Attached files
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EX-32.1 - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/ | v178028_ex32-1.htm |
EX-31.2 - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/ | v178028_ex31-2.htm |
EX-31.1 - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/ | v178028_ex31-1.htm |
EX-32.2 - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/ | v178028_ex32-2.htm |
EX-99.1 - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/ | v178028_ex99-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
x ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF
1934
For
the Fiscal Year Ended December 31, 2009
¨ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF
1934
Commission
File No. 0-15940
UNIPROP
MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
a
Michigan Limited Partnership
(Exact
name of registrant as specified in its charter)
MICHIGAN
|
38-2702802
|
(State
or other jurisdiction of
|
(I.R.S.
employer
|
incorporation
or organization)
|
identification
number)
|
280
Daines Street, Birmingham, Michigan 48009
(Address
of principal executive offices) (Zip Code)
(248)
645-9220
(Registrant's
telephone number, including area code)
Securities
registered pursuant to Section 12(g) of the Act:
units of
beneficial assignments of limited partnership interest
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act of
1933. Yes
¨ No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15 (d) of the Exchange Act of
1934.
Yes ¨ No
x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes ¨
No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K
x
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
Accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Securities Exchange Act of 1934).
Yes ¨ No
x
The
estimated aggregate net asset value of the units as of March 1, 2010 held by
non-affiliates, as estimated by the General Partner (based on a 2010 appraisal
of Partnership properties), was $32,828,870. As of March 1,
2010, the number of units of limited partnership interest of the registrant
outstanding was 3,303,387. The Partnership units of interest are not
traded in any public market.
DOCUMENTS
INCORPORATED BY REFERENCE
NONE
PART
I
This Form 10-K contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Such statements are based on assumptions and expectations which may
not be realized and are inherently subject to risks and uncertainties, many of
which cannot be predicted with accuracy and some of which might not even be
anticipated. Future events and actual results, financial and otherwise, may
differ materially from the results discussed in the forward-looking statements.
Risks and other factors that might cause such a difference include, but are not
limited to, the effect of economic and market conditions; financing risks, such
as the inability to obtain debt financing on favorable terms; the level and
volatility of interest rates; and failure of the Partnership’s properties to
generate additional income to offset increases in operating expenses, as well as
other risks listed herein under Item 1.
ITEM
1.
|
BUSINESS
|
General Development of
Business
Uniprop
Manufactured Housing Communities Income Fund II, a Michigan Limited Partnership
(the "Partnership"), acquired, maintains, leases, operates and ultimately will
dispose of income producing residential real properties consisting of seven
manufactured housing communities (the "Properties"). The Partnership was
organized and formed under the laws of the State of Michigan on November 7,
1986. Its principal offices are located at 280 Daines Street,
Birmingham, Michigan 48009 and its telephone number is (248)
645-9220.
-2-
The
Partnership filed an S-11 Registration Statement in November 1986, which was
declared effective by the Securities and Exchange Commission on December 23,
1986. The Partnership thereafter sold 3,303,387 units (the "Units") of
beneficial assignment of limited partnership interest representing capital
contributions by unit holders (the "Unit Holders") to the Partnership of $20 per
unit. The sale of all 3,303,387 Units was completed in December 1987,
generating $66,067,740 of contributed capital to the Partnership.
The
Partnership originally acquired seven properties in 1987 and acquired two
additional Properties in 1988. Paradise Village was sold in 2007, and
Country Roads was sold in 2008. Today the Partnership owns seven
manufactured home communities. They are Ardmor Village, Camelot
Manor, Dutch Hills, El Adobe, Stonegate, Sunshine Village and West
Valley. The Partnership does not intend to acquire any other
communities.
The
Partnership operates the Properties as manufactured housing communities with the
primary investment objectives of: (1) providing cash from operations to
investors; (2) obtaining capital appreciation; and (3) preserving capital of the
Partnership. There can be no assurance that such objectives can
continue to be achieved.
On August
20, 1998, the Partnership borrowed $30,000,000 (the “Loan”) from GMAC Commercial
Mortgage Corporation. It secured the Loan by placing new mortgages on
seven of its nine properties. The note was payable in monthly
installments of $188,878, including interest at 6.37%. The
Partnership used the proceeds from the Loan to refinance the Partnership’s
outstanding indebtedness of $30,045,000, which was incurred in a 1993 mortgage
financing transaction.
On August 29, 2008, the Partnership
refinanced the GMAC mortgage note payable and executed seven new mortgages
payable with StanCorp Mortgage Investors, LLC in the aggregate amount of
$23,225,000 secured by the seven remaining properties of the Partnership. To pay
off the prior mortgage balance of $25,277,523 and the costs of refinancing, the
Partnership transferred $2,735,555 from cash reserves. The mortgages
are payable in monthly installments of interest and principal through September
2033. Interest on these notes is accrued at a fixed rate of 6.625%
for five years, at which time, the rate will reset to the lender’s then
prevailing market rate. As of December 31, 2009, the balance on these
notes was $22,750,674. In connection with the new mortgage debt, the
Partnership incurred $693,798 in financing costs as a result of the refinancing,
which are being amortized over the life of the mortgage of 25
years.
Financial Information About
Industry Segment
The
Partnership's business and only industry segment is the operation of its
seven manufactured
housing communities. Partnership operations commenced in April 1987,
upon the acquisition of the first two Properties. For a description
of the Partnership's revenues, operating profit and assets please refer to
Items 7 and 8.
-3-
Description of
Business
General
The
Sunshine Village, Ardmor Village and Camelot Manor Properties were acquired from
affiliates of Genesis Associates Limited Partnership, the General Partner of the
Partnership (the "General Partner"). The other six communities were
purchased from unaffiliated third parties, of which, two have been sold as of
December 31, 2009. The Partnership rents home sites in the Properties
to owners of manufactured homes. It was intended that the Partnership
would hold the Properties for extended periods of time, originally anticipated
to be seven to ten years after their acquisition. The General Partner
has the discretion to determine when a Property is to be sold; provided,
however, that the determination of whether a particular Property should be
disposed of will be made by the General Partner only after consultation with an
independent consultant, Manufactured Housing Services Inc. (the
"Consultant"). In making their decision, the General Partner and
Consultant will consider relevant factors including current operating results of
the particular Property and prevailing economic conditions, with a view to
achieving maximum capital appreciation to the Partnership while considering
relevant tax consequences and the Partnership's investment
objectives.
As
described in Form 8-K dated July 28, 2008, the Partnership had entered into a
Contract for Sale and Purchase of Real and Personal Property with a private
buyer for the Country Roads Manufactured Housing Community located in
Jacksonville, Florida. On August 7, 2008, the sale closed with a
purchase price of $3,000,000, less closing costs for proceeds in the amount of
$2,934,000. The Partnership recognized a gain on the sale of
approximately $ 881,000. The Partnership distributed approximately $562,000 from
the sale to its unit holders with the balance of the proceeds being maintained
in reserve until such time as the General Partner determines the optimal use of
the funds. As a result of the sale, the Partnership has classified the Country
Roads community and associated financial results as “discontinued operations” in
the accompanying financial statements for all historical periods.
Competition
The
business of owning and operating residential manufactured housing communities is
highly competitive, and the Partnership may be competing with a number of
established companies having greater financial resources. Moreover,
there has been a trend for manufactured housing community residents to purchase
(where zoning permits) their manufactured home sites on a collective
basis. This trend may result in increased competition with the
Partnership for residents. In addition, the General Partner, its
affiliates or both, has and may in the future participate directly or through
other partnerships or investment vehicles in the acquisition, ownership,
development, operation and sale of projects which may be in direct competition
with one or more of the Properties.
-4-
Each of
the Properties competes with numerous similar facilities located in its
geographic area. The Davie/Fort Lauderdale area contains
approximately five communities offering approximately 2,148 housing sites
competing with the Partnership’s Sunshine Village. The Partnership’s
Ardmor Village competes with approximately fourteen communities in the
Lakeville, Minnesota area offering approximately 3,655 housing
sites. The Partnership’s Camelot Manor competes with approximately
twelve communities in the Grand Rapids, Michigan area offering approximately
2,700 housing sites. The Partnership’s Dutch Hills and Stonegate Manor compete
with approximately twelve other communities in the Lansing, Michigan area
offering approximately 3,938 housing sites. In the Las Vegas, Nevada
area, the Partnership’s West Valley competes with approximately ten other
communities offering approximately 2,428 housing sites and the Partnership’s El
Adobe competes with seventeen other communities offering 5,578 home
sites. The Properties also compete against other forms of housing
including apartments, condominium complexes and site built homes.
Governmental
Regulations
The
Properties owned by the Partnership are subject to certain state regulations
regarding the conduct of the Partnership operations. For example, the
State of Florida regulates agreements and relationships between the Partnership
and the residents of Sunshine Village. Under Florida law, the Partnership is
required to deliver to new residents of those Properties a prospectus describing
the property and all tenant rights, Property rules and regulations, and changes
to Property rules and regulations. Florida law also requires minimum
lease terms, requires notice of rent increases, grants to tenant associations
certain rights to purchase the community if being sold by the owner and
regulates other aspects of the management of such properties. The
Partnership is required to give 90 days notice to the residents of Sunshine
Village of any rate increase, reduction in services or utilities, or change in
rules and regulations. If a majority of the residents object to such
changes as unreasonable, the matter must be submitted to the Florida Department
of Professional Business Regulations for mediation prior to any legal
adjudication of the matter. In addition, if the Partnership seeks to
sell Sunshine Village to the general public, it must notify any homeowners’
association for the residents, and the association shall have the right to
purchase the Property on the price, terms and conditions being offered to the
public within 45 days of notification by the owner. If the
Partnership receives an unsolicited bona fide offer to purchase the Property, it
must notify any such homeowners’ association that it has received an offer,
state to the homeowners’ association the price, terms and conditions upon which
the Partnership would sell the Property, and consider (without obligation)
accepting an offer from the homeowners’ association. The Partnership
has, to the best of its knowledge, complied in all material respects with all
requirements of the States of Florida, Michigan, Minnesota and Nevada, where its
operations are conducted.
