SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
a Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
|
MICHIGAN
|
38-2593067
|
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:
units of beneficial assignments 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 [ ]
As of March 1, 2000, 3,303,387 units of limited partnership interest of the registrant were outstanding and the estimated aggregate market value of the units as of such date held by non-affiliates, as estimated by the General Partner (based on a 2000 appraisal of Partnership properties), was approximately $48,658,384.
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 II, a Michigan Limited Partnership (the "Partnership"), acquired, maintains, operates and ultimately will dispose of income producing residential real properties consisting of nine manufactured housing communities (the "Properties"). The Partnership was organized and formed under the laws of the State of Michigan on November 7, 1986. Its principal offices are located at 280 Daines Street, Birmingham, Michigan 48009 and its telephone number is (248) 645-9261.
The Partnership filed an S-11 Registration Statement in November 1986, which was declared effective by the Securities and Exchange Commission on December 23, 1986. The Partnership thereafter sold 3,303,387 units (the "Units") of beneficial assignment of limited partnership interest representing capital contributions by unit holders (the "Unit Holders") to the Partnership of $20 per unit. The sale of all 3,303,387 Units was completed in December 1987, generating $66,067,740 of contributed capital to the Partnership.
The Partnership acquired seven of the Properties in 1987 and acquired two additional Properties in 1988.
The Partnership operates the Properties as manufactured housing communities with the primary investment objectives of: (1) providing cash from operations to investors; (2) obtaining capital appreciation; and (3) preserving capital of the Partnership. There can be no assurance that such objectives can be achieved.
On August 20, 1998, the Partnership borrowed $30,000,000 (the "Loan") from GMAC Commercial Mortgage Corporation. It secured the Loan by placing new mortgages on seven of its nine properties. The Loan carries a fixed interest rate of 6.37% over its term of 126 months and is amortized over 360 months. The Partnership used the proceeds from the Loan to refinance the Partnership. s outstanding indebtedness of $30,045,000, which was the result of a 1993 mortgage financing transaction.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation of its nine manufactured housing communities. Partnership operations commenced in April 1987 upon the acquisition of the first two Properties. For a description of the Partnership's revenues, operating profit and assets, please refer to Items 6 and 8.
Narrative Description of Business
General
The Sunshine Village, Ardmor Village and Camelot Manor Properties were selected from 25 manufactured housing communities then owned by affiliates of Genesis Associates Limited Partnership, the General Partner of the Partnership (the "General Partner"). The other six communities were purchased from unaffiliated third parties. 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 decision, the General Partner and Consultant will consider relevant factors, including current operating results of the particular Property and prevailing economic conditions, and will make the decision 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 home sites 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, has and may in the future participate directly or through other partnerships or investment vehicles in the acquisition, ownership, development, operation and sale of projects which may be in direct competition with one or more of the Properties.
Each of the Properties competes with numerous similar facilities located in its geographic area. The Davie/Fort Lauderdale area contains approximately five communities offering approximately 2,045 housing sites competing with Sunshine Village. Ardmor Village competes with approximately nine communities in the Lakeville, Minnesota area offering approximately 2,363 housing sites. Camelot Manor competes with approximately 16 communities in the Grand Rapids, Michigan area offering approximately 3,631 housing sites. In the Jacksonville, Florida area, Country Roads competes with approximately nine communities offering approximately 3,636 housing sites. The Tampa, Florida area contains approximately four communities offering approximately 1,190 housing sites competing with Paradise Village. Dutch Hills and Stonegate Manor compete with approximately 11 other communities in the Lansing, Michigan area offering approximately 3,438 housing sites. In the Las Vegas, Nevada area, West Valley and El Adobe compete with approximately 13 other communities offering approximately 3,719 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 Sunshine Village, Country Roads and Paradise Village. Under Florida law, the Partnership is required to deliver to new residents of those Properties a prospectus describing the property and all tenant rights, Property rules and regulations, and changes to Property rules and regulations. Florida law also requires minimum lease terms, requires notice of rent increases, grants to tenant associations certain rights to purchase the community if being sold by the owner and regulates other aspects of the management of such properties. The Partnership is required to give 90 days notice to the residents of 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 Professional 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 on the price, terms and conditions being offered to the public within 45 days of notification by the owner. If the Partnership receives an unsolicited bona fide offer to purchase the Property from any party that it is considering or negotiating with, it must notify any such homeowners association that it has received an offer, state to the homeowners association the price, terms and conditions upon which the Partnership would sell the Property, and consider (without obligation) accepting an offer from the homeowners association. The Partnership has, to the best of its knowledge, complied in all material respects with all requirements of the States of Florida, Michigan, Minnesota and Nevada, where its operations are conducted.
Employees
The Partnership employs two part-time 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 on-site maintenance and administrative services. Uniprop, Inc., as property manager, has overall management authority for each Property.
ITEM 2.PROPERTIES
The Partnership purchased all nine manufactured housing communities for cash. As a result of the Loan, however, seven of the nine Properties are now encumbered with mortgages.
Each of the Properties is a modern manufactured housing community containing lighted and paved streets, side-by-side off-street parking and complete underground utility systems. The Properties consist of only the underlying real estate and improvements, not the actual homes themselves. In January 1990, the Partnership did begin acquiring some homes in conjunction with its home purchase/lease program for Country Roads and Paradise Village. Each of the Properties has a community left, which includes offices, meeting rooms and game rooms. The Ardmor Village community includes a resident manager's apartment. Country Roads has a 1,200 square foot rental cottage. Each of the Properties, except Stonegate Manor, has a swimming pool. Several of the Properties also have laundry rooms, playground areas, garage and maintenance areas and recreational vehicle or boat storage areas.
The table below contains certain information concerning the Partnership's nine properties.
|
Property Name
|
Year Constructed |
Acreage |
Number |
|
Ardmor Village
|
1974 |
74 |
339 |
|
Camelot Manor
|
1973 |
57 |
335 |
|
Country Roads
|
1967 |
37 |
312 |
|
Dutch Hills
|
1975 |
42.8 |
278 |
|
El Adobe
|
1975 |
36 |
371 |
|
Paradise Village
|
1971 |
91 |
611 |
|
Stonegate Manor
|
1968 |
43.6 |
308 |
|
Sunshine Village
|
1972 |
45 |
356 |
|
West Valley
|
1972 |
53 |
420 |
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 Unit Holders and Limited Partners are restricted to certain matters of fundamental significance to the Partnership. The Unit Holders and 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 Unit Holders and 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 Unit Holders and Limited Partners, as a group, holding more than 50% of the then outstanding interests. No matters were submitted to Unit Holders for vote during 1999.
