SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999 Commission File No. 015940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
MICHIGAN (State or other jurisdiction of incorporation or organization) |
382593067 (I.R.S. employer identification number) |
280 Daines Street, Birmingham, Michigan 48009
(Address of principal executive offices) (Zip Code)
(248) 6459261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
units of limited partnership interest
Yes [X] No [ ]
As of March 1, 2000, 30,000 units of limited partnership interest of the registrant were outstanding and the estimated aggregate market value of the units as of such date (based on a 2000 appraisal of Partnership properties) held by nonaffiliates was approximately $17,652,516.
DOCUMENTS INCORPORATED BY REFERENCE
See Item 14.
PART I
This form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein.
ITEM 1. BUSINESS
General Development of Business
Uniprop Manufactured Housing Communities Income Fund, a Michigan Limited Partnership (the "Partnership"), acquired, maintains, operates and ultimately will dispose of income producing residential real properties consisting of four manufactured housing communities (the "Properties"). The Partnership was organized and formed under the laws of the State of Michigan on May 16, 1985. Its principal offices are located at 280 Daines Street, Birmingham, Michigan 48009 and its telephone number is (248) 6459261.
The Partnership filed an S11 Registration Statement (Registration No. 298180) in June 1985, which was declared effective by the Securities and Exchange Commission on September 24, 1985. The Partnership thereafter offered a maximum of 30,000 units of limited partnership interest representing capital contributions by the limited partners to the Partnership of $1,000 per unit (the "Units"). The sale of all 30,000 Units was completed in March 1986, generating $30 million of contributed capital to the Partnership.
On February 10, 1986, the Partnership acquired Aztec Estates, a 645space manufactured housing community in Margate, Florida and Kings Manor, a 314space manufactured housing community in Ft. Lauderdale, Florida. On March 4, 1986, the Partnership acquired Old Dutch Farms, a 293space manufactured housing community in Novi, Michigan. On March 27, 1986, the Partnership acquired The Park of the Four Seasons, a 572space manufactured housing community in Blaine, Minnesota.
The Partnership operates the Properties as manufactured housing communities with the primary investment objectives of: (1) obtaining net cash from operations; and (2) obtaining capital appreciation. There can be no assurance that such objectives can be achieved.
On March 25, 1997 the Partnership borrowed $33,500,000 from Nomura Asset Capital Corporation and secured the borrowing with liens on its Properties (the "Financing"). The interest rate on the Financing is 8.24% and the term is 120 months. The loan is amortized over 360 months. On March 26, 1997 the Partnership distributed $30,000,000 to the Limited Partners, representing a full return of original capital contributions of $1,000 per unit held. The Partnership continues to own and operate its properties and has been able to continue to pay cash distributions to the Limited Partners, although in amounts substantially lower than the distributions paid prior to the Financing. Limited Partners continue to have an interest in the Partnership because their original capital contributions have appreciated since their initial investments were made and only the original capital contributions were returned on March 26, 1997.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation of its four manufactured housing communities. For a description of the Partnership's revenues, operating profit and assets, please refer to Items 6 and 8.
Narrative Description of Business
General
The Properties were selected from 23 manufactured housing communities then owned by affiliates of P.I. Associates Limited Partnership, a Michigan limited partnership, the General Partner (the "General Partner") of the Partnership. The Partnership rents space in the Properties to owners of manufactured homes thereby generating rental revenues. 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 Manufactured Housing Services Inc. (the "Consultant"). In making their decisions they will consider relevant factors, including, current operating results of the particular Property, prevailing economic conditions and with a view to achieving maximum capital appreciation to the Partnership considering relevant tax consequences and the Partnership's investment objectives.
Competition
The business of owning and operating residential manufactured housing communities is highly competitive, and the Partnership may be competing with a number of established companies having greater financial resources. Moreover, there has been a trend for manufactured housing community residents to purchase (where zoning permits) their manufactured homesites on a collective basis. This trend may result in increased competition with the Partnership for tenants. In addition, the General Partner, its affiliates or both, have participated, 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.
Each of the Properties competes with numerous similar facilities located in its geographic area. The Margate/Fort Lauderdale area contains approximately seven communities offering approximately 2,713 housing sites competing with Aztec Estates. The Davie/Fort Lauderdale area contains approximately five communities offering approximately 1,765 housing sites competing with Kings Manor. Old Dutch Farms competes with approximately seven communities offering approximately 3,455 housing sites. Park of the Four Seasons competes with approximately 11 communities offering approximately 3,207 housing sites. The Properties also compete against other forms of housing, including apartment and condominium complexes.
Governmental Regulations
The Properties owned by the Partnership are subject to certain state regulations regarding the conduct of the Partnership operations. For example, the State of Florida regulates agreements and relationships between the Partnership and the residents of Aztec Estates and Kings Manor. Under Florida law, the Partnership is required to deliver to new residents of those Properties a prospectus describing the Property and all tenant rights, Property rules and regulations, and changes to Property rules and regulations. Florida law also requires minimum lease terms, requires notice of rent increases, grants to tenant associations certain rights to purchase the community if being sold by the owner and regulates other aspects of the management of such properties. The Partnership is required to give 90 days notice to the residents of Florida properties of any rate increase, reduction in services or utilities or change in rules and regulations. If a majority of the residents object to such changes as unreasonable, the matter must be submitted to the Florida Department of Business Regulations for mediation prior to any legal adjudication of the matter. In addition, if the Partnership seeks to sell Florida Properties to the general public, it must notify any homeowners association for the residents, and the association shall have the right to purchase the Property for the price, terms and conditions being offered to the public within 45 days of notification by the owner. If the Partnership receives an unsolicited bona fide offer to purchase the Property from any party that it is considering or negotiating, it must notify any such homeowners association that it has received an offer, state to the homeowners association the price, terms and conditions upon which the Partnership would sell the Property, and consider (without obligation) accepting an offer from the homeowners association. The Partnership has, to the best of its knowledge, complied in all material respects with all requirements of the States of Florida, Michigan and Minnesota, where its operations are conducted.
Employees
The Partnership employs two parttime employees to perform Partnership management and investor relations' services. The Partnership retains an affiliate, Uniprop, Inc., as the property manager for each of its Properties. Uniprop, Inc. is paid a fee equal to the lesser of 5% of the annual gross receipts from each of the Properties or the amount which would be payable to unaffiliated third parties for comparable services. Uniprop, Inc. retains local managers on behalf of the Partnership at each of the Properties. Salaries and fringe benefits of such local managers are paid by the Partnership and are not included in any property management fee payable to Uniprop, Inc. Local managers are employees of the Partnership and are paid semi-monthly. The yearly salaries and expenses for local managers range from $20,000 to $40,000. Local managers have no direct management authority, make no decisions regarding operations and act only in accordance with instructions from the property manager. They are utilized by the Partnership to provide onsite maintenance and administrative services. Uniprop, Inc., as property manager, has overall management authority for each Property.