-5-
Employees
The
Partnership employs three part-time employees to perform Partnership management
and investor relations’ services. The Partnership retains an
affiliate, Uniprop AM, LLC, as the property manager for each of its
Properties. Uniprop AM, LLC is paid a fee equal to the lesser of 5%
of the annual gross receipts from each of the Properties or the amount which
would be payable to unaffiliated third parties for comparable
services. Uniprop AM, LLC retains local managers on behalf of the
Partnership at each of the Properties. Salaries and fringe benefits
of such local managers are paid by the Partnership and are not included in any
property management fee payable to Uniprop AM, LLC. The yearly
salaries and expenses for local managers range from $25,000 to
$50,000. Community Managers are utilized by the Partnership to
provide on-site maintenance and administrative services. Uniprop AM,
LLC, as property manager, has overall management authority for each
property.
ITEM
1A.
|
RISK
FACTORS
|
FACTORS
THAT MAY AFFECT FUTURE OPERATING RESULTS
The
following risks and uncertainties could cause our business, financial condition
or results of operations to be materially adversely affected. In that
case, we might not be able to pay distributions on our Units, the net asset
values of the Units could decline, and a Unit holder might lose all or a portion
of its investment.
1.
|
Real Estate
Investments. The Partnership’s investments are subject
to the same risks generally incident to the ownership of real estate
including: the uncertainty of cash flow to meet fixed or
variable obligations, adverse changes in economic conditions, changes in
the investment climate for real estate, adverse changes in local market
conditions, changes in interest rates and the availability of mortgage
funds or chattel financing, changes in real estate tax rates, governmental
rules and regulations, acts of God and the inability to attract or retain
residential tenants.
|
Residential
real estate, including manufactured housing communities, is subject to adverse
housing pattern changes and uses, vandalism, rent controls, rising operating
costs and adverse changes in local market conditions such as a decrease in
demand for residential housing due to a decrease in employment. State
governments also often regulate the relationship between manufactured housing
community owners and residents.
The
manufactured housing industry is now in the eighth consecutive year of declining
unit sales due, in part, to lack of financing for the purchase of manufactured
homes intended to be sited in land-lease communities.
As a
result of the geographic concentration of our properties in Michigan, Florida
and Nevada, we are exposed to the risks of downturns in the local economy or
other local real estate market conditions due to plants closing and industry
slowdowns which could adversely affect occupancy rates, rental rates and
property values in these markets. Our income would also be adversely affected if
residents were unable to pay rent or if sites were unable to be rented on
favorable terms.
-6-
2.
|
The General Partner and its
Affiliates have Conflicts of Interest. Although the
General Partner has a fiduciary duty to manage the Partnership in a manner
beneficial to the Unit holders, the directors and officers of the General
Partner have a fiduciary duty to manage the General Partner in a manner
beneficial to its owners. Furthermore, certain directors and
officers of the General Partner are directors or officers of affiliates of
the General Partner. Conflicts of interest may arise between
the General Partner and its affiliates and the Unit holders. As
a result of these conflicts, the General Partner may favor its own
interests and the interests of its affiliates over the interests of the
Unit holders.
|
3.
|
Reliance on General Partner’s
Direction and Management of the Properties. The success
of the Partnership will, to a large extent, depend on the quality of the
management of the Properties by the General Partner and affiliates of the
General Partner and their collective judgment with respect to the
operation, financing and disposition of the Properties. To the
extent that the General Partner and its affiliates are unable to hire and
retain quality management talent, the Partnership’s financial results and
operations may be adversely
affected.
|
4.
|
Federal Income Tax
Risks. Federal income tax considerations will materially
affect the economic consequences of an investment in the
Properties. The tax consequences of the Partnership’s
activities are complex and subject to many
uncertainties. Changes in the federal income tax laws or
regulations may adversely affect the Partnership’s financial results and
its ability to make distributions to the Unit
holders. Additionally, the tax benefits enjoyed by the Unit
holders may be reduced or
eliminated.
|
5.
|
Limited Liquidity of the
Units. The transfer of Units is subject to certain
limitations. The public market for such Units is very
limited. Unit Holders may not be able to liquidate their
investment promptly or at favorable prices, if at
all.
|
6.
|
Competition. The
business of owning and operating residential manufactured housing
communities is highly competitive. The Partnership competes
with a number of established communities having greater financial
resources. Moreover, there has been a trend for manufactured
housing community residents to purchase home sites either collectively or
individually. Finally, the popularity and affordability of site
built homes has also increased in recent years while the availability of
chattel financing has decreased. These trends have resulted in
increased competition for tenants to occupy the Partnership
properties.
|
7.
|
Management and Control of
Partnership Affairs. The General Partner is vested with
full authority as to the general management and supervision of the
business affairs of the Partnership. The Unit Holders do not
have the right to participate in the management of the Partnership or its
operations. However, the vote of Unit Holders holding more than
50% of the outstanding voting interests is required to: (a)
amend the Partnership Agreement; (b) approve or disprove the sale of one
property or a series of transactions of all or substantially all of the
assets of the Partnership; (c) dissolve the Partnership; (d) remove the
General Partner; or (e) approve certain actions by the General Partner
that the Consultant recommends
against.
|
-7-
8.
|
Uninsured Losses. The
Partnership carries comprehensive insurance, including liability, fire and
extended coverage, and rent loss insurance which is customarily obtained
for real estate projects. There are certain types of losses,
however, that may be uninsurable or not economically insurable such as
certain damage caused by a hurricane. If such losses were to be
incurred, the financial position and operations of the Partnership as well
as the Partnership’s ability to make distributions would be adversely
affected.
|
9.
|
Environmental
Matters. Because the Partnership deals with real estate,
it is subject to various federal, state and local environmental laws,
rules and regulations. Changes in such laws, rules and
regulations may cause the Partnership to incur increased costs of
compliance which may have a material adverse effect on the operations of
the Partnership and its ability to make distributions to Unit
holders.
|
10.
|
No Guarantee of
Distributions. The General Partner may withhold cash for
extended periods of time if such cash is necessary to build cash reserves
or for the conduct of the Partnership’s business. A Unit holder
will be required to pay federal income taxes, and, in some cases, state
and local income taxes on the Unit holder’s share of the Partnership’s
taxable income, whether or not cash distributions are made by the
Partnership. A Unit holder may not receive cash distributions
from the Partnership equal to the holder’s share of taxable income or even
equal to the tax liability that results from the Unit holder’s share of
the Partnership’s taxable income.
|
11.
|
The Partnership May Not be Able
to Generate Sufficient Working Capital to Fund its
Operations. There can be no assurance that the
Partnership will generate sufficient working capital from operations to
operate the business or to fund distributions. Further, there
can be no assurance that the Partnership will be able to borrow additional
funds on terms favorable to the Partnership, if at all, to meet
unanticipated working capital needs or to make distributions to the Unit
holders.
|
ITEM
1B.
|
UNRESOLVED STAFF
COMMENTS
|
None.
ITEM
2.
|
PROPERTIES
|
The
Partnership purchased all seven remaining manufactured housing communities for
cash. As a result of the StanCorp Financing, all Properties are now encumbered
with mortgages.
-8-
Each of
the Properties is a modern manufactured housing community containing lighted and
paved streets, side-by-side off-street parking and complete underground utility
systems. The Properties consist of only the underlying real estate
and improvements, not the actual homes themselves. Each
of the Properties has a community center, which includes offices, meeting rooms
and game rooms. Each of the Properties, except Stonegate Manor, has a swimming
pool. Several of the Properties also have laundry rooms, playground
areas, garage and maintenance areas and recreational vehicle or boat storage
areas.
The table
below contains certain information concerning the Partnership's seven
properties.
Property Name
and Location
|
Year Constructed
|
Acreage
|
Number
of Sites
|
|||
Ardmor
Village
|
||||||
Cedar
Avenue S.
|
||||||
Lakeville,
MN
|
1974
|
74
|
339
|
|||
Camelot
Manor
|
||||||
Camelot
Blvd. S.W.
|
||||||
Grand
Rapids, MI
|
1973
|
57
|
335
|
|||
Dutch
Hills
|
||||||
Upton
Road
|
||||||
E.
Lansing, MI
|
1975
|
42.8
|
278
|
|||
El
Adobe
|
||||||
N.
Lamb Blvd.
|
||||||
Las
Vegas, NV
|
1975
|
36
|
367
|
|||
Stonegate
Manor
|
||||||
Eaton
Rapids Drive
|
||||||
Lansing,
MI
|
1968
|
43.6
|
308
|
|||
Sunshine
Village
|
||||||
Southwest
5th St.
|
||||||
Davie,
FL
|
1972
|
45
|
356
|
|||
West
Valley
|
||||||
W.
Tropicana Ave
|
||||||
Las
Vegas, NV
|
1972
|
53
|
421
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
None.
-9-
ITEM
4.
|
RESERVED
|
PART
II
ITEM 5.
|
MARKET
FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY
HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
There is
no established public trading market for the Units of the Partnership and it is
not anticipated that one will ever develop. During the last twelve
months, less than ten percent (10.0%) of the Units have been transferred,
including transfers due to death or intra-family transfers. The
Partnership believes there is no formal secondary market, or the substantial
equivalent thereof, and none will develop.
The
General Partner calculates the estimated net asset value of each Unit by
dividing (i) the amount of distributions that would be made to the Unit Holders
in the event of the current sale of the Properties at their current appraised
value, plus cash reserves less the outstanding balances of the mortgages on the
mortgaged Properties and sales expenses (but without consideration to tax
consequences of the sale), by (ii) 3,303,387. In March 2010,
the Properties were appraised at an aggregate fair market value of $49,700,000
plus cash reserves of $7,370,544, as of December 31, 2009. Assuming a sale of
the seven properties at March 1, 2010, at the appraised value plus the cash
reserves less payment of 3% selling expenses and mortgage debt, the net
aggregate proceeds available for distribution to the Unit Holders is estimated
to be $32,828,870 or $9.94 per Unit. There can be no assurance that
the estimated net asset value could ever be realized. As of December
31, 2009, the Partnership had 3,043 Unit Holders holding 3,303,387
units.
The
following table sets forth the distributions per limited partnership unit for
each calendar quarter in the last two fiscal years. Distributions
were paid in the periods immediately subsequent to the periods in which such
distributions were declared.
