CHATEAU COMMUNITIES INC - 10-Q Quarterly Report

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

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2003

or

o	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)

303.741.3707
Registrant’s telephone number, including area code

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

Yes x

No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x

No o

The number of shares of the registrant’s Common Stock outstanding on May 6, 2003 was 29,411,828 shares.

CHATEAU COMMUNITIES, INC.
FORM 10-Q
INDEX

		Pages

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2002	1

	Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002	2

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002	3

	Notes to Condensed Consolidated Financial Statements	4 - 9

Item 2.	Management Discussion and Analysis of Financial Condition and Results of Operations	9 - 16

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16

Item 4.	Controls and Procedures	16

PART II.	OTHER INFORMATION	17

SIGNATURE		22

CERTIFICATIONS		23 - 24

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CHATEAU COMMUNITIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended March 31,

(In thousands, except per share data)	2003			2002

Revenues
Rental income	$	63,432		$	61,936
Interest income		2,806			2,752
Management fee and other income (loss)		(94	)		466

		66,144			65,154
Expenses
Property operating and maintenance		19,707			18,445
Real estate taxes		4,335			4,214
Depreciation and amortization		17,683			16,277
Administrative		3,102			3,367
Interest and related amortization		16,702			16,800

		61,529			59,103

Income before gain on disposition of properties and minority interests		4,615			6,051
Gain on disposition of properties		—			1,164
Minority interests of preferred OP Unitholders		(1,523	)		(1,523	)
Minority interests of common OP Unitholders		(496	)		(950	)

Income from continuing operations		2,596			4,742

Discontinued operations
Income from discontinued operations, net of minority interests		641			1,467
Gain on disposition of properties, net of minority interests		385			—

Income from discontinued operations		1,026			1,467

Income before cumulative effect of accounting change		3,622			6,209
Cumulative effect of accounting change, net of minority interests		—			(845	)

Net income available to common shareholders	$	3,622		$	5,364

Earnings per common share / OP Unit - basic
Income from continuing operations	$	0.09		$	0.16
Income from discontinued operations		0.03			0.05

Income before cumulative effect of accounting change		0.12			0.21
Cumulative effect of accounting change		—			(0.03	)

Net income available to common shareholders	$	0.12		$	0.18

Weighted average common shares - basic		29,351			29,185

Earnings per common share / OP Unit - diluted
Income from continuing operations	$	0.09		$	0.16
Income from discontinued operations		0.03			0.05

Income before cumulative effect of accounting change		0.12			0.21
Cumulative effect of accounting change		—			(0.03	)

Net income available to common shareholders	$	0.12		$	0.18

Weighted average common shares - diluted		29,359			29,344

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

CHATEAU COMMUNITIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)	March 31, 2003 (unaudited )			December 31, 2002

ASSETS
Rental property:
Land	$	199,328		$	207,137
Land and improvements for expansion sites		42,596			41,751
Depreciable property, net		1,395,074			1,433,327

		1,636,998			1,682,215
Less: accumulated depreciation		351,169			346,583

Net rental property		1,285,829			1,335,632
Rental property held for sale		39,177			6,004
Cash and cash equivalents		4,013			2,025
Rents and other receivables, net		5,092			5,304
Notes receivable		43,388			42,611
Investments in and advances to affiliates		106,408			112,054
Prepaid expenses and other assets		13,766			11,358

Total assets	$	1,497,673		$	1,514,988

LIABILITIES
Debt	$	1,006,573		$	1,013,809
Accrued interest payable		14,306			13,911
Accounts payable and accrued expenses		16,009			15,248
Rents received in advance and security deposits		19,246			16,266
Dividends and distributions payable		20,006			20,038

Total liabilities		1,076,140			1,079,272
Minority interests in Operating Partnership		130,956			134,477
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; 29,398,309 and 29,263,416, shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively		294			293
Additional paid-in capital		500,350			498,869
Dividends in excess of accumulated earnings		(195,493	)		(182,991	)
Accumulated other comprehensive income		(5,293	)		(5,537	)
Notes receivable from officers, 347,875 and 355,885 shares outstanding at March 31, 2003 and December 31, 2002, respectively		(9,281	)		(9,395	)

Total shareholders’ equity		290,577			301,239

Total liabilities and shareholders’ equity	$	1,497,673		$	1,514,988

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

CHATEAU COMMUNITIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended March 31,

(In thousands)	2003			2002

Cash flows from operating activities:
Net income	$	3,622		$	5,364
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items included in discontinued operations		415			915
Equity in loss of CSI		622			472
Share of loss from N’Tandem		27			130
Net gain on disposition of properties - continuing operations		—			(1,164	)
Income attributed to common minority interests - continuing operations		496			950
Cumulative effect of accounting change, net of minority interests		—			845
Bad debt expense		188			464
Depreciation and amortization from continuing operations		17,683			16,277
Amortization of debt issuance costs		1,111			735
Decrease in operating assets		176			2,463
Increase in operating liabilities		1,264			3,273

Net cash provided by operating activities		25,604			30,724
Cash flows from investing activities:
Net proceeds from dispositions of rental properties		4,067			6,232
Collection of amounts held in escrow, from prior year property dispositions		—			10,660
Additions to rental property and equipment		(4,798	)		(8,348	)
Investment in and advances to affiliates		(1,297	)		(4,764	)
Proceeds from Notes Receivable - OP Unitholder		6,000			—
Payments (advances) on notes receivable, net		(708	)		633

Net cash provided by investing activities		3,264			4,413
Cash flows from financing activities:
Borrowings on lines of credit		36,785			32,454
Payments on lines of credit		(42,959	)		(64,098	)
Principal payments on debt		(1,062	)		(1,165	)
Dividends/distributions to shareholders/OP Unitholders		(19,229	)		—
Payment of debt issuance costs		(412	)		(1,612	)
Exercise of common stock options and other		(3	)		88

Net cash used in financing activities		(26,880	)		(34,333	)

Increase in cash and cash equivalents		1,988			804
Cash and cash equivalents, beginning of period		2,025			61

Cash and cash equivalents, end of period	$	4,013		$	865

Supplemental non-cash information:
Fair market value of OP Units/common shares issued in connection with acquisitions/development	$	246		$	698

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

CHATEAU COMMUNITIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.	Background and Basis of Presentation:

	Background -
	Chateau Communities, Inc. is a real estate investment trust (“REIT”) formed in 1993. We are engaged in owning and operating manufactured housing community properties, primarily through our Operating Partnership, CP Limited Partnership. As of March 31, 2003, our portfolio consisted of 203 properties, containing an aggregate of 67,966 homesites and 1,359 park model/RV sites, located in 32 states. We also fee manage 35 properties, containing an aggregate of 7,835 homesites.

	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America and in conformity with the rules and regulations of the Securities and Exchange Commission requires management to make estimates and assumptions. These estimates may affect the reported amounts of 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.

	In our opinion, the interim financial statements presented herein reflect all adjustments of a normal and recurring nature that are necessary to fairly present the interim financial statements. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the year ended December 31, 2003. These financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2002.