ITEM 2. PROPERTIES
The Partnership purchased all four manufactured housing communities for cash. As a result of the 1997 financing, the Properties are now encumbered with mortgages.
Each of the Properties is a modern manufactured housing community containing lighted and paved streets, sidebyside offstreet parking and complete underground utility systems. The Properties consist of only the underlying real estate and improvements, not the actual homes themselves. Each of the Properties has a community center which includes offices, meeting rooms and game rooms. Each of the Properties, except Old Dutch Farms, has a swimming pool and tennis courts.
The table below contains certain information concerning the Partnership's four properties.
Property Name and Location |
Year Constructed |
Acreage |
Number of Sites | |
| Aztec Estates Sundial Circle Margate, FL |
1970 |
100 |
645 | |
|
Kings Manor State Road 84 & Flamingo Road Ft. Lauderdale, FL |
1972 |
45 |
314 | |
| Old Dutch Farms Novi Road Novi, MI |
1972 |
47 |
293 | |
| Park of the Four Seasons University Avenue Blaine, MN |
1972 |
107 |
572 |
ITEM 3. LEGAL PROCEEDINGS
In the opinion of the Partnership and its legal counsel, there are no material legal proceedings pending except such ordinary routine matters as are incident to the kind of business conducted by the Partnership. To the knowledge of the Partnership and its counsel, no legal proceedings have been instituted or are being contemplated by any governmental authority against the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The voting privileges of the limited partners are restricted to certain matters of fundamental significance to the Partnership. The Limited Partners must approve certain major decisions of the General Partner if the General Partner proposes to act without the approval of the Consultant. The Limited Partners also have a right to vote upon removal and replacement of the General Partner, dissolution of the Partnership, material amendments to the partnership agreement and the sale or other disposition of all or substantially all of the Partnership's assets, except in the ordinary course of the Partnership's disposing of the Properties. Such matters must be approved by Limited Partners, as a group, holding more than 50% of the then outstanding Units. No matters were submitted to Limited Partners for vote during 1999.
PART II
| Fiscal Year Ended December31, 1999 | Fiscal Year EndedDecember31, 1998 | Fiscal YearEndedDecember31, 1997 | Fiscal YearEndedDecember31, 1996 | Fiscal YearEndedDecember31, 1995 | |
| Total Assets | $22,403,064 | $22,508,884 | $23,052,433 | $21,307,555 | $21,822,565 |
| Income | $8,748,916 | $8,451,561 | $8,234,904 | $7,751,358 | $7,502,221 |
| Expenses | (7,977,428) | (7,934,674) | (7,175,119) | (4,776,905) | (4,513,031) |
| Net Income | $ 771,488 | $ 516,887 | $1,059,785 | $2,974,453 | $2,989,190 |
| Distributions to Limited Partners, per Unit |
$9.25 |
$8 |
$1,052 |
$100 |
$100 |
|
Income per Unit: Class A |
$8 |
$2 |
$17 |
$69 |
$69 |
| Class B | $46 | $39 | $52 | $100 | $100 |
| Weighted average number of Units outstanding: Class A Class B |
20,230 9,770 |
20,230 9,770 |
20,230 9,770 |
20,230 9,770 |
20,230 9,770 |
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Capital Resources
The capital formation phase of the Partnership began on February 10, 1986, when Aztec Estates and Kings Manor were purchased by the Partnership and operations commenced. On March 4, 1986, and March 27, 1986, Old Dutch Farms and Park of the Four Seasons were purchased, respectively. From the $30,000,000 capital raised from the sale of the units, $26,400,000 was used to purchase the four Properties after deducting sales commissions, advisory fees and other organization and offering costs.
The Partnership had no capital expenditure commitments as of December 31, 1999 and does not anticipate any during the next fiscal year.
In an effort to provide Limited Partners with a full return of original capital contributions of $1,000 per unit, the General Partner, with majority consent from the Limited Partners, mortgaged the four Properties owned by the Partnership on March 25, 1997 in the aggregate amount of $33,500,000. The General Partner acknowledges that the mortgages impose some risks to the Partnership, but considers that such risks are not greater than risks typically associated with real estate financing.
Liquidity
The Partnership has, since inception, generated adequate amounts of cash to meet its operating needs. The Partnership retains cash reserves, which it considers adequate to maintain the Properties. All funds in excess of operating needs, amounts sufficient to pay debt service, and cash reserves have been distributed to the Partners, quarterly.
While the Partnership is not required to maintain a working capital reserve, it has not distributed all the cash generated from operations in order to build cash reserves. As of December 31, 1999, the Partnership cash reserves amounted to $1,113,061. The amount of any funds placed in reserves is at the discretion of the General Partner. The Partnership expects to generate adequate amounts of cash to meet its operating needs and debt service during the next fiscal year.
The Partnership
has a renewable line of credit of $600,000 with National City Bank of
Michigan/Illinois (formerly First of America Bank). The interest rate floats 180
basis points above 1 month LIBOR, which on December 31, 1999 was 5.95%. The sole
purpose for the line of credit is to purchase new and used homes to be used as
model homes and offered for sale with the Partnership's communities. Over the
past four years, sales of the new and used model homes has been steady and the
General Partner believes that continuing the model home program is in the best
interest of the Partnership. As of December 31, 1999, the outstanding balance on
the line of credit was $600,000. During 2000, the General Partner has determined
that cash reserves are adequate, and that the Partnership may therefore begin to
pay down the outstanding balance on the line of credit. If the Partnership's
consultant, Manufactured Housing Services, agrees with the Partnership's intent
to pay down the balance, payments will be quarterly until the balance is paid in
full.
On March 25, 1997
the Partnership completed the Financing pursuant to which the Partnership
borrowed $33,500,000 from Nomura Asset Capital Corporation and secured the
borrowing with liens on its Properties. The interest rate on the Financing is
8.24%, and the term is 120 months. The loan is amortized over 360 months. On
March 26, 1997, the Partnership distributed $30,000,000 of the financing
proceeds to the Limited Partners, representing a full return of original capital
contributions of $1,000 per Unit held. The Partnership continues its operations
and expects to be able to continue to pay cash distributions to the Limited
Partners, although, due to payment of debt service resulting from the Financing,
in amounts substantially lower than paid prior to the financing. Limited
Partners will continue to have an interest in the Partnership because their
original capital contributions have appreciated since their initial investments
were made. Only the original capital contributions were returned on March 26,
1997.
