For the Fiscal Year Ended December 31, 1996 Commission File No.
016701
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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.
As of March 1, 1997, 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 nonaffiliates, as estimated by the General
Partner (based on a 1997 appraisal of Partnership properties),
was approximately $42,317,000.
DOCUMENTS INCORPORATED BY REFERENCE
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) 6459261.
The Partnership filed an S11 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.
On April 1, 1987, the Partnership acquired Sunshine Village,
a 356space manufactured housing community located in Davie,
Florida and Ardmor Village, a 339space manufactured housing
community located in Lakeville, Minnesota. On May 22, 1987,
the Partnership acquired Camelot Manor, a 335space manufactured
housing community located in Grand Rapids, Michigan. On July
1, 1987, Country Roads, a 312space manufactured housing
community located in Jacksonville, Florida and Paradise Village,
a 611space manufactured housing community located in Tampa,
Florida, were acquired by the Partnership. On September 1, 1987,
Dutch Hills, a 278space manufactured housing community located
in Haslett, Michigan and Stonegate Manor, a 308space manufactured
housing community located in Lansing, Michigan, were acquired
by the Partnership. On January 8 and 15, 1988, respectively,
the Partnership acquired West Valley, a 420space manufactured
housing community, and El Adobe, a 371space manufactured
housing community, both located in Las Vegas, Nevada.
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 December 27, 1993, the Partnership participated in a financing
transaction (the "Mortgage Financing") which created
mortgage financing for 28 manufactured housing communities (collectively,
the "Projects," and individually, a "Project").
Seven (7) of the Projects are owned by the Partnership; thirteen
(13) are owned by affiliates of Genesis Associates Limited Partnership,
the general partner of the Partnership (the "General Partner"),
and eight (8) are owned by unrelated third parties. The Projects
owned by the Partnership (the "Fund II Projects") are
as follows:
Ardmor Village
Camelot Manor
Dutch Hills
El Adobe
Stonegate
Sunshine Village
West Valley
Essentially, mortgage notes executed by the owners of each of
the Projects were issued in favor of Neutron-Uniprop, Inc. ("Neutron"),
a wholly-owned subsidiary of Uniprop, Inc. (an affiliate of the
General Partner), and assigned by Neutron to an independent trustee
of a newly-formed trust (the "Trust"). The specific
purpose of the Trust is to hold the mortgage notes and the mortgages
and other security provided in connection therewith for the benefit
of the owners of the newly-issued Uniprop MHC Mortgage Pass-Through
Certificates (the "Mortgage Certificates"). The proceeds
derived from the sale of the Mortgage Certificates were used to
fund the mortgage loans made to the Project owners and pay the
various expenses of the transaction.
Five classes of Mortgage Certificates were issued with varying
seniority and carrying different interest rates. The interest
rate on the senior securities (i.e. the Class A Certificates)
floats and equals 1.67% in excess of the LIBOR rate, computed
monthly. The Class B and D Certificates carry fixed rates of
interest of 7.04% and 7.5%, respectively. The interest rate on
the Class C Certificate floats and equals 2.5% in excess of the
LIBOR rate, computed monthly. The Class R Certificates do not
have a principal balance or accrue interest.
The original principal amounts of the mortgage loans for the
Fund II Projects and their terms are as follows:
Ardmor Village $2,930,000
Camelot Manor $3,490,000
Dutch Hills $2,580,000
El Adobe $5,530,000
Stonegate $3,015,000
Sunshine Village $4,290,000
West Valley $8,210,000
Term: 30 years
Amortization: Years 1-5; none
Years 6-30; 25 year schedule
Interest Rate: Weighted average cost of the Mortgage Certificates
plus 135 basis points (the "Excess Interest"), computed
monthly, but in no event greater than 9.9% per annum in years
1 through 10 and 10.9% per annum in years 11 through 30, or less
than 7% per annum in years 1 through 10 or 8% per annum in years
11 through 30. After payment of certain servicing expenses and
the costs of administering the Trust, the Excess Interest will
be used to reduce the principal balance of the Mortgage Certificates,
which could ultimately result in an increase in the value of the
Class R Certificates.
Prepayment: Penalty of 5%, 4%, 3%, 2%, and 1% of the principal
amount outstanding for prepayment in years 1, 2, 3, 4, and 5,
respectively. No prepayment penalty after year 5.