	Basis of Presentation -
	The accompanying condensed consolidated financial statements include all accounts of Chateau, our wholly owned qualified REIT subsidiaries, our Operating Partnership, and controlled joint ventures. All significant inter-entity balances and transactions have been eliminated in consolidation. Investments in joint ventures or entities that we do not control but exercise significant influence over are accounted for using the equity method of accounting.

	We own 100% of the preferred stock of Community Sales, Inc. (“CSI”), our taxable service corporation through which we conduct manufactured home sales and brokerage activities. Through our ownership, we are entitled to 100% of the CSI cash flow and economics; however, we account for our investment in CSI using the equity method of accounting, since we do not own any of its voting common stock.

	Reclassifications –
	Certain prior year amounts have been reclassified to conform to current period presentation.

2.	Comprehensive Income:

	We amortize the loss of a forward rate interest swap hedge transaction, which was settled in 2001 with the issuance of fixed rate debt and included in comprehensive income in the equity section of the Condensed Consolidated Balance Sheets. Total comprehensive income for the three months ended March 31, 2003 and 2002 is summarized as follows (in thousands):

	2003			2002

Net income available to common shareholders	$	3,622		$	5,364
Add back: amortization of hedge loss		244			219
Less: adjustment for amounts included in net income		(244	)		(219	)

Total comprehensive income	$	3,622		$	5,364

3.	Common Stock and Related Transactions:

	On February 25, 2003, we declared a cash dividend/distribution of $.55 per share/OP Unit to Shareholders and OP Unitholders of record as of March 31, 2003. The dividend/distribution was paid April 15, 2003 and is included in dividends/distributions payable in the accompanying condensed consolidated balance sheet as of March 31, 2003.

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

(In thousands, except per share data)	For the Three Months Ended March 31,

	2003		2002

Basic EPS:
Income from continuing operations plus minority interests of common OP Unitholders	$	3,092	$	5,692

Weighted average common shares outstanding		29,351		29,185
Weighted average common OP Units outstanding		5,618		5,857

Weighted average common shares and OP Units - Basic		34,969		35,042

Per Share	$	0.09	$	0.16

Diluted EPS:
Income from continuing operations plus minority interests of common OP Unitholders	$	3,092	$	5,692

Weighted average common shares outstanding		29,351		29,185
Weighted average common OP Units outstanding		5,618		5,857
Employee stock options		8		159

Weighted average common shares and OP Units - Diluted		34,977		35,201

Per Share	$	0.09	$	0.16

	We have notes receivable from stock option exercises that bear interest, primarily at LIBOR plus 80 basis points, range in maturity dates from 2003 to 2005, are collateralized by the underlying common shares, and are non-recourse to the borrower. Approximately $3.6 million of the loans mature in August 2003 and are collateralized by approximately 140,000 shares of common stock. We may recognize impairment on these notes receivable depending on our share price at maturity.

4.	Stock Options Plan:

	If compensation cost for stock option grants had been recognized based on the fair value at the grant dates for March 31, 2003 and 2002 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):

	For the Three Months Ended March 31,

	2003			2002

Net income, as reported	$	3,622		$	5,364
Less: Total stock-based employee compensation expense determined under fair value based method for all awards		(228	)		(282	)

Pro forma net income	$	3,394		$	5,082

Earnings per share
Basic - as reported	$	0.12		$	0.18

Basic - pro forma	$	0.12		$	0.17

Diluted - as reported	$	0.12		$	0.18

Diluted - pro forma	$	0.12		$	0.17

5.	Financing:

	The following table sets forth certain information regarding debt at March 31, 2003:

(Dollars in thousands)	Weighted Average Interest Rate			Maturity Date		Principal Balance

Fixed rate mortgage debt		7.70	%		2003 - 2011	$	278,911
Unsecured senior notes		7.77	%		2003 - 2021		470,000
Unsecured installment notes		7.50	%		2012		9,662

Total fixed rate debt							758,573

Unsecured term loan		3.08	%		2004		125,000
Unsecured lines of credit		2.70	%		2005		123,000

Total variable rate debt							248,000

						$	1,006,573

	We have a line of credit available with BankOne, N.A., acting as lead agent with a total borrowing capacity of $175 million (the “Bank One Credit Facility”). Beginning April 2003, our borrowing capacity on this facility is restricted by $10 million each month to ensure availability of $50 million in August 2003 to repay $50 million of senior unsecured notes upon their maturity. Subsequent to the repayment, the borrowing capacity will be restored to $175 million. The capacity will then be restricted by $20 million through November 2003 to ensure adequate borrowing capacity to repay $20 million of senior unsecured debt upon its maturity. Subsequent to that repayment, the borrowing capacity will be restored to $175 million. The facility matures in February 2005 and as of March 31, 2003, the facility bears interest at LIBOR plus 140 basis points (2.68% as of March 31, 2003). In addition we have a $7.5 million revolving line of credit from US Bank, which, as of March 31, 2003, bears interest at a rate of LIBOR plus 125 basis points (2.53% as of March 31, 2003) (together with our BankOne Credit Facility, “Credit Facilities”). As of March 31, 2003 we had approximately $123 million outstanding under our Credit Facilities and had available $59.5 million in additional borrowing capacity.

	We have a $125 million term loan with BankOne acting as lead agent, which as of March 31, 2003, bears interest at LIBOR plus 175 basis points (3.03% as of March 31, 2003) and matures in May 2004.

	In January 2003, Standard & Poor’s Ratings Services affirmed our credit ratings at BBB-, but revised its outlook of our company from stable to negative. In March 2003, Moody’s Investors Service revised our debt rating to Ba1, outlook uncertain. Among other things, the downgrade was attributed to uncertainty regarding plans to address 2004 and 2005 debt maturities. This downgrade resulted in increased borrowing costs under our Bank One Credit Facility, term loan and $70 million of unsecured senior notes, and is reflected above. In addition, with the change in ratings, we may be required to repurchase $20 million of privately issued unsecured debt, at the lenders option, including related interest and other charges. This debt is currently scheduled to mature November 2003.

6.	Related Party Transactions:

	During the first quarter of 2003, we owned approximately 19% of N’Tandem Trust’s (“N’Tandem”) outstanding equity. As of March 31, 2003, we had loans and advances of approximately $38 million outstanding to N’Tandem. We also guarantee N’Tandem’s working capital line of credit, which had $16.5 million outstanding as of March 31, 2003. Subsequent to March 31, 2003, we advanced N’Tandem $16.5 million to pay off its working capital line of credit. In addition, we own N’Tandem’s external advisor and provide management and other services to N’Tandem. As such, we possess significant influence over the operating and financial decisions of N’Tandem, and accordingly, account for our investment in N’Tandem utilizing the equity method of accounting. The following table details the fees charged to N’Tandem for the respective periods (in thousands):

	For the Three Months Ended March 31,

	2003		2002

Interest income and related fees	$	500	$	722
Advisory fees		317		337
Management and overhead fees		267		426

	$	1,084	$	1,485

	In an effort to maximize the return on our investment in N’Tandem and to assume control over the portfolio that we manage for N’Tandem, we signed an agreement in January 2003 to purchase a subsidiary of N’Tandem. This transaction, which carries a total purchase price of approximately $150 million, will require a $5 million additional cash investment. We will assume $85 million of secured debt and $3 million of other liabilities and retire our loans and advances to N’Tandem, which will be approximately $54.5 million. The transaction was approved by the shareholders of N’Tandem and is expected to close in the second quarter of 2003. When the transaction is completed, we plan to market 12 communities for disposition, representing approximately 15% of N’Tandem’s net operating income, in the remainder of 2003.