PART II
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year Ended
|
Fiscal Year Ended
|
Fiscal Year Ended
| |
|
Total Assets |
$47,525,657 |
$48,834,623 |
$52,652,238 |
$53,583,381 |
$53,583,381 |
|
Long Term |
|
|
|
|
|
|
Income |
12,718,010 |
12,419,636 |
11,922,526 |
11,250,156 |
11,210,541 |
|
Operating Expenses |
(11,077,253) |
(11,488,193) |
(10,755,270) |
(10,854,181) |
(10,670,390) |
|
Income before |
|
|
|
|
|
|
Extraordinary Item: |
250,998 |
||||
|
Net Income: |
$1,640,757 |
$1,182,441 |
$1,167,256 |
$395,975 |
$395,975 |
|
Distributions to Unit Holders, |
|
|
|
|
|
|
Income per Unit: |
$.50 |
$.28 |
$.35 |
$.12 |
$.16 |
|
Extraordinary Item |
.08 |
||||
|
Weighted average |
|
|
|
|
|
ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The capital formation phase of the Partnership
began on April 1, 1987 when Sunshine Village and Ardmor Village were purchased
by the Partnership and operations commenced. It ended on January 15, 1988 when
El Adobe, the Partnership's last property, was purchased. The total capital
raised through December 1987 was $66,067,740 of which approximately $58,044,000
was used to purchase the nine Properties after deducting sales commissions,
advisory fees and other organization and offering costs.
The Partnership had no capital expenditure
commitments as of December 31, 1999 and does not anticipate any during the next
fiscal year.
As described in Item 1, the Partnership
borrowed $30,000,000 from GMAC Commercial Mortgage Corporation. The Loan carries
a fixed interest rate of 6.37% over its term of 120 months, amortized over 30
years. The Loan was secured by mortgages on the Partnership. s Ardmor Village,
Camelot Manor, Dutch Hills, El Adobe, Stonegate Manor, Sunshine Village and West
Valley Properties. The Partnership used the proceeds from the Loan to refinance
the Partnership. s outstanding indebtedness of $30,045,000.
The General Partner acknowledges that the
mortgages pose some risks to the Partnership, but believes that such risks are
not greater than risks typically associated with real estate financing.
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 are distributed to the Unit Holders on a quarterly basis.
While the Partnership is not required to maintain a working capital reserve, the
Partnership has not distributed all the cash generated from operations in order
to build capital reserves. As of December 31, 1999, the Partnership had
$2,821,681 in reserves.
In February of 1994, the Partnership
distributed $23,119,767 to the Unit Holders, or $7.00 per $20.00 Unit held. Of
this amount, $13,572,978 (or $4.11 per Unit), restored the then shortfall in the
Unit Holders. 10.0% cumulative preferred return, and $9,546,789 (or $2.89 per
Unit), was a partial return of the Limited Partners' original capital
contributions.
Results of Operations
Distributions
For the year ended December 31, 1999, the
Partnership made distributions to the Unit Holders of $2,411,473, which is
equal, on an annualized basis, to 4.3% on their adjusted capital contributions,
or $.73 per $17.11 Unit. Distributions paid to Unit Holders in 1998 totaled
$4,723,832, (of which $2,543,608 was the result of the liquidation of the Class
D and R certificates, which were issued as a result of the original 1993
financing transaction), and $2,114,171 in 1997.
The distributions paid in 1999 were less than
the amount required for the annual 10.0% preferred return to the Unit Holders by
approximately $3,240,000. As described in Note 7 to the Partnership. s financial
statements, the cumulative preferred return deficit through December 1999 was
approximately $18,864,000. No distributions can be made to the General Partner
in regard to its incentive management interest until the cumulative preferred
return deficit has been distributed to the Unit Holders. At December 31, 1999,
the unpaid amount to be distributed to the General Partner was approximately
$7,100,000.
Net Income
For the years ended December 31, 1999, 1998
and 1997, income before extraordinary item was $1,640,757, $931,443 and
$1,167,256 on total revenues of $12,718,010, $12,419,636 and $11,922,526,
respectively. The increase in 1999 from 1998 was due primarily to lower
operating expenses, specifically the reduction in interest paid on the
Partnership. s mortgage debt. The decrease from 1997 to 1998 was due primarily
to property operating expenses, which increased approximately $707,000, whereas
total revenues increased only $497,000.
Net income plus depreciation and amortization
less distributions to Unit Holders, was $1,072,491, ($1,694,214) and $903,864,
for the years ended December 31, 1999, 1998 and 1997, respectively. The
shortfall reflected in 1998 was funded with proceeds from the liquidation of the
Class D and R Certificates.
Capital Resources
|
|
Total |
Occupied Sites |
Occupancy Rate |
Average Rent | ||||||
|
|
|
1999 |
1998 |
1997 |
1999 |
1998 |
1997 |
1999 |
1998 |
1997 |
|
Ardmor Village |
339 |
335 |
329 |
326 |
98.8% |
97.1% |
96.2% |
$333 |
$319 |
$306 |
|
Camelot Manor |
335 |
323 |
321 |
323 |
96.4 |
95.8 |
96.4 |
331 |
320 |
308 |
|
Country Roads |
312 |
283 |
287 |
288 |
90.7 |
92.0 |
92.3 |
253 |
240 |
225 |
|
Dutch Hills |
278 |
269 |
261 |
260 |
96.8 |
93.9 |
93.5 |
331 |
321 |
309 |
|
El Adobe |
371 |
344 |
363 |
366 |
93.7 |
97.8 |
98.7 |
404 |
384 |
374 |
|
Paradise Village |
611 |
504 |
504 |
480 |
82.1 |
82.5 |
78.6 |
291 |
297 |
282 |
|
Stonegate Manor |
308 |
302 |
295 |
293 |
98.1 |
95.8 |
95.1 |
336 |
326 |
312 |
|
Sunshine Village |
356 |
327 |
336 |
326 |
91.9 |
94.4 |
91.6 |
434 |
418 |
399 |
|
West Valley |
420 |
403 |
415 |
418 |
95.7 |
98.8 |
99.5 |
467 |
449 |
429 |
|
Overall |
3,330 |
3,090 |
3,111 |
3,080 |
92.8% |
93.4% |
92.5% |
$357 |
$348 |
$333 |
The table below summarizes gross revenues and net operating income for the Partnership and Properties during 1999, 1998 and 1997.