Distribution per
|
||||
Limited Partnership Unit
|
||||
Quarter Ended
|
||||
March
31, 2009
|
$ | 0.08 | ||
June
30, 2009
|
$ | 0.08 | ||
September
30, 2009
|
$ | 0.08 | ||
December
31, 2009
|
$ | 0.08 | ||
March
31, 2008
|
$ | 0.08 | ||
June
30, 2008
|
$ | 0.08 | ||
September
30, 2008
|
$ | 0.25 | ||
December
31, 2008
|
$ | 0.08 |
The
Partnership intends to continue to declare quarterly
distributions. However, distributions are determined by the General
Partner and will depend on the results of the Partnership’s
operations.
-10-
The
Partnership has no equity compensation plans.
ITEM
6.
|
SELECTED FINANCIAL
DATA
|
Not required.
ITEM
7.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
|
Capital
Resources
The
capital formation phase of the Partnership began on April 1, 1987 when Sunshine
Village and Ardmor Village were purchased by the Partnership and operations
commenced. It ended on January 15, 1988 when El Adobe, the
Partnership's last property, was purchased. The total capital raised
through December 1987 was $66,067,740 of which approximately $58,044,000 was
used to purchase the nine Properties after deducting sales commissions, advisory
fees and other organization and offering costs.
As
described in Item 1, the Partnership borrowed $30,000,000 from GMAC Commercial
Mortgage Corporation in August 1998. The note was payable in monthly
installments, including interest at 6.37% through March, 2009. The Loan was
secured by mortgages on the Partnership’s Ardmor Village, Camelot Manor, Dutch
Hills, El Adobe, Stonegate Manor, Sunshine Village and West Valley Properties.
The Partnership used the proceeds from the Loan to refinance the Partnership’s
outstanding indebtedness of $30,045,000, which was incurred in a 1993 mortgage
transaction.
In August, 2008, the Partnership
refinanced the GMAC mortgage note payable and executed seven new mortgages
payable with StanCorp Mortgage Investors, LLC (the “StanCorp Financing”) in the
aggregate amount of $23,225,000 secured by the seven properties of the
Partnership. To pay off the prior mortgage balance of $25,277,523 and the costs
of refinancing, the Partnership transferred $2,735,555 from cash
reserves. The mortgages are payable in monthly installments of
interest and principal through September 2033. Interest on these
notes is accrued at a fixed rate of 6.625% for five years, at which time, the
rate will reset to the lender’s then prevailing market rate. As of
December 31, 2009 the balance on these notes was $22,750,674.
Future principal and interest payments
under the StanCorp Financing are scheduled to be $1,903,668 each year for the
period from 2010 through 2014.
In connection with the new mortgage
debt, The Partnership incurred $693,798 in financing costs as a result of the
refinancing which are being amortized over the life of the mortgage of 25
years. This included a 1% refinance fee of $232,250 paid to Uniprop
AM LLC.
The
General Partner acknowledges that the mortgages pose some risks to the
Partnership, but believes that such risks are not greater than risks typically
associated with real estate financing.
-11-
As described in Form 8-K dated July 28,
2008, the Partnership had entered into a Contract for Sale and Purchase of Real
and Personal Property with a private buyer for the Country Roads Manufactured
Housing Community located in Jacksonville, Florida. On August 7,
2008, the sale closed with a purchase price of $3,000,000, less closing costs
for proceeds in the amount of $2,934,000. The Partnership recognized
a gain on the sale of approximately $ 881,000. The Partnership distributed
approximately $562,000 from the sale to its unit holders with the balance of the
proceeds being maintained in reserve until such time as the General Partner
determines the optimal use of the funds. As a result of the sale, the
Partnership has classified the Country Roads community and associated financial
results as “discontinued operations” in the accompanying financial statements
for all historical periods.
Liquidity
The
Partnership has, since inception, generated adequate amounts of cash to meet its
operating needs. The Partnership retains cash reserves, which it
believes will be adequate to maintain the Properties. All funds in excess of
operating needs, amounts sufficient to pay debt service, and cash reserves are
distributed to the Unit Holders on a quarterly basis. While the
Partnership is not required to maintain a working capital reserve, the
Partnership has not distributed all of the cash generated from operations or
from property sales in order to maintain capital reserves. As of
December 31, 2009, the Partnership had $7,370,544 in cash balances.
In
February 1994, the Partnership distributed $23,119,767 to the Unit Holders, or
$7.00 per $20.00 Unit held. Of this amount, $13,572,978 (or $4.11 per
Unit), was applied to the then shortfall in the Unit Holders’ 10.0% cumulative
preferred return, and $9,546,789 (or $2.89 per Unit), was a partial return of
the Limited Partners' original capital contributions.
Results of
Operations
Distributions
For the
year ended December 31, 2009, the Partnership made distributions to the Unit
Holders of $1,057,084, which is equal, on an annualized basis, to a 1.9% return
on their adjusted capital contributions ($0.32 per $17.11
Unit). Distributions paid to Unit Holders in 2008 totaled $1,618,660
and $4,030,132 was paid in 2007.
The
distributions paid in 2009 were less than the amount required for the annual
10.0% preferred return to the Unit Holders by approximately
$4,595,000. As described in Note 8 to the Partnership’s financial
statements, the cumulative preferred return deficit through December 2009 was
approximately $50,544,000. No distributions can be made to the
General Partner in regard to its incentive management interest until the
cumulative preferred return deficit has been distributed to the Unit
Holders. At December 31, 2009, the unpaid amount to be distributed to
the General Partner was approximately $12,122,000.
-12-
Revenue and Net (Loss)
Income
For the
years ended December 31, 2009 and 2008, net loss from Continuing Operations was
($240,394) and ($904,383) and gross revenue from Continuing Operations was
$8,407,246 and $8,767,517, respectively.
For the
year ended December 31, 2008, net income from Discontinued Operations was
$825,036 and gross revenue from Discontinued Operations was
$300,720.
Partnership
Management
Certain employees of the Partnership
are also employees of affiliates of the General Partner. The
Partnership paid these employees an aggregate of $283,624, and $225,649, in 2009
and 2008 respectively, to perform partnership management and investor relation
services for the Partnership.
Critical Accounting
Policies
In the course of developing and
evaluating accounting policies and procedures, we use estimates, assumptions and
judgments to determine the most appropriate methods to be
applied. Such processes are used in determining capitalization of
costs related to real estate investments and potential impairment of real estate
investments.
Real estate assets are stated at cost
less accumulated depreciation. Revenue from the sale of manufactured
homes is recognized upon transfer of title at the closing of the sale
transactions. Expenditures for property maintenance are charged to operations as
incurred, while significant renovations are capitalized. Depreciation
of the buildings is recorded on the straight-line method using an estimated
useful life of thirty years.
In determining the fair value of real
estate investments, the Partnership engaged an independent valuation firm to
appraise the fair value of each property using the discounted cash flow or
comparable sale methods. These methods consider future cash flow
projections on a property by property basis, future capitalization rates,
current interest rates and current market conditions of the geographical
location of each property. In preparing these financial statements, the
Partnership’s management has made its best estimates and judgment of certain
amounts included in the financial statements. Nevertheless, actual results may
differ from these estimates under different assumptions or
conditions.
Property
Operations
Overall, as illustrated in the table
below, the Partnership's seven remaining properties had a combined average
occupancy of 52% for the year ended December 31, 2009, as compared to 54% for
the year ended December 31, 2008. The average monthly rent (not
weighted average) was approximately $475 per home site for the year ended
December 31, 2009, as compared to $465 for the year ended December 31,
2008. The manufactured housing industry in general has experienced
lower retail sales over the past two years due to restrictive financing and the
ease at which site-built homes, until recently, could be acquired and
financed.
-13-
Total
Sites
|
Occupied Sites
|
Occupancy Rate
|
Average Rent
|
|||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||
Ardmor
Village
|
339 | 172 | 183 | 51 | % | 54 | % | $ | 480 | $ | 466 | |||||||||||||||||
Camelot
Manor
|
335 | 112 | 124 | 33 | % | 37 | % | 403 | 394 | |||||||||||||||||||
Dutch
Hills
|
278 | 121 | 133 | 44 | % | 48 | % | 404 | 395 | |||||||||||||||||||
El
Adobe
|
367 | 200 | 208 | 55 | % | 57 | % | 498 | 483 | |||||||||||||||||||
Stonegate
Manor
|
308 | 119 | 129 | 39 | % | 42 | % | 390 | 381 | |||||||||||||||||||
Sunshine
Village
|
356 | 228 | 224 | 64 | % | 63 | % | 587 | 587 | |||||||||||||||||||
West
Valley
|
421 | 324 | 328 | 77 | % | 78 | % | 564 | 552 | |||||||||||||||||||
Overall
|
2,404 | 1,276 | 1,329 | 52 | % | 54 | % | $ | 475 | $ | 465 |
The
following table summarizes gross revenues and net operating income for the
Partnership and Properties during 2009 and 2008.
GROSS REVENUE
|
NET OPERATING INCOME (LOSS)
AND NET INCOME (LOSS)
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Ardmor
Village
|
$ | 1,049,799 | $ | 1,136,131 | $ | 459,860 | $ | 520,106 | ||||||||
Camelot
Manor
|
714,262 | 751,211 | 141,810 | 199,064 | ||||||||||||
Dutch
Hills
|
646,720 | 729,895 | 249,199 | 259,814 | ||||||||||||
El
Adobe
|
1,261,232 | 1,281,040 | 626,913 | 608,861 | ||||||||||||
Stonegate
Manor
|
648,007 | 767,659 | 205,234 | 266,387 | ||||||||||||
Sunshine
Village
|
1,582,957 | 1,440,829 | 748,713 | 427,743 | ||||||||||||
West
Valley
|
2,473,756 | 2,509,790 | 1,326,840 | 1,237,676 | ||||||||||||
8,376,733 | 8,616,555 | 3,758,569 | 3,519,651 | |||||||||||||
Partnership
Management Income and Expense
|
$ | 30,513 | $ | 150,962 | (525,401 | ) | (333,621 | ) | ||||||||
Other
Expenses
|
(449,061 | ) | (513,324 | ) |
-14-
GROSS REVENUE
|
NET OPERATING INCOME (LOSS)
AND NET INCOME (LOSS)
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Interest
Expense
|
(1,546,739 | ) | (2,120,139 | ) | ||||||||||||
Depreciation
|
(1,477,762 | ) | (1,456,950 | ) | ||||||||||||
Continuing
Operations
|
8,407,246 | 8,767,517 | (240,394 | ) | (904,383 | ) | ||||||||||
Discontinued
Operations
|
- | 300,720 | - | 825,036 | ||||||||||||
TOTAL
|
$ | 8,407,246 | $ | 9,068,237 | $ | (240,394 | ) | $ | (79,347 | ) |
Net
Operating Income (“NOI”) is a non-GAAP financial measure equal to net income,
the most comparable GAAP financial measure, plus depreciation, interest expense,
partnership management expense, and other expenses. The Partnership
believes that NOI is useful to investors and the Partnership’s management as an
indication of the Partnership’s ability to service debt and pay cash
distributions. NOI presented by the Partnership may not be comparable
to NOI reported by other companies that define NOI differently, and should not
be considered as an alternative to net income as an indication of performance or
to cash flows as a measure of liquidity or ability to make
distributions.
