178 - 39 3,617
Lakeside Terrace Fruitland Park, FL 964 4,631 - 17
Lakewood Montgomery, AL 931 2,107 - 1,010
Lakewood Estates Davenport, LA 442 1,210 - 365
Lamplighter GA Marietta, GA 8,733 1,724 13,114 - 34
Land O'Lakes Orlando, FL 472 2,507 - 113
Landmark Village Fairburn, GA 2,539 4,352 - 533
Leisure Woods 0 Rockland Rockland, MA 791 14,326 - 166
Leisure Woods 0 Tauton Tauton, MA 256 2,780 162 2,362
Leisure World Weslaco, TX 228 1,639 - 122
Leonard Gardens Walker, MI 94 - 175 5,683
Longview, CO Longmont, CO 1,604 14,288 - -
Los Ranchos Apple Valley, CA 1,982 1,556 6,299 14 13

Macomb Macomb Township, MI 35,955 1,459 - 1,182 14,804

Gross Amount
Carried at Close of
Period 12/31/01 Date of
--------------------------------
Depreciable Accumulated Construction (C)
Community Location Land Property Total Depreciation Acquisition (A)
- ------------------------------------------------------------------------------------------------------------ ----------------

Homestead Ranch McAllen, TX 195 1,283 1,478 327 1997(A)
Hoosier Estates Lebanon, IN 1,008 4,435 5,443 129 2001(A)
Howell Howell, MI 496 2,895 3,391 2,453 1972(C)
Hunters Chase Lima, OH 138 2,109 2,247 512 1997(A)
Hunter Ridge Jonesboro, GA 2,564 20,071 22,635 669 2001(A)
Huron Estates Flint, MI 432 2,387 2,819 407 1998(A)

Indian Rocks Clearwater, FL 441 1,119 1,560 169 1998(A)

Jade Isle Orlando, FL 273 1,124 1,397 267 1993(A)
Jurupa Hills Riverside, CA 1,288 11,459 12,747 242 2001(A)

Knoll Terrace Salem, OR 1,379 2,374 3,753 582 1993(A)

La Quinta Ridge Indio, CA 1,013 2,336 3,349 706 1994(A)
Lake in the Hills Auburn Hills, MI 952 6,494 7,446 2,430 1994(A)
Lakeland Harbor Lakeland, FL 875 3,407 4,282 2,698 1983(C)
Lakeland Junction Lakeland, FL 471 1,111 1,582 952 1981(C)
Lakes at Leesburg Leesburg, FL 1,217 3,617 4,834 2,540 1984(C)
Lakeside Terrace Fruitland Park, FL 964 4,648 5,612 97 2001(A)
Lakewood Montgomery, AL 931 3,117 4,048 312 1999(A)
Lakewood Estates Davenport, LA 442 1,575 2,017 382 1993(A)
Lamplighter GA Marietta, GA 1,724 13,148 14,872 276 2001(A)
Land O'Lakes Orlando, FL 472 2,620 3,092 630 1993(A)
Landmark Village Fairburn, GA 2,539 4,885 7,424 1,154 1994(A)
Leisure Woods 0 Rockland Rockland, MA 791 14,492 15,283 1,490 1997(A)
Leisure Woods 0 Tauton Tauton, MA 418 5,142 5,560 458 1997(A)
Leisure World Weslaco, TX 228 1,761 1,989 421 1994(A)
Leonard Gardens Walker, MI 269 5,683 5,952 1,998 1987(C)
Longview, CO Longmont, CO 1,604 14,288 15,892 182 2001(A)
Los Ranchos Apple Valley, CA 1,570 6,312 7,882 134 2001(A)

Macomb Macomb Township, MI 2,641 14,804 17,445 9,752 1973(C)

59

Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
----------------------- -----------------------
Depreciable Depreciable
Community Location Encumbrance Land Property Land Property
- ------------------------------------------------------------------ -------- ------------- -------- -------------