	Effective April 1, 2003, we had the unilateral right to convert our notes receivable from N’Tandem into a common equity investment in N’Tandem. We exercised that right in April 2003. Based on the conversion right, we will consolidate N’Tandem beginning April 1, 2003.

7.	Rental Property Held for Sale / Discontinued Operations:

	Assets held for sale are carried at the lower of book value or fair value less costs to sell the assets. Consistent with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, income from discontinued operations, for all periods presented, includes the results of operations through the property sale date (if the property was sold prior to March 31, 2003) and the results of operations for the properties held for sale through March 31, 2003. During the first quarter of 2003, we sold two communities for a combined gross sales price of $4.4 million, which includes a net gain on sale of $434,000. These communities are included in discontinued operations for all periods presented.

	As of March 31, 2003 we have thirteen communities that are classified as held for sale and are included in discontinued operations for all periods presented. Properties are identified as assets held for sale when certain disposition criteria are met, and are adjusted to the lower of book value or fair value less costs to sell the assets at the time of reclassification.

	During 2002, we disposed of eleven communities, which are included in discontinued operations in 2002.

	The following table shows the results of operations for the discontinued operations, in thousands:

	For the Three Months Ended March 31,

	2003			2002

Total revenues	$	2,288		$	4,099
Total operating expenses		(826	)		(1,684	)
Interest expense and related amortization		(21	)		(33	)
Depreciation expense		(677	)		(620	)

Income from discontinued operations before
Gain on disposition of properties and common minority interests		764			1,762
Gain on disposition of properties		459			—
Minority interests of common OP Unitholders		(197	)		(295	)

Income from discontinued operations, net of minority interests	$	1,026		$	1,467

8.	Goodwill:

	We adopted the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), as of January 1, 2002. Under the new rules, goodwill and intangible assets deemed to have indefinite lives are no longer amortized, instead being subject to impairment tests at least annually.

	SFAS No. 142 requires us to test goodwill for impairment using a two-step process. The first step is a screen for potential impairment, while the second step measures the amount of impairment. We completed the first step of our goodwill impairment testing by the end of the second fiscal quarter of 2002. As a result of performing the first “step” of goodwill impairment testing, we identified impairment related to the goodwill associated with CSI’s only company-owned home sales dealership. As allowed under the transitional provisions of SFAS No. 142, we completed the second “step” in the third quarter of 2002. As a result of this test, we recognized impairment of approximately $1.0 million before allocation to minority interests. The impairment loss has been recorded in the first quarter as a cumulative effect of a change in accounting principle in the Condensed Consolidated Statements of Income during the three months ended March 31, 2002.

9.	New Accounting Pronouncements:

	In December 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No.148, “Accounting for Stock-Based Compensation – Transition Disclosure – an amendment of FASB Statement No. 123” (“SFAS No. 148”). SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation”, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. We have not yet elected to adopt the transitional provisions of this standard.

In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities” (“FIN 46”).A variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A company that consolidates a variable interest entity is called the primary beneficiary. Previous practice has dictated that one company would include another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 changes that by requiring a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a significant variable interest. This statement is effective in two parts. The statement immediately applies to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after January 31, 2003. The statement applies no later than the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired prior to February 1, 2003. The adoption of this statement will require the consolidation of CSI beginning July 1, 2003. We do not believe additional exposure exists as a result of consolidating CSI, as CSI is currently accounted for under the equity method through our recognition of 100% of CSI’s equity earnings/losses.

Item 2.

Management Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the financial statements and notes appearing elsewhere in this report and with the December 31, 2002 Form 10-K. Certain statements in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. Such forward-looking statements may involve our plans, objectives and expectations that may be impacted by a number of risks and uncertainties. Those risks and uncertainties include, but are not limited to: national, regional and local economic climates, competition from other forms of single or multi-family housing, changes in market rental rates, supply and demand for affordable housing, the ability of manufactured home buyers to obtain financing, our ability to maintain rental rates and occupancy, the level of repossessions by manufactured home lenders, changes in interest rates, the pace of dispositions, our corporate debt ratings, and the condition of capital markets. We undertake no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Overview

Since our organization, we have elected to qualify as a REIT under the Internal Revenue Code and thus do not generally pay Federal income taxes to the extent that such earnings are distributed to shareholders in accordance with REIT requirements. We conduct substantially all of our activities through our Operating Partnership in which we owned a combined 84% general partner interest as of March 31, 2003. As of March 31, 2003, we owned 203 properties containing an aggregate of 67,966 homesites and 1,359 park model/RV sites, located in 32 states. Approximately 28% of these homesites were in Florida, 25% were in Michigan, and 9% were in Georgia. We also fee managed 35 properties containing an aggregate of 7,835 homesites. In January 2003, we entered into an agreement to acquire the N’Tandem subsidiary that owns 33 of these communities (further described below).

During the third quarter of 2001, we began the implementation of our plan to dispose of those communities that do not fit our overall strategic objectives or do not meet our operating standards, which in turn will help us meet our financial objectives. From the inception of the plan through March 31, 2003, we have disposed of an aggregate of 24 properties and three parcels of land for approximately $96.6 million (see further discussion under “Liquidity and Capital Resources” below).

Results of Operations

Our results of operations in 2003 continue to be adversely impacted by many of the same factors that affected our 2002 results, including:
	•	Continued weakening economic conditions, which are more pronounced in certain markets in which we operate, specifically, greater Atlanta, Indiana, Michigan, North Carolina and Alabama.
	•	Several retail lenders who provide financing to our residents have exited the market place, while others have tightened their underwriting standards, making it more difficult for prospective residents to finance homes to be placed in our communities.
	•	Readily available and lower rate mortgage financing allows our traditional customers the opportunity to purchase a moderately priced site-built home, with an affordable monthly payment.
	•	Declining rental rates from apartments have added to the competitive environment.
	•	Two retail lenders filed for protection under the bankruptcy laws in the fourth quarter of 2002. This has affected the pricing of manufactured homes by increasing the supply of repossessed and other pre-owned homes, thereby exerting downward pressure on new and pre-owned home pricing. In addition, these lenders were making rental payments on an aggregate of 800 sites that they were occupying as a result of their repossession of homes from our residents. Effective in the fourth quarter of 2002, these lenders discontinued rental payments on these sites. As of March 31, 2003, 1,200 sites are occupied by repossessed homes not considered revenue producing in our portfolio.