Comparison
of Year Ended December 31, 2009 to Year Ended December 31, 2008
Total revenues from continuing
operations decreased $360,271 to $8,407,246 in 2009, compared to $8,767,517 in
2008. The decrease is primarily the result of a decrease in
occupancy. The decrease in occupancy is due primarily to increased
foreclosures on home mortgages, which frequently results in the home being moved
out of the property.
The Partnership’s operating expenses
from continuing operations decreased $1,024,260, to $8,647,640 in 2009, compared
to $9,671,900 in 2008. The decrease is primarily due to lower
interest expense as a result of the mortgage refinancing in August of
2008. Property operations expense was also reduced due to the
conclusion of the Sunshine Village resident relocation program in early
2009. In addition, expenses associated with home sales decreased as a
result of lower sales volumes.
As a result of the aforementioned
factors, continuing operations experienced a net loss of $240,394 in 2009
compared to a net loss of $904,383 in 2008.
-15-
IMPORTANT
DISCLOSURES
The General Partner believes it is
important to disclose certain recent events to the Unit Holders along with a
description of the actions taken by the General Partner to respond to the
events.
Industry conditions remained depressed
due to the lack of available retail financing. Reduced retail home
sales for manufactured homes and high default rates on chattel mortgage loans
for manufactured homes continued through 2009. In addition, the
affordability and ease of financing site built homes, until recently, continued
to provide competition for the manufactured housing industry. As a
result, occupancy levels have decreased in recent years, and management does not
expect a short term turnaround. As lending standards for site built
homes begin to tighten because of high default rates in that market, demand for
manufactured housing may increase but this increase, if it occurs, may take
years to materialize.
As described in Form 8-K dated July 28,
2008, the Partnership had entered into a Contract for Sale and Purchase of Real
and Personal Property with a private buyer for the Country Roads Manufactured
Housing Community located in Jacksonville, Florida. On August 7,
2008, the sale closed with a purchase price of $3,000,000, less closing costs
for proceeds in the amount of $2,934,000. The Partnership recognized
a gain on the sale of approximately $ 881,000. The Partnership distributed
approximately $562,000 from the sale to its unit holders with the balance of the
proceeds being maintained in reserve until such time as the General Partner
determines the optimal use of the funds. As a result of the sale, the
Partnership has classified the Country Roads community and associated financial
results as “discontinued operations” in the accompanying financial statements
for all historical periods.
In August 2008, the Partnership
refinanced the GMAC mortgage note payable and executed seven new mortgages
payable with StanCorp Mortgage Investors, LLC (the “StanCorp Financing”) in the
aggregate amount of $23,225,000 secured by the seven properties of the
Partnership. To pay off the prior mortgage balance of $25,277,523 and the costs
of refinancing, the Partnership transferred $2,735,555 from cash
reserves. The mortgages are payable in monthly installments of
interest and principal through September 2033. Interest on these
notes is accrued at a fixed rate of 6.625% until August, 2014, at which time,
the rate will reset to the lender’s then prevailing market rate. As
of December 31, 2009 the balance on these notes was $22,750,674.
ITEM
7A.
|
QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
The
Partnership is exposed to interest rate risk primarily through its borrowing
activities. There is inherent roll over risk for borrowings as they
mature and are renewed at current market rates. The extent of this
risk is not quantifiable or predictable because of the variability of future
interest rates and the Partnership’s future financing
requirements.
-16-
Notes Payable: At
December 31, 2009 the Partnership had notes payable outstanding in the amount of
$22,750,674, collateralized by the seven remaining properties within the
Partnership. Interest on these notes is accrued at a fixed rate of
6.625% for five years, at which time, the rate will reset to the lender’s then
prevailing market rate.
The Partnership does not enter into
financial instruments transactions for trading or other speculative purposes or
to manage its interest rate exposure.
ITEM
8.
|
FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
|
The
following Partnership’s financial statements for the fiscal years ended
December 31, 2009 and 2008, and supplementary data are filed with this
Report:
|
(i)
|
Reports
of Independent Registered Public Accounting
Firm
|
|
(ii)
|
Balance
Sheets as of December 31, 2009 and
2008
|
|
(iii)
|
Statements
of Income for the fiscal years ended December 31, 2009 and
2008.
|
|
(iv)
|
Statements
of Partners' Equity for the fiscal years ended December 31, 2009 and
2008.
|
|
(v)
|
Statements
of Cash Flows for the fiscal years ended December 31, 2009 and
2008.
|
(vi)
|
Schedule
III -
Real Estate and Accumulated Depreciation as of
December 31,
2009
|
ITEM
9.
|
CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
As
described in Form 8-K dated July 14, 2009, a change was made in the
Partnership's independent registered public accounting firm. The
Board of Directors of the General Partner dismissed BDO Seidman, LLP and named
Plante & Moran, PLLC as the successor accounting firm. During the
Partnership’s most recent two fiscal years including the interim period ended
July 13, 2009, there were no disagreements with BDO Seidman, LLP on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, that contributed to this decision.
-17-
ITEM
9A(T).
|
CONTROLS AND
PROCEDURES
|
The Partnership maintains disclosure
controls and procedures that are designed to ensure that information required to
be disclosed in the Partnership’s Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms, and that such information is accumulated
and communicated to the Partnership’s management, including its Principal
Executive Officer and Principal Financial Officer, as appropriate to allow
timely decisions regarding required disclosure based closely on the definition
of “disclosure controls and procedures” in Rule 13a – 14(c). In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures. As of the end of the period covered by this report
(the-evaluation date), the Partnership conducted an evaluation under the
supervision and with the participation of its Principal Executive Officer and
Principal Financial Officer, of the effectiveness of the design and operation of
its disclosure controls and procedures (as defined in Rule 13a – 14(c) under the
Securities Exchange Act of 1934 (“the Exchange Act”)). Based on this
evaluation, the Principal Executive Officer and Principal Financial Officer
concluded that, as of the evaluation date, the Partnership’s disclosure controls
and procedures were effective to reasonably ensure that information required to
be disclosed by us in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.
Our management is responsible for
establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act Rule 13a-15(f). Under the
supervision and with the participation of our management, including our
Principal Executive Officer and Principal Financial Officer, we conducted an
evaluation of the effectiveness of our internal control over financial reporting
based on the framework in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. There has been
no change in the Partnership’s internal control over financial reporting during
its most recently completed quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting. Based on our assessment of the effectiveness of internal
control over financial reporting, management concluded that our internal control
over financial reporting was effective as of December 31, 2009.
This annual report does not include an
attestation report from the Partnership’s registered public accounting firm
regarding internal control over financial reporting. Management’s
report was not subject to attestation by the Partnership’s registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the Partnership to provide only management’s report in
this annual report.
PART
III
ITEM
10.
|
DIRECTORS AND
EXECUTIVE OFFICERS OF THE
REGISTRANT
|
The
Partnership, as an entity, does not have any officers or
directors. The General Partner, Genesis Associates Limited
Partnership is a Michigan limited partnership, of which Uniprop, Inc. is the
General Partner.
Information
concerning officers of Uniprop, Inc., during the last five years or more is as
follows:
-18-
Paul M.
Zlotoff, 60 became the Chairman of Uniprop, Inc. in May 1986 and was its
President from 1979 through 1997. He is also the sole owner of GP
P.I. Associates Corp., the general partner of P.I. Associates, the general
partner of Uniprop Manufactured Housing Communities Income Fund. Mr.
Zlotoff currently, and in the past, has acted as the general partner for various
other limited partnerships owning manufactured housing communities and some
commercial properties.
Joel
Schwartz, CPA, 48, became Chief Financial Officer of Uniprop Inc. on June 1,
2004. Mr. Schwartz is responsible for all financial affairs including
accounting operations, banking relationships, raising mortgage capital, asset
management and investor relations. From 1998 to 2004, Mr. Schwartz
was Chief Financial Officer for Village Green Companies. From 1990 to
1998, Mr. Schwartz was Project Manager for Ford Motor Land Services
Corporation. Mr. Schwartz was also an Associate at Plante & Moran
CPA’s from 1983 to 1989. Mr. Schwartz received his B.A. from Michigan
State University in 1983 with a major in accounting and received an MBA from the
University of Michigan in 1990.
Jody Burttram, 49, became Independent
Director of Genesis Associates in 2007. As Independent Director, Mr.
Burttram is responsible for the oversight and approval of management decisions
and planning for the Partnership. Currently, Mr. Burttram is Principal of
Harbinger Capital Advisors LLC, a boutique investment banking firm located in
Orlando, Florida. Mr. Burttram was Chief Operating Officer of Century Capital
Markets and CNL Capital Corp. from 1998 to 2005. Previously, Mr. Burttram was
Vice President of International Banking, First Union National Bank from 1983 to
1992.
Roger
Zlotoff, 49, is
President and Chief Operating Officer of Uniprop, Inc. He has been
with Uniprop since October 18, 1999. Mr. Zlotoff is primarily
responsible for raising equity capital, managing partnership investments,
evaluating acquisitions of existing properties and leading the development
process for new properties. From 1997 to 1999, Mr. Zlotoff served as
Director of Business Development for Vistana, Inc. in Orlando,
FL. Previously, Mr. Zlotoff was Managing Director for Sterling
Finance International from 1994 to 1997 and was a corporate banker with First
Union National Bank from 1988 to 1994. Mr. Zlotoff received his B.A.
from the University of Central Florida as a philosophy major, and received his
Masters Degree in International Business from the University of South
Carolina.