Net Cash from Operations
available for aggregate distributions to all Partners during the year ended
December 31, 1999 amounted to $1,724,770. Management considers Net Cash from
Operations to be a supplemental measure of the Partnership's operating
performance. Net Cash from Operations is defined to mean net income computed in
accordance with generally accepted accounting principles ("GAAP"), plus
depreciation and amortization expense. Net Cash from Operations does not
represent cash generated from operating activities in accordance with GAAP and
is not necessarily indicative of cash available to fund cash needs. Net Cash
from Operations should not be considered as an alternative to net income as the
primary indicator of the Partnership's operating performance or as an
alternative to cash flow as a measure of liquidity.
The yearly
Partnership Management Distribution due and paid to the General Partner for 1999
was $569,250, or 1.0% of the then most recent appraised value of the properties
held by the Partnership.
The cash available after payment of the Partnership
Management Distribution of $569,250 from Net Cash from Operations was
$1,155,520. From this amount the General Partner elected to make a total
distribution of $346,850 for 1999, 80.0% of which, or $277,500, was paid to the
Limited Partners and 20.0% of which, or $69,350, was paid to the General
Partner. The remaining Net Cash from Operations was used to reduce debt and
purchase certain equipment.
Results of Operations
a. Distributions
For the year ended December 31, 1999, the Partnership
made distributions to Limited Partners of $9.25 per Unit held, or $277,500. In
1998 the Partnership made distributions to Limited Partners of $8.00 per Unit
held, or $240,000. In 1997 the Partnership made distributions to Limited
Partners of $1,052 per Unit held, or $31,568,400. The General Partner received
distributions totaling $638,600, $611,500, and $871,000 during the same periods.
Included in the 1997 distributions was $30,000,000, which was the result of the
1997 financing, constituting a complete return of the Limited Partners' original
capital contributions of $1,000 per Unit.
b. Net Income
For the years ended December 31, 1999, 1998 and 1997 net
income was $771,488, $516,887 and $1,059,785 on total revenues of $8,748,916,
$8,451,561 and $8,234,904. The increase in net income from 1998 to 1999 is the
result of higher gross revenues. The significant decline in net income from 1997
to 1998 is due primarily to the Partnership's first full year of interest
payments associated with the Financing and an increase in property operating
expenses.
Net income, plus depreciation and amortization, less
distributions to all Partners, was $808,670, $601,960 and $650,476, for the
years ended December 31,1999, 1998, and 1997, respectively. The $650,476
indicated for 1997 excludes the effects of the Financing, which resulted in a
$30,000,000 distribution to Limited Partners.
|
|
GROSS REVENUE |
NET OPERATING INCOME AND NET INCOME | ||||
|
|
|
|
|
|
| |
| Aztec Estates | $3,292,625 | $3,187,994 | $3,101,572 | $1,635,311 | $1,652,513 | $1,643,833 |
| Kings Manor | 1,491,893 | 1,470,598 | 1,405,468 | 915,165 | 923,980 | 892,472 |
| Old Dutch Farms | 1,403,048 | 1,378,539 | 1,319,097 | 893,138 | 897,758 | 873,242 |
| Park of the Four Seasons | 2,501,226 | 2,373,946 | 2,345,585 | 1,515,013 | 1,426,937 | 1,378,661 |
| $8,688,792 | $8,411,077 | $8,171,722 | $4,958,627 | $4,901,188 | $4,788,208 | |
| Partnership Management |
60,124 |
40,484 |
63,182 |
(162,104) |
(246,847) |
(459,343) |
| Other Non-Recurring Expenses |
(231,720) |
(345,512) |
(235,746) | |||
|
Debt Service Depreciation and Amortization
|
(2,840,033)
|
(2,855,369)
|
(2,142,196)
| |||
| TOTAL: | $8,748,916 | $8,451,561 | $8,234,904 | $771,488 | $ 516,887 | $1,059,785 |
Comparison of Year Ended December 31, 1999 to Year Ended December 31, 1998
Gross revenues increased $297,355, or 3.5%, to $8,748,916 in 1999, compared to $8,451,561 in 1998. The increase was primarily the result of the increase in rental income due to higher average monthly rents. (See table on previous page.)
As described in the Statements of Income, the Partnership's operating expenses increased minimally, from $7,934,674 in 1998, to $7,977,428 in 1999.
As a result of the foregoing factors, net income increased from $516,887 in 1998 to $771,488 in 1999.
Gross revenues increased $216,657, or 2.6%, to $8,451,561 in 1998, compared to $8,234,904 in 1997. The increase was primarily the result of the increase in rental income due to higher average monthly rents. (See table on previous page.)
As described in the Statements of Income, the Partnership's operating expenses increased $759,555, or 10.6%, to $7,934,674 in 1998, compared to $7,175,119 in 1997. The increase is primarily due to the Partnership's first full year of interest payments associated with the mortgage debt and an increase in property operating expenses. The increase in property operating expenses is specifically related to non-recurring costs associated with the removal of older homes from the Properties and expenses incurred related to improvements to the vacant homesites. The higher operating expenses were partially offset by a decrease in administrative costs in 1998 from 1997.
As a result of the foregoing factors, net income decreased from $1,059,785 in 1997 to $516,887 in 1998.
Year 2000 Costs
The Partnership's significant business relations with external parties, including its banking and vendor relations, along with its information systems were fully "Year 2000" compliant and therefore, there were no adverse effects related to "Year 2000".
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate risk primarily through its borrowing activities. There is inherent roll over risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and the Partnership's future financing requirements.
Note Payable: At December 31, 1999 the Partnership had a note payable outstanding in the amount of $32,879,105. Interest on this note is at a fixed annual rate of 8.24% through June 2007.
Line-of-Credit: At December 31, 1999 the Partnership owed $600,000 pursuant to its line-of-credit agreement, whereby interest is charged at a variable rate of 1.80% in excess of LIBOR.
A 10% adverse change in interest rates on the portion of the Partnership's debt bearing interest at variable rates would result in an increase in interest expense of less than $10,000.