These factors have made it more difficult for us to attract new residents and maintain historical occupancy rates at our communities. As of the end of the first quarter we lost 235 revenue producing sites in the same store portfolio, from December 31, 2002. We expect occupancy to remain relatively flat for the remainder of 2003. In addition, these factors have led to increased repossessions, increased collection costs, additional pressure for lower rental increases and losses of value in home inventory held by CSI.

The following table summarizes certain information relative to our properties for the three months ended March 31, 2003 and 2002. We consider all communities owned by us at both the beginning of the period and the end of the period, which are not classified as held for sale, as our “Same Store Portfolio.”

	Same Store Portfolio						Total Portfolio

(Dollars in thousands, except per site information)	2003			2002			2003			2002

As of March 31,
Number of communities		186			186			203			214
Total manufactured homesites		65,147			64,771			67,966			69,990
Occupied sites		55,863			57,419			58,065			61,733
Occupancy		85.7	%		88.6	%		85.4	%		88.2	%
For the three months ended March 31,
Rental income	$	63,187		$	61,703		$	63,432		$	61,936
Property operating expenses	$	22,768		$	21,461		$	24,042		$	22,659
Net operating income	$	40,419		$	40,242		$	39,390		$	39,277
Weighted average monthly rent per site	$	362		$	346		$	362		$	343

NOTE: Discontinued operations are included only in “Total Portfolio” site and community information.

Comparison of three months ended March 31, 2003 to three months ended March31, 2002

For the three months ended March 31, 2003, income from continuing operations was $2.6 million, a decrease of $2.1 million from the three months ended March31, 2002. The decrease was due to increased depreciation in 2003 and lower gains on dispositions in 2003, as compared with 2002.

Rental revenue for the three months ended March 31, 2003 was $63.4 million, an increase of $1.5 million from the three months ended March 31, 2002. The increase is primarily due to rental increases in our Same Store Portfolio offset somewhat by declining occupancy.

As of March 31, 2003, occupancy in our stable portfolio was 89.3%, 75.5% in the expansion portfolio, and 38.9% in the development properties. Total portfolio occupancy at March 31, 2003 was 85.4%. This compares to occupancy at March 31, 2002 of 92.3% in the stable portfolio, 77.1% in the expansion portfolio and 42.4% in the development portfolio, or total portfolio occupancy of 88.2%. On a per-site basis, weighted monthly rental revenue for the three months ended March 31, 2003 was $362 compared with $343 for the same period in 2002, an increase of 5.4%.

Management fee and other income primarily include management and advisory fee income for the management of 35 manufactured home communities, which includes N’Tandem Trust (“N’Tandem”), and equity earnings/losses from our taxable REIT subsidiary, Community Sales, Inc. (“CSI”). The decrease is due to reduced fees from N’Tandem, (see further discussion on N’Tandem under “Liquidity and Capital Resources” below) and increased losses from CSI. We recognized a loss of $622,000 from CSI in the first quarter of 2003, compared with a loss of $472,000 in the first quarter of 2002. The increased losses are a result of lower home sales margins and an increase in inventory reserves as a result of the increased pressure on home values.

Property operating and maintenance expense for the three months ended March 31, 2003 increased by $1.3 million or 7% from the same period a year ago. The increase was due to the increases in our Same Store Portfolio, including increased water and sewer expense, repairs and maintenance, property insurance and payroll burden costs, offset by a decrease in collection costs.

Administrative expense for the three months ended March 31, 2003 decreased by $265,000 from the same period a year ago. Administrative expense in the first quarter of 2003 was 4.7% of total revenues as compared to 5.2% in the same period of 2002. This decrease was primarily due to the restructuring of some of our divisional and corporate departments that was completed in the fourth quarter of 2002 in an effort to lower our costs, in addition to a number of operational-related consulting projects that were completed in 2002.

Depreciation and amortization expense for the three months ended March 31, 2003 increased $1,406,000 from the same period a year ago. Depreciation expense as a percentage of average depreciable rental property in the first quarter of 2003 remained relatively unchanged from 2002.

Discontinued Operations

Consistent with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, income from discontinued operations, for all periods presented, includes the results of operations through the property sale date (if the property was sold prior to March 31, 2003) and the results of operations for the properties held for sale through March 31, 2003. During the first quarter of 2003 we sold two communities, which have been reclassified to discontinued operations for all periods presented.

As of March 31, 2003 we have thirteen communities that are classified as held for sale and are included in discontinued operations (see further discussion under “2003 Portfolio Changes” below) for all periods presented. Properties are identified as assets held for sale when certain criteria are met, and are adjusted to the lower of book value or fair value less costs to sell the assets at the time of reclassification.

During 2002, we disposed of eleven communities, which are included in discontinued operations for 2002.

Cumulative Effect of a Change in Accounting Principle

CSI adopted the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”, as of January 1, 2002, resulting in an impairment charge in the first quarter of approximately $1 million. This resulted from an impairment in the goodwill related to its investment in the only company owned home sales dealership. This charge is reflected as a cumulative effect of a change in accounting principle.

Liquidity and Capital Resources

Net cash provided by operating activities was $25.6 million for the three months ended March 31, 2003, compared to $30.7 million for the same period in 2002, due to changes in our operating assets and liabilities.

Net cash provided by investing activities for the three months ended March 31, 2003 was $3.3 million as compared to $4.4 million for the same period in 2002. This amount is comprised of proceeds from the disposition of rental properties and a payment from a Notes Receivable OP Unitholder, offset somewhat by investments in development, acquisitions and capital expenditures, as well as additional investments in and advances to affiliates. We advanced $1.5 million to CSI during the first quarter of 2003 to primarily fund inventory purchases.

Net cash used in financing activities for the three months ended March 31, 2003 was $26.9 million. This consisted primarily of net payments on our Credit Facilities (discussed below) and distributions to our shareholders and OP Unitholders of $19.2 million.

We anticipate that cash generated from operating activities and borrowing on our Credit Facilities will continue to provide the necessary funding for our short-term liquidity needs such as operating expenses, interest expense on outstanding indebtedness, recurring capital expenditures and dividends and distributions to our shareholders and OP Unitholders.

Our long-term liquidity is affected by a number of factors, including the acquisition and disposition of properties, the amount of nonrecurring capital expenditures, the pace and cost of new and existing community development and expansion activities, our credit ratings with the national rating agencies and the timing of principal payments due on our indebtedness.

We have approximately $70 million of senior unsecured notes maturing in 2003, $50 million in August and $20 million in November. We expect to repay the balance with refinancings, the proceeds from property dispositions, borrowings on our Credit Facilities, which, as described below, have been amended to require adequate capacity to handle these maturities, or the issuance of additional secured or unsecured debt.