|
|
GROSS REVENUE |
NET OPERATING INCOME | ||||
|
|
1999 |
1998 |
1997 |
1999 |
1998 |
1997 |
|
Ardmor Village |
$1,267,773 |
$1,241,339 |
$1,129,735 |
$614,910 |
$ 664,873 |
$ 523,625 |
|
Camelot Manor |
1,172,434 |
1,131,841 |
1,123,127 |
508,750 |
519,695 |
614,242 |
|
Country Roads |
864,405 |
836,800 |
763,727 |
284,374 |
43,923 |
109,568 |
|
Dutch Hills |
989,591 |
958,776 |
918,958 |
487,671 |
500,881 |
481,335 |
|
El Adobe |
1,748,554 |
1,731,799 |
1,646,510 |
1,128,435 |
1,137,530 |
1,051,448 |
|
Paradise Village |
1,570,490 |
1,448,095 |
1,460,543 |
248,023 |
297,217 |
326,009 |
|
Stonegate Manor |
1,146,597 |
1,110,040 |
1,035,924 |
568,042 |
544,209 |
578,851 |
|
Sunshine Village |
1,595,829 |
1,547,644 |
1,513,820 |
913,078 |
950,739 |
901,389 |
|
West Valley |
2,288,155 |
2,326,778 |
2,240,418 |
1,458,086 |
1,548,420 |
1,510,414 |
|
12,643,828 |
12,333,112 |
11,832,762 |
6,211,369 |
6,207,487 |
6,096,881 | |
|
Partnership |
74,182 |
86,524 |
89,764 |
(213,440) |
(413,691) |
(155,024) |
|
Extinguisment of Debt |
- |
250,998 |
- | |||
|
Other nonrecurring Expenses |
(578,247) |
(589,597) |
(262,257) | |||
|
Debt Service |
(1,935,712) |
(2,425,579) |
(2,661,565) | |||
|
Depreciation and r Amortization |
(1,843,213) |
(1,847,177) |
(1,850,779) | |||
|
TOTAL: |
$12,718,010 |
$12,419,636 |
$11,922,526 |
$1,640,757 |
$1,182,441 |
$1,167,256 |
Comparison of Year Ended December 31, 1999 to Year Ended December 31, 1998
Gross revenues increased $298,374, or 2.4%, to $12,718,010 in 1999, compared to $12,419,636 in 1998. The increase is primarily the result of an 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 decreased $410,940, or 3.6%, to $11,077,253 in 1999, compared to $11,488,193 in 1998. The decrease in due primarily to lower interest expense associated with the Partnership. s mortgage debt and lower administrative expenses due to the absence of costs associated with the 1998 proxy.
As a result of the foregoing factors, net income increased from $1,182,441 in 1998 to $1,640,757 in 1999.
Comparison of Year Ended December 31, 1998 to Year Ended December 31, 1997
Gross revenues increased $497,110, or 4.2%, to $12,419,636 in 1998, compared to $11,922,526 in 1997. The increase was primarily the result of higher average occupancy and an 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 $707,033, or 16.3%, to $5,054,906 in 1998, compared to $4,347,873 in 1997. The increase is due primarily to increases in marketing expenses, repairs and maintenance to the Properties, and wages. The Partnership. s administrative expenses also increased $234,784, or 23.5%, to $1,233,734 in 1998, compared to $998,950 in 1997. The increase in administrative expenses is due to costs associated with the proxy completed in 1998.
Also reported in the Statements of Income is a gain of $250,998 on the extinguishment of debt, which includes the gain on the liquidation of the Class R Certificate, less loan prepayment penalties and the write-off of unamortized financing costs related to the original 1993 financing.
As a result of the foregoing factors, net income increased slightly from $1,167,256 in 1997 to $1,182,441 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 $29,572,116. Interest on this note is at a fixed rate of 6.37% through March 2009.
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 year 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.
PART III
ITEM 10.DIRECTORS AND
EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership, as an entity, does not have
any officers or directors. The General Partner, Genesis Associates Limited
Partnership, is a Michigan limited partnership which has two general partners,
Uniprop, Inc., the managing General Partner, and Paul M. Zlotoff.
Information concerning Mr. Zlotoff's age and
principal occupations, as well as for other officers of Uniprop, Inc., during
the last five years or more is as follows:
Paul M. Zlotoff, 50, is and has been an
individual general partner of Genesis Associates since its inception in November
1986. 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
P.I. Associates Limited Partnership, the general partner of Uniprop Manufactured
Housing Communities Income Fund, a public limited partnership which owns and
operates four manufactured housing communities. Mr. Zlotoff currently, and in
the past, has acted as the general partner for various other limited
partnerships owning manufactured housing communities and some commercial
properties.
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.
Gloria Koster, 46,
became Chief Financial Officer of Uniprop, Inc. on January 1, 1998. Previously,
Ms. Koster had been Vice President - Finance of Uniprop, Inc. since July 1989.
She is responsible for accounting, financial controls, data processing, cash
management, financial reporting, budgeting, financing, and tax matters. Prior to
joining Uniprop, Inc., Ms. Koster had been with Michigan National Bank for 13
years, most recently as a first vice-president. Ms. Koster has a M.B.A. from the
University of Detroit.
Roger Zlotoff, 38,
became Chief Investment Officer of Uniprop, Inc. on October 18, 1999. Mr.
Zlotoff is primarily responsible for raising equity capital, managing
partnership investments, evaluating acquisitions of existing properties and
leading the development process for new properties. From 1997 to 1999, Mr.
Zlotoff served as Director of Business Development for Vistana, Inc. in Orlando,
FL. Previously, Mr. Zlotoff was Managing Director for Sterling Finance
International from 1994 to 1997 and was a corporate banker with First Union
National Bank from 1988 to 1994. Mr. Zlotoff received his B.A. from the
University of Central Florida as a philosophy major, and received his Masters
Degree in International Business from the University of South Carolina.