All prepayments of principal made under any of the mortgage notes
will be applied in reduction of the principal balance of the Mortgage
Certificates according to their respective payment priorities.
To the extent the Excess Interest is not used to pay servicing
fees and other costs of the trustee and servicers, it will be
applied first in reduction of the principal balance of the Class
B Certificates and Class C Certificates, pro rata until reduced
to zero, then in reduction of the principal balance of the Class
A Certificates until reduced to zero, and then in reduction of
the Class D Certificates until reduced to zero. As a result of
the foregoing, the weighted average cost of the Mortgage Certificates
and, therefore, the interest rate charged to each Project owner,
may increase due to prepayment by another borrower and as the
principal amount of the Mortgage Certificates is reduced. In
addition, because the Fund II Projects all have a common owner,
the loans to each of the Fund II Projects are cross-defaulted
and cross-collateralized with one another, such that a default
by Uniprop Income Fund II with respect to any one of its loans
will permit the enforcement of remedies on behalf of the Trust
against all seven (7) Fund II Projects and recovery against each
Fund II Project in excess of the amount of its mortgage loan.
As a condition to participating in the mortgage-backed securities
transaction, each Project owner was required to use approximately
5% of its mortgage proceeds to purchase a subordinated portion
of the mortgage-backed securities, the Class D Certificates.
The Class D Certificates are not rated, carry a fixed interest
rate of 7.5% per annum and are subordinated to the Class A, Class
B and Class C Mortgage Certificates, although, as long as there
are sufficient funds in the Trust, the holders of the Class D
Certificates are entitled to receive monthly payments of interest.
The Partnership was issued a Class D Certificate with a face
amount of $1,502,250.
The Class R Certificates, which constitute the residual interest
in the Trust, are owned by Uniprop MHC Residual L.L.C., a newly
created Michigan limited liability company (the "R Holder"
or "LLC"). The owners of the R Holder are the respective
owners of the Projects participating in this mortgage-backed securities
financing, with their ownership interest determined based on the
amount each Project owner contributes to the value of the Class
R Certificates. Initially, the Partnership holds a 20.986% interest
in the R Holder.
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
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, although a Property may be
disposed of later, if in the opinion of the General Partner, it
is in the best interest of the Partnership to do so. The determination
of whether a particular Property should be disposed of will be
made by the General Partner only after consultation with Hutton
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.
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 seven communities offering approximately
3,441 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 3,697 housing sites.
In the Jacksonville, Florida area, Country Roads competes with
approximately nine communities offering approximately 2,181 housing
sites. The Tampa, Florida area contains approximately five communities
offering approximately 1,566 housing sites competing with Paradise
Village. Dutch Hills and Stonegate Manor compete with approximately
11 other communities in the Lansing, Michigan area offering approximately
3,386 housing sites. In the Las Vegas, Nevada area, West Valley
and El Adobe compete with approximately 10 other communities offering
approximately 2,897 housing sites. The Properties also compete
against other forms of housing, including apartment and condominium
complexes.
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, 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.
The Partnership employs three parttime 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 onsite maintenance and administrative services.
Uniprop, Inc., as property manager, has overall management authority
for each Property.
The Partnership purchased all nine manufactured housing
communities for cash. As a result of the Mortgage Financing, seven
of the nine Properties are encumbered with mortgages in the following
original principal amounts:
Ardmor Village $2,930,000
Camelot Manor $3,490,000
Dutch Hills $2,580,000
El Adobe $5,530,000
Stonegate $3,015,000
Sunshine Village $4,290,000
West Valley $8,210,000
Each of the Properties is a modern manufactured housing community
containing lighted and paved streets, sidebyside offstreet
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 center 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
and Location |
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| |
| Ardmor Village
Cedar Avenue S. Lakeville, MN | |||
| Camelot Manor
South Division Grand Rapids, MI | |||
| Country Roads
Townsend Road Jacksonville, FL | |||
| Dutch Hills
Upton Road Haslett, MI | |||
| El Adobe
N. Lamb Blvd. Las Vegas, NV | |||
| Paradise Village
Paradise Drive Tampa, FL | |||
| Stonegate Manor
Eaton Rapids Drive Lansing, MI | |||
| Sunshine Village
Southwest 5th St. Davie, FL | |||
| West Valley
W. Tropicana Ave Las Vegas, NV |
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. There
have been no matters submitted to a vote of the limited partners
during the last fiscal year.