We have a line of credit available with BankOne, N.A., acting as lead agent with a total borrowing capacity of $175 million (the “Bank One Credit Facility”). Beginning April 2003, our borrowing capacity on this facility is restricted by $10 million each month to ensure availability of $50 million in August 2003 to repay $50 million of senior unsecured notes upon their maturity. Subsequent to the repayment, the borrowing capacity will be restored to $175 million. The capacity will then be restricted by $20 million through November 2003 to ensure adequate borrowing capacity the repay of $20 million of senior unsecured debt upon its maturing. Subsequent to that repayment, the borrowing capacity will be restored to $175 million. The facility matures in February 2005 and as of March 31, 2003, the facility bears interest at LIBOR plus 140 basis points (2.68% as of March 31, 2003). In addition we have a $7.5 million revolving line of credit from US Bank, which, as of March 31, 2003, bears interest at a rate of LIBOR plus 125 basis points (2.53% as of March 31, 2003) (together with our BankOne Credit Facility, “Credit Facilities”). As of March 31, 2003 we had approximately $123 million outstanding under our Credit Facilities and had available $59.5 million in additional borrowing capacity.

As of March 31, 2003, we had outstanding, in addition to the Credit Facilities, $470 million of senior unsecured debt with a weighted average interest rate and remaining maturity of 7.8% and 5.6 years, respectively, $279 million of secured mortgage debt with a weighted average interest rate and remaining maturity of 7.7% and 6.4 years, respectively, $9.7 million unsecured installment notes with an interest rate of 7.5% and a $125 million unsecured term loan with an interest rate of 3.1%. As of March 31, 2003, we had approximately $1.0 billion of total debt outstanding, representing approximately 57.8% of our total market capitalization. We consider market capitalization to be the sum of outstanding debt, preferred OP Units and the market value of our outstanding common shares and OP Units, all at the end of the period. All of the debt is fixed rate debt, other than our Credit Facilities and term loan. The fixed rate debt carries a weighted average interest rate of 7.7%.

In January 2003, Standard & Poor’s Ratings Services affirmed our credit ratings at BBB-, but revised its outlook of our company from stable to negative. In March 2003, Moody’s Investors Service revised our debt rating to Ba1, outlook uncertain. This downgrade was attributed, among other things, to uncertainty regarding plans to address 2004 and 2005 debt maturities. The downgrade resulted in increased borrowing costs under our BankOne Credit Facility, term loan and $70 million of unsecured senior notes of approximately $1 million annually. In addition, with the change in ratings, we may be required to repurchase $20 million of privately issued unsecured debt, at the lenders option, including related interest and other charges. This debt is currently scheduled to mature November 2003.

We are currently in the process of securing $50 million of unsecured senior notes, which are due 2021. As a result of our current credit rating, the covenant waivers that were received effective December 31, 2002 require us to complete this transaction by June 24, 2003, or be in default on these notes. We expect to complete the transaction by the required date.

As we have done historically, we expect to finance future debt maturities and meet our long-term liquidity needs through proceeds from property dispositions, additional borrowings under our existing or new credit facilities, issuances of new secured or unsecured debt financings or where appropriate, additional issuances of equity.

2003 Portfolio Change

As part of our strategy to bring our overall debt to market capitalization ratio more in line with our historical operating parameters, as of March 31, 2003 we disposed of 2 properties and during 2002 we disposed of 15 properties, as outlined in the table below:

(Dollars in thousands)	Number of Communities		Number of Sites		Gross Sales Price		Gain / (Loss) on Sale

Included in Discontinued Operations		11		2,250	$	41,440	$	8,879
Included in Continuing Operations		4		723		8,450		(401	)

2002 totals		15		2,973	$	49,890	$	8,478
2003 totals - all included in Discontinued Operations		2		338	$	4,400	$	459

Grand total		17		3,311	$	54,290	$	8,937

For the three months ended March 31, 2003, the proceeds from the dispositions were used to repay amounts outstanding under our Credit Facilities.

As a continuing part of our long-term strategic plan, we expect to dispose of an additional $100 million of assets during 2003 (of which $39.2 million met the held for sale criteria under SFAS No.144) and potentially another aggregate $100-$200 million in 2004 and 2005. The disposition pace and pricing will depend on a number of factors, including the availability and terms of mortgage financing for manufactured housing communities and current capitalization rates.

Capital Investments

Our investment in capital improvements for the three months ended March 31, is as follows (in thousands, except per site):

	For the Three Months Ended March 31,

	2003

Recurring capital expenditures (per site average $25.34) (a)	$	1,699
Site upgrades (b)		117
Acquisitions (c)		311
Expansions and development (d)		1,736
Revenue producing (e)		137

Total	$	4,000

(a)	Includes capital expenditures necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures do not include water meters, sheds, homes, or acquisitions. This is the actual cost to maintain the asset quality in the communities, e.g. clubhouse and building improvements, vehicles and maintenance equipment, road and other paving work, utility systems, common area amenities, drainage etc. Minimum capitalizable amount of project is $1,000.

(b)	Includes costs that are incurred when an existing older home (usually a smaller single-sectional home) moves out, and the site is prepared for a larger new home, more often than not, a multi-sectional home. These activities which are governed by manufacturers’ installation requirements and state building codes include grading, electrical, concrete, landscaping, drainage and water/sewer lines.

(c)	Acquisitions, as presented above, represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. Acquisitions also include deferred capital improvements identified during due diligence and provided for in the acquisition pricing formula. These are identified during due diligence, but sometimes require up to 12 months after closing to complete.

(d)	These are the costs included in the development and expansion of communities. Costs in this category may include engineering, driveways, paving, utilities, homesite preparation and amenities.

(e)	Revenue producing includes costs related to revenue-generating activities, consisting primarily of sub-metering of water and sewer, and storage sheds.

As of March 31, 2003, we substantially completed the development of approximately 40 sites. In response to economic conditions that have weakened the demand for manufactured home community sites in many of our markets, we have moderated the pace of our development and expansion activity and will focus on filling the sites already substantially complete and currently vacant. We expect to spend an additional $10 million in finish costs in 2003, as these sites are filled. 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, and to increase our potential cash flow from the community.

N’Tandem

As of March 31, 2003, we owned approximately 19% of N’Tandem’s outstanding equity and have made loans and advances to N’Tandem. We account for this investment utilizing the equity method of accounting. Subsequent to March 31, 2003, we advanced N’Tandem $16.5 million to pay off their working capital line of credit. In an effort to maximize the return on our investment in N’Tandem and to assume control over the portfolio that we manage for N’Tandem, we signed an agreement in January 2003 to purchase a subsidiary of N’Tandem. This transaction, which carries a total purchase price of approximately $150 million, will require a $5 million additional cash investment. In addition, we will assume $85 million of secured debt and $3 million of other liabilities and retire our loans and advances to N’Tandem, which are currently $54.5 million. The transaction has been approved by the shareholders of N’Tandem and is expected to close in the second

quarter of 2003. When the transaction is completed, we plan to market 11 communities for disposition, representing approximately 15% of N’Tandem’s net operating income, in the remainder of 2003.

Effective April 1, 2003, we had the unilateral right to convert our notes receivable from N’Tandem into a common equity investment in N’Tandem. We exercised that right in April 2003. Based on the conversion right, we will consolidate N’Tandem beginning April 1, 2003.

