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 September 30, 2004 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
|
| September 30, 2004(Unaudited) and
|
| December 31, 2003 | 3
|
|
| Statements of Income
|
| Nine months ended September 30, 2004 and 2003
|
| Three months ended September 30, 2004
|
| and 2003(Unaudited) | 4
|
|
| Statement of Partners' Equity
|
| Nine months ended September 30, 2004(Unaudited)
| 4
|
|
|
| Statements of Cash Flows
|
| Nine months ended September 30, 2004(Unaudited)
|
|
|
| Notes to Financial Statements
|
| September 30, 2004(Unaudited) | 6
|
|
|
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS
|
| OF FINANCIAL CONDITION AND RESULTS
|
| OF OPERATIONS | 7
|
| ITEM 3. | QUANTITATIVE AND QUALITATIVE
|
| DISCLOSURES ABOUT MARKET RISK | 10
|
| ITEM 4. | CONTROLS AND PROCEDURES | 10
|
PART II OTHER
INFORMATION
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 30, 2004(Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2004 financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The balance sheet at December 31, 2003 has been derived from the
audited financial statements at that date. Operating results for the nine months ended September 30,
2004 are not necessarily indicative of the results that may be expected for the year ending December 31,
2004, or for any other interim period. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Partnership's Form 10-K for the year ended December 31,
2003.
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. 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.
The General Partner has decided to distribute $759,779, or $.23 per unit, to the unit holders during the
quarter ending September 30, 2004. 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.
As of September 30, 2004, the Partnership's cash reserves amounted to $2,455,429.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine properties reported combined
occupancy of 70% at the end of September 2004, versus 82% for September 2003. The average monthly
homesite rent as of September 30, 2004 was approximately $401, versus $382 for the quarter ending
September 2003.
|
| Total Capacity | Occupied Sites
| Occupancy Rate | Average Rent*
|
| Ardmor Village | 339 | 279 | 82% |
409
|
| Camelot Manor | 335 | 226 | 67% |
367
|
| Country Roads | 311 | 196 | 63% |
278
|
| Dutch Hills | 278 | 226 | 81%
| 384
|
| El Adobe | 367 | 242 | 66%
| 437
|
| Paradise Village | 614 | 327 | 53%
| 340
|
| Stonegate Manor | 308 | 213 | 69% |
383
|
| Sunshine Village | 356 | 317 | 89%
| 512
|
| West Valley | 421 | 317 | 75% | 499
|
|
| Total on
6/30/04: | 3,329 | 2,343 | 70% |
$401
|
| Total on
9/30/03: | 3,329 | 2,735 | 82% |
$382
|
*Not a weighted average
For the three and nine months ending September 30,2004 and September 30,2003
|
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|
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|
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|
|
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|
|
|
|
|
|
|
|
Gross
Revenue
|
|
Net Income
|
|
Gross
Revenue
|
|
Net Income
|
|
|
9/30/2004
|
9/30/2003
|
|
9/30/2004
|
9/30/2003
|
|
9/30/2004
|
|
9/30/2003
|
|
9/30/2004
|
|
9/30/2003
|
|
|
three
months ended
|
|
three
months ended
|
|
nine months ended
|
|
nine months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ardmor
|
$473,380
|
$489,779
|
|
$208,208
|
$206,728
|
|
$1,253,917
|
|
$1,623,130
|
|
$626,110
|
|
$593,028
|
|
Camelot
Manor
|
254,250
|
329,917
|
|
117,616
|
112,297
|
|
865,388
|
|
991,940
|
|
412,979
|
|
429,140
|
|
Country
Roads
|
179,297
|
214,006
|
|
71,496
|
85,130
|
|
586,229
|
|
658,030
|
|
185,887
|
|
247,901
|
|
Dutch
Hills
|
259,514
|
318,059
|
|
130,969
|
148,999
|
|
834,414
|
|
900,896
|
|
400,309
|
|
456,397
|
|
El Adobe
|
352,915
|
401,153
|
|
148,324
|
193,537
|
|
1,083,370
|
|
1,127,293
|
|
564,462
|
|
577,751
|
|
Paradise
|
487,858
|
439,015
|
|
123,158
|
81,409
|
|
1,265,349
|
|
1,284,633
|
|
344,791
|
|
285,113
|
|
Stonegate
|
287,595
|
300,631
|
|
149,814
|
103,608
|
|
880,871
|
|
868,382
|
|
362,522
|
|
353,289
|
|
Sunshine
|
508,717
|
605,727
|
|
267326
|
272,019
|
|
1,480,181
|
|
1,513,924
|
|
804,100
|
|
821,440
|
|
West
Valley
|
487,820
|
573,533
|
|
270,416
|
327,846
|
|
1,485,869
|
|
1,701,114
|
|
857,384
|
|
1,000,584
|
|
|
3,291,346
|
3,671,820
|
|
1,487,327
|
1,531,573
|
|
9,735,588
|
|
10,669,342
|
|
4,558,544
|
|
4,764,643
|
|
Partnership
Management
|
1,973
|
3,034
|
|
(69,820)
|
(70,652)
|
|
4,950
|
|
12,299
|
|
(301,125)
|
|
(244,378)
|
|
Other Expense
|
-----
|
-------
|
|
(152,964)
|
(102,728)
|
|
-------
|
|
------
|
|
(328,362)
|
|
(220,289)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
-----
|
-------
|
|
(447,933)
|
(455,549)
|
|
-------
|
|
-------
|
|
(1,341,418)
|
|
(1,358,840)
|
|
|
|
|
|
|
|
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|
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|
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|
