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, 2003 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 | | 38-2702802
|
| (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:
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 II,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
| | | | Page
|
| ITEM 1. | FINANCIAL STATEMENTS |
|
| Balance Sheets
|
| March 31, 2003 and
|
| December 31, 2002 | 3
|
|
| Statements of Income
|
| Three months ended March 31, 2003
|
| and 2002(Unaudited) | 4
|
|
| Statement of Partners' Equity
|
| Three months ended March 31, 2003(Unaudited) | 4
|
|
|
| Statements of Cash Flows
|
| Three months ended March 31, 2003
|
| and 2002(Unaudited) | 5
|
|
|
| Notes to Financial Statements
|
| March 31, 2003(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 | 9
|
| ITEM 4. | CONTROLS AND PROCEDURES | 10
|
PART II OTHER
INFORMATION
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K
| | |
11
|
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 2003(Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2003 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, 2002 has been derived from the
audited financial statements at that date. Operating results for the three
months ended March 31, 2003 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2003, 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, 2002.
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. On
August 20, 1998, the Partnership refinanced seven of its nine properties with GMAC Commercial Mortgage
Corporation (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 amount 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. Upon acquisition, the Partnership
anticipated owning the properties for seven to ten years. All of the properties have been owned by the
Partnership for 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.
Distributable Cash from Operations totaled $963,224 and $932,759 for the
quarters ended March 31, 2003 and 2002, respectively. Distributable Cash from
Operations is defined as net income computed in accordance with generally
accepted accounting principals ("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 nor as an
alternative to cash flow as a measure of liquidity. From Distributable Cash
from Operations the General Partner has decided to distribute $759,779, or $.23
per unit, to the unit holders as of March 31, 2003. The General Partner will
continue to monitor cash flow generated by the Partnership's nine properties
during the coming quarters. If cash flow generated is greater or lesser 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 reserves. The remaining $203,445 was added to reserves, as of
March 31, 2003, the Partnership's cash reserves amounted to $2,957,348. The
level of cash reserves maintained is at the discretion of the General Partner.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine
properties reported combined occupancy of 80% at the end of March 2003, versus
88% for March 2002. The average monthly homesite rent as of March 31, 2003 was
approximately $387, versus $376, an increase of 3% from March 2002.
|
| Total Capacity | Occupied Sites
| Occupancy Rate | Average Rent*
|
| Ardmor Village | 339 | 312 | 92% |
378
|
| Camelot Manor | 335 | 260 | 78% |
366
|
| Country Roads | 312 | 242 | 77% |
261
|
| Dutch Hills | 278 | 261 | 94%
| 364
|
| El Adobe | 367 | 280 | 76%
| 432
|
| Paradise Village | 614 | 381 | 62%
| 325
|
| Stonegate Manor | 308 | 243 | 79% |
368
|
| Sunshine Village | 356 | 333 | 94%
| 493
|
| West Valley | 421 | 355 |
84% |
494
|
|
| Total on
3/31/03: | 3,330 | 2,667 | 80% |
$387
|
| Total on
3/31/02: | 3,330 | 2,925 | 88% |
$376
|
*Not a weighted average
| Gross Revenues | | Net Income
|
| 3/31/03 | 3/31/02 |
3/31/03 | 3/31/02
|
| Ardmor Village
| $ 440,400
| $ 357,087
| $ 177,126
| $ 178,191
|
| Camelot Manor
| 275,746
| 356,513
| 135,949
| 152,390
|
| Country Roads
| 195,992
| 205,559
| 76,784
| 71,969
|
| Dutch Hills
| 277,199
| 273,421
| 154,274
| 143,786
|
| El Adobe
| 354,625
| 379,877
| 188,987
| 206,647
|
| Paradise Village
| 417,812
| 432,475
| 95,169
| 108,916
|
| Stonegate Manor
| 296,079
| 277,999
| 132,323
| 135,209
|
| Sunshine Village
| 452,344
| 498,483
| 273,508
| 268,572
|
| West Valley
| 536,386
| 528,145
| 324,691
| 299,101
|
|
| 3,246,583
| 3,309,559
| 1,558,811
| 1,564,781
|
| Partnership Management:
| 4,608
| 9,174
| (92,807)
| (114,096)
|
| Other Non Recurring expenses:
| ----- | ----
| (53,486)
| (58,510)
|
| Debt Service
|
|
| (449,294)
| (458,046)
|
| Depreciation and Amortization
| ----- | ----
| (440,907)
| (431,227)
|
|
| $ 3,251,191
| $ 3,318,733
| $522,317
| $502,902
|
Comparison of Quarter Ended March 31, 2003 to Quarter Ended March 31, 2002
Gross revenues decreased $67,542 to $3,251,191 in 2003, as compared to
$3,318,733 in 2002. The decrease was primarily the result of weak economic
conditions.
(See table on previous page.)
As described in the Statements of Income, total operating expenses decreased
$86,957, or 3%, to $2,728,874 in 2003, as compared to $2,815,831 in 2002. The
decrease is due to controlling property expenses as well as lower utilities and
property taxes.
As a result of the aforementioned factors, Net Income increased to $522,317 for
the first quarter of 2003 compared to $502,902 for the first quarter of 2002.
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, 2003 the Partnership had a note payable outstanding in the amount
of $28,156,219. 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 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The General Partner and Principal Financial Officer have
reviewed and evaluated the
effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a
date within 90 days before the filing date of this quarterly report. Based on that evaluation, The
General Partner and Principal Financial Officer the have concluded that our current disclosure controls
and procedures are effective and timely, providing them with material information relating to us required
to be disclosed in the reports we file or submit under the Exchange Act.
Changes in Internal Controls
There have not been any significant changes in our internal
controls or in other factors that
could
significantly affect these controls subsequent to the date of their evaluation. We are not aware of any
significant deficiencies or material weaknesses, therefore no corrective actions were taken.
PART II - OTHER INFORMATION
ITEM 6. Reports of Form 8-K
(A) Reports of Form 8-K
There were no reports filed on Form 8-K during
the three months ended March 31, 2003.
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. We the undersigned certify to the
best of our knowledge neither the report nor the financial statements therein, contain any untrue
statements of material fact. The financial information included in the report fairly represents the
financial condition and result of operations for the periods presented herein.
Uniprop Manufactured Housing
Communities Income Fund II,
A Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc.,
its Managing 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 13, 2003
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 II;
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 a date within 90 days prior to the filing date of this
quarterly 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 13, 2003 Signature: /s/ Paul M. Zlotoff
Paul M. Zlotoff, Principal Executive Officer
President & Director of GP Genesis Corp.
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 II.
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 a date within 90 days prior to the filing date of this
quarterly 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 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 and 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 13,2003 Signature: /s/ Gloria A. Koster
Gloria A. Koster, Chief Financial Officer