Historically we recognized income from a property management agreement, an advisory agreement, overhead reimbursements and interest income on advances as earned from N’Tandem. The amount of fee income and interest income earned is outlined in the table below.

	For the Three Months Ended March 31,

	2003		2002

Interest income and related fees	$	500	$	722
Advisory fees		317		337
Management and overhead fees		267		426

	$	1,084	$	1,485

Interest is earned on the loan to N’Tandem (Prime plus one percent, or 5.25% at March 31, 2003) and in 2002, includes fees paid by N’Tandem for the subordination of our loan to the N’Tandem bank debt (approximately $200,000). 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 were based on a specific allocation of costs. During the first quarter of 2003, we recorded a loss of $27,000, representing our ownership interest in N’Tandem’s loss.

New Accounting Pronouncements

See footnote 9 of the Notes to Condensed Consolidated Financial Statements for discussion of the impact of new accounting pronouncements.

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 sales of property and rental property depreciation and amortization. We believe 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 (1) does not represent cash flow from operations as defined by generally accepted accounting principles; (2) 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; (3) is not an alternative to cash flow as a measure of liquidity; and (4) may not be comparable to similarly titled measures reported by other REITs.

Our FFO is calculated as follows:

	For the Three Months Ended March 31,

(In thousands)	2003			2002

Income available to common shareholders	$	3,622		$	5,364
Adjustments:
Depreciation and amortization on rental properties		17,107			15,835
Gain on disposition of rental property		—			(1,164	)
Minority interests of common OP Unitholders		693			1,076
Cumulative effect of accounting change		—			1,014
Discontinued operations:
Depreciation on rental property		677			620
Net gain on disposition of properties		(459	)		—

FFO	$	21,640		$	22,745

Item 3.

Quantitative and Qualitative Disclosures about Market Risks

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 March 31, 2003, our Credit Facilities and term loan represented our only variable rate debt.

We face market risk relating to our fixed-rate debt upon refinancing of such debt and depending upon prevailing interest rates at the time of such refinance. We have approximately $70 million of senior unsecured notes maturing in 2003, $50 million in August and $20 million in November. We expect to repay the balance with the proceeds from property dispositions or borrowings on our Credit Facilities or issuing new secured or unsecured debt.

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 $2.5 million increase in interest expense based on our average variable rate debt outstanding during 2003 of $253 million.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures. The term “disclosure controls and procedures,” as defined by the regulations of the Securities and Exchange Commission (“SEC”), means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the “Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit to the SEC under the Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions to be made regarding required disclosure. The Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of a date within 90 days of the filing date of this Form 10-Q and have concluded that our disclosure controls and procedures are effective as of the date of such evaluation.

Changes in Internal Controls

We also maintain a system of internal controls. The term “internal controls,” as defined by the American Institute of Certified Public Accountants’ Codification of Statement on Auditing Standards, AU Section 319, means controls and other procedures designed to provide reasonable assurance regarding the achievement of objectives in the reliability of our financial reporting, the effectiveness and efficiency of our operations and of our compliance with applicable laws and regulations. There have been no significant changes in our internal controls or in other factors that could significantly affect such controls subsequent to the date we carried out our evaluation.

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings
	None.

Item 2.	Changes in Securities and Use of Proceeds
	Not Applicable.

Item 3.	Defaults Upon Senior Securities
	Not Applicable.

Item 4.	Submission of Matters to a Vote of Security Holders
	None.

Item 5.	Other Information

Property Information

We classify all our properties in one of four categories: stable, expansion, development, or disposition. The stable portfolio includes communities that do not have expansion activities. These communities normally have stable occupancy rates. The development portfolio includes our ground-up development properties. The expansion portfolio includes properties that have non-revenue producing homesites, which were constructed through an expansion of the community. When an expansion community becomes 90% occupied, it is reclassified as a stabilized community. The disposition portfolio includes those communities that meet the criteria to be classified as assets held for sale.

The following table sets forth certain information, as of March 31, 2003, regarding our properties, excluding our three park model/RV communities, as well as two of our greenfield properties that we have not yet commenced actual site development. 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.

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

*Stable*
100 Oaks		AL		Fultondale		235		74.0	%	$	253.99
Anchor Bay		MI		Detroit		1,384		88.1	%	$	404.54
Anchor North		FL		Tampa Bay		93		94.6	%	$	321.44
Apache East		AZ		Apache Jct		123		91.9	%	$	275.38
Arlington Lakeside		TX		Dallas		233		86.3	%	$	310.38
Audubon		FL		Orlando		280		95.7	%	$	309.94
Autumn Forest		NC		Greensboro		299		57.9	%	$	274.54
Avon		MI		Detroit		617		94.8	%	$	455.74
Beacon Hill Colony		FL		Tampa		201		99.5	%	$	266.78

