<PAGE> 1
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, 1997 Commission File No. 0-15940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
a Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2593067
(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:
$1,000 per unit, 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 [ ]
<PAGE> 2
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
----
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
September 30, 1997 (Unaudited) and
December 31, 1996 3
Statements of Income
Nine months ended September 30, 1997
and 1996 and Three months ended
September 30, 1997 and 1996 4
Statements of Cash Flows
Nine months ended September 30, 1997
and 1996 (Unaudited) 5
Notes to Financial Statements
September 30, 1997 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
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<PAGE> 3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Properties:
Land $ 5,280,000 $ 5,280,000
Buildings And Improvements 23,874,944 22,128,664
Manufactured Homes 538,728 101,700
Furniture And Fixtures 113,864 538,914
----------- -----------
29,807,536 28,049,278
Less Accumulated Depreciation 8,578,123 7,989,565
----------- -----------
21,229,413 20,059,713
Cash And Cash Equivalents 726,485 640,086
Unamortized Finance Costs 828,758 0
Other Assets 937,737 607,756
----------- -----------
Total Assets $23,722,393 $21,307,555
----------- -----------
<CAPTION>
LIABILITIES SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Line of Credit $ 430,482 $ 495,300
Accounts Payable 98,681 110,583
Mortgage Payable (3) 33,414,673 0
Other Liabilities 1,073,747 991,619
----------- -----------
Total Liablities $35,017,583 $ 1,597,502
Partners' Equity:
General Partner (1,066,472) (602,862)
Class A Limited Partners (9,333,493) 11,438,140
Class B Limited Partners (895,225) 8,874,775
----------- -----------
Total Partners' Equity (11,295,190) 19,710,053
----------- -----------
Total Liabilities And
Partners' Equity $23,722,393 $21,307,555
----------- -----------
</TABLE>
See Notes to Financial Statements
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<PAGE> 4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF INCOME NINE MONTHS ENDED THREE MONTHS ENDED
(UNAUDITED) SEPT. 30, 1997 SEPT. 30, 1996 SEPT. 30, 1997 SEPT. 30, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income:
Rental Income $5,863,350 $5,597,288 $1,967,425 $1,869,271
Other 249,466 204,541 49,784 60,187
---------- ---------- ---------- ----------
Total Income $6,112,816 $5,801,829 $2,017,209 $1,929,458
---------- ---------- ---------- ----------
Operating Expenses:
Administrative Expenses
(Including $303,058, 288,915, 101,549 and 96,019
In Property Management Fees Paid
To An Affliate For The Nine and Three Month
Periods Ended Sept. 30, 1997 and
1996, Respectively) 1,256,942 1,199,577 411,116 373,512
Property Taxes 622,512 613,382 206,646 204,436
Utilities 342,291 361,837 105,333 115,523
Property Operations 699,210 767,899 236,862 300,816
Depreciation And Amortization 620,847 587,870 206,949 195,956
Interest 1,462,857 0 704,060 0
---------- ---------- ---------- ----------
Total Operating Expenses $5,004,659 $3,530,565 $1,870,966 $1,190,243
---------- ---------- ---------- ----------
Net Income $1,108,157 $2,271,264 $ 146,243 $ 739,215
---------- ---------- ---------- ----------
Income Per Limited Partnership Unit:
Class A $30.00 $52.00 $2.00 $17.00
Class B $50.00 $75.00 $2.00 $25.00
Distribution Per Limited Partnership Unit
Class A $50.00 $75.00 $2.00 $25.00
Class B $50.00 $75.00 $2.00 $25.00
Weighted Average Number Of Limited
Partnership Units Outstanding
Class A 20,230 20,230 20,230 20,230
Class B 9,770 9,770 9,770 9,770
</TABLE>
See Notes to Financial Statements
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<PAGE> 5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPT. 30, 1997 SEPT. 30, 1996
-------------- --------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ 1,108,157 $2,271,264
Adjustments To Reconcile Net Income
(Loss) To Net Cash Provided By
Operating Activities:
Depreciation 588,558 587,870
Amortization 32,289 0
(Increase) Decrease In Other Assets From Operations (1,191,028) 33,953
Increase (Decrease) In Accounts Payables (11,902) (74,171)
Increase (Decrease) Other Liabilities From Operations 82,128 (105,544)