Maple Grove Boise, ID 702 2,384 - 369
Maple Ridge Manteno, IL 126 - - 1,459
Maple Run Clio, MI 1,632 5,520 - -
Maple Valley Manteno, IL 338 - - 4,263
Mariwood Indianapolis, IN 324 2,415 - 301
Marnelle Fayetteville, GA 778 464 2,635 - 448
Meadow Park Fargo, ND 133 1,183 - 87
Meadowbrook Ithaca, NY 291 4,029 - 89
Midway Estates Vero Bch., FL 1,313 2,095 2 222
Misty Winds Corpus Christi, TX 1,068 2,728 - 34
Mosby's Point Florence, KY 608 1,574 2 81
Mountain View Henderson, NV 11,926 1,396 21,962 - 6

Northbluff Estates Austin, TX 1,096 8,319 - 7
Northwood Lewisville, TX 8,935 1,820 15,158 - 6
Norton Shores Norton Shores, MI 103 - 118 4,944
Novi Novi, MI 896 - 393 5,305

Oak Grove Albany, GA 418 764 - 55
Oak Hill Groveland Township, MI 115 2,165 - 4,358
Oak Ridge South Bend, IN 615 3,770 - 86
Oak Springs Sorrento, FL 206 1,461 2 525
Oakcrest Pointe San Antonio, TX 1,188 6,676 - -
Oakley Point Moncks Corner, SC - 7
Oakwood Forest Greensboro, NC 1,111 3,843 - 519
Old Orchard Davison, MI 210 182 - 2,671
One Hundred Oaks Fultondale, AL 345 1,839 - 113
Onion Creek Austin, TX 1,072 6,983 - -
Orange Lake Clermont, FL 246 85 1 2,320
Orion Orion Township, MI 422 198 721 5,400

Palm Beach Colony West Palm Beach, FL 691 1,962 - 325
Palm Valley Oviedo, FL 11,887 2,568 21,995 - 140

Gross Amount
Carried at Close of
Period 12/31/01
-------------------------------- Date of
Depreciable Accumulated Construction (C)
Community Location Land Property Total Depreciation Acquisition (A)
- ---------------------------------------------------- ----------------------------------------------------- ----------------

Maple Grove Boise, ID 702 2,753 3,455 630 1993(A)
Maple Ridge Manteno, IL 126 1,459 1,585 401 1997(A)
Maple Run Clio, MI 1,632 5,520 7,152 464 1998(C)
Maple Valley Manteno, IL 338 4,263 4,601 1,109 1997(A)
Mariwood Indianapolis, IN 324 2,716 3,040 642 1993(A)
Marnelle Fayetteville, GA 464 3,083 3,547 746 1997(A)
Meadow Park Fargo, ND 133 1,270 1,403 389 1994(A)
Meadowbrook Ithaca, NY 291 4,118 4,409 908 1993(A)
Midway Estates Vero Bch., FL 1,315 2,317 3,632 546 1993(A)
Misty Winds Corpus Christi, TX 1,068 2,762 3,830 58 2001(A)
Mosby's Point Florence, KY 610 1,655 2,265 401 1993(A)
Mountain View Henderson, NV 1,396 21,968 23,364 462 2001(A)

Northbluff Estates Austin, TX 1,096 8,326 9,422 175 2001(A)
Northwood Lewisville, TX 1,820 15,164 16,984 320 2001(A)
Norton Shores Norton Shores, MI 221 4,944 5,165 3,424 1978(C)
Novi Novi, MI 1,289 5,305 6,594 4,730 1973(C)