Paul M. Zlotoff and Roger Zlotoff are
brothers.
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. Depending upon the results of
operations and other factors, 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 duly
formed pursuant to the Uniform Limited Partnership Act, as amended, of the State
of Michigan. The General Partner, Genesis Associates Limited Partnership, is
vested with full authority as to the general management and supervision of
business and the other affairs of the Partnership, subject to certain
constraints in the partnership agreement and consulting agreement. Unit holders
and/or 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 knowledge of the Partnership, no person owns of
record or beneficially, more than five percent of the Partnership's Units.
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion describes all of the
types of compensation, fees or other distributions paid by the Partnership or
others to the General Partner or its affiliates from the operations of the
Partnership during the last fiscal year, as well as certain of such items which
may be payable during the next fiscal year. Certain of the following
arrangements for compensation and fees were not determined by arm's length
negotiations between the General Partner, its affiliates and the Partnership.
Paul M. Zlotoff has an interest in the
original sellers of Sunshine Village and Ardmor Village and is entitled to share
in a contingent purchase price with respect to each Property, when and if the
Properties are sold and the sellers become entitled thereto. The maximum amounts
which could be payable to the sellers are as follows: Sunshine Village,
$1,108,260 and Ardmor Village, $946,236. The cash purchase price and contingent
purchase price for each Property were determined by reference to the average of
two independent real estate appraisals which were obtained by the General
Partner. Such appraisals are only estimates of value and are not necessarily
indicative of the actual real estate value. Each seller will become entitled to
any unpaid contingent purchase price upon the sale, financing or other
disposition of each such Property, but, only after the receipt by each Unit
Holder and Limited Partner of aggregate distributions equal to the sum of (i)
his 10% cumulative preferred return plus (ii) 125% of his capital contribution.
The actual amounts to be received, if any, will depend upon the results of the
Partnership's operations and the amounts received upon the sale, financing or
other disposition of the Properties and are not determinable at this time. The
Partnership does not anticipate any such amount will become payable during the
next fiscal year.
The Partnership will pay an Incentive
Management Interest to the General Partner for managing the Partnership's
affairs, including: determining distributions, negotiating agreements, selling
or financing properties, preparing records and reports, and performing other
ongoing Partnership responsibilities. This incentive management interest is 15%
of distributable cash from operations in any quarter. However, in each quarter,
the General Partner's right to receive any net cash from operations is
subordinated to the extent necessary to first provide each Unit Holder and
Limited Partner his 10% cumulative preferred return. During the last fiscal
year, the General Partner received no distributions on account of its Incentive
Management Interest from operations because distributions were approximately
$3,240,000 less than the 10% cumulative preferred return due Unit Holders. Any
such amounts of Incentive Management Interest unpaid in a taxable year will be
accumulated and paid from distributable cash from capital transactions, but only
after each Unit Holder and Limited Partner has first received his 10% cumulative
preferred return and 125% of his capital contribution. For 1999, approximately
$500,000 was accumulated for the General Partner, and the General Partner's
aggregate accumulated Incentive Management Interest as of December 1999 was
approximately $7,100,000. The actual Incentive Management Interest from
operations to be accumulated or paid during the next fiscal year will depend
upon the results of the Partnership's operations and is not determinable at this
time. The Partnership does not anticipate any such amount will be distributed to
the General Partner during the next fiscal year and will again be accumulated
with payment deferred. No distributions of Incentive Management Interest could
be made to the General Partner until the 10% cumulative preferred return of
approximately $18,864,000, as of December 31, 1999, is first distributed to the
Unit Holders. In February of 1994, as part of the 1993 mortgage financing,
$23,119,767 was distributed to the Unit Holders, $13,572,978 of which eliminated
the Unit Holders' preferred return deficit through December 31, 1993.
The Partnership must also pay an Incentive
Management Interest from capital transactions to the General Partner for its
services rendered to the Partnership. The General Partner will be entitled to
receive its share of distributable cash from capital transactions after (i) each
Unit Holder and Limited Partner has received aggregate distributions in an
amount equal to the sum of (a) his 10% cumulative preferred return plus (b) 125%
of his capital contribution, (ii) any contingent purchase prices have been paid,
and (iii) any property disposition fees to Uniprop, Inc. have been paid. The
General Partner's share of distributable cash from capital transactions so
payable will be (i) 100% of such distributable cash from capital distributions
until the General Partner's share of the aggregate capital distributions made
under section 11c(iii) and 11c(v) of the partnership agreement equal 25% and
(ii) thereafter, 25% of such distributable cash from capital transactions. No
Incentive Management Interest from capital transactions was paid to the General
Partner for the fiscal year ended December 31, 1999. The Partnership does not
anticipate that any such amounts will be paid or become payable to the General
Partner during the next fiscal year.
Uniprop, Inc. received and will receive
property management fees for each Property managed by it. Uniprop, Inc. is
primarily responsible for the day-to-day management of the Properties and for
the payment of the costs of operating each Property out of the rental income
collected. The property management fees are equal to the lesser of 5% of the
annual gross receipts from the Properties managed by Uniprop, 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 $631,175: Ardmor Village, $63,248; Camelot
Manor, $58,604; Country Roads, $43,724; Dutch Hills, $49,454; El Adobe, $87,309;
Paradise Village, $77,699; Stonegate Manor, $57,232; Sunshine Village, $79,509;
and West Valley, $114,396. The actual amounts to be received during the next
fiscal year will depend upon the results of the Partnership's operations and are
not determinable at this time.
Certain employees of affiliates of the General
Partner were paid an aggregate of $208,593 during 1999 to perform local property
management, data processing and investor relation services for the Partnership.
It is anticipated comparable amounts will be paid in the next fiscal year.
PART IV
ITEM 14. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (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
(iii) Statements of Income for the fiscal
years ended December 31, 1999, 1998 and 1997
(iv) Statements of Partners' Equity for the
fiscal years ended December 31, 1999, 1998 and 1997
(v) Statements of Cash Flows for the fiscal
years ended December 31, 1999, 1998 and 1997
The following exhibits are incorporated by
reference to the S-11 Registration Statement of the Partnership filed November
12, 1986, as amended on December 22, 1986 and January 16, 1987:
3(a) Certificate of Limited Partnership for
the Partnership
3(b) Uniprop Income Fund II Agreement of
Limited Partnership
4(a) First Amendment to Uniprop Income Fund II
Agreement of Limited Partnership (April 1, 1987)
10(a) Form of Management Agreement between the
Partnership and Uniprop, Inc.