The Partnership does not enter into financial instruments transactions for trading or other speculative purposes or to manage its interest rate exposure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the fiscal
years ended December 31, 1999, 1998 and 1997, and supplementary data are
filed with this Report under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in the Partnership's
independent public accountants nor have there been any disagreements during the
past two fiscal years.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership, as an entity, does not have any officers
or directors. The General Partner of the Partnership is P.I. Associates Limited
Partnership. P.I. Associates is a Michigan limited partnership. From November
1985 until March 19, 1997, Paul M. Zlotoff served as the sole general partner of
P.I. Associates. In order to address concerns raised by the lender in connection
with the Financing, on March 19, 1997, GP P.I. Associates Corp. was admitted as
a corporate General Partner of the P.I. Associates. GP P.I. Associates Corp. is
wholly owned by Paul M. Zlotoff. Under the amended partnership agreement of P.I.
Associates, all actions taken by P.I. Associates must be approved by both
general partners.
Information concerning Mr. Zlotoff's age and principal
occupations during the last five years or more is as follows:
Paul M. Zlotoff, 50, is and has been an individual
general partner of P.I. Associates since its inception in May 1985. Mr. Zlotoff
became the Chairman of Uniprop, Inc. in May 1986 and was its President from 1979
through 1997. He is also an individual general partner of Genesis Associates
Limited Partnership, the general partner of Uniprop Manufactured Housing
Communities Income Fund II, a public limited partnership, which owns and
operates nine manufactured housing communities. Mr. Zlotoff currently, and in
the past, has acted as the general partner for various other limited
partnerships owning manufactured home communities, as well as some commercial
properties.
The following individuals are the directors and officers
of GP P.I. Associates Corp.:
Name and Age Position Held
Paul M. Zlotoff, 50 Director and President, Secretary and
Treasurer
Arthur Weiss, 50 Director
Charles Soberman, 50 Director
Arthur Weiss, 50 has been practicing law at Jaffe, Raitt,
Heuer & Weiss, Professional Corporation ("JRH&W"), which has represented
the company in various matters since 1976. Mr. Weiss is currently a shareholder,
director and vice president of JRH&W.
Arthur Weiss is an Independent Director, meaning that he
has not been, at any time, in the five years preceding his appointment: (a) a
stockholder, director, officer, employee, or partner of GP P.I. Associates
Corp., P.I. Associates, or the Partnership; (b) a customer, supplier, or other
person who derives more than 10% of its purchases or revenues from its
activities with GP P.I. Associates Corp., P.I. Associates, or the Partnership;
(c) a person or other entity controlling or under common control with any such
stockholder, partner, customer, supplier or other person referenced in
subparagraph (a) or (b) above; or (d) a member of the immediate family of any
such stockholder, director, officer employee, partner, customer, supplier or
other person referenced in subparagraph (a) or (b) above.
Charles Soberman, 50, joined Uniprop, Inc. in June 1999
as its Chief Executive Officer and Executive Vice President. Mr. Soberman's
responsibilities include supervision of property operations and corporate
oversight. Mr. Soberman has a law degree from The Harvard Law School and a
M.B.A. from Michigan State University. Mr. Soberman also has a B.A. from the
University of Michigan. From 1979 through 1996, he was president of Mercury
Paint Company, a manufacturer and retailer of coatings and allied products. From
1996 to 1999 Mr. Soberman was a Senior Lecturer at Wayne State University School
of Business Administration.
Under the Articles of Incorporation of GP P.I. Associates
Corp., until such time as the notes payable to the lender in connection with the
Financing have been discharged and the liens have been released from the
Properties, certain major corporate actions may be taken only with the unanimous
vote of the directors of GP P.I. Associates Corp. These actions include:
a) Filing or consenting to the filing of any bankruptcy,
insolvency or reorganization case or proceeding, instituting any proceedings
under any applicable insolvency law or otherwise seeking relief under any laws
relating to the relief from debts or the protection of debtors generally;
b) Seeking or consenting to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar
official for GP P.I. Associates Corp., P.I. Associates, or the Partnership or a
substantial portion of any of their properties;
c) Making any assignment for the benefit of the creditors
of GP P.I. Associates Corp., P.I. Associates, or the Partnership; or
d) Taking any action in furtherance of the foregoing
subparagraphs (a) through (c).
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no executive officers and therefore,
no officers received a salary or remuneration exceeding $100,000 during the last
fiscal year. The General Partner of the Partnership and an affiliate, Uniprop,
Inc., received certain compensation and fees during the fiscal year in the
amounts described in Item 13. The Partnership anticipates that it will provide
similar compensation to the General Partner and Uniprop, Inc. during the next
fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The Partnership is a limited partnership formed pursuant
to the Michigan Uniform Limited Partnership Act, as amended. The General
Partner, P.I. Associates Limited Partnership, is vested with full authority as
to the general management and supervision of the business and other affairs of
the Partnership, subject to certain constraints in the partnership agreement and
consulting agreement. Limited Partners have no right to participate in the
management of the Partnership and have limited voting privileges only on certain
matters of fundamental significance. To the Partnership's knowledge, no person
owns of record or beneficially, more than five percent of the Partnership's
Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion describes all of the types of
compensation, fees or other distributions paid by the Partnership or others to
the General Partner or its affiliates from the operations of the Partnership
during the last fiscal year, as well as certain of such items which may be
payable during the next fiscal year. Certain of the following arrangements for
compensation and fees were not determined by arm's length negotiations between
the General Partner, its affiliates and the Partnership.
Paul M. Zlotoff has an interest in the successors to the
sellers of all the Properties acquired by the Partnership and may be entitled to
share in a Contingent Purchase Price with respect to each Property, when and if
the successors to the sellers become entitled thereto. Each of the sellers has
been dissolved and liquidated and their interests in the Contingent Purchase
Price have been assigned to certain partners of the General Partner. The
Contingent Purchase Price for each Property was determined by reference to the
average of two independent real estate appraisals that were obtained by the
General Partner. Such appraisals are only estimates of value and are not
necessarily indicative of the actual real estate value. Each seller becomes
entitled to any unpaid Contingent Purchase Price upon the sale, financing or
other disposition of one or more Properties, but, only after the receipt by each
Limited Partner of any shortfall in his 9% cumulative preferred return plus the
return of his adjusted capital contribution. Because the Financing resulted in a
complete return of the Limited Partners' capital contributions, and because the
Limited Partners have received their cumulative preferred return in full, the
successors to the sellers did receive $1,500,000 in partial payment of the
Contingent Purchase Price on or about May 15, 1997. The maximum amounts which
could be payable to the successors to the sellers are as follows: Aztec Estates,
$1,374,323; Kings Manor, $529,724; Old Dutch Farms, $452,359; and Park of the
Four Seasons, $1,113,594. The partial payment made for each property was as
follows: Aztec Estates, $594,088; Kings Manor, $228,987; Old Dutch Farms,
$195,544; and Park of the 4 Seasons, $481,381. The maximum amounts remaining
which could be payable to the successors of the sellers are as follows: Aztec
Estates, $780,235; Kings Manor, $300,737; Old Dutch Farms, $256,815; and Park of
the Four Seasons, $632,213. The actual amounts to be received, if any, will
depend upon the results of the Partnership's operations and the amounts received
upon the sale, financing or other disposition of the Properties and are not
determinable at this time.