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Depreciation
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
-----
|
-------
|
|
(457,455)
|
(445,964)
|
|
-------
|
|
-------
|
|
(1,366,935)
|
|
(1,330,375)
|
|
|
$3,293,319
|
$3,674,854
|
|
$359,155
|
$456,680
|
|
$9,740,538
|
|
$10,681,641
|
|
$1,220,704
|
|
$1,610,761
|
|
|
|
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|
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|
Comparison of Nine Months and Quarter Ended September 30, 2004 to Nine Months and Quarter Ended September
30, 2003
Gross revenues for the first nine months of 2004 decreased to $9,740,538 as compared to $10,681,641 for
the same nine months of 2003. Gross revenues for the quarter ended September 30, 2004 decreased to
$3,293,319, as compared to $3,674,854 the same three months of 2003. The decrease was the result of the
decrease in occupancy and lower home sale income.
As described in the Statements of Income, Total Operating Expenses for the first nine months of 2004
decreased to $8,519,834 compared to $9,070,880 for the same nine months of 2003. Total Operating
Expenses for the three months ended September 30, 2004 decreased $284,010, to $2,934,164 compared to
$3,218,174 in 2003, due to a decrease in home purchases.
As a result of the aforementioned factors, Net Income for the nine month period of 2004 decreased to
$1,220,704, compared to $1,610,761 for the same nine months in 2003. Net Income for the three months
ended September 30, 2004 decreased to $359,155 compared to $456,680 for the same three months of 2003.
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 September 30, 2004 the Partnership had a note payable outstanding in the amount of $27,465,360.
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
As of the end of the period covered by this report, the Partnership carried out an evaluation, under the
supervision and with the participation of the Principal Executive Officer and the Principal Financial
Officer, of the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15. Based upon, and as of the date of, this evaluation, the Principal
Executive Officer and the Principal Financial Officer concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed in the quarterly report is
recorded, processed, summarized and reported as and when required.
There was no change in the Partnership's internal controls over financial reporting that occurred during
the most recently completed quarter that has materially affected, or is reasonably likely to materially
affect the Partnership's internal control over financial reporting.
ITEM 6. Exhibits
Exhibit 31.1 Principal Executive Officer Certification pursuant to Rule 13a-14(a)/15d-14(a) of
The Securities and Exchange Act of 1934, as amended
Exhibit 31.2 Principal Financial Officer Certification pursuant to Rule 13a-14(a)/15d-14(a) of
The Securities and Exchange Act of 1934, as amended
Exhibit 32.1 Certifications pursuant to 18 U.S C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes -Oxley Act of 2002.
SIGNATURES
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.
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/ Joel Schwartz
Joel Schwartz, Principal Financial Officer
Dated: November 11, 2004
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul M Zlotoff, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Uniprop Manufactured Housing Income Fund
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 the end
of the period covered by this report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the of the
disclosure controls and procedures based on our evaluation as the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls;
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: November 11, 2004 Signature: /s/ Paul M. Zlotoff
Paul M. Zlotoff, Principal Executive Officer
President & Director of GP Genesis Corp.
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Joel Schwartz, 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 the end
of the period covered by this report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the effectiveness of the of the
disclosure controls and procedures based on our evaluation as the Evaluation Date.
5. The registrant's other certifying officers and I have 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: November 11,2004 Signature: /s/ /s/ Joel Schwartz,
Joel Schwartz, Principal Financial Officer
GP Genesis Corp.
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Uniprop Manufactured Housing Communities Income Fund II (the
"Company") on Form 10-Q for the period ending September 30, 2004 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I Paul M Zlotoff, Principal Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act
of 1934; and
2. The information contained in the Report fairly presents, in all material respect, the financial
condition and results of operations of the Company.
/s/ Paul M Zlotoff, General Partner
/s/ Joel Schwartz, Principal Financial Officer