10(b) Form of Consulting Agreement among the
Partnership, the General Partner and Consultant
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K
during the fourth quarter of 1999.
The following exhibits are incorporated by
reference to the Form 10-K for the fiscal year ended December 31, 1997:
4(b) Form of Beneficial Assignment Certificate
(BAC) for the Partnership
(Originally submitted with Form 10-K for the
fiscal year ended December 31, 1987.)
10(c) Contingent Purchase Price Agreement with
Sunrise Broward Associates, Ltd.
(As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
10(d) Contingent Purchase Price Agreement with
Ardmor Associates Limited Partnership. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
10(e) Incentive Acquisition Fee Agreement
between the Partnership and Uniprop, Inc. (As last submitted with Form 10-K for
the fiscal year ended December 31, 1997.)
The following exhibit is incorporated by
reference to the Form 8-K that was filed on September 8, 1998:
2 Mortgage notes, made as of August 20, 1998,
between Uniprop Manufactured Housing Communities Income Fund II and GMACCM.
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 nine manufactured housing communities, as of March
1, 2000
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, Uniprop Manufactured Housing
Communities Income Fund II, a Michigan Limited Partnership, has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
BY: Uniprop, Inc., Managing General Partner
By: Paul M. Zlotoff
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
By: Gloria A.
Koster By: Paul M. Zlotoff
By: Susann Szepytowski
EXHIBIT INDEX
Chairman
Dated: March 30,
2000
(Chief Financial Officer of (Principal
Executive Officer)
Dated: March 30, 2000
Chairman of Uniprop, Inc.
Dated: March 30, 2000
(Controller of Uniprop, Inc.)
| EXHIBIT
NUMBER |
DESCRIPTION | METHOD OF FILING | PAGE | |||
|
2
3(a) |
Mortgage Notes, made on August 20, 1998 between Uniprop Income Fund II and GMACCM Certificate of Limited Partnership for the Partnership |
Incorporated by reference to the Form 8-K filed on September 8, 1998. Incorporated by reference to the S-11 Registration Statement of the Partnership filed November 12, 1986, as amended on December 22, 1986 and January 16, 1987 (the "Registration Statement"). |
||||
|
3(b) |
Uniprop Income Fund II Agreement of Limited Partnership |
Incorporated by reference to the Registration Statement. |
||||
|
4(a) |
First Amendment to Uniprop Income Fund II Agreement of Limited Partnership (April 1, 1987) |
Incorporated by reference to the Registration Statement. |
||||
|
4(b) |
Form of Beneficial Assignment Certificate (BAC) for the Partnership (originally filed with Form 10-K for the fiscal year ended December 31, 1987) |
Incorporated by reference to Form 10-K for fiscal year ended December 31, 1997. |
||||
|
10(a) |
Form of Management Agreement between the Partnership and Uniprop, Inc. |
Incorporated by reference to the Registration Statement. |
||||
|
10(b) |
Form of Consulting Agreement among the Partnership, the General Partner and Consultant |
Incorporated by reference to the Registration Statement. |
||||
|
10(c) |
Contingent Purchase Price Agreement with Sunrise Broward Associates, Ltd. (originally filed with Form 10-K for the fiscal year ended December 31, 1987) |
Incorporated by reference to Form 10-K for fiscal year ended December 31, 1997. |
||||
|
10(d) |
Contingent Purchase Price Agreement with Ardmor Associates Limited Partnership (originally filed with Form 10-K for the fiscal year ended December 31, 1987) |
Incorporated by reference to Form 10-K for fiscal year ended December 31, 1997. |
||||
|
10(e) |
Incentive Acquisition Fee Agreement between the Partnership and Uniprop, Inc. (originally filed with Form 10-K for the fiscal year ended December 31, 1987) |
Incorporated by reference to Form 10-K for fiscal year ended December 31, 1997. |
||||
|
10(f) |
First Amended and Restated Consulting Agreement among the Partnership, the General Partner and the Consultant. |
Filed herwith. |
||||
|
27 28
|
Financial Data Schedule Letter summary of the estimated fair market values of the Partnership's nine manufactured housing communities, as of March 1, 2000. |
Filed herewith. Filed herewith. |
||||
|
|
Report of Independent Certified Public Accountants
To the Partners
Uniprop Manufactured Housing
Communities Income Fund II
(a
Michigan limited partnership)
|
December 31, |
1999 |
1998 |
|
Assets |
||
|
Property and Equipment (Note2) |
||
|
Buildings and improvements |
$ 49,776,786 |
$ 49,421,935 |
|
Land |
11,644,103 |
11,644,103 |
|
Manufactured homes and improvements |
1,875,567 |
2,100,666 |
|
Furniture and equipment |
453,437 |
400,872 |
|
63,749,893 |
63,567,576 | |
|
Less accumulated depreciation |
20,587,823 |
18,819,413 |
|
Net Property and Equipment |
43,162,070 |
44,748,163 |
|
Cash |
2,821,681 |
2,482,314 |
|
Unamortized financing costs (Note 2) |
597,528 |
622,800 |
|
Other assets (Note 3) |
944,378 |
981,346 |
|
$ 47,525,657 |
$ 48,834,623 | |
|
Liabilities and Partners. Equity |
||
|
Notes payable (Note 2) |
$ 29,572,116 |
$ 29,915,975 |
|
Accounts payable |
235,098 |
322,340 |
|
Other liabilities (Note 4) |
769,853 |
876,996 |
|
Total Liabilities |
30,577,067 |
31,115,311 |
|
Partners. Equity |
||
|
Unit holders |
16,690,170 |
17,477,300 |
|
General partner |
258,420 |
242,012 |
|
Total Partners. Equity |
16,948,590 |
17,719,312 |
|
$ 47,525,657 |
$ 48,834,623 |
See accompanying notes to financial statements.
