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 nine months ended September 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 financial statements and
footnotes thereto included in the Partnership's Form 10-K for the year ended December 31, 2000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The capital resources of Uniprop Manufactured Housing Communities Income Fund (the "Partnership") 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"). The Partnership 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
contribution 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 amounts 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 expected to be sold or financed within seven to ten years after their
acquisition. All of the properties have been owned by the Partnership more than ten years, and they were
financed approximately 11 years after their acquisition. 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 September 30, 2001 was 2.64%. 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. As of September 30, 2001, the outstanding balance on the line of credit was $270,755.
Net Cash from Operations available for aggregate distributions to all Partners in the Partnership during
the quarter ended September 30, 2001 amounted to $563,145. The amount available during the same period
in 2000 was $562,394. 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 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 or 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
was $147,750, or one-fourth of 1.0% of the most recent appraised value of the properties held by the
Partnership ($59,100,000x .01 = $591,000 / 4 = $147,750)
The cash available, after payment of the Partnership Management Distribution of $147,750 from Net Cash
from Operations, was $415,395 From this amount, the General Partner elected to make a total distribution
of $112,500 for the third quarter of 2001, 80.0% or $90,000 was paid to the Limited Partners and 20.0% or
$22,500 was paid to the General Partner. The General Partner will continue to monitor on-going Net Cash
from Operations generated by the Partnership during the coming quarters. If Net Cash from Operations is
lower or higher than the amount needed to maintain the current distribution level, the General Partner
may elect to reduce or increase the level of future distributions paid to the Limited Partners.
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. As of September 30,
2001, the Partnership cash reserves amounted to $538,678. The level of cash reserves maintained is at
the discretion of the General Partner.
Results of Operations
Overall, as illustrated in the tables below, the four properties enjoyed a combined average occupancy of
94% (1,709 sites) at the end of September 2001, compared to 96% a year ago. The average monthly rent in
September 2001 was approximately $440, or 3% more than the $427 average monthly rent in September 2000.
|
| Total
Capacity | Occupied
Sites
| Occupancy
Rate | Average
Rent*
|
| Aztec Estates | 645 | 570 | 88% | $485
|
| Kings Manor | 314 | 298 | 95% | 466
|
| Old Dutch Farms | 293 | 271 | 93% | 424
|
| Park of the Four Seasons | 572 | 570 | 99% | 387
|
| Total on 9/30/01: | 1,824 | 1,709 | 94% | $440*
|
| Total on 9/30/00: | 1,824 | 1,744 | 96% | $427
|
*Average Rent is not a weighted average.
Gross Revenues Net Income
three months ending three months ending
9/30/01 9/30/00 9/30/01 9/30/00
Aztec Estates $823,087 $862,422 $433,115 $472,757
Kings Manor 399,599 381,500 259,898 239,765
Old Dutch Farms 347,947 343,127 209,232 186,460
Park of the Four Seasons 671,346 656,363 430,325 436,700
2,241,979 2,243,412 1,332,570 1,335,682
Partnership Management: 12,473 29,694 (35,444) (21,718)
Other Expenses ----- ----- (52,051) (63,365)
Interest (681,930) (688,205)
Depreciation and Amortization ------- ---- (226,680) (238,320)
$2,254,452 $2,273,106 $336,465 $324,074
Comparison of the Nine months ended September 30, 2001
to Nine months Ended September 30, 2000
Rental Income increased by $67,084 from $6,282,301 to $6,349,385. Total Income decreased $44,027 or 0.6%
to $6,739,445 in 2001 compared to $6,783,472 in 2000 due to a decrease in "Other Income". "Other Income"
fell from $501,171 in 2000 to $390,060 in 2001 due to lower gains on home sales, lower interest income
(decline in interest rates), and lower forfeitures of security deposits.
As described in the Statements of Income, total operating expenses decreased $52,368 to $5,860,760, in
2001, as compared to $5,913,128 in 2000. The decrease in total operating expenses is primarily due to
improved cost control.
The foregoing factors resulted in net income increasing to $878,685 for the nine months ended September
30, 2001, 0.9% higher than the $870,344 reported for the same period in 2000.
Comparison of Quarter Ended September 30, 2001
to Quarter Ended September 30, 2000
Rental Income increased by $24,798 from $2,089,369 to $2,114,167. Total Income decreased $18,654 or 0.8%
to $2,254,452 in 2001 compared to $2,273,106 in 2000 due to a decrease in "Other Income". "Other Income"
fell from $183,737 in 2000 to $140,285 in 2001 due to, lower gains on home sales, lower interest income
(decline in interest rates), and lower forfeitures of security deposits. As described in the Statements
of Income, total operating expenses decreased $31,045, or 1.6%, to $1,917,987, in 2001, as compared to
$1,949,032 in 2000. The decrease in total operating expenses is primarily due to improved cost control.
As a result of the foregoing factors, net income increased to $336,465 for the quarter ended September
30, 2001 from $324,074 reported for the same period in 2000.
ITEM 3.
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 September 30, 2001 the Partnership had a note payable outstanding in the amount of
$32,354,305. Interest on this note is at a fixed annual rate of 8.24% through June 2007.
Line-of-Credit: At September 30, 2001 the Partnership owed $270,755 pursuant to its line-of-credit
agreement, whereby interest is charged at a variable rate of 1.80% in excess of one month 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. Exhibits and 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 September30, 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: November 14, 2001