Paul M.
Zlotoff and Roger Zlotoff are brothers.
CODE OF
ETHICS
Because
the Partnership has no executive officers, the Partnership has not adopted a
code of ethics for the Partnership. A code of ethics has been
established for the Directors, Officers, and Employees of Uniprop. A
copy of the Code of ethics is available at no charge upon
request.
-19-
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
The
Partnership has no executive officers and therefore, no officers received a
salary or remuneration exceeding $100,000 during the last fiscal
year. The General Partner of the Partnership and an affiliate,
Uniprop AM, LLC, received certain compensation and fees during the fiscal year
in the amounts described in Item 13. Depending upon the results of
operations and other factors, the Partnership anticipates that it will provide
similar compensation to the General Partner and Uniprop AM, LLC. during the next
fiscal year.
ITEM
12.
|
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER
MATTERS
|
The
Partnership is a limited partnership duly formed pursuant to the Uniform Limited
Partnership Act, as amended, of the State of Michigan. The General
Partner, Genesis Associates Limited Partnership, is vested with full authority
as to the general management and supervision of business and the other affairs
of the Partnership, subject to certain constraints in the Partnership Agreement
and consulting agreement. Unit holders have no right to
participate in the management of the Partnership and have limited voting
privileges only on certain matters of fundamental significance. To
the knowledge of the Partnership, no person owns of record or beneficially, more
than five percent of the Partnership's Units.
ITEM
13.
|
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
|
The
following discussion describes all of the types of compensation, fees or other
distributions paid by the Partnership or others to the General Partner or its
affiliates from the operations of the Partnership during the last fiscal year,
as well as certain of such items which may be payable during the next fiscal
year. Certain of the following arrangements for compensation and fees
were not determined by arm's length negotiations between the General Partner,
its affiliates and the Partnership.
Paul M.
Zlotoff has an interest in the original sellers of Sunshine Village and Ardmor
Village and is entitled to share in a contingent purchase price with respect to
each Property, when and if the Properties are sold and the sellers become
entitled thereto. The maximum amounts which could be payable to Paul
M. Zlotoff are as follows: Sunshine Village, $1,108,260 and Ardmor Village,
$946,236. The cash purchase price and contingent purchase price for
each Property were determined by reference to the average of two independent
real estate appraisals which were obtained by the General
Partner. Such appraisals are only estimates of value and are not
necessarily indicative of the actual real estate value. Each seller
will become entitled to any unpaid contingent purchase price upon the sale,
financing or other disposition of each such Property, but, only after the
receipt by each Unit Holder of aggregate distributions equal to the sum of (i)
his 10% cumulative preferred return plus (ii) 125% of his capital
contribution. The actual amounts to be received, if any, will depend
upon the results of the Partnership's operations and the amounts received upon
the sale, financing or other disposition of the Properties and are not
determinable at this time. The Partnership does not anticipate any
such amount will become payable during the next fiscal year, nor do unpaid
amounts carry over from year to year.
-20-
The
Partnership will pay an Incentive Management Interest to the General Partner for
managing the Partnership's affairs, including: determining distributions,
negotiating agreements, selling or financing properties, preparing records and
reports, and performing other ongoing Partnership
responsibilities. This incentive management interest is 15% of
distributable cash from operations in any quarter. However, in each
quarter, the General Partner's right to receive any net cash from operations is
subordinated to the extent necessary to first provide each Unit Holder his 10%
cumulative preferred return. During the last fiscal year, the General
Partner received no distributions on account of its Incentive Management
Interest from operations because distributions were approximately $4,595,000
less than the 10% cumulative preferred return due Unit Holders. Any
such amounts of Incentive Management Interest unpaid in a taxable year will be
accumulated and paid from distributable cash from capital transactions, but only
after each Unit Holder has first received his 10% cumulative preferred return
and 125% of his capital contribution. For 2009, approximately
$190,000 was accumulated for the General Partner, and the General Partner's
aggregate accumulated Incentive Management Interest as of December 2009 was
$12,122,000. The actual Incentive Management Interest from operations
to be accumulated or paid during the next fiscal year will depend upon the
results of the Partnership's operations and is not determinable at this
time. The Partnership does not anticipate any such amount will be
distributed to the General Partner during the next fiscal year and will again be
accumulated with payment deferred. No distributions of Incentive
Management Interest may be made to the General Partner until the 10% cumulative
preferred return of approximately $50,544,000, as of December 31, 2009, is first
distributed to the Unit Holders. In February of 1994, as part of the
1993 mortgage financing with mortgage backed securities held with Bankers Trust,
$23,119,767 was distributed to the Unit Holders, $13,572,978 of which eliminated
the Unit Holders' preferred return deficit through December 31,
1993.
The
Partnership must also pay an Incentive Management Interest from capital
transactions to the General Partner for its services rendered to the
Partnership. The General Partner will be entitled to receive its share of
distributable cash from capital transactions after (i) each Unit Holder has
received aggregate distributions in an amount equal to the sum of (a) his 10%
cumulative preferred return plus (b) 125% of his capital contribution, (ii) any
contingent purchase prices have been paid, and (iii) any property disposition
fees to Uniprop AM, LLC have been paid. The General Partner's share
of distributable cash from capital transactions so payable will be (i) 100% of
such distributable cash from capital distributions until the General Partner's
share of the aggregate capital distributions made under section 11c(iii) and
11c(v) of the Partnership Agreement equal 25% and (ii) thereafter, 25% of such
distributable cash from capital transactions. No Incentive Management
Interest from capital transactions was paid to the General Partner for the
fiscal year ended December 31, 2009. The Partnership does not
anticipate that any such amounts will be paid or become payable to the General
Partner during the next fiscal year.
-21-
Uniprop
AM, LLC received and will receive property management fees for each Property
managed by it. Uniprop AM, LLC is primarily responsible for the
day-to-day management of the Properties and for the payment of the costs of
operating each Property out of the rental income collected. The
property management fees are equal to the lesser of 5% of the annual gross
receipts from the Properties managed by Uniprop AM, LLC, or the amount which
would be payable to an unaffiliated third party for comparable
services. During the last fiscal year, Uniprop AM, LLC received
property management fees totaling $387,000. The actual amounts to be
received during the next fiscal year will depend upon the results of the
Partnership's operations and are not determinable at this time.
Certain
employees of affiliates of the General Partner were paid an aggregate of
$283,624 during 2009 to perform partnership management, and investor relation
services for the Partnership. It is anticipated comparable amounts
will be paid in the next fiscal year. Uniprop Homes, Inc., a related
entity, received commissions totaling $29,491 in 2009 for certain services
provided as a broker/dealer of manufactured homes for the
communities. Uniprop Homes, Inc. represented the communities in the
sale of new and pre-owned homes to community residents.
ITEM 14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
The
Partnership retained Plante & Moran, PLLC to audit its financial statements
and provide other services for the year ended December 31, 2009. BDO
Seidman, LLP performed the same for the year ended December 31,
2008.
The
aggregate fees billed to the Partnership for professional services performed by
Plante & Moran, PLLC during 2009 and BDO Seidman, LLP during 2008 were as
follows.
2009
|
2008
|
|||||||
(1) Audit
Fees
|
$ | 64,000 | $ | 80,000 | ||||
(2) Audit-Related
Fees
|
$ | 0 | $ | 0 | ||||
(3) Tax
Fees
|
$ | 15,000 | $ | 16,500 | ||||
(4)
All Other Fees
|
$ | 0 | $ | 0 | ||||
(5)
Total
|
$ | 79,000 | $ | 96,500 |
Audit
fees: pertain to the audit of the Partnership’s annual
financial statements, including reviews of the interim financial statements
contained in the Partnership’s Quarterly Reports on Form 10-Q.
Tax
fees: pertain to services performed for tax compliance,
including preparation of tax returns and partners Schedule K-1
processing.
The
services performed by Plante & Moran, PLLC and BDO Seidman, LLP in 2009 and
2008 were pre-approved by the General Partner.
-22-
PART
IV
ITEM
15.
|
EXHIBITS
AND FINANCIAL STATEMENT
SCHEDULES
|
|
(a)
|
Financial
Statements
|
|
(1)
|
The
following financial statements and related documents are filed with this
report:
|
|
(i)
|
Reports
of Independent Registered Public Accounting
Firm
|
|
(ii)
|
Balance
Sheets as of December 31, 2009 and
2008
|
|
(iii)
|
Statements
of Income for the fiscal years ended December 31, 2009 and
2008.
|
|
(iv)
|
Statements
of Partners' Equity for the fiscal years ended December 31, 2009 and
2008.
|
|
(v)
|
Statements
of Cash Flows for the fiscal years ended December 31, 2009 and
2008.
|
|
(2)
|
The
following financial statement schedule is filed with this
report:
|
Schedule
III - Real Estate and Accumulated Depreciation as of December 31,
2009.
|
(3)
|
Exhibits
|
The
following exhibits are incorporated by reference to the S-11 Registration
Statement of the Partnership filed November 12, 1986, as amended on December 22,
1986 and January 16, 1987:
|
3(a)
|
Certificate
of Limited Partnership for the
Partnership
|
|
3(b)
|
Uniprop
Manufactured Housing Communities Income Fund II Agreement of
Limited Partnership
|
|
4(a)
|
First
Amendment to Uniprop Manufactured Housing Communities Income Fund II
Agreement of Limited Partnership (April 1,
1987)
|
10(a)
|
Form
of Management Agreement between the Partnership and Uniprop AM,
LLC.
|
-23-
10(b)
|
Form
of Consulting Agreement among the Partnership, the General Partner and
Consultant
|
The
following exhibits are incorporated by reference to the Form 10-K for the fiscal
year ended December 31, 1997:
|
4(b)
|
Form
of Beneficial Assignment Certificate (BAC) for the Partnership (Originally
submitted with Form 10-K for the fiscal year ended December 31,
1987.)
|
10(c)
|
Contingent
Purchase Price Agreement with Sunrise Broward Associates, Ltd. (As last
submitted with Form 10-K for the fiscal year ended December 31,
1997.)
|
10(d)
|
Contingent
Purchase Price Agreement with Ardmor Associates Limited
Partnership. (As last submitted with Form 10-K for the fiscal
year ended December 31, 1997.)
|
10(e)
|
Incentive
Acquisition Fee Agreement between the Partnership and Uniprop, Inc. (As
last submitted with Form 10-K for the fiscal year ended December 31,
1997.)
|
The
following exhibit is incorporated by reference to the Form 8-K that was filed on
September 8, 1998:
10(f)
|
Mortgage
notes, made as of August 20, 1998, between Uniprop Manufactured Housing
Communities Income Fund II and GMAC
CMC.
|
The
following exhibit is incorporated by reference to the Form 10-K for the fiscal
year ended December 31, 2005:
10(g)
|
Second
Amended and Restated Consulting Agreement among the Partnership, the
General Partner, and Consultant, January 9,
2005
|
10(h)
|
Line
of Credit Loan Agreement between the Partnership and National City Bank,
October 19, 2005.
|
The
following exhibit is incorporated by reference to the Form 8-K that was filed on
January 17, 2007
10(i)
|
Contract
for Sale and Purchase of Real and Personal Property between Uniprop
Manufactured Housing Communities Income Fund II and Nelson C. Steiner for
the sale of Paradise Village.
|
-24-
The
following exhibit is incorporated by reference to the Form 8-K that was filed on
March 13, 2007
10(j)
|
Termination
of Contract for Sale and Purchase of Real and Personal Property between
Uniprop Manufactured Housing Communities Income Fund II and Nelson C.