------------ ----------
Total Adjustments (499,955) 442,108
------------ ----------
Net Cash Provided By (Used In)
Operating Activities 608,202 2,713,372
------------ ----------
Cash Flows From Investing Activities:
Capital Expenditures (1,758,258) (67,392)
Funds From Line of Credit (64,818) 44,590
------------ ----------
Net Cash Provided By (Used In)
Investing Activities (1,823,076) (22,802)
------------ ----------
Cash Flows From Financing Activities:
Funds from Mortgage 33,500,000
Distributions To Partners (2,113,400) (2,700,000)
Return of Capital (30,000,000) 0
Principal Payments on Mortgage (85,327) 0
------------ ----------
Net Cash Provided By (Used In)
Financing Activities 1,301,273 (2,700,000)
------------ ----------
Increase (Decrease) In Cash 86,399 (9,430)
Cash, Beginning 640,086 468,664
------------ ----------
Cash, Ending $ 726,485 $ 459,234
------------ ----------
</TABLE>
See Notes to Financial Statements
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<PAGE> 6
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation:
The balance sheet as of September 30, 1997, 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 included.
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, which should be consulted.
2. PAYMENTS TO AFFILIATES:
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPT. 30, 1997 SEPT. 30, 1996 SEPT. 30, 1997 SEPT. 30, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
PROPERTY MANAGEMENT FEE
TO UNIPROP, INC.: $303,058 $288,915 $101,549 $96,019
</TABLE>
3. MORTGAGE FINANCING
On March 25, 1997, the Partnership placed mortgages on the four properties in
connection with the borrowing of $33,500,000 from Nomura Asset Capital
Corporation. The interest rate on the financing is 8.24% and the term is 120
months. The loan is amortized over 360 months. There is no prepayment
allowed except during the last six months of the term of the loan. The
Partnership distributed $30,000,000 to the Limited Partners representing a full
return of the original capital contribution of $1,000 per unit held. The
monthly loan payment, including principal and interest, is approximately
$251,439 and began May, 1997.
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<PAGE> 7
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 four manufactured
housing communities. On March 25, 1997 the Partnership borrowed $33,500,000
from Nomura Asset Capital Corporation (the "Nomura Financing"), as described in
Note 3 to Financial Statements. The Nomura Financing was secured by placing
liens on its four communities. Resulting from the Nomura Financing, as
contemplated in the Proxy Statement, dated December 4, 1996, the Partnership
distributed $30,000,000 to the Limited Partners, which represented a full
return of the original capital contributions of $1,000 per unit.
Liquidity
As a result of the Nomura Financing, the Partnership's four properties are
mortgaged. At the time of the Nomura Financing, the aggregate principal
amounts due under the four mortgage notes was $33,500,000 and the aggregate
fair market value of the Partnership's mortgaged properties was $53,200,000.
The Partnership expects to meet its short-term liquidity needs generally
through its working capital provided by operating activities.
The Partnership's long-term liquidity is based, in part, upon its investment
strategy. The properties owned by the Partnership were anticipated to be held
for seven to ten years after their acquisition. All of the properties have
been owned by the Partnership at least seven years. The General 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.
On July 17, 1997 the Partnership replaced an existing $600,000 line of credit
with Comerica Bank with a renewable line of credit of $600,000 with First of
America Bank. The interest rate on the line floats 180 basis points above 1
month LIBOR, which is currently at 5.63%. The sole purpose of the line of
credit is to purchase new and used homes to be used as model homes and offered
for sale within the Partnership's communities. Over the past two years, sales
of the new and used model homes have been growing and the General Partner
believes that continuing model home program is in the best interest of the
Partnership. As of September 30, 1997, the outstanding balance on the line of
credit was $430,482.