Oak Grove Albany, GA 418 819 1,237 196 1993(A)
Oak Hill Groveland Township, MI 115 6,523 6,638 3,092 1983(A)
Oak Ridge South Bend, IN 615 3,856 4,471 715 1998(A)
Oak Springs Sorrento, FL 208 1,986 2,194 1,477 1981(A)
Oakcrest Pointe San Antonio, TX 1,188 6,676 7,864 141 2001(A)
Oakley Point Moncks Corner, SC - 7 7 1 2000(C)
Oakwood Forest Greensboro, NC 1,111 4,362 5,473 1,057 1993(A)
Old Orchard Davison, MI 210 2,853 3,063 410 1988(A)
One Hundred Oaks Fultondale, AL 345 1,952 2,297 477 1997(A)
Onion Creek Austin, TX 1,072 6,983 8,055 263 1999(C)
Orange Lake Clermont, FL 247 2,405 2,652 1,251 1988(A)
Orion Orion Township, MI 1,143 5,598 6,741 3,559 1986(A)

Palm Beach Colony West Palm Beach, FL 691 2,287 2,978 944 1983(A)
Palm Valley Oviedo, FL 2,568 22,135 24,703 464 2001(A)

60

Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
----------------------- -----------------------
Depreciable Depreciable
Community Location Encumbrance Land Property Land Property
- ------------------------------------------------------------------ -------- ------------- -------- -------------

Paradise Village Albany, GA 340 918 - 56
Parkwood Communities Wildwood, FL 3,569 2,792 8,873 - 43
Pedaler's Pond Lake Wales, FL 350 285 - 2,265
Pendleton Indianapolis, IN 122 964 - 114
Pine Lakes Lapeer, MI 1,983 7,822 - -
Pine Lakes Ranch Thornton,CO 2,463 10,379 - 445
Pinecrest Village Shreveport, LA 93 719 - 604
Pinelake Gardens Stuart, FL 7,340 2,128 11,414 - 25
Pinellas Cascades Clearwater, FL 1,747 2,313 - 97
Pinewood Columbus, MI 1,242 10,070 57 408
Pleasant Ridge Lansing, MI 915 3,898 122 59
Pooles Manor Ellenwood, GA 776 3,050 - 3
Prarie Greens Frederick, CO 3 22
Presidents Park Grand Forks, ND 258 1,283 - 377

Redwood Estates Thornton,CO 2,473 10,044 - 341
Regency Lakes Winchester, VA 423 3,705 - 2,667
Riverview Portland, OR 537 1,942 - 123
Rosemount Woods Minneapolis/St. Paul, MN 475 4,297 - 42
Royal Estates Kalamazoo, MI 1,015 2,475 - 81

Saddlebrook N. Charleston, SC 1,284 5,497 - 46
Science City Midland, MI 870 1,760 - 100
Shadow Hills Orlando, FL 2,680 11,148 - 4
Shadowood Acworth, GA 8,336 2,024 12,669 - 25
Shady Lane Clearwater, FL 324 1,574 - 36
Shady Oaks Clearwater, FL 750 6,967 - 36
Shady Village Clearwater, FL 468 3,179 - 42
Shenandoah Boise, ID 443 2,528 - 226
Shenandoah Village Sicklerville, NJ 6,159 1,436 10,306 - 6
Sherwood Marion, IN 264 1,175 - 948
Skyway Indianapolis, IN 178 1,366 - 168
Smokecreek Snelville, GA 1,056 4,378 - 2

Gross Amount
Carried at Close of
Period 12/31/01
-------------------------------- Date of
Depreciable Accumulated Construction (C)
Community Location Land Property Total Depreciation Acquisition (A)
- ---------------------------------------------------- ----------------------------------------------------- ----------------

