SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2004 Commission
File No. 0-15940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
a Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
| MICHIGAN | | 38-2593067
|
| (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) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
$1,000 per unit, units of limited partnership interest
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 [ ]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
PART I FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
|
| Balance Sheets
|
| March 31, 2004(Unaudited) and
|
| December 31, 2003 | | | 3
|
|
| Statements of Income
|
| Three months ended March 31, 2004
|
| and 2003(Unaudited) | | | 4
|
|
| Statement of Partners' Deficit
|
| Three months ended March 31, 2004(Unaudited) | | | 4
|
|
|
| Statements of Cash Flows
|
| Three months ended March 31, 2004
|
| and 2003(Unaudited) | | | 5
|
|
|
| Notes to Financial Statements | | |
|
| March 31, 2004(Unaudited) | | | 6
|
|
|
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS
|
| OF FINANCIAL CONDITION AND RESULTS
|
| OF OPERATIONS | | | 7
|
| ITEM 3. | QUANTITATIVE AND QUALITATIVE
|
| DISCLOSURES ABOUT MARKET RISK | | | 10
|
| ITEM 4. | CONTROLS AND PROCEDURES
| | | 11
|
PART II OTHER INFORMATION
| ITEM 5. | LEGAL PROCEEDINGS | | |
11
|
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K | | |
12
|
| | CERTIFICATION EXHIBITS
|
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 2004(Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2004 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, 2003 has been derived from the
audited financial statements at that date. Operating results for the three months ended March 31, 2004
are not necessarily indicative of the results that may be expected for the year ending December 31, 2004,
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 ended December 31, 2003.
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 $1,000,000 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 March 31, 2004 was 1.090%. 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 March 31, 2004 the outstanding balance on the line of credit was $270,000.
The quarterly Partnership Management Distribution paid to the General Partner during the first quarter
based on prior quarter results was $150,875, or one-fourth of 1.0% of the most recent appraised value of
the properties held by the Partnership ($60,350,000 x 1/4 = $150,875).
The General Partner elected to make a total distribution of $112,500 for the first quarter of 2004
(unchanged from 2003), 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. As of March 31, 2004,
the Partnership’s cash balance amounted to $45,371. 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 85% at the
end of March 2004, versus 90% a year ago. The average monthly rent in March 2004 was approximately $477,
or 3% more than the $462 average monthly rent in March 2003 (average rent not a weighted average).
|
| Total
Capacity | Occupied
Sites
| Occupancy
Rate | Average
Rent*
|
| Aztec Estates | 645 | 496 | 77% | $517
|
| Kings Manor | 314 | 305 | 97% | 514
|
| Old Dutch Farms | 293 | 239 | 82% | 449
|
| Park of the Four Seasons | 572 | 519 | 91% | 426
|
|
| Total on 3/31/04: | 1,824 | 1,559 | 85% |
$477
|
| Total on 3/31/03: | 1,824 | 1,645 | 90% |
$462
|
*Not a weighted average
Gross Revenues Net Income
3/31/04 3/31/03 3/31/04 3/31/03
Aztec Estates $990,005 $879,073 $336,254 $399,320
Kings Manor 424,504 598,064 261,971 298,794
Old Dutch Farms 322,372 392,455 151,841 237,706
Park of the Four Seasons 619,496 643,363 370,788 365,723
2,356,377 2,512,955 1,120,854 $1,301,543
Partnership Management: 1,325 1,725 (89,554) (75,818)
Other expenses: ----- ----- (98,825) (40,612)
Debt Service (657,298) (651,884)
Depreciation and Amortization ----- ----- (238,714) (229,412)
$ 2,357,702 $ 2,514,680 $36,463 $303,817
Comparison of Quarter Ended March 31, 2004 to Quarter Ended March 31, 2003
Gross revenues decreased $156,978 to $2,357,702 in 2004, as compared to $2,514,680 in 2003. The decrease
was the result of lower occupancy due to weak economic conditions.
(See table in previous section.)
As described in the Statements of Income, total operating expenses were $110,376 higher,
moving from $2,210,863 to $2,321,239. The increase was due to an increase in property operating expenses,
property taxes and administrative expense.
As a result of the aforementioned factors, Net Income decreased, $267,354 for the first quarter of
2004 compared to the same quarter of the prior year, moving from $303,817 for 2003 to $36,463 for 2004.
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 March 31, 2004 the Partnership had a note payable outstanding in the amount of
$31,479,889. Interest on this note is at a fixed annual rate of 8.24% through June 2007.
Line-of-Credit: At March 31, 2004 the Partnership owed $270,000 under 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.
ITEM 4.
Controls and Procedures
As of the end of the period covered by this report, the Partnership carried out an evaluation, under the
supervision and with the participation of the Principal Executive Officer and the Principal Financial
Officer, of the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15. Based upon, and as of the date of, this evaluation, the Principal
Executive Officer and the Principal Financial Officer concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed in the quarterly report is
recorded, processed, summarized and reported as and when required.
There was no change in the Partnership's internal controls over financial reporting that occurred during
the most recent completed quarter that has materially affected, or is reasonably likely to materially
affect, the Partnership's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 5. Legal Proceeding
The City of Novi, Michigan, on February 11, 2004 filed a lawsuit in Circuit Court of Oakland County
against the Partnership to compel the Old Dutch Farms community to connect to the City of Novi sanitary
sewer system. Legal counsel for the Partnership is currently in negotiations with the City and DEQ to
resolve this matter. Estimates for the connection fees and the cost of abandonment of that Property's
waste water treatment plant range from $850,000 to $1,000,000.
The City of Novi has agreed to a settlement in this matter. Legal counsel for the Partnership is
currently in negotiations on a settlement.
ITEM
6. Reports on Form 8-K
(A) Reports of Form 8-K
There were no reports filed on Form 8-K during
the three months ended March 31, 2004.
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: May 11, 2004
Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul M Zlotoff, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Uniprop Manufactured Housing Income Fund;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by
the quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of the end
of the period covered by this report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the of the
disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 11, 2004 Signature: /s/ Paul M. Zlotoff
Paul M. Zlotoff, Principal Executive Officer
President & Director of GP P.I. Associates Corp.
Exhibit 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gloria A. Koster, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Uniprop Manufactured Housing
Income Fund;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by
the quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a. designed such disclosure controls and procedures to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of the end
of the period covered by this report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the effectiveness of the of the
disclosure controls and procedures based on our evaluation as the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 11, 2004 Signature: /s/ Gloria A. Koster
Gloria A. Koster, Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Uniprop Manufactured Housing Communities Income Fund (the
"Company") on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I Gloria A. Koster, Principal Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act
of 1934; and
2. The information contained in the Report fairly presents, in all material respect, the financial
condition and results of operations of the Company.
/s/ Paul M Zlotoff
Principal Executive Officer,
General Partner of P.I. Associates Limited Partnership
President & Director of GP P.I. Associated Corp.
May 11, 2004
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Uniprop Manufactured Housing Communities Income Fund (the
"Company") on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I Gloria A. Koster, Principal Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 that:
3. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act
of 1934; and
4. The information contained in the Report fairly presents, in all material respect, the financial
condition and results of operations of the Company.
/s/ Gloria A. Koster
Principal Financial Officer,
Chief Financial Officer of Uniprop, Inc.
May 11, 2004