During the quarters ended September 30, 1997 and 1996, distributable cash
generated by operations was $353,192 and $935,171, respectively. The decrease
in cash flow for
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<PAGE> 8
the quarter was due to the Partnership's mortgage payments of approximately
$754,317 per quarter, which is a result of the Nomura Financing.
The quarterly Partnership Management Distribution due the General Partner for
the third quarter was $133,000, or one-fourth of 1.0% of the most recent
appraised value of the properties held by the Partnership. ($53,200,000 x .01 =
$532,000/4 = $133,000).
The cash available after payment of the Partnership Management Distribution
amounted to $220,192. From this amount, the General Partner elected to make a
total distribution of $75,000 for the third quarter of 1997, 80.0% or $60,000
was paid to the Limited Partners and 20.0% or $15,000 was paid to the General
Partner.
While the Partnership is not required to maintain a working capital reserve,
the Partnership has not distributed all the cash generated from operations in
order to build cash reserves. For the quarter ended September 30, 1997, the
Partnership added $145,192 to reserves. During the same quarter in 1996, the
Partnership added $35,171 to cash reserves. The amount placed in reserves is
at the discretion of the General Partner.
Results of Operations
Overall, as illustrated in the tables below, the four properties enjoyed a
combined average occupancy of 97.9% (1,786/1,824 sites) at the end of September
1997, versus 97.1% a year ago. The average monthly rent in September 1997 was
approximately $384, or 3.2% more than the $372 average monthly rent in
September 1996.
<TABLE>
<CAPTION>
Total Occupied Occupancy Average
Capacity Sites Rate Rent
<S> <C> <C> <C> <C>
Aztec Estates 645 617 95.7% $427
Kings Manor 314 307 97.8 404
Old Dutch Farms 293 292 99.7 390
Park of the Four Seasons 572 570 99.7 329
----- ----- ---- ----
Total on 9/30/97: 1,824 1,786 97.9% $384
Total on 9/30/96: 1,824 1,771 97.1% $372
</TABLE>
During the third quarter of 1997, the Partnership generated gross revenues of
$2,017,209 or 4.5% more than the $1,929,458 generated in the third quarter of
1996. The net operating income before other non-recurring expenses and
Partnership Management was $1,192,824 or 59.1% of the total revenues, versus
$1,055,866 or 54.7% during the same period in 1996. Cash flow for the third
quarter, after mortgage debt service and non-recurring items was $353,192. The
cash flow for the same period in 1996 was $935,171, but it is not comparable
because the Partnership had no mortgage debt as of that date.
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<PAGE> 9
<TABLE>
<CAPTION>
GROSS NET OPERATING MORTGAGE CASH
REVENUES INCOME DEBT FLOW
<S> <C> <C> <C> <C>
Aztec Estates $ 728,660 $ 397,097 $266,810 $130,287
Kings Manor 353,653 217,509 133,886 83,623
Old Dutch Farms 331,215 220,806 120,600 100,206
Park of the Four Seasons 598,273 357,412 182,764 174,648
Partnership Management 5,408 (75,289) -0- (75,289)
Other Non Recurring expenses: -- (60,283) -0- (60,283)
---------- ---------- -------- --------
Total on 9/30/97: $2,017,209 $1,057,252 $704,060 $353,192
Total on 9/30/96: $1,929,458 $ 935,171 $ -0- $935,171
</TABLE>
As shown in the Partnership's financial statements, the properties' operating
expenses for the third quarter of 1997 compared to the same period in 1996,
reflect slight increases in wages, marketing expenses, taxes and
legal/professional fees.
AZTEC ESTATES, in Margate, Florida, reported an occupancy on September 30, 1997
of 95.7% (617/645 sites), versus 94.6% as of September 30, 1996. The average
rent in the community as of September 30, 1997 was $427, versus $411, an
increase of 3.9% from the same period in 1996. For the third quarter of 1997,
the net operating income was $397,097, or 3.4% more than the $383,887 reported
for the same period in 1996.