Paradise Village Albany, GA 340 974 1,314 250 1993(A)
Parkwood Communities Wildwood, FL 2,792 8,916 11,708 187 2001(A)
Pedaler's Pond Lake Wales, FL 350 2,550 2,900 1,465 1990(A)
Pendleton Indianapolis, IN 122 1,078 1,200 241 1993(A)
Pine Lakes Lapeer, MI 1,983 7,822 9,805 664 1998(C)
Pine Lakes Ranch Thornton,CO 2,463 10,824 13,287 2,641 1997(A)
Pinecrest Village Shreveport, LA 93 1,323 1,416 310 1997(A)
Pinelake Gardens Stuart, FL 2,128 11,439 13,567 243 2001(A)
Pinellas Cascades Clearwater, FL 1,747 2,410 4,157 566 1993(A)
Pinewood Columbus, MI 1,299 10,478 11,777 1,982 1998(A)
Pleasant Ridge Lansing, MI 1,037 3,957 4,994 766 1998(A)
Pooles Manor Ellenwood, GA 776 3,053 3,829 64 2001(A)
Prarie Greens Frederick, CO 3 22 25 2 2001(A)
Presidents Park Grand Forks, ND 258 1,660 1,918 402 1994(A)

Redwood Estates Thornton,CO 2,473 10,385 12,858 2,540 1997(A)
Regency Lakes Winchester, VA 423 6,372 6,795 1,328 1997(A)
Riverview Portland, OR 537 2,065 2,602 492 1993(A)
Rosemount Woods Minneapolis/St. Paul, MN 475 4,339 4,814 532 1994(A)
Royal Estates Kalamazoo, MI 1,015 2,556 3,571 632 1993(A)

Saddlebrook N. Charleston, SC 1,284 5,543 6,827 1,077 1998(A)
Science City Midland, MI 870 1,860 2,730 466 1993(A)
Shadow Hills Orlando, FL 2,680 11,152 13,832 235 2001(A)
Shadowood Acworth, GA 2,024 12,694 14,718 267 2001(A)
Shady Lane Clearwater, FL 324 1,610 1,934 304 1998(A)
Shady Oaks Clearwater, FL 750 7,003 7,753 1,350 1998(A)
Shady Village Clearwater, FL 468 3,221 3,689 331 1998(A)
Shenandoah Boise, ID 443 2,754 3,197 634 1994(A)
Shenandoah Village Sicklerville, NJ 1,436 10,312 11,748 221 2001(A)
Sherwood Marion, IN 264 2,123 2,387 464 1998(A)
Skyway Indianapolis, IN 178 1,534 1,712 356 1993(A)
Smokecreek Snelville, GA 1,056 4,380 5,436 93 2001(A)

61

Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
----------------------- -----------------------
Depreciable Depreciable
Community Location Encumbrance Land Property Land Property
- ------------------------------------------------------------------ -------- ------------- -------- -------------

South Oaks Palmetto, GA 1,817 885 1,755 - -
Southwind Naples, FL 1,476 3,463 - 157
Spring Brook Utica, MI 4,509 1,209 10,928 - 110
Springfield Farms Brookline, MO 1,698 2,157 - 2,152
Starlight Ranch Orlando, FL 5,597 8,859 - 452
Steeple Chase Battle Creek, MI - -
Stone Mountain Stone Mounatain, GA 7,228 1,416 10,574 - 14
Stonegate Austin Austin, TX 1,436 11,218 - 57
Stonegate Pines Arlington, TX 644 3,395 - -
Stonegate, LA Shreveport, LA 160 642 - 117
Suburban Woods Union City, GA 920 4,129 - 5
Sun Valley Jackson, MI 606 2,514 9 107
Sunny South Boynton Beach, FL 7,334 1,276 11,308 - 58
Sunset Palms Boynton Beach, FL 1 5
Swan Creek Ann Arbor, MI 882 9,709 - 43