|
Year Ended December 31, |
1999 |
1998 |
1997 |
|
Income |
|||
|
Rental |
$ 12,091,007 |
$ 11,737,284 |
$ 11,340,654 |
|
Interest |
76,964 |
183,803 |
203,570 |
|
Other |
550,039 |
498,549 |
378,302 |
|
12,718,010 |
12,419,636 |
11,922,526 | |
|
Operating Expenses |
|||
|
Property operations |
5,170,508 |
5,054,906 |
4,347,873 |
|
Depreciation and amortization |
1,843,213 |
1,847,177 |
1,850,779 |
|
Administrative (Note 5) |
1,134,947 |
1,233,734 |
998,950 |
|
Property taxes |
992,873 |
926,797 |
896,103 |
|
Interest |
1,935,712 |
2,425,579 |
2,661,565 |
|
11,077,253 |
11,488,193 |
10,755,270 | |
|
Income Before Extraordinary Item |
1,640,757 |
931,443 |
1,167,256 |
|
Extraordinary Item - Gain on Extinguishment |
|||
|
of Debt (Note 2) |
- |
250,998 |
- |
|
Net Income |
$ 1,640,757 |
$ 1,182,441 |
$ 1,167,256 |
|
Income Per Limited Partnership Unit (Note 7) |
|||
|
Income before extraordinary item |
$ .50 |
$ .28 |
$ .35 |
|
Extraordinary item |
- |
.08 |
- |
|
Distributions Per Limited Partnership Unit (Note 7) |
.73 |
1.43 |
.64 |
|
Number of Limited Partnership Units Outstanding |
3,303,387 |
3,303,387 |
3,303,387 |
|
Net Income Allocable to General Partner (Note 7) |
|||
|
Income before extraordinary item |
$ 16,408 |
$ 9,314 |
$ 11,673 |
|
Extraordinary item |
- |
2,510 |
- |
|
16,408 |
11,824 |
11,673 | |
|
Distributions Allocable to General Partner |
$ - |
$ - |
$ - |
See accompanying notes to financial statements.
Statements of Partners' Equity
|
Unit Holders |
Total | ||
|
Balance, January 1, 1997 |
$ 218,515 |
$ 21,989,103 |
$ 22,207,618 |
|
Distributions to unit holders |
- |
(2,114,171) |
(2,114,171) |
|
Net income for the year |
11,673 |
1,155,583 |
1,167,256 |
|
Balance, December 31, 1997 |
230,188 |
21,030,515 |
21,260,703 |
|
Distributions to unit holders |
- |
(4,723,832) |
(4,723,832) |
|
Net income for the year |
11,824 |
1,170,617 |
1,182,441 |
|
Balance, December 31, 1998 |
242,012 |
17,477,300 |
17,719,312 |
|
Distributions to unit holders |
- |
(2,411,479) |
(2,411,479) |
|
Net income for the year |
16,408 |
1,624,349 |
1,640,757 |
|
Balance, December 31, 1999 |
$ 258,420 |
$ 16,690,170 |
$ 16,948,590 |
See accompanying notes to financial statements.
|
Year Ended December 31, |
1999 |
1998 |
1997 |
|
Cash Flows From Operating Activities |
|||
|
Net income |
$ 1,640,757 |
$ 1,182,441 |
$ 1,167,256 |
|
Adjustments to reconcile net income to net cash provided by operating activities |
|||
|
Depreciation |
1,817,941 |
1,817,628 |
1,792,127 |
|
Amortization |
25,272 |
29,549 |
58,652 |
|
Gain on sale of property and equipment |
(70,903) |
(188,583) |
(18,850) |
|
Extraordinary item - gain on extinguishment of debt |
- |
(250,998) |
- |
|
Decrease (increase) in other assets |
36,968 |
(365,610) |
(178,077) |
|
(Decrease) increase in accounts payable |
(87,242) |
196,277 |
(29,826) |
|
(Decrease) increase in other liabilities |
(107,143) |
(343,476) |
26,085 |
|
Net Cash Provided By Operating Activities |
3,255,650 |
2,077,228 |
2,817,367 |
|
Cash Flows From Investing Activities |
|||
|
Purchase of property and equipment |
(994,655) |
(1,422,431) |
(982,115) |
|
Proceeds from sale of property and equipment |
833,710 |
1,183,069 |
822,721 |
|
Proceeds from redemption of investment |
- |
2,418,891 |
- |
|
Proceeds from redemption of mortgage backed securities |
- |
1,502,250 |
- |
|
Proceeds from sale of marketable securities |
- |
875,859 |
450,000 |
|
Purchase of marketable securities |
- |
- |
(507,677) |
|
Net Cash Provided By (Used In) Investing Activities |
(160,945) |
4,557,638 |
(217,071) |
|
Cash Flows From Financing Activities |
|||
|
Distributions to unit holders |
(2,411,479) |
(4,723,832) |
(2,114,171) |
|
Repayments of notes payable |
(343,859) |
(30,129,025) |
- |
|
Payment for financing costs |
- |
(930,247) |
- |
|
Proceeds from note payable |
- |
30,000,000 |
- |
|
Net Cash Used In Financing Activities |
(2,755,338) |
(5,783,104) |
(2,114,171) |
|
Net Increase In Cash |
339,367 |
851,762 |
486,125 |
|
Cash, at beginning of year |
2,482,314 |
1,630,552 |
1,144,427 |
|
Cash, at end of year |
$ 2,821,681 |
$ 2,482,314 |
$ 1,630,552 |
Notes to Financial Statements
See accompanying notes to financial
statements.