Steiner for the sale of Paradise Village and Contract for Sale and
Purchase of Real and Personal Property between Uniprop Manufactured
Housing Communities Income Fund II and a private buyer for the sale
of Paradise Village.
|
The
following exhibit is incorporated by reference to the Form 8-K that was filed on
May 17, 2007
10(k)
|
Closure
of the Sale of Paradise Village between Uniprop Manufactured Housing
Communities Income Fund II and a private
buyer.
|
The
following exhibit is incorporated by reference to the Form 8-K that was filed on
August 27, 2008.
10(l)
|
Closure
of the Sale of Country Roads between Uniprop Manufactured Housing
Communities Income Fund II and a private
buyer.
|
The
following exhibit is incorporated by reference to the Form 8-K that was filed on
July 14, 2009.
10(m)
|
Change
in Registrant’s Certifying Accountant from BDO Seidman, LLP to Plante
& Moran, PLLC.
|
The
following exhibits are attached to this Report:
99.1
|
Letter
summary of the estimated fair market values of the Partnership's seven
manufactured housing communities, as of March 1,
2010.
|
31.1
|
Certificate
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
31.2
|
Certificate
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
32.1
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
-25-
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, Uniprop Manufactured Housing Communities Income Fund II, a Michigan
Limited Partnership, has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
|
||||
Income Fund II, a Michigan Limited Partnership
|
||||
BY:
|
Genesis Associates Limited Partnership,
|
|||
General Partner
|
||||
BY:
|
Uniprop, Inc., Managing General Partner
|
|||
By:
|
/s/ Paul M Zlotoff
|
|||
Paul M. Zlotoff, Chairman
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Dated: March
22, 2010
By:
|
/s/ Joel Schwartz
|
By:
|
/s/ Paul M Zlotoff
|
||
Joel Schwartz
|
Paul M. Zlotoff, Chairman of Uniprop, Inc.
|
||||
Principal Financial Officer
|
(Principal Executive Officer)
|
||||
(Chief Financial Officer of
|
|||||
Uniprop, Inc.)
|
|||||
By:
|
/s/ Susann Szepytowski
|
||||
Susann
Szepytowski
|
|||||
Principal
Accounting Officer
|
|||||
(Controller
of Uniprop, Inc.)
|
-26-
EXHIBIT
INDEX
EXHIBIT
NUMBER
|
DESCRIPTION
|
METHOD OF FILING
|
PAGE
|
|||
3(a)
|
Certificate
of Limited Partnership for the Partnership
|
Incorporated
by reference to the S-11 Registration Statement of the Partnership filed
November 12, 1986, as amended on December 22, 1986 and
January 16, 1987 (the "Registration Statement").
|
||||
3(b)
|
Uniprop
Manufactured Housing Communities Income Fund II Agreement of Limited
Partnership
|
Incorporated
by reference to the Registration Statement.
|
||||
4(a)
|
First
Amendment to Uniprop Manufactured Housing Communities Income Fund II
Agreement of Limited Partnership (April 1, 1987)
|
Incorporated
by reference to the Registration Statement.
|
||||
4(b)
|
Form
of Beneficial Assignment Certificate (BAC) for the Partnership (originally
filed with Form 10-K for the fiscal year ended December 31,
1987)
|
Incorporated
by reference to Form 10-K for fiscal year ended December 31,
1997.
|
||||
10(a)
|
Form
of Management Agreement between the Partnership and Uniprop AM,
LLC
|
Incorporated
by reference to the Registration Statement.
|
||||
10(b)
|
Form
of Consulting Agreement among the Partnership, the General Partner and
Consultant
|
Incorporated
by reference to the Registration Statement.
|
||||
10(c)
|
Contingent
Purchase Price Agreement with Sunrise Broward Associates, Ltd. (originally
filed with Form 10-K for the fiscal year ended December 31,
1987)
|
Incorporated
by reference to Form 10-K for fiscal year ended December 31,
1997.
|
-27-
10(d)
|
Contingent
Purchase Price Agreement with Ardmor Associates Limited Partnership
(originally filed with Form 10-K for the fiscal year ended
December 31, 1987)
|
Incorporated
by reference to Form 10-K for fiscal year ended December 31,
1997.
|
||||
10(e)
|
Incentive
Acquisition Fee Agreement between the Partnership and Uniprop, Inc.
(originally filed with Form 10-K for the fiscal year ended
December 31, 1987)
|
Incorporated
by reference to Form 10-K for fiscal year ended December 31,
1997.
|
||||
10(f)
|
Mortgage
Notes, made on August 20, 1998 between Uniprop Manufactured Home
Communities Income Fund II and GMAC CMC
|
Incorporated
by reference to the Form 8-K filed on September 8, 1998.
|
||||
10(g)
|
Second
Amended and Restated Consulting Agreement among the Partnership, the
General Partner and Consultant January 9, 2005
|
Incorporated
by reference to Form 10-K for fiscal year ended December 31,
2005.
|
||||
10(h)
|
Line
of Credit Loan Agreement between the Partnership and National City Bank
October 19, 2006
|
Incorporated
by reference to Form 10-K for fiscal year ended December 31,
2005.
|
||||
10(i)
|
Contract
for Sale and Purchase of Real and Personal Property for the sale of
Paradise Village January 17, 2007.
|
Incorporated
by reference to the Form 8-K filed on January 17, 2007.
|
||||
10(j)
|
Termination
of Contract for Sale and Purchase of Real and Personal Property for the
sale of Paradise Village January 17, 2007. Contract for Sale and Purchase
of Real and Personal Property for the sale of Paradise Village March 13,
2007.
|
Incorporated
by reference to the Form 8-K filed on March 13, 2007.
|
||||
10(k)
|
Closure
of the Sale of Paradise Village May 17, 2007.
|
Incorporated
by reference to the Form 8-K filed on May 17, 2007.
|
-28-
10(l)
|
Closure
of the Sale of Country Roads August 27, 2008.
|
Incorporated
by reference to the Form 8-K filed on August 27, 2008.
|
||||
10(m)
|
Change
in Registrant’s Certifying Accountant July 14, 2009.
|
Incorporated
by reference to the Form 8-K filed on July 14, 2009.
|
||||
99.1
|
Letter
summary of the estimated fair market values of the Partnership's seven
manufactured housing communities, as of March 1, 2010.
|
Filed
herewith.
|
||||
31.1
|
Certificate
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
Filed
herewith.
|
||||
31.2
|
Certificate
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
Filed
herewith.
|
||||
*32.1
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Filed
herewith.
|
||||
*32.2
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Filed
herewith.
|
* This
certificate is being furnished solely to accompany the report pursuant to 18
U.S.C. 1350 and is not being filed for purposes of Section 18 of the Securities
and Exchange Act of 1934, as amended, and is not to be incorporated by reference
into any filing of the Partnership, whether made before or after the date
hereof, regardless of any general incorporation language in such
filing.
-29-
Report
of Independent Registered Public Accounting Firm
To the
Partners
Uniprop
Manufactured Housing
Communities
Income Fund II
(A
Michigan limited partnership)
We have
audited the accompanying balance sheet of Uniprop Manufactured Housing
Communities Income Fund II (a Michigan limited partnership) as of December 31,
2009, and the related statements of income, partners' equity and cash flows for
the period ended December 31, 2009. These financial statements are the
responsibility of the Partnership’s management. Our responsibility is to
express an opinion on these financial statements based on our
audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Partnership is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances but not for the purpose of
expressing an opinion on the effectiveness of the Partnership’s internal control
over financial reporting. Accordingly, we express no such
opinion. Our audit of the financial statements included
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 audit provides a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Uniprop Manufactured Housing
Communities Income Fund II at December 31, 2009, and the results of its
operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of
America.
/S/
Plante & Moran, PLLC
Auburn
Hills, Michigan
March 22,
2010
![]() |
BDO
Seidman, LLP
Accountants
and Consultants
|
755
West Big Beaver, Suite 1900
Troy,
Michigan 48084-0178
Telephone:
(248) 362-2100
Fax:
(248) 362-5258
|
Report
of Independent Registered Public Accounting Firm
To the
Partners
Uniprop
Manufactured Housing
Communities Income Fund II
(a
Michigan Limited Partnership)
We have
audited the accompanying balance sheet of Uniprop Manufactured Housing
Communities Income Fund II as of December 31, 2008 and the related statements of
income, partners’ equity and cash flow for the year ended December 31,
2008. In connection with our audit of the financial statements, we
have also audited the 2008 information in the financial statement schedule
listed under Item 15 of Form 10-K. These financial statements and
schedule are the responsibility of the Partnership’s management. Our
responsibility is to express an opinion on the 2008 financial statements based
on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Partnership is
not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership’s internal control
over financial reporting. Accordingly, we express no such opinion. An
audit also 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, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Uniprop Manufactured Housing
Communities Income Fund II at December 31, 2008, and the results of its
operations and its cash flows for the year ended December 31, 2008, in conformity with
accounting principles generally accepted in the United States of
America.
