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, 1998 | 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 (State or other jurisdiction of incorporation or organization) |
38-2702802 (I.R.S. employer 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)
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 require d to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]
No [ ]
| PART I. FINANCIAL INFORMATION | |||
| ITEM 1. FINANCIAL STATEMENTS | |||
| UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II, A MICHIGAN LIMITED PARTNERSHIP | |||
| BALANCE SHEETS | |||
| ASSETS | March 31, 1998 | Dec. 31, 1997 | |
| (Unaudited) | |||
| Properties: | |||
| Land | $11,644,103 | $11,644,103 | |
| Buildings And Improvements | 49,177,038 | 49,099,290 | |
| Furniture And Fixtures | 388,515 | 369,274 | |
| Manufactured Homes | 2,213,009 | 2,082,250 | |
| $63,422,665 | $63,194,917 | ||
| Less Accumulated Depreciation | 17,505,071 | 17,057,071 | |
| $45,917,594 | $46,137,846 | ||
| Cash And Cash Equivalents | 1,175,073 | 1,630,552 | |
| Marketable Securities | 875,859 | 875,859 | |
| Mortgage-backed Securities | 1,502,250 | 1,502,250 | |
| Unamortized financing costs | 879,000 | 891,000 | |
| Investment | 998,995 | 998,995 | |
| Other Assets | 592,000 | 615,736 | |
| Total Assets | $51,940,771 | $52,652,238 | |
| LIABILITIES AND PARTNERS' EQUITY | |||
| Accounts Payable | $138,842 | $126,063 | |
| Other Liabilities | 860,803 | 1,220,472 | |
| Note Payable | 30,045,000 | 30,045,000 | |
| Total Liabilities | $31,044,645 | $31,391,535 | |
| Partners' Equity: | |||
| General Partner | 232,158 | 230,188 | |
| Unit Holders | 20,896,126 | 21,260,703 | |
| Total Partners' Equity | $20,896,126 | $21,260,703 | |
| Total Liabilities And | |||
| Partners' Equity | $51,940,771 | $52,652,238 | |
| See Notes To Financial Statements | |||
| UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II, | |||||||
| A MICHIGAN LIMITED PARTNERSHIP | |||||||
| STATEMENTS OF INCOME | |||||||
| (Unaudited) | |||||||
| Three Months Ended | |||||||
| March 31, 1998 | March 31, 1997 | ||||||
| Income: | |||||||
| Rental Income | $2,851,408 | $2,746,882 | |||||
| Other | 187,053 | 188,626 | |||||
| Total Income | $3,038,461 | $2,935,508 | |||||
| Operating Expenses: | |||||||
|
Administrative Expenses (Including $150,346 And $144,617 In Property Management Fees Paid To An Affliate For The Three Month Periods Ended March 31, 1998 And 1997, Respectively) |
825,691 | 768,140 | |||||
| Property Taxes | 235,263 | 224,025 | |||||
| Utilities | 238,136 | 256,735 | |||||
| Property Operations | 408,014 | 317,387 | |||||
| Depreciation And Amortization | 460,000 | 457,083 | |||||
| Interest | 674,358 | 656,340 | |||||
| Total Operating Expenses | $2,841,462 | $2,679,710 | |||||
| Net Income | $196,999 | $255,798 | |||||
| Income Per Unit: | $0.06 | $0.08 | |||||
| Distribution Per Unit | $0.17 | $0.15 | |||||
| Weighted Average Number Of Units Of Beneficial Assignment Of Limited Partnership Interest Outstanding During The Periods Ending March 31, 1998 and 1997 | 3,303,387 | 3,303,387 | |||||
| See Notes To Financial Statements | |||||||
| UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II, | |||
| A MICHIGAN LIMITED PARTNERSHIP | |||
| STATEMENTS OF CASH FLOWS | |||
| (Unaudited) | |||
| Three Months Ended | |||
| March 31, 1998 | March 31, 1997 | ||
| Cash Flows From Operations: | |||
| Net Income | $196,999 | $255,798 | |
| Adjustments To Reconcile Net Income To Net Cash | |||
| Provided By Operating Activities: | |||
| Depreciation | 448,000 | 440,000 | |
| Amortization | 12,000 | 17,083 | |
| (Increase) Decrease In Other Assets | 23,736 | (71,492) | |
| Increase (Decrease) In Accounts Payables | 12,779 | (33,441) | |
| Increase (Decrease) In Other Liabilities | (359,669) | (345,251) | |
| Total Adjustments | 136,846 | 6,899 | |
| Net Cash Provided By | |||
| Operating Activities | 333,845 | 262,697 | |
| Cash Flows From Investing Activities: | |||
| Purchase of Marketable Securities | 0 | 0 | |
| Capital Expenditures | (227,748) | 45,158 | |
| Sale of Fixed Assets | 0 | 0 | |
| Net Cash Provided By (Used In) | |||
| Investing Activities | (227,748) | 45,158 | |
| Cash Flows From Financing Activities: | |||
| Distributions To Partners | (561,576) | (495,508) | |
| Net Cash Provided By (Used In) | |||
| Financing Activities | (561,576) | (495,508) | |
| Increase (Decrease) In Cash | (455,479) | (187,653) | |
| Cash, Beginning | 1,630,552 | 1,144,427 | |
| Cash, Ending | $1,175,073 | $956,774 | |
| See Notes To Financial Statements | |||
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (Unaudited)
1. Summary of significant accounting policies:
Presentation:
The balance sheet as of March 31, 1998, the related statements of income and statements of cash flow for the periods ended September 30, 1997 and 1996 have been prepared by management, pursuant to the rules and regulations of the Securities and Exchange Commission, without audit by independent public accountants. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of such financial statements have been inc luded.
The financial statements and notes are presented as permitted by the rules and regulations of the Securities and Exchange Commission for Form 10-Q and do not contain certain information included in the Company's annual financial statements and notes, w hich should be consulted.
2. Payments to affiliates:
| Three Months Ended | ||
| March 31, 1998 | March 31, 1997 | |
| Property management fee to Uniprop, Inc.: | $150,346 | $144,617 |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured home communities. As part of the mortgage financing the Partnership completed in 1993, the Partnership was required to purchase $1,502,250 in mortgage-backed securit ies, known as the "Class D Certificates". These mortgage-backed securities equal approximately 5.0% of the seven mortgage notes payable and pay interest computed at a monthly fixed rate of 7.5% per annum. The interest income, as well as the future value o f the Class D Certificates could be adversely affected by a foreclosure or a significant decline in operating results involving any of the 28 properties participating in the financing transaction which include mortgages on 21 additional properties not own ed by the Partnership.
Liquidity
As a result of the 1993 mortgage financing, seven of the Partnership's nine properties are mortgaged. At the time of the mortgage financing, the aggregate principal amounts due under the seven mortgage notes was $30,045,000 and the aggregate fair m arket value of the Partnership's mortgage properties was $56,400,000. The Partnership expects to meet its short-term liquidity needs generally through its working capital provided by operating activities.
Partnership liquidity is based, in part, upon its investment strategy. Upon acquisition, the partnership anticipated owning the properties for seven to ten years. All of the properties have been owned by the Partnership at least seven years and the Gen eral Partner may elect to have the Partnership own the properties for longer than ten years, if, in the opinion of the General Partner, it is in the best interest of the Partnership to do so.
The cash flow generated by the Partnership's operations during the quarter ending March 31, 1998 amounted to $656,999. The General Partner has decided to distribute $561,576, or 4.0% on an annualized basis, to the Unit Holders. The difference between income generated by operations and cash distributed, or $95,423, has been added to the Partnership's cash reserves.
The General Partner will continue to monitor on-going cash flow generated by the Partnership's nine properties during the coming quarters. If cash flow generated 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 Unit Holders.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine properties reported combined occupancy of 92.6% (3085/3,330 sites), versus 91.9% (3,059/3,330) for March 1997. The average monthly homesite rent as of March 31, 1998 was approximately $336, versus $331, an increase of 1.5% from March 1997. The less than historical increase in average monthly homesite rent from 1997 to 1998 is due to rent reductions at various communities related to the implementation of the new individual resident water/sewer billing system.
| Total Capacity | Occupied Sites | Occupancy Rate | Average Rent | |
| Ardmor Village | 339 | 333 | 98.2% | $309 |
| Camelot Manor | 335 | 319 | 95.2 | 309 |
| Country Roads | 312 | 284 | 91.0 | 226 |
| Dutch Hills | 278 | 260 | 93.5 | 313 |
| El Adobe | 371 | 364 | 98.1 | 374 |
| Paradise Village | 611 | 484 | 79.2 | 282 |
| Stonegate Manor | 308 | 299 | 97.1 | 317 |
| Sunshine Village | 356 | 323 | 90.7 | 417 |
| West Valley | 420 | 419 | 99.8 | 429 |
| Total on 3/31/98: | 3,330 | 3,085 | 92.6% | $336 |
| Total on 3/31/97: | 3,330 | 3,059 | 91.9% | $331 |
| Gross Revenues | Net Operating Income | |||
| 3/31/98 | 3/31/97 | 3/31/98 | 3/31/97 | |
| Ardmor Village | $311,341 | $315,688 | $150,708 | $175,795 |
| Camelot Manor | 273,454 | 276,495 | 144,334 | 151,058 |
| Country Roads | 201,684 | 181,373 | 17,880 | 10,007 |
| Dutch Hills | 235,528 | 225,736 | 118,041 | 108,648 |
| El Adobe | 430,739 | 404,206 | 283,101 | 259,624 |
| Paradise Village | 347,810 | 351,885 | 51,377 | 72,525 |
| Stonegate Manor | 273,242 | 259,119 | 123,340 | 135,113 |
| Sunshine Village | 382,300 | 369,447 | 231,480 | 216,970 |
| West Valley | 580,453 | 548,726 | 394,097 | 373,395 |
| 3,036,551 | 2,932,675 | 1,514,358 | 1,503,135 | |
| Partnership Mgt: | 1,910 | 2,833 | (87,326) | (61,039) |
| Other Non | ||||
| Recurring Expenses: | ----- | ----- | (95,675) | (72,875) |
| Debt Service | (674,358) | (656,340) | ||
| Depreciation and Amortization | ----- | ----- | (460,000) | (457,083) |
| $3,038,461 | $2,935,508 | $196,999 | $255,798 |
Gross revenues increased $102,953, or 3.5%, to $3,038461 in 1998, as compared to $2,935,508 in 1997. The increase was the result of the increase in average monthly rents and an increase in overall occupancy. (See table on previous page.)
Operating expenses increased $161,752, or 6.0%, to $2,841,462 in 1998, as compared to $2,679,710 in 1997. The increase was the result of an increase in administrative expenses of $57,551, or 7.5%, to $825,691 in 1998, as compared to $768,140 in 1997. This increase is the result of higher legal and professional fees. Additionally, ex[emses relating to property operations increased $90,627, or 28.6%, to $408,014 in 1998, as compared to $317,387 in 1997. This increase is the result of a new water/sewer metering system installed at three of the Partnership's properties and higher than normal legal expenses associated with evictions.
As a result of the foregoing factors, net income decreased to $196,999 as of March 31, 1998 from $255,798 as of March 31, 1997.
MANAGEMENT EXPENSES
Net Partnership management expenses for the quarter amounted to $87,326. Expenses of $89,236 (data processing, accounting and legal expenses, appraisals and wages to employees of the Partner-ship) were offset by gross income of $1,910, generated by inter-est on the Partnership's cash reserves and transfer fees. The equiva-lent figures for the first quarter of 1997 were $61,039, $63,872 and $2,833, respectively. Please note that the income of $1,910 reported here on cash reserves, does not include income from reserves held in securities.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
| Exhibit Number | Description |
| 27 | Financial Data Schedule |
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the three months ended March 31, 1998.
| 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 15, 1998
EXHIBIT INDEX
| Exhibit No. | Description | Page |
| 27 | Financial Data Schedule |