The Partnership paid and will continue to pay an
Incentive Management Interest to the General Partner for managing the
Partnership's affairs, including: determining distributions, negotiating
agreements, selling or financing properties, preparing records and reports, and
performing other ongoing Partnership responsibilities. As a result of the
Financing and full return of the $30,000,000 original capital contributions of
the Limited Partners, no further Preferred Return or Cumulative Return will
apply, and the payment of the Incentive Management Interest will not be
contingent on the satisfaction of those returns. The Incentive Management
Interest is 20% of the net cash from operations (cash revenues less cash
operating expenses and specified reserves) in any taxable year. As of December
31, 1999, the General Partner had earned and was entitled to an Incentive
Management Interest of $18,750. The actual amount to be received in future years
will depend upon the results of the Partnership's operations and is not
determinable at this time. Because the Limited Partners have received the return
of their adjusted capital contributions, the General Partner also has a right to
receive 20% of any sale or financing proceeds.
The General Partner is also entitled to a quarterly
Partnership Management Distribution equal to one-fourth of 1% of the most recent
appraised value of the Properties of the Partnership. The Partnership Management
Distribution for each quarter is paid in arrears, 45 days after the end of each
fiscal quarter. The Partnership Management Distribution was proposed by the
General Partner and approved by the Limited Partners to compensate, in part, for
the substantial reduction in the amounts expected to be paid to the General
Partner pursuant to the Incentive Management Interest following the Financing.
Based on the Properties' March 1999 aggregate appraised value of $57,300,000,
the Partnership Management Distribution due to the General Partner was $573,000.
The Partnership Management Distribution paid to the General Partner during 1999
was $569,250, a portion of which was calculated on the 1998 aggregate appraised
value of $55,800,000. As of December 31, 1999, the Partnership Management
Distribution due the General Partner totaled $143,250. This amount was paid to
the General Partner on February 15, 2000 from cash reserves. Based on the
Properties' March 2000 aggregate appraised value of $58,675,000, the Partnership
Management Distribution due the General Partner for the Partnership's 2000
fiscal year will be $586,750 ($58,675,000 x 1.0% = $586,000).
Uniprop, Inc., an affiliate of the General Partner,
received and will receive property management fees for each Property managed by
it. Uniprop, Inc. is primarily responsible for the daytoday management of the
Properties and for the payment of the costs of operating each Property out of
the rental income collected. The property management fees are equal to the
lesser of 5% of the annual gross receipts from the Properties managed by
Uniprop, Inc., or the amount which would be payable to an unaffiliated third
party for comparable services. During the last fiscal year, Uniprop, Inc.
received the following property management fees totaling $432,033: Aztec
Estates, $164,102; Kings Manor, $74,695; Old Dutch Farms, $69,343; and Park of
the Four Seasons, $123,893. In addition, certain employees of the Partnership
are also employees of affiliates of the General Partner. During the last fiscal
year, these employees received an aggregate of $158,491 for performing local
property management, data processing and investor relations' services for the
Partnership. The actual amounts to be received during the next fiscal year will
depend upon the results of the Partnership's operations and are not determinable
at this time.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8K
(a) Financial Statements
(1) The following financial statements and related
documents are filed with this Report:
(i) Report of Independent Certified Public Accountants
(ii) Balance Sheets as of December 31, 1999 and 1998 and
Statements of Income for the fiscal years ended December 31, 1999, 1998 and 1997
(iii) Statements of Partners' Equity for the fiscal years
ended December 31, 1999, 1998 and 1997
(iv) Statements of Cash Flows for the fiscal years ended
December 31, 1999, 1998 and 1997
(2) The following financial statement schedule is filed
with this report:
Schedule III - Real Estate and Accumulated Depreciation
for the fiscal years ended December 31, 1999, 1998 and 1997
(3) Exhibits
The following exhibits are incorporated by reference to
the S11 Registration Statement of the Partnership filed June 4, 1985, as amended
on August 1, 1985 and September 11, 1985:
3(a) Amended Certificate of Limited Partnership for the
Partnership
3(b) Agreement of Limited Partnership for the Partnership
10(a) Form of Management Agreement between the
Partnership and Uniprop, Inc.
10(b) Form of Consulting Agreement between the
Partnership, the General Partner and Consultant
The following exhibits are incorporated by reference to
the Form 10-K for fiscal year ended December 31, 1997:
3(c) Certificate of Amendment to the Certificate of
Limited Partnership for the Partnership (originally filed with Form 10-Q for the
fiscal quarter ended June 30, 1986).
4 Form of Certificate of Limited Partnership Interest in
the Partnership (Originally filed with Form 10-K for the fiscal year ended
December 31, 1986)
10(c) Contingent Purchase Price Agreement between the
Partnership, Aztec
10(d) Contingent Purchase Price Agreement between the
Partnership and O.D.F. Mobile Home Park (Originally filed with Form 10-K for the
fiscal year ended December 31, 1987)
10(e) Contingent Purchase Price Agreement between the
Partnership and The Park of the Four Seasons (Originally filed with Form 10-K
for the fiscal year ended December 31, 1987)
The following exhibits are attached to this Report:
10(f) First Amended and Restated Consulting Agreement
among the Partnership, the General Partner and the Consultant.
27 Financial Data Schedule
28 Letter summary of the estimated fair market values of
the Partnership's four
Manufactured housing communities, as of March 1, 2000.
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the
fourth quarter of 1999.
PART III
Estates (Originally filed with Form 10-K for the
fiscal year ended December 31, 1987)
|
NUMBER |
DESCRIPTION |
METHOD OF FILING |
PAGE | |||
| 3(a) | Amended Certificate of Limited Partnership for the Partnership | Incorporated by reference to the S-11 Registration Statement of the Partnership filed June 4, 1985, as amended on August 1, 1985 and September 11, 1985 ("Registration Statement"). | ||||
| 3(b) | Agreement of Limited Partnership for the Partnership | Incorporated by reference to The Registration Statement. | ||||
| 3(c)
3(d) 3(e) |
Certificate of Amendment to
the Certificate of Limited Partnership for the Partnership (originally
filed with Form 10-Q for the fiscal Quarter ended June 30, 1986).