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

Beacon Terrace		FL		Tampa		297		99.7	%	$		296.30
Bermuda Palms		CA		Palm Springs		185		98.4	%	$		383.83
Berryman’s Branch		NJ		Philadelphia		257		92.2	%	$		386.12
Buena Vista		ND		Fargo		400		94.8	%	$		312.22
Camden Point		GA		Kingsland		268		40.7	%	$		194.46
Castlewood Estates		GA		Atlanta		334		81.7	%	$		388.87
Casual Estates		NY		Syracuse		961		64.0	%	$		331.00
Cedar Grove		CT		New Haven		60		96.7	%	$		354.92
Cedar Knolls		MN		Minneapolis		458		96.9	%	$		453.24
Chesterfield		MI		Detroit		345		93.0	%	$		435.20
Cimarron Park		MN		St. Paul		505		96.2	%	$		468.23
Clinton		MI		Detroit		1,000		88.8	%	$		440.47
Coach Royale		ID		Boise		91		96.7	%	$		337.62
Colonial Acres		MI		Kalamazoo		612		82.2	%	$		336.81
Colonial Manor		MI		Kalamazoo		195		87.7	%	$		311.78
Colony Cove		FL		Sarasota		2,210		98.3	%	$		408.45
Columbia Heights		ND		Grand Forks		302		95.4	%	$		325.65
Country Estates		MI		Grand Rapids		254		80.3	%	$		331.61
Countryside Village - Denver		CO		Denver		345		91.9	%	$		455.52
Countryside Vlg Jacksonville		FL		Jacksonville		643		85.4	%	$		343.10
Countryside Vlg Longmont		CO		Longmont		310		97.4	%	$		451.58
Creekside		TX		Dallas		583		94.2	%	$		417.22
Crestview		OK		Stillwater		238		68.1	%	$		224.37
Crystal Lake Club		FL		Tampa		599		79.3	%	$		310.53
Denali Park		AZ		Apache Jct		162		82.7	%	$		280.37
Eagle Point		WA		Seattle		230		84.8	%	$		521.05
Eastridge Estates		CA		San Jose		187		99.5	%	$		734.10
Eldorado Estates		FL		Daytona Beach		126		94.4	%	$		305.05
Emerald Lake		FL		Fort Myers		201		99.0	%	$		321.11
Evergreen		CT		New Haven		102		97.1	%	$		357.26
Fairways Country Club		FL		Orlando		1,141		99.3	%	$		326.16
Falcon Farms		IL		Moline		215		90.2	%	$		293.42
Ferrand Estates		MI		Grand Rapids		420		97.6	%	$		383.40
Forest Creek		IN		South Bend		167		77.8	%	$		338.14
Fountainvue		IN		Marion		120		85.8	%	$		206.42
Four Seasons		GA		Atlanta		214		88.3	%	$		335.84
Foxhall Village		NC		Raleigh		315		87.6	%	$		363.99
Friendly Village		GA		Atlanta		203		94.6	%	$		400.73
Friendly Village - CO		CO		Greeley		226		98.2	%	$		364.12
Grand Place		TX		Dallas		334		93.7	%	$		374.27
Green Acres - CT		CT		New Haven		64		100.0	%	$		351.38
Green River Village		CA		Los Angeles		333		99.7	%	$		772.68
Greenbriar Village		PA		Allentown		319		98.7	%	$		393.11
Greenpark South		AL		Montgomery		421		90.7	%	$		293.18
Haselton Village		FL		Orlando		292		97.6	%	$		258.11
Hickory Knoll		IN		Indianapolis		325		91.4	%	$		357.47
Hidden Valley		FL		Orlando		303		99.7	%	$		361.83
Highland		CT		New Haven		50		90.0	%	$		364.14
Hillcrest		MA		Boston		83		96.4	%	$		387.56
Holiday Estates		MI		Grand Rapids		204		93.6	%	$		352.88
Hoosier Estates		IN		Indianapolis		288		97.2	%	$		213.68
Howell		MI		Lansing		455		89.7	%	$		420.01
Hunter Ridge		GA		Atlanta		838		82.1	%	$		355.50
Jurupa Hills		CA		Los Angeles		322		99.7	%	$		597.83
La Quinta Ridge		CA		Palm Springs		151		91.4	%	$		438.31
Lake in the Hills		MI		Detroit		238		95.8	%	$		431.48
Lakeland Harbor		FL		Tampa		504		99.8	%	$		282.15
Lakeland Junction		FL		Tampa		191		99.5	%	$		224.72
Lakes at Leesburg		FL		Orlando		640		99.7	%	$		294.31
Lakeside Terrace		FL		Orlando		241		97.9	%	$		233.99
Lakewood Estates IA		IA		Davenport		180		89.4	%	$		321.64
Lamplighter GA		GA		Atlanta		431		87.2	%	$		380.78

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

Land O’ Lakes		FL		Orlando		173		93.6	%	$		286.65
Landmark Village		GA		Atlanta		524		79.8	%	$		338.07
Leisurewoods Rockland		MA		Boston		394		98.5	%	$		364.08
Leisurewoods Taunton		MA		Boston		222		100.0	%	$		338.81
Longview - CO		CO		Longmont		400		99.0	%	$		432.75
Los Ranchos		CA		Los Angeles		389		75.1	%	$		365.99
Macomb		MI		Detroit		1,427		86.6	%	$		432.26
Maple Grove Estates		ID		Boise		270		92.6	%	$		357.92
Maple Valley		IL		Kankakee		276		98.6	%	$		311.94
Mariwood		IN		Indianapolis		296		88.5	%	$		343.37
Marnelle		GA		Atlanta		205		85.9	%	$		329.19
Meadow Park		ND		Fargo		117		94.0	%	$		248.82
Mountain View		NV		Las Vegas		349		100.0	%	$		550.91
North Bluff Estates		TX		Austin		274		95.3	%	$		368.33
Northwood		TX		Dallas		451		96.0	%	$		417.76
Novi		MI		Detroit		725		81.8	%	$		465.19
Oak Ridge		IN		South Bend		204		82.4	%	$		297.46
Oakhill		MI		Flint		504		80.8	%	$		401.56
Oakwood Forest		NC		Greensboro		482		72.2	%	$		304.42
Old Orchard		MI		Flint		200		99.0	%	$		372.57
Orange Lake		FL		Orlando		242		92.1	%	$		296.98
Palm Beach Colony		FL		West Palm Beach		285		94.4	%	$		337.67
Parkwood Communities		FL		Orlando		695		95.7	%	$		192.59
Pine Lakes Ranch		CO		Denver		762		96.7	%	$		423.83
Pinecrest Village		LA		Shreveport		446		76.2	%	$		186.17
Pinewood		MI		Columbus		380		85.3	%	$		341.34
Pleasant Ridge		MI		Lansing		305		57.0	%	$		253.91
President’s Park		ND		Grand Forks		174		84.5	%	$		281.04
Redwood Estates		CO		Denver		754		97.5	%	$		428.28
Regency Lakes		VA		Winchester		384		98.2	%	$		266.52
Riverdale(Colonial Coach)		GA		Atlanta		481		72.3	%	$		352.70
Rosemount Woods		MN		Minneapolis/St. Paul		182		97.8	%	$		442.30
Royal Estates		MI		Kalamazoo		183		85.8	%	$		360.06
Saddlebrook		SC		Charleston		425		93.4	%	$		253.85
Science City		MI		Midland		171		87.7	%	$		321.95
Shadow Hills		FL		Orlando		670		72.4	%	$		351.02
Shadowood		GA		Atlanta		506		82.8	%	$		362.36
Shady Lane		FL		Clearwater		108		90.7	%	$		301.60
Shady Oaks		FL		Clearwater		250		95.6	%	$		367.96
Shady Village		FL		Clearwater		156		96.2	%	$		348.63
Shenandoah Estates		ID		Boise		154		93.5	%	$		335.94
Shenandoah Village		NJ		Philadelphia		359		99.4	%	$		370.33
Skyway		IN		Indianapolis		156		93.6	%	$		343.42
Smokecreek		GA		Atlanta		264		83.3	%	$		351.02
Southwind Village		FL		Naples		337		95.8	%	$		363.87
Springbrook		MI		Utica		398		94.2	%	$		383.79
Starlight Ranch		FL		Orlando		783		95.0	%	$		344.72
Stone Mountain		GA		Atlanta		354		83.1	%	$		404.40
Stonegate Austin		TX		Austin		359		93.0	%	$		399.02
Stonegate Pines		TX		Dallas		160		92.5	%	$		340.36
Stonegate, LA		LA		Shreveport		157		93.0	%	$		208.82
Suburban Woods		GA		Atlanta		216		71.3	%	$		360.21
Sunny South Estates		FL		West Palm Beach		319		97.5	%	$		416.55
Swan Creek		MI		Ann Arbor		294		98.6	%	$		392.69
Tara Woods		FL		Tampa		531		99.2	%	$		358.36
Tarpon Glen		FL		Clearwater		170		87.1	%	$		331.65
Terrace Heights		IA		Dubuque		317		91.2	%	$		302.42
The Colony		CA		Palm Springs		220		97.3	%	$		650.20
The Glen		MA		Boston		36		100.0	%	$		459.00
The Orchard		CA		San Francisco		233		99.6	%	$		698.43
Tierra West		NM		Albuquerque		653		50.8	%	$		351.60
Twenty-Nine Pines		MN		St. Paul		152		90.1	%	$		354.85