Tara Woods N. Ft Myers, FL 2,124 13,345 - 8
Tarpon Glen Clearwater, FL 510 2,893 - 106
Terrace Heights Dubuque, IA 919 2,413 - 297
The Colony Rancho Mirage, CA 4,725 2,259 4,745 - 151
The Glen Rockland, MA 261 252 - 637
The Homestead McAllen, TX 473 100 742 - 238
The Mill (Pooles Rex) Rex, GA 600 2,283 - 9
The Orchard Sanat Rosa, CA 7,886 2,794 6,363 - 61
Tierra West Albuquerque, NM 2,612 10,249 - -
Timber Heights Davison, MI 274 - 119 6,703
Torrey Hills Flint, MI 346 205 - 5,162
Town & Country, FL Orlando, FL 245 896 - 15
Trails End Weslaco, TX 260 1,804 - 223
Twenty Nine Pines St. Paul, MN 317 2,859 - -
Twin Pines Goshen, IN 197 1,934 - 244

Universtiy Village Orlando, FL 1,920 10,599 - -

Gross Amount
Carried at Close of
Period 12/31/01 Date of
--------------------------------
Depreciable Accumulated Construction (C)
Community Location Land Property Total Depreciation Acquisition (A)
- ------------------------------------------------------------------------------------------------------------ ----------------

South Oaks Palmetto, GA 885 1,755 2,640 97 2000(A)
Southwind Naples, FL 1,476 3,620 5,096 880 1993(A)
Spring Brook Utica, MI 1,209 11,038 12,247 2,143 1998(A)
Springfield Farms Brookline, MO 1,698 4,309 6,007 812 1997(A)
Starlight Ranch Orlando, FL 5,597 9,311 14,908 2,228 1997(A)
Steeple Chase Battle Creek, MI - - - - 2000(C)
Stone Mountain Stone Mounatain, GA 1,416 10,588 12,004 223 2001(A)
Stonegate Austin Austin, TX 1,436 11,275 12,711 235 2001(A)
Stonegate Pines Arlington, TX 644 3,395 4,039 72 2001(A)
Stonegate, LA Shreveport, LA 160 759 919 239 1993(A)
Suburban Woods Union City, GA 920 4,134 5,054 87 2001(A)
Sun Valley Jackson, MI 615 2,621 3,236 506 1998(A)
Sunny South Boynton Beach, FL 1,276 11,366 12,642 239 2001(A)
Sunset Palms Boynton Beach, FL 1 5 6 4 2001(A)
Swan Creek Ann Arbor, MI 882 9,752 10,634 1,879 1998(A)

Tara Woods N. Ft Myers, FL 2,124 13,353 15,477 329 2001(A)
Tarpon Glen Clearwater, FL 510 2,999 3,509 322 1998(A)
Terrace Heights Dubuque, IA 919 2,710 3,629 638 1993(A)
The Colony Rancho Mirage, CA 2,259 4,896 7,155 1,148 1994(A)
The Glen Rockland, MA 261 889 1,150 133 1997(A)
The Homestead McAllen, TX 100 980 1,080 223 1997(A)
The Mill (Pooles Rex) Rex, GA 600 2,292 2,892 49 2001(A)
The Orchard Sanat Rosa, CA 2,794 6,424 9,218 1,435 1994(A)
Tierra West Albuquerque, NM 2,612 10,249 12,861 218 2001(A)
Timber Heights Davison, MI 393 6,703 7,096 1,306 1996(A)
Torrey Hills Flint, MI 346 5,367 5,713 665 1987(A)
Town & Country, FL Orlando, FL 245 911 1,156 215 1993(A)
Trails End Weslaco, TX 260 2,027 2,287 461 1994(A)
Twenty Nine Pines St. Paul, MN 317 2,859 3,176 732 1994(A)
Twin Pines Goshen, IN 197 2,178 2,375 524 1993(A)

Universtiy Village Orlando, FL 1,920 10,599 12,519 230 2001(A)

62

Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
----------------------- -------------------------
Depreciable Depreciable
Community Location Encumbrance Land Property Land Property
- ------------------------------------------------------------------------ -------- ------------- -------- ---------------

Valley Vista Grand Rapids, MI 1,504 411 2,791 - 148
Vance Columbus, OH 200 993 - 424
Villa Flint, MI 128 332 - 2,793
Village Green Vero Beach, FL 13,666 3,120 17,713 - 292