First Amendment to Agreement of Limited Partnership Second Amendment to Agreement of Limited Partnership |
Incorporated by reference to
Form 10-K for fiscal year ended December 31, 1992.
Incorporated by reference to Form 10-K for the fiscal year ended December 31, 1996. Incorporated by reference to Form 10-K for the fiscal year ended December 31, 1996. |
||||
| 4 | Form of Certificate of Limited Partnership Interest in the Partnership (originally filed with Form 10-K for the fiscal year ended December 31, 1986). | Incorporated by reference to Form 10-K for fiscal year ended December 1997. | ||||
| 10(a) | Form of Management Agreement between the Partnership and Uniprop, Inc. | Incorporated by reference to The Registration Statement. | ||||
| 10(b) | Form of Consulting Agreement between the Partnership, the General Partner and Consultant | Incorporated by reference to The Registration Statement. | ||||
| 10(c) | Contingent Purchase Price Agreement between the Partnership, Aztec Estates, Ltd., and Kings Manor Associates (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 1997. | ||||
| 10(d) | Contingent Purchase Price Agreement between the Partnership and O.D.F. Mobile Home Park (originally filed with Form 10-K for the fiscal year ended December 31, 1987 | Incorporated by reference to Form 10-K for fiscal year ended December 1997. | ||||
| 10(e) | Contingent Purchase Price Agreement between the Partnership and The Park of the Four Seasons (originally filed with Form 10-K for the fiscal year ended December 31, 1987) | Incorporated by reference to Form 10-K for fiscal year ended December 1997. | ||||
| 10(f) | First Amended and Restated Consulting Agreement among the Partnership, the General Partner and the Consultant. | Filed Herewith |
| 27
28 |
Financial Data
Schedule
Letter summary of the Estimated fair market values of the Partnership's four manufactured housing Communities, as of March 1, 2000 |
Filed herewith.
Filed herewith. |
||||
To the Partners
Uniprop Manufactured Housing
Communities Income Fund
(a Michigan limited partnership)
We have audited the accompanying balance sheets of Uniprop Manufactured Housing Communities Income Fund (a Michigan limited partnership), as of December 31, 1999 and 1998, and the related statements of income, partners' equity (deficit) and cash flows for each of the three years in the period ended December 31, 1999. We have also audited the schedule listed under Item 14 of Form 10-K. These financial statements and the schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and the schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and the schedule. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Uniprop Manufactured Housing Communities Income Fund at December 31, 1999 and 1998 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles.
Also, in our opinion, the schedule listed under Item 14 of Form 10-K presents fairly, in all material respects, the information set forth therein.
BDO SEIDMAN, LLP
February 4, 2000
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
|
December 31, |
1999 |
1998 |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Property and Equipment (Note 2) |
|
|
|
Buildings and improvements |
$ 24,134,260 |
$23,934,391 |
|
Land |
5,280,000 |
5,280,000 |
|
Manufactured homes and improvements |
1,002,680 |
748,657 |
|
Furniture and equipment |
169,741 |
127,800 |
|
|
|
|
|
|
30,586,681 |
30,090,848 |
|
Less accumulated depreciation |
10,521,838 |
9,654,556 |
|
|
|
|
|
Net Property and Equipment |
20,064,843 |
20,436,292 |
|
|
|
|
|
Cash |
1,113,061 |
537,777 |
|
Unamortized financing costs |
624,548 |
710,548 |
|
Other assets (Note 3) |
600,612 |
824,267 |
|
|
|
|
|
|
$ 22,403,064 |
$22,508,884 |
|
|
|
|
|
Liabilities and Partners' Deficit |
|
|
|
|
|
|
|
Note payable (Note 2) |
$ 32,879,105 |
$33,119,108 |
|
Line-of-credit (Note 4) |
600,000 |
469,523 |
|
Accounts payable |
197,810 |
76,588 |
|
Other liabilities (Note 5) |
874,936 |
847,840 |
|
|
|
|
|
Total Liabilities |
34,551,851 |
34,513,059 |
|
|
|
|
|
Partners' Deficit |
|
|
|
Class A limited partners |
(9,656,324) |
(9,636,980) |
|
Class B limited partners |
(238,133) |
(597,167) |
|
General partner |
(2,254,330) |
(1,770,028) |
|
|
|
|
|
Total Partners' Deficit |
(12,148,787) |
(12,004,175) |
|
|
|
|
|
|
$ 22,403,064 |
$22,508,884 |
See accompanying notes to financial statements.
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
| Year Ended December 31, |
1999 |
1998 |
1997 |
|
|
|
|
|
|
Income |
|
|
|
|
Rental |
$ 8,226,292 |
$ 8,004,749 |
$ 7,821,138 |
|
Interest |
63,526 |
45,423 |
73,543 |
|
Other |
459,098 |
401,389 |
340,223 |
|
|
|
|
|
|
|
8,748,916 |
8,451,561 |
8,234,904 |
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
Property operations |
2,570,534 |
2,568,006 |
2,354,635 |
|
Depreciation and amortization |
953,282 |
936,573 |
891,138 |
|
Property taxes |
867,491 |
797,971 |
792,452 |
|
Administrative (Note 6) |
746,088 |
776,755 |
994,698 |
|
Interest |
2,840,033 |
2,855,369 |
2,142,196 |
|
|
|
|
|
|
|
7,977,428 |
7,934,674 |
7,175,119 |
|
|
|
|
|
|
Net Income |
$ 771,488 |
$ 516,887 |
$ 1,059,785 |
|
|
|
|
|
|
Income Per Limited Partnership Unit (Note 8) |
|
|
|
|
Class A |
$ 8 |
$ 2 |
$ 17 |
|
Class B |
$ 46 |
$ 39 |
$ 52 |
|
|
|
|
|
|
Distributions Per Limited Partnership Unit (Note 8) |
|
|
|
|
Class A |
$ 9.25 |
$ 8 |
$ 1,052 |
|
Class B |
$ 9.25 |
$ 8 |
$ 1,052 |
|
|
|
|
|
|
Number of Limited Partnership Units Outstanding |
|
|
|
|
Class A |
20,230 |
20,230 |
20,230 |
|
Class B |
9,770 |
9,770 |
9,770 |
|
|
|
|
|
|
Net Income Allocable to General Partner |
$ 154,298 |
$ 103,377 |
$ 211,957 |
|
|
|
|
|
|
Distributions Allocable to General Partner |
$ 638,600 |
$ 611,500 |
$ 871,000 |
See accompanying notes to financial statements.