Also, in
our opinion, the 2008 information in the financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
![]() |
Troy,
Michigan
March 27,
2009
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Balance
Sheets
December 31,
|
2009
|
2008
|
||||||
Assets
|
||||||||
Property
and Equipment
|
||||||||
Buildings
and improvements
|
$ | 41,422,578 | $ | 41,241,255 | ||||
Land
|
8,952,937 | 8,952,937 | ||||||
Furniture
and equipment
|
576,801 | 560,906 | ||||||
50,952,316 | 50,755,098 | |||||||
Less
accumulated depreciation
|
29,674,778 | 28,197,016 | ||||||
Net
Property and Equipment
|
21,277,538 | 22,558,082 | ||||||
Cash
|
7,370,544 | 7,469,961 | ||||||
Manufactured
homes and improvements
|
412,635 | 787,563 | ||||||
Unamortized
financing costs
|
652,170 | 679,922 | ||||||
Other
assets
|
1,417,425 | 1,383,357 | ||||||
$ | 31,130,312 | $ | 32,878,885 | |||||
Liabilities
and Partners’ Equity
|
||||||||
Note
payable
|
$ | 22,750,674 | $ | 23,133,242 | ||||
Accounts
payable
|
95,517 | 91,120 | ||||||
Other
liabilities
|
416,672 | 489,596 | ||||||
Total
Liabilities
|
23,262,863 | 23,713,958 | ||||||
Partners’
Equity
|
||||||||
Unit
holders - 3,303,387 units issued and outstanding
|
7,451,425 | 8,746,499 | ||||||
General
partner
|
416,024 | 418,428 | ||||||
Total
Partners’ Equity
|
7,867,449 | 9,164,927 | ||||||
$ | 31,130,312 | $ | 32,878,885 |
See
accompanying notes to financial statements.
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Statements
of Income
Year Ended December 31,
|
2009
|
2008
|
||||||
Revenue
|
||||||||
Rental
|
$ | 7,288,627 | $ | 7,088,651 | ||||
Home
sale income
|
545,248 | 889,568 | ||||||
Other
|
573,371 | 789,298 | ||||||
8,407,246 | 8,767,517 | |||||||
Operating
Expenses
|
||||||||
Administrative
|
2,304,801 | 2,267,489 | ||||||
Property
taxes
|
939,089 | 1,003,404 | ||||||
Utilities
|
628,350 | 612,573 | ||||||
Property
operations
|
953,345 | 1,111,854 | ||||||
Depreciation
|
1,477,762 | 1,456,950 | ||||||
Interest
|
1,546,739 | 2,120,139 | ||||||
Home
sale expense
|
797,554 | 1,099,491 | ||||||
8,647,640 | 9,671,900 | |||||||
(Loss)from
Continuing Operations
|
(240,394 | ) | (904,383 | ) | ||||
Discontinued
Operations
|
||||||||
Loss
from discontinued operations
|
- | (55,620 | ) | |||||
Net
gain on sale of discontinued operations
|
- | 880,656 | ||||||
Income
from Discontinued Operations
|
- | 825,036 | ||||||
Net
Loss
|
$ | (240,394 | ) | $ | (79,347 | ) | ||
Loss
Per Limited Partnership Unit - Continuing Operations
|
$ | (.07 | ) | $ | (.27 | ) | ||
Income
Per Limited Partnership Unit - Discontinued
Operations
|
$ | - | $ | .25 | ||||
Total
Loss Per Limited Partnership Unit
|
$ | (.07 | ) | $ | (.02 | ) | ||
Distributions
Per Limited Partnership Unit
|
$ | .32 | $ | .49 | ||||
Weighted
Average Number of Limited Partnership Units Outstanding
|
3,303,387 | 3,303,387 | ||||||
Net Loss Allocable to General
Partner
|
$ | (2,404 | ) | $ | (793 | ) | ||
Distributions
Allocable to General Partner
|
$ | - | $ | - |
See
accompanying notes to financial statements.
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Statements
of Partners’ Equity
Years
Ended December 31, 2009 and 2008
General
|
||||||||||||
Partner
|
Unit Holders
|
Total
|
||||||||||
Balance, January 1,
2008
|
419,221 | 10,443,713 | 10,862,934 | |||||||||
Distributions
to unit holders
|
- | (1,618,660 | ) | (1,618,660 | ) | |||||||
Net
loss for the year
|
(793 | ) | (78,554 | ) | (79,347 | ) | ||||||
Balance, December 31,
2008
|
418,428 | 8,746,499 | 9,164,927 | |||||||||
Distributions
to unit holders
|
- | (1,057,084 | ) | (1,057,084 | ) | |||||||
Net
loss for the year
|
(2,404 | ) | (237,990 | ) | (240,394 | ) | ||||||
Balance, December 31,
2009
|
$ | 416,024 | $ | 7,451,425 | $ | 7,867,449 |
See
accompanying notes to financial statements.
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Statements
of Cash Flows
Year Ended December 31,
|
2009
|
2008
|
||||||
Cash
Flows From Operating Activities
|
||||||||
Net
loss
|
$ | (240,394 | ) | $ | (79,347 | ) | ||
Adjustments
to reconcile net (loss) income to net cash provided by operating
activities
|
||||||||
Depreciation
|
1,477,762 | 1,516,524 | ||||||
Amortization
and write off of deferred financing costs
|
27,752 | 442,417 | ||||||
Gain
on sale of property
|
- | (880,656 | ) | |||||
Decrease
(increase) in manufactured homes and improvements
|
374,928 | (76,350 | ) | |||||
Increase in
other assets
|
(34,068 | ) | (34,497 | ) | ||||
Increase
(decrease) in accounts payable
|
4,397 | (67,727 | ) | |||||
(Decrease)
increase in other liabilities
|
(72,924 | ) | 109,761 | |||||
Net
Cash Provided By Operating Activities
|
1,537,453 | 930,125 | ||||||
Cash
Flows From Investing Activities
|
||||||||
Purchase
of property and equipment
|
(197,218 | ) | (243,180 | ) | ||||
Net
proceeds from sale of property
|
- | 2,934,000 | ||||||
Net
Cash (Used In) Provided By Investing Activities
|
(197,218 | ) | 2,690,820 | |||||
Cash
Flows From Financing Activities
|
||||||||
Distributions
to unit holders
|
(1,057,084 | ) | (1,618,660 | ) | ||||
Payment
on prior mortgage
|
- | (25,687,191 | ) | |||||
Proceeds
from mortgage refinancing
|
- | 23,225,000 | ||||||
Repayments
of notes payable
|
(382,568 | ) | (91,758 | ) | ||||
Debt
issuance costs
|
- | (693,798 | ) | |||||
Net
Cash Used In Financing Activities
|
(1,439,652 | ) | (4,866,407 | ) | ||||
Net
(Decrease) Increase In Cash
|
(99,417 | ) | (1,245,462 | ) | ||||
Cash, at beginning of
year
|
7,469,961 | 8,715,423 | ||||||
Cash, at end of
year
|
$ | 7,370,544 | $ | 7,469,961 |
See
accompanying notes to financial statements.
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
1.
|
Summary
of Accounting Policies
|
Organization
and Business
|
|
Uniprop
Manufactured Housing Communities Income Fund II, a Michigan Limited
Partnership (the “Partnership”) acquired, maintains, operates and will
ultimately dispose of income producing residential real properties
consisting of seven manufactured housing communities (the “properties”) at
December 31, 2009, and 2008, located in Florida, Michigan,
Nevada and Minnesota. The Partnership was organized and formed under the
laws of the State of Michigan on November 7, 1986. The
general partner is Genesis Associates Limited
Partnership.
|
|||
In
accordance with its Prospectus dated December 1986, the Partnership sold
3,303,387 units of beneficial assignment of limited partnership interest
(“Units”) for $66,068,000. The Partnership purchased nine properties for
an aggregate purchase price of approximately $58,000,000. Three of the
properties costing approximately $16,008,000 were previously owned by
entities which were affiliates of the general partner. One
property was sold in 2007 and one was sold in 2008 leaving a total of
seven properties on December 31, 2009.
|
|||
Use
of Estimates
|
|||
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of (1) assets and liabilities
and the disclosure of contingent assets and liabilities as of the date of
the financial statements, and (2) revenues and expenses during the
reporting period. Actual results could differ from these
estimates.
|
|||
Fair
Values of Financial Instruments
|
|||
The
carrying amounts of cash, accounts payable and notes payable approximate
their fair
values.
|
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
Property
and Equipment
|
||
Property
and equipment are stated at cost. Depreciation is provided using the
straight-line method over a period of thirty years except for furniture
and equipment which is depreciated over a period ranging from three to ten
years.
|
||
Accumulated
depreciation on continuing properties for tax purposes was $29,675,000 and
$28,197,000 as of December 31, 2009 and 2008,
respectively.
|
||
Long-lived
assets such as property and equipment are evaluated for impairment when
events or changes in circumstances indicate that the carrying amount of
the assets may not be recoverable through the estimated undiscounted
future cash flows from the use of these assets. When any such impairment
exists, the related assets will be written down to fair
value.
|
||
Manufactured
Homes and Improvements
|
||
Manufactured
homes and improvements are stated at the lower of cost or market and
represent manufactured homes held for sale.
|
||
Financing
Costs
|
||
As
a result of the refinance of the mortgage note payable during 2008, costs
to obtain the financing (see Note 2) have been capitalized and are being
amortized over the 25-year term of the related mortgage note payable.
Previously deferred financing costs were written off.