Improvement and maintenance actions undertaken during the quarter focused on
landscaping the front entrance and installing an air conditioning unit in the
office. In addition, minor repairs and remodeling were completed at the
clubhouse which included the installation of new doors, concrete repairs and
new storage closets. Pedestal upgrades were done at some sites to accommodate
the larger homes.
KINGS MANOR, in Fort Lauderdale, Florida, reported an occupancy of 97.8%
(307/314 sites) on September 30, 1997, versus 96.5% as of September 30, 1996.
The average rent in the community as of September 30, 1997 was $404, versus
$388, an increase of 4.1% from the same period in 1996. For the third quarter
of 1997, the net operating income was $217,509, or 7.7% more than the $201,934
reported during the same period in 1996.
Improvement and maintenance actions undertaken during the quarter involved tree
trimming throughout the community, pressure washing homes, painting and
carpeting the Recreation Monitor's office, and painting and wallpapering the
restrooms and hallway in the community center building. Asphalt repairs for
new home placements also were completed over the third quarter.
OLD DUTCH FARMS, in Novi Michigan, reported an occupancy of 99.7% (292/293
sites) on September 30, 1997, versus 98.3% as of September 30, 1996. The
average rent in the community as of September 30, 1997 was $390, versus $379,
an increase of 2.9% from the same period in 1996. For the third quarter of
1997, the net operating income was
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<PAGE> 10
$220,806, up 23.6% from the $178,618 reported for the same period in 1996. The
increase in net operating income is due to higher revenues from increases in
occupancy and average rent.
Improvement and maintenance actions undertaken during the third quarter focused
on re-siding the pole barn, upgrades to the mail center, upgrades to the
satellite storage building, and general site upgrades. Also completed during
the last quarter was the installation of an underground sprinkler system at the
entrance.
PARK OF THE FOUR SEASONS, in Blaine, Minnesota, reported an occupancy of 99.7%
(570/572 sites) on September 30, 1997, representing no change from the same
quarter ended September 30, 1996. The average rent in the community as of
September 30, 1997 was $329, versus $318, an increase of 3.3% from the same
period in 1996. For the third quarter of 1997, the net operating income was
$357,412, or 22.6% more than the $291,428 reported for the same period in
1996. The increase in income is due to higher average monthly rent and lower
operating expenses.
Improvement and maintenance actions undertaken during the quarter involved
approximately $103,000 in road, driveway, and sidewalk repairs. In addition,
the roof of the swimming pool room was painted.
MANAGEMENT EXPENSES
Net Partnership management expenses paid during the quarter amounted to
$75,289. Gross expenses of $80,697 (data processing, accounting and legal
expenses, office supplies and wages to employees of the Partnership) were
partially offset by income of $5,408 generated by interest on the Partnership's
reserves and transfer fees. The figures for last year's third quarter were
$21,064, $24,662 and $3,598, respectively.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
(b) Reports of Form 8-K
There were no reports filed on Form 8-K during
the three months ended September 30, 1997.
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<PAGE> 11
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, thereunto duly authorized.
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: November 14, 1997
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<PAGE> 12
EXHIBIT INDEX
Exhibit
No. Description Page
------- ----------- ----
27 Financial Data Schedule
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 726,485
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,492,980
<PP&E> 29,807,536
<DEPRECIATION> 8,578,123
<TOTAL-ASSETS> 23,722,393
<CURRENT-LIABILITIES> 35,017,583
<BONDS> 33,414,673
0
0
<COMMON> 0
<OTHER-SE> (11,295,190)
<TOTAL-LIABILITY-AND-EQUITY> 23,722,393
<SALES> 0
<TOTAL-REVENUES> 6,112,816
<CGS> 0
<TOTAL-COSTS> 4,383,812
<OTHER-EXPENSES> 588,558
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,495,146
<INCOME-PRETAX> 1,108,157
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,108,157
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,108,157
<EPS-PRIMARY> 30.00<F1>
<EPS-DILUTED> 50.00<F2>
<FN>
<F1>INCOME PER CLASS A UNIT
<F2>INCOME PER CLASS B UNIT
</FN>
</TABLE>