|
1. Summary of Accounting Policies |
Organization and Business |
|
Uniprop Manufactured Housing Communities Income Fund II, a Michigan Limited Partnership (the "Partnership") acquired, maintains, operates and will ultimately dispose of income producing residential real properties consisting of nine manufactured housing communities (the "properties") located in Florida, Michigan, Nevada and Minnesota. The Partnership was organized and formed under the laws of the State of Michigan on November 7, 1986. | |
|
In accordance with its Prospectus dated December 1986, the Partnership sold 3,303,387 units of beneficial assignment of limited partnership interest ("Units") for $66,067,740. The Partnership purchased the properties for an aggregate purchase price of approximately $56,000,000. Three of the properties costing approximately $16,008,000 were previously owned by entities which were affiliates of the general partner. | |
|
The general partner is Genesis Associates Limited Partnership. Uniprop Beneficial Corporation was the initial limited partner who assigned to those persons purchasing units a beneficial limited partnership interest when the minimum number of units were sold. | |
| Use of Estimates | |
|
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from these estimates. | |
| Fair Values of Financial Instruments | |
|
The carrying amounts of cash and notes payable approximate their fair values. | |
| Property and Equipment | |
|
Property and equipment are stated at cost. Depreciation is provided using the straight-line 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 $18,414,221 and $16,805,437 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. | |
| Mortgage-Backed Securities | |
|
In connection with the Partnership's 1993 financing transaction (see Note 2), the Partnership was required to use approximately 5% of its mortgage proceeds to purchase a subordinated portion of the mortgage-backed securities ("Class D Certificates"). These Class D Certificates were not rated, carried a fixed interest rate of 7.5% per annum and were subordinated to the Class A, B and C mortgage certificates issued as part of the aforementioned financing transaction. The Partnership was issued a Class D Certificate in 1993 with a face amount of $1,502,250, which represented cost. | |
|
In 1998, as part of the refinancing of its note payable (see Note 2), the Partnership redeemed the Class D Certificate at cost. | |
| Financing Costs | |
|
Costs to obtain financing have been capitalized and are amortized using the straight-line method over the 30-year term of the related mortgage note payable. | |
| Investment | |
|
In 1998, as part of the refinancing of its note payable (see Note 2), the Partnership redeemed the Class R Certificates. As a result, the Partnership recognized a gain of $1,419,896 on the redemption of the certificates, which has been included in the calculation of the extraordinary gain on the extinguishment of debt (see Note 2). | |
| 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. | |
| 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. Notes Payable |
In 1998, the Partnership refinanced its outstanding long-term debt by entering into a new note agreement totaling $30,000,000. These borrowings are secured by mortgages on the Partnership's properties. The note is payable in monthly installments of $188,878, including interest at 6.37%, through March, 2009. Thereafter, the monthly installment and interest rate will be adjusted based on the provisions of the agreement through the note maturity date of September 2028. The outstanding balance on the note payable at December 31, 1999 and 1998 was $29,572,116 and $29,915,975, respectively. |
|
In connection with the refinancing, the Partnership recorded a gain in 1998 on the extinguishment of debt of $250,998, which includes the gain on the redemption of the Class R Certificates ($1,419,896), less loan prepayment penalties ($300,450) and the write-off of unamortized financing costs related to the original 1993 financing ($868,448). | |
|
Future maturities on the note payable for the next five years are as follows: 2000 - $362,000; 2001 - $392,000; 2002 - $418,000; 2003 - $445,000; and 2004 - $470,000. | |
|
3. Other Assets |
At December 31, 1999 and 1998, "Other Assets" included cash of approximately $319,000 and $425,000 in an escrow account for property taxes, insurance, and capital improvements, as required by the Partnership. s note payable agreement. The account is restricted from operating use. |
|
At December 31, 1999 and 1998, "Other assets" also included cash of approximately $216,000, in a security deposit escrow account for three of the Partnership. s properties, which is required by the laws of the state in which they are located and is restricted from operating use. | |
|
4. Other Liabilities |
Other liabilities consisted of: | ||
|
December 31, |
1999 |
1998 | |
|
Tenants. security deposits |
$ 548,434 |
$ 509,707 | |
|
Accrued interest |
125,049 |
124,050 | |
|
Accrued property taxes |
- |
106,481 | |
|
Other |
96,370 |
136,758 | |
|
Total |
$ 769,853 |
$ 876,996 | |
|
5. 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. | |||
|
Fees and Expenses | |||
|
During the years ended December 31, 1999, 1998 and 1997, the affiliate earned property management fees of $631,175, $611,741 and $585,394, respectively, as permitted in the Agreement of Limited Partnership. These fees are included with "Administrative" expenses in the respective statements of income. The Partnership owed $13,231 to the affiliate at December 31, 1999, and owed $335 to the affiliate at December 31, 1998. | |||
|
Certain employees of the Partnership are also employees of affiliates of the general partner. These employees were paid by the Partnership $208,593, $222,949 and $177,046 in 1999, 1998 and 1997, respectively, to perform local property management and investor relations services for the Partnership. | |||
|
Contingent Purchase Price | ||||
|
A general partner of Genesis Associates Limited Partnership has an interest in the sellers of two of the properties acquired by the Partnership and is entitled to share in a contingent purchase price that will not exceed $2,054,000. Additional amounts to be paid, if any, will depend upon the results of the Partnership's operations and the amounts received upon the sale, financing or other disposition of the properties, and are not determinable at this time. The Partnership does not anticipate any such amount will become payable during the next fiscal year. | ||||
|
Financing Costs | ||||
|
In 1998, as part of the financing transaction described in Note 2, the Partnership paid approximately $300,000 in financing costs to an affiliate of the general partner. | ||||
|
6. Reconciliation of Financial Statement Income and Taxable Income |