Accumulated
amortization on continuing properties was $27,752 and $13,876 as of
December 31, 2009 and 2008, respectively.
|
||
Revenue
Recognition
|
||
Rental
income attributable to leases is recorded when due from the
lessees. Revenue from the sale of manufactured homes is
recognized upon transfer of title at the closing of the sale
transaction.
|
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
Other
Revenue
|
|||
Other
revenue consists of interest income, rental late fees, utility charges and
miscellaneous income. Income from utility charges is recognized based upon
actual monthly usage.
|
|||
Income
Taxes
|
|||
Federal
income tax regulations provide that any taxes on income of a partnership
are payable by the partners as individuals. Therefore, no provision for
such taxes has been made at the partnership level.
|
|||
2. |
Note
Payable
|
In
1998, the Partnership entered into a $30,000,000 note payable
agreement. The note was payable in monthly installments of
$188,878, including interest at 6.37%. The
note was secured by mortgages on the Partnership’s Ardmor Village, Camelot
Manor, Dutch Hills, El Adobe, Stonegate Manor, Sunshine Village and West
Valley properties. The Partnership used the proceeds from the note to
refinance the Partnership’s outstanding indebtedness of $30,045,000, which
was incurred in a 1993 mortgage transaction.
|
|
During
2008, the Partnership refinanced the mortgage note payable and executed
new notes payable to StanCorp Mortgage Investors, LLC in the
aggregate amount of $23,225,000 secured by the seven remaining properties
of the Partnership. To pay off the prior mortgage balance of $25,277,523
and the costs of refinancing, the Partnership transferred $2,735,555 from
cash reserves. The mortgages are payable in monthly
installments of interest and principal through September
2033. Interest on these notes is accrued at a fixed rate of
6.625% for five years, at which time, the rate will reset to the lender’s
then prevailing market rate. As of December 31, 2009, the
balance on these notes was $22,750,674. In connection with the new
mortgage debt, the Partnership incurred $693,798 in financing costs as a
result of the refinancing which are being amortized over the life of the
mortgage of 25 years. This
included a 1% refinance fee of $232,250 paid to Uniprop AM LLC, a related
party. In addition, the Partnership recognized additional
interest expense of $418,083 related to the write off of previously
unamortized financing costs in
2008.
|
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
Future
maturities on the note payable for the next five years and thereafter are
as follows: 2010 - $408,698; 2011 - $436,612; 2012 - $466,432;
2013 - $498,289; 2014 - $532,321 and thereafter -
$20,408,322.
|
||
At
December 31, 2009 and 2008, “Other Assets” included cash of approximately
$299,000 and $242,000, respectively, in an escrow account for property
taxes, insurance, and capital improvements, as required by the
Partnership’s note payable agreement. The cash is restricted from
operating use.
|
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
3. |
Related
Party Transactions
|
Management
Agreement
|
|
The
Partnership has an agreement with an affiliate of the general partner to
manage the properties owned by the Partnership. The management agreement
is automatically renewable annually, but may be terminated by either party
upon sixty days written notice. The property management fee is the lesser
of 5% of annual gross receipts from the properties managed, or the amount
which would be payable to an unaffiliated third party for comparable
services.
|
|||
Certain
employees of affiliates of the General Partner were paid an aggregate of
$283,624 during 2009 to perform partnership management, and investor
relation services for the Partnership. Uniprop Homes, Inc., a
related entity, received commissions totaling $29,491 in 2009 for certain
services provided as a broker/dealer of manufactured homes for the
properties. Uniprop Homes, Inc. represented the properties in the sale of
new and pre-owned homes to property residents.
|
|||
Fees
and Expenses
|
|||
During
the years ended December 31, 2009 and 2008, Uniprop AM LLC, an
affiliate earned property management fees from continuing operations of
$387,000, and $380,000, respectively, as permitted in the Agreement of
Limited Partnership. These fees are included with “Administrative”
expenses in the respective statements of income. The Partnership was owed
$9,700 and $9,100 by the affiliate at December 31, 2009 and 2008,
respectively, for previously overpaid fees.
|
|||
Contingent
Purchase Price
|
|||
A
general partner of Genesis Associates Limited Partnership has an interest
in the sellers of two of the properties acquired by the Partnership and is
entitled to share in a contingent purchase price that will not exceed
$2,054,000. Additional amounts to be paid, if any, will depend upon the
results of the Partnership's operations and the amounts received upon the
sale, financing or other disposition of the related properties, and are
not determinable at this time. The Partnership does not anticipate any
such amount will become payable during the next fiscal
year.
|
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
4. |
Reconciliation
of
|
Year
Ended December 31,
|
2009
|
2008
|
|||||
Financial
Statement
|
|||||||||
Income
and Taxable
|
Loss per the financial
statements
|
$
|
(240,394
|
)
|
(79,347
|
)
|
|||
Income
|
|||||||||
Loss
on disposal of assets
|
-
|
(206,918
|
)
|
||||||
Adjustments
to depreciation for difference in methods
|
(452,908
|
)
|
8,751
|
||||||
Adjustments
for prepaid rent, meals and entertainment
|
9,783
|
2,250
|
|||||||
Loss
Per the Partnership’s Tax Return
|
$
|
(683,519
|
)
|
(275,264
|
)
|
||||
5. |
Partners’
Capital
|
Subject
to the orders of priority under certain specified conditions more fully
described in the Agreement of Limited Partnership (the “Agreement”)
distributions of partnership funds and allocations of net income from
operations are principally determined as follows:
|
|||||||
Distributions
|
|||||||||
Distributable
cash from operations in the Agreement (generally defined as net income
plus depreciation and amortization, less mortgage amortization) is to be
distributed to unit holders until they have received a 10% cumulative
preferred return. After the unit holders have received their 10%
cumulative preferred return, all remaining cash from operations is
distributed to the general partner in the form of an incentive management
interest until the total amount received by the general partner is equal
to 15% of the aggregate amount of cash distributed from operations in a
given year. Amounts payable to but not paid to the general partner will be
accumulated and paid from future capital transactions after the unit
holders have first received their 10% preferred return and 125% of their
capital contributions. Thereafter, 85% of distributable cash from
operations is to be paid to the unit holders and 15% to the general
partner.
|
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
Annual
distributable cash from operations was less than the amount required for
the annual 10% preferred return to the unit holders by approximately
$4,595,000 and $4,033,000, in 2009, and 2008, respectively. No
distributions can be made to the general partner until the cumulative
preferred return deficit of approximately $50,544,000 as of December 31,
2009 has been distributed to the unit holders.
|
|||
At
December 31, 2009, the general partner’s cumulative incentive
management interest to be distributed was approximately $12,122,000. The
actual amount to be accumulated or paid in the future depends on the
results of the Partnership’s operations and is not currently determinable;
however, no such distribution to the general partner is anticipated during
fiscal year 2010.
|
|||
Allocation
of Net Income
|
|||
Net
income is principally allocated 99% to the unit holders and 1% to the
general partner until the cumulative amount of net income allocated to the
unit holders equals the aggregate cumulative amount of cash distributed to
the unit holders. After sufficient net income has been allocated to the
unit holders to equal the amount of cash distributed to them, all the net
income is to be allocated to the general partner until it equals the
amount of cash distributed to
it.
|
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
6. |
Supplemental
Cash Flow Information
|
Interest
paid during 2009 and 2008 was approximately $1,521,000, and $1,678,000,
respectively.
|
||||
7. |
Discontinued
Operations
|
As
described in Form 8-K dated July 28, 2008, the Partnership had entered
into a Contract for Sale and Purchase of Real and Personal Property with a
private buyer for the Country Roads Manufactured Housing Community located
in Jacksonville, Florida. On August 7, 2008, the sale closed
with a purchase price of $3,000,000, less closing costs for proceeds in
the amount of $2,934,000. The Partnership recognized a gain on
the sale of approximately
$881,000.
The Partnership distributed approximately $562,000 from the sale to its
unit holders with the balance of the proceeds being maintained in reserve
until such time as the General Partner determines the optimal use of the
funds. As a result of the sale, the Partnership has classified the Country
Roads community and associated financial results as “discontinued
operations” in the accompanying financial statements for all years
presented.
|
||||
Below
is a summary of the results of operations of the Country Roads property
through disposition date:
|
||||||
Year
Ended December 31,
|
2008
|
|||||
Rental
income
|
$
|
254,000
|
||||
Other
Income
|
47,000
|
|||||
Administrative
expenses
|
(183,000
|
)
|
||||
Property
tax expense
|
(32,000
|
)
|
||||
Utilities
expense
|
(47,000
|
)
|
||||
Property
operations
|
(35,000
|
)
|
||||
Depreciation
expense
|
(60,000
|
)
|
||||
Home
sale expense
|
-
|
|||||
Loss
From Discontinued Operations
|
(56,000
|
)
|
||||
Gain
on Sale of Discontinued Operations
|
881,000
|
|||||
Income
From Discontinued Operations
|
$
|
825,000
|
Uniprop
Manufactured Housing
Communities
Income Fund II
(a
Michigan limited partnership)
Notes
to Financial Statements
8.
|
Interim
Results (Unaudited)
|
The
following summary represents the unaudited results of operations of the
Partnership, expressed in thousands except per unit amounts, for the
periods from January 1, 2008 through December 31,
2009:
|
Three
Months Ended
|
|||||||||||||||||
2009
|
March
31,
|
June
30,
|
September 30,
|
December 31,
|
|||||||||||||
|
Revenues
From Continuing Operations
|
$ | 2,108 | $ | 2,187 | $ | 2,043 | $ | 2,069 | ||||||||
(Loss)
Income from Continuing Operations
|
$ | (246 | ) | $ | (38 | ) | $ | 35 | $ | 9 | |||||||
(Loss)
Income Per Limited Partnership Unit from Continuing
Operations
|
$ | (.07 | ) | $ | (.02 | ) | $ | .01 | $ | .01 | |||||||
Three
Months Ended
|
|||||||||||||||||
2008
|
March
31,
|
June
30,
|
September 30,
|
December 31,
|
|||||||||||||
Revenues
From Continuing Operations
|
$ | 2,274 | $ | 2,143 | $ | 2,199 | $ | 2,152 | |||||||||
Income
(Loss) from Continuing Operations
|
$ | 83 | $ | 95 | $ | (579 | ) | $ | (503 | ) | |||||||
Income
(Loss) from Discontinued Operations
|
3 | (7 | ) | 821 | 8 | ||||||||||||
Income
(Loss) Per Limited Partnership Unit from Continuing
Operations
|
$ | .03 | $ | .03 | $ | (.18 | ) | $ | (.15 | ) | |||||||
Income
Per Limited Partnership Unit from Discontinued Operations
|
- | - | .25 | - |
Uniprop
Manufactured
Housing
Communities Income Fund II
(a
Michigan limited partnership)
Schedule
III - Real Estate and Accumulated Depreciation
December
31, 2009
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
Column
F
|
Column G
|
Column
H
|
||||||||||||||||||||||||||||||||
Costs
|
|||||||||||||||||||||||||||||||||||||||
Capitalized
|