Westbrook Detroit, MI 190 2,451 3 5,815
Westpark Wickenburg, AZ 888 4,356 - 10
Whispering Pines Clearwater, FL 4,208 4,071 - 292
Willo Arms Cleveland, OH 473 2,146 - 89
Winter Haven Oaks Winter Haven, FL 490 705 362 1,396
Winter Paradise RV Hudson, FL 300 1,593 - 411
Woodlake Greensboro, NC 924 6,311 12 216
Woodlands of Kennesaw Kennesaw, GA 1,092 7,989 - 15

Yankee Springs Grand Rapids, MI 948 5,360 78 767
Yorktowne Sharonville, OH 2,130 6,311 - 357

Difference between allocated purchase price and historical
cost of properties acquired in the ROC Acquistion
- ---------------------------------------------------------------------- -------- ------------- -------- -------------
$285,653 $203,242 $1,003,092 $ 10,345 $ 301,984
========== ======== ============= ======== =============

Gross Amount
Carried at Close of
Period 12/31/01
-------------------------------- Date of
Depreciable Accumulated Construction (C)
Community Location Land Property Total Depreciation Acquisition (A)
- ----------------------------------------------------- ----------------------------------------------------- ----------------

Valley Vista Grand Rapids, MI 411 2,939 3,350 532 1998(A)
Vance Columbus, OH 200 1,417 1,617 251 1993(A)
Villa Flint, MI 128 3,125 3,253 2,547 1984(A)
Village Green Vero Beach, FL 3,120 18,005 21,125 377 2001(A)

Westbrook Detroit, MI 193 8,266 8,459 1,159 1996(C)
Westpark Wickenburg, AZ 888 4,366 5,254 93 2001(A)
Whispering Pines Clearwater, FL 4,208 4,363 8,571 1,027 1993(A)
Willo Arms Cleveland, OH 473 2,235 2,708 550 1993(A)
Winter Haven Oaks Winter Haven, FL 852 2,101 2,953 279 1988(A)(C)
Winter Paradise RV Hudson, FL 300 2,004 2,304 182 1998(A)
Woodlake Greensboro, NC 936 6,527 7,463 1,250 1998(A)
Woodlands of Kennesaw Kennesaw, GA 1,092 8,004 9,096 168 2001(A)

Yankee Springs Grand Rapids, MI 1,026 6,127 7,153 1,145 1998(A)
Yorktowne Sharonville, OH 2,130 6,668 8,798 1,649 1997(A)

Difference between allocated purchase price and historical
cost of properties acquired in the ROC Acquistion 959 176,178 177,137 37,216
- ------------------------------------------------------------------------------------------------------------
$214,546 $1,481,254 * $1,695,800 * $287,709 *
===================================================

*-includes rental property and rental properties held for sale

63

SCHEDULE III
Continued

CHATEAU COMMUNITIES, INC.

REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued

The changes in total real estate for the years ended December 31, 2001, 2000,
and 1999 are as follows:

2001 2000 1999
------------ ------------- -------------

Balance, beginning of year $ 1,132,493 $ 1,055,450 $ 1,026,509
Acquisitions 563,088 7,577 14,808
Improvements 34,678 69,466 25,105
Dispositions and other (43,585) - (10,972)
------------ ------------- -------------

Balance, end of year $ 1,686,674 $ 1,132,493 $ 1,055,450
============ ============= =============

The change in accumulated depreciation for the years ended December 31, 2001,
2000, and 1999 are as follows:

2001 2000 1999
------------ ------------- -------------

Balance, beginning of year $ 235,653 $ 192,015 $ 151,260
Depreciation for the year 57,650 43,638 41,422
Dispositions and other (8,094) - (667)
------------ ------------- -------------
Balance, end of year 285,209 235,653 192,015
============ ============= =============

64