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
Statements of Partners' Equity (Deficit)
Years Ended
December 31, 1999, 1998 and 1997
|
|
|
Total | ||
|
|
|
Class A |
Class B |
Partners' |
|
|
General |
Limited |
Limited |
Equity |
|
|
Partner |
Partners |
Partners |
(Deficit) |
|
|
|
|
|
|
|
Balance, January 1, 1997 |
$ (602,862) |
$ 11,438,140 |
$ 8,874,775 |
$ 19,710,053 |
|
|
|
|
|
|
|
Distributions to partners |
(871,000) |
(21,287,624) |
(10,280,776) |
(32,439,400) |
|
|
|
|
|
|
|
Net income for the year |
211,957 |
339,548 |
508,280 |
1,059,785 |
|
|
|
|
|
|
|
Balance, December 31, 1997 |
(1,261,905) |
(9,509,936) |
(897,721) |
(11,669,562) |
|
|
|
|
|
|
|
Distributions to partners |
(611,500) |
(161,840) |
(78,160) |
(851,500) |
|
|
|
|
|
|
|
Net income for the year |
103,377 |
34,796 |
378,714 |
516,887 |
|
|
|
|
|
|
|
Balance, December 31, 1998 |
(1,770,028) |
(9,636,980) |
(597,167) |
(12,004,175) |
|
|
|
|
|
|
|
Distributions to partners |
(638,600) |
(187,128) |
(90,372) |
(916,100) |
|
|
|
|
|
|
|
Net income for the year |
154,298 |
167,784 |
449,406 |
771,488 |
|
|
|
|
|
|
|
Balance, December 31, 1999 |
$ (2,254,330) |
$ (9,656,324) |
$ (238,133) |
$(12,148,787) |
See accompanying notes to financial statements.
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
| Year Ended December 31, |
1999 |
1998 |
1997 |
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
Net income |
$ 771,488 |
$ 516,887 |
$ 1,059,785 |
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
Depreciation |
867,282 |
850,574 |
826,638 |
|
Amortization |
86,000 |
85,999 |
64,500 |
|
Gain on disposals of property and equipment |
(54,075) |
(99,577) |
(86,216) |
|
Decrease (increase) in other assets |
223,655 |
(339,860) |
123,349 |
|
Increase (decrease) in accounts payable |
121,222 |
(39,478) |
5,483 |
|
Increase (decrease) in other liabilities |
27,096 |
(43,233) |
(100,546) |
|
|
|
|
|
|
Net Cash Provided By Operating Activities |
2,042,668 |
931,312 |
1,892,993 |
|
|
|
|
|
|
Cash Flows Used In Investing Activities |
|
|
|
|
Purchase of property and equipment |
(1,322,832) |
(1,285,501) |
(956,133) |
|
Proceeds from disposals of property and equipment |
881,074 |
1,220,554 |
653,082 |
|
Payment of contingent purchase price |
- |
- |
(1,500,000) |
|
|
|
|
|
|
Net Cash Used In Investing Activities |
(441,758) |
(64,947) |
(1,803,051) |
|
|
|
|
|
|
Cash Flows Used In Financing Activities |
|
|
|
|
Distributions to partners |
(916,100) |
(851,500) |
(32,439,400) |
|
Repayment of note payable |
(240,003) |
(236,832) |
(144,060) |
|
Net advances (payments) under line of credit |
130,477 |
110,607 |
(136,384) |
|
Proceeds from note payable |
- |
- |
33,500,000 |
|
Payment for financing costs |
- |
- |
(861,047) |
|
|
|
|
|
|
Net Cash Used In Financing Activities |
(1,025,626 |
(977,725) |
(80,891) |
|
|
|
|
|
|
Net Increase (Decrease) In Cash |
575,284 |
(111,360) |
9,051 |
|
|
|
|
|
|
Cash, at beginning of year |
537,777 |
649,137 |
640,086 |
|
|
|
|
|
|
Cash, at end of year |
$ 1,113,061 |
$ 537,777 |
$ 649,137 |
See accompanying notes to financial statements.
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
| 1. Summary of Accounting Policies | Organization and Business |
| Uniprop Manufactured Housing Communities Income Fund, a Michigan Limited Partnership (the "Partnership") acquired, maintains, operates and will ultimately dispose of income producing residential real properties consisting of four manufactured housing communities (the "properties") located in Florida, Minnesota and Michigan. The Partnership was organized and formed under the laws of the State of Michigan on May 16, 1985. | |
| The general partner of the Partnership is P. I. Associates Limited Partnership. Taxable investors acquired 20,230 Class A units, and 9,770 Class B units were acquired by tax exempt investors. Depreciation is allocated only to holders of Class A units and to the general partner. | |
| The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from these estimates. | |
| Fair Value of Financial Instruments | |
| The carrying amounts of the Partnership's financial instruments, which consist of cash, the line-of-credit and note payable, approximate their fair values. | |
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
Notes to Financial Statements
| Property and Equipment | ||
| Property and equipment are stated at cost. Depreciation is provided using the straightline method over the following estimated useful lives: | ||
| Buildings and improvements | 30 years | |
| Manufactured homes and improvements | 30 years | |
| Furniture and equipment | 3-10 years | |
| Accumulated depreciation for tax purposes was $11,939,258 and $10,989,216 as of December 31, 1999 and 1998, respectively. | ||
| Long-lived assets, such as property and equipment, are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value. No impairment loss recognition has been required through December 31, 1999. | ||
| Financing Costs | ||
| As a result of management's present intent to refinance the note payable after ten years, costs to obtain the 1997 financing (see Note 2) are amortized over a ten-year period. | ||
| Income Taxes | ||
| Federal income tax regulations provide that any taxes on income of a partnership are payable by the partners as individuals. Therefore, no provision for such taxes has been made at the partnership level. | ||
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
Notes to Financial Statements
| Recent Accounting Pronouncements | |
| In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative Instruments and Hedging Activities." This statement, which was subsequently amended by SFAS No. 137, will become effective in fiscal 2001, and is not expected to have an impact on the Partnership's financial statements. | |
| 2. Note Payable | In 1997, the Partnership entered into a $33,500,000 note payable agreement. The borrowings are secured by mortgages on the Partnership's properties and the assignment of all current and future leases and rents. The note is payable in monthly installments of $251,439, including interest, through March 2027. The interest rate is 8.24% per annum through June 2007; thereafter, the interest rate will be adjusted based on the provisions of the note agreement. The loan may be prepaid without penalty beginning in January 2007. There are certain requirements and restrictions contained in the note payable agreement. The Partnership is in compliance with these requirements. |
| The proceeds of the note were used primarily to return to the limited partners their original $30,000,000 capital contribution, to pay certain amounts to the general partner as described in Note 6, and to pay related financing costs. | |
| Future maturities on the note payable for the next five years are as follows: 2000 - $265,000; 2001 - $295,000; 2002 - $320,000; 2003 - $350,000; and 2004 - $372,000. | |
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
Notes to Financial Statements
| 3. Other Assets | At December 31, 1999 and 1998, "Other assets" included cash of approximately $216,000 and $372,000, respectively, in an escrow account for property taxes, capital improvements, and debt service payments, as required by the Partnership's note payable agreement, which is restricted from operating use. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 1999 and 1998, "Other assets" also included cash of $231,000 and $241,000, respectively, in a security deposit escrow account for two of the Partnership's properties, as required by the laws of the state in which they are located, which is restricted from operating use. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4. Line-of-Credit | The Partnership currently has an unsecured $600,000 revolving line-of-credit agreement with a bank. Interest on outstanding balances is charged at 1.80% in excess of LIBOR; the Partnership's interest rate at December 31, 1999 was 7.75%. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5. Other Liabilities | Other liabilities consisted of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1999 | 1998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tenants' security deposits | $ 543,541 | $ 528,008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest |
156,000 |
158,691 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Accrued property taxes |
11,894 |
11,894 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Other |
163,501 |
149,247 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ 874,936 | $ 847,840 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6. Related Party Transactions | Management Agreement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Partnership has an agreement with an affiliate of the general partner to manage the properties owned by the Partnership. The management agreement is automatically renewable annually, but may be terminated by either party upon sixty days written notice. The property management fee is the lesser of 5% of annual gross receipts from the properties managed, or the amount which would be payable to an unaffiliated third party for comparable services. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
Notes to Financial Statements
| Fees and Expenses | |
| During the years ended December 31, 1999, 1998 and 1997 the affiliate earned property management fees of $432,033, $419,223 and $404,514, 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 $5,012 and $776 by the affiliate at December 31, 1999 and 1998, respectively. | |
| Certain employees of the Partnership are also employees of affiliates of the general partner. These employees were paid by the Partnership the amounts of $158,491, $141,046 and $128,094, in 1999, 1998 and 1997, respectively, to perform local property management and investor relations services for the Partnership. | |
| Contingent Purchase Price | |
| The general partner of P.I. Associates has an interest in the sellers of all the properties acquired by the Partnership and is entitled to share in a contingent purchase price with respect to each property. Each seller will become entitled to any unpaid contingent purchase price upon the sale, financing or other distribution of one or more of the properties, but only after the receipt by the limited partners of any shortfall in their 9% cumulative preferred return, plus the return of their adjusted capital contribution. | |
| Since inception of the Partnership, there has been no shortfall in the 9% cumulative return and, as described in Note 2, the Partnership used a portion of the proceeds from the 1997 financing to return the limited partners' original capital contribution. In addition, $1,500,000 of the proceeds from the financing transaction was used to make a partial payment in 1997 on the contingent purchase price. The total remaining contingent purchase price will not exceed $1,970,000. Additional amounts to be paid, if any, will depend upon the results of the Partnership's operations and the amounts received upon the sale, financing or other disposition of the properties; such amounts are not determinable at this time. Therefore, no liability related to this remaining contingency has been recorded at December 31, 1999. |
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
Notes to Financial Statements
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
Notes to Financial Statements
| 9. Contingency | The Partnership is currently undergoing a sales and use tax audit which is being conducted by the Florida Department of Revenue. No provision for any expense related to this ongoing audit has been recorded in the accompanying financial statements since management believes the eventual liability (if any) that may result will not be a material amount. |
| 10. Supplemental Cash Flow Information | Cash paid for interest totaled approximately $2,843,000, $2,854,000 and $1,984,000 in 1999, 1998 and 1997, respectively. |
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
Schedule III . Real Estate
and Accumulated Depreciation
December 31,
1999
| Column A | Column C | Column D | Column E | Column F | Column G | Column H | ||||||||||||
| Costs | ||||||||||||||||||
| Capitalized | Life on Which | |||||||||||||||||
| Subsequent to | Gross Amount at Which Carried | Depreciation in | ||||||||||||||||
| Initial Cost | Acquisition | at Close of Period | Latest Income | |||||||||||||||
| Buildings and | Buildings and | Buildings and | Accumulated | Date | Statement is | |||||||||||||
| Description |
|
|
Land | Improvements | Improvements | Land | Improvements | Total | Depreciation | Acquired | Computed | |||||||
| Aztec Estates
(Margate, FL) |
|
$ 2,199,868 |
$ 8,799,475 |
|
$ 843,395 |
|
$ 9,642,870 |
|
$ 4,277,034 |
1986 |
30 years | |||||||
| Kings Manor | ||||||||||||||||||
| (Ft. Lauderdale, FL) | 6,284,002 | 847,923 | 3,391,694 | 424,116 | 847,923 | 3,815,810 | 4,663,733 | 1,659,628 | 1986 | 30 years | ||||||||
| Park of the Four Seasons | ||||||||||||||||||
| (Blaine, MN) | 8,531,313 | 1,508,121 | 6,032,483 | 778,434 | 1,508,121 | 6,810,917 | 8,319,038 | 1,566,587 | 1986 | 30 years | ||||||||
| Old Dutch Farms | ||||||||||||||||||
| (Novi, MI) | 5,623,995 | 724,088 | 2,896,348 | 968,315 | 724,088 | 3,864,663 | 4,588,751 | 2,897,447 | 1986 | 30 years | ||||||||
|
$5,280,000 | $ 21,120,000 | $ 3,014,260 |
|
$ 24,134,260 |
|
$ 10,400,696 | |||||||||||
Uniprop Manufactured
Housing
Communities Income Fund
(a Michigan
limited partnership)
April 14, 2000
Ms. Gloria Koster
Uniprop Manufactured Housing Communities
280 Daines St.
Birmingham, Michigan 48009
Dear Gloria,
Enclosed are ten copies of the audited financial statements for Uniprop Manufactured Housing Communities Income Fund for the years ended December 31, 1999 and 1998.
If you have any questions regarding the enclosed, please do not hesitate to contact me.
Sincerely,
Bill Eickemeyer
Partner