Year Ended December 31, |
1999 |
1998 |
1997 |
|
Income per the financial |
||||
|
statements |
$ 1,640,757 |
$ 1,182,441 |
$ 1,167,256 | |
|
Adjustments to depreciation |
||||
|
for difference in methods |
158,545 |
168,071 |
175,340 | |
|
Adjustments for prepaid |
||||
|
rent, meals and |
||||
|
entertainment |
(7,920) |
3,448 |
(3,100) | |
|
Adjustment for LLC income |
- |
(1,106,973) |
576,904 | |
|
Income Per the Partner- |
||||
|
ship. s Tax Return |
$ 1,791,382 |
$ 246,987 |
$ 1,916,400 | |
|
7. Partners. Capital |
Subject to the orders of priority under certain specified conditions more fully described in the Agreement of Limited Partnership, distributions of partnership funds and allocations of net income from operations are principally determined as follows: |
| Distributions | |
|
Distributable cash from operations in the Agreement (generally defined as net income plus depreciation and amortization) is to be distributed to unit holders until they have received a 10% cumulative preferred return. After the unit holders have received their 10% cumulative preferred return, all remaining cash from operations is distributed to the general partner in the form of an incentive management interest until the total amount received by the general partner is equal to 15% of the aggregate amount of cash distributed from operations in a given year. Amounts payable to but not paid to the general partner will be accumulated and paid from future capital transactions after the unit holders have first received their 10% preferred return and 125% of their capital contributions. Thereafter, 85% of distributable cash from operations is to be paid to the unit holders and 15% to the general partner. | |
|
Annual distributable cash from operations was less than the amount required for the annual 10% preferred return to the unit holders by approximately $3,240,000 and $928,000 in 1999 and 1998, respectively. No distributions can be made to the general partner until the cumulative preferred return deficit of approximately $18,864,000 has been distributed to the unit holders. | |
|
At December 31, 1999, the general partner. s cumulative incentive management interest to be distributed was approximately $7.1 million. The actual amount to be accumulated or paid in the future depends on the results of the Partnership. s operations and is not currently determinable; however, no such distribution to the general partner is anticipated during fiscal 2000. | |
| Allocation of Net Income | |
|
Net income is principally allocated 99% to the unit holders and 1% to the general partner until the cumulative amount of net income allocated to the unit holders equals the aggregate cumulative amount of cash distributable to the unit holders. After sufficient net income has been allocated to the unit holders to equal the amount of cash distributable to them, all the net income is to be allocated to the general partner until it equals the amount of cash distributed to it. | |
|
8. 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. |
|
9. Supplemental Cash Flow Information |
Interest paid during 1999, 1998 and 1997 was approximately $1,935,000, $2,531,000 and $2,654,000, respectively. |
|
Column A |
Column B |
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 |
En |
Encumbrance |
Land |
Improvements |
Land |
Improvements |
Land |
Improvements |
Total |
Depreciation |
Acquired |
Computed | |||||||||||
| Ardmor Village
(Lakeville, MN) |
$ 2,868,425 |
$ 1,063,253 |
$ 4,253,011 |
$ - |
$ 932,695 |
$ 1,063,253 |
$ 5,185,706 |
$ 6,248,959 |
$ 2,010,007 |
1987 |
30 years | ||||||||||||
| Sunshine Village | |||||||||||||||||||||||
| (Davie, FL) | 4,229,436 | 1,215,862 | 4,875,878 | - | 168,960 | 1,215,862 | 5,044,838 | 6,260,700 | 2,144,133 | 1987 | 30 years | ||||||||||||
| Camelot Manor | |||||||||||||||||||||||
| (Grand Rapids, MI) | 3,415,495 | 918,949 | 3,681,051 | - | 619,687 | 918,949 | 4,300,738 | 5,219,687 | 1,734,778 | 1987 | 30 years | ||||||||||||
| Country Roads | |||||||||||||||||||||||
| (Jacksonville, FL) | - | 636,550 | 2,546,200 | 38,106 | 559,300 | 674,656 | 3,105,500 | 3,780,156 | 1,249,232 | 1987 | 30 years | ||||||||||||
| Paradise Village | |||||||||||||||||||||||
| (Tampa, FL) | - | 1,760,000 | 7,040,000 | 279,053 | 1,139,954 | 2,039,053 | 8,179,954 | 10,219,007 | 3,194,330 | 1987 | 30 years | ||||||||||||
| Dutch Hills | |||||||||||||||||||||||
| (Haslett, MI) | 2,543,140 | 839,693 | 3,358,771 | 23,104 | 458,816 | 862,797 | 3,817,587 | 4,680,384 | 1,505,621 | 1987 | 30 years | ||||||||||||
| Stonegate Manor | |||||||||||||||||||||||
| (Lansing, MI) | 2,971,924 | 930,307 | 3,721,229 | 40,552 | 337,604 | 970,859 | 4,058,833 | 5,029,692 | 1,624,045 | 1987 | 30 years | ||||||||||||
| El Adobe | |||||||||||||||||||||||
| (Las Vegas, NV) | 5,450,993 | 1,480,000 | 5,920,000 | 39,964 | 366,492 | 1,519,964 | 6,286,492 | 7,806,456 | 2,499,333 | 1988 | 30 years | ||||||||||||
| West Valley | |||||||||||||||||||||||
| (Las Vegas NV) | 8,092,703 | 2,289,700 | 9,158,800 | 89,010 | 638,338 | 2,378,710 | 9,797,138 | 12,175,848 | 3,851,988 | 1988 | 30 years | ||||||||||||
| $ 29,572,116 | $ 11,134,314 | $ 44,554,940 | $ 509,789 | $ 5,221,846 | $ 11,644,103 | $ 49,776,786 | $ 61,420,889 | $ 19,813,467 | |||||||||||||||
|
1. Reconciliation of Land |
The following table reconciles the land from January 1, 1997 to December 31, 1999: | |||
|
1999 |
1998 |
1997 | ||
|
Balance, at January 1 |
$ 11,644,103 |
$ 11,644,103 |
$ 11,644,603 | |
|
Additions to land, net |
- |
- |
(500) | |
|
Balance, at December 31 |
$ 11,644,103 |
$ 11,644,103 |
$ 11,644,103 | |
|
2. Reconciliation of Buildings and Improvements |
The following table reconciles the buildings and improvements from January 1, 1997 to December 31, 1999: | |||
|
1999 |
1998 |
1997 | ||
|
Balance, at January 1 |
$ 49,421,935 |
$ 49,099,290 |
$ 48,558,632 | |
|
Additions to buildings and improvements |
354,851 |
322,645 |
540,658 | |
|
Balance, at December 31 |
$ 49,776,786 |
$ 49,421,935 |
$ 49,099,290 | |
|
3. Reconciliation of Accumulated Depreciation |
The following table reconciles the accumulated depreciation from January 1, 1997 to December 31, 1999: | |||
|
1999 |
1998 |
1997 | ||
|
Balance, at January 1 |
$ 18,101,874 |
$ 16,399,511 |
$ 14,735,004 | |
|
Current year depreciation expense |
1,711,593 |
1,702,363 |
1,664,507 | |
|
Balance, at December 31 |
$ 19,813,467 |
$ 18,101,874 |
$ 16,399,511 | |
|
4. Tax Basis of Buildings and Improvements |
The aggregate cost of buildings and improvements for federal income tax purposes is equal to the cost basis used for financial statements purposes. | |||
April 17, 2000
Ms. Gloria Kosler
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 II 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
/ms
Enclosures
Uniprop-II SEC.doc