The accompanying unaudited 2001 financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The balance sheet at December 31, 2000 has been derived from the
audited financial statements at that date. Operating results for the six months ended June 30, 2001 are
not necessarily indicative of the results that may be expected for the year ending December 31, 2001, or
for any other interim period. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Partnership's Form 10-K for the year ending December 31, 2000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its four manufactured housing
communities. On March 25, 1997 the Partnership borrowed $33,500,000 from Nomura Asset Capital
Corporation (the "Financing"). It secured the Financing by placing liens on its four communities. As a
result of the Financing, the Partnership distributed $30,000,000 to the Limited Partners, which
represented a full return of the original capital contributions of $1,000 per unit.
Liquidity
As a result of the Financing, the Partnership's four properties are mortgaged. At the time of the
Financing, the aggregate principal amount due under the four mortgage notes was $33,500,000 and the
aggregate fair market value of the Partnership's mortgaged properties was $53,200,000. The Partnership
expects to meet its short-term liquidity needs generally through its working capital provided by
operating activities.
The Partnership's long-term liquidity is based, in part, upon its investment strategy. The properties
owned by the Partnership were anticipated to be held for seven to ten years after their acquisition. All
of the properties have been owned by the Partnership more than ten years. The General Partner may elect
to have the Partnership own the properties for as long as, in the opinion of the General Partner, it is
in the best interest of the Partnership to do so.
The Partnership has a renewable $600,000 line of credit with National City Bank of Michigan/Illinois
(formerly First of America Bank). The interest rate, on such line of credit, floats 180 basis points
above 1 month LIBOR, which on June 30, 2001 was 4.0887%. The sole purpose of the line of credit is to
purchase new and used homes to be used as model homes offered for sale within the Partnership's
communities. Over the past three years, sales of the new and used model homes has been growing and the
General Partner believes that continuing the model home program is in the best interest of the
Partnership. As of June 30, 2001 the outstanding balance on the line of credit was $221,736. Because the
Partnership's cash reserves have remained stable over the past several quarters, the General Partner has
elected to begin paying down the line of credit. On or about June 30, 2001, the Partnership, in
agreement with the Partnership's consultant, made a $75,000 payment on the line of credit.
Net Cash from Operations available for aggregate distributions to all Partners in UMHCIF during the
quarter ended June 30, 2001 amounted to $493,760.
-7-
The amount available during the same period in 2000 was $466,288. Net Cash from
Operations is meant to be a supplemental measure of the Partnership's operating performance. Net Cash
from Operations is defined as net income computed in accordance with generally accepted accounting
principles ("GAAP"), plus real estate related depreciation and amortization.
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 nor as an alternative to cash flow as a measure of liquidity.
The quarterly Partnership Management Distribution paid to the General Partner during the third quarter
based on second quarter results was $147,750, or one-fourth of 1.0% of the most recent appraised value of
the properties held by the Partnership ($59,100,000 x .01 = $591,000 / 4 = $147,750).
The cash available after payment of the Partnership Management Distribution amounted to $346,010. From
this amount, the General Partner elected to make a total distribution of $112,500 for the second quarter
of 2001 (an increase of 9% from 2000), 80.0% or $90,000, was paid to the Limited Partners and 20.0% or
$22,500 was paid to the General Partner.
While the Partnership is not required to maintain a working capital reserve, the Partnership has not
distributed all the cash generated from operations in order to build cash reserves. For the quarter ended
June 30, 2001, the Partnership added $233,510 to reserves. During the same quarter in 2000, the
Partnership added $216,475 to cash reserves. The amount placed in reserves is at the discretion of the
General Partner.
Results of Operations
Overall, as illustrated in the tables below, the four properties had a combined average occupancy of 94%
at the end of June 2001, versus 95% a year ago. The average monthly rent in June 2001 was approximately
$438, or 3% more than the $425 average monthly rent in June 2000 (average rent not a weighted average).
|
| Total
Capacity | Occupied
Sites
| Occupancy
Rate | Average*
Rent
|
| Aztec Estates | 645 | 571 | 89% | $485
|
| Kings Manor | 314 | 294 | 94 | 466
|
| Old Dutch Farms | 293 | 273 | 93 | 419
|
| Park of the Four Seasons | 572 | 571 | 100 | 382
|
| Total on 6/30/01: | 1,824 | 1,709 | 94% | $438
|
| Total on 6/30/00: | 1,824 | 1,742 | 95% | $425
|
*Not a weighted average
For the three months ending June 30, 2001
Gross Revenues Net Income
6/30/01 6/30/00 6/30/01 6/30/00
Aztec Estates $ 827,600 $ 844,920 $433,538 $ 416,047
Kings Manor 400,474 388,388 262,069 239,598
Old Dutch Farms 342,192 350,192 199,506 196,346
Park of the Four Seasons 662,590 638,284 409,286 399,303
2,232,856 2,221,784 1,304,399 $ 1,251,294
Partnership Management: 14,288 22,196 (67,362) (53,387)
Other Non Recurring expenses:----- ---- (64,825) (47,067)
Debt Service (678,452) (684,552)
Depreciation and Amortization----- ---- (219,323) (238,321)
$ 2,247,144 $ 2,243,980 $274,437 $227,967
Comparison of Quarter Ended June 30, 2001 to Quarter Ended June 30, 2000
Gross revenues increased $3,164 to $2,247,144 in 2001, as compared to $2,243,980 in 2000. Remaining
consistent with the prior quarter.
(See table in previous section.)
As described in the Statements of Income, total operating expenses were lower,
moving from $2,016,013 in 2000 to $1,972,707 in 2001.
As a result of the aforementioned factors, Net Income increased 20% for the second quarter
of 2001 compared to the same quarter of the prior year, moving from $227,967 for 2000 to $274,437 for
2001.
Comparison of Six months Ended June 30, 2001 and Six months ended June 30, 2000
For the first six months of 2001, Gross Revenues were $4,484,993, $25,373 below the $4,510,366 for the
same period of 2000. Total Operating Expenses for the first two quarters of 2001 were $3,942,773, a
decrease of $21,323 compared to $3,964,096 for 2000. Net Income for the first six months ending June 30,
2001 was $542,220 a decrease of $4,050 compared to the first six months ending June 30, 2000.
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise 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 June 30, 2001 the Partnership had a note payable
outstanding in the amount of $32,426,355. Interest on this note is at a fixed annual rate of 8.24%
through June 2007.
Line-of-Credit: At June 30, 2001 the Partnership owed $221,736 under
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 of 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 annually.
The Partnership does not enter into financial instruments transactions for trading or other
speculative purposes or to manage its interest rate exposure.
PART II - OTHER INFORMATION
ITEM 6. Reports of Form 8-K
(A) Reports of Form 8-K
There were no reports filed on Form 8-K during
the three months ended June 30, 2001.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Uniprop Manufactured Housing
Communities Income Fund,
A Michigan Limited Partnership
BY: P.I. Associates Limited Partnership,
A Michigan Limited Partnership,
its General Partner
BY: /s/ Paul M. Zlotoff
Paul M. Zlotoff, General Partner
BY: /s/ Gloria A. Koster
Gloria A. Koster, Principal Financial Officer
Dated: August 10, 2001