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

Twin Pines		IN		Goshen		238		90.3	%	$		317.97
University Village		FL		Orlando		480		80.2	%	$		368.30
Valley Vista		MI		Grand Rapids		137		89.1	%	$		367.49
Villa		MI		Flint		319		76.5	%	$		372.14
Village Green		FL		Vero Beach		780		99.9	%	$		360.74
Westpark		AZ		Phoenix		183		90.7	%	$		369.20
Whispering Pines		FL		Clearwater		392		93.6	%	$		397.96
Woodlake		NC		Greensboro		308		73.4	%	$		280.26
Woodlands of Kennesaw		GA		Atlanta		273		80.6	%	$		397.99
Yorktowne		OH		Cincinnati		354		87.3	%	$		388.07

Subtotal stable portfolio				144		51,680		89.3	%	$		370.43

*Expansion*
Algoma Estates		MI		Grand Rapids		343		83.7	%	$		327.16
Broadmore		IN		South Bend		370		67.8	%	$		303.16
Butler Creek		GA		Augusta		376		57.7	%	$		211.61
Canterbury Estates		MI		Grand Rapids		290		61.4	%	$		271.85
Carnes Crossing		SC		Summerville		604		80.3	%	$		232.13
Conway Plantation		SC		Myrtle Beach		299		67.6	%	$		209.57
Cranberry Lake		MI		Pontiac		328		82.0	%	$		413.13
Crystal Lakes - Zephyrhills		FL		Tampa		330		64.2	%	$		177.03
Del Tura		FL		Fort Myers		1,344		88.6	%	$		476.12
Eagle Creek		TX		Tyler		194		81.4	%	$		190.97
Forest Lake Estates		MI		Grand Rapids		221		67.4	%	$		340.00
Foxwood Farms		FL		Orlando		375		80.8	%	$		257.95
Grand Blanc		MI		Flint		478		76.2	%	$		409.45
Hunter’s Chase		OH		Lima		135		68.1	%	$		189.26
Huron Estates		MI		Flint		111		83.8	%	$		242.01
Indian Rocks		FL		Clearwater		148		71.6	%	$		301.11
Lakewood - AL		AL		Montgomery		396		43.4	%	$		193.84
Leonard Gardens		MI		Grand Rapids		319		73.0	%	$		339.38
Midway Estates		FL		Vero Beach		204		60.8	%	$		374.62
Misty Winds		TX		Corpus Christi		354		84.5	%	$		296.42
Norton Shores		MI		Grand Rapids		656		76.1	%	$		301.31
Palm Valley		FL		Orlando		790		82.3	%	$		383.47
Pedaler’s Pond		FL		Orlando		214		81.8	%	$		242.06
Pinelake Gardens		FL		Vero Beach		532		87.4	%	$		348.44
Sherwood		IN		Marion		134		47.8	%	$		225.76
South Oaks		GA		Atlanta		294		46.3	%	$		111.04
Springfield Farms		MO		Springfield		290		55.5	%	$		202.84
The Highlands		MI		Flint		682		86.2	%	$		334.69
Timber Heights		MI		Flint		221		82.8	%	$		340.49
Torrey Hills		MI		Flint		377		85.4	%	$		366.47
Westbrook		MI		Detroit		388		90.2	%	$		431.14
Winter Haven Oaks		FL		Orlando		343		53.9	%	$		236.75
Yankee Springs		MI		Grand Rapids		284		76.4	%	$		286.23

Subtotal expansion portfolio				33		12,424		75.5	%	$		327.63

*Development*
Antelope Ridge		CO		Colorado Springs		246		39.0	%	$		342.49
Deerfield Manor		MI		Grand Rapids		96		42.7	%	$		263.29
Glenmoor		MI		Battle Creek		41		36.6	%	$		199.22
Harston Woods		TX		Fort Worth		145		19.3	%	$		236.14
Holly Hills		MI		Holly		174		50.6	%	$		211.98
Maple Run		MI		Clio		146		59.6	%	$		281.37
Oakley Point		SC		North Charleston		91		8.8	%	$		180.89
Onion Creek		TX		Austin		350		45.1	%	$		312.55
Pine Lakes		MI		Lapeer		136		62.5	%	$		342.87
Prairie Greens		CO		Denver		139		20.9	%	$		388.78
Wolf Creek		IA		Des Moines		80		6.3	%	$		220.94

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

Subtotal development portfolio				11		1,644		38.9	%	$		287.15

Subtotal				188		65,748		85.4	%	$		363.21

*Disposition*
Arbor Village		MI		Jackson		266		89.8	%	$		299.31
Breazeale		WY		Laramie		117		97.4	%	$		287.72
Chateau Jonesboro		GA		Atlanta		75		98.7	%	$		286.95
Crystal Lake - Pinellas		FL		St. Petersburg		166		86.7	%	$		300.95
Golden Valley		GA		Atlanta		131		69.5	%	$		327.43
Knoll Terrace		OR		Salem		212		85.4	%	$		414.27
Mosby’s Point		KY		Cincinnati		150		90.0	%	$		349.48
Orion		MI		Detroit		423		90.1	%	$		393.36
Pinellas Cascades		FL		Clearwater		238		89.9	%	$		416.49
Pooles Manor		GA		Atlanta		194		68.0	%	$		347.46
Riverview		OR		Portland		133		90.2	%	$		471.48
Vance		OH		Columbus		113		78.8	%	$		289.90

Subtotal disposition portfolio				12		2,218		86.3	%	$		361.82

Total portfolio				200		67,966		85.4	%	$		363.17

Item 6.	Exhibits and Reports on Form 8-K

	(a)	Exhibits and Index of Exhibits
		99.1 Certifications of Chief Executive Officer and Chief Financial Officer pursuant to §906 of The Sarbanes-Oxley Act of 2002.

	(b)	Reports on Form 8-K
		None.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, and in the capacities indicated, on the 13^th day of May, 2003.

	CHATEAU COMMUNITIES, INC.

	By:	/s/ TAMARA D. FISCHER

		Tamara D. Fischer Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)

Sarbanes-Oxley §302(a) Certification

I, Rees F. Davis, Jr., certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Chateau Communities, Inc.;

2)	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3)	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4)	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a.	Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c.	Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5)	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a.	All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6)	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weakness.

Date: May 13, 2003

	By:	/s/ REES F. DAVIS, JR.

	Name:	Rees F. Davis, Jr.
	Title:	Chief Executive Officer

Sarbanes-Oxley §302(a) Certification

I, Tamara D. Fischer, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Chateau Communities, Inc.;

2)	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3)	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4)	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a.	Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c.	Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5)	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a.	All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6)	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weakness.

Date: May 13, 2003

	By:	/s/ TAMARA D. FISCHER

	Name:	Tamara D. Fischer
	Title:	Chief Financial Officer

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents