Washington, D.C. 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2000 Commission File No. 016701
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) 6459261
(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
Yes [ X ] No [ ]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
| UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II, | |||||||
| A MICHIGAN LIMITED PARTNERSHIP | |||||||
| BALANCE SHEETS | |||||||
| ASSETS | September 30,2000 | December 31, 1999 | |||||
| (Unaudited) | |||||||
| Properties: | |||||||
| Land | $11,662,525 | $11,644,103 | |||||
| Buildings And Improvements | 50,120,951 | 49,776,786 | |||||
| Furniture And Fixtures | 506,322 | 453,437 | |||||
| Manufactured Homes | 1,617,466 | 1,875,567 | |||||
| 63,907,264 | 63,749,893 | ||||||
| Less Accumulated Depreciation | 21,951,278 | 20,587,823 | |||||
| 41,955,986 | 43,162,070 | ||||||
| Cash And Cash Equivalents | 3,386,036 | 2,821,681 | |||||
| Unamortized Finance Costs | 580,699 | 597,528 | |||||
| Other Assets | 1,190,431 | 944,378 | |||||
| Total Assets | $47,113,152 | $47,525,657 | |||||
| LIABILITIES and PARTNERS' EQUITY | September 30, 2000 | December 31, 1999 | |||||
| (Unaudited) | |||||||
| Accounts Payable | $145,942 | $235,098 | |||||
| Other Liabilities | 1,133,577 | 769,853 | |||||
| Notes Payable | 29,304,639 | 29,572,116 | |||||
| Total Liabilities | $30,584,158 | $30,577,067 | |||||
| Partners' Equity: | |||||||
| General Partner | 258,420 | ||||||
| Unit Holders | 16,255,941 | 16,690,170 | |||||
| Total Partners' Equity | 16,528,994 | 16,948,590 | |||||
| Total Liabilities And | |||||||
| Partners' Equity | $47,113,152 | $47,525,657 | |||||
| See Notes to Financial Statements | |||||||
| 3 |
| UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II, | |||||||||||||||||
| A MICHIGAN LIMITED PARTNERSHIP | |||||||||||||||||
| STATEMENTS OF INCOME | NINE MONTHS ENDED | THREE MONTHS ENDED | |||||||||||||||
| Sept. 30, 2000 | Sept. 30, 1999 | Sept. 30,2000 | Sept. 30, 1999 | ||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited | ||||||||||||||
| Income: | |||||||||||||||||
| Rental Income | $9,205,143 | $8,938,928 | 3,100,711 | 2,993,519 | -- | ||||||||||||
| Other | 605,403 | 552,777 | 214,782 | 193,220 | |||||||||||||
| Total Income | $9,810,546 | $9,491,705 | 3,315,493/U> | 3,186,739 | |||||||||||||
| Operating Expenses: | |||||||||||||||||
| Administrative Expenses | |||||||||||||||||
| (Including $484,796, $472,050,$163,473, and $158,626 in Property Management | |||||||||||||||||
| Fees Paid to an Affiliate for the Nine and Three Month Period Ending | |||||||||||||||||
| September 30, 2000 and 1999 Respectively) | 2,429,726 | 2,544,445 | 795,995 | 982,422 | |||||||||||||
| Property Taxes | 753,429 | 717,357 | 251,607 | 238,875 | |||||||||||||
| Utilities | 719,748 | 706,738 | 242,730 | 267,011 | |||||||||||||
| Property Operations | 1,629,465 | 1,495,180 | 660,523 | 388,666 | |||||||||||||
| Depreciation And Amortization | 1,382,421 | 1,387,500 | 440,807 | 462,500 | |||||||||||||
| Interest | 1,432,423 | 1,438,107 | 477,977 | 479,977 | |||||||||||||
| Total Operating Expenses | $8,347,212 | $8,289,327 | $2,869,639 | $2,819,451 | |||||||||||||
| Net Income | $1,463,334 | $1,202,378 | $445,854 | $367,288 | |||||||||||||
| Income Per Unit: | 0.44 | 0.36 | 0.13 | 0.11 | |||||||||||||
| Distribution Per Unit: | 0.57 | 0.54 | 0.19 | 0.18 | |||||||||||||
| Weighted Average Number Of Units | |||||||||||||||||
| Of Beneficial Assignment Of Limited Partnership | |||||||||||||||||
| Interest Outstanding During The Period Ending | |||||||||||||||||
| September 30, 2000 and 1999 | 3,303,387 | 3,303,387 | 3,303,387 | 3,303,387 | |||||||||||||
| See Notes to Financial Statements | |||||||||||||||||
| 4 | |||||||||||||||||
| Statement of partners Equity(Unaudited) | |||||||||||||||||
| Genral Partner | Unit Holders | Total | |||||||||||||||
| Beginning Balnce Dec.31, 1999 |   | 258,420 | 16,690,170 | 16,948,590 | |||||||||||||
| Net Income |   | 14,633 | 1,448,701 | 1,463,334 | |||||||||||||
| Distributions |   | 0 | (1,882,930) | (1,882,930) | |||||||||||||
| Balnce, September 30, 2000 |   | 273,053 | 16,255,941 | 16,528,994 |
| UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II, | ||||||||||||||||
| A MICHIGAN LIMITED PARTNERSHIP | ||||||||||||||||
| STATEMENTS OF CASH FLOWS | ||||||||||||||||
| NINE MONTHS ENDED | ||||||||||||||||
| September 30,2000 | September 30,1999 | |||||||||||||||
| (unaudited) | (unaudited | |||||||||||||||
| Cash Flows From Operating Activities: | ||||||||||||||||
| Net Income | $1,463,334 | $1,202,378 | ||||||||||||||
| Adjustments To Reconcile Net Income | ||||||||||||||||
| To Net Cash Provided By | ||||||||||||||||
| Operating Activities: | ||||||||||||||||
| Depreciation | 1,363,456 | 1,365,000 | ||||||||||||||
| Amortization | 18,965 | 22,500 | ||||||||||||||
| (Increase) Decrease In Other Assets | (248,189) | (449,352) | ||||||||||||||
| Increase (Decrease) In Accounts Payables | (89,156) | 65,523 | ||||||||||||||
| Increase (Decrease) Other Liabilities | 363,724 | 325,639 | ||||||||||||||
| Total Adjustments | 1,408,800 | 1,329,310 | ||||||||||||||
| Net Cash Provided By (Used In) | ||||||||||||||||
| Operating Activities | 2,872,134 | 2,531,688 | ||||||||||||||
| Cash Flows From Investing Activities: | ||||||||||||||||
| Capital Expenditures | (157,372) | (398,707) | ||||||||||||||
| Net Cash Provided By (Used In) | ||||||||||||||||
| Investing Activities | (187,372) | (398,707) | ||||||||||||||
| Cash Flows From Financing Activities: | ||||||||||||||||
| Payment On Mortgage | (267,477) | (261,792) | ||||||||||||||
| Distributions To Partners | (1,882,930) | (1,783,835) | ||||||||||||||
| Net Cash Provided By (Used In) | ||||||||||||||||
| Financing Activities | (2,150,407) | (2,045,627) | ||||||||||||||
| Increase (Decrease) In Cash and Equivalents | 564,355 | 87,354 | ||||||||||||||
| Cash and Equivalents, Beginning | 2,821,681 | 2,482,314 | ||||||||||||||
| Cash and Equivalents, Ending | $3,386,036 | $2,569,668 | ||||||||||||||
| See Notes to Financial Statements | ||||||||||||||||
| 5 | ||||||||||||||||
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 30, 2000 (Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2000 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, 1999 has been derived from the audited financial statements at that date. Operating results for the nine months ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000, or for any other interim period. For further information, refer to the financial statements and footnotes thereto included in the Partnership’s Form 10-K for the year ended December 31, 1999.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The capital resources of Uniprop Manufactured Housing Communities Income Fund II (the “Partnership”) consist primarily of its nine manufactured home communities. On August 20, 1998 the Partnership refinanced seven of its nine properties with GMAC Commercial Mortgage (the “Refinancing”).
Liquidity
As a result of the Refinancing, seven of the Partnership’s nine properties are mortgaged. At the time of the Refinancing, the aggregate principal amounts due under the seven mortgage notes was $30,000,000 and the aggregate fair market value of the Partnership’s mortgaged properties was $66,000,000. 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. The properties owned by the Partnership were expected to be sold or financed within seven to ten years after their acquisition. All of the properties have been owned by the Partnership at least ten years and they were refinanced approximately 10 years after their acquisition. Genesis Associates Limited Partnership (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.
Distributable Cash from Operations totaled $886,661 for the quarter ended September 30, 2000. Distributable Cash from Operations is defined to mean net income computed in accordance with generally accepted accounting principles (“GAAP”), plus real estate related depreciation and amortization. Distributable Cash from Operations does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs. Distributable Cash from Operations should not be considered as an alternative to net income as the primary indicator of the Partnership’s operating performance or as an alternative to cash flow as a measure of liquidity. From Distributable Cash from Operations for the third quarter of 2000, the General Partner has decided to distribute $627,644 to the Unit Holders. The General Partner will continue to monitor on-going Distributable Cash from Operations generated by the Partnership during the coming quarters. If Distributable Cash from Operations 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.
While the Partnership is not required to maintain a working capital reserve, the Partnership has not distributed all the Distributable Cash from Operations in order to build cash reserves. As of September 30, 2000, the Partnership cash reserves amounted to $3,386,036. The level of cash reserves maintained is at the discretion of the General Partner.
Overall, as illustrated in the following table, the Partnership's nine properties reported a combined occupancy of 93%, (3,051/3,330 sites), versus 94% (3,102/3,330) for September 1999. The average monthly homesite rent as of September 30, 2000 was approximately $361, versus $356, an increase of 1.4% from September 1999.
Ardmor Village 339 334 99% $342
Camelot Manor 335 320 96 339
Country Roads 312 276 89 241
Dutch Hills 278 275 99 338
El Adobe 369 332 90 419
Paradise Village 614 493 80 303
Stonegate Manor 308 294 96 346
Sunshine Village 356 323 91 446
West Valley 421 404 96 479
Total on 9/30/00 3,330 3,051 93% $361*
Total on 9/30/99: 3,330 3,102 94% $356*
*Average rent is not weighted average.
For three months ending September 30, 2000
Ardmor Village $ 344,646 $ 345,088 $ 190,138 $ 171,234
Country Roads 201,832 208,169 (73,128) 18,312
Dutch Hills 263,718 245,018 147,124 110,655
El Adobe 426,755 440,484 259,984 281,595
Paradise Village 427,745 361,163 63,163 32,845
Stonegate Manor 292,004 280,787 145,932 123,278
Sunshine Village 403,261 426,171 233,586 292,181
West Valley 600,729
5575,544 390,735 349,791
$3,274,449 $3,173,396 $ 1,547,083 $1,497,939
Partnership Management: 41,044 13,343 (12,564) (28,770)
Other Non Recurring expenses: ----- ---- (169,881) (159,404)
Interest Expense: (477,977) (479,977)
Depreciation and Amortization _______ ________ (440,807) (462,500)
Total $3,315,493 $3,186,739 $445,845 $367,288
Comparison of the Nine months Ended September 30, 2000 to the Nine months ended September 30, 1999.
Gross revenues increased $318,841, or 3.4%, to $9,810,546 in 2000, as compared to $9,491,705 in 1999.
As reported in the Statements of Income, total operating expenses increased $57,885, to $8,347,212 in 2000 compared to $8,289,327 in 1999. Total operating expenses increased as the result of cost related to upgrading the properties. Net income increased to $1,463,334 for the nine months ended September 30, 2000 from $1,202,378 for the nine months ended September 30, 1999 due to the increase in revenue.
Gross revenues increased $128,754, or 4.0%, to $3,315,493 in 2000, as compared to $3,186,739 in 1999.
As reflected in the Statements of Income, total operating expenses increased $50,188, or 1.8%, to $2,869,639 in 2000 as compared to $2,819,451 in 1999. The increase in total operating expenses was primarily the result of cost related to upgrading the properties. Net income increased to $445,854 for the quarter ended September 30, 2000 from $367,288 for the quarter ended September 30, 1999 primarily due to the increase in revenue.
ITEM 3.
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 September 30, 2000 the Partnership had a note payable outstanding in the amount of $29,304,639. Interest on this note is at a fixed annual 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 6. Exhibits and Reports on Form 8-K
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 15, 2000
EXHIBIT INDEX
Exhibit
No. Description Page
27